Trafalgar investors attack Touche Ross

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The Independent Online
TOUCHE ROSS yesterday came under fire from Trafalgar House shareholders, concerned about the firm of chartered accountants' competence in auditing the results of the hotel, construction and engineering conglomerate.

At the annual meeting the resolution to re-appoint Touche was initially narrowly defeated on a show of hands, necessitating a poll. Touche refused to comment on the events.

Several shareholders questioned Touche's role in the restatement of Trafalgar's results for the year to 30 September 1991, when a previously reported pre- tax profit of pounds 122m subsequently became a loss of pounds 38.5m.

The issue dominated the meeting, which lasted two hours and 40 minutes, at which shareholders were again told that there was no firm evidence of an upturn in the company's markets.

Yesterday's unrest also came amid further City rumours that Trafalgar was lining up a rights issue. Trafalgar did not dismiss the reports. After the meeting Allan Gormly, chief executive, said: 'I can't rule out anything like that.'

The shares fell 2p to 87p yesterday with some investors concerned about the shareholders' attacks on Touche. One analyst said: 'The board has got to be mindful that on a free vote the majority voted against the re-election of the auditors.'

At the meeting, Alan Clements, acting chairman, threw a protective fence around Touche, allowing only the company's directors to field questions from the 400- strong gathering in London.

One shareholder asked how Touche could write in 1991 that the report and accounts gave a true and fair view, and say the same thing a year later after restating the results.

He demanded an explanation from Touche, but was given a reiteration of the chairman's opening address, which covered the company's dispute with the Financial Reporting Review Panel.

The panel had two main concerns. One was the reclassification of certain properties, from current to fixed assets, and the subsequent write-downs in values. The second was the amount of advance corporation tax carried forward in the balance sheet.

'The debate with the panel was a long one,' Mr Clements said. 'At the end of the day we had to decide if it was in shareholders' interests whether we should get involved in a long drawn-out court case.'

Trafalgar's decision to restate the figures, he said, 'stopped a long period of uncertainty. The decision was right in the circumstances. If we had lost it would have been very damaging.'

Further accounting questions flowed from the floor and one shareholder quipped: 'Auditors are not infallible, the only thing they know how to do well is charge fees.'

Touche was eventually reappointed on 281.7 million votes, including proxies, with 490,000 cast against.