Patisserie Valerie 'needs major cash injection' to survive
PUBLISHED: 16:38 11 October 2018 | UPDATED: 16:53 11 October 2018
Cake chain Patisserie Valerie will cease trading without an "immediate" cash injection after discovering a major black hole in its finances.
The cafe’s parent company Patisserie Holdings made the admission in a market announcement on Thursday, after being slapped with a winding up petition over unpaid taxes and unearthing potentially fraudulent accounting irregularities a day earlier.
The chain has shops in Norwich, Ipswich and Bury St Edmunds.
Patisserie Holdings said: “The company, in conjunction with its professional advisers, has during the last 24 hours, undertaken further investigation into the financial status of the company.
“The board has now reached the conclusion that there is a material shortfall between the reported financial status and the current financial status of the business,” the company added.
“Without an immediate injection of capital, the directors are of the view that there is no scope for the business to continue trading in its current form.”
It said the company’s directors and professional advisers are “assessing all options available to the business to keep it trading”.
Patisserie Holdings said it would update the market in due course.
The company’s future was originally thrown into question on Wednesday, when shares were suspended following the discovery of a major black hole in its accounts.
Patisserie Holdings said it has been notified of “significant, and potentially fraudulent, accounting irregularities and therefore a potential material mis-statement of the company’s accounts”.
This significantly affected the company’s cash position, with the firm saying it could lead to a “material change” in its overall financial position.
Finance chief Chris Marsh has since been suspended from his role and accountancy giant PwC drafted in to look through the company’s books.
Later on Wednesday, Patisserie Holdings said it had received a winding-up petition for its principal trading unit Stonebeach, with a hearing now scheduled for October 31.
It relates to £1.14m owed to HMRC.
Patisserie Holdings said on Wednesday that it was in communication with HMRC as it worked to “understand better the financial position of the group”.
Chairman Luke Johnson, a serial entrepreneur, is Patisserie Holdings’ largest shareholder with a 37% stake.
In May, the firm reported a 14.2% rise in pre-tax profit for the six months ended March 31, up from £9.7m to £11.1m.
Revenue climbed 9.1% to £60.5m, it said at the time.
Patisserie Valerie trades from more than 200 stores and also has a partnership with Sainsbury’s, with branded counters present in the supermarket.