Text of announcement:
STATEMENT TO AUSTRALIAN SECURITIES EXCHANGE – January 21, 2008
FLIGHT CENTRE UNLIKELY TO PURSUE MFS ACQUISITIONS
FLIGHT Centre Limited (FLT) has today reaffirmed its acquisition strategy in light of
speculation relating to a possible sale of MFS’s travel assets.
While FLT continues to seek acquisition and joint venture opportunities as part of its
global growth strategy, it is unlikely to pursue assets held by MFS.
FLT managing director Graham Turner said the company would instead focus on
opportunities that were likely to create greater value for FLT shareholders.
“FLT has historically been reasonably disciplined in applying its acquisition strategy
and has only pursued businesses that could be acquired for the right prices to create
significant shareholder value,” Mr Turner said.
“For various reasons at this stage, we do not believe at this time that the MFS travel
assets represent an attractive acquisition opportunity.”
FLT has today boosted its operations by acquiring a 50% holding in Employment
Office Australia, a Brisbane-based recruitment business.
The joint venture agreement will see FLT partner with the Employment Office to
expand the recruitment business’s operations in Australia and overseas.
Mr Turner said the acquisition was in line with the company’s strategy of diversifying
its revenue streams by applying the Flight Centre business model to other sectors.
“We have identified real opportunities to strategically expand into other spheres of
business, while at the same time continuing to expand our global leisure, corporate
and wholesale travel businesses,” he said.
“Through this joint venture, FLT has effectively secured a strategic holding in an
established and well run business that generates healthy profit, healthy margins and
has considerable scope for expansion.
“Importantly, the businesses have similar philosophies and core characteristics,
including an incentive-based remuneration structure and a systemised and replicable
business model that can be rolled out in Australia and overseas.”
Employment Office was incorporated in 2003 and currently employs 24 people at its
Brisbane, Sydney and Melbourne locations. The business provides time and cost
efficient recruitment services to a number of local government, financial services,
mining and nationally recognised companies.
Employment Office managing director Tudor Marsden-Huggins and sales director
Susanne Mather will manage the joint venture’s daily operations. A joint venture
Board, with equal FLT and Employment Office representation, will also be created.
Mr Marsden-Huggins said the joint venture agreement would fast-track the
business’s growth and deliver tangible benefits.
“The Employment Office model differs from typical recruitment businesses and offers
clients the benefits of flat fees and modular service systems, which allows our
partners to choose the level of service they require on a case-by-case basis,” he
said.
“Through this relationship with Flight Centre Limited, we can build on our success
and develop a significantly larger presence in Australia and overseas, in addition to
leveraging advertising rates, consolidating recruitment products and services and
taking advantage of various marketing synergies.”
FLT and Employment Office have initially agreed a three-year relationship. EO will
have a put option after three years and FLT will have a call option.
FLT will initially invest $1.1million for its 50% interest, including a $500,000 payment
to the joint venture to fund its future growth. The joint venture is expected to trade
profitably during 2007/08.
ENDS Media and investor enquiries to Haydn Long 0418 750454
MFS
mfs limited
