Wednesday 10 October: a day that went from bad to worse for Patisserie (CAKE).
First, we learnt that the board had been notified of “significant, and potentially fraudulent, accounting irregularities”, which could constitute a material misstatement of its accounts. This has significantly impacted Patisserie’s cash position, and could cause a material change in its overall financial position. A report from Sky News suggested the accounting hole could be £20m or more. For comparison, Patisserie’s net cash as at 31 March was £28.8m. Half-year pre-tax profits came in at £11.1m – up 14.2 per cent year on year.
Patisserie is now investigating its true financial position, with legal and professional help. Meanwhile, chief financial officer Chris Marsh was suspended – as were the group’s shares, at 429.5p.
Just hours after the first announcement, Patisserie released another. Management had become aware of a winding-up petition for Stonebeach Limited, its principal trading subsidiary, filed at The High Court of Justice on 14 September. This relates to an amount of around £1.14m owed to HMRC, with a hearing date of 31 October. The petition had been advertised in the London Gazette on 5 October. Patisserie is liaising with HMRC, with the aim of addressing the petition.
Patisserie’s directors have been big share sellers this year. The suspended chief finance officer has pocketed nearly £2m through the exercise of options and sale of shares in two tranches in February and July. Similar transactions by chief executive Paul May have netted him close to £3m. Two non-executives have also offloaded shares this year, pocketing just over £360,000 between them.