Keystone Law : Interim Results Investor Presentation

INTERIM RESULTS

for the 6 months ended 31 July 2022

INVESTMENT CASE

1. DISRUPTING

A LARGE MARKET

• £9bn largely addressable market
• Existing structural challenges and lawyer dissatisfaction only temporarily masked by strong demand and "war for talent" which has driven unsustainable wage inflation

2. SCALABLE

• Successful recruitment model drives long-term organic growth
• Lawyers work remotely so
  no office constraints / paid when paid
  - no working cap constraint

3. PROVEN MODEL BUILT FOR POST-COVID WORLD

• Excellent record of growth, cash generation and margin progression; resilient during COVID
• Legitimisation of remote working

2

STRATEGIC HIGHLIGHTS

STRONG FINANCIAL PERFORMANCE

• Revenues up 9.3% on H1 2022
• Revenue per Principal largely in line with H2 2022
• Adjusted PBT largely in line with H1 2022(1)
• Operating cash conversion 101%
• On track to be comfortably in line with market expectations for the full year

ATTRACTING QUALITY CANDIDATES IN CHALLENGING MARKET

• Continued recruitment of high calibre candidates
• 22 Principals joined
• Principals increased from 394 to 399

CONTINUED INVESTMENT IN OUR PEOPLE AND CULTURE

• Delivered a full programme of face to face networking and social events which form such a central element of the Keystone DNA
• Continued to invest in attracting and retaining talent and delivering first class service to our lawyers

(1) Profitability in H1 2022 was enhanced by approximately £0.2m of cost savings as Covid restrictions prevented face to face networking events

3

LAWYER RECRUITMENT

399	122	34
Principals up from 394 to 399	Applicants (Principals)	Offers Made (Principals)
22 New Principals joined	10.2% down on H1 2022	5.6% down on H1 2022
H1 2022: 21

17

Offers Accepted (Principals)	11 Pod members joined	In a very competitive market
39.3% down on H1 2022	(H1 2021: 16)	we continue to attract high
	70 Pod members across 45 Pods	calibre candidates

Qualified New Applicants

136

122

92

H1 2022

H2 2022

H1 2023

Offers Made / Accepted

36	40	34
28	28
		17
H1 2022	H2 2022	H1 2023

Challenging market conditions for recruitment during "the biggest war for talent seen in over a decade"(1), with 85% of law firms in London recruiting

4		(1) Robert Walters' study of the legal recruitment landscape July 2022

FINANCIAL HIGHLIGHTS

£36.8m		26.4%			£4.5m			12.4%
Revenue		GM%			Adj. PBT			Adjusted PBT margin
+9.3% v H1 2022: £33.7m		H1 2022: 26.5%			-1.1% v H1 2022: £4.6m(1)			H1 2022: 13.7%

101%		£7.5m		11.8p		5.2p
Operating cash conversion		Net cash		Adjusted EPS		Interim Dividend 5.2p
H1 2022: 85.7%		H1 2022: 7.2m		H1 2022: 11.9p		H1 2022: 4.5p

(1) Profitability in H1 2022 was enhanced by approximately £0.2m of cost savings as Covid restrictions prevented face to face networking events

5