annual report 2005 - Pumpkin Patch investor relations

Pumpkin Patch Limited & Subsidiaries notes to and forming part of the financial statements
for the 12 months ended 31 July 2005
6. pre-listing employee share ownership schemes
In the period from 1999 to prior to listing in June 2004 the Company established a number of employee share
ownership schemes which allowed employees (including Executive Directors) to purchase shares in the Company. These
share purchases were funded by interest free loans from the Company.
Prior to listing and the allotment of shares under the share offer in June 2004 the Company restructured all pre-listing
employee share ownership schemes.
The effect of the restructuring was:
• All shares allocated under these schemes were fully paid. In 2004 the Company provided additional interest free
loans of $5,710,750 to employees to pay for any shares under the schemes not already purchased in cash
• The Company committed to pay grossed up bonuses to employees, in some cases over a three year period and in
some cases prior to listing, to fully or substantially discharge the amount of the loans.
• The total net tax cost of restructuring the pre-listing employee share ownership schemes of $7,431,490 was fully
provided for prior to listing in 2004. This consisted $7,220,411 for the provision of bonuses to employees,
including Executive Directors, to fully or substantially discharge their loans and $211,079 for the discharge of a loan
outstanding from the pre-listing Pumpkin Patch Employee Share Scheme Trust.
• Approximately one third of each employees shares issued under the schemes were held by a Trustee as security for
the payment of the loans owing to the Company and are to be released to employees progressively over three years
from 2004 to 2007 as their loans are progressively discharged. During 2005 security over 1,266,316 shares was
released to employees.
• Should an employee’s employment cease they are required to forfeit to the Company any remaining shares held as
security. During 2005 employees ceasing employment forfeited 24,978 shares to the Company. These shares are
held by the Trustee for use in satisfying its obligations under other existing employee share schemes.
• Employees retain full voting and dividend rights attached to their shares while held as security.
• As at 31 July 2005 the Trustee holds 2,479,389 shares as security (2004: 3,800,847).
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