BFW Preliminary Half Year Results 30 Sept 2017

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Burger Fuel Worldwide Limited
Results for announcement to the market


Reporting Period 6 Months to 30 September 2017

Previous Half - Year Reporting Period 6 Months to 30 September 2016


Amount (000’s) Percentage
change
Revenue from ordinary activities. 12,651 21.9%
Profit (loss) from ordinary activities after tax
attributable to security holders..
65 156.6%
Net profit (loss) attributable to security holders. 65 156.6%

Interim/Final Dividend Amount per security
Imputed
amount
per security


Record Date -
Dividend Payment Date -


Comments:
See attached Directors’ Commentary
and following

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Burger Fuel Worldwide Limited
Chairman and Chief Executive’s Review
For the period ended 30 September 2017

Burger Fuel Worldwide Ltd Half Year Results for the 6 months ended 30 September 2017

Overview

The Directors of BurgerFuel Worldwide (BFW) present the unaudited results for the 6 months to 30 September 2017.

Net Profit after tax in the period was $65,071 compared to a loss of ($115,328) in the same period last year, showing a gain
of $180,399.

Our Group Operating Revenue increased by 21.9% on the same period last year to $12.6M. This increase in revenue is
mainly due to the new Indianapolis & Takapuna company owned stores. Takapuna was purchased in October 2016 & the
Indianapolis store opened in May 2017. BurgerFuel Total System Sales (store sales including franchised stores) are up 9.2%
to $52.7M for the period - this is made up of both new and existing stores’ sales growth.


BFW RESULTS (UNAUDITED) FOR THE PERIOD 1 APRIL TO 30 SEPTEMBER 2017

30 September 2017 30 September 2016
$000 $000

Operating Revenue * 12,651 10,378

Operating Expenses ** (12,247) (10,457)

Net Profit Before Tax 404 (79)
Net Profit After Tax 65 (115)
* Revenue includes; Operating revenue & interest income.
** Expenses include; Operating expenses, depreciation, amortisation & interest expense.


TOTAL SYSTEM SALES UP 9.02% to $52.7M

Australasian Region

In New Zealand we continue to receive strong customer support in both the regional areas and cities.

Our focus remains on operational excellence, cost efficiencies, systemisation and the development of world-class training
technology and system development and are seeing the benefits of this.

The BurgerFuel NZ company-owned store strategy continues to develop, with last year’s purchase of Takapuna becoming a
key contributor. We see further potential to own more BurgerFuel outlets over time and will continue to review these
opportunities as they present themselves.

While sales continue to grow year-on-year, as previously communicated, the Board notes that the market should expect new
store openings in New Zealand to slow down as this market approaches its full potential – especially in the North Island.
BFW still sees the opportunity for further expansion in the South Island where we are actively reviewing potential sites and
franchisees.

While focus will remain on the protection and growth of the existing New Zealand business, BFW will continue in its
exploration of diversification opportunities. As communicated in the Annual Report, the board will continue to consider all
options for expansion within the New Zealand Market, both inside and outside the BurgerFuel brand.

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Australia remains difficult, and alongside an extremely competitive landscape, we continue to face high operating costs such
as rent and labour. In November 2017, our franchisees in the Gold Coast closed their Mermaid Beach store due to a
relatively low performance level. This will have no material effect on BFW results.

We will continue to support our existing franchised stores in Australia but comfortable operating margins remain hard to
achieve and accordingly further expansion in this market is highly unlikely.

The Middle East

In the Middle East, despite the many adversities we face due to ongoing economic and political unrest, we have seen growth
in certain areas and continue to make progress in this market.

As of the 30th September 2017, we now have a total of 25 BurgerFuel stores across the Middle East.

Our business in Saudi Arabia has continued to see growth in sales within the period. As previously communicated, this can
be largely attributed to the recent revitalisation of the Saudi economy as well as an increase in BurgerFuel’s marketing
activity.

The UAE, as a whole, is continuing to see a slowdown in the retail sector and this has been reflected in sales. We are also
facing a densely populated competitor market. Despite these challenges, our business in the UAE continues to operate
reasonably well, and Dubai remains a strong focus for us in the Middle Eastern region.

In Egypt, the ongoing political turmoil as well as the economy there in general, continues to result in extremely low sales
volumes. The reality is that should this continue, this is not a market that BurgerFuel can operate in successfully or safely.
We are currently working with our local partners to assess our future in Egypt and will update the market with any
developments as they come to light. The market should note that Egypt has never contributed in any significant way to BFW
results, and therefore a full exit from this country will have no material impact on the group.

In Iraq, where we have one store in Baghdad, sales continue to perform reasonably well. This has given our Master
Franchisees in that country confidence to open another site in Baghdad. We hope to announce that the doors have swung
open on this store shortly.

In summary, the MENA region continues to be a good contributor for the Group. We do however caution the market every
year that our outlook in any of these regions can change quickly due to the ongoing potential for volatility in the Middle
East. As such, we continue to monitor these markets closely.

United States

The first BurgerFuel USA store in Indianapolis has now been open for 6 months. Initial operations demonstrated strong sales
but sales have since softened to a level that whilst still reasonable, are below where we need to be. We are entering our first
winter in this market, which in general is a known contributor to a reduction in sales. At this stage, it is too early to advise on
the viability of the brand in the USA. Focus will remain on the continued growth of this store and monitoring its
performance closely as we come into the warmer months. Costs of operating in America are very high as we do not have a
partner in that country and the Board is conscious that major investment is required there in order to both establish and build
a brand.

BurgerFuel continues to maintain a high level of awareness in Indianapolis and American consumers are indicating that they
like our product. BurgerFuel recently won the ‘Best Burger’ award and ‘Best Restaurant’ award in Indianapolis via public
vote. The brand has also received some strong exposure on a national level in the United States, placing in the Thrillist ‘Top
31 Burgers in America’s list. Whilst we are proud of these achievements we are also highly mindful of costs and a potential
weakening of the New Zealand dollar. We will keep the market informed of any further developments in the USA.

Group Outlook / Summary

The Group continues to protect and grow the existing business, as well as look for new expansion opportunities both inside
and outside of the BurgerFuel brand.

Investment over the last 6 months has continued to be significant due to the resource required to support the USA entry and
development plan. Additionally, investments have been made in new product development and business development that
will allow the Group to keep moving forward within existing markets and create a strong foundation for further growth.

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It is clear to the Board that the cost of doing business in overseas markets is rising and the time required to establish a brand
overseas is also lengthening due to the level of high competition in every global market. Rent and labour costs are also
approaching levels never seen before and this makes return on investment both longer and more expensive to achieve. It is
for this reason that new strategies that allow for diversification within the New Zealand market, where we are well
established, have been put in place.


The Group has no debt and as at 30 September 2017 had cash reserves of $5.3M.

BFW remains in a strong position, not only financially, but also from a resource and intellectual property perspective. This
puts the Group in good stead for further growth and the Board will continue to consider all options for further expansion
within the New Zealand market.

We would like to thank all our shareholders for their continued support and we look forward to keeping you informed of our
progress.

We wish all our shareholders, staff, franchisees, suppliers and of course our valued customers, a safe and Merry Christmas
and a prosperous New Year.

Best regards




Peter Brook Josef Roberts
Chairman Group CEO

5
Burger Fuel Worldwide Limited
Consolidated Statement of Comprehensive Income
For the period ended 30 September 2017




Unaudited Unaudited Audited

30 Sep
2017

30 Sep
2016
31 Mar
2017


6 months 6 months
Full Year


$’000

$’000
$’000






Revenue
12,612 10,299 22,217


Operating Expenses
(11,858) (10,117) (20,520)


Profit / (Loss) before interest, taxation,
depreciation and amortisation 754 182 1,697


Depreciation
329 297 616
Amortisation
57 40 86

386 337 702


Profit / (Loss) before Interest and Taxation
368 (155) 995


Interest Income
39 79 126
Interest Expense
(3) (3) (7)

36 76 119


Profit / (Loss) before Taxation
404 (79) 1,114


Income Tax Expense
339 36 225


Net Profit / (Loss) attributable to shareholders
65 (115) 889


Other comprehensive income:

Items that may be reclassified subsequently to profit
or loss:
Movement in Foreign Currency Translation Reserve
(4) 9 3


Total comprehensive income
61 (106) 892


Basic Net Earnings per Share (cents)
0.11 (0.19) 1.49
Diluted Earnings per Share (cents)
0.11 (0.19) 1.49

6
Burger Fuel Worldwide Limited
Consolidated Statement of Financial Position
As at 30 September 2017


Unaudited Unaudited Audited


30 Sep
2017

30 Sep
2016
31 Mar
2017


6 months 6 months
Full Year
$’000 $’000 $’000
Shareholders’ Equity

Contributed equity
16,034 16,034 16,034
Retained earnings
(1,809) (2,878) (1,874)
IPO capital costs
(223) (223) (223)
Other reserves
(309) (299) (305)

13,693 12,634 13,632
Current assets

Cash and cash equivalents
5,309 6,498 6,413
Trade and other receivables
3,471 2,559 2,634
Income tax receivable
- 136 -
Inventories
1,290 1,323 1,174
Loans
133 23 133

10,203 10,539 10,354
Non-current assets

Property, plant and equipment
3,729 2,863 3,278
Deferred tax asset
95 77 95
Intangible assets
2,413 1,214 2,424

6,237 4,154 5,797
Total assets
16,440 14,693 16,151


Current liabilities

Trade and other payables
1,945 1,635 2,122
Tax payable
323 - 25
Provisions
443 424 337

2,711 2,059 2,484
Non-current liabilities

Provisions
36 - 35

36 - 35
Total liabilities
2,747 2,059 2,519


Net assets
13,693 12,634 13,632

Net Tangible Assets per Share (cents) 19.0 19.0 19.0

7
Burger Fuel Worldwide Limited
Consolidated Statement of Changes in Equity
For the period ended 30 September 2017

September 2017


Share
capital
Foreign
currency
translation
reserve
IPO capital
costs
Share
option
reserve
Retained
earnings Total equity

$’000 $’000 $’000 $’000 $’000 $’000
Balance as at 1 April 2017
16,034 (305) (223) - (1,874) 13,632
Movement in foreign currency translation
reserve recognised in other comprehensive
income - (4) - - - (4)
Net Profit for the period ended 30
September 2017 - - - - 65 65


Balance as at 30 September 2017
16,034 (309) (223) - (1,809) 13,693





September 2016

Share
capital
Foreign
currency
translation
reserve
IPO capital
costs
Share
option
reserve
Retained
earnings Total equity
$’000 $’000 $’000 $’000 $’000 $’000
Balance as at 1 April 2016
16,034 (308) (223) - (2,763) 12,740
Movement in foreign currency translation
reserve recognised in other comprehensive
income - 9 - - - 9
Net Loss for the period ended 30
September 2016 - - - - (115) (115)


Balance as at 30 September 2016
16,034 (299) (223) - (2,878) 12,634




March 2017



Share
capital
Foreign
currency
translation
reserve
IPO capital
costs
Share
option
reserve
Retained
earnings Total equity
$’000 $’000 $’000 $’000 $’000 $’000
Balance as at 1 April 2016
16,034 (308) (223) 0 (2,763) 12,740
Movement in foreign currency translation
reserve recognised in other comprehensive
income - 3 - - - 3
Net Profit for the year ended 31 March
2017 - - - - 889 889


Balance as at 31 March 2017
16,034 (305) (223) - (1,874) 13,632

8
Burger Fuel Worldwide Limited
Consolidated Statement of Cash Flows
For the period ended 30 September 2017

Unaudited Unaudited Audited


30 Sep
2017

30 Sep
2016
31 Mar
2017



6 months 6 months
12 months
$’000 $’000 $’000
Cash flows from operating activities
Cash was provided from:

Receipts from customers
11,566 10,498 22,935
Interest received
39 79 126
Goods and services tax received
60 - 8

11,665 10,577 23,069
Cash was applied to:

Operating expenses
(11,865) (9,939) (20,375)
Interest paid
(3) (3) (7)
Taxes paid
(41) (51) (107)

(11,909) (9,993) (20,489)
Net cash flow provided from / (applied to)
operating activities (244) 584 2,580


Cash flows from investing activities
Cash was provided from:
Repayments from franchisees - 23 46
Sale of property, plant and equipment - 63 140
- 86 186
Cash was applied to:

Acquisition of intangible assets
(46) (126) (194)
Advance to Supplier
- - (133)
Acquisition of property, plant & equipment
(821) (117) (815)
Acquisition of subsidiary
- - (1,298)

(867) (243) (2,440)
Net cash flow applied to investing activities
(867) (157) (2,254)






Net movement in cash and cash equivalents
(1,111) 427 326
Exchange gain / (loss) on cash and cash equivalents
7 (7) 9
Opening cash and cash equivalents
6,413 6,078 6,078
Closing cash and cash equivalents
5,309 6,498 6,413

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SEGMENT INFORMATION


Operating Segments
The Group operates in four geographical segments – New Zealand, Australia, USA and the Middle East. All the
segments operations are made up of franchising fees, royalties and sales to franchisees. The segments are in the
business of Franchise Systems - Gourmet Burger Restaurants. New Zealand’s segment result is also due to the
amortisation of intangible assets.



September 2017
New Zealand
Australia Middle East USA Total

$’000 $’000 $’000 $’000 $’000
Revenue
6 months
6 months 6 months 6 months
6 months
Sales
5,409 78 96 986 6,569
Royalties
2,299 102 595 - 2,996
Franchising fees
170 - - - 170
Advertising fees
1,746 86 119 - 1,951
Foreign exchange gain
20 (4) - - 16
Sundry income
806 11 93 - 910
Interest income
38 1 - - 39
Total Revenue
10,488 274 903 986 12,651

Interest Expense
- 3 - - 3
Depreciation
237 15 4 73 329
Amortisation
57 - - - 57
Segment Result before Tax 1,424 (22) 437
(1,435)
404
Income Tax Expense 339 - - - 339
Segment Assets 13,954 586 105 1,795 16,440
Segment Liabilities 2,357 13 64 313 2,747



September 2016
New Zealand
Australia Middle East USA Total

$’000 $’000 $’000 $’000 $’000
Revenue
6 months
6 months 6 months 6 months
6 months
Sales
4,383 83 537
-
5,003
Royalties
2,028 99 633
-
2,760
Franchising fees
- - -
-
-
Advertising fees
1,561 91 126
-
1,778
Foreign exchange gain
22 (62) -
-
(40)
Sundry income
781 14 3
-
798
Interest income
78 1 -
-
79
Total Revenue
8,853 226 1,299
-
10,378

Interest Expense
3 - - - 3
Depreciation
247 21 8 21 297
Amortisation
40 - - - 40
Segment Result before Tax 664 (192) 17
(568)
(79)
Income Tax Expense 25 - - 11 36
Segment Assets 13,531 269 767 126 14,693
Segment Liabilities 871 1,075 39 74 2,059

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Operating Segments (Continued)


March 2017
New Zealand Australia Middle East USA Total


12 months 12 months 12 months 12 months 12 months


$’000 $’000 $’000 $’000 $’000
Revenue



Sales

9,890 181 694
-
10,765
Royalties

4,233 199 1,281
-
5,713
Franchising fees

263 - -
-
263
Advertising fees

3,241 182 256
-
3,679
Foreign exchange gain

7 (9) -
-
(2)
Sundry income

1,645 53 101
-
1,799
Interest received

125 1 -
-
126
Total Revenue

19,404 607 2,332
-
22,343

Interest Expense

1
1 -
5

7
Depreciation

523
42 9
42

616
Amortisation

86
- -
-

86
Segment Result Before Tax 1,539 (124) 954 (1,255)
1,114
Income Tax Expense 196 - - 29
225
Segment Assets 14,210 257 825 859
16,151
Segment Liabilities 682 1,049 63 725
2,519

Acquisition of Property, Plant & Equipment & Intangible Assets

Business Combination 1,290 - - -
1,290
Other 446 2 4 566
1,018