Page 7 - Patisserie Valerie Teaching Note
P. 7

At this point the company’s auditor comes under scrutiny as

               the, Grant Thornton had given the company accounts a

               clean bill of health.


               The Group’s stores stayed open as Johnson, injected funds

               into the business. But with little to no cash, that situation

               could not last, as suppliers would simply stop delivering.


               It rapidly became clear to KPMG, who had been brought in

               to handle the preservation of the company and its
               administration, found that the misstatement of the accounts


               was extensive, involving very significant manipulation of the
               balance sheet and profit and loss accounts. The financial

               blackhole was more than double at £94m than the £40m

               initially suspected on the 10  October 2018.
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               Mike Ashley of Sports Direct offered £15m for the company

               but this was rejected by KPMG as being some £2m short of

               what was being sought. Ashley did not increase his bid.


               With many bricks-and-mortar stores struggling due to a

               combination of rising rents and increasing online

               competition and given Ashley’s business portfolio it may not

               be surprising that he did not pursue Patesserie Holdings’

               acquisition.


               The nationwide chain of 96 Patisserie Valerie outlets was

               sold to Causeway Capital and in total the group sold for

               £13.5m this compared with a stock market value some three

               months earlier of £440m.


               Based on these figures Luke Johnson suffered a personal

               loss of £180m. However, questions over the speed of the
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