annual report - Pumpkin Patch investor relations

PUMPKIN PATCH LIMITED & SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 JULY 2010
PUMPKIN PATCH LIMITED & SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 JULY 2010
3 INCOME AND EXPENSES
Consolidated - Year ended Parent - Year ended
31 July 2010 31 July 2009 31 July 2010 31 July 2009
$Õ000 $Õ000 $Õ000 $Õ000
Profit before income tax from continuing
activities includes the following specific
expenses:
Interest received (192) (309) (7,402) (871)
Dividends received (4) (1) (25,161) (1)
Rental and operating lease expenses 61,159 63,851 2,777 2,952
Impairment of store assets - 16,787 - -
Management fees - - (47,839) (40,894)
Write down of investment in subsidiary - - - 20,307
Net (gains) / losses on financial assets or
liabilities designated as fair value through
profit and loss (36) (1,255) - -
Interest expense 2,549 5,144 12,739 448
Bad debts written off 94 111 54 -
DirectorÕs fees 381 321 381 321
Donations 110 97 - -
Employee benefit expenses
Salaries & wages 77,561 78,707 20,556 22,057
Share based payments 432 1,691 415 -
77,993 80,398 20,971 22,057
Depreciation
Leasehold improvements 41 61 - -
Computer equipment and point of sale
equipment 820 781 536 387
Shop fitouts 5,160 9,820 - -
Plant and machinery 375 168 357 141
Office equipment and furniture and fittings 2,397 2,531 842 1,103
8,793 13,361 1,735 1,631
Amortisation
Trademarks 209 196 - -
Software 2,408 1,500 2,408 1,475
2,617 1,696 2,408 1,475
Audit fees
Statutory audit 235 216 165 138
235 216 165 138
4 NON-RECURRING EXPENSES
(A) REORGANISATION OF UNITED STATES OPERATIONS
On 29 June 2009 the Company announced a reorganisation in the United States of its
35 retail stores operated by a wholly owned United States registered subsidiary company,
Pumpkin Patch LLC.
Under the reorganisation plan Pumpkin Patch LLC made the decision to close 15 stores
in July 2009. All 15 stores were closed in July and August 2009 and Pumpkin Patch LLC
renegotiated the leases on the remaining 20 stores which continue to trade uninterrupted
and under normal course of business.
The reorganisation was conducted utilising Chapter 11 of the United States Bankruptcy
Code which provides certain legal protections while businesses implement reorganisations
of the nature undertaken by Pumpkin Patch LLC. A hearing was held on 27 May 2010
in the United States Bankruptcy Court in Delaware, during which the reorganisation plan
was approved. The plan was effected on 16 August 2010 at which point notice was given
to all outstanding creditors, resulting in Pumpkin Patch LLC exiting from Chapter 11
on that date.
An accrual for costs totalling $39,900,000 was reflected in the Group financial statements
in the 2009 financial year. This accrual consisted of costs relating to the writing off
and impairment of all fixed assets at the United States stores, inventory revaluation,
employee entitlements, legal and professional costs, and other costs directly related to the
reorganisation. No further costs relating to the restructuring of Pumpkin Patch LLC were
incurred in the 2010 financial year nor are expected to be incurred in future periods.
Financial information relating to the discontinued operation for the 2009 financial year is
set out in section (C) below. Further information is set out in note 5 - segment information.
(B) IMPAIRMENT OF URBAN ANGEL AND UNITED KINGDOM STORES
In July 2009, management reviewed the performance of all stores. As a result of this
review, management identified that the assets of a number of the CompanyÕs stores in
the United Kingdom, as well all its stand-alone Urban Angel stores in New Zealand were
impaired, based upon below par performance during the 2009 financial year with no sign
of any improvement in the short to medium term. Accordingly, an impairment charge was
recorded in the 2009 financial statements totalling $6,540,000, of which $6,377,000
related to the United Kingdom stores and $163,000 related to the stand-alone Urban
Angel stores. Refer to point (D) below.
A review of store performance during the 2010 financial year did not identify any
indicators of impairment, thus no impairment charge has been recorded in the current year.
20
years
young
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