Corporate Travel Management (ASX: CTD) Scraps Guidance as £80M UK Accounting Scandal Unfolds

Corporate Travel Management’s (ASX: CTD) accounting scandal escalated dramatically yesterday, with the company confirming an £80 million (~A$162 million) revenue reversal across three years, suspending its UK CEO, and scrapping FY25 guidance entirely. The corporate travel specialist’s shares haven’t traded since being suspended on 22 August, and the situation has now gone from bad to worse. For investors hoping this creates a bargain opportunity, our view is unequivocal: stay away until the dust settles.

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One-Third of European Revenue Now Under Question

The scale of this scandal is staggering. KPMG’s forensic team has spent months analysing approximately 47,000 documents and more than 1.5 million individual sales and purchase transaction lines, covering over GBP 400 million in transactions for its UK business.
To put this in perspective, reversing one-third of European revenue essentially wipes out years of reported growth in that region.

Here’s what KPMG found:

– Incorrect revenue recognition relating to several large customer contracts completed between 2021 and 2023, accounting for GBP 45.4 million that should not have been recognised
– Restatements across FY 2023 and FY 2024 of up to GBP 58.2 million, and further FY 2025 adjustments of up to GBP 19.4 million
– An additional $13.9 million in provisions for the Australia and New Zealand region, separate from the UK issues

In simple terms, “revenue recognition issues” means the company booked sales it shouldn’t have – either too early or for contracts that didn’t materialise as expected. According to RBC Capital Markets, up to a third of European revenues from FY23-25 may need to be restated and possibly refunded, which could lead to significant cash impacts. When analysts start asking about potential criminal investigations on a conference call, you know the situation has moved well beyond a simple accounting error.

Why Corporate Travel Management Is Uninvestable Right Now

We believe Corporate Travel Management is simply uninvestable right now – and that’s not a term we use lightly.
The company says it remains well-capitalised, with A$148.3 million in cash and no drawn debt as of 31 October. However, it acknowledged that customer refunds could impact near-term liquidity, with timing and amounts still uncertain.
That cash figure looks comfortable on paper. But here’s our concern: if significant customer refunds materialise and the KPMG review uncovers additional issues, that buffer could erode quickly. RBC has flagged “significant balance sheet risk” – a warning that shouldn’t be dismissed.
The timeline doesn’t inspire confidence either. The company has secured an extension from ASIC to lodge its FY 2025 financial statements by 31 December, though it concedes it is unlikely to meet that deadline. This means shares could remain suspended well into 2026, leaving investors completely locked out. UK CEO Michael Healy has been temporarily stood down with immediate effect, with global COO Eleanor Noonan stepping in as interim leader during the investigation. Leadership changes mid-crisis rarely inspire confidence.

The Investor’s Takeaway

RBC Capital Markets noted the November update was “far worse than we expected and largely contrary to the company’s prior disclosures.” This is the core issue: management credibility has been severely damaged. When a company’s own disclosures prove unreliable, how can investors trust anything going forward?

Before this stock becomes investable again, we’d want to see:

– Full completion of KPMG’s forensic review with no further surprises
– Audited financial statements were actually filed and signed on
– Clear understanding of total customer refund obligations
– Confirmation that major UK government contracts remain intact

Even when shares eventually resume trading, the price discovery process will likely be brutal. We expect a significant gap-down on reopening as the market reprices years of overstated earnings.
This isn’t a “buy the dip” situation. It’s a credibility crisis that could take years to repair. For now, watch from the sidelines – there are far better opportunities elsewhere on the ASX.