Page 17 - Patisserie Valerie Teaching Note
P. 17
Q & A
Q1 Why would Luke Johnson feel obligated to introduce
funds into Patisserie Holdings plc after the 10 October
th
2018?
A1 In its most recent results statement in May, 2018
Patisserie Holdings said it had cash reserves of £28.8m.
The company collapsed after the accounting scandal
which left the firm without enough money to pay its
debts.
Q2 How quickly did the cash black hole open up?
A2 Cash black holes generally open up when the finance
department loses control of the process of reconciling
the cash in the bank to the accounts. If it built up
quickly, it means the business is haemorrhaging cash
and would make investors nervous of putting in any
more money. This was not the case with Patisserie
Valerie where the sheer volume of misstatements
would indicate a much longer period blood-letting.
Q3 What was the finance director doing?
A3 Chris Marsh had worked with Luke Johnson for well
over a decade. Current and former associates of his tell
me he is a "quiet guy", "not ostentatious - no gold
watch or fast car", "definitely Luke's man". He has been
suspended while forensic accountants try to figure
what happened here.