Press Room
Placing and Admission to AIM
Et-china, a leading travel services group in the fast growing region of South China, is pleased to announce the successful completion of its placing and admission to the AIM market of the London Stock Exchange plc. Trading in its Ordinary Shares commenced at 8am today.
Highlights
- The placing price is 127p per Share (the "Placing Price").
- At the Placing Price, Et-china will, on commencement of dealings on AIM, have a market capitalisation of approximately
£42 million and 32,953,398 Ordinary Shares in issue. - Seymour Pierce Limited is acting as Nominated Adviser and Broker to Et-china, and Market Capital Italia S.r.l. is its international financial adviser.
- Et-china is primarily engaged in serving the corporate and leisure markets through the sale of airline tickets, hotel rooms, packaged group tours and associated travel products to both corporate entities, individual travellers and group travellers, in South China, China's fastest growing economic region.
- The Group principally operates under two well known brands; Et-china and GZL:
- Et-china is focused on corporate travel (over 200 accounts such as Shell China, L'OREAL (China) and Kodak (China) and on the fast growing frequent independent travellers ("FITs") market primarily through the internet and its call centre operations in South China; and
- GZL, which was established in 1980, is a leading provider of domestic and overseas packaged group tours in South China, largely through retail outlets and a call centre. Tour packages typically comprise transport (including air, sea, rail and road as relevant), accommodation and sightseeing activities.
- In addition, through an exclusive 10 year joint venture with China Southern Airlines ("CSA"), China's largest airline, based in South China, Et-china provides an e-ticketing service and back office support for CSA. There are approximately 6,000 contracting e-ticketing agents and secured counters in about 90 airports across China.
- In 2006, the Group sold 762,210 airline tickets, 660,800 hotel rooms and 718,432 individual travellers' group packages (excluding airline tickets and hotel rooms processed through the e-JV but booked through other agents).
Matthew Ng, President and Chief Executive Officer, said:
"We are delighted to be listing on London's fast growing AIM market. We look forward to using the funds we have raised in the placing to deliver on our plans for our new investors and are well placed to expand and develop in a market which has significant growth prospects and, given our strong position as a full service travel company in South China, we are excited about the Company's future."
Contact details for enquiries:
| Seymour Pierce, Nomad and Broker | 0207 107 8000 |
| Mark Percy | |
| Weber Shandwick Financial | 0207 067 0700 |
|
Terry Garrett Stephanie Badjonat John Moriarty |
Notes to Editors
Background to Et-china
Group Activities
The Group currently operates in two travel market segments being FIT travel (encompassing both independent corporate and leisure) through Et-china; and group leisure travel through its 50.64 per cent. subsidiary, GZL. In addition, Et-china operates, by way of an e-commerce joint venture with China Southern Airlines, a dedicated e-ticketing service platform exclusively for China Southern Airlines and its group subsidiaries.
The Group currently has direct and contractual supply relationships with 57 airlines (both domestic and international), 1,165 hotels and 197 destination travel agency/wholesaler partners for its package business.
Et-china
Since its inception in 2000, the Group, through Et-china, has focused on the FIT travel market (made up of independent travellers for both leisure and business) and is one of the lending air-ticketing agents to independent travellers in South China. Et-china provides airline ticketing, hotel reservations, and, to a lesser extent, car rental and ancillary travel-related services to Chinese nationals and over 200 Chinese based corporate accounts including Shell China, L’OREAL (China) and Kodak (China). ETCH has adopted a multi-platform distribution model, offering access through a 160-seat 24/7 call centre, advanced Internet booking engine, 10 high street shops in Guangzhou and through over 500 internet kiosks across South China.
Et-china also provides tailor-made FIT packages for specific corporate clients and off-the-shelf FIT packages for individual leisure travellers. These are currently sold through independent third party tour operators as well as through CSA.
In December 2006 Et-china launched its own travel packages business having obtained a travel agency permit issued by CNTA. Focused on the FIT market, the Directors believe this business will benefit significantly from the GZL acquisition. At the same time Et-china re-launched a corporate conference business focused on the corporate travel requirements of meetings, incentives, conferences, exhibitions and seminars (“MICE”) held in Guangzhou or surrounding cities or tourism destinations.
GZL
GZL was reincorporated from Guangzhou Travel Company which was established in 1980 by the Government of Guangzhou and has become one of the largest travel companies in South China for both outbound and domestic travel. It specialises in leisure tour services and is one of the largest leisure tour operators in China. GZL is the only regional travel company which has ever been awarded the prestigious “Famous Brand of China”, and the sole travel company in China to receive the “The Outstanding Manager for Countrywide Customers Satisfaction” for Mr Hong Zheng, its Chairman and General Manager by the Chinese Central Government in 2005.
GZL provides these services through a network of some 115 high street GZL branded stores across 20 cities in Guangdong Province of which some 66 stores are franchised, as well as offering a 54 seat call centre for bookings by telephone. The tour packages typically comprise transport (being air and/or sea and/or rail and road), accommodation and sightseeing. To complement its tour packages, GZL maintains a fleet of 53 tour coaches that it provides to service inbound and domestic tour groups. GZL currently has direct sales contracts with approximately 500 hotels, 55 domestic and international airlines, 105 destination agents and 80 inbound agents. In 2006, GZL arranged tours for over 710,000 travellers.
Due to its strong links with local government, GZL, though its subsidiary GZL Real Estate, has historically undertaken some property development, particularly in Guangzhou. In 1996 GZL Real Estate entered into a joint venture development of GZL Tower in Guangzhou with two other developers. GZL Tower was completed in 2002 with some 32,154 square metres of gross floor area of which GZL Real Estate’s share was 13,269 square metres. Since completion, 9,679 square metres have been sold by the joint venture development company.
e-JV
E-ticketing is relatively new in China with the first e-ticket operation launched on 28 March 2000 in a joint venture between China Southern Airlines and Et-china. The relationship was formalized in 2002 with the formation of the e-JV of which China Southern Airlines owns 51 per cent. and Et-china 49 per cent. Et-china manages the joint venture with the right to appoint the general manager. Originally a five year agreement, in June 2007 the e-JV was extended for an additional ten years to April 2018.
Growth Drivers
The Directors consider that the main drivers behind travel and tourism growth in China are:
- Economic Growth – steady economic expansion has greatly benefited Chinese travel and tourism. China is forecast to become the world’s largest economy by 2030 (Chinese Academy of Social Sciences).
- Increase in disposable income – although the traditional consumption pattern in China is quite conservative, expenditure on leisure has been gaining higher prevalence, especially in younger consumers.
- Rising middle class – the Chinese National Bureau of Statistics estimated that in 2005 about 13 per cent. of the country’s urban households, some 73 million people, were middle class. This number is expected to increase to 25 per cent. by 2010, indicating 170 million people will be classified as middle class in China.
- Increased holiday entitlement – since 1999 the Chinese State Council has introduced three national one week holidays, namely the Spring Festival in the beginning of the year, International Labour Day holiday in May and the National Day holiday in October. The Chinese State Council is considering the possibility of increasing national holidays by including more traditional Chinese festivals. In addition, planning to travel during these national holiday periods has become a more popular choice for Chinese nationals with the number of Chinese nationals taking a holiday increasing from 46 per cent. in 2000 to 53.2 per cent. in 2005 (source: Euromonitor).
- Government led initiatives to promote outbound tourism – the Chinese government has removed certain restrictions for Chinese nationals to travel abroad by increasing the number of countries with Approved Destination Status (i.e. countries where Chinese nationals are allowed to travel on a tourism visa) to some 132 countries (and districts of Hong Kong, Macau and Taiwan) and simplified the procedures required to travel outside of China. In addition, more countries, especially in South East Asia, have allowed visa-free status or landing visas to Chinese nationals.
- Internet usage – higher levels of internet penetration in China and wider adoption of the internet for purchasing travel products are expected to drive further growth, particularly in the FIT sector.