Patisserie Valerie owner suspends shares amid fraud probe

Patisserie Valerie

The High Street cake shop and continental tea room says it could shut down unless it gets an "immediate cash injection".

Later on Wednesday, Patisserie Holdings said it had received a winding-up petition for its principal trading unit Stonebeach, with a hearing now scheduled for October 31.

Patisserie Holdings issued the bleak update a day after it revealed that it had learned of "potentially fraudulent accounting irregularities" resulting in the misstatement of its financial position, and suspended trading in its shares.

It further disclosed that it had just learned of a winding-up petition that had been filed against its main subsidiary relating to more than £1m owed to the United Kingdom tax office.

Chairman Luke Johnson said: "We are all deeply concerned about this news and the potential impact on the business".

Shares in the cafe chain have now been suspended from London Stock Exchange's junior AIM market.

In the 24 hours which followed, the company met with professional advisors and the board has "reached the conclusion there is a material shortfall between the reported financial status and the current financial status of the business".

Directors now believed that a "immediate injection of capital" was needed and were "assessing all options available to the business to keep it trading".

The company said that the board of directors had been notified of the potential fraud on Tuesday and announced it to the stock market just before its shares were due to start trading on Wednesday.

As well as the stakes in Patisserie Valerie and Gail's, Mr Johnson's website also lists stakes in Neilson Active Holidays and Elegant Hotels Group, the largest hotel business in Barbados, and Xstrahl, a medical devices specialist.

Sky News reports the "black hole" in the company's accounts may amount to more than £20 million.

Patisserie Holdings - which had a market value of almost £450m before shares were suspended this week - operates from more than 200 stores.

In May, the firm reported a 14.2 per cent rise in pre-tax profit for the six months ended March 31, up from £9.7 million to £11.1 million.

Revenue climbed 9.1% to £60.5m, it said at the time.

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