Keystone shares push ever higher after strong maiden results as listed company

Knight: Keystone is well positioned

Keystone Law – the self-styled ‘challenger’ law firm that listed on AIM late last year – has unveiled strong annual results today, pushing its share price ever higher.

The firm reported a 24% increase in revenue to £32m, with profit before tax up 63% to £2.9m. Underlying EBITDA jumped 43% to £3.27m.

Keystone said these maiden results as a listed company were “comfortably ahead of market expectations”.

Its share price was up 7.5% in early trading to 275p – it listed on 27 November 2017 at 160p.

The announcement said that the number of fee-earners at the firm has risen from 228 to 266

The gross profit margin of the business increased from 25.7% to 27.6%, part of which was due to a change that means Keystone always earns at least a 25% gross margin on fees paid to lawyers; before then, there were circumstances where it could be less.

The remaining increase in gross margin was driven “by a growth in the revenue generated by the employed in house fee earners as well as margin-only income which the group receives from operations in the Isle of Man”.

Chief executive James Knight said: “The group has delivered a positive maiden set of final results, with strong performance driving revenue and EBITDA growth. Furthermore, our business model has led to impressive cash conversion within the business.

“I am delighted to have successfully completed our recent IPO and strongly believe that Keystone is well positioned to take advantage of the significant market opportunity in the UK legal services market, which we believe is ripe for disruption.

“The ability of our clear strategy to deliver organic growth has been demonstrated by the rising number of fee-earners joining the business, as our distinctive platform model proves increasingly attractive to quality lawyers and their valuable clients.”

Keystone was the third law firm to list, after Gateley and Gordon Dadds, and this week City litigation firm Rosenblatt announced its intention to become the fourth next month.

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