Patisserie Valerie began as a single boutique shop on the bustling streets of Soho in central London in 1926 but would soon become the bright star for the multimillionaire serial entrepreneur Luke Johnson.
When he bought a controlling stake in 2006 he had already “significant experience” in growing food and drink companies such as Pizza Express and Strada. And grow the company certainly did.
Building on its illustrious Soho reputation the patisserie already had expanded to eight stores when Mr Johnson came on the scene. Patisserie Valerie’s delicately prepared, indulgent cakes spread across the UK to the high streets of the country. Now numbering nearly 200 outlets and several brands including Baker and Spice, which has branches in the UAE, the collapse of “Pat-Val” has come as shock.
Opened by Belgian-born Madame Valerie in 1926, the ambition for Patisserie Valerie to “introduce fine continental patisserie to the English”. The company has a history of dealing with upheaval - during the Second World War the shop on the original site in Soho was razed to the ground by German bombers.
The chain’s parent company, Patisserie Holdings plc, announced it would go into administration late Tuesday after months of fraud investigations. In October 2018, a £40 million blackhole was discovered amid financial irregularities. Finance director Chris Marsh was arrested when £30 million previously declared on accounts were found not to exist and £9.8 million in debt was unearthed through two overdrafts that had not received permission.
It emerged last week the damage was far great that thought as a result “very significant manipulation of the balance sheet and profit and loss accounts.”
Thousands of false entries were found in the company’s books with revenue and profits downgraded significantly.
“As a direct result of the significant fraud referred to in previous announcements, (the company) has been unable to renew its bank facilities, and therefore regrettably the business does not have sufficient funding to meet its liabilities as they fall due,” Patisserie Holdings said on Tuesday.
For a measure of how dramatic its reversal of fortunes have been Mr Johnson, who is the son of prominent magazine editor Paul, was writing as recently as September 2018 an “aide-memoire” to businessmen “looking to spot the next fraud”.
One of the 12 points was to: “Make it complicated: most people do not understand the technicalities of investing or accounting. Many con artists fool investors by making the apparent complexities of their scheme so esoteric that no one can see the fraud.”
Clearly Mr Johnson, nor his auditors Grant Thornton, had any inclincing of the alleged activities that are being blamed for sinking his own business.
In an unpublished column from October, he had also written about what to do if business partners disagreed for a multitude of reasons. “It might be over strategy, or relative contributions, or whether to sell out.”
The patisserie’s downfall has also turned up the spotlight of auditors, their industry and shortcomings. The UK’s Business, Energy and Industrial Strategy Committee (BEIS) has recently begun an enquiry into role of accountancy firms – the review is focused on improving quality and competition in the audit market and reducing conflicts of interests sparked by the fall of companies such as Carillion and homeware giant BHS.
Grant Thornton, who were previously charged with overseeing Patisserie Valerie, are currently being investigated by the UK’s accountant’s regulators over their inability to find thousands of company inaccuracies.
“The extraordinary black-hole in Patisserie Valerie’s accounts which has led to this administration raises grave corporate governance concerns and poses serious questions regarding the effectiveness of the auditor and the current arrangements for regulation,” said Labour MP Rachel Reeves, who chairs the UK’s BEIS Committee.
“In today’s environment of regulation and scrutiny, it’s shocking that a fraud of this scale can take place within a listed company,” said Laith Khalaf, senior analyst at Hargreaves Lansdown.
“Investing in smaller companies clearly comes with risks attached. However it’s one thing to see a company’s shares wiped out by poor trading conditions, or even bad management decisions, it’s quite another to see your investment disappear as a result of fraudulent activity,” he added.
Patisserie Valerie’s final plea would fall on death ears. It had begged HSBC and Barclays to extend a £9.7 million loan deal, which expired on Friday, after the impact of the fraud was revealed to be far more damaging that previously thought.
Despite intensive efforts to rescue the business, on Tuesday it announced its administration.
KPMG have been appointed as administrators, 70 shops are to close immediately, and some 3,000 jobs are at risk and Mr Johnson has “personally” extended an £3 million unsecured, interest-free loan to ensure January salaries are paid. Mrs Reeves said she hoped “the administrators will make every effort to safeguard jobs and protect the interests of suppliers.”
The outlook, however, for shareholders is bleak. “Any dim hope investors had of recovering any value from shares they bought in good faith has now been extinguished,” said Mr Khalaf from Hargreaves Lansdown.
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Squid Game season two
Director: Hwang Dong-hyuk
Stars: Lee Jung-jae, Wi Ha-joon and Lee Byung-hun
Rating: 4.5/5
Tips for taking the metro
- set out well ahead of time
- make sure you have at least Dh15 on you Nol card, as there could be big queues for top-up machines
- enter the right cabin. The train may be too busy to move between carriages once you're on
- don't carry too much luggage and tuck it under a seat to make room for fellow passengers
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
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FIVE%20TRENDS%20THAT%20WILL%20SHAPE%20UAE%20BANKING
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COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
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Torno Subito by Massimo Bottura
When the W Dubai – The Palm hotel opens at the end of this year, one of the highlights will be Massimo Bottura’s new restaurant, Torno Subito, which promises “to take guests on a journey back to 1960s Italy”. It is the three Michelinstarred chef’s first venture in Dubai and should be every bit as ambitious as you would expect from the man whose restaurant in Italy, Osteria Francescana, was crowned number one in this year’s list of the World’s 50 Best Restaurants.
Akira Back Dubai
Another exciting opening at the W Dubai – The Palm hotel is South Korean chef Akira Back’s new restaurant, which will continue to showcase some of the finest Asian food in the world. Back, whose Seoul restaurant, Dosa, won a Michelin star last year, describes his menu as, “an innovative Japanese cuisine prepared with a Korean accent”.
Dinner by Heston Blumenthal
The highly experimental chef, whose dishes are as much about spectacle as taste, opens his first restaurant in Dubai next year. Housed at The Royal Atlantis Resort & Residences, Dinner by Heston Blumenthal will feature contemporary twists on recipes that date back to the 1300s, including goats’ milk cheesecake. Always remember with a Blumenthal dish: nothing is quite as it seems.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
A timeline of the Historical Dictionary of the Arabic Language
- 2018: Formal work begins
- November 2021: First 17 volumes launched
- November 2022: Additional 19 volumes released
- October 2023: Another 31 volumes released
- November 2024: All 127 volumes completed
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Wednesday: West Indies v Scotland
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Friday: Afghanistan v Ireland
Sunday: Final
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- Charlotte retained the SmackDown Women’s title against Asuka
- Seth Rollins won the Intercontinental title against The Miz and Finn Balor
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Killing of Qassem Suleimani
The UAE's journey to space
What is the Supreme Petroleum Council?
The Abu Dhabi Supreme Petroleum Council was established in 1988 and is the highest governing body in Abu Dhabi’s oil and gas industry. The council formulates, oversees and executes the emirate’s petroleum-related policies. It also approves the allocation of capital spending across state-owned Adnoc’s upstream, downstream and midstream operations and functions as the company’s board of directors. The SPC’s mandate is also required for auctioning oil and gas concessions in Abu Dhabi and for awarding blocks to international oil companies. The council is chaired by Sheikh Khalifa, the President and Ruler of Abu Dhabi while Sheikh Mohamed bin Zayed, Abu Dhabi’s Crown Prince and Deputy Supreme Commander of the Armed Forces, is the vice chairman.
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
