Image copyright
Getty Images

Shares in Patisserie Valerie have been suspended after the cafe chain discovered “significant, potentially fraudulent, accounting irregularities”.

The company said these could cause a “potential material” mis-statement in its accounts.

Finance Director Chris Marsh has been suspended, the company said.

Entrepreneur Luke Johnson owns a 37% stake in the businesses, which also includes Druckers, Philpotts, Baker & Spice and the Flour Power City Bakery.

Mr Johnson said: “We are all deeply concerned about this news and the potential impact on the business. We are determined to understand the full details of what has happened and will communicate these to investors and stakeholders as soon as possible.”

HMRC has launched an insolvency process at the High Court to try to recover £1.14m in taxes from the firm’s principal subsidiary, Stonebeach.

The owner of the Patisserie Valerie chain said it had only just become aware of a winding-up petition filed on 14 September by HMRC and was engaging with the tax office to address it.

‘Material change’

The company, which was listed on the stock market in 2014, said that the board of directors had been notified of the potential irregularities on Tuesday.

It said it had asked for its shares to be suspended while a full investigation was conducted.

The company’s cash position could be affected and “this may lead to a material change in its overall financial position”, it added.

Patisserie Holdings

It has five brands: Patisserie Valerie, Druckers – Vienna Patisserie, Philpotts, Baker & Spice and Flour Power City.

The first first Patisserie Valerie café was opened on Frith Street in London’s Soho district in 1926 by Belgian-born Madame Valerie. It was destroyed in World War II and a new site opened at nearby Old Compton Street.

In 1987 the Scalzo family bought the Old Compton Street store and ran the business.

In 2006, Luke Johnson’s Risk Capital Partners bought a majority stake when it had eight stores.

Now, there are 206 stores across the chain and about 2,000 staff.

It was floated on the AIM stock market, for smaller companies, in 2014.

The last trading update was in May, when Patisserie Valerie said its half-year profits were 14.2% up on the previous year at £11.1m and it had cash reserves of £28.8m.

Its auditors, Grant Thornton, said: “We are aware of the news released by Patisserie Valerie. Given our duty of client confidentiality it would be inappropriate for us to comment”.

The first Patisserie Valerie store was opened in the Soho district of London in 1926 by a Belgian woman, Madame Valerie. It is now part of a chain with 206 stores and also trades in the supermarket chain Sainsbury’s.

Earlier this year, it was linked with a possible bid for artisan bread chain Gail’s, owned by Bread Holdings in which Mr Johnson has a majority stake.

Patisserie Valerie – which is known as CAKE on the stock market – was floated at 170p a share and was trading at 429p before its shares were suspended.

Mr Johnson bought into Patisserie Valerie in 2006, one of a number of business ventures by the entrepreneur, who built his reputation taking control of Pizza Express in 1993 before selling out in 1999.

Image copyright
Shutterstock

Image caption

Entrepreneur Luke Johnson has a 37% stake in Patisserie Valerie

He then started and later sold Signature Restaurants – owner of the Ivy, J. Sheekey and Le Caprice, as well as the Belgo and Strada restaurant chains. He has also been involved in dental surgeries and bingo clubs.

He served as chairman of Channel 4 for six years until January 2010 and set up private equity company Risk Capital Partners in 2001.

As well as the stakes in Patisserie Valerie and Gail’s, Mr Johnson’s website also lists stakes in Neilson Active Holidays and Elegant Hotels Group, the largest hotel business in Barbados, and Xstrahl, a medical devices specialist.

His website also says he is a board member of sporting goods company Zoggs and Brompton Bicycles. He is chairman of the Brighton Pier Group, Majestic Bingo and Small Batch Coffee.