AVADA GROUP LIMITED — Capital/Financing Update 2023

Apr 16, 2023

Suite 1, Level 2 116 Ipswich Road, Woolloongabba QLD 4102 Email: contact@avadagroup.com.au Website: www.avadagroup.com.au

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ACN 648 988 783

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ASX Announcement

17 April 2023

AVADA GROUP LIMITED ANNOUNCES MARQUEE ACQUISITION OF NEW ZEALAND TRAFFIC MANAGEMENT COMPANY

Traffic management operator AVADA Group Limited (ASX: AVD) (‘AVADA’, ‘the Company’ or ‘the Group’), is pleased to announce that it has secured a pathway to enter the New Zealand market after its subsidiary AVADA NZ Limited (‘AVADA NZ’) entered into a binding agreement to acquire Wilsons TM Limited (‘Wilsons Traffic Management' or ‘Wilsons’), the largest traffic management company in New Zealand’s South Island.

Key Highlights

• Strategic growth opportunity gives AVADA a substantial foothold in New Zealand for organic growth and further acquisitions including in New Zealand’s North Island.

• Wilsons has a reported normalised EBITDA of NZ$3.2 million for 12 months to December 2022. 75 vehicles and more than 115 traffic controllers.

• Key step in AVADA expanding capability and establishing its position as one of the leading traffic management operators in Australia and New Zealand.

Acquisition of Wilsons Traffic Management

AVADA NZ has entered into an agreement to acquire 100 per cent of the issued share capital in Wilsons Traffic Management.

In addition to expanding and diversifying AVADA’s customer base and geographic reach, the acquisition of Wilsons will bring a talented team of professionals and a wealth of experience, delivering strong results.

The acquisition of Wilsons will also provide AVADA with new opportunities for organic growth and acquisitions in New Zealand. With the added expertise and resources, AVADA Group looks forward to supporting the evolving needs of its customers with the delivery of high-quality projects.

The acquisition of Wilsons is expected to be earnings accretive. AVADA also expects to generate cost synergies from integrating Wilsons and standardising back-office operating processes. This will also create scope for new career opportunities for staff across the Group and its key operating markets. Wilsons will retain its existing brand which reflects its position as an established market leader.

The acquisition is expected to complete on or around 28 April 2023, subject to satisfaction of certain conditions precedent requiring a limited set of third-party consents to be obtained to the change in control of Wilsons.

Overview of Wilsons Traffic Management

Wilsons Traffic Management was established in 2020 by the vendors, Sam Wilson and Gabby Krauze, who will continue to manage the business after the transaction. Sam has been involved in traffic management in the South Island for more than a decade. Wilsons’ head office is in Christchurch, the South Island’s largest city, with traffic management operations in Nelson and Queenstown.

Wilsons reported normalised EBITDA of NZ$3.2 million for the 12 months to December 2022, derived predominantly from road maintenance, civil construction and asphalting projects. The company employs more than 115 traffic controllers and has a fleet of 75 vehicles (38 utilities, 37 trucks).

AVADA Group Chief Executive Officer and Managing Director, Mr Daniel Crowley said, “Wilsons Traffic Management gives us a solid foothold in the New Zealand market with a business that is well-managed and recognised as a market leader. Integrating Wilsons into AVADA will deliver cost synergies and support organic growth and introduce us to new acquisition opportunities in this attractive market.”

Purchase price and Funding

The purchase price for the acquisition includes:

• a cash payment on completion of NZ$9.6 million (subject to customary working capital adjustments) funded through a combination of New Zealand bank debt of NZ$7.4 million and cash reserves and existing facilities of NZ$2.2 million.

• an additional retention cash payment of between NZ$1.4 million and NZ$4.1 million, depending on Wilsons achieving certain performance hurdles, payable 12 months after completion.

• subject to certain targets being achieved, an earn out payment in respect of each of the first and second years after completion.

Retention and earn-out payments are to be funded through existing facilities and operating cash flows.

Outlook

The Group’s outlook for the second half of FY23 remains positive based on the pipeline of infrastructure investments planned by State and Commonwealth governments in Australia and the intended addition of an exposure to the New Zealand market.

After the normal seasonal effects of the January holiday period, revenue momentum is building across the business for the final four months of FY23. AVADA continues to concentrate on improving performance and achieving cost savings by transitioning the business and new acquisitions to a centralised operating and management structure.

This announcement is authorised for release by the Board of Directors of AVADA Group Limited.

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About AVADA Group Limited

AVADA is Australia’s largest listed integrated traffic management provider, with established operations throughout Queensland, NSW and Victoria servicing major public and private sector clients.

With an extensive network of 27 Depots, more than 900 vehicles and 1,900 dedicated employees the Group is well positioned in the integrated traffic management and associated civil sectors.

Visit us at avadagroup.com.au

For further information contact the following:

Paul Fitton Chief Financial Officer & Company Secretary +61 434 685 661 pfitton@avadagroup.com.au