The chief financial officer of travel conglomerate TUI Travel plc has resigned after it emerged that £117 million of previously reported sales were in fact the result of a data integration glitch.
TUI Travel Plc, which owns the Thomson travel agency, acquired rival company First Choice in 2007. An error during the integration of First Choice’s accounting software with TUI Travel’s own systems meant that discounts offered by First Choice sales people were not registered on TUI’s accounts.
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This meant TUI Travel plc overstated its revenue for the last year to the tune of £117 million. The company restated its accounts this week, writing down £117 million in revenue, reducing its profit by £42 million and reducing cash reserves by £70 million. TUI Travel plc’s share price fell by 12% following the news.
The company has accepted CFO Paul Bowtell’s resignation, and he will leave at the end of the year. Bowtell had joined TUI Travel when it acquired First Choice.
“It is now clear that at the time of the merger there were weaknesses in legacy systems we chose to use in the TUI UK business,” said chief executive Peter Long in a statement.
The company is now “satisfied that the weaknesses in the systems have been rectified”.
UPDATED: A little more detail on TUI Travel’s legacy accounting systems comes from a case study by IT services company Avanade, which helped a division of the company to deploy Microsoft’s Dynamics AX enterprise resource planning (ERP) application last year.
“TUI inherited four different sets of accounting software,” the case study reads. "This mess meant that the finance team had to reconcile four different sets of figures from four different programs to produce a company-wide report. In other words, it was time consuming and slow."
"There were other inefficiencies too. Different user interfaces restricted team members to one software package or another, making it difficult to move people from one set of accounts to another. They had to pay a third party company to scan invoices into their system ready for processing. Lastly, it was difficult to ensure that the company claimed all the discounts that it had agreed with its suppliers. These problems, though minor in themselves, cost the company a considerable amount of money to work around."
Avanade says the Dynamics AX deployment was not related to the First Choice integration.
