TIDMKEYS
RNS Number : 9281L
Keystone Law Group PLC
16 September 2021
16 September 2021
Keystone Law Group plc
('Keystone' or the 'Group' or 'Company')
Half year results for the six months ending 31 July 2021
Strong financial performance; well positioned to capitalise on
opportunities in the recruitment market
Keystone Law Group plc (AIM: KEYS), the fast growing, UK Top
100, challenger law firm, today announces its half year results for
the six months ended 31 July 2021 ('H1-2022').
Financial Highlights
-- Revenue of GBP33.7 million (up 37.6% on H1-2021; up 10.2% on H2-2021)
-- PBT of GBP4.3 million (up 118% on H1-2021; up 23.1% on H2-2021)
-- Adjusted PBT of GBP4.6 million (up 109% on H1-2021; up 22.4% on H2-2021)
-- Basic EPS of 10.8 pence, up 116% from 5.0 pence in H1-2021
-- Adjusted EPS of 11.9 pence, up 105% from 5.8 pence in H1-2021
-- Cash generated from operations of GBP4.2 million, up 27.2% from GBP3.3 million in H1-2021
-- Maintained robust cash position of GBP7.2 million, remain debt free
-- Declared interim dividend of 4.5p
Strategic Highlights
-- Activity levels across all practice areas have been very high throughout the period.
-- Conditions in the recruitment market have been similar to
those of H2-2021, with 136 qualified new applicants (H2-2021: 108)
and 28 accepted offers (H2-2021: 29) .
-- Our unique and operationally efficient model continues to
drive strong organic growth with 21 new joiners growing the number
of Principals to 386 (H1-2021: 347).
-- Lawyers have grown their practices to support increased
activity, with 83 (31 January 2021: 74) Pod members operating
across 48 Pods.
-- The business now has a total of 479 fee earners (H1-2021: 426).
-- Our collaborative and supportive culture is at the heart of
Keystone, being a fundamental element of what attracts and retains
our lawyers. As such, throughout the first half we have used
technology to continue delivering a broad range of social and
networking opportunities to our lawyers.
Current trading and outlook
-- Activity remains buoyant and we are well positioned to take
advantage of the opportunities that will result from the further
impetus generated in the legal recruitment market as the Covid-19
restrictions are fully relaxed and potential candidates are
required to return to the office during the second half of this
year. As such, We are confident that we will deliver another good
performance during the rest of this year which will be materially
ahead of current market expectations.
James Knight, Chief Executive Officer of Keystone Law,
commented:
We have delivered another impressive set of results, continuing
to grow our lawyer base and demonstrating strong increases in both
revenue and profit, all of which once again validates the
attractive nature of the Keystone model.
The legal market remains very busy and we are well positioned to
take advantage of the further opportunities which we believe the
"return to work" will present.
I am looking forward to carrying on delivering strong results in
second half of the year.
-S-
For further information please contact:
Keystone Law Group plc
James Knight, Chief Executive Officer
Ashley Miller, Finance Director +44 (0) 20 3319
www.keystonelaw.com 3700
Panmure Gordon (UK) Limited (Nominated Adviser
and Joint Broker)
Dominic Morley (Corporate Finance)
Erik Anderson (Corporate Broking) +44 (0) 20 7886
www.panmure.com 2500
Investec Bank plc (Joint Broker)
Carlton Nelson
James Rudd
www.investec.co.uk
+44 (0) 20 7597
Media enquiries: 5970
FTI Consulting
+44 (0)7711 387
Laura Ewart 085
keystonelaw@fticonsulting.com
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014 as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018 ("MAR").
Analyst Briefing
A meeting for analysts will be held virtually at 9.30am today,
16 September 2021. Analysts wishing to attend this event can
register via email at keystonelaw@ fticonsulting.com . Keystone's
Half Year 2021 results announcement will also be available today on
the Group's website at www.keystonelaw.com .
Notes to editors
Keystone is an award-winning law firm, providing conventional
legal services to SMEs and high net worth individuals in a GBP9bn
addressable market.
Keystone has a scalable and unique model, with three defining
characteristics:
-- Our lawyers have freedom, flexibility and autonomy, and are
paid up to 75% of what they bill.
-- Our lawyers determine how, when and where they work, in
contrast to the conventional law firm model.
-- We offer lawyers full infrastructure and support via its
central office, bespoke user-friendly IT platform, and network of
colleagues and events.
Keystone is a full-service law firm, with 20 service areas and
more than 50 industry sectors delivered by over 380 high calibre
self-employed Principals who work from their own offices.
In November 2020, Keystone was named Law Firm of the Year by The
Lawyer, the first time a 'new' law firm has won the award.
More information about Keystone can be found at
www.keystonelaw.co.uk .
Chief Executive Officer's Statement
I am delighted to report that Keystone has delivered a very
strong financial performance in the first half of this financial
year ('H1-2022' or the 'period'), with revenue rising to GBP33.7m
(37.6% up on H1-2021: GBP24.5m, 10.2% up on H2-2021: GBP30.6m),
reported PBT of GBP4.3m (up 118% on H1-2021: GBP1.9m, up 23.1% on
H2-2021 GBP3.5m), adjusted PBT(1) of GBP4.6m (up 109% on H1-2021:
GBP2.2m, up 22.4% on H2-2021 GBP3.8m) and cash generated from
operations of GBP4.2m up 27.2% (H1-2021: GBP3.3m, H2-2021:
GBP3.3m).
Throughout the period, the business has continued to perform
extremely well. The ongoing Covid-19 restrictions have had no
detrimental effect on the operational efficiency of the model; a
model which was described at the Lawyer Awards 2020 as being
"vindicated in spades" and "light years ahead" and this has been
demonstrated in the financial results.
Activity levels across all practice areas have been very high
throughout the period as the economy has opened up and, to some
small degree, changes to stamp duty and the rumoured changes to the
capital gains tax regime have driven demand across the legal
industry. Furthermore, the Covid-19 restrictions on movement have
reduced the normal seasonal downturns often experienced around
Easter and the early summer months. The total number of
Principals(2) has grown to 386, with 21 joining in the period (H1-
2021: 27). The increased activity has also driven continued growth
in the demand for junior support, delivered both through the
Pods(2) and the Central office lawyers. As a result, we have had 16
new Pod members join taking the total number of Pod members to 83
(31 January 2021: 74) across 48 Pods (31 January 2021: 44), whilst
the number of central office lawyers has increased by 1 to 10. All
of which means that we now have a total of 479 fee earners (31
January 2021: 452).
The conditions in the recruitment market during the period have
been more akin to those experienced in H2-2021 than during H1-2021
as the ongoing disruption and uncertainty caused by Covid-19
restrictions, now combined with the generally robust levels of
activity across the legal industry, encouraged high quality
candidates to remain where they are rather than seek new
opportunities. Accordingly, qualified new candidate applications in
the period were 136 compared to 145 during the same period last
year and 108 during H2-2021. We extended offers to 36 candidates
(H1-2021 53, H2-2021 28) and 28 candidates accepted offers in the
period (H1-2021 41, H2-2021 29).
The central office team have continued to rise to the challenge
of delivering the broad and varied array of social and networking
opportunities, albeit that these have had to be online rather than
in person, which form such an important part of maintaining the
cohesive Keystone culture. These events are an essential means by
which both new and existing lawyers develop and maintain the
internal networks and relationships which underpin the collegiate
spirit of Keystone. It is this networked collegiate approach which
so successfully delivers multi lawyer and cross disciplinary
solutions to our clients.
Dividend
I am pleased to announce that the Board has declared an interim
dividend of 4.5p per share in line with our stated dividend policy.
The dividend will be payable on 15 October 2021 to shareholders on
the register on 24 September 2021 and the shares will go
ex-dividend on 23 September 2021.
Summary and Outlook
In summary, I am extremely pleased with the financial
performance of the period. The activity levels across the business
have driven strong revenue and slightly enhanced gross profit
margins as the utilisation of the central office lawyers has
recovered following a slowdown last year. This, together with some
cost savings resulting from Covid-19 restrictions, has generated a
highly profitable set of results.
The prolonged period of uncertainty which the Covid-19
restrictions have caused, combined with the expectation that these
restrictions would soon be ending has undoubtedly dampened the
appetite of some high quality candidates to seek new opportunities
for the moment and in light of these conditions I am satisfied with
the growth in the lawyer base that we have achieved.
Looking ahead, activity remains buoyant and I am confident that
the relaxation of the Covid-19 restrictions and more significantly,
the return to office which will generally affect potential
candidates during the second half of this year will serve to
provide further impetus to the legal recruitment market and we are
well positioned to take advantage of the opportunities that this
will present. As such, I am confident that we will deliver another
good performance during the rest of this year which will be
materially ahead of current market expectations.
James Knight
Chief Executive Officer
15 September 2021
(1) Adjusted PBT is calculated utilising profit before tax and
adding back amortisation and share based payments for all
periods.
(2) The terms Principal and Pod were defined on page 7 of the
annual report and accounts for year ended 31 January 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 31 July 2021
6 Months 6 Months
to to
July 2021 July 2020
(Unaudited) (Unaudited)
Note GBP GBP
---------------------------------- ---- ------------ ------------
Revenue 33,672,472 24,468,027
Cost of sales (24,751,915) (18,159,798)
---------------------------------- ---- ------------ ------------
Gross profit 8,920,557 6,308,229
Depreciation and amortisation 2 (438,436) (435,879)
Share-based payments (169,175) (80,831)
Administrative expenses 2 (4,014,381) (3,831,021)
Other operating income - 11,285
---------------------------------- ---- ------------ ------------
Operating profit 4,298,565 1,971,783
Finance income 3,196 36,051
Finance costs (47,729) (59,357)
---------------------------------- ---- ------------ ------------
Profit before tax 4,254,032 1,948,477
Corporation tax expense (864,970) (388,156)
---------------------------------- ---- ------------ ------------
Profit and total comprehensive
income for the year attributable
to equity holders of the
Parent 3,389,062 1,560,321
---------------------------------- ---- ------------ ------------
Basic EPS (p) 1 10.8 5.0
---------------------------------- ---- ------------ ------------
The above results were derived from continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 July 2021
31 January
31 July 31 July
2021 2020 2021
(Unaudited) (Unaudited) (Audited)
Note GBP GBP GBP
---------------------------- ---- ------------ ------------ ----------
Assets
Non-current assets
Property, plant and
equipment
- Owned assets 273,337 356,589 323,940
- Right of use assets 1,129,867 1,493,082 1,335,297
---------------------------- ---- ------------ ------------ ----------
Total property, plant
and equipment 1,403,204 1,849,671 1,659,237
---------------------------- ---- ------------ ------------ ----------
Intangible assets 5,933,164 6,284,047 6,108,606
---------------------------- ---- ------------ ------------ ----------
Other assets 13,628 13,628 13,628
---------------------------- ---- ------------ ------------ ----------
7,349,996 8,147,346 7,781,471
---------------------------- ---- ------------ ------------ ----------
Current assets
Trade and other receivables 3 19,024,724 15,285,987 18,108,298
Cash and cash equivalents 7,243,438 6,878,613 7,371,300
---------------------------- ---- ------------ ------------ ----------
26,268,162 22,164,600 25,479,598
---------------------------- ---- ------------ ------------ ----------
Total assets 33,618,158 30,311,946 33,261,069
---------------------------- ---- ------------ ------------ ----------
Equity and liabilities
Equity
Share capital 62,548 62,548 62,548
Share premium 9,920,760 9,920,760 9,920,760
Share-based payments
reserve 549,337 252,322 380,162
Retained earnings 6,297,120 5,518,455 6,223,096
---------------------------- ---- ------------ ------------ ----------
Equity attributable
to equity holders
of the Parent 16,829,765 15,754,085 16,586,566
---------------------------- ---- ------------ ------------ ----------
Non-current liabilities
Lease liabilities 794,298 1,189,875 1,015,924
Deferred tax liabilities 231,732 301,910 266,821
---------------------------- ---- ------------ ------------ ----------
1,026,030 1,491,785 1,282,745
---------------------------- ---- ------------ ------------ ----------
Current liabilities
Trade and other payables 14,228,636 12,022,773 14,032,341
Lease liabilities 538,544 538,544 538,544
Corporation tax liability 874,485 422,918 719,445
Provisions 120,698 81,841 101,428
---------------------------- ---- ------------ ------------ ----------
15,762,363 13,066,076 15,391,758
---------------------------- ---- ------------ ------------ ----------
Total liabilities 16,788,393 14,557,861 16,674,503
---------------------------- ---- ------------ ------------ ----------
Total equity and
liabilities 33,618,158 30,311,946 33,261,069
---------------------------- ---- ------------ ------------ ----------
The interim statements were approved and authorised for issue by
the Board of Directors on 15 September 2021 and were signed on its
behalf by:
A Miller
Director
consolidated statement OF CHANGES IN EQUITY
For the period ended 31 July 2021
Attributable to equity holders of the Parent
-----------------------------
Share Share Share-based
capital premium payment reserve Retained earnings Total
GBP GBP GBP GBP GBP
----------------------------- -------- --------- ---------------- ----------------- -----------
At 1 February 2020 (audited) 62,548 9,920,760 171,491 3,958,134 14,112,933
Profit for the period
and total comprehensive
income - - - 1,560,321 1,560,321
Share-based payments - - 80,831 - 80,831
Dividend paid - - - - -
----------------------------- -------- --------- ---------------- ----------------- -----------
At 31 July 2020 (unaudited) 62,548 9,920,760 252,322 5,518,455 15,754,085
Profit for the period
and total comprehensive
income - - - 2,768,720 2,768,720
Share-based payments - - 127,840 - 127,840
Dividend paid - - - (2,064,079) (2,064,079)
----------------------------- -------- --------- ---------------- ----------------- -----------
At 31 January 2021 (audited) 62,548 9,920,760 380,162 6,223,096 16,586,566
----------------------------- -------- --------- ---------------- ----------------- -----------
Profit for the period
and total comprehensive
income - - - 3,389,062 3,389,062
Share-based payments - - 169,175 - 169,175
Dividend paid - - - (3,315,038) (3,315,038)
----------------------------- -------- --------- ---------------- ----------------- -----------
At 31 July 2021 (unaudited) 62,548 9,920,750 549,337 6,297,120 16,829,765
----------------------------- -------- --------- ---------------- ----------------- -----------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 31 July 2021
6 Months to July 6 Months to July
2021 (Unaudited) 2020 (Unaudited)
Note GBP GBP
------------------------------------- ------------------- ----------------- -----------------
Cash flows from operating activities
Profit before tax 4,254,032 1,948,477
Adjustments to cash flows from non-cash items
Depreciation and amortisation 2 438,436 435,879
Share-based payments 169,175 80,831
Finance income (3,196) (36,051)
Finance costs 47,729 59,357
------------------------------------- ------------------- ----------------- -----------------
4,906,176 2,488,493
Working capital adjustments
(Increase)/Decrease in trade and other receivables (916,426) 1,275,452
Increase/(Decrease) in trade and other payables 196,295 (477,545)
Increase/(Decrease) in provisions 19,270 19,374
------------------------------------- ------------------- ----------------- -----------------
Cash generated from operations 4,205,315 3,305,774
Interest paid (83) (11,710)
Interest portion of lease liability (47,646) (47,647)
Corporation taxes paid (745,019) (542,219)
------------------------------------- ------------------- ----------------- -----------------
Cash generated from operating activities 3,412,567 2,704,198
---------------------------------------------------------- ----------------- -----------------
Cash flows from/(used in) investing activities
Interest received 3,196 36,051
Purchases of property plant and equipment (6,963) (26,597)
---------------------------------------------------------- ----------------- -----------------
Net cash (used in)/generated from investing activities (3,767) 9,454
---------------------------------------------------------- ----------------- -----------------
Cash flows from financing activities
Repayment of lease liabilities (221,624) (221,624)
Dividend paid (3,315,038) -
------------------------------------- ------------------- ----------------- -----------------
Net cash (used in) financing activities (3,536,662) (221,624)
---------------------------------------------------------- ----------------- -----------------
Net increase/(decrease) in cash
and cash equivalents (127,862) 2,492,028
Cash at 1 February 7,371,300 4,386,586
------------------------------------- ------------------- ----------------- -----------------
Cash at 31 July 7,243,438 6,878,613
------------------------------------- ------------------- ----------------- -----------------
NOTES TO THE interim report
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 Report is presented in Pounds Sterling, being the
functional currency of the Group.
Accounting Policies
Statement of Compliance
The Interim Report has been prepared in accordance with the
recognition and measurement principles of UK adopted International
Accounting Standards.
Basis of Preparation
The Interim Report does 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 2021,
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
Act 2006. The Interim Report has been prepared in accordance with
the recognition and measurement principles of UK adopted
International Accounting Standards and on the same basis and using
the same accounting policies as used in the financial statements
for the year ended 31 January 2021.
The Interim Report has not been audited or reviewed in
accordance with the International Standard on Review Engagement
(UK) 2410 issued by the Financial Reporting Council.
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
There have been no new standards or interpretations, relevant to
the Group's operations applied in the Interim Report for the first
time.
Adjusted PBT
Adjusted PBT is utilised as a key performance indication for the
Group and is calculated as follows:
6 months to 6 months to
July 2021 July 2020
(Unaudited) (Unaudited)
GBP'000 GBP'000
--------------------- ------------ ------------
Profit before tax 4,254 1,948
Amortisation 175 175
Share-based payments 169 81
Adjusted PBT 4,598 2,204
--------------------- ------------ ------------
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 (H1-2021: 31,273,941) and the
basic earnings per share was 10.8p (H1-2021:5.0p). Diluted earnings
per share is calculated by dividing the same profit by the weighted
average number of ordinary shares, taking into account the dilution
effect from grants made under the Long Term Incentive Plan
(31,597,083 (H1-2021: 31,435,134)). Diluted earnings per share was
10.7p (H1-2021: 5.0p).
The adjusted earnings per share was 11.9p (H1-2021: 5.8 p),
whilst the diluted adjusted earnings per share was 11.8p (H1-2021:
5.8p). Adjusted earnings are stated by making the same adjustments
to earnings as those made in calculating adjusted PBT.
2. Expenses by Nature
6 months to 6 months to
July 2021 July 2020
(Unaudited) (Unaudited)
Expenses are comprised of: GBP GBP
----------------------------------- ------------ -------------
Depreciation - right of use assets 205,430 205,430
Depreciation - other 57,564 55,007
Amortisation 175,442 175,442
Staff costs 2,091,302 1,917,512
Share-based payments 169,175 80,831
Other administrative expenses 2,206,166 2,172,914
----------------------------------- ------------ -------------
4,905,079 4,607,136
----------------------------------- ------------ -------------
Included within staff costs above are the costs of employed fee
earners who are included within cost of sale (H1-2022: GBP283,087;
H1-2021: GBP259,405).
3. Trade and Other Receivables
31 July 31 January
31 July 2020 2021
2021 (Unaudited) (Unaudited) (Audited)
GBP GBP GBP
------------------------------ ----------------- ------------ -----------
Trade receivables 12,179,168 9,543,586 10,381,433
Provision for impairment
of trade receivables (3,952,255) (2,875,072) (2,976,731)
------------------------------ ----------------- ------------ -----------
Net trade receivables 8,226,913 6,668,513 7,404,702
Receivables from related
parties - 10,360 -
Accrued income 7,923,182 6,013,730 7,519,042
Prepayments 1,167,187 755,114 1,592,149
Other receivables 1,707,442 1,838,270 1,592,405
------------------------------ ----------------- ------------ -----------
Total current trade and
other receivables 19,024,724 15,285,987 18,108,298
------------------------------ ----------------- ------------ -----------
Net trade receivables average
age (days) 34 30 38
------------------------------ ----------------- ------------ -----------
4. DIVIDENDS
The directors have declared an interim dividend of 4.5 pence per
share (H1-2021: two ordinary interim dividends were declared, each
being for 3.3 pence per share, one of these was a catch up element
of dividends not declared for the year ended 31 January 2020). The
dividend will be paid on 15 October 2021 to shareholders on the
register on 24 September 2021 with the shares going ex-dividend on
23 September 2021. In accordance with IAS10 "Events after the
Balance Sheet Date" these dividends have not been reflected in the
Interim Report.
Keystone Law
48 Chancery Lane
London
WC2A 1JF
www.keystonelaw.co.uk
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