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').
* 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.
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."
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 £19.9m (H1-2018: £15.3m). Underlying PBTA (*) for the period has increased by 40.3% to £2.3m (H1-2018: £1.7m). 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 £2.2m being a conversion of 95.8% (H1-2018: £1.4m 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.
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.
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.
|Note||6 months to
|6 months to
|Cost of sales||(14,559,616)||(11,183,544)|
|Depreciation and amortisation||2||(191,753)||(189,551)|
|Other operating income||32,816||1,516|
|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.
|Property, plant and equipment||43,780||41,440||50,392|
|Available-for-sale financial assets||13,628||13,628||13,628|
|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|
|Equity and liabilities|
|Equity attributable to equity holders of the Parent||13,999,540||2,465,025||12,551,651|
|Deferred tax liabilities||442,266||521,768||477,355|
|Trade and other payables||9,347,961||9,724,314||9,646,204|
|Corporation tax liability||284,625||243,144||59,750|
|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 24th September 2018 and were signed on its behalf by:
Keystone Law Group Plc
Registered No: 09038082
|Attributable to equity holders of the Parent|
|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|
|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|
|Note||6 months to
|6 months to
|Year ended 31
|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|
|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|
|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|
|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)|
|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 are available in the printable PDF version