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Patisserie Valerie rescue is not a piece of cake

14th Jan 2019
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Patisserie Valerie’s interim CFO has told MPs the troubled chain is still working through a mountain of unpaid invoices and “there remains much to do”.

Last October, Patisserie Valerie hit the headlines when it suspended its shares and its erstwhile CFO, Chris Marsh. The café chain revealed that it had uncovered accounting irregularities that had led it to significantly overstate its cash position.

Marsh left the business as a fraud probe into the company’s finances got under way. His departure was swiftly followed by Paul May, the then chief exec of Patisserie Holdings. May was replaced by Steve Francis, and Marsh’s role was filled by Nick Perrin in an interim capacity.
In a written response to Business, Energy and Industrial Strategy Committee chair, Rachel Reeves MP, Perrin wrote that this new executive team is making progress with Patisserie Holding’s stack of unpaid creditors, but it’s slow progress.
“This is a complex and time-consuming task,” Perrin told Reeves in the response. “We are gradually ensuring that overdue payments are made and that terms agreed with suppliers are adhered to, but there remains much to do to complete this task.
“The payment processes are getting back to normal and I would expect that it will be about six months before we will have representative data with which we can calculate the matters above.”

No reports published

Reeves’ original letter wanted to know why Patisserie Valerie had not published any reports on its payment practices and asked for information about its payment terms.
Perrin noted that he was unable to explain why the previous management had not published the reports and that Patisserie Valerie is currently unable to provide figures such as average time to pay invoices, payment terms or how many invoices are paid late.
The main reason, Perrin wrote, was “a large number of payments on account” that have been made, “making it impossible to state when any particular invoice was paid”.
But despite the sanguine tone of Perrin’s letter, the intrigue around Patisserie Valerie’s future seems to be far from over. Just today, the company announced that its non-executive director James Horler has resigned with immediate effect. 
According to a statement from the firm on the London Stock Exchange this afternoon, Horler has resigned “with immediate effect in order to focus on his role as chief executive officer at another business”.
Meanwhile, the recriminations from Patisserie Valerie’s near collapse last year only seems to spreading outward. The Times reported that the FRC approved Grant Thornton’s audit of Patisserie Valerie’s accounts six months before the café chain revealed the £40m fraud, adding to a growing list of embarrassing oversights by the regulator. 
Patisserie Valerie has since replaced Grant Thornton with RSM.

Replies (6)

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the sea otter
By memyself-eye
15th Jan 2019 11:18

If I were a shareholder in PV I would now be sharpening my litigation pencil in Grant Thornton's direction.

Odd though, that a plc audited by one of the big 4 (or is it 5?) has subsequently been found.... err 'wanting'

Who'd have thunk it!

Thanks (1)
Replying to memyself-eye:
JD Portrait
By John Downes
17th Jan 2019 10:00

Grant Thornton are not a Big 4 firm.
I believe they come in at number 6.

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By johnhemming
15th Jan 2019 15:42

The issue as I see it here (beyond financial control) is that one would assume they have been breaking even or making a small loss. Hence there is that to factor in to any recovery process.

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17th Jan 2019 11:22

We need more 'say it as it is' types in finance middle and senior roles, those who are low in the big 5 personality type :agreeableness. If you tell the truth about how poor systems are you are more likely to get your head blown off by a CEO who doesent want his reality disturbing.

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By andye
17th Jan 2019 18:03

After the crash the big 4 or 5 have had the spotlight on them and now realise that they may have to pay for their how do I put this ? Emm negligence basically.
Although if they did their jobs right then scandals like this would have not had come to light.

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By tedbuck
18th Jan 2019 16:43

It's a long time since I did large audits but audits now seem to be tick lists that have to be followed to keep the regulators happy that we are doing what we should. Most of it appears to be just that - keep the regulators happy - so no small wonder that major matters are missed. Sometimes there seems to be no sense of proportion anymore but I suppose it was ever thus. I recall one audit of a major motor manufacturer where the stock was over valued by about 10% which was actually more than the net profit of the branch concerned but it was considered not material in terms of the stock figure.

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