Catering group Sodexho Alliance has lost over a third of its value on news that the group's British unit, Land Technology, suffered accounting problems earlier this year.

Sodexho's chief financial officer Sian Herbert Jones told the BBC that the shortfall related to unpaid bills from clients, money which the company had already accounted for but never received.

Ms Herbert Jones said this had been found through an internal audit, and would cost the group 22m euros (£13.9m).

The French-based company issued a profit warning this week because of the shortfall, although it had originally warned the market of the accounting problem in May.

Nonetheless, the warning wiped 30% off its shares, sending then down to a six-year low of 19.25 euros.

Not enough vigilance

Sodexho,which operates in the same market as catering group Compass, said: "Serious errors of management as well as accounting anomalies" in its British operations had been discovered and that this would set its objectives back by a year in the UK.

The company also criticised its UK auditors, PriceWaterhouseCoopers, which it said "have not been sufficiently vigilant."

Sodexho's warning spooked investors its UK rival Compass, whose brands include Little Chef and Ritazza coffee bars.

Its shares fell 10% in early trade on the back of the warning before recovering to a 2% fall by the end of the day.

Analysts said they had been aware of the accounting problems in Britain but had not been expecting a profit warning.They now fear more bad news.

"It is difficult to believe their forecasts for 2003.....given the current state of the economy," said one analyst in Paris.