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AWF blames RWC for shortfall in profit growth, shares gain

Monday 31st October 2011

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Contract labour company AWF Group is blaming the Rugby World Cup for falling short of its own profit growth guidance.

AWF's earnings before interest, tax, depreciation and amortisation (EBITDA) for the six months ended September came in at $3.56 million, up 31 percent on the previous first half but less than the more than 40 percent increase the company told shareholders at the July 27 annual meeting to expect this year.

The shares gained 6.2 percent on the news.

“The group lost a little ground on earlier guidance provided to the market, largely due to a slowing of major customer activity through the build up to Rugby World Cup 2011,” chairman Ross Keenan said.

“While this was unexpected, it is not considered significant when it comes to AWF achieving overall annual targets,” Keenan said.

A jump in amortisation (non-cash) costs relating to the intangible assets of Panacea Healthcare, which AWF bought in November 2010, dragged the bottom line net profit down to $1.73 million, down 1 percent from the previous first half.

Managing director Simon Hull said Panacea has performed well and up to pre-acquisition expectations. The company's other recent acquisition, the Waihi-based AWF Mourant gold mining operations, “has had an exceptional year,” he said.

AWF bought 75 percent of Mourant in September last year and Hull said it bought the remaining 25 percent this month.

Hull said the 35 percent sales increase to $54.8 million for the six months shows the company is well on track to achieve its $100 million target for the full year.

“While the economy remains a little uncertain, there are strong opportunities for the placement of good temporary staff in AWF's core sectors of healthcare, manufacturing, food processing, transport and logistics, construction, infrastructure development and general labouring,” Hull said.

AWF will pay a fully imputed first-half dividend of 5 cents per share, up from 3.8 cents last year.

AWF shares are 12 cents higher at $2.05 in today’s trading, their highest price since the company listed in mid-2005. They have risen from 95 cents a year ago.

BusinessDesk.co.nz

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