investment statement for - Pumpkin Patch investor relations

Lead ManagerGoldman Sachs JBWere (NZ) Limitedinvestment statement foroffers of shares and options

• a New Zealand success story• Australasia’s leading children’s fashion brand• employs approximately 1,700 people, producesmore than 1,500 styles per season and sells productsthrough more than 250 stores worldwide• strong history of revenue and earnings growth• well positioned for growth and to increaseshareholder valuefashion created for kids1

fashion created for kidsimportant datesShare OfferEventKey DateProspectus Registration 14 May 2004Opening Date of the Offer 17 May 2004Closing Date of the Offer 4 June 2004Pricing 8 June 2004Allocation and Allotment Date Between 8 June and 15 June 2004Dispatch of Statements From 8 June 2004Quotation on the NZX and trading expectedto commence (on a “delayed delivery” basis) 9 June 2004Expected first dividend 1 April 2005Expected subsequent dividends 1Interim dividend in approximately April each year starting 2005 and final dividend inapproximately November each year starting 2005This timetable is indicative only and investors are encouraged to submit their applications as early as possible.The Company reserves the right to extend the Closing Date (in which case the Key Dates referred to above may change correspondingly).Option OfferDirectors of Pumpkin Patch Limited (“Pumpkin Patch” or the “Company) and senior managers with Pumpkin Patch and its Subsidiaries,(together "Senior Managers") selected to participate in the Option Offer will receive individual offers of Options in the Company. Publicinvestors are not being offered Options. The Senior Managers who receive Option Offers will be advised of the number of Options for whichthey will be entitled to apply. This Option Offer will be on the basis of the following timetable:EventKey DateProspectus Registration 14 May 2004Opening Date of the Offer Upon receipt of the individual offer, expected to be made on or about 17 May 2004Closing Date of the Offer12 Business Days following receipt of the individual offerSetting the Exercise Price 8 June 2004Allocation and Allotment Date By 8 June 2004Dispatch of Option Certificates By 12 June 2004The Options will not be quoted on the New Zealand Exchange (“NZX”) and cannot be traded. No dividends will be payable in respect ofthe Options.1 Pumpkin Patch can give no assurance about the amount or frequency of future dividends or other distributions, if any, payable on the Shares.2

forecast multiples and yield 1Offer Price Per Share$1.20 $1.40Fully Paid Shares on Issue (million) 2 166.5 166.5Market Capitalisation ($ million) 3 $199.8 $233.1Enterprise Value ($ million) 4 $201.5 $234.8FY2004 EBITDA ($ million) $26.7FY2005 EBITDA ($ million) $31.2FY2004 NPAT (pre ESOP adjustment) ($ million) $11.5FY2005 NPAT ($ million) $15.3Dividends Forecast from FY2005 ($ million) $7.2Offer Multiples and YieldEnterprise Value / FY2004 EBITDA 7.5 8.8Enterprise Value / FY2005 EBITDA 6.5 7.5Price / FY2004 Earnings (pre ESOP adjustments) 5 17.4 20.3Price / FY2005 Earnings 6 13.0 15.2Gross Dividend Yield FY2005 7 5.4% 4.6%Note: “EBITDA” means earnings before interest, tax, depreciation and amortisation costs.“NPAT” means net profit after tax.“ESOP” means employee share ownership plan.All forecast figures (for FY2004 and FY2005) referred to above appear in the ProspectiveFinancial Information appearing on page 36 of the Prospectus.1Certain figures in this table are derived from forecastsprepared by Pumpkin Patch and set out on pages 21 to 25and in the Prospectus. The forecast multiples and yieldshould be read in conjunction with the forecastassumptions set out on pages 22 to 25 and the risk factorsset out on pages 41 to 45.2”Fully paid Shares on Issue” is the value of the fully paidShares on issue at the conclusion of the Share Offer andafter the repurchase of Shares from Selling Shareholders iscompleted (assuming that the Share Offer is fullysubscribed and all share repurchases carried out).3”Market Capitalisation” is calculated as the value of fullypaid Shares on issue at the conclusion of the Share Offer(assuming that the Share Offer is fully subscribed and allshare repurchases carried out) multiplied by the price atthe bottom and top of the Indicative Price Range perShare, as appropriate.4”Enterprise Value” is calculated as Market Capitalisationplus borrowings of $1.7 million as forecast at 31 July 2004 asshown on page 21 (assuming that the Share Offer is fullysubscribed).5”Price/FY2004 Earnings (pre ESOP adjustments)” iscalculated as Indicative Price Range per Share divided byEarnings per Share. Earnings per Share is calculated asforecast net profit after tax (excluding ESOP adjustments)of $11.5 million (as shown on page 21) divided by thenumber of Shares on issue (assuming that the Share Offer isfully subscribed).6”Price/FY2005 Earnings” is calculated as Indicative PriceRange per Share divided by Earnings per Share. Earningsper Share is calculated as forecast net profit after tax (asshown on page 21) divided by the number of Shares onissue.7”Gross Dividend Yield FY2005” is calculated as CashDividend per Share divided by Final Price per Share. CashDividend per Share calculated as forecast net dividendfrom FY2005 divided by Shares on issue. The dividends inrespect of the FY2005 year are forecast to be fully imputed(as shown on page 25).3

fashion created for kidsPumpkin Patch is Australasia’s leading children’sfashion company. Pumpkin Patch is increasinglybecoming an international brand associated withinnovative design and quality product.The Company’s product range encompasses allstages of a child’s growth – from baby to toddler,primary school kid to pre and early teen – includingclothing, nightwear, accessories, rainwear, footwearand bedroom linen coordinates. Pumpkin Patch alsocaters for mums-to-be with a stylish maternitycollection. There are also two fashion mini-brands fordiscerning pre and early teen girls – Urban Angel andHBK Girl.The entire Pumpkin Patch collection is designed bythe Company’s in-house design team whose objectiveis to ensure that each garment is innovative and stylishwith a distinctive design signature.Pumpkin Patch employs approximately 1,700people, produces well over 1,500 styles per season,and its fashion forward childrenswear is sold through111 Company stores worldwide. The collections arecurrently available in numerous countries andregions including – New Zealand, Australia, theUnited Kingdom, Ireland, the United States, andthe Middle East.Pumpkin Patch predominantly sells through its ownextensive store network in New Zealand and Australia,and a small number of stores it has established in theUnited Kingdom. The Company has also developed anumber of other successful approaches to selling itsproduct internationally including forming partnershipswith successful international retailers such as DavidJones in Australia, Nordstrom in the United States,Jawad in the United Arab Emirates and Roches inIreland.Pumpkin Patch has a strong history of revenueand earnings growth, and is forecast to generateapproximately $247 million in sales in the 2005financial year.Pumpkin Patch is at an exciting stage in itsdevelopment with a strong and growing core businessin New Zealand and Australia and international salesoffering future growth opportunities.This Investment Statement relates to an offer ofShares and an offer of Options. Public investors are notbeing offered Options. Options are only being offeredto certain Senior Managers of Pumpkin Patch.4

contentsimportant dates 2chairman’s letter 6letter from managing director 7summary of share offer 9pumpkin patch... our people 14investment overview 19pumpkin patch... the brand 27pumpkin patch... a platform for growth 36answers to important questions 38other material matters 48summary of option offer 54application instructions for option offer - employees only 56glossary of terms 57application instructions for share offer 59directory and advisorsinside back cover5

chairman’s letterDear InvestorOn behalf of the Directors, it is my pleasure to invite you to become a shareholder inPumpkin Patch Limited. Pumpkin Patch is Australasia’s leading childrenswear design,marketing and retail company. This offer provides investors with the opportunity toparticipate in the ownership of this successful New Zealand brand as it leverages itsestablished position in its home market of New Zealand and Australia into internationalmarkets.In the 14 years since Pumpkin Patch was established, by current Director Sally Synnott, ithas grown to become an Australasian fashion icon. Much of this growth has been under theleadership of current Managing Director, Maurice Prendergast, and Design Director,Chrissy Conyngham.In 2000 Pumpkin Patch began a carefully measured international expansion programme withthe opening of retail operations in England, followed by the more recent establishment ofwholesale operations in the United States, Australia, Ireland and the U.A.E.The Company is seeking to raise approximately $100 million and a listing on the New ZealandExchange. Approximately $40 million of the money raised will be used to provide newcapital to fund the Company’s expansion plans, with the balance used to reduce theholdings of existing shareholders.Following the completion of the full offer (on the basis that it is fully subscribed) existingsubstantial shareholders, including some management, will retain approximately 42% of thefully paid shares in the Company with a commitment to hold these shares for at least 12months.This offer is an opportunity to become part of a successful and growing Australasian basedinternational brand. The Board is committed to the success of Pumpkin Patch and looksforward to welcoming you as a shareholder.Yours sincerelyGreg MuirExecutive Chairman6

letter from the managing directorDear InvestorIt is with great pleasure that I introduce the initial public offering for Pumpkin Patch, acompany I have had the privilege to be involved with since 1993.From small beginnings as a mail order company in New Zealand, Pumpkin Patch hasbecome an internationally recognised brand, standing for great quality kidswear with aninnovative fashion edge. We also cater for mums-to-be with a stylish maternity line, andfor discerning pre and early teen girls with our mini brands – Urban Angel and HBK Girl.Pumpkin Patch has a strong management team, experienced Board of Directors andinnovative designers, providing a wealth of expertise across buying and design, retail andwholesale sales, IT, clothing manufacturing and logistics. We are known as a company withintegrity in all our relationships, and strong values that encourage loyalty from our own staff,our suppliers and our customers.Pumpkin Patch’s success to date means that the brand’s opportunities are expandingwith our products now sold in the United States, the Middle East and Europe.Our team has the commitment to ensure that Pumpkin Patch stays at the forefront ofchildren’s fashion, something we have successfully done for over 10 years.As both the Managing Director and a significant shareholder in Pumpkin Patch, I believe thatthe strategic direction we have chosen will create further shareholder wealth. On behalf ofthe Board of Directors, I invite you to consider being a part of Pumpkin Patch’s future byparticipating in this offer.Yours sincerelyMaurice PrendergastManaging Directorfashion created for kids7

summary of share offeroffer descriptionPumpkin Patch is offering for issue up to 81,027,200 new ordinary fully paid shares ("Shares") in Pumpkin Patch Limited.Pumpkin Patch has entered into conditional repurchase agreements (“Repurchase Agreements”) with some of its existing shareholders("Selling Shareholders") to repurchase and cancel between 28,770,400 and 49,027,200 Shares currently held by those shareholders. Some ofthe proceeds of the Share Offer may be paid to the Selling Shareholders (as the purchase price) on repurchase and cancellation of thoseShares. Further details are contained on page 50 of this Investment Statement and in the Prospectus.Any residual shares not repurchased by the Company and held by shareholders, other than employees or trustees of employee shareschemes, will be the subject of arrangements placing restrictions on their transferability for a period of 12 months from 9 June 2004. Thosearrangements are more fully described in the Prospectus.The Shares are not guaranteed by any person.pricingThe price per Share will be set via a book build process involving institutional and professional investors. An Indicative Price Range of $1.20to $1.40 per Share has been set to assist institutional investors in the bidding process. When the book build process is complete a Final Pricewill be set. The Final Price for institutional and professional investors participating in the book build may exceed $1.40, but the Final Price setfor other investors will be capped at $1.40.The value of Shares applied for by investors under firm allocation will be divided by the [applicable] Final Price to calculate the number ofShares they will be allocated. The number of Shares allocated to an investor will be rounded down to the nearest whole Share, and norefund will be given for any difference resulting solely from rounding.9

The Company, in association with the Lead Manager, will set the Final Price(s) before noon on 8 June 2004 following the completion of thebook build process described below in the section “Book Build Process”. As referred to above, for institutional and professional investorsparticipating in the book build process, the Company reserves the right to set the Final Price outside the Indicative Price Range. All Sharesallocated under the Share Offer will be sold or issued at the relevant Final Price. All applications for Shares under the Share Offer should bemade on a dollar value basis.The Final Price will be set and notified before noon on Tuesday 8 June 2004. The Final Price will be:• Announced to the NZX; and• Available from any Primary Market Participant.share allocationThere is no public pool. No over-subscriptions will be accepted.Approximately $60 million of Shares have been reserved for firm allocation to clients of selected Primary Market Participants.Institutional and professional investors will have the opportunity to submit bids in accordance with book build procedures set out by the LeadManager.Shares will be able to be traded from 9 June to 16 June 2004 on a “delayed delivery” basis. None of Pumpkin Patch, the Lead Manager norany of their respective directors, officers, employees or advisors accepts any liability or responsibility should any person attempt to sell orotherwise deal with the Shares before the statements confirming allotment are received by the applicants for the Shares and the “delayeddelivery” designation is lifted.book build processThe Indicative Price Range for the Shares is $1.20 to $1.40 per Share. Between Wednesday 2 June 2004 and Friday 4 June 2004 the LeadManager will undertake a book build process inviting institutional and professional investors in New Zealand and Australia to submit bidsindicating the number of Shares they wish to purchase at a range of prices. This book build process, in addition to demand indicated fromother investor classes prior to and during the book build process, will be used to assist the Company and the Lead Manager to determinethe Final Price(s). There is no assurance that any particular institutional or professional investor participating in the book build process will beallocated the Shares for which it has bid. In determining the Final Price(s) and allocations the Company and Lead Manager will takeaccount of:• The overall demand profile for Shares at various prices;• Pricing indications from institutional and other investors under the book build process;• The desire of the Company to have an orderly and successful aftermarket for the Shares; and• Any other factors the Company considers relevant.10

application for sharesAdditional information on how to apply for Shares is contained in the back of this Investment Statement. Investors must complete the ShareApplication Form in full to be eligible to be allocated Shares. This includes providing the applicant’s IRD number. Failure to include any ofthe required details may disqualify the application.All applications by way of firm allocation under the Share Offer must include a cheque for the total application moneys. Applications underthe Share Offer must be lodged in time for such applications to be forwarded and received by BK Registries Limited no later than 5.00pmon 4 June 2004.The Company reserves the right to extend the Closing Date, (in which case the Key Dates referred to in this Investment Statement under thesection titled “Important Dates” may change correspondingly).The Company reserves the right to decline any Share Application in whole or in part, without giving any reason. Money received in respectof applications which are declined in whole or part will be refunded in whole or in part (as the case may be). Interest will not be paid onany application money refunded.minimum applicationApplications under the Share Offer must be made for a minimum of $5,000 worth of shares and in increments of $500 thereafter.paymentInstitutional investors or professional investors that are allocated Shares under the book build process must settle their allocation prior to5:00pm on Tuesday 8 June 2004 via Austraclear or in cleared funds under notification to the Lead Manager.Other investors must make payment of the Share Application Price in full upon application under the Share Offer. All cheques in paymentof application moneys must be denominated in New Zealand dollars and made payable to “The Pumpkin Patch Share Offer” and crossed“Not Transferable.” Cheques will be banked as they are received and must not be post-dated.underwritingThis Offer is not underwritten.11

epurchaseIt is intended that if:• All 81,027,200 Shares offered by the Company are subscribed for, the Company will repurchase and cancel 49,027,200 Shares of theSelling Shareholders;• 60,770,399 Shares or fewer are subscribed for, the Company will not repurchase any Shares from the Selling Shareholders and may, in itsdiscretion, refund any subscription proceeds in excess of $40 million; and• More than 60,770,399 Shares, but less than 81,027,200 Shares are subscribed for, the Company will repurchase and cancel between28,770,400 and 49,027,200 Shares from the Selling Shareholders.Details of the Repurchase Agreements are set out in the Prospectus.stock exchange listingApplication has been made to NZX for permission to list the Shares. All requirements of the NZX relating to listing the Shares that can becomplied with on or before the date of this Investment Statement have been duly complied with. However, the NZX accepts no responsibilityfor any statement in this Investment Statement.New Zealand and Australian institution onlyshare offerThe Share Offer described in this section is an offer only to New Zealand resident investors, and eligible Australian institutional and professionalinvestors invited to participate in the book build process. This Investment Statement is only intended for use in connection with these offersand the Option Offer, and is not to be sent or given to any person outside New Zealand or Australia in any circumstances in which the ShareOffer or use of the Investment Statement would be unlawful.use of proceedsThe subscription proceeds from the issue of Shares under the Share Offer are intended to be used by Pumpkin Patchto fund:• continued development and store rollout in New Zealand and Australia;• expansion of overseas third party retailing through department stores in the United States;• extension of existing operations in Europe and the Middle East; and• the retirement of up to $13.1 million of existing term debt facilities; and• the repurchase of Shares from the Selling Shareholders in accordance with the Repurchase Agreements described on page 50 and setout in full in the Prospectus.Although it is intended that these proceeds will be used as set out above, they may be applied to any undertaking in which Pumpkin Patchmay lawfully engage.Based upon the Indicative Price Range for the book build the subscription proceeds will total $97 million (at a Final Price of $1.20 perShare) or $113 million (at a Final Price of $1.40 per Share) assuming all 81,027,200 Shares are subscribed for.12

shareholding structureOn the Allocation and Allotment Date following the issue of new Shares under the Share Offer (assuming that all 81,027,200 new Shares aresubscribed for and all proposed share repurchases from Selling Shareholders have occurred) Pumpkin Patch will have 166,513,000 Shareson issue. Of these Shares, approximately 42% will be owned by the existing Shareholders, approximately 9% will be owned by (or held onbehalf of or for allocation to) management and other employees of the Company and 49% will be owned by institutional investors andmembers of the public.The following table provides a summary of the shareholdings in the Company prior to the Share Offer and approximates what theregister of the Company may look like after the Share Offer.Immediately prior to listingPost-listing (assuming32,000,000 Shares aresubscribed for)Post-listing (assuming81,027,200 Shares aresubscribed for and allproposed share repurchaseshave occurred)Shares % Shares % Shares %Feruza Trust 48,780,000 36.3 48,780,000 29.3 24,390,000 14.6Quadrant Capital Fund 24,000,000 17.8 24,000,000 14.4 12,000,000 7.2Simdec Trust 20,037,200 14.9 20,037,200 12.0 7,400,000 4.4Kezza Family Trust 13,400,000 10.0 13,400,000 8.0 13,400,000 8.0The Opito Family Trust 10,400,000 7.7 10,400,000 6.2 10,400,000 6.2Punchestown Family Trust 1,200,000 0.9 1,200,000 0.7 1,200,000 0.7Muir Trust 1,111,100 0.8 1,111,100 0.7 1,111,100 0.7Shares Issued UnderEmployee Share Schemes 13,584,700 10.1 13,584,700 8.2 13,584,700 8.2DF7 Scheme Trustee 2,000,000 1.5 2,000,000 1.2 2,000,000 1.2Institutions and retail investors N/a N/a 32,000,000 19.2 81,027,200 48.7Total 134,513,000 100.00% 166,513,000 100.00% 166,513,000 100.00%Notes:1. If between 32,000,000 and 81,027,200 Shares are subscribed for, the Company willrepurchase between 28,770,400 and 49,027,200 Shares from the Selling Shareholders. Iffewer than 60,770,400 Shares are subscribed for, the Company may, in its discretion,refund any subscription proceeds in excess of $40 million and no part of thesubscriptions received will be used to repurchase Shares.2. All of the shares in the Company on issue as at the date of this Investment Statementare fully paid, except some Shares issued under employee share schemes, which will befully paid upon listing. Immediately following listing and the repurchase (assuming fullsubscription) an additional $42.2 million will be credited as paid up in respect of newShares (assuming an issue price of $1.32 per Share).3. The Feruza Trust is associated with interests of Setar Motani.4. The Simdec Trust is associated with interests of Stephen Sher.5. The Kezza Family Trust is associated with interests of Managing Director, MauricePrendergast.6. The Opito Family Trust and the Punchestown Family Trust are associated with theinterests of Sally Synnott.7. The Muir Trust is associated with interests of Executive Chairman, Greg Muir.8. Shares held under the current employee share schemes are held by trustees on behalfof a number of employees of the Company. These are currently B Class and C Classshares (which do not confer voting rights) which will convert to fully paid ordinary shares(all ranking equally for dividends and voting rights) immediately prior to listing. 3,795,467will be retained by the trustees and will be progressively released over three years to theindividual employees. The remainder will be released to the employees on whose behalfthey are held. Certain of the Directors currently, and will upon listing, hold Shares underthe employee share schemes.9. Post-listing (on at or about 9 June 2004), the Company will have on issue up to 2,274,000Options, which may convert into 2,274,000 Shares in the Company no earlier than 9 June2007. On the basis of the post listing shareholdings set out above and assuming allOptions convert into Shares, this would represent 1.35% of the Company.10. Prior to listing, certain share transfers have occurred between the shareholders. TheSimdec Trust has received 700,000 Shares from the Opito Family Trust and 4,537,200Shares from the trustees of the employee share schemes (3 million of which weretransferred for and on behalf of Maurice Pendergast and 1,537,200 of which weretransferred for and on behalf of Chrissy Conyngham). The Simdec Trust is obliged to payan amount for those shares equal to the repurchase price per share it receives underthe Repurchase Agreements described on page 50.11. As at January 2004, the Company had 1,282,911 shares on issue (as described on page56 of the Prospectus). Since then, the Company has carried out a 100:1 share split, issuedan aggregate of 3,110,800 B and C Class shares to the trustees of the employee shareschemes, issued 2,000,000 A Class shares to the trustees of the DF7 scheme and issued1,111,100 A Class shares to the Muir Trust, bringing the total number of shares issued (asat 14 May 2004) to 134,513,000.13

Pumpkin Patch... our people14

directorsGreg MuirExecutive Chairman, BA, MBAGreg Muir was appointed Executive Chairman in February 2004. Prior to joining Pumpkin Patchhe was Chief Executive Officer of The Warehouse Group Ltd, and held senior management roleswith TNT Australia Pty Ltd, Enerco New Zealand Ltd and Lion Nathan Ltd. Greg is a Director of theAuckland Rugby Union Inc, Chairman of the Blues Super 12 Franchise and a member of theEden Park Board of Control. Greg lives in Auckland.Maurice PrendergastManaging DirectorMaurice Prendergast has been Managing Director of Pumpkin Patch since 1993. Maurice hasheld executive positions in accounting, distribution and property development in both NewZealand and Australian companies. Maurice is a Director of two apparel companies: BendonLtd and Sports Resources Ltd. Maurice lives in Auckland.Chrissy ConynghamDesign and Marketing DirectorChrissy Conyngham joined Pumpkin Patch as Design Director in 1993. Chrissy leads the designand marketing teams and is responsible for bringing together comprehensive ranges, productsourcing and brand promotion. Chrissy has 17 years of experience in the fashion industry, andwas previously the childrenswear product manager for Kmart. She draws inspiration from herthree daughters who are keen product testers and aspiring fashionistas! Chrissy lives inAuckland.15

directorsJane FreemanIndependent Non-Executive Director, BComChairman of the Remuneration Committee and member of the Audit, Compliance and RiskManagement Committee.Jane has held senior marketing and management positions at Telecom's esolutions, BankDirect,Clear Communications and ASB Bank Ltd. Jane is currently a director of Air New Zealand Ltd,Sheffield Consulting Ltd, St George Bank New Zealand Ltd and Albert St Dental Ltd. Jane lives inAuckland.David JacksonIndependent Non-Executive Director, MCom (Hons), FCAChairman of the Audit, Compliance and Risk Management Committee and member of theRemuneration CommitteeDavid was appointed as a Director of Pumpkin Patch in March 2004 and is a Senior Audit Partnerwith and former Chairman of Ernst & Young. Since 2001 David has been Chairman of the DameMalvina Major Foundation and is also a member of the Executive Board of the Institute ofChartered Accountants in New Zealand. David lives in Auckland.Sally SynnottNon-Executive DirectorMember of the Remuneration and the Audit, Compliance and Risk Management CommitteesSally Synnott founded Pumpkin Patch in 1990 and held an executive role within the Companyuntil 1993. Since then Sally has undertaken specialist assignments and has been a nonexecutiveDirector. Sally started her career in the apparel industry as a production planner andmarketing assistant before moving to Kmart NZ as childrenswear buyer. By the time she leftKmart in 1990 she was a group buyer responsible for a number of apparel categories. Thesedays Sally enjoys mentoring a number of small NZ business start-ups in between running afterthree boys and playing golf. Sally lives in Auckland.16

senior managementMike ArandGeneral Manager – Business DevelopmentBMS (Intl)Mike joined Pumpkin Patch in 1999 as General Manager – Business Development. Mike was withCanterbury International Ltd before joining Pumpkin Patch with his last position beingInternational Manager responsible for global development of the Canterbury of New Zealandbrand. Mike speaks Japanese having been awarded Monbusho Research Scholarships to studyJapanese at Osaka University of Foreign Language and Japanese Business Studies at ChuoUniversity in Japan.Lyn BryantGeneral Manager – OperationsLyn joined Pumpkin Patch in 1994 as Customer Service Supervisor in 1994. She was appointedCustomer Service Manager in 1996, Distribution Centre Manager in 1999 and was appointed toher current position as General Manager-Operations in 2003. Before joining Pumpkin Patch Lynwas the Office Manager at an insurance brokerage where she was responsible for managingthe customer service, payroll and telemarketing teams. Before that she was with AMP for sevenyears, holding various customer service roles. Lyn is a member of the Institute of Logistics andTransport.Marilyn CrockerGeneral Manager – Human ResourcesBA, MBA, RGON, MIHRMNZMarilyn joined Pumpkin Patch in 2003 as Global Human Resources Manager responsible fordeveloping procedures for managing Pumpkin Patch's more than 1700 employees worldwide.Before joining Pumpkin Patch Marilyn spent over four years at Fletcher Building as the HumanResources Manager for Winstone Wallboards Limited and prior to that spent four years as NewZealand Human Resources Manager for Country Road (New Zealand) Ltd.She is a certificate member of the Institute of Human Resource Managers of New Zealand, andaccredited Zenger Miller Trainer, a registered Hay job evaluator and a registered Saville andHoldsworth Psychometric tester.17

Kay GillardGeneral Manager – RetailKay joined Pumpkin Patch in 1996 as Operations Manager to head the retail initiative intoAustralia. In 1997 Kay was appointed General Manager – Australia and in 1999 was appointedGeneral Manager – Retail with responsibility for Pumpkin Patch's global retail operation. BeforeKay joined Pumpkin Patch she was Business Director at Three Bears and Route 66 Ltd and priorto that she was General Manager at Saks Newmarket.Zarina ThesingGeneral Manager – Information Technology, BComZarina joined Pumpkin Patch in 2000 as an IT Development Manager and was appointed asGeneral Manager-IT in 2002. Zarina has been involved in the IT industry for 9 years prior to joiningPumpkin Patch including: Wilson & Horton Ltd, management of the replacement of billingsystems; Vodafone New Zealand Ltd, systems architect and manager of dealer systems project;Auckland City Council and Southern Regional Health Authority, implementation of ContractManagement System (CMS) and, Royal New Zealand Navy, system architect, co-ordinator forANZAC frigate project implementation on 'the existing fleet'.Bruce WalkleyGeneral Manager – Business Development (Europe and UK), BComBruce joined Pumpkin Patch in 1993 as Finance Director. In 2000 he was appointed GeneralManager – United Kingdom with responsibility for managing Pumpkin Patch's internationalexpansion in the United Kingdom and Europe. Before joining Pumpkin Patch Bruce was thefinancial controller for a joint venture developing multi-use property development in Londonand prior to that he worked as an accountant in London.Matthew WashingtonGroup Financial Controller, BCom, CAMatthew joined Pumpkin Patch in 2000 as Group Financial Controller.He has over 16 years accounting and commercial experience of which eight years were withErnst & Young most recently as a Senior Manager and a further three years were with FletcherWood Panels Ltd as Finance Manager.corporate governanceThe Board of Pumpkin Patch has the responsibility of ensuringPumpkin Patch is properly managed to protect and enhanceshareholders’ interests. The Directors take this responsibilityseriously and to this end, the Board of Directors has adoptedwhat it believes to be appropriate corporate governancepolicies and practices. The main corporate governancepolicies incorporate:• Board committees:- Audit, Compliance and Risk Management Committee:and- Remuneration Committee.The Board has undertaken to regularly review the corporategovernance policies to ensure that Pumpkin Patch’sresponsibilities and obligations are met.• Appointment and retirement of Directors;• Directors’ access to independent professional advice;18

investment overviewstrong Australasian and growing international brandEstablished in New Zealand in 1990, Pumpkin Patch has built an enviable reputation for fashionable childrenswear throughoutNew Zealand and Australia. Pumpkin Patch is also increasingly recognised internationally.Pumpkin Patch has Company–owned retail stores in New Zealand, Australia and the United Kingdom and has distributionagreements in Ireland and the Middle East. The Company also sells in high profile department stores in Australia and the UnitedStates, on the internet – www.pumpkinpatch.co.nz – and via a mail order catalogue.Pumpkin Patch plans to continue growing its already extensive chain of retail stores in Australia and New Zealand. The PumpkinPatch strategy is to deliver continued profit growth from its Australasian expansion over the next two to three years, while continuingto develop markets further afield.Sales Composition$300,000$250,000Aggregated Sales NZ Retail Aust Retail UK Retail OtherNZ$ Sales (000)$200,000$150,000$100,000$50,00001991Dec1992Dec1993Dec1994Dec1995Dec1996Dec1997Dec1998Dec1999Dec2000Dec2001July2002July2003July2004July2005July(Pro forma) (Pro forma) (Audited) (Forecast) (Forecast)Note: The December 2000 bar represents the 12 month period from 1 January 2000 to 31 December 2000.The July 2001 (pro forma) bar represents the 12 month period from 1 August 2000 to 31 July 2001.19

management with extensiveindustry experienceThe team at Pumpkin Patch has demonstrated its ability to grow the business oversuccessive years. The design team, led by Chrissy Conyngham, has a consistent history ofproducing exceptional ranges that are at the forefront of children’s fashion.Pumpkin Patch’s strong management team has the expertise and capabilities to ensurethat the complex apparel, design, manufacture and retail business that is Pumpkin Patchwill continue to grow.The Pumpkin Patch Board of Directors has extensive retail, apparel and corporateexperience which complements the skills of the management team.strong infrastructure and systemsPumpkin Patch has delivered growth through an effective core of infrastructure and anability to continually develop new systems for emerging markets.From its 13,395m 2 distribution centre in Auckland, Pumpkin Patch responds daily to theinventory requirements of its retail stores in New Zealand, Australia and the UK, and to itsdepartment store, internet and mail order sales.Pumpkin Patch has a commitment to embracing new technology, and has developed itsown forecasting and inventory systems. The resulting modern software platforms enableflexibility and integration with all facets of design, manufacture, distribution, sales andaccounting.Pumpkin Patch is well known throughout the New Zealand and Australian apparelindustries as a company that is able to efficiently and effectively adopt new technologyto its benefit.significant earnings growthEstablished in 1990 as a mail order company, Pumpkin Patch has a history of revenue andearnings growth. Pumpkin Patch believes that it has the potential to further develop its homemarket in New Zealand and Australia through new store openings and brand expansion.Pumpkin Patch also believes that there are significant growth opportunities availableinternationally.Forecast EBITDA before non-recurring items is expected to increase to $26.7 million in the 2004financial year, more than double its level of $11.0 million in the 2001 pro forma financial year.The Directors expect the positive earnings growth trend to continue with forecast EBITDA for2005 forecast at $31.2 million, an increase of 17% on 2004. This forecast growth in EBITDA is theresult of sales growth in all of Pumpkin Patch’s key markets during the 2005 financial year.20

financial informationThe financial summary set out below has been prepared to enable investors to compare forecast financialinformation with the three year historical performance of the underlying business of Pumpkin Patch.Financial Performance for 12 months ended 31 July 2001 2002 2003 2004 2005$000 $000 $000 $000 $000(Pro Forma) (Pro Forma)Note (Unaudited) (Unaudited) (Audited) (Forecast) (Forecast)Operating Revenue 150,238 174,534 193,510 213,524 246,774Group EBITDA Before Costs of Restructuring Employee Share Schemes 11,038 14,096 16,655 26,717 31,199Depreciation 4,403 5,631 6,536 7,224 8,164Group EBITA Before Costs of Restructuring Employee Share Schemes 6,635 8,465 10,119 19,493 23,035Amortisation/Impairment of UK goodwill 2 - 1,538 - - -Group EBIT Before Costs of Restructuring Employee Share Schemes 6,635 6,927 10,119 19,493 23,035Costs of restructuring employee share schemes 5 - - - 7,450 -Group EBIT 1 6,635 6,927 10,119 12,043 23,035Net interest expense* 2,610 490Operating Profit Before Income Tax* 9,433 22,545Income tax expense* 5,397 7,214Operating Profit After Income Tax* 4,036 15,331Cash Flow SummaryOperating Cash Flow 3 (13,293) 5,809 13,109 12,452 22,099Capital expenditure 4 9,906 5,065 7,972 5,421 4,450Operating Cash Flow After Capital Expenditure (23,199) 744 5,137 7,031 17,649Note:*Pro forma (31 July 2001 and 31 July 2002) and audited (31 July 2003) historical financial performance numbers are not includedfor these items as they are not relevant following the completion of the Share Offer.“EBIT” means earnings before interest and tax.“EBITA” means earnings before interest, tax and amortisation.“EBITDA” means earnings before interest, tax, depreciation and amortisation.Summary Statement of Financial Position Jan 2004 July 2004 July 2005$000 $000 $000Note (Audited) (Forecast) (Forecast)Current assets 43,593 52,379 67,137Non-current assets 30,292 33,105 27,811Total Assets 73,885 85,484 94,948Borrowings (including overdraft facility) 6 32,093 1,652 -Other current liabilities 14,886 15,294 15,525Non-current liabilities 2,316 3,959 1,913Total Liabilities 49,295 20,905 17,438Net Assets 24,590 64,579 77,510The amounts shown above as at 31 January 2004 have been taken from the audited consolidated statement of financial position of theissuing group as at that date, a copy of which is contained in the Prospectus.21

Basis of PreparationPro forma historical financial information used for the 12 month periods ended 31 July 2001 and 2002 is extracted from thehistorical financial statements and management accounts of Pumpkin Patch and adjusted for the change in balance datefrom 31 December to 31 July effective 31 July 2003 and the change in the accounting policy in 2001 relating to the treatmentof landlord contributions; so that the historical results are comparable with the Pumpkin Patch forecast performance.Accordingly the pro forma figures presented above differ from the summary historical information set out on page 67 of theProspectus. The amounts included for 31 July 2003 have been taken from special purpose audited financial statements for the12 months then ended and differ from the summary historical financial information set out on page 67 of the Prospectus asthat information includes the historical financial information for the 7 months ended 31 July 2003.The principal assumptions applied in arriving at the forecasts are set out on page 22.Notes to Accompany Financial Information1. United Kingdom RetailThe Financial Performance summary includes the following results for the United Kingdom.Financial Performance for 12 months ended 31 July 2001 2002 2003 2004 2005$000 $000 $000 $000 $000(Pro Forma) (Pro Forma)(Unaudited) (Unaudited) (Audited) (Forecast) (Forecast)Operating Revenue 5,384 12,413 14,480 17,323 17,841EBITDA (Loss) (999) (852) (1,870) (1,673) (1,547)Depreciation 188 436 716 799 811EBIT (Loss) (1,187) (1,288) (2,586) (2,472) (2,358)2. In 2002 the group acquired 100% of the shares in Pumpkin Patch Limited (UK). The 2002 results includeamortisation/impairment of goodwill of $1,538k on the purchase of Pumpkin Patch Limited (UK). The charge was deemednecessary by the Directors after they reviewed the carrying value of the subsidiary and recognising that the purchase wasmade primarily as part of overall restructuring of group ownership structures.3. Operating cash flow in 2001 was impacted primarily by an increase in the value of inventory resulting from increased storenumbers and the timing of deliveries from suppliers.4. Capital Expenditure is disclosed after deducting landlord contributions. Capital expenditure in 2001 reflects the 17 storesopened during the year; 2002 reflects lower store openings but higher than average landlord contributions; 2003 includesthe purchase of land adjoining the East Tamaki Road distribution centre.5. The Directors have decided to restructure all existing employee share schemes prior to listing on the NZX at an estimatedcost of $7,450k.This will be recognised in the period ended 31 July 2004. Full details of the schemes can be found on pages51 to 52. A portion of the $7,450k is not deductible for tax purposes in 2004.6. January 2004 borrowings include bank overdraft of $3,955k, short term borrowings of $11,000k, current portion of termliabilites of $763k, term liabilities of $13,875k and loans and advances from shareholders of $2,500k. Forecast July 2004borrowings only comprise bank overdraft of $1,652k.Principal Assumptions underlying the Prospective Financial InformationThe principal assumptions upon which the forecast financial information is based are summarised below and should be readin conjunction with ‘What are my Risks?’ on pages 41 to 45.The prospective financial information for the years ending 31 July 2004 (“FY04”) and 31 July 2005 (“FY05”) on page 21 constitutesa forecast as defined by the New Zealand Financial Reporting Standard No. 29,‘Prospective Financial Information’ and has beenprepared on the basis of assumptions as to future events that the Directors reasonably expect to occur associated with theactions the Directors reasonably expect to take as at the date the information was prepared. The forecast was prepared as at8 April 2004 for use in this Investment Statement. Actual audited results for the 6 month period to 31 January 2004 and actual22

unaudited results for February 2004 and March 2004 have been incorporated into the forecast for the year end 31 July 2004.The forecast information has been prepared for the purposes of this Investment Statement and may not be suitable for any otherpurpose. There is no present intention to update this prospective financial information or to publish prospective financialinformation in the future.In preparing the forecast financial information, the accounting policies set out in the Prospectus as part of the Group financialinformation have been applied without change. There is no expectation of any change to the accounting policies that wouldrequire a material change in the reporting of Pumpkin Patch’s activities in the future.General assumptions across all countries in which Pumpkin Patch operatesEconomic EnvironmentThere will be no material change in the general economic environment.Legislative and Regulatory EnvironmentThere will be no material change to the legislative and regulatory environment in which Pumpkin Patch operates.Competitive EnvironmentThere will be no material changes to the competitive markets in which Pumpkin Patch operates and no new entrants that willmaterially change the competitive environment.Industry ConditionsThere will be no material change to the competitive activity, industry structure, unanticipated fashion trends, general industryconditions, third party retailer relationships or the employee environment.Other AssumptionsIncome TaxThere will be no change to the tax regime in New Zealand, Australia or the UK, including no change to the company tax rateof 33%, 30% and 30% respectively.Management of Pumpkin PatchPumpkin Patch’s senior management and other key people will continue in their current roles.Disruptions to OperationsThere will be no material disruptions to Pumpkin Patch’s operations or brand arising from long term IT or power failures, naturaldisasters, fires and explosions, and major disruptions to freight distribution networks.Company-Specific AssumptionsForeign ExchangeActual rates to March 2004 have been included in the FY04 forecasts and the following exchange rates have been utilised inthe prospective financial information:FY04FY05April to July 04AUD 0.8750 0.8750USD 0.6150 0.6150GBP 0.3703 0.3700EUR 0.5000 0.500023

The Company’s policy is to take out forward cover for a percentage of future forecast cashflow requirements depending onthe time until the forecasted cash flow. FY04 is 100% hedged at an average rate of AUD0.8740 and USD0.6207 and hedgingprogrammes will be in place for FY05. Currently the Company has 20% and 62% of FY05’s AUD and USD requirements hedgedat an average rate of AUD0.8700 and USD0.6280.RevenueForecast Operating Revenue Consists of:Group Group12 Months 12 Months31 July 2004 31 July 2005$000 $000Australia retail 133,911 149,812New Zealand retail 47,390 61,314United Kingdom retail 17,323 17,841Other 14,900 17,807Other consists of mail order, internet, and wholesale sales.213,524 246,774(i)Retail(a)The following new store openings have been forecast for the remainder of FY04 and for FY05, with forecastrevenues in line with historical averages for new stores:FY04remainderFY05Australia retail - 7New Zealand retail 2 2UK retail - -(b)(c)Forecast sales for those stores that are in existence at 8 April 2004 are expected to be at the same trading levelsfor the remainder of FY04 and for FY05.14 stores arising from the HBK acquisition as at 3 May 2004 have been included in the prospective financialinformation.(ii)WholesaleForecast sales for the remainder of FY04 are based on actual orders received. The sales for the first half of FY05 arebased on actual orders received while the second half FY05 are forecast at similar levels to that of the first half of FY05.United Kingdom RetailThe forecast Statements of Financial Performance include the following forecasts for the United Kingdom retailoperation.Group Group12 Months 12 Months31 July 2004 31 July 2005$000 $000Operating Revenue 17,323 17,841Earnings Before Interest, Tax, Depreciation and Amortisation (‘EBITDA’) (Loss) (1,673) (1,547)Depreciation 799 811Earnings Before Interest and Tax (‘EBIT’) (Loss) (2,472) (2,358)24

Cost of SalesForecast Cost of Sales (excluding the effect of foreign exchange) for the remainder of FY04 are anticipated at the percentagelevels experienced to March 2004 and FY05 at those levels forecast for FY04.Retail, Wholesale, and Head Office OverheadsActual costs to March 2004 have been included in the forecasts for FY04 with the remaining period forecast at similar levelsadjusted for new stores and other anticipated changes. FY05 costs are forecast at similar levels forecast for FY04, againadjusted for new stores and other anticipated changes.Costs of restructuring employee share schemesThe Directors have decided to restructure all existing employee share schemes upon or immediately prior to listing on the NZXat an estimated cost of $7,450k. This been recognised in the period ended 31 July 2004. Full details of the restructuring of theschemes can be found on pages 51 to 52. A portion of the $7,450k is not deductible for tax purposes in FY04.InterestInterest expense for the remainder of FY04 and FY05 has been forecast based on an average interest rate of 7.5% whichincludes all margins and other costs of borrowing paid to lenders.DividendsThe Directors forecast that approximately 50% of net profit after tax will be paid as dividends subsequent to listing on the NZX.The Directors propose to declare fully imputed dividends, forecast at $2.4m in April 2005, payable April 2005, being an interimdividend for FY05, and $4.8m in November 2005, being the final dividend for FY05.In addition to the above an interim dividend was paid in March 2004 and a further dividend of $8.3m is forecast to be declaredand paid in June 2004, prior to listing on the NZX.Working CapitalWorking capital (inventory, accounts payable, and accounts receivable) has been forecast based on the forecastedinventory purchases by season and forecast changes in purchase costs (e.g. foreign exchange changes), forecastedwholesale sales, and forecasted other expenditure.Property, Plant and EquipmentCapital expenditure forecast is based on new store openings and other general capital expenditure requirements. No othermaterial or one-off capital expenditure has been forecast.Term DebtThe forecast assumes that all existing term debt at May 2004 is repaid in full.Finance FacilitiesIt is forecast that there are adequate finance facilities in place and available to the Company to cover its anticipated fundingrequirements for the forecast periods. Current finance facilities in place with the company’s bankers are three year facilitiesand are due for renewal in May 2007.Capital StructureIt is forecast that $107.0m will be received from the issue of ordinary shares on listing, based on an assumed issue price of $1.32per Share. Significant outflows from the proceeds are forecast to include the repurchase of ordinary shares from existingshareholders of $64.7m and the repayment of bank loans of $13.1m.Offer CostsThe Company will pay its share of the costs (forecast to be $1,335k) directly attributable to the Offer and will be accountedfor as a reduction in equity.25

fashion created for kids26

Pumpkin Patch... the brandFounded in 1990 by Sally Synnott, Pumpkin Patch has become an iconic brand in thechildrenswear market. Innovative design is fundamental to Pumpkin Patch’s success and theongoing recognition both in Australasia and further afield signifies the underlying strength ofthe brand.The Company has a large design team led by Chrissy Conyngham, with extensive experiencein childrenswear and other apparel markets. The in-house design team produces more than1,500 styles per season using a tightly controlled process that ensures all garments are freshand coordinated.Product development includes conceptual artwork, style creation, product sourcing and controlof quality.Pumpkin Patch has nurtured its brand ensuring that all product design, shop merchandising,catalogues and marketing to the customer are developed in-house. This delivers a consistentapproach to branding which increases brand recognition amongst customers.Today, Pumpkin Patch's employees are focused on the same aspirations of brand quality that ourdesign team have built into the product. Utilising a fully integrated process, the Company hasdeveloped software and information systems that track products from design/origination throughto sale.design• origination• shared story• style creationsales & marketing• retail stores• wholesale• internet• catalogueproduct sourcing• quality control• final productwarehousing& distribution27

designPumpkin Patch provides one-stop clothes shopping – arguably every parent's dream! Thecoordinated collection offers quality kidswear with a cutting edge – the junior version ofcurrent looks with a fresh, young twist – ‘seriously fun’ clothes that have wide appeal.The design philosophy encompasses the entire collection – from babywear to kidswear,which also includes nightwear, accessories, rainwear and footwear, as well as bedroom linencoordinates. For the mums-to-be who are determined to retain their fashion style there’s agreat maternity collection and there’s also a developing pre and early teen girls offer.Department Ages LabelBabies Newborn to 9 months Baby PatchToddler girls 6 months to 4 years Pumpkin PatchToddler boys 6 months to 4 years Pumpkin PatchBig girls 5 years to 11 years Pumpkin PatchBig boys 5 years to 11 years Pumpkin PatchPre and early teen girl Girls 8 to 14 years Urban Angel GirlMaternityPatch MaternityUnderwear Baby to 14 years Pumpkin Patch & Urban Angel (Girl)Nightwear Baby to 14 years Pumpkin Patch & Urban Angel (Girl)Swimwear Baby to 14 years Pumpkin Patch & Urban Angel (Girl)Accessories Baby to 14 years Pumpkin Patch & Urban Angel (Girl)Footwear Baby to 14 years Pumpkin Patch & Urban Angel (Girl)Kids’ bedroom co-ordinatesPatch@HomePumpkin Patch’s success has come as a result of a clear design focus and emphasis ondistinctive fashion styling, combined with strong customer and supplier relationships.28

Pumpkin Patch’s innovative design team has a wealth of experience in the kidswear industry,both within the buying/retail sector and the design/manufacturing side of the business. Thebroad knowledge base, combined with a sound understanding of the marketplace, resultsin design-driven collections of highly saleable merchandise, comprising over 1,500 stylesper season.In order to keep abreast of emerging fashion ideas, the design team spends considerable timeresearching the market, and absorbing and interpreting international artistic and fashion trends.This results in the design of Pumpkin Patch childrenswear collections appealing to wide socioeconomicand demographic ranges of customers.New ranges based on emerging fashion trends are introduced throughout the season to keepthe stores looking fresh and to encourage return visits by parents to make further purchasesthroughout each season. Pumpkin Patch uses historic data to predict sales trends enabling it todevelop future ranges with increased confidence.product sourcingPumpkin Patch's continuous design philosophy results in regular orders to its manufacturers.Manufacturers are largely based overseas, supplemented by New Zealand manufacturers, andare selected based on their skills, product quality, timeliness and cost. Many of the suppliershave long-standing relationships with Pumpkin Patch and this assists the Company’s qualityaspirations while still meeting the demanding production timelines of an apparel company.fashion created for kids29

warehousing and distributionPumpkin Patch operates a 13,395m 2 distribution centre attached to its head office in EastTamaki, Auckland. The distribution centre serves as the global warehouse for all of PumpkinPatch’s stores and sales.The distribution centre receives substantially all manufacturedgarments and product ranges and is responsible for the daily dispatch of the products to itsstores in New Zealand, Australia and the United Kingdom, to its international wholesalecustomers and to fill its internet and catalogue orders. The distribution centre receives, picks,packs and distributes approximately 70,000 garments per day. Existing facilities are expected tobe sufficient for the foreseeable future.The distribution centre employs around 70 staff.It utilises a paperless management systemwhich enables Pumpkin Patch to receive daily sales information from each Pumpkin Patchstore, individual catalogue purchases and internet sales. These are then usually dispatched thefollowing day. The management system also allows packages that are sent internationally fromthe distribution centre to be tracked and electronically processed through various countries’customs departments.The distribution centre is capable of handling over 30,000 SKUs (discrete lines of stock) in anygiven period enabling the Southern and Northern hemispheres to be serviced simultaneouslydespite differing seasons and ranges.The distribution centre was leased in August 1999 for an initial term of 10 years with rights ofrenewal for a further 15 years. To provide for future development of the distribution centre,should the need arise, Pumpkin Patch has acquired approximately 20,300m 2 of undevelopedland surrounding its East Tamaki site.30

fashion created for kidssales and marketingPumpkin Patch’s sales are forecast to reach $213.5 million in the 2004 financial year, a forecast increase of more than 42% over the 2001 proforma financial year. This consistent and strong sales growth is expected to result from the Company using a range of sales channelsincluding:• Pumpkin Patch retail stores;• International wholesaling;- Department stores;- Pumpkin Patch branded stores owned by third parties; and• Catalogue and Internet.Forecast FY04 Unit Sales CompositionRetail Aust64%Direct NZ / Aust 3%Wholesale NZ / Aust 2%Wholesale EU 1%Wholesale USA 2%Retail UK 7%Retail NZ21%31

Pumpkin Patch storesPumpkin Patch currently has 111 stores in New Zealand, Australia and the United Kingdom and employs approximately 1,700 staff (includingboth full time and part time staff). 37 of these stores are located in New Zealand with 64 in Australia and 10 in the United Kingdom - and afurther 2 stores will be opened in New Zealand by the end of the 2004 financial year. Each of these stores sells the comprehensive PumpkinPatch collections and is designed to be open, inviting and exciting.The Pumpkin Patch shopping experience is fresh and unique – when people walk into one of the stores they are meant to get a real senseof the passion that the Company has put into the clothes. Every store has a toy-filled play area to keep even the smallest shoppers amused,and lots of room for parents and kids to move around.Given that the unique stores are perceived by some parents as a shopper’s heaven with specially designed areas for boys and girls and acool mini-store for the Urban Angel brand, it is not surprising that several stores have been voted by shopping centre customers as the bestin the centre.140Pumpkin Patch Store Numbers120NZ HBK Aust UK11312210080718460402005640271114841 1 21992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005(Financial Year End)The fixtures and fittings throughout our stores reflect the commitment to quality that is evidentthroughout the business. Special interior effects and hand-painted finishes are used to createa warm and friendly ‘designer store’ atmosphere.Pumpkin Patch carefully evaluates the location for new stores. The Company undertakesreviews with external consultants that analyse customer catchments, customer demographics,availability, cost of retail space, proximity of competitors and proximity to other existing PumpkinPatch stores.Pumpkin Patch’s in-house design and fitout teams enable the Company to quickly design andbuild new stores. Generally a store is open within eight to ten weeks from the receipt of finalplans and approvals.Most stores are between 250m 2 and 350m 2 (the largest is 500m 2 ) with standard leases havinginitial durations of approximately five years.Pumpkin Patch has identified specific store expansion opportunities in both New Zealandand Australia and expects to open an additional 2 stores in New Zealand and 7 stores inAustralia during the 2005 financial year.32

wholesale salesPumpkin Patch has identified wholesaling opportunities as a way of:• Introducing the Pumpkin Patch brand and ranges to countries that are not currentlyserviced by Pumpkin Patch stores; and• Supplementing the accessibility of the Pumpkin Patch brand and ranges in countries thatdo have Pumpkin Patch stores.Pumpkin Patch’s wholesaling relationships are at a relatively early stage of developmentand at present predominantly involve international department stores in Australia, theUnited States, Ireland and the Middle East. Currently Pumpkin Patch supplies 10 internationalretailers with the three largest being Nordstrom (United States), David Jones (Australia) andRoches (Ireland).Department stores agree in advance, season by season, to acquire a given quantity ofPumpkin Patch apparel and accessories. They display the merchandise either:• In a Pumpkin Patch branded area of the department store (i.e. visually similar to a PumpkinPatch retail store) called a “store in store”; or• On generic sales racks but with Pumpkin Patch branding surrounding the racks.Pumpkin Patch has a specific sales team that is responsible for pursuing and servicinginternational wholesaling opportunities.fashion created for kids33

fashion created for kidsPumpkin Patch directPumpkin Patch has specific websites for New Zealand (www.pumpkinpatch.co.nz), Australia(www.pumpkinpatch.com.au) and the United Kingdom (www.pumpkinpatch.co.uk).Onaverage in 2003, Pumpkin Patch’s websites received (in total) approximately 121,000 visitsper month.The internet sites, which are predominantly developed by Pumpkin Patch’s in-house team ofspecialists, are regularly refreshed to include the latest available ranges and remove itemswhere stock is low.During the past 12 years Pumpkin Patch has built up a significant database of customerswho have either bought merchandise from stores, over the internet or out of the catalogue.The database is regularly updated and analysed to ensure that customer details are up-todateand that “non-responsive” entries are deleted.Each season Pumpkin Patch sends out approximately 750,000 catalogues to customers inNew Zealand, Australia and the UK. The catalogues are designed in-house and feature thelatest fashion ranges. Any sales orders received from the catalogue are processed byPumpkin Patch’s in-house call centre (located at its head office) and despatched by thedistribution centre.The Pumpkin Patch call centre in Auckland is operated seven days a week and has facilitiesfor 20 operators at any one time.34

Pumpkin Patch... our peoplePumpkin Patch employs approximately 1,700 people, (34% inNew Zealand, 59% in Australia and 7% in the United Kingdom).Approximately 68% of Pumpkin Patch’s staff work part time.When hiring staff Pumpkin Patch endeavours to identify peoplewho share its vision and who are passionate about kidswear andcommitted to meeting, and exceeding, customers’ expectationsof excellent service.One of Pumpkin Patch’s core philosophies is integrity – withinthe Pumpkin Patch team, with suppliers, and towards customers.This integrity is intended to create a platform of trust andcommitment, and a foundation for all of Pumpkin Patch'sbusiness relationships.Pumpkin Patch believes family life and strong family values areintegral to the wellbeing of its people and therefore theCompany. Family-friendly work policies encourage flexibility,adaptability and balance. People are rewarded for loyalty andlong service, and families with young children are supported within-house crèche facilities or childcare subsidies.Pumpkin Patch recognises that employee retention andsuccession planning are vital to a successful organisation. Assuch the Company has always ensured that key employeeshave been rewarded with equity interests in the Company, andthe Company has established a number of employee shareschemes which have allowed employees to share in our success.The share schemes are being restructured prior to the listing ofthe Company and details of the restructuring are set out onpage 51.In addition to these current schemes, the Directors agree withthe philosophy of rewarding employees with equity interests inthe Company and have established two new schemes to allowemployees to share in the success of the Company.One of these schemes is the DF7 Scheme, which will give allpermanent employees working more than 10 hours a week theopportunity to acquire Shares. The details of the DF7 Schemeare set out on page 52.The other is the Pumpkin Patch 2004 Share Option Scheme, underwhich the Option Offer is made. This Scheme is intended to giveEligible Senior Managers an additional incentive to strive tocreate shareholder value by aligning their interests with those ofPumpkin Patch shareholders. Pumpkin Patch intends to establishsimilar schemes in subsequent years.This Investment Statement is issued in respect of the 2004 ShareOption Scheme and further details of the Scheme can befound on pages 54 to 56 and in the Prospectus. This InvestmentStatement is not issued in respect of either the DF7 Scheme orthe schemes to be established in subsequent years althoughPumpkin Patch anticipates that these schemes will be onsimilar terms.35

Pumpkin Patch... a platform for growthPumpkin Patch intends to continue increasing its sales and earnings by using strategies similar to thosethat it has successfully used during the past five years.Pumpkin Patch’s strategy is based around selling leading edge kids’ fashion through a range ofchannels including its own retail stores, selected department stores, wholesale distributionarrangements, the internet – www.pumpkinpatch.co.nz – and via mail order catalogues.Through these avenues, Pumpkin Patch sees its key growth coming from the following:• Continued development of its home market in New Zealand and Australia through new storeopenings;• Expansion of its pre and early teen brands;• Continued incremental revenue growth in Pumpkin Patch’s United Kingdom retail chain;• Expansion of overseas third party retailing through department stores in the United States; and• Extension of existing operations in Europe and the Middle East in conjunction with our thirdparty retailers.Pumpkin Patch company owned storesThe core of the Company’s sales growth in the last few years has come from developing the Australianmarket and strengthening our presence in New Zealand. Pumpkin Patch currently has 64 stores inAustralia and 37 in New Zealand.Pumpkin Patch management is confident that the market can be further developed in both countriesby establishing stores in catchments that are not already covered. Based on past experience, PumpkinPatch believes this strategy can be successfully implemented through 2004, 2005 and beyond.It is expected that New Zealand and Australian store openings will generate the bulk of the salesgrowth during the next two years.36

fashion created for kidswholesaling: third party retailersPumpkin Patch has developed relationships with a number of third party retailers includingDavid Jones in Australia and independent department stores in the United States, Ireland andthe Middle East. These relationships are expected to continue to contribute to sales growth in2005 and beyond.brand extensionsOn 3 May 2004, Pumpkin Patch acquired the New Zealand retail chain HBK Girl. HBK Girlspecialises in pre and early teen girlswear which is similar to Pumpkin Patch’s Urban Angel label.The HBK Girl chain has 14 stores throughout New Zealand. The chain was acquired to widen thedistribution of the Urban Angel brand.Management have not forecast for the new chain to make any financial contribution in thenext two years.37

answers to important questionswhat sort of investmentis this?SharesThe Shares being offered under the Share Offer are ordinaryfully paid shares in Pumpkin Patch.Each Share confers on the holder:• The right to an equal share in dividends and otherdistributions paid in respect of Shares;• The right to attend and vote at a meeting of shareholdersof the Company including the right to cast one vote on apoll;• The right to an equal share in the distribution of surplusassets in any liquidation of the Company;• The right to be sent certain information, including notices ofmeetings and Company reports, sent to shareholdersgenerally; and• All other rights that are conferred on shareholders by theCompanies Act 1993 and the Constitution.OptionsEach Option being offered under the Option Offer entitles theOption Holder to purchase one Share for an Exercise Priceequivalent to the Final Price per Share for investors other thaninstitutional and professional investors as determined pursuantto the Share Offer.The Options can only be exercised on written notice toPumpkin Patch within an Exercise Period commencing on 9June 2007 and ending on 9 June 2009 (although the Companymay permit earlier exercise in certain extraordinarycircumstances). The Options will lapse if they are not exercisedby the end of the Exercise Period or if certain othercircumstances exist (these are set out in full in the Prospectus).In addition, the Options are not able to be exercised unlesscertain conditions are met. In particular, the Market Price atExercise Date, must exceed the Benchmark Price (as defined inthe glossary) set by Pumpkin Patch.Further information on the terms and conditions of the Optionsis contained on page 54 of this Investment Statement andin the Prospectus.who is involved inproviding it for me?Pumpkin Patch is the issuer of the Shares and the Options.Pumpkin Patch's address is 439 East Tamaki Road, East Tamaki,Auckland.Pumpkin Patch was established in 1990 and its principalactivities include the design, manufacture and distribution ofapparel through its own retail stores, wholesale arrangementsand a mail order catalogue system. Additional informationabout Pumpkin Patch and its business can be found in thesection titled "Pumpkin Patch: the brand" on page 27.how much do I pay?SharesThe price per Share will be set via a book build processinvolving institutional and professional investors. An IndicativePrice Range of $1.20 to $1.40 per Share has been set to assistinstitutional investors in the bidding process. Upon completionof the book build process a Final Price will be set. TheCompany reserves the right to set the Final Price forinstitutional and professional investors participating in the bookbuild process above the Indicative Price Range but the FinalPrice set for other investors will be capped at $1.40. In settingthe Final Price(s) and allocations Pumpkin Patch and the LeadManager will take account of:38

fashion created for kids• The overall demand profile for Shares at various prices;• Pricing indications from institutional and other investorsunder the book build process;• The desire of the Company to have an orderly andsuccessful aftermarket for the Shares; and• Any other factors the Company considers relevant.The Final Price will be set and notified before noon on Tuesday8 June 2004.The Final Price will be:• Announced to the NZX; and• Available from any Primary Market Participant.Payment in any currency other than New Zealand dollars willnot be accepted.Institutional investors or professional investors that aresuccessfully allocated Shares under the book build processmust settle their allocation prior to 5.00pm on Tuesday 8 June2004 via Austraclear or in cleared funds under notification tothe Lead Manager. Other investors must make payment in fullupon application under the Share Offer, by chequedenominated in New Zealand dollars, made payable to "ThePumpkin Patch Share Offer" and crossed “Not Transferable”.Cheques will be banked as they are received and must not bepost dated. Completed Share Application Forms, together withpayment, should be received by the Share Registrar no laterthan 5.00pm New Zealand time on the 4 June 2004, at thefollowing address:The Pumpkin Patch Share OfferBK Registries Limited138 Tancred StreetP O Box 384ASHBURTONor received by any Primary Market Participant or GoldmanSachs JBWere (NZ) Limited (as Lead Manager) or any otherchannel approved by the NZX in time to enable theApplication Form to be forwarded to the appropriate addressand be received by 4 June 2004.Full details on how to apply for Shares and make payment areset out in the section titled “Application Instructions for ShareOffer” on page 59.OptionsThere is no application fee or other sum payable for theOptions. However an Exercise Price equivalent to the FinalPrice for investors other than institutional and professionalinvestors participating in the book building process will applyfor Option Holders wishing to exercise their Options. OptionHolders wishing to exercise any Options must give writtennotice to Pumpkin Patch specifying the Options to beexercised, and together with such notice must make paymentfor the amount of the Exercise Price for the Option exercisedby cheque payable to Pumpkin Patch (unless the OptionHolder has made prior arrangements with Pumpkin Patch foralternative means of payment).Payment must be received by the Company before expiry ofthe Exercise Period at the following address:Managing DirectorPumpkin Patch Limited439 East Tamaki RoadEast TamakiAUCKLANDwhat are the charges?Investors offered Shares under the Share Offer and EligibleSenior Managers offered Options under the Option Offer arenot required to pay any charges to Pumpkin Patch, or anyassociated person in relation to the Share Offer or the OptionOffer respectively other than, in the case of the Share Offer, theShare Application Price payable on application under theShare Offer, or in the case of the Option Offer, the ExercisePrice payable upon exercise of the Options.Total expenses for the Share Offer and the Option Offer areestimated to amount to $2,700,000, of which approximately$1,335,000 is to be paid by the Company and the remainderto be paid by or on behalf of the Selling Shareholders. Theseexpenses include lead management fees, legal andaccounting fees, advertising, printing and other costsincurred by Pumpkin Patch in making the Share Offer and theOption Offer.39

what returns will I get?Type of returnsSharesShareholders may receive returns from their Shares in two ways:• shareholders will be entitled to receive any dividends orother distributions paid or provided on their Shares byPumpkin Patch; and• shareholders may also benefit from the proceeds of the saleor other disposition of their Shares.Pumpkin Patch can give no assurance as to the amount of anyreturns, whether by way of dividends paid, proceeds of sale orin any other form.The ability of Pumpkin Patch to pay dividends, and the marketprice of the Shares, will depend on a number of factorsincluding economic conditions in New Zealand andelsewhere, the operational and financial performance ofPumpkin Patch, prevailing government policies and the levelsof interest rates or currency markets, as well as other factorsdiscussed in this Investment Statement under the section titled“What Are My Risks?”.The dividend policy of the Board of Pumpkin Patch is to targeta dividend payout ratio of approximately 50% of the net profitafter tax of the Company, subject to a number of factorsincluding the level of expenditure required to pursue growthopportunities and the Company’s objective to provideshareholders with appropriate returns. In each financial yearthe Directors expect to pay an interim dividend in April and afinal dividend in November. Pumpkin Patch can give noassurances as to the level or frequency of any future dividend(or other distribution, if any) payable on the Shares or as to thelevel of imputation credits, if any, attached to any dividends.Pumpkin Patch will be legally liable to pay any dividendsdeclared on the Shares. If a shareholder sells any Shares, thepurchaser will be legally liable to pay the purchase price ofthose Shares.Shareholders who sell Shares will receive returns from the sale(i.e. the price the buyer agrees to pay). Pumpkin Patch doesnot promise any amount of returns on a sale. Furthercomments on selling your Shares are set out in this InvestmentStatement under the section titled “How Do I Cash In MyInvestment?”.Pumpkin Patch does not promise or guarantee the return ofcapital or the amount of dividends, distributions or any otherreturns in respect of the Shares.OptionsOption Holders under the Option Offer are not entitled to anyreturns from the Options until they are converted to Shares,and in particular are not entitled to any dividends or otherdistributions, and are not entitled to dispose of their Optionsother than by having them converted to Shares upon exercise.Shares issued on conversion of Options will rank equally in allrespects with all other Shares on issue at the date on which theOptions are exercised, and will accordingly be entitled to thesame returns as described in relation to Shares above, exceptfor any dividend in respect of which the Record Date occurredprior to that date.40

Tax implications on returnsThis summary addresses certain New Zealand taxconsequences for New Zealand tax residents who arenatural persons. The summary is not a comprehensivedescription of all New Zealand tax considerations that may berelevant to a decision to purchase, sell or hold Shares orOptions. Therefore it is strongly recommended that allprospective investors obtain professional advice relevant totheir own particular circumstances.SharesDividends – Dividends paid to shareholders will be subject toNew Zealand withholding tax and final taxes but liability inrespect of such taxes may be reduced or satisfied to theextent the dividends have imputation credits attached.Sale of Shares – A profit on the sale of Shares could be subjectto New Zealand tax in certain circumstances. Gains on thesale of Shares by a New Zealand tax resident will be subject toNew Zealand tax if the seller is in the business of dealing inshares or if the Shares were acquired for the purpose of sale orif the Shares were sold as part of a profit-making undertakingor scheme.OptionsThere will be no tax implications until such time that theOptions are exercised. Upon exercise, the holder of the Optionwill be taxed on the difference between the Exercise Price andthe market price of the Shares at the time the Option wasexercised. Once an Option converts to Shares uponconversion, the same tax implications as described for Sharesabove will apply.what are my risks?Principal risksSharesThe principal risk to investors under the Share Offer is that theymay not be able to recoup their original investment or theymay not receive the returns they expect. This could happen fora number of reasons including that:• The price at which the Shares trade may be lower than theprice paid for them;• There is no ready market for Pumpkin Patch shares;• Pumpkin Patch does not have funds available to paydividends;• Pumpkin Patch becomes insolvent or does not havesufficient assets to pay returns to holders of the Shares;• The operational and financial performance of PumpkinPatch falls below expectation; and/or• The Company is placed in receivership or liquidation.The Shares will be fully paid ordinary shares and holders ofShares will have no liability to Pumpkin Patch for any furtherpayment in respect of the Shares.Risk factors exist that are both specific to Pumpkin Patch'sbusiness activities and of a general nature. These factors may,individually or in combination, affect the future operatingperformance of Pumpkin Patch and the value of a holder'sinvestment in Pumpkin Patch.Many factors will affect the price of the Shares includingeconomic conditions in New Zealand and elsewhere, theoperational and financial performance of Pumpkin Patch,changes in government policies and regulations in countrieswhere Pumpkin Patch operates and movements in interestrates or currency exchange rates.fashion created for kids41

An investor in Shares will also face the business risks arising fromthe assets and undertakings of the Pumpkin Patch groupof companies.OptionsThe principal risk to holders of Options under the Option Offeris that the Options cannot be exercised because the Shareprice does not meet the stipulated performance benchmark.This could happen for a number of reasons including those setout above in relation to Shares. In addition once a holder ofOptions has paid the Exercise Price and had the Optionsconverted to Shares, he or she is subject to the same risks asany shareholder, as set out generally in this section.Exchange RatesPumpkin Patch is exposed to movements in exchange rates (inparticular the exchange rates between the Australian dollar,the New Zealand dollar and the United States dollar) as:• In excess of 75% of Pumpkin Patch's stock inventory ispurchased internationally in United States dollars; and• The majority of Pumpkin Patch's stock is sold in currenciesother than New Zealand dollars with approximately 60% ofthe Company’s sales denominated in Australian dollars.Exchange rate movements affecting these currencies willimpact the financial performance and financial position ofPumpkin Patch to the extent the foreign exchange rate isnot hedged.System RisksPumpkin Patch's business is reliant on information technologysystems to manage stock, costs, stock despatch, a retaildatabase and retail sales. These computer based systems areessential to managing the business. Pumpkin Patch is exposedto a number of risks including:• Complete or partial failure or sabotage of the informationtechnology systems;• Inadequacy of information technology systems used byPumpkin Patch due to, among other things, failure to keeppace with developments;• Capacity of the existing systems to effectivelyaccommodate Pumpkin Patch's growth and businessdevelopment; and• Inability of separate systems to successfully integrate andcommunicate with each other.To mitigate some of these risks, Pumpkin Patch has disasterrecovery, system development and strategic plans in place.However, any failure or inadequacy in Pumpkin Patch's systemscould result in business interruption, the loss of customers,damaged reputation and weakening of Pumpkin Patch'scompetitive position and could therefore adversely affect thebusiness. No assurances can be given that Pumpkin Patch'sinformation technology systems will, in the future, be adequateto manage the business or that its disaster recovery andsystem development plans will be adequate.Public and Product LiabilityPumpkin Patch markets its products in several countries.Regulations relating to product quality and safety, and publicand product liability differs in each of these countries.Pumpkin Patch has procedures in place to ensure that relevantrequirements are reviewed and evaluated prior to supplyingproduct to these countries, and, where appropriate, insurancecover is obtained. There is a risk, however, that notwithstandingthese procedures Pumpkin Patch may be liable in respect of itsproduct supplied in New Zealand and internationally.42

fashion created for kidsKey PersonnelPumpkin Patch's performance is dependent on the efforts andabilities of its executive management (see page 17). Whileeach of these executives is party to an employment contract,under the terms of the contracts each executive is permittedto terminate the contract upon notice. Pumpkin Patch'ssuccess is also dependent on its ability to hire additionalpersonnel as necessary to meet its business needs. Whilstevery effort is made to retain key employees, plan forsuccession and recruit new personnel as the need arises, theloss of one or more key personnel may adversely affectPumpkin Patch's business and earnings or growth prospects.Reputation or Brand DamagePumpkin Patch's reputation and brand are valuablecomponents of its business. Pumpkin Patch has in placeprocedures to set relevant terms of trade with suppliers andbuying agents to ensure that the quality of the product ismaintained and also to deal with other activities of supplierswhich could affect the quality of the product or the reputationor brand of Pumpkin Patch. Notwithstanding these efforts, it ispossible that customers’ perceptions of a reduction in qualityin Pumpkin Patch products or a perceived association byPumpkin Patch with socially irresponsible behaviour or supplypractices may damage Pumpkin Patch's reputation or brandand thereby adversely affect its earnings or growth prospects.LogisticsPumpkin Patch is reliant on third parties to deliver its stock to itsdistribution centre in New Zealand and stores in variousmarkets around the world. Industrial relations at sea ports andairports in New Zealand and overseas are traditionally volatile.There is a risk that delivery of its product to the distributioncentre and stores may be delayed by reason of industrialdispute or other factors affecting the transport arrangements.This may adversely affect Pumpkin Patch's ability to deliverstock to the stores which may adversely affect business andearnings.Head OfficePumpkin Patch’s head office and distribution centre arelocated on the one site in Auckland from which all the businessoperations are managed and from which all stock isdistributed. Pumpkin Patch has in place procedures to ensurethat disruption to business in the event of a disaster affectingthe site is minimal and in particular holds general insuranceover the site. However, a major disaster affecting the site mayadversely affect the ability of Pumpkin Patch’s personnel tomanage the business and may adversely affect PumpkinPatch’s earnings and financial position.Fashion TrendsThe long term success of Pumpkin Patch depends on its abilityto interpret trends in the children's clothing market. While thishas been successful in the past there is a risk that new designswill not be well received by these markets resulting in PumpkinPatch having to clear inventory at a discount which wouldaffect its earnings.CompetitionThe Company may encounter higher levels of competitionthan it currently experiences. Any increase in the competitiveenvironment may have an adverse effect on Pumpkin Patch'sbusiness, earnings and growth.Third Party Retailer ArrangementsPumpkin Patch’s future strategy involves selling a greaterproportion of its products through arrangements with agents43

and distributors. There can be no assurance that thesearrangements once established, will continue. In the eventthat one or more of these arrangements ends or provesunsatisfactory, the Company would seek to negotiateacceptable alternative arrangements, or to open its ownstores.Management of Growth OpportunitiesPumpkin Patch is pursuing new initiatives, including expansionwithin existing markets and into new markets and newdistribution models. Pumpkin Patch expects that growth andincreased operating complexity will place additionaldemands on its systems and its personnel given the additionaltime and space needed to service the greater demand forproduct and to anticipate and meet the particularrequirements of new markets and new initiatives. If theCompany's systems, personnel or distribution networks areunable to keep pace with these demands, the business,operating results and financial condition of Pumpkin Patchmay be adversely affected.If new initiatives cannot be implemented satisfactorily, or onceimplemented, fail to perform satisfactorily, Pumpkin Patch mayneed to withdraw from an activity which may adversely affectearnings and assets.Pumpkin Patch may find that it cannot continue to expand itsbusiness in the New Zealand and Australian market. This mayresult in lower growth or decreased earnings from this market.Stock Market InvestmentThe price of the Shares on the NZX may rise or fall due tonumerous factors which may affect the market price ofPumpkin Patch Shares, including:• General economic conditions, including performance of theNew Zealand dollar on world markets, inflation rates andinterest rates;• Variations in the general market for listed stocks, in general,or for New Zealand stocks, in particular;• Changes to government policy, legislation or regulation; and• General operational and business risks.In particular, the share prices for many companies have inrecent times been subject to wide fluctuations, which in manycases may reflect a diverse range of non-company specificinfluences such as global hostilities, acts of terrorism and thegeneral state of the world economy. Such market fluctuationsmay adversely affect the market price of the Shares.No assurances can be made that Pumpkin Patch’s marketperformance will not be adversely affected by any suchmarket fluctuations or factors.Liquidity and Realisation RiskThere can be no guarantee that an active market in theShares will develop or that the price of the Shares will increase.There may be relatively few or many potential buyers or sellersof the Shares on NZX at any time. This may increase thevolatility of the market price of the Shares. It may also affectthe prevailing market price at which shareholders are able tosell their Shares. This may result in shareholders receiving amarket price for their Shares that is less or more than the pricethat shareholders paid.Investors should also seek professional guidance from theirstockbrokers, solicitors, accountants and other professionaladvisers before deciding whether to invest.44

consequences ofinsolvency and/orwinding upSharesIn the event of insolvency of Pumpkin Patch, shareholders willnot be liable to anyone for payment of any money. In thesecircumstances, Shareholders would not receive any return ofmoney in respect of shares until Pumpkin Patch had paid all itsother creditors, both secured and unsecured, including thecosts of liquidation or receivership. Any assets remaining afterthe payments of debt would be distributed to Pumpkin Patchshareholders in proportion to their respective shareholdingsand may not be sufficient to repay shareholders in full.OptionsIn the event of insolvency of Pumpkin Patch, Option Holderswould not be liable to anyone for payment of any money.Option Holders are not entitled to share in any assets of theCompany.can the investment bealtered?The full terms of the Share Offer including the amounts payableon application for the Shares, are set out in the Prospectus andin this Investment Statement. Those terms may be altered byPumpkin Patch by an amendment to the Prospectus, details ofwhich must be filed with the Registrar of Companies. However,those terms cannot be altered without investor consent afteran Application for Shares has been accepted. The terms ofthe Share Offer are described on pages 9 to 12.The rights attaching to the Shares are governed by theCompanies Act 1993 and the Constitution. The Constitutionmay be altered by a special resolution of shareholders, subjectto the rights of interest groups under the Companies Act 1993,or in certain circumstances by Court order. Section 117 of theCompanies Act 1993 restricts a company from taking anyaction which affects the rights attached to the Shares unlessthat action has been approved by a special resolution ofshareholders whose rights are affected by the action. Undercertain circumstances, a shareholder whose rights areaffected by a special resolution may require the Company topurchase its Shares.The full terms of the Option Offer (including the amountspayable on exercise) are set out in the Prospectus.Those terms may be altered by Pumpkin Patch by anamendment to the Prospectus, details of which must be filedwith the Registrar of Companies. However those terms cannotbe altered if they will substantially adversely affect thefinancial position of any Option Holder unless that OptionHolder consents to such alteration or the alteration isconsented to in writing by 75% of all then current OptionHolders.how do I cash in myinvestment?Under the Companies Act 1993, the Shares could be cancelledby Pumpkin Patch under a reduction of capital, share buybackor other form of capital reconstruction. Subject to this,neither the Shareholders, Pumpkin Patch, nor any other personfashion created for kids45

has any right to terminate, cancel, surrender, or otherwisemake or obtain payment of the returns from the Shares, or theOptions, other than as referred to in this Investment Statementunder the section titled “What Returns Will I Get?”.Shareholders may sell their Shares to another person. TheShares are transferable in accordance with Pumpkin Patch'sconstitution and all other relevant legal requirements.No charges are payable to Pumpkin Patch or any associatedperson of Pumpkin Patch on any such sale, although aShareholder may be liable to pay charges to other persons,such as brokerage fees.There is likely to be an established market for such sales.Application has been made to the NZX for permission to list theShares on the NZX and all requirements of the NZX relatingthereto that can be complied with on or before the date ofthe distribution of this Investment Statement have been dulycomplied with. However, the NZX accepts no responsibility forany statement in the Prospectus or this Investment Statement.It is expected that the Shares will be quoted on the NZX on orabout 9 June 2004.The Options offered under the Option Offer will not be listed onthe NZX and cannot be transferred or cashed in. OptionHolders wishing to cash in their Options will only be able to doso by exercising those Options in accordance with their termsand selling the Shares issued upon such exercise.who do I contact withenquiries about myinvestment?Enquiries about Shares can be directed to:The Pumpkin Patch Share OfferBK Registries Limited138 Tancred StreetP O Box 384, ASHBURTONPhone: (03) 308 8887Facsimile: (03) 308 1311Enquiries about the Option can be directed to:Managing DirectorPumpkin Patch Ltd439 East Tamaki RoadEast Tamaki, AUCKLANDPhone: (09) 274 7088Facsimile: (09) 274 1122is there anyone to whom Ican complain if I haveproblems with theinvestment?Complaints about Shares can be directed to:The Pumpkin Patch Share OfferBK Registries Limited138 Tancred StreetP O Box 384, ASHBURTONPhone: (03) 308 8887Facsimile: (03) 308 1311Complaints about the Options can be directed to:Managing DirectorPumpkin Patch Ltd439 East Tamaki RoadEast Tamaki, AUCKLANDPhone: (09) 274 7088Facsimile: (09) 274 1122There is no ombudsman to whom complaints can be made.46

fashion created for kidswhat other informationcan I obtain about thisinvestment?Further information about the Shares, Options and PumpkinPatch is contained or referred to in the Prospectus, whichcontains a copy of Pumpkin Patch's financial statements.Copies of the Prospectus, this Investment Statement, andPumpkin Patch's most recent financial statements, can beobtained free of charge by written request to:The Pumpkin Patch Share OfferBK Registries Limited138 Tancred StreetP O Box 384, ASHBURTONPhone: (03) 308 8887Facsimile: (03) 308 1311A copy of the Prospectus, Pumpkin Patch's financialstatements and other documents of or relating to PumpkinPatch and the Share Offer and the Option Offer are filed on apublic register and are available for public inspectionon the Companies Office public register at www.companies.govt.nz.Shareholders will receive periodic statutory reports, including anannual report containing Pumpkin Patch's annual auditedfinancial statements in respect of each financial year.Shareholders may request copies of Pumpkin Patch's mostrecent annual report, its most recent financial statements, theProspectus, this Investment Statement and a comparison ofactual returns against the prospective information in theProspectus and this Investment Statement by requesting theinformation in writing from:The Pumpkin Patch Share OfferBK Registries Limited138 Tancred StreetP O Box 384, ASHBURTONPhone: (03) 308 8887Facsimile: (03) 308 131147

other material mattersstatement as tosubstantial securityholdingsAs required by Listing Rule 7.1.15, Pumpkin Patch has, not earlierthan two months prior to the date of this Prospectus, made awritten request pursuant to sections 28 and 29 of the SecuritiesMarkets Act 1988 (as though Pumpkin Patch was listed) requiring allregistered and other holders of relevant interests (as defined in thatAct) of 5% or more of voting securities in Pumpkin Patch to providedisclosure of:• Where the relevant interest is beneficial ownership, theconsideration and other terms and conditions of anytransaction under which that interest was acquired before thedate of this Offer Document.No person who received a request for disclosure has failed toprovide the information requested.The following table shows, as at 7 April 2004, the holders of relevantinterests of 5% or more of the voting securities in Pumpkin Patchand the nature of their relevant interests and where the relevantinterest is beneficial ownership that was acquired within 2 yearsprior to 7 April 2004, the consideration and other terms andconditions of transaction(s) relating to such beneficial ownership.• Any relevant interest;• The nature of that relevant interest; andRelevant Interest Holder No of Nature of Interest heldsharesPerpetual Trustee Limited(as trustee of the Quadrant Trust)Wynyard Wood Trustee Services Ltdand Nigel P Smith (as trustees of theFeruza Trust)Wynyard Wood Trustee Services Ltdand Nigel P Smith (as trustees of theSimdec Trust)Maurice J Prendergast, Kerry DPrendergast and Stuart G Callender(as trustees of the Kezza Family Trust)Mark J Synnott, Sally R Synnott andThe Gale Trustee Co Limited (astrustees of The Opito Family Trust)Adam L Ryall, Judith M Ryall andStanley A Carwardine (as trustees ofthe Punchestown Family Trust)240,000 Legal and registered title. Beneficial interest in the shares is held by the unit holders of the QuadrantCapital Fund No 2 (being CSS Board, Fabemu Pty Limited (as trustee for Gibbon Superannuation Fund),Health Super Pty Limited (as trustee for Health Super Fund), ING Private Capital Pty Limited (as trusteefor ING Private Capital Fund 1), Perpetual Trustee Company Limited (as trustee for MacquarieAlternative Investment Trust), MLC Limited, National Australia Financial Management Limited, PSS Board,Unisuper, Westpac Banking Corporation and Westpac Staff Superannuation Fund).487,800 Legal and registered title. Beneficial interest in the shares is held by those beneficiaries (being unstatedrelatives of Setar Motani and trusts for the benefit of such relatives) in favour of whom the trustees mayexercise their discretion from time to time.148,000 Legal and registered title. Beneficial interest in the shares is held by those beneficiaries (being unstatedrelatives of Steven Sher and trusts for the benefit of such relatives) in favour of whom the trustees mayexercise their discretion from time to time.134,000 Legal and registered title. Beneficial interest in the shares is held by those beneficiaries (being unstatedrelatives of MJ and KD Prendergast and trusts for the benefit of such relatives) in favour of whom thetrustees may exercise their discretion from time to time.111,000 Legal and registered title. Beneficial interest in the shares is held by those beneficiaries (being unstatedrelatives of MJ and SR Synnott and trusts for the benefit of such relatives) in favour of whom the trusteesmay exercise their discretion from time to time.12,000 Legal and registered title. Beneficial interest in the shares is held by those beneficiaries (being unstatedrelatives of MJ and SR Synnott and trusts for the benefit of such relatives) in favour of whom the trusteesmay exercise their discretion from time to time.48

fashion created for kidsnotes1. The information on page 48 is stated as at 7 April 2004 and, as such,precedes (and so does not take account of):(i) the 100:1 share split to be carried out prior to listing;(ii) the re-designation, immediately prior to listing, of all Shares asordinary shares (ranking equally as to dividends and votingrights). Currently, the Shares are all Class A shares (which conferfull dividend and voting rights), except those held by the trusteesof the various employee share schemes which are acombination of Class B and Class C shares (and which typicallydo not confer voting rights and contain restrictions on theirtransferability and, in respect of the Class C shares, do not conferdividend rights);(iii) certain share transfers to occur between the shareholders asdescribed on page 50.(iv)the share repurchases to be carried out immediately followinglisting in accordance with the Repurchase Agreements, asdescribed in more detail on page 50;(v) the issue of shares to PPNL as the trustee of the DF7 scheme (tobe carried out on listing, as described in more detail on page52); and(vi)allocation of options under the Option Offer (to be carried outprior to listing, as described in more detail on page 54).2. The information on page 48 does not refer to the shares held by thetrustees of the various Pumpkin Patch employee share schemes assuch shares do not confer voting rights and so are not votingsecurities of Pumpkin Patch. As described further in Note 1(b)above, however, such shares will immediately prior to listing be redesignatedas ordinary shares, carrying full voting rights.49

share repurchasePumpkin Patch has entered into the Repurchase Agreementsunder which it has conditionally agreed to repurchase between28,770,400 and 49,027,200 shares from the Selling Shareholders(free of all liens, charges, mortgages, encumbrances and securityinterests of any kind) set out below:Minimum Number of Shares Maximum Number of SharesSelling Shareholder to be Repurchased to be RepurchasedPerpetual Trustees Limited as trustee of Quadrant Trust 7,041,903 12,000,000Wynyard Wood Trustee Services and Nigel P Smith as trustees of the Simdec Trust 7,415,828 12,637,200Wynyard Wood Trustee Services and Nigel P Smith as trustees of the Feruza Trust 14,312,669 24,390,000Total 28,770,400 49,027,200If:• All 81,027,200 of the Shares offered by Pumpkin Patch pursuantto the Share Offer are subscribed for the Company will (subjectto the conditions set out below) repurchase and cancel themaximum number of Shares from the Selling Shareholders as setout in the above table;• 60,770,399 or fewer of the Shares offered pursuant to the ShareOffer are subscribed for no Shares held by the SellingShareholders will be repurchased and the Company may, in itsdiscretion, refund any subscription proceeds received in excessof $40 million; and• More than 60,770,399 but fewer than 81,027,200 of the Sharesoffered pursuant to the Share Offer are subscribed for then theCompany will (subject to the conditions set out below)repurchase and cancel between the minimum and themaximum number of Shares from Selling Shareholders as set outin the table above.The agreement to repurchase Shares from the Selling Shareholdersis conditional upon successful completion of the Share Offer andallotment of Shares to investors. The Shares will be repurchasedand cancelled effective immediately upon the allotment of Sharesunder the Share Offer. The consideration for each Sharerepurchased will be the subscription proceeds of the Share Offerafter deducting certain expenses associated with the Share Offerand the Option Offer, divided by the total number of Shares issuedpursuant to the Share Offer. This consideration will be paid to theSelling Shareholders immediately following allotment of the Sharesunder the Share Offer, registration of the transfer of the SellingShareholders' shares to Pumpkin Patch and cancellation of thoseshares.Prior to listing, certain transfers of Shares have occurred betweenthe shareholders. The Simdec Trust has received 700,000 Sharesfrom the Opito Family Trust and 4,537,200 shares from the trusteesof the employee share schemes (3 million of which weretransferred for and on behalf of Maurice Prendergast, and1,537,200 of which were transferred for and on behalf of ChrissyConyngham). The Simdec Trust is obliged to pay an amount forthose Shares equal to the repurchase price per Share it will receiveunder the Repurchase Agreements.To give effect to the repurchase of shares from the SellingShareholders, Pumpkin Patch will secure the approval of all EntitledPersons (as that term is defined in the Companies Act 1993) to:• Repurchase shares from the Selling Shareholders pursuant tosection 107(1)(c) of the Companies Act 1993; and• Repurchase shares from Wynyard Wood Trustee Services Limitedand Nigel Philip Smith as trustees of the Simdec Trust (as one ofthe Selling Shareholders) notwithstanding that MauricePrendergast, Chrissy Conyngham and Sally Synnott as Directors,have relevant interests in such repurchase for the purposes ofsections 140 and 141 of the Companies Act 1993 pursuant tosection 107(3) of that Act.The Share Application Form is expressly stated to constitute anirrevocable and binding agreement on the part of each applicantunder the Share Offer to approve the repurchase of shares fromthe Selling Shareholders for the purposes of sections 107(1)(c) and107(3) of the Companies Act 1993.As a further prerequisite to the repurchase, the Directors ofPumpkin Patch must be satisfied on reasonable grounds thatPumpkin Patch will, immediately after the repurchase, satisfy thesolvency test prescribed by the Companies Act 1993 and, pursuantto section 108(2) of that Act, sign a certificate to that effect.securities act exemptionsPumpkin Patch has applied for and has been granted exemptionsfrom Regulation 12(1)(a) of the Securities Regulations 1983 andfrom clauses 1(4), 8(5), 13(a)(iii) and 10(1)(c) of the First Schedule tothose Regulations.Regulation 12The Securities Commission has granted an exemption fromRegulation 12(1)(a) of the Securities Regulations 1983 to allowPumpkin Patch to include in the Investment Statement summaryhistorical financial statements showing the amount of total assetsheld by Pumpkin Patch divided into current and fixed assets.50

Clauses 1(4) and 13(a)(iii) of Schedule 1The Securities Commission has granted an exemption from clauses1(4) and 13(a)(iii) of Schedule 1 to the Securities Regulations 1983.The exemptions from clause 1(4) and 13(a)(iii) are necessary asPumpkin Patch is using a book build process to determine the FinalPrice for Shares and is using that Final Price as the Exercise Price forOptions, rather than specifying a fixed dollar value for thesubscription price for the Shares and the Exercise Price of theOptions issued pursuant to the Share Offer and the Option Offerrespectively. The Prospectus instead states the Indicative PriceRange and the Company’s right to fix the Final Price outside theIndicative Price Range; describes how investors can ascertain theFinal Price, the procedures for holding subscription moneys, howover-subscriptions will be treated and the procedure for makingrefunds; that the Company has applied to the NZX for permissionto list the Shares.Clause 8(5) of Schedule 1The Securities Commission has granted an exemption from clause8(5) of Schedule 1 to the Securities Regulations 1983. This exemptsPumpkin Patch from the necessity to provide historical summaryfinancial statements of the net tangible asset backing per Sharecalculated on the basis that the subscription money has beenreceived. Given that the Final Price of the Shares will not bedetermined before the date of this Prospectus, it is not possible tocomply with Clause 8(5). This Prospectus instead shows theinformation required by clause 8(5) calculated as if the number ofShares on which the assumptions are based are calculated byreference to the maximum number of specified securities thatwould be allotted if the subscription price of the Shares was at thehigh point, at the mid point and at the low point of the indicativeprice range stated in the Prospectus.Clause 10(1)(c) of Schedule 1The Securities Commission has granted an exemption from Clause10(1)(c) of Schedule 1. This exempts Pumpkin Patch from thenecessity to provide a prospective statement of cash flowsexpected during the year commencing on the date theProspectus is delivered to the Registrar of Companies in registrableform.The Prospectus instead contains consolidated prospectivestatements of cashflows for Pumpkin Patch and its subsidiaries ineach of the following periods:• the period of 12 months commencing on 1 August 2003 andending on the close of 31 July 2004; and• the period of 12 months commencing on 1 August 2004 andending on the close of 31 July 2005.The financial statements for Pumpkin Patch for the 12 monthperiods commencing on 1 August 2003 and 1 August 2004 willinclude a comparison of the actual cashflows for the same periodsas stated in the Prospectus, in the manner required underparagraph 5.4 of the Financial Reporting Standard No. 9 (as ifthose statements were required to comply with that standard).standstill agreementsPumpkin Patch and the following shareholders:• Perpetual Trustee Limited as trustee of the Quadrant Trust;• Wynyard Wood Trustee Services Limited and Nigel Philip Smith astrustees of the Simdec Trust;• Wynyard Wood Trustee Services Limited and Nigel Philip Smith astrustees of the Feruza Trust;• Maurice John Prendergast, Kerry Donna Prendergast and StuartGavin Callender as trustees of the Kezza Family Trust;• Adam Lindsay Gordon Ryall, Judith Mabel Ryall and StanleyAlexander Carwardine as trustees of the Punchestown FamilyTrust;• Mark Joseph Synnott, Sally Rene Synnott and the Gale TrusteeCompany Limited as trustees of the Opito Family Trust; and• Gregory John Muir, Debra Jane Muir and Geoffrey Alistair Lawrieas trustees of the Muir Trust;have entered into a deed in favour of the Lead Manager wherebythose shareholders have agreed that, for a minimum period of 12months from the date on which Pumpkin Patch is quoted on theNZX, they will not:• Dispose of, or agree or offer to dispose of, the Shares they hold;• Create, or agree or offer to create, any security interest(including the sale or purchase of options or similar financialinstruments) in their Shares; and/or• Do, or omit to do, any act or omission which would have theeffect of transferring effective ownership or control of theirShares.If the shareholder takes any of the steps set out above:• Pumpkin Patch will take such reasonable steps that are within itscontrol to give effect to the terms of the deed or to rectify thematter giving rise to the breach;• Pumpkin Patch will (to the extent reasonably permitted by law)refuse to acknowledge, deal with, accept or register any sale,assignment, transfer or conversion of any of relevant Shares;• Pumpkin Patch, for as long as the breach continues, will not payany dividends or distributions to any person in respect of therelevant Shares and will not count any votes cast in respect ofthose Shares, in any shareholder resolution; and• The relevant shareholder acknowledges that it will cease to beentitled to any dividends, distributions or voting rights in respectof its Shares while the breach continues.employee share schemerestructuringThe Company has established a number of employee shareschemes which have allowed employees (including executiveDirectors) to purchase shares in the Company. The Company hascommitted to restructure these schemes, such restructuring takingeffect prior to or upon the allotment of Shares under the ShareOffer. The effect of the restructuring will be:• All shares allocated under these schemes prior to listing will befully paid, and the Company will have provided interest freeloans in aggregate of $7,202,861 to pay for any Shares underthese schemes not already purchased by the relevantemployee in cash;• All shares allocated under these schemes will be ordinary fullypaid shares in the Company ranking equally in all respects withall other shares;51

• Pumpkin Patch must pay grossed up bonuses to employees (in somecases over three years, and is some cases payable immediately) toenable the employees (including executive directors) to fully orsubstantially discharge the amount of these loans and the full costof this has been fully provided for in the 31 July 2004 forecastfinancial information.• Approximately one third of each employee's shares issued under theemployee share schemes will be held by a trustee as security for thepayment of the loans owing to the Company, and will typically bereleased progressively over three years to employees as their loansare progressively discharged. Different arrangements are in placefor the executive Directors, Maurice Prendergast, Greg Muir andChrissy Conyngham. Greg Muir will have 512,000 shares held inescrow and progressively released over three years. MauricePrendergast will procure the provision to the trustees of the schemeof 1,500,000 Shares which will be held (by way of security) andprogressively released over three years. Chrissy Conyngham willhave 570,000 Shares held in escrow and progressively released overthree years.DF7 share schemeThe Company has established an Employee Share Scheme undersection DF7 of the Income Tax Act 1994. Under this Scheme PumpkinPatch has issued 2,000,000 Shares to Pumpkin Patch Nominees Limited(the "Trustee") and intends to procure the Trustee to offer those Sharesto employees as soon as possible (taking into account certainpractical matters) after Pumpkin Patch is quoted on the NZX.It is intended that Shares will be offered to employees at a price 25%less than the Final Price for investors (other than institutional orprofessional investors) determined under the Share Offer. Allpermanent employees in New Zealand who have been with theCompany for at least six months and who work 30 hours or more perweek (including Directors) will be eligible to purchase $2,340 of Sharesat this discounted rate. All permanent employees in New Zealandwho have been with the Company for at least six months and whowork between 10 and 30 hours per week (including Directors) will beeligible to subscribe for up to $1,170 worth of Shares at thediscounted rate.Pumpkin Patch will, prior to listing, give the Trustee an interest free loanfor the aggregate purchase price to enable it to purchase the Sharesissued to it for this scheme. Pumpkin Patch has agreed that the Trusteeis, in turn, entitled to novate a portion of that loan to individualemployees to assist them to purchase Shares under the DF7Share Scheme.Pumpkin Patch intends to implement similar schemes for its employeesin the United Kingdom and in Australia within the next 12 to 24 monthsand to this end has issued the appropriate number of Shares (andmade the associated loan) to the Trustee and has made provision foradditional Shares which may be offered to these employees.Offers of Shares under the DF7 Share Scheme are not required tocomply with the Securities Act 1978 and are not part of either theShare Offer or the Option Offer.52

summary of option offer... employees onlyoffer descriptionPumpkin Patch is offering a total of 2,274,000 Options topurchase Shares pursuant to the terms of the Pumpkin Patch2004 Share Option Scheme (the “Scheme”). Each Option willentitle the holder to purchase one Share on the terms andconditions of the Scheme which have been set out in full onpages 93 to 98 of the Prospectus.Assuming all offers of Options are accepted, the Company willhave on issue 2,274,000 Options, which may convert into2,274,000 Shares in the Company no earlier than 9 June 2007.On the basis of the post listing shareholdings set out in thetable on page 13 and assuming all Options convert intoShares, this would represent 1.35% of the Company.The Options will only be offered to selected Senior Managers.Each Senior Manager selected to participate in the OptionOffer will receive, together with the Prospectus and thisInvestment Statement, an individual offer specifying thenumber of Options being offered to that Senior Manager.Included in the Option Offer will be an offer of 870,000 Optionsto executive Directors.application for optionsThere is no application fee or other sum payable for Optionsoffered under the Option Offer. Eligible Senior Managerswishing to accept the Option Offer need to complete theOption Application Form personally provided to them in fulland return it to the address below no later than 5.00pm on the12th Business Day after receipt of their individual offer or suchlater date as may be advised by Pumpkin Patch in writing. TheOption Application Form contains an undertaking to complywith the terms and conditions of the Scheme and must besigned before a witness.Eligible Senior Managers will be notified of the number ofOptions being offered to them. Eligible Senior Managerswishing to apply for Options pursuant to the Option Offer mustapply for the full number of Options offered to them.The completed Option Application Form must be returned to:Managing DirectorPumpkin Patch Limited439 East Tamaki RoadEast TamakiAucklandNEW ZEALANDallocation of optionsOnce Pumpkin Patch receives a completed OptionApplication Form from an Eligible Senior Manager it will:• Grant to that Eligible Senior Manager the number of Optionsapplied for forthwith; and• Issue an Option Certificate in the name of that EligibleSenior Manager by 12 June 2004.exercise of optionsAn Exercise Price will apply for Option Holders wishing toexercise their Options. The Exercise Price will be equivalent tothe Final Price per Share for investors other than institutionaland professional investors participating in the book buildprocess as determined pursuant to the Share Offer.The Options can only be exercised within an exercise periodcommencing on 9 June 2007 and ending on 9 June 2009(“Exercise Period”) (although the Company may permit earlierexercise in certain extraordinary circumstances). The Optionswill lapse if they are not exercised by the end of the ExercisePeriod or if certain other circumstances exist (these are set outin full in the Prospectus).In addition the Options are not able to be exercised unlesscertain conditions are met. In particular Shares must havebeen quoted on the NZX for at least one day in the periodprior to the commencement of the Exercise Period, and theMarket Price at Exercise Date must exceed the BenchmarkPrice set by Pumpkin Patch. The Benchmark Price has been54

fashion created for kidsdetermined by the Company in order to encourage EligibleSenior Managers to add to shareholder value and will becalculated taking into account the return investors requiregiven the risk associated with an equity investment in theCompany less the expected returns from dividends. Theconditions are set out in full in the Prospectus.Option Holders may exercise their Options by giving a writtennotice to Pumpkin Patch detailing the Options to be exercised.This notice must be accompanied by:• A cheque made payable to Pumpkin Patch in payment ofthe Exercise Price for the Options exercised under thatnotice (unless the Option Holder has made priorarrangements with Pumpkin Patch for alternative means ofpayment); and• The Option Certificate issued in respect of the Options.Option Holders may exercise either all or part of their Optionsbut the minimum number of Options that may be exercised onany one occasion is the lesser of 1,000 Options or the balanceof Options then remaining (where an Option Holder exercisesonly some of their Options, Pumpkin Patch will issue a newOption Certificate for the balance of Options remaining).minimum applicationApplications must be for the total number of Options offered tothe selected Senior Manager.allocation of sharesEach Option will, upon exercise, convert into one Shareranking equally in all respects with all other Shares on issue atthe date on which it is exercised, except for any dividend inrespect of which the Record Date occurred prior to the dateof exercise. Pumpkin Patch will issue, transfer or procure thetransfer of the appropriate number of Shares to the OptionHolder within 5 Business Days of receiving payment of therelevant Exercise Price.listingPumpkin Patch does not intend to list the Options on the NZX.Application has been made to NZX for permission to list theShares. All requirements of the NZX relating to listing the Sharesthat can be complied with on or before the date of thisInvestment Statement have been duly complied with.However, the NZX accepts no responsibility for any statement inthis Investment Statement.New Zealand andAustralian-only optionofferThe Option Offer described in this section is an offer to EligibleSenior Managers in New Zealand and Australia. This InvestmentStatement is intended for use only in connection with theOption Offer in New Zealand and is not to be sent or given toany person outside New Zealand in any circumstances inwhich the Offer or use of this Investment Statement wouldbe unlawful.Notwithstanding this, the Company intends to make offers ofOptions to certain Eligible Senior Managers in Australia. TheProspectus will be distributed to those available EligibleSenior Managers and this Investment Statement may bedistributed with the Prospectus. The Company intends tomake offers of Options to Eligible Senior Managementgenerally specified in “offer description” above who reside inother countries, predominantly the United Kingdom.use of proceedsPumpkin Patch will not receive any proceeds from theallotment of the Options under the Option Offer but willreceive proceeds from the issue of Shares upon exercise of theOptions. It is intended that these proceeds will be used forgeneral business purposes of Pumpkin Patch, however theymay be applied to any undertaking in which Pumpkin Patchmay lawfully engage.55

application instructions for option offer... employees onlygeneral1. Applications for Options must be made on the OptionApplication Form included with and forming part of this OfferDocument, and in accordance with the Application Termsset out on the back of the Option Application Form.2. Completed Option Application Forms must be sent so as tobe received by Pumpkin Patch at:Managing DirectorPumpkin Patch Limited439 East Tamaki RoadEast TamakiAUCKLANDno later than 5.00pm on the 12th Business Day followingreceipt of an individual offer of Options pursuant to theOption Offer.3. An Application will constitute an irrevocable acceptanceby the applicant to acquire the number of Options offeredto the applicant by Pumpkin Patch on the terms andconditions set out in this Offer Document and on the OptionApplication Form.4. If your Option Application Form is not completed correctly,your Application may still be treated as valid. TheCompany’s decision as to whether to treat your applicationas valid, and how to construe, amend or complete yourApplication Form, shall be final.5. Further details of how to apply are set out in the followingsection titled “How to Apply”.how to applyYou should read this Offer Document carefully beforecompleting the Option Application Form.Completing the Application FormPlease complete all relevant sections of the Option ApplicationForm using CAPITAL BLOCK LETTERS.Insert DetailsThe numbers shown below correspond to the relevant section ofthe application form.1 Enter your FULL NAME. You should refer to the table on theback of the application form in this Offer Document, underthe heading “Correct form of registrable names” for thecorrect form of name that can be registered. Applicationsusing the wrong form of name may be rejected for thatreason.2 Enter your POSTAL ADDRESS for all correspondence. Allcommunications to you from Pumpkin Patch will be mailedto you at the address as shown.3 Please let us know your TELEPHONE NUMBER(S) and contactname in case we need to contact you in relation toyour application.4 You will have received an individual offer specifying theNUMBER OF OPTIONS offered to you pursuant to the OptionOffer. Applications must be for this number of Options.5 Please enter your IRD NUMBER. Pumpkin Patch is required bylaw to hold it. Note that your application may be rejected ifyour IRD number is not entered. Indicate by ticking theappropriate box whether or not you hold a residentwithholding tax exemption certificate. If you hold acertificate, Pumpkin Patch will not be obliged to deductresident withholding tax on dividends if it has seen therelevant certificate.6 Read the declaration carefully and SIGN the applicationform before a witness. The witness will be required to sign theapplication form and enter his or her full name and address.Closing DateApplications must be received by no later than 5.00pm NewZealand time on 12th Business Day following receipt of anindividual offer of Options unless this date is varied byPumpkin Patch.DeliveryApplications cannot be revoked or withdrawn.Application forms must be mailed or delivered to Pumpkin Patch(see address below) to arrive by 5.00pm on the 12th BusinessDay following receipt of an individual offer of Options pursuantto the Option Offer.Please lodge your application AS SOON AS POSSIBLE.56

glossary of termsTermDefinitionAllocation and Allotment Date Between 8 June and 12 June 2004Assumed Annual DividendBenchmark PriceBusiness DayClosing DateConstitutionCost of EquityDirectorsEBITEBITDAEligible Senior ManagerExercise PeriodExercise PriceFinal PriceFor each of the years commencing 9 June 2004, 9 June 2005 and 9 June 2006, the assumed dividendwhich will be paid by the Company in each of those years (which will be determined by the Company inits discretion after taking such independent advice (if any) as it considers desirable, based on theexpected dividend in those three years)The price set by the Company after taking such independent advice (if any) as it considers desirableand calculated in accordance with the following formula: Exercise Price x [(1+ Cost of Equity) – AssumedAnnual Dividend for the year commencing 9 June 2004] x [(1+ Cost of Equity) – Assumed Annual Dividend forthe year commencing 9 June 2005] x [(1+ Cost of Equity) – Assumed Annual Dividend for the yearcommencing 9 June 2006]Day on which the NZX is open for tradingFor the Share Offer 4 June 2004. For the Option Offer the 15th Business Day following receipt of anindividual offer of OptionsThe constitution of Pumpkin Patch to be adopted prior to listingA factor, selected by the Company in its discretion after taking such independent advice (if any) as itconsiders desirable and calculated in accordance with the following formula:Where: Re =Rf(1-T1) +ße (PTMRP)Rf = Risk free rate of return, based on the yield on New Zealand government stock.T1 = New Zealand investors' effective tax rate on interest and dividend income relative to capital gains.ße = Equity beta, a measure of the volatility of returns from the Company compared to returns fromthe investment market.PTMRP = Post tax market risk premium, or expected return, measured after New Zealand investor taxes,on the market portfolio of equity investments, derived from PricewaterhouseCoopers research on NewZealand equity market returnsMembers of the Board of Directors of Pumpkin PatchEarnings Before Interest and TaxEarnings Before Interest Tax Depreciation and AmortisationA Senior Manager that has been offered Options pursuant to the Option OfferThe period during which Options issued pursuant to the Option Offer can be exercised, being theperiod between 9 June 2007 and 9 June 2009The Exercise Price for Options issued pursuant to the Option Offer, which shall be the Final Price forinvestors other than institutional and professional investors participating in the book buildFor institutional and professional investors participating in the book build - the price set by the Companyon or prior to 8 June 2004 and payable by institutional and professional investors participating in the bookbuild under the Share Offer in respect of a Share; For other investors - the price set by the Company on orprior to 8 June 2004 and payable by investors other than investors who are institutional and professionalinvestors participating in the book build under the Share Offer in respect of a ShareIndicative Price Range The indicative price range per Share set out on page 9Investment Statement or Offer DocumentLead ManagerMarket Price at Exercise DateThis Investment StatementGoldman Sachs JBWere (NZ) LimitedVolume weighted average selling price per Share traded on the NZX during the 10 Business Daysprior to exercise (adjusted as Pumpkin Patch may determine in its sole discretion to take accountof the Shares going ex-dividend and to ensure that such weighted average does not take intoaccount any purchase or sale of Shares by an Option Holder)57

fashion created for kidsNZXOpening DateOptionOption ApplicationOption Application FormOption HolderOption OfferPrimary Market ParticipantPrincipal OfficerNew Zealand Exchange LimitedFor the Share Offer 17 May 2004 For the Option Offer, upon receipt by an Eligible Senior Managerof an individual offer of Options pursuant to the Option Offer, being approximately 17 May 2004An option to acquire one Share issued pursuant to the Option OfferAn application by an Eligible Senior Manager under the Option OfferOption Application form provided by Pumpkin Patch to Eligable Senior ManagersAn Eligible Senior Manager who has accepted an offer of Options under the Option OfferThe offer of Options to Eligible Senior Managers under this Investment StatementAny company, firm, organisation or corporation or any other business entity designated or approved as aPrimary Market Participant from time to time by the NZX pursuant to Rule 3.18 of the NZX Participant RulesA Director or any person in accordance with whose directions or instructions the Directors areaccustomed to act (except any person in accordance with whose directions or instructions any or all ofthe Directors are accustomed to act by reason only that the Directors act on advice given by him or hersolely in a professional capacity) as more particularly defined in the Securities Act 1978Prospectus The Prospectus issued in respect of the Share Offer and the Option Offer dated 14 May 2004Pumpkin Patch or the CompanyRepurchase AgreementsSchemeSelling ShareholdersSenior ManagerShare ApplicationShare Application FormShare OfferSharesSKUSubscriptionSubsidiariesPumpkin Patch LimitedThe agreements between the Company and the Selling Shareholders to repurchase certain Shares, asset out on page 50 of this Investment StatementPumpkin Patch 2004 Share Option SchemePerpetual Trustees Limited as Trustee of Quadrant Capital Fund No 2 and Wynyard Wood Trustee ServicesNigel Philip Smith as Trustees of the Simdec Trust and the Feruza TrustA Director or a senior manager of Pumpkin Patch or any of its SubsidiariesAn application by an investor for Shares under the Share OfferShare Application form on page 61 of this Investment StatementThe offer of Shares under this Investment StatementOrdinary fully paid shares in Pumpkin PatchStock Keeping UnitSubscription for Shares under the Share OfferPumpkin Patch (Australia) Pty Limited;Pumpkin Patch Originals Limited;Pumpkin Patch Limited (U.K.);Studio Works Limited;The Catalogue Studio Pty Limited;Torquay Enterprises Limited.58

application instructions for share offergeneral1. Applications to subscribe for the Shares must be made onthe Share Application Form included with and formingpart of this Investment Statement, and in accordance withthe Application Terms set out on the back of the ShareApplication Form.2. Applications must be accompanied by payment in full forthe Shares. Cheques should be made payable to “ThePumpkin Patch Share Offer”. Cheques must not be postdated.3. Completed Share Application Forms must be sent so as tobe received by BK Registries Limited at:The Pumpkin Patch Share OfferC/- BK Registries Limited138 Tancred StreetP.O. Box 384ASHBURTONno later than 5.00pm on 4 June 2004.4. Investors may also lodge applications with:Any Primary Market Participant orGoldman Sachs JBWere (NZ) LimitedLevel 38, Vero Centre48 Shortland StreetPO Box 887AUCKLANDin time to enable forwarding to the Registrar prior to5:00pm on 4 June 2004.7. Money received in respect of applications that aredeclined in whole or in part will be refunded in whole or inpart (as the case may be). Refunds will be posted withinfive business days after allocation of Shares to successfulapplicants. Interest will not be paid on any applicationmoney refunded to applicants.8. None of Pumpkin Patch, the Lead Manager, or any of theirrespective officers, employees, or advisors accepts anyliability or responsibility should any person attempt to sellor otherwise deal with Shares before the statementsconfirming allotment are received by the applicants andthe “delayed delivery” designation is lifted.9. If your Share Application Form is not completed correctly, or ifthe accompanying payment is for the wrong amount, yourApplication may still be treated as valid. The Company'sdecision as to whether to treat your application as valid, andhow to construe, amend or complete your Share ApplicationForm, shall be final. The Company’s decision on the numberof Shares to be allotted to you shall also be final. Applicantswill not, however, be treated as having applied to purchasemore Shares than the number indicated on the ShareApplication Form, or more Shares than those for whichpayment has been made.10. The Company reserves the right to refuse any application inwhole or in part, without giving any reason.11. Further details of how to apply are set out in the followingsection titled “How to Apply”.5. Applications for Shares may be lodged from the openingdate of the Share Offer on 17 May 2004. The Share Offerwill remain open until 4 June 2004 or such later date as theDirectors may determine.6. An Application will constitute an irrevocable offer by theapplicant to acquire the number of Shares specified onthe Share Application Form (or such lesser number asPumpkin Patch and the Lead Manager may determine)on the terms and conditions set out in this Offer Documentand on the Share Application Form.59

how to applyYou should read this Offer Document carefully before completingthe Share Application Form.1. Completing the Share Application FormPlease complete all relevant sections of the Share ApplicationForm using CAPITAL BLOCK LETTERS.2. Insert DetailsThe numbers shown below correspond to the relevant section ofthe Share Application Form.1. Enter your FULL NAME. You should refer to the table on the backof the Share Application Form in this Investment Statement,under the heading “Correct form of registrable names” for thecorrect form of name that can be registered. Applicationsusing the wrong form of name may be rejected for that reason.2. Enter your POSTAL ADDRESS for all correspondence. Allcommunications to you from Pumpkin Patch (statements ofshareholding, dividend cheques, periodic reports,correspondence, etc) will be mailed to the person(s) at theaddress as shown. For joint applicants, only one address is to beentered. Up to three applicants may apply jointly.3. Please let us know your TELEPHONE NUMBER(S) and contactname in case we need to contact you in relation to yourapplication.4. Insert the DOLLAR VALUE OF SHARES applied for. Theapplication must be for a minimum of $5,000 and thereafter inincrements of $500.5. If you wish any dividends to be credited directly to an accountwith your bank, ensure that appropriate details are entered.6. Please enter your IRD NUMBER. Pumpkin Patch is required bylaw to hold it. For joint applicants, please fill in the IRD numberof the first named applicant. Note that your application maybe rejected if your IRD number is not entered. Indicate byticking the appropriate box whether or not you hold a residentwithholding tax exemption certificate. If you hold a certificate,Pumpkin Patch will not be obliged to deduct residentwithholding tax on dividends if it has seen the relevantcertificate.7. If you currently have a BK Registries holder number and/or aCommon Shareholder number, please enter it.8. Read the declaration carefully and SIGN the Share ApplicationForm. It must be signed by applicants personally. Companiesor other bodies corporate must sign in the same way as theywould sign a formal deed or other formal legal document.Applications may, in either case, be executed by an attorney. Ifyour Share Application Form is signed by an attorney, the powerof attorney document is not required to be lodged, but theattorney must complete the certificate at the bottom of theShare Application Form. Joint applicants must all sign the ShareApplication Form.3. PaymentPayment must accompany each Share Application Form.Payment must be made by a cheque drawn on a New Zealandbank, for New Zealand dollars, for value immediately. Post-datedcheques will not be accepted. Please ensure that the total of thecheque equals the amount payable.Make the cheque payable to “The Pumpkin Patch Share Offer”and cross it “Not Transferable”.Sufficient cleared funds should be held in your account, ascheques returned unpaid are likely to result in your applicationbeing rejected or your allocation being cancelled. Staple yourcheque to the Share Application Form.Institutional investors or professional investors that are successfullyallocated Shares under the book build process must settle theirallocation prior to 5:00pm on Tuesday 8 June 2004 via Austraclearor in cleared funds under notification to the Lead Manager.4. Minimum ApplicationsApplications must be for a minimum of $5,000 and thereafter inincrements of $500.5. Closing DateApplications must be received by no later than 5.00pm NewZealand time on 4 June 2004 unless this date is varied by PumpkinPatch. Pumpkin Patch has the right to extend the offer period.6. DeliveryApplications cannot be revoked or withdrawn.Share Application Forms must be mailed or delivered (withpayment) to “The Pumpkin Patch Share Offer” c/- BK RegistriesLimited (see address below) to arrive on or before 4 June 2004.You may lodge your application with any Primary MarketParticipant or Goldman Sachs JBWere (NZ) Limited (as LeadManager) or any other channel approved by the NZX, but mustdeliver it in time to enable the application to be forwarded to BKRegistries Limited before the relevant closing time.Please lodge your application AS SOON AS POSSIBLE.60

directory and advisorsDirectorsChrissy ConynghamJane FreemanDavid JacksonGreg Muir (Executive Chairman)Maurice PrendergastSally SynnottThe Directors of PumpkinPatchcan be contacted:c/- Pumpkin Patch LimitedPrivate Bag 94-310PakurangaAUCKLANDRegistered OfficePumpkin Patch Limited439 East Tamaki RoadEast TamakiAUCKLANDShare RegistrarBK Registries Limited138 Tancred StreetPO Box 384ASHBURTONTelephone: 03 308 8887Facsimile: 03 308 1311Email:info@bkregistries.co.nzLead ManagerGoldman Sachs JBWere(NZ) LimitedFree Phone: 0800 555 555AucklandLevel 38Vero Centre48 Shortland StreetPO Box 887AUCKLANDTelephone: 09 357 3200Facsimile: 09 357 3248WellingtonLevel 8IAG Tower1 Willis StreetWELLINGTONTelephone: 04 471 6260Facsimile: 04 471 6261ChristchurchLevel 1HSBC House141 Cambridge TerraceCHRISTCHURCHTelephone: 03 477 8800Facsimile: 03 364 5611SolicitorsSimpson GriersonSimpson Grierson Building92-96 Albert StreetPrivate Bag 92518Wellesley StreetAUCKLANDTelephone: 09 358 2222Facsimile: 09 307 0331AuditorsPricewaterhouseCoopersPricewaterhouseCoopersTower188 Quay StreetPrivate Bag 92126AUCKLANDTelephone: 09 355 8000Facsimile: 09 355 8001