Patisserie Share Discussion Threads

[mrtenpercent] 12/10/2018 22:39

@Sleepy

Good idea to ask questions. Sometimes questions lead to answers. Nothing wrong with asking questions. Hard to pin a libel suit on someone who is merely asking pertinent questions.

Here are some additional pertinent questions. I anticipate that you might be able to hone these, and add others.

The Sky news item which "blew the gaff" was (I assume) based on information from someone with knowledge of the situation. Did that person first attempt to communicate their concerns to the board before they spoke to Sky? If so, who did they speak to, and when? What response did they get? Why did they speak to Sky?

When and how did Luke Johnson first learn of the alleged fraudulent misrepresentations?

When he learned of the alleged fraudulent misinterpretations, what did he do and when did he do it?

Were Grant Thornton aware of the alleged fraudulent misrepresentations before the Sky news item? If so, who at Grant Thornton was aware, what did they do about it, and when did they do it?

Prior to the RNS dated 10 October 2018 at 07:30 did Luke Johnson or anyone else on the board of Patisserie Holdings confer with anyone at Grant Thornton? If so, what was said by the parties? Was a record made of any such conference?

Were minutes kept of the meetings held today (12 October 2018) between the board of Patisserie Holdings and other parties who were involved in today's placing? Do these minutes evidence a concern for the interests of shareholders other than Luke Johnson (the largest single shareholder)? If so, how were these concerns addressed and reconciled with the eventual decision to exclude existing private investors from any opportunity to participate in the placing? During today's meetings, who spoke for the interests of private individuals who hold shares in Patisserie Holdings, and what did they say?

Notes:
Grant Thornton have been the auditors of Patisserie Holdings plc.
The Sky News item is this:

[owenski] 12/10/2018 22:30

"At least two of Patisserie Valerie’s London cafés have been forced to stop trading after falling behind with their rent.

The two stores affected are in Hammersmith and on Edgeware Road, with social media users posting pictures of the re-possession notices."

Trouble is, if they have deeper problems, then it could end up with a situation of throwing good money after bad.

When and if this comes out of Suspension the share price is going a lot lower than 50p.

[danny baker] 12/10/2018 22:10

It may have been an internal whistle blower in the accounts department or buying department but they would still need to contact a director to ring the alarm. Reporting it to the FD wouldn't have done much good.

[thegreatgeraldo] 12/10/2018 22:01

Might, just might, have been that someone saw the notice of a winding up petition?

[sleepy] 12/10/2018 22:00

Danny - yes that’s one way it could have developed. But not the only one. Apart from Luke there are only 4 other Dirs, 2 exec (of which 1 now suspended) and 2 non-exec

[danny baker] 12/10/2018 21:59

Sleepy the way these things develop someone would have notified one of the directors who would then email the others and say they need to have an emergency telephone board meeting. Presumably it was the lack of cash and creditors demanding to be paid which rang the alarm bell that things weren't right. Until then the directors were in blissful ignorance which begs the question what on earth the Chief Executive was doing. I can't see the Chief Executive lasting long post the conditional placing but they need him there until the board is properly restructured.

[slopsjon2] 12/10/2018 21:57

CBOX seem to have an op margin better than CAKE so is that an indication of something wrong topvest

[thegreatgeraldo] 12/10/2018 21:56

Did you own nearly 40% of it?

[sleepy] 12/10/2018 21:54

Just asking. Am in the somewhat unusual position of having been an Exec Chairman for many years of a larger and more successful plc than CAKE

[mrtenpercent] 12/10/2018 21:51

In a moment of misguided public spiritedness I thought I might forward gustavfenk's excellent post to the appropriate person at the FCA. After ten minutes spent studying the FCA website and reading the pages which describe the responsibilities of the various posts in the organisation I concluded that there is nobody at the FCA whose remit includes considering and responding to complaints about corporate governance or incompetent auditing in the UK.

My wife is right. Buying shares is gambling and we are on our own. May the best fraudster win.

@KNIGEL - we were during most of our productive years SME owners and we never worked for anyone else long enough to amass meaningful employer pensions. I have a 6 figure SIPP and two very small defined benefit pensions which amount to peanuts, and one of the companies is slowly going bust. My wife has one small defined benefit pension. What we do have is low 7 figure net wealth and a desire to maintain our independence as long as possible. We have always had 80% to 90% of our wealth in real estate and I thought we ought to diversify so I started investing in listed securities, using my SIPP and ISAs as the vehicles. I am gradually losing all confidence in this strategy and I tend to agree with my wife that it really is no better than gambling because one really can't trust audited accounts.

[thegreatgeraldo] 12/10/2018 21:48

Sleepy, so are you suggesting/implying Johnson knew about it some time before? Bizarre

[sleepy] 12/10/2018 21:44

Topvest - yes as he is Executive Chairman.

But the announcement does not say ‘were first notified’ and leaves it open as to when each Director was first aware that something was wrong

My question stands

[eeza] 12/10/2018 21:39

If Luke Johnson hadn't been a Director here I wonder what comments he would have made about the BOD's oversight.

[topvest] 12/10/2018 21:34

Sleepy - LJ is on the Board.

[knigel] 12/10/2018 21:32

Don't tell your wife were her pensions are invested then...

[mrtenpercent] 12/10/2018 21:24

Over dinner this evening my wife accused me of gambling with our money because I buy listed securities. She's a sensible woman and she said 'You might as well go down the betting shop'.

Best post I've ever read on ADVFN:-

gustavfenk 12 Oct '18 - 19:16 - 1576 of 1603
I sincerely hope that the CAKE scandal will be a turning point in UK corporate governance and regulation, but I'm not holding my breath. What has happened here hasn't just undermined confidence in the CAKE directors, but in the whole stock market and concept of investing in shares. There was no warning here. Those directors who weren't directly involved in the actual fraud, along with the auditors, have been negligent in their oversight of the company. How many other companies out there have similar skeletons in their cupboards? The answer is that nobody knows and that all we can do is hope that it isn't many of them. It could be all of them for all we know. Investors make their decisions based on the company accounts. How can anyone make any sensible investment choices if the accounts are works of fiction? You may as well pick company names to invest in out of a hat, bet on the horses or take a trip to Las Vegas. All listed companies and consequently the whole economy of the country suffers from the fear, uncertainty and doubt resulting from the CAKE fraud contagion. Things need to change.

[sleepy] 12/10/2018 21:19

Anyone taking a serious interest in this should be aware of the first sentence of the announcement of the problem at 7.30 a.m. on 10 October

Patisserie Holdings plc (AIM: CAKE) ("PH", the "Company" and together with its subsidiary undertakings, the "Group") announces that, during the course of 9 October 2018, the board of directors of the Company (the "Board") has been notified of significant, and potentially fraudulent, accounting irregularities and therefore a potential material mis-statement of the Company's accounts.

So the board was notified during 9 October. When did Luke first know that something was wrong?

[edmondj] 12/10/2018 21:13

topvest

"Luke Johnson has been caught with a whopping fraud, presumably because he trusted his Finance Director. Grant Thornton have also been caught out by the looks of things. I'm sure most people involved were trying their best. I am, however, astonished that some clever person somewhere hadn't actually worked out that a 17% return on sales was way out of line with the industry and therefore a massive red flag. I worked this out last night in about 30 minutes."

Maybe you should have been advising Luke Johnson and the CEO! CAKE's financial reports consistently have him defend the above-industry margin due to "our vertically integrated, flexible business model...(thus)...converts profit to cash efficiently and delivers consistent and predictable cash flows....(thus)...a cash balance of £28.8m at the period end."

[mw8156] 12/10/2018 21:01

Have to agree with you Topvest,post 1599, think that hvs has fallen into the trap of immediately jumping in with conclusions that may be completely erroneous and has found the Fd guilty already which is a bit rich when the man has not been charged with any offence.
only observation is that Luke Johnson may have been overcommitted having read about all his multiple business and other interests, which must have meant that he could not devote the time required to be an effective executive, but do feel sorry for him.

[hvs] 12/10/2018 20:42

hvs - think you are just an anti-capitalist who slams people that have made a mistake. LJ is an entrepeneur trying his best and creating jobs.

And make HUGE losses for shareholders . £ 400 mill wiped out. Well done LUKE JHONSON.

JOB very well done.

[topvest] 12/10/2018 20:37

hvs - I think that you are an anti-capitalist who enjoys slamming people that have made a mistake. LJ is an entrepeneur trying his best and creating jobs. I'm sure he will be absolutely gutted by what has happened, but from what I can see he had no incentive to cover this up...it's cost him a well earned reputation and £10-20m cash this week plus £100m of net wealth deterioration. He has suffered more than most I would suggest!

[hvs] 12/10/2018 20:33

Luke Johnson has been caught with a whopping fraud.

Was he not in charge as Executive Chairman collecting six figures and granting OPTIONs to his so called FRAUDSTERS ???? All basking in the GLORY of how sweet their CAKES were ???

£ 400 mill of savers hard earned money wiped out and LUKE JHONSON is a HERO . Very very nice.