LONDON (Alliance News) - Patisserie Holdings PLC on Wednesday said work by forensic accountants has uncovered significant manipulation of the company's accounts and its profitability is significantly below prior guidance.
The firm owns cafe and hand-made cake seller Patisserie Valerie. Back in October, it announced that it had found a GBP20 million black hole in its financial accounts, necessitating a heavily discounted share issue which raised GBP15.7 million.
Work carried out by Patissersie's forensic accountants since October has found that the accounting misstatement was "extensive" and involved "very significant manipulation of the balance sheet and profit and loss accounts".
Alongside other manipulations, thousands of false entries were made into Patisserie's ledgers.
"It will take some time before a reliable trading outlook can be completed while the above work streams progress," Patisserie said.
Based the evidence so far, Patisserie's profitability has been "overstated in the past" and is "materially below" its October trading update, which guided for GBP120 million in revenue and earnings before interest, tax, depreciation, and amortisation of around GBP12 million, before exceptional costs.
KPMG has been hired to assist in reviewing the company's options for recovering from "the devastating effects of the fraud", as well as preserving shareholder value.
Patisserie also appointed RSM as its new auditor, but said that the fraud and accounting issues mean that it will take some time to complete a restatement of the firm's accounts and to prepare its figures to September 30.
In addition, Patisserie said it has been in discussions with bankers to extend the standstill on its bank facilities past Friday, and will issue an update once these talks have concluded.
The firm has appointed a new chief executive and made a number of other appointments after finding evidence of fraud.
These include a new interim chief financial officer, new non-executive director, new commercial director, and new production director. Other management appointments have also been made.
Shares in Patisserie were suspended in October and remained suspended at Wednesday close.