Good morning!



Patisserie Holdings (LON:CAKE)

We had a reminder last night that frauds are usually worse than they first appear.

Patisserie Holdings (LON:CAKE) provided investors with the following update:

  • "the misstatement of its accounts was extensive, involving very 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."
  • "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"

Shocking stuff and a cautionary tale about frauds: after initial discovery, there is usually a lot more deception that is yet to be discovered.

Commiserations to shareholders, as the equity must be worth less than the 12 October 2018 update suggested.

That update said revenue and EBITDA for FY 2019 could be c. £120 million and £12 million, respectively. 

If EBITDA is running materially below £12 million for the year, I suppose we have to wonder whether the company is profitable at all - perhaps it has not been profitable for years.

It is impossible to say, but what we can say with certainty is that the shares would be worth very little if they were admitted to trading today.

Those who took part in the £15 million October placing will have been warned that the profitability estimates released at that time were based on very limited information, so I can't imagine that they have any recourse after this latest update. But one or two of them are likely to be feeling disappointed and angry after those initial estimates turned out to be optimistic.



Plenty of updates this morning. My list is:




GAME Digital (LON:GMD)

  • Share price: 25.5p (+10%)
  • No. of shares: 173 million
  • Market cap: £44 million

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