annual report 2012 - Pumpkin Patch investor relations

other financial informationReorganisation CostsFull recognition was made for all expected costs relating to the closure of the UnitedKingdom and United States retail business units and the reorganisation of head officefunctions across FY12.An impairment and onerous lease charge of $1.5m was made in relation to 6 marginalAustralian stores which are underperforming and have upcoming lease renewals.Should appropriate lease reductions not be negotiated with landlords the stores willbe closed.Total reorganisation costs recognised in FY12 were $39.8m before tax of which$34.3m are non-cash in nature.Cash Flows and Balance SheetNet bank debt at July was $54.7m down 10% on last year. Based on current tradingconditions and the continued control over working capital, overheads, and capitalexpenditure bank debt is expected to further reduce over the coming year.At the end of July we had $100m of total available bank facilities in place. We havecommenced the scheduled annual facility review and are expecting to soon have inplace funding facilities for another three years.Capital expenditure for the year totalled $7.8m considerably lower than last year(FY11: $17.1m) reflecting the lower number of new stores opened this year and thenew store mix moving towards the smaller and lower cost Charlie & Me stores.The international and online growth strategies are not expected to lead to anymaterial capital expenditure requirements in the foreseeable future.Inventory levels were 27% lower at $61.4m. Inventory holdings are well matched tocurrent trading conditions and maintaining that position is a key focus area for us inthe coming year.DividendWhile no dividends were paid for FY12 we will review dividend payments at thecompletion of 1H13.SummaryAlthough trading conditions across all markets were challenging in 2012 wegenerated sales growth across our core local and international markets while atthe same time undertaking a major reorganisation of our operations.The reorganisation means we are a much simpler and more agile business whichcan now focus on our core strengths such as product design and online capabilities,and start implementing longer term strategic initiatives that will deliver benefits forshareholders in years to come, and allow us and our shareholders to look moreconfidently into the future.I would like to thank the entire Pumpkin Patch team for their hard work and ongoingdedication to the future of our brands. I have been very impressed by the way the teamstood up to the challenges the markets through their way while at the same time theywere implementing a major reorganisation of our business. It has been a privilege tohave worked with them over the last year and I look forward with much excitement toseeing them take advantage of the international opportunities thatawait the business in the future.Neil CowieChief Executive Officer19