Analyses of the 2011 Annual Report of Pumpkin Patch Limited

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Introduction:
This report is readied for shareholders who are thinking to make an investment in Pumpkin Patch Ltd. Pumpkin Patch Ltd. are a child-clothing brand that based in Auckland, New Zealand. It was founded in 1990 by Sally Synnott, who is the current Non-Executive Director. Clothing design, marketing, retail and wholesale are this brand mostly focuses on. There are retail store all around New Zealand, Australia, United Kingdom, Ireland and United States.

Profitability:
Pumpkin Patch Limited (PPL) had a very challenging year in 2011, not only PPL faced to that but with all other opponents did as well. PPL’s Total Revenue was down by 6.6%, from $381m in 2010 to $356m in 2011, followed by the decrease in EBIT by 46.1%, from NZ$40m in 2010 to NZ$21m in 2011, the decrease in Sales Revenue by 6.74%, from NZ$362m in 2010 to NZ$338m in 2011. As well as the decrease in Net Profit by an unfortunately large 27.5%, from NZ $25m in 2010 to NZ$18m in 2011, these caused by the high New Zealand dollar exchange rate and natural disasters in the major markets country around the world.

The decrease in Profit worldwide caused by the different economics and non-economics factors, like the high NZD exchange rate in New Zealand market start from the 2011Jan, Queensland floods in Australia market, and the general economic situation across Europe in the United Kingdom market and planning to quit the United Market by the end of January. Also all these factors caused the sales decreased as well.

The increase in expenses caused by opening 23 new stores worldwide, 13 stores in Australia, 6 stores in New Zealand, 1 stores in The United Kingdom and 3 stores in a new market country: Ireland, but no new stores in United States because they are planning to quit this market country. Also PPL started operates online trading websites in these market countries.

Although PPL opened 23 new stores worldwide in 2011, but only the stores in UK, Ireland and US had an increase in sales, by 2.7% in UK and Ireland market from GBP$23m in 2010 to GBP$24m in 2011, and by 4.9% in the US market from USD$13m in 2010 to USD$14m in 2011. However these 3 markets are still making loss in NZD because of the high exchange rate, so if we covert all of these sales into NZD, then the UK and Ireland market is making a loss by 5.2%, from NZ$52m in 2010 to NZ$49m in 2011, and the US market is making a loss as well by 3.6%, from NZ$19m in 2010 to NZ$18m in 2011.

Other than UK, Ireland and US stores are making loss in NZD, Australia and New Zealand stores are making a lost as well. The sales in Australia market was decreased by 9.0%, from NZ$198m in 2010 to NZ$180m in 2011, as well as their main market, New Zealand market was decreased by 8.0%, from NZ$58m in 2010 to NZ$54m in 2011. Even though the retail department in the New Zealand market is making a loss, but the Wholesale and Direct department is making a profit by 1.7%, from NZ$53m in 2010 to NZ$54m in 2011

Earnings before interest and tax (EBIT) had experienced the same result as the sale, decreased by 46.1% from NZ$40m in 2010 to NZ$21m in 2011. This can be caused by the decreased in cost of goods sold by 8.5% from NZ$137m in 2010 to NZ$125m in 2011

Due to PPL opened 23 new stores worldwide in 2011, so it boosted up the expenses, including the salaries and wages increased by 5.3%, from NZ$72m in 2010 to NZ$75m in 2011, the director’s fees increased by 6.5%, from NZ$38m in 2011 to NZ$40m in 2011 and the rental and operating lease expenses increased by 6.4%, from NZ$57m in 2010 to NZ$61m in 2011

Their total assets has increased by 82%, from NZ$117m in 2010 to NZ$205m in 2011, due to the largely increase in Intangible assets, Derivative financial instruments and Deferred tax assets. While the total assets have increased, the total liabilities have also increased, by 76% from NZ$97m in 2010 to NZ$172m in 2011. It caused by the increase in Trade and other payables, Derivative financial instruments and...
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