Latest Results

Financial Highlights:

• Revenue growth of 14.9% to £42.3 million (H1 2023: £36.8 million)
• Revenue per Principal up 12.2% to £104k (H1 2023: £92.8k)
• PBT increased 29.3% to £5.3 million (H1 2023: £4.1 million)
• Adjusted PBT increased 25.2% to £5.7 million (H1 2023: £4.5 million)
• Adjusted basic EPS of 13.6p, up 22.5% (H1 2023: 11.1p)
• Strong operating cash conversion at 113.3% with cash generated from operations of £6.3 million (H1 2023: £4.9 million).
• The Group remains debt-free with net cash of £11.3m (H1 2023: £7.5m)
• Declared interim ordinary dividend of 5.8p (H1 2023: 5.2p) and special dividend of 12.5p

Operational Highlights:

• Recruitment market conditions evolved positively
• Keystone generated strong market and recruitment momentum during H1 2024:
  • 144 qualified high-calibre new applicants (H1 2023: 122)
  • 25 Principals joined, increasing the number of Principals to 415 (31 January 2023: 398)
  • Total fee earners increased to 523 (31 January 2023: 507)
• Ongoing investment in our people, culture and technology platform

Current trading and outlook:

• Activity levels and client demand remain strong
• Recruitment market conditions have moved in the Group’s favour, with the Keystone model continuing to attract high-calibre talent, although economic uncertainty continues to weigh on candidate flow
• The Board is confident that the business will continue to trade well for the rest of the year and that FY 2024 results will be comfortably ahead of current market expectations⁽¹⁾.

James Knight, Chief Executive Officer of Keystone, commented:

“I have been delighted with the performance of the business during the first half of this year.  As anticipated, recruitment market conditions have moved in our favour and Keystone’s model continues to prove highly attractive to the high-calibre lawyers we pride ourselves on being able to attract and retain. I look forward to the rest of the year, confident that Keystone’s core business fundamentals will continue to deliver strong results.”

(1)      Management understands current market expectations to be revenue £78.9m and adjusted PBT £9.5m

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CHIEF EXECUTIVE’S STATEMENT

I am extremely pleased to report that Keystone Law has again delivered a strong performance during the first half of this financial year (“H1-2024” or the “period”), with revenue rising to £42.3m (14.9% up on H1-2023: £36.8m), reported PBT of £5.3m and adjusted PBT⁽¹⁾ of £5.7m  (£4.1m and £4.5m respectively in H1-2023) and cash generated from operations of £6.3m, an increase of 27.8% (H1-2023: £4.9m).

In spite of the broader economic headwinds, client demand has remained strong across all practice areas throughout the period and this, together with rate rises implemented during last year, has driven increased revenue per Principal of £104k, up 12.2% on H1-2023. 

During the period, we have seen conditions in the legal recruitment market evolve positively for Keystone.  The extremely high level of demand for candidates, experienced during FY-2023, has now slightly subsided and, although the uncertain economic outlook continues to weigh on candidate movement, the results of our recruitment activity in H1-2024 have been extremely encouraging. The table below reflects these positive results:

Twenty five Principals joined us during the Period (H1-2023: 22) bringing the total number of Principals to 415 (31 January 2023: 398). These Principals, existing and new, have continued to recruit Pod members to build their practices and leverage the value of their clients.  These Pod members satisfy either permanent resource needs or shorter term project-based demand providing both scalability and flexibility to our lawyers and, over time, have become an increasingly important element of the Keystone model.

The central office team has continued to deliver exceptional service to our lawyers.  The ongoing investment in our IT platform and infrastructure is very much part of “business as usual” for Keystone. Our bespoke platform is the technological hub of the business; built to support our model, it provides our lawyers with first class, dynamic systems, which deliver a high-quality user experience, whilst ensuring compliance and comprehensive IT security.   We have also continued to invest in the networking programmes and social events, thereby providing extensive opportunities for our lawyers to establish and build their personal and professional networks within Keystone.  These events are a core element of the Group’s cultural DNA, encouraging collaboration and cross-referral of work thereby creating a fertile environment for our lawyers to deliver high calibre, multi-lawyer and cross disciplinary solutions to our clients.

I would, therefore, like to take this opportunity to thank everyone at Keystone for their dedication and passion, which has made these excellent results possible.

Dividend

I am pleased to announce that the Board has declared an interim ordinary dividend of 5.8p per share as well as a special dividend of  12.5p per share. These dividends will be payable on 13 October 2023 to shareholders on the register on 22 September 2023 and the shares will go ex-dividend on 21 September 2023.

Summary and Outlook

In summary, I have been delighted with all aspects of the Group’s performance during H1-2024.  Our lawyers have continued to respond to demand across the legal sector driving strong revenue growth, and this, together with the interest rate evolution and our strong balance sheet, has contributed to the enhanced profits we report today.

As expected, some of the heat has come out of the legal recruitment market and this has been beneficial to our growth.

Although it is clear that the UK economy continues to face significant headwinds, to date we have not been adversely affected by these, and whilst there may be some impact on overall client demand during the second half, we remain confident that Keystone will continue to deliver strong results for the rest of this year, which will be comfortably ahead of current market expectations⁽²⁾.

James Knight
Chief Executive Officer
13 September 2023

(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 £78.9m and adjusted PBT £9.5m

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 31 JULY 2023

The above results were derived from continuing operations.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 JULY 2023

The interim statements were approved and authorised for issue by the Board of Directors on 13 September 2023 and were signed on its behalf by:

A Miller
Director

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

YEAR ENDED 31 JULY 2023 

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CONSOLIDATED STATEMENT OF CASH FLOWS

YEAR ENDED 31 JULY 2023

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