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New Zealand – AWF Group acquires white collar staffing firm

02 October 2013

New Zealand-based blue-collar temporary staffing provider AWF Group (AWF: NZSX ) has reached an agreement to acquire 100% of the shares in Maddison Recruitment Ltd and Madison Force Ltd, known collectively as the Madison Group.

AWF Group will acquire the Madison Group for a maximum purchase price of NZD 36 million (USD 29.8 million) comprising NZD 30 million (USD 24.9 million) to be paid at completion and an additional payment of up to NZD 6 million (USD 4.97 million), which is payable subject to the earnings of the Madison Group’s business for the 52 weeks following 4 November 2013 exceeding certain thresholds.

AWF Group Chief Executive Mike Huddleston said that this opportunity would provide AWF Group with a major strategic presence within the white collar recruitment and contracting sector aligned with a very successful brand.

He noted that turnover for the Madison Group in the financial year ended 31 March 2013 was in excess of NZD 56 million (USD 46.4 million) with strong revenue and earnings growth being recorded in the current 2013/14 financial year.

Company Director Simon Hull said that it has been important for AWF Group to be patient in seeking the right acquisition and that the Board had been satisfied through an extensive due diligence process that the Madison Group brings together the right positioning for the Company.

He added that AWF Group had established a very strong market position in the largely blue collar sectors but as indicated by the current flat performance expected for the first six months this year, a broader sector involvement is required to achieve sustainable growth.

Simon Hull advised that he was in full support of the proposed transaction noting that on the basis of underlying earnings, the combined Group after a complete financial year (2014/15) was forecasting EPS for AWF Group Ltd to lift by over 50%, allowing a steady growth in dividends ongoing.

Chairman Ross Keenan noted that the AWF Group was currently in a very strong position with zero debt, and that the Board felt confident that this significant investment would deliver excellent growth, while providing significant and diverse new revenue streams across a well spread client and sector base.

In trading today the company’s share price rose by +2.4% to NZD 3.00 (USD 2.49), an increase of +40.2% compared with a year ago. Based on its current share price, the company has a market value of NZD 77.4 million (USD 64.2 million).


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