Keystone Law (KEYS) bolstered its litigation ranks by around 11 per cent over its first half, taking its roster to 355 self-employed lawyers who have embraced a platform business approach to the £9bn mid-tier legal market.
Keystone provides legal services to clients through a network of lawyers, who work from their own offices via the Keystone software and the company’s London-based head office. Its gross margin for the period was essentially flat at 26.9 per cent (against 27 per cent at this time last year) as the company invested in its lawyer centre, hot desks and meeting rooms – the balance sheet now shows £278,700 in property, plant and equipment assets, up from £55,775 at its 2019 year end.
But Keystone maintained its profit growth and posted a cash conversion rate of 90.3 per cent, which helped it award shareholders an 8p special dividend. “What fuels our organic growth is the recruitment of new lawyers,” says chief executive James Knight, with new recruits bringing client contacts into the firm. There was a cross-referral rate of work between Keystone lawyers of around 32 per cent, he added.
Broker Panmure Gordon forecasts July 2020 pre-tax profits of £5.7m and EPS of 14.7p, rising to £6.4m and 16.6p respectively in 2021.
| KEYSTONE LAW (KEYS) | ||||
| ORD PRICE: | 523p | MARKET VALUE: | £164m | |
| TOUCH: | 510-536P | 12-MONTH HIGH: | 547p | LOW: 312p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 40 | |
| NET ASSET VALUE: | 49p* | NET CASH: | £6.4m | |
| Half-year to 31 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 19.9 | 2.17 | 5.5 | 2.50 |
| 2019** | 23.0 | 2.43 | 6.3 | 3.20 |
| % change | +15 | +13 | +15 | +28 |
| Ex-div: | 3 Oct | |||
| Payment: | 25 Oct | |||
| *Includes intangible assets of £6.6m, or 21p a share. **Does not include special dividend of 8p | ||||
