Receivers’ Second Report EX-PPL Limited (formerly Pumpkin Patch Limited) (In Receivership and In Liquidation) (‘the Company’) Company No. 637120 26 June 2017 30629 1 Introduction Brendon Gibson and Neale Jackson were appointed Joint and Several Receivers and Managers of the assets and undertaking of Pumpkin Patch Limited on 26 October 2016 pursuant to a composite general security deed dated 24 June 2009 granted in favour of ANZ Bank New Zealand Limited and Australia and New Zealand Banking Group Limited (‘the Bank’), following the directors placing the Company into Voluntary Administration. At the creditors meeting held on 27 March 2017, the creditors resolved to appoint Liquidators to the Company. This is a statutory, six monthly report that covers the period 26 October 2016 to 25 April 2017 (‘the relevant period’). 2 Restrictions This report has been prepared by us in accordance with and for the purposes of Section 24 of the Receiverships Act 1993. It is prepared for the sole purpose of reporting on the state of affairs with respect to the property in receivership and the conduct of the receivership. In compiling this report we have relied on the accuracy of all relevant information provided by the Company. While all care and attention has been taken in compiling this report, we do not accept any liability whatsoever arising from this report. All information contained in this report is for the confidential use of the parties to which it is provided, in accordance with Sections 26 and 27 of the Receiverships Act 1993 and is not to be disseminated or passed to any other person without prior written authority or in accordance with the law. 3 Background The Company is the parent entity to a group of subsidiaries. The New Zealand subsidiary companies, of which we have also been appointed receivers, are:  EX-PPOL Limited (formerly Pumpkin Patch Originals Limited) (In Receivership and In Liquidation) (‘PPOL’)– owned all inventory, held the majority of retail leases and employed all retail employees;  EX-PPDL Limited (formerly Pumpkin Patch Direct Limited) (In Receivership and In Liquidation) (‘PPDL’) – operated the online business;  EX-PKL Limited (formerly Patch Kids Limited) (In Receivership and In Liquidation) (‘PKL’) – owned the US based subsidiaries; and  Torquay Enterprises Limited (In Receivership and In Liquidation) (‘TEL’) – owned some of the group’s intellectual property. The five entities together are referred to as ‘the Companies’ (and the former Pumpkin Patch business is referred to as ‘the business’). The banking facilities were cross guaranteed by each of the above Companies (and other entities of the Pumpkin Patch group). The business designed and retailed children’s clothing focused on the New Zealand and Australian markets. The Company was listed on the NZX stock exchange in New Zealand. The financial position of the Company and the subsidiaries was therefore publicly available, due to the reporting obligations of a listed company. The Company was delisted from the NZX on 8 June 2017. Page 1 In the lead up to our appointment the business was significantly capital constrained. The business faced difficult trading conditions in a highly competitive industry, combined with unfavourable movements in the Australian dollar. The financial position had been well canvassed in the period leading up to the receivership, leading ultimately to a trading halt of the Company’s shares announced to the market in the days leading up to our appointment. As a result, the directors made the decision to place the Companies into Voluntary Administration. Subsequently we were appointed Receivers by the secured creditor. At the date of our appointment there were 166 Pumpkin Patch and Charlie & Me retail stores in New Zealand and Australia, and 1,600 staff employed across the group. The Company performed the head office function for the Pumpkin Patch group. All head office and distribution centre staff in New Zealand were employed by the Company. The Company had 208 employees as at the receivership date. This report should be read in conjunction with the Receivers’ other statutory reports regarding the Companies available at http://www.kordamentha.com/Creditors/Pumpkin-Patch/Pumpkin-Patch-NZ. 4 Commentary 4.1 Realisation of assets As noted, the Company is the parent entity of the Pumpkin Patch group. Its predominant asset was its investment in the trading entities. It also owned some of the Company’s intellectual property and some fixed assets located at the Company’s head office. The Companies ceased trading on 10 April 2017 when the last Pumpkin Patch retail outlet was closed. As at the date of this report, the majority of the Company’s assets have been realised.  The Company’s intellectual property and other intangible assets were sold to Catch Group on 12 April 2017.  Some book debts are still being collected from its offshore subsidiaries.  A small number of assets, comprising office equipment, remain as at the date of this report. These will be sold by a third party auctioneer. Assets realised in the period after 25 April 2017 will be reported in the next statutory report. For completeness, the Company did not own any inventory. All inventory was owned by PPOL. 4.2 Secured Creditors Based on the information available to us, the amount owing to the Bank (in whose interest the Receivers were appointed) was $59.5 million at the date of receivership. All indebtedness to the Bank is cross guaranteed by each of the Companies (and other Pumpkin Patch group companies). As at 25 April 2017, the New Zealand Receivers have paid the Bank total distributions of NZ$22 million from the Companies. Subsequent distributions to the Bank will be reported in the next statutory report. Distributions paid by the Australian Receivers will be separately reported. As at the date of this report:  $31.8 million remains outstanding to the Bank (including accrued interest).  Almost all of the group’s assets have been realised. Based on those asset realisations, there will be a shortfall to the Bank. 4.3 PMSI Creditors Our search of the Personal Property Securities Register (‘PPSR’) shows a number of parties have registered financing statements against the Company. Page 2 26 June 2017 30629 We have assessed the position of these creditors. Goods supplied that had valid security interests (which have priority over the Bank's security interests) have been returned to the relevant creditors. All other goods with invalid security interests have been realised. 4.4 Preferential Creditors Preferential claims as at the date of our appointment totalled $2.9 million. This includes:  Employee preferential claims of $2.7 million.  PAYE and other deductions due to the IRD of $154k. In the period covered by this statutory report, we paid approximately $672,000 to employees for preferential claims. Since 25 April 2017, all employee and IRD preferential claims have been paid in full. These payments will be reflected in the accounts presented in our next statutory report. 4.5 Unsecured Creditors A Liquidator was appointed to the Company on 27 March 2017. The Liquidator is currently assessing the amount of unsecured claims. As there will be a shortfall to the Bank, there will be no funds available to distribute to this class of creditor. 4.6 Intercompany Transactions As at the date of this report the Company was a debtor or creditor of other group Companies in relation to transactions during the receivership. Subsequent to the date of this report, further transactions have eliminated those balances. 5 Statement of Receipts and Payments A statement of Receivers’ receipts and payments for the six months from 26 October 2016 is attached to this report. Should you have any queries regarding this report please do not hesitate to contact Hugh Delmonte of this office. Yours faithfully Neale Jackson Joint Receiver Page 3 26 June 2017 30629 EX-PPL Limited (formerly Pumpkin Patch Limited) (In Receivership and In Liquidation) Statement of Receivers' receipts and payments from 26 October 2016 to 25 April 2017 $ Receipts Asset realisations Creche fees Interest received Pre-receivership debtors Sundry Total receipts 1,904,199 100,768 2,217 4,739,839 788 6,747,812 Payments Asset realisation expenses Bank fees Commission Contractors Courier & freight Duress payments Employee preferential payments Equipment lease Fringe Benefit Tax Insurance IT costs Legal fees Marketing Operating expenses Premise rent Receivers' remuneration Salaries & wages Valuation expenses Total payments Net cash flow 5,625 1,492 14,968 92,940 2,010 101,747 671,922 71,009 1,589 53,694 580,555 4,754 146,777 256,755 904,408 183,382 3,949,638 3,140 7,046,404 -298,592 Intercompany inflows / (outflows) Intercompany - PPDL Intercompany - PPOL Intercompany - TEL Net intercompany position Total net cash flow -294,601 7,056,353 700,000 7,461,752 7,163,160 Page 4 26 June 2017 30629