Basis of Preparation
Pro forma historical financial information used on page 34 for the financial years ended 31 July 2001and 2002 is extracted from the audited historical financial statements and management accounts of Pumpkin Patch and adjusted for the change in balance date from 31 December to 31 July effective 31 July 2003 and the change in the accounting policy in 2001 relating to the treatment of landlord contributions; so that the historical results are comparable with the Pumpkin Patch forecast performance. Accordingly the pro forma figures presented on page 34 differ from the summary historical information set out on page 67. The amounts included for 31 July 2003 have been taken from special purpose audited financial statements for the 12 months then ended and differ from the summary historical financial information set out on page 67 as that information 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 in arriving at the forecasts.
1. United Kingdom Retail
The Financial Performance summary includes the following results for the United Kingdom retail operation
Financial Performance for 12 months ended 31 July
In 2002 the group acquired 100% of the shares in Pumpkin Patch Limited (UK). The 2002 results include amortisation/impairment of goodwill of $1,537,886 on the purchase of Pumpkin Patch Limited (UK). The charge was deemed necessary by the Directors after they reviewed the carrying value of the subsidiary and recognising that the purchase was made primarily as part of overall restructuring of group ownership structures.
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.
Capital Expenditure is disclosed after deducting landlord contributions. Capital expenditure in 2001 reflects the 17 stores opened during the year; 2002 reflects lower store openings but higher than average landlord contributions; 2003 includes the purchase of land adjoining the East Tamaki Road distribution centre.
The Directors have decided to restructure all existing employee share schemes prior to listing on the NZX at an estimated cost of $7,450k. This will be recognised in the period ended 31 July 2004. Full details of the schemes can be found on page 84. A portion of the $7,450k is not deductible for tax purposes in 2004.
January 2004 borrowings include bank overdraft of $3,955k, short term borrowings of $11,000k, current portion of 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.