Patisserie Valerie’s misstated accounts

The owner of Patisserie Valerie café chain will review all options available for the business after revealing that problems with its accounts were even worse than previously thought. Patisserie Holdings said its advisers had discovered that past mis statement of accounts was “extensive, involving very significant manipulation including thousands of false entries into the company’s ledgers. The company warned that profitability would be less than had been predicted when the irregularities in its financial reporting were first discovered on October 10, 2018.

Patisserie Holdings have now appointed KPMG to assist “in carrying out a review of all options available to it in order to recover from the devastating effects of the fraud  and to preserve value for its shareholders.

Shares in the group were suspended after the discovery of significant and potentially fraudulent accounting irregularities. The company came close to collapse  before being rescued by executive chairman and major shareholder Luke Johnson committed £20m of his own cash as loans, while shareholders backed a deeply discounted share sale.

The company said that cash flow and profitability  were “materially below that announced in the trading update on October 12, 2018 which was based on limited work carried out over a 48-hour period. It was estimated that earnings before exceptional items, interest, tax, depreciation and amortisation for the year ending September 30 2019 could be £12m, before the investors put an additional £15m into the company via a discounted share placing.

Patisserie Holdings has replaced most of its top management team since the issues were first revealed.