BFG Preliminary announcement of full year results FY20

Burger Fuel Group Limited (Formerly Burger Fuel Worldwide limited)
Preliminary Full Year Results
For The Year Ended 31 March 2020


Results for announcement to the market
Name of issuer Burger Fuel Group Limited
Reporting Period 12 months to 31 March 2020
Previous Reporting Period 12 months to 31 March 2019
Currency NZD
Amount (000s) Percentage change
Revenue from continuing operations $ 21,869 4.0%
Total Revenue $ 21,869 4.0%
Net profit/(loss) from continuing operations $ 505 (59.1%)
Total net profit/(loss) $ 505 (59.1%)
Interim/Final Dividend
Amount per Quoted Equity Security Not Applicable
Imputed amount per Quoted Equity Security Not Applicable
Record Date Not Applicable
Dividend Payment Date Not Applicable
Current period
Prior comparable
period
Net tangible assets per Quoted Equity Security $0.15 $0.14
A brief explanation of any of the figures above necessary to
enable the figures to be understood
Group Operating Revenue increased by 4.0% on the same
period last year to $21.9M. This increase in revenue is
mainly due to the opening of our company owned Shake Out
store at the Smales Farm complex in Takapuna, Auckland,
as well as the additional interest income booked for the non-
occupied leases as per the new IFRS16 lease accounting
standard ($1.4M).
The Group also incurred additional costs around the KPMG
process, legal costs, writing off certain obsolete assets and
stock write offs due to the closure of restaurants over the
COVID-19 lockdown period. The Group has also undertaken
significant investment in the ongoing development of the
new brands.
Authority for this announcement
Name of person authorised to make this announcement Mark Piet
Contact person for this announcement Mark Piet
Contact phone number 21453333
Contact email address Mark.Piet@Burgerfuel.com
Date of release through MAP 29/06/2020

Burger Fuel Group Limited
Preliminary Full Year Results
For The Year Ended 31 March 2020

Chairman and Chief Executives’ Review

Burger Fuel Group Ltd Preliminary Full Year Results for the 12 months ended 31st March 2020

On the 1
st
July 2019 Burger Fuel Worldwide Limited changed its name to Burger Fuel Group Limited to better reflect
the business focus and our recent transformation into a multi-brand business. At the same time, we also migrated to the
NZX main board from the NZAX.

The Group will be relying on the NZX class waiver from listing rules 3.6.1, dated 19 March 2020, which provides listed
companies with an additional two months to prepare and release annual reports in acknowledgement of the challenges
caused by COVID-19. The Group will be releasing the Annual Report by the 31 July 2020.

Overview – FY20

The Directors of Burger Fuel Group Limited (BFG) present the audited results for the 12 months to 31 March 2020.

Net Profit after tax for the period was $505,478 representing a 59.1% decrease on the previous year.

The Group has no debt, and cash reserves of $5.6M.

BurgerFuel Group (unaudited) Total System Sales (all three brands) reduced (2.18%) to $101.3M on the same period
last year. Group Operating Revenue increased by 4.0% to $21.9M. Whilst revenue is up on FY19, this is mainly due to
the opening of our company owned Shake Out store at the Smales Farm complex in Takapuna, Auckland in November
2018, as well as the additional interest income booked for the non-occupied leases as per the new IFRS 16 lease
accounting standard $1.4M.

Revenue is largely comprised of sales from our company owned restaurants, manufacturing, and long-term recurring
royalties.

In FY20 we had a reduction in MENA royalty and advertising income and an internal business structure change lowered
revenue from our proprietary product manufacturing operation but will ensure that this business unit becomes more
financially efficient going forward.

The Group also incurred additional costs around the KPMG process, legal costs, writing off certain obsolete assets and
stock write offs due to the closure of restaurants over the COVID-19 lockdown period. The Group has also undertaken
significant investment in the ongoing development of the new brands.


As at 31 March 2020 there were 78 BurgerFuel, Shake Out® and Winner Winner® stores operating in NZ and
worldwide.

BFG PRELIMINARY RESULTS FOR THE PERIOD 1 APRIL 2019 TO 31 MARCH 2020

31 March 2020 31 March 2019
$000 $000

Operating Revenue * 20,459 21,028
Interest Income – IFRS 16 non-occupied leases 1,410 -
Total Income 21,869 21,028

Operating Expenses ** (18,663) (19,172)
Depreciation Expense – IFRS 16 occupied leases
(630) -
Interest Expense - IFRS 16 non-occupied leases
(1,410) -
Interest Expense - IFRS 16 occupied leases
(443) -
Total Expenses
(21,146) (19,172)


Net Profit (Loss) Before Tax 723 1,856
Net Profit (Loss) After Tax *** 505 1,236

* Revenue includes: Operating revenue and interest income.
** Expenses include: Operating expenses, depreciation, amortisation and interest expense.
*** The New Zealand entities had taxable income and were unable to utilise the foreign tax losses. The overseas
entities had minimal tax.



The Year to Date and Group Outlook

New Zealand

Systemwide sales across New Zealand (62 restaurants, all 3 brands) increased by 1.3% on the previous year this was
mainly due to the opening of 5 new stores. The COVID-19 Alert Level 4 lockdown resulted in FY20 having 6 less days
of trade which impacted the Group’s NZ sales by approx. (1.7%). Since our mid-year announcement, trading conditions
in Christchurch have remained difficult, however Auckland was showing some improvement prior to the COVID-19
Alert Level 4 lockdown. The distribution of our sales has been inconsistent and is now favouring the suburbs over the
city centres as office buildings remain underutilised. It remains to be seen as to whether the cities will return to pre-
COVID-19 levels of pedestrian traffic.

Comparable BurgerFuel (same store) sales in NZ decreased by (2.1%) which is partly due to 6 lost days of trade caused
by the lockdown. At this stage BurgerFuel NZ will continue with our policy of not undertaking third-party, home
delivery as over time we believe this will negatively affect both the brand and individual store profitability. This
decision is likely to have impacted our FY20 growth numbers, however we remain committed to this policy at this
stage. The COVID-19 crisis delayed the opening of our new BurgerFuel store in Point Chevalier (Auckland). It has
since opened and is trading well. There are still some opportunities for new BurgerFuel stores to open in the remaining
main centres of New Zealand however, there is much uncertainty in the current environment and we are not able to
determine at this stage what new development will be possible.

Shake Out total store sales increased by 243% in FY20. No stores have yet had a full financial year of comparable trade.
The main events for Shake Out have been the opening of stores in Browns Bay (Auckland) and Palmerston North. The
impending COVID-19 crisis delayed the opening of our new Hamilton East store. It has since opened and is trading well
in its first few weeks. The Browns Bay Shake Out did not meet expectations and did not reopen after the COVID-19
Alert Level 4 lockdown. Shake Out has also deployed a portable pop up type operation that uses two shipping
containers. It was extremely successful at music festivals and concerts but as those types of events may become less
popular, it will be popping up in various locations to sell directly to the public. It is currently operating from the Trusts
Arena in Henderson (Auckland).

Winner Winner total sales increased by 56.4% due to two new stores, Courtenay Place (Wellington) and Pukekohe,
opening in January 2020. Both new stores were trading well, however the momentum of these two new stores has been
greatly impacted by the necessity to close during the COVID-19 Level 4 lockdown. It remains to be seen how each of
those stores will recover over the coming months, but we are optimistic about the Winner Winner brand.

In February and March, the two new brands represented 7.6% of total NZ sales for the group. Unfortunately, expansion
plans have now stalled because of the COVID-19 crisis and any future development will depend on the future economic
conditions, which at this point remain uncertain.

The Middle East

The Middle East continues to be a difficult market for BurgerFuel with each country experiencing major challenges. We
announced the closure of the Iraq store as we now see no future in this country.

In the UAE we have experienced less competitive pressure, as many restaurants are closing, but increasing pressure
from the overall economic conditions in the UAE. The UAE as a country is experiencing a downturn that is directly
affecting the hospitality and food service industries. Together with the COVID-19 crisis, there is finally some
acknowledgment that rents were unsustainable, and they are now starting to reduce. Unfortunately, the Dubai World
Expo has been delayed by a year, so we are not expecting any recovery in the UAE trading conditions during FY21.
Because of tough economic conditions, and then the impact of COVID-19, our Licensee in UAE has closed several
stores with only 2 BurgerFuel stores now operating in Dubai and 2 in Abu Dhabi. At this stage we are uncertain of
BurgerFuel’s ongoing future in the UAE.

The Kingdom of Saudi Arabia is showing mild improvements, in part because of their populace not leaving the country
for entertainment options. We expect that the ever-increasing freedoms within the country will continue to be good for
the domestic hospitality & food service industry, potentially at the expense of regional entertainment hubs such as
Dubai or Bahrain. Our Licensee opened a new store in the city of Jubail and has another store under construction in the
city of Dammam.
Overall, and as always, we continue to caution the market as to the future of the Middle Eastern region for BurgerFuel.
These countries remain very uncertain and we anticipate further declines in our revenue from the Middle East region.
United States

In the United States we have one licenced store in Broad Ripple, Indianapolis. That store has experienced a decline in
sales in the past 12 months and due to the COVID-19 crisis it was forced to close on 22
nd
March, a few days before the
New Zealand lockdown and it has not yet reopened. There are significant challenges in the USA, both with the ongoing
community transmission of the COVID-19 epidemic and more recently with the arrival of major civil unrest. We are
unsure about the future of BurgerFuel in the USA at this point but will update the market when we receive further
information.

Outlook

BurgerFuel Group has completed its transformation to a multi-brand business and was preparing for the additional
growth opportunities that the new brands had presented. The COVID-19 crisis has forced us to moderate those plans and
prepare for a challenging environment in FY21 and potentially beyond that. We do not anticipate any significant store
development in the next 12 months. We remain focused on safeguarding the business and reducing costs in order to
endure these uncertain times and be able to take opportunities that may present themselves in the months to come.

BurgerFuel Group in conjunction with its advisors KPMG are still reviewing its options regarding a possible sale,
merger, joint venture, international partnership, domestic partnership or alternative process. The Board will keep the
market updated with any material developments should they occur throughout the ongoing strategic review process.

We would like to thank all shareholders, staff, franchisees, suppliers and of course our valued customers for their
continued support.



Best regards,



Peter Brook Josef Roberts
Chairman Group CEO

Burger Fuel Group Limited
Consolidated Statement of Comprehensive Income
For The Year Ended 31 March 2020


2020

2019


$

$




Revenue 20,345,736

20,899,915

Operating Expenses (17,973,431)

(18,408,971)




Profit before Interest, Taxation, Depreciation and Amortisation 2,372,305

2,490,944




Depreciation on Property, Plant and Equipment (545,765)

(577,343)

Depreciation on Leases (630,329) -
Amortisation (143,084)

(174,648)


(1,319,178)

(751,991)






Profit / (Loss) before Interest and Taxation 1,053,127 1,738,953


Interest Income

113,223

127,751

Interest Income leases non-occupied 1,410,421 -
Interest Expense (345)

(10,925)

Interest Expense leases occupied (442,632) -
Interest Expense leases non-occupied (1,410,421) -

(329,754)

116,826


Profit / (Loss) before Taxation 723,373

1,855,779


Income Tax Expense

(217,895)

(619,438)






Net Profit / (Loss) attributable to shareholders 505,478 1,236,341


Other comprehensive income:

Items that may be reclassified subsequently to profit or loss:

Movement in Foreign Currency Translation Reserve

(117,216)

(52,968)


Total comprehensive income 388,262

1,183,373


Basic Earnings per Share (cents)

0.94

2.18


Diluted Earnings per Share (cents) 0.94 2.18

Burger Fuel Group Limited
Consolidated Statement of Financial Position
As at 31 March 2020


2020

2019
Shareholders’ equity $

$
Contributed equity 13,818,257

14,087,498
Retained earnings (1,980,020)

(2,541,498)
IPO capital costs (223,432)

(223,432)
Other reserves (441,299)

(324,083)

11,173,506

10,998,485
Current assets



Cash and cash equivalents 5,570,167

5,503,473
Trade and other receivables 3,189,334

3,021,234
Income tax receivable 184,326 -
Lease Receivable: non-occupied 1,518,310 -
Inventories 565,217

621,618
Loans 174,325

170,900

11,201,679

9,317,225
Non-current assets


Property, plant and equipment 2,462,017

2,538,702
Right of use asset - leases 7,828,007 -
Lease receivable non-occupied 21,238,840 -
Deferred tax asset 689,104

715,959
Loans 134,140 -
Intangible assets 2,421,445

2,544,788

34,773,553

5,799,449
Total assets

45,975,232

15,116,674
Current liabilities



Trade and other payables 982,062

1,498,449
COVID-19 Wage Subsidy 488,887 -
Contract Liability 412,620 263,215
Lease Liability 452,141 -
Lease Liability: non-occupied 1,518,310 -
Income tax payable -

152,013
Provisions 436,456 414,631
4,290,476 2,328,308
Non-current liabilities
Contract Liability 1,625,998 1,751,831
Lease Liability 7,607,212 -
Lease Liability non-occupied 21,238,840 -
Provisions 39,200 38,050
30,511,250 1,789,881
Total liabilities 34,801,726 4,118,189

Net assets 11,173,506 10,998,485

Burger Fuel Group Limited
Consolidated Statement of Financial
Position As at 31 March 2020





2020 2019


Net tangible assets per share ($ per share)


0.15


0.14
For and on behalf of the board who approved these financial statements for issue on 29th June 2020.

Director Director

Burger Fuel Group Limited
Consolidated Statement of Changes in Equity
For The Year Ended 31 March 2020


2020

Contributed
Equity
Foreign Currency
Translation
Reserve
IPO
Capital
Costs
Retained
Earnings
Total
Equity
$ $ $ $ $




Balance as at 31 March 2019
14,087,498 (324,083) (223,432) (2,541,498) 10,998,485
Impact of Changes in Accounting
Policies

- - - 56,000 56,000
Balance as at 1 April 2019

14,087,498 (324,083) (223,432) (2,485,498) 11,054,485
Buy Back and cancellation of
ordinary shares

(269,241) - - - (269,241)
Movement in foreign currency
translation reserve recognised in
other comprehensive income

- (117,216) - - (117,216)
Net Profit for the year ended 31
March 2020

- - - 505,478 505,478
Total comprehensive
income

- (117,216) - 505,478 388,262


Balance as at 31 March
2020

13,818,257 (441,299) (223,432) (1,980,020) 11,173,506





2019


Contributed
Equity
Foreign Currency
Translation
Reserve
IPO
Capital
Costs
Retained
Earnings
Total
Equity
$ $ $ $ $




Balance as at 31 March
2018

16,034,443 (271,115) (223,432) (2,336,651) 13,203,245
Impact of Changes in
Accounting Policies

- - - (1,441,188) (1,441,188)
Balance as at 1 April 2018
16,034,443 (271,115) (223,432) (3,777,839) 11,762,057
Buy Back and cancellation of Ordinary
Shares

(1,946,945) - - - (1,946,945)
Movement in foreign currency
translation reserve recognised in other
comprehensive income

- (52,968) - - (52,968)
Net Profit for the year ended 31 March
2019

- - - 1,236,341 1,236,341
Total comprehensive income
- (52,968) - 1,236,341 1,183,373


Balance as at 31 March 2019
14,087,498 (324,083) (223,432) (2,541,498) 10,998,485

Burger Fuel Group Limited
Consolidated Statement of Cash Flows
For The Year Ended 31 March 2020



2020

2019

$

$
Cash flows from operating activities


Cash was provided from:


Receipts from customers
20,260,648 20,849,474
Interest received
113,223 127,751
Interest Income non- occupied leases
1,410,421 -
Goods and services tax received / (paid)
(5,547) 13,867

21,778,745 20,991,092
Cash was applied to:

Payments to suppliers & employees
(18,066,261) (17,908,340)
Interest paid
(345) (10,925)
Interest Expense non- occupied leases
(1,410,421) -
Interest on leases
(442,632) -
Taxes paid
(527,380) (883,146)


(20,447,039) (18,802,411)
Net cash flows provided from operating activities
1,331,706 2,188,681


Cash flows from investing activities

Cash was provided from:

Repayments from suppliers & staff 12,436 8,711
Sale of property, plant and equipment 50,054 76,794
Lease receivable - non-occupied 1,443,697 -
1,506,187 85,505
Cash was applied to:

Acquisition of intangible assets
(21,507) (194,247)
Advances to franchisee and staff
(150,000) (46,611)
Acquisition of property, plant & equipment
(512,459) (870,799)
Share buyback & cancellation
(269,241) (1,946,945)

(953,207) (3,058,602)
Net cash flows applied to investing activities
(552,980) (2,973,097)


Cash flows from financing activities

Cash was applied to:

Lease Liability
(398,984) -
Lease Liability – non-occupied
(1,443,697) -
Net cash flows applied to financing activities
(1,842,681) -


Net movement in cash and cash equivalents
42,005 (784,416)
Exchange gains / (loss) on cash and cash equivalents
24,689 (12,989)
Opening cash and cash equivalents
5,503,473 6,300,878
Closing cash and cash equivalents
5,570,167 5,503,473

Burger Fuel Group Limited

SEGMENT REPORTING

Operating Segments

The Group operates in four operating segments; these operating segments have been divided into the following
geographical regions, New Zealand, Australia, USA and the Middle East. All the segment’s 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.

The amounts provided to the Board with respect to total liabilities are measured in a manner consistent with that of the
financial statements. These liabilities are allocated based on the operations of the segment.

2020
New
Zealand
Australia Middle East USA Consolidated

$
$

$
$ $
Revenue





Sales
8,324,238
- 89,253
-

8,413,491
Royalties
4,876,942
- 791,785
15,498

5,684,225
Franchising fees
140,758
- - -
140,758
Franchise Fees IFRS15 Adjustment
175,476
- 46,543
13,077

235,096
Training fees
110,000
- -
-

110,000
Property management fees
53,000
- -
-

53,000
Advertising fees
3,581,227
- 143,941
-

3,725,168
Foreign exchange gain
(74,525)
(17,095) (11,485)
245,997

142,892
Sundry income
1,694,215
1,937 65,243
79,711

1,841,106
Interest received
67,076
1,009 834
44,304

113,223
Interest Leases
1,410,421
- - -
1,410,421
Total Revenue 20,358,828 (14,149) 1,126,114 398,587 21,869,380

Interest Expense 214 40 - 91 345
Interest Expense Leases Occupied 442,632 - - - 442,632
Interest Expense Leases non occupied 1,410,421 - - - 1,410,421
Depreciation 542,143 - 3,622 - 545,765
Depreciation Leases 630,329 - - - 630,329
Amortisation 143,084 - - - 143,084

Segment Result before Income Tax (313,999) 147,473 588,948 300,951 723,373
Income Tax Expense 219,190 - - (1,295) 217,895

Segment Assets 44,383,022 542,381 97,178
952,651

45,975,232
Segment Liabilities 34,698,950 10,611 92,165
-

34,801,726




Acquisition of Property, Plant & Equipment & Intangible Assets


Other 533,996 - - - 533,966

Burger Fuel Group Limited

SEGMENT REPORTING (CONTINUED)

2019
New Zealand Australia Middle East USA Consolidated

$
$

$
$ $
Revenue





Sales
8,592,548

-

95,282 -

8,687,830
Royalties
4,872,084

-

1,064,777 1,339

5,938,200
Franchising fees
300,186

-

48,217 13,077

361,480
Training fees
30,000

-

- -

30,000
Construction and property
management fees
55,000

-

- -

55,000
Advertising fees
3,640,806

-

213,880 -

3,854,686
Foreign exchange gain
(52,884)

(24,053)

29 117,699

40,791
Sundry income
1,341,460

80,169

- 510,299

1,931,928
Interest received
86,185

1,067

- 40,499

127,751
Total Revenue 18,865,385 57,183 1,422,185 682,913 21,027,666

Interest Expense 10,087 838 - - 10,925

Depreciation 572,522 - 4,821 - 577,343

Amortisation 174,648 - - - 174,648

Segment Result before
income Tax
1,042,405

51,669

663,002 98,703

1,855,779

Income Tax Expense 617,956 - - 1,482 619,438

Segment Assets
13,749,506

372,111

120,059 874,998

15,116,674








Segment Liabilities
4,017,543

-

62,370 38,276

4,118,189




Acquisition of Property, Plant & Equipment & Intangible Assets


Other 1,063,470 - - - 1,063,470

Burger Fuel Group Limited

SUBSEQUENT EVENTS

COVID-19 Pandemic

The Group earns revenue from their franchisees, company owned stores and their sauce manufacturing operation.
The COVID-19 pandemic and responses inhibited general activity and confidence levels within the community, the
economy and the operations of the Group’s business. When the country went into Alert level 4 lockdown on the 26
th

March 2020 all stores in NZ closed, as did the US. The MENA region closed some stores and ran limited services in
others. The NZ stores reopened in Level 3 on the 28
th
April 2020 with limited services, providing click and collect,
kerbside pickup and delivery services in some stores. The US store remains closed.

While the impact of COVID-19 remains uncertain as at the date of signing these financial statements, the Group
continues to monitor developments and will initiate plans to mitigate adverse impacts and maximise opportunities.

In response to the COVID-19 pandemic, management has:

Implemented appropriate health and safety responses to ensure the continuity of its business operations under each of
the Alert Levels, whilst complying with the applicable public health and social measures for that level.

Implemented measures to reduce operating costs and capital expenditures (where applicable deferring nonessential
capital projects).

Applied for the COVID-19 ‘Wage Subsidy Scheme’ developed by the New Zealand Government, which is available to
certain New Zealand businesses that are adversely affected by the COVID-19 pandemic. The group received a total of
$744,516 across 8 subsidiary companies, with $488,887 of this amount received in the FY20 financial year, thus
impacting our cash position as at 31 March 2020. The remainder of the $744,516 was received in FY21. This wage
subsidy will be taken to the Statement of Comprehensive Income as other income, and allocated over 12 weeks from the
1 April 2020, thus increasing the Group’s FY21 revenue by $744,516.

Approached landlords for rent relief during the lockdown periods. The group received rent relief on all occupied sites
and the franchise system also received short-term rent relief packages. This rent relief occurred in FY21 from 1 April
2020.

These financial statements have been prepared based upon conditions existing at the end of the reporting period, 31
March 2020, and considering those events occurring subsequent to that date, up to the date of the signing of these
financial statements (29 June 2020), that provide evidence of conditions that existed at the end of the reporting period.
As the outbreak of COVID-19 pandemic occurred before 31 March 2020, its impacts are considered an event that is
indicative of conditions that arose prior to reporting period. Accordingly, as at the date of the signing of these financial
statements, all reasonably known and available information with respect to the COVID-19 pandemic, has been taken
into consideration and all reasonably determinable adjustments have been made in preparing these financial statements.

Burger Fuel Group Limited


NEW STANDARDS ADOPTED
NZ IFRS 16 – Leases

NZ IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases. NZ IFRS 16
replaces NZ IAS 17 Leases. It provides much improved transparency and comparability of the Group’s lease assets and
lease liabilities for investors and other users of general purpose financial statements and applies to all Tier 1 and Tier 2
for-profit reporting entities, and is effective for annual periods beginning on or after 1 January 2019.

The Standard eliminates the classification of leases as either operating leases or finance leases. Instead, there is a single
lessee model which requires a lessee to recognise on its statement of financial position assets and liabilities for all leases
with a term of more than 12 months, unless the underlying asset is of low value.

NZ IFRS 16 significantly impacts the Group’s Statement of Financial Position as they hold the head leases on most of
the New Zealand franchised stores and all of the company owned stores. In addition to the head office, company owned
stores & warehouse leases, the Group at 31 March 2020 holds the head leases on 53 franchised Burger Fuel stores in
New Zealand.

The Group has elected to apply the following practical expedients to the measurement of right-of-use assets and lease
liabilities in relation to those leases previously classified as operating leases under the predecessor standard:
• Applied a single discount rate to a portfolio of leases with reasonably similar characteristics.
• Relied on previous assessments of whether leases are onerous applying NZ IAS 37 Provisions, Contingent
Liabilities and Contingent Assets immediately before the date of initial application as an alternative to
performing an impairment review.
• Applied the exemption to not recognise right-of-use assets and liabilities of leases with remaining lease term of
12 months or less.
• Applied the exemption to not recognise right-of-use assets and liabilities of leases for which the underlying
assets are of low value.
• Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.
• Used hindsight, such as in determining the lease term for contracts that contain options to extend or terminate a
lease.

The Group has elected to apply the modified retrospective approach to the adoption of NZ IFRS 16. Under this
approach the right-of-use assets (and lease receivable) are measured as an amount equal to the lease liability, adjusted
by the amount of any prepaid or accrued lease payments.

The BFG occupied leases
The Group recognised $7.1M right of use asset and an offsetting lease liability as at 1 April 2019 for the current
occupied leases. This led to the recognition of a deferred tax asset of $2.0M and a corresponding deferred tax liability of
$2.0M. The weighted average incremental borrowing rate applied in the calculation of the initial carrying amount of the
lease liability was 6.3%. These current occupied leases are amortised to the Statement of Comprehensive Income over
the expected lease term of the underlying right of use assets as depreciation expense.

The BFG non- occupied leases
Previously, the Group classified all its subleases as operating leases under NZ IAS 17. On transition to NZ IFRS 16,
these leases were reassessed and classified as finance leases, since the subleases were for the whole of the remaining
terms of the head leases. These subleases have been accounted for as new finance leases entered into at the date of
initial application.

At transition, the right-of-use assets recognised from the head leases were disposed by entering into finance leases.
Since the interest rate implicit in the subleases cannot be readily determined, the discount rates used for the head leases
were used for measuring the finance lease receivables associated with the subleases. Since the sublease contracts are
further like-for-like when compared to the head lease (e.g. same duration and payments), no gain or loss was recognised
on the disposal of the right-of-use assets and the initial recognition of the finance lease receivables. Subsequently, the
interest income from the subleases is further equal to the interest expense incurred on the related head leases.

The Group recognised $23.3M lease receivable and offsetting lease liability as at 1 April 2019 for the non-occupied
leases that have been sub-let to the franchisees on the same terms. This led to the recognition of a deferred tax asset of
$6.5M and a corresponding deferred tax liability of $6.5M. As the deferred tax asset and deferred tax liability arise in
the same tax jurisdiction, the entity has offset the asset and liability and therefore no deferred tax recognised on the non-
occupied leases. The weighted average incremental borrowing rate applied in the calculation of the initial carrying
amount of the lease liability was 6.3%. These non-occupied leases are recognised in the Statement of Comprehensive
Income as interest income & interest expense over the term of the lease. This expense was $1.4M in FY20 but is
negated with a lease income entry in the financial statements to recognise the fact that the leased premises have been
sub-let to the franchisees.

The right of use asset, lease receivable & lease liability amount is calculated to the lease expiry together with periods
covered by an option to extend, if the Group is reasonably certain to exercise that option.

The adoption of NZ IFRS 16 resulted in a reduction of rent expense in the Statement of Comprehensive Income of
$841K (2019: $760K if reporting under IFRS 16).

Reconciliation
Occupied Non-occupied Total
31 March 2019 lease commitments (including limited liability clauses) 2,534,692 5,268,442 7,803,134
Adjustment to full lease term (excluding limited liability clauses) 7,601,754 28,910,669 36,512,423
Impact of discounting to present value at 1 April 2019 (3,040,888) (10,877,540) (13,918,428)

Carrying amount of lease liability at 1 April 2019 7,095,558 23,301,571 30,397,129

Burger Fuel Group Limited
Company Directory
As at 31 March 2020

Registered Office Accountants
Grant Thornton New Zealand Limited Grant Thornton New Zealand Limited
152 Fanshawe Street Level 4
Auckland 1011 152 Fanshawe Street

Auckland 1011
Company Number

1947191 Bridgepoint Group Accounting Pty Ltd

Suite 301, 8 West Street,
North Sydney
Date of Incorporation NSW 2060
14 June 2007 Australia

Directors Citrin Cooperman
Peter Brook - Chairman (Independent) 529 Fifth Avenue
Alan Dunn (Independent) New York, NY 10017
Josef Roberts (Executive) USA


Board Executives KPMG
Tyrone Foley (Chief Operating Officer)
Mark Piet (Chief Financial Officer / Company Secretary)
18 Viaduct Harbour Avenue,
Auckland 1140


Business Headquarters
66 Surrey Crescent

Grey Lynn Bankers
Auckland 1021 ASB Bank Limited

CBA Bank Limited (Australia)
Auditor Emirates NBD (UAE)
Baker Tilly Staples Rodway Bank of America Merrill Lynch (USA)
Level 9, Tower Centre

45 Queen Street

Auckland 1010




Solicitors
Dentons Kensington Swan, 18 Viaduct Harbour Avenue, Auckland 1011.
Buddle Findlay, PwC Tower, 188 Quay Street, PO Box 1433, Auckland 1140.
Wiggin and Dana LLP, Two Liberty Place, 50 S. 16th Street, Suite 2925, PA, 19102, USA.
Corporate Counsel Limited Solicitors, P.O Box 37-322, Parnell, Auckland 1151.
Davidson and Co Legal Consultants, Shangri La Offices, Sheikh Zayed Road, Dubai, UAE.
Cedar White Bradley Consulting, Burj Al Salam, 47th Floor, 2 Sheikh Zayed Road, Dubai, UAE.

---

Monday, 29
th
June 2020
BURGER FUEL GROUP LTD PRELIMINARY FULL
YEAR RESULTS FOR THE YEAR ENDED 31 March 2020
On the 1st July 2019 Burger Fuel Worldwide Limited changed its name to Burger Fuel Group Limited to
better reflect the business focus and our recent transformation into a multi-brand business. At the
same time, we also migrated to the NZX main board from the NZAX.
The Group will be relying on the NZX class waiver from listing rules 3.6.1, dated 19 March 2020, which
provides listed companies with an additional two months to prepare and release annual reports in
acknowledgement of the challenges caused by COVID-19. The Group will be releasing the Annual Report
by the 31 July 2020.
OVERVIEW – FY20
The Directors of Burger Fuel Group Limited (BFG) present the audited results for the 12 months to 31
March 2020.
Net Profit after tax for the period was $505,478 representing a 59.1% decrease on the previous
year.
The Group has no debt, and cash reserves of $5.6M.
BurgerFuel Group (unaudited) Total System Sales (all three brands) reduced (2.18%) to $101.3M on
the same period last year. Group Operating Revenue increased by 4.0% to $21.9M. Whilst revenue is
up on FY19, this is mainly due to the opening of our company owned Shake Out store at the Smales
Farm complex in Takapuna, Auckland in November 2018, as well as the additional interest income
booked for the non-occupied leases as per the new IFRS 16 lease accounting standard $1.4M.
Revenue is largely comprised of sales from our company owned restaurants, manufacturing, and
long-term recurring royalties.
In FY20 we had a reduction in MENA royalty and advertising income and an internal business
structure change lowered revenue from our proprietary product manufacturing operation but will
ensure that this business unit becomes more financially efficient going forward.
The Group also incurred additional costs around the KPMG process, legal costs, writing off certain
obsolete assets and stock write offs due to the closure of restaurants over the COVID-19 lockdown
period. The Group has also undertaken significant investment in the ongoing development of the new
brands.
As at 31 March 2020 there were 78 BurgerFuel, Shake Out® and Winner Winner® stores operating in
NZ and worldwide.
BURGERFUEL GROUP - PRESS RELEASE

BFW PRELIMINARY RESULTS FOR THE PERIOD 1 APRIL 2019 TO 31 March 2020
31 March 2020 31 March 2019
$000 $000

Operating Revenue * 20,459 21,028
Interest Income – IFRS 16 non-occupied leases 1,410 -
Total Income 21,869 21,028

Operating Expenses ** (18,663) (19,172)
Depreciation Expense – IFRS 16 occupied leases (630) -
Interest Expense - IFRS 16 non-occupied leases (1,410) -
Interest Expense - IFRS 16 occupied leases (443) -
Total Expenses (21,146) (19,172)

Net Profit (Loss) Before Tax 723 1,856
Net Profit (Loss) After Tax *** 505 1,236


THE YEAR TO DATE AND GROUP OUTLOOK
NEW ZEALAND
Systemwide sales across New Zealand (62 restaurants, all 3 brands) increased by 1.3% on the previous
year this was mainly due to the opening of 5 new stores. The COVID-19 Alert Level 4 lockdown
resulted in FY20 having 6 less days of trade which impacted the Group’s NZ sales by approx. (1.7%).
Since our mid-year announcement, trading conditions in Christchurch have remained difficult,
however Auckland was showing some improvement prior to the COVID-19 Alert Level 4 lockdown. The
distribution of our sales has been inconsistent and is now favouring the suburbs over the city centres
as office buildings remain underutilised. It remains to be seen as to whether the cities will return to
pre-COVID-19 levels of pedestrian traffic.
Comparable BurgerFuel (same store) sales in NZ decreased by (2.1%) which is partly due to 6 lost days
of trade caused by the lockdown. At this stage BurgerFuel NZ will continue with our policy of not
undertaking third-party, home delivery as over time we believe this will negatively affect both the
brand and individual store profitability. This decision is likely to have impacted our FY20 growth
numbers, however we remain committed to this policy at this stage. The COVID-19 crisis delayed the
opening of our new BurgerFuel store in Point Chevalier (Auckland). It has since opened and is trading
well. There are still some opportunities for new BurgerFuel stores to open in the remaining main
centres of New Zealand however, there is much uncertainty in the current environment and we are
not able to determine at this stage what new development will be possible.
Shake Out total store sales increased by 243% in FY20. No stores have yet had a full financial year of
comparable trade. The main events for Shake Out have been the opening of stores in Browns Bay
(Auckland) and Palmerston North. The impending COVID-19 crisis delayed the opening of our new
Hamilton East store. It has since opened and is trading well in its first few weeks. The Browns Bay
* Revenue includes; Operating revenue and interest income.
** Expenses include; Operating expenses, depreciation, amortisation and interest expense.
*** The New Zealand entities had taxable income and were unable to utilise the foreign tax losses. The overseas entities had minimal tax.

Shake Out did not meet expectations and did not reopen after the COVID-19 Alert Level 4 lockdown.
Shake Out has also deployed a portable pop up type operation that uses two shipping containers. It
was extremely successful at music festivals and concerts but as those types of events may become
less popular, it will be popping up in various locations to sell directly to the public. It is currently
operating from the Trusts Arena in Henderson (Auckland).
Winner Winner total sales increased by 56.4% due to two new stores, Courtenay Place (Wellington)
and Pukekohe, opening in January 2020. Both new stores were trading well, however the momentum
of these two new stores has been greatly impacted by the necessity to close during the COVID-19
Level 4 lockdown. It remains to be seen how each of those stores will recover over the coming
months, but we are optimistic about the Winner Winner brand.
In February and March, the two new brands represented 7.6% of total NZ sales for the group.
Unfortunately, expansion plans have now stalled because of the COVID-19 crisis and any future
development will depend on the future economic conditions, which at this point remain uncertain.

THE MIDDLE EAST

The Middle East continues to be a difficult market for BurgerFuel with each country experiencing
major challenges. We announced the closure of the Iraq store as we now see no future in this country.
In the UAE we have experienced less competitive pressure, as many restaurants are closing, but
increasing pressure from the overall economic conditions in the UAE. The UAE as a country is
experiencing a downturn that is directly affecting the hospitality and food service industries. Together
with the COVID-19 crisis, there is finally some acknowledgment that rents were unsustainable, and
they are now starting to reduce. Unfortunately, the Dubai World Expo has been delayed by a year, so
we are not expecting any recovery in the UAE trading conditions during FY21. Because of tough
economic conditions, and then the impact of COVID-19, our Licensee in UAE has closed several stores
with only 2 BurgerFuel stores now operating in Dubai and 2 in Abu Dhabi. At this stage we are
uncertain of BurgerFuel’s ongoing future in the UAE.
The Kingdom of Saudi Arabia is showing mild improvements, in part because of their populace not
leaving the country for entertainment options. We expect that the ever-increasing freedoms within
the country will continue to be good for the domestic hospitality & food service industry, potentially at
the expense of regional entertainment hubs such as Dubai or Bahrain. Our Licensee opened a new
store in the city of Jubail and has another store under construction in the city of Dammam.
Overall, and as always, we continue to caution the market as to the future of the Middle Eastern
region for BurgerFuel. These countries remain very uncertain and we anticipate further declines in our
revenue from the Middle East region.

UNITED STATES
In the United States we have one licenced store in Broad Ripple, Indianapolis. That store has
experienced a decline in sales in the past 12 months and due to the COVID-19 crisis it was forced to
close on 22nd March, a few days before the New Zealand lockdown and it has not yet reopened.
There are significant challenges in the USA, both with the ongoing community transmission of the
COVID-19 epidemic and more recently with the arrival of major civil unrest. We are unsure about the
future of BurgerFuel in the USA at this point but will update the market when we receive further
information.
OUTLOOK
BurgerFuel Group has completed its transformation to a multi-brand business and was preparing for
the additional growth opportunities that the new brands had presented. The COVID-19 crisis has
forced us to moderate those plans and prepare for a challenging environment in FY21 and potentially
beyond that. We do not anticipate any significant store development in the next 12 months. We
remain focused on safeguarding the business and reducing costs in order to endure these uncertain
times and be able to take opportunities that may present themselves in the months to come.
BurgerFuel Group in conjunction with its advisors KPMG are still reviewing its options regarding a
possible sale, merger, joint venture, international partnership, domestic partnership or alternative
process. The Board will keep the market updated with any material developments should they occur
throughout the ongoing strategic review process.
We would like to thank all shareholders, staff, franchisees, suppliers and of course our valued
customers for their continued support.

Best regards,








Peter Brook
Chairman
Josef Roberts
Group CEO
For further information please contact:
Mark Piet
+64 9 360 6730
communications@burgerfuel.com
www.burgerfuel.com