Coopers settles out of court with TGI for pounds 725,000 over subsidiary
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Your support makes all the difference.COOPERS & Lybrand, the accountancy firm, has paid pounds 725,000 to TGI, the Hampshire-based maker of Tannoy, Goodman and Mordaunt-Short loudspeakers, as a final out-of-court settlement over a disputed set of accounts for a subsidiary bought by TGI in 1989. Under the settlement Coopers expressly denies negligence.
Coopers was auditor to TGI when it bought Audix, a maker of loudspeaker systems, in 1989. Audix systems are used at Gatwick, Heathrow and Stansted airports. TGI is one of the UK's manufacturing success stories, with nearly 70 per cent of sales going abroad.
The price TGI paid for Audix was linked to the latter's profits for the year to 31 March 1990, and this is where the five-year dispute arose. The consideration for Audix was payable in two parts, the first of pounds 2.2m immediately, and the second a 'contingent consideration' dependent on Audix's pre-tax profits for 1990.
TGI paid both parts, and Audix's accounts showed a pre-tax profit for 1990 of pounds 1.1m. This figure was subsequently found to be in dispute, and TGI restated the profit as a loss of pounds 700,000.
Coopers resigned as auditor of both TGI and Audix in 1991, and the dispute began. Yesterday TGI's chief executive, Nigel Hamilton, hailed the settlement as the best course for all concerned.
'It's good news to get this behind us because we have spent a lot of management time on this, and we have reclaimed some of the consideration, which will restore shareholders' funds by about 10 per cent. It also avoids the huge costs of court action.'
TGI said it will apply this pounds 725,000 to further reduce its bank borrowings. The impact on current year profit will be broadly neutral as most of this payment will be used to reduce the goodwill written off against reserves on the acquisition of the Audix companies in 1989.
TGI's shareholders' funds, which at 31 March were pounds 6.3m, will be increased by pounds 725,000.
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