Suspended Patisserie Valerie Opportunity

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Patisserie Valerie owner appoints Nick Perrin as interim CFO

(Reuters) – Scandal-hit Patisserie Holdings Plc (L: CAKEP ) said it had appointed Nick Perrin as interim chief financial officer, marking another top management change for the British cafe chain owner weeks after it appointed a new top boss.

Perrin’s appointment comes nearly two months after then CFO Chris Marsh, who was arrested following reported accounting irregularities and potential fraud.

Perrin was most recently the finance director of veterinary services provider CVS Plc (L: CVSG ), Patisserie said, adding that he had been appointed while the firm undertakes a process to appoint a permanent finance head.

The company, which owns the Patisserie Valerie chain, has been under pressure since an accounting black hole was discovered and reports emerged that its former chief executive and Marsh had been issued twice the number of shares it had disclosed in official filings, forcing both executives to step down.

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Suspended Patisserie Valerie Opportunity?

Wednesday 10 October 2020 17:03, UK

The owner of Patisserie Valerie has suspended trading in its shares amid an inquiry into potential fraud and also revealed that its main subsidiary was being pursued for more than £1m by tax authorities.

The announcement on Wednesday morning followed a story by Sky News hours earlier that Patisserie Holdings was investigating a multimillion-pound hole in its accounts that could exceed £20m.

In a later statement, the company disclosed that it had just become aware of a winding-up petition that had been filed against is main subsidiary, Stonebeach, relating to £1.14m owed to the UK tax office, HM Revenue and Customs.

It said it was in touch with HMRC “with the objective of addressing the petition”.

The company revealed in its initial statement that on Tuesday the board had “been notified of significant, and potentially fraudulent, accounting irregularities and therefore a potential material misstatement of the company’s accounts”.

It added: “This has significantly impacted the company’s cash position and may lead to a material change in its overall financial position.

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“As a result the company has requested that its shares be suspended from trading on AIM while it conducts a full investigation with its legal and professional advisers into its true financial position.

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“In the meantime Chris Marsh, the chief financial officer, has been suspended from his role.

The ‎situation creates a huge headache for Luke Johnson, one of Britain’s best-known and most successful entrepreneurs, who is Patisserie Holdings’ executive chairman and largest shareholder.

He bought a 70% stake in the business in 2006 and his current 37% holding was worth approximately £200m ahead of the suspension in trading.

Mr Johnson is a serial entrepreneur who has enjoyed huge success with restaurant chains including Pizza Express – and this year, he has tried to engineer takeovers of others such as Gaucho, which collapsed into administration during the summer.

He said of the company’s inquiry: “We are all deeply concerned about this news and the potential impact on the business.

“We are determined to understand the full details of what has happened and will communicate these to investors and stakeholders as soon as possible.”

Patisserie Holdings, run by chief executive Paul May, last reported group revenue in the half-year to 31 March of £60.5m – a rise of 9.1%.

Pre-tax profits came in at £11.1m, an increase of 14%.

Patisserie Holdings trades from more than 200 stores.

Suspended Patisserie Valerie Opportunity?

Published: 22:54 BST, 20 October 2020 | Updated: 20:44 BST, 21 October 2020

Six months ago Britain’s favourite posh coffee and cake shop Patisserie Valerie was flying.

While the rest of the high street was shaken to its core by a wave of collapsing shop and restaurant businesses, the 206-store Belgian-themed chain employing 2,500 staff was having a bumper year – or so its investors believed.

Chairman Luke Johnson, who made his fortune building up the Pizza Express chain, issued a report in May to the London stock market saying he was ‘delighted’ with the chain’s performance.

Sell-off: Bosses Luke Johnson, left, and Paul May cashed in shares

All the more astonishing because, that same month, restaurant chains Carluccio’s, Cote and Byron were all digesting painful and very public store closure plans.

Few – least not, we are told, Johnson and several of his fellow credulous directors – stopped to find out how it could be that a chain selling coffee and cakes could be doing so well when all around it was engulfed in chaos.

The opportunity was too good to miss. With the company’s shares hitting new peaks in February as investors’ confidence in the numbers ballooned, chief executive Paul May, finance director Chris Marsh and a non-executive director James Horler, whose job it was to keep an eye on the management, cashed in a swathe of shares worth almost £5.9million.

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The stock price surged further, peaking at £4.92 by mid-June, and another £7.2million of shares were sold by the board, company documents say – this time with Marsh and May joined by deputy chairman Lee Ginsberg, a South African and former finance director at pizza delivery chain Domino’s.

No doubt they could hardly believe their good fortune. But the company’s run was about to come crashing to a halt.

Just 11 days ago, on October 10, as stock markets were rocked, the hype exploded – and the business almost followed.

The directors said they had been made aware of ‘potentially fraudulent accounting irregularities’. What was more, it needed to find £25million in the next few days. Two days later, another blow came when finance director Marsh was arrested before being released on bail.

Marsh previously helped run two firms which later went bust, The Mail on Sunday’s inquiries revealed, but otherwise had an unblemished record at Patisserie Valerie.

Red flags: Stores have been opening in increasingly far-flung locations while the average takings appeared static, analysts have said

Then the Serious Fraud Office released a statement relating to Patisserie Valerie, saying it had ‘opened a criminal investigation into an individual’, without identifying the person. ‘We can give no further information or comment at this time,’ it added.

Their shares were suspended, which prohibits further trading for now. Short-term funding, in part from major shareholder Johnson, has been found. But, analysts say, when trading resumes the value of the firm is likely to plummet, assuming it survives at all.

Sources estimated the slump could leave Johnson nursing losses of more than £100million. City sources said there were a number of red flags – stores have been opening in increasingly far-flung locations while the average takings appeared static.

Several sources drew attention to the nominal interest earnings of £1,000 on huge cash reserves estimated at £25million, which were tucked away in the company’s accounts.

That cash pile has now been restated as a £9.8million debt. The board has since discovered the existence of almost £10million overdrafts run up in two ‘secret’ company facilities. Johnson said neither he nor the board had know of the overdraft facilities.

Johnson – who says he only discovered the accounting catastrophe the day before the shock news emerged – has spoken of the ‘nightmare’ that has become the ‘most harrowing week of my life’.

But one industry insider told The Mail on Sunday that Johnson is well known for his usually meticulous approach to his investments – of which this was by far his largest.

‘Everyone who has ever worked with Johnson says he is normally all over the fine details of his investments. How could it be that this could have happened, that he let this past him? Nobody can get their head around it.’

Johnson, who has had a pugilistic relationship with corporate governance bodies, finally concedes that accusations he ‘was stretched too thin’ were ‘fair criticism’.

Shareholders – unamused and bemused in equal measure that someone who weekly doles out business advice through a newspaper column could be blindsided in this way – are yet to find out how much of their money has been burnt.

One investor said, if the accounts were ‘bogus or misleading,’ directors may need to ‘consider repaying the proceeds [of share sales] back into the company’.

An industry insider went further, saying that if any criminal deceit is uncovered there could be an attempt to recover money through ‘proceeds of crime’ legislation – including money made through the sale of shares by anyone with knowledge of wrongdoing.

‘This could get very complicated very quickly,’ the insider added.

Patisserie Valerie owner’s suspended finance director resigns

Firm reserving position on potential further claims against Chris Marsh

Patisserie Valerie logo on cakes: under Chris Marsh’s watch, chain grew from eight stores in 2006 to more than 200. Photograph: Simon Dawson/Bloomberg

Patisserie Holdings, the British cafe chain owner hit by an accounting scandal, said on Friday that its suspended finance director, Chris Marsh, had resigned.

The company, which owns Patisserie Valerie, also said it was reserving its position in respect of any potential claims it may have against Marsh, arrested this month and released on bail.

Marsh, a main figure in the success of Patisserie Valerie over the past 10 years, has been suspended since an accounting black hole was discovered by the company. Under his watch, the company grew from only eight stores in 2006 to more than 200.

Share issue

This week a petition for a winding-up of the company’s main operating unit was dismissed by the UK’s high court of justice, business and property.

Patisserie had also responded to reports that two of its directors, Marsh and chief executive Paul May, had been issued twice the number of shares it disclosed in official filings.

The company’s chairman, Luke Johnson, this month offered £20 million pounds (€22.5 million) of loans to keep Patisserie up and running, saving the 90-year-old company from collapse. Shares of the company remain suspended. – Reuters

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