Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • DesmondT
    • By DesmondT 11th Oct 18, 10:40 PM
    • 5Posts
    • 3Thanks
    DesmondT
    Patisserie Valerie
    • #1
    • 11th Oct 18, 10:40 PM
    Patisserie Valerie 11th Oct 18 at 10:40 PM
    Hello
    I'm unfortunate to have a significant shareholding in PV via my SIPP. I did my research, studied the books (via Stockopedia), understood the business and invested a modest proportion of my fund over the last. year. All the indications were that this was a stable, low risk company with good growth potential. It now appears that there may have been some fraudulent accounting and at the very least it looks like the auditors were negligent.

    My question is, assuming that the Company goes into administration, what steps can I take to recover what are likely to be significant loses? If I own these shares through a SIPP (in my case Hargreaves Lansdowne) am I still able to bring an action as a shareholder? In general do I have any come-back on this?

    Thanks for any input.
Page 3
    • veryintrigued
    • By veryintrigued 12th Oct 18, 6:16 PM
    • 2,536 Posts
    • 2,074 Thanks
    veryintrigued
    I'd say the Finance director is crêpping themselves right now.
    Originally posted by Zola.
    What do you think has happened to the dough?
    • dealer wins
    • By dealer wins 12th Oct 18, 6:26 PM
    • 6,031 Posts
    • 11,671 Thanks
    dealer wins
    If the shareholders get back 20% of last weeks value they have been lucky!

    I would expect to get sweet FA though
    Choose life
    • Zola.
    • By Zola. 12th Oct 18, 6:29 PM
    • 1,320 Posts
    • 554 Thanks
    Zola.
    What do you think has happened to the dough?
    Originally posted by veryintrigued

    I'll go against the grain, and say it is looking gloomy. At yeast the truth will come out.

    Getting out in time before all of this would have been worth its wheat in gold.
    • Economic
    • By Economic 12th Oct 18, 6:33 PM
    • 324 Posts
    • 339 Thanks
    Economic
    What do you think has happened to the dough?
    Originally posted by veryintrigued
    I doughnut know!
    • londoninvestor
    • By londoninvestor 12th Oct 18, 7:12 PM
    • 326 Posts
    • 249 Thanks
    londoninvestor
    I'd say the Finance director is crêpping themselves right now.
    Originally posted by Zola.
    He's not sure whether what he's done is a crime or just a torte.
    • DesmondT
    • By DesmondT 12th Oct 18, 7:29 PM
    • 5 Posts
    • 3 Thanks
    DesmondT
    So, it now looks likely that the Company will survive (touch wood). Assuming the cash flow problems are sorted then I think there are grounds for optimism that the share price will recover in the longer term - would expect it to be way down next week though. Hats off to Luke Johnson for putting his hand into his pocket - though it's a shame he allowed this to happen in the first place.

    It does irk me that only institutional investors had the option of buying in at 50p, but I guess given the urgency of the situation there was little alternative. If there does turn out to have been fraud or culpable negligence then I really think existing shareholders should be compensated - but I'm not holding my breath.

    And please please please - no more cake jokes!!!
    • jimjames
    • By jimjames 12th Oct 18, 7:29 PM
    • 12,780 Posts
    • 11,490 Thanks
    jimjames
    Indeed you do, but as someone that worked in finance for several large corporates, I can tell you some sail pretty close to the wind.
    Originally posted by OldMusicGuy
    Even a company as large as Tesco isn't immune from accounting issues
    Remember the saying: if it looks too good to be true it almost certainly is.
    • DesmondT
    • By DesmondT 12th Oct 18, 7:35 PM
    • 5 Posts
    • 3 Thanks
    DesmondT
    Remember the saying: if it looks too good to be true it almost certainly is.
    I don't think it did look too good to be true - solid growth but nothing incredible.
    • Alexland
    • By Alexland 12th Oct 18, 7:45 PM
    • 3,402 Posts
    • 2,736 Thanks
    Alexland
    As the company is essentially worthless.
    Originally posted by Thrugelmir
    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. There are probably a lot of concerned employees wondering what happens next. I am pretty confident it will be saved.

    Alex
    Last edited by Alexland; 12-10-2018 at 7:48 PM.
    • londoninvestor
    • By londoninvestor 12th Oct 18, 7:52 PM
    • 326 Posts
    • 249 Thanks
    londoninvestor
    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. There are probably a lot of concerned employees wondering what happens next. I am pretty confident it will be saved.

    Alex
    Originally posted by Alexland
    They're obviously being cagey about exactly what happened. But I guess existing shareholders should "hope" (funny word for the situation) that the underlying business was profitable; miscreants were siphoning off cash from it; and the accounting irregularities were there to disguise the pilfering.

    The less good scenario would be that it was an intrinsically loss-making business and the dodgy accounting was there to hide that.

    However, at least some people who know more than we do have been prepared to lend and to buy equity, so that may be a little cheering.
    • kidmugsy
    • By kidmugsy 12th Oct 18, 7:58 PM
    • 11,814 Posts
    • 8,317 Thanks
    kidmugsy
    The greater the return sought the higher the risk that must be undertaken. Is that better?
    Originally posted by Thrugelmir
    I think it's better, as long as you also acknowledge that the nature of risk is that you also may get an unusually low return.
    Free the dunston one next time too.
    • Alexland
    • By Alexland 12th Oct 18, 9:46 PM
    • 3,402 Posts
    • 2,736 Thanks
    Alexland
    The less good scenario would be that it was an intrinsically loss-making business and the dodgy accounting was there to hide that.
    Originally posted by londoninvestor
    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."

    Alex
    • Thrugelmir
    • By Thrugelmir 12th Oct 18, 11:55 PM
    • 60,299 Posts
    • 53,632 Thanks
    Thrugelmir
    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.
    Originally posted by Alexland
    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.
    Last edited by Thrugelmir; 12-10-2018 at 11:58 PM.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • Alexland
    • By Alexland 13th Oct 18, 7:13 AM
    • 3,402 Posts
    • 2,736 Thanks
    Alexland
    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.
    Last edited by Alexland; 13-10-2018 at 8:25 AM.
    • thrifty_pete
    • By thrifty_pete 13th Oct 18, 8:22 AM
    • 256 Posts
    • 53 Thanks
    thrifty_pete
    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.
    • Super Whiskey
    • By Super Whiskey 13th Oct 18, 5:47 PM
    • 203 Posts
    • 82 Thanks
    Super Whiskey
    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.
    Originally posted by thrifty_pete

    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!
    • Thrugelmir
    • By Thrugelmir 13th Oct 18, 5:58 PM
    • 60,299 Posts
    • 53,632 Thanks
    Thrugelmir
    The Aim market is the Wild West in comparison.
    Originally posted by thrifty_pete
    You obviously don't remember Maxwell publishing then. How complex and sophisticated the fraud was to deceive the auditors.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • bxboards
    • By bxboards 13th Oct 18, 6:02 PM
    • 1,597 Posts
    • 1,256 Thanks
    bxboards
    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?!
    • Glen Clark
    • By Glen Clark 13th Oct 18, 8:58 PM
    • 4,245 Posts
    • 3,265 Thanks
    Glen Clark
    (Patisserie Valerie) seems to have a good business model that delivers what customers want in a way that should be profitable
    Originally posted by Alexland
    Yes but their market is saturated. Over expansion driven by cheap borrowing - but it still has to be paid back.
    “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair
    • Thrugelmir
    • By Thrugelmir 13th Oct 18, 9:03 PM
    • 60,299 Posts
    • 53,632 Thanks
    Thrugelmir

    Suddenly news headlines everywhere - am I living under a rock?!
    Originally posted by bxboards
    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.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

4,884Posts Today

7,511Users online

Martin's Twitter