Page 7 - Patisserie Valerie Teaching Note

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