16 February 2021
Positioned for recovery with robust revenue, strategic acquisitions creating a much larger business upon recovery
Corporate Travel Management is well positioned to benefit from a recovery in corporate travel activity, with Group revenue growing through the first half of FY21 and expected to accelerate in the second half.
The first half underlying EBITDA loss of AU$15.7m was lower than expected after a resilient revenue performance, despite the worsening COVID-19 impact in the second quarter.
CTM has capacity to pursue more value-creating acquisitions after acquiring Travel & Transport (T&T) and Tramada in the first half of the year, with no debt, AU$119m cash and an undrawn, committed AU$178m finance facility.
Managing Director, Jamie Pherous said, “We are in a good position to capitalise on a recovery in corporate travel activity. We are now very close to a break-even position with new client revenue momentum, and we remain most leveraged to the largest travel markets that are also the most advanced in rolling out vaccinations.
“Significant new client wins across all of our regions supported a better than expected first-half earnings result and have given us revenue momentum into the second half.
“We have maintained service levels throughout the pandemic and continued to invest in our proprietary technology to deploy tailored solutions at speed in response to the fast-changing needs of our customers and the travel industry. In fact, technology spend is returning to pre-COVID levels.
“Our scale and financial strength, combined with CTM’s personalised service and tailored technology solutions, have translated into new client wins and growing market share globally.”
Improving performance over the first half
The Group reported revenue of AU$74.2m for the first half of the financial year. December, which is typically the lowest activity month in the first half, was the highest monthly revenue at $17.3m including the T&T contribution.
North America was the largest region in Group revenue and new client wins. CTM’s increased scale in North America through the T&T acquisition and proprietary technology offering, combined with the Group’s financial strength, have driven an acceleration in new client wins.
The Australia/New Zealand region reported underlying EBITDA profit of AU$3.0m for the first half, including AU$1.9m in December 2020 when domestic Australian borders re-opened. This result was achieved on revenue representing only 29% of 1H20, highlighting the capacity of the business to operate profitably on domestic travel.
The Europe region delivered a resilient revenue performance, despite ongoing pandemic restrictions. After new client wins, the region reached break-even in January and is expected to become profitable from February 2021.
CTM grew market share in Asia and has been able to acquire client books with no capital outlay, as competitors exited the travel industry.
Integration of strategic acquisitions on track
The acquisition of T&T was completed on 30 October 2020 and integration of T&T is on track. With its strong balance sheet, CTM is expected to emerge from the COVID-19 pandemic in a position of strength with enhanced opportunities for organic growth in North America.
CTM also completed the acquisition of Sydney-based travel technology company, Tramada Holdings on 29 October 2020.
Continued technology investment
The Group has continued to invest in its technology platform with capex nearing pre-pandemic levels, focused on traveller wellbeing, risk management, safety and hygiene information and budget optimisation tools.
CTM’s ability to leverage its proprietary technology to rapidly respond to changing client needs during the pandemic has been an important factor in growing market share in the reporting period.
Mr Pherous said, “Whilst Australia and New Zealand have not commenced their vaccination programmes, USA and UK are well advanced. The UK (population 67m) has surpassed 15m vaccinations and the USA (population 329m) has surpassed 50m vaccinations. Both countries expect to have the high-risk segment of their populations vaccinated in this quarter, potentially allowing a relaxation in travel restrictions, much earlier than ANZ. Given 70% of our pre-COVID revenue is derived from the UK and USA, we are well positioned for the incremental revenue gains from travel relaxations in these markets.”
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