BFW Preliminary Half Year Result 30 September 2018

1



Burger Fuel Worldwide Limited
Results for announcement to the market


Reporting Period 6 Months to 30 September 2018

Previous Half - Year Reporting Period 6 Months to 30 September 2017


Amount (000’s) Percentage
change
Revenue from ordinary activities. 10,967 (13.3%)
Profit (loss) from ordinary activities after tax
attributable to security holders..
646 893.3%
Net profit (loss) attributable to security holders. 646 893.3%

Interim/Final Dividend Amount per security
Imputed
amount
per security


Record Date -
Dividend Payment Date -


Comments:
See attached Directors’ Commentary
and following

2
Burger Fuel Worldwide Limited
Chairman and Chief Executive’s Review
For the period ended 30 September 2018

Burger Fuel Worldwide Ltd Half Year Results for the 6 months ended 30 September 2018

Overview

The Directors of Burger Fuel Worldwide Limited (BFW) present the unaudited results for the 6 months to 30 September
2018.

Net Profit after tax for the period was $646,373 compared to $65,071 in the same period last year, showing a gain of
$581,302.

Our Group Operating Revenue decreased by 13.3% on the same period last year to $11.0M. This decrease in revenue is
mainly due to the sale of the Indianapolis store and the outsourcing of our packaging distribution. This reduction in revenue
was partly offset with the IFRS 15 Revenue adjustment of $122K which increased the Group revenue for the 6 months to 30
September 2018.

The Group has no debt and as at 30 September 2018 had cash reserves of $4.5M. The reduction in cash reserves was mainly
due to the BFW share buyback from Franchise Brands. This transaction reduced the cash balance by $1.5M.

BurgerFuel Total System Sales (store sales including franchised stores) are down 4.47% to $50.3M for the period. This
decrease in sales is mainly due to exiting Australia & reduced sales in the Middle Eastern region.


BFW RESULTS (UNAUDITED) FOR THE PERIOD 1 APRIL TO 30 SEPTEMBER 2018

30 September 2018 30 September 2017
$000 $000

Operating Revenue * 10,967 12,651

Operating Expenses ** (10,108) (12,247)

Net Profit Before Tax 859 404
Net Profit After Tax 646 65
* Revenue includes; Operating revenue & interest income.
** Expenses include; Operating expenses, depreciation, amortisation & interest expense.


TOTAL SYSTEM SALES DOWN 4.47 % to $50.3M

Australasian Region

In New Zealand, the BurgerFuel brand has continued to perform well overall. Focus has remained on maximising the
potential of our existing store network, as well as seeking opportunities to franchise any new BurgerFuel locations.

In Australia, as previously advised, reasonable operating margins proved too difficult to achieve despite every effort to move
towards profit, and we completed our exit from this market in early FY19, closing all franchised stores.

As communicated by the Board at the AGM, while we remain fully dedicated to supporting the BurgerFuel brand and
driving growth within the BurgerFuel business, concentration is now also on the development of other brands, like Winner
Winner, the chicken concept purchased by BFW in FY18, as well as exploring new opportunities, as part of our efforts to
stimulate financial growth for the Group.

During the period, the Group focused on systemising Winner Winner in preparation for further expansion - as well as the
development and launch of a new brand into the New Zealand market. Late last month, we opened the doors to the first store
for Shake Out, a fast, modern, simple burger concept developed in-house by the existing BFW team. If proof of concept is
achieved with this first store, efforts will be turned to the further expansion of this brand here in New Zealand.

3
The Middle East

In the Middle East, as previously cautioned, we are facing challenging times in this volatile market and sales are down.

The UAE especially, is continuing to see a significant slowdown in the retail sector, and the competitor market is becoming
even more densely populated, both of which have been reflected in the slowing of sales. We are also facing
disproportionately high retail rent costs, especially in Dubai, and our Master Franchisees in the Middle East who have
already closed a number of sites, are planning to close more sites that are no longer financially viable.
As communicated at the 2018 BFW AGM, these closures are consistent with our Master Franchisees strategy to relocate
high rent stores to lower rent, key residential areas so as to reduce overheads, while maintaining customer reach. To further
assist this strategy, our partners in Dubai have been driving forward with the development of a home delivery service in
order to maximise revenue.
Our licensed business in Saudi Arabia has continued to see satisfactory sales, but like our other Middle Eastern markets, they
are also facing high retail rent, increasing labour costs and staff shortages due to work visa changes. In-line with our other
Middle Eastern markets, our partners in Saudi are also optimising locations, working to reduce overheads and increase
customer reach.
Iraq too, is facing significant challenges, and while the brand has experienced positive traction in this market, the political
and economic climate is experiencing some volatility, and this is having an impact on trade. We will monitor the situation
closely and continue to support our Iraqi partners.
Overall, we caution the market as to the future of the Middle Eastern region for BurgerFuel - these countries remain
uncertain and we anticipate further declines in our revenue from this market. That said, we remain committed to supporting
the BurgerFuel business in this region and will continue working closely with our partners in each market.
United States

In the United States we have one licenced store in Broad Ripple, Indianapolis, operated by our Licencee, Chris Mason.
Whilst the store has experienced a decline in sales in the past 12 months since opening, Chris remains focused on his search
for an established US partner.

Group Outlook / Summary

The past six months have been pivotal for BFW, and the Group now has three brands operating within the New Zealand
market.

As previously advised, since the loss of Franchise Brands as our international partner, the reality of global expansion and
development has become an expensive and risky proposition. Accordingly, we are now focusing our resources on expansion
within New Zealand, where we have an intimate knowledge of the market and the ability to better contain costs.

During the past 6 months the board has sought input from KPMG’s Corporate Finance team on potential opportunities and
options that could help accelerate the company, beyond what is currently an organic growth strategy. As a result of their
input the board has now requested that KMPG Corporate Finance undertake a full strategic options review of the business.
This review is now underway, and we will update the market further on any material developments.

BFW remains in a strong position financially, as well as from a resource and intellectual property perspective, putting the
Group in good stead for further growth as we continue our efforts to drive forward. We thank all shareholders, staff,
franchisees, suppliers and of course our valued customers for their support and wish you all a safe and Merry Christmas and
a prosperous New Year.

Best regards



Peter Brook

Josef Roberts
Chairman Group CEO

4
Burger Fuel Worldwide Limited
Consolidated Statement of Comprehensive Income
For the period ended 30 September 2018




Unaudited Unaudited Audited

30 Sep
2018

30 Sep
2017
31 Mar
2018


6 months 6 months
Full Year


$’000

$’000
$’000






Revenue
10,920 12,612 24,689


Operating Expenses
(9,728) (11,858) (24,153)


Profit before interest, taxation, depreciation and
amortisation 1,192 754 536


Depreciation
275 329 535
Amortisation
96 57 118

371 386 653


Profit / (Loss) before Interest and Taxation
821 368 (117)


Interest Income
47 39 85
Interest Expense
(9) (3) (4)

38 36 81


Profit / (Loss) before Taxation
859 404 (36)


Income Tax Expense
213 339 427


Net Profit / (Loss) attributable to shareholders
646 65 (463)


Other comprehensive income:

Items that may be reclassified subsequently to profit
or loss:
Movement in Foreign Currency Translation Reserve
(127) (4) 34


Total comprehensive income
519 61 (429)


Basic Net Earnings per Share (cents)
1.10 0.11 (0.78)
Diluted Earnings per Share (cents)
1.10 0.11 (0.78)

5
Burger Fuel Worldwide Limited
Consolidated Statement of Financial Position
As at 30 September 2018


Unaudited Unaudited Audited


30 Sep
2018

30 Sep
2017
31 Mar
2018


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

Contributed equity
14,519 16,034 16,034
Retained earnings
(3,774) (1,809) (2,337)
IPO capital costs
(223) (223) (223)
Other reserves
(398) (309) (271)

10,124 13,693 13,203
Current assets

Cash and cash equivalents
4,526 5,309 6,301
Trade and other receivables
3,458 3,471 3,031
Income tax receivable
201 - -
Inventories
590 1,290 1,079
Loans
129 133 133

8,904 10,203 10,544
Non-current assets

Property, plant and equipment
2,600 3,729 2,387
Deferred tax asset
160 95 188
Intangible assets
2,508 2,413 2,525

5,268 6,237 5,100
Total assets
14,172 16,440 15,644


Current liabilities

Trade and other payables
3,654 1,945 1,657
Income tax payable
- 323 449
Provisions
357 443 298

4,011 2,711 2,404
Non-current liabilities

Provisions
37 36 37

37 36 37
Total liabilities
4,048 2,747 2,441


Net assets
10,124 13,693 13,203

Net Tangible Assets per Share (cents) 12.7 19.0 18.0

For and on behalf of the board on 6
th
December 2018

___________________ _____________________
Director Director

6
Burger Fuel Worldwide Limited
Consolidated Statement of Changes in Equity
For the period ended 30 September 2018

September 2018



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

$’000 $’000 $’000 $’000 $’000
Balance as at 1 April 2018

16,034 (271) (223) (2,337) 13,203
IFRS 15 Revenue adjustment to Retained
Earnings

- - - (2,083) (2,083)
Buy Back and Share cancellation

(1,515) - - - (1,515)
Movement in foreign currency translation
reserve recognised in other comprehensive
income

- (127) - - (127)
Net Profit for the period ended 30
September 2018

- - - 646 646



Balance as at 30 September 2018

14,519 (398) (223) (3,774) 10,124


September 2017


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


March 2018





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

- 34 - - 34
Net loss for the year ended 31 March 2018

- - - (463) (463)



Balance as at 31 March 2018

16,034 (271) (223) (2,337) 13,203

7
Burger Fuel Worldwide Limited
Consolidated Statement of Cash Flows
For the period ended 30 September 2018

Unaudited Unaudited Audited


30 Sep
2018

30 Sep
2017
31 Mar
2018



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

Receipts from customers
10,385 11,566 24,089
Interest received
47 39 85
Goods and services tax received / (paid)
29 60 (16)

10,461 11,665 24,158
Cash was applied to:

Payments to suppliers & employees
(9,300) (11,865) (23,226)
Interest paid
(9) (3) (4)
Taxes paid
(834) (41) (98)

(10,143) (11,909) (23,328)
Net cash flow provided from / (applied to)
operating activities 318 (244) 830


Cash flows from investing activities
Cash was provided from:
Sale of property, plant and equipment 9 - 1,176
9 - 1,176
Cash was applied to:

Acquisition of intangible assets
(79) (46) (219)
Advance to supplier
- - -
Acquisition of property, plant & equipment
(520) (821) (1,899)
BFW Share buy back & cancellation
(1,515) - -
Acquisition of subsidiary
- - -

(2,114) (867) (2,118)
Net cash flow applied to investing activities
(2,105) (867) (942)






Net movement in cash and cash equivalents
(1,787) (1,111) (112)
Exchange gain / (loss) on cash and cash equivalents
12 7 -
Opening cash and cash equivalents
6,301 6,413 6,413
Closing cash and cash equivalents
4,526 5,309 6,301

8
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 2018
New Zealand
Australia Middle East USA Total


$’000 $’000 $’000 $’000 $’000
Revenue
6 months
6 months 6 months 6 months
6 months
Sales

4,390 - 95 - 4,485
Royalties

2,409 - 494 - 2,903
Franchising fees

71 - - - 71
Franchise Fees IFRS 15 Adjustment
91 - 31 - 122
Advertising fees

1,806 - 100 - 1,906
Foreign exchange gain

(65) 38 - 167 140
Sundry income
997 - (2) 298 1,293
Interest income

46 1 - - 47
Total Revenue

9,745 39 718 465 10,967

Interest Expense
9 - - - 9
Depreciation
273 - 2 - 275
Amortisation
96 - - - 96
Segment Result before Tax

320 39 393
107
859
Income Tax Expense 173 - - 40 213
Segment Assets 13,125 489 204 354 14,172
Segment Liabilities 4,610 (205) 62 (419) 4,048

Acquisition of Property, Plant & Equipment & Intangible Assets

Other 599 - - - 599


The IFRS 15 retrospective adjustment for franchise fee & licence fee income for the 6 months to 30 September 2018 is
$122,183.64. The above has no cash effect to the Group and the change is for financial reporting purposes only.

9
Operating Segments (Continued)


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


March 2018
New Zealand Australia Middle East USA Total


12 months 12 months 12 months 12 months 12 months


$’000 $’000 $’000 $’000 $’000
Revenue



Sales

10,734 133 145 1,605 12,617
Royalties

4,674 140 1,192 - 6,006
Franchising fees

565
- -
-
565
Advertising fees

3,528 105 240 - 3,873
Foreign exchange gain

58 (37) - (63) (42)
Sundry income

1,473 14 130 53 1,670
Interest received

84 1 - - 85
Total Revenue

21,116 356 1,707 1,595 24,774

Interest Expense

4 - - - 4
Depreciation

528 - 7 - 535
Amortisation

118 - - - 118
Segment Result Before Tax
2,303 (163) 912 (3,088) (36)
Income Tax Expense
444 - - (17) 427
Segment Assets
14,101 505 102 936 15,644
Segment Liabilities
2,552 (216) 23 82 2,441

Acquisition of Property, Plant & Equipment & Intangible Assets

Other
784 - 1 1,333 2,118