Group Financial Statements/Auditors' Report - Pumpkin Patch ...

PUMPKIN PATCH LIMITED & SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 JULY 2010
PUMPKIN PATCH LIMITED & SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 JULY 2010
1 GENERAL INFORMATION
Pumpkin Patch Limited (“Company” or “Parent”) together with its subsidiaries (the “Group”)
is a leading designer, marketer, retailer and wholesaler of children’s clothing.
The Company is a limited liability company incorporated and domiciled in New Zealand.
The address of its registered office is 439 East Tamaki Road, East Tamaki, Auckland,
New Zealand.
These financial statements were authorised for issue on 22 September 2010 by the
Board of Directors who have the power to amend after issue.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements
are set out below. These policies have been consistently applied to all the years presented,
unless otherwise stated.
(A) BASIS OF PREPARATION
The financial statements have been prepared in accordance with New Zealand Generally
Accepted Accounting Practice (NZ GAAP). They comply with New Zealand Equivalents to
International Financial Reporting Standards (NZ IFRS), and other applicable New Zealand
Financial Reporting Standards, as appropriate for profit‐oriented entities. The financial
statements comply with International Financial Reporting Standards (IFRS).
The principal accounting policies adopted in the preparation of the financial statements
are set out below. The policies have been consistently applied to all the periods presented,
unless otherwise stated.
The reporting currency used in the preparation of these consolidated financial statements
is New Zealand dollars, rounded where necessary to the nearest thousand dollars.
To ensure consistency with the current year, comparative figures have been restated
where appropriate.
Entities reporting
The financial statements for the “Group” are the consolidated financial statements
comprising the economic entity Pumpkin Patch Limited and its subsidiaries. The
financial statements of the Parent are for the company as a seperate legal entity.
Statutory base
The Company is listed on the New Zealand Exchange (NZX). It is registered under the
Companies Act 1993 and is an issuer in terms of the Securities Act 1978. The financial
statements have been prepared in accordance with the requirements of the Financial
Reporting Act 1993 and the Companies Act 1993.
Historical cost convention
These financial statements have been prepared under the historical cost convention,
as modified by the revaluation of financial assets and liabilities, including derivative
instruments.
Changes in accounting policies
The group has adopted the following new and amended NZ IFRSs as of 1 August 2009:
- NZ IFRS 7 Financial instruments: Disclosures (amendment) ‐ effective 1 January 2009.
The amendment requires enhanced disclosures about fair value measurement and liquidity
risk. In particular, the amendment requires disclosure of fair value measurements by level
of a fair value measurement hierarchy. As the change in accounting policy only results in
additional disclosures, there is no impact on earnings per share.
- IAS 1 (revised), ‘Presentation of financial statements’. The revised standard prohibits the
presentation of items of income and expenses (that is ‘non‐owner changes in equity’)
in the statement of changes in equity, requiring ‘non‐owner changes in equity’ to be
presented separately from owner changes in equity. All ‘non‐owner changes in equity’
are required to be shown in a performance statement.
Entities can choose whether to present one performance statement (the statement
of comprehensive income) or two statements (the income statement and statement
of comprehensive income).
The group has elected to present two statements: an income statement and a statement
of comprehensive income.
Critical accounting estimates
The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are addressed below:
(i) Impairment of Property, Plant and Equipment
The Group undertakes to annually review its assets for indicators that their value is
impaired. Testing for impairment involves judgements and estimates in relation to the
recoverability of asset values. As disclosed in note 4, in 2009 the Group performed
impairment testing of its United Kingdom and United States retail stores as well as all
Urban Angel stores, this resulted in an impairment charge being recognised in the 2009
income statement. Following a review of the 2010 operations no indicators of impairment
were identified and as such, no impairment charge was deemed necessary in 2010.
(ii) Inventory
As disclosed in note 2(M), inventories are recorded at the lower of cost and net realisable
value. Assessing the net realisable value of inventory involves making estimates and
judgements in relation to future selling prices.
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