Patisserie (CAKE)

Patisserie (CAKE)

Blog posts

Deferred Shares Report and Voting Trends Survey

Study shows low adoption of deferred share plans Tom Gosling, Partner, PwC | Executive Fellow, London Business School | Steering Committee Member, Purposeful Company Taskforce has written a good...

GB Group, Patisserie Holdings, FRC Stewardship Code and Halma

The stock market seems to be in limbo as business waits to see the outcome of Brexit politics. In my portfolio, small cap companies are drifting down and even...

Patisserie and Interserve Administrations, plus Brexit latest

Yesterday the administrators (KPMG) of Patisserie (CAKE) issued their initial report. It makes for grim reading. The hole in the accounts was much worse than previously thought with an overstatement of net assets of at least £94 million. That includes: Intangible assets overstated by £18m; Tangible assets overstated by £5m; Cash position overstated by £54m; Prepayments and debtors overstated by £7m; Creditors understated by £10m. The accounts were clearly a total fiction. It is uncertain whether there will even be sufficient assets ...

Metro Bank, Improving Accounts, Patisserie, Telford Homes and GoCompare

Originally posted 28th February 2019 The latest example of a public company publishing misleading accounts is Metro Bank (MTRO). Both the FCA and PRA (the bank regulator) are looking into the “misclassification” of some loans which resulted in the bank overstating its regulatory capital. The result was that it has had to do an equity share issuance to bolster its capital. There was a very good letter to the FT today on the subject of improving accounting and audits from Tim Sutton. He ...

AssetCo, Patisserie, Stockpiling, Warehouses, Sheds, Brexit and Venezuela

A week ago, an award of damages of £21 million plus interest and costs was made against Grant Thornton for their breach of duty when acting as auditors of AssetCo Plc (ASTO) in 2009/10. See https://www.bailii.org/ew/cases/EWHC/Comm/2019/150.html for the full judgement. I understand Grant Thornton may appeal. These are the key sentences in the judgement: It is common ground that in those years the senior management team at AssetCo behaved in a way that was fundamentally dishonest. During the audit process management made ...

Staffline Issues, Audit Purpose and Patisserie

Yesterday Staffline Group (STAF) issued a statement first thing in the morning saying that the publication of results scheduled for that day would be delayed. The shares promptly dropped...

Patisserie – and How to Avoid Such Disasters

The events at Patisserie (CAKE) have been well covered in both the national media and financial press so I won’t repeat them here. This article will, therefore, concentrate on...

Bogle Death, Patisserie and Diploma AGM

The death of John Bogle has been announced at the age of 89. He wrote several very informative books on investment and was the founder of Vanguard which has grown into one of the largest mutual fund managers by promoting index fund management. He also promoted the idea that the investors should own the fund manager. He suffered from heart attacks from a young age, the first at age 31, and actually had a heart transplant in 1990. So in some ...

The trouble with net debt…

Net debt is a vital metric for investors and lenders. What ultimately kills companies is when they are unable to pay their debts when due. Hence, measuring the ratio of net debt to profits (and cashflow) is crucial to judging a company's ability to pay and whether it is likely to find itself in trouble, potentially leading to a permanent loss of capital for investors. Therefore it is very troubling that there have been several instances in recent years where reported net ...

Too Much Cash, Wey Education and Patisserie Accounts

Are you stacked up with cash in your ISAs, SIPPs, and direct portfolios? As a dedicated follower of fashion (if the markets are falling as investors sell, then so do I) it is of some concern that the cash is not earning any interest. There was some relatively good news yesterday from soon to be listed A.J.Bell Youinvest. They are increasing the interest they pay on cash held in portfolios. Previously you got 0.05% on balances more than £50,000. It will ...

Earthport Accounts, City of London IT and Patisserie

Earthport (EPO) is the latest AIM company to report that its past accounts are not all they should have been. Following a review by the new CEO and CFO, it seems there have been errors in reporting of forward foreign exchange transactions. This will result in fair value adjustments and a reduction of £6.3 million to £16.6 million in the net assets of the group at June 2017. Likewise adjustments are required to previous years. Reported earnings are also reduced although ...

Patisserie General Meeting – No Excitement But Few Questions Answered Either

I attended the General Meeting of Patisserie Holdings (CAKE) this morning at the ungodly time of 9.00 am – presumably chosen to deter attendance. An announcement earlier from the company will also have deterred attendance as it said no questions on past events would be answered so as not to prejudice investigations by “multiple regulators and authorities”. But there were about 20 shareholders present, including some institutional representatives. This GM was to approve the second tranche of share placings and I expected ...

Brexit Prevarication, The Company, Sarbanes-Oxley and Patisserie Holdings (CAKE)

Prevarication definitions: delaying giving someone an answer, or avoiding telling the whole truth. Theresa May’s suggestion for an extension of the Brexit transition period surely smacks of prevarication and all sides of the Brexit debate saw it for what it was. The result is some furious back-peddling by the Prime Minister. Putting off decisions usually does not make them any easier. It is not at all clear what the PM’s strategy is here. Was she perhaps hoping to put off Brexit ...

Patisserie Rescue Bid and Closing Accounts

It looks like Luke Johnson’s reputation will not be totally trashed after all after he announced a way for the company to be rescued today. It is proposed to do a placing at a heavily discounted share price of 50p (last price before suspension was 429p). This will raise £15 million from the issue of 30 million shares. The current shares in issue are 104 million so that implies substantial dilution although I have seen worse. It will take some time to ...

CAKE (Patisserie), Foresight 4 VCT AGM, Payment Companies and Dunelm

More bad news from Patisserie Holdings (CAKE) today – well at least you can’t say the directors are not keeping you informed about their dire situation which is not always the case in such circumstances. Yesterday the company announced that its major operating company had received a winding-up petition from HMRC, of which the directors had only recently become aware. Today the company said after further investigation the board has reached the conclusion that without an “immediate injection of capital, the Directors ...

Black Hole in Patisserie Holdings, Audit Reviews, Telford Homes and Brexit

Let’s take the really bad news first. AIM listed Patisserie Holdings (CAKE) shares have been suspended following an announcement of “potentially fraudulent accounting irregularities” which will significantly impact the company’s cash position. The CFO, Chris Marsh, has been suspended. Media reports suggest there may be shortfall of as much as £20 million. The auditors are Grant Thornton which won’t improve their reputation much but as the company’s year end is September they may not yet have looked at last year’s results. According ...

Revenue Recognition, Patisserie Valerie, Utilitywise and Cryptocurrencies

Revenue recognition is a hot topic at present as folks have come to realise that this is a frequent cause of company accounts misrepresenting the true state of the business. Quindell and Blancco are two examples and I cover Utilitywise below. But first let me report on the Annual General Meeting of Patisserie Valerie (TIDM:CAKE) which I attended this morning (as a shareholder of course). The company operates a chain of cake+coffee shops under the company name but they also have several ...