Corporate Travel Management (CTM) is under increased scrutiny following revelations of a more significant accounting issue than initially disclosed. According to RBC Capital Markets analyst Wei-Weng Chen, the accounting scandal presents potential challenges for the company’s cash flow and balance sheet. Corporate Travel Management specialises in managing travel programs for businesses of all sizes, offering services such as booking flights, accommodations, and ground transportation. They also provide event management services.
The company now anticipates reversing up to one-third of its European revenues from financial years 2023 to 2025. This adjustment amounts to approximately £77.6 million (or $147 million AUD). Further adjustments are possible as KPMG finalises its review of the company’s financials. RBC Capital Markets suggests that these revenue reversals could create ‘significant balance sheet risk’ for CTM.
Despite Corporate Travel Management holding over $148 million in cash, which includes restricted funds, RBC maintains a ‘Sector Perform’ rating on the company with a price target of $15.00. The analyst also highlighted the prevailing ‘negative’ market sentiment surrounding Corporate Travel Management. This negative sentiment is largely driven by the ongoing financial reporting issues and the uncertainty surrounding the final outcome of the KPMG review. Investors are closely monitoring the situation as Corporate Travel navigates these financial challenges.
