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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

* 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

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."

 

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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 £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.

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.

 

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended:

  Note 6 months to
July 2018
(Unaudited)
£
6 months to
July 2017
(Unaudited)
£
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.

 

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at:

  Note 31 July
2018
(Unaudited)
£
31 July
2017
(Unaudited)
£
31 January
2018
(Audited)
£
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 24th September 2018 and were signed on its behalf by:

A Miller
Director

Keystone Law Group Plc

Registered No: 09038082

 

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STATEMENT OF CHANGES IN EQUITY
For the period ended 31 July 2018

  Attributable to equity holders of the Parent
  Share
capital
Share
premium
Retained
earnings
  Total
  £ £ £ £
         
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

 

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CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 31 July 2018

  Note 6 months to
July 2018
(Unaudited)
£
6 months to
July 2017
(Unaudited)
£
Year ended 31
January 2017
(Audited)
£
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

 

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Notes

Notes to the Financial Statements are available in the printable PDF version

 

 
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