Patisserie Valerie has announced to the stock market it has found the misstatement in its accounts was “extensive” and involved “very significant manipulation”.
The cake specialist, which came close to collapse in October before an emergency £36m cash injection, has updated the market this afternoon on the scale of the potential fraud that took place.
The work carried out by the company’s forensic accountants revealed that the misstatement of its accounts was extensive, involving of the balance sheet and profit and loss accounts.
It said that among other manipulations, this involved thousands of false entries into the company’s ledgers and the impact could be worse than first estimated.
Patisserie Valerie stated: “It will take some time before a reliable trading outlook can be completed while the above work streams progress
“The initial indications from the work carried out to date is that the cash flow and profitability of the business has been overstated in the past and is materially below that announced in the trading update on 12 October 2018, which was based on limited work carried out over a 48-hour period.”
The company has hired KPMG to review of all options available to it in order to recover from the “devastating” effects of the fraud.
The firm also confirmed it appointed RSM were appointed auditors today, but due to the fraud and it will be some time to complete a restatement of the its accounts and prepare the audited figures to 30th September 2018.
Patisserie Valerie added that it has also been in discussion with its bankers to extend the standstill of its bank facilities beyond January 18th, and will issue an update when those discussions have concluded.
The firm’s shares have been suspended since news of the fraud was first revealed in early October.
Since that date it had appointed a new CEO, a new interim CFO, a new non-executive director, a new commercial director and a new production director, as well as other management appointments to lead a recovery.
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