prospectus for - Pumpkin Patch investor relations

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