The crisis-hit owner of Patisserie Valerie is examining “options” for the business, warning the scale of alleged fraud in its accounts may be much worse than initially feared.
Trading in shares of Patisserie Holdings were suspended in October when it flagged a black hole in its accounts from “potentially fraudulent” accounting irregularities.
The fallout saw its former finance director arrested and released amid a Serious Fraud Office investigation.
The company said on Tuesday evening: “The work carried out by the company’s forensic accountants since (October) has revealed that the misstatement of its accounts was extensive, involving very significant manipulation of the balance sheet and profit and loss accounts.
“Among other manipulations, this involved thousands of false entries into the company’s ledgers.
“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 cashflow 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.”
That work last year had resulted in estimated revenue and profits for the year to September being slashed to £120m and £12m respectively.
Patisserie added on Wednesday that advisers from KPMG were currently working with it to review its options and secure value for stakeholders.
Patisserie Holdings, which has over 2,000 staff at 200 shops, was saved from collapse following a cash injection by its chairman Luke Johnson and the purchase of new shares by investors.
It has since hired a new chief executive and appointed an interim chief financial officer.
The company also confirmed a story by Sky News that it had appointed a new auditor in RSM.
Grant Thornton, which had overseen Patisserie’s books since 2006, is the subject of a Financial Reporting Council inquiry for its handling of the contract.