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AWF more than doubles profit on Panacea sale, will pay special dividend

Wednesday 15th May 2013

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AWF Group, the contract labour firm, more than doubled annual profit after selling its Panacea Healthcare unit and will return most of the $2.24 million proceeds to shareholders via a special dividend.

Net profit climbed to $6.9 million, or 26.5 cents per share, in the 12 months ended March 31, from $2.6 million, or 10 cents, a year earlier, the Auckland-based company said in a statement.

AWF will pay a special dividend of 3 cents per share, reflecting three-quarters of the Panacea sale, and adding to a final dividend of 9.2 cents. That takes the total payout to 18.6 cents per share, compared to 13 cents a year earlier. The record date is June 21 with payment on June 28.

The shares rose 2.5 percent to $3.28, and have climbed 26 percent this year.

Sales gained 24 percent to $130.5 million, meeting guidance, with underlying earnings, which strips out the impact of the Panacea sale, up 18 percent to $5.4 million, or 20.7 cents per share.

"It is no surprise to see continued steady growth in Christchurch, but this has been supported over the second half of the financial year by strength in the Auckland job market," chief executive Mike Huddleston said. "Construction and infrastructure development have led the way in Auckland, but the great summer also resulted in stronger manufacturing activity."

AWF is New Zealand's largest provider of temporary staff, placing an average 3,000 people a day into jobs via a network of 34 branches.

Government figures this month showed New Zealand's unemployment rate unexpectedly dropped to 6.2 percent in the first three months of the year, driven by increasing job opportunities in Canterbury.

AWF doesn't expect the tight labour market to ease, and said it sees a lack of labour resources as a possible threat to the Christchurch rebuild, with increasing activity in Auckland likely to damp the appeal of a shift south for skilled workers.

"We think there will be a return of a reasonable number of New Zealanders from Australia and these workers, supported by immigration, will go some way to meet demand," Huddleston said. "This environment presents good opportunity for AWF."

The company didn't give guidance for the 2014 financial year, and said it's still searching for another acquisition.

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