[SharePad] A Special SharePad Investigation: Patisserie Valerie

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11 December 2018
By Maynard Paton

Perhaps the most spectacular share collapse of the year has been that of Patisserie Holdings, the owner of the Patisserie Valerie chain of cake shops.

I am sure you already know the grim story.

To recap, during October the firm confessed to “significant, and potentially fraudulent, accounting irregularities and therefore a potential material mis-statement of the Company’s accounts.

The shares — which had traded at 429p and supported a £440m market cap — have been suspended ever since.

An emergency £15m was then raised by shareholders at 50p a share, while a further £10m was loaned to Patisserie by group boss Luke Johnson.

Before the fraud came to light, Patisserie said its net cash was £28m. Now the group estimates net debt might be £10m.

So, the obvious question:

Could we have spotted Patisserie’s fraud using SharePad?

Simply click here to read my Patisserie Holdings article for SharePad.

Maynard Paton

2 thoughts on “[SharePad] A Special SharePad Investigation: Patisserie Valerie

  1. Perlican

    Interesting post. I was not a shareholder in Pat Val but was still shaken by what happened as I run a concentrated portfolio and faith in the veracity of the accounts is fundamental. Dressing the presentation of the numbers up (eg ‘underlying’ earnings) is one thing, but outright fraud is another as so hard to detect. I would like to think I would have been clever enough to have spotted it…

    The chapter on working capital in O’Glove’s “Quality of Earnings’ is the one I found most useful, in terms of spotting red flags.

    1. Maynard Paton Post author

      Hello Perlican

      Thanks for the note. I reckon many of us would like to think we would have spotted all was not well at PatVal…

      Thanks for the reminder about that book. I have a copy somewhere and I shall have to dig it out.

      I have just read Tim Steer’s The Signs Were There, and he would not have spotted PatVal using the examples cited.



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