The management of Gordon Dadds (GOR) reckons the law firm's first preliminary results since last November's IPO “mask the growth” created via acquisitions in the period. Most of the five businesses purchased in the year to March arrived late and made a limited contribution to these numbers; all things being equal, annualised revenues would have exceeded £42m, and profits would have been "significantly higher".
That's a good sign, because buying other legal services firms – and integrating them with the support of its back office and technology platform in Cardiff – is Gordon Dadds' modus operandi. Recent acquisitions have included financial technology specialist White & Black and Bristol-based firm Metcalfes, and the £20m raised at IPO has allowed the group to open an office in Hong Kong since the year-end. Management plans to continue this rapid expansion both in the UK and overseas.
The year-on-year decline in pre-tax profit (see table) was caused by flotation-related expenses, although strip out this one-off hit (and another £380,000 of deal-making costs) and profit would have risen from £2.4m to £2.96m. With plenty of cash left over from the initial public offering, the firm proposed a maiden dividend.
House broker Arden forecasts adjusted pre-tax profit of £5.1m and EPS of 13.1p for the year to March 2019 (from £3m and 8.5p in FY2018).
| GORDON DADDS (GOR) | ||||
| ORD PRICE: | 173p | MARKET VALUE: | £49.7m | |
| TOUCH: | 170-175p | 12-MONTH HIGH: | 173p | LOW: 142p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 314 | |
| NET ASSET VALUE: | 100p* | NET CASH | £8.4m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015** | 19.7 | 1.22 | na | na |
| 2016** | 21.0 | 0.51 | na | na |
| 2017** | 24.9 | 6.81 | 14.4 | na |
| 2018 | 31.2 | 6.38 | 0.55 | 4.0 |
| % change | +25 | -6 | -96 | - |
| Ex-div: | 2 Aug | |||
| Payment: | 14 Sep | |||
| *Includes intangible assets of £27m, or 94p a share. **Pre-IPO figures | ||||
