travel ctm .com Acquisition of Westminster Travel 4 for 27 - - PowerPoint PPT Presentation

travel ctm com
SMART_READER_LITE
LIVE PREVIEW

travel ctm .com Acquisition of Westminster Travel 4 for 27 - - PowerPoint PPT Presentation

travel ctm .com Acquisition of Westminster Travel 4 for 27 Underwritten Entitlement Offer to raise $53.3 million November 2013 Disclaimer This document is not a prospectus under Australian law and does not constitute an offer, invitation or


slide-1
SLIDE 1

travelctm.com

Acquisition of Westminster Travel 4 for 27 Underwritten Entitlement Offer to raise $53.3 million November 2013

slide-2
SLIDE 2

This document is not a prospectus under Australian law and does not constitute an offer, invitation or recommendation to subscribe for or purchase any security or financial product and neither this document nor anything contained in it shall form the basis of any contract or commitment. It has not been lodged with the Australian Securities and Investments Commission (ASIC) and is given to the recipient for information purposes only, pursuant to section 734(9) of the Corporations Act. This document is not, and should not be construed as a recommendation by Corporate Travel Management Limited its directors, employees, officers and advisers to you to participate in the proposed Offer. Nothing in this document constitutes legal, tax or other advice. The information in this document does not take into account your investment objectives, financial situation

  • r particular needs. Before making an investment decision, you should consider whether an investment in Corporate Travel Management Limited is appropriate in light of your particular

investment needs, objectives and financial circumstances and consider obtaining professional securities advice. In all cases you should conduct your own investigations and analysis of the proposed Offer, the financial condition, assets and liabilities and business affairs of Corporate Travel Management Limited and its business, and the contents of this document. No representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the information, opinions and conclusions contained in this document by any

  • person. To the maximum extent permitted by law, Corporate Travel Management Limited, its related bodies corporate (as that term is defined in the Corporations Act) and the officers,

directors, employees and agents of those entities do not accept any responsibility and disclaim all liability including, without limitation, any liability arising from fault or negligence on the part of any person, for any loss arising from the use of this document or its contents or otherwise arising in connection with it. This presentation contains forward-looking statements which can be identified by the use of words such as “may”, “should”, “will”, “expect”, “anticipate”, “believe”, “estimate”, “intend”, “scheduled” or “continue” or similar expressions. Any forward-looking statements contained in this presentation are subject to significant risks, uncertainties, assumptions, contingencies and other factors (many of which are outside the control of, and unknown to, Corporate Travel Management Limited and its officers, employees, agents or associates), which may cause the actual results or performance to be materially different from any future result so performed, expressed or implied by such forward-looking statements. There can be no assurance or guarantee that actual outcomes will not differ materially from these statements. This document is confidential and has been given to you solely for your information and may not be reproduced or distributed to any other person except those within your organisation. The distribution of this document in jurisdictions outside Australia may be restricted by law and you should observe any such restrictions. This document (or any copy thereof) may not be transmitted in the United States or distributed, directly or indirectly, in the United States or to any US persons, and does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States, and is not available to persons in the United States or to US persons.

Disclaimer

slide-3
SLIDE 3

Highlights

Acquisition

  • Corporate Travel Management Limited (“CTM” or “the Company”) has agreed to acquire 75.1% of Westminster

Travel (WT)# for A$49.2 million cash consideration

  • The remaining 24.9% will be acquired by the two major shareholders of Westminster Travel, Dato WONG Sin

Just and Mr YU Kam Kee Lawrence, MBE.

  • Westminster Travel is a 40 year old leading travel management and services provider with offices in five Asian

countries/territories - Hong Kong, Singapore, China, Macau and Taiwan

  • In FY13 Westminster Travel achieved ^HK$52.5 million NPAT (in A$7.3m) on revenue of HK$278.5 million ^(in

A$38.7m)

  • The acquisition price reflects 7x FY13 profit before tax # (HK corporate tax rate is 16.5%)
  • Conditions on Acquisition:
  • WTL Shareholder approval – irrevocable undertakings have been obtained from shareholders with the

voting power required to pass the resolution

  • Approval of Travel Agents Registry of Hong Kong, Travel Industry Council of Hong Kong

Strategic Rationale

  • Fast-tracks entry into the Asian travel market, delivering an immediate mature Asian footprint in key Asian

markets.

  • Cross-sell opportunities for both businesses leading to increased market share in all CTM geographies.
  • Business improvement opportunities for both groups through sharing of best practice systems and technology

innovations.

# CTM will be acquiring 75.1% of the subsidiaries of Westminster Travel Limited (WTL), which is listed on the Catalist Exchange of the Singapore Stock Exchange (SGX). 7 x PBT is for the subsidiaries of WTL ^ Exchange rate used HKD$7.2=AUD1.00

slide-4
SLIDE 4

Highlights

EPS accretive in FY14

  • EPS accretive in FY14 based on 5 months contribution at 75.1% share
  • Subject to no accounting adjustments relating to treatment of amortisation

Funding

  • The acquisition will be funded through an underwritten 4 for 27 Renounceable Entitlement Offer at $4.60 per

share to raise $53.3 million

  • The offer price reflects a 10% discount to theoretical ex-rights price (TERP) and a discount of 11.2% to the

closing price of $5.18 on Friday 15th November.

  • Jamie Pherous will be a significant participant in the offer but is not in a position to take up his full entitlement
  • All non-executive directors of CTM will take up their entitlements in full

Trading Update  FY14 guidance increased to underlying EBITDA $27m-$28m based on:

  • WTL contribution for 5 month period (Feb-Jun14)
  • ANZ and USA continue to trade in line with previous guidance
slide-5
SLIDE 5
  • Overview of Westminster Travel
  • Strategic rationale
  • Combined group overview
  • Entitlement Offer details
  • Appendix

Agenda

slide-6
SLIDE 6
  • Established in Hong Kong in 1973
  • Employs approximately 700 people across five Asian countries/territories:
  • Hong Kong, Singapore, China, Macau and Taiwan
  • One-stop travel management - corporate travel services, wholesale products and leisure travel services
  • Listed on the Catalist Exchange of the SGX in 2009
  • Awarded Best Travel Agency in Hong Kong (four of the last six years)
  • 5 years compound annual growth in NPAT of 19%
  • Well known to CTM - worked with WT for several years including successfully winning and networking clients
  • Highly capable WT senior management team collectively boasts 150 years of experience in the travel industry
  • Skin in the Game - the two major shareholders will acquire 24.9% of the company
  • Website www.westminstertravel.com (click English button)

BEST TRAVEL AGENCY HONG KONG 2013

slide-7
SLIDE 7

Leisure Wholesale Corporate Travel

FY2013 Revenue

Westminster Operating Segments

  • Corporate Travel Services – Corporate business travel, Meetings Incentives Conferences Events (MICE)
  • Wholesale – Sale of Air, Hotel, Cruise and Fully Independent Travellers (FIT) packages on behalf of suppliers to

Travel Agency customers

  • Leisure Travel – Retail travel agency providing FIT packages, Air, Hotel and other travel related product
slide-8
SLIDE 8

Track Record of NPAT Growth

26.3 29.6 39.1 44.3 52.5 5 10 15 20 25 30 35 40 45 50 55 60 FY09 FY10 FY11 FY12 FY13

HKD$m

Source: Westminster Travel Limited Annual Report 2013

slide-9
SLIDE 9

Continuing Shareholders

Dato WONG Sin Just - Non Executive Chairman WT since 2008

  • Founder of SBI E2-Capital Limited
  • Possesses over 20 years of experience in investment banking and

venture capital.

  • Independent Non Executive Director of CSI Properties Limited and

China Zenith Chemical Group Limited.

  • Holds a Bachelor of Engineering (First Class Honours) from the

Imperial College of Science, Technology and Medicine, University of London and was qualified with the Institute of Chartered Accountants, England and Wales in 1992 as a Chartered Accountant.

Mr YU Kam Kee Lawrence, BBS, MBE, JP

  • Mr Yu boasts many years of Senior Management experience
  • Currently an independent Non Executive Director of Great China

Holdings Limited and the Director of TVB Network Vision Limited

  • Previously Chairman and Executive Director of China Renji Medical

Group Limited, Rosedale Hotel Holdings Limited, See Corporation Limited, Trasy Gold ex Limited, The Hong Kong Building and Loan Agency Limited, CMMB Vision Holdings Limited and Evergrande Real Estate Group Limited.

  • Mr Yu was awarded the Member of the Order of the British Empire

(MBE) in June 1997. In July 1999 Mr Yu was awarded the Bronze Bauhinia Star (“BBS”).

  • The CTM Board is delighted to have Dato WONG and Mr YU as co-shareholders in WT
  • They bring experience and an extensive network in Asia which will be invaluable to WT going forward
slide-10
SLIDE 10

Motivated and Experienced Management

LEUNG Tai Leung, William Managing Director - Wincastle Travel Experience 40 years LIOW Yoke Ching, Lena General Manager- Westminster SG Travel Experience 30 years MA Wai Ling, Eliza General Manager, TLX Travel Experience 33 years CHANG Mei Po, Helen Managing Director, S Travel. Travel Experience 31 years

LO Fai Wah, Larry, Managing Director WT

  • 23 years experience in the travel industry
  • Responsible for the Company’s local and regional sales and operations
  • Holds a Bachelor Degree in Business Management, Royal Melbourne Institute of

Technology

  • Was a Director of the Travel Industry Council of Hong Kong (TIC)
  • Current Vice Chairman in the Society of International Air Transport Association

Passenger Agents (SIPA)

YU Chung Hang, Lucian, Executive Director WT Business Development

  • More than 11 years of experience in the field of venture capital, private equity,

corporate finance and software development

  • Mr Yu served as a Director of China Renji Medical Group Limited which is listed on

the HKEx

  • Holds a Masters Degree in Engineering, Imperial College of Science, Technology and

Medicine, University of London

CHU Tak Shun, Henry, Finance Director WT

  • Experience spans over 18 years in financial management, merger and acquisition,

investor relations, corporate governance and compliance and he has worked with several listed companies and an international accounting firm in Hong Kong

  • Holds a Bachelor of Arts (Hon) Degree in Accountancy, Hong Kong Polytechnic

University, and is a fellow member of the Association of Chartered Certified Accountants and an associate member of Hong Kong Institute of Certified Public Accountants TONG, Elaine

Head of Human Resource, Administration and

Communications 24 years experience in international companies KOK Kiu Ngor, Sharon Financial Controller 19 years of experience in financial and management accounting

slide-11
SLIDE 11
  • Overview of Westminster Travel
  • Strategic rationale
  • Combined group overview
  • Entitlement Offer details
  • Appendix

Agenda

slide-12
SLIDE 12

Strategic Rationale

‘1 in 100 acquisition’

Cultural alignment Best in region Scale Key travel market

  • Establishes an immediate and mature scalable presence in

five countries/territories of the Asian travel market - a key region in CTM’s global strategy

  • CTM becomes a key player in the Asia-Pac region

Asia

  • ANZ and USA clients demand presence in Asian markets
  • Opportunity to target regionally based clients
  • Pool of potential new clients grows significantly
  • Cross-sell opportunities for both groups providing an
  • pportunity for market share and revenue growth in all

regions (Asia, ANZ, USA)

  • Business improvement opportunities for both groups

through sharing of best practice systems and technology innovations

  • EPS accretive in FY14 based on 5 months contribution at

75.1% share

  • 33% of the world’s new aircraft deliveries expected in the

Asian market compared to 20% in North America*

  • Widely recognised as future growth market
  • 2 major shareholders acquiring 24.9% (Dato WONG Sin

Just, Mr YU Kam Kee Lawrence)

Clients Cross-Sell Technology EPS Accretive Growing Market Ownership

* Boeing Current Market Outlook 2013-2032

slide-13
SLIDE 13

Asian Market Size

Growth Measures China Northeast Asia South Asia Southeast Asia Total Asia North America World GDP growth rate 6.4 1.6 4.7 6.6 2.5 3.2 Traffic growth rate 6.9 3.1 6.7 8.6 2.7 5.0 New deliveries (units) 5,580 1,360 3,080 1,790 11,810 7,250 35,280 % of New Aircraft 33% 20% 100%

Source: Boeing Current Market Outlook 2013-2032

slide-14
SLIDE 14

Strategic Alignment

Westminster CTM

Client service and people focused culture as reflected by high client and staff retention rates

 

Focus on improving client-facing solutions through in-house developed

  • perating platforms

 

Industry recognition – multi-award winning travel agency

 

Sustained compound double-digit profit growth over last 5 years

 

Successful acquisition track record across geographies

 

Passionate and experienced management team

 

Ability to network business between both companies

 

Diversity – no client represents more than 4% profit for each business

 

slide-15
SLIDE 15
  • Overview of Westminster Travel
  • Strategic rationale
  • Combined group overview
  • Entitlement Offer details
  • Appendix

Agenda

slide-16
SLIDE 16

Global Presence – CTM Post Acquisition

Brisbane Gold Coast Sydney Melbourne Perth Auckland Denver Dallas Fort Worth Houston Lafayette Baton Rouge New Orleans Taipei Beijing Singapore Guangzhou Macau Hong Kong

*ASIA FY13

TTV: $556m EBITDA: $7.0m NPAT: $5.5m 700 Employees

ANZ FY13

TTV: $719m EBITDA: $19.3m 450 Employees

NORTH AMERICA FY13

TTV: $165m EBITDA: $1.7m 170 Employees

* XR HKD7.2 = AUD1. 75.1% of Asia P&L flows through to CTM Group.

# FY13 CTM Underlying EBITDA and NPAT

FY13 COMBINED

(annualised)

TTV: $1.440bn EBITDA: $28.0m# NPAT: $18.6m# Operating out of 18 cities Over 1300 employees

slide-17
SLIDE 17

Group Result

CTM AUD $m WTL AUD $m^# Pro-forma Group Total AUD $m

TTV (unaudited) 883.8 556.8 1,440.6 Revenue 79.0 32.1 111.1 EBITDA (unadjusted) 20.0 7.0 27.0 EBITDA (underlying) 21.0 7.0 28.0 NPBT (statutory) 12.4 5.5 17.9 NPAT (underlying) 13.1 5.5 18.6 Attributable to equity holders 12.4 5.8 18.2

Source: Audited 30 June 2013 Financial statements ^ Exchange rate used HKD$7.2=AUD1.00 # Balances at 75.1% using equity accounting method

slide-18
SLIDE 18

Pro Forma Balance Sheet

CTM AUD$m WTL AUD$m^ Acquisition AUD$m Pro-forma Group Total AUD$m

Cash 13.5 29 1.3 43.8 Receivables and other 28.7 86.9 115.6 Total Current Assets 42.2 115.8 1.3 159.3 PP&E 3.2 3.9 7.1 Intangibles 75.7 15.7 11.2 102.6 Total Assets 121.1 135.5 12.5 269.0 Payables 26.0 61.7 87.7 Other current 5.7 27.7 33.4 Total Current liabilities 31.7 89.3 121.0 Non Current liabilities 16.4 0.7 17.1 Total Liabilities 48.1 90.0 0.0 138.1 Net Assets 73.0 45.4 12.5 130.9 Equity 73.0 50.5* 123.5 WTL Equity 45.4 (45.4) 0.0 Non controlling interest 0.0 7.4 7.4 Total Equity 73.0 12.5 130.9

Source: Audited 30 June 2013 Financial statements ^ Exchange rate used HKD$7.2=AUD1.00 * Entitlement offer of circa $53m less raising costs of circa $2.5m

slide-19
SLIDE 19

FY14 underlying EBITDA guidance upgraded to $27m-$28m (circa 29% - 33% growth on p.c.p.)

  • Assumes 5 months contribution from the 75.1% share of WT, with built-in M&A contingencies
  • ANZ and USA continue to trade in line with previous guidance
  • Underlying NPAT for group more favourable (HK corporate tax rate 16.5%)

Trading Update

  • ANZ – 1H record new client wins
  • Expecting stronger 2H14 due to new client wins not yet trading and lower 2H13 comparatives
  • Continue to build market share
  • Remain well placed to leverage from economic recovery
  • USA - Performing well with strong new client wins, integration going to plan
  • Expecting stronger 2H due to new client wins not yet trading and USA seasonal skew to 2H
  • ASIA – performing to expectations in 1Q14 as per management accounts
  • M & A contingencies built into 2H contribution to group

Trading Update and Guidance

slide-20
SLIDE 20

Our acquisition strategy has remained consistent across 8 acquisitions:

  • Strong discipline in selection criteria – looking for the “1 in 100”
  • Alignment - “Skin in the game” for leaders and/or senior Management
  • Focus on financial and people due diligence for cultural match
  • Robust transition process concentrating on enhancing people, systems and revenue growth
  • EPS accretive

Creates better business acumen and discipline in team for better results

Merger and Acquisition Discipline

2001 Acquisition Rhodes Corp. CTM MELBOUNE 2003 CTM SYDNEY 2007 Acquisition Debretts CTM PERTH 2008 Acquisition Travelogic SYDNEY & PERTH 2010 Acquisition Cavalier CTM AUCKLAND

2008 216 Staff

2011 Acquisition Travelcorp (AU) SYDNEY, MELBOURNE & PERTH

2011 369 Staff

2011 Acquisition ETM GROUP MELBOURNE 2012 Acquisition R&A TRAVEL CTM NTH AMERICA 2013 Acquisition TravelCorp(USA) CTM NTH AMERICA

2013 616 Staff 2014 1,316 Staff

2014 Acquisition Westminster ASIA

slide-21
SLIDE 21

FY14 Initiatives

slide-22
SLIDE 22

Aspirations:

  • 5 year forward planning for ANZ, to ensure it continues to be a “fortress” of

continued growth and high profitability that underpins global expansion strategy

  • To be in every major region (ANZ, North America, Asia, Europe) with

potential for emerging markets where suitable

  • To organically grow in all operations and win regional and global clients via a

client friendly multi-regional solution

  • By working with our clients, continuing to develop new technology, client

facing solutions and business models that evolve with their changing needs

  • To be renowned as the best travel company in every region we operate by

retaining CTM’s highly differentiated service model and high staff engagement, underpinned by technology solutions that add client value

  • To ultimately be a truly global company where substantial profit is derived
  • ff-shore

5 Year Plan

slide-23
SLIDE 23
  • Overview of Westminster Travel
  • Strategic rationale
  • Combined group overview
  • Entitlement Offer details
  • Appendix

Agenda

slide-24
SLIDE 24

.

Entitlement Offer Details

Fully Underwritten Renounceable Entitlement Offer Entitlement Offer Ratio 4 for 27 Amount Raised $53.3 million Capital Structure Current Issued Capital 78,246,245 shares New Shares Issued 11,592,036 shares Post Entitlement Offer Capital Structure 89,838,281 shares Offer Price Metrics Offer Price $4.60 TERP* $5.11 Offer Price discount to TERP 10%

* Theoretical ex-rights price

slide-25
SLIDE 25

Acquisition and Offer Timetable

Announcement of Acquisition and Entitlement Offer 20 November 2013 Ex-date and Rights trading commences 22 November 2013 Record Date for Entitlement Offer (7pm AEDT) 28 November 2013 Entitlement Offer opens and Offer Documents sent to Eligible Shareholders 02 December 2013 Rights trading ends 09 January 2014 New shares quoted on deferred settlement basis 10 January 2014 Entitlement Offer closes (5pm AEDT) 16 January 2014 ASX notified of under subscriptions 21 January 2014 Despatch of Holding Statements 24 January 2014 Normal trading expected to commence 28 January 2014 Completion of Acquisition 31 January 2014

slide-26
SLIDE 26
  • Overview of Westminster Travel
  • Strategic rationale
  • Combined group overview
  • Entitlement Offer details
  • Appendix

Agenda

slide-27
SLIDE 27

Risks

Acquisition of WT entity

  • Subject to the satisfaction of limited conditions
  • Historical liabilities

Economic

  • Specific (corporate and leisure travel), or general

Information technology

  • Reliance on non-proprietary IT licences

Competition

  • Growing through internet based travel providers

Client relationships

  • Reduced demand or termination by key clients

Supplier relationships

  • Key suppliers
  • Changes to commission rates

Hostilities, terrorism and other external events

  • General or specific travel locations

Employees

  • Ability to retain key staff
  • Increases in recruitment and remuneration costs

Future growth

  • Identification and execution of future merger and acquisition opportunities
  • Capital and funding requirements
  • Changes in regulation of travel industry
  • Post completion integration

Intellectual property

  • Ability to develop and protect
slide-28
SLIDE 28

Summary of Key Terms & Conditions

CTM will acquire 75.1% of Wealthy Aim Investments Limited (WAIL), a BVI registered entity, through Corporate Travel Management (UK) Limited, a wholly owned subsidiary of CTM, registered in the UK. CTM has agreed to guarantee Corporate Travel Management UK’s obligations under the share purchase agreement. The remaining 24.9% of WAIL shall be acquired by Ever Prestige, a special purpose vehicle (SPV) jointly held by Dato WONG Sin Just and Mr YU Kam Kee Lawrence, MBE the two largest shareholders of Westminster Travel Limited. CTM will loan the amount of HK$117,420,074 to the SPV to enable it to complete the acquisition. CTM will take security over the SPV’s shares in WAIL in support

  • f the SPV’s obligations under the loan agreement.

SPV and CTM will enter into a shareholders’ agreement in respect of their rights and obligations as shareholders of WAIL which includes certain minority shareholder protections including veto rights in certain circumstances. Completion of the share purchase agreement for the acquisition of WAIL is conditional upon the satisfaction of the following:

  • approval by the shareholders of WTL;
  • approval by the Singapore Exchange Securities Trading Limited, WTL’s Catalist Sponsor;
  • approval by the Travel Agents Registry of Hong Kong;
  • approval by the Travel Industry Council of Hong Kong.

The Entitlement Offer is not subject to completion of the share purchase agreement. WTL has given limited warranties in favour of CTM and SPV under the share purchase agreement, confirming its ability to sell the shares in WAIL, the accuracy of the due diligence information provided to CTM and its compliance with relevant laws and regulations.

slide-29
SLIDE 29

Westminster Travel History

1973: Westminster- HK established Early 1990s: appointed to act as consolidator to Cathay Pacific 1994: acquisition of Jecking Tours & Travel 1996: First MICE event for 400 IBM staff in Penang, Malaysia 1997: Appointed exclusive Fulfillment Agent of China Airlines’ Dynasty Packages 1998: Expansion into the Peoples’ Republic of China (Guangzhou) 2001: Appointed Hogg Robinson representative in Hong Kong, PRC, Macau and Taiwan 2002: Acquired 75% of Wincastle Travel (HK) 2004: Acquired Westminster Travel (Taiwan) and Westminster Travel (Singapore)

2005: Appointed international sales

  • ffice for Best

Western International in Hong Kong, PRC and Macau

2007: Westminster-HK acquired by Wealthy Aim creating an Asian-based travel company with

  • perations in Hong Kong,

Singapore, Macau, China and Taiwan

2009: Listed on the Singapore Securities Exchange

2010: Joint Venture with Webjet (renounced in 2013 following Webjet acquisition of Zuji)

2011: Established S Travel (70%

  • wned subsidiary)

targeting leisure travel 2012: Acquired Travelex Hong Kong (rebranded TLX Travel)

2013: Mia travel established (60% subsidiary) targeting

  • verseas tours for

Chinese customers