TIDMKEYS
RNS Number : 7728B
Keystone Law Group PLC
25 September 2018
For immediate release 25 September 2018
Keystone Law Group plc
('Keystone' or the 'Group')
Interim Results
Keystone Law (AIM: KEYS), the fast growing, UK Top 100,
challenger law firm, today announces its interim results for the
six months ended 31 July 2018 ('H1-2019' or the 'period').
Financial Highlights
-- Strong revenue growth of 29.9% to GBP19.9 million (H1-2018:
GBP15.3 million)
-- PBTA* increased by 40.3% to GBP2.3 million (H1-2018: GBP1.7
million)
-- Basic EPS rising to 5.5 pence (H1-2018: 4.0 pence)
-- Robust cash conversion at 95.8% with operating cashflow of GBP2.2
million (H1-2018: GBP1.4 million)
-- Interim dividend of 2.5 pence per share, in line with progressive
dividend policy
* Underlying PBTA is calculated utilising profit before tax and
adding back amortisation for both periods; for the prior year loan
note interest is also added back.
Business Highlights
-- Lawyer recruitment continues to be strong
* Number of new applicants rose by 6% to 132 (H1-2018:
125)
* Lawyers accepting offers increased by 9% to 36
(H1-2018: 33)
* Number of lawyers increased by 31 (H1-2018: 20)
-- Organic growth enhanced by rising reputation as a leading, quality
mid-market law firm
-- Continued investment in Keystone's core IT platform
-- New IT security initiatives to enhance the Group's systems and
support distinctive platform model
-- Nominated for "Law firm of the Year" in the prestigious Lawyer
Magazine Awards 2018
-- Performance of the first half has traded ahead of expectations
and this has laid a strong foundation for the rest of the year.
James Knight, Chief Executive Officer of Keystone Law,
commented: "I am delighted to report an excellent set of Interim
Results, as reflected by the Group's strong revenue and profit
growth alongside the continued high levels of cash conversion.
"Keystone has a clear first mover advantage and our unique
business model is underpinning our strategy to drive forward the
delivery of UK centric organic growth. The recruitment activity in
the period further demonstrates that our increasing reputation as a
leading, quality-centric mid-market law firm makes Keystone an
attractive proposition for good quality lawyers; thus, driving our
expansion and enabling us to exploit the market opportunity which
exists in the UK legal services sector, which we believe is ripe
for disruption.
"The performance of the existing lawyers, together with the
recruitment activity during the first half and the strength of the
recruitment pipeline at the half year all serve to underpin
management's confidence in the second half."
- Ends -
For further information:
Keystone Law Group plc
James Knight, Chief Executive Tel: +44 (0) 20 3319 3700
Officer
Ashley Miller, Finance Director www.keystonelaw.co.uk
Panmure Gordon (UK) Limited
(Nominated Adviser and Broker)
Andrew Potts / Dominic Morley (Corporate Tel: +44 (0) 20 7886
Finance) 2500
Erik Anderson (Corporate Broking) www.panmure.com
Media enquiries:
Buchanan
Henry Harrison-Topham / Steph Watson Tel: +44 (0) 20 7466 5000
KeystoneLaw@Buchanan.uk.com www.buchanan.uk.com
Notes to editors
Keystone Law is a UK Top 100, fast growing, profitable and cash
generative challenger law firm. Established in 2002, Keystone is
one of the first platform models disrupting the traditional law
firms operating within the legal services mid-market. Keystone's
model permits rapid scalability, enabling the Group to increase the
number of revenue generating lawyers more quickly than the
traditional model.
As a full service law firm, Keystone delivers conventional legal
services across more than 20 service areas and over 50 industry
sectors to a client base comprising predominantly of SMEs and
private individuals. These services are delivered by over 290
experienced self-employed lawyers who work from their own offices;
with no fixed remuneration their fees are calculated with direct
reference to the income they generate for the Group. The lawyers
are fully supported by the Group's central office team of
approximately 40 employees, and are therefore able to focus
entirely on business development and the delivery of legal
work.
With the head office located in the heart of London's legal
district on Chancery Lane, the Group uses its bespoke proprietary
software platform to enable Keystone's lawyers to interact with the
central office team and each other in an easy and efficient manner,
whilst extensive networking and social events engender a strong
sense of belonging to the Keystone family. The platform also drives
interaction, co-operation and a strong corporate culture across the
business.
Keystone joined the AIM market of the London Stock Exchange in
November 2017, raising GBP15 million, under the ticker KEYS. More
information can be found at: www.keystonelaw.co.uk/
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via a Regulatory Information Service, this inside
information is now considered to be in the public domain. The
person responsible for arranging the release of this announcement
on behalf of the Group is Ashley Miller, Finance Director.
Chief Executive Officer's Statement
I am pleased to report that the Group has continued to trade
strongly throughout the first half of this financial year
('H1-2019'). As a result, revenue for the first six months has
increased by 29.9% to GBP19.9m (H1-2018: GBP15.3m). Underlying PBTA
(*) for the period has increased by 40.3% to GBP2.3m (H1-2018:
GBP1.7m). Continued operational gearing has more than offset the
additional costs incurred as a result of being AIM Listed and as
such the Underlying PBTA margin has increased to 11.75% (H1-2018:
10.9%). Cash conversion has also remained strong with operating
cash inflow for the period of GBP2.2m being a conversion of 95.8%
(H1-2018: GBP1.4m and 82.4%).
As a management team we have continued to drive forward the
delivery of our UK centric organic growth strategy and have been
pleased with the progress made during the period. Lawyer
recruitment has been buoyant with the number of new applicants
increasing by 6% from 125 in the H1-2018 to 132 this year, whilst
lawyers accepting offers has increased by 9% to 36 (H1-2018: 33).
Overall lawyer numbers have increased by 31 (with 42 lawyers
starting in the period) to 297 (H1-2018: increased by 20).
As part of our ongoing focus on IT security, we have rolled out
a number of new initiatives which enhance the security and
visibility of our systems as well as further facilitating the
support delivered to our lawyers. These solutions are best of breed
and are ideally adapted to the modern agile working practices of
the Keystone model. At the same time, we continue to develop and
deliver enhancements to Keyed In, building on the investment made
during the last financial year.
It has also been a busy period for the rest of the central
office team, with all our employees working to ensure that the
services we deliver, both to our lawyers and our clients, continue
to be of the highest standard. As ever, we have invested in the
team to ensure that this support infrastructure is in a position to
support and drive the ongoing growth of the business.
We are confident that the market continues to move in our favour
with our business model becoming increasingly accepted by the
mainstream legal establishment. This has been clearly demonstrated
during the period not only by the calibre of the lawyers who have
sought to join us but also by our nomination for "Law firm of the
Year" in the prestigious Lawyer Magazine Awards. Furthermore, we
have been included, for the second year running, in Legal Week's
"Best Legal Advisers" report; this is based on an independent
survey of clients and general counsel and as such we are very proud
that this demonstrates the confidence our clients have in the
quality of services we deliver.
At the Company's AGM, shareholders approved the introduction of
a long-term incentive plan to incentivise key management to deliver
superior returns for the Company's shareholders.
Dividend
As a result of the strong performance as well as the ongoing
confidence which the Board has in the outlook for the full year, I
am pleased to announce that the Board has declared an interim
dividend of 2.5p per share. The dividend will be payable on 26
October 2018 to shareholders on the register on 5 October 2018 and
the shares will go ex-dividend on 4 October 2018.
Summary and Outlook
In summary, the Board is extremely pleased with the performance
of the first half of this year, which has traded ahead of
expectations, and confident that this has laid a strong foundation
for the rest of the year.
The performance of the existing lawyers, together with the
recruitment activity during the first half and the strength of the
recruitment pipeline at the half year all serve to underpin
management's confidence in the second half.
James Knight
Chief Executive Officer
25 September 2018
*Underlying PBTA is calculated utilising profit before tax and
adding back amortisation for both periods; for the prior year loan
note interest is also added back.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended:
6 months to 6 months to
July 2018 July 2017
(Unaudited) (Unaudited)
Note GBP GBP
Revenue 19,940,081 15,347,844
Cost of sales (14,559,616) (11,183,544)
------------- --------------
Gross profit 5,380,465 4,164,300
Depreciation and amortisation 2 (191,753) (189,551)
Administrative expenses 2 (3,098,525) (2,480,984)
Other operating income 32,816 1,516
------------- --------------
Operating profit 2,123,003 1,495,281
Finance income 50,681 16,512
Finance costs 3 (5,982) (265,996)
------------- --------------
Profit before tax 2,167,702 1,245,797
Corporation tax expense (457,092) (239,371)
------------- --------------
Profit and total comprehensive
income for the year attributable
to equity holders of the
Parent 1,710,610 1,006,426
============= ==============
Basic and diluted EPS (p) 5.5 4.0
============= ==============
The above results were derived from continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at:
Note 31 July 31 July 31 January
2018 2017 2018
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
Assets
Non-current assets
Property, plant and equipment 43,780 41,440 50,392
Intangible assets 6,985,816 7,336,700 7,161,258
Available-for-sale financial
assets 13,628 13,628 13,628
------------ ------------ -----------
7,043,224 7,391,768 7,225,278
------------ ------------ -----------
Current assets
Trade and other receivables 11,804,946 10,716,271 11,994,713
Cash and cash equivalents 5,312,192 1,892,639 3,589,969
------------ ------------ -----------
17,117,138 12,608,910 15,584,682
------------ ------------ -----------
Total assets 24,160,362 20,000,678 22,809,960
============ ============ ===========
Equity and liabilities
Equity
Share capital 62,548 471 62,548
Share premium 9,920,760 428,123 9,920,760
Retained earnings 4,016,232 2,036,431 2,568,343
------------ ------------ -----------
Equity attributable to
equity holders of the
Parent 13,999,540 2,465,025 12,551,651
------------ ------------ -----------
Non-current liabilities
Borrowings 4 - 5,771,427 -
Deferred tax liabilities 442,266 521,768 477,355
------------ ------------ -----------
442,266 6,293,195 477,355
------------ ------------ -----------
Current liabilities
Trade and other payables 9,347,961 9,724,314 9,646,204
Borrowings 4 - 1,200,000 -
Corporation tax liability 284,625 243,144 59,750
Provisions 85,970 75,000 75,000
------------ ------------ -----------
9,718,556 11,242,458 9,780,954
------------ ------------ -----------
Total liabilities 10,160,822 17,535,654 10,258,309
------------ ------------ -----------
Total equity and liabilities 24,160,362 20,000,678 22,809,960
============ ============ ===========
The interim statements were approved and authorised for issue by
the Board of Directors on 24(th) September 2018 and were signed on
its behalf by:
A Miller
Director
Keystone Law Group Plc
Registered No: 09038082
STATEMENT OF CHANGES IN EQUITY
For the period ended 31 July 2018
Attributable to equity holders
of the Parent
Share Share Retained
capital premium earnings Total
GBP GBP GBP GBP
At 1 February 2017 (audited) 471 428,123 1,030,005 1,458,599
Profit for the period
and total comprehensive
income - - 1,006,426 1,006,426
At 31 July 2017(unaudited) 471 428,123 2,036,431 2,465,025
Profit for the period
and total comprehensive
income - - 581,487 581,487
Bonus Share Issue 49,575 - (49,575) -
New share capital subscribed 12,502 9,492,637 - 9,505,139
----------- ------------ ------------ -----------
At 31 January 2018 (audited) 62,548 9,920,760 2,568,343 12,551,651
Dividend Paid - - (262,721) (262,721)
Profit for the period
and total comprehensive
income - - 1,710,610 1,710,610
----------- ------------ ------------ -----------
At 31 July 2018 (unaudited) 62,548 9,920,760 4,016,232 13,999,540
=========== ============ ============ ===========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 31 July 2018
6 months to
Year ended
6 months 31 January
to July 2018 July 2017 2017
(Unaudited) (Unaudited) (Audited)
Note GBP GBP GBP
Cash flows from operating activities
Profit before tax 2,167,702 1,245,797 1,932,433
Adjustments to cash flows from non-cash
items
Depreciation and amortisation 2 191,753 189,552 382,266
Finance income (50,681) (16,512) (41,368)
Finance costs 5,982 265,997 392,462
------------- -------------- ------------
2,314,756 1,684,834 2,665,793
Working capital adjustments
Decrease / (Increase) in trade and other
receivables 189,767 (1,432,645) (2,711,087)
(Decrease) / Increase in trade and other
payables (287,272) 1,135,693 2,484,063
------------- -------------- ------------
Cash generated from operations 2,217,251 1,387,882 2,438,769
Interest Paid 3 (5,982) (6,792) (2,870)
Corporation taxes paid (267,307) (214,415) (538,049)
------------- -------------- ------------
Cash generated from operating activities 1,943,962 1,166,675 1,897,850
------------- -------------- ------------
Cash flows from investing / (used in)
activities
Interest received 3 50,681 16,512 41,368
Purchases of property plant and equipment (9,699) (4,815) (31,039)
------------- -------------- ------------
Net cash generated from investing activities 40,982 11,697 10,329
------------- -------------- ------------
Cash flows from financing activities
Proceeds from issue of ordinary shares,
net of issue costs - - 9,505,142
Repayment of other borrowings - - (8,537,617)
Dividend Paid (262,722) - -
------------- -------------- ------------
Net cash (used in) from financing activities (262,722) - 967,525
------------- -------------- ------------
Net increase in cash and cash equivalents 1,722,223 1,178,372 2,875,704
Cash at 1 February 3,589,970 714,266 714,266
------------- -------------- ------------
Cash at 31 July 5,312,192 1,892,638 3,359,970
============= ============== ============
NOTES TO THE FINANCIAL STATEMENTS
1. General Information
The Company was incorporated as Keystone Law Group Limited on 13
May 2014 under the Companies Act 2006 (registration no. 09039092)
and subsequently used as the vehicle to acquire Keystone Law
Limited (the main trading company in the Group) and its
subsidiaries on 17 October 2014. The Company was re-registered as a
Public Limited company on 10 November 2017. The company was
incorporated and is domiciled in England and Wales. The principal
activity of the Group is the provision of legal services. The
address of its registered office is:
48 Chancery Lane
London
WC2A 1JF
The Interim Financial Statements are presented in Pounds
Sterling, being the functional currency of the Group.
Accounting Policies
Statement of Compliance
The Interim Financial Statements have been prepared in
accordance with International Financial Reporting Standards and
interpretations issued by the International Financial Reporting
Standards Interpretations Committee ("IFR IC") as adopted by the
European Union (collectively "adopted IFRS's").
Basis of Preparation
The interim financial statements do not constitute statutory
accounts as defined in Section 434 of the Companies Act 2006. The
Group's statutory financial statements for the year ended 31
January 2018, prepared under IFRS, have been filed with the
Registrar of Companies. The auditor's report on those financial
statements was unqualified and did not contain a statement under
Section 498 (2) or (3) of the Companies House 2006. The interim
financial information has been prepared in accordance with the
recognition and measurement principles of International Financial
Reporting Standards (IFRS) and on the same basis and using the same
accounting policies as used in the financial statements for the
year ended 31 January 2018.
The Interim Report has not been audited or reviewed in
accordance with the International Standard on Review Engagement
2410 issued by the Auditing Practices Board.
Going Concern
The Interim Report has been prepared on a going concern basis as
the Directors have reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. The Group has no debt, is strongly cash
generative and has a strong trading performance. The Group's
forecasts and projections show that the Group has sufficient
resources for both current and anticipated cash requirements.
Accounting Developments
None of the standards, interpretations and amendments effective
for the first time from 1 February 2017 have had a material effect
on the Interim Report. The following standards and interpretations,
relevant to the Group's operations have been applied in the Interim
Report for the first time.
IFRS9 Financial Instruments
IFRS 15 Revenue from contracts with customers
PBTA
PBTA and Underlying PBTA is utilised as a key performance
indication for the Group. PBTA is calculated utilising profit
before tax and adjusted amortisation, whilst underlying PBTA uses
PBTA and in respect of the prior year adjusts for loan note
interest.
Earnings per Share
Basic earnings per share is calculated by dividing the profit
for the period by the weighted average number of ordinary shares
outstanding during the period. The weighted average number of
shares in the period was 31,273,941 (period ended 31 July 2017:
25,023,941 adjusted for the bonus issue and share consolidation in
the year).
The underlying earnings per share was 6.0p per share (period
ended 31 July 2017: 5.7p). Underlying earnings are stated after
adding back amortisation costs in both periods and loan note
interest in the prior period. Had the underlying earnings per share
for the period ended 31 July 2017 been calculated against the
current year weighted average number of shares, then the underlying
earnings per share for that period would have been 4.6p per
share.
2. Expenses by Nature
6 months to 6 months to
July 2018 July 2017
(Unaudited) (Unaudited)
Expenses are comprised of: GBP GBP
Depreciation 16,311 14,109
Amortisation 175,442 175,442
Staff costs 1,392,613 1,146,171
Operating lease expense - property 151,350 140,955
Other administrative expenses 1,780,570 1,278,795
------------ ------------
3,516,286 2,755,472
============ ============
Included within staff costs above are the costs of employed fee
earners who are included within cost of sale (2018: GBP226,008,
2017: GBP84,937).
3. Finance Costs
6 months to 6 months to
July 2018 July 2017
(Unaudited) (Unaudited)
GBP GBP
Interest on bank overdrafts and
borrowings (5,982) (17,114)
Interest expense on other financing
liabilities - (248,882)
------------ ------------
Total finance costs (5,982) (265,996)
============ ============
4. Borrowings
31 July 31 July 31 January
2018 201 2018
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
Non-current loans - 5,771,427 -
and borrowings
Other borrowings
============= ============= ===========
31 July 31 July 31 January
2018 2017 2018
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
Current loans and - 1,200,000 -
borrowings
Other borrowings
============= =============== =============
The loans were unsecured loan notes held by the Company which
attracted an interest rate of 6% per annum which is included within
the interest expense on other financing activities in Note 3. These
were fully paid down using the funds raised from the float in
November 2017.
5. Dividends
The final dividend for the year ended 31 January 2018 of 0.84p
per share (Nil: 2017) was paid in June 2018.
Furthermore, the directors have declared an interim dividend for
the current year of 2.5p per share (2017: Nil) which will be paid
on 26 October 2018 to shareholders on the register on 5 October
2018 with the shares going ex-dividend on 4 October 2018. In
accordance with IAS10 "Events after the Balance Sheet Date" this
dividend has not been reflected.
- Ends -
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END
IR BLGDCXUDBGIS
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