annual report - Pumpkin Patch investor relations

annual report 

2010

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TABLE OF CONTENTS 

PERFORMANCE HIGHLIGHTS 06 

FINANCIAL HIGHLIGHTS 07 

CHAIRMANÕS LETTER 08 

CHIEF EXECUTIVE OFFICERÕS REPORT 13 

DIRECTORS 18 

CORPORATE GOVERNANCE 22 

GENERAL DISCLOSURES 28 

GROUP FINANCIAL STATEMENTS 37 

AUDITORSÕ REPORT 98 

SHAREHOLDER INFORMATION 100 

CORPORATE DIRECTORY 102 

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MAJOR ACHIEVEMENTS IN 2010 

- Net profit after tax up 76% to $25.5m 

FINANCIAL HIGHLIGHTS 

- Total dividend for the year up 27% to 

9.50 cents per share 

- Improved EBIT (earnings before interest and 

tax) margins across all retail markets 

- Launch of our new brand Charlie & Me 

- Entered 4 new wholesale markets, taking 

total wholesale markets to 20 

- The Company is well positioned to take 

advantage of growth opportunities across 

all of our markets 

2010 

2009 

Change 

NZ $000 NZ $000 

Trading Results 

Group operating revenue 381,994 428,609 (10.9%) 

Earnings before interest & tax 40,117 26,736 50.0% 

Net profit after tax 

25,502 14,522 75.6% 

(before non-recurring items) 

Financial Position at Year End 

Total equity 80,867 88,678 

Total assets 178,589 188,189 

Capital expenditure 13,379 11,796 

Number of Stores 

Australia 119 111 

New Zealand 49 51 

United Kingdom 39 36 

United States 20 20 

Total 227 218 

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CHAIRMANÕS LETTER 

DEAR SHAREHOLDERS 

The 2010 financial year proved to be challenging with continued uncertainty in 

global economic markets creating difficult general retail environments for all of our 

trading entities. Despite these challenging conditions the Company generated a very 

significant improvement in earnings and continued to grow the Pumpkin Patch brand 

in its 22 markets. The result reflects the strength of the Pumpkin Patch brand and the 

quality of the teams we have around the world. 

The various initiatives we have undertaken over the last two years, particularly the 

rationalisation of our US business, prepared us well for the current conditions. We 

have paid particular attention to balance sheet management over this last year, 

both debt and inventory levels are prudently low and we are well positioned to take 

advantage of growth opportunities that are available to us as a gradual recovery 

in trading conditions is looking to be possible over the next couple of years. 

The Annual Shareholders Meeting is to be held in Auckland at the Ellerslie 

Convention Centre on Tuesday 23 November 2010 at 1pm. The meeting will be 

a good opportunity for all shareholders to meet our new Independent Director 

Brent Impey, hear about the opportunities the Company is exploring and to receive 

an update on how we are trading in the current financial year. 

On behalf of the shareholders and the Board of Directors I would like to thank 

Maurice and his dedicated team for delivering such an outstanding result in very 

tough conditions and for continuing to develop opportunities to position Pumpkin 

Patch for growth in the future. 

One item of particular note in the past year has been the launch of our new 

brand Charlie & Me. This new brand will allow the Company to target the very 

large Ôeveryday wearÕ segment of the market which makes up over 75% of global 

childrenswear sales. Charlie & Me affords us the opportunity to leverage the 

infrastructure and capabilities we already have across the business and enter a 

part of the market that the Pumpkin Patch brand does not directly target. Given that 

the first store has only recently opened we cannot yet comment on performance. 

However it is important to note that demonstrating success in this segment will have 

very positive implications for Pumpkin Patch and its growth aspirations. Charlie & Me 

has significant potential in our existing markets and perhaps even more so in markets 

where we are not yet represented. 

GREG MUIR - CHAIRMAN 

GREG MUIR 

Although it is easy to get distracted by the current economic environment the Board 

continues to take a long term view and develop and execute strategies that look to 

the future. In the coming year we expect to open at least 22 new stores, we will 

develop the Charlie & Me brand, and we will enter a number of new wholesale 

markets; all of which is an investment in the future of the Company that will generate 

long term benefits for shareholders. 

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SALES COMPOSITION 

Wholesale/ Direct 

14% 

Retail United States 

5% 

Retail Australia 

52% 

Retail 

United Kingdom 

14% 

Retail New Zealand 

15% 

STORE NUMBERS 

250 

249 

225 

228 

218 

227 

200 

200 

175 

167 

150 

136 

125 

114 

100 

75 

50 

25 

0 

84 

71 

56 

40 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Fcast 2011 

New Zealand Australia United Kingdom United States Ireland 

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CHIEF EXECUTIVE OFFICERÕS REPORT 

During the 2010 year we faced subdued market conditions across most of our 

global markets. While total group revenue was down 11% we delivered a 76% 

increase in full year earnings to $25.5m and improved EBIT margins across all 4 

of our retail markets. This was the result of inventory, margin, and cost management 

initiatives implemented during the year and the restructuring initiatives undertaken 

over the last two years. 

We continue to have a very strong Balance Sheet and are well positioned to take 

advantage of the significant growth opportunities the Pumpkin Patch brand and the 

new Charlie & Me brand have in Australasia and other international markets. 

While we expect general conditions in all markets to remain challenging in the short 

term the strength of the Pumpkin Patch brand will ensure we benefit when trading 

conditions improve. 

AUSTRALIA RETAIL 

2010 2009 

Turnover AU $Õ000 157,056 166,398 (5.6%) 

Turnover NZ $Õ000 198,276 203,426 (2.5%) 

EBIT NZ $Õ000 38,705 38,469 0.6% 

19.5% 18.9% 

Stores 

Pumpkin Patch 103 99 

Outlet 16 12 

119 111 

While we experienced a general improvement in sales in the first half of the year a 

softening of the general retail environment in the second half of the year offset much 

of that improvement. Total sales for the year were down 2.5% in NZD terms. 

MAURICE PRENDERGAST 

We continued to focus on the management of margins and overheads, the results of 

which can be seen in the 0.6% improvement in EBIT as a percentage of sales and 

the increase in total EBIT to $38.7m. 

During the year we opened 8 new stores (2009: 5) taking total stores to 119 at year 

end. We expect to open 8 new Pumpkin Patch stores in Australia in the 2011 year 

and see continued new store growth opportunities in coming years. 

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NEW ZEALAND RETAIL 

2010 2009 

Turnover NZ $Õ000 58,908 64,357 (8.5%) 

EBIT (1) NZ $Õ000 11,310 11,125 1.7% 

19.2% 17.3% 

Stores 


Outlet 12 12 

Urban Angel 3 6 

49 51 

(1) Operating EBIT before non-recurring costs. 

The New Zealand retail environment remained subdued for much of the year 

with total sales down 8.5% or 6.3% when excluding temporary clearance stores 

operating in 2009 but not in 2010. 

Total EBIT was up 1.7% to $11.3m and EBIT as a percentage of sales was up a strong 

1.8% reflecting the focus on margin and inventory management across the year. 

At year end we had 49 stores open across New Zealand. Two new Pumpkin Patch 

stores are expected to open in the 2011 year. 

WHOLESALE AND DIRECT 

2010 2009 

Turnover NZ $Õ000 53,217 62,540 (14.9%) 

EBIT NZ $Õ000 13,708 16,583 (17.3%) 

25.8% 26.5% 

With soft retail environments in their home markets our wholesale partners lowered their 

product orders in 2010. As a result of this and the continued strength of the NZD against 

most export currencies total sales were down 14.9% to $53.2m. 

The lower sales result led to EBIT being down 17.3% to $13.7m however EBIT margins 

remained at levels similar to 2009. 

During the year we established new wholesale partnerships in China, Lebanon, Malta, 

and Thailand taking the total number of wholesale markets to 20. We are in the process 

of finalising a number of relationships in new markets for the 2011 year. 

The continued softness in global retail markets mean wholesale partners are only slowly 

returning to more normal buying patterns. The full impact of this and the impact of the 

new markets we are adding will not be seen until the 2012 financial year. 

UNITED KINGDOM RETAIL 

2010 2009 

Turnover GB £Õ000 23,636 22,520 5.0% 

Turnover NZ $Õ000 52,455 59,200 (11.4%) 

EBIT (1) NZ $Õ000 (885) (4,962) 82.2% 

Stores 


Outlet 4 3 

39 36 

(1) Operating EBIT before non-recurring costs. 

While general retail conditions in the United Kingdom remained volatile throughout the 

year total sales in GBP terms were up 5.0%. However in NZD terms sales were down 

11.4% due to the significantly higher exchange rates experienced across the year. 

The EBIT loss for the year was $0.9m, a significant improvement on $5.0m loss 

last year. Improved margins and a focus on reducing overheads particularly at 

underperforming stores have all benefited the United Kingdom this year. 

Trading conditions are expected to remain soft in the short term but steadily improve 

later in the year and into 2012. 

During the year we opened 3 new stores (2009: 1) taking the total number of stores 

to 39. We expect to open 3 new stores in 2011. 

UNITED STATES RETAIL 

2010 2009 

Turnover US $Õ000 13,586 13,585 0.0% 

Turnover NZ $Õ000 19,138 22,825 (16.1%) 

EBIT (2) NZ $Õ000 (2,685) (9,289) 71.1% 

Stores 


(2) EBIT excluding discontinued stores and before non-recurring costs. 

While retail conditions remained soft across the year trading patterns became more 

stable as the year progressed. Total USD sales from the 20 stores trading during the 

year were at similar levels as 2009. Sales in NZD terms were impacted by higher 

exchange rates and ended the year down 16%. 

The segment EBIT loss was $2.7m, a 71.1% improvement on last year (2009: $9.3m 

loss). Improved margins and the benefits of the 2009 reorganisation plan, mainly lower 

rental and depreciation charges, contributed to the much improved result. 

Conditions are expected to remain soft until the United States economy as a whole 

shows significant improvement. 

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NEW BUSINESS 

CHARLIE & ME 

During the year we announced the launch of Charlie & Me, our new stand alone 

brand targeting the Ôeveryday wearÕ segment of the market which makes up over 

75% of total global childrenswear sales. The new brand will allow us to leverage 

off our existing infrastructure and capabilities to expand into a very large segment 

of the market that our Pumpkin Patch brand does not directly cater for. 

While the initial focus of Charlie & Me will primarily be on Australia the brand 

creates substantial global growth opportunities. 

We opened the first Charlie & Me store in August 2010 and plan to open at least 

another 6 stores in 2011. 

IRELAND 

SUMMARY 

Although retail conditions were subdued in 2010 the 76% improvement in earnings 

shows we have responded well to the environment we faced and reflects the strength 

of the Pumpkin Patch brand. 

The initiatives undertaken over the last 24 months have ensured we are well 

positioned to take advantage of growth opportunities in all our markets and 

to reap the benefits when general trading conditions improve. 

The launch of the Charlie & Me brand and the ongoing development of new 

wholesale markets are expected to open up a new phase of long term growth 

and will deliver long term rewards to our shareholders. 

On behalf of the Board of Directors we again thank the very dedicated Pumpkin 

Patch team based around the world for the hard work they put in everyday to 

make the Company the success that it is. 

Over the last three months we have opened our first two company operated Pumpkin 

Patch stores in Ireland. While the retail environment remains challenging in Ireland 

the soft leasing conditions creates an opportunity for us to enter the market with 

relatively low risk. 

CASH FLOWS AND BALANCE SHEET 

We continue to maintain a very strong balance sheet which will allow us to take 

advantage of growth opportunities that exist across all markets. Net bank debt at 

year end was $26.1m. Based on current trading conditions and expected working 

capital and capital expenditure requirements net bank debt is expected to be 

between $30.0m and $35.0m at July 2011. The bulk of the bank debt facilities 

are in place until December 2011. 

MAURICE PRENDERGAST - CEO 

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JANE FREEMAN 

Independent Non-Executive Director, BCom 

Chair of the Remuneration and Nomination Committee 

and member of the Audit and Risk Committee 

DIRECTORS 

Jane has held senior marketing and management positions at TelecomÕs 

e-solutions, BankDirect, Clear Communications and ASB Bank Limited. Jane is 

currently a Director of Air New Zealand Limited and Delegats Group Limited. 

GREG MUIR 

Chairman, BA, MBA 

Greg was appointed Chairman in 2004. He is currently Managing Director 

of Tru-Test Ltd. Prior to joining Tru-Test he was Executive Chairman of Pumpkin 

Patch from 2004 to 2008, Chief Executive of The Warehouse Group and held 

senior roles at TNT and Lion Nathan. Greg is currently Chairman of Tourism 

New Zealand, Pioneer Capital and the Blues Super 14 Franchise and a 

Director of the Auckland Rugby Union. 

BRENT IMPEY 

Independent Non-Executive Director 

Brent was most recently the CEO of MediaWorks NZ Limited and prior to 

this role he held a number of legal, corporate advisory, consultancy and 

media related roles. Brent is also a Director of Hutchwilco NZ Limited, Devon 

Funds Management, Fred Hollows Australia, and has been Chairman of Fred 

Hollows Foundation (NZ). 

MAURICE PRENDERGAST 

Chief Executive Officer 

Maurice has been Chief Executive Officer of Pumpkin Patch since 1993. 

Maurice has held executive positions in accounting, distribution and property 

development in both New Zealand and Australian companies. Maurice is 

currently a Director of Comvita Limited. 

DAVID JACKSON 

Independent Non-Executive Director, MCom (Hons), FCA 

Chair of the Audit and Risk Committee and member of the 

Remuneration and Nomination Committee 

David is currently a Director of Nuplex Industries Limited, Fonterra Co Operative 

Group Limited and Chairman of The New Zealand Refining Company Limited. 

David formerly was a Senior Audit Partner and Chairman of Ernst & Young. 

CHRISSY CONYNGHAM 

Group General Manager 

Design Director 

Chrissy joined Pumpkin Patch as Design Director in 1993. Chrissy leads 

the design team and is responsible for bringing together comprehensive 

ranges and product sourcing. Chrissy has over 20 years of experience 

in the fashion industry. 

SALLY SYNNOTT 

Non-Executive Director 

Member of the Audit and Risk Committee and the 

Remuneration and Nomination Committee 

Sally founded Pumpkin Patch in 1990 and held an executive role within the 

Company until 1993. Since then Sally has undertaken specialist assignments 

for the Company and has been a non-executive Director. 

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CORPORATE GOVERNANCE 

The Board of Directors have the overall responsibility for ensuring that the Company 

and Group is properly managed to enhance and protect shareholdersÕ interests. The 

Directors take this responsibility seriously and to this end, the Board has in place 

what it believes to be appropriate Group corporate governance policies 

and practices. 

The Board has undertaken to regularly review the corporate governance policies 

to ensure the CompanyÕs responsibilities and obligations are met. 

COMMITTEES 

The Board has an Audit and Risk Committee and a Remuneration and Nomination 

Committee. The objectives, composition and responsibilities of each committee are 

set out in its charter. These charters are available on the CompanyÕs corporate and 

investor relations website www.pumpkinpatch.biz 

AUDIT AND RISK COMMITTEE 

The Committee provides assistance to the Board in fulfilling their oversight 

responsibility to shareholders, potential shareholders, the investment community, 

and others relating to:- 

- the CompanyÕs financial statements and the financial reporting process; 

- the systems of internal accounting and financial controls; 

- the internal audit function; 

- the annual independent audit of the CompanyÕs financial statements; and 

- the legal compliance and ethics programmes as established by management 

and the Board. 

The Committee comprises a minimum of three non-executive Directors, the majority 

of which must be independent directors. The current members of the Committee are 

David Jackson (Chair), Jane Freeman, and Sally Synnott. 

REMUNERATION AND NOMINATION COMMITTEE 

The Committee provides assistance to the Board to ensure that the Company adopts 

remuneration policies that:- 

- attract, retain and motivate high calibre executives and directors so as to encourage 

enhanced performance by the Company 

- motivate directors and management to pursue the long-term growth and success of 

the Company within an appropriate control framework, and 

- demonstrate a clear relationship between key executive performance and 

remuneration. 

The committee comprises a minimum of three non-executive Directors, the majority 

of which must be independent directors. The current members of the Committee are 

Jane Freeman (Chair), David Jackson, and Sally Synnott. 

BOARD AND COMMITTEE MEETINGS HELD DURING THE YEAR 

Board Meetings 

(1) Brent Impey was appointed by the Board on 2 July 2010 

Audit and Risk 

Committee 

Remuneration 

and Nomination 

Committee 

Chrissy Conyngham 10 - - 

Jane Freeman 11 2 2 

Brent Impey (1) - - - 

David Jackson 10 2 2 

Greg Muir 10 - - 

Maurice Prendergast 10 - - 

Sally Synnott 10 2 2 

Total Meetings Held 11 2 2 

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INDEPENDENT DIRECTORS 

The Company considers that three of the current seven Directors are independent 

directors, namely Jane Freeman, David Jackson and Brent Impey. The remaining 

four directors are deemed not to be independent due to disqualifying relationships 

as defined in NZX Listing Rules; Chrissy Conyngham and Maurice Prendergast due 

to being executives in the Company, Greg Muir due to having held an executive 

position in the Company within the last three years, and Sally Synnott due to having 

a beneficial interest in securities held by a substantial security holder. 

The Company notes that it has a minimum of two independent Directors as required 

by the NZX Listing Rules. 

Having reviewed the composition of the Board, the Company considers the Directors 

hold an appropriate mix of skills, expertise, and independence. 

SHARE TRADING BY DIRECTORS AND OFFICERS 

The Company has formal procedures Directors and Officers are required to follow 

when trading in Pumpkin Patch Limited shares. Directors and selected senior officers 

must notify and obtain the consent of the Remuneration and Nominations Committee 

prior to trading. Other officers and other selected employees deemed to be 

restricted persons must notify and obtain the consent of the Company Secretary 

prior to trading. Restricted persons cannot trade shares during two blackout periods. 

The first blackout period commences 1 January and ends the day after the Company 

publically releases its Half Year financial result. The second blackout period 

commences 1 July and ends the day after the Company publically releases 

its Full Year financial result. 

A copy of this policy is available on the CompanyÕs website www.pumpkinpatch.biz 

CODE OF ETHICS 

The Company has a formal Code of Conduct and Ethics Policy. This policy provides 

guidance to all Directors, managers, employees and contractors of Pumpkin Patch 

Limited and it subsidiaries on how it expects them to conduct themselves when 

undertaking business on behalf of the Pumpkin Patch Group. 


SHAREHOLDER RELATIONS 

The Company has a formal Shareholder Relations policy. The purpose of this Policy 

is to promote effective communication with shareholders and to encourage active 

participation at General Meetings. 


CONTINUOUS DISCLOSURE POLICY 

The Board has adopted a Market Disclosure Policy to provide a framework to assist 

the Company to meet its obligations under the NZX continuous disclosure rules. A 

copy of this policy is available on the CompanyÕs website www.pumpkinpatch.biz 

In the period 1 August 2009 to 31 July 2010 the Company made the following 

disclosures to the market:- 

- 23 September 2009: release of the audited result for the full year ended 31 July 2009 

- 2 March 2010: release of the unaudited result for the half year ended 31 January 2010 

- 26 April 2010: Pumpkin Patch to launch a new childrenswear brand 

- 2 July 2010: appointment of Independent Director, Brent Impey 

The Company believes it has met its obligations under the NZX continuous disclosure rules. 

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EXTERNAL AUDITOR INDEPENDENCE 

To ensure the independence of the CompanyÕs external auditor is maintained the Board 

has agreed the external auditor should not provide any services not permitted under 

IFAC (International Federation of Accountants) auditor independence regulations. The 

Audit and Risk Committee review services provided by the external auditor to ensure 

the company complies with this policy. 

RISK MANAGEMENT 

The Company recognises that in order to achieve its business plans and strategic 

goals, there must be a thorough understanding across the Group of the risks that 

may affect the ability of the Group to achieve those plans and goals. Throughout all 

of its business operations the Group has in place processes and systems which are 

designed to identify, assess, monitor and manage risk. 

- The Board satisfies itself that adequate external insurance cover is in place 

appropriate for the GroupÕs size and risk profile; 

- The Board satisfies itself that adequate Health, Safety and Environmental Protection 

Policies and hazard assessments are in place and monitors performance; 

- The CEO and Chief Financial Officer also provide a declaration that the financial 

statements of the Group present a true and fair view, in all material respects of the 

GroupÕs financial position and operating results. The CEO and Chief Financial Officer 

are able to make this declaration having regard to the GroupÕs sound system of risk 

management and control. 

The Board considers that the corporate governance principles followed by the Group 

do not materially differ from the NZX Corporate Governance Best Practice Code. 

The Board has ultimate responsibility for internal control and compliance across 

the Group. 

Accordingly, the Board manages risk in the following ways:- 

- The Board of Directors has oversight of risk management initiatives, policies and 

practices and is assisted in this regard by the Audit & Risk Committee in identifying 

risks which may have a material impact on the GroupÕs business; 

- The Chief Executive Officer (CEO) and Senior Executives of the Group are 

responsible for designing and implementing risk management and internal control 

systems which identify material risks that the Group faces as well as managing risk 

across the Group, and are required to report to the Board through the CEO. This 

includes the identification, assessment, reduction, management and monitoring of 

risk, as well as identifying any material changes to the GroupÕs risk profile. These 

are required to be reported to the Board at regular intervals; 

- There is regular assessment by the Board of strategic risks affecting the GroupÕs 

operations and the establishment of controls to reduce their impact. This includes 

maintaining all relevant registrations and approvals in relation to business operations. 

On a regular basis the Board also reviews the GroupÕs internal controls and risk 

management practices to ensure that they are adequate and reflect the GroupÕs 

risk profile; 

- Risk assessments are conducted for all major work initiatives, where new projects 

are undertaken; 

- There is periodic verification of risk controls at various levels across the GroupÕs 

operations; 

- The Group has established a range of policies and procedures aimed at assisting 

in the management of risk across the GroupÕs operations; 

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GENERAL DISCLOSURES 

DIRECTORSÕ REMUNERATION 

Remuneration of the Directors of the company and other benefits received, or due 

and receivable during the year was as follows: 

$000 $000 

Non Executive Directors 2010 2009 

Jane Freeman (1) 85 85 

Brent Impey 6 - 

David Jackson (1) 85 85 

Greg Muir (2) 130 283 

Sally Synnott 75 75 

(1) Includes fees of $10,000 for, in the case of Jane Freeman, holding the position 

of Chair of the Remuneration and Nominations Committee, and for David Jackson, 

holding the position of Chair of the Audit and Risk Committee. 

(2) During 2009 Greg Muir ceased his executive position with the Company 

and retained the role of Chairman. Total remuneration for 2009 of $283,001 

consisted of executive role related remuneration ($207,168) for part of the year 

and ChairmanÕs fees ($75,833) for part of the year. Remuneration for 2010 

consists only of ChairmanÕs fees. 

2010 2009 2008 2007 2006 

Executive Directors $000 $000 $000 $000 $000 

Net Profit after tax (1) 25,502 14,522 17,079 23,542 26,490 

Maurice Prendergast 

Base Salary 526 526 526 492 457 

Cash Based Incentive 280 - 61 225 248 

Total 806 526 587 717 705 

Chrissy Conyngham 

Base Salary 472 451 437 389 340 

Cash Based Incentive 414 - 45 168 177 

Total 886 451 482 557 517 

(1) Before non-recurring items 

Base salary is the total cost of salary and packaged benefits, which may include 

the provision of a motor vehicle and other benefits received in their capacity as 

employees. Executive Directors do not receive Directors fees. 

In addition to the above remuneration, Executive Directors were each issued 

partly paid shares under Partly Paid Share Schemes, the value of which were 

independently assessed using a binominal option pricing model at the time of 

granting. The number of partly paid shares issued and their independently 

assessed fair values were: 

- Maurice Prendergast 250,000 shares valued at $80,000 (2009: 125,000 

shares valued at $41,250); 

- Chrissy Conyngham 250,000 shares valued at $80,000 (2009: 250,000 

shares valued at $82,500) 

Refer to note 19 in the Financial Statements for full details of the partly paid 

share scheme. 

DIRECTORS SHAREHOLDINGS 

31 July 2010 31 July 2009 


Beneficially or directly owned 813,510 813,510 

Options to acquire ordinary shares (1) 475,000 755,000 

Partly paid shares (2) 500,000 250,000 

Jane Freeman 

Beneficially or directly owned - - 

Brent Impey 

Beneficially or directly owned 4,000 - 

David Jackson 

Beneficially or directly owned 50,000 50,000 

Greg Muir 

Beneficially owned 1,461,900 1,661,900 



Beneficially or jointly owned 10,820,000 10,830,400 


Partly paid shares (2) 375,000 125,000 

Not beneficially owned (3) 761,627 945,268 

Sally Synnott 

Beneficially or directly owned 9,506,800 10,006,800 

Not beneficially owned (3) 761,627 945,268 

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(1) The Executive Directors and Chairman hold options under the 2006 and 2007 

Employee Share Option Plans (refer note 19 of the Financial Statements). The 

2006 options have an exercise period of between 9 June 2009 and 9 June 

2011. The 2007 options have an exercise period of between 9 June 2010 

and 9 June 2012. Greg Muir was issued options under these schemes while 

he held an executive position with the Company. Non executive Directors 

were not eligible to participate in the option schemes. 

(2) Executive Directors have been issued partly paid shares during the year (refer 

note 19 of the Financial Statements). The 2008 partly paid shares can be 

converted to ordinary shares between 23 June 2011 and 23 June 2013. 

The 2009 partly paid shares can be converted to ordinary shares between 

23 June 2012 and 23 June 2014. Non executive Directors were not eligible 

to participate in the Partly Paid Share Schemes. 

(3) Maurice Prendergast and Sally Synnott are Directors and shareholders of 

Pumpkin Patch Nominees Limited which acts as Trustee for various employee 

share ownership plans. 

SHARE DEALINGS BY DIRECTORS 

DISCLOSURE OF INTERESTS BY DIRECTORS 

The Directors named below have made a general disclosure of interest to the 

Board and entered the interest in the CompanyÕs interest register. 


Beneficial and direct shareholder in: 

Jane Freeman 

Director of: 

Brent Impey 

Director of: 

Beneficial shareholder in: 

David Jackson 


Pumpkin Patch Limited 

Air New Zealand Limited 

Jane Freeman Consulting Limited 

Man Cave Consulting Limited 



The Board has received disclosures from the Directors named below of changes in 

relevant interests in the Company during the period 1 August 2009 and 31 July 2010. 

Particulars of such disclosures are:- 

- Sally Synnott disposed of a total of 500,000 shares in three on market transactions 

between 13 and 15 October 2009; 

- On 6 November 2009, Partly Paid Shares were issued to Maurice Prendergast 

(250,000) and Chrissy Conyngham (250,000); 

- Greg Muir disposed of 200,000 shares on 17 December 2009; 

- On 9 June 2010 the 2005 options held by Greg Muir (140,000), Maurice 

Prendergast (150,000) and Chrissy Conyngham (280,000) expired; and 

- Maurice Prendergast disposed of 10,400 jointly held shares on 29 June 2010. 

Greg Muir 

Director of: 



Director of: 

Beneficial and joint shareholder in: 

Sally Synnott 

Director of: 

Beneficial and direct shareholder in: 

Ronaki Investments Limited 


Espies Shopfitters Limited 

Pumpkin Patch Limited and 

Espies Shopfitters Limited 

Matangi Holdings Limited 

Pumpkin Patch Limited and 

The Dickens Street Partnership 

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SUBSIDIARY COMPANY DIRECTOR DISCLOSURES 

In relation to Pumpkin Patch LimitedÕs subsidiary companies, the Companies Act 

1993 requires Pumpkin Patch Limited to disclose, during the year to 31 July 2010, 

particulars of entries in the Interests Register, the total remuneration and value of 

other benefits paid to subsidiary directors, the number of employees who received 

more than $100,000 and donations made by the subsidiaries and amounts paid 

to auditors. 

No wholly owned subsidiary has directors who are not employees of the Pumpkin 

Patch group. No employee appointed as a Director of a subsidiary receives any 

remuneration or other benefits in his/her role as a director. The number of such 

employees that receive more than $100,000 as a result of employee remuneration 

(and other benefits) is included in the remuneration table on the following page. 

Audit fees are paid on behalf of the Group as disclosed in the financial statements, 

as are any donations made. 

During the financial year, there were no entries in any Pumpkin Patch Limited subsidiary 

company Interest Register pursuant to section 140 of the Companies Act 1993. 

Subsidiary Company Country of Registration Directors 

Torquay Enterprises Limited New Zealand Chrissy Conyngham, 

Pumpkin Patch Originals Limited New Zealand Neil Cowie, 

Pumpkin Patch Limited United Kingdom Maurice Prendergast 

Patch Kids Limited New Zealand & Matthew Washington 

Pumpkin Patch Direct Limited New Zealand 

Pumpkin Patch Asia Limited New Zealand 

Urban Angel Girls Limited New Zealand 

Pumpkin Patch LLC United States Chrissy Conyngham, 

Pumpkin Patch Wholesale LLC United States Greg Muir, 


& Matthew Washington 

Pumpkin Patch (Australia) Pty Limited Australia Chrissy Conyngham, 

The Catalogue Studio Pty Limited Australia Neil Cowie, 

Maurice Prendergast, 

Matthew Washington 

& Trish Watt 

Pumpkin Patch Ireland Limited Ireland Neil Cowie, 

Pamela March, 


& Matthew Washington 

REMUNERATION OF EMPLOYEES 

The number of employees (not including Directors) whose remuneration exceeded $100,000 is disclosed in 

the following table. Remuneration may include salary, performance based short term incentive payments, the 

value of performance based long term incentive benefits, provision of a motor vehicle, and other miscellaneous 

employment related benefits. 

During 2010 payments were made to employees under performance based short term incentive schemes, 

(2009: nil) 

$000 2010 2009 

100 - 110 10 10 

110 - 120 7 2 

120 - 130 7 7 

130 - 140 8 11 

140 - 150 3 8 

150 - 160 4 3 

160 - 170 1 2 

170 - 180 - 1 

180 - 190 1 2 

190 - 200 2 2 

200 - 210 3 - 

210 - 220 1 2 

230 - 240 1 4 

260 - 270 2 - 

280 - 290 2 - 

310 - 320 1 1 

320 - 330 1 - 

330 - 340 - 1 

340 - 350 1 - 

360 - 370 - 2 

400 – 410 1 - 

440 - 450 1 - 

450 - 460 - 1 

490 - 500 1 - 

580 - 590 1 - 

600 - 610 1 - 

Australian, United Kingdom, and United States remuneration has been converted into New Zealand 

dollars at $0.8035, $0.4659, and $0.7270 respectively. 

20 

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20 

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PUMPKIN PATCH LIMITED & SUBSIDIARIES 

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2010 

20 

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37

PUMPKIN PATCH LIMITED & SUBSIDIARIES FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2010 

PUMPKIN PATCH LIMITED & SUBSIDIARIES STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 JULY 2010 

INCOME STATEMENTS For the year ended 31 July 2010 

Consolidated - Year ended Parent - Year ended 

31 July 2010 31 July 2009 31 July 2010 31 July 2009 

Notes $Õ000 $Õ000 $Õ000 $Õ000 

Sales revenue 381,994 412,348 - - 

Cost of goods sold (147,556) (175,231) - - 

Gross profit 234,438 237,117 - - 

Other operating income 204 197 73,167 41,090 

Expenses 3 

Selling expenses (167,138) (177,954) - - 

Finance expenses (2,356) (4,835) (5,337) 423 

Administrative and general expenses (27,388) (27,142) (46,926) (40,762) 

Profit from continuing operations before 

non-recurring items and income tax 37,760 27,383 20,904 751 

Non-recurring items 4 - (16,787) - (20,307) 

Profit/(loss) from continuing operations 

before income tax 37,760 10,596 20,904 (19,556) 

Income tax expense 6 (12,258) (8,834) 914 (1,504) 

Net profit from continuing operations 25,502 1,762 21,818 (21,060) 

(Loss) from discontinued operations (net of tax) 4 - (28,501) - - 

Profit /(loss) for the year 25,502 (26,739) 21,818 (21,060) 

STATEMENTS OF COMPREHENSIVE INCOME For the year ended 31 July 2010 



Notes $Õ000 $Õ000 $Õ000 $Õ000 

Profit/(loss) for the year 25,502 (26,739) 21,818 (21,060) 

Other comprehensive income 

Exchange differences on translation 

of foreign operations (6,132) 5,044 - - 

Net movement on cash flow hedges (3,944) 6,715 - - 

Mark to market gains /(losses) on foreign 

currency portfolio restructure (17,103) 26,182 - - 

Income tax relating to components 

of other comprehensive income 8,055 (9,948) - - 

(19,124) 27,993 - - 

Total comprehensive income for the year, 

net of tax 6,378 1,254 21,818 (21,060) 

Total comprehensive income for the year 

is attributable to: 

Equity holders of Pumpkin Patch Limited 6,378 1,254 21,818 (21,060) 

6,378 1,254 21,818 (21,060) 

The above statements of comprehensive income should be read in conjunction with the accompanying notes. 

Earnings per share for profit attributable 

to shareholders: Cents Cents 

Basic earnings per share 22 15.3 (16.0) 

Diluted earnings per share 22 15.2 (16.0) 

Attributable to continuing operations: 

Basic earnings per share 22 15.3 1.1 

Diluted earnings per share 22 15.2 1.1 

Attributable to discontinuing operations: 

Basic earnings per share 22 - (17.1) 

Diluted earnings per share 22 - (17.1) 

The above income statements should be read in conjunction with the accompanying notes. 


David Jackson 

22 September 2010 22 September 2010 

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PUMPKIN PATCH LIMITED & SUBSIDIARIES BALANCE SHEETS AS AT 31 JULY 2010 

PUMPKIN PATCH LIMITED & SUBSIDIARIES STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JULY 2010 

BALANCE SHEETS As at 31 July 2010 

Consolidated at Parent at 


Notes $Õ000 $Õ000 $Õ000 $Õ000 

ASSETS 

Current assets 

Cash and cash equivalents 7 6,945 12,563 31 38 

Trade and other receivables 8 20,727 19,559 166,836 128,633 

Derivative financial instruments 10 4,930 4,123 - - 

Inventories 9 71,355 80,210 - - 

Current tax receivables 1,381 - 4,328 8,391 

Total current assets 105,338 116,455 171,195 137,062 

Non-current assets 

Property, plant and equipment 11 53,096 52,299 12,026 12,593 

Intangible assets 12 8,435 7,266 7,869 6,653 

Other financial assets 14 - - 58,189 58,189 

Trade and other receivables 4 4 4 4 


Deferred tax assets 13 9,161 9,502 - - 

Total non-current assets 73,251 71,733 78,088 77,439 

Total assets 178,589 188,188 249,283 214,501 

LIABILITIES 

Current liabilities 

Trade and other payables 15 31,653 34,055 212,970 185,531 

Interest bearing liabilities 16 25,000 10,000 28 319 

Current tax liabilities - 1,826 - - 


Deferred landlord contributions 2,058 2,326 - - 

Total current liabilities 74,407 58,616 212,998 185,850 

Non-current liabilities 

Interest bearing liabilities 16 8,000 21,000 - - 

Deferred landlord contributions 5,461 6,581 - - 


Deferred tax liabilities 13 - - 804 379 

Total non-current liabilities 23,315 40,894 804 379 

Total liabilities 97,722 99,510 213,802 186,229 

Net assets 80,867 88,678 35,481 28,272 

EQUITY 

Share capital 18 58,398 57,978 58,431 58,431 

Reserves 20 (1,544) 17,149 5,830 5,399 

Retained earnings / (deficit) 20 24,013 13,551 (28,780) (35,558) 

Total equity 80,867 88,678 35,481 28,272 

The above statements of financial position should be read in conjunction with the accompanying notes. 

STATEMENTS OF CHANGES IN EQUITY For the year ended 31 July 2010 

Attributable to equity holders of the Company 

Share 

capital Reserves 

Treasury 

stock 

Retained 

earnings 

Total 

equity 

Consolidated Notes $Õ000 $Õ000 $Õ000 $Õ000 $Õ000 

Balance at 01 August 2008 58,802 (12,420) (790) 51,138 96,730 

Comprehensive income 

Profit/(loss) - - - (26,739) (26,739) 

Other comprehensive income - 27,993 - - 27,993 

Total comprehensive income - 27,993 - (26,739) 1,254 

Movement in treasury stock - - 337 - 337 

Movement in share based 

payments reserve 20 - 1,576 - - 1,576 

Shares issued 18 752 - - - 752 

Shares repurchased 18 (1,123) - - - (1,123) 

Dividends paid 21 - - - (10,848) (10,848) 

Balance at 31 July 2009 58,431 17,149 (453) 13,551 88,678 

Balance at 01 August 2009 58,431 17,149 (453) 13,551 88,678 


Profit/(loss) - - - 25,502 25,502 

Other comprehensive income - (19,124) - - (19,124) 

Total comprehensive income - (19,124) - 25,502 6,378 

Movement in treasury stock 18 - - 420 - 420 

Movement in share based 

payments reserve 20 - 431 - - 431 

Dividends paid 21 - - - (15,040) (15,040) 

Balance at 31 July 2010 58,431 (1,544) (33) 24,013 80,867 

The above statements of changes in equity should be read in conjunction with the accompanying notes. 

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PUMPKIN PATCH LIMITED & SUBSIDIARIES STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JULY 2010 

PUMPKIN PATCH LIMITED & SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 JULY 2010 

STATEMENTS OF CHANGES IN EQUITY continued 

Attributable to equity holders of the Company 

Share 

capital 

Reserves 

Retained 

earnings/ 

(deficit) 

Total 

equity 

Parent Notes $Õ000 $Õ000 $Õ000 $Õ000 

Balance at 01 August 2008 58,802 3,823 (3,650) 58,975 


Profit/(loss) - - (21,060) (21,060) 

Other comprehensive income - - - - 

Total comprehensive income - - (21,060) (21,060) 

Movement in share based payments reserve 20 - 1,576 - 1,576 

Shares issued 18 752 - - 752 

Shares repurchased 18 (1,123) - - (1,123) 

Dividends paid 21 - - (10,848) (10,848) 

Balance at 31 July 2009 58,431 5,399 (35,558) 28,272 

Balance at 01 August 2009 58,431 5,399 (35,558) 28,272 


Profit/(loss) - - 21,818 21,818 

Other comprehensive income - - - - 

Total comprehensive income - - 21,818 21,818 

Movement in share based payments reserve 20 - 431 - 431 

Dividends paid 21 - - (15,040) (15,040) 

Balance at 31 July 2010 58,431 5,830 (28,780) 35,481 

The above statements of changes in equity should be read in conjunction with the accompanying notes. 

STATEMENTS OF CASH FLOWS For the year ended 31 July 2010 


31 July 31 July 31 July 31 July 

2010 2009 2010 2009 

Notes $Õ000 $Õ000 $Õ000 $Õ000 

Cash flows from operating activities 

Cash was provided from: 

Receipts from customers 380,765 429,535 9,583 41,364 

Sales tax received 763 - - 1 

Dividends received 3 4 1 25,161 - 

Interest received 3 192 309 7,402 871 

Cash was applied to: 

Payments to suppliers and employees (343,395) (352,765) (14,679) (16,409) 

Interest paid 3 (2,549) (5,144) (12,739) (448) 

Sales tax paid - (691) (14) (165) 

Income taxes paid (14,979) (10,668) 5,402 (9,413) 

Net cash operating inflows/(outflows) 24 20,801 60,577 20,116 15,801 

Cash flows from investing activities 

Cash applied to: 

Purchase of property, plant and equipment (9,593) (8,152) (1,168) (1,598) 

Purchase of intangibles (3,786) (3,644) (3,624) (3,475) 

Net investing cash inflows/(outflows) (13,379) (11,796) (4,792) (5,073) 

Cash flows from financing activities 

Cash was provided from: 

Proceeds from issue of share capital 18 - 752 - 752 

Repayment of borrowings - (66,000) (291) - 

Proceeds of borrowings 2,000 - - 319 

Cash was applied to: 

Payments for shares bought back 18 - (1,123) - (1,123) 

Proceeds from restructure of foreign 

currency portfolio 20 - 25,339 - - 

Dividends paid 21 (15,040) (10,848) (15,040) (10,848) 

Net financing cash (outflows)/inflows (13,040) (51,880) (15,331) (10,900) 

Net (decrease)/ increase in cash and 

cash equivalents (5,618) (3,099) (7) (172) 

Cash and cash equivalents at the 

beginning of the financial year 12,563 15,662 38 210 

Cash and cash equivalents at end of year 7 6,945 12,563 31 38 

The above statements of cash flows should be read in conjunction with the accompanying notes. 

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PUMPKIN PATCH LIMITED & SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 JULY 2010 


1 GENERAL INFORMATION 

Pumpkin Patch Limited (Ò CompanyÓ or Ò ParentÓ ) together with its subsidiaries (the Ò GroupÓ ) 

is a leading designer, marketer, retailer and wholesaler of childrenÕs 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 Ò GroupÓ 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), ÔPresentation of financial statementsÕ. The revised standard prohibits the 

presentation of items of income and expenses (that is Ônon-owner changes in equityÕ) 

in the statement of changes in equity, requiring Ônon-owner changes in equityÕ to be 

presented separately from owner changes in equity. All Ônon-owner changes in equityÕ 

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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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued 

(iii) Income Tax 

The Group has recognised deferred tax as disclosed in note 13. In recognising this asset, 

management have assumed that there will be no significant changes in the tax laws within 

the jurisdictions in which the Group operates. 

(B) PRINCIPLES OF CONSOLIDATION 

(i) Subsidiaries 

Subsidiaries are all entities (including special purpose entities) over which the group 

has the power to govern the financial and operating policies generally accompanying 

a shareholding of more than one half of the voting rights. The existence and effect of 

potential voting rights that are currently exercisable or convertible are considered when 

assessing whether the group controls another entity. Subsidiaries are fully consolidated 

from the date on which control is transferred to the group. They are de-consolidated 

from the date that control ceases. 

Inter-company transactions, balances and unrealised gains on transactions between group 

companies are eliminated. Unrealised losses are also eliminated. Accounting policies of 

subsidiaries have been changed where necessary to ensure consistency with the policies 

adopted by the group. 

(C) SEGMENT REPORTING 

An operating segment is a component of an entity that engages in business activities 

which earns revenue and incurs expenses and where the chief decision maker reviews 

the operating results on a regular basis and makes decisions on resource allocation. 

The Group is organised into five operating segments, depicting the four geographical 

regions the GroupÕs retail chain operates in and the wholesale/direct line of business. 

(D) FOREIGN CURRENCY TRANSLATION 

(i) Functional and presentation currency 

Items included in the financial statements of each of the GroupÕs entities are measured 

using the currency of the primary economic environment in which the entity operates 

(Ôthe functional currencyÕ). The consolidated and parent financial statements are presented 

in New Zealand dollars, which is the GroupÕs presentation currency. 

(iii) Foreign operations 

The results and balance sheets of foreign operations that have a functional currency 

different from the presentation currency are translated into the presentation currency 

as follows: 

- assets and liabilities for each balance sheet presented are translated at the closing 

rate at the date of that balance sheet; 

- income and expenses for each income statement are translated at average exchange 

rates (unless this is not a reasonable approximation of the cumulative effect of the rates 

prevailing on the transaction dates, in which case income and expenses are translated 

at the dates of the transactions); and 

- all resulting exchange differences are recognised as a separate component of equity. 

(E) REVENUE RECOGNITION 

Revenue comprises the fair value for the sale of goods and services, net of sales tax and 

discounts and after eliminating sales within the Group. Revenue is recognised as follows: 

(i) Sales of goods - retail 

Sales of goods are recognised when a Group entity sells a product to the customer. 

Retail sales are usually in cash or by credit card. 

(ii) Sales of goods - wholesale 

Wholesale sales are recognised in accordance with the terms of sales when the title has 

transferred and the benefits of ownership and risk pass to the customer. This is dependent 

on customer specific terms of trade. 

(iii) Interest income 

Interest income is recognised using the effective interest method. 

(iv) Dividend income 

Dividend income is recognised when the right to receive payment is established. 

(F) COST OF GOODS SOLD 

Cost of goods sold represent expenses associated with the design, purchase and 

all other costs incurred in getting the inventory to the point of sale. 

(ii) Transactions and balances 

Foreign currency transactions are translated into the functional currency using the exchange 

rates prevailing at the dates of the transactions. Foreign exchange gains and losses 

resulting from the settlement of such transactions and from the translation at year-end 

exchange rates of monetary assets and liabilities denominated in foreign currencies are 

recognised in the income statement, except when deferred in equity as qualifying cash 

flow hedges and qualifying net investment hedges. 

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(G) INCOME TAX 

The income tax expense or revenue for the period is the total of the current periodÕs taxable 

income based on the income tax rate for each jurisdiction plus/minus any prior yearsÕ 

under/over provisions, plus/minus movements in the deferred tax balance except where 

the movement in deferred tax is attributable to a movement in reserves. 

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates 

expected to apply when the assets are recovered or liabilities are settled, based on those 

tax rates which are enacted or substantively enacted for each jurisdiction. No deferred tax 

asset or liability is recognised in relation to these temporary differences if they arose in a 

transaction, other than a business combination, that at the time of the transaction did not 

affect either accounting profit or loss or taxable profit or loss. 

Deferred tax assets are recognised for deductible temporary differences and unused tax 

losses only to the extent that is probable that future taxable amounts will be available to 

utilise those temporary differences and losses. 

The income tax expense or revenue attributable to amounts recognised directly in equity 

are also recognised directly in equity. 

(H) GOODS AND SERVICES TAX (GST) 

The Income Statement has been prepared so that all components are stated exclusive of 

GST. All items in the balance sheet are stated net of GST, with the exception of receivables 

and payables, which include GST invoiced. 

(I) LEASES AND DEFERRED LANDLORD CONTRIBUTIONS 

Leases in which a significant portion of the risks and rewards of ownership are retained by 

the lessor are classified as operating leases. Payments made under operating leases are 

charged to the Income Statement on a straight-line basis over the period of the lease. 

Where a landlord makes a contribution to the initial setup cost of a store, the contribution 

is captialised. The contribution is amortised on a straight line basis over the life of the lease 

offsetting the lease payments made. 

(J) IMPAIRMENT OF NON FINANCIAL ASSETS 

Assets that have an indefinite useful life are not subject to amortisation and are tested 

annually for impairment. Assets that are subject to amortisation are reviewed for impairment 

whenever events or changes in circumstances indicate that the carrying amount may not 

be recoverable. An impairment loss is recognised for the amount by which the assetÕs 

carrying amount exceeds its recoverable amount. The recoverable amount is the higher 

of an assetÕs fair value less costs to sell and value in use. For the purposes of assessing 

impairment, assets are grouped at the lowest levels for which there are separately 

identifiable cash flows. 

(K) CASH AND CASH EQUIVALENTS 

Cash and cash equivalents includes cash on hand, deposits held at call with financial 

institutions, other short-term, highly liquid investments with original maturities of three months 

or less that are readily convertible to known amounts of cash. Bank overdrafts are shown 

within interest bearing liabilities in current liabilities on the balance sheet. 

(L) TRADE RECEIVABLES 

Trade receivables are recognised initially at fair value and subsequently at amortised 

cost less provision for doubtful debts. 

Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known 

to be uncollectible are written off. A provision for doubtful receivables is established when 

there is objective evidence that the Group will not be able to collect all amounts due 

according to the original terms of receivables. The amount of the provision is the difference 

between the assetÕs carrying amount and the present value of estimated future cash flows. 

The amount of the provision is recognised in the Income Statement. 

Significant financial difficulties of the debtor, probability that the debtor will enter 

bankruptcy or financial reorganisation, and default or delinquency in payments are 

considered indicators that the trade receivable is impaired. 

(M) INVENTORIES 

Work in progress and finished goods are stated at the lower of cost and net realisable 

value. Costs are assigned to individual items of inventory on the basis of weighted average 

costs, and includes expenditure incurred in acquiring the assets and bringing them to their 

existing location and condition. Net realisable value is the estimated selling price in the 

ordinary course of business. 

(N) DERIVATIVES 

Derivatives are initially recognised at fair value on the date a derivative contract is entered 

into and are subsequently remeasured to their fair value. The method of recognising the 

resulting gain or loss depends on whether the derivative is designated as a hedging 

instrument, and if so, the nature of the item being hedged. The Group designates certain 

derivatives as either; (a) hedges of the fair value of recognised assets or liabilities or a firm 

commitment (fair value hedge); or (b) hedges of highly probable forecast transactions (cash 

flow hedges). 

The Group documents at the inception of the transaction the relationship between hedging 

instruments and hedged items, as well as its risk management objective and strategy for 

undertaking various hedge transactions. The Group also documents its assessment, both 

at hedge inception and on an ongoing basis, of whether the derivatives that are used 

in hedging transactions have been and will continue to be highly effective in offsetting 

changes in fair values or cash flows of hedged items. 

20 

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(i) Fair value hedge 

Changes in the fair value of derivatives that are designated and qualify as fair value 

hedges are recorded in the Income Statement, together with any changes in the fair 

value of the hedged asset or liability that are attributable to the hedged risk. 

(ii) Cash flow hedge 

The effective portion of changes in the fair value of derivatives that are designated and 

qualify as cash flow hedges is recognised in equity in the hedging reserve. The gain or 

loss relating to the ineffective portion is recognised immediately in the income statement. 

Amounts accumulated in equity are recycled in the Income Statement in the periods 

when the hedged item will affect profit or loss (for instance when the forecast sale that is 

hedged takes place). However, when the forecast transaction that is hedged results in the 

recognition of a non-financial asset (for example, inventory) or a non-financial liability, the 

gains and losses previously deferred in equity are transferred from equity and included in 

the measurement of the initial cost or carrying amount of the asset or liability. 

When a hedging instrument expires, is sold or terminated, or when a hedge no longer 

meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at 

that time remains in equity and is recognised when the forecast transaction is ultimately 

recognised in the Income Statement. When a forecast transaction is no longer expected 

to occur, the cumulative gain or loss that was reported in equity is immediately transferred 

to the Income Statement. 

(iii )Derivatives that do not qualify for hedge accounting 

Certain derivative instruments do not qualify for hedge accounting. Changes in the 

fair value of any derivative instrument that does not qualify for hedge accounting are 

recognised immediately in the Income Statement. 

(O) FINANCIAL ASSETS 

The Group classifies its financial assets in the following categories: Ò financial assets at 

fair value through profit or lossÓ and Ò loans and receivablesÓ. The classification depends 

on the purpose for which the financial assets were acquired. Management determines 

the classification of its investments at initial recognition. 

(i) Financial assets at fair value through profit or loss 

This category has two sub-categories: Ò financial assets held for tradingÓ , and those 

designated at Ò fair value through profit or loss on initial recognitionÓ . A financial asset is 

classified in this category if acquired principally for the purpose of selling in the short term. 

Derivatives are also categorised as held for trading unless they are designated as hedges. 

Assets in this category are classified as current assets if they are either held for trading or 

are expected to be realised within 12 months of the balance sheet date. 

(ii) Loans and receivables 

Ò Loans and receivablesÓ are non derivative financial assets with fixed or determinable 

payments that are not quoted in an active market. They are included in current assets, 

except for those with maturities greater than 12 months after the balance sheet date which 

are classified as non-current assets. Loans and receivables are included in receivables in 

the balance sheet (note 8). 

Financial assets carried at fair value through profit or loss are initially recognised at fair 

value, and transactions costs are expensed in the Income Statement. Loans and receivables 

are initially recognised at fair value plus transaction costs, and are subsequently carried at 

amortised cost using the effective interest method. Financial assets are recognised on trade 

dates, being the date on which the Group commits to purchase or sell the asset. Financial 

assets are derecognised when the rights to receive cash flows from the financial asset have 

expired or have been transferred and the Group has transferred substantially all risk and 

rewards of ownership. 

(P) FAIR VALUE ESTIMATION 

The fair value of financial assets and financial liabilities must be estimated for recognition 

and measurement or for disclosure purposes. The carrying value of cash and cash 

equivalents, trade receivables, trade payables, and short term liabilities is equivalent 

to their fair value due to their short term nature. 

The fair value of forward exchange contracts is determined using forward exchange market 

rates at the balance date. The Group assesses at each balance sheet date whether there 

is objective evidence that a financial asset or a group of financial assets is impaired. 

Gains or losses arising from changes in the fair value of the financial assets category 

are presented in the Income Statement in the period in which they arise. 

(Q) PROPERTY, PLANT AND EQUIPMENT 

All property, plant and equipment is stated at historical cost less depreciation and 

impairment. Historical cost includes expenditure that is directly attributable to the acquisition 

of the items. 

Subsequent costs are included in the assetÕs carrying amount or recognised as a separate 

asset, as appropriate, only when it is probable that future economic benefits associated 

with the item will flow to the Group and the cost of the item can be measured reliably. 

All repairs and maintenance are charged to the Income Statement during the financial 

period in which they are incurred. 

Land is not depreciated. Depreciation on other assets is calculated using the straight line 

method to allocate their costs, net of their residual values, over their estimated useful lives, 

as follows: 

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- Shop fit out ........................................................................................5-10 years 

- Office equipment (including furniture and fittings (F&F)) .................................5-10 years 

- Computer equipment (including point of sale equipment (POS)) ......................3-5 years 

- Plant and machinery ............................................................................3-7 years 

- Vehicles ............................................................................................4-5 years 

- Leasehold improvements .......................................................................6-7 years 

The assetsÕ residual values and useful lives are reviewed, and adjusted if appropriate, 

at each balance sheet date. 

An assetÕs carrying amount is written down immediately to its recoverable amount 

if the assetÕs carrying amount is greater than its estimated recoverable amount. 

Gains and losses on disposals are determined by comparing proceeds with carrying 

amount. These are included in the Income Statement. 

(R) INTANGIBLE ASSETS 

(i) Trademarks 

Trademarks have a finite useful life and are carried at cost less accumulated amortisation 

and impairment losses. Amortisation is calculated using the straight line method to allocate 

the cost of trademarks and licences over their estimated useful lives, which varies from three 

to five years. 

(ii) Software costs 

Acquired computer software licences are capitalised on the basis of the costs incurred 

to acquire and bring to use the specific software. These costs are amortised over their 

estimated useful lives (three to five years). 

Costs associated with developing or maintaining computer software programmes are 

recognised as an expense as incurred. Costs that are directly associated with the production 

of identifiable and unique software products controlled by the Group, and that will probably 

generate economic benefits exceeding costs beyond one year, are recognised as intangible 

assets. Direct costs include the software development employee costs. 

Computer software development costs recognised as assets are amortised over their 

estimated useful lives (not exceeding five years). 

(S) TRADE AND OTHER PAYABLES 

Trade and other payables are initially recognised at fair value and subsequently 

at amortised costs. 

These amounts represent liabilities for goods and services provided to the Group prior 

to the end of financial year which are unpaid. The amounts are unsecured and are 

usually paid within 30 days of recognition. 

(T) BORROWINGS 

Borrowings are initially recognised at fair value, net of transaction costs incurred. 

Borrowings are subsequently measured at amortised cost. Any difference between 

the proceeds (net of transaction costs) and the redemption amount is recognised in the 

Income Statement over the period of the borrowings using the effective interest method. 

Borrowings are classified as current liabilities unless the Group has an unconditional right 

to defer settlement of the liability for at least 12 months after the balance sheet date. 

The classification of borrowings reflects the underlying bank facility agreement. 

(U) PROVISIONS 

Provisions are recognised when the Group has a present legal or constructive obligation as 

a result of past events, it is more likely than not that an outflow of resources will be required 

to settle the obligation, and the amount has been reliably estimated. Provisions are not 

recognised for future operating losses. 

(V) EMPLOYEE BENEFITS 

(i) Wages and salaries, annual leave and sick leave 

Liabilities for wages and salaries, including non-monetary benefits, annual leave and 

accumulating sick leave expected to be settled within 12 months of the reporting date 

are recognised in the provision for employee benefits in respect of employeesÕ services 

up to the reporting date and are measured at the amounts expected to be paid when the 

liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the 

leave is taken and measured at the rates paid or payable. 

(ii) Long service leave 

The liability for long service leave is recognised in the provision for employee benefits 

and measured as the present value of expected future payments to be made in respect 

of services provided by employees up to the reporting date. Consideration is given to 

experience of employee departures and periods of service. 

(iii) Employee share based payments 

The Group operates an equity-settled, share-based compensation plan. The fair value of 

the instruments granted is recognised as an employee expense in the Income Statement 

with a corresponding increase in the share based payments reserve. The total amount 

to be expensed over the vesting period is determined by reference to the fair value of 

the instruments granted, excluding the impact of any non-market vesting conditions (for 

example, profitability and sales growth targets). Non-market vesting conditions are included 

in assumptions about the number of instruments that are expected to become exercisable. 

At each balance sheet date, the entity revises its estimates of the number of instruments 

that are expected to become exercisable. It recognises the impact of the revision of 

original estimates, if any, in the Income Statement, and a corresponding adjustment 

to equity over the remaining vesting period. 

20 

years 

young 

V53




When instruments are exercised the amount in the share based payment reserve relating to those 

options, together with the exercise price paid by the employee, is transferred to share capital. 

(W) SHARE CAPITAL 

Ordinary shares are classified as capital. 

Incremental costs directly attributable to the issue of new shares or instruments are shown 

in equity as a deduction, net of tax, from the proceeds. 

Where any Group company purchases or controls the CompanyÕs equity share capital 

(treasury stock), the consideration paid, including any directly attributable incremental 

costs (net of income taxes), is deducted from equity attributable to the GroupÕs equity 

holders until the shares are cancelled or reissued. Where such shares are subsequently 

reissued, any consideration received (net of any directly attributable incremental transaction 

costs and the related income tax effects) is included in equity attributable to the GroupÕs 

equity holders. 

(X) DIVIDENDS 

Provision is made for the amount of any dividend declared on or before the end of the 

financial year but not distributed at balance date. 

(Y) EARNINGS PER SHARE 

Basic earnings per share is calculated by dividing the profit attributable to equity holders of 

the company, by the weighted average number of ordinary shares on issue during the year. 

Diluted earnings per share is calculated by dividing the profit by the weighted average 

number of ordinary shares on issue during the year adjusted to include the potential dilutive 

effect as a result of the issue of share options. 

(Z) STATEMENT OF CASH FLOWS 

The following are definitions of the terms used in the Statement of Cash Flows: 

i) Cash comprises cash and bank balances. 

ii) Investing activities are those activities relating to the acquisition, holding and disposal 

of Property, Plant and Equipment, Intangible assets and Investments. 

iii) Financing activities are those activities which result in changes in the size and 

composition of the capital structure of the Group. This includes both equity and 

debt not falling within the definition of cash. Dividends paid are included in 

financing activities. 

(AA) STANDARDS, AMENDMENTS AND INTERPRETATIONS TO EXISTING STANDARDS 

THAT ARE NOT YET EFFECTIVE 

Below is a list of new standards, amendments and interpretations to existing standards 

which have been published that are mandatory for the GroupÕs accounting periods 

beginning on or after 1 August 2010 or later periods but which the Group has not early 

adopted. The standards listed are expected to effect the Group but are not expected to 

have a material impact on the GroupÕs financial statements. 

NZ IFRS 9 Financial Instruments 

(Mandatory for annual periods commencing on or after 1 January 2013). It is the 

intention of the IASB to replace IAS 39 with IFRS 9. The first phase of the implementation 

of IFRS 9 relates to the classification and measurement of financial assets. 

NZ IFRS 9 specifies how an entity should classify and measure financial assets, including 

some hybrid contracts. Management have not yet ascertained the impact which the 

implementation of this standard will have on the Group financial statements nor assessed 

when it will be adopted. 

NZ IAS 1 Presentation of Financial Statements (amendments) 

(Effective for annual periods beginning on or after 1 January 2010) The amendment 

to NZ IAS 1 stipulates that the terms of a liability that could result, at anytime, in its 

settlement by the issuance of equity instruments at the option of the counter party do not 

affect its classification. 

NZ IAS 7 Statement of Cash Flows (amendments) 

(Mandatory for annual periods commencing on or after 1 January 2010). The amendment 

to NZ IAS 7 explicitly states that only expenditure that results in a recognised asset can 

be classified as cash flow from investing activities. 

NZ IAS 17 Leases (amendments) 

(Mandatory for annual periods commencing on or after 1 January 2010). The amendment 

to NZ IAS 17 removes the specific guidance on classifying land as 

a lease. 

NZ IAS 24 Related Party Disclosures (revised) 

(effective from 1 July 2010). This standard supersedes NZ IAS 24 (issued in 2004). This 

revised NZ IAS 24 simplifies the definition of a related party, clarifying 

its intended meaning and eliminating inconsistencies from the previous definition. 

iv) Operating activities include all transactions and other events that are not investing 

or financing activities. 

20 

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55



3 INCOME AND EXPENSES 



$Õ000 $Õ000 $Õ000 $Õ000 

Profit before income tax from continuing 

activities includes the following specific 

expenses: 

Interest received (192) (309) (7,402) (871) 

Dividends received (4) (1) (25,161) (1) 

Rental and operating lease expenses 61,159 63,851 2,777 2,952 

Impairment of store assets - 16,787 - - 

Management fees - - (47,839) (40,894) 

Write down of investment in subsidiary - - - 20,307 

Net (gains) / losses on financial assets or 

liabilities designated as fair value through 

profit and loss (36) (1,255) - - 

Interest expense 2,549 5,144 12,739 448 

Bad debts written off 94 111 54 - 

DirectorÕs fees 381 321 381 321 

Donations 110 97 - - 

Employee benefit expenses 

Salaries & wages 77,561 78,707 20,556 22,057 

Share based payments 432 1,691 415 - 

77,993 80,398 20,971 22,057 

Depreciation 

Leasehold improvements 41 61 - - 

Computer equipment and point of sale 

equipment 820 781 536 387 

Shop fitouts 5,160 9,820 - - 

Plant and machinery 375 168 357 141 

Office equipment and furniture and fittings 2,397 2,531 842 1,103 

8,793 13,361 1,735 1,631 

Amortisation 

Trademarks 209 196 - - 

Software 2,408 1,500 2,408 1,475 

2,617 1,696 2,408 1,475 

Audit fees 

Statutory audit 235 216 165 138 

235 216 165 138 

4 NON-RECURRING EXPENSES 

(A) REORGANISATION OF UNITED STATES OPERATIONS 

On 29 June 2009 the Company announced a reorganisation in the United States of its 

35 retail stores operated by a wholly owned United States registered subsidiary company, 

Pumpkin Patch LLC. 

Under the reorganisation plan Pumpkin Patch LLC made the decision to close 15 stores 

in July 2009. All 15 stores were closed in July and August 2009 and Pumpkin Patch LLC 

renegotiated the leases on the remaining 20 stores which continue to trade uninterrupted 

and under normal course of business. 

The reorganisation was conducted utilising Chapter 11 of the United States Bankruptcy 

Code which provides certain legal protections while businesses implement reorganisations 

of the nature undertaken by Pumpkin Patch LLC. A hearing was held on 27 May 2010 

in the United States Bankruptcy Court in Delaware, during which the reorganisation plan 

was approved. The plan was effected on 16 August 2010 at which point notice was given 

to all outstanding creditors, resulting in Pumpkin Patch LLC exiting from Chapter 11 

on that date. 

An accrual for costs totalling $39,900,000 was reflected in the Group financial statements 

in the 2009 financial year. This accrual consisted of costs relating to the writing off 

and impairment of all fixed assets at the United States stores, inventory revaluation, 

employee entitlements, legal and professional costs, and other costs directly related to the 

reorganisation. No further costs relating to the restructuring of Pumpkin Patch LLC were 

incurred in the 2010 financial year nor are expected to be incurred in future periods. 

Financial information relating to the discontinued operation for the 2009 financial year is 

set out in section (C) below. Further information is set out in note 5 - segment information. 

(B) IMPAIRMENT OF URBAN ANGEL AND UNITED KINGDOM STORES 

In July 2009, management reviewed the performance of all stores. As a result of this 

review, management identified that the assets of a number of the CompanyÕs stores in 

the United Kingdom, as well all its stand-alone Urban Angel stores in New Zealand were 

impaired, based upon below par performance during the 2009 financial year with no sign 

of any improvement in the short to medium term. Accordingly, an impairment charge was 

recorded in the 2009 financial statements totalling $6,540,000, of which $6,377,000 

related to the United Kingdom stores and $163,000 related to the stand-alone Urban 

Angel stores. Refer to point (D) below. 

A review of store performance during the 2010 financial year did not identify any 

indicators of impairment, thus no impairment charge has been recorded in the current year. 

20 

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57



4 NON-RECURRING EXPENSES continued 

(C) SUMMARY OF DISCONTINUED ACTIVITIES 



$Õ000 $Õ000 $Õ000 $Õ000 

Revenue - US discontinued stores - 16,261 - - 

Operating Expenses - US discontinued stores - (21,751) - - 

(Loss) from US discontinued operating activities - (5,490) - - 

Impairment of assets of discontinued stores - (12,098) - - 

Inventory write down - (15,019) - - 

Other expenses - (2,546) - - 

Income tax credit - 6,652 - - 

(Loss) from discontinued operations - (28,501) - - 

Loss before income tax includes the following 

specific expenses: 

Rental and operating lease expenses - (4,119) - - 

Salaries and wages - (4,087) - - 

Impairment of store assets - (12,098) - - 

Depreciation - Computer and point of sale 

equipment - (50) - - 

Depreciation - Shop fitouts - (1,395) - - 

Depreciation - Office equipment and furniture 

& fittings - (337) - - 

Cash flow from discontinued activities: 

Cash flow from operating activities - (4,202) - - 

Net increase/(decrease) in cash generated 

by discontinued activities - (4,202) - - 

5 SEGMENT INFORMATION 

Management has determined the operating segments based on the reports reviewed by the 

Board of Directors that are used to make strategic decisions. 

The Board considers the business from both a geographic and distribution perspective. 

Geographically, the Board considers the performance of retail operations in New Zealand, 

Australia, the UK and the US, while the performance of the Wholesale and Direct business 

is assessed as a whole. 

The following is an analysis of the GroupÕs revenue and results by operating segment. 

Revenue reported below represents revenue generated from external customers. There were 

no inter-segment sales in the year (2009:nil). 

The accounting policies of the reportable segments are the same as the GroupÕs accounting 

policies described in note 2. 

Segment profit represents the profit earned by each segment without allocation of central 

administration costs, finance costs and income tax expense. 

(D) SUMMARY OF NON-RECURRING EXPENSES 

Impairment of continuing stores - United States - (10,247) - - 

Impairment of continuing stores - United Kingdom - (6,377) - - 

Impairment of continuing stores - Urban Angel - (163) - - 

Impairment of investment in subsidiary - - - (20,307) 

Total Impairment - (16,787) - (20,307) 

20 

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59



5 SEGMENT INFORMATION continued 

Australia 

Retail 

New 

Zealand 

Retail 

United 

Kingdom 

Retail 

United 

States Wholesale 

Retail & Direct 

Head 

Office 

Group 

2010 $Õ000 $Õ000 $Õ000 $Õ000 $Õ000 $Õ000 $Õ000 

Total revenue 198,276 58,908 52,455 19,138 53,217 204 382,198 

Total segment result before 

non-recurring expenses 38,705 11,310 (885) (2,685) 13,708 (22,393) 37,760 

Non-recurring expenses (note 4) - - - - - - - 


income tax 38,705 11,310 (885) (2,685) 13,708 (22,393) 37,760 

Income tax - - - - - (12,258) (12,258) 

Profit for the year 38,705 11,310 (885) (2,685) 13,708 (34,651) 25,502 

Segment total assets 57,986 19,567 26,199 6,030 21,449 47,358 178,589 

Segment non-current assets 23,664 5,546 8,787 270 - 34,984 73,251 

Acquisitions of property, plant and 

equipment, intangibles and other 

non-current segment assets 6,757 1,311 1,368 - 70 5,512 15,018 

Depreciation and amortisation 

expense 4,229 1,045 1,482 - 47 4,607 11,410 

Interest expense - - - - - 2,549 2,549 

2009 

Total revenue 203,426 64,357 59,200 22,825 62,540 197 412,545 


non-recurring expenses 38,469 11,125 (4,962) (9,289) 16,583 (24,543) 27,383 

Non-recurring expenses (note 4) - (163) (6,377) (10,247) - - (16,787) 


income tax 38,469 10,962 (11,339) (19,536) 16,583 (24,543) 10,596 

Income tax (note 6) - - - - - (8,834) (8,834) 

(Loss) from discontinuing operations 

net of tax (note 4) - - - - - - (28,501) 

(Loss) for the year - - - - - - (26,739) 

Segment total assets 57,348 18,504 31,921 9,412 18,373 52,631 188,189 

Segment non-current assets 23,144 6,248 9,988 - 73 32,280 71,733 

Acquisitions of property, plant and 

equipment, intangibles and other 

non-current segment assets 3,686 719 1,708 583 73 4,961 11,730 

Depreciation and amortisation 

expense 4,833 1,312 3,262 2,323 32 3,295 15,057 

Interest expense - - - - - 5,144 5,144 

The GroupÕs liabilities are not analysed on a segmental basis and therefore have not been reported. 

6 INCOME TAX EXPENSE/(CREDIT) 



$Õ000 $Õ000 $Õ000 $Õ000 

(A) INCOME TAX EXPENSE/(CREDIT 

Current tax expense/(credit) 5,403 17,858 (1,405) 363 

Prior period adjustment 210 31 93 1,025 

Deferred tax (note 13) 6,371 629 240 116 

Tax impact on equity - (9,835) - - 

Foreign tax credits not utilised 21 151 - - 

Effect of change in tax rate 3 - (92) - 

Adjustment for removal of building depreciation 250 - 250 - 

12,258 8,834 (914) 1,504 

(B) NUMERICAL RECONCILIATION OF INCOME TAX EXPENSE TO PRIMA FACIE TAX PAYABLE 

Profit before income tax expense 37,760 10,596 20,904 (19,556) 

Tax at other jurisdictions tax rate of 30% 

(2009 - 30%) 11,328 3,179 6,273 (5,867) 

Adjustments to taxation for: 

Non-assessable income - (1,143) (7,438) (38) 

Non-deductible expenses 446 1,628 - 6,384 

Non-deductible impairment charge - 4,988 - - 

Prior period adjustment 210 31 93 1,025 

Foreign tax credits not utilised 21 151 - - 

Effect of change in tax rate from 30% to 28% 3 - (92) - 

Adjustment for removal of building 

depreciation 250 - 250 - 

Income tax expense/(credit) 12,258 8,834 (914) 1,504 

During the year, as a result of the change in the NZ corporate tax rate from 30% to 28% which was 

enacted on 27 May 2010 and which will be effective from 1 June 2011, the relevant deferred tax 

balances have been remeasured. Deferred tax expected to reverse in the year to 31 May 2012 or 

later has been measured using the effective rate that will apply for that period, being 28%. 

(C) UNRECOGNISED TAX LOSSES 

The Group has estimated tax losses to carry forward from: 

- Pumpkin Patch Limited (UK) of GBP 146,000 (NZD 314,000) (2009: GBP 1,002,000; NZD 

2,532,000) which can be carried forward indefinitely to be offset against future profits; and 

- Pumpkin Patch LLC USD 16,302,000 (NZD 22,424,000) (2009: USD 15,426,000; NZD 

23,617,000) which expire between 2026 and 2030. 

The Group operates in a number of tax jurisdictions where the tax rates range from 

28% - 34% (2009: 28% - 34%). 

20 

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61



7 CASH AND CASH EQUIVALENTS 



$Õ000 $Õ000 $Õ000 $Õ000 

Cash at bank - NZD balances 6,718 12,357 10 3 

Cash on hand 227 206 21 35 

6,945 12,563 31 38 

The carrying amount for cash and cash equivalents equals the fair value. 

8 TRADE AND OTHER RECEIVABLES 



$Õ000 $Õ000 $Õ000 $Õ000 

Trade receivables 10,590 12,052 2 2 

Amounts owed from subsidiaries - - 165,450 126,780 

Prepayments 8,111 6,306 1,023 1,005 

Sales tax receivable 40 - - - 

Employee share scheme receivable 203 215 203 215 

Other receivables 1,783 986 158 631 

20,727 19,559 166,836 128,633 

The carrying amounts of the GroupÕs and Parent entityÕs trade and other receivables are 

denominated in the following currencies: 

NZD 4,413 3,182 138,211 99,183 

USD 9,617 10,781 24,788 23,377 

AUD 1,616 1,500 - - 

GBP 5,081 4,096 3,837 6,073 

20,727 19,559 166,836 128,633 

As at 31 July 2010, trade receivables of $48,000 (2009: $149,000) were between 90 

and 120 days past due but not considered doubtful. These relate to a number of accounts 

for which there is no recent history of default. All other balances are considered current. 

The maximum exposure to credit risk at the reporting date is the fair value of receivables 

mentioned above. The Group does not hold any collateral as security. No trade receivables 

are considered impaired at 31 July 2010 (2009: $nil) and no provision for doubtful debts has 

been made (2009: $nil). 

Carrying amounts of trade receivables are equivalent to their fair value. 

9 INVENTORIES 



$Õ000 $Õ000 $Õ000 $Õ000 

Work in progress 174 705 - - 

Finished Goods - at cost 71,181 79,505 - - 

71,355 80,210 - - 

Inventory provisions of $390,000 (2009: $224,000) have been provided for at year end 

for stock obsolescence. 

10 DERIVATIVE FINANCIAL INSTRUMENTS 

31 July 2010 31 July 2009 

Assets Liabilities Assets Liabilities 

Consolidated at $Õ000 $Õ000 $Õ000 $Õ000 

Current 

Foreign currency forward exchange contracts 4,930 (15,696) 4,069 (10,022) 

Foreign currency option contracts - - 54 - 

Interest rate swaps - - - (387) 

Non current 

Foreign currency forward exchange contracts 2,555 (9,854) 2,662 (13,313) 

7,485 (25,550) 6,785 (23,722) 

The above table shows the GroupÕs financial derivative holdings at year end. The Parent 

does not enter into any financial derivatives. 

The Group hedge accounts for all foreign exchange forward contractÕs, and all fair value 

movements in these contracts are recorded in a cash flow hedge reserve. 

At 31 July 2009 the Group had also entered into one foreign exchange option and 

one interest rate swap, for which the Group does not hedge account and all fair value 

movements in these financial derivatives are recorded in the Income Statement. The Group 

held no foreign exchange options or interest rate swaps at 31 July 2010. 

Refer to note 2(N) for information on the calculation of fair values. 

Credit risk 

The GroupÕs exposure to credit risk from derivative financial instruments is limited because 

it does not expect non-performance of the obligation contained therein due to the credit 

rating of the financial institutions concerned. 

20 

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63



11 PROPERTY, PLANT AND EQUIPMENT 

Leasehold 

improvements 

Shop fitout 

Computer 

equipment and 

POS 

Consolidated $Õ000 $Õ000 $Õ000 

Year ended 31 July 2010 

Opening net book amount 155 34,059 4,833 

Exchange differences (7) (1,167) (27) 

Additions - 5,297 1,340 

Disposals - - - 

Depreciation charge (41) (5,160) (820) 

Closing net book amount 107 33,029 5,326 

Office equipment 

and F&F 

Plant and 

machinery 

Land 

Total 

$Õ000 $Õ000 $Õ000 $Õ000 

7,709 2,195 3,348 52,299 

(142) - - (1,343) 

4,594 - - 11,231 

- (298) - (298) 

(2,397) (375) - (8,793) 

9,764 1,522 3,348 53,096 

At 31 July 2010 

Cost 1,406 112,286 8,851 

Accumulated depreciation (1,299) (79,257) (3,525) 

Net book amount 107 33,029 5,326 

23,615 6,338 3,348 155,844 

(13,851) (4,816) - (102,748 ) 

9,764 1,522 3,348 53,096 

At 01 August 2008 

Cost 1,799 119,631 13,342 



19,624 7,019 3,144 164,559 

(8,165) (4,315) - (75,149) 

11,459 2,704 3,144 89,410 



Exchange differences (104) (190) (34) 

Additions 6 4,655 523 

Disposals (4) - (66) 

Impairment charge recognised in profit & loss - (25,417) (319) 

Depreciation charge (61) (11,215) (830) 


11,459 2,704 3,144 89,410 

(50) - - (378) 

3,482 (340) 204 8,530 

(1,165) - - (1,235) 

(3,148) (1) - (28,885) 

(2,869) (168) - (15,143) 

7,709 2,195 3,348 52,299 

At 31 July 2009 

Cost 1,555 115,191 13,575 



20,863 6,673 3,348 161,205 

(13,154) (4,478) - (108,906) 

7,709 2,195 3,348 52,299 

20 

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young 

65



11 PROPERTY, PLANT AND EQUIPMENT continued 

Computer 

equipment 

and POS 

Office 

equipment 

and F&F 

Plant and 

machinery 

Parent $Õ000 $Õ000 $Õ000 $Õ000 $Õ000 


Opening net book amount 4,030 3,299 1,916 3,348 12,593 

Additions 1,109 365 - - 1,474 

Disposals - - (306) - (306) 

Depreciation charge (536) (842) (357) - (1,735) 

Closing net book amount 4,603 2,822 1,253 3,348 12,026 

At 31 July 2010 

Cost 8,851 6,401 5,585 3,348 24,185 

Accumulated depreciation (4,248) (3,579) (4,332) - (12,159) 

Net book amount 4,603 2,822 1,253 3,348 12,026 


Cost 7,388 4,995 6,228 3,144 21,755 




Opening net book amount 4,064 3,361 2,394 3,144 12,963 

Additions 353 1,041 - 204 1,598 

Disposals - - (337) - (337) 

Depreciation charge (387) (1,103) (141) - (1,631) 

Closing net book amount 4,030 3,299 1,916 3,348 12,593 

At 31 July 2009 

Cost 7,742 6,036 5,891 3,348 23,017 



Land 

Total 

12 INTANGIBLE ASSETS 

Trademarks Software Total 

Consolidated $Õ000 $Õ000 $Õ000 



Exchange differences - (1) (1) 

Additions 163 3,624 3,787 

Disposals - - - 

Amortisation charge (209) (2,408) (2,617) 


At 31 July 2010 

Cost 1,544 15,735 17,279 

Accumulated amortisation (980) (7,864) (8,844) 



Cost 1,230 8,637 9,867 





Exchange differences - 7 7 

Additions 149 3,488 3,637 

Disposals - (4) (4) 

Amortisation charge (196) (1,500) (1,696) 


At 31 July 2009 

Cost 1,381 12,117 13,498 



20 

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young 

67



12 INTANGIBLE ASSETS continued 

Software 

Total 

Parent $Õ000 $Õ000 


Opening net book amount 6,653 6,653 

Additions 3,624 3,624 

Amortisation charge (2,408) (2,408) 

Closing net book amount 7,869 7,869 

At 31 July 2010 

Cost 15,597 15,597 

Accumulated amortisation (7,728) (7,728) 

Net book amount 7,869 7,869 


Cost 8,498 8,498 




Opening net book amount 4,653 4,653 

Additions 3,475 3,475 

Amortisation charge (1,475) (1,475) 

Closing net book amount 6,653 6,653 

At 31 July 2009 

Cost 11,974 11,974 



13 DEFERRED TAX ASSETS/ (LIABILITIES) 


31 July 

2010 

31 July 

2009 

31 July 

2010 

31 July 

2009 

$Õ000 $Õ000 $Õ000 $Õ000 

The balance comprises temporary differences 

attributable to: 

Amounts recognised in the income statement: 

Employee benefits 1,610 1,449 621 630 

Non-deductible provisions 3,041 3,524 306 60 

Property, plant and equipment (1,354) (416) (1,742) (988) 

Trade and other receivables (86) - (81) - 

Derivatives 5,419 5,081 - - 

Other Items 534 (136) - (81) 

Impact of tax rate change (3) - 92 - 

Total deferred asset/(liability) 9,161 9,502 (804) (379) 

Movements: 

Opening balance at 1 August 9,502 8,430 (379) (199) 

Credited (charged) to the income statement 

relating to continuing operations (note 6) (6,371) (629) (240) (116) 

Credited (charged) to the income statement 

relating to discontinued operations - 2,628 - - 

Credited (charged) to equity 5,319 - - - 

Prior year adjustment 964 (927) (27) (64) 

Impact of tax rate change (3) - 92 - 

Adjustment for removal of building depreciation (250) - (250) - 

Closing balance at 31 July 9,161 9,502 (804) (379) 

Deferred income tax assets are recognised for provisions, financial derivatives and fixed 

assets to the extent that the realisation of the related tax benefit through future taxable 

profit is deemed to be probable. 

The majority of the deferred income tax balances are expected to be settled in the next 

12 months. 

20 

years 

young 

69



14 INVESTMENTS IN SUBSIDIARIES 

The consolidated financial statements incorporate the assets, liabilities and results of the 

following significant subsidiaries in accordance with the accounting policy described in 

note 2(B): 

Name of entity Principal Activity Country of 

incorporation 

Torquay Enterprise Limited 

Pumpkin Patch Originals Limited 

Pumpkin Patch (Australia) Pty Limited 


Investment 

company 

Clothing retailer 

and wholesaler 

Holding/admin 

company 

Clothing retailer 

and wholesaler 

Equity 

holding 

2010 2009 

% % 



Australia 100 100 

United Kingdom 100 100 

Pumpkin Patch LLC * Clothing retailer United States 100 100 

15 TRADE AND OTHER PAYABLES 



$Õ000 $Õ000 $Õ000 $Õ000 

Trade payables 12,972 7,471 549 984 

Amounts due to subsidiaries - - 207,221 179,867 

Sundry accruals 12,206 19,202 2,293 1,402 

Sales tax payable - 898 519 856 

Employee benefits 6,475 6,484 2,388 2,422 

31,653 34,055 212,970 185,531 

The carrying amounts of the GroupÕs and Parent entityÕs trade and other payables are 

denominated in the following currencies: 

NZD 10,769 4,576 212,896 185,531 

USD 9,800 10,538 - - 

AUD 7,942 14,778 74 - 

GBP 3,142 4,163 - - 

31,653 34,055 212,970 185,531 

Pumpkin Patch Wholesale LLC 

Clothing 

wholesaler 

United States 100 100 

The fair value of trade and other payables approximates their carrying value. 

Pumpkin Patch Direct Limited Clothing retailer New Zealand 100 100 

Pumpkin Patch Ireland Limited # Clothing retailer Ireland 100 - 

* During the 2009 financial year the investment in Pumpkin Patch LLC was fully impaired. 

Refer to note 4 for further details. 

# Pumpkin Patch Ireland was incorporated as a subsidiary of Pumpkin Patch Limited in 

June 2010, however, it had not commenced trading as at 31 July 2010. 

All subsidiary entities have a balance date of 31 July and are audited by 

PricewaterhouseCoopers. 

Parent at 

31 July 2010 31 July 2009 

$Õ000 $Õ000 

Investment in subsidiaries 58,189 58,189 

20 

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71



16 INTEREST BEARING LIABILITIES 



$Õ000 $Õ000 $Õ000 $Õ000 

Current interest bearing liabilities 

Bank overdrafts - - 28 319 

Bank loans 25,000 10,000 - - 

Total current interest bearing 

liabilities 25,000 10,000 28 319 

Non-current interest bearing 

liabilities 

Bank loans 8,000 21,000 - - 

Total non current interest bearing 

liabilities 8,000 21,000 - - 

Total interest bearing borrowings 33,000 31,000 28 319 

17 IMPUTATION CREDIT ACCOUNT 

Through shareholding in parent company 

31 July 2010 31 July 2009 

$Õ000 $Õ000 

Imputation credit account 4,161 5,178 

Movements: 

Balance at beginning of year 5,178 409 

Tax payments, net of refunds 4,959 9,417 

Credits attached to dividend distributions (5,976) (4,648) 

4,161 5,178 

The Parent is part of an imputation credit group, therefore the above note details the 

imputation credits available to the Group and ultimately to the shareholders of the 

parent company. 

The bank loans are provided under the terms of an ANZ National Bank Limited Revolving 

Advances Facility Agreement dated 24 June 2009. The bank facilities outlined in this 

agreement expire in December 2011. 

The Company draws down on its bank facility as required via short-term loans which are 

required to be disclosed under current liabilities for external financial reporting purposes. 

These borrowings have been aged in accordance with the repayment terms of the 

facilities. At year end the weighted average interest rate is 4.60% (2009: 4.04%). 

As at 31 July 2010, the Group had $49,000,000 of unused lines of credit 

(2009: $67,000,000). 

The fair value of interest bearing liabilities approximates their carrying value. 

SECURITY 

The Company has guaranteed, together with subsidiary companies, the indebtedness 

of Pumpkin Patch Limited and subsidiaries at 31 July 2010, together with, in all cases, 

interest thereon under a cross guarantee deed dated 18 April 1996 and a guarantee and 

indemnity dated 11 July 2005. At 31 July 2010 the total indebtedness guaranteed by the 

deed amounted to $32,950,000 (2009: $28,165,000). 

Included in this are other guarantees held by the ANZ National Bank Limited of: 

- Rent guarantees to certain landlords amount to $2,112,000 (2009: $2,863,000); 

- Guarantees provided to the UK Customs Department, amounting to $1,614,000 (2009: 

$1,062,000); & 

- A guarantee of $75,000 (2009: $75,000) to the NZX. 

20 

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young 

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18 SHARE CAPITAL 

Consolidated Parent 


$Õ000 $Õ000 $Õ000 $Õ000 

Opening balance of issued and 

paid up capital 58,431 58,802 58,431 58,802 

Issues of ordinary shares during the year - - - - 

Exercise of options - 752 - 752 

Shares held as Treasury stock (33) (453) - - 

Shares bought back on market 

and cancelled - (1,123) - (1,123) 

58,398 57,978 58,431 58,431 

31 July 2010 31 July 2009 

Shares Shares 

Opening balance of ordinary 

shares issued 166,814,799 167,350,000 

Issues of ordinary shares during the year 

Exercise of options - 508,000 

Shares bought back on market 

and cancelled - (1,043,201) 

Closing balance of ordinary 

shares issued 166,814,799 166,814,799 

(A) ORDINARY SHARES 

As at 31 July 2010 there were 166,814,799 ordinary shares on issue 

(2009: 166,814,799). All ordinary shares are fully paid and rank equally with one 

vote attaching to each share. 

(B) TREASURY STOCK 

As at 31 July 2010 there were 34,142 shares (2009: 482,309) which have been issued 

under the DF7 (Income Tax Act 1994) Scheme but at balance date, have not been 

allocated to employees. The shares are held in trust by Pumpkin Patch Nominees Limited. 

The terms of the Trust Deed between the Company and the Trustee gives the Company 

the right to appoint trustees and to benefit from any surplus funds held by the Trust. 

Therefore the Company has consolidated the DF7 Scheme as an in substance subsidiary 

and as such has recognised unallocated DF7 Scheme shares as Treasury Stock. The value 

of the balance of Treasury Stock as at 31 July 2010 is $32,000 (2009: $453,000). 

(C) EMPLOYEE SHARE SCHEME 

Pumpkin Patch Nominees Limited acts as a Trustee for the CompanyÕs employee share 

purchase plans. The Company advanced the Trustee an interest free loan to enable it to 

purchase the shares issued to it for the plans. The Company has agreed that the Trustee is, 

in turn, entitled to novate a portion of that loan to individual employees to assist them to 

purchase shares under the plans. 

At regular intervals the Trustee offers shares to those permanent employees of the Company 

with in excess of six months continuous service. The shares are offered at a discount to 

market price. Employees purchasing shares are provided financial assistance on an interest 

free basis, repayable in regular instalments. Dividends paid on allocated shares during the 

qualifying period are paid to employees. 

New Zealand Plan 

Shares are offered to employees in accordance with section DF7 of the New Zealand 

Income Tax Act 1994 to a maximum consideration of $2,340 per employee in any three 

year period. The qualifying period between grant and vesting dates is a minimum of three 

years. If an employee leaves the Company before the three year qualifying period ends 

the shares are repurchased by the Trustee at the lesser of the market price or the price at 

which the shares were offered. 

Australian Plan 

In September 2005 the Group introduced a share purchase plan for Australian employees. 

The Australian plan mirrors the New Zealand plan to the extent that it has been possible 

to comply with Australian legislation requirements. The main differences between the two 

plans are: 

- the maximum consideration is set at AU $780 per employee in any 12 month period 

- an employee who leaves the Company before the 12 month period ends is entitled to 

retain the shares after repaying the loan. 

United Kingdom Plan 

In September 2005 the Group introduced a share purchase plan for United Kingdom 

employees. The United Kingdom plan mirrors the New Zealand plan to the extent that 

it has been possible to comply with United Kingdom legislation requirements. The main 

differences between the two plans are: 

- the scheme is managed by an independent United Kingdom registered trustee company 

- shares are purchased by the trustee company at the end of the 12 month vesting period, 

at the lower of the market share price at either the beginning or the end of the 12 month 

vesting period 

- no loan is provided to employees to help purchase shares 

- an employee who leaves the Company before a three year vesting period ends is 

entitled to retain any shares that have been bought on their behalf by the trustee 

company. 

20 

years 

young 

75



18 SHARE CAPITAL continued 

(D) SHARE BUY-BACK 

The company did not repurchase any of its own ordinary shares during the 2010 financial year. 

During the 2009 financial year the company purchased and cancelled 1,043,201 

ordinary shares on market in December 2008. The shares were acquired at an average 

price of $1.08 per share, with prices ranging from $0.96 to $1.08. The total cost of 

$1,123,000 was deducted from shareholder equity. 

Average 

Date 

Shares 

repurchased 

purchase 

price 

2 December 2008 1,000,000 1.08 

19 December 2008 43,201 0.96 

(E) PARTLY PAID SHARES 

As at 31 July 2010 there were 2,335,000 (2009: 1,100,000) partly paid shares on issue. 

Partly paid redeemable shares are offered to selected senior executives at market value, 

who are initially required to pay 1 cent per share to participate in the scheme. Partly paid 

shares are held by a Trust for the benefit of the employees until they are fully paid. The 

trustee will exercise voting rights, and vote as directed by the Board, whilst the shares are 

held by the Trust. Employees are entitled to participate in any dividend pro rata to the 

extent the share is paid up. Legal title of the shares is not transferred to the participating 

employees until the shares are fully paid. Employees can request shares to be transferred 

by the holder three years after the date of issue, and lapse after five years if not exercised, 

as long as the market price of the ordinary shares is equal or greater than the benchmark 

performance target specified by the Board. 

19 SHARE BASED PAYMENTS 

(A) EMPLOYEE OPTION PLAN 

The Company operates a share Option Plan for selected senior employees, including 

Executive Directors, under the following terms. 

Options may be exercised in part or in full by the holder three years after the date of issue, 

and lapse after five years if not exercised, as long as the market price of the ordinary 

shares is equal or greater than the benchmark price. Each option entitles the holder to 

one ordinary share in the capital of the Company. The exercise price is determined by the 

Board but is based on the volume weighted average selling price of the CompanyÕs shares 

traded on the NZX during the 10 working days prior to issue date. Payment must be made 

in full for all options exercised on the dates they are exercised. 

During the financial year the Company issued 956,000 (2009: 1,025,000) options, of 

which none (2009: nil) were issued to Executive Directors. The fair value of the total options 

issued is estimated at $490,000 (2009:$287,000) under the binomial option-pricing 

valuation model using the following assumptions: 

Risk free interest rate - 5.6% (2009:5.6%) 

Expected dividend yield - 4.9% (2009: 4.5%) 

Expected share volatility - 30% to 40% (2009: 25% to 35%) 

The expected price volatility is derived by analysing the historical volatility over a recent 

historical period similar to the term of the option. 

The estimated fair value for each tranche of options issued is amortised over the vesting 

period of three years, from the grant date. The Company has recognised a compensatory 

expense in the income statement of $146,000 (2009: $1,579,000) 

which represents this amortisation. 

Set out below are summaries of options granted under the plan: 

Grant 

Date 

Expiry 

date 

Exercise 

price 

Balance at 

start of the 

year 

Granted 

during the 

year 

Exercised 

during the 

year 

Expired/ 

Lapsed 

during the 

year 

Balance at Exercisable 

end of the at end of the 

year year 

000 000 000 000 000 $000 

June 

2005 

9 June 

2010 2.75 1,958 - - (1,958) - - 

June 

2006 

9 June 

2011 4.14 1,859 - - (91) 1,768 7,320 

June 

2007 

9 June 

2012 3.33 2,308 - - (535) 1,773 5,904 

June 

2008 

9 June 

2013 1.59 971 - - (134) 837 - 

June 

2009 

9 June 

2014 1.30 - 956 - (30) 926 - 

Total 7,096 956 - (2,748) 5,304 13,224 

Weighted average exercise price 3.14 1.30 - 2.84 2.97 - 

20 

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young 

77



19 SHARE BASED PAYMENTS continued 

(B) PARTLY PAID SHARE SCHEME 

The Company operates a Partly Paid Share Scheme for selected senior employees, 

including Executive Directors, under the following terms. 

Partly paid redeemable shares are offered to selected senior executives at market value, 

who are initially required to pay 1 cent per share to participate in the scheme. Partly paid 

shares are held by a Trust for the benefit of the employees until they are fully paid. The 

trustee will exercise voting rights, and vote as directed by the Board, whilst the shares are 

held by the Trust. Employees are entitled to participate in any dividend pro rata to the 

extent the share is paid up. Legal title of the shares is not transferred to the participating 

employees until the shares are fully paid. Employees can request shares to be transferred 

by the holder three years after the date of issue, and lapse after five years if not exercised, 

as long as the market price of the ordinary shares is equal or greater than the benchmark 

performance target specified by the Board. 

During the financial year the Company issued 1,235,000 (2009: 1,100,000) partly 

paid redeemable shares, of which 500,000 (2009: 375,000) were issued to Executive 

Directors. The total fair value of the Partly paid shares issued is estimated at $395,000 

(2009: $363,000) under the binomial option-pricing valuation model using the following 

assumptions: 

Risk free interest rate -5.3% (2009: 6.4%) 

Expected dividend yield - 4.9% (2009: 4.5%) 

Expected share volatility - 30% to 40% (2009: 30% to 40%) 

The expected price volatility is derived by analysing the historical volatility over a recent 

historical period similar to the term of the scheme. 

The estimated fair value for each tranche of the partly paid shares issued is amortised 

over the vesting period of three years from the grant date. The Company has recognised 

a compensatory expense in the Income Statement of $286,000 (2009: $112,000) which 

represents this amortisation. 

Set out below are summaries of partly paid redeemable shares granted under the plan: 

Grant 

Date 

June 

2008 

June 

2009 

Expiry 

date 

Exercise 

price 

Balance at 

start of the 

year 

Expired/ 

Lapsed 

during the 

year 

Granted 

during the 

Exercised 

during the 

Balance at Exercisable 

end of the at end of the 

year year 

year year 

000s 000s 000s 000s 000s $000 

23 June 

2013 1.59 1,100 - - - 1,100 - 

23 June 

2014 1.30 - 1,235 - - 1,235 - 

Total 1,100 1,235 - - 2,335 - 

Weighted average exercise price 1.59 1.30 - - 1.44 - 

20 RESERVES AND RETAINED EARNINGS 

Consolidated Parent 


$Õ000 $Õ000 $Õ000 $Õ000 

(A) RESERVES 

Hedging reserve - cash flow hedges (12,642) (11,622) - - 

Share based payments reserve 5,830 5,399 5,830 5,399 

Foreign currency translation reserve (1,088) 5,044 - - 

Foreign currency portfolio restructure reserve 6,356 18,328 - - 

(1,544) 17,149 5,830 5,399 

Hedging reserve - cash flow hedges 

Balance 1 August (11,622) (16,243) - - 

Revaluation - gross (7,469) (2,170) - - 

Deferred tax 2,922 (2,094) - - 

Transfer to net profit - gross (4,653) 3,488 - - 

Transfer to inventory - gross 8,180 5,397 - - 

Balance 31 July (12,642) (11,622) - - 

Share based payments reserve 

Balance 1 August 5,399 3,823 5,399 3,823 

Option expense 431 1,691 416 1,290 

Transfer from Group company - - 15 401 

Transfer to share capital (options exercised) - (115) - (115) 

Balance 31 July 5,830 5,399 5,830 5,399 

Foreign currency translation reserve 

Balance 1 August 5,044 - - - 

Translation differences arising during the year (6,132) 5,044 - - 

Balance 31 July (1,088) 5,044 - - 

Foreign currency portfolio restructure reserve 

Balance 1 August 18,328 - 

Mark to market gains realised - 25,339 

Recognised in Income Statement (net of tax) (11,972) (7,011) 

Balance 31 July 6,356 18,328 

(i) Hedging reserve - cash flow hedges 

The hedging reserve is used to record gains or losses on a hedging instrument in a cash 

flow hedge that are recognised directly in equity, as described in note 2(N). Amounts are 

recognised in the Income Statement when the associated hedged transaction affects the 

Income Statement. 

20 

years 

young 

79



20 RESERVES & RETAINED EARNINGS continued 

(ii) Share based payments reserve 

The share based payments reserve is used to recognise the fair value of instruments issued 

but not exercised. 

(iii) Foreign currency translation reserve 

Exchange differences arising on translation of the foreign controlled entity are taken to the 

foreign currency translation reserve, as described in note 2(D). The reserve is recognised in 

the Income Statement when the net investment is disposed of. 

21 DIVIDENDS 

Interim dividend for the period ended 

31 January 2010 

Final dividend for the period ended 

31 July 2009 

Consolidated and Parent - Year ended 


Cents per 

share 

Cents per 

share $Õ000 $Õ000 

4.50 - 7,537 - 

4.50 - 7,503 - 

(iv) Foreign currency portfolio restructure reserve 

The foreign currency portfolio restructure reserve is used to record the mark-to-market gains 

realised from the realignment of the GroupÕs foreign currency forward cover during the 

2009 financial year. Amounts are recognised in the Income Statement in the period in 

which the original foreign currency contract was due to mature. 

Interim dividend for the period ended 

31 January 2009 

Final dividend for the period ended 

31 July 2008 

- 3.00 - 4,980 

- 3.50 - 5,868 

Total dividends provided for or paid 9.00 6.50 15,040 10,848 

(B) RETAINED EARNINGS/ (DEFICIT) 



$Õ000 $Õ000 $Õ000 $Õ000 

All dividends paid were fully imputed. Supplementary dividends of $460,000 (2009: 

$354,000) were paid to shareholders not tax resident in New Zealand for which the 

Group received a foreign investor tax credit entitlement. 

Balance 1 August 13,551 51,138 (35,558) (3,650) 

Net profit/(loss) for the year 25,502 (26,739) 21,818 (21,060) 

Dividends (15,040) (10,848) (15,040) (10,848) 

Balance 31 July 24,013 13,551 (28,780) (35,558) 

20 

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81



22 EARNINGS PER SHARE 

Consolidated -Year ended 

31 July 2010 31 July 2009 

(A) BASIC EARNINGS PER SHARE 

(i) Group 

Profit/(loss) attributable to the ordinary equity holders of the company 

($Õ000) 25,502 (26,739) 

Weighted average number of ordinary shares on issue (thousands) 166,815 167,082 

Basic earnings per share (cents) 15.3 (16.0) 

(ii) Continuing operations 

Profit/(loss) from continuing operations attributable to the ordinary 

equity holders of the company ($Õ000) 25,502 1,762 


Basic earnings per share (cents) 15.3 1.1 

(iii) Discontinuing operations 

Profit/(loss) from discontinuing operations attributable to the ordinary 

equity holders of the company ($Õ000) - (28,501) 


Basic earnings per share (cents) - (17.1) 

(B) DILUTED EARNINGS PER SHARE 

(i) Group 

Profit/(loss) attributable to the ordinary equity holders of the company 

($Õ000) 25,502 (26,739) 

Weighted average number of ordinary shares on issue adjusted for 

share options issued but not exercised (thousands) 167,719 167,082 

Diluted earnings per share (cents) 15.2 (16.0) 

(ii) Continuing operations 

Profit/(loss) from continuing operations attributable to the ordinary 

equity holders of the company ($Õ000) 25,502 1,762 



Diluted earnings per share (cents) 15.2 1.1 

(iii) Discontinuing operations 

Profit/(loss) from discontinuing operations attributable to the ordinary 

equity holders of the company ($Õ000) - (28,501) 



Diluted earnings per share (cents) - (17.1) 

Basic earnings per share is calculated by dividing the profit by the weighted average 

number of ordinary shares on issue during the year. 

Diluted earnings per shares is calculated by dividing the profit by the weighted average 

number of ordinary shares on issue during the year adjusted to assume conversion of 

dilutive potential of ordinary shares as a result of the issue of share options. Where the 

market price is lower that the exercise price of the option, there is no effect on diluted 

earnings per share. 

23 RELATED PARTY TRANSACTIONS 

(A) SUBSIDIARIES 

Interests in subsidiaries are set out in note 14. 

During the year the Company advanced and repaid loans to its subsidiaries by way of 

internal current accounts. In presenting the financial statements of the Group, the effect of 

transactions and balances between fellow subsidiaries and those with the parent have 

been eliminated. All transactions with related parties were in the normal course of business 

and provided on commercial terms. 

Material transactions between the Company and its subsidiaries were: 

Management fees charged by the Company to the subsidiaries during the financial year 

were $47,839,000 (2009: $40,894,000). 

Interest charges of $7,402,000 (2009: nil). Inter-group loans are repayable on demand 

and attract an interest rate equivalent to that of the LIBOR rate plus 3.25% (2009: nil). 

Dividends of $25,161,000 were received by the Company from Torquay Enterprises 

Limited during the financial year (2009: $Nil) 

The Company incurs logistics and group administration and management costs. These 

costs are recharged to subsidiaries in the form of management fees. Subsidiary companies 

account for these costs based on the functional nature of the expenses. 

Refer also to note 16 for the related party guarantees. 

(B) OTHER TRANSACTIONS WITH KEY MANAGEMENT OR ENTITIES RELATED TO THEM 

In addition the Group undertook transactions with Directors and their related interests as 

detailed below: 

The Group paid rent of $67,000 (2009: $59,000) to The Dickens Street Partnership which 

is 66% owned by the Opito Family Trust, a shareholder in Pumpkin Patch Limited. The Opito 

Family Trust is associated with Sally Synnott, a Director in Pumpkin Patch Limited. The 

balance owed to The Dickens Street Partnership at 31 July 2010 was nil (2009: nil). 

The Group has made purchases of shop fixtures and fittings from Espies Shopfitters during 

the year of $2,769,000 (2009: $2,091,000). Espies Shopfitters is 59.6% (2009: 49.5%) 

beneficially owned by Kezza Family Trust a shareholder of Pumpkin Patch Limited. Kezza 

Family Trust is associated with Maurice Prendergast, a Director in Pumpkin Patch Limited. 

The balance owed to Espies Shopfitters at 31 July 2010 was $67,000 (2009: $180,000). 

20 

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83



23 RELATED PARTY TRANSACTIONS continued 

(C) KEY MANAGEMENT AND DIRECTOR COMPENSATION 

Key management personnel compensation for the years ended 31 July 2010 and 31 July 

2009 is set out below. The key management personnel comprise certain members of 

the executive team (including both executive and non-executive directors) who have the 

greatest authority for the strategic direction and management of the company. 

The amount paid by the Group and the Parent were consistent for both 2010 and 2009. 

Directors 

fees 

Salaries and 

other short 

term employee 

benefits 

Cash 

based 

incentive 

issued 

Fair Value 

of share 

instruments 

issued 

Total 

$Õ000 $Õ000 $Õ000 $Õ000 $Õ000 

2010 381 1,789 1,010 248 3,428 

2009 321 1,842 - 214 2,377 

During the 2009 financial year, no cash based incentive payments were made. 

(D) BALANCES OUTSTANDING BETWEEN THE COMPANY AND ITS SUBSIDIARIES 

Parent at 

31 July 2010 31 July 2009 

$Õ000 $Õ000 

Amounts due from subsidiaries 165,450 126,780 

Amounts due to subsidiaries (207,221) (179,867) 

(41,771) (53,087) 

24 RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET 

CASH INFLOW FROM OPERATING ACTIVITIES 


31 July 

2010 

31 July 

2009 

31 July 

2010 

31 July 

2009 

$Õ000 $Õ000 $Õ000 $Õ000 

Profit/(loss) after tax for the year 25,502 (26,739) 21,818 (21,060) 

Add (deduct) non-cash items: 

Depreciation 8,793 15,143 1,735 1,631 

Amortisation of intangibles 2,617 1,696 2,408 1,475 

Share based payments expense 431 1,576 431 1,290 

Revaluation of derivative financial 

instruments 108 (1,255) - - 

Fit out contributions amortised (2,205) (3,159) - (100) 

(Increase)/decrease in deferred taxation 342 8,895 425 (7,269) 

Writedown of investment in subsidiary 

company - - - 20,307 

Impairment of continuing stores - 16,787 - - 

Non-cash items discontinuing operations - 17,345 - - 

Foreign currency portfolio restructure 

reserve amortisation (11,972) - - - 

Add/(less) movements in working 

capital items: 

(Increase)/decrease in receivables and 

prepayments (2,548) 894 (34,140) 275 

(Increase)/decrease in inventories 2,722 25,804 - - 

Increase/(decrease) in payables and 

provisions (2,989) 3,590 27,439 1,580 

(Increase)/decrease in related party 

balances - - - 17,672 

Net cash inflow from operating activities 20,801 60,577 20,116 15,801 

20 

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young 

85



25 FINANCIAL RISK MANAGEMENT 

The GroupÕs activities expose it to a variety of financial risks: market risk (including currency 

risk and interest rate risk), credit risk and liquidity risk. The GroupÕs overall risk management 

programme focuses on the unpredictability of financial markets and seeks to minimise 

potential adverse effects on the financial performance of the Group. The Group uses 

derivative financial instruments such as foreign exchange contracts and options and interest 

rate swaps to manage certain risk exposures. Derivatives are exclusively used for economic 

hedging purposes (ie not as trading or other speculative instruments), however not all 

derivative financial instruments qualify for hedge accounting. 

Risk management is carried out based on policies approved by the Board of Directors. The 

Group treasury policy provides written principles for overall risk management, as well as 

policies covering specific areas, such as foreign exchange risk. The Parent is not directly 

exposed to any significant financial risk. 

(iii) Summarised sensitivity analysis 

The following table summarises the sensitivity of the GroupÕs financial assets and financial 

liabilities to interest rate risk and foreign exchange risk. 

A sensitivity of 10% for foreign exchange risk has been selected. Despite the recent volatility 

in the currency markets over the past 12 months, an overall sensitivity of 10% is considered 

to be reasonable based upon the exchange rate volatility observed on a historic basis for 

the preceding five year period and market expectation for potential future movements. 

A sensitivity of 1% has been selected for interest rate risk. The 1% sensitivity is based on 

reasonably possible changes over a financial year, using the observed range of historical 

data for the preceding five year period. 

Amounts are shown net of income tax. All variables other than applicable interest rates and 

exchange rates are held constant. 

(A) MARKET RISK 

(i) Foreign exchange risk 

The Group operates internationally and is exposed to foreign exchange risk arising from 

various currency exposures, primarily with respect to the United States dollar, the British 

pound and Australian dollar. 

The purpose of the GroupÕs foreign currency risk management activities is to protect the 

Group from exchange rate volatility with respect to the New Zealand dollar net cash 

movements resulting from the sale of products in foreign currencies to foreign customers and 

the purchase of products and raw materials in foreign currencies from foreign suppliers. 

The Group enters into foreign currency option contracts and forward foreign currency 

contracts within policy parameters to manage risk associated with anticipated sales or 

costs denominated principally in United States dollars, British pounds and the Australian 

dollar. The terms of the foreign currency option contracts and the forward foreign currency 

contracts do not exceed three years. These anticipated sales or costs qualify as highly 

probable forecasts for hedge accounting purposes. 

Refer to note 10 which shows the forward foreign exchange contracts and options held 

by the Group as derivative financial instruments at balance date. A sensitivity analysis of 

foreign exchange rate risk on the GroupÕs financial assets and liabilities is provided in the 

table below. 

(ii) Cash flow and fair value interest rate risk 

The GroupÕs main interest rate risk arises from floating rate borrowings drawn down under 

bank debt facilities. When deemed appropriate, the Group manages floating interest rate 

risk by using floating to fixed interest rate swaps. Interest rate swaps have the economic 

effect of converting borrowings from floating to fixed rates. 

Refer to note 10 for notional principal amounts and valuations of interest rate swaps 

outstanding at balance date. A sensitivity analysis of interest rate risk on the GroupÕs 

financial assets and liabilities is provided in the table below. Refer to Note 16 for further 

details of the GroupÕs borrowings. 

20 

years 

young 

87



25 FINANCIAL RISK MANAGEMENT continued 

Interest rate risk 

Foreign exchange risk 

-1% +1% -10% +10% 

Carrying 

amount Profit Equity Profit Equity Profit Equity Profit Equity 

Consolidated sensitivity analysis $Õ000 $Õ000 $Õ000 $Õ000 $Õ000 $Õ000 $Õ000 $Õ000 $Õ000 

31 July 2010 

Financial assets 

Cash and cash equivalents 6,945 (9) - 9 - 725 - (654) - 

Trade receivables 10,590 - - - - 1,219 - (896) - 

Sales tax receivable 40 - - - - (41) - 33 - 

Employee share scheme 

receivable 203 - - - - - - - - 

Other receivables 1,783 - - - - 49 - (40) - 

Derivative financial instruments 7,485 - - - - - (29,507) - 24,186 

Financial liabilities 

Trade payables 12,972 - - - - (1,209) - 989 - 

Employee benefits 6,475 - - - - (369) - 302 - 

Interest bearing liabilities 33,000 330 - (330) - - - - - 

Derivative financial instruments 25,550 - - - - - 20,334 - (16,500) 

321 - (321) - 374 (9,173) (266) 7,686 

31 July 2009 


Cash and cash equivalents 12,563 (37) - 37 - 992 - (811) - 

Trade receivables 12,052 - - - - 1,331 - (1,089) - 

Employee share scheme 

receivable 215 - - - - - - - - 

Other receivables 986 - - - - 25 - (21) - 

Derivative financial instruments 6,785 - - - - 211 (3,889) (48) 3,169 


Trade payables 7,471 - - - - (545) - 446 - 

Sales tax payable 898 - - - - (183) - 149 - 

Employee benefits 6,484 - - - - (374) - 306 - 

Interest bearing liabilities 31,000 310 - (310) - - - - - 

Derivative financial instruments 23,722 (75) - 73 - - (598) - 613 

198 - (200) - 1,457 (4,487) (1,068) 3,782 

Foreign exchange risk 

-10% +10% 

Carrying 

amount Profit Equity Profit Equity 

Parent sensitivity analysis $Õ000 $Õ000 $Õ000 $Õ000 $Õ000 

31 July 2010 


Cash and cash equivalents 31 1 - (1) - 

Trade Receivables 2 - - - - 

Amounts owed from subsidiaries 165,450 3,181 - (2,602) - 

Employee share scheme receivable 203 - - - - 

Other receivables 158 - - - - 


Trade payables 549 - - - - 

Amounts owed to subsidiaries 207,221 - - - - 

Sales tax payable 519 - - - - 

Employee benefits 2,388 - - - - 

Interest bearing liabilities 28 - - - - 

3,182 - (2,603) - 

31 July 2009 


Cash and cash equivalents 38 - - - - 

Trade Receivables 2 - - - - 

Amounts owed from subsidiaries 126,780 3,272 - (2,677) - 

Employee share scheme receivable 215 - - - - 

Other receivables 631 - - - - 


Trade payables 984 - - - - 

Amounts owed to subsidiaries 179,867 - - - - 

Sales tax payable 856 - - - - 

Employee benefits 2,422 - - - - 

Interest bearing liabilities 319 - - - - 

3,272 - (2,677) - 

The Parent is not sensitive to any interest rate risk, nor is it sensitive to foreign exchange risk 

on amounts owed to its subsidiaries. 

20 

years 

young 

89




(B) CREDIT RISK 

Credit risk is managed on a Group basis and refers to the risk of a counterparty failing to 

discharge an obligation. In the normal course of business, the Group incurs credit risk from 

trade receivables and transactions with financial institutions. The Group places its cash, 

short-term deposits and derivative financial instruments with only high credit quality financial 

institutions. Sales to retail customers are required to be settled in cash or using major credit 

cards, mitigating credit risk. Trade receivables arising from wholesale arrangements are 

individually reviewed regularly for impairment as part of normal operating procedures 

and provided for where appropriate. Overdue amounts that have not been provided for 

relate to customers that have no recent history of default. Less than 9.2% (2009: 10.4%) of 

reported sales give rise to trade receivables. The top five wholesale customers account for 

54% (2009: 84%) of the trade receivables balance. Refer also to note 8 for further details. 

(C) LIQUIDITY RISK 

Prudent liquidity risk management implies maintaining sufficient cash and the availability 

of funding through an adequate amount of committed credit facilities. Due to the dynamic 

nature of the underlying businesses, Management aims at maintaining flexibility in funding 

by keeping committed credit lines available. 

Management monitors rolling forecasts of the GroupÕs liquidity reserve on the basis of 

expected cash flow. Bank facilities are provided under the terms of an ANZ National Bank 

Limited Revolving Advances Facility Agreement dated 24 June 2009. The bank facilities 

outlined in this agreement expire in December 2011. The Company draws down on its 

bank facility as required via short-term loans which are required to be disclosed under 

current liabilities for external financial reporting purposes. For details of available facilities, 

refer note 16 for further details. 

The table below analyses the GroupÕs financial liabilities into relevant maturity groupings 

based on the remaining period at the reporting date to the contractual maturity date. The 

amounts disclosed in the table are the contractual undiscounted cash flows. 

Less than 

1 year 

Between 1 

& 2 years 

Between 2 

& 5 years Total 

$Õ000 $Õ000 $Õ000 $Õ000 

Consolidated maturity analysis 

31 July 2010 

Trade payables 12,932 - - 12,932 

Employee benefits 6,475 - - 6,475 

Interest bearing liabilities 26,507 8,413 - 34,920 

Derivative financial instruments 15,696 9,854 - 25,550 

Guarantees issued 3,801 - - 3,801 

65,411 18,267 - 83,678 

31 July 2009 

Trade payables 7,471 - - 7,471 

Sales tax payable 898 - - 898 


Interest bearing liabilities 10,178 - 21,000 31,178 

Derivative financial instruments 10,409 13,313 - 23,722 


39,440 13,313 21,000 73,753 

Parent maturity analysis 

31 July 2010 

Trade payables 549 - - 549 

Amounts due to subsidiaries 207,221 - - 207,221 



Interest bearing liabilities 28 - - 28 


214,506 - - 214,506 

31 July 2009 

Trade payables 984 - - 984 

Amounts due to subsidiaries 179,867 - - 179,867 



Interest bearing liabilities 319 - - 319 


188,448 - - 188,448 

20 

years 

young 

91




The Group enters into forward exchange contracts to manage the risks associated with 

foreign currency denominated sales and also manage the purchase of foreign currency 

denominated products. 

The table below analyses the GroupÕs derivative financial instruments that will be settled on 

a gross or net basis into relevant maturity groupings based on the remaining period at the 

balance sheet to the contractual maturity date. The amounts disclosed in the table are the 

contractual undiscounted cash flows. They are expected to occur and affect profit or loss 

at various dates between balance date and the following five years. 

Less than 

1 year 

Between 1 

& 2 years 

Between 2 

& 5 years 

Over 

5 years 

Consolidated $Õ000 $Õ000 $Õ000 $Õ000 

At 31 July 2010 

Forward foreign exchange contracts - 

cash flow hedges 

inflow 137,567 88,329 63,426 - 

outflow (108,732) (71,041) (30,061) - 

At 31 July 2009 

Forward foreign exchange contracts - 

cash flow hedges 

inflow 86,805 75,157 43,828 - 

outflow (66,782) (66,683) (41,238) - 

Net settled derivatives - 

interest rate swaps 

net outflow (476) - - - 

(D) FAIR VALUE ESTIMATION 

Effective for annual periods beginning on or after 1 January 2009, the group adopted the 

amendment to NZ IFRS 7 for financial instruments that are measured in the balance sheet 

at fair value, this requires disclosure of fair value measurements by level of the following fair 

value measurement hierarchy: 

Level 1 

Quoted prices (unadjusted) in active markets for identical assets or liabilities. 

Level 2 

Inputs other than quoted prices included within level 1 that are observable for the asset or 

liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). 

Level 3 

Inputs for the asset or liability that are not based on observable market data (that is, 

unobservable inputs) (level 3). 

The following table presents the groupÕs assets and liabilities that are measured at fair 

value. The parent company did not have any assets or liabilities measured at fair value 

(2009: nil) 

Level 1 Level 2 Level 3 Total balance 

Consolidated $Õ000 $Õ000 $Õ000 $Õ000 

At 31 July 2010 

Assets 

Derivatives used for hedging - 7,485 - 7,485 

- 7,485 - 7,485 

Liabilities 


- 25,550 - 25,550 

At 31 July 2009 

Assets 


- 6,785 - 6,785 

Liabilities 


- 23,722 - 23,722 

Level 2 

The fair value of financial instruments that are not traded in an active market (for example, 

over-the-counter derivatives) is determined by using valuation techniques. These valuation 

techniques maximise the use of observable market data where it is available and rely as 

little as possible on entity specific estimates. If all significant inputs required to fair value an 

instrument are observable, the instrument is included in level 2. 

20 

years 

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93




(E) FINANCIAL INSTRUMENTS BY CATEGORY 

Fair value Derivatives Measured at 

Loans and 

receivables 

through 

profit or loss 

used for 

hedging 

amortised 

cost Total 

Consolidated $Õ000 $Õ000 $Õ000 $Õ000 $Õ000 

At 31 July 2010 

Cash and cash equivalents 6,945 - - - 6,945 

Trade receivables 10,590 - - - 10,590 

Employee share scheme receivable 203 - - - 203 

Other receivables 1,783 - - - 1,783 

Derivative financial instrument assets - - 7,485 - 7,485 

Trade payables - - - (12,972) (12,972) 

Employee benefits - - - (6,475) (6,475) 

Interest bearing liabilities - - - (33,000) (33,000) 

Derivative financial instrument liabilities - - (25,550) - (25,550) 

19,521 - (18,065) (52,447) (50,991) 

At 31 July 2009 

Cash and cash equivalents 12,563 - - - 12,563 

Trade receivables 12,052 - - - 12,052 


Other receivables 986 - - - 986 

Derivative financial instrument assets - 55 6,730 - 6,785 

Trade payables - - - (7,471) (7,471) 

Sales tax payable - - - (898) (898) 


Interest bearing liabilities - - - (31,000) (31,000) 

Derivative financial instrument liabilities - (387) (23,335) - (23,722) 

25,816 (332) (16,605) (45,853) (36,974) 

The accounting policies for financial instruments have been applied to the line items above. 

Loans and 

receivables 

Fair value 

through 

profit or loss 

Derivatives Measured at 

used for 

hedging 

amortised 

cost Total 

Parent $Õ000 $Õ000 $Õ000 $Õ000 $Õ000 

At 31 July 2010 

Cash and cash equivalents 31 - - - 31 

Trade receivables 2 - - - 2 

Amounts owed from subsidiaries 165,450 - - - 165,450 



Trade payables - - - (549) (549) 

Amounts due to subsidiaries - - - (207,221) (207,221) 



Interest bearing liabilities - - - (28) (28) 

165,844 - - (210,705) (44,861) 

At 31 July 2009 

Cash and cash equivalents 38 - - - 38 

Trade receivables 2 - - - 2 

Amounts owed from subsidiaries 126,780 - - - 126,780 



Trade payables - - - (984) (984) 

Amounts due to subsidiaries - - - (179,867) (179,867) 



Interest bearing liabilities - - - (319) (319) 

127,666 - - (184,448) (56,782) 

The accounting policies for financial instruments have been applied to the line items above. 

20 

years 

young 

95




(F) CAPITAL RISK MANAGEMENT 

The main objective of capital risk management is to ensure the Group operates as a going 

concern, meets debts as they fall due, maintains the best possible capital structure, and 

reduces the cost of capital. Group capital is regarded as equity as shown in the balance 

sheet. This quantifies capital as reference to the balance sheet. To maintain or alter the 

capital structure the Board has the ability to review the size of the dividends paid to 

shareholders, return capital or issue new shares, reduce or increase debt or sell assets. 

There are a number of external bank covenants in place relating to debt facilities. These 

covenants are calculated monthly and reported to the bank quarterly. The principal 

convenants relating to capital management are the earnings before interest and taxation 

(EBIT) fixed cover charge ratio and the cashflow gearing ratio. There have been no 

breaches of these covenants for the current or prior period. 

27 CONTINGENCIES 

As at 31 July 2010 the parent entity and Group had no contingent liabilities or assets 

(2009:$Nil). 

28 EVENTS OCCURRING AFTER THE BALANCE SHEET DATE 

- On 16 August 2010, the approved reorganisation plan for Pumpkin Patch LLC was 

effected resulting in notice being given to all outstanding creditors. Pumpkin Patch LLC 

exited from Chapter 11 status on this date. 

- On 21 September 2010 the Directors resolved to provide for a final dividend to be paid 

in respect of the year ended 31 July 2010. The dividend will be paid at a rate of 5.0 

cents per share (2009: 4.50 cents per share) on issue as at 7 October 2010, with full 

imputation credits attached. 

26 COMMITMENTS 

The Group has commitments for future capital expenditure at 31 July 2010 of $2.8 million 

(2009: $0.5 million). 

The Group leases various retail outlets under non-cancellable operating lease agreements. 

The leases reflect normal commercial arrangements with varying terms, escalation clauses 

and renewal rights. 


31 July 

2010 

31 July 

2009 

31 July 

2010 

31 July 

2009 

$Õ000 $Õ000 $Õ000 $Õ000 

Commitments for minimum lease payments in relation to non-cancellable operating leases 

are payable as follows: 

Within one year 49,961 57,397 2,775 2,795 

Later than one year but not later 

than five years 110,526 117,347 10,843 11,293 

Later than five years 36,532 40,959 17,415 20,794 

197,019 215,703 31,033 34,882 

20 

years 

young 

97

PricewaterhouseCoopers 

188 Quay Street 

Private Bag 92162 

Auckland, New Zealand 

Telephone +64 9 355 8000 

Facsimile +64 9 355 8001 

www.pwc.com/nz 

AuditorsÕ Report 

To the shareholders of Pumpkin Patch Limited 

We have audited the financial statements on pages 38 to 97. The financial statements provide information about 

the past financial performance and cash flows of the Company and Group for the year ended 31 July 2010 and 

their financial position as at that date. This information is stated in accordance with the accounting policies set 

out on pages 44 to 55. 

This report is made solely to the CompanyÕs shareholders, as a body, in accordance with Section 205 (1) of the 

Companies Act 1993. Our audit has been undertaken so that we might state to the CompanyÕs shareholders 

those matters we are required to state to them in an auditorsÕ report and for no other purpose. To the fullest extent 

permitted by law, we do not accept or assume responsibility to anyone other than the Company and the CompanyÕs 

shareholders, as a body, for our audit work, for this report or for the opinion we have formed. 

DirectorsÕ Responsibilities 

The CompanyÕs Directors are responsible for the preparation and presentation of the financial statements which 

give a true and fair view of the financial position of the Company and Group as at 31 July 2010 and their financial 

performance and cash flows for the year ended on that date. 

We have no relationship with or interests in the Company or any of its subsidiaries other than in our capacity as 

auditors. 

Unqualified Opinion 

We have obtained all the information and explanations we have required. 

In our opinion: 

(a) proper accounting records have been kept by the Company as far as appears from our examination of those 

records; and 

(b) the financial statements on pages 38 to 97: 

(i) comply with generally accepted accounting practice in New Zealand; 

(ii) comply with International Financial Reporting Standards; and 

(iii) give a true and fair view of the financial position of the Company and Group as at 31 July 2010 and 

their financial performance and cash flows for the year ended on that date. 

Our audit was completed on 22 September 2010 and our unqualified opinion is expressed as at that date. 

AuditorsÕ Responsibilities 

We are responsible for expressing an independent opinion on the financial statements presented by the Directors 

and reporting our opinion to you. 

Basis of Opinion 

An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial 

statements. It also includes assessing: 

Chartered Accountants 

Auckland 

(a) the significant estimates and judgements made by the Directors in the preparation of the financial statements; 

and 

(b) whether the accounting policies are appropriate to the circumstances of the Company and Group, consistently 

applied and adequately disclosed. 

We conducted our audit in accordance with generally accepted auditing standards in New Zealand. We 

planned and performed our audit so as to obtain all the information and explanations which we considered 

necessary to provide us with sufficient evidence to give reasonable assurance that the financial statements are 

free from material misstatements, whether caused by fraud or error. In forming our opinion we also evaluated the 

overall adequacy of the presentation of information in the financial statements. 

99

SHAREHOLDER INFORMATION 

FOR THE YEAR ENDED 31 JULY 2010 

size of holdings number of holders % number of shares % 

1 - 1,000 1,891 30.08 1,213,374 0.73 

1001 - 5,000 2,862 45.53 8,038,676 4.82 

5,001 - 10,000 890 14.16 6,813,753 4.08 

10,001 - 100,000 590 9.39 14,934,914 8.95 

Over 100,000 53 0.84 135,934,082 81.43 

6,286 100.00 166,934,799 100.00 

The details set out above were as at 31 August 2010. 

PRINCIPAL SHAREHOLDERS 

The names and holdings of the twenty largest registered shareholders as at 

31 August 2010 were: 

Ordinary Shares % 

New Zealand Central Securities Depository Limited 38,945,342 23.22 

Nigel P Smith and Wynyard Wood Trustee Services Limited 20,000,000 11.98 

JBWERE (NZ) Nominees Limited (45230 a/c) 16,791,181 10.06 


Maurice J Prendergast, Kerry D Prendergast and Stuart G Callender 10,620,000 6.36 

SUBSTANTIAL SECURITY HOLDERS 

Pursuant to Section 26 of the Securities Markets Act 1988, the following 

substantial security holders at 31 August 2010 were as follows: 

Ordinary Shares 

Setar A Motani (notice dated 16 June 2006) 20,000,000 

Janet Heather Cameron (notice dated 29 April 2010) 16,086,181 

Rodney Adrian Duke and Alaister John Wall 

(notice dated 11 June 2008) 

15,700,000 

ING NZ Limited (notice dated 30 November 2009) 13,479,304 

Maurice J Prendergast and Kerry D Prendergast 


Fisher Funds Management Limited 


Mark J Synnott and Sally R Synnott 

(notice dated 19 October 2010) 

10,620,000 

10,073,400 

9,506,800 

Mark J Synnott, Sally R Synnott and The Gale Trustee Company Limited 9,500,000 5.69 


Gregory J Muir, Debra J Muir and Geoffrey A Lawrie 1,461,900 0.88 

FNZ Custodians Limited 1,342,304 0.80 

Bruce M Walkley, Deborah F Walkley, Nigel P Smith 1,200,000 0.72 

Pumpkin Patch Nominees Limited 857,217 0.51 

Christine Conyngham 813,510 0.49 

Investment Custodial Services Limited 781,142 0.47 

Custodial Services Limited (3 a/c) 759,469 0.45 

Joanna Hickman, John A Callaghan, Kevin J Hickman and John W Ryder 720,000 0.43 

Brendon Thomas, Katrina Thomas, and John Turrall 635,000 0.38 

NZPT Custodians (Grosvenor) Limited 536,575 0.32 

Adrastea Limited 511,168 0.31 

Kay Gillard 510,289 0.31 

JBWERE (NZ) Nominees Limited (31100 a/c) 500,000 0.30 

20 

years 

young 

101

CORPORATE DIRECTORY 

Registered Office 

439 East Tamaki Road 

Auckland 

New Zealand 

Contact Details 

Private Bag 94 310 

Pakuranga 

Auckland 

New Zealand 

Phone: +64 9 274 7088 

Facsimile: +64 9 274 1122 

Website: www.pumpkinpatch.co.nz 

Investor Relations 

E-mail: investor@pumpkinpatch.co.nz 

Website: www.pumpkinpatch.biz 

EXECUTIVE TEAM 

Maurice Prendergast ..................................... Chief Executive Officer 

Chris Cardwell .................................... General Manager – Property 

Chrissy Conyngham ........... Group General Manager/Design Director 

Neil Cowie ...............................................Chief Operating Officer 

Dominique De Give .......................... General Manager – Wholesale 

Brian De Gregory ................... General Manager – Human Resources 

Glenys Hoffman...............................General Manager – Operations 

Bronny Jacobsen ........................... General Manager – Merchandise 

Kate Tattersfield................................. General Manager – Marketing 

Zarina Thesing ................ General Manager – Information Technology 

Bruce Walkley ........................................ General Manager – Direct 

Matthew Washington .......Chief Financial Officer/Company Secretary 

Share Registrar 

Link Market Services Limited 

PO Box 384 

Ashburton 

New Zealand 

Phone: +64 3 308 8887 

Facsimile: +64 3 308 1311 

Solicitors 

Simpson Grierson 


Shortland Street 

Auckland 

New Zealand 

Auditors 

PricewaterhouseCoopers 


Auckland 

New Zealand 

20 

years 

young 

103

annual report - Pumpkin Patch investor relations

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