Burger Fuel Worldwide Limited
Preliminary Full Year Results
For The Year Ended 31 March 2017
Chairman and Chief Executive''s Review
Burger Fuel Worldwide Ltd Preliminary Full Year Results for the 12 months
ended 31st March 2017
Overview - FY17
The Directors of BurgerFuel Worldwide (BFW) are pleased to present audited
results for the 12 months to 31 March 2017.
Group Operating Revenue increased by 9.9% to $22.3M. BurgerFuel Total
(unaudited) System Sales are up 5.78% to $102M* for the 12 month period, a
key milestone for the Group.
(*Please note; taking foreign exchange rate movements'' into account, the
adjusted total system sales growth on a year-on-year basis is 4.0% equalling
$100M).
Net Profit after tax for the period was $888,948 representing an increase of
178% on last year.
This result is particularly pleasing considering the costs associated with
the annulment of the Franchise Brands relationship and the resulting
expenditure that occurred in order for BFW to enter the USA on its own. It
should, however, be noted that further costs for the support and opening of
the USA store have occurred in the early months of FY18.
The Group has no debt, and cash reserves of $6.4M.
Our Group Operating Revenue increased by 9.9% on the same period last year.
This revenue is largely comprised of long-term recurring royalties and sales.
The 4.0% increase in BurgerFuel Total System Sales for the period is made up
of both new and existing stores'' sales growth.
We have added nine new restaurants between 1 April 2016 and 31 March 2017
within New Zealand as well as in Iraq and Egypt (relocation). As at 31 March
2017 there were 86 BurgerFuel stores operating worldwide.
BFW RESULTS FOR THE PERIOD 1 APRIL 2016 TO 31 MARCH 2017
31 March 2017 31 March 2016
$000 $000
Operating Revenue * 22,343 20,328
Operating Expenses ** (21,229) (21,374)
Net Profit (Loss) Before Tax 1,114 (1,046)
Net Profit (Loss) After Tax 889 (1,144)
* Revenue includes; Operating revenue and interest income.
** Expenses include; Operating expenses, depreciation, amortisation and
interest expense.
TOTAL (UNAUDITED) SYSTEM SALES UP 4.0% to $100M
Australasian Region
System sales across New Zealand (54 restaurants) and Australia (5
restaurants) increased by 15%.
In New Zealand, we continue to strengthen our growth position. BurgerFuel
remains the largest gourmet burger chain in this market, and the third
largest burger concept overall.
As well as functioning as a highly successful business unit in its own right,
the New Zealand business continues to act as an incubator and testing ground
for the global business. Constant focus on operational excellence, the
development of world class training technology and system development will
all continue to benefit the global business.
The three NZ-based company-owned stores have performed well, and we continue
to see potential in this area. With strong cash reserves and no debt, the
Group is well placed to facilitate further key BurgerFuel restaurant
purchases, should opportunities arise that fit the BFW criteria for
company-owned stores.
While sales continue to grow year-on-year, the board notes that the market
should expect 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 and this will
be explored during FY18.
While focus will remain on the protection and growth of the existing New
Zealand business, BFW will continue in its exploration of diversification
opportunities. The board will be considering all options for continued
expansion within the New Zealand Market, both inside and outside the
BurgerFuel brand.
The Australian market remains difficult, and alongside an extremely
competitive landscape, we continue to face high operating costs such as rent
and labour.
Sales and royalty income derived from Australia has seen a reduction in
comparison to FY16, due to the reduced store numbers, and a move to sourcing
locally produced products, rather than exporting from NZ. In the long term,
this move will improve profitability for the Group and the remaining
franchised Australian stores.
As we seek to explore new markets in new countries our strategy has always
incorporated our ability to both open and if necessary close or re-locate
locations if the need arises. In early FY18, the franchised Parramatta store
in Sydney was closed due to a less than expected trading performance. This
will have no material impact on BFW results.
As previously communicated, we are aware that it will require significant
time and investment to establish the brand to a profitable level in
Australia. At this stage we will continue to operate in the Australian market
but it remains under review and accordingly monthly performance will be
closely monitored with view to our long term commitment to Australia.
Middle Eastern Region
In the Middle East, despite facing the ongoing effects of low oil prices as
well as economic and political unrest, we have seen significant growth in
certain areas and continue to make progress in this market.
As of the 31st March 2017, we now have a total of 27 BurgerFuel stores across
the Middle East.
Most notably, our business in Saudi Arabia has seen significant growth in
sales in the last six months, and this can be largely attributed to the
recent revitalisation of the Saudi economy as well as efforts to increase
marketing activity in that region.
The UAE, as a whole, is seeing a downturn in the retail sector and this has
been reflected in our sales. We are also facing a densely populated
competitor market, with over 55 burger concepts now competing. 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.
The largest problem facing all retail brands in Dubai is the continued upward
movement of occupancy costs with retail rents rising obliviously against a
slowdown in actual retail consumer spending. These out of proportion
occupancy costs take the shine off trading results and remove incentives to
develop further. This is a trend that is occurring in nearly all developed
world markets (including New Zealand) and can only lead to both the failure
of some concepts as well as the increased ticket prices of all retail goods
sold in store, including food.
In Egypt, we relocated a store in September 2016. While we remain optimistic
about this market, the reality is that due to ongoing political turmoil,
store turnover is very low and this market will require close monitoring. Our
partners continue to look for expansion opportunities in Egypt and have our
support in this endeavour.
In Iraq, where we have one store in Baghdad, sales are strong, and our
partners are actively looking at expansion opportunities.
In summary, while revenue is down for the MENA region, it continues to be a
good contributor for us, despite heavy competition, regional unrest and the
economic effects of lower oil prices. We do 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 will monitor
all of these markets closely.
The Year to Date and Group Outlook.
Despite withdrawing from the collaboration agreement with Franchise Brands
last year, in May 2017 we announced the opening of the first BurgerFuel store
in the United States, located in Indianapolis. This is a 100% company owned
and operated store.
Although it is early days, the store is operating well, and the initial
public reaction has been extremely positive. The focus is now on ensuring the
continued growth of this store, monitoring performance closely and preparing
for further expansion in the American market.
Outside of the US, 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.
Despite significant investment into the USA, cash reserves have increased,
and BFW is in a strong position, not only financially, but also from a
management, resource and intellectual property perspective. This places the
Group in good stead for both further expansion and diversification into new
opportunities.
The Board will be considering all options for the expansion of the Group both
in New Zealand and internationally. In this regard, and as always, we will
keep the market informed of any progress made.
The Group has no debt, and as of 31st March 2017 had cash reserves of $6.4M.
We would like to thank all our shareholders for their continued support, and
we look forward to keeping you informed of our progress.
Best regards
Peter Brook Josef Roberts
Chairman Group CEO
End CA:00302533 For:BFW Type:FLLYR Time:2017-06-14 12:04:19