TTC Acquires Further 3 Clinics
Sydney, May 13, 2016 AEST (ABN Newswire) - Traditional Therapy Clinics Limited (
ASX:TTC) through its wholly owned subsidiary, Fuqiao (Chongqing) Holdings Co. Limited, has entered into contracts to acquire a further three (3) clinics from its franchised clinic base in line with its business strategy to grow its owned clinic network and diversify its revenue stream. The signing of these contracts to acquire a further 3 clinics takes the number of clinics acquired by TTC, since listing on the ASX in September 2015, to 11 and the total number of owned clinics to 22.
In addition, TTC has signed 15 new franchise agreements for the period from 1 January 2016 to 11 May 2016.
The purchase price for the 3 clinics will be paid in cash by TTC and totals RMB 19.2 million which equates to AUD 4 million at an exchange rate of 4.78 (AUD:RMB). The total purchase price represents an average EBITDA multiple of 2.3 based on the clinics' earnings in the 2015 financial year.
The 3 clinics to be acquired are located in Chongqing, the largest municipality in south-west China and home to the company's flagship clinic and head office. Settlement of the acquisitions is expected to be complete during June 2016. The total number of franchised and owned clinics and new franchise licences granted and clinics acquired by TTC during 2015 and 2016 calendar years is shown below:
TTC Clinics Franchised Clinics Owned Clinics----------------------------------------------------------------------------Total number of franchised / owned clinics at 31 December 2014 286 11----------------------------------------------------------------------------Newly franchised / acquired in CY2015 36 8----------------------------------------------------------------------------Newly franchised / acquired in CY2016 (at 12 May 2016) 15 3----------------------------------------------------------------------------Acquired from the franchised clinics in CY2015 and CY2016 (at 12 May 2016) (11) -----------------------------------------------------------------------------Total 326 22----------------------------------------------------------------------------
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.
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 TTC's brand and further demonstrating the high standards of quality and service within the TTC network.
Refund of Purchase Money for Head Office
On 31 March 2016, TTC advised that it has decided not to go forward with the purchase of its new head office building and had successfully negotiated a mutual termination of the property purchase agreement. Under that termination, the developer agreed to refund TTC, in full, the purchase money paid (RMB 128 million which equates to AUD 27.3 million using an exchange rate of 4.681), in four instalments by 31 December 2016. By way of update, TTC advises it has received the first of those four instalments equating to RMB 12.8 million (AUD 2.73 million). The developer is currently on schedule to meet the remainder of the agreed payments.
To view tables and figures, please visit:
http://abnnewswire.net/lnk/S36Z83Z1
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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