The shocking turn of events at Patisserie Valerie owner Patisserie Holdings (CAKE:AIM) has shaken faith in the company and left investors wondering what will happen next.

Earlier this week, shares in Patisserie were suspended after the company revealed ‘significant and possibly fraudulent’ accounting irregularities that could have led to a mis-statement of its accounts.

Finance director Chris Marsh, who was suspended this week, was arrested on Thursday and has been released on bail.

The company has since said its cash position was mis-stated and that it now calculates it has a £9.8m net debt position rather than the previously stated £28.8m net cash position.

The company has also subsequently raised £15.7m via a share placing at 50p. Chairman Luke Johnson is providing a £10m bridging loan pending receipt of the share placing proceeds, plus another £10m longer term loan.

This weeks events come as a shock as there were no signs that fraudulent activity was taking place and the board says it only became aware this week of a winding-up petition against its main trading subsidiary Stonebeach for £1.14m in tax despite the fact it being filed on 14 September.

Shareholders are still in the dark as to when their stock will come out of suspension.

Patisserie says: Shareholders should be aware that the investigations into the company's financial irregularities remain at a very preliminary stage, and will be subject to further, comprehensive review in the weeks and months to come. 

‘At present, the directors do not expect that suspension to be lifted at least until (a) there is there is greater clarity disclosed to the market around the financial position of the group and (b) they are satisfied that the company's financial reporting function is appropriate for a quoted company.


Before this week, Patisserie was seen as a star AIM performer, delivering a strong performance despite lower high street footfall and the pressures on disposable income.

Its success was one reason why many investors have been interested in fellow cake shop business Cake Box (CBOX:AIM) which floated earlier this year on the stock market.

Shares in Cake Box were down nearly 18% between Monday and Thursday, perhaps a mixture of investors worried there could be a possible read-across from Patisserie if it turned out trading pressures were partly to blame for the financial problems at the latter business, plus being caught up in the market sell-off in general. The shares managed a small recovery of 3.8% on Friday.

NOTE: This article has been updated to reflect subsequent news about the share placing and the net cash position.

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Issue Date: 12 Oct 2018