Keystone Law (KEYS) floated on the Alternative Investment Market (Aim) last November and its maiden full-year results show that the 'challenger law firm' is firing on all cylinders, as it adjusts to life as a publicly-traded entity.The preliminary numbers revealed strong top-line growth, with accelerating momentum further down the income statement. Reported cash profits were up 28.9 per cent to £2.7m; adjusting for IPO-related costs, the improvement was even greater at 42.7 per cent to £3.3m, while the underlying margin increased from 9 per cent to 10.3 per cent – a reflection of the company’s continued operational gearing.
Management said the UK legal mid-market is worth around £8bn, and while Keystone remains, in essence, an outlier in the market, it believes it is well-positioned to gain from cultural changes occurring within the legal profession. This is thanks to its first-mover advantage as a platform model firm, whereby self-employed lawyers are connected to the London-based central office via a proprietary software system (‘Keyed In’). This structure is proving attractive: lawyer numbers rose from 228 to 266 year on year.
Panmure Gordon forecasts pre-tax profits of £4m and EPS of 10.3p (upgraded from 9.6p) for FY2019, up from £2.9m and 8.1p for FY2018.
KEYSTONE LAW (KEYS) | ||||
ORD PRICE: | 253p | MARKET VALUE: | £79.2m | |
TOUCH: | 248-258p | 12-MONTH HIGH: | 267p | LOW: 175p |
DIVIDEND YIELD: | 0.3% | PE RATIO: | 42 | |
NET ASSET VALUE: | 40p* | NET CASH: | £3.6m |
Year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2015 | 16.1 | 0.6 | na | nil |
2016 | 20.9 | 0.8 | na | nil |
2017 ** | 25.6 | 1.2 | 3.5 | nil |
2018 | 31.6 | 1.9 | 6.0 | 0.84 |
% change | +24 | +61 | +71 | - |
Ex-div: | 14 Jun | |||
Payment: | 02 Jul | |||
*Includes intangible assets of £7.2m, or 23p a share **Restated |