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
4. Concentration of Credit Risk
In the normal course of business, the Group incurs credit risk from trade debtors and transactions with financial
institutions. The Group has a credit policy which is used to manage this risk.
The Group has no significant concentrations of credit risk. The Group does not require any collateral or security to
support financial instruments due to the quality of financial institutions and trade debtors dealt with.
(b) Fair Values
The estimated fair values of the Group’s financial assets and liabilities which differ from the carrying values are noted
below:
31 July 2005 31 July 2004
Carrying Value
$000
Fair Value
$000
Carrying Value
$000
Fair Value
$000
Assets
Investments 4 4 4 4
Unrecognised
Foreign exchange contracts - 3,077 - 1,712
The Group anticipates that term liabilities will be held to maturity and that settlement at fair value is unlikely.
The following methods and assumptions were used to estimate the fair values for each class of financial instrument.
Trade Debtors, Trade Creditors and Bank Overdraft
The carrying value of these items is equivalent to their fair value and therefore they are excluded from the table
shown above.
Investments
The fair value of listed investments is estimated based on quoted market prices at balance date. The fair value of
unlisted investments is estimated to be the net asset backing, as there are no quoted market prices available.
Term Liabilities
The fair value of the Group’s term liabilities is estimated based on current market rates available to the Group for debt
of similar maturity.
Foreign Exchange Contracts
The fair value of these instruments is estimated based on the quoted market price of these instruments.
Guarantees and Overdraft Facilities
The fair value of these instruments is estimated on the basis that management do not expect settlement at face value
to arise. The carrying value and fair value of these instruments is nil.
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