Patisserie Valerie
Comments
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londoninvestor wrote: »The less good scenario would be that it was an intrinsically loss-making business and the dodgy accounting was there to hide that.
Looks like they are doing a good job with the rescue further details below.
http://otp.investis.com/clients/uk/patisserie_holdings/rns/regulatory-story.aspx?cid=844&newsid=1199404
In particular,
"The Directors estimate that based on current run rate information available, annual revenue and EBITDA, before exceptional one off costs, for the year ending 30 September 2019 could be approximately £120 million and £12 million, respectively."
Alex0 -
Sure any new investment will dilute existing shareholders but it's not worthless - it seems to have a good business model that delivers what customers want in a way that should be profitable.
Prior to recapitalisation the Company is. As has inadequate cash to trade. Remember the old saying. Turover is vanity, profit is sanity but cash is always is king. Declared profit isn't cash. Profit figures can be manipulated. Whereas the cashflow statement in the annual accounts provides a far better health indicator of the state of the business.
Customers are fickle. Tastes change. New competitors enter the market. There's no moat around a cafe/bakery business.0 -
Well it looks like the directors have defended the value of the business and the new placement will be issued with equal rank to existing ordinary shares and will represent only 30% of the total share capital. Still the existing shares will be worth less due to loss of confidence, reduced assets, dilution and there is now a loan to repay.0
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It does seem strange if the accounts were looked at by an outside firm this didn't come to light. Do auditors have any incentive to do a thorough job? They are only responsible to the directors? I've read warnings like "this audit is not to be relied upon by third parties". As a shareholder the audit is not worth the paper it is written on?
If you think the Ftse 100 has risky Russian and mining companies in it, that is enough risk for anyone. The Aim market is the Wild West in comparison.0 -
thrifty_pete wrote: »It does seem strange if the accounts were looked at by an outside firm this didn't come to light. Do auditors have any incentive to do a thorough job? They are only responsible to the directors? I've read warnings like "this audit is not to be relied upon by third parties". As a shareholder the audit is not worth the paper it is written on?
If you think the Ftse 100 has risky Russian and mining companies in it, that is enough risk for anyone. The Aim market is the Wild West in comparison.
The Bannerman paragraph is so auditors can cover their back so that if someone buys the company and they find out that things weren't as they seemed, the auditors can absolve themselves of responsiblity because they didn't owe that entity anything. If the potential purchaser lets them know ahead of time then things would be different.
In terms of the Big 4, there's so many connections in terms of partners moving in to industry and then engaging their old firms to do the audit, partners moving between the Big 4 etc. It makes sense to open up the FTSE100, 250 etc audits so that smaller firms get a look in but on the flip side, they're unlikely to have sufficient resources and experience to do an efficient job.
Auditors by nature aren't going to focus on everything because if you've got a company with £100m+ turnover, who cares about why the company has spent £100,000 on cleaning products?
I'm interested to know whether this has happened over a long time or in the last couple of years. If the latter then it should at the very least have been questioned!0 -
thrifty_pete wrote: »The Aim market is the Wild West in comparison.
You obviously don't remember Maxwell publishing then. How complex and sophisticated the fraud was to deceive the auditors.0 -
I like to think I'm well informed but I never heard of these people.
Suddenly news headlines everywhere - am I living under a rock?!0 -
Yes but their market is saturated. Over expansion driven by cheap borrowing - but it still has to be paid back.(Patisserie Valerie) seems to have a good business model that delivers what customers want in a way that should be profitable“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0 -
Suddenly news headlines everywhere - am I living under a rock?!
Why would you know every listed company on the London Stock Exchange. There are some 2,600 of them. The smaller they are. The less coverage they receive. Unless you set out to looking to make an investment in potential high growth companies.0 -
Glen_Clark wrote: »Yes but their market is saturated.
In this country there seems to be a huge market for people sitting around doing nothing but slurping on expensive coffee and eating cake. I was in Costa today (using up Zeek TopCashBack credit on a Frostino and getting the free Babyccinno for my son) and the place was rammed with punters. Most of them seemed to be paying with real money.
Alex0
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