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Acquisition of Westminster Travel 4 for 27 Underwritten Entitlement Offer to raise $53.3 million November 2013
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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
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Acquisition of Westminster Travel 4 for 27 Underwritten Entitlement Offer to raise $53.3 million November 2013
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
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
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.
Acquisition
Travel (WT)# for A$49.2 million cash consideration
Just and Mr YU Kam Kee Lawrence, MBE.
countries/territories - Hong Kong, Singapore, China, Macau and Taiwan
A$38.7m)
voting power required to pass the resolution
Strategic Rationale
markets.
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
EPS accretive in FY14
Funding
share to raise $53.3 million
closing price of $5.18 on Friday 15th November.
Trading Update FY14 guidance increased to underlying EBITDA $27m-$28m based on:
BEST TRAVEL AGENCY HONG KONG 2013
Leisure Wholesale Corporate Travel
FY2013 Revenue
Travel Agency customers
26.3 29.6 39.1 44.3 52.5 5 10 15 20 25 30 35 40 45 50 55 60 FY09 FY10 FY11 FY12 FY13
HKD$m
Source: Westminster Travel Limited Annual Report 2013
Dato WONG Sin Just - Non Executive Chairman WT since 2008
venture capital.
China Zenith Chemical Group Limited.
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
Holdings Limited and the Director of TVB Network Vision Limited
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.
(MBE) in June 1997. In July 1999 Mr Yu was awarded the Bronze Bauhinia Star (“BBS”).
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
Technology
Passenger Agents (SIPA)
YU Chung Hang, Lucian, Executive Director WT Business Development
corporate finance and software development
the HKEx
Medicine, University of London
CHU Tak Shun, Henry, Finance Director WT
investor relations, corporate governance and compliance and he has worked with several listed companies and an international accounting firm in Hong Kong
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
‘1 in 100 acquisition’
Cultural alignment Best in region Scale Key travel market
five countries/territories of the Asian travel market - a key region in CTM’s global strategy
regions (Asia, ANZ, USA)
through sharing of best practice systems and technology innovations
75.1% share
Asian market compared to 20% in North America*
Just, Mr YU Kam Kee Lawrence)
* Boeing Current Market Outlook 2013-2032
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
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
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
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
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$7.2=AUD1.00 # Balances at 75.1% using equity accounting method
CTM AUD$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
FY14 underlying EBITDA guidance upgraded to $27m-$28m (circa 29% - 33% growth on p.c.p.)
Trading Update
Our acquisition strategy has remained consistent across 8 acquisitions:
Creates better business acumen and discipline in team for better results
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
Aspirations:
continued growth and high profitability that underpins global expansion strategy
potential for emerging markets where suitable
client friendly multi-regional solution
facing solutions and business models that evolve with their changing needs
retaining CTM’s highly differentiated service model and high staff engagement, underpinned by technology solutions that add client value
.
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
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
Acquisition of WT entity
Economic
Information technology
Competition
Client relationships
Supplier relationships
Hostilities, terrorism and other external events
Employees
Future growth
Intellectual property
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
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:
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.
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
Western International in Hong Kong, PRC and Macau
2007: Westminster-HK acquired by Wealthy Aim creating an Asian-based travel company with
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%
targeting leisure travel 2012: Acquired Travelex Hong Kong (rebranded TLX Travel)
2013: Mia travel established (60% subsidiary) targeting
Chinese customers