Burger Fuel : FY2024

Burger Fuel Group Limited

Consolidated Interim Financial Statements

For the Period Ended 30 September 2023

Contents	Page
Chairman and Chief Executive's Review	3-5
Consolidated Condensed Statement of Comprehensive Income	6
Consolidated Condensed Statement of Financial Position	7-8
Consolidated Condensed Statement of Changes in Equity	9
Consolidated Condensed Statement of Cash Flows	10
Notes to the Consolidated Interim Financial Statements	11-14
Company Directory	15

2

Burger Fuel Group Limited

Chairman and Chief Executive's Review

For the period ended 30 September 2023

Burger Fuel Group Ltd Half Year Results for the 6 months ended 30 September 2023

OVERVIEW

The Directors of Burger Fuel Group Limited (BFG) present the unaudited results for the 6 months to 30 September 2023.

Net Profit after tax for the period was $581,136 compared to $552,316 for the same period last year. This represents an increase of 5.2%.

Group Operating Revenue (excluding IFRS 16 and the Government support income) increased by 16.8% on the same period last year to $12.6M.

The Group has no debt and as at 30 September 2023 had cash reserves of $8.9M.

BFG RESULTS (UNAUDITED) FOR THE PERIOD 1 APRIL TO 30 SEPTEMBER 2023

	30 September 2023	30 September 2022
Operating Revenue *	12,553,784	10,748,756
Interest Income - IFRS 16 non-occupied leases	503,048	569,845
COVID-19 Government wage subsidy	19,736	17,139
Total Income	13,076,568	11,335,740
Operating Expenses **	(10,957,977)	(9,382,323)
Depreciation Expense - IFRS 16 occupied leases	(551,425)	(401,674)
Interest Expense - IFRS 16 non-occupied leases	(503,048)	(569,845)
Interest Expense - IFRS 16 occupied leases	(221,882)	(235,263)
Total Expenses	(12,234,332)	(10,589,105)
Net Profit (Loss) Before Tax	842,236	746,635
Net Profit (Loss) After Tax ***	581,136	552,316

• Revenue includes: Operating revenue and interest income but excludes COVID-19 related Government grants and interest income on non- occupied leases.
• 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.

GROUP PERFORMANCE

Total system sales (all regions all brands) were $57.7M for the period, representing an increase of 11.1% over the same period last year. The increase is mainly due to the opening of the franchised BurgerFuel Dunedin and BurgerFuel Rolleston (Christchurch) stores and the introduction of delivery services in March 2023. Delivery has been rolled out by region over the last 6 months and as at 30 September there were 43 out of 61 Burgerfuel stores offering delivery.

Total store numbers globally across all three brands were 73 as at 30 September 2023, with the closing of 4 stores in Saudi and the Company owned Winner Winner store in May 2023. This was offset by the opening of BurgerFuel Dunedin, BurgerFuel Rolleston and a Company Owned Shake Out store in Auckland CBD Commercial Bay precinct. The new brands, Winner Winner and Shake Out accounted for 7.6% of total systems sales.

BurgerFuel International sales accounted for 5.24% of total BurgerFuel sales.

3

OPERATING RESULTS

BurgerFuel New Zealand

Total BurgerFuel sales for the period were up 12.2% on the previous year.

This was driven by the opening of BurgerFuel Rolleston (Christchurch), and BurgerFuel Dunedin stores in October 2022 and April 2023 respectively, and with the introduction of delivery across a significant portion of the BurgerFuel System. We have been cautious to enter delivery as we do see potential issues with this model. However, to date we have seen good sales growth with participating stores, and generally, we have been satisfied with the quality of the product being delivered, but we will continue to monitor this closely.

Supply chain and labour costs are still a major issue in NZ, and this is impacting the franchise system's profitability.

The Group launched its own online ordering platform for BurgerFuel in August 2023 and its integrated loyalty app in November 2023. To date there has been a great uptake across these two platforms. These bespoke, tailored platforms will allow us to further engage with our customers and better identify their purchasing habits and needs.

BurgerFuel Middle East (MENA)

Development of BurgerFuel in the UAE is proceeding under the DA (Development Agent) agreement.

The Group incurred some costs in FY24 in relation to developing the new look store design and other aspects of BurgerFuel brand development being undertaken in the MENA region.

The BurgerFuel store in the Dubai World Trade Centre has undergone a full refit, which reflects an updated store design. It is intended that this new look store which will be further developed, will attract potential new franchisees within the region and allow further franchising by the DA. The new look will also assist us in providing an updated image here in our New Zealand stores, many of which are coming up for refits.

There are still third-party delivery only dark kitchens in the UAE, however these remain under review as these facilities are overwhelmed with other brands, and it is difficult to maintain a quality standard that is synonymous with the BurgerFuel brand in New Zealand.

There have been store closures in Saudi Arabia. We now have 4 stores under licence in the Kingdom compared to 8 at the same time last year. Together with our Licensees in Saudi Arabia we will be evaluating their future involvement with BurgerFuel to determine their ongoing commitment to store development within that country.

The future success and development of MENA is dependent on the new DA structure recently installed in the region. As previously advised, whilst BFG's percentage share of royalties will be lower than in previous years, our operational involvement and costs will also be on a reduced basis.

Winner Winner & Shake Out New Zealand

Sales are down for the Winner Winner brand compared to the same 6-month period last year, due to the closure of the company owned Winner Winner store in Takapuna, Auckland and the increased competition from a new food precinct opening up in Wellington, which has impacted sales of the franchised Winner Winner Wellington store.

As previously advised in May 2023 we decided to close our company owned Winner Winner store in Takapuna. This site opened during Covid and suffered as a result. It never really performed well, and its closure has reduced the ongoing losses in that location. We learnt from this restaurant and as a result we are reworking our Winner Winner offer, to reduce complexity and ultimately make the brand more scalable.

The Winner Winner store numbers are now 3 nationwide.

Sales are up for the Shake Out brand due to the opening of our company owned Shake Out store in the Commercial Bay precinct in the Auckland CBD on 31 October 2022. This is our 4th Shake Out store and this busy location will assist in the brand's exposure. This store is performing reasonably well but is dependent on the foot traffic generated within the Commercial Bay food court on a weekly basis.

The Group remains committed to investment in these new brands and will continue to do so going forward.

4

CHANGES TO BOARD COMPOSITION

In September we announced the retirement of Alan Dunn who has been an Independent Director of BFG and the introduction of Alan Gourdie as his replacement as Independent Director. Alan Gourdie was appointed on 1 October and Alan Dunn has now resigned.

RETURN OF CAPITAL

As previously advised on the 27 October 2023 the Burger Fuel Group Limited (BFG) proposes to return approximately NZ$4.077 million to shareholders via a Court and shareholder sanctioned pro‐rata share cancellation which would return approximately NZ$0.27 per share to shareholders for each share cancelled. 30% of BFG shares will be cancelled on a pro-rated basis.

BFG's balance sheet currently includes excess cash that the board of directors of BFG (Board) believes is over and above the cash needed for BFG's working capital requirements for the foreseeable future.

Since 2014 BFG has had surplus capital following the issue of 4,357,298 shares in BFG (New Shares) to Franchise Brands LLC (FBL) a company affiliated to the Subway® Corporation of USA on 28 February 2014 at $1.35 per share raising $5,882,352 of new capital to help fund BFG's plans to expand into the United States under a collaboration agreement with FBL. Following the death of the founder of Subway® in September 2015 the expansion plans stalled, and the collaboration agreement was terminated.

As part of the termination arrangements, BFG agreed to buy all of FBL's shares in BFG (including the New Shares) at $0.37 per share in tranches during 2018 and 2019 resulting in a net capital surplus on the balance sheet after these transactions of $3,675,910. At this time, BFG looked at possible utilisations of its unrestricted capital but did not consider that there were any transactions (including any material acquisitions or investments) that would be suitable for BFG to undertake.

In March 2020, the Covid-19 pandemic began in New Zealand. At the early stages of the pandemic the Board considered that all cash should remain in BFG until the pandemic was clearly over and BFG's business had returned to a foreseeable, regular trading pattern.

BFG has been through an extensive exercise to determine the best use of its excess cash. The Board does not believe that any suitable opportunities exist at present or are likely in the short to medium term for the full amount of the cash currently held within BFG thus has proposed to return NZ$4.077 million to shareholders.

A Special Shareholders meeting will be held on the 14th December 2023 to decide whether the proposal will proceed.

GROUP OUTLOOK

We do see challenging times ahead with increasing supply chain costs, rising labour costs and globally there are many issues the world is facing that affect us, here in New Zealand. These times more than ever mean that a key focus for us is to protect our customer's experience, as well as our franchisee margins.

While operating costs are increasing, we are seeing some areas of sales growth, once again demonstrating the strength of the BurgerFuel brand.

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

Best regards

Peter Brook	Josef Roberts
Chairman	Group CEO

5

Burger Fuel Group Limited

Consolidated Condensed Statement of Comprehensive Income For the period ended 30 September 2023

Revenue

COVID-19 Government wage subsidy

Operating Expenses

Profit before interest, taxation, depreciation and amortisation

Unaudited	Unaudited	Audited
30 Sep	30 Sep	31 Mar
2023	2022	2023
6 months	6 months	Full Year
12,437,193	10,727,543	22,799,659
19,736	17,139	35,606
(10,624,918)	(9,106,071)	(19,453,197)
1,832,011	1,638,611	3,382,068

Depreciation on Property, Plant and Equipment	(247,890)	(207,674)	(648,444)
Depreciation on Right of Use Assets	(551,425)	(401,674)	(828,911)
Amortisation	(85,169)	(68,522)	(265,676)
	(884,484)	(677,870)	(1,743,031)
Profit before Interest and Taxation	947,527	960,741	1,639,037
Interest Income	116,591	21,213	91,600
Interest Income leases non-occupied	503,048	569,845	1,089,474
Interest Expense	-	(56)	(325)
Interest Expense leases occupied	(221,882)	(235,263)	(471,326)
Interest Expense leases non-occupied	(503,048)	(569,845)	(1,089,474)
	(105,291)	(214,106)	(380,051)
Profit before Taxation	842,236	746,635	1,258,986
Income Tax Expense	(261,100)	(194,319)	(358,568)

Net Profit attributable to shareholders

581,136

552,316

900,418

Other comprehensive income:
Items that may be reclassified subsequently to profit or
loss:
Movement in Foreign Currency Translation Reserve	(1,473)	(25,706)	1,708

Total comprehensive income

579,663

526,610

902,126

Basic Net Earnings per Share (cents)	1.15	1.10	1.79
Diluted Earnings per Share (cents)	1.15	1.10	1.79

6

Burger Fuel Group Limited

Consolidated Condensed Statement of Financial Position

As at 30 September 2023

	Unaudited	Unaudited		Audited
	30 Sep	30 Sep		31 Mar
	2023	2022	2023
	6 months	6 months		Full Year
	$	$	$
Shareholders' Equity
Contributed equity	11,913,499	11,913,499	11,913,499
(Accumulated losses) / retained earnings	790,388	(138,850)	209,252
Foreign currency translation reserve	(285,241)	(311,182)	(283,768)
	12,418,646	11,463,467	11,838,983
Current assets
Cash and cash equivalents	8,918,239	7,360,933	8,202,024
Trade and other receivables	2,036,109	1,815,577	2,133,744
Lease Receivable non-occupied	1,499,490	1,484,007	1,482,830
Inventories	526,406	710,720	578,993
Loans	9,361	7,034	16,189
	12,989,605	11,378,271	12,413,780
Non-current assets
Property, plant and equipment	2,533,565	2,667,969	2,441,342
Right of use asset - leases	6,305,566	7,436,330	6,687,547
Lease receivable non-occupied	14,782,276	16,213,071	15,602,844
Deferred tax asset	598,813	553,455	618,420
Loans	22,915	51,296	29,311
Intangible assets	2,192,355	1,838,764	2,056,255
	26,435,490	28,760,885	27,435,719
Total assets	39,425,095	40,139,156	39,849,499
Current liabilities
Trade and other payables	1,889,533	1,223,472	1,853,546
Contract Liability	104,939	317,202	195,072
Lease Liability	781,275	631,054	731,509
Lease Liability non-occupied	1,499,490	1,484,007	1,482,830
Income tax payable	131,225	94,911	267,063
Provisions	511,821	384,097	345,692
	4,918,283	4,134,743	4,875,712
Non-current liabilities
Contract Liability	605,545	635,888	610,240
Lease Liability	6,655,353	7,650,287	6,878,478
Lease Liability non-occupied	14,782,276	16,213,071	15,602,844
Provisions	44,992	41,700	43,242
	22,088,166	24,540,946	23,134,804
Total liabilities	27,006,449	28,675,689	28,010,516
Net assets
12,418,646	11,463,467		11,838,983

7

Burger Fuel Group Limited

Consolidated Condensed Statement of Financial Position (continued) As at 30 September 2023

	Unaudited	Unaudited	Audited
	30 Sep	30 Sep	31 Mar
	2023	2022	2023
Net tangible assets per share ($ per share)	0.19	0.18	0.18
For and on behalf of the Board on 24th November 2023

Peter Brook	Josef Roberts
Director	Director

8

Burger Fuel Group Limited

Consolidated Condensed Statement of Changes in Equity For the period ended 30 September 2023

September 2023

Balance as at 1 April 2023

Movement in foreign currency translation reserve recognised in other comprehensive income

Net Profit for the period ended 30 September 2023

Total comprehensive income

Balance as at 30 September 2023

September 2022

Balance as at 1 April 2022

Movement in foreign currency translation reserve recognised in other comprehensive income

Net Profit for the period ended 30 September 2022

Total comprehensive income

Balance as at 30 September 2022

Contributed	Foreign currency	Accumulated
Equity	translation reserve	Losses		Total equity
$	$	$	$
11,913,499	(283,768)	209,252	11,838,983
-	(1,473)	-	(1,473)
-	-	581,136	581,136
-	(1,473)	581,136	579,663
11,913,499	(285,241)	790,388	12,418,646
Contributed	Foreign currency	Accumulated
Equity	translation reserve	Losses		Total equity
$	$	$	$
11,913,499	(285,476)	(691,166)	10,936,857
-	(25,706)	-	(25,706)
-	-	552,316	552,316
-	(25,706)	552,316	526,610
11,913,499	(311,182)	(138,850)		11,463,467

March 2023

Balance as at 1 April 2022

Movement in foreign currency translation reserve recognised in other comprehensive income

Net Profit for the year ended 31 March 2023 Total comprehensive income

	Foreign Currency	Accumulated	Total
Contributed Equity	Translation Reserve	Losses	Equity
$	$	$	$
11,913,499	(285,476)	(691,166)	10,936,857
-	1,708	-	1,708
-	-	900,418	900,418
-	1,708	900,418	902,126

Balance as at 31 March 2023		(283,768)		209,252		11,838,983
11,913,499

9

Burger Fuel Group Limited

Consolidated Condensed Statement of Cash Flows

For the period ended 30 September 2023

		Unaudited	Unaudited	Audited
		30 Sep	30 Sep	31 Mar
	2023	2022	2023
		6 months	6 months	12 months
	$	$	$
Cash flows from operating activities
Receipts from customers	12,500,692	10,785,897	22,567,953
COVID-19 Government wage subsidy	19,736	17,139	35,606
Interest received	116,591	21,213	91,600
Goods and services tax	83,582	39,220	54,443
Payments to suppliers & employees	(10,527,840)	(9,183,296)	(18,948,977)
Interest paid	-	(56)	(325)
Interest on leases	(221,882)	(235,112)	(471,326)
Taxes (paid/refund)	(377,328)	(191,770)	(248,832)
Net cash flow provided from / (applied to) operating
activities	1,593,551	1,253,235	3,080,142
Cash flows from investing activities
Repayments of loans	13,224	16,000	28,830
Sale of property, plant and equipment	50,671	76,332	187,050
Acquisition of intangible assets	(221,270)	(1,722)	(427,050)
Acquisition of property, plant & equipment	(377,259)	(482,725)	(815,465)
Sale of subsidiary company	-	24,253	-
Net cash flow applied to investing activities
(534,634)	(367,862)	(1,026,635)
Cash flows from financing activities
Lease Liability Principal Component	(342,804)	(336,759)	(662,486)

Net cash flows applied to financing activities	(342,804)	(336,759)

(662,486)

Net movement in cash and cash equivalents	716,113	548,614	1,391,021
Exchange gain / (loss) on cash and cash equivalents	102	13,957	12,641
Opening cash and cash equivalents	8,202,024	6,798,362	6,798,362

Closing cash and cash equivalents

8,918,239

7,360,933

8,202,024

10