Enters into Contracts to Acquire Four New Clinics in China
Sydney, Nov 2, 2015 AEST (ABN Newswire) - Traditional Therapy Clinics Limited (
ASX:TTC) has entered into contracts to acquire four clinics from its franchised clinic base in line with its business strategy to grow its owned clinic network and diversify its revenue stream.
The purchase price for all four clinics is RMB 31.7 million which equates to AUD $6.73 million at an exchange rate of 4.71 (AUD:RMB). The purchase price represents an EBITDA multiple of between 2 and 2.3 based on earnings in the 2014 financial year.
The clinics to be acquired are located in Liuzhou, Zhanjiang, Haikou and Nanning cities and will take the number of clinics owned directly by TTC to 15, complementing its 311 franchised clinics throughout China. Settlement of the acquisitions is expected to be complete by the end of November 2015.
TTC's Growth Strategy
TTC's multi pronged growth strategy is focused on:
- Growing its number of franchised clinics; and
- Expanding its owned clinic network through the acquisition of existing clinics (from third parties or franchisees) or developing greenfield owned clinics in suitable locations.
Since 2011, the average annual growth in the number of TTC franchised clinics has been approximately 40% and the company forecasts a growth rate of franchised clinics of c.12% in the 2015 financial year.
The "owned clinic" model has become a key focus given the ability to generate a greater return on investment and its added advantage of assisting with projecting the company brand and establishing the high standards of service within the TTC network.
TTC is targeting a further 7 clinic acquisitions from its franchised clinic network over the next 2-3 months.
To support this growth, TTC intends to extend its current involvement in training with the establishment of an additional training facility in addition to the current facility it operates in conjunction with Chongqing Municipal Health Bureau. TTC's "control" over the supply of appropriately qualified therapists is considered a durable competitive advantage and a potential barrier for aspiring competitors to provide similar levels of service to TTC.
About Traditional Therapy Clinics Ltd
Traditional Therapy Clinics Limited (ASX:TTC) is a franchisor and the owner of one of the largest chains (by number of clinics) of traditional therapeutic health and wellness clinics in China. It currently has 343 franchised clinics and 35 owned clinics in operation. It is a well established business with a strong growth profile, employing a repeatable and scalable business model.
TTC has a highly recognised and respected brand, having received the prestigious Chinese Well-Known Trademark designation from the State Administration for Industry and Commerce. It operates within a strongly regulated industry sector of significant scale, which offers opportunity for further growth.
TTC is an ASX listed company employing around 1,000 staff across 27 of the 33 administrative divisions in China. More information is available at https://www.ttc-ltd.com/
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