Half-year Results

• Recruitment activity remained buoyant with Keystone adding 30 new Principals across H1 2025
• Keystone now expects revenue and adjusted PBT slightly ahead of current expectations for FY 2025

Keystone, the tech-enabled challenger law firm, is pleased to announce its results for the six months ended 31 July 2024 ("H1 2025" or the "Period").

Financial Highlights:

• Revenue growth of 8.3% to £46.5 million (H1 2024: £42.9 million*)
• Adjusted PBT increased by 7.2% to £6.1 million (H1 2024: £5.7 million)
• Adjusted PBT margin stable at 13.1% (H1 2024: 13.3%)
• Adjusted basic EPS of 14.6p (H1 2024: 13.6p)
• Cash generated from operations of £6.2 million (H1 2024: £6.3 million) with operating cash conversion of 106% (H1 2024: 113.3%); the Group remains debt-free and with net cash of £8.3m
• Declared interim ordinary dividend of 6.2p per share (H1 2024: 5.8p)

*restated as per restatement in recent annual report and accounts

Operational Highlights:

• Strong performance across all recruitment KPI's as the legal recruitment market remained positive:

o 153 high-calibre new applicants in the Period (H1 2024: 144)

o 56 offers made (H1 2024: 42) and 31 offers accepted (H1 2024: 25)

o 30 new Principals joined in the Period, increasing the number of Principals to 442 (31 January 2024: 432).

• Total fee earners increased to 557 (31 January 2024: 549)
• Current refurbishment of the London office which, when complete, will provide greater workplace flexibility and enhanced lawyer experience, remains on track
• The calibre of candidates joining the Group demonstrates the mainstream appeal of the model and emphasises Keystone's position as market leader within our sub-sector

Current Trading and Outlook:

• In light of the strong first half performance and the positive start to the second half of the year, the Board is confident that Keystone will deliver both revenue and adjusted PBT slightly ahead of current market expectations.

James Knight, Chief Executive Officer of Keystone, commented:

"Keystone's position in the market continues to strengthen and I am delighted that our ongoing operational excellence has been reflected in our financial performance. The business has delivered well across all our operational KPIs, reflecting the ongoing growth in demand for the benefits that Keystone provides."

Analyst Briefing

A meeting for analysts will be held virtually at 9.30am this morning. Analysts wishing to attend this event can register via email at keystonelaw@vigoconsulting.com.

Retail Investor Presentation

Keystone's management team will provide a separate presentation and Q&A for investors at 1.00pm on Monday 16 September 2024.

The presentation will be hosted on the Investor Meet Company digital platform, where questions can be submitted pre-event up until 9.00am on the day before the meeting, or at any time during the live presentation.

To sign up to IMC, please visit: www.investormeetcompany.com/keystone-law-group-plc/register-investor

Chief Executive's Statement

I am pleased to report that Keystone has continued to perform well, delivering strong results for the first half of this financial year ("H1 2025" or the "Period"). Revenue for the period of £46.5m was 8.3% up on H1 2024 (restated) (£42.9m), reported PBT rose to £5.5m and adjusted PBT(1) increased to £6.1m (increases of 5.3% and 7.2% on H1 2024 results of £5.3m and £5.7m respectively). Furthermore, the cash generative nature of the model meant that these profits converted to cash, with cash generated from operations of £6.2m (H1 2024: £6.3m).

Conditions in the legal recruitment market have also remained positive for Keystone and we have experienced increases across all the recruitment KPIs as shown in the graph below.

H1 2025 saw 30 new Principals join us, bringing the total number of Principals to 442 (31 January 2024: 432). As highlighted in our recent Annual Report and Accounts, Keystone now regularly attracts candidates from the leading law firms in the UK, which continued to be the case during the first half of this year. This demonstrates the mainstream acceptability and appeal of Keystone's model, as well as our position as market leader within the sub-sector, commonly referred to as the 'platform' or 'consultancy' model.

The central office team has continued to deliver outstanding support to all our lawyers, both new and existing. Successfully onboarding new joiners is a key element in ensuring the long-term sustainable growth of the business, whilst providing excellent ongoing support to established Keystone lawyers is equally fundamental. It is important for us to focus as much on service delivery and lawyer retention as we do on recruitment. During the Period, the team has worked unceasingly to successfully deliver on each of these objectives. For our new lawyers, this has meant providing a bespoke, one-to-one onboarding process, focusing on understanding the individual needs and opportunities of each new Principal, providing solutions to any challenges they may have and helping them to build the professional support network which they need to maximise the opportunities which their practice offers. For our established lawyers, the team has focused on continually enhancing the lawyer experience whilst delivering support of the highest calibre across all departments.

Having renewed our leases in Chancery Lane, we have been busy planning the refit of the two floors to enhance the workspace experience. The implementation phase of the project started in July and will continue through H2 2025; during which time, we will maintain service levels for our lawyers by maintaining one floor open throughout. Once completed, our lawyers and the central office team will benefit from a modern, flexible environment providing a variety of workspaces, including highly professional client meeting rooms, collaborative workspaces and areas for silent working.

I would like to take this opportunity to thank my central office colleagues for their dedication and passion, which continues to drive the business forwards and has made these results possible.

Dividend

I am pleased to announce that the Board has declared an interim ordinary dividend of 6.2p per share. This dividend will be payable on 11 October 2024 to shareholders on the register on 20 September 2024, and the shares will go ex-dividend on 19 September 2024.

Summary and outlook

We are delighted with the all-round success of the H1 2025 results. We have delivered a strong performance across all KPIs of the business, continuing to build sustainable growth and increased profits whilst re-enforcing Keystone's position as a market leader.

Although the UK economy continues to have its challenges and the recent change in government has introduced a new element of uncertainty to the future, we remain confident that Keystone will continue to build on this performance to deliver ongoing sustainable growth. Therefore the Board is confident that Keystone will deliver both revenue and adjusted PBT slightly ahead of current market expectations(2).

James Knight

Chief Executive Officer

• Adjusted PBT is calculated using profit before tax and adding back amortisation and share-based payments for all periods.
• Management understands current market expectations to be revenue of £93.3m and adjusted PBT of £11.5m.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the period ended 31 July 2024

The above results were derived from continuing operations.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 July 2024

The interim statements were approved and authorised for issue by the Board of Directors on 11 September 2024 and were signed on its behalf by:

A Miller

Director

consolidated statement OF CHANGES IN EQUITY

For the period ended 31 July 2024

Attributable to equity holders of the Parent

NOTES TO THE interim report

General Information

The Company was incorporated as Keystone Law Group Limited on 13 May 2014 under the Companies Act 2006 (registration no. 09039092) 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 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 Interim Report is presented in Pounds Sterling, being the functional currency of the companies within the Group.

Accounting Policies

Statement of Compliance

The Interim Report has been prepared in accordance with the recognition and measurement principles of UK-adopted International Accounting Standards.

Basis of Preparation

The Interim Report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 January 2024 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498 (2) or (3) of the Companies House 2006. The Interim Report information has been prepared in accordance with the recognition and measurement principles of UK adopted International Accounting Standards, and on the same basis, and using the same accounting policies, as used in the financial statements for the year ended 31 January 2024.

The Interim Report has not been audited or reviewed, in accordance with the International Standard on Review Engagement 2410 (UK) issued by the Financial Reporting Council ("FRC").

PRIOR YEAR RESTATEMENT

As reflected in the Group's Annual Report and Accounts for the year ended 31 January 2024, in January 2024, the FRC submitted a request for further information on the Group's Annual Report and Accounts for the year ended 31 January 2023. The review conducted by the FRC was based solely on the Group's published Annual Report and Accounts and does not provide assurance that the Annual Report and Accounts are correct in all material respects; the FRC's role is not to verify the information provided but to consider compliance with reporting requirements.

Following completion of this review, the Directors concluded that although the "pay when paid" payment terms of the lawyers' fees means that any impairment in trade receivables automatically generates a directly related adjustment to trade payables (being approximately 75% of the net value impaired); for statutory reporting purposes, these items should be considered and disclosed separately. Accordingly, in order to reflect these transactions in full compliance with para 5.5.8 of IFRS 9 and IAS 1.82(BA), the consolidated statement of comprehensive income for the year ended 31 January 2023 was restated to reflect the impairment charge separately and not as a reduction in revenue, with the corresponding adjustment to lawyer fee notes equally shown separately and not as a reduction to cost of sales; this, in turn, has led to the restatement of the corresponding values in this Interim Report for the six months ended 31 July 2023.

Going Concern

The Interim Report has been prepared on a going concern basis as the Directors have reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group has no debt, is strongly cash generative and has a strong trading performance. The Group's forecasts and projections show that the Group has sufficient resources for both current and anticipated cash requirements.

ACCOUNTING DEVELOPMENTS

There have been no new standards or interpretations relevant to the Group's operations applied in the Interim Report for the first time.

ADJUSTED PBT

Earnings per Share

Basic earnings per share is calculated by dividing the profit for the period by the weighted average number of ordinary shares outstanding during the period. The weighted average number of shares in the period was 31,515,028 (H1 2024: 31,373,312) and the basic earnings per share was 12.9p (H1 2024: 12.2p). Diluted earnings per share is calculated by dividing the same profit by the weighted average number of ordinary shares, taking into account the dilution effect from grants made under the Long Term Incentive Plan (32,041,554; H1 2024: 31,880,828). Diluted earnings per share was 12.6p (H1 2024: 12.0p).

The adjusted earnings per share was 14.6p (H1 2024: 13.6p), whilst the diluted adjusted earnings per share was 14.4p (H1 2024: 13.4p). Adjusted earnings are stated by making the same adjustments to earnings as those made in calculating adjusted PBT.

Expenses by Nature

Included within staff costs above are the costs of employed fee earners who are included within cost of sale (H1 2025: £628,270; H1 2024: £555,335).

Trade and Other Receivables

DIVIDENDS

The Directors have declared an interim ordinary dividend of 6.2p per share (H1 2024: ordinary dividend of 5.8p per share; special dividend of 12.5p per share). The dividend will be paid on 11 October 2024 to shareholders on the register on 20 September 2024, with the shares going ex-dividend on 19 September 2024. In accordance with IAS10 "events after the balance sheet date", these dividends have not been reflected in the Interim Report.

Keystone Law

48 Chancery Lane

London

WC2A 1JF