Shares in Alpha Airports, the UK aviation catering and retailing group, were suspended on Tuesday, after its auditors, PricewaterhouseCoopers, withdrew approval of the group’s preliminary results, which were announced last month.
PwC has refused to sign off Alpha’s final report and accounts forcing the group to miss this week’s deadline for sending out its annual report to shareholders and to postpone its annual meeting, which was due to take place on May 25.
Alpha said PwC’s move was in connection with the investigation by the auditors of “a series of related transactions” connected with a major contract awarded to the group during its last financial year to the end of January.
The group, the biggest supplier of onboard airline catering and retail services in the UK, said it was “urgently seeking to clarify the position” with its auditors.
Alpha refused to disclose any details of the contract that was under investigation. In its preliminary results issued last month it highlighted only one major contract award, a deal to supply inflight catering in Australia to Malaysian Airlines.
Alpha Airports is 26.7 per cent owned by Servair, the inflight catering subsidiary of Air France-KLM, Europe’s leading airline.
The announcement of its preliminary results on March 30 led to a strong recovery in the group’s share price, which had fallen steeply late last year after it announced in late October the loss of one of its main catering contracts.
With effect from the end of this month it has lost its deal with Thomsonfly, the leading UK charter airline, which it has been supplying at 11 airports across the UK.
The Alpha share price dropped from a peak of 102½p in February last year to a low of 64p in November after news of the loss of the Thomsonfly contract. Since it published its preliminary results on March 30, however, which showed a much stronger performance in the second half, the share price has risen in less than four weeks by 26 per cent from 68p to a high last week of 85¾p. It closed on Monday at 84½p ahead of the suspension on Tuesday.
A spokesman for the company said that the move by its auditors was not related to the separate problems it was facing arising from a fraud by a third party from which Alpha had suffered a loss of around £2.5m across a number of European countries. It has already started legal proceedings over the fraud.
The group said last month that it was restructuring its under-performing UK and Ireland businesses with the aim of doubling operating profit margins within three years.
According to the preliminary unaudited results reported last month Alpha Airports’ core UK and Ireland operations accounted for 82 per cent of turnover but only 41 per cent of operating profits, while international operations produced 59 per cent of profits from only 18 per cent of sales.
It said its pre-tax profits had risen by 6.3 per cent from £17.4m to £18.5m including exceptional charges of £4m on a turnover which rose 12.9 per cent from £487.8m to £550.9m.
Get alerts on Transport when a new story is published