Deep Sea halts shares amid accounts quandary

Deep Sea Leisure, the aquarium owner, yesterday suspended trading in its shares on the Alternative Investment Market pending the resolution of an accounting quandary that may lead to it restating results.

The company, which owns Deep Sea World in Fife and Blue Planet in Cheshire, was on the brink of financial ruin in 2000 and narrowly avoided falling in to the hands of receivers after the costs of building Blue Planet spiralled out of control.

The company hit problems with its accounts this summer after being taken over by the privately owned Spanish attraction company Aspro. DSL's founder, Philip Crane, sold his 20 per cent stake to Aspro in July, at a 9.2 per cent discount. This took Aspro's holding to more than 29.9 per cent and triggered a takeover bid from the Spanish company. It now owns 83 per cent of DSL.

Aspro decided in August to change DSL's year-end from February to October in order to bring it in line with the rest of its business divisions. It also appointed PricewaterhouseCoopers as the new auditor for the group.

The subject of contention in the company's accounts is a £2.9m regional development grant given by the Government to help fund the Blue Planet site, the largest aquarium in the UK and the only one to have successfully bred stingrays.

DSL missed the November deadline by which it had to report its interim results, as it tries to resolve with PwC how to account for the amortisation of the Government grant in its figures. AIM agreed to give DSL an extension for completing its results, on the condition its shares were suspended. Trading stopped yesterday at 31.5p, giving the company a market capitalisation of £6.5m.

"DSL and PwC are presently clarifying the position and establishing the impact of any necessary changes in relation to the financial results," a statement from the company said. Prior results may have to be restated.

A spokesman for the company said the matter was not a cash-issue for DSL and all the conditions of the grant had been met. He said the issue would be resolved within two weeks. The Chancellor of the Exchequer, Gordon Brown, paid a visit to the Fife aquarium this weekend, while John Prescott, the Deputy Prime Minister, paid a visit to the Blue Planet.

DSL made a pre-tax profit of £1.26m in its last financial year on turnover of £6m, compared with a pre-tax loss of £719,000 after exceptional items in the previous 12 months.

In the quarter to the beginning of June DSL improved its trading performance with sales up by 7 per cent over the equivalent period last year.