Crisis-hit cake chain Patisserie Valerie in battle to survive
Crisis-hit luxury pastry chain Patisserie Valerie needs an immediate cash injection if it is to survive, bosses revealed today.
The Birmingham-based company – with cafes in Wolverhampton, Telford and Shrewsbury - suspended both its shares and its finance director yesterday after discovering "significant, and potentially fraudulent, accounting irregularities and therefore a potential material mis-statement of the company's accounts".
But then it discovered it had received a winding up petition for its principal trading unit, Stonebeach, relating to £1.14m owed to the taxman, with a hearing set for October 31.
Reports suggest the company has uncovered a black hole in its accounts of up to £20 million.
Today the chain's owner, Patisserie Holdings, announced: "Without an immediate injection of capital, the directors are of the view that that is no scope for the business to continue trading in its current form."
The company, with professional advisers from accountants PwC, have spent the last 24 hours investigating 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."
Faced the immmediate need for new cash, "the directors and the company's professional advisers are assessing all options available to the business to keep it trading and will update the market in due course."
Patisserie Valerie trades from more than 200 stores, including one at Resorts World Birmingham at the NEC, and also has a partnership with Sainsbury's, with branded counters present in the supermarket.
The crisis broke early yesterday morning when the company asked for trading in its shares to be suspended on the London Stock Exchange's junior AIM market and said it had unearthed potentially fraudulent accounting irregularities.
After discovering that it faced a winding up hearing, Patisserie Holdings said it was in communication with HMRC as it scrambled to "understand better the financial position of the group".
Its finance chief Chris Marsh has been suspended from his role as accountancy giant PwC was been drafted in to look through the company's books.
Chairman Luke Johnson said: "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."
Mr Johnson, a serial entrepreneur, is Patisserie Holdings' largest shareholder with a 37 per cent stake.
In May, the firm reported a 14.2 per cent rise in pre-tax profit for the six months ended March 31, up from £9.7 million to £11.1 million.
Revenue climbed 9.1 per cent to £60.5 million, it said at the time.