Page 6 - Patisserie Valerie Teaching Note

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Up until 10 October 2018, Patisserie Holdings gave every
sign that it was a profitable company making good profits

and expanding well. Its chairman, Luke Johnson trusted the

figures supplied to him by his Chief Financial Officer and

believed the auditor who gave the company a clean bill of

health. Moreover, any questions he did raise were

satisfactorily answered.

Financial Overview

Overview 30 September Year 1 Growth 3 Year CAGR 5 Year CAGR
2017

Turnover 114,197,000 GBP 9.66 14.2% -

EBITDA 25,636,000 GBP - 20.99% -

Post-tax Profit 16,364,000 GBP 19.14% 22.48% -

Total Assets 98,921,000 GBP 15.93% 17.05% -

Net Assets 92,332,000 GBP 18.08% 18.93% -

Gearing 7.14% - - -

A low gearing percentage typically shows a company is

financially stable. For Patisserie Holdings gearing would

seem to indicate that management are in a financially

strong position certainly capable for sustaining future

growth.

However, by the 11 October 2018, the company was
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insolvent and requiring a cash injection on to keep going. In

addition, the cash and assets shown in the accounts were

fictitious.