VGI Partners has questioned Corporate Travel Management’s accounting practices
Short-selling hedge fund VGI Partners released a 176 page report on Sunday that raised a number of red flags for the company including serious allegations that its cash flows are at odds with its claims of strong organic growth, that senior managers have been selling company shares and that it did not fully disclose the impact of revised revenue figures.
The report also highlighted the change to Corporate Travel’s accounting of recognised revenue last financial year that saw the company include confirmed commissions from suppliers as revenue; something that it hadn’t done before.
VGI also alleged that Corporate Travel Management’s global offices in Glasgow, Paris, Amsterdam, Stockholm and Switzerland and the US were either operating with skeleton staff or were unused.
Corporate Travel Management has delivered strong returns for its shareholders since it listed on the ASX eight years ago, delivering total shareholder returns of over 3500 per cent since then, and of 18 per cent in the past year.
Even as recently as last week, the company’s share price was amongst the best performers on the market, gaining 3.5 percent at $29.84 last Wednesday.
Among other points that VGI has raised are that its price to earnings multiple was well above its peers at 28.6 times, compared to 15.8 for local rival Flight Centre.