Latest Results

Financial Highlights:

• Revenue growth of 8.3% to £46.5 million (H1 2024: £42.9 million*)
• Adjusted PBT increased by 7.2% to £6.1 million (H1 2024: £5.7 million)
• Adjusted PBT margin stable at 13.1% (H1 2024: 13.3%)
• Adjusted basic EPS of 14.6p (H1 2024: 13.6p)
• Cash generated from operations of £6.2 million (H1 2024: £6.3 million) with operating cash conversion of 106% (H1 2024: 113.3%); the Group remains debt-free and with net cash of £8.3m
• Declared interim ordinary dividend of 6.2p per share (H1 2024: 5.8p)

*restated as per restatement in recent annual report and accounts

Operational Highlights:

• Strong performance across all recruitment KPI's as the legal recruitment market remained positive:
  • 153 high-calibre new applicants in the Period (H1 2024: 144)
  • 56 offers made (H1 2024: 42) and 31 offers accepted (H1 2024: 25)
  • 30 new Principals joined in the Period, increasing the number of Principals to 442 (31 January 2024: 432).
• Total fee earners increased to 557 (31 January 2024: 549)
• Current refurbishment of the London office which, when complete, will provide greater workplace flexibility and enhanced lawyer experience, remains on track
• The calibre of candidates joining the Group demonstrates the mainstream appeal of the model and emphasises Keystone's position as market leader within our sub-sector

Current Trading and Outlook:

• In light of the strong first half performance and the positive start to the second half of the year, the Board is confident that Keystone will deliver both revenue and adjusted PBT slightly ahead of current market expectations.

James Knight, Chief Executive Officer of Keystone, commented:

"Keystone's position in the market continues to strengthen and I am delighted that our ongoing operational excellence has been reflected in our financial performance. The business has delivered well across all our operational KPIs, reflecting the ongoing growth in demand for the benefits that Keystone provides."

Analyst Briefing

A meeting for analysts will be held virtually at 9.30am this morning. Analysts wishing to attend this event can register via email at [email protected].

Retail Investor Presentation

Keystone's management team will provide a separate presentation and Q&A for investors at 1.00pm on Monday 16 September 2024.

The presentation will be hosted on the Investor Meet Company digital platform, where questions can be submitted pre-event up until 9.00am on the day before the meeting, or at any time during the live presentation.

To sign up to IMC, please visit: www.investormeetcompany.com/keystone-law-group-plc/register-investor

Chief Executive's Statement

I am pleased to report that Keystone has continued to perform well, delivering strong results for the first half of this financial year ("H1 2025" or the "Period"). Revenue for the period of £46.5m was 8.3% up on H1 2024 (restated) (£42.9m), reported PBT rose to £5.5m and adjusted PBT(1) increased to £6.1m (increases of 5.3% and 7.2% on H1 2024 results of £5.3m and £5.7m respectively). Furthermore, the cash generative nature of the model meant that these profits converted to cash, with cash generated from operations of £6.2m (H1 2024: £6.3m).

Conditions in the legal recruitment market have also remained positive for Keystone and we have experienced increases across all the recruitment KPIs as shown in the graph below.

H1 2025 saw 30 new Principals join us, bringing the total number of Principals to 442 (31 January 2024: 432). As highlighted in our recent Annual Report and Accounts, Keystone now regularly attracts candidates from the leading law firms in the UK, which continued to be the case during the first half of this year. This demonstrates the mainstream acceptability and appeal of Keystone's model, as well as our position as market leader within the sub-sector, commonly referred to as the 'platform' or 'consultancy' model.

The central office team has continued to deliver outstanding support to all our lawyers, both new and existing. Successfully onboarding new joiners is a key element in ensuring the long-term sustainable growth of the business, whilst providing excellent ongoing support to established Keystone lawyers is equally fundamental. It is important for us to focus as much on service delivery and lawyer retention as we do on recruitment. During the Period, the team has worked unceasingly to successfully deliver on each of these objectives. For our new lawyers, this has meant providing a bespoke, one-to-one onboarding process, focusing on understanding the individual needs and opportunities of each new Principal, providing solutions to any challenges they may have and helping them to build the professional support network which they need to maximise the opportunities which their practice offers. For our established lawyers, the team has focused on continually enhancing the lawyer experience whilst delivering support of the highest calibre across all departments.

Having renewed our leases in Chancery Lane, we have been busy planning the refit of the two floors to enhance the workspace experience. The implementation phase of the project started in July and will continue through H2 2025; during which time, we will maintain service levels for our lawyers by maintaining one floor open throughout. Once completed, our lawyers and the central office team will benefit from a modern, flexible environment providing a variety of workspaces, including highly professional client meeting rooms, collaborative workspaces and areas for silent working.

I would like to take this opportunity to thank my central office colleagues for their dedication and passion, which continues to drive the business forwards and has made these results possible.

Dividend

I am pleased to announce that the Board has declared an interim ordinary dividend of 6.2p per share. This dividend will be payable on 11 October 2024 to shareholders on the register on 20 September 2024, and the shares will go ex-dividend on 19 September 2024.

Summary and outlook

We are delighted with the all-round success of the H1 2025 results. We have delivered a strong performance across all KPIs of the business, continuing to build sustainable growth and increased profits whilst re-enforcing Keystone's position as a market leader.

Although the UK economy continues to have its challenges and the recent change in government has introduced a new element of uncertainty to the future, we remain confident that Keystone will continue to build on this performance to deliver ongoing sustainable growth.  Therefore the Board is confident that Keystone will deliver both revenue and adjusted PBT slightly ahead of current market expectations(2).

James Knight
Chief Executive Officer
11 September 2024

(1) Adjusted PBT is calculated using profit before tax and adding back amortisation and share-based payments for all periods.

(2) Management understands current market expectations to be revenue of £93.3m and adjusted PBT of £11.5m.