Keystone Law Group (LSE:KEYS) — Final results for the year ended 31 January 2026

0:01 Good afternoon, ladies and gentlemen, and welcome to the KEYSTONE LAW GROUP PLC investor presentation. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish your responses where it's appropriate to do so on the investor meet company platform. Before we begin, we would just like to submit the following poll. I would now like to hand you over to the executive management team from KEYSTONE LAW GROUP PLC. James, good

0:34 afternoon, sir. Thank you very much, and good afternoon, everybody. Welcome to KEYSTONE's annual results for the year just gone finishing end of January 2029 2026. I am delighted to report that it's been a good year for KEYSTONE. I'd like to give you a little bit of a summary, of the, a bit more background to the firm just in case, you are not aware of what sort of, organization it is. We are a regulated law firm. We operate a very different model described as the platform model. It is something that we invented in 2002. It has now become a very mainstream type option for lawyers coming from private practice.

1:26 Lawyers have a great deal of freedom, flexibility, and autonomy to work with their clients in the way that they choose, but they also have a tremendous amount of infrastructure support and regulation insofar as it is necessary, all provided by the KEYSTONE central office. Whilst we used to be the only platform law firm in the country, we are now considered to be the premier platform law firm. We are the number one. This is a much better than being alone, the outlier. It may be seen as competition, but in actual fact, it is adds to the efficacy of the business model. We have grown into a significant law firm now over the years, and with that becomes an extremely strong sense of community, cross referral of work, a sense of belonging, a culture, a dynamism.

2:25 So we are essentially seeking to give our lawyers everything that they could possibly have, any benefit in the conventional workplace, whilst also removing some of the downsides of the conventional workplace. The, technology is a significant part of of what we do, and we'll come on to talk about AI in due course. We have grown consistently since creation and in IPO November 2017. Since IPO, we have continued to scale up in an extremely proactive way and managed to return dividends on every six months since we IPO ed.

3:15 We do have a great ability to scale, thanks to the pay when paid model that we operate and the fact that our lawyers operate from their own offices, whether that be at home or elsewhere, enabling us to, scale in a way that is not inhibited in the same way as the conventional workspace. The offices in Central London do have meeting rooms, hot desking, even permanent desks, for the very few that wish to use those permanent desks. We have a proven proven track record in delivering sustainable, growth and a progressive dividend policy.

4:02 I'd like to turn now to the, results themselves for the year just gone. As I mentioned at the start, it was a great year for us. In fact, one of the best years well, I think possibly the best year we've ever had in terms of really well rounded results. Nothing that is an outlier, nothing that I would prefer to be better. Revenue increased 17.9%. Adjusted PBT is up 20.6%. Operating cash conversion is always good at KEYSTONE as a result of the paid when paid business model, 98.9% being pretty much around where it normally is.

4:47 We've never had debt. We've got cash in the bank. And as also mentioned earlier, we are very good at paying dividends, having done so, at the interim period at 7.5p, and we will be doing so 70, paying 17.2%, in the near future. That's a 22 or 22 and a half percent increase on last year. The other side of our business, is the recruitment. That is because we grow this firm by recruiting good quality lawyers with good quality client followings. And, that is the numero uno way of that we we we do grow the firm.

5:37 And in a way, it gives you insight to the the future in terms of next year's results. 61 new principals, these are the senior lawyers. They are self employed, but they are KEYSTONE LAWYERS at the same time and very much presented as KEYSTONE LAWYERS. 63 new POD members. These are junior lawyers employed by the principals. Again, KEYSTONE LAWYERS with all the insulation and all the environment of KEYSTONE around them. New principals, have this year been particularly effective in bringing in pod members with them. In other words, mostly these would have may have been their their junior lawyers at their previous law firm.

6:28 This gives an indication of the, confidence in which they are joining us, bringing an overhead for themselves with them, knowing that they are going to be extremely busy and going to need this support from day one. Total fee earners up 13.5%. Turning across the page, we see some details on more details on the recruitment KPIs. We focus, as I mentioned, this is the number one source of growth. Yes. Our revenue per principal has increased beautifully, 10.5% over the year. However, the number one driver is the recruitment.

7:16 The figures speak for themselves. All of the metrics are good. The, total number of principals at KEYSTONE is 491, and the total number of fee owners is now 654. I would mention, at this stage that we've become a a very significant firm now. Obviously, in the early days, we were small, an outlier. We attracted lawyers and clients because we offered something that was new and innovative, the freedom, of for and the flexibility and the autonomy. But what we are now, we have we we still obviously, that is a great attraction for principals joining us.

8:06 However, we are also now a significantly powerful law firm that is attracting lawyers who wish to join us because of what we have become. They may may like the flexible working, etcetera, But, really, they're joining us because they they we are a better, stronger, stronger brand, better colleagues than their previous firms. So notwithstanding previously, we had some advantages. Now we have those advantages and many more. AI is, of course, an incredibly important story. It's a subject on everybody's mind at the current time. KEYSTONE has always been propagated upon an IT, upon the from the word go.

8:59 We were our story was that we use IT and technology to drive efficiencies, to reduce overheads, and to support work. So it's very much it's very much ingrained in our DNA to try and take advantage of any new useful IT tools. And the AI story is extremely useful, and the the the technology that's coming on board are some of these are absolutely fantastic tools to help with fee earning. We have assembled a team, that has been looking into this over the last eight months of lawyers, IT, management, principles,

9:48 etcetera, to test and carefully assess what is best out there. Is it Harvey? Is it Ligura? Is it Jilo? Is it co counsel? And we have very recently, in fact, just announced to the firm on Tuesday at the spring conference that co counsel is a solution that we are going with. It's amazing. We've tested it all the way. It's perfect for this business. It it encapsulates it's owned by Thomson Reuters. It encapsulates PLC, which is the template database and knowledge hub that we principally use anyway, and Westlaw are is a may comprise of 10,000 legal books. It is, I think, the perfect solution for us.

10:43 Other solutions that we have been using up until now and will continue to to to use are things like Keybot. Keybot being that's our name for an environment that is very much like ChatGPT and Claude that gets you so far. I mean, it has been a very useful stand in. It continues to be relevant for the for more general type work required. I mean, it does what ChatGPT does. It is, you know, it's as good as far as it goes, but it it it only goes to the public environment, to the to the Internet, whereas co counsel is going straight into accessing. It can do everything that chat can do or Keybot can do, but it can also, do a whole lot more.

11:36 We have six months ago, I would've, I did announce that we had created an AI solution on the operating manual to interrogate that. That's going extremely well. We have a new AI solution coming out about source of funds to help with the money laundering side of things. We've bought in the, n one assist, which is part of NetDocuments, which is there to help interrogate the documents in our massive database knowledge hub where everything is held in a secure manner being part of net documents. So far too early to tell how the technology that is now being sort of introduced and is now people are getting upskilled on and learning and getting used to using, quite how that will affect pricing, etcetera.

12:37 But we're very confident that these tools are going to be great enhancers. I think with AI, one of the most important things is to embrace it, is to get ahead of it, to use it, to become skilled on it. Only about in the legal profession at the current time, only about 3% of lawyers are using AI. Even with KEYSTONE, we had some 360 something of our lawyers were using that, and and and and and that's you know, we're our lawyers are more, let's say, tech friendly, I think, than than many. I suppose the model is about entrepreneurialism.

13:24 It's seizing opportunities. So that is what is happening on that front.

13:32 Since I last presented to you, we have undertaken our brand refresh. This has been about a year's work. What you see in front of you in terms of the slides is if you can remember what it used to look like, it's it's a different look. It's one that I'm very happy with. It's modern, fresh, dynamic. I think so anyway, and our lawyers do as well. On the right hand side there, you can see the, the results of a very recent survey from our lawyers indicating not a 100% happiness, but you're never gonna gonna gonna get that with a with a rebrand or a refresh. You know, there's always people that like change. But, I mean, in terms of people that that that that agree that they like it or they're not too sure, it's overwhelming.

14:26 And I'd say very, very good for a brand refresh. We involved them in the process in as much as not decision making process, but involved kept them up updated as we went along so they felt that they were really part of the progression. I'll pass over now to Ashley who will take you through the financials. Yeah. So as James has said, it'd been a particularly strong period for us last year with revenue growth of 17.9%, taking us to a 115,200,000 of revenue. Adjusted PBIT was up 11.4% to 12,900,000, and adjusted PBT up 20.6 to 15,300,000, which represented a margin of 13.3%.

15:12 The operating cash conversion at just under 99% was particularly strong, although we do constant consistently deliver a conversion in the region of 95 to a 100%. And we finished the period with £9,700,000 cash in the bank. We are debt free. We had had EPS adjusted EPS for the period of 37p, and the ordinary DPS in total will be 24.7p. In terms of the income statements and just a bit more detail behind those numbers, the revenue growth was really driven by a combination of the broad based demand and continued strength in recruitment with average principal numbers increasing 6.7% and the average total number of fee earners rising 9.3.

15:58 Revenue per principal also grew strongly and 10.5 in the period, moving from 20 220,000 to 243,500. The revenue growth this year has really been driven dramatically by or more considerably by our principals and their pods. And as a result of that, the revenue we gain from the areas we enjoy an enhanced margin on, which are a small number of lawyers in the Isle Of Man and

16:26 the our centrally employed lawyers reduced as a percentage of the mix, which meant the gross profit margin moved down to 25.4 25.5% in the period. Staff costs in the business increased 17% as we continue to invest in our people. We really do have to across the pieces, fundamental that we continue to invest in all elements of the business, the infrastructure, the people, the, IT, the tech in order to facilitate and empower our lawyers to deliver the high quality services they need to deliver to our clients. And we saw that in the staff costs with an increase in the headcount rising on average from 69 last year to 81. As well as that, in order to attract and retain the best talent, we need to pay a competitive wage in this market.

17:16 On the other admin cost, we saw an increased spend of 19.3 percent, with the largest single feature being, one of those strange situations where it's a good thing to pay an increased cost. And that's because our recruitment costs increased by 500,000

17:30 this year. That was a feature of a number of lawyers coming through our recruitment channel, the the recruiters, where we pay our recruiters with reference a percentage with reference to the size of the practice that they bring with them. So larger practices resulted in a higher cost there. Over and above this, the other main drivers really were the cost of investment in IT, the ongoing the cost of the refresh, and also just the general growth in the business. So so many of our costs are are semi variable or variable linked with the activities we carry out. As a result of all of this, our adjusted PBIT increased 11.4 to 12,900,000 on a margin of 11.2%. And the this year, we have benefited from renegotiation in the first half of the year of interest rates with the the banks, meaning that we are getting a as interest rates started to fall, we're getting a better share of the interest rates.

18:29 Consequently, you've seen a step up there. And that left our adjusted PBT increase of 20.6% to 15,300,000 or a margin of 13.3%.

18:43 The balance sheet of the business is very clean, and very straightforward. Our cash position is strong, and we're debt free. The alignment of interest we have with our lawyers because of the pay when paid model means that working capital lockup in the business is is minimal, and debtor days were thirty five at the year end compared to 34 the year before. We also, because of this pay when paid, have a significant interconnectivity between the the debtor balances and our creditor liabilities with 23,000,000 of the trade and other payables only payable upon receipt of funds to KEYSTONE. On the provisions, it's important to recognize that whilst as required by governance, we disclose the under professional indemnity provision, we disclose the gross liability. We also have a corresponding asset being the amount we'd recover under our insurance.

19:31 And consequently, the net increase of the position year on year was only £75,000.

19:37 The intangible assets on the balance sheet are a reflection of a structure a PE structure of a deal done in October 2014 before we came to market and therefore have nothing really to do with trading. The cash flow again just is demonstrates the strength and the high quality of the earnings we have with the conversion into cash very significant. Operating cash conversion has already been mentioned before. This year, we've seen the net interest flow through from the p and l account comes through into an increase in the cash flow. And really across a number of land lines such as corporation tax, CapEx, and lease payments, this year is a a return to a normal run rate, whether we'd have distortions in 2025. So on the corporation tax, 2025 was a year we transitioned through to paying all corporation tax in year, which meant we last year paid six quarterly payments as opposed to four.

20:31 On the CapEx, again, last year, we had a significant outlay in terms of the fit out of our offices upon signing our new leases. So that refit cost was a one off last year, and we've reverted to our normal levels this year of about point one of CapEx. And likewise, the lease payments this year are the normal run rate with last year benefiting from a a rent free period upon resigning of the leases.

20:57 The dividends this year, the cash flow impact was was larger than the previous year, and that's really a factor not only of the progressive dividend, but also the payments of the special dividend that we paid during the year declared this time last year of £4,700,000. Thank you, Ashley. Well, not much more to say about the year just gone. I wish every year was as good as that one. In terms of outlook, well, I think it's it's good. We started the year well. And the pipeline from or the the, let's say, the recruits, both principals and pod members made during the twelve months just gone, will basically help to inform the year,

21:51 the year ahead. But at the same time, of course, we continue as ever to recruit good quality, high caliber lawyers, something that our brand and reputation helps us enhance it. As we become ever more respected, ever more larger in many ways, the the the pool of lawyers who are keen to join KEYSTONE, increases ever more. I would say, though, that we have really managed to become very much, part of the establishment whilst still retaining our entrepreneurial model and our very unique culture.

22:46 I should emphasize that KEYSTONE is a is a law firm where people are very team orientated. They know each other well. They operate together very well, very collaborative. This is a very much a human business, not a platform of disparate individuals just tapping into the software.

23:12 I think that the trading conditions for the year ahead are going to be much the same as the ones just gone as in the level of client demand, which I must say is very good. I have no complaints about that at all. I'm confident that we will deliver a strong set of results in in due course in line with our market expectations. And and, yeah, I look forward to answering your questions as we go into the next stage. Perfect, guys. If I may just jump back in there, I thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that have been submitted already, just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A, can all be accessed via your investor dashboards.

24:12 Guys, you can see that we have received a number of questions, and thank you to all of those on the call for taking the time to submit their questions. But, James, Ashley, at this point, if I may just hand back to you to address those questions where appropriate. And if I pick up from you at the end, that'd be great. Thank you. Thank you. Again, yes, I'll I'll read out and deal with the first question that we have here. How high do you think the referral share can go? And to give us some indication of its flywheel effect, when did it reach the 30%. So the referral fee referred to here is based upon the very simple remuneration structure that we use at KEYSTONE. And its simplicity is part of its success in many ways. It's a percentage basis that in terms of the fees that lawyers take home.

25:05 So they take home 60% of fees for work

25:09 that they do. They take out take home an additional 15% of fees on clients that they brought into the firm. Either way, that leaves central office, KEYSTONE, the legal entity, with 25%. That is our gross our gross income, our gross revenue, and upon which we pay all the overheads of of the firm.

25:37 So if a lawyer brings in the the work and does it, they get the 60 plus 15%. If they refer it to a colleague, they get the 15%, and the lawyer who does the work gets the 60%. It is as simple as that and so effective in its simplicity and its fairness. So the referral the the the amount of work cross referred in the firm is about 33% of of work. So not relevant to the percentage that I just gave you, though that was just a little bit of of background. 33% is cross referred,

26:24 and and that's very good. I mean, it it compares very favorably with the conventional law firms. It's better, basically, and it's better because our lawyers know each other well and because they're very collaborative. It's it it it's sort of it's as good as it can get in many ways. If it does, tick up a little bit, well, all all well and good. But it's not something that I I think we can you can certainly think that that's that's that's pretty stable. Obviously, the numbers in terms of the the the pounds will increase in in line with turnover and revenue, but the share will be pretty much the same.

27:12 Okay. How about I take this next one? There's a question here on how much of the revenue last year was derived from increase in in rate versus versus other things. We don't break it out exactly those splits, but to be clear, the the revenue increase or the the cost the revenue per principal increase is really being driven by a number of factors. You've got this sort of umbrella overarching fact that we are driving up the revenue the value chain and becoming ever more respectable and bringing in lawyers with larger practices. That's also supported with the

27:46 the investment they make in bringing on board the juniors, and we've seen a very successful period there with the pod principles increasing substantially this year. So both of those will have fed into those. The ongoing demand from from from the market is also a factor. And then in terms of revenue and pricing, we do also review prices each year, our hourly rates and rack rates on an annual basis broadly to reflect sort of inflationary increases in the market and to an extent as our our brand uplifts. That also gets factored into those considerations. So whilst we don't give an exact spritz out, those are the various factors driving that onwards.

28:26 Next question. You have previously stated that hirings are not limited by cash flows or capacity. So what is the limitation? Why don't you go, hiring 20 to 30 net annually up to 50 to a 100 net? In other words, in terms of new principles. Well, it is true that cash flow and office space capacity are not restraints. However, the this is where it's important to understand that KEYSTONE is a very real law firm, a very real business,

29:06 not just a technology platform. Technology is a very important part of what we do. We have recruitment channels. Every good CV application that we get goes into a a pipeline for further assessment. We interview, several times. We assess. We're looking for excellent CV. We're looking for membership of the legal five hundred chambers directories. We're looking for a good fit into the business. We may may not be paying salaries, but we're responsible for the work that is undertaken. The the quality of our lawyers goes straight to our our brand, our reputation, our claims history, and our insurance policy.

29:55 So, it's important to get it right. The numbers that come out of that, the numbers that we've seen over the last few years, and in this case, 61, are the the are the right numbers to allow us to maintain that caliber and to scale in a considered, articulate way, making sure that the lawyers receive a proper induction process and get assimilated into the firm. So we're largely, you know, happy at the speed of growth. It is, by law firm standards, extremely strong as it is. And maintaining quality, maintaining consistency, been doing this twenty four years now in the right way is much more important than throwing caution to the wind and just opening the doors to everybody, which would be the death knell of Keystone.

31:03 Okay. A number of people have raised questions around AI productivity, pricing, and the the the interrelationship of all of that. Obviously, we're at the start of a journey with the rollout of AI. So in terms of the actual implementation and and how that flows through. But, really, our expectation is if if we start at top the in terms of the client demand, we don't anticipate that in the space of market we operate in, that AI is likely to impact on the actual demand for legal services. And and the reason we say that is so we believe that is very much that at the level of the market we operate, our clients are dealing with transactions which are either highly complex, dealing with very high value assets, and all very personal circumstances of of value to them. Until that end, they're unlikely to see consider an option of of of going online and essentially downloading a contract, which will be it. It's got an AI element to it. It's it's unlikely they're going to self serve. So we don't see that being an impact of that perspective.

32:05 In terms of then coming on to how pricing may change or develop over time and whether or not there's an expectation there. Again, from our perspective, we believe that most clients in our space are happy with the value that they get for the products they receive and the mechanics by which that are calculating, whether that's by hourly rate, fixed fee, capped with reference to transaction sizes, All of these tools already exist within the legal markets. And however one calculates fees, if this is the rate and the value is not there or not perceived to be there, it would be challenged anyway. So we believe that the efficiencies that may be generated are unlikely to be met with a significant pricing pressure as a result of that because it also delivers value in its own context.

32:56 We've also been asked in terms of how KEYSTONE will value benefit from the the productivity gains generated by the lawyers because of our our model and the way we pay our lawyers. And the point is is this, that we really as a business, we already invest. Our very starting point on investment and support to our lawyers is to provide all the tools and solutions they need and support in order to empower them to deliver legal services of the highest quality. And, really, this is no different on the AI space. This is another tool which will be be in that space. There will be an overarching benefit to us through this investment through positioning us strongly in the marketplace, a lot continuing to build our brand and continuing on the attraction. And then from a financial benefit perspective, it's the the value that any efficiencies that the lawyers gain themselves, I. If something will take less time to do, that will potentially give them the opportunity to drive more revenue should they have more demand out there and be demand constrained as opposed to supply or be supply constrained as opposed to demand constrained.

34:02 So the take would come really through our additional revenue growth rather than through other areas. There's also then been a question about whether we would be using there are significant AI efficiencies in the the facilities that could enhance margin as in the central office function. But really, at this point in time, whilst there are a number of tools we're using and rolling out to support the really to support the lawyers in some of the back office things that they do, whether that's conflict checking, anti money laundering, those sorts of things. Most of the facilities, the support that the people we invest in in the central office are not doing the sort of roles which AI is very good at doing. I we're not sat in front dealing with large volumes of data or transactional pieces in that sort of nature.

34:51 A lot of the roles are very much delivering services which are either people based, whether that's our community and engagement team or our marketing team, and or within the admin team doing the administration roles to support our lawyers there. So it's unlikely we're going to see a significant change in margin off the back of AI generation. Thanks, Ashley. Next question. What is your international strategy? Well, KEYSTONE does have a, what you might call, a sister firm in Australia called Keypoint. It would be KEYSTONE, except there was already, unfortunately, a KEYSTONE law firm of that name in Australia when we launched this back in '20 I think it was 2013 or 2014.

35:43 So it's done well. It's it's grown it's grown a little bit, but it's not a big part of the story. We actually own 19 and a bit percent of KEYSTONE. It pays some dividends. It's profitable. Not it's it's not a it doesn't really move the dial that significantly. It's been successful, but it's it was more of a a licensing type arrangement. We're not an integrated law firm. We're completely separate organizations. In summary, we do not have plans to move internationally into other countries, Europe or Asia or anywhere else. It's for there are there are very many reasons for that. We we have looked at it very carefully in in the past. There are very many reasons why there was a limited upside and quite a large potential downside, And and we are very happy with the domestic market in The UK. This is the second biggest legal market in the world.

36:53 It is our segment of that is worth approximately £12,000,000,000. It there it is an area that we have really only just started on. So to run off to different countries would be something that I would suggest a complete mistake. We are gonna concentrate on this market, concentrate on what we know best and do best. I'm not adverse to taking business risks, but when they make sense, and this one, I promise you, does not. K. I've got a question couple of questions again in relation to the Ministry of Justice consultation on the on the Ministry of Justice taking an element of client account interest and the timing on when that consultation might become clear.

37:48 In terms of the consultation itself and what the impact could be on KEYSTONE really does depend on the results and the outturn of that consultation and where it lands. But, ultimately, they were consulting on whether they would take a percentage of client interest for the government, essentially. So the impact to Keystone to the extent that that were the case would be that there would be less net finance income to the business. As I say, were that to come is that whether that's to come about. But in terms of the consultation or the time on the answer on when the government will actually land on a decision, it it is there isn't a clear date, I'm afraid. There was a clear timeline for us to for us to provide responses, and the industry did go back overwhelmingly against the proposal as you can imagine.

38:37 But in terms of the timing when the government may or may not do that, we're unsure because they don't haven't set a deadline. For what it's worth, my view would be that to the extent they do make a decision, they do wish to press press ahead with some elements of that, it would be likely to take a period of time before it could be implemented because it would be quite a significant change and potentially quite complex if it needs to involve the banks as well as as the law firms. So that's, I'm afraid, is where we're at on that. I'll read the next question for Ashley to answer. Do you expect to continue defaulting to special dividends to return surplus capital? Or are share buybacks now actively under consideration? Well, as a board, we continue to you know, we've we've always taken an approach on paying our our ordinary dividend, which is progressive, but also ensuring that we don't sit on surplus cash for periods of time. And to date, we've paid various several special dividends returning to date nearly the entire share price 95 and a bit percent. I think it is of the IPO price.

39:44 In terms of going forward at each opportunity, we consider all options open to the business, whether that be specials and or buybacks. But we as I say, at this point in time, we've we will con keep the situation under review. Thank you. Do you expect the increased momentum in revenue per principal growth partially derived from the increased hiring of other fee and as will continue for the foreseeable future? Well, revenue per principal was up 10.5%, during this period and has been consistently up over previous, periods. It is, I would not suggest necessarily a complete reflection of, of the hiring policy.

40:32 It is as much a, reflection on the, let's say, the, enhanced quality of of of the lawyers, the number of factors, the the referral amount of referral work, and very importantly as well, the pod members that are joining with principals and adding to the bottom line of those principals. I'm not sure if, Ashley, if you've got anything else to add to that. No. Not really. Okay. Great. There's a question here with regards to professional indemnity insurance, who covers it, where does it sit, and and and how does the the insurance market essentially, the insurance market works on this. The answer is that we are the law firm.

41:32 We provide the sign the the services to the clients. And to that extent, therefore, we are liable for the work delivered to them. We carry a good strong position from a professional indemnity insurance, and you can see from the movements in the on the balance sheet and also the movement through the p and l as a result of movements in provisions that our our position is very strong. The increase in in provisions this year was $7,575,000 pounds year on year as a net position. It it's the insurance market really is priced against on two bases. One is linked to our revenue, and then the other is a percentage based on risk. We don't disclose the exact pricing percentages, obviously, and that would be commercially sensitive. But what I can say is we have a very good claims history, and our insurers are very, very happy with the with us. And, therefore, we have very competitively priced insurance policy.

42:25 Raymond has asked two questions. I'll deal with the first one. Ashley will deal with the second one. Can you continue to attract lawyers of sufficient commercial quality going forward? In short, I firmly believe so. We've been doing this for twenty four years or so, and and and we are most certainly able continuing to attract lawyers who have a good fit, good experience, good expertise, good clients, and are highly beneficial to the firm. The legal profession, as I mentioned earlier, is very significant in this country. And not only that, we are appealing to more and more of those lawyers.

43:14 And so we are at a at a revenue of 115,000,000 per annum, which is where we are at the moment and a market in the billions, we are confident that we have a long way to go before finding enough lawyers will until we exhaust the pool of lawyers. That's for sure. It was also being a question raised in terms of what's our cost to the the the normal level of bad bad debt or trade receivable impairments. You can see on the face of the p and l actually in the the the full p and l, not not not so much on the statement, but within the the r and s. The the trade receivable impairment, the cost the gross cost of that this year was 1,700,000.

44:02 It was 1,500,000 in the prior year. That said, because of the fact that we have our pay when paid and the roulette lawyer has their fee notes, if we aren't paid, they're not paid, there's a corresponding reduction in cost the other way. So, actually, the net cost of the business for from bad debts last year was only £500,000, and it was 400,000 the year before that. So it's not considerable. And and, clearly, as the lawyers are on a pay when paid, there is no cash impact to the business from these things. Gareth asks, now you have 654 principals. In actual fact, we have 654 fee owners, but the same question really applies. Does the possibility of malpractice suits increase disproportionately?

44:52 No. It doesn't just increase disproportionately. The more lawyers one has, the the more more revenue one has, the more difficulties, the more of everything. And we are the law firm. We are responsible for the work. We have the insurance. We also have an extremely effective compliance team that is there to get involved at the very early stage if something does go wrong. Every law firm, things go wrong. Every law firm has complaints claims and compliance issues. It's how well you manage it that is is really very important, and we manage it extremely well.

45:41 The bigger we get, the bigger our team that manages problems, gets. It's all I mean, we have an extremely good claims history. We have an exceptionally good claims history. And and and and but, you know, that's that's really that is part of what we do. That is our job. There's a couple of questions about our our margins, and I'll look forward of margins where we see those in moving forwards. Really, we need to look at the business margin the the margins, I think, in two two different levels. Firstly, looking at the adjusted PBIT margin, essentially, our operating margin. And we're very comfortable with the margins that are are out in expectations, which is really broadly a continuation of the margin at the level we're broadly at at the moment.

46:29 We're comfortable that all the investment we can do in the business continues to be achievable within those margins until that delivers a good return. The reason I separate that out from the PBT is clearly the the interest we receive depends not so much on us driving the business forward nor the positive attributes we have, but very much dictated by Bank of England base rates and and such features of that. And therefore, the current market expectations are that this year, we will be operating in environments probably of a kind of hold interest rates and therefore generating circa 2,000,000 worth of net interest in this period. But thereafter, we'll return to a a a reduction in interest interest rates as we move further forward, and that therefore sees a decline in net interest received into the business and consequently with the effect that has on on the PBT margin.

47:25 Thanks, Ashley. Your operating I'll I'll read this one out for Ashley. Your operating margin has increased from 10% to 10.6% in five years. Given your growth, is this not disappointing? Well, I think the the the honest answer to that is no. Not really. We've I think we delivered some very successful growth over the last five years. The revenue growth, the growth in profit in absolute terms, the returns we've given in terms of earnings, you know, the the the dividend growth over that period. I mean, if you talk about the last five years, our operating our ordinary dividends moved from 15.7p a share to 24.7p a share. The the earnings in the periods over five years from 23.6 to 37p.

48:17 So the the percentage margin for me is is less important in so far as we can sustain a a consistently strong margin, I feel, given that we start from a gross profit margin of of 25 and a bit percent. And we are investing in the business we are today, and the sort of lawyers we're able to attract requires an infrastructure appropriate to that to continue the sustainable long term growth of the business. Thank you. David asks, is there anything to read in the rising percentage of accepted offers? Bear in mind that it fluctuates over the three periods shown. Not really. Vagaries in the market, vagaries in terms of the applicants that we receive.

49:10 We we seek to initially to assess applications just on paper by CV in the normal way. And then if that looks good, it goes into the pipeline, and we invite the the applicant to to meet with us. That meeting can go, well or not so well. We may or may not make an offer after that, and that offer may or may not be accepted. It's, it's it's it's just it's just I suppose in many ways, it's just a normal a normal recruitment process, and there's always gonna be vagaries here and there. And the final one here is really just clarity of what our our our revenue is. Our revenue we are the law firm.

49:59 We bill the clients in the entirety of the fee, and our revenue is the entirety of the revenue that we bill those lawyers. It is not the the amount we retain after paying our lawyers away. Our payment to our lawyers is the cost of sales. Thank you. I think that's the last of the questions there. That's all. I'd like to say thank you to everybody for attending today's seminar or today's presentation, I should say. And I look forward to presenting updates in about six months' time. Perfect, guys. If I may just jump back in there. Thank you very much indeed for being so generous of your time then addressing all of those questions that came in from investors this afternoon. Of course, if there are any further questions that do come through, we'll make these available to you after the meeting. But, apart from that, guys, thank you very much indeed for updating investors, this afternoon.

50:53 Could I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of KEYSTONE LAW GROUP PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.