Patisserie Valerie accounting fraud scandal worse than initially feared
After the café chain nearly collapsed last year over accounting irregularities, the company’s owner has since announced that the scale of the alleged fraud is far worse than it initially thought.
The owner of Patisserie Valerie is looking at ‘all options available’ to the company after finding out that the scale of its accounting scandal is far worse than it initially feared.
The severity of the issue came to light after Patisserie Holdings’ forensic accountants revealed that the misstatement of the café chain’s accounts was extensive and involved ‘significant manipulation of the balance sheet and profit and loss accounts’.
Other account manipulations also involved thousands of false entries into the company’s ledgers, according to a recent update released by Patisserie Holdings.
The café chain’s owner admitted that it will take some time before it is able to provide a reliable trading outlook, with more investigation required into the account irregularities.
Patisserie Valerie caught cooking the books
From the work carried out by forensic accountants to date, it appears that the cash flow and profitability of Patisserie Valerie had been exaggerated in the past and is materially lower than the figures it provided in its October 12 2018 trading update.
Patisserie Holdings has hired KPMG to assist it in carrying out a review of all options available to it to recover from the devastating effects of the fraud, and to preserve value for its stakeholders going forward.
The company confirmed that RSM have been appointed auditors, but due to the fraud and attendant accounting issues it will be some time to complete a restatement of the business’ accounts and prepare the audited figures to 30th September 2018.
The company has also been in discussion with its bankers to extend the standstill of its bank facilities beyond January 18 and will issue an update when those discussions have concluded.
Unclear future for Patisserie Valerie
There is still a lot of work to be carried out before its shares will recommence trading, with its owner offering no timeline for when the business will return to normal.
Since the revelations about the alleged fraud surfaced the company has replaced practically all of its senior management team, with former Starbucks executive Rhys Iley coming onboard as commercial director in December and turnaround specialist Steve Francis taking the helm as its new CEO back in November.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
See an opportunity to trade?
Go long or short on more than 13,000 markets with IG.
Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
