prospectus for - Pumpkin Patch investor relations

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

egistrationThis Prospectus is dated 14 May 2004. A copy of this Prospectus signed by or on behalf of the Directors ofPumpkin Patch Limited (“Pumpkin Patch” or the “Company”) and having endorsed thereon or attachedthereto all documents, information, certificates and other matters required to be so endorsed or attached bysection 41 of the Securities Act 1978, has been delivered to the Registrar of Companies for registration undersection 42 of the Securities Act 1978.investment statementAn investment statement for the purposes of the Securities Regulations 1983 has been prepared in connectionwith offers of securities in New Zealand which are contained in this Prospectus. Copies of the investmentstatement (which includes application forms for the offers) can be obtained from Goldman Sachs JBWere (NZ)Limited (see inside back cover for contact details) or selected Primary Market Participants.key datesShare OfferEventKey DateOpening 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 finaldividend in approximately 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 maychange correspondingly).Option OfferDirectors and senior managers with Pumpkin Patch and its Subsidiaries (together “Senior Managers”) selectedto participate in the Option Offer will receive individual offers of Options in the Company. Public investors arenot being offered Options. The Senior Managers who receive Option Offers will be advised of the number ofOptions for which they will be entitled to apply. This Option Offer will be on the basis of the following timetable:EventOpening Date of the OfferClosing Date of the OfferKey DateUpon receipt of the individual offer, expected to be made on or about17 May 200412 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 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.

table of contentsInvestment overview 2Description of the company’s business 5The offering 14Shareholding structure 20Directors & senior management 22Corporate governance & business strategy 25Risk and special trade factors 27Financial information 33Prospective financial information 36Group financial statements 44Summary historical financial statements 67Statutory and other information 73Glossary of certain terms 86Application instructions 89Rules relating to the Pumpkin Patch 2004share option scheme 93Directory and advisersInside back cover1

investment overview2

strong Australasian and growing international brandEstablished in New Zealand in 1990, Pumpkin Patch has built an enviable reputation for fashionablechildrenswear throughout New Zealand and Australia. Pumpkin Patch is also increasingly recognisedinternationally.Pumpkin Patch has Company-owned retail stores in New Zealand, Australia and the United Kingdom and it hasdistribution agreements in Ireland and the Middle East. The Company also sells in high profile department storesin Australia and the United States, 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 NewZealand. The Pumpkin Patch strategy is to deliver continued profit growth from its Australasian expansion overthe next two to three years, while continuing to develop markets further afield.management with extensive industry experienceThe team at Pumpkin Patch has demonstrated its ability to grow the business over successive years. The designteam, led by Chrissy Conyngham, has a consistent history of producing exceptional ranges that are at theforefront of children’s fashion.Pumpkin Patch’s strong management team has the expertise and capabilities to ensure that the complexapparel, design, manufacture and retail business that is Pumpkin Patch will continue to grow.The Pumpkin Patch Board of Directors has extensive retail, apparel and corporate experience whichcomplements the skills of the management team.Sales Composition$300,000$250,000Aggregated Sales NZ Retail Aust Retail UK Retail OtherNZ$ Sales (000)$200,000$150,000$100,000$50,0000199119921993199419951996199719981999200020012002200320042005DecDecDecDecDecDecDecDecDecDecJulyJulyJulyJulyJuly(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 2001.3

strong infrastructure and systemsPumpkin Patch has delivered growth through an effective core of infrastructure and an ability to continuallydevelop new systems for emerging markets.From its 13,395m 2 distribution centre in Auckland, Pumpkin Patch responds daily to the inventory requirementsof its retail stores in New Zealand,Australia and the UK, and to its department store, internet and mail order sales.Pumpkin Patch has a commitment to embracing new technology and has developed its own forecasting andinventory systems. The resulting modern software platforms enable flexibility and integration with all facets ofdesign, manufacture, distribution, sales and accounting.Pumpkin Patch is well known throughout the New Zealand and Australian apparel industries as a company thatis able to efficiently and effectively adopt new technology to its benefit.significant earnings growthEstablished in 1990 as a mail order company, Pumpkin Patch has a history of revenue and earnings growth.Pumpkin Patch believes that it has the potential to further develop its home market in New Zealand andAustralia through new store openings and brand expansion. Pumpkin Patch also believes that there aresignificant growth opportunities available internationally.Forecast EBITDA before non-recurring items is expected to increase to $26.7 million in the 2004 financial year,more than double its level of $11.0 million in the 2001 pro forma financial year. The Directors expect the positiveearnings growth trend to continue with forecast EBITDA for 2005 forecast at $31.2 million, an increase of 17% on2004. This forecast growth in EBITDA is the result of sales growth in all of Pumpkin Patch’s key markets during the2005 financial year.4

description of the company’s business5

description of the company’s businessPumpkin Patch: A Platform for GrowthPumpkin Patch intends to continue increasing its sales and earnings by using strategies similar tothose that 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 newstore openings;• 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 theAustralian market and strengthening our presence in New Zealand. Pumpkin Patch currently has 64stores in Australia and 37 in New Zealand.Pumpkin Patch management is confident that the market can be further developed in bothcountries by establishing stores in catchments that are not already covered. Based on pastexperience, Pumpkin Patch 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.Wholesaling: Third Party RetailersPumpkin Patch has developed relationships with a number of third party retailers, including DavidJones in Australia and independent department stores in the United States, Ireland and the MiddleEast. These relationships are expected to continue to contribute to sales growth in 2005 and beyond.Brand ExtensionsOn 3 May 2004, Pumpkin Patch acquired the New Zealand retail chain HBK Girl. HBK Girl specialisesin pre and early teen girlswear which is similar to Pumpkin Patch’s Urban Angel label. The HBK Girlchain has 14 stores throughout New Zealand. The chain was acquired to widen the distribution ofthe Urban Angel brand.Management have not forecast for the new chain to make any financial contribution in the nexttwo years.bedlinen created for kids6

Pumpkin Patch... the brandFounded in 1990 by Sally Synnott, Pumpkin Patch has become an iconic brand in the childrenswear market.Innovative design is fundamental to Pumpkin Patch’s success and the ongoing recognition both in Australasiaand further afield signifies the underlying strength of the brand.The Company has a large design team led by Chrissy Conyngham, with extensive experience in childrenswearand other apparel markets. The in-house design team produces more than 1,500 styles per season using atightly controlled process that ensures all garments are fresh and coordinated.Product development includes conceptual artwork, style creation, product sourcing and control of quality.Pumpkin Patch has nurtured its brand ensuring that all product design, shop merchandising, catalogues andmarketing to the customer are developed in-house. This delivers a consistent approach to branding whichincreases brand recognition amongst customers.Today, Pumpkin Patch’s employees are focused on the same aspirations of brand quality that our design teamhave built into the product. Utilising a fully integrated process, the Company has developed software andinformation systems that track products from design/origination through to sale.design• origination• shared story• style creationsales & marketing• retail stores• wholesale• internet• catalogueproduct sourcing• quality control• final productwarehousing& distribution7

product sourcingPumpkin Patch’s continuous design philosophy results in regular orders to itsmanufacturers. Manufacturers are largely based overseas, supplemented byNew Zealand manufacturers, and are selected based on their skills, product quality,timeliness and cost. Many of the suppliers have long-standing relationships withPumpkin Patch and this assists the Company’s quality aspirations while still meeting thedemanding production timelines of an apparel company.warehousing and distributionPumpkin Patch operates a 13,395m 2 distribution centre attached to its head office inEast Tamaki, Auckland. The distribution centre serves as the global warehouse for all ofPumpkin Patch’s stores and sales. The distribution centre receives substantially allmanufactured garments and product ranges and is responsible for the daily dispatchof the products to its stores in New Zealand, Australia and the United Kingdom to itsinternational wholesale customers and to fill its internet and catalogue orders. Thedistribution centre receives, picks, packs and distributes approximately 70,000 garmentsper day. Existing facilities are expected to be sufficient for the foreseeable future.The distribution centre employs approximately 70 staff. It utilises a paperlessmanagement system which enables Pumpkin Patch to receive daily sales informationfrom each Pumpkin Patch store, individual catalogue purchases and internet sales.These are then usually dispatched the following day. The management system alsoallows packages that are sent internationally from the distribution centre to be trackedand electronically processed through various countries’ customs departments.The distribution centre is capable of handling over 30,000 SKUs (discrete lines of stock)in any given period enabling the Southern and Northern hemispheres to be servicedsimultaneously despite differing seasons and ranges.The distribution centre was leased in August 1999 for an initial term of approximately 10years with rights of renewal for a further 15 years. To provide for future development ofthe distribution centre, should the need arise, Pumpkin Patch has acquiredapproximately 20,300m 2 of undeveloped land surrounding its East Tamaki site.9

sales and marketingPumpkin Patch’s sales are forecast to reach $213.5 million in the 2004 financial year, a forecast increase of morethan 42% over the 2001 pro forma financial year. This consistent and strong sales growth is expected to resultfrom the Company using a range of sales channels including:• 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%Retail NZ21%Direct NZ / Aust 3%Wholesale NZ / Aust 2%Wholesale EU 1%Wholesale USA 2%Retail UK 7%10

Pumpkin Patch storesPumpkin Patch currently has 111 stores in New Zealand, Australia and the UnitedKingdom and employs approximately 1,700 staff (including both full time and part timestaff). 37 of these stores are located in New Zealand with 64 in Australia and 10 in theUnited Kingdom – and a further 2 stores will be opened in New Zealand by the end ofthe 2004 financial year. Each of these stores sells the comprehensive Pumpkin Patchcollections and is designed to be open, inviting and exciting.The Pumpkin Patch shopping experience is fresh and unique – when people walk intoone of the stores they are meant to get a real sense of the passion that the Companyhas put into the clothes. Every store has a toy-filled play area to keep even the smallestshoppers 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 heavenwith specially designed areas for boys and girls and a cool mini-store for the UrbanAngel brand, it is not surprising that several stores have been voted by shopping centrecustomers as the best in the centre.The fixtures and fittings throughout our stores reflect the commitment to quality that isevident throughout the business. Special interior effects and hand-painted finishes areused to create a warm and friendly ‘designer store’ atmosphere.Pumpkin Patch carefully evaluates the location for new stores. The Companyundertakes reviews with external consultants that analyse customer catchments,customer demographics, availability and cost of retail space, proximity of competitorsand proximity to other existing Pumpkin Patch stores.Pumpkin Patch’s in-house design and fitout teams enable the Company to quicklydesign and build new stores. Generally a store is open within eight to ten weeks fromthe receipt of final plans and approvals.Most stores are between 250m 2 and 350m 2 (the largest is 500m 2 ) with standard leaseshaving initial durations of approximately five years.Pumpkin Patch has identified specific store expansion opportunities in bothNew Zealand and Australia and expects to open an additional 2 stores in New Zealandand 7 stores in Australia during the 2005 financial year.Pumpkin Patch Store Numbers140120NZ HBK Aust UK11312210080718460402005640271114841 1 21992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005(Financial Year End)11

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 countriesthat do have Pumpkin Patch stores.Pumpkin Patch’s wholesaling relationships are at a relatively early stage of developmentand at present predominantly involve department stores in Australia, the United States,Ireland and the Middle East. Currently Pumpkin Patch supplies 10 international retailerswith 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 aPumpkin Patch 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.Pumpkin 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-houseteam of specialists, are regularly refreshed to include the latest available ranges andremove items where 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 thecatalogue. The database is regularly updated and analysed to ensure that customerdetails are up-to-date and that “non-responsive” entries are deleted.Each season Pumpkin Patch sends out approximately over 750,000 catalogues tocustomers in New Zealand, Australia and the UK. The catalogues are designed in-houseand feature the latest fashion ranges. Any sales orders received from the catalogue areprocessed by Pumpkin Patch’s in-house call centre (located at its head office) anddispatched by the distribution centre.The Pumpkin Patch call centre in Auckland is operated seven days a week and hasfacilities for 20 operators at any one time.12

Pumpkin Patch... our peoplePumpkin Patch employs approximately 1,700 people (34% in New Zealand, 59% inAustralia and 7% in the United Kingdom). Approximately 68% of Pumpkin Patch’s staffwork part time. When hiring staff Pumpkin Patch endeavours to identify people whoshare its vision and who are passionate about kidswear and committed to meeting,and exceeding, customers’ expectations of excellent service.One of Pumpkin Patch’s core philosophies is integrity – within the Pumpkin Patch team,with suppliers, and towards customers. This integrity is intended to create a platformof trust and commitment, and a foundation for all of Pumpkin Patch’s businessrelationships.Pumpkin Patch believes family life and strong family values are integral to the wellbeingof our people and therefore the Company. Family-friendly work policies encourageflexibility, adaptability and balance. People are rewarded for loyalty and long service,and families with young children are supported with in-house crèche facilities orchildcare subsidies.Pumpkin Patch recognises that employee retention and succession planning are vitalto a successful organisation. As such the Company has always ensured that keyemployees have been rewarded with equity interests in the Company, and theCompany has established a number of employee share schemes which have allowedemployees to share in our success. The share schemes are being restructured prior tothe listing of the Company and details of the restructuring are set out on page 84.In addition to these current schemes, the Directors of Pumpkin Patch agree with thephilosophy of rewarding employees with equity interests in the Company and haveestablished two new schemes to allow employees to share in the success of theCompany. One of these schemes is the DF7 Scheme, which will give all permanentemployees working more than 10 hours a week the opportunity to acquire Shares. Thedetails of that Scheme are set out on page 85.The other is the Pumpkin Patch 2004 Share Option Scheme, under which the OptionOffer is made. This Scheme is intended to give Eligible Senior Managers an additionalincentive to strive to create shareholder value by aligning their interests with those ofPumpkin Patch shareholders. Pumpkin Patch intends to establish similar schemes insubsequent years.This Prospectus is issued in respect of the 2004 Share Option Scheme and further detailsof the Scheme can be found on pages 93 and 98.This Prospectus is not issued in respectof either the DF7 Scheme or the schemes to be established in subsequent yearsalthough Pumpkin Patch anticipates that these schemes will be on similar terms.13

the offering14

the offeringThis Prospectus relates to an offer of Shares and an offer of Options. Public investors are not being offeredOptions. Options are only being offered to certain Senior Managers.Share OfferOffer DescriptionPumpkin Patch is offering for issue up to 81,027,200 new ordinary fully paid shares (“Shares”) in PumpkinPatch Limited.Pumpkin Patch has entered into conditional repurchase agreements (“Repurchase Agreements”) with someof its existing shareholders (“Selling Shareholders”) to repurchase and cancel between 28,770,400 and49,027,200 Shares currently held by those shareholders. Some of the proceeds of the Share Offer may be paidto the Selling Shareholders (as the purchase price) on repurchase and cancellation of those Shares. Furtherdetails are contained on pages 81 and 82 of this Prospectus.Any residual shares not repurchased by the Company and held by shareholders, other than employees ortrustees of employee share schemes, will be the subject of arrangements placing restrictions on theirtransferability for a period of 12 months from 9 June 2004. Those arrangements are more fully described atpage 83 of this 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. AnIndicative Price Range of $1.20 to $1.40 per Share has been set to assist institutional investors in the biddingprocess. When the book build process is complete a Final Price will be set. The Final Price for institutional andprofessional investors participating in the book build may exceed $1.40, but the Final Price set for other investorswill be capped at $1.40.The value of Shares applied for by investors under firm allocation will be divided by the applicable Final Price tocalculate the number of Shares they will be allocated.The number of Shares allocated to an investor will be roundeddown to the nearest whole Share, and no refund will be given for any difference resulting solely from rounding.The Company, in association with the Lead Manager, will set the Final Price(s) before noon on 8 June 2004following the completion of the book build process described in the section “Book Build Process”. As referredto above, for institutional and professional investors participating in the book build process, the Companyreserves the right to set the Final Price outside the Indicative Price Range. All Shares allocated under the ShareOffer 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 New Zealand Exchange (“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 MarketParticipants.Institutional and professional investors will have the opportunity to submit bids in accordance with book buildprocedures set out by the Lead Manager.15

Shares will be able to be traded from 9 June to 16 June 2004 on a “delayed delivery” basis. None of PumpkinPatch, the Lead Manager nor any of their respective directors, officers, employees or advisors accepts anyliability or responsibility should any person attempt to sell or otherwise deal with the Shares before thestatements confirming allotment are received by the applicants for the Shares and the “delayed delivery”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 andFriday 4 June 2004 the Lead Manager will undertake a book build process inviting institutional and professionalinvestors in New Zealand and Australia to submit bids indicating the number of Shares they wish to purchase ata range of prices. This book building process, in addition to demand indicated from other investor classes priorto 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 inthe book build process will be allocated the Shares for which it has bid. In determining the final price(s) andallocations the Company and Lead Manager will take account 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.Application for SharesAdditional information on how to apply for Shares appears on page 90 and further details appear in the backof the Investment Statement. Investors must complete the Share Application Form in full to be eligible to beallocated Shares. This includes providing the applicant’s IRD number. Failure to include any of the requireddetails may disqualify the application.All applications by way of firm allocation under the Share Offer must include a cheque for the total applicationmoneys. Applications under the Share Offer must be lodged in time for such applications to be forwarded andreceived by BK Registries Limited no later than 5.00pm on 4 June 2004.The Company reserves the right to extend the Closing Date (in which case the key dates referred to on theinside front cover 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 respect of applications which are declined in whole or part will be refunded in whole or inpart (as the case may be). Interest will not be paid on any application money refunded.Minimum ApplicationApplications under the Share Offer must be made for a minimum of $5,000 worth of shares and in incrementsof $500 thereafter.PaymentInstitutional investors or professional investors that are allocated Shares under the book build process must settletheir allocation prior to 5:00pm on Tuesday 8 June 2004 via Austraclear or in cleared funds under notification tothe Lead Manager.Other investors must make payment of the Share Application Price in full upon application under the ShareOffer. All cheques in payment of application moneys must be denominated in New Zealand dollars and madepayable to “The Pumpkin Patch Share Offer” and crossed “Not Transferable.” Cheques will be banked as theyare received and must not be post-dated.16

UnderwritingThis Offer is not underwritten.RepurchaseIt is intended that if:• All 81,027,200 Shares offered by the Company are subscribed for, the Company will repurchase and cancel49,027,200 Shares of the Selling Shareholders;• 60,770,399 Shares or fewer are subscribed for, the Company will not repurchase any Shares from the SellingShareholders and may, in its discretion, refund any subscription proceeds received 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 repurchaseand cancel between 28,770,400 and 49,027,200 Shares from the Selling Shareholders. Details of theRepurchase Agreements are set out on page 81.Stock Exchange ListingApplication has been made to NZX for permission to list the Shares. All requirements of the NZX relating to listingthe Shares that can be complied with on or before the date of this Prospectus have been duly complied with.However, the NZX accepts no responsibility for any statement in this Prospectus.New Zealand and Australian Institutional Only Share OfferThe Share Offer described in this section is an offer only to New Zealand resident investors, and eligibleAustralian institutional and professional investors invited to participate in the book build process. This Prospectusis only intended for use in connection with these offers and the Option Offer, and is not to be sent or given toany person outside New Zealand or Australia in any circumstances in which the Share Offer or use of theProspectus would be unlawful.Use of Proceeds of Share OfferThe subscription proceeds from the issue of Shares under the Share Offer are intended to be used by PumpkinPatch to 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;• The retirement of up to $13.1 million of existing debt facilities; and• The repurchase of Shares from the Selling Shareholders in accordance with the Repurchase Agreementsdescribed on pages 81 and 82.Although it is intended that these proceeds will be used as set out above, they may be applied to anyundertaking in which Pumpkin Patch may lawfully engage.Based upon the Indicative Price Range for the book build the subscription proceeds will total $97.2 million (ata Final Price of $1.20 per share), or $113.4 million (at a Final Price of $1.40 per Share) assuming all 81,027,200Shares are subscribed for.17

Option Offer (Employees Only)Offer DescriptionPumpkin Patch is offering a total of 2,274,000 Options to purchase Shares pursuant to the terms of the PumpkinPatch 2004 Share Option Scheme (the “Scheme”). Each Option will entitle the holder to purchase one Shareon the terms and conditions of the Scheme which have been set out in full on pages 93-98.Assuming all offers of Options are accepted, the Company will have on issue 2,274,000 Options, which mayconvert into 2,274,000 Shares in the Company no earlier than 9 June 2007. On the basis of the post listingshareholdings set out in the table on page 21 and assuming all Options convert into Shares, this would represent1.35% of the Company.The Options will only be offered to selected Senior Managers. Each Senior Manager selected to participate inthe Option Offer will receive, together with the Investment Statement and this Prospectus, an individual offerspecifying the number of Options being offered to that Senior Manager.Included in the Option Offer will be an offer of 870,000 Options to executive Directors.Application for OptionsThere is no application fee or other sum payable for Options offered under the Option Offer. Eligible SeniorManagers wishing to accept the Option Offer need to complete the Option Application Form personallyprovided to them in full and return it to the address below no later than 5.00pm on the 12th Business Day afterreceipt of their individual offer or such later date as may be advised by Pumpkin Patch in writing. The OptionApplication Form contains an undertaking to comply with the terms and conditions of the Scheme and mustbe signed before a witness.Eligible Senior Managers will be notified of the number of Options being offered to them. Eligible SeniorManagers wishing to apply for Options pursuant to the Option Offer must apply for the full number of Optionsoffered 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 Option Application Form from an Eligible Senior Manager it will :• Grant to that Eligible Senior Manager the number of Options applied for forthwith; and• Issue an Option Certificate in the name of that Eligible Senior Manager by 12 June 2004.Exercise of OptionsAn Exercise Price will apply for Option Holders wishing to exercise their Options. The Exercise Price will beequivalent to the Final Price per Share for investors other than institutional and professional investorsparticipating in the book build process as determined pursuant to the Share Offer.The Options can only be exercised on written notice to Pumkin Patch within an Exercise Period commencingon 9 June 2007 and ending on 9 June 2009 (“Exercise Period”) (although the Company may permit earlierexercise in certain extraordinary circustances). The Options will lapse if they are not exercised by the end ofthe Exercise Period or if certain other circumstances exist (these are set out in full on pages 93-98).In addition the Options are not able to be exercised unless certain conditions are met. In particular the Sharesmust have been quoted on the NZX for at least one day in the period prior to the commencement of the18

Exercise Period, and the Market Price at Exercise Date must exceed the Benchmark Price (as defined in theglossary) set by Pumpkin Patch. This performance benchmark has been determined by the Company in orderto encourage Eligible Senior Managers to add to shareholder value and will be calculated taking into accountthe return investors require given the risk associated with an equity investment in the Company less theexpected returns from dividends. The conditions are set out in full on pages 93 to 98.Option Holders may exercise their Options by giving a written notice to Pumpkin Patch detailing the Options tobe exercised. This notice must be accompanied by:• a cheque made payable to Pumpkin Patch in payment of the Exercise Price for the Options exercised underthat notice (unless the Option Holder has made prior arrangements with Pumpkin Patch for alternativemeans of payment); and• the Option Certificate issued in respect of the Options.Option Holders may exercise either all or part of their Options but the minimum number of Options that maybe exercised on any one occasion is the lesser of 1,000 Options or the balance of Options then remaining(where an Option Holder exercises only some of their Options, Pumpkin Patch will issue a new Option Certificatefor the balance of Options remaining).Minimum ApplicationApplications must be for the total number of Options offered to the selected Senior Manager.Allocation of SharesEach Option will, upon exercise, convert into one Share ranking equally in all respects with all other Shares onissue at the date on which it is exercised, except for any dividend in respect of which the Record Date occurredprior to the date of exercise. Pumpkin Patch will issue, transfer or procure the transfer of the appropriate numberof Shares to the Option Holder within 5 Business Days of receiving payment of the relevant Exercise Price.ListingPumpkin Patch does not intend to list the Options on the NZX. Application has been made to NZX for permissionto list the Shares. All requirements of the NZX relating to listing the Shares that can be complied with on orbefore the date of this Prospectus have been duly complied with. However, the NZX accepts no responsibilityfor any statement in this Prospectus.New Zealand and Australian-Only Option OfferThe Option Offer described in this section is an offer to Eligible Senior Managers in New Zealand and Australia.This Prospectus is intended for use only in connection with the Option Offer in New Zealand and Australia andis not to be sent or given to any person outside New Zealand or Australia in any circumstances in which theOffer or use of this Prospectus would be unlawful. This Prospectus will be distributed to Eligible Senior Managersin Australia together with a separate document containing additional disclosures as required by Australian law.Notwithstanding this, the Company intends to make offers of Options to certain Eligible Senior Managers asgenerally specified in section “Offer Description” above who reside in other countries, predominantly theUnited Kingdom.Use of Proceeds of Option OfferPumpkin Patch will not receive any proceeds from the allotment of the Options under the Option Offer but willreceive proceeds from the issue of Shares upon exercise of the Options. It is intended that these proceeds willbe used for general business purposes of Pumpkin Patch, however they may be made be applied to anyundertaking in which Pumpkin Patch may lawfully engage.19

shareholding structure20

shareholding structureOn the Allocation and Allotment Date following the issue of new Shares under the Share Offer (assuming thatall 81,027,200 new Shares are subscribed for and all proposed share repurchases from Selling Shareholdershave occurred) Pumpkin Patch will have 166,513,000 Shares on issue. Of these Shares, approximately 42% willbe owned by the existing Shareholders, approximately 9% will be owned by (or held on behalf of or forallocation to) management and other employees of the Company and 49% will be owned by institutionalinvestors and members of the public.The following table provides a summary of the shareholdings in the Company prior to the Share Offer andapproximates what the register 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, theCompany will repurchase between 28,770,400 and 49,027,200Shares from the Selling Shareholders. If fewer than 60,770,400 Sharesare subscribed for, the Company may, in its discretion, refund anysubscription 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 thisInvestment Statement are fully paid, except some Shares issuedunder employee share schemes, which will be fully paid upon listing.Immediately following listing and the repurchase (assuming fullsubscription) an additional $42.2 million will be credited as paid upin respect of new Shares (assuming an issue price of $1.32 perShare).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 ManagingDirector, Maurice Prendergast.6. The Opito Family Trust and the Punchestown Family Trust areassociated with the interests 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 bytrustees on behalf of a number of employees of the Company.These are currently B Class and C Class shares (which do not confervoting rights) which will convert to fully paid ordinary shares (allranking equally for dividends and voting rights) immediately prior tolisting. 3,795,467 will be retained by the trustees and will beprogressively released over three years to the individual 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 under the employee share schemes.9. Post-listing (on at or about 9 June 2004), the Company will have onissue up to 2,274,000 Options, which may convert into 2,274,000Shares in the Company no earlier than 9 June 2007. On the basis ofthe post listing shareholdings set out above and assuming allOptions convert into Shares, this would represent 1.35% of theCompany.10. Prior to listing, certain share transfers have occurred between theshareholders. The Simdec Trust has received 700,000 Shares from theOpito Family Trust and 4,537,200 Shares from the trustees of theemployee share schemes (3 million of which were transferred forand on behalf of Maurice Pendergast and 1,537,200 of which weretransferred for and on behalf of Chrissy Conyngham). The SimdecTrust is obliged to pay an amount for those shares equal to therepurchase price per share it receives under the RepurchaseAgreements described on page 81-82.11. As at January 2004, the Company had 1,282,911 shares on issue (asdescribed on page 56). Since then, the Company has carried out a100:1 share split, issued an aggregate of 3,110,800 B and C Classshares to the trustees of the employee share schemes, issued2,000,000 A Class shares to the trustees of the DF7 scheme andissued 1,111,100 A Class shares to the Muir Trust, bringing the totalnumber of shares issued (as at 14 May 2004) to 134,513,000.21

directors & senior management22

directors and senior managementDirectorsGreg MuirExecutive ChairmanBA, MBAGreg Muir was appointed Executive Chairman in February 2004. Prior to joining Pumpkin Patch he was ChiefExecutive Officer of The Warehouse Group Ltd and held senior management roles with TNT Australia Pty Ltd,Enerco New Zealand Ltd and Lion Nathan Ltd. Greg is a Director of the Auckland Rugby Union Inc., Chairmanof the Blues Super 12 Franchise and a member of the Eden Park Board of Control. Greg lives in Auckland.Maurice PrendergastManaging DirectorMaurice Prendergast has been Managing Director of Pumpkin Patch since 1993. Maurice has held executivepositions in accounting, distribution and property development in both New Zealand and Australiancompanies. Maurice is a Director of two apparel companies – Bendon Ltd and Sports Resources Ltd. Mauricelives in Auckland.Chrissy ConynghamDesign and Marketing DirectorChrissy Conyngham joined Pumpkin Patch as Design Director in 1993. Chrissy leads the design and marketingteams and is responsible for bringing together comprehensive ranges, product sourcing and brand promotion.Chrissy has 17 years of experience in the fashion industry, and was previously the childrenswear productmanager for Kmart. She draws inspiration from her three daughters who are keen product testers and aspiringfashionistas! Chrissy lives in Auckland.Jane FreemanIndependent Non-Executive DirectorBComChairman of the Remuneration committee and member of the Audit, Risk Management and ComplianceCommittee. Jane has held senior marketing and management positions at Telecom’s esolutions, BankDirect,Clear Communications Ltd and ASB Bank Ltd. Jane is currently a director of Air New Zealand Ltd, SheffieldConsulting Ltd, St George Bank New Zealand Ltd and Albert St Dental Ltd. Jane lives in Auckland.David JacksonIndependent Non-Executive DirectorMCom (Hons), FCAChairman of the Audit, Compliance and Risk Management Committee and member of the RemunerationCommittee. David 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 Dame Malvina MajorFoundation and is a member of the Executive Board of the Institute of Chartered Accountants in New Zealand.David lives in Auckland.Sally SynnottNon-Executive DirectorMember of the Remuneration and the Audit, Compliance and Risk Management Committees.Sally Synnott founded Pumpkin Patch in 1990 and held an executive role within the Company until 1993.Since then Sally has undertaken specialist assignments and has been a non-executive Director. Sally startedher career in the apparel industry as a production planner and marketing assistant before moving to KmartNZ as childrenswear buyer. By the time she left Kmart in 1990 she was a group buyer responsible for a numberof apparel categories. These days Sally enjoys mentoring a number of small NZ business start-ups in betweenrunning after three boys and playing golf. Sally lives in Auckland.23

Senior ManagementMike ArandGeneral Manager – Business DevelopmentBMS (Intl)Mike joined Pumpkin Patch in 1999 as General Manager – Business Development. Mike was with CanterburyInternational Ltd before joining Pumpkin Patch, with his last position being International Manager responsiblefor global development of the Canterbury of New Zealand brand. Mike speaks Japanese having beenawarded Monbusho Research Scholarships to study Japanese at Osaka University of Foreign Language andJapanese Business Studies at Chuo University in Japan.Lyn BryantGeneral Manager – OperationsLyn joined Pumpkin Patch as Customer Service Supervisor. She was appointed to her current position asGeneral Manager-Operations in 2003. Before joining Pumpkin Patch Lyn was the Office Manager at aninsurance brokerage where she was responsible for managing the customer service, payroll and telemarketingteams. Lyn is a member of the Institute of Logistics and Transport.Marilyn CrockerGeneral Manager – Human ResourcesBA, MBA, RGON, MIHRMNZMarilyn joined Pumpkin Patch in 2003 as Global Human Resources Manager responsible for developingprocedures for managing Pumpkin Patch’s 1,700 or so employees worldwide. Before joining Pumpkin PatchMarilyn spent over four years at Fletcher Building Ltd and prior to that four years as New Zealand HumanResources Manager for Country Road (New Zealand) Ltd. She is a certificate member of the Institute of HumanResource Managers of NZ, and accredited Zenger Miller Trainer, a registered Hay job evaluator and a registeredSaville and Holdsworth Psychometric tester.Kay GillardGeneral Manager – RetailKay joined Pumpkin Patch in 1996 as Operations Manager to head the retail initiative into Australia. In 1997 Kaywas appointed General Manager – Australia and in 1999 was appointed General Manager – Retail withresponsibility for Pumpkin Patch’s global retail operation. Before Kay joined Pumpkin Patch she was BusinessDirector at Three Bears and Route 66 Ltd and prior to that she was General Manager at Saks Newmarket.Zarina ThesingGeneral Manager – Information TechnologyBComZarina joined Pumpkin Patch in 2000 as an IT Development Manager and was appointed as GeneralManager-IT in 2002. Zarina has been involved in the IT industry for 9 years prior to joining Pumpkin Patchincluding: Wilson & Horton Ltd, Vodafone New Zealand Ltd, Accident Compensation Corporation andSouthern Regional Health Authority.Bruce WalkleyGeneral Manager – Business Development (Europe and UK)BComBruce joined Pumpkin Patch in 1993 as Finance Director. In 2000 he was appointed General Manager – UnitedKingdom with responsibility for managing Pumpkin Patch’s international expansion in the United Kingdom andEurope. Before joining Pumpkin Patch Bruce was the financial controller for a joint venture developing multi-useproperty development in London and prior to that he worked as an accountant in London.Matthew WashingtonGroup Financial ControllerBCom, CAMatthew joined Pumpkin Patch in 2000 as Group Financial Controller. He has over 16 years accounting andcommercial experience of which eight years were with Ernst & Young most recently as a Senior Manager, anda further three years were with Fletcher Wood Panels Ltd as Finance Manager.24

corporate governance & business strategy25

corporate governanceThe Board of Pumpkin Patch has the responsibility of ensuring Pumpkin Patch is properly managed to protectand enhance shareholders’ interests. The Directors take this responsibility seriously and to this end, the Board ofDirectors has adopted what it believes to be appropriate corporate governance policies and practices. Themain corporate governance policies incorporate:• Appointment and retirement of Directors;• Directors’ access to independent professional advice;• Board committees:— Audit, Compliance and Risk Management Committee; and— Remuneration Committee.The Board has undertaken to regularly review the corporate governance policies to ensure that PumpkinPatch’s responsibilities and obligations are met.business strategyPurpose of the IssueIt is intended that the proceeds of the Share Offer will be used as described at page 17. There will not be anyproceeds from the allocation of Options under the Option Offer, but proceeds from the exercise of Options willbe used by the Company for its general business purposes. Any proceeds may also be applied to anyundertaking in which the Company may lawfully engage.Directors’ PlansThe Directors’ plans for the following twelve months are to focus on growth in sales and earnings through:• Continued development of Pumpkin Patch in New Zealand and Australia through new store openings;• Expansion of pre and early teen brands;• Continued incremental 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 third party retailers.ForecastsForecast financial statements including cash flows (and the notes and assumptions upon which the statementsare based), for the years commencing on 1 August 2003 and 1 August 2004 are set out at pages 36 to 43.Dividend PolicyThe dividend policy of the Board of Pumpkin Patch is to target a dividend payout ratio of approximately 50%of the net profit after tax of the Company, subject to a number of factors including the level of expenditurerequired to pursue growth opportunities and the Company’s objective to provide shareholders withappropriate returns. In each financial year the Directors expect to pay an interim dividend in April and a finaldividend in November. Pumpkin Patch can give no assurances as to the level or frequency of any futuredividend (or other distributions, if any) payable on Shares or as to the level of imputation credits, if any,attached to any dividends. Option Holders under the Option Offer are not entitled to any dividends inrespect of their Options.26

isk and special trade factors27

isk and special trade factorsPrincipal RisksSharesThe principal risk to investors under the Share Offer is that they may not be able to recoup their originalinvestment or they may not receive the returns they expect. This could happen for a number of reasonsincluding that:• The price at which the Shares trade may be lower than the price paid for them;• There is no ready market for Pumpkin Patch shares;• Pumpkin Patch does not have funds available to pay dividends;• Pumpkin Patch becomes insolvent or does not have sufficient assets to pay returns to holders of the Shares;• The operational and financial performance of Pumpkin Patch falls below expectation; and/or• The Company is placed in receivership or liquidation.The Shares will be ordinary fully paid shares and holders of Shares will have no liability to Pumpkin Patch for anyfurther payment in respect of the Shares.Risk factors exist that are both specific to Pumpkin Patch’s business activities and of a general nature. Thesefactors may, individually or in combination, affect the future operating performance of Pumpkin Patch and thevalue of a holder’s investment in Pumpkin Patch.Many factors will affect the price of the Shares including economic conditions in New Zealand and elsewhere,the operational and financial performance of Pumpkin Patch, changes in government policies and regulationsin countries where Pumpkin Patch operates and movements in interest rates or currency exchange rates.An investor in Shares will also face the business risks arising from the assets and undertakings of the PumpkinPatch Group.OptionsThe principal risk to holders of Options under the Option Offer is that the Options cannot be exercised becausethe Share price does not meet the stipulated performance benchmark. This could happen for a number ofreasons including those set out above in relation to Shares. In addition once a holder of Options has paid theExercise Price and had the Options converted to Shares, he or she is subject to the same risks as anyshareholder, as set out generally in this section.Exchange RatesPumpkin Patch is exposed to movements in exchange rates (in particular the exchange rates between theAustralian dollar, the New Zealand dollar and the United States dollar) as:• In excess of 75% of Pumpkin Patch’s inventory is purchased internationally in United States dollars; and• The majority of Pumpkin Patch’s stock is sold in currencies other than New Zealand dollars with approximately60% of the Company’s sales denominated in Australian dollars.Exchange rate movements affecting these currencies will impact the financial performance and financialposition of Pumpkin Patch to the extent the foreign exchange rate is not hedged.28

System RisksPumpkin Patch’s business is reliant on information technology systems to manage stock, costs, stock despatch,a retail database and retail sales. These computer based systems are essential to managing the business.Pumpkin Patch is exposed to a number of risks, including:• Complete or partial failure or sabotage of the information technology systems;• Inadequacy of information technology systems used by Pumpkin Patch due to, among other things, failureto keep pace with developments;• Capacity of the existing systems to effectively accommodate Pumpkin Patch’s growth and businessdevelopment; and• Inability of separate systems to successfully integrate and communicate with each other.To mitigate some of these risks, Pumpkin Patch has disaster recovery, system development and strategic plansin place. However, any failure or inadequacy in Pumpkin Patch’s systems could result in business interruption,the loss of customers, damaged reputation and weakening of Pumpkin Patch’s competitive position and couldtherefore adversely affect the business. No assurances can be given that Pumpkin Patch’s informationtechnology systems will, in the future, be adequate to 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, andpublic and product liability differs in each of these countries. Pumpkin Patch has procedures in place to ensurethat relevant requirements are reviewed and evaluated prior to supplying product to these countries, and,where appropriate, insurance cover is obtained.There is a risk, however, that notwithstanding these procedures,Pumpkin Patch may be liable in respect of its product supplied in New Zealand and internationally.Key PersonnelPumpkin Patch’s performance is dependent on the efforts and abilities of its executive management (seepages 23 and 24). While each of these executives is party to an employment contract, under the terms of thecontracts each executive is permitted to terminate the contract upon notice. Pumpkin Patch’s success is alsodependent on its ability to hire additional personnel as necessary to meet its business needs. Whilst every effortis made to retain key employees, plan for succession and recruit new personnel as the need arises, the loss ofone or more key personnel may adversely affect Pumpkin Patch’s business and earnings or growth prospects.Reputation or Brand DamagePumpkin Patch’s reputation and brand are valuable components of its business. Pumpkin Patch has in placeprocedures to set relevant terms of trade with suppliers and buying agents to ensure that the quality of theproduct is maintained and also to deal with other activities of suppliers which could affect the quality of theproduct or the reputation or brand of Pumpkin Patch. Notwithstanding these efforts, it is possible that customers’perceptions of a reduction in quality in Pumpkin Patch products or a perceived association by Pumpkin Patchwith socially irresponsible behaviour or supply practices 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 its distribution centre in New Zealand and storesin various markets around the world. Industrial relations at sea ports and airports in New Zealand and overseasare traditionally volatile. There is a risk that delivery of product to the distribution centre and stores may bedelayed by reason of industrial dispute or other factors affecting the transport arrangements. This mayadversely affect Pumpkin Patch’s ability to deliver stock to the stores which may adversely affect business andearnings.29

Head OfficePumpkin Patch’s head office and distribution centre are located on the one site in Auckland from which all thebusiness operations are managed and from which all stock is distributed. Pumpkin Patch has in placeprocedures to ensure that disruption to business in the event of a disaster affecting the site is minimal and inparticular holds general insurance over the site. However, a major disaster affecting the site may adverselyaffect the ability of Pumpkin Patch’s personnel to manage the business and may adversely affect PumpkinPatch’s earnings and financial position.Fashion TrendsThe long term success of Pumpkin Patch depends on its ability to interpret trends in the children’s clothingmarket. While this has been successful in the past there is a risk that new designs will not be well received bythese markets resulting in Pumpkin Patch having to clear inventory at a discount which would affect itsearnings.CompetitionThe Company may encounter higher levels of competition than it currently experiences. Any increase in thecompetitive environment may have an adverse effect on Pumpkin Patch’s business, earnings and growth.Third Party Retailer ArrangementsPumpkin Patch’s future strategy involves selling a greater proportion of its products through arrangements withagents and distributors. There can be no assurance that these arrangements, once established, will continue.In the event that one or more of these arrangements ends or proves unsatisfactory, the Company would seekto negotiate acceptable alternative arrangements, or to open its own stores.Management of Growth OpportunitiesPumpkin Patch is pursuing new initiatives, including expansion within existing markets and into new markets andnew distribution models. Pumpkin Patch expects that growth and increased operating complexity will placeadditional demands on its systems and its personnel given the additional time and space needed to servicethe greater demand for product and to anticipate and meet the particular requirements of new markets andnew initiatives. If the Company’s systems, personnel or distribution networks are unable to keep pace with thesedemands, the business, operating results and financial condition of Pumpkin Patch may be adversely affected.If new initiatives cannot be implemented satisfactorily, or once implemented, fail to perform satisfactorily,Pumpkin Patch may need to withdraw from an activity which may adversely affect earnings and assets.Pumpkin Patch may find that it cannot continue to expand its business in the New Zealand and Australianmarket. This may result in lower growth or decreased earnings from this market.30

Stock Market InvestmentThe price of the Shares on the NZX may rise or fall due to numerous factors which may affect the market priceof Pumpkin Patch Shares, including:• General economic conditions, including performance of the New Zealand dollar on world markets, inflationrates and interest 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 in recent times been subject to wide fluctuations,which in many cases may reflect a diverse range of non-company specific influences such as global hostilities,acts of terrorism and the general state of the world economy. Such market fluctuations may adversely affectthe market price of the Shares.No assurances can be made that Pumpkin Patch’s market performance will not be adversely affected by anysuch market fluctuations or factors.Liquidity and Realisation RiskThere can be no guarantee that an active market in the Shares will develop or that the price of the Shares willincrease. There may be relatively few or many potential buyers or sellers of the Shares on the NZX at any time.This may increase the volatility of the market price of the Shares. It may also affect the prevailing market priceat which Shareholders are able to sell their Shares. This may result in Shareholders receiving a market price fortheir Shares that is less or more than the price that Shareholders paid.Investors should also seek professional guidance from their stockbrokers, solicitors, accountants and otherprofessional advisers before deciding whether to invest.Consequences of Insolvency and/or Winding UpSharesIn the event of insolvency of Pumpkin Patch, Shareholders will not be liable to anyone for payment of any money.In these circumstances, Shareholders would not receive any return of money in respect of shares until PumpkinPatch had paid all its other creditors,both secured and unsecured,including the costs of liquidation or receivership.Any assets remaining after the payments of debt would be distributed to Pumpkin Patch shareholders in proportionto their respective shareholdings and may not be sufficient to repay Shareholders in full.OptionsIn the event of insolvency of Pumpkin Patch, Option Holders would not be liable to anyone for payment of anymoney. Option Holders are not entitled to share in any assets of the Company.31

33financial information

financial summaryThe financial summary below has been prepared to enable investors to compare forecast financial informationwith 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 7,214Net 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 17,649* Pro forma (31 July 2001 and 31 July 2002) and audited (31 July 2003) historical financial performance numbers are notincluded for 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 meansearnings 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 77,51034

Basis of PreparationPro forma historical financial information used on page 34 for the financial years ended 31 July 2001and 2002is extracted from the audited historical financial statements and management accounts of Pumpkin Patchand adjusted for the change in balance date from 31 December to 31 July effective 31 July 2003 and thechange in the accounting policy in 2001 relating to the treatment of landlord contributions; so that thehistorical results are comparable with the Pumpkin Patch forecast performance. Accordingly the pro formafigures presented on page 34 differ from the summary historical information set out on page 67. The amountsincluded for 31 July 2003 have been taken from special purpose audited financial statements for the 12months then ended and differ from the summary historical financial information set out on page 67 as thatinformation includes the historical financial information for the 7 months ended 31 July 2003.Pages 36 to 43 contain the prospective financial information, including the principal assumptions applied inarriving at the forecasts.Notes:1. United Kingdom RetailThe Financial Performance summary includes the following results for the United Kingdom retail operationFinancial 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 $1,537,886 on the purchase of Pumpkin Patch Limited (UK). Thecharge was deemed necessary by the Directors after they reviewed the carrying value of the subsidiary andrecognising that the purchase was made primarily as part of overall restructuring of group ownershipstructures.3. Operating cash flow in 2001 was impacted primarily by an increase in the value of inventory resulting from:increased store numbers and the timing of deliveries from suppliers.4. Capital Expenditure is disclosed after deducting landlord contributions. Capital expenditure in 2001 reflectsthe 17 stores opened during the year; 2002 reflects lower store openings but higher than average landlordcontributions; 2003 includes the 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 atan estimated cost of $7,450k. This will be recognised in the period ended 31 July 2004. Full details of theschemes can be found on page 84. 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 portionof term liabilities of $763k, term liabilities of $13,875k and loans and advances from shareholders of $2,500k.Forecast July 2004 borrowings only comprise the bank overdraft of $1,652k.35

prospective financial information36

prospective financial informationThe prospective financial information consists of forecast financial information and the underlying assumptions for the yearsending 31 July 2004 and 31 July 2005 presented on pages 40 to 43.The prospective financial information has been the subject of due diligence by the Directors. Although due care and attentionhas been taken in preparing the prospective financial information, the Directors cannot provide assurance that the prospectivefinancial information will be achieved. Actual results may vary from the prospective financial information due to thenon-occurrence of anticipated events or alternatively events occurring that were not anticipated and any variations maybe material.The prospective financial information has been prepared under NZ GAAP. International Financial Reporting Standards arerequired to be implemented by July 2007 and therefore any potential impact has not been incorporated in the prospectivefinancial information as they will not be in place for the 31 July 2004 or 31 July 2005 financial year ends.FORECAST STATEMENTS OF FINANCIAL PERFORMANCEGroup Group12 Months 12 Months31 July 2004 31 July 2005$000 $000Operating Revenue 213,524 246,774Group Earnings Before Interest, Tax, Depreciation and Amortisation (‘EBITDA’) andCosts of Restructuring Employee Share Schemes 26,717 31,199Depreciation 7,224 8,164Group Earnings Before Interest, Tax and Costs of RestructuringEmployee Share Schemes 19,493 23,035Costs of restructuring employee share schemes 7,450 -Group Earnings Before Interest and Tax (‘EBIT’) 12,043 23,035Net interest expense 2,610 490Operating Profit Before Income Tax 9,433 22,545Income tax expense 5,397 7,214Net Profit after Income Tax (‘NPAT’) 4,036 15,331FORECAST STATEMENTS OF MOVEMENTS IN EQUITYGroup Group12 Months 12 Months31 July 2004 31 July 2005$000 $000Equity at Beginning of Year 20,330 64,579Net profit after income tax 4,036 15,331Dividends to ordinary shareholders (9,500) (2,400)Issue of ordinary shares prior to listing on NZX 1,000 -Issue of ordinary shares on listing on NZX 106,956 -Issue costs arising on issue of ordinary shares (1,335) -Repurchase of ordinary shares on listing on NZX (64,716) -Issue of ordinary shares under wound up employee share schemes 5,708 -Issue of ordinary shares under DF7 Scheme 2,100Movement in Equity for the Year 44,249 12,931Equity at End of Year 64,579 77,51037

PROSPECTIVE FINANCIAL INFORMATION (CONTINUED)FORECAST STATEMENTS OF FINANCIAL POSITIONGroup Group31 July 2004 31 July 2005$000 $000Current AssetsCash and bank balances - 14,297Accounts receivable 7,633 8,133Inventories 42,911 42,987Income tax receivable 1,835 1,720Total Current Assets 52,379 67,137Non-Current AssetsProperty, plant and equipment 28,597 25,483Accounts receivable 4,266 2,133Intangible assets 237 190Investments 5 5Total non-Current Assets 33,105 27,811Total Assets 85,484 94,948Current LiabilitiesBank overdraft 1,652 -Payables, accruals, and provisions 15,294 15,525Total Current Liabilities 16,946 15,525Non-Current LiabilitiesPayables, accruals, and provisions 3,959 1,913Total Term Liabilities 3,959 1,913Total Liabilities 20,905 17,438Net Assets 64,579 77,510EquityShare capital 60,620 60,620Retained earnings 3,959 16,890Total Equity 64,579 77,51038

PROSPECTIVE FINANCIAL INFORMATION (CONTINUED)FORECAST STATEMENTS OF CASH FLOWSGroup Group12 Months 12 Months31 July 2004 31 July 2005$000 $000Cash Flows from Operating ActivitiesReceipts from customers 212,116 246,274Payment to suppliers and employees (191,804) (216,585)Interest and other costs of finance paid (2,610) (490)Income taxes paid (5,250) (7,100)Net Cash Inflows (Outflows) from Operating Activities 12,452 22,099Cash Flows from Investing ActivitiesDF7 advances repaid - 700Payments for property, plant and equipment (5,421) (4,450)Net Cash Inflows (Outflows) from Investing Activities (5,421) (3,750)Cash Flows from Financing ActivitiesDividends to ordinary shareholders (9,500) (2,400)Repayment of bank borrowings (36,636) -Issue of ordinary shares prior to float 1,000 -Issue of ordinary shares on float 106,956 -Repurchase of ordinary shares on float (64,716) -Costs of share issue (1,335) -Net Cash Inflows (Outflows) from Financing Activities (4,231) (2,400)Net increase (decrease) in cash held 2,800 15,949Cash at beginning of year (4,452) (1,652)Cash at End of Year (1,652) 14,29739

PROSPECTIVE FINANCIAL INFORMATION (CONTINUED)Principal assumptions underlying the prospective financial informationThe principal assumptions upon which the forecast financial information is based are summarised below andshould be read in conjunction with ‘Risk and special trade factors’ on pages 27 to 31.The prospective financial information for the years ending 31 July 2004 (“FY04”) and 31 July 2005 (“FY05”) onpages 36 to 43 constitutes a forecast as defined by the New Zealand Financial Reporting Standard No. 29,‘Prospective Financial Information’ and has been prepared on the basis of assumptions as to future events thatthe Directors reasonably expect to occur associated with the actions the Directors reasonably expect to takeas at the date the information was prepared. The forecast was prepared as at 8 April 2004 for use in this OfferDocument. Actual audited results for the 6 month period to 31 January 2004 and actual unaudited results forFebruary 2004 and March 2004 have been incorporated into the forecast for the year ending 31 July 2004. Theforecast information has been prepared for the purposes of this prospectus and may not be suitable for anyother purpose. There is no present intention to update this prospective financial information or to publishprospective financial information in the future.In preparing the forecast financial information, the accounting policies set out on pages 49 to 52 as part of theGroup financial information have been applied without change. There is no expectation of any change to theaccounting policies that would require a material change in the reporting of Pumpkin Patch’s activities in thefuture.General assumptions across all countries in which Pumpkin Patch operatesEconomic EnvironmentThere will be no material change in the general economic environmentLegislative and regulatory EnvironmentThere will be no material change to the legislative and regulatory environment in which Pumpkin Patchoperates.Competitive EnvironmentThere will be no material changes to the competitive markets in which Pumpkin Patch operates and no newentrants that will materially change the competitive environment.Industry ConditionsThere will be no material change to the competitive activity, industry structure, unanticipated fashion trends,general industry conditions, 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 thecompany tax rate of 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 powerfailures, natural disasters, fires and explosions, and major disruptions to freight distribution networks.40

PROSPECTIVE FINANCIAL INFORMATION (CONTINUED)Company Specific AssumptionsForeign ExchangeActual rates to March 2004 have been included in the FY04 forecasts and the following exchange rates havebeen utilised in the prospective financial information:FY04April to July 04FY05AUD 0.8750 0.8750USD 0.6150 0.6150GBP 0.3703 0.3700EUR 0.5000 0.5000The Company’s policy is to take out forward cover for a percentage of future forecast cashflow requirementsdepending on the time till the forecasted cashflow. FY04 is 100% hedged at an average rate of AUD0.8740 andUSD0.6207 and hedging programmes will be in place for FY05. Currently the Company has 20% and 62% ofFY05’s AUD and USD requirements hedged at 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 17,807213,524 246,774Other consists of mail order, internet, and wholesale sales.(i)Retail(a) The following new store openings have been forecast for the remainder of FY04 and for FY05, wiithforecast revenues 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 sametrading levels for the remainder of FY04 and for FY05.14 stores arising from the HBK acquisition as at 3 May 2004 have been included in the prospectivefinancial information.(ii)WholesaleForecast sales for the remainder of FY04 are based on actual orders received. The sales for the first half ofFY05 are based on actual orders received while the second half FY05 are forecast at similar levels to thatof the first half of FY05.41

PROSPECTIVE FINANCIAL INFORMATION (CONTINUED)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)Cost of SalesForecast Cost of Sales (excluding the effect of foreign exchange) for the remainder of FY04 are anticipated atthe percentage levels 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 atsimilar levels adjusted for new stores and other anticipated changes. FY05 costs are forecast at similar levelsforecast for FY04, again adjusted 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 tolisting on the NZX at an estimated cost of $7,450k. This been recognised in the period ended 31 July 2004. Fulldetails of the restructuring of the schemes can be found on page 84. A portion of the $7,450k is not deductiblefor tax purposes in FY04.InterestInterest expense for the remainder of FY04 and FY05 has been forecast based on an average interest rate of7.5% which includes 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 tolisting on the NZX. The Directors propose to declare fully imputed dividends, forecast at $2.4m in April 2005,payable April 2005, being an interim dividend for FY05, and $4.8m in November 2005, being the final dividendfor FY05.In addition to the above an interim dividend was paid in March 2004 and a further dividend of NZ$8.3m isforecast to be declared and paid in June 2004, prior to listing on the NZX.Working CapitalWorking capital (inventory, accounts payable, and accounts receivable) has been forecast based on theforecasted inventory purchases by season and forecast changes in purchase costs (e.g. foreign exchangechanges), forecasted wholesale sales, and forecasted other expenditure.Property, plant and equipmentCapital expenditure forecast is based on new store openings and other general capital expenditurerequirements. No other material or one-off capital expenditure has been forecast.42

PROSPECTIVE FINANCIAL INFORMATION (CONTINUED)Term DebtThe forecast assumes that all existing term debt at May 2004 is repaidin full.Finance FacilitiesIt is forecast that there are adequate finance facilities in place andavailable to the Company to cover its anticipated fundingrequirements for the forecast periods. Current finance facilities inplace with the company’s bankers are three year facilities and aredue for renewal in May 2007.Capital StructureIt is forecast that $107.0m will be received from the issue of ordinaryshares on listing, based on an assumed issue price of $1.32 per Share.Significant outflows from the proceeds are forecast to include therepurchase of ordinary shares from existing shareholders of $64.7mand 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 accounted for as areduction in equity.43

group financial statements for the 6 months ended 31 January 200444

group financial statementsPUMPKIN PATCH LIMITED & SUBSIDIARIESSTATEMENTS OF FINANCIAL PERFORMANCEFOR THE 6 MONTHS ENDED 31 JANUARY 2004Group6 months 7 months 12 months31 Jan 2004 31 July 2003 31 Dec 2002Notes $000 $000 $000Operating Revenue 99,730 111,750 181,919Operating Profit Before Income Tax 2 8,229 2,639 5,646Income tax expense 3 2,766 1,482 3,296Net Profit Attributable to the Shareholders of the Parent Company 5,463 1,157 2,350PUMPKIN PATCH LIMITED & SUBSIDIARIESSTATEMENTS OF MOVEMENTS IN EQUITYFOR THE 6 MONTHS ENDED 31 JANUARY 2004Group6 months 7 months 12 months31 Jan 2004 31 July 2003 31 Dec 2002Notes $000 $000 $000Equity at Beginning of Period 20,330 20,974 20,983Net profit for period 5,463 1,157 2,350Shares issued during the period 4 - - 73Shares repurchased during the period 4 - - (31)Dividends Paid 6 (1,203) (1,801) (2,401)Equity at the End of Period 24,590 20,330 20,97445

PUMPKIN PATCH LIMITED & SUBSIDIARIESSTATEMENTS OF FINANCIAL POSITIONAS AT 31 JANUARY 2004Group31 Jan 2004 31 July 2003 31 Dec 2002Notes $000 $000 $000EquityShare capital 4 10,907 10,907 10,907Retained earnings 6 13,683 9,423 10,067Total Equity 24,590 20,330 20,974Equity Represented by:Current AssetsAccounts receivable 980 1,360 266Advances to employee share scheme and employees 19 1,721 1,647 1,647Other receivables and prepayments 2,992 2,824 5,310Inventories 11 37,900 41,216 39,237Income tax receivable 3 - 1,537 2,629Total Current Assets 43,593 48,584 49,089Current LiabilitiesBank overdraft 8 3,955 4,452 5,048Short term borrowings 8 11,000 17,000 12,000Trade creditors 5,515 7,910 6,381Income tax payable 3 836 - -Accruals and provisions 10 8,535 7,418 8,845Current portion of term liabilities 8 763 1,707 2,199Total Current Liabilities 30,604 38,487 34,473Net Working Capital 12,989 10,097 14,616Non-Current AssetsProperty, plant and equipment 12 29,341 29,652 29,202Intangible assets 20 202 207 201Other investments 14 4 4 3Deferred taxation 15 745 446 -Total Non-Current Assets 30,292 30,309 29,406Non-Current LiabilitiesTerm liabilities 8 13,875 15,430 18,020Loan and advances from shareholders 9 2,500 2,500 2,500Accruals and provisions 10 2,316 2,146 2,126Deferred taxation 15 - - 402Total Non-Current Liabilities 18,691 20,076 23,048Net Assets 24,590 20,330 20,97446

PUMPKIN PATCH LIMITED & SUBSIDIARIESSTATEMENTS OF CASHFLOWSFOR THE 6 MONTHS ENDED 31 JANUARY 2004Group6 months 7 months 12 months31 Jan 2004 31 July 2003 31 Dec 2002$000 $000 $000Cash Flow From Operating ActivitiesCash was provided from:Receipts from customers 99,867 110,656 179,717Interest received 7 - 18Cash was applied to:Payment to suppliers and employees (81,789) (99,253) (159,669)Net GST paid (2,655) (3,506) (1,251)Income tax paid (694) (1,238) (2,109)Interest paid (1,335) (1,871) (2,570)Net Cash Flow from Operating Activities 13,401 4,788 14,136Cash Flow From Investing ActivitiesCash was provided from:Proceeds from sale of property, plant and equipment 94 41 206Purchase of subsidiary - - 506Cash was applied to:Purchase of property, plant and equipment (3,243) (4,276) (9,965)Purchase of patents and trade marks (36) (37) (59)Net Cash Used in Investing Activities (3,185) (4,272) (9,312)Cash Flow From Financing ActivitiesCash was provided from:Proceeds of short term debt issued (net) * (6,000) 5,000 -Proceeds of mortgage receivable - - 375Proceeds of issue of shares - - 73Cash was applied to:Repayment of term debt (2,499) (3,082) (5,330)Purchase of shares - - (31)Dividends paid (1,203) (1,801) (2,401)Net Cash Used in Financing Activities (9,702) 117 (7,314)Net Increase / (Decrease) In Cash Held 514 633 (2,490)Add opening cash brought forward (4,452) (5,048) (2,540)Effect of exchange rate changes on cash (17) (37) (18)Ending Cash Carried Forward (3,955) (4,452) (5,048)* Proceeds from short term borrowings have been netted against payments of short term borrowings. Theseborrowings are covered by an arranged finance facility.47

RECONCILIATION OF NET SURPLUS AFTER TAXATION TO CASHFLOWFROM OPERATING ACTIVITIESGroup6 months 7 months 12 months31 Jan 2004 31 July 2003 31 Dec 2002Notes $000 $000 $000Net Profit For Period 5,463 1,157 2,350Add/(Less) Non-cash items:Depreciation 3,497 3,821 6,012(Increase)/Decrease in deferred taxation (299) (848) 972Amortisation of goodwill on purchase of subsidiary 2 - - 308Amortisation expense 2 24 30Impairment charge 2 - - 1,230Add/(Less) movements in workingCapital items:(Increase)/Decrease in receivables and prepayments 137 1,392 (2,202)Increase in creditors and provisions 1,263 1,215 6,457(Increase)/Decrease in inventories 3,316 (1,979) (991)Net Cash Flow From Operating Activities 13,401 4,788 14,13648

PUMPKIN PATCH LIMITED & SUBSIDIARIESSTATEMENT OF ACCOUNTING POLICIESFOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)Entities ReportingThe financial statements for the “Group” are for the economic entity comprising Pumpkin Patch Limited and itssubsidiaries.Statutory BasePumpkin Patch Limited is a company registered under the Companies Act 1993.The financial statements have been prepared in accordance with the requirements of the SecuritiesRegulations 1983.Measurement BaseThe financial statements have been prepared on the historical cost basis.Accounting PoliciesThe financial statements are prepared in accordance with New Zealand generally accepted accountingpractice. The accounting policies that materially affect the measurement of financial performance, financialposition and cash flows are set out below.Group Financial StatementsThe Group financial statements consolidate the financial statements of subsidiaries, using the purchasemethod. Subsidiaries are entities that are controlled, either directly or indirectly, by the Parent.All material transactions between subsidiaries or between the Parent and subsidiaries are eliminated onconsolidation.The results of subsidiaries acquired or disposed of during the year are included in the consolidated statementof financial performance from the date of acquisition or up to the date of disposal.Operating RevenuesGoods and ServicesRevenue comprises the amounts received and receivable for goods and services supplied to customers in theordinary course of business.Investment incomeDividend income is recognised in the period the dividend is declared. Interest and rental income areaccounted for as earned.Income TaxThe income tax expense recognised for the year is based on the accounting surplus, adjusted for permanentdifferences between accounting and tax rules.The impact of all timing differences between accounting and taxable income is recognised as a deferred taxliability or asset. This is the comprehensive basis for the calculation of deferred tax under the liability method. Adeferred tax asset, or the effect of losses carried forward that exceed the deferred tax liability, is recognised inthe financial statements only where there is virtual certainty that the benefit of the timing differences, or losses,will be utilised.Goods and Services Tax (GST)The statement of financial performance and statement of cash flows have been prepared so that allcomponents are stated exclusive of GST. All items in the statement of financial position are stated net of GST,with the exception of receivables and payables, which include GST invoiced.49

PUMPKIN PATCH LIMITED & SUBSIDIARIESSTATEMENT OF ACCOUNTING POLICIESFOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)Foreign CurrenciesTransactionsTransactions denominated in a foreign currency are converted to New Zealand dollars at the exchange ratesin effect at the date of the transaction, except when forward currency contracts have been taken out to covershort-term forward currency commitments. Where short-term forward currency contracts have been taken out,the transaction is translated at the rate contained in the contract.Monetary assets and liabilities arising from trading transactions, such as inventory, trade debtors, cash and tradecreditors, or overseas borrowings are translated at closing rates from the following currencies at the closing rateas at the financial period end:31 January 31 July 31 December2004 2003 2002Australian Dollar 0.8808 0.8929 0.9300US Dollar 0.6710 0.5822 0.5247British Pound 0.3703 0.3699 0.3269Gains and losses due to currency fluctuations on these items are included in the statement of financialperformance.Foreign operationsThe results of integrated foreign operations are translated in the same way as if the underlying transactions hadbeen entered into by the reporting entity.Exchange differences arising from the translation of integrated foreign operation are recognised in thestatement of financial performance.Share Schemes and Employee Ownership PlansThe Company operates employee share ownership plans for certain employees. The initial purchase of sharesby the scheme is funded by advances from the company, the advances being recognised as assets in thestatement of financial position. Where shares are issued in lieu of bonus, the expense is recognised in thestatement of financial performance.The Company operates share schemes for certain executive employees. No compensation expense isrecognised in the statement of financial performance.Deferred Landlord ContributionsLandlord contributions to fit-out costs are capitalised as deferred contributions and amortised to the statementof financial performance over the lesser of the minimum period of the lease or the useful life of the asset.Property, Plant and EquipmentThe cost of purchased property, plant and equipment is the value of the consideration given to acquire theassets and the value of other directly attributable costs which have been incurred in bringing the assets to thelocation and condition necessary for their intended service.50

PUMPKIN PATCH LIMITED & SUBSIDIARIESSTATEMENT OF ACCOUNTING POLICIESFOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)The cost of assets constructed by the Group includes the cost of all materials used in construction, directlabour on the project and financing costs that are directly attributable to the project. Costs cease to becapitalised as soon as the asset is ready for productive use.DepreciationDepreciation on property, plant and equipment, other than freehold land, has been calculated on a straightline basis so as to expense the cost of the assets to their residual values over their useful lives as follows:Shop fit out 10-29%Office equipment 10-29%Point of sale equipment 33%Computer equipment & software 20-36%Motor vehicles 21.6%Plant and machinery 7-48%Furniture and fittings 10%Leasehold improvements 15%Building 2.5-3%Leased AssetsOperating lease payments are representative of the pattern of benefits derived from the leased assets andaccordingly are charged to the statements of financial performance in the periods in which they are incurred.Landlord contributions to fit-out costs are recognised in the statement of financial performance over theminimum period of the lease, as a reduction in operating lease costs.InvestmentsInvestments are stated at the lower of cost or net realisable value.IntangiblesThe excess of cost over the fair value of the net assets of the subsidiary entities is recognised as goodwill and isamortised to the statements of financial performance on a straight line basis over the shorter of its estimatedlife or five years.Other intangibles comprise of the cost of registering trademarks. These are amortised over their anticipateduseful lives which range between 5 and 10 years.InventoriesRaw materials and finished goods are stated at the lower of average weighted cost and net realisable value.Cost is determined on a first in, first out basis.Accounts ReceivableAccounts receivable are carried at estimated realisable value after providing against debts where collectionis doubtful.51

PUMPKIN PATCH LIMITED & SUBSIDIARIESSTATEMENT OF ACCOUNTING POLICIESFOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)ImpairmentAnnually, the directors assess the carrying value of each asset.Where the estimated recoverable amount of theasset is less than its carrying amount, the asset is written down. The impairment loss is recognised in thestatements of financial performance.Employee EntitlementsEmployee entitlements to salaries and wages, annual leave, long service leave and other benefits arerecognised when they accrue to employees.The liability for employee entitlements is carried at the present value of the estimated future cash outflows.Financial InstrumentsRecognisedFinancial instruments carried on the statement of financial position include cash and bank balances,investments, receivables, trade creditors and borrowings. The particular recognition methods adopted aredisclosed in the individual policy statements associated with each item.Forward exchange contracts entered into as hedges of foreign exchange assets and liabilities are valued atexchange rates prevailing at period end. Any unrealised gains or losses are offset against foreign exchangegains and losses on the related asset or liability. Premiums paid on currency options are amortised over theperiod to maturity.UnrecognisedFinancial instruments with off-balance sheet risk, have been entered into for the primary purpose of reducingexposure to fluctuations in foreign exchange rates and interest rates. While financial instruments are subject torisk that market rates may change subsequent to acquisition, such changes would generally be offset byopposite effects on the items hedged.Financial instruments purchased with the intention to be held for the long term or until maturity are recordedat original cost, adjusted for amortisation of premiums and discounts to maturity.Statements of CashflowsThe following are the definitions of the terms used in the Statements of Cashflows:(i)(ii)(iii)(iv)Cash is considered to be cash on hand and current accounts in the bank, net of bank overdrafts.Investing activities are those activities relating to the acquisition, holding and disposal of property, plantand equipment and of investments. Investments can include securities not falling within the definition ofcash.Financing activities are those activities which result in changes in the size and composition of the capitalstructure of the Group. This includes both equity and debt not falling within the definition of cash.Dividends paid in relation to the capital structure are included in financing activities.Operating activities include all transactions and other events that are not investing or financing activities.Changes in Accounting PoliciesThere were no changes to accounting policies during the period.52

PUMPKIN PATCH LIMITED & SUBSIDIARIESNOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE 6 MONTHS ENDED 31 JANUARY 20041. Segment Information6 months 7 months 12 months 6 months 7 months 12 months31 Jan 31 July 31 Dec 31 Jan 31 July 31 Dec2004 2003 2002 2004 2003 2002$000 $000 $000 $000 $000 $000New Zealand RetailAustralia RetailAssetsSegment 13,602 14,507 14,347 41,017 44,501 46,751Consolidated 13,602 14,507 14,347 41,017 44,501 46,751RevenueSegment 20,444 24,359 42,407 62,783 70,246 115,385Consolidated 20,444 24,359 42,407 62,783 70,246 115,385ResultSegment 3,467 2,301 5,049 6,722 3,107 6.840Consolidated 3,467 2,301 5,049 6,722 3,107 6,840United Kingdom RetailOtherAssetsSegment 11,269 10,330 9,369 3,522 3,964 2,331Consolidated 11,269 10,330 9,369 3,522 3,964 2,331RevenueSegment 10,055 8,127 12,916 6,448 9,018 11,211Consolidated 10,055 8,127 12,916 6,448 9,018 11,211ResultSegment (1,204) (2,742) (2,352) 912 2,170 2,346Consolidated (1,204) (2,742) (2,352) 912 2,170 2,346TotalAssetsSegment 69,410 73,302 72,798Unallocated and other 4,475 5,591 5,697Consolidated 73,885 78,893 78,495RevenueSegment 99,730 111,750 181,919Consolidated 99,730 111,750 181,919ResultSegment 9,897 4,836 11,883Interest expense (1,335) (1,871) (2,570)Unallocated (333) (326) (3,667)Consolidated 8,229 2,639 5,646“Other” represents wholesale, mailorder and internet sales.The result is that of the Group beforeincome tax.The Group operates in one industrybeing the retailing and wholesalingof children’s clothing. Intersegmentsales are on an arms length basis.53

PUMPKIN PATCH LIMITED & SUBSIDIARIESNOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)2. Operating Profit Before Income TaxThe operating profit before income tax is stated after charging/(crediting):Group6 months 7 months 12 months31 Jan 2004 31 July 2003 31 Dec 2002$000 $000 $000Depreciation:- Leasehold improvements 24 28 156- Computer equipment 349 415 764- Shop fitouts 2,317 2,488 3,819- POS equipment 56 48 99- Plant and machinery 238 282 782- Office equipment 46 53 79- Motor vehicles 9 14 62- Furniture and fittings 458 493 251Total Depreciation 3,497 3,821 6,012Foreign currency losses 816 1,413 1,095Rental and operating lease costs 11,370 12,256 18,850Bad debts written off 15 - 48Interest expense 1,335 1,871 2,570Gain on sale of property plant and equipment (6) (17) (23)Interest received (6) - (18)Amortisation expense 24 30 -Amortisation of goodwill on purchase of subsidiary - - 308Impairment charge - - 1,230Directors’ fees 105 118 180Donations 22 66 100Audit fees (PricewaterhouseCoopers) 80 103 102Other auditors - 24 18Other services:PricewaterhouseCoopers - 26 -54

PUMPKIN PATCH LIMITED & SUBSIDIARIESNOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)3. TaxationThe Income Tax Expense has been calculated as follows:Group6 months 7 months 12 months31 Jan 2004 31 July 2003 31 Dec 2002$000 $000 $000Surplus for the Period: 8,229 2,639 5,646Income tax on the surplus for the period at 33% 2,716 870 1,863Plus/(Less): -Prior period adjustment (174) 6 49Foreign tax credits not utilised - - 162Tax effect of permanent differences 224 606 1,222Income Tax Expense 2,766 1,482 3,296The income tax expense is represented by:Current taxation 3,241 2,237 2,202Prior period adjustment (175) 6 49Deferred taxation (300) (761) 883Foreign tax credits not utilised - - 162Income Tax Expense 2,766 1,482 3,296Income Tax ReceivableOpening Balance (1,537) (2,629) (2,842)Current taxation 3,241 2,237 2,202Withholding tax paid (228) (230) (347)Income tax paid (1,719) (697) (1,510)Income tax refunded 1,408 - -Prior period adjustment (174) 13 16Foreign investor tax credit (155) (231) (309)Foreign tax credits not utilised - - 161Closing Balance 836 (1,537) (2,629)The group has estimated losses of $6,799,834 (2003: $6,240,695, 2002: $4,948,347) available to carry forward arising from PumpkinPatch Limited (UK).55

PUMPKIN PATCH LIMITED & SUBSIDIARIESNOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)4. Share CapitalGroup31 Jan 2004 31 July 2003 31 Dec 2002$000 $000 $000Issued and paid up capital 10,907 10,907 10,865Movement in shares held as treasury stock - - 42Balance at the End of the Period 10,907 10,907 10,907As at 31 January 2004 there were 1,282,911 shares on issue (2003: 1,248,850, 2002: 1,201,500) as follows:31 Jan 2004 31 July 2003 31 Dec 2002A Class 1,132,800 1,132,800 1,132,800B Class 70,861 68,700 68,700C Class 79,250 47,350 -1,282,911 1,248,850 1,201,500A Class shares carry full voting rights and full dividend rights.B Class shares carry no voting rights unless fullly paid and full dividend rights.C Class shares carry no voting rights and no dividend rights unless fully paid.Share issue:B Class:During the period, 2,161 B Class shares were issued to the Pumpkin Patch Limited Employee Share Scheme Trust to be held intrust for certain employees in recognition of their long service or to assist them in becoming shareholders.C Class:During the period, 31,900 C Class shares were issued under the provisions of the employee share scheme.The shares were issuedto Pumpkin Patch Nominees Limited for nil consideration to hold in trust for certain employees who were invited by the Boardof Directors to participate in a share scheme.C Class share scheme:The total shares issued under the scheme to the end of 31 January 2004 have an exercise value totalling $5,980,940 and maybe paid for at various times from 1 April 2003 to 31 December 2008. The issue price has been set based upon the estimatedmarket value of ordinary A shares.Unpaid shares under the C Class share scheme outstanding at balance date have the following terms:Exercise Expiry Number Number Number Exercise Price 31 Jan 2004 31 July 2003 31 Dec 2002Date Date 31 Jan 2004 31 July 2003 31 Dec 2002 $ $ $ $1/01/2003 31/12/2004 6,000 6,000 - 55.00 330,000 330,000 -1/04/2003 31/03/2005 5,200 5,200 - 67.00 348,400 348,400 -1/01/2004 31/12/2005 6,000 6,000 - 63.25 379,500 379,500 -1/04/2004 31/03/2006 13,650 5,950 - 70.00 955,500 416,500 -1/01/2005 31/12/2006 6,000 6,000 - 72.74 436,440 436,440 -1/04/2005 31/03/2007 14,200 6,200 - 70.00 994,000 434,000 -1/01/2006 31/12/2007 6,000 6,000 - 83.65 501,900 501,900 -1/04/2006 31/03/2008 16,200 - - 90.00 1,458,000 - -1/01/2007 31/12/2008 6,000 6,000 - 96.20 577,200 577,20079,250 47,350 - - 5,980,940 3,423,940 -56

PUMPKIN PATCH LIMITED & SUBSIDIARIESNOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)4. Share Capital (Continued)The shares are subject to put and call options at the exercise price in the event of a participatory employee ceasingemployment; or a receiver or liquidator being appointed; or shares in the company being publicly listed; or more than 50% ofthe voting shares in the company (or the assets/business of the Pumpkin Patch Group) being sold.There have been no put or call rights exercised during the period.Treasury StockDuring the 2002 period Pumpkin Patch Limited acquired 374 shares from shareholders at a total cost of $31,401, reissued 288Treasury Stock shares to employees under the Pumpkin Patch Limited Employee Share Scheme at $20,160, and sold 759Treasury Stock shares to employees at $53,130. As at 31 January 2004 no shares are being held as Treasury stock.5. Employee Share Ownership PlansPumpkin Patch Limited Employee Share Scheme TrustThe Pumpkin Patch Limited Employee Share Scheme Trust was established by Pumpkin Patch Limited in 1999 to recognise the longservice of employees and to assist them in becoming shareholders. Employees who have six years continuous service and certainother employees determined by the directors can participate in the scheme.Neither the Company nor its related parties have any rights with respect to the shares issued under the scheme.During the period 2,161 B Class shares were issued to the Pumpkin Patch Limited Employee Share Scheme Trust.The scheme held the following shares at balance date:31 January % of total 31 July % of total 31 December % of total2004 ordinary 2003 ordinary 2002 ordinaryshares shares sharesB Class shares: 70,861 5.5% 68,700 5.5% 68,700 5.7%Shares held by the scheme carry no voting rights and full dividend rights.The issue price has been set based upon the estimatedmarket value of ordinary A shares. MJ Prendergast, a director of Pumpkin Patch Limited, is one of three trustees of the scheme.The trustees are appointed by the scheme’s Trustees.Advances of $1,720,740 (2003: $1,647,240, 2002: $1,647,240) have been made to the Trust and to employees to assist in thepurchase of shares under the scheme. These advances are interest free and repayable on demand.Executive Employee Share Scheme TrustThe Pumpkin Patch Limited Executive Employee Share Scheme Trust was established by Pumpkin Patch Limited in 2003. Theshares are issued to Pumpkin Patch Nominees Limited for nil consideration to hold in trust for certain employees who wereinvited by the Board of Directors to participate in a share option scheme. Pumpkin Patch Limited or its subsidiaries have noownership in Pumpkin Patch Nominees Limited nor do they have any ability to appoint its directors.During the period, 31,900 C Class shares were issued under the provisions of the employee share scheme.This scheme held the following shares at the end of the period:31 January % of total 31 July % of total 31 December % of total2004 ordinary 2003 ordinary 2002 ordinaryshares shares sharesC class shares unallocatedto employees 79,250 6.2% 47,350 3.8% - -The shares carry no voting rights and no dividends rights unless fully paid.57

PUMPKIN PATCH LIMITED & SUBSIDIARIESNOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)6. Retained EarningsGroup6 months 7 months 12 months31 Jan 2004 31 July 2003 31 Dec 2002$000 $000 $000Opening Balance 9,423 10,067 10,118Surplus for the period 5,463 1,157 2,350Dividends paid (1,203) (1,801) (2,401)Closing Balance 13,683 9,423 10,067The dividends are fully imputed. Supplementary dividends of $154,553 (2003: $231,829, 2002: $309,106) were paid toshareholders not tax resident in New Zealand for which the Group received a foreign investor tax credit entitlement.7. Imputation Credit AccountParent31 Jan 2004 31 July 2003 31 Dec 2002$ $ $Opening Balance 742,964 511,067 49,232Correction to opening balance - - 2,276Plus income tax paid - - 271,004Imputation credits attached to dividends received 592,666 887,008 1,182,761Withholding tax credits - 23 157Less imputation credits attached to dividends paid to shareholders (438,011) (655,134) (873,357)Transfer to Group companies - - (120,143)Tax refund - - (863)Closing Balance 897,619 742,964 511,0678. BorrowingsGroup31 Jan 2004 31 July 2003 31 Dec 2002$000 $000 $000Bank overdraft 3,955 4,452 5,048Short term borrowings 11,000 17,000 12,000Current portion of term liabilities 763 1,707 2,199Term loans 13,875 15,430 18,02029,593 38,589 37,267Term liabilities fall due for repayment in the following periods:Bank LoansGroup31 Jan 2004 31 July 2003 31 Dec 2002$000 $000 $000One to two years 13,875 15,430 18,02058

PUMPKIN PATCH LIMITED & SUBSIDIARIESNOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)8. Borrowings (continued)Bank Loans – The bank borrowings are secured by first mortgage over certain assets of the group. Refer to note 16 – ContingentLiabilities.Interest Rates – Refer to Note 21 for effective interest rates on borrowings.9. Loans and AdvancesAdvances have been made to the Group in the amount of $2,500,000 (2003: $2,500,000, 2002: $2,500,000) by the followingshareholders:Feruza TrustSimdec TrustKezza Family TrustThe Opito Family TrustThese advances are interest free, repayable within a period not less than 5 years of the date of the advance being made.10. Accruals and ProvisionsGroup31 Jan 2004 31 July 2003 31 Dec 2002$000 $000 $000CurrentSundry accruals 5,804 3,220 5,188Employee entitlements 1,278 1,281 1,229GST payable 182 1,887 1,540Deferred landlord contributions 1,271 1,030 8888,535 7,418 8,845Non CurrentDeferred landlord contributions 2,316 2,146 2,12610,851 9,564 10,97111. InventoriesGroup31 Jan 2004 31 July 2003 31 Dec 2002$000 $000 $000Inventories Comprise:Finished goods 35,105 38,941 36,672Raw materials 2,795 2,275 2,56537,900 41,216 39,23759

PUMPKIN PATCH LIMITED & SUBSIDIARIESNOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)12. Property, Plant and Equipment31 January 2004Cost Acc Depn Book Value$000 $000 $000Leasehold improvements 1,836 619 1,217Computer equipment 5,606 4,527 1,079Shop fit out 33,103 15,002 18,101Point of sale equipment 922 685 237Plant and machinery 4,142 2,588 1,554Office equipment 740 409 331Motor vehicles 143 102 41Furniture and fittings 6,957 2,140 4,817Land 1,964 - 1,964Total 55,413 26,072 29,34131 July 2003Cost or Valuation Acc Depn Book Value$000 $000 $000Leasehold improvements 1,767 505 1,262Computer equipment 5,332 4,178 1,154Shop fit out 30,367 12,586 17,781Point of sale equipment 785 629 156Plant and machinery 4,136 2,351 1,785Office equipment 714 363 351Motor vehicles 170 118 52Furniture and fittings 6,829 1,682 5,147Land 1,964 - 1,964Total 52,064 22,412 29,65231 December 2002Cost or Valuation Acc Depn Book Value$000 $000 $000Leasehold improvements 1,656 369 1,287Computer equipment 5,156 3,855 1,301Shop fit out 31,520 10,774 20,746Point of sale equipment 692 581 111Plant and machinery 3,396 1,882 1,514Office equipment 701 330 371Motor vehicles 373 287 86Furniture and fittings 2,393 571 1,822Land 1,964 - 1,964Total 47,851 18,649 29,202Property ValuationThe Directors, having taken into consideration purchase offers, independent and government valuations and other knownfactors, have assessed the fair value of freehold land to be $3.05 million.60

PUMPKIN PATCH LIMITED & SUBSIDIARIESNOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)13. Investments in SubsidiariesInvestments in subsidiaries are as follows:Interest held by the groupAudited By31 January 31 July 31 December2004 2003 2002Torquay Enterprises Limited 100% 100% 100% PricewaterhouseCoopersPumpkin Patch Originals Limited 100% 100% 100% PricewaterhouseCoopersPumpkin Patch Pty Limited 100% 100% 100% PricewaterhouseCoopersPumpkin Patch Limited (UK) 100% 100% 100% PricewaterhouseCoopersThe Catalogue Studio Pty Limited 100% 100% 100% PricewaterhouseCoopersAll subsidiary entities have a balance date of 31 July. Pumpkin Patch Pty Limited and The Catalogue Studio Pty Limited areincorporated in Australia. Pumpkin Patch Limited (UK) is incorporated in the United Kingdom. All other subsidiary entities areincorporated in New Zealand.The principal activities of the subsidiaries are:Torquay Enterprises LimitedPumpkin Patch Originals LimitedPumpkin Patch Pty LimitedPumpkin Patch Limited (UK)The Catalogue Studio Pty LimitedInvestment companyClothing retailerHolding/Administration functionsClothing retailerNon tradingAcquisition of SubsidiaryOn 1 January 2002 the Group acquired 100% of the shares of Pumpkin Patch Limited (UK) for cash consideration of $40,789.From 1 January 2002 the operating results of Pumpkin Patch Limited (UK), consisting of an operating deficit after taxation of$2,210,349, were included in the Group statements of financial performance for the year ended 31 December 2002.Summary of the effect of acquisition of SubsidiaryGroup31 Jan 2004 31 July 2003 31 Dec 2002$000 $000 $000Net assets acquired:Bank balances - - 547Net current assets - - 2,797Fixed assets - - 2,699Borrowings - - (7,540)- - (1,497)Goodwill on acquisition - - 1,538Consideration paid - - 41Bank balances acquired - - 547Net Cash Impact of Acquisition - - 50661

PUMPKIN PATCH LIMITED & SUBSIDIARIESNOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)14. Other InvestmentsInvestments are stated at quoted market value and comprise:Group31 Jan 2004 31 July 2003 31 Dec 2002$000 $000 $000Quoted Market Value 4 4 315. Deferred TaxationGroup31 Jan 2004 31 July 2003 31 Dec 2002$000 $000 $000Deferred taxation opening 446 (402) 570Prior Period adjustment - 87 (89)For the period 299 761 (883)Deferred Taxation Closing 745 446 (402)16. Contingent LiabilitiesGroupThe Company has guaranteed, together with subsidiary companies, the indebtedness of Pumpkin Patch Limited andsubsidiaries at 31 January 2004, together with, in all cases, interest thereon under a deed of guarantee dated 18 April 1996. Thedeed with the ANZ Banking Group (NZ) Limited and Australia and New Zealand Banking Group Limited provides for theconstitution and issue of securities in respect of indebtedness from time to time of Pumpkin Patch and/or any guaranteeingsubsidiary. At 31 January 2004 the total indebtedness guaranteed by the deed amounted to $29,689,745 (2003: $32,202,508,2002: $35,002,526). The repayment terms are by instalment and are due over more than three years.Other guarantees held by the ANZ Banking Group include rent guarantees to certain landlords amounting to $1,129,362 (2003:$1,030,390, 2002: $917,212) and rent guarantees provided to the landlords of a subsidiary, Pumpkin Patch Limited (UK),amounting to $1,216,646 (2003: $1,250,442, 2002: $1,377,054).The amount of outstanding liabilities under Letters of Credit at 31 January 2004 amounted to $377 (2003: $34,421, 2002:$444,098).17. Capital Expenditure CommitmentsThe Group has commitments for future capital expenditure at 31 January 2004 amounting to $1,188,500 (2003: $418,000, 2002:$20,500).62

PUMPKIN PATCH LIMITED & SUBSIDIARIESNOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)18. Operating Lease ObligationsObligations payable after balance date on non-cancellable operating leases as follows:Group31 Jan 2004 31 July 2003 31 Dec 2002$000 $000 $000Not Later than One Year 21,890 19,865 19,149Later than one year and not later than two years 16,910 16,486 16,459Later than two years and not later than five years 20,651 20,509 25,518Later than five years 1,094 1,606 2,48460,545 58,466 63,61019. Related Party TransactionsThe Group has entered into certain transactions in the form of recharging of expenses and overheads with itssubsidiaries. Details of the identity of subsidiaries are disclosed in Note 13 – Investments in subsidiaries.The Group has paid management fees of $53,270 (2003: $54,211, 2002: $36,036) to Emery Hill Limited which isowned by a Director. These were made on normal commercial terms and there are no outstanding balancesat period end.The Group has paid rent to One Fine Day Limited of $28,380 (2003: $33,110, 2002: $56,760). One Fine Day isowned equally by three shareholders (Kezza Family Trust, Simdec Trust and The Opito Family Trust) ofPumpkin Patch Limited.These were made on normal commercial terms and there are no outstanding balancesat period end.The Group has made purchases from Espies Shopfitters Limited of $1,071,700. Espies Shopfitters is 48.75%beneficially owned by Kezza Family Trust, a shareholder of Pumpkin Patch Limited. These were made on normalcommercial terms. At period end $529,781 was outstanding.The Group has advanced funds to The Pumpkin Patch Limited Employee Share Scheme Trust. The amountoutstanding at period end is $1,199,240 (2003: $1,199,240, 2002: $1,199,240). The parent company has alsoadvanced funds to selected employees. The amount outstanding at period end is $521,500 (2003: $448,000,2002: $448,000).63

PUMPKIN PATCH LIMITED & SUBSIDIARIESNOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)20. Intangible AssetsGroup31 Jan 2004 31 July 2003 31 Dec 2002$000 $000 $000Patents and TrademarksPatents and trademarks at beginning of period 207 201 142Acquisitions 19 36 59Current period amortisation (24) (30) -Patents and trademarks at end of period 202 207 201Goodwill on ConsolidationGoodwill (gross) at beginning of the period 1,538 1,538 -Amortisation charge (1,538) (1,538) -Unamortised balance at beginning of the period - - -Goodwill arising on acquisition of subsidiary - - 1,538Current period amortisation - - (308)Impairment charge - - (1,230)Goodwill at end of the period - - -Total Intangible Assets 202 207 20121. Financial Instruments(a)Currency and Interest Rate RiskNature of activities and management policies with respect to financial instruments:1. CurrencyThe Group undertakes transactions denominated in foreign currencies from time to time, and resulting from these activities,exposures in foreign currency arise. It is the Group’s policy to hedge foreign currency risks as they arise except for foreigncurrency risks authorised by the Board. To manage these exposures, the Group uses forward foreign exchange contracts andforeign currency options.The notional principal or contract amounts of foreign exchange instruments outstanding at balance date are:31 Jan 2004 31 July 2003 31 Dec 2002$000 $000 $000Forward foreign exchange contracts 38,971 22,627 28,442Forward options 5,276 11,009 9,529Total 44,247 33,636 37,971The cash settlement requirements of the forward foreign exchange contracts and options approximates the notional amountshown above.2. Interest RateThe Group has long-term fixed rate borrowings which are used to fund on-going activities. Management monitors the levels ofinterest rates on an on-going basis and periodically will lock in fixed rates on the next floating reset, when they are of the viewthat interest rates may increase.64

PUMPKIN PATCH LIMITED & SUBSIDIARIESNOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)3. Repricing AnalysisTrade debtors, other debtors, trade creditors, other creditors and dividends payable have not been includedin the table below as they are not interest rate sensitive.Group Repricing Maturities31 January 2004Effective < 6 6-12 1-2 2-5 > 5 TotalInterest Months Months Years Years YearsRates $000 $000 $000 $000 $000 $000LiabilitiesBank overdraft 8.35% 3,955 - - - - 3,955Short & long term borrowings 6.05% 11,000 - 13,875 - - 24,875Term liabilities 7.50% 763 - - - - 763Total Liabilities 15,718 - 13,875 - - 29,593Repricing Gap 15,718 - 13,875 - - 29,593Group Repricing Maturities31 July 2003Effective < 6 6-12 1-2 2-5 > 5 TotalInterest Months Months Years Years YearsRates $000 $000 $000 $000 $000 $000LiabilitiesBank overdraft 8.35% 4,452 - - - - 4,452Short & long term borrowings 5.99% 17,000 - 15,345 - - 32,345Term liabilities 7.50% - 1,707 85 - - 1,792Total Liabilities 21,452 1,707 15,430 - - 38,589Repricing Gap 21,452 1,707 15,430 - - 38,589Group Repricing Maturities31 December 2002Effective < 6 6-12 1-2 2-5 > 5 TotalInterest Months Months Years Years YearsRates $000 $000 $000 $000 $000 $000LiabilitiesBank overdraft 7.60% 5,048 - - - - 5,048Short & long term borrowings 6.61% 12,000 - 17,060 - - 29,060Term liabilities 8.05% - 2,199 960 - - 3,159Total Liabilities 17,048 2,199 18,020 - - 37,267Repricing Gap 17,048 2,199 18,020 - - 37,2674. Concentration of Credit RiskIn the normal course of business, the Group incurs credit risk from trade debtors and transactions with financialinstitutions. The Group has a credit policy which is used to manage this risk.The Group has no significant concentrations of credit risk. The Group does not require any collateral or securityto support financial instruments due to the quality of financial institutions and trade debtors dealt with.65

PUMPKIN PATCH LIMITED & SUBSIDIARIESNOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE 6 MONTHS ENDED 31 JANUARY 2004 (CONTINUED)(b)Fair ValuesThe estimated fair values of the Group’s financial assets and liabilities which differ from the carrying values arenoted below:31 January 2004 31 July 2003 31 December 2002Carrying Fair Carrying Fair Carrying FairValue Value Value Value Value Value$000 $000 $000 $000 $000 $000AssetsInvestments 4 4 4 4 3 3UnrecognisedForeign exchange contracts - (1,814) - (1,369) - (2,988)The Group anticipates that Term Liabilities will be held to maturity and that settlement at fair value is unlikely.The following methods and assumptions were used to estimate the fair values for each class of financialinstrument.Debtors, Trade Creditors and Bank OverdraftThe carrying value of these items is equivalent to their fair value and therefore they are excluded from the tableshown above.InvestmentsThe fair value of listed investments is estimated based on quoted market prices at balance date. The fair valueof unlisted investments is estimated to be the net asset backing, as there are no quoted market pricesavailable.Term LiabilitiesThe fair value of the Group’s term liabilities is estimated based on current market rates available to the Groupfor debt of similar maturity.Foreign Exchange ContractsThe fair value of these instruments is estimated based on the quoted market price of these instruments.Guarantees and Overdraft FacilitiesThe fair value of these instruments is estimated on the basis that management do not expect settlement atface value to arise. The carrying value and fair value of these instruments is nil.22. Significant Events After Balance DateSince balance date the company has entered into an agreement to purchase the inventory, fixed assets, andcertain employee related obligations of the HBK Girl retail operation. In addition the company is also takingover the ongoing lease obligations of the operations. Settlement date was 3 May 2004.66

summary historical financial informationBasis of preparationThe historical financial information summarised below is derived from the audited consolidated financialstatements of Pumpkin Patch Limited for the financial years ended 31 December 1999, 2000, 2001, 2002, theseven months ended 31 July 2003, and the six months ended 31 January 2004. Pumpkin Patch changed itsfinancial year end from December to July in 2003. Therefore the 2003 financial statements are only for a sevenmonth period.The accounting policies as set out on pages 49 to 52 have been consistently applied [except where statedbelow] for all the financial periods presented.Audited31 December 31 July 31 January12 Months 7 Months 6 Months1999 2000 2001 2002 2003 2004$000 $000 $000 $000 $000 $000Operating revenue 103,033 132,890 161,293 181,919 111,750 99,730Other revenue 3,006 5 34 23 17 6Total revenue (excluding interest) 106,039 132,895 161,327 181,942 111,767 99,736Expenditure (excluding depreciation) 94,873 119,630 149,776 167,732 103,436 86,681Group EBITDA (earnings before interest,tax, depreciation and amortisation) 11,166 13,265 11,551 14,210 8,331 13,055Depreciation 2,737 2,997 4,833 6,012 3,821 3,497Group EBIT (earnings before interest and taxation) 8,429 10,268 6,718 8,198 4,510 9,558Net interest expense 1,385 970 2,725 2,552 1,871 1,329Net profit before tax and extraordinary items 7,044 9,298 3,993 5,646 2,639 8,229Income tax expense 1,658 3,240 1,090 3,296 1,482 2,766Net profit before extraordinary items 5,386 6,058 2,903 2,350 1,157 5,463Extraordinary items - - - - - -Net profit 5,386 6,058 2,903 2,350 1,157 5,463Minority interest 305 - - - - -Dividends paid or payable 3,409 3,596 1,499 2,401 1,801 1,203Net profit (deficit) retained in group 1,672 2,462 1,404 (51) (644) 4,260Dividends – cents per share 284.0 299.8 125.0 200.0 144.2 93.8Audited31 December 31 July 31 January12 Months 7 Months 6 Months1999 2000 2001 2002 2003 2004$000 $000 $000 $000 $000 $000Total tangible assets 37,416 53,280 74,098 78,294 78,686 73,683Total assets 38,329 53,400 74,240 78,495 78,893 73,885Total liabilities 20,723 33,873 53,257 57,521 58,563 49,295Total equity 17,606 19,526 20,983 20,974 20,330 24,590Net tangible assets (‘NTA’) 16,693 19,407 20,841 20,772 20,123 24,389Number of ordinary shares issued (000s) 1,200 1,199 1,199 1,202 1,249 1,283NTA backing per share – cents 1,391 1,619 1,738 1,728 1,611 1,901Adjusted NTA N/A N/A N/A N/A N/A N/AAdjusted and diluted NTA N/A N/A N/A N/A N/A N/A67

SUMMARY HISTORICAL FINANCIAL INFORMATION (CONTINUED)Notes1. Number of ordinary shares issued at 31 July 2003 and 31 January 2004 include C Class shares that are notentitled to receive dividends. There were 47,350 and 79,250 C Class shares on issue at 31 July 2003 and31 January 2004 respectively. Excluding the C Class shares the dividends paid in cents per share were 150and 100 cents per share in 2003 and 2004, respectively.2. In accordance wiith clause 8(5) of the First Schedule to the Regulations, set out below is the adjusted anddiluted net tangible asset backing per share as at 31 January 2004.Proceeds From 32,000,000 shares (a)Proceeds From 60,770,399 shares (b)Assumed Adjusted NTA Adjusted and Diluted NTA Adjusted NTA Adjusted and Diluted NTAFinal Price Backing Per Share Backing Per Share Backing Per Share Backing Per Share$1.20 $0.37 $0.38 $0.49 $0.50$1.30 $0.39 $0.40 $0.52 $0.53$1.40 $0.41 $0.42 $0.55 $0.56The above table has been calculated based on the following assumptions:(a)(b)(c)(d)(e)All new shares (81,027,200) have been allotted and the maximum number of shares have beenrepurchased (49,027,200), assuming Final Price of $1.20, $1.30 and $1.40.The Board reserves the rightto set the Final Price outside of the Indicative Price Range;60,779,399 shares are subscribed for by investors and the Company, at its discretion, retains allproceeds rather than returning proceeds from all shares over 32,000,000 to investors (i.e. the numberof shares subscribed for is less than the repurchase threshold described on pages 81 and 82);The 100:1 share split (described on page 79) has occurred, offer related costs of $1,335k wereincurred which reduced equity;The shares to be issued under the DF7 Share Scheme had been allotted and the proceedsreceived before that date; andThe adjusted and diluted NTA backing per share assumes, in addition to (a) to (d) above, theOptions have been allotted and proceeds received.3. The other revenue in 1999 largely comprises a profit on sale of the current head office, warehouse andlogistics facility at 439 East Tamaki Road, Auckland. The property was sold to a third party.4. During 1999, PPL Group exited the Studio Works stores. Below is a table of the historical discontinuingactivities details. Some costs associated with exiting the stores, such as the write-off of inventory and fixedassets, were recognised in the 1999 results, with the remainder of the exiting costs being incurred in 2000with the completion of the exiting process.31 December 31 July 31 January12 Months 7 Months 6 MonthsDiscontinued Activities 1999 2000 2001 2002 2003 2004$000 $000 $000 $000 $000 $000Revenue (included in operating revenue) 5,827 2,124 - - - -Expenditure (included in expenditure) (7,493) (2,124) - - - -Cost of exiting activity (included in expenditure) (830) (361) - - - -Income tax benefit (included in tax expense) 823 - - - - -Net Loss from Discontinued Activities (1,673) (361) - - - -5. Amounts presented for net interest above include both interest income and interest expenses. Theindividual interest income and interest expense amounts for each period are presented below.The higherinterest charges from 2001 are a consequence of higher debt used to fund additional growth in the business.31 December 31 July 31 January12 Months 7 Months 6 MonthsNet Interest 1999 2000 2001 2002 2003 2004$000 $000 $000 $000 $000 $000Interest revenue 10 38 257 18 - 6Interest expense (1,395) (1,008) (2,982) (2,570) (1,871) (1,335)Net Interest (1,385) (970) (2,725) (2,552) (1,871) (1,329)68

SUMMARY HISTORICAL FINANCIAL INFORMATION (CONTINUED)6. During the 2000 and 2001 periods the group entered into transactions with a related company, PumpkinPatch Limited (UK). A summary of these transactions are presented below.31 December12 MonthsRelated party transactions 2000 2001$000 $000Statement of Financial PerformanceSale of inventory to Pumpkin Patch Limited (UK) 1,678 6,621Franchise royalties charged to Pumpkin Patch Limited (UK) - 301Management fees charged to Pumpkin Patch Limited (UK) 37 630Statement of Financial PositionReceivable from Pumpkin Patch Limited (UK) 3,948 7,7377. In 2001 the Group changed its accounting policy regarding fit-out contributions received from landlords.Prior to 2001 contributions were either capitalised and taken to income at a later date or taken toincome in full upon receipt of the contribution. The new policy required that all contributions must beinitially capitalised and then recognised in the statement of financial performance over the minimumperiod of the lease as a reduction in operating lease costs. The lease periods average 5 years.The table below summarises the net impact on the reported results of the company resulting from thechange in accounting policy.31 December 31 July 31 January12 Months 7 Months 6 Months1999 2000 2001 2002 2003 2004$000 $000 $000 $000 $000 $000Net impact of change in policy - (1,058) 318 (170) (381) (2)8. In 2002 the group acquired 100% of the shares in Pumpkin Patch Limited (UK) for cash consideration of$40,789. The table below details the transaction. The 2002 results not only include amortisation of goodwillof $307,577 but also a write-off of $1,230,309 relating to the balance of goodwill on the purchase ofPumpkin Patch Limited (UK). The charge was deemed necessary by the Directors after they reviewed thecarrying value of the subsidiary and recognising that the purchase was made primarily as part of overallrestructuring of group ownership structures.Acquisition of PPL (UK)NZ$’000 2002Cash & bank 547Net current assets 2,797Fixed assets 2,699Borrowings (7,540)Net Liabilities Acquired (1,497)Cash consideration 41Goodwill on Acquisition 1,5389. The results include trading losses attributable to Pumpkin Patch Limited (UK).2002 2003 200412 Months 7 Months 6 Months$000 $000 $000Trading losses attributed to Pumpkin Patch (UK) 1,445 1,958 59910. The growth in total assets and liabilities over the periods relate to growth in store numbers, their associatedworking capital items (e.g. inventory, accounts payable), and use of debt to fund asset growth.69

Auditors’ LetterThe DirectorsPumpkin Patch LimitedPrivate Bag 94310, East TamakiPakuranga, AUCKLAND14 May 2004Auditors’ report for inclusion in the ProspectusDear DirectorsAs auditors of Pumpkin Patch Limited (“the Company”) we have prepared this report pursuant to clause 42 ofthe First Schedule of the Securities Regulations 1983 for inclusion in a Prospectus to be dated 14 May 2004.Directors’ responsibilitiesThe Company’s Directors are responsible for the preparation and presentation of:(a) the financial statements which give a true and fair view of the state of affairs of Pumpkin Patch Limitedand its subsidiaries (“the Group”) as at 31 January 2004 and 31 July 2003 and its financial performanceand cash flows for the periods ended on that date, as required by clauses 23 to 38 of the First Scheduleof the Securities Regulations 1983;(b) the summary of financial statements of the Group for the years ended 31 December 1999, 2000, 2001 and2002, for the seven months ended 31 July 2003 and for the six months ended 31 January 2004, as requiredby clauses 8(2) and 8(3) of the First Schedule of the Securities Regulations 1983; and(c) the prospective financial information of the Group for the years ending 31 July 2004 and 31 July 2005,including the assumptions on which they are based.Auditors’ responsibilitiesWe are responsible for expressing an independent opinion on the financial statements of the Group for the sixmonths ended 31 January 2004 and for the seven months ended 31 July 2003 presented by the Directors andreporting our opinion in accordance with clause 42(1) of the First Schedule of the Securities Regulations 1983.We are also responsible for reporting, in accordance with clauses 42(1)(g) and 42(2) of the First Schedule of theSecurities Regulations 1983,on the following matters which have been prepared and presented by the Directors:(a) the amounts included in the summary of financial statements of the Group for the years ended 31December 1999, 2000, 2001 and 2002, for the seven months ended 31 July 2003 and for the six monthsended 31 January 2004; and(b) the prospective financial information of the Group for the years ending 31 July 2004 and 31 July 2005.We have no relationship with or interests in the Company or any of its subsidiaries other than in our capacitiesas auditors and accounting advisers.Basis of opinion on the financial statementsAn audit of the financial statements includes examining, on a test basis, evidence relevant to the amounts anddisclosures in the financial statements. It also includes assessing:(a) the significant estimates and judgements made by the Directors in the preparation of the financialstatements; and(b) whether the accounting policies used and described on pages 49 to 52 are appropriate to thecircumstances of the Group and Company, consistently applied and adequately disclosed.We have conducted our audit in accordance with generally accepted auditing standards in New Zealand. Weplanned and performed our audit so as to obtain all the information and explanations which we considerednecessary in order to provide us with sufficient evidence to give reasonable assurance that the financialstatements are free from material misstatements, whether caused by fraud or error. In forming our opinion wealso evaluated the overall adequacy of the presentation of the information in the financial statements.70

Basis of opinion on the summary of financial statementsWe have undertaken procedures to provide reasonable assurance that the amounts set out in the summary offinancial statements of the Group on page 67, pursuant to clauses 8(2) and 8(3) of the First Schedule of theSecurities Regulations 1983, have been correctly taken from the audited financial statements of the Group forthe years ended 31 July 1999, 2000, 2001 and 2002, for the seven months ended 31 July 2003 and for the sixmonths ended 31 January 2004.Basis of opinion on the prospective financial informationTo meet our reporting responsibilities we have examined the prospective financial information for the years ending31 July 2004 and 31 July 2005 as set out on pages 37 to 39 to confirm that, so far as the accounting policies andcalculations are concerned, the prospective financial information has been properly compiled on the footing ofthe assumptions made or adopted by the Directors as set out on pages 40 to 43 of this Prospectus and arepresented on a basis consistent with the accounting policies normally adopted by the Group.Unqualified opinion on the financial statements and the summary of financial statementsWe have obtained all the information and explanations we have required.In our opinion:(a)(b)proper accounting records have been kept by the Group as far as appears from our examination ofthose records;the financial statements of the Group, on pages 45 to 66 of this Prospectus, as required by clauses 23 to38 of the First Schedule of the Securities Regulations 1983, and that are required to be audited, have beendrawn up to:(i)(ii)comply with the Regulations;subject to those Regulations, comply with generally accepted accounting practice inNew Zealand; and(iii) give a true and fair view of the state of affairs of the Group as at 31 January 2004 and 31 July 2003and its financial performance and cash flows for the periods ended on that date;(c)the amounts or details set out in the summary of financial statements, on page 67 of this Prospectus, asrequired by clauses 8(2) and 8(3) of the First Schedule of the Securities Regulations 1983, have beencorrectly taken from the audited financial statements of the Group from which they were extracted.Unqualified opinion on the prospective financial informationIn our opinion, the prospective financial information for the years ending 31 July 2004 and 31 July 2005 as setout on pages 37 to 39, so far as the accounting policies and calculations are concerned, have been properlycompiled on the footing of the assumptions made or adopted by the Directors of the Company as set out onpages 40 to 43 of this Prospectus and are presented on a basis consistent with the accounting policies normallyadopted by the Group.Actual results are likely to be different from the prospective financial information since anticipated eventsfrequently do not occur as expected and the variation could be material. Accordingly, we express no opinionas to whether the prospective financial information will be achieved.Yours faithfullyChartered AccountantsAuckland71

statutory information72

statutory and other informationThe following includes, but is not limited to, particulars given pursuant to the First Schedule of the SecuritiesRegulations 1983.Statutory Index as required by Regulation 5(6) of the Securities Regulationspage1. Main Terms of Offer 742. Name and Addresses of Offeror 743. Details of Incorporation of Issuer 744. Principal Subsidiaries of Issuer 745. Directorate and Advisers 745a. Restrictions of Directors’ Powers 756. Substantial Equity Securities Holders of Issuer 757. Description of Activities of Issuing Group 788. Summary of Financial Statements 789. Prospects and Forecasts 7810. Provisions Relating to Initial Flotations 7811. Acquisition of Business and Subsidiary 7912. Securities Paid Up Otherwise than in Cash 7913. Options to Subscribe for Securities of Issuing Group 7914. Appointment and Retirement of Directors 7915. Directors’ Interests 8016. Promoters’ Interests 8017. Material Contracts 8018. Pending Proceedings 8019. Preliminary and Issuing Expenses 8020. Restrictions on Issuing Group 8121. Other Terms of Offer and Securities 8122-38. Financial Statements 8139. Places of Inspection of Documents 8140. Other Material Matters 8141. Directors’ Statements 8542. Auditors’ Report 7073

1. Main Terms of OfferPumpkin Patch Limited is the issuer of the Shares and the Options which are offered pursuant to this Prospectusand has its registered office at 439 East Tamaki Road, East Tamaki, Auckland.A description of the Shares and Options offered under this Prospectus including their maximum number andprice to be paid for them is set out on page 14 to 19.2. Name and Address of the OfferorPumpkin Patch Limited is both the issuer and the offeror of the Shares and the Options.3. Details of Incorporation of the IssuerPumpkin Patch Limited was incorporated under the provisions of the Companies Act 1993 (New Zealand) on27 June 1994 in Auckland under company number 637120.The public file relating to the incorporation of the Company is kept by the Companies Office, and is availablefor inspection on the Companies Office electronic register at www.companies.govt.nz.4. Principal Subsidiaries of the IssuerAt the date of registration of this Prospectus the Company had the following wholly owned subsidiaries whosetotal tangible assets exceed 5% of the amount of the total tangible assets of Pumpkin Patch and its subsidiaries:• Pumpkin Patch Originals Limited;• Pumpkin Patch Limited (registered in the United Kingdom); and• Torquay Enterprises Limited.5. Directorate and AdvisorsThe names, addresses and technical or professional qualifications of every Director are set out on page 23.The names of the Directors employed directly by the Company are:• Greg Muir – Executive Chairman;• Maurice Prendergast – Managing Director; and• Chrissy Conyngham – Director of Design and Marketing.No Director has been adjudged bankrupt during the five years preceding the date of this Prospectus.The names of the Company’s auditors, securities registrar and any sharebrokers, bankers and solicitors whohave been involved in the preparation of this Prospectus are set out in page 99.There are no experts named in this Prospectus, and the offers of Shares and Options made under this Prospectusare not underwritten.74

5A. Restrictions of Directors’ PowersThere are no other modifications, exceptions or limitations on the powers of the Board imposed by theConstitution, other than those limitations and other requirements that apply to every company registered underthe Companies Act 1993, or pursuant to the NZX Listing Rules, which require the approval of shareholders tovarious matters including major transactions, material transactions and related party transactions.The Companies Act 1993 contains a number of provisions which would have the effect or consequence, incertain circumstances, of restricting the powers of Directors. Such provisions are common to all companiesregistered under that Act, and include requirements that:• A major transaction (as defined in the Companies Act 1993) must have the approval of a special resolutionof shareholders;• Any action by the Company affecting the rights attached to any shares must be approved by specialresolution of each interest group (as defined in the Companies Act 1993) affected;• Distributions (including dividends) may not occur if the solvency test (as defined in the Companies Act 1993)is not satisfied; and• The Board of Directors may not delegate certain powers conferred on it as specified in the Second Scheduleof the Companies Act 1993.6. Substantial Equity Security Holders of IssuerThe following table sets out names of all registered holders of Shares as at the date of registration of thisProspectus. None of these persons undertake any liability in respect of, or guarantee, the Shares or Optionsoffered pursuant to this Prospectus.HolderNo of shares heldAs at date ofProspectus 1,2 Post-listing 3Wynyard Wood Trustee Services Ltd and 48,780,000 Between 48,780,000 and 24,390,000Nigel P Smith (as trustees of the Feruza Trust)(number depends on number of shares repurchased)Perpetual Trustee Limited 24,000,000 Between 24,000,000 and 12,000,000(as trustee of the Quadrant Trust)(number depends on number of shares repurchased)Wynyard Wood Trustee Services Ltd and 20,037,200 Between 20,037,200 and 7,400,000Nigel P Smith (as trustees of the Simdec Trust)(number depends on number of shares repurchased)Maurice J Prendergast, Kerry D Prendergast and 13,400,000 13,400,000Stuart G Callender (as trustees of the Kezza Family Trust)Mark J Synnott, Sally R Synnott and The Gale Trustee 10,400,000 10,400,000Co Limited (as trustees of The Opito Family Trust)Adam L Ryall, Judith M Ryall and Stanley A 1,200,000 1,200,000Carwardine (as trustees of the Punchestown Family Trust)Gregory J Muir, Debra J Muir and Geoffrey 1,111,100 1,111,100A Lawrie (as trustees of the Muir Trust)Pumpkin Patch Nominees Limited 9,875,000 9,875,000 4(as trustee for various PPL employee share schemes) (C shares)Maurice J Prendergast, Nigel P Smith and Trustee 5,709,700 5,709,700Services No 4 Limited (as trustees of various(B shares)PPL employee share schemes)Public, including institutional and 0 Between 0 and 81,027,200professional investors(number depends on the level of subscriptionsreceived under the Share Offer).75

NOTES1. The numbers of shares stated in this column include the result of a 100:1 share split carried out prior tolisting. Note however that the numbers stated do not include any Options to be allocated as part of theOption Offer.2. As at the date of this Prospectus, all of the shares in Pumpkin Patch (except those held by the trustees ofthe various Pumpkin Patch employee share schemes which are a combination of Class B and Class Cshares) are designated as Class A shares and confer full dividend and voting rights on the holders. ClassB and Class C shares typically do not confer voting rights and contain restrictions on their transferabilityand, in addition, the Class C shares do not confer dividend rights. Immediately prior to listing, however, allPumpkin Patch shares will be re-classified as ordinary shares ranking equally with respect to dividendsand voting rights.3. The Company proposes, immediately after listing, to repurchase certain shares from the SellingShareholders. Post-listing, the numbers of shares held by each Selling Shareholder will depend on the levelof shares repurchased from them by Pumpkin Patch which, in turn, will depend on the level ofsubscriptions received under the Share Offer (see pages 81 and 82). Prior to listing, certain share transferswill have occurred between shareholders. The Simdec Trust has received 700,000 shares from the OpitoFamily Trust and 4,537,200 shares from the trustees of the employee share schemes (3 million of whichwere transferred for and on behalf of Maurice Prendergast and 1,537,200 of which were transferred forand on behalf of Chrissy Conyngham). The Simdec Trust is obliged to pay an amount for these sharesequivalent to the repurchase price per share it will receive under the Repurchase Agreements (seepages 81 and 82).4. Pumpkin Patch has issued 2,000,000 Shares to Pumpkin Patch Nominees Limited in its capacity as trusteeof the DF7 Scheme.As required by Listing Rule 7.1.15, Pumpkin Patch has, not earlier than two months prior to the date of thisProspectus, made a written request pursuant to sections 28 and 29 of the Securities Markets Act 1988 (asthough Pumpkin Patch was listed) requiring all registered and other holders of relevant interests (as defined inthat Act) of 5% or more of voting securities in Pumpkin Patch to provide disclosure of:• any relevant interest;• the nature of that relevant interest; and• where the relevant interest is beneficial ownership, the consideration and other terms and conditions of anytransaction under which that interest was acquired before the date of this Prospectus.No person who received a request for disclosure has failed to provide the information requested.The following table shows, as at 7 April 2004, the holders of relevant interests of 5% or more of the votingsecurities in Pumpkin Patch and the nature of their relevant interests, and where the relevant interest isbeneficial ownership that was acquired within 2 years prior to 7 April 2004, the consideration and other termsand conditions of transaction(s) relating to such beneficial ownership.76

Relevant Interest Holder No of Nature of Interest heldshares 1Perpetual 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)240,000 Legal and registered title. Beneficial interest in the shares is held by theunit holders of the Quadrant Capital 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), INGPrivate Capital Pty Limited (as trustee for ING Private Capital Fund 1),Perpetual Trustee Company Limited (as trustee for MacquarieAlternative Investment Trust), MLC Limited, National Australia FinancialManagement Limited, PSS Board, Unisuper, Westpac BankingCorporation and Westpac Staff Superannuation Fund).487,800 Legal and registered title. Beneficial interest in the shares is held bythose beneficiaries (being unstated relatives of Setar Motani and trustsfor 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 bythose beneficiaries (being unstated relatives of Steven Sher and trustsfor 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 bythose beneficiaries (being unstated relatives of MJ and KDPrendergast and trusts for the benefit of such relatives) in favour ofwhom the trustees may exercise their discretion from time to time.111,000 Legal and registered title. Beneficial interest in the shares is held bythose beneficiaries (being unstated relatives of MJ and SR Synnott andtrusts for the benefit of such relatives) in favour of whom the trusteesmay exercise their discretion from time to time.Adam L Ryall, Judith M Ryall and 12,000 Legal and registered title. Beneficial interest in the shares is held byStanley A Carwardine (as trusteesthose beneficiaries (being unstated relatives of MJ and SR Synnottof the Punchestown Family Trust).and trusts for the benefit of such relatives) in favour of whom thetrustees may exercise their discretion from time to time.NOTES:1. The above information is stated as at 7 April 2004 and, as such, precedes (and so does not take accountof):(i) the 100:1 share split to be carried out prior to listing (see page 79);(ii)(iii)(iv)(v)the re-designation, immediately prior to listing, of all shares as ordinary shares (ranking equally as todividends and voting rights). Currently, the shares are all Class A shares (which confer full dividendand voting rights), except those held by the trustees of the various employee share schemes whichare a combination of Class B and Class C shares (and which typically do not confer voting rightsand contain restrictions on their transferability and, in respect of the Class C shares, do not conferdividend rights);the share repurchases to be carried out immediately following listing in accordance with theRepurchase Agreements, as described in more detail on pages 81 and 82;the issue of shares to PPNL as the trustee of the DF7 scheme (to be carried out on listing, asdescribed in more detail on page 85); andallocation of options under the Option Offer (to be carried out prior to listing, as described in moredetail on page 93).2. The above information does not refer to the shares held by the trustees of the various Pumpkin Patchemployee share schemes as such shares do not confer voting rights and so are not voting securities ofPumpkin Patch. As described further in Note 1(ii) above, however, such shares will immediately prior tolisting be re-designated as ordinary shares, carrying full voting rights.77

7. Description of the Activities of the Issuing GroupThe business activities of the Company and its Subsidiaries carried out in the five years preceding the date ofregistration of this Prospectus include the design, manufacture and distribution of apparel through its own retailstores, wholesale arrangements and a mail order catalogue system.For more details on the activities of the Company and its Subsidiaries in the five years preceding the date ofthis Prospectus, refer to page 67.The principal fixed assets of Pumpkin Patch and its subsidiaries are the fixtures and fittings in its retail stores andat its principal place of business at 439 East Tamaki Road in Auckland. These assets are owned by PumpkinPatch (or a Subsidiary) and are used in its business.8. Summary of Financial StatementsSummary financial information for Pumpkin Patch and its Subsidiaries prepared for the purposes of clause 8 ofthe First Schedule to the Securities Regulations 1983, and the information required by that clause, is set out onpages 67 to 69.9. Prospects and ForecastsThe trading prospects of Pumpkin Patch and its Subsidiaries, together with any material information relevant tothose prospects, are described generally on page 26, and more particularly in the Prospective FinancialInformation set out on pages 36 to 43 of this Prospectus.Risk and special trade factors which could materially affect the prospects of Pumpkin Patch and its Subsidiariesare described on pages 28 to 31.10. Provisions Relating to Initial FlotationsThe plans of the Directors of Pumpkin Patch and its subsidiaries during the twelve month period commencingon the date of this Prospectus are set out on pages 26. The sources of funds required for the implementation ofthese plans will be funds on hand (including funds raised under the Share Offer) funds generated in the normalcourse of business and, if required, borrowed funds.The intended use of the proceeds of the Share Offer and the Option Offer is set out on page 17. However thoseproceeds may, notwithstanding the stated Directors’ plans, be applied towards any undertaking that theCompany may lawfully engage in.A prospective statement of cash flows of Pumpkin Patch and its Subsidiaries (including the principalassumptions on which it is based) which the Directors expect to occur for the years commencing 1 August 2003and 1 August 2004 are set out on pages 39 to 43.There is no minimum amount that, in the opinion of the Directors, must be raised by the issue of the Sharesoffered under this Prospectus in order to provide for any of the following:• The purchase price of any property purchased or to be purchased which is to be defrayed in whole or inpart from the proceeds of the offer;• Any preliminary expenses or commission so payable to any person in consideration of such person agreeingto subscribe for, or procuring or agreeing to procure subscriptions for, any of the Shares;• Working capital;• The repayment of money borrowed by the Company in respect of any of the foregoing matters.78

11. Acquisition of Business or SubsidiaryOn 3 May 2004 the Company acquired, from Hallensteins Bros Limited, the business known as “HBK Girl” andassociated assets. The consideration paid for that acquisition was not more than one-fifth of the amount of thetotal tangible assets in the statement of financial position as at 31 July 2003 appearing on page 46.No other business, subsidiary or body corporate has been acquired by the Company from any person at anytime in the period of two years immediately preceding the date of registration of this Prospectus, where theconsideration paid or payable for that acquisition was more than one-fifth of the amount of the total tangibleassets of the Company as at 31 July 2003.12. Securities Paid Up Otherwise than in CashPrior to the date of this Prospectus the Company has undertaken a share sub-division in respect of every shareon issue in the Company prior to that sub-division. Each such share was sub-divided into 100 shares, for noadditional consideration. No other equity or participatory securities have been, within the five years precedingthe date of this Prospectus, issued or allotted, or subscribed for and are to be so allotted, as fully or partly paidup otherwise than in cash.13. Options to Subscribe for Securities of Issuing GroupThe Option Offer is an offer of Options to acquire Shares upon the terms and conditions described on pages93 to 98. Subject to those terms and conditions each Option entitles the Option Holder upon exercise toacquire one Share ranking equally in all respects with all other Shares on issue at the date on which the Optionis exercised, except for any dividend in respect of which the Record Date occurred prior to that date.No consideration is payable for the Options but an Exercise Price will apply for Option Holders wishing toexercise their Options. The Exercise Price will be equivalent to the Final Price per Share for investors other thaninstitutional and professional investors as determined pursuant to the Share Offer.The Options can only be exercised within the Exercise Period (commencing on 9 June 2007 and ending on 9June 2009) (although the Company may permit earlier exercise in certain extraordinary circumstances). TheOptions will lapse if they are not exercised by the end of the Exercise Period.All Options will be granted to persons who are employees or Directors of Pumpkin Patch or its Subsidiaries. Thetotal number of Shares under option will be 2,274,000, of which:• 1,415,000 will be granted to Principal Officers of Pumpkin Patch or its subsidiaries; and• 859,000 will be granted to other employees (i.e. excluding the Principal Officers of Pumpkin Patch or itssubsidiaries, who are also employees).14. Appointment and Retirement of DirectorsNo Director has been appointed in a manner that is materially different from that specified in sections 153 and155 of the Companies Act 1993.There are no rules in the Constitution relating to the retirement age of Directors.No person (other than the members of the Company in general meeting or Directors acting as a Board) hasthe right to appoint a Director or Directors. Directors have the power to appoint alternate directors under theConstitution, subject to approval by a majority of the other Directors. No alternate directors have beenappointed as at the date of this Prospectus.79

15. Directors’ InterestsMaurice Prendergast, Greg Muir and Chrissy Conyngham are employed by Pumpkin Patch as ManagingDirector, Executive Chairman and Director of Design and Marketing respectively. Maurice, Greg and Chrissyprovide executive and management services to Pumpkin Patch and Chrissy additionally provides fashiondesign services. Each is entitled to salary and other remuneration and benefits in respect of their employmentby Pumpkin Patch. Each are also entitled to termination of their employment by not more than 12 monthsnotice (and the Company may make a payment in lieu of notice) and, in the case of redundancy, each areentitled to a further payment of 6 months total remuneration. No other compensation on termination ispayable. Each of Maurice, Greg and Chrissy will be offered Options pursuant to the Option Offer (870,000Options, in aggregate) and will be entitled to participate in the DF7 Scheme as set out on page 85.The Company has granted indemnities, to the fullest extent permitted by the Companies Act 1993, in favour ofeach of its Directors. The Company also maintains insurance for its Directors and officers to support suchindemnities to the extent permitted by the Companies Act 1993.Directors are entitled to be paid reasonable travelling, accommodation and other expenses incurred in thecourse of performing duties or exercising powers as Directors.No material transaction has been entered into in the five years preceding the date of this Prospectus or is tobe entered into between Pumpkin Patch and any of its Directors or between any of the persons specified inparagraph 15 of the First Schedule to the Securities Regulations Act 1983.16. Promoters’ InterestsThere are no promoters of the Shares or the Options the subject of the offers set out in this Prospectus, otherthan the Company as the issuer of the Shares and the Options.17. Material ContractsPumpkin Patch has entered into the Repurchase Agreements with the Selling Shareholders. The terms of theseagreements are as described on pages 81 and 82.There are no other material contracts (other than contracts in the ordinary course of business) which havebeen entered into by the Company or any of its Subsidiaries at any time in the last two years preceding thedate of registration of this Prospectus.18. Pending ProceedingsThere are no legal proceedings or arbitration pending at the date of the registration of this Prospectus that mayhave a material adverse effect on the Company or its Subsidiaries.19. Preliminary and Issuing ExpensesIssue expenses, including lead management fees, legal and accounting fees, advertising, printing and othercosts incurred by the Company in making the Share Offer and the Option Offer are estimated at $2,700,000, ofwhich approximately $1,335,000 is to be paid by the Company and the remainder to be paid by or on behalfof the Selling Shareholders. The lead management fees include brokerage fees (payable by the LeadManager) of 1.75% of the subscription price for Shares issued under firm allocation to retail investors and 1% ofthe subscription price for Shares issued to institutional investors.80

20. Restrictions on the Issuing GroupIt is intended that Pumpkin Patch and its Subsidiaries will obtain secured debt funding on new terms prior to theClosing Date, and it currently has secured debt funding in place. The secured debt funding (both existing andnew) will be on terms which contain the usual financial covenants as to debt/equity levels and restrictions onadditional borrowings and on pledging any assets as security for additional borrowing without approval. Otherthan those, there are no restrictions on Pumpkin Patch or its Subsidiaries from making a distribution, or borrowing,the restrictions that result from any undertaking to them, or contract or deed entered into, by Pumpkin Patchor its Subsidiaries.21. Other Terms of Offer and SecuritiesAll other terms of the Share Offer and all the terms of the Shares being offered are set out in this Prospectusexcept for those implied by law or set out in a document that is registered with a public official and is availablefor public inspection and is referred to in this Prospectus.The full terms and conditions relating to the Option Offer are set out at pages 93 to 98.22-38. Financial StatementsThe information required by clauses 22 to 38 (inclusive) of the First Schedule to the Securities Regulations 1978(for the seven month period ending 31 July 2003 (and for the six month period ending 31 January 2004)) iscontained in section “Group Financial Statements”.39. Places of Inspection of DocumentsThe Constitution of the Company and the material contracts referred to in paragraph 17 of this StatutoryInformation section are available for public inspection either on the Companies Office electronic register atwww.companies.govt.nz or at the registered office of the Company (without payment of any fee) until thedate on which the Share Offer closes (at the offices of Pumpkin Patch Limited, 439 East Tamaki Road, EastTamaki, Auckland). The Companies Office may charge a fee for inspection of certain documents.40. Other Material MattersShare RepurchasePumpkin Patch has entered into Repurchase Agreements under which it has conditionally agreed torepurchase between 28,770,400 and 49,027,200 shares from the Selling Shareholders (free of all liens, charges,mortgages, encumbrances and security interests of any kind) set out below:Selling Shareholder Minimum Number Maximum Numberof Shares to be of Shares to beRepurchasedRepurchasedPerpetual Trustees Limited as Trustee of Quadrant Trust 7,041,903 12,000,000Wynyard Wood Trustee Services and Nigel Philip Smithas Trustees of the Simdec Trust 7,415,828 12,637,200Wynyard Wood Trustee Services and Nigel Philip Smithas Trustees of the Feruza Trust 14,312,669 24,390,000Total 28,770,400 49,027,20081

If:• all 81,027,200 of the Shares offered by Pumpkin Patch pursuant to the Share Offer are subscribed for theCompany will (subject to the conditions set out below) repurchase and cancel the maximum number ofShares from the Selling Shareholders as set out in the table on page 81;• 60,770,399 or fewer of the Shares offered pursuant to the Share Offer are subscribed for no Shares held bythe Selling Shareholders will be repurchased and the Company may, in its discretion, refund any subscriptionproceeds received in excess of $40 million; and• more than 60,770,399 but fewer than 81,027,200 of the Shares offered pursuant to the Share Offer aresubscribed for then the Company will (subject to the conditions set out below) repurchase and cancelbetween the minimum and the maximum number of Shares from the Selling Shareholders as set out in thetable on page 81.The agreement to repurchase Shares from the Selling Shareholders is conditional upon successful completionof the Share Offer and allotment of Shares to investors. The Shares will be repurchased and cancelled effectiveimmediately upon the allotment of Shares under the Share Offer.The consideration for each Share repurchasedwill be the subscription proceeds of the Share Offer after deducting certain expenses associated with the ShareOffer and the Option Offer, divided by the total number of Shares issued pursuant to the Share Offer. Thisconsideration will be paid to the Selling Shareholders immediately following allotment of the Shares under theShare Offer, registration of the transfer of the Selling Shareholders’ shares to Pumpkin Patch and cancellation ofthose Shares.Prior to listing, certain transfers of shares have occurred between the shareholders. The Simdec Trust hasreceived 700,000 shares from the Opito Family Trust and 4,537,200 shares from the trustees of the employeeshare schemes (3 million of which were transferred for and on behalf of Maurice Prendergast and 1,537,200 ofwhich were transferred for and on behalf of Chrissy Conyngham). The Simdec Trust will be obliged to pay anamount for those shares equal to the repurchase price per share it will receive under the RepurchaseAgreements.To give effect to the repurchase of shares from the Selling Shareholders, Pumpkin Patch will secure the approvalof all Entitled Persons (as that term is defined in the Companies Act 1993) to:• repurchase shares from the Selling Shareholders pursuant to section 107(1)(c) of the Companies Act 1993;and• repurchase shares from Wynyard Wood Trustee Services Limited and Nigel P Smith as trustees of the SimdecTrust (as one of the Selling Shareholders) notwithstanding that Maurice Prendergast, Chrissy Conynghamand Sally Synnott are Directors, have relevant interests in such repurchase for the purposes of sections 140and 141 of the Companies Act 1993) pursuant to section 107(3) of that Act.The Share Application Form is expressly stated to constitute an irrevocable and binding agreement on the partof each applicant under the Share Offer to approve the repurchase of shares from the Selling Shareholders forthe purposes of sections 107(1)(c) and 107(3) of the Companies Act 1993.As a further prerequisite to the repurchase, the Directors must be satisfied on reasonable grounds that PumpkinPatch will, immediately after the repurchase, satisfy the solvency test prescribed by the Companies Act 1993and, pursuant to section 108(2) of that Act, sign a certificate to that effect.Securities Act ExemptionsPumpkin Patch has applied for and has been granted exemptions from Regulation 12(1)(a) of the SecuritiesRegulations 1983 and from clauses 1(4), 8(5), 13(a)(iii) and 10(1)(c) of the First Schedule to those Regulations.82

Regulation 12The Securities Commission has granted an exemption from Regulation 12(1)(a) of the Securities Regulations1983 to allow Pumpkin Patch to include in the Investment Statement summary historical financial statementsshowing the amount of total assets held by Pumpkin Patch divided into current and fixed assets.Clauses 1(4) and 13(a)(iii) of Schedule 1The Securities Commission has granted an exemption from Clauses 1(4) and 13(a)(iii) of Schedule 1 to theSecurities Regulations 1983.The exemptions from clause 1(4) and 13(a)(iii) are necessary as Pumpkin Patch is using a book build process todetermine the Final Price for Shares and is using that Final Price as the Exercise Price for Options, rather thanspecifying a fixed dollar value for the subscription price for the Shares and the Exercise Price of the Optionsissued pursuant to the Share Offer and the Option Offer respectively. This Prospectus instead: states theIndicative Price Range and the Company's right to fix the Final Price outside the Indicative Price Range;describes how investors can ascertain the Final Price, the procedures for holding subscription moneys, howover-subscriptions will be treated and the procedure for making refunds; that the Company has applied to theNZX for permission to list the Shares.Clause 8(5) of Schedule 1The Securities Commission has granted an exemption from clause 8(5) of Schedule 1 to the SecuritiesRegulations 1983. This exempts Pumpkin Patch from the necessity to provide historical summary financialstatements of the net tangible asset backing per Share calculated on the basis that the subscription money hasbeen received. Given that the Final Price of the Shares will not be determined before the date of this Prospectus,it is not possible to comply with Clause 8(5).This Prospectus instead shows the information required by clause 8(5)calculated as if the number of Shares on which the assumptions are based are calculated by reference to themaximum number of specified securities that would be allotted if the subscription price of the Shares was at thehigh point, at the mid point and at the low point of the indicative price range stated in the Prospectus.Clause 10(1)(c) of Schedule 1The Securities Commission has granted an exemption from Clause 10(1)(c) of Schedule 1.This exempts PumpkinPatch from the necessity to provide a prospective statement of cash flows expected during the yearcommencing on the date the Prospectus is delivered to the Registrar of Companies in registrable form.This Prospectus instead contains consolidated prospective statements of cashflows for Pumpkin Patch and itssubsidiaries in each of the following periods:• the period of 12 months commencing on 1 August 2003 and ending on the close of 31 July 2004; and• the period of 12 months commencing on 1 August 2004 and ending on the close of 31 July 2005.The financial statements for Pumpkin Patch for the 12 month periods commencing on 1 August 2003 and 1August 2004 will include a comparison of the actual cashflows for the same periods as stated in the Prospectus,in the manner required under paragraph 5.4 of the Financial Reporting Standard No. 9 (as if those statementswere 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 as trustees of the Simdec Trust;• Wynyard Wood Trustee Services Limited and Nigel Philip Smith as trustees of the Feruza Trust;• Maurice John Prendergast, Kerry Donna Prendergast and Stuart Gavin Callender as trustees of the KezzaFamily Trust;83

• Adam Lindsay Gordon Ryall, Judith Mabel Ryall and Stanley Alexander Carwardine as trustees of thePunchestown Family Trust;• Mark Joseph Synnott, Sally Rene Synnott and the Gale Trustee Company Limited as trustees of The OpitoFamily Trust; and• Gregory John Muir, Debra Jane Muir and Geoffrey Alistair Lawrie as trustees of the Muir Trust;have entered into a deed in favour of the Lead Manager, whereby those shareholders have agreed that, fora minimum period of 12 months from the date on which Pumpkin Patch is quoted on the NZX, they will not:• Dispose of, or agree or offer to dispose of, Shares they hold;• Create, or agree or offer to create, any security interest (including the sale or purchase of options or similarfinancial instruments) in their Shares; and/or• Do, or omit to do, any act or omission which would have the effect of transferring effective ownership orcontrol of their Shares.If the shareholder takes any of the steps set out above:• Pumpkin Patch will take such reasonable steps that are within its control to give effect to the terms of thedeed or to rectify the matter giving rise to the breach;• Pumpkin Patch will (to the extent reasonably permitted by law) refuse to acknowledge, deal with, acceptor register any sale, assignment, transfer or conversion of any of the relevant Shares;• Pumpkin Patch will, for as long as the breach continues, not pay any dividends or distributions to any personin respect of the relevant shares and will not count any votes cast in respect of those Shares, in anyshareholder resolution; and• The relevant shareholder acknowledges that it will cease to be entitled to any dividends, distributions orvoting rights in respect of its Shares while the breach continues.Employee Share Scheme RestructuringThe Company has established a number of employee share schemes which have allowed employees(including executive Directors) to purchase shares in the Company.The Company has committed to restructurethese schemes, such restructuring taking effect prior to or upon the allotment of Shares under the Share Offer.The effect of the restructuring will be:• All shares allocated under these schemes prior to listing will be fully paid, and the Company will haveprovided interest free loans in aggregate of $7,202,861 to pay for any shares under these schemes notalready purchased by the relevant employee in cash;• All shares allocated under these schemes will be ordinary fully paid shares in Pumpkin Patch, ranking equallyin all respects with all other shares;• Pumpkin Patch must pay grossed up bonuses to employees (in some cases over three years, and in somecases payable immediately) to enable the employees (including executive Directors) to fully or substantiallydischarge the amount of these loans and the full cost of this has been fully provided for in the 31 July 2004forecast financial information.• Approximately one third of each employee’s shares issued under the employee share schemes will be held bya trustee as security for the payment of the loans owing to the Company, and will typically be releasedprogressively over three years to employees as their loans are progressively discharged. Different arrangementsare in place for the executive Directors, Maurice Prendergast, Greg Muir and Chrissy Conyngham. Greg Muirwill have 512,000 Shares held in escrow and progressively released over three years. Maurice Prendergast willprocure the provision to the trustees of the scheme of 1,500,000 Shares which will be held (by way of security)and progressively released over three years. Chrissy Conyngham will have 570,000 Shares held in escrow andprogressively released over three years.84

DF7 Share SchemeThe Company has established an Employee Share Scheme under section DF7 of the Income Tax Act 1994.Under this Scheme Pumpkin Patch will, immediately prior to listing, issue 2,000,000 Shares to Pumpkin PatchNominees Limited (the “Trustee”) and intends to procure the Trustee to offer those Shares to its employees assoon as possible (taking into account certain practical 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 (otherthan institutional or professional investors) determined under the Share Offer. All permanent employees inNew Zealand who have been with the Company for at least six months and who work 30 hours or more perweek (including Directors) will be eligible to purchase $2,340 of Shares at this discounted rate. All permanentemployees in New Zealand who have been with the Company for at least six months and who work between10 and 30 hours per week (including Directors) will be eligible to subscribe for up to $1,170 worth of Shares atthe discounted rate.Pumpkin Patch will, prior to listing, give the Trustee an interest free loan for the aggregate purchase price toenable it to purchase the Shares issued to it for this scheme. Pumpkin Patch has agreed that the Trustee is, inturn, entitled to novate a portion of that loan to individual employees to assist them to purchase Shares underthe DF7 Share Scheme.Pumpkin Patch intends to implement similar schemes for its employees in the United Kingdom and in Australiawithin the next 12 to 24 months and to this end has issued the appropriate number of Shares (and made theassociated loan) to the Trustee and has made provision for additional Shares which may be offered to theseemployees.Offers of Shares under the DF7 Share Scheme are not required to comply with the Securities Act 1978 and arenot part of either the Share Offer or the Option Offer.There are no other material matters relating to the offer of Shares and Options in this Prospectus other thanmatters elsewhere set out in this Prospectus and contracts entered into in the ordinary course of business of theCompany or its subsidiaries.41. Directors’ StatementThe Directors, after due enquiry by them in relation to the period between the date of the latest balance sheetset out in this Prospectus and the date of registration of this Prospectus are of the opinion that no circumstanceshave arisen that materially adversely affect the trading or profitability of the Company or its subsidiaries, thevalue of the assets of the Company or its subsidiaries, or the ability of the Company or its subsidiaries to pay itsliabilities due within the next 12 months.42. Auditors’ ReportA copy of the auditors’ report required by clause 42 of the First Schedule to the Securities Regulations is set outon pages 70 and 71.This Prospectus was signed by or on behalf of the Directors of the Company when it was delivered to theRegistrar of Companies for registration.Greg Muir (Executive Chairman)Maurice Prendergast (Managing Director)Chrissy ConynghamJane FreemanDavid JacksonSally Synnott85

glossary of certain terms86

glossary of certain termsTermDefinitionAllocation and Allotment Date Between 8 June and 12 June 2004Assumed Annual DividendBenchmark PriceBusiness DayFor each of the years commencing 9 June 2004, 9 June 2005 and 9 June 2006 theassumed dividend which will be paid by the Company in each of those years (which willbe determined by the Company in its discretion after taking such independent advice(if any) as it considers desirable, based on the expected dividend in those three years)The price set by the Company after taking such independent advice (if any) as itconsiders desirable and calculated in accordance with the following formula:Exercise Price x [(1+ Cost of Equity) - Assumed Annual Dividend for the year commencing9 June 2004] x [(1+ Cost of Equity) - Assumed Annual Dividend for the year commencing9 June 2005] x [(1+ Cost of Equity) - Assumed Annual Dividend for the year commencing9 June 2006]Day on which the NZX is open for tradingClosing Date For the Share Offer 4 June 2004For the Option Offer the 15th Business Day following receipt of an individual offer ofOptionsConstitutionCost of EquityDirectorsEBITEBITDAEligible Senior ManagerExercise PeriodExercise PriceFinal PriceThe 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 it considers desirable and calculated in accordance with the followingformula:R e = R ƒ(1-T 1) + ß e (PTMRP)Where:R ƒ = Risk free rate of return, based on the yield on New Zealand government stock.T 1 = New Zealand investors’ effective tax rate on interest and dividend income relative tocapital gains.ß e = Equity beta, a measure of the volatility of returns from the Company compared toreturns from the investment market.PTMRP = Post tax market risk premium, or expected return, measured after New Zealandinvestor taxes, on the market portfolio of equity investments, derived fromPricewaterhouseCoopers research on New Zealand 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 the period between 9 June 2007 and 9 June 2009The Exercise Price for Options issued pursuant to the Option Offer, which shall be theFinal Price for investors other than institutional and professional investors participating inthe book buildFor institutional and professional investors participating in the book build the price set bythe Company on or prior to 8 June 2004 and payable by institutional and professionalinvestors participating in the book build under the Share Offer in respect of a Share;For other investors the price set by the Company on or prior to 8 June 2004 and payableby investors other than investors who are institutional and professional investorsparticipating 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 15Investment StatementLead ManagerMarket Price at Exercise DateThe Investment Statement issued in respect of the Share Offer and the Option Offerdated 14 May 2004Goldman Sachs JBWere (NZ) LimitedVolume weighted average selling price per Share traded on the NZX during the10 Business Days prior to exercise (adjusted as Pumpkin Patch may determine in its solediscretion to take account of the Shares going ex-dividend and to ensure that suchweighted average does not take into account any purchase or sale of Shares by anOption Holder)87

TermNZXDefinitionNew Zealand Exchange LimitedOpening Date For the Share Offer 17 May 2004For the Option Offer, upon receipt by an Eligible Senior Manager of an individual offer ofOptions pursuant to the Option Offer, being approximately 17 May 2004OptionOption ApplicationOption Application FormOption HolderOption OfferPrimary Market ParticipantPrincipal OfficerProspectusPumpkin Patch or the CompanyRepurchase AgreementsSchemeSelling ShareholdersSenior ManagerShare ApplicationShare Application FormShare OfferSharesSKUSubscriptionSubsidiariesAn 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 OptionOfferThe offer of Options to Eligible Senior Managers under this ProspectusAny company, firm, organisation or corporation designated as a Primary MarketParticipant 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 theDirectors are accustomed to act (except any person in accordance with whosedirections or instructions any or all of the Directors are accustomed to act by reasononly that the Directors act on advice given by him or her solely in a professionalcapacity) as more particularly defined in the Securities Act 1978This ProspectusPumpkin Patch LimitedThe agreements between the Company and the Selling Shareholders to repurchasecertain Shares, as set out on pages 81 and 82.Pumpkin Patch 2004 Share Option SchemePerpetual Trustees Limited as Trustee of Quadrant Capital Fund No 2; andWynyard Wood Trustee Services and Nigel Philip Smith as Trustees of the Simdec Trust andthe 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 the Investment StatementThe offer of Shares under this ProspectusOrdinary 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.88

89application instructions

application instructionsShare Offer1. Applications to subscribe for the Shares must be made on the Share Application Form included with andforming part of the Investment Statement, and in accordance with the Application Terms set out on theback of the Share Application Form.2. Applications must be accompanied by payment in full for the Shares. Cheques should be made payableto “The Pumpkin Patch Share Offer”. Cheques must not be post dated.3. Completed Share Application Forms must be sent so as to be received by BK Registries Limited at:The Pumpkin Patch Share OfferC/- BK Registries Limited138 Tancred StreetPO Box 384ASHBURTONno later than 5.00pm on 4 June 2004.4. Investors may also lodge applications with:Any Primary Market ParticipantorGoldman Sachs JBWere (NZ) LimitedLevel 38, Vero Centre48 Shortland StreetPO Box 887AUCKLANDin time to enable forwarding to the Registrar prior to 5.00pm on 4 June 2004.5. Applications for Shares may be lodged from the opening date of the Share Offer on 17 May 2004. TheShare Offer will remain open until 4 June 2004 or such later date as the Directors may determine.6. An Application will constitute an irrevocable offer by the applicant to acquire the number of Sharesspecified on the Share Application Form (or such lesser number as Pumpkin Patch and the LeadManager may determine) on the terms and conditions set out in this Prospectus and on the ShareApplication Form.7. Money received in respect of applications that are declined in whole or in part will be refunded in wholeor in part (as the case may be). Refunds will be posted within five business days after allocation of Sharesto successful applicants. Interest will not be paid on any application moneys refunded to applicants.8. None of Pumpkin Patch, the Lead Manager, or any of their respective officers, employees, or advisorsaccepts any liability or responsibility should any person attempt to sell or otherwise deal with Sharesbefore the statements confirming allotment are received by the applicants and the “delayed delivery”designation is lifted.90

9. If your Share Application Form is not completed correctly, or if the accompanying payment is for thewrong amount, your Application may still be treated as valid. The Company’s decision as to whether totreat your application as valid, and how to construe, amend or complete your Share Application Form,shall be final. The Company’s decision on the number of Shares to be allotted to you shall also be final.Applicants will not, however, be treated as having applied to purchase more Shares than the numberindicated on the Share Application Form, or more Shares than those for which payment has been made.10. The Company reserves the right to refuse any application in whole or in part, without giving any reason.11. Further details of how to apply are set out in the section titled “How to Apply” (on page 60 of theInvestment Statement).Payment1. Payment must accompany each Share Application Form. Payment must be made by a cheque drawnon a New Zealand bank, for New Zealand dollars, for value immediately. Post-dated cheques will not beaccepted. Please ensure that the total of the cheque equals the amount payable.2. Make the cheque payable to “The Pumpkin Patch Share Offer” and cross it “Not Transferable”.3. Sufficient cleared funds should be held in your account, as cheques returned unpaid are likely to result inyour application being rejected or your allocation being cancelled. Staple your cheque to the ShareApplication Form.4. Institutional investors or professional investors that are successfully allocated Shares under the book buildprocess must settle their allocation prior to 5.00pm on Tuesday 8 June 2004 via Austraclear or in clearedfunds under notification to the Lead Manager.Minimum Applications5. Applications must be for a minimum of $5,000 worth of Shares and in increments of $500 thereafter.Closing Date6. Applications must be received by no later than 5.00pm New Zealand time on 4 June 2004 unless this dateis varied by Pumpkin Patch. Pumpkin Patch has the right to extend the Offer period.Delivery7. Applications cannot be revoked or withdrawn.8. Share Application Forms must be mailed or delivered (with payment) to “The Pumpkin Patch Share Offer”c/- BK Registries Limited (see address below) to arrive on or before 4 June 2004.9. You may lodge your application with any Primary Market Participant or Goldman Sachs JBWere (NZ)Limited (as Lead Manager) or any other channel approved by the NZX, but must deliver it in time toenable the application to be forwarded to BK Registries Limited before the relevant closing time.10. Please lodge your application AS SOON AS POSSIBLE.91

Option Offer – Employees Only1. Applications for Options must be made on the Option Application Form included with and forming partof this Prospectus, and in accordance with the Application Terms set out on the back of the OptionApplication Form.2. Completed Option Application Forms must be sent so as to be received by Pumpkin Patch at:Managing DirectorPumpkin Patch Limited439 East Tamaki RoadEast TamakiAUCKLANDno later than 5.00pm on the 12th Business Day following receipt of an individual offer of Options pursuantto the Option Offer.3. An Application will constitute an irrevocable acceptance by the applicant to acquire the number ofOptions offered to the applicant by Pumpkin Patch on the terms and conditions set out in this Prospectusand on the Option Application Form.4. If your Option Application Form is not completed correctly, your Application may still be treated as valid.The Company’s decision as to whether to treat your application as valid, and how to construe, amendor complete your Application Form, shall be final.5. Further details of how to apply are set out in the section titled “How to Apply” (on page 56 of theInvestment Statement).Closing Date6. Applications must be received no later than 5.00pm New Zealand time on the 12th Business Dayfollowing receipt of an individual offer of Options pursuant to the Option Offer unless this date is variedby Pumpkin Patch.Delivery7. Applications cannot be revoked or withdrawn.8. Application forms must be mailed or delivered to Pumpkin Patch (see address below) to arrive by 5.00pmon the 12th Business Day following receipt of an individual offer of Options pursuant to the Option Offer.9. Please lodge your application AS SOON AS POSSIBLE.92

ules relating to the Pumpkin Patch 2004share option scheme1. Introduction1.1 Name: The name of this scheme is the Pumpkin Patch 2004 Share Option Scheme.1.2 Purpose: The Scheme is intended to create incentives for, and enable the Company and its Subsidiariesto attract and/or retain, key persons connected to the Company and its Subsidiaries, by conferring onthem a right to participate in the equity of the Company.1.3 Defined Terms: Further definitions specific to this Scheme are set out in clause 8.2. Offer of Options2.1 Content of Offer: The Company may make an offer of Options to an Eligible Person. Each offer shall:2.1.1 be in writing;2.1.2 enclose details of the Scheme;2.1.3 specify the number of Options to be granted to the Eligible Person;2.1.4 specify the Exercise Period or Exercise Periods for exercise of the Options, including tranches (if any)of the Options;2.1.5 specify the conditions (if any) which must be satisfied before the Options may be exercised;2.1.6 specify the Exercise Price or Exercise Prices for exercise of the Options;2.1.7 specify the minimum number or multiple of a number of Options for exercise of the Options;2.1.8 specify the date by which the offer of Options must be accepted; and2.1.9 provide a form of Option Certificate setting out certain of the details referred to above.2.2 Maximum Number: The maximum number of Options to be offered to any Eligible Person under theScheme in any 12 month period shall be determined by the Company.3. Acceptance of Offer of Options3.1 Response: An Eligible Person who wishes to accept an offer of Options must return to the Company acompleted acceptance of the letter of offer and completed Scheme Member Undertaking, by 5.00pm onthe 12th Business Day following the date of the offer or such later date as the Company advises in writing.3.2 Acknowledgement: In accepting an offer of Options, an Eligible Person acknowledges that:3.2.1 the terms of the Scheme are binding on him or her; and3.2.2 participation in the Scheme does not affect the terms of the Eligible Person’s employment (if any)or prospective employment (if any). In no event shall the Company be deemed, by making an offerof Options, to have represented that any employment or prospective employment shall continueuntil, during and/or beyond the Exercise Period.3.3 Grant: On receipt of acceptance of an offer of Options from an Eligible Person the Company shall grantOptions, and send an Option Certificate, as soon as practicable to the Scheme Member.93

4. Exercise of Options4.1 Exercise: Subject to clauses 4.2 and 4.3, Options may be exercised on any Business Day during theExercise Period, unless:4.1.1 the Company considers that the exercise is not permitted by the Rules; or4.1.2 there has been a Lapse Event prior to the Exercise Period or any conditions that must be satisfiedbefore exercise have not been satisfied; or4.1.3 the Market Price at Exercise Date is less than the Benchmark Price; or4.1.4 the Ordinary Shares were not quoted on the NZX for at least one day in the period prior to thecommencement of the Exercise Period; or4.1.5 the Options have expired under clause 5.4.2 Change of Control: Notwithstanding clause 4.1, and subject to clause 4.3, the Company may, by noticeto all Scheme Members, permit the Options to be exercised before the Exercise Period where a person(excluding the Company) or a group of associated persons acquires a beneficial (or legal andbeneficial) interest in at least 50% of the total voting rights (as defined in the Takeovers Code ApprovalOrder 2000) in the Company, provided that:4.2.1 the exercise of any Options pursuant to such notice shall take place within 30 Business Days of thedate of that notice;4.2.2 for the avoidance of doubt, the failure of a Scheme Member to exercise any Options pursuant toclause 4.2.1 shall not prejudice that Scheme Member's right to exercise those Options during theExercise Period pursuant to clause 4.1;4.2.3 the Options shall be exercisable pursuant to such notice unless:(a) the Company considers that the exercise is not permitted by the Rules; or(b) there has been a Lapse Event prior to the date of the notice; or(c) the Market Price at Exercise Date is less than the lower of:(i) the Benchmark Price; or(ii) the price per Ordinary Share paid by the person or group of associated persons soacquiring the beneficial (or legal and beneficial) interest in at least 50% of the total votingrights in the Company (whichever is lower), or if there is more than one such price, the highestsuch price in the six month period preceding the date of the notice; or(d) the Ordinary Shares were not quoted on the NZX at any time prior to the date of the notice; or(e) the Options have expired pursuant to clause 5; and4.2.4 any such notice given under this clause 4.2 may not be subsequently withdrawn by the Companyincluding under a reconstituted Board.4.3 Insider Trading: Notwithstanding clauses 4.1 and 4.2, Options may only be exercised in the periodscontemplated by the Insider Trading (Approved Procedure for Company Officers) Notice 1996, or otherrelevant insider trading laws. If the final day in the Exercise Period does not fall within one of these periods,then the final date for exercise shall be extended to the fifth Business Day after the commencement ofthe next such period.4.4 Exercise Notice: Subject to clause 5 and the terms of grant of Options, a Scheme Member may exercise94

part or all of the Options (subject to any minimum number or multiple of a number of Options prescribedby the Company from time to time and advised in the offer of Options), by a notice in writing to theCompany in such form as the Company may from time to time specify, detailing the Options exercised.4.5 Payment: Contemporaneously with the exercise notice provided under clause 4.4, on the Exercise Datethe Scheme Member shall remit to the Company the Exercise Price and surrender the relevant OptionCertificate. If fewer than all the Options comprised in a certificate are exercised, a replacement OptionCertificate shall be issued for the remaining Options.4.6 Minimum Number: The minimum number of Options that may be exercised on any one occasion shall bethe lesser of 1,000 Options or the balance then remaining.4.7 Issue: Subject to the provisions of clause 6, within 5 Business Days after the date on which the Companyreceives payment of the relevant Exercise Price and the relevant Option Certificate under this clause 4,the Company shall issue, transfer, or procure the transfer of Ordinary Shares to the Scheme Member, unlessthis clause 4 precludes the exercise of Options (in which case, the Company shall give notice to theScheme Member accordingly, refund the Exercise Price (without interest) and return the OptionCertificate).4.8 Company’s Notice: The Company shall give a further notice to a Scheme Member who has beenprecluded pursuant to clause 4.2 from exercising an Option, as soon as it considers that the exercisewould no longer be precluded.4.9 Ranking: Subject to the provisions of clause 6, Ordinary Shares issued or transferred to a Scheme Memberpursuant to the exercise of an Option shall be credited as fully paid and shall rank equally in all respectswith all other Ordinary Shares on issue at the Exercise Date, except for any dividend in respect of whichthe Record Date occurred prior to the Exercise Date.4.10 Rights Issue: In the event that there is a rights issue prior to the Exercise Date, the Exercise Price of theOptions shall be reduced in accordance with the formula stipulated by Listing Rule 8.1.7.4.11 Bonus Issues etc: If there is a bonus issue to the holders of the Ordinary Shares, the number of OrdinaryShares to be received on the exercise of an Option shall be increased (or additional Ordinary Shares maybe reserved for issue on exercise of an Option) by the number of Ordinary Shares which the SchemeMember would have received if that Option had been exercised before the Record Date for the issue.4.12 Proportionate Reconstruction: If there is a consolidation or subdivision or similar proportionatereconstruction of the Ordinary Shares, the number of Ordinary Shares to be received on the exercise ofan Option may be consolidated or subdivided in the same ratio and the Exercise Price amended ininverse proportion to that ratio.4.13 Notice: The Company shall give notice of any adjustment to the number of Ordinary Shares to bereceived on the exercise of Options to all Scheme Members affected.5. Expiration of Options5.1 Exercise Period Passed: Subject to clause 4.3, an Option shall expire on the expiry of the Exercise Periodfor such Option.5.2 Lapse Event: An Option shall expire (subject to a determination by its Board to the contrary) on theoccurrence of a Lapse Event.5.3 After Exercise: Nothing in this Scheme as to expiry of an Option shall apply to an Option which has beenexercised.95

6. Vesting and Resumption of SharesOrdinary Shares issued or transferred as the result of the exercise of an Option shall immediately vest in and betransferred to the Scheme Member and shall not in any way be subject to the provisions of the Scheme.7. Miscellaneous7.1 Amendment: The Company may from time to time modify or amend all or any of the provisions of theScheme or the Rules and any such modification or amendment shall be embodied in a Deed executedby the Company and forwarded to all Scheme Members, provided that no modification or amendmentmay be made which shall substantially adversely affect the financial position of any Scheme Memberunless that Scheme Member consents to the modification or amendment or the modification oramendment is consented to in writing by at least 75% of all then current Scheme Members holdingOptions under the relevant Scheme.7.2 Spirit of the Scheme: If any circumstance arises which might result in the spirit and intent of the Schemenot being fulfilled, the Company shall use all reasonable endeavours to effect any modification to theScheme required to preserve that spirit and intent.7.3 Fractions: If a calculation or adjustment under the Scheme produces a fraction of a cent or OrdinaryShare, the product shall be rounded to the nearest whole number favourable to the Scheme Member.7.4 Delay: No failure, delay or indulgence by the Company in exercising any power or right conferred on itunder the Scheme shall operate as a waiver of that power or right nor shall a single exercise of a poweror right preclude further exercises of or the exercise of any other power or right under the Scheme.7.5 Quotation: The Company shall not apply, or be required to apply, for quotation of an Option on the NZXnor does the Company undertake to remain listed on the NZX and/or have Ordinary Shares quoted onthe NZX.7.6 Disputes: Any dispute or difference affecting the issue or exercise of the Options shall be determined bythe Company whose decision shall be final and binding in all respects.7.7 Dispute Resolution:7.7.1 Written Notice: In the event of a dispute concerning the provisions of this Scheme or any Rulesarising between a Scheme Member and the Company, then the person claiming that a disputehas arisen must give written notice to the other specifying the nature of the dispute (“DisputeNotice”).7.7.2 Mediation: Any person sending or receiving a Dispute Notice (“Party”) may require any dispute,which has not been resolved within 10 Business Days of the date of the Dispute Notice, to bereferred to mediation. The mediator shall be appointed by both Parties, or failing agreement within5 Business Days of the date of reference to mediation, appointed by the Chairperson of theNew Zealand Chapter of Lawyers engaged in Alternative Dispute Resolution. The mediator shallconduct the mediation in accordance with the guidelines agreed between the Parties or, if theParties cannot agree within 10 Business Days following appointment of the mediator, inaccordance with the guidelines set by the mediator. The costs and expenses of the mediator shallbe shared by the Parties equally.7.7.3 Arbitration: In the event that the dispute is not resolved by mediated agreement or otherwise within30 Business Days of the date of the Dispute Notice, either Party may by written notice served on theother Party require the dispute to be determined by the arbitration of a single arbitrator. The96

arbitrator shall be appointed by the Parties or, failing agreement within 5 Business Days of service ofthe date of reference to arbitration, shall be appointed at the request of either Party by thepresident or vice-president for the time being of the Auckland District Law Society. The arbitrationshall be conducted as soon as possible in accordance with, and subject to the provisions of, thearbitration statutes for the time being in force in New Zealand.7.8 Correspondence: Any correspondence from a Scheme Member to the Company or the Boardconcerning the Options shall be delivered or posted to the registered office of the Company or to suchother address as may be notified by the Board in writing. Any correspondence from the Company or theBoard to a Scheme Member concerning the Options shall be delivered to the Scheme Member orposted to the Scheme Member’s last known residential address.7.9 Employment: If a Scheme Member is an Employee, he or she acknowledges in acceptance of an offerof Options that nothing in the Scheme or issue of the Options is relevant to his or her employment terms.7.10 Employment Rights: A Scheme Member waives any rights to compensation or damages in consequenceof the termination of his or her employment (if any) with the Company or any Subsidiary for any reasonwhatsoever insofar as those rights arise, or may arise, from his or her ceasing to be entitled to any Optionsas a result of such termination.8. Notices8.1 Method of Delivery: Any notice or other communications required or permitted under this Scheme andany Rules shall be sufficiently given if in writing and personally delivered or sent by facsimile, post, or bycourier, addressed, if to the Company, as follows, or to such other address as the Company shall havegiven notice of under this Scheme:If to the Company:Address:Attention:Pumpkin Patch Limited439 East Tamaki RoadEast TamakiAucklandManaging DirectorTelephone number: 09 274 7088Facsimile number: 09 274 11228.2 Change of Details: The notice details given in clause 8.1 may be varied by the Company as appropriateat any time by notice given in accordance with that clause.8.3 Receipt: Any notice or demand given by either party to the other shall be conclusively deemed to bereceived by the intended recipient:8.3.1 in the case of delivery by hand, when actually delivered;8.3.2 in the case of delivery by post, on the third Business Day after posting;8.3.3 in the case of facsimile, on the Business Day on which it is despatched or, if despatched on a Non-Business Day or after 5pm (in the place of receipt) on a Business Day, on the next Business Day afterthe date of despatch.97

9. InterpretationIn this Schedule, unless the context otherwise requires:“Assumed Annual Dividend” for each of the three years commencing 9 June 2004, 9 June 2005 and 9 June2006, the assumed dividend which will be paid by the Company in each of those years (which will bedetermined by the Company in its discretion after taking such independent advice (if any) as it considersdesirable, based on the expected dividend in those three years);“Benchmark Price” means the price set by the Company after taking such independent advice (if any) as itconsiders desirable and calculated in accordance with the following formula:Exercise Price x [(1+ Cost of Equity) - Assumed Annual Dividend for the year commencing 9 June2004] x [(1+ Cost of Equity) - Assumed Annual Dividend for the year commencing 9 June 2005] x[(1+ Cost of Equity) – Assumed Annual Dividend for the year commencing 9 June 2006]“Cost of Equity” means a factor, selected by the Company in its discretion after taking such independentadvice (if any) as it considers desirable and calculated in accordance with the following formula:R e = R ƒ (1-T 1) + ß e (PTMRP)Where:R ƒ = Risk free rate of return, based on the yield on New Zealand government stock.T 1 = New Zealand investors’ effective tax rate on interest and dividend income relative to capital gains.ß e = Equity beta, a measure of the volatility of returns from the Company compared to returns from theinvestment market.PTMRP = Post tax market risk premium, or expected return, measured after New Zealand investor taxes, on themarket portfolio of equity investments. Derived from PricewaterhouseCoopers research on New Zealand equitymarket returns;“Employee” means a person who, at the date of offer of Options, is an employee of the Company or anySubsidiary;“Exercise Date” means the date on which an Option is exercised;“Exercise Period” means the period commencing on 9 June 2007 and ending on 9 June 2009;“Exercise Price” means the price per Share payable by investors other than institutional and professionalinvestors participating in the book build pursuant to the 2004 Initial Public Offering of Shares in the Company;“Lapse Event” means the occurrence of an event by which a Scheme Member who (at the date of offer ofthe relevant Option) is an Employee ceases to be an Employee for any reason whatsoever (including butwithout limitation, death, normal retirement or resignation, ill health, accident or redundancy, or termination bythe Company for cause) provided that the Board may, in its absolute discretion, determine that any givencircumstances do not constitute a Lapse Event;“Listing Rules” means the Listing Rules of the NZX;“Market Price at Exercise Date” means the volume weighted average selling price per share of all of the Sharesin the Company traded on the NZX during the 10 Business Days prior to the date that the Company receivesan Exercise Notice pursuant to clause 4.3, adjusted as the Company may determine in its sole discretion, totake account of the Shares going ex–dividend in that period and to ensure, as far as practicable, that suchweighted average does not take into account any purchase or sale of Shares by or on behalf of the SchemeMember;“Option Certificate” means a certificate evidencing Options, including the Schedule (if any) to such certificate;“Record Date” bears the same meaning as it bears in the Listing Rules;98

directory and advisersDirectorsChrissy ConynghamJane FreemanDavid JacksonGreg Muir (Executive Chairman)Maurice PrendergastSally SynnottThe Directors of Pumpkin Patchcan 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 0331AuditorsPricewaterhouseCoopersPricewaterhouseCoopers Tower188 Quay StreetPrivate Bag 92126AUCKLANDTelephone: 09 355 8000Facsimile: 09 355 8001

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