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Corporate Travel Management US Acquisition now complete

Corporate Travel Management Limited (CTM, ASX code: CTD), today announced the acquisition of TravelCorp LLC (TravelCorp), a travel company based in Texas and Louisiana in the USA, effective 1 May 2013.

CTM’s strategic rationale behind the acquisition: 
1) Strategic Alignment – TravelCorp meets CTM’s strict acquisition criteria. They are a leader in corporate travel in their region, enjoy high staff and client retention and have a capable and passionate management team.

2) Geographic Strategy – Texas and Louisiana are high growth regions that prefer local service solutions. The regional oil and gas industry is complementary to CTM’s Australian client base and CTM expertise in the mining, oil and gas sectors.

3) Scale – TravelCorp will add to CTM’s US buying power, leverage our support service skills and client facing solutions in North America. CTM’s combined North American TTV for FY14 will approach USD$350m, allowing us to become a more significant player in the North American market.

Financial considerations: 
1) Base consideration is USD$10.3125m, being USD$3m in CTD shares and USD$7.3125m in cash, which represents approximately 5.5 times 31 December 2012 NPBT of USD$1.9m.

2) An additional cash earn-out component of up to a maximum of USD$9.48m is payable for above target earnings performance in the 24 months commencing 1 July 2013, with consideration being a mixture of cash and CTD shares.

3) The acquisition will be funded entirely from current CTM cash reserves and future cash flow, including the recent AUD$10m capital raising that was completed in March 2013.
4) The acquisition is EPS accretive, and is a strong strategic fit for CTM’s longer term growth plans to have core locations in North America, Asia and Europe. 

About TravelCorp: 
1) TravelCorp has been operating for 11 years, with operations in Texas and Louisiana and employs over 80 staff with offices in New Orleans, Houston, Fort Worth, Baton Rouge and Lafayette.

2) Client mix approximately 80% Corporate, 15% Leisure, 5% MICE (meetings, incentives, conferences, events).

3) TravelCorp has 250 local, national and global clients with Sales TTV of approximately USD$120m and NPBT of USD$1.9m at 31 December 2012.

Managing Director, Jamie Pherous, said “We are delighted to have TravelCorp as a key part of our North American business. It possesses all the qualities that we look for, being a great service reputation, a dedicated team and great management. The combination with our successful USA business will allow us to better leverage our combined buying power, client facing solutions and support expertise moving forward.”

CEO of TravelCorp, Scott Evans said “The opportunity to become a part of the wonderful team that CTM has built will allow TravelCorp to enhance our product and service offering to our many clients. By expanding our global footprint, TravelCorp will add new opportunities to network international clients and work with CTM to support their U.S. based clients as well. TravelCorp employees will see new and exciting career opportunities evolve as a result of our future growth initiatives.”

“CTM has developed a unique culture of employee training, support and empowerment, which has a significant benefit in allowing us to be creative and responsive in our effort to provide our clients with customised travel solutions.”

Name and transitionary arrangements: 
1) The corporate divisions of TravelCorp will change their name to TravelCorp CTM effective 1 May 2013.

2) Together with TravelCorp management, CTM’s management will work through a transition plan to maximise the combined opportunities.