Gordon Dadds Group Plc (GOR.L), formerly Work Group Plc, is an acquisitive legal and professional services business headquartered in London with a significant back office and technology platform based in Cardiff. The Group targets firms of all sizes and will merge the business into the Gordon Dadds brand or allow a firm to retain their identity and culture but benefit from the back-office technology platform used by Gordon Dadds, enabling the targeting of law firms seeking an alternative solution to the regulatory and investment requirements of the UK legal market. Gordon Dadds LLP has been operating in this way since 2013, successfully integrating firms into its cost efficient platform, and floated on AIM in 2017.
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On June 28th 2018, GOR published maiden final results for the year ending March 31st 2018, and announced a 23.3% hike in adjusted PBT to £2.96m on revenues 25.3% higher at £31.24m. GOR recommended a maiden dividend of 4.0p on the back of gross assets up to £55m (2017: £24.9m) and an end of year cash balance of £8.9m. CEO Adrian Biles called it a year of “great progress”, “exceeding the expectations that we set for ourselves and for our shareholders.” He added; “We expect to achieve significant further growth during the year from additional acquisitions, together with organic growth arising principally from the increasing cross-referral of clients between the Group’s businesses and as the more specialised businesses take advantage of the Group’s full service capabilities. We continuously examine expansion opportunities and are engaged in discussions with firms in a number of other international jurisdictions. In the UK, we have a good pipeline of potential acquisitions with which we are at various stages of discussion or negotiation.”
The impressive progress by GOR in it’s first year as a listed company did not go unnoticed by VectorVest. A Relative Value flag, (RV – indicator of long-term price appreciation) alerted members in early June, as the level moved above 1, and continued to rise, logging GOR today at 1.57, excellent on a scale of 0.0 – 2.0. Other leading metrics include a GRT (Earnings Growth Rate) of 37%, which also rates as excellent on the VectorVest stock and portfolio management system. Even so, trading today at 177p, GOR is still a long way below the current VectorVest valuation of 281p.
The chart of GOR.L is shown above in my normal format. The share is in a Buy recommendation and has charted a first rising low. The VectorVest revaluation in June and July 2018 is invariably a leading indicator of a high momentum move.
Summary: For a company to complete a listing on AIM and deliver such an impressive set of maiden results is a relative rarity in this day and age. GOR not only achieved that, but it paid a dividend and has ample cash resources on the balance sheet to complete the acquisitions currently under negotiation. Even at this early stage in its life as a listed company, VectorVest sees considerable growth potential, particularly with the stock trading at nearly 40% under valuation. Buy.
Dr David Paul
August 8th 2018
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