DTI calls Trafalgar in over accounts

TRAFALGAR House has been summoned before the Department of Trade and Industry's Financial Reporting and Review Panel to answer questions over its accounts.

Trafalgar insisted last night that any consequential amendment to its accounting practices and policies should not affect the value of shareholders funds shown by the company in its last balance sheet.

News of the FRRP investigation is a further blow to the company as it attempts to fight off a corporate raid for 30 per cent of its shares from the Keswick brothers of Hong Kong. Trafalgar is among six companies currently being investigated by the Panel, set up in September 1991 to examine allegations of unduly creative accounting methods.

Trafalgar's standing in the City has plummeted since a pounds 310m rights issue a year ago. Both its management acumen and its accounting practices have been strongly criticised.

According to confidential internal valuations Trafalgar would be worth at least pounds 1bn net of debt, or nearly 150p a share, if broken up into its constituent businesses and sold off piecemeal.

Trafalgar may hint at these valuations in a letter to shareholders this week, urging them to resist the Keswicks' offer.

Through one of their satellite companies, Hongkong Land, the Keswicks bought 15 per cent of Trafalgar House in a stock market raid last week and announced their intention to tender for a further 15 per cent at 85p a share.

Sir Nigel Broackes, Trafalgar's chairman, will tell shareholders in a letter to be posted on Tuesday that the offer severely undervalues the firm and should be resisted.

(Photograph omitted)