Tech Data discovers UK accounting 'improprieties'

Distributor to restate three years of numbers to correct errors in how its UK arm reflects vendor accounting

Tech Data is restating some or all of its numbers for the past three years due to accounting improprieties relating to its UK business.

The distributor announced last night that it will restate some or all of its previously issued quarterly and audited annual financial statements for the fiscal years 2011, 2012 and 2013.

The adjustments – which could see it lop up to $33m (£21.7m) off its previously reported net profit – will be made to "correct improprieties primarily related to how the company's UK subsidiary reflected vendor accounting", the distributor said.

"Accordingly, investors should no longer rely upon the company's previously released financial statements and other financial data relating to these periods," it stated.

In the UK, Tech Data operates five divisions under the Computer 2000 brand: Computer 2000, Datech, Tech Data Mobile, Azlan and Maverick. It recently acquired SDG, the distribution arm of SCH, propelling its turnover past the £2bn mark.

The global distributor dropped the bombshell in a financial statement last night following discussions with its accountant Ernst & Young. Its share price fell by more than 10 per cent this morning.

The restatements are expected to cut previously reported consolidated operating income by a total of $30m to $40m and consolidated net profit by $25m to $33m, Tech Data said.

"These preliminary estimates are based on currently available information and are subject to change during the course of the company's ongoing investigation," Tech Data stated.

Tech Data chief executive Robert Dutkowsky said: "We are working diligently to resolve this matter as soon as possible. We do not plan to comment further during the course of the investigation unless any material developments arise."

It is not the first time in recent months that a US-based firm has cried foul play over the way its UK arm recognises revenue. HP is still locked in a war with Autonomy's founder Mike Lynch after claiming he inflated the UK software maker's value prior to it acquiring the firm – claims Lynch sternly denies.