More trouble for Patisserie

PRESSURE is mounting on businessman Luke Johnson as further write-downs threaten to blow another hole in Patisserie Valerie’s finances.

When the bakery chain last filed accounts, for the year to September 2017, it was carrying £17.7m of so-called goodwill on its balance sheet.

This is an accounting method used to measure the value of the Patisserie Valerie brand name, which looks at factors such as cash flows. But City insiders have suggested the recent crisis at Patisserie Valerie, which revealed a £40m black hole in its accounts, could mean the goodwill is worth significantly less.

One restructuring expert said it was possible the £17.7m goodwill asset could be written down to zero which could mean more trouble for Johnson, the chairman, who provided a £20m loan to keep Patisserie Valerie afloat.

This month, the company said it had found ‘potentially fraudulent’ accounting irregularities.

It also emerged the business was being chased by HM Revenue & Customs for £1.1m of unpaid tax. Finance head Chris Marsh was arrested and later bailed. Johnson, who also heads the company’s remuneration committee that looks after executive pay, now faces questions over bonuses awarded to Marsh and chief executive Paul May.

They were awarded millions of pounds of shares, without notifying shareholders, raising questions about governance.

Peter Kyle, a Labour MP and member of the Business Select Committee, said: ‘ No detail should escape the chairman of a remuneration committee about significant payments.’