Full year results for the period ending 31 January 2022


Elevated financial performance driven by strong client demand; special dividend declared

Keystone Law Group plc (AIM: KEYS), the fast growing, UK Top 100, challenger law firm, today announces its full year results for the year ended 31 January 2022 ('2022').


Financial Highlights:

  • Revenue growth of 26.5% to £69.6 million (2021: £55.0 million)
  • PBT of £8.4 million (2021: £5.4 million)
  • Adjusted PBT of £9.1 million, representing growth of 52.3% (2021: £6 million)
  • Basic EPS of 21.3 pence, up 42.7% (2021: 13.8 pence)
  • Adjusted basic EPS of 23.6 pence, up 51.3% from 15.6 pence
  • Strong operating cash conversion at 102.7% with cash generated from operations of £10.0 million (2021: £6.6 million); remain debt free
  • Proposed final ordinary dividend of 11.2p (2021: 7.1p(1)), plus a special dividend of 10p per share

(1) 2021 dividend excludes 3.5p paid as catch up for non-payment of a final dividend for the year ended 31 January 2020

Strategic Highlights:

  • In a challenging recruitment market we have increased the number of Principals to 394 (2021: 369), and lawyers continued to grow their practices with Pod members increasing from 74 to 80.
  • Our Central Office team will continue to work remotely, having demonstrated outstanding levels of support to lawyers and clients by this means throughout the pandemic.
  • We have continued to run regular social and networking events for lawyers to foster a supportive and collegiate culture, mostly taking the form of online events this year, but also face to face events when restrictions allowed.
  • We continue to invest into our IT systems, to ensure “best in class” core systems and drive ever greater operational efficiencies for lawyers.

Current trading and outlook:

  • The current financial year has started well with lawyers remaining busy.
  • We have made a fair start on recruitment, continuing to attract high quality candidates.
  • Well placed to deliver another strong performance.

James Knight, Chief Executive Officer of Keystone Law, commented:

“Keystone has had another very successful year. Our unique business model, with technology enabled remote working and flexibility at its core, has ensured that our lawyers have been perfectly placed to capitalise on the high levels of client demand throughout the period.

As a result of the experience of the last two year, remote working within the legal profession has now been accepted by the mainstream and I believe it will remain a preference for many. Keystone offers so much more than just remote working.  It gives genuine flexibility, providing the platform for our lawyers to take control of the manner in which they build their practices, often to earn more money, whilst being supported by a central office team of the highest calibre.

Being highly cash generative and capital light has meant that we have built a strong cash position and we are extremely pleased to be able to propose both a final ordinary dividend of 11.2p and a special dividend of 10p per share.”

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I am pleased to introduce Keystone Law’s results for the year ended 31 January 2022.

It has been another good year for Keystone and we are delighted to be reporting very strong financial results.  Our model has continued to demonstrate its value, placing our lawyers in prime position to take advantage of the strong demand across the legal industry in spite of the Covid-19 restrictions which have ebbed and flowed throughout the period.  Accordingly, revenue has increased by 26.5% to £69.6m (2021: £55.0m), and adjusted PBT(1) has increased by 52.3% to £9.1m representing an adjusted PBT margin of 13.0% (2021: £6.0m, 10.8%).  Cash generation has remained strong, with cash generated from operations of £10.0m (2021: £6.6m) representing an operating cash conversion of 102.7% (2021: 100%).

(1)Adjusted PBT is calculated by adding share based payment costs and amortisation to PBT.  Details of these calculations are shown in the Financial Review.


In accordance with the Group’s stated dividend policy, the Board is proposing to pay a final ordinary dividend for the year ended 31 January 2022 of 11.2p per share (2021: 7.1p(2)) bringing the total ordinary dividend for the year to 15.7p (2021:10.4p(1)).

Furthermore, recognising the strength of the balance sheet and considering the cash requirements of the Group as well as the cash generative nature of our model, the Board is also proposing to pay a special dividend of 10p per share. If approved at our AGM, this will be the second special dividend that we have paid since we joined the AIM market.  This has been made possible by the strong cash generation and capital light nature of our business model together with our organic growth strategy.

(2) 2021 dividend excludes amounts (3.3p interim and 3.5p final) paid as catch up for non-payment of a final dividend for year ended 31 January 2020


As the CEO remarks, our central office team has provided excellent support to our lawyers and clients throughout the year and I would like to thank them on behalf of the Board.


I am happy to report that the Board has continued to operate within the structures and governance requirements of the Quoted Companies Alliance (“QCA”) Code as set out in the corporate governance section of the Annual Report and Accounts.

In response to the evolution of ESG (Environmental, social and governance) within the governance framework, we have extended our reporting this year to incorporate those areas of our ESG strategy which had not previously been communicated beyond the Boardroom.  We are proud that our model has a low carbon density and are committed to strive to reduce the already small footprint further where possible.

During the year, we made changes to the Chairing of Board Committees and I would like to thank both Simon Philips and Isabel Napper for their commitment to their new roles.


I am pleased to say that the current year has started well.  Whilst the UK economy is starting to be affected by certain headwinds, we are confident that Keystone is well placed to continue yielding the benefit of its organic growth strategy and delivering ongoing strong results.

Robin Williams
Non-executive Chairman
27April 2022

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Operational Review



I am very pleased to be able to report that Keystone has had another successful year.

In what has been a unique period of trading conditions, the business has continued to grow, with revenue up 26.5% to £69.6m (2021: £55m) and adjusted PBT increasing by 52.3% to £9.1m (2021: £6.0m) (PBT increase of 54.7% to £8.4m). The cash generative nature of the model and its resilience have continued to be strongly demonstrated this year, with cash generated from operations of £10.0m. This cash position, together with our confidence in the ongoing strength of performance, has given us the confidence not only to propose a final ordinary dividend in line with our stated policy of 11.2p but also to propose a special dividend of 10p.

Client demand across the industry has been high and our model has ensured that our lawyers have been able to take advantage of this to drive enhanced revenue during the period. Equally, for much of the year, Covid-19 restrictions have prevented us from delivering many of the face-to-face networking and marketing events in which we normally invest. The confluence of these two factors has resulted in the Group enjoying heightened profits this year.

The same factors which have contributed to the strong financial performance have also affected the conditions within the recruitment market and, in light of these, I am satisfied that the number of Principals* has increased from 369 to 394 and we saw the number of Pod members increase from 74 to 80.

*Principal lawyers are the senior lawyers who own the service company (“Pod”) which contracts with Keystone. The relationship between Keystone and its lawyers is governed by two agreements: a service agreement (which governs the commercial terms and is between the Pod and Keystone) and a compliance agreement (which governs the behaviour of lawyers and is between each lawyer and Keystone). Pods can employ more than one fee earner. A junior lawyer who is employed by a Pod is, to all intents and purposes, a Keystone lawyer and presented to the outside world in much the same way as a conventional law firm would present a conventionally employed junior lawyer. Junior lawyers are properly interviewed and vetted by the recruitment team in central office to ensure that they are of the requisite quality and calibre. As is the case for the Principal lawyers, these juniors sign a compliance agreement with Keystone and are required to comply with all rules and regulations governing the professional conduct of Keystone’s lawyers.


Throughout the pandemic, we have focused on ensuring that our people are both safe and fully productive.  Both the culture and technology on which Keystone is built have proven their worth in these challenging times. 

Ordinarily, we invest substantial time, effort and resources in regularly bringing our lawyers together, face to face, to facilitate networking and build relationships which engender a real sense of belonging and collegiality across the business.  This made the transition to online events, necessitated by the pandemic, a great success and our people have continued to come together at regular events, face to face when restrictions allowed but equally adapting formats to continue to maintain and enhance the cohesion which is ever present within Keystone.

Prior to the pandemic, it was our lawyers who benefitted from the flexibility of remote working facilitated by our technology but since moving offsite during the first lockdown, our Central Office team has demonstrated that this method of working is equally applicable to them.  Throughout the last two years, they have delivered support services of the highest calibre to both our clients and our lawyers and, as such, we have decided to continue with this model when the pandemic ends.


We have continued to drive forwards in the delivery of our clear and simple strategy; organic growth through the recruitment of high calibre lawyers from within the mid-market segment of the UK legal services industry.

We actively encourage and support our Principals to grow their practices in the manner best suited to them.  During the recruitment and onboarding process, and throughout a Principal’s time at Keystone, we work with them to understand the nature of their practice and to help them develop relationships with the colleagues they will need to meet the needs of their clients and grow their practice. Where appropriate, we encourage and assist them in the growth of their Pods, which they can do by recruiting their own juniors, providing the means to build larger practices, further enhancing the value of their client relationships and increasing their income earning potential. For those who either do not need or wish to have a dedicated junior resource, we employ a number of junior lawyers within the central office team whose role it is to provide the necessary ad hoc support to the whole lawyer base.

Our model is an appealing proposition for many lawyers across the industry who find themselves constrained or dissatisfied by the conventional model.  We encourage our lawyers to stand out from the crowd, developing their practices on their own terms, offering genuine flexibility, concentrating exclusively on client development and the delivery of high calibre legal work.  The regular social and networking events provide the opportunities for our lawyers to really get to know each other and it is by forming these genuine relationships that our lawyers are able to deliver an enhanced service to their clients when delivering multi-disciplinary and multi-lawyer assignments.

All of this is made possible by the technology which sits at the heart of what we do, developed to meet the needs of our people and supported by our central office team which provides best in class support across all areas needed by our lawyers.


The recruitment market has had unique challenges this year.  The high level of demand across the industry has seen many lawyers simply too busy to consider moving roles, whilst the timing of changes in government restrictions in response to the evolution of the pandemic has also played its part in influencing candidates’ behaviour.  As reported in our Interim Statement, conditions during the first half of this year were very similar to those experienced during the second half of the last financial year. Potential candidates were very busy dealing with client work and although restrictions were slowly relaxing, there remained much uncertainty.  The second half of the year saw greater disruption. The relaxation of most restrictions in late July, coupled with the anticipation of the return to office life in early autumn, led to a prolonged period of slower activity as potential candidates decided to enjoy the summer and defer making decisions about the future until they had seen what the return to office life looked like in practice.  During October we saw the market pick up again, but the outbreak of the Omicron variant in late November and the reimposition of restrictions caused a further hiatus in activity as people once again decided to wait and see what the New Year would bring. As such, the number of qualified new applicants this year was 228 (2021: 253), whilst we made 76 offers (2021: 81) and 56 candidates accepted offers (2021: 70).


In spite of the ongoing pandemic, this year has been a year of “business as usual” for the IT team.  Our IT systems and infrastructure have been developed over many years to deliver results to our remote workforce and, as such, the ongoing government restrictions have not affected the focus of the team this year.  The constant evolution of the risk profile across the IT landscape means that IT security is a constant and ongoing focus for the team as we continually enhance and update the tools used to provide protection across our IT estate.  Likewise, our development team work constantly to deliver the upgrades and enhancements across our core systems to keep them “best in class” and drive ever greater operational efficiencies.


This year, I have been delighted with the manner in which the Central Office team has excelled following the move from office-based to remote working which was implemented at the start of the pandemic.  They have continued to deliver outstanding service to our lawyers and because of this, we have decided that when the pandemic ends, we will continue to operate in this way.  This will enable all our people to enjoy the benefits and flexibility afforded by remote working whilst retaining access to high quality facilities at our offices in Chancery Lane to meet the needs of our clients, our lawyers and our Central Office team.


It has been a good start to the year, with our lawyers remaining busy.  The sanctions imposed on Russia since the invasion of Ukraine have had only a very limited and immaterial impact on us. We have also made a fair start to recruitment, with high quality candidates continuing to be attracted to the business. As such, we are well placed to deliver another strong performance this year


James Knight
Chief Executive
27 April 2022

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The following KPIs are used by the management to monitor the financial and operational performance of the Group:

  • Revenue growth: 26.5% increase (2021: 10.9%)
  • Adjusted PBT growth: 52.3% increase (2021: 3.6%)
  • Adjusted PBT margin: 13.0% (2021: 10.8%)
  • PBT growth: 54.7% increase (2021: 3.4%)
  • PBT margin: 12.0% (2021: 9.8%)
  • Adjusted basic EPS: 23.6p (2021: 15.6p)
  • Operating cash conversion %: 102.7% (2021: 100%)
  • Trade debtor days: 32 (2021: 38)
  • Qualified New Applicants(1): 228 (2021: 253)
  • Offers Made(1): 76 (2021: 81)
  • Offers Accepted(1): 56 (2021: 70)

(1)  Non-financial KPI’s are commented on with the Chief Executive’s review

The calculation of adjusted PBT is shown below.


I am pleased to report revenue for the year of £69.6m, an increase of 26.5% on the prior year. Following a drop in client demand in the prior year, particularly during the first half of the year, the legal market has bounced back strongly with activity levels being very strong throughout the period. Our lawyers have taken full advantage of this demand to deliver enhanced revenue this year, whilst further growth has been delivered by the continued growth in the number of Principals, which have increased from 369 to 394 this year.


The gross profit margin of the business has risen this year to 26.4% (2021: 25.9%). This increase has been driven by the strong demand across the business which has meant that our centrally employed lawyers have been in high demand, with higher utilisation rates generating enhanced margins.


Administrative expenses have increased by 13.0% to £8.7m (2021: £7.7m). The largest single component of this is staff costs which increased by 18.3% to £3.9m (2021: £3.3m), with support staff increasing from an average of 47 in 2021 to 53 in 2022. Other administrative costs increased by 10.3% to £4.8m (2021: £4.4m).  The Covid-19 related government restrictions, which were in place for much of this year, continued to depress the level of administrative expenses, primarily because face-to-face social and networking events for our lawyers and clients were unable to be held for most of the year.


Amortisation, both of right of use assets and intangible assets remained unchanged year on year with no changes to the underlying assets, whilst depreciation increased by 3%. The charge in respect of share based payments increased from £0.2m to £0.4m as a new grant was made and the cost of all historic grants continued to be charged to the income statement, whilst finance income was negligible in the year as interest rates fell close to nil.


Adjusted PBT is calculated as follows:

Profit before tax 8,363,199 5,405,135
Amortisation 350,884 350,884
Share based payments 369,796 208,671
Adjusted PBT 9,083,879 5,964,690
PBT Margin 12.0% 9.8%
Adjusted PBT Margin 13.0% 10.8%


Both PBT and adjusted PBT have been enriched this year, benefitting from the confluence of enhanced revenue, as our lawyers responded to the high demand for their services, and suppressed administrative costs caused by the Covid-19 related government restrictions.  Had it not been for these two factors coinciding in the period, the margin would have been approximately 1% lower than reported.


The effective tax rate of 20.5% is higher than the standard rate and lower than that of the prior year (19.9%). Due to the nature of our business and the investment we make in providing networking opportunities in social environments for our lawyers, the tax rate of the business is always likely to be slightly higher than the standard rate as these costs are disallowable for corporation tax purposes. Compared to the previous year, the level of disallowable expenses was higher as we were able to hold a small number of events during the late summer and early autumn period, whereas during the prior year, we were unable to run any face-to-face events.


Basic earnings per share increased from 13.8p to 21.3p, with fully diluted EPS being 21.0p (2021: 13.8p). Adjusted basic earnings per share (calculated by making the same adjustments to earnings as has been made in calculating adjusted PBT and divided by the average shares in circulation this year) increased by 51.3% to 23.6p (2021: 15.6p).



The Group’s business model is strongly cash generative because its most significant cost, the fees paid to lawyers, is only paid once Keystone has been paid for the work it has delivered. Operating cash conversion has remained very strong this year at 102.7% (2021: 100%), generating cash from operations of £10.0m (2021: £6.6m). Capital expenditure was £0.04m (2021: £0.05m). Corporation tax payments were £1.5m (2021: £1.0m). Net interest received (ex the interest portion of lease payments) of £0.01m (2021: £0.02m) remains negligible as interest base rates continue to be almost nil, whilst the interest element of lease payments was £0.1m (2021: £0.1m). Lease repayments of £0.4m reflect the normal run rate of payments under our existing leases which run until April 2024 (2021: £0.4m). As such, cash generated by the business in the year, being net cash flow pre dividend payments, was £7.8m (2021: £5.0m). The Group paid dividends of £4.7m (2021: £2.1m). This left closing cash of £10.5m (2021: £7.4m) and no debt.


The net assets of the Group have increased from £16.6m to £18.9m, with retained earnings of £6.6m less the dividends of £4.7m. This leaves the business with a strong balance sheet.


The statements below address the reporting requirements of the Board under Section 172 of the Companies Act and the Companies (Miscellaneous Reporting) Regulations 2018.

The Directors of the Company have a duty to promote the success of the Company. A Director of the Company must act in the way they consider, in good faith, to promote the success of the Company for the benefit of its members, and in doing so have regard (amongst other matters) to:

  • the likely consequences of any decision in the long term;
  • the interests of the Company’s employees;
  • the need to foster the Company’s operations on the community and the environment;
  • the desirability of the Company to maintain a reputation for high standards of business conduct; and
  • the need to act fairly between members and the Company.

The Directors are committed to developing and maintaining a governance framework that is appropriate to the business and supports effective decision making coupled with robust oversight of risks and internal controls.

Keystone has a clearly stated long term organic growth strategy and, as such, all significant business decisions consider both the short and long term impact in the process. The key to delivering this strategy is to continue to recruit and retain high calibre lawyers. In order to be an attractive place for high calibre lawyers to work, it is essential that Keystone maintains its reputation for delivering work to the highest professional standards. Central to the success of the business is the development and maintenance of its open, welcoming and collegiate culture and we invest significant time and resources to ensure that these facets are maintained and developed for the benefit of all those involved with the Company.

Keystone’s primary asset is its people, be it the central office staff, the lawyers, the clients or third party suppliers with whom we work (such as counsel, experts and other professionals). As a business, we dedicate substantial time, effort and resources in working to develop and maintain strong relationships from which all parties benefit. As a people business, the impact of business decisions on our principal stakeholders is always central to the decision making process.

The nature of the Group’s business is fundamentally low impact to the environment, we have an extremely small office footprint and the use of technology across the business further reduces the environmental impact as our lawyers have no need to commute to work.

The Directors treat all members of the Group fairly and consistently, as required by both professional standards and in compliance with various pieces of legislation. We provide information to all shareholders and other third parties on an equal basis.


The Board is proposing to pay a final ordinary dividend for the year ended 31 January 2022 of 11.2p per share (2021: 7.1p(1)). This brings the total ordinary dividend for the year to 15.7p per share (2021: 10.4p(1) per share).

In light of the strength of the balance sheet, together with the cash generative nature of the business model, the Board is also proposing a special dividend of 10.0p per share.

The large movement in the cash flows from dividends paid this year versus last year reflects the timing of payments as we caught up the value of the final dividend that would have been declared for the year ended 31 January 2020. This meant that the 3.5p per share (£1,094,588) catch-up which was paid as part of the final dividend for the year ended 31 January 2021 fell into the cashflow for this year.  Accordingly, the cash value of dividends paid during the year was £4,722,364 (2021: £2,064,079).

Both the proposed Ordinary and Special dividends will be payable on 8 July 2022 to shareholders on the register at the close of business on 17 June 2022.

(1) 2021 dividend excludes amounts (3.3p interim and 3.5p final) paid as catch up for non-payment of a final dividend for the year ended 31 January 2020


On behalf of the Board

Ashley Miller
Finance Director
27 April 2022

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 Note 2022
Revenue  69,615,77055,027,227
Cost of sales  (51,216,643)(40,770,513)
Gross profit  18,399,12714,256,714
Depreciation and amortisation 3 (877,991)(874,110)
Share based payments 3 (369,796)(208,671)
Administrative expenses 3 (8,706,591)(7,706,481)
Other operating income  6,33411,285
Operating profit  8,451,0835,478,737
Finance income 4 7,51139,515
Finance costs 4 (95,395)(113,117)
Profit before tax  8,363,1995,405,135
Corporation tax expense  (1,713,566)(1,076,094)
Profit and total comprehensive income for the year attributable to equity holders of the Parent  6,649,6334,329,041
Basic EPS (p) 6 21.313.8

The above results were derived from continuing operations.

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 Note 2022
Non-current assets   
Property, plant and equipment    
Owned assets  247,551323,940
Right-of-use assets  924,4371,335,297
Total property, plant and equipment  1,171,9881,659,237
Intangible assets  5,757,7226,108,606
Other assets  13,62813,628
Current assets   
Trade and other receivables 7 19,973,81418,108,298
Cash and cash equivalents  10,482,6767,371,300
Total assets 37,399,82833,261,069
Equity and liabilities   
Share capital  62,54862,548
Share premium  9,920,7609,920,760
Share based payments reserve  749,958 380,162
Retained earnings  8,150,3656,223,096
Equity attributable to equity holders of the Parent  18,883,63116,586,566
Non-current liabilities   
Lease liabilities 8 571,7301,015,924
Deferred tax liabilities  202,610266,821
Provisions  107,945101,428
Current liabilities   
Trade and other payables 8 16,143,16614,032,341
Lease liabilities 8 538,544538,544
Corporation tax liability  952,202719,445
Total liabilities 18,516,19716,674,503
Total equity and liabilities 37,399,82833,261,069

The prior year comparatives have been restated to reclassify the provisions balance as non-current liabilities as the leases to which this relates do not expire within the next twelve months.

Ashley Miller

27 April 2022

Keystone Law Group Plc
Registered No. 09038082


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  Attributable to equity holders of the Parent
 Note Share

Share premium
Share based payments reserve
Retained earnings
At 31 January 2020 18 62,548 9,920,760 171,491 3,958,134 14,112,933
Profit for the year and total comprehensive income  4,329,041 4,329,041
Dividends paid in the year  (2,064,079) (2,064,079)
Share based payments  208,671 208,671
At 31 January 2021 18 62,548 9,920,760 380,162 6,223,096 16,586,566
Profit for the year and total comprehensive income  6,649,633 6,649,633
Dividends paid in the year  (4,722,364) (4,722,364)
Share based payments  369,796 369,796
At 31 January 20221862,5489,920,760749,9588,150,36518,883,631


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 Note 2022
Cash flows from operating activities   
Profit before tax  8,363,1995,405,135
Adjustments to cash flows    
Depreciation and amortisation 3 877,991874,110
Share based payments 3 369,796208,671
Finance income 4 (7,511)(39,515)
Finance costs 4 95,395113,117
Working capital adjustments    
Increase in trade and other receivables  (1,865,516)(1,546,859)
Increase in trade and other payables  2,110,8241,532,023
Increase in provisions  6,51738,962
Cash generated from operations  9,960,6956,585,644
Interest paid  (104)(17,826)
Interest portion of lease liability  (95,291)(95,291)
Corporation taxes paid  (1,545,956)(968,719)
Cash generated from operating activities  8,309,3445,503,808
Cash flows from/(used in) investing activities   
Interest received  7,51139,515
Purchases of property, plant and equipment  (39,858)(51,306)
Net cash used in investing activities  (32,347)(11,791)
Cash flows from financing activities   
Lease repayments  (443,257)(443,224)
Dividends paid in year  (4,722,364)(2,064,079)
Net cash (used in) financing activities  (5,165,621)(2,507,303)
Net increase in cash and cash equivalents  3,111,3762,984,714
Cash at 1 February 7,371,3004,386,586
Cash at 31 January 10,482,6767,371,300


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