interim report january 2012 - Pumpkin Patch investor relations

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interim report january 2012 - Pumpkin Patch investor relations

Unaudited Consolidated Income StatementsHalf year ended31 January 2012Half year ended31 January 2011$000 $000Sales revenue 161,144 137,236Cost of goods sold (72,238) (52,652)Gross profit 88,906 84,584Other operating income 551 142ExpensesSelling expenses (66,988) (62,979)Finance expense (2,249) (1,832)Administrative and general expenses (11,818) (7,399)Profit from continuing operations before income tax 8,402 12,516Income tax expense (2,559) (3,931)Net profit from continuing operations 5,843 8,585(Loss) from discontinued operations (net of tax) (35,826) (527)(Loss)/profit for the period (29,983) 8,058Earnings per share for (loss)/profit attributable to shareholders: Cents CentsBasic earnings per share (17.84) 4.82Diluted earnings per share (17.84) 4.77Attributable to continuing operations:Basic earnings per share 3.48 5.14Diluted earnings per share 3.48 5.08Pumpkin patch limited & subsidiariesunauditedconsolidatedfinancial statementsAttributable to discontinued operations:Basic earnings per share (21.32) (0.32)Diluted earnings per share (21.32) (0.31)Jane FreemanChairperson14 March 2012David JacksonDirector14 March 2012For the half year ended 31st January 2012UNAUDITED CONSOLIDATED Financial STATEMENTSPumpkin Patch Interim Report, January 2012 | PAGE 7 Pumpkin Patch Interim Report, January 2012 | PAGE 8


PUmpkin Patch limited & Subsidiariesnotes to & formingpart of the financialstatementsFor the half year ended 31 st January 2012Pumpkin Patch Interim Report, January 2012 | PAGE 15 Pumpkin Patch Interim Report, January 2012 | PAGE 16


1. General InformationPumpkin Patch Limited (the “Company” or “Parent”) together with its subsidiaries (the “Group”) is a leadingdesigner, marketer, retailer and wholesaler of children’s clothing.The Company is a limited liability company, incorporated and domiciled in New Zealand.The Company is registered under the Companies Act 1993, and is an issuer in terms of the Securities Act1978 and the Financial Reporting Act 1993.The Group is designated as a profit oriented entity for financial reporting purposes.2. Summary of Signficant Accounting PoliciesThese condensed consolidated interim financial statements for the six months ending 31 January 2012 havebeen prepared in accordance with NZ IAS34, Interim Financial Reporting.The condensed consolidated interim financial statements should be read in conjunction with the annualfinancial statements for the year ended 31 July 2011, which have been prepared in accordance withInternational Financial Reporting Standards (IFRS).The reporting currency used in the preparation of these consolidated financial statements is New Zealanddollars, rounded where necessary to the nearest thousand dollars.Changes in accounting policiesExcept as described below, the accounting policies applied are consistent with those of the annual financialstatements for the year ended 31 July 2011, as described in those annual financial statements.3. Reorganisation of Group Operations(a) Reorganisation of United States operationsOn 15th June 2011 the Company announced the intention to close the remaining 20 retail stores operated bythe wholly owned United States registered subsidiary company, Pumpkin Patch LLC.In 2009 the Group renegotiated all of its United States leases down to levels that reflected market rents at thetime. As these leases approached their expiry dates, the Group held discussions with landlords to extend leaseperiods. While lease extensions were available, the proposed lease terms were deemed to make the UnitedStates operation unsustainable.As a result of this, the Group implemented a managed store closure program which resulted in the closure ofall 20 stores. The last store ceased trading on 21st January 2012.Financial information relating to the discontinued operation is set out in section (c) below.(b) Abandonment of United Kingdom subsidiaryOn 19th January 2012, following the completion of an extensive review of trading operations and longerterm market strategies, the United Kingdom subsidiary was placed into administration. As a result of this, thePumpkin Patch Limited (UK) assets and operations were no longer controlled by the Pumpkin Patch Group from19th January 2012.The trading results of the United Kingdom trading operations up to the 18th January have been included in thefinancial statements of the Pumpkin Patch Group as a discontinued operation. The net assets held by PumpkinPatch Limited (UK) have been written off and recognised as a non-recurring cost to the Pumpkin Patch Group.Financial information relating to the discontinued operation is set out in section (c) below. A summary of thenon-recurring costs associated with the abandonment of the United Kingdom subsidiary can be seen in section(d) below.Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expectedtotal annual earnings.To ensure consistency with the current period, comparative figures have been reclassified where appropriate.NOTESPumpkin Patch Interim Report, January 2012 | PAGE 17 Pumpkin Patch Interim Report, January 2012 | PAGE 18NOTES


3. Reorganisation of Group Operations (cont’d)(c) Summary of discontinued operationsUnited States Retail United Kingdom Retail Total DiscontinuedOperations$000 $000 $000Unaudited 6 months ended 31 January 2012Total Revenue 8,872 21,320 30,192(Loss) from discontinued(2,108) (2,198) (4,306)trading operationsNon-recurring (costs)/credit2,562 (36,749) (34,187)relating to discontinued operationsIncome tax credit relating to657 2,010 2,667discontinued operationsProfit/(loss) from1,111 (36,937) (35,826)discontinued operationsOperating cashflows fromdiscontinued operations(2,682) (2,780) (5,462)Unaudited 6 months ended 31 January 2011Total Revenue 10,820 25,811 36,631(Loss) from discontinued(505) (249) (754)trading operationsIncome tax credit relating to151 76 227discontinued operations(Loss) from(354) (173) (527)discontinued operationsOperating cashflows fromdiscontinued operations(505) (136) (641)(d) Summary of non-recurring (costs)/creditsHalf Year Ended31 January 2012Half Year Ended31 January 2011$000 $000United States Reorganisation (costs)/creditsAsset write off costs (2,324) -Net gains on financial assets or liabilities designated as fair value719 -through profit and loss relating to United States operationsGain on realisation of Foreign Currency Translation Reserve 4,634 -Other costs (467) -2,562 -United Kingdom Abandonment (costs)/creditsAsset write off costs (14,002) -Redundancy costs (691) -Net losses on financial assets or liabilities designated as fair value(10,312) -through profit and loss relating to United Kingdom operationsLoss on realisation of Foreign Currency Translation Reserve (9,920) -Other costs (1,824) -(36,749) -(34,187) -NOTESPumpkin Patch Interim Report, January 2012 | PAGE 19 Pumpkin Patch Interim Report, January 2012 | PAGE 20NOTES


4. Segment InformationThe Group has five reportable segments that are defined by geographical area and the nature of thedistribution channel to external customers.The following is an analysis of the Group’s revenue and results from continuing operations by operating segment.Revenue reported below represents revenue generated from external customers. There were no intersegmentsales in the period (HY2011:nil).Segment result represents the profit earned by each segment without allocation of central administration costs,finance costs and income tax expense.AustraliaRetailUnaudited 6 months ended 31 January 2012Total RevenueNew ZealandRetailUnitedKingdomRetailUnitedStatesRetailWholesale& OnlineHeadOfficeGroup$000 $000 $000 $000 $000 $000 $000Continuing activities 98,382 28,803 - - 33,959 - 161,144Discontinued activities - - 21,320 8,872 - - 30,192Segment result before non-recurring costsContinuing activities 12,955 4,031 - - 6,661 (12,996) 10,651Discontinued activities - - (2,198) (2,108) - - (4,306)Non-recurring costsDiscontinued activities - - (36,749) 2,562 - - (34,187)Interest costsContinuing activities - - - - - (2,249) (2,249)Segment result before taxContinuing activities 12,955 4,031 - - 6,661 (15,245) 8,402Discontinued activities - - (38,947) 454 - - (38,493)AustraliaRetailNew ZealandRetailUnitedKingdomRetailUnitedStatesRetailWholesale& OnlineHeadOffice$000 $000 $000 $000 $000 $000 $000Unaudited 6 months ended 31 January 2011Total RevenueContinuing activities 86,372 27,031 - - 23,833 - 137,236Discontinued activities - - 25,811 10,820 - - 36,631Segment resultContinuing activities 14,871 4,696 - - 5,608 (10,827) 14,348Discontinued activities - - (249) (505) - - (754)Interest costsContinuing activities - - - - - (1,832) (1,832)Segment result before taxContinuing activities 14,871 4,696 - - 5,608 (12,659) 12,516Discontinued activities - - (249) (505) - - (754)Total Segment assetsContinuing activities 71,561 24,041 - - 28,432 43,903 167,937Discontinued activities - - 25,855 4,864 - - 30,71971,561 24,041 25,855 4,864 28,432 43,903 198,656GroupTotal Segment assetsContinuing activities 60,519 21,306 - - 32,092 42,768 156,685As a result of a Group strategic review following the administration of the United Kingdom subsidiary, the Ireland retail operations are now being managed asan integral part of the Group’s European wholesale operations. As such the results of the Ireland retail operations (representing only three stores) have beenincluded within the Wholesale & Online operating segment. The comparative segment note for January 2011 has been restated to reflect this change.Pumpkin Patch Interim Report, January 2012 | PAGE 21 Pumpkin Patch Interim Report, January 2012 | PAGE 22


5. ExpensesProfit from continuing operations before non-recurringitems and income tax includes the following:Half year ended31 January 2012Half year ended31 January 2011$000 $0007. PROPERTY, PLANT AND EQUIPMENTAcquisitions and disposalsDuring the six months ended 31 January 2012, the Group acquired assets with a total cost of $1.7 million(HY2011: $8.9 million).Property, Plant and Equipment with a Net Book Value of $4.0 million was abandoned by the Group as a resultof the United Kingdom subsidiary being placed into administration on 18th January 2012. No other assetswere disposed of during the six months ended 31 January 2012 (HY2011: $nil).Interest income 389 11Interest expense (2,249) (1,832)Depreciation (3,573) (3,307)Amortisation of intangible assets (1,849) (1,657)Employee benefit expenses (31,277) (32,798)Rental and operating lease expenses (25,209) (23,678)Loss from discontinued operations includesthe following:Depreciation (274) (685)Employee benefit expenses (6,167) (8,425)Rental and operating lease expenses (5,629) (8,924)6. INTEREST BEARING LIABILITIESBank facilityThe bank loans are provided under the terms of an ANZ National Bank Limited Revolving Advances FacilityAgreement dated 24 June 2009. The total bank facility of $100 million (31 January 2011: $100 million)outlined in this agreement is split into three different tranches. The first tranche, up to $25 million, will expireon 31 July 2012, while the second tranche, a further $25 million, will expire on 31 December 2012 and thethird tranche, a further $50 million, will expire on 31 December 2013.These borrowings have been aged in accordance with the repayment terms of the facilities.As at 31 January 2012, the Group had $25 million of unused lines of credit (31 January 2011: $25 million).Fair valueThe fair value of interest bearing liabilities approximates their carrying value.8. RELATED PARTY TRANSACTIONSDuring the period the Company advanced and repaid loans to its subsidiaries by way of internal currentaccounts. In presenting the condensed interim financial statements of the Group, the effect of transactions andbalances between fellow subsidiaries and those with the Parent have been eliminated. All transactionswith related parties were in the normal course of business, provided on commercial terms and arerepayable on demand.Other transactionsIn addition, the Group undertook transactions with Directors and their related interests as detailed below:• The Group made a payment of $693,000 to Maurice Prendergast to extinguish all employment contractobligations following his ceasing to be Chief Executive Officer in December 2011. All rights to Share Options,Partly Paid Shares and Long Term Incentive shares previously held by Maurice Prendergast have been forfeited.• The Group has made purchases of shop fixtures and fittings from Espies NZ Limited during the year of$584,853 (HY2011: $3,983,842). Espies NZ Limited is 59.6% (HY2011: 59.6%) beneficially owned byKezza Family Trust, a shareholder of Pumpkin Patch Limited. Kezza Family Trust is associated with MauricePrendergast, a Director in Pumpkin Patch Limited. All transactions with Espies NZ Limited are reviewed andapproved by the Property Committee, which consists of the Chief Executive Officer, the Chief Financial Officerand the General Manager Property, to ensure the transactions are appropriate.Director fees & dividendsThe following Directors received directors’ fees and dividends in relation to their personally held shares asdetailed below:Half year ended 31 January 2012 Half year ended 31 January 2011Directors’ fees Dividends Directors’ fees Dividends$000 $000 $000 $000Executive Directors - - - 582Non Executive Directors 171 - 231 551NOTESPumpkin Patch Interim Report, January 2012 | PAGE 23 Pumpkin Patch Interim Report, January 2012 | PAGE 24NOTES


9. COMMITMENTSdirectorya. Capital expenditure commitmentsThe Group has commitments for future capital expenditure not provided for in the condensed consolidatedfinancial information as at 31 January 2012 of $1.4 million (31 January 2011: $1.4 million).b. Operating lease commitmentsObligations payable after balance date on non-cancellable operating leases as follows:DirectorsJane Freeman – Chairperson & Independent DirectorBrent Impey – Independent DirectorDavid Jackson – Independent DirectorMaurice Prendergast – Non-Executive DirectorSally Synnott – Non-Executive DirectorMedia & Investor Relations ContactsNeil Cowie – Chief Executive OfficerMatthew Washington – Chief Financial OfficerHalf Year Ended31 January 2012Half Year Ended31 January 2011$000 $000Total non-cancellable operatingleases for the Group10. CONTINGENCIES156,125 212,946As at 31 January 2012 the Parent entity and Group had no contingent liabilities or assets.(31 January 2011: $nil)Registered Office439 East Tamaki RoadAuckland, New ZealandContact DetailsPrivate Bag 94 310PakurangaAuckland, New ZealandPhone: +64 9 274 7088Facsimile: +64 9 274 1122www.pumpkinpatchkids.co.nzInvestor RelationsE-mail: investor@pumpkinpatch.co.nzWebsite: www.pumpkinpatch.bizShare RegistrarLink Market Services LimitedPO Box 384Ashburton, New ZealandPhone: +64 3 308 8887Facsimile: +64 3 308 1311SolicitorsSimpson GriersonPrivate Bag 92 518Wellesley StreetAucklandNew ZealandAuditorsPricewaterhouseCoopersPrivate Bag 92 162AucklandNew Zealand11. EVENTS OCCURRING AFTER THE BALANCE SHEET DATEAs at 14 March 2012, there have been no significant events subsequent to 31 January 2012.NOTESPumpkin Patch Interim Report, January 2012 | PAGE 25 Pumpkin Patch Interim Report, January 2012 | PAGE 26NOTES


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