Corporate Travel Management shares surge on $3b contract with UK Home Office

Corporate Travel Management’s (ASX: CTD) strategic acquisitions during the pandemic have begun to reap riches for the Brisbane-based company, which has today announced the landing of a £1.6 billion ($3 billion) contract over the next two years with the UK Home Office.

Although the precise value of the ‘bridging accommodation and travel services’ contract to Corporate Travel Management’s bottom line is not yet clear, investors were bullish on the transaction in early trade, pushing the company’s shares as much as 16 per cent higher to $21.90.

Corporate Travel Management, which held its nerve during global lockdowns by acquiring key global assets in anticipation of a market recovery, bolstered its global footprint with the $274 million buyout of US-based Travel and Transport, Inc. in 2020.

At the time, Corporate Travel Management said the deal placed it among the world’s leading global mid-market corporate travel managers by lifting its scale in the UK, Europe and US.

In 2021, the company acquired Helloworld Travel's (ASX: HLO) business and entertainment travel arm for $175 million.

While the contract with the UK Home Office will deliver an expected $3 billion in total transaction value (TTV) over the two years from March this year, the deal can be extended by another year by the Home Office if demand requires.

The UK Home Office has about 35,000 employees working in a range of roles in the UK and overseas. The Home Office oversees Britain’s border security, citizenship, immigration enforcement and passport services.

“This work involves highly complex services and logistic support that will be delivered by an already established dedicated team within CTM that has both the experience and specialised knowledge to support this work,” says Corporate Travel Management in a statement to the ASX.

“This region is already CTM's strongest contributor to CTM’s financial results and, as a result, this contract will have a significant impact on the further growth of our European region in FY24 and beyond.”

Corporate Travel Management posted record European TTV of $924.3 million in the first half of FY24, up 15 per cent from a year earlier.

With $1.4 billion in TTV from the US and $1.33 billion in Australia/New Zealand over the same period, the latest deal with the UK Home Office is expected to propel the company’s European operations into its biggest market.

Corporate Travel Management alluded to the UK contract in its first-half results, saying it expected ‘very strong’ growth for its European division in the second half that was to be ‘enhanced by significant and large new client wins transacting’.

The company bounced back into the black in the first half of FY24 with a net profit after tax of $15.7 million. The result was buoyed by a 102 per cent increase in TTV to $4.2 billion.

Business News Australia has sought further comment from Corporate Travel Management on the impact of the UK Home Office contract to its business.