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Tui Travel braced for stormy AGM

Tui Travel senior executives face a potentially stormy annual general meeting today following the group’s restatement of accounts at the end of last year.


Institutional investors are expected to oppose the group’s choice to replace former auditor KPMG, which resigned at New Year saying its relations with “certain directors” had become“increasingly strained”.


Shareholder advisory group PIRC (Pensions Investment Research Consultants) recommended last week that investors oppose the appointment of PricewaterhouseCoopers (PwC) as replacement, arguing: “PwC were the incumbent auditor at the predecessor company [Thomson] where fundamental flaws in internal controls led to the reporting inaccuracies which led to the resignation of KPMG.”


Europe’s biggest travel group and a FTSE-100 company, Tui Travel revealed in October that an accounting error first identified in August had swelled to £117 million. It was KPMG that uncovered the problem – a failure to record price discounts and fees for changes to bookings accurately and a consequent overstatement of revenue – which extended back five years


KPMG’s resignation surprised analysts, as the company had only audited the Thomson part of the group – where the problem originated – for a year. Thomson had been audited by PwC for the rest of the period.


Group audit committee chairman Jeremy Hicks and fellow non-executive director Giles Thorley resigned soon after KPMG, although Tui Travel insisted there was no connection between the departures.


Representatives of the City institutions that own up to 45% of Tui Travel may make it an uncomfortable AGM. At the same time, German parent company Tui AG – which owns 55% of the group – is believed ready to increase its holding.


One City source described the German owner as “unhappy” at events at the UK-based group.

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