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I bet the CEO and MD still get their bonuses this year and staff get a pay cut due to the “difficult market”
Next they will be telling us that their lovingly made fresh cakes are frozen and will claim that they did not realise that big white thing in the corner of the factory was a freezer.
The LJ rescue cash is just paying back what owed to hsbc and barclays. Hardly a knight in shining armour eh.
Oh and ....
https://www.telegraph.co.uk/business/2018/10/13/30m-rescue-deal-ignored-patisserie-valerie-bosses/
Ive never bought their Cakes and never will. Prefer to support independents and not corporate chains whose standards are non existent.
When they tell you that all the new store opening costs have come out of cash flow..you have to question things especially when there was still so much cash left over
I guess they just kept expanding thinking that selling cakes was like a money printing factory ....
...sounds like the story for a good movie ...cant wait for the next crumb of information....jeez
those cake slices look so industrial ...yuk
All pretty frightening overall ...given the standards that are supposed to be set
So two overdrafts make up the correct net debt figure. What happened about the 29m cash reported that presumably the auditors checked back to bank statements and got independent confirmation from the banks about?
Or did they just not do this?
Crumbs!
i dont believe LJ statement in the s.times today....how can you not know state of financial affairs of a company where u r the chairman....dilute the shares ,then buy more cos you have the money to do so ,small PI dont have deep pockest ,so they take a loss...brag the shares up in time so theu have more money and then another financial issue and so forth
Amazing. Moral obligation he says. Legal requirement moreover. Lets see how this one pans out. Ceo has legal responsibility. Who were the auditors ?! LOL
I tend to agree. The cake has a soggy bottom.
Why? Illegal.
Unviable business.
That said.... If running with a 10M hole... Secret hole...then do the HMRC owe them money ? As not made profits year on year ar all... If spent on the biz needs... If not...what has it been spent on?! A hard cake to swallow this one.
Mr Johnson said neither he, the board, nor the auditors had known that the firm had bank overdraft facilities.
Guess they did not read note 24 of the 2017 Accounts.
Curious about HSBC and Barclays credit procedures - did they not read the accounts and wonder on the purpose of the £9.6m overdrafts and, indeed, of the location / spending of £28.8m cash.
I've been reading Luke Johnson's ST account of events..He has stepped up to the plate ,however ,at no point does he accept any responsibility .He and his board were at best sleeping on the job for this to have gone" unnoticed " this long.They are all being well paid to oversee good practice but failed shareholders, all be it that Johnson is the largest shareholder.It is true to say as Johnson says "he was betrayed"but the level and length of that betrayal was aided by he and others being distracted from the day job.
I did raise the possibility of undisclosed overdrafts yesterday. Chris Marsh would have had to forge another officer's signature to open the account. Key question now is what was the account used for, and whether funds from the ordinary bank account were transferred into it. Auditors should get confirmation from the bank on year-end balances but they can only write to the banks they know about. The existence of the undisclosed accounts at least gives the investigators a timeline on when that kind of subterfuge started.
They could always start selling "Fudge" it could go down a storm! And sell like hot cakes.
If 10M overdrawn, the biz isnt viable in current form, or someones been .....
With HSBC and Barclays. How can anyone trust this brsnd ever sgain? I saw this on the BBC and thought you should see it:
Patisserie Valerie discovers 'secret' overdrafts - http://www.bbc.co.uk/news/business-45854817
Business model is:
1. Multi-site, leased high street sites.
2. Higher raw material costs due to commodity price increases.
3. Higher labour costs due to NLW and other govt add-ons.
4. Weak consumer situation.
Not sure these are the ingredients of an appetising cake tbh.
agree that being taken private is a strong possibility.it is what happened i believe with belgo.havent checked so don't quote me but i think that is correct.im assuming the financial problems are manageable but we don't yet know of course.all in my opinion only
get Ocado to deliver the cakes & coffee? Their highly developed AI system would be perfect here :)) I’m sure they would know before we do that we are hungry and exactly what cake we fancy :(
I suspect this sp will tank when trading starts and it will be a “take private” situation eventually as it’s a whole lot easier to sort it out when private than in the public domain. GLA holders.
agree with all you say lignum vitae.in a way the ticker (CAKE) sums it up for me.slightly clever but pretentious in the extreme.personally i have always felt that the cakes were very attractive looking but failed to deliver on taste with a very synthetic taste and texture .just my opinion of course as they are obviously very popular.however with great respect to other posters i am doubtful whether popularity of product will be sufficient in itself to secure a viable future here.until the full extent of the problems and the reasons for them are known(if they ever are) i fail to see how anyone could contemplate investing in the company except as a pure punt .its just a complete unknown at the moment and as other posters have already said this whole business casts doubt on the previous figures so without reliable independent clarification of the financial position including recent years too much uncertainty exists to justify the risk of investing.all just my opinion of course.
If this company had been called Bloggs Bakers would it ever have achieved the investor following it did. It reminds me of those perfumes advertised on TV with a french name & a breathy, sexy voice whispering it quickly. No-one has the faintest idea what they are saying, could be "Essence of Dog Turd" but it sounds good & so sells a a fancy price. Well Patisserie has been selling at a fancy price - last reported earnings were 16p. If that were to be overstated by 50% and was actually 8p & with a 30% dilution following the placing that becomes 5.5p & who is going to rate the shares at more than a PE of 10 in the short to medium term. So that makes the 50p quite understandable. Trust has been broken & has to be restored. It won't be easy.
Its fair to say they have had their cake and eaten it !
78% margin ? No. As in debt and has been runing at a loss.
Time to increase cake prices ! 50p ?! Ermm
@lignumvitae
Why are debtors in the accounts representing two months' sales? (There will of course be the quarterly prepayment for rent but that doesn't explain it.) Has the FD been booking cash withdrawals to receivables? If there is fraud (cash withdrawals), are they insured? I agree that it's more likely that creditors/expenses have been recorded late and that the profits have been overstated for several years. The business is viable but at a different level of profitability.
So let's get down to the fundamentals. Firstly this is a cash business so there should be no problem with debtor balances. Therefore either [1] There has been theft on a very large scale or [2] The business has simply not been making the profit margins that the board and, by extension the shareholders were led to believe. More likely the latter & covered up by a misstatement of creditors. In that case the business may not be viable, even with the cash injection, without increasing margins by either jacking up prices or cutting wage/ingredient costs. The placees have agreed to put up money at just 50p per share because of the risk that the deeper the investigators dig the bigger hole they may find. By the time the suspension is lifted hopefully we will be in possession of much more detailed information.
All shares are tradable just not on the AIM platform, I think thats why the placing shares say tradable from 18th. So to the likes of you and me no we carn’t trade our shares. That’s my is my take on it.
Puzzling to me how the Directors can ever be confident of their accounting records as It appears this developed over a fairly long period of time and presumably creditors were either understated or unrecorded to keep the company appearing healthier than it actually was? There can’t be many (or any) debtors on the books as we all pay for our cake & coffee after we eat. There are no fixed assets to worry about as every site looks like it is leased. So it’s only really creditors and bank balance to worry about. I’m just curious how the directors can be confident enough after a couple of (busy) days of work that they believe they have got to the bottom of the major problem. Time will tell I suppose. GLA.