Keystone Law Group Plc · LSE:KEYS
Keystone Law — FY2024 Earnings Presentation
22 slides from Keystone Law's earnings presentation, Apr 18, 2024
Slide 1: Annual Results for the year ended 31 January 2024
ANNUAL RESULTS for the year ended 31 January 2024
Slide 2: Executive Summary
EXECUTIVE SUMMARY 1. THE MODEL 2. GROWTH & SCALABLE 3. THE OPPORTUNITY • Fully regulated law firm with plug and • Growth predominantly driven through • Profitable, cash generative, low risk, play platform recruitment of high calibre lawyers resilient business with excellent track record • Over 500 h
Slide 3: Results Highlights
RESULTS HIGHLIGHTS STRONG FINANCIAL POSITIVE EVOLUTION IN THE QUALITY OF LAWYERS PERFORMANCE RECRUITMENT MARKET CREATING LONG TERM STAKEHOLDER VALUE • Revenues up 15.1% to £87.9m • “War for talent” of prior year calmed • Majority of lawyers recruited from top 100 but candidate movement still slowed
Slide 4: Lawyer Recruitment: Positive Market Conditions
LAWYER RECRUITMENT: POSITIVE MARKET CONDITIONS Qualified New Applicants 270 103 68 232 270 228 Applicants (Principals) Offers Made (Principals) Offers Accepted (Principals) Up 16.4% on 2023 Up 30.4% on 2023 Up 61.9% 2023 2022 2023 2024 Offers Made / Accepted 51 432 103 76 79 New Principals joined Pr
Slide 5: Financial Highlights
FINANCIAL HIGHLIGHTS £87.9m £10.4m £11.3m 12.8% Revenue +15.1% Adj. PBIT +13.3% Adj. PBT +22.0% Adj PBT margin 2023 (1) : £76.4m 2023: £9.2m 2023:.£9.2m 2023: 12.1% 96.1% £8.4m 27.4p 18.3p & 12.5p Operating cash conversion Net cash Adjusted EPS Ordinary & Special DPS 2023: 96.5% 2023: £9.2m 2023: 24
Slide 6: Income Statement
INCOME STATEMENT Year ended 31 January 2023 2023 Revenue Net Interest £'000 2024 (Restated(1)) (Reported) Change Major step change in the interest rate Revenue up 15.1% to £87.9m. Driven Revenue 87,931 76,406 75,260 15.1% by sustained client demand, environment caused substantial increase in supplem
Slide 7: Balance Sheet
BALANCE SHEET As at : 31-Jan 31-Jan £'000 2024 2023 Property, plant and equipment 121 188 Cash Leases Right of use assets 2,428 514 Intangible assets 5,056 5,407 Cash positive and debt free; net Lease liabilities & right of use assets Investments 129 14 cash £8.4m reflects leases on two floors in To
Slide 8: Cash Flow
CASH FLOW Year ended 31 January £'000 2024 2023 Cash Generative Capital Light Profit before tax 10,306 8,385 Depreciation - right of use assets 411 411 Keystone’s business model is inherently cash CAPEX negligible in the period Amortisation & other depreciation 487 475 generative - lawyers only paid
Slide 9: Summary & Outlook
SUMMARY & OUTLOOK Summary Outlook Strong performance across the business A positive start and confident in the future Sustained client demand and the impact of new Our ever-growing team of lawyers remain busy meeting client Principals has continued to drive revenue and profits demand Recruitment act
Slide 10: Appendix - Business Overview
APPENDIX - BUSINESS OVERVIEW
Slide 11: The Model
THE MODEL Keystone contracts directly with the Keystone provides its lawyers with infrastructure and clients for the provision of legal services. support via its central office, a bespoke IT platform and access to a network of colleagues and events CLIENTS Keystone invoices the Keystone’s lawyers ar
Slide 12: Award-Winning
AWARD-WINNING WINNER The innovative business model allows for a flawless service, first rate advice and a pragmatic approach - LEGAL 500 12
Slide 13: Track Record of Growth
TRACK RECORD OF GROWTH • Fast growing – revenue of £ 87.9m(1), increase of 15% p.a. (Jan 23– Jan 24) 117 107 • UK’s 60th largest law firm by revenue (2) 87 80 109 93 83 432 • Profitable with enhancing margins 79 415 394 399 398 65 386 369 • Adjusted PBT (3) of £ 11.3m (1), increase of 17% p.a. (Jan
Slide 14: Large Addressable Market
LARGE ADDRESSABLE MARKET UK LEGAL SERVICES MARKET • 2nd largest in the world £43.7 billion revenue p.a. (1) • Extremely diverse from Magic Circle to “high street” MID MARKET Over £10bn UK MID MARKET(2) FOR LEGAL SERVICES 34,000 Solicitors • Over £10 bn revenues p.a. TOP 15 • Predominantly addressabl
Slide 15: Nuts and Bolts of Keystone Product
NUTS AND BOLTS OF KEYSTONE PRODUCT Leading brand Marketing and business Finance and and reputation development support administrative support Substantial internal networking opportunities Compliance and Junior lawyers with high calibre risk management and paralegals colleagues IT platform designed f
Slide 16: Drivers of Growth
DRIVERS OF GROWTH Clear shift in attitudes to remote working during and after COVID Recruitment of high Keystone is far and calibre lawyers, who away the leading can scale their firm of its type practice through Pod structure Conventional Law firms in the partnership model mid-market no longer seen
Slide 17: Why Lawyers Join Keystone
WHY LAWYERS JOIN KEYSTONE Survey of Keystone Lawyers November 2023 • Ability to focus on legal work and clients Firm culture • Avoid management obligations, commuting and politics Work / life balance • Remuneration structure Personal earnings • Excellent brand, support and infrastructure Job satisfa
Slide 18: Growth Metrics
GROWTH METRICS Accepted offers by channel 2024 • Continued recruitment of lawyers with client followings 18% • 270 qualified new applicants 2024 34% • c20% of applicants join post vetting 49% • 90% of new lawyers generate sustainable practice • 5% annual churn across base mainly due to retirement Re
Slide 19: Low Risk Model
LOW RISK MODEL Billing by Case Type 2023 • No client or lawyer dependency – none > 5% Other 3% recurring revenue Private client Employment 6% 12% • No dependency on one area of law 8 practice areas • No dependency on one sector – more than Commercial 20% 50 sectors Corporate 18% • Minimal exposure t
Slide 20: Robust Risk Management
ROBUST RISK MANAGEMENT Survey of Keystone Lawyers November 2023 • Strategic planning Compliance team support • Selective recruitment • Regular training and professional development Compliance training • Experienced compliance and risk management team • Use of technology and exception reporting Compl
Slide 21: Summary
SUMMARY FAST GROWING, £10BN LARGELY ADDRESSABLE MARKET WHICH WELL DIVERSIFIED WITH PROFITABLE LAW FIRM IS RIPE FOR DISRUPTION AS LAWYERS SEEK TO NO CLIENT, LAWYER, WITH OPERATIONAL SECTOR OR PRACTICE • Focus on legal work and client needs GEARING ENHANCING AREA DEPENDENCY • Avoid politics, commuting
Slide 22: Disclaimer
DISCLAIMER This presentation has been prepared by Keystone Law Group plc (“Keystone” or the “Company”) and the information contained herein is restricted and is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be con