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Wed 16th Jan 2019 - Patisserie Holdings appoints KPMG to review options as it reveals balance sheet was ‘significantly manipulated’
Patisserie Holdings appoints KPMG to review options as it reveals balance sheet was ‘significantly manipulated’: Patisserie Holdings has hired KPMG to review options for the business as it revealed its balance sheet was “significantly manipulated” including ledgers containing thousands of false entries. The company stated: “The work carried out by the company’s forensic accountants since then has revealed the mis-statement of its accounts was extensive, involving significant manipulation of the balance sheet and profit and loss accounts. Among other manipulations, this involved thousands of false entries into the company’s ledgers. It will take some time before a reliable trading outlook can be completed while the above work streams progress. The initial indications from the work carried out to date is that the cash flow and profitability of the business has been overstated in the past and is materially below that announced in the trading update on 12 October 2018, which was based on limited work carried out over a 48-hour period. The company has hired KPMG to assist it in carrying out a review of all options available to it in order to recover from the devastating effects of the fraud, and to preserve value for its stakeholders going forward. The company confirms RSM was appointed auditor today (16 January) but, due to the fraud and attendant accounting issues, it will be some time to complete a restatement of the company’s accounts and prepare the audited figures to 30 September 2018. The company has also been in discussions with its bankers to extend the standstill of its bank facilities beyond 18 January and will issue an update when those discussions have concluded.” The October update had stated the company had a net debt position of £9.8m, rather than the £28m of net cash announced at the end of March. The company also said at the time it expected sales of about £120m and Ebitda of £12m for the year to September 2019. Since evidence of the “black hole” was uncovered and an emergency fund-raising took place to save the business, the company has appointed a new chief executive, interim chief financial officer, non-executive director, commercial director and production director, as well as other management appointments.

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