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Patisserie Valerie warns of potential fraud

October 10, 2018 11:39 AM
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Patisserie Valerie warns of potential fraud

Shares in Patisserie Valerie have been suspended after the cafe chain discovered "significant, potentially fraudulent, accounting irregularities".

The company said these could cause a "potential material" mis-statement in its accounts.

Entrepreneur Luke Johnson owns a 37% stake in the businesses, which also includes Druckers, Philpotts, Baker & Spice and the Flour Power City Bakery.

Mr 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 and will communicate these to investors and stakeholders as soon as possible."

The company, which was listed on the stock market in 2014, said that the board of directors had been notified of the potential irregularities on Tuesday.

It said it had asked for its shares to be suspended while a full investigation was conducted.

The company's cash position could be affected and "this may lead to a material change in its overall financial position", it added.

It has five brands: Patisserie Valerie, Druckers - Vienna Patisserie, Philpotts, Baker & Spice and Flour Power City.

The first first Patisserie Valerie café was opened on Frith Street in London's Soho district in 1926 by Belgian-born Madame Valerie. It was destroyed in World War II and a new site opened at nearby Old Compton Street.

In 1987 the Scalzo family bought the Old Compton Street store and ran the business.

In 2006, Luke Johnson's Risk Capital Partners bought a majority stake when it had eight stores.

It was floated on the AIM stock market, for smaller companies, in 2014.

The last trading update was in May, when Patisserie Valerie said its half-year profits were 14.2% up on the previous year at £11.1m and it had cash reserves of £28.8m.

Its auditors, Grant Thornton, said: "We are aware of the news released by Patisserie Valerie. Given our duty of client confidentiality it would be inappropriate for us to comment".

The first Patisserie Valerie store was opened in the Soho district of London in 1926 by a Belgian woman, Madame Valerie. It is now part of a chain with 206 stores and also trades in the supermarket chain Sainsbury's.

Earlier this year, it was linked with a possible bid for artisan bread chain Gail's, owned by Bread Holdings in which Mr Johnson has a majority stake.

Patisserie Valerie - which is known as CAKE on the stock market - was floated at 170p a share and was trading at 429p before its shares were suspended.

Mr Johnson bought into Patisserie Valerie in 2006, one of a number of business ventures by the entrepreneur, who built his reputation taking control of Pizza Express in 1993 before selling out in 1999.

He then started and later sold Signature Restaurants - owner of the Ivy, J. Sheekey and Le Caprice, as well as the Belgo and Strada restaurant chains. He has also been involved in dental surgeries and bingo clubs.

He served as chairman of Channel 4 for six years until January 2010 and set up private equity company Risk Capital Partners in 2001.

As well as the stakes in Patisserie Valerie and Gail's, Mr Johnson's website also lists stakes in Neilson Active Holidays and Elegant Hotels Group, the largest hotel business in Barbados, and Xstrahl, a medical devices specialist.

His website also says he is a board member of sporting goods company Zoggs and Brompton Bicycles. He is chairman of the Brighton Pier Group, Majestic Bingo and Small Batch Coffee.


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