REG - Keystone Law Grp PLC - Final Results
Today 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250501:nRSA8977Ga&default-theme=true
RNS Number : 8977G Keystone Law Group PLC 01 May 2025
1 May 2025
Keystone Law Group Plc
('Keystone', the 'Group' or the 'Company')
Full Year Results for the Year Ended 31 January 2025
- Revenue and profit in line with recently upgraded expectations((1))
- Recruitment conditions remained positive during 2025, with Keystone adding
50 new Principals, alongside organic growth in pods
- Proposed special dividend of 15p, reflecting balance sheet strength and
continuing confidence in the outlook
Keystone, the tech-enabled platform law firm, is pleased to announce its full
year results for the year ended 31 January 2025 ('2025' or the 'Period').
Financial Highlights:
· Revenue growth of 11.1% to £97.7 million (2024: £87.9 million)
· Revenue per Principal up 4% to £220k (2024: £212k)
· Adjusted PBT up 12.8% to £12.7 million (2024: £11.3 million)
representing an adjusted PBT margin of 13.0% (2024: 12.8%)
· Adjusted basic EPS of 30.4p (2024: 27.4p)
· Cash generated from operations up 10.3% to £11.5 million (2024:
£10.4 million) with operating cash conversion of 94.5% (2024: 96.1%); the
Group retains a strong balance sheet with net cash of £9.7 million (2024:
£8.4 million)
· Paid interim ordinary dividend of 6.2p per share and proposed
final ordinary dividend of 14.0p per share bringing total ordinary dividend
per share to 20.2p per share (2024: 18.3p)
· Proposed special dividend of 15.0p per share
Operational Highlights:
· Another positive performance with strong client demand across
practice areas
· Keystone continues to capitalise on favourable recruitment market
conditions with 283 new applicants in the Period (2024: 270)
· Added 50 high-calibre new Principals in the Period bringing total
Principals to 455 (2024: 432)
· Ongoing organic growth in Pods with total Pod members increasing
to 108 (2024: 102) and total fee earners growing to 576 (2024: 549)
· Quality focused recruitment strategy continues to reinforce
Keystone as 'the premier platform law firm'
o 207 Keystone lawyers ranked in Legal 500 UK Solicitors 2025
o Over 25% of new joiners coming from the UK office of a large US firm or
top 25 UK law firm
· Delivered extensive office fit out providing a modern working
environment to satisfy the varied needs of our people; fostering greater in
person collaboration, in addition to aiding recruitment and retention of
talent
· Ongoing investment in IT infrastructure, enhancing resilience,
security and scalability whilst assessing rapidly changing AI landscape to
identify how this may best be applied to deliver operational efficiencies
across the business
Current Trading and Outlook:
· The Group has made a positive start to 2026 with client demand
and recruitment activity remaining positive during Q1 2026
· The Board remains confident that Keystone will continue to
deliver strong, sustainable growth and expects results for 2026 to be in in
line with current market expectations((2))
(1) Management understand current market expectations for
2025 to be: revenue £97.5m and adjusted PBT £12.5m.
(2) Management understand current market expectations for
2026 to be: revenue £103.4m and adjusted PBT £12.8m.
James Knight, Chief Executive Officer of Keystone, commented:
"I have been extremely pleased with Keystone's performance over the last
financial year. Our quality focused recruitment strategy continues to pay
dividends, making Keystone the premier platform law firm and the stand-out
choice for the high-calibre talent we wish to attract and retain.
"Our focus on the delivery of excellence across the business continues to
underpin our growth aspirations, alongside our commitment to maintaining our
progressive dividend policy, which has now seen us return over £45 million to
shareholders since our IPO in 2017."
For further information please contact:
Keystone Law Group plc
James Knight, Chief Executive Officer
Ashley Miller, Finance Director
www.keystonelaw.com
+44 (0) 20 3319 3700
Panmure Liberum Limited (Nominated Adviser and Joint Broker)
Atholl Tweedie (Corporate Finance)
Rupert Dearden (Corporate Broking)
www.panmureliberum.com
+44 (0) 20 7886 2500
Investec Bank plc (Joint Broker)
Carlton Nelson
James Rudd
www.investec.co.uk (http://www.investec.co.uk)
+44 (0) 20 7597 5970
Vigo Consulting (Financial Public Relations)
Jeremy Garcia / Fiona Hetherington
keystonelaw@vigoconsulting.com (mailto:keystonelaw@vigoconsulting.com)
+44 (0)207 390 0233
The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulation (EU) No.
596/2014 as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR").
Notes to editors
Keystone (AIM: KEYS) is a highly scalable, premier tech-enabled platform law
firm. Ranked within the UK Top 100 law firms, providing conventional legal
services in a £12bn addressable market through its differentiated platform
model which has three defining characteristics:
· Lawyers have freedom, flexibility and autonomy, and are paid up
to 75% of what they bill.
· Lawyers determine how, when and where they work, in contrast to
the conventional law firm model.
· Lawyers are provided full infrastructure and support via its
central office team, bespoke user-friendly IT platform, and network of
colleagues and events.
Keystone is a full-service law firm, with 20 service areas and more than 50
industry sectors delivered by over 450 high calibre self-employed Principal
lawyers who work from their own offices.
More information about Keystone can be found at www.keystonelaw.co.uk
(http://www.keystonelaw.co.uk/) .
CHAIRMAN'S STATEMENT
I am pleased to introduce Keystone Law's results for the year ended 31 January
2025.
It has been another good year for the business, with sustained client demand
and a return to recruitment levels last seen pre pandemic. The Group has
delivered a strong set of financial results with revenue growing 11.1% to
£97.7m (2024: £87.9m), and adjusted PBT((1)) increasing to £12.7m
representing an adjusted PBT margin of 13.0% (2024: £11.3m, 12.8%) (PBT of
£11.7m (2024: £10.3m) and PBT margin of 12% (2024: 11.7%)). These results
reflect the continued strength of the broad-based demand for our services as
well as the ongoing growth of the firm, as well as the higher interest rates
and strength of our balance sheet in this Period. The cash generative nature
of the business model has meant that these profits have converted strongly to
cash, demonstrating the quality of earnings that Keystone delivers.
DIVIDEND
At this time, in recognition of the strength of the balance sheet, we are
proposing to pay both a final ordinary dividend of 14.0p and a special
dividend of 15.0p. This will bring the total value of dividends paid since
IPO to just over £45m, or equivalent to just over 145p((2)) per share, which
is 96% of the adjusted earnings generated by the business over the same
period.
Having paid an ordinary interim dividend of 6.2p (2024: 5.8p) this will bring
the total ordinary dividend for the year to 20.2p (2024: 18.3p).
OUR PEOPLE AND CULTURE
Our focus on excellence pervades all aspects of the business, creating the
positive, supportive and inclusive environment in which our people are able to
thrive. This creates an atmosphere in which people flourish, encouraging
them to act as ambassadors for the Keystone community. We are, rightly,
proud of this culture and invest heavily in it, working tirelessly to continue
to build on this strong foundation to ensure its long-term sustainability.
THE CENTRAL OFFICE TEAM
The central office team provides the full range of support and infrastructure
that our lawyers need, leaving them free to focus on the work which they
enjoy: growing their practices and delivering legal advice to clients. We
thank the team for their continued hard work, skill and dedication throughout
the year and continue to invest across the business to ensure that we maintain
the level of talent necessary to support the growth in volume and
sophistication of the work our lawyers advise on.
BOARD AND GOVERNANCE
The Board has continued to operate within the structures and governance
requirements of the Quoted Companies Alliance ("QCA") Code 2018 as set out in
the corporate governance section. In November 2023, the QCA issued a revised
code which is to apply to financial years starting on or after 1 April 2024.
As announced last year, we have been moving to adopt the new requirements of
the latest code ahead of that timeline and following last year's decision to
implement annual re-election of all Directors, this year we have chosen to
disclose our remuneration policy in the Annual Report and Accounts. This
forms part of the Group's remuneration report which, in early adoption of the
2023 QCA code, will be placed before shareholders at our coming AGM for an
advisory vote.
OUTLOOK
I am pleased to say that 2026 has started well with good levels of activity
providing us with confidence in the year ahead.
Robin Williams
Non-executive Chairman
30 April 2025
((1) ) Adjusted PBT is calculated by adding share-based payment costs and
amortisation of intangible assets to PBT. Details of these calculations are
shown in the Financial Review
((2) ) Sum of the Ordinary DPS paid for the years ended 31 January 2019 to 31
January 2025, together with the special dividends, DPS paid and proposed to
date.
CHIEF EXECUTIVE'S REVIEW
INTRODUCTION AND HIGHLIGHTS
I am delighted to report that Keystone has had another excellent year. The
quality of our lawyers, with their extensive range of knowledge and
experience, ensures the delivery of excellent legal advice to our clients,
driving growth whilst enhancing the brand and reputation of the business
across the legal sector. This growing reputation for first class legal work is
the core of our success, it is fundamental to client acquisition and retention
and essential in attracting new lawyers to join Keystone, underpinning our
long term, sustainable growth.
This year, client demand has remained strong across practice areas and this,
together with the impact of the new Principals((1)) who have joined us, has
delivered strong growth. Revenue has increased by 11.1% to £97.7m (2024:
£87.9m), whilst adjusted PBT increased to £12.7m (2024: £11.3m) (PBT of
£11.7m (2024: £10.3m) and PBT margin of 12.0% (2024: 11.7%)). Cash flow has,
as always, been strong; guaranteed by the nature of our model and ensures that
these profits have converted to cash, with cash generated from operations of
£11.5m (2024: £10.4m).
Conditions in the recruitment market have remained positive for Keystone and
it has been a pleasure to welcome a further 50 excellent new Principals this
year (2024: 51).
ASPIRING TO EXCELLENCE UNDERPINS LONG-TERM SUSTAINABLE GROWTH
By aspiring to excellence in everything we do, we continue to drive the
business forwards, delivering long-term sustainable growth. This ethos
permeates all decisions we make, whether that be in the recruitment of new
Principals and the vetting of pod members or the standard of service delivery
we expect both from our central office team to our lawyers and from our
lawyers to our clients.
It was in this pursuance of excellence that we decided to refit our offices in
Chancery Lane this year. The successful transition to remote working by our
central office teams enabled us to retain the same office footprint when
renewing our leases. However, changes in working habits, both of the central
office and our lawyers, meant that the design and layout of these offices no
longer lived up to our exceedingly high standards. As such, we decided to take
advantage of the lease renewal to rectify this situation. Working with
professionals in the sector and taking into consideration the feedback of the
relevant stakeholders, we developed a new, modern design, encompassing the
varied elements needed to provide a first-class working environment to match
the levels of excellence delivered across Keystone. Following the successful
delivery of the project, we are now able to fully satisfy the varied needs of
our people, whether that be conventional desk space for quiet working, booths
for confidential online meetings, areas designed for more interactive group
working or relaxed social interaction, as well as highly professional client
meeting rooms. I am delighted with the success of the project which I
believe further enhances the appeal of Keystone to both new lawyers and
central office staff aiding in the recruitment and retention of the talent we
need to continue to drive the business forwards.
RECRUITMENT MARKET CONDITIONS REMAIN POSITIVE
Overall, recruitment market conditions have remained positive throughout 2025,
with the momentum gained last year persisting through this year, in spite of
the political and economic uncertainty mid-year caused by the change in
government. Against this backdrop, the activity levels and results delivered
have been very pleasing.
During the Period we received 283 qualified applicants (2024: 270), made
offers to 95 candidates (2024: 103) with 52 candidates accepting offers (2024:
68), whilst welcoming 50 new joiners (2024: 51). This meant that we have
ended the year with 455 Principals (2024: 432). Our Principals have also
continued to drive growth by recruiting into their pods and as such we have
ended the Period with 108 pod members (2024: 102), which, together with our
central office lawyers brings the total number of fee earners to 576 (2024:
549).
The excellent quality of the lawyers now attracted to Keystone is a real
testament to the success of our quality-focused recruitment strategy. The
success of this strategy is reflected in the number of Keystone lawyers ranked
in the leading legal directories, with 207 being recognised in the Legal 500
UK Solicitors 2024 rankings((2)) (2023: 172 listed up from 65 in 2019). It
is by continuing to focus on the calibre of our lawyers that we guarantee the
long-term sustainable growth of the business, generating a virtuous circle as
high calibre candidates are attracted to join a firm with lawyers who have a
similar market presence to their own. As a result of this we now regularly
attract lawyers from the very top of the legal profession with over a quarter
of the new Principals joining us this year coming from either the UK office of
a large US law firm or a top 25 UK law firm((3)).
EXCELLENCE AT THE HEART OF CENTRAL OFFICE TEAM
The central office team has again had a busy and successful year, providing
our lawyers with not only the platform they need to excel, but also the
supportive and connected environment for them to do so. The community team has
onboarded 50 new Principals this year, supporting them as they transition to
their new lives at Keystone. Key to the successful integration of new
Principals is the investment made in understanding the unique needs of each
lawyer and, using this information to identify and connect them with suitable
colleagues with whom they will work well to successfully achieve their mutual
objectives. Whilst the ongoing support delivered to all our lawyers ensures
that during both the highs and, in some cases, the lows of their professional
lives at Keystone, they feel fully supported both technically and, quite
often, emotionally as well.
On the IT front, we have successfully migrated a number of our systems from
the private cloud to the public cloud - Microsoft Azure. This provides
enhanced resilience, security and scalability to our infrastructure. The roll
out of a SIEM solution at the end of last financial year has ensured further
oversight of the IT security risks, of which we remain ever vigilant. The
development of AI and its delivery of real-life solutions within the business
remains in its infancy, although the pace of evolution in this area is
extremely rapid. As such, we continue to assess how this can best be applied
across the business to deliver operational efficiencies for our lawyers as
well as our central office team, combining the use of third-party products as
well as bespoke development with AI agents.
Across all areas of the central office team we continue to aspire to
excellence in the delivery of all elements of support which we provide to our
lawyers and I have been very satisfied with the successes achieved by the
business this year.
LOOKING AHEAD
The business has made a positive start to the new financial year, with strong
client demand across all practice areas and positive recruitment activity.
We are confident that we will continue to deliver strong, sustainable growth
and achieve results that are in line with market expectations for the coming
year.
James Knight
Chief Executive
30 April 2025
((1) ) 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 ("Pod Member") is, to all intents and purposes, a
Keystone lawyer and is 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 interviewed and fully 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.
((2) ) The Lawyer Survey 2024 ranking by revenue.
((3) ) The Legal 500 UK Solicitors 2025 rankings is the leading guide to law
firms and solicitors in the UK (Source: Legal500.com).
FINANCIAL REVIEW AND STRATEGIC REPORT
KEY PERFORMANCE
INDICATORS (KPIs)
The following KPIs are used by the management to monitor the financial and
operational performance of the Group:
• Revenue growth: 11.1% increase (2024: 15.1%)
• Adjusted PBT((3)) growth: 12.8% increase (2024: 22.0%)
• Adjusted PBT margin((3)): 13.0% (2024: 12.8%)
• PBT growth:13.4% increase (2024: 22.9%)
• PBT margin: 12% (2024: 11.7%)
• Adjusted basic EPS: 30.4p (2024: 27.4p)
• Operating cash conversion: 94.5%((1)) (2024: 96.1%)
• Trade receivables days: 34 (2024: 34)
• Qualified new applicants((2)): 283 (2024: 270)
• Offers made((2)): 95 (2024: 103)
• Offers accepted((2)): 52 (2024: 68)
((1) ) Operating cash conversion is calculated utilising cash generated from
operations and dividing it by the PBT before non-cash movements and net
interest (£12,178,139 per cash flow statement 2025).
((2) ) Non-financial KPIs are commented on with the Chief Executive's review.
Recruitment data refers to numbers of potential Principals.
((3) ) The calculation of adjusted PBT, adjusted PBT margin and adjusted EPS
is shown on the next page.
INCOME STATEMENT
I am pleased to report revenue for the year of £97.7m, an increase of 11.1%
on the prior year. As a business, we have seen broad-based client demand
across practice areas this year which has been further enhanced by the
additional income generated from the growth in Principal numbers (ending the
Period with 455 Principals and averaging 443.5 (2024: ended with 432 and
averaged 415). This has enabled revenue per Principal to grow by 4.0% to
£220k (2024: £212k).
GROSS PROFIT
The gross profit of the business has risen this year by 11.6% to £25.5m
(2024: £22.8m), with gross profit margins remaining largely stable at 26.1%
(2024: 26%).
AMORTISATION, DEPRECIATION AND SHARE-BASED PAYMENTS
Amortisation of intangibles has fallen this year as the underlying asset
became fully amortised during the year, whilst the commencement of new leases
in Chancery Lane resulted in a slight increase in the amortisation of
right-of-use assets. Depreciation also saw a marginal decrease this year. The
charge in respect of share-based payments increased from £0.6m to £0.8m.
OTHER ADMINISTRATIVE EXPENSES
Other administrative expenses have increased by 11.8% to £12.9m (2024:
£11.6m). Staff costs increased by 15% to £5.4m (2024: £4.7m), whilst wage
inflation has eased somewhat from the prior year it still remains a feature of
the labour market and, as with all businesses, we need to pay a competitive
rate in order to attract and retain talent within the business. This,
together with the increase in headcount (69 v 2024: 63), as we have continued
to invest in supporting our lawyers to the highest standards has driven the
increased costs. Other administrative costs (per note 5) increased by 9.5% to
£7.5m (2024: £6.9m), with the largest contributory factors to this being
investment in IT as we migrated to the public cloud and fully implemented our
SIEM solution to enhance security oversight as well as professional indemnity
insurance. The IT costs increased by £0.2m, whilst professional indemnity
insurance costs have increased by £0.2m driven predominantly by revenue
growth as well as the increase in cover from £50m to £60m.
FINANCE INCOME AND COSTS
Interest rates have remained high for most of this Period, only starting to
fall late in the year, and as cash positive business we have benefitted from
this with our net finance income rising this year to £1.1m (2024: £0.9m).
PBT, ADJUSTED PBT AND PBT MARGINS
Adjusted PBT is calculated as follows:
2025 2024
£ £
Profit before tax 11,684,999 10,306,331
Amortisation of 248,543 350,884
intangible assets
Share-based payments 780,662 610,644
Adjusted PBT 12,714,204 11,267,859
Net finance income 1,111,203 889,204
Adjusted PBIT 11,603,001 10,378,655
PBT margin 12.0% 11.7%
Adjusted PBIT margin 11.9% 11.8%
Adjusted PBT margin 13.0% 12.8%
The Board consider adjusted PBT to be a better measure of performance than PBT
as it excludes costs which are either not a result of the underlying
performance of the business (as is the case for the amortisation which arose
from the structuring of the 2014 private equity investment in the business) or
where the cost represents neither a cash impact to the business, nor is it a
reflection of the value received by the recipient (as is the case with
share-based payment costs).
The growth in revenue and gross profits have driven a 11.8% increase in
adjusted PBIT, representing an 11.9% margin, which is largely in line with the
prior year (2024: 11.8%). Profit before tax and adjusted profit before tax
have increased by 13.4% and 12.8% respectively, with margins also stepping up
as the contribution of finance income more than compensated for the change in
adjusted PBIT margin.
TAXATION
This year we have continued to feel the impact of the increase in the standard
rate of corporation tax from 19% to 25% in April 2023. As a result of this
change, the average rate of corporation tax last year was 24%, whilst this
year the full impact of this change has taken effect with the standard rate
being 25% for the whole Period. The Group's effective rate of corporation
tax this year was 26.8% (2024: 25.8%). The effective rate of the Group is
always higher than the standard rate due to the level of investment we make in
providing networking opportunities in social environments for our lawyers,
which are disallowable for corporation tax purposes.
EARNINGS PER SHARE
Basic earnings per share increased from 24.4p to 27.1p, with fully diluted EPS
being 23.6p (2024: 23.9p). Adjusted basic earnings per share (calculated by
making the same adjustments to earnings as have been made in calculating
adjusted PBT and divided by the average shares in issue this year) increased
to 30.4p (2024: 27.4p).
STATEMENT OF FINANCIAL POSITION
CASH
The strongly cash generative nature of the Group's business model, benefitting
as it does from the payments to lawyers in respect of their fees only being
paid once Keystone has been paid for the work delivered, has again been
demonstrated by its cashflow profile, with operating cash conversion of 94.5%
(2024: 96.1%), generating cash from operations of £11.5m (2024: £10.4m).
Capital expenditure of £0.8m (2024: £0.07m) was higher than usual this year,
reflecting the costs of the office fit out in Chancery Lane. Corporation tax
payments increased to £4.4m (2024: £2.2m) as the Group became qualified as
"super large" by HMRC, accelerating the quarterly payments such that all
corporation tax is now payable within the year. This being a transition
year, we have had to pay not only 100% of the corporation tax relating to 2025
but also the remaining half of the tax relating to the prior year, meaning
that there has been a one-off additional outflow of c.£1.5m. Sustained high
interest rates throughout this year have ensured that net interest received
has increased to £1.1m (2024: £0.9m) and the rent-free periods included in
the new leases on Chancery Lane caused the reduction in such payments to
£0.2m (2024: £0.6m). As such, cash generated by the business in the year,
being net cash flow pre dividend payments, was £7.2m (2024: £8.4m). The
Group paid dividends of £5.9m in respect of ordinary dividends (2024: £5.3m
ordinary dividend and £3.9m special dividend). This left closing cash of
£9.7m (2024: £8.4m) and no debt.
NET ASSETS
The Group's balance sheet is extremely strong with net assets having increased
from £16.9m to £20.5m by virtue of profit for the year of £8.5m, dividends
paid of £5.9m and £0.8m movement in reserves to account for the vesting of
LTIP awards.
DIVIDEND
In light of the strength of our balance sheet and our confidence in the
future, the Board is proposing to pay a final ordinary dividend for the year
ended 31 January 2025 of 14.0p per share (2024: 12.5p) as well as a special
dividend of 15.0p. This brings the total ordinary dividend for the year to
20.2p per share (2024: 18.3p per share). Subject to approval at the Annual
General Meeting, the final dividend will be paid on 8 July 2025 to
shareholders on the register at the close of business on 13 June 2025.
The cash value of dividends paid this year was £5.9m.
On behalf of the Board
Ashley Miller
Finance Director
30 April 2025
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 JANUARY 2025
Note 2025 2024
£ £
Revenue 97,703,149 87,930,626
Cost of sales (72,229,270) (65,101,369)
Gross profit 25,473,879 22,829,257
Trade receivables impairment 8 (1,470,788) (1,471,291)
Corresponding reduction in trade payables 8 1,065,268 1,088,755
(405,520) (382,536)
Depreciation and amortisation 4 (823,681) (897,814)
Share-based payments 4 (780,662) (610,644)
Other administrative expenses 4 (12,940,290) (11,573,319)
Other operating income 50,070 52,183
Operating profit 10,573,796 9,417,127
Finance income 5 1,966,246 1,575,930
Financing costs 5 (855,043) (686,726)
Profit before tax 11,684,999 10,306,331
Corporation tax (3,135,226) (2,656,641)
Profit and total comprehensive income for the year attributable to equity 8,549,773 7,649,690
holders of the Parent
Basic EPS (p) 7 27.1 24.4
Diluted EPS (p) 7 26.6 23.9
The above results were derived from continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 JANUARY 2025
Note 2025 2024
£ £
Assets
Non-current assets
Property, plant and equipment
Owned assets 772,027 120,517
Right-of-use assets 1,973,730 2,428,005
Total property, plant and equipment 2,745,757 2,548,522
Intangible assets 4,807,411 5,055,954
Investments 129,350 129,350
7,682,518 7,733,826
Current assets
Trade and other receivables 8 28,325,545 25,194,349
Cash and cash equivalents 9,687,172 8,367,072
38,012,717 33,561,421
Total assets 45,695,235 41,295,247
Equity and liabilities
Equity
Share capital 63,186 62,963
Share premium 9,920,760 9,920,760
Share-based payments reserve 1,276,080 1,059,531
Retained earnings 9,102,454 5,896,437
Equity attributable to equity holders of the Parent 20,362,480 16,939,691
Non-current liabilities
Lease liabilities 1,563,376 2,027,866
Deferred tax liabilities - 49,699
Provisions 9 1,162,235 907,945
2,725,611 2,985,510
Current liabilities
Trade and other payables 10 21,985,238 19,782,587
Lease liabilities 594,848 344,804
Corporation tax liability 27,058 1,242,655
22,607,144 21,370,046
Total liabilities 25,332,755 24,355,556
Total equity and liabilities 45,695,235 41,295,247
Ashley Miller
Director
30 April 2025
Keystone Law Group Plc
Registered No. 09038082
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 JANUARY 2025
Attributable to equity holders of the Parent
Share Share premium Share-based payments reserve Retained earnings Total
capital
£ £ £ £
£
At 31 January 2023 62,732 9,920,760 1,028,247 6,847,378 17,859,117
Profit for the year and total comprehensive income - - - 7,649,690 7,649,690
Transactions with owners
Dividends paid in the year - - - (9,179,991) (9,179,991)
Share-based payments vesting 231 - (579,360) 579,360 231
Share-based payment awards - - 610,644 - 610,644
At 31 January 2024 62,963 9,920,760 1,059,531 5,896,437 16,939,691
Profit for the year and total comprehensive income - - - 8,549,773 8,549,773
Transactions with owners
Dividends paid in the year - - - (5,907,869) (5,907,869)
Share-based payments vesting 223 - (564,113) 564,113 223
Share-based payment awards - - 780,662 - 780,662
At 31 January 2025 63,186 9,920,760 1,276,080 9,102,454 20,362,480
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 31 JANUARY 2025
Note 2025 2024
£ £
Cash flows from operating activities
Profit before tax 11,684,999 10,306,331
Adjustments
Depreciation and amortisation 4 823,681 897,814
Share-based payments 4 780,662 610,644
Revaluation of other assets - (70,810)
Finance income 5 (1,966,246) (1,575,930)
Financing costs 5 855,043 686,726
12,178,139 10,854,775
Working capital adjustments
Increase in trade and other receivables (3,131,196) (2,588,441)
Increase in trade and other payables 2,202,651 1,435,229
Increase in provisions 254,290 724,444
Cash generated from operations 11,503,884 10,426,007
Interest paid (767,002) (615,726)
Interest portion of lease liability (88,041) (71,468)
Corporation taxes paid (4,404,523) (2,205,784)
Cash generated from operating activities 6,244,318 7,533,029
Cash flows from/(used in) investing activities
Interest received 1,966,246 1,575,930
Purchases of property, plant and equipment (772,373) (68,910)
Investment in other assets - (44,812)
Net cash generated by investing activities 1,193,873 1,462,208
Cash flows from financing activities
Proceeds from issue of ordinary shares 223 231
Lease repayments (210,445) (600,280)
Dividends paid in year (5,907,869) (9,179,991)
Net cash used in financing activities (6,118,091) (9,780,040)
Net decrease in cash and cash equivalents 1,320,100 (784,803)
Cash at 1 February 8,367,072 9,151,875
Cash at 31 January 9,687,172 8,367,072
NOTES TO THE PRELIMINARY ANNOUNCEMENT
1. GENERAL INFORMATION
The Company was incorporated as Keystone Law Group Limited on 13 May 2014
under the Companies Act 2006 (registration no. 09038082) and, subsequently,
used as the vehicle to acquire Keystone Law Limited (the main trading company
in the Group) and its subsidiaries on 17 October 2014. The Company was
re-registered as a Public Limited Company limited by shares on 10 November
2017. The Company was incorporated and is domiciled in England and Wales. The
principal activity of the Group is the provision of legal services.
The address of its registered office is:
48 Chancery Lane
London
WC2A 1JF
The preliminary announcement is presented in Pounds Sterling, being the
functional currency of the companies within the Group.
2. ACCOUNTING POLICIES
BASIS OF PREPARATION
The preparation of Financial Statements, in conformity with UK-adopted
International Accounting Standards requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in
the process of applying the Group's accounting policies.
BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial statements of
the parent company and entities controlled by the parent company (its
subsidiaries) made up to 31 January each year. Control is achieved when the
parent company:
• Has the power over the investee
• Is exposed, or has rights, to variable returns from its
involvement with the investee
• Has the ability to use its power to affect its returns
The parent company reassesses whether or not it controls an investee if facts
and circumstances indicate that there are changes to one or more of the three
elements of control listed above.
When the parent company has less than a majority of the voting rights of an
investee, it considers that it has power over the investee when the voting
rights are sufficient to give it the practical ability to direct the relevant
activities of the investee unilaterally. The parent company considers all
relevant facts and circumstances in assessing whether or not the parent
company's voting rights in an investee are sufficient to give it power,
including:
• The size of the parent company's holding of voting rights relative
to the size and dispersion of holdings of the other vote holders
• Potential voting rights held by the parent company, other vote
holders or other parties
• Rights arising from other contractual arrangements
• Any additional facts and circumstances that indicate that the
parent company has, or does not have, the current ability to direct the
relevant activities at the time that decisions need to be made, including
voting patterns at previous shareholders' meetings
Consolidation of a subsidiary begins when the parent company obtains control
over the subsidiary and ceases when the parent company loses control of the
subsidiary. Specifically, the results of subsidiaries acquired or disposed of
during the year are included in profit or loss from the date the parent
company gains control until the date when the parent company ceases to control
the subsidiary. Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used into line
with the Group's accounting policies.
All intra-Group assets and liabilities, equity, income, expenses and cash
flows relating to transactions between the members of the Group are eliminated
on consolidation.
Non-controlling interests in subsidiaries are identified separately from the
Group's equity therein. Those interests of non-controlling shareholders that
are present ownership interests entitling their holders to a proportionate
share of net assets upon liquidation may initially be measured at fair value
or at the non-controlling interests' proportionate share of the fair value of
the acquiree's identifiable net assets. The choice of measurement is made on
an acquisition-by-acquisition basis. Other non-controlling interests are
initially measured at fair value.
Subsequent to acquisition, the carrying amount of non-controlling interests is
the amount of those interests at initial recognition plus the non-controlling
interests' share of subsequent changes in equity.
Profit or loss and each component of other comprehensive income are attributed
to the owners of the parent company and to the non-controlling interests.
Total comprehensive income of the subsidiaries is attributed to the owners of
the parent company and to the non-controlling interests even if this results
in the non-controlling interests having a deficit balance.
Changes in the Group's interests in subsidiaries that do not result in a loss
of control are accounted for as equity transactions. The carrying amount of
the Group's interests and the non-controlling interests are adjusted to
reflect the changes in their relative interests in the subsidiaries. Any
difference between the amount by which the non-controlling interests are
adjusted and the fair value of the consideration paid or received is
recognised directly in equity and attributed to the owners of the parent
company.
When the Group loses control of a subsidiary, the gain or loss on disposal
recognised in profit or loss is calculated as the difference between (i) the
aggregate of the fair value of the consideration received and the fair value
of any retained interest and (ii) the previous carrying amount of the assets
(including goodwill), less liabilities of the subsidiary and any
non-controlling interests. All amounts previously recognised in other
comprehensive income in relation to that subsidiary are accounted for as if
the Group had directly disposed of the related assets or liabilities of the
subsidiary (i.e. reclassified to profit or loss or transferred to another
category of equity as required/permitted by applicable IFRS Accounting
Standards). The fair value of any investment retained in the former subsidiary
at the date when control is lost is regarded as the fair value on initial
recognition for subsequent accounting under IFRS 9 Financial Instruments when
applicable, or the cost on initial recognition of an investment in an
associate or a joint venture.
BUSINESS COMBINATIONS
Acquisitions of businesses are accounted for using the acquisition method. The
consideration transferred in a business combination is measured at fair value,
which is calculated as the sum of the acquisition-date fair values of assets
transferred by the Group, liabilities incurred by the Group to the former
owners of the acquiree and the equity interest issued by the Group in exchange
for control of the acquiree. Acquisition-related costs are recognised in
profit or loss as incurred. At the acquisition date, the identifiable assets
acquired and the liabilities assumed are recognised at their fair value at the
acquisition date.
Goodwill is measured as the excess of the sum of the consideration
transferred, the amount of any non-controlling interests in the acquiree, and
the fair value of the acquirer's previously held equity interest in the
acquiree (if any) over the net of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed. If, after
reassessment, the net of the acquisition-date amounts of the identifiable
assets acquired and liabilities assumed exceeds the sum of the consideration
transferred, the amount of any non-controlling interests in the acquiree and
the fair value of the acquirer's previously held interest in the acquiree (if
any), the excess is recognised immediately in profit or loss as a bargain
purchase gain.
GOING CONCERN
The Group and Company financial statements have been prepared on a going
concern basis as the Directors have a reasonable expectation that the Group
and Company have adequate resources to continue in operational existence for
the foreseeable future. The Group is cash positive, has no debt, has a model
which is strongly cash generative and has, to date, a strong trading
performance. The Group's forecasts and projections show that the Group has
sufficient resources for both current and anticipated cash requirements for a
period of at least one year from the approval of these financial statements.
ADJUSTED PROFIT BEFORE TAX ("PBT")
Adjusted PBT is utilised as a key performance indication for the Group and is
calculated as follows:
2025 2024
£ £
Profit before tax 11,684,999 10,306,331
Amortisation 248,536 350,884
Share-based payments 780,662 610,644
Adjusted PBT 12,714,197 11,267,859
Management considers that the use of the alternative performance measure
above, which removes the non-cash items charged to the income statement,
provides a truer representation of the underlying performance of the Group.
3. OTHER AREAS OF JUDGEMENT AND ACCOUNTING ESTIMATES
In the application of the Group's accounting policies, management is required
to make judgements and accounting estimates.
These estimates and underlying assumptions are based on historical experience
and other factors that are considered to be relevant. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of revision and future periods if the revision affects both current and future
periods.
Whilst these do not meet the definition under IAS 1 of significant accounting
estimates or critical accounting judgement, the recognition of certain
material assets and liabilities is based on assumptions and/or is subject to
longer-term uncertainties. The other areas of judgement and accounting
estimates are set out below.
RECOVERABILITY OF TRADE RECEIVABLES
Due to the nature of the business, there are high levels of trade receivables
at the year end and, therefore, a risk that some of these balances may be
irrecoverable. Because amounts due to lawyers are only payable when the Group
has been paid, there is a built-in hedge to this exposure to the extent of
approximately 75%. A variance of 1% in the loss ratio reflected in the
impairment provision would equate to a movement in trade receivables
impairment of £172,840 (2024: £153,170) which, in turn, would result in a
change in the corresponding reduction in trade payables of £129,630 (2024:
£115,177) and an impact to profit of £43,210 (2024: £37,993).
AMOUNTS RECOVERABLE ON CONTRACTS (ACCRUED INCOME) AND ASSOCIATED ACCRUED
LIABILITY
During each financial year, the business carries out a review of billing
activity to identify what share of each month's billing relates to a period
prior to the start of that financial year. The results of these reviews are
then added to the data derived from similar reviews in previous financial
years and demonstrate a materially consistent performance insofar as to the
share of each given month's billing which relates to a prior financial year. A
fundamental judgement made when performing these reviews is that the contracts
entered into each year have performance obligations with similar
characteristics to those entered into in previous years; for example that the
value of the services provided to the client is transferred evenly over the
period of time that the services are provided. We use this data to generate a
profile of the share of post year-end billing which relates to a previous
financial year. This profile is then applied to the current year's budgeted
billing to calculate the gross value of accrued income at the year end, a
further adjustment is made to this value to reflect the estimated recoverable
value, this adjustment is not material and as such is not separately
disclosed. The accrued income valuation is then validated by reviewing the
actual billing between the year end and the time the accounts are prepared
(representing approximately 60% of the value of accrued income) to ensure that
actual performance is in line with the expected profile.
Keystone's lawyers' fees are 100% variable and directly associated with the
value of fee income produced. Accordingly, when the Group recognises a value
of accrued income, it also recognises a directly associated accrued liability
in respect of the fees payable to its lawyers for that work which equates to
approximately 75% of the value of accrued income.
Were the actual billing to differ to the budget but all other things remained
equal, then a 1% variance in billing would equate to a movement in revenue of
£79,464 (2024: £70,383). This, in turn, would result in a change in the
associated cost of sale of £59,362 (2024: £52,263) and an impact to profit
of £20,102 (2024: £18,120).
4. EXPENSES BY NATURE
Expenses are comprised of:
2025 2024
£ £
Depreciation 120,863 136,070
Amortisation - intangible assets 248,543 350,884
Amortisation - right-of-use assets 454,275 410,860
Share-based payments 780,662 610,644
Staff costs 6,657,878 5,834,699
Other administrative expenses 7,512,604 6,858,305
15,774,825 14,201,462
Included within staff costs above are the costs of employed fee earners who
are included within cost of sales (2025: £1,230,192, 2024: £1,119,685).
5. FINANCE INCOME AND COSTS
2025 2024
£ £
Finance income
Interest income on bank deposits 1,966,246 1,575,930
Financing costs
Interest on client monies held (767,002) (615,258)
Interest on leases for own use (88,041) (71,468)
Total finance costs (855,043) (686,726)
Net finance income/(costs) 1,111,203 889,204
6. STAFF COSTS
The aggregate payroll costs (including Directors' remuneration but excluding
share-based payment charges disclosed separately in note 5) were as follows:
2025 2024
£ £
Wages and salaries 5,674,063 5,049,463
Social security costs 741,316 573,268
Pension costs, defined contribution scheme 242,499 211,968
6,657,878 5,834,699
Included within the social security costs above is an amount of £98,652
(2024: £Nil) in respect of employer's national insurance contributions, which
will be payable in respect of shares granted under the Group's LTIP scheme.
The average number of persons employed by the Group (including Directors)
during the year, analysed by category, was as follows:
2025 2024
£ £
Fee earners 13 13
Administration and support 69 63
Total 82 76
7. EARNINGS PER SHARE
The calculations of earnings per share are based on the following profits and
number of shares:
2025 2024
£ £
Profit attributable to owners of the Parent 8,549,773 7,649,690
Amortisation((1)) 248,543 350,884
Share-based payments((1)) 780,662 610,644
Adjusted earnings 9,578,978 8,611,218
2025 2024
No. of
No. of shares
shares
Weighted average number of shares
For basic earnings per share 31,554,166 31,386,062
Dilutive effect of grants under LTIP 547,383 563,260
For diluted earnings per share 32,101,549 31,949,322
Basic earnings per share (p) 27.1 24.4
Diluted earnings per share (p) 26.6 23.9
Adjusted basic earnings per share (p) 30.4 27.4
Adjusted diluted earnings per share (p) 29.8 27.0
((1) ) Amounts shown are before tax.
Adjusted basic earnings per share is calculated by taking adjusted basic
earnings and dividing it by undiluted average shares for the year.
8. TRADE AND OTHER RECEIVABLES
Group
2025 2024
£ £
Trade receivables 17,283,997 15,308,230
Provision for impairment of trade receivables (5,497,587) (4,812,995)
Net trade receivables 11,786,410 10,495,235
Receivables from related parties - -
Accrued income 12,856,306 11,571,696
Prepayments 1,919,904 1,843,276
Unbilled disbursements 842,334 793,825
Reimbursement asset 442,541 280,000
Other receivables 478,050 210,317
Total current trade and other receivables 28,325,545 25,194,349
The fair value of those trade and other receivables classified as financial
instruments are disclosed in the financial instruments note 27.
The Group's exposure to credit and market risks, including impairments and
allowances for credit losses, relating to trade and other receivables, is
disclosed in the financial risk management and impairment of financial assets
note.
Trade receivables stated above include amounts due at the end of the reporting
period for which an allowance for expected credit loss has not been recognised
as the amounts are still considered recoverable and there has been no
significant change in credit quality.
The provision for impairment of trade receivables (analysed below) is the
difference between the carrying value and the present value of the expected
proceeds. For all other categories of current receivables, there is no
difference between the carrying value and the expected proceeds.
2025 2025 Provision 2025 Expected Loss Rate 2024 2024 Provision 2024 Expected Loss Rate
Gross £ % Gross £ %
£ £
0 to 30 days 6,458,897 323,383 5.0 5,555,147 278,200 5.0
31 to 60 days 2,295,345 229,535 10.0 2,361,527 236,153 10.0
61 to 90 days 1,043,915 104,391 10.0 1,306,762 130,676 10.0
91 to 120 days 958,313 239,578 25.0 752,254 206,870 27.5
4 to 6 months 1,256,700 801,660 63.8 396,358 216,965 54.7
6 months to 1 year 2,102,230 1,071,717 51.0 2,291,042 1,260,901 55.0
Over 1 year 3,168,597 2,727,323 86.1 2,645,140 2,483,230 93.9
17,283,997 5,497,587 31.8 15,308,230 4,812,995 31.4
The Directors consider that the carrying value of trade and other receivables
approximates to fair value.
The movement in the provision for impairment of trade receivables was as
follows:
2025 2024
£ £
Balance at 1 February 4,812,995 4,114,670
Charge for the year 1,470,788 1,471,291
Amounts written off (786,196) (772,966)
Balance at 31 January 5,497,587 4,812,995
Because the payment terms of the Group's lawyers is "pay when paid", the
impairment of a trade receivable balance automatically generates a directly
related adjustment to trade payables (being approximately 75% of the net value
impaired).
Accrued income has increased year on year largely in line with revenue, with
accrued income days of 48 as at 31 January 2025 (2024: 48 days).
9. PROVISIONS
Dilapidation Professional Indemnity Total
£ £ Provision
£
At 31 January 2023 183,501 - 183,501
Reclassified from accruals - 492,250 492,250
Additional provision in the year 44,444 410,000 454,444
Utilisation of provision - (222,250) (222,250)
At 31 January 2024 227,945 680,000 907,945
Additional provision in the year 15,730 300,316 316,046
Utilisation of provision - (61,756) (61,756)
At 31 January 2025 243,675 918,560 1,162,235
The dilapidation provision in respect of leased premises in Chancery Lane.
The professional indemnity provision represents the current best estimates of
the amounts likely to be needed to settle claims in respect of alleged
professional negligence. These are the gross value before any amount is
reclaimed from insurers under the Group's professional indemnity insurance
policy. These estimates are subject to a high level of uncertainty as they
depend on the outcome of a range of future events and accordingly may need to
be updated as circumstances evolve. No separate disclosure is made in relation
to the detail of any such claims as to do so would be seriously prejudicial to
the position of the Group. Note that prior to 31 January 2024, the
professional indemnity provision and the reimbursement asset, the value of
which were not material, were presented net within accruals.
Separately, the Group recognises expected reimbursements from professional
indemnity insurance associated with this provision within trade and other
receivables (note 17). The table below shows the gross and net position
Professional Indemnity provision Reimbursement asset Net
£ £ £
At 31 January 2024 680,000 280,000 400,000
At 31 January 2025 918,560 442,541 476,019
10. TRADE AND OTHER PAYABLES
Group
2025 2024
£ £
Trade payables 10,222,352 8,984,449
Accrued expenses 11,529,447 10,393,799
Social security and other taxes 233,439 404,339
Total trade and other payables 21,985,238 19,782,587
Included within the above accrued expenses is the liability for lawyer fees
associated with the accrued income (2025: £9,595,543; 2024: £8,636,465).
The fair value of the trade and other payables classified as financial
instruments is disclosed in the financial instruments note.
The Group's exposure to market and liquidity risks related to trade and other
payables is disclosed in the financial risk management and impairment of
financial assets note. The Group pays its trade payables on terms and as such
trade payables are not yet due at the reporting dates.
FINANCIAL LIABILITIES
0 to 6 months 7 to 12 months 1 to 5 Pay when paid Total
years
£ £
£ £
£
Trade payables 175,700 - - 10,046,652 10,222,352
Accrued expenses 1,544,202 210,000 179,702 9,595,543 11,529,447
Lease Liabilities 297,424 297,424 1,823,647 - 2,418,495
At 31 January 2025 2,017,326 507,424 2,003,349 19,642,195 24,170,294
0 to 6 months 7 to 12 months 1 to 5 Pay when paid Total
years
£ £
£ £
£
Trade payables 181,900 - - 8,802,549 8,984,449
Accrued expenses 1,944,230 588,104 - 7,861,465 10,393,799
Lease Liabilities 47,380 297,424 2,379,392 - 2,724,196
At 31 January 2024 2,173,510 885,528 2,379,392 16,664,014 22,102,444
Financial liabilities are held at amortised cost. There is no significant
difference between the fair value and carrying value of financial instruments.
Amounts shown as pay when paid in the tables above, principally, reflect
amounts payable in respect of lawyers' fees, as well as amounts payable to
third-party counsel and experts whose fees have been incurred on behalf of the
Group's clients as disbursements. Lease liabilities are shown at their
undiscounted value.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR SDIFISEISEDLRecent news on Keystone Law
See all newsREG - Keystone Law Grp PLC - Final Results
AnnouncementREG - Keystone Law Grp PLC - Trading Update and Notice of Results
AnnouncementREG - Keystone Law Grp PLC - Holdings in Company
AnnouncementREG - AIM - Schedule One - Pri0r1ty Intelligence Group PLC
AnnouncementREG - Keystone Law Grp PLC - Half Year Report
Announcement