BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 BURGER FUEL WORLDWIDE LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
CONTENTS PAGE
Annual Report of the Directors ...... 3
Shareholder Information ...... 9
Corporate Governance ...... 27
Auditor’s Report ...... 31
Income Statement ...... 34
Balance Sheet ...... 35
Statements of Changes in Equity ...... 36
Cash Flow Statement ...... 38
Notes to the Financial Statements ...... 40
Company Directory ...... 74 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED CHAIRMAN’S AND CHAIRMAN’S AND CHIEF EXECUTIVE’S REVIEW CHIEF EXECUTIVE’S REVIEW (CONTINUED)
We are pleased to present the second annual report “System Sales” and this is what BFW is constantly working INTERNATIONAL Total unaudited System Sales Australasia are up 15.5% for Burger Fuel Worldwide Limited (“BFW”) for the year to grow. to $25,927,266 (excl GST). ended 31 March 2009. During the year to 31 March 2009 the group signed NEW ZEALAND – area development agreements in UAE, Saudi Arabia Burger Fuel Worldwide revenue for the 12 months As advised on 11 June 2009 the Group has reported ended 31 March 2009 is up $3,376,454 or 75% v 9.5 BURGERFUEL SYSTEM SALES ARE UP 13.2% and Bahrain. Due to the considerable slow down in an audited loss of $710,282 for the year ended 31 Dubai, no stores were opened during this year, however months to 31 March 2008. March 2009. Total BurgerFuel system sales (unaudited) from 1 April the UAE partners are now actively seeking sites in key Burger Fuel Worldwide loss for the 12 months ended 2008 to 31 March 2009 are up 13.2% to $23,785,621. Of this, $669,000 represents the previously reported loss ORFDWLRQVDQG%):HQYLVDJHVDQQRXQFLQJDÀUVWVWRUH 31 March 2009 is down $1,438,785 or 67% v 9.5 months BFW’s royalty earnings correlate directly to growth in for the six month period 1 April – 30 September 2008. location in Dubai shortly. to 31 March 2008. BurgerFuel system sales. The balance of $41,282 represents the loss for the past ,Q6DXGL$UDELDWKHÀUVWVWRUHORFDWLRQKDVEHHQ Area Development agreements for 3 new countries six month period from 1 October 2008 – 31 March 2009. In the year to 31 March 2009, the group opened 3 new selected in Al Kohbar and construction is due to signed. franchise stores in NZ bringing store numbers in NZ to 26. Losses are attributed to the continued development of commence shortly. The stores were Johnsonville, Taupo and Windsor Park. Store development in NZ continues. the New Zealand and Australian operations as well as The board’s current policy on expansion into new investment into other international markets, such as the The Directors will continue to concentrate on the markets is only by way of Area Development or Master Consolidation in Australia with growth of 47% but no United Arab Emirates (UAE), Saudi Arabia and Bahrain development of new stores in NZ and elsewhere. License agreements, whereby the licensee is responsible new stores opened. where BFW has signed Area Development agreements However, the continuation of a weak economy and for all capital costs associated with BurgerFuel store BFW will continue with its strategy as outlined in its for the rollout of new stores in those regions. uncertain conditions will adversely affect expansion construction and operations. prospectus. in general. Other country opportunities are currently being assessed SUMMARY OF BFW RESULTS FOR THE YEAR Directors expect continued measured progress given The board’s policy is only to open stores that meet and progress in this regard will be reported to the ENDED 31 MARCH 2009 global and local economic climate. the criteria for successful trading. This includes: prime market if and when licensing agreements for other locations, economically sustainable rents and high countries are unconditionally signed. The board is committed to continued but measured $(000’s) quality franchisees. investment to ensure brand growth in NZ and BFW OUTLOOK LQWHUQDWLRQDOO\LQRUGHUWRDFKLHYHIXWXUHSURÀWDELOLW\ 7KHFRQWLQXHGGLIÀFXOWHFRQRPLFFRQGLWLRQVLQERWK As a consequence and based on the requirements for NZ and elsewhere around the world will mean slower The board of directors have advised that the BFW company reinvestment, no dividends will be paid while Total Revenue 8,020 development and a continued focus on containing the strategy remains consistent with the previous year. The this strategy is pursued. Group’s administrative costs. We continue to provide group is focused on three main areas: Total Expenses (8,730) strong support to our franchisees both in marketing and The Group thanks its shareholders for their continued 1) Continued growth of the total system sales in NZ, by Loss (710) WKHJHQHUDWLRQRIRSHUDWLQJHIÀFLHQFLHV,QWKLVUHJDUG support and also all employees, franchisees and way of increased store sales as well as an increased WKHFRPSDQ\FRQWLQXHVWRGHYHORSDQGUHÀQHLWVPHQX partners for the effort and hard work that is being number of stores. However, the board is mindful of the and we are pleased to announce the introduction of contributed to develop BurgerFuel both in NZ and THE BURGERFUEL BUSINESS current economic climate. permanent combos in all BurgerFuel New Zealand and overseas. All efforts will continue to grow BurgerFuel The core business of BFW remains consistent in that it Australian stores. 2) Continuing to build up trading in both Australian in order to become the leading franchisor of gourmet LVWKHRZQHURIVLJQLÀFDQWLQWHOOHFWXDOSURSHUW\LQWKH VWRUHVWRHQVXUHIXWXUHSURÀWDEOHH[SDQVLRQFDQ burgers worldwide. In summary, the NZ system sales remain strong and form of trade marks and specially developed operating ultimately occur in Australia. systems. It is the master franchisor / licensor and licenses despite economic conditions further growth in the its intellectual property to various franchisees / licensees year to 2010 is anticipated. 3) Negotiating Area Development or Master Franchise in New Zealand and other countries such as Australia DJUHHPHQWVLQRWKHULGHQWLÀHGFRXQWULHVWRHDUQUR\DOWLHV and to date the Middle East countries of UAE, Saudi AUSTRALIA (REPORTED IN NZ$) – and other revenue by licensing the BurgerFuel system. BURGERFUEL SYSTEM SALES ARE UP 47% Arabia and Bahrain. Given the global and local economic situation, a key BFW’s earnings are generated from up-front store and BurgerFuel Australia (unaudited) system sales for the focus has been on reducing costs to ensure that the Peter Brook territory payments as well as on-going royalties from year 1 April 2008 to 31 March 2009 were up 47% to group can preserve cash and mitigate losses while Chairman stores, based on their turnover. In addition, earnings $2,141,645. VWULYLQJWRUHDFKSURÀWDELOLW\ZLWKLQWKH*URXS,QWKHODVW are generated from company owned stores (two stores six months to 31 March 2009 the Group was close to No new stores were opened in Australia during the in NZ and one in Sydney) and from the exclusive supply breaking even. Costs will continue to be managed in year. The weak Australian economy together with rising of its proprietary goods which are manufactured by its accordance with board policy, however further losses employment costs has meant that a cautious approach Satellite Kitchen divisions. are expected in the 6 months to 30 September 2009, to the opening of further stores within Australia has due to the requirement to support international markets been necessary. The group has increased turnover and It is therefore important to recognise that future and also continue to expand NZ. earnings correlate directly to new stores opened, as continued to reduce costs and associated losses. The well as the ongoing turnover and growth of both Directors feel it is prudent to continue to build the brand SUMMARY existing and new stores. in Australia within existing stores, before opening any new stores. Full year audited loss is ($710,282). This is made up of Royalty payments are calculated in accordance with ($669,000) from 1 April 2008 – 30 September 2008 and store turnovers and paid directly to BFW by the franchisees the balance of ($41,282) from 1 October 2008 – 31 Chris Mason / licensees on a regular basis. The total consolidated March 2009. CEO turnover of all stores is known as
3 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 4 SYSTEM STORE GROWTH - AUSTRALASIA TOTAL SYSTEM SALES - AUSTRALASIA System store numbers are based on franchised and company owned stores 7RWDO6\VWHP6DOHVUHSUHVHQWWRWDOWLOOVDOHVÀJXUHVDFURVVWKHFRXQWHUIRUDOO open as at 31 March of the correspnding year. BurgerFuel Mission Bay opened in IUDQFKLVHGDQGFRPSDQ\RZQHGVWRUHV7KHVHÀJXUHVDUHEDVHGRQVWRUHVDOHV July 2009. At the time of publication the BurgerFuel store network consisted of 27 UHSRUWHGE\)UDQFKLVHHVWR%XUJHU)XHO/LPLWHGIRUWKHFRUUHVSRQGLQJÀQDQFLDO stores in New Zealand and 2 stores in Australia. years, and have not been independently reviewed or audited by Staples 5RGZD\$OOÀJXUHVDUHWDNHQIURPWLOOVDOHVDQGDUHXSWRDQGLQFOXGLQJWKH ODVWGD\RIWKHFDOHQGDUPRQWK7KHVHÀJXUHVDUHH[FOXVLYHRI*67
TOTAL SYSTEM SALES ARE UP 15.5% FROM $22.5M TO $25.9M
28 25 STORES STORES NZ$25.9M
19 NZ$22.5M STORES NZ$16.6M
2007 2008 2009 2007 2008 2009
BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 MARKETING ENGINEERING THE ULTIMATE BURGER …AND ULTIMATE OTHER STUFF TOO
BurgerFuel has invested heavily into menu and product development over the past year leading up to 31 March 2009 – essentially gearing itself up for expansion into international markets and exposure to new customer segments.
Several products and ranges have been launched and integrated successfully into the menu contributing to sales growth and our ability to meet customer needs and expectations. The Low Carbo-Rator wrap range (April 2008), Mini burger range (July 2008), Chicken Fenders (July 2008) and Motobites (July 2008) have all helped to broaden and improve the BurgerFuel experience. In other words, they taste awesome.
Trials and testing at the end of 2008 were conducted to assess the potential impact of a combo or meal deal being introduced as a permanent BurgerFuel offering. After extensive forecasting and modelling the decision to launch combos during this year was made. 12 permanent combos were introduced to the BurgerFuel menu, incorporating the new Low Carbo-Rator and Mini burger ranges as well as the Lightweight and Classic burger ranges in May 2009.
The year ahead looks to be another challenging, yet exciting year, with the launch of combos and a few new additions to the Marketing and Promotions departments adding to the atmosphere and general NHUIXIÁHDW%XUJHU)XHO+4,QJHQHUDOLWKDV been noted that the average sex appeal has increased dramatically in both departments since 2008.
BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED SHAREHOLDER INFORMATION SHAREHOLDER INFORMATION (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
Share Dealings Remuneration of Directors 2009 2008 12 Months 9 ½ Months 'XULQJWKH\HDUHQGHG0DUFK WKHIROORZLQJ'LUHFWRUVDQG2IÀFHUVDFTXLUHGRUGLVSRVHGRIDUHOHYDQWLQWHUHVWLQ $ $ the Company’s ordinary shares: Peter Brook 52,500 55,000 Emmet Hobbs 33,333 41,667 Date 'LUHFWRU2IÀFHU Nature of Relevant Number of Shares Consideration Paid Carl Howard-Smith 33,333 41,667 ,QWHUHVW Acquired (Disposed) (Received) Christopher Mason 200,000 162,745 2 May 2008 Christopher Mason %HQHÀFLDO2ZQHU (650) $241 Josef Roberts 120,000 80,000 2 May 2008 Josef Roberts %HQHÀFLDO2ZQHU (650) $241 Alan Dunn 68,475 - Substantial Security Holders
Remuneration of Employees 2009 2008 The following information is given pursuant to Section 26 of the Securities Amendment Act 1988. The following are (Excluding Executive Directors) 12 Months 9 ½ Months registered by the Company at 14 May 2009 as Substantial Security Holders in the Company, having declared the Number of Employees Number of Employees following relevant interest in voting securities in terms of Section 25 of the Securities Amendment Act 1988.
Substantial Security Holder Number of Voting Securities % $100,000 - $110,000 - 1 JCR Capital Limited & 730 Trustee Company Limited 21,982,632 41.48% $130,000 - $140,000 2 - Christopher Mason and Christopher Mills 22,018,132 41.54%
6WDWHPHQWRI'LUHFWRUVDQG2IÀFHUV,QWHUHVWV CMJR Trustee Limited 2,742,900 5.18% 'LUHFWRUVDQG2IÀFHUVKHOGWKHIROORZLQJHTXLW\VHFXULWLHVLQWKH&RPSDQ\ The total number of voting securities of the Company on issue at 31 March 2009 was 53,000,000 fully paid ordinary shares. %HQHÀFLDOO\KHOG 1RQEHQHÀFLDOO\ %HQHÀFLDOO\KHOG 1RQEHQHÀFLDOO\ at 31/3/09 held at 31/3/09 at 31/3/08 held at 31/3/08 Peter Brook 52,500 - 52,500 - Emmet Hobbs 32,500 - 32,500 - Carl Howard-Smith 42,500 - 42,500 - Christopher Mason 22,018,132 - 22,028,782 - Josef Roberts 24,771,682 - 24,771,682 - Alan Dunn - - - - Paul Devereux 105,000 - 105,000 - Alexis Lam 18,000 - 18,000 - Andrew Kingstone 2,500 - 2,500 -
9 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 10 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED SHAREHOLDER INFORMATION (CONTINUED) SHAREHOLDER INFORMATION (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
Twenty Largest Security Holders as at 31 May 2009 Spread of Security Holders
Shareholder Number of Domicile of Security Holdings Number of Number of Shares % Holders Shares % Christopher Mason and Christopher Mills 22,018,132 41.54% 1 – 1,999 1783 1,822,930 3.44% JCR Capital Limited and 730 Trustee Company Limited 21,982,632 41.48% 2,000 – 4,999 566 1,362,570 2.57% CMJR Trustee Limited 2,742,900 5.18% 5,000 – 9,999 175 933,320 1.76% Grant Samuel & Associates Limited 100,000 0.19% 10,000 – 49,999 108 1,608,468 3.03% Ginostra Capital Pty Limited 100,000 0.19% 50,000 – 99,999 5 329,048 0.62% Michael Daniel, Nigel Burton & Michael Benjamin 81,548 0.15% 100,000 – 499,999 2 200,000 0.38% Private Nominees Limited 77,500 0.15% 1,000,000 – 9,999,999 3 46,743,664 88.20% Dex Management Limited 67,500 0.13% 2,642 53,000,000 100% Peter Brook 52,500 0.10% Swan Holdings Limited 50,000 0.09% Damen Horrell 43,766 0.08% Roy Sunde 40,000 0.08% Motu Trustee Pty Limited 35,000 0.07% Beverly Dorman, Carl Howard-Smith & Pamela Howard-Smith 32,500 0.06% Emmet Hobbs 32,500 0.06% Trumpeter Consulting Limited 32,500 0.06% James Knill 30,011 0.06% Simon Wagg 27,000 0.05% Chris Mills 26,000 0.05% Robyn Fendall 25,000 0.05% 47,596,989 89.81%
Domicile of Security Holdings Number of Number of Holders Shares % New Zealand 2,557 52,624,368 99.29% Australia 51 254,421 0.48% Canada 2 2,000 0.00% China 1 3,000 0.01% Korea 1 2,000 0.00% Germany 1 3,000 0.01% Hong Kong 2 3,000 0.01% Singapore 2 32,011 0.06% Taiwan 1 1,000 0.00% United States of America 10 27,100 0.05% United Kingdom 14 48,100 0.09% 2,642 53,000,000 100%
11 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 12 NEW ZEALAND BURGERFUEL NZ SYSTEM SALES UP 13.2% Total BurgerFuel system sales (unaudited) the summer in Taupo. The Taupo store from 1 April 2008 to 31 March 2009 are up LVWKHÀUVWWRLQFRUSRUDWHQHZGHVLJQ BurgerFuel Windsor Park in Mairangi Bay was 13.2% to $23,785,621 (excluding GST). BFW’s features and concepts being developed opened in November 2008 as the fourth store royalty earnings correlate directly to growth for international markets and the next in Auckland’s North Shore region by one of in BurgerFuel system sales. generation in BurgerFuel store design. our existing franchisees. There is also a second storey dining area to In the year to 31 March 2009, we opened accommodate peak trading seasons. In light of the current economic climate, 3 new franchise stores in NZ bringing store further store openings in New Zealand will numbers in NZ to 26. Increased demand and brand presence depend on prospective sites and franchisees in Wellington has led to the opening of meeting strict criteria. However, New Zealand BurgerFuel Taupo (pictured) opened BurgerFuel Johnsonville in September store numbers will still continue to grow, with a in July 2008 on the lake front in prime 2008 as our third Wellington store. Further new store having just opened in Mission Bay, position to take advantage of ski season opportunities in the region are also being Auckland on 20 July 2009. tourists passing through as well as the explored with the Courtenay Place store in large events hosted regularly during the CBD trading well.
BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 AUSTRALIA BURGERFUEL AUSTRALIA SYSTEM SALES UP 47%
BurgerFuel Australia (unaudited) system sales for the period 1 April 2008 to 31 March 2009 were up 47% to $2,141,645 (reported in NZ$) excluding GST.
No new stores have been opened in Australia within the period and plans to introduce platypus and koala to the menu have been sidelined for the moment. The current state of the Australian economy together with rising employment costs has meant that a cautious approach to the opening of further stores in Australia has been necessary.
Additionally, having the Kiwis win the Rugby League World Cup has not improved trans Tasman burger relations either. Nonetheless, ZHKDYHZRUNHGKDUGWRVLJQLÀFDQWO\LQFUHDVH turnover and reduce costs across our operations in Australia.
We will continue to build the brand in Australia within existing stores using a tight, well focused team to grow the customer base amongst the strong Kiwi expat community and Sydney opinion leaders.
BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 DUBAI, UNITED ARAB EMIRATES COMBO TO DUBAI!!!
Our former Australian Operations Manager store location in Dubai, shortly. BurgerFuel has been appointed as GCC Business will also send 3 customers over to the grand Development Manager to support our opening as part of an extensive marketing local partners, Alphamed, in the UAE with campaign in 2009 to launch combos in setting up operations in the Middle East. He New Zealand and Australia. Customers will LVFXUUHQWO\EDVHGLQWKH$OSKDPHGRIÀFHV have been given the opportunity to literally working as liaison between New Zealand “Combo” their way to Dubai by collecting and Dubai. Burger points with every combo (or burger) purchased to win a trip to the grand opening Due to the considerable economic slow of BurgerFuel Dubai. down in Dubai, no stores were opened in this period, however the UAE partners are now We look forward to announcing when actively seeking sites in the key locations you will be able to enjoy your favourite DQG%XUJHU)XHOKRSHVWRDQQRXQFHDÀUVW BurgerFuel burger in Dubai.
BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 SAUDI ARABIA, BAHRAIN & BEYOND SHAREEF, DOES LIKE IT - ROCK THE KOHBAR!!!
During the year to 31 March 2009 the group Group, a major Saudi Arabian corporation The deal will involve the construction of where the licensee is responsible for all capital signed area development agreements in UAE, based in the eastern province of Dammam. BurgerFuel stores in Saudi Arabia and Bahrain. costs of BurgerFuel store construction and Saudi Arabia and Bahrain. In Saudi Arabia, The Abdulla Fouad Group is ranked within As master licensee Abdulla Fouad Group will operations. Opportunities in various other WKHÀUVWVWRUHORFDWLRQKDVEHHQVHOHFWHGLQ$O the top 100 companies in Saudi Arabia and fully fund store construction and operational markets on the same Master License basis as Kohbar and construction is due to commence is respected as one of the most prominent costs. Through this licensing agreement those above are being assessed. Any further shortly. The 6m wide neon BurgerFuel sign families in the eastern province. The BurgerFuel Worldwide will support the brand developments in this area will be announced pictured has been constructed locally and is and earn up-front territory fees and on-going when the relevant licensing agreement has company holds the agencies for many large already on its way to Al Kohbar (batteries royalties based on store turnover. been unconditionally signed. international brands in Saudi Arabia. They not included). also have diverse interests in real estate, oil, The board’s current policy on expansion into The agreement for Saudi Arabia and Bahrain telecommunications and numerous other other new markets is only by way of Area has been signed with the Abdulla Fouad industries. Development or Master License agreements, BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 COMBOS WE MADE AN ABSOLUTE MEAL OF IT
In June 2009 (FY2010) we made an absolute The combos present an exciting new step in meal of it! 12 permanent combos were the BurgerFuel journey where a long period launched in both New Zealand and Australian RISURGXFWGHYHORSPHQWV\VWHPVUHÀQHPHQW markets in typical BurgerFuel style. An all star supplier negotiations, instore trialling and cast of living BurgerFuel customer caricatures FXVWRPHUPRGHOLQJKDVÀQDOO\DOORZHGXVWR and stereotypes were used to introduce the present an incredibly well priced meal deal combos to our customers. The characters included everything from the extreme offering within the premium BurgerFuel setting. ComCho and ComHo to the hilarious ComFro All departments have worked tirelessly to and ComGro. ensure that BurgerFuel could launch combos without compromising the quality of anything The 12 combos cover the full BurgerFuel on the BurgerFuel menu. This methodology spectrum, with offerings in all 4 ranges – and commitment to perfection is commonly Classic, Lightweight, Mini & Low Carbo-Rator. referred to in the vernacular as “the hardest Vegetarian options are also available in every range to ensure that all members of the core way possible”. There’s no way, but the hard BurgerFuel audience are being catered for. way when you want to be the best and the Additionally, a new range of slimline Coke end result has been worth it, with early signs cans have also been added to the BurgerFuel showing a welcome reception for combos by drinks offering for the combos. new and existing BurgerFuel customers.
BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 STORE DEVELOPMENT IT’S WHAT’S ON THE INSIDE THAT COUNTS
During 2008 our design and store construction BurgerFuel at the forefront of the burger world. team have been getting ready for the The stores will be sleek whilst maintaining the BurgerFuel of the future. The new concepts burger bar edge BurgerFuel is known for. are already being incorporated into the construction and development in Al Kohbar 7KHVHQHZGHVLJQFRQFHSWVFDQÀUVWEHVHHQ as well as our Mission Bay store opening in in our Mission Bay store in Auckland, which Auckland. opened on 20 July 2009.
The stores feature a further development in ergonomic kitchen design as well as keeping
BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 ENVIRO-MENTAL BURGERFUEL, NOW EVEN MORE ECOLICIOUS.
As part of our continuing “enviro-mental” and sustainability campaign, as well as our perpetual quest for self improvement, new packaging has been designed and manufactured locally to BurgerFuel VSHFLÀFDWLRQVDQGUHTXLUHPHQWV1HZ BurgerFuel chip cups in both small and large sizes were introduced in December 2008. Serious consideration for the environment has been taken into selecting the materials Made from 100% recycled Fibre used in all our packaging, with the BurgerFuel Doofer now being produced from the same material as our new chip cups as well. Our ÁHHWRIGHOLYHU\YHKLFOHLQ$XFNODQG WKHUH·V 100% recyclable and biodegradable still only one), continues to be powered by OSCO (Old Shitty Chip Oil) Bio Diesel produced from old oil collected from stores in the BurgerFuel system. Printed using natural and sustainable A lot of tree hugging went into the design of our new chip cups and doofers. We even vegetable oil based inks looked at potato chip cups made out of potatoes, but potatoes served in potatoes seemed like some sort of weird tuber incest. After going through a Woodstock load RIKLSSLHVZHÀQDOO\IRXQGVRPHGHFHQW recycled, recyclable and biodegradable packaging.
We’ve even made sure the ink is made from a natural vegetable oil base sourced from renewable resources instead of the usual mineral oil solvent stuff. We then did a little survey in store and asked people whether or not they’d only come to us if we were more environmentally friendly than the other guys. The survey results came back with a resounding “not really”. Oh well, all the kids at BurgerFuel grew up wanting to be Planeteers so we decided to combine all our powers (especially heart) and save the planet anyway.
BurgerFuel - gonna take pollution down to zero.
Remember, the power is yours.
BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED CORPORATE GOVERNANCE CORPORATE GOVERNANCE (CONTINUED) FOR THE PERIOD ENDED 31 MARCH 2009 FOR THE PERIOD ENDED 31 MARCH 2009
The Board of Directors is responsible for the corporate )LQDQFLDO2IÀFHU7KH&KDLUPDQRIWKH%RDUGDQGWKH 'LUHFWRUV 2IÀFHUV%RDUG $XGLW&RPPLWWHH$WWHQGDQFH5HFRUG governance of the Group. “Corporate Governance” Chairman of the Audit Committee are non-executive and involves the direction and control of the business by LQGHSHQGHQWRIWKHUROHRIWKH&KLHI([HFXWLYH2IÀFHU Director Board Meetings Audit Committee Meetings the Directors and the accountability of Directors to Audit Committee Peter Brook (Chair) 8 4 shareholders and other stakeholders for the performance of the Group and compliance with applicable laws and Although not required by the NZAX Listing Rules, to assist Carl Howard-Smith standards. the Board in the execution of its responsibilities, an Audit [Retired 1 May 2009] 8 5 Committee is in operation. Emmet Hobbs Role of the Board (i) Risk Management [Retired 1 May 2009] 8 4 The Board is elected by the Shareholders of the Josef Roberts 8 2 The Audit Committee is required to establish a framework Company. At each Annual Meeting one third of the of internal control mechanisms to ensure proper Chris Mason 7 2 directors will retire by rotation. The Directors to retire are management of the Group’s affairs and that key business those who wish to retire, or those who have been longest Alan Dunn DQGÀQDQFLDOULVNVDUHLGHQWLÀHGDQGFRQWUROVDQG LQRIÀFHVLQFHODVWEHLQJHOHFWHG [Appointed 9 October 2008] 4 2 procedures are in place to effectively manage those risks. 2IÀFHUV The Board of Directors is responsible for the overall The Audit Committee is accountable to the Board for direction of Burger Fuel Worldwide’s business and affairs the recommendation of the external auditors, directing Paul Devereux (Company Secretary) 8 5 on behalf of all shareholders. The Board’s key role is to and monitoring the audit function and reviewing the $QGUHZ.LQJVWRQH &KLHI)LQDQFLDO2IÀFHU ensure that corporate management is continuously and adequacy and quality of the annual audit process. [Appointed 15 September 2008] 4 2 effectively striving for above-average performance, (ii) Additional Assurance taking account of risk. The Committee provides the Board with additional Constitution The Chairman receives an annual fee of $30,000 and The Board: DVVXUDQFHUHJDUGLQJWKHDFFXUDF\RIÀQDQFLDO each independent, non-executive Director will receive an A full copy of the Company’s constitution is available on information for inclusion in the Group’s annual report, annual fee of $20,000. The Company Secretary supplies Establishes the objectives of Burger Fuel Worldwide the Company’s internet website (www.burgerfuel.com). LQFOXGLQJWKHÀQDQFLDOVWDWHPHQWV7KH&RPPLWWHHLV company secretarial and corporate governance services. Limited; also responsible for ensuring that Burger Fuel Worldwide Board Remuneration &RQÁLFWRI,QWHUHVW Approves major strategies for achieving these Limited has an effective internal control framework. These Directors are entitled to Directors’ fees, reasonable objectives; controls include the safeguarding of assets, maintaining The Board has guidelines dealing with the disclosure of travelling, accommodation and other expenses incurred proper accounting records, complying with legislation, interests by Directors and the participation and voting at Oversees risk management and compliance; in the course of performing duties or exercising powers including resource management and health and safety Board meetings where any such interests are discussed. as Directors. Aggregate fees payable to the Board will Sets in place the policy framework within which Burger LVVXHVHQVXULQJWKHUHOLDELOLW\RIÀQDQFLDOLQIRUPDWLRQDQG not exceed $180,000 per annum, excluding the CEO, the Fuel operates; and assessing and over viewing business risk. The Committee Executive Director and the Company Secretary. also deals with governmental and New Zealand Stock Monitors management performance against this Exchange requirements. background. (iii) Share Trading Policy The Board has delegated the day-to-day leadership and PDQDJHPHQWRIWKH*URXSWRWKH&KLHI([HFXWLYH2IÀFHU The Company has adopted a formal Securities Trading Policy (“Policy”) to address insider trading requirements 7KH%RDUGPRQLWRUVÀQDQFLDOUHVXOWVDQGFRPSDUHVWKHP under the Securities Markets Act 1988 (as amended by the to annual plans and forecasts on a regular basis, and Securities Markets Amendment Act 2006 and the Securities on a quarterly basis reviews the Group’s performance Markets Regulations 2007). The Policy is modelled on the against its strategic planning objectives. Listed Companies Association Securities Trading Policy and Board Size and Composition Guidelines and is administered by the Audit Committee and restricts share trading in a number of ways. Unlike the NZX Listing Rules for NZSX listed companies, the NZAX Listing Rules do not require that the Company LY ,QVXUDQFHDQG,QGHPQLÀFDWLRQ have any independent directors. However, in the interests Burger Fuel Worldwide Limited provides indemnity of good governance, and notwithstanding that there LQVXUDQFHFRYHUWRGLUHFWRUVRIÀFHUVDQGHPSOR\HHVRI is no requirement under the NZAX Listing Rules, the the Group except where there is conduct involving a Directors have decided to adopt a governance policy wilful breach of duty, improper use of inside information whereby at least 2 of the Directors of the Board will be or criminality. ´,QGHSHQGHQWµDVGHÀQHGLQWKH1=;/LVWLQJ5XOHV7KH size and composition of the Board is determined by the Company’s constitution. As at 22 June 2009, there were 4 Directors, a Company Secretary and a Chief
27 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 28 THE BOARD
PETER BROOK BCom, ACA, CFIP CHRIS MASON JOSEF ROBERTS ALAN DUNN PAUL DEVEREUX BCom, LLB, FCIS, MNZIM ANDREW KINGSTONE BBS, CA CHAIRMAN CHIEF EXECUTIVE OFFICER EXECUTIVE DIRECTOR INDEPENDENT DIRECTOR COMPANY SECRETARY CHIEF FINANCIAL OFFICER MEMBER - BFW AUDIT COMMITTEE CHAIRMAN - BFW AUDIT COMMITTEE Chris is the founder of Josef is a full time Executive BurgerFuel Legal Affairs Committee Member of the Formerly Managing Director of BurgerFuel and continues to Director for BurgerFuel with a Former CEO and Chairman Manager since 2003. CFO Special Interests Group - Merril Lynch (NZ) Ltd. head the operational business strategic focus on company of McDonalds NZ from 1993 NZ Institute of Chartered on a daily basis. development and international to 2003. In 2004 became Board member of Chartered Accountants. Other Directorships: ING business. Chicago based VP Operations, Secretaries New Zealand. Property Trust Management In addition to overseeing the Prior to joining BurgerFuel then Regional VP Nordics and Formerly Executive Director, Ltd, Trust Investments continued development of Former CEO and founder of Managing Director Sweden Andrew was Chief Financial Company Secretary for Red Management Ltd and a New Zealand and Australia, Red Bull Australasia until retirement in 2007. 2IÀFHUIRU7UDQVÀHOG6HUYLFHV number of private directorships Chris is actively involved in Bull Australia Pty Ltd and prior in New Zealand. the operational roll out of our Other Directorships: A number Other Directorships: A number to that General Manager and In addition to this he held a overseas markets. of directorships of private of directorships of private corporate lawyer for Red Bull UDQJHRIVHQLRUÀQDQFHSRVLWLRQV Trustee of the Melanesian Trust companies. companies. New Zealand. in the UK and New Zealand. Board.
BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009
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BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 BURGER FUEL WORLDWIDE LIMITED INCOME STATEMENTS THE FINANCIALS FOR THE YEAR ENDED 31 MARCH 2009
Group Parent 2009 2008 2009 2008 12 Months 9 ½ Months 12 Months 9 ½ Months Note $ $ $ $ Revenue 5 7,854,057 4,477,603 48,935 -
Operating Expenses 6 (8,427,705) (6,639,106) (938,353) (5,367)
Loss before interest, taxation, depreciation and amortisation (573,648) (2,161,503) (889,418) (5,367)
Depreciation 11 233,539 156,849 - - Amortisation 14 49,108 19,504 - - 282,647 176,353 - -
Loss before interest and taxation (856,295) (2,337,856) (889,418) (5,367)
Interest Income 23 166,171 232,989 823,508 538,124 Interest Expense (20,158) (44,200) (673) - 146,013 188,789 822,835 538,124
/RVV 3URÀWEHIRUHWD[DWLRQ (710,282) (2,149,067) (66,583) 532,757
Income Tax (Expense) 7 - - - (177,549)
(Loss)/Net earnings attributable to shareholders (710,282) (2,149,067) (66,583) 355,208
Basic Net Earnings per Share (cents) (1.34) (4.15) (0.13) 0.69 Diluted Earnings per Share (cents) (1.34) (4.03) (0.13) 0.67
Net Tangible Assets per Share (cents) 6.94 8.52 15.65 15.77
7KHDWWDFKHGQRWHVIRUPSDUWRIWKHVHÀQDQFLDOVWDWHPHQWV
33 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 34 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED BALANCE SHEETS STATEMENTS OF CHANGES IN EQUITY AS AT 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
Group Parent GROUP 2009 2008 2009 2008 Note $ $ $ $ 2009 Shareholders’ Equity Foreign Contributed Equity 17 8,000,002 8,000,002 8,000,002 8,000,002 currency Share Retained Earnings/(Accumulated Losses) 18 (4,028,960) (3,318,678) 288,625 355,208 Share translation Merger IPO capital option Retained IPO Capital Costs 17 (223,432) (223,432) - - capital reserve reserve costs reserve earnings Total equity Other Reserves 19 128,831 176,503 5,269 5,269 $ $ $ $ $ $ $ 3,876,441 4,634,395 8,293,896 8,360,479 Balance as at Current assets 1 April 2008 8,000,002 (13,566) 184,799 (223,432) 5,269 (3,318,678) 4,634,394 Cash and cash equivalents 1,517,069 3,154,899 1,085,810 2,797,640 Foreign currency Trade and other receivables 9 1,030,802 563,784 53,418 44,448 translation reserve - (47,671) - - - - (47,671) Inventories 10 151,721 90,740 - - (Loss) for the year Loans 13 90,557 34,255 - - ended 31 March 2009 - - - - - (710,282) (710,282) 2,790,149 3,843,678 1,139,228 2,842,088 Non-current assets Balance as at 31 Property, plant and equipment 11 1,195,933 865,437 - - March 2009 8,000,002 (61,237) 184,799 (223,432) 5,269 (4,028,960) 3,876,441 Investment in subsidiaries 12 - - 2 2 Loans 13 685,634 907,835 7,332,215 5,695,938 2008 ,QWDQJLEOHDVVHWV 14 196,341 119,522 - - Foreign 2,077,908 1,892,794 7,332,217 5,695,940 currency Share Share translation Merger IPO capital option Retained capital reserve reserve costs reserve earnings Total equity Total assets 4,868,057 5,736,472 8,471,445 8,538,028 $ $ $ $ $ $ $
Current liabilities Balance as at 14 June 2007 2 - - - - - 2 Trade and other payables 15 634,975 758,990 - - Issue of ordinary Current tax payable - - 177,549 177,549 shares 8,000,000 - - - - - 8,000,000 Lease Liabilities 22 36,184 31,981 - - Foreign currency Provisions 16 34,422 102,705 - - translation reserve - (13,565) - - - - (13,565) 705,581 893,676 177,549 177,549 Pre acquisition Non-current liabilities reserve - - - - - (622,560) (622,560) Lease liabilities 22 101,252 137,436 - - Merger reserve - - 184,799 - - - 184,799 Provisions 16 184,783 70,965 - - IPO capital costs - - - (223,432) - - (223,432) 286,035 208,401 - - Share option reserve - - - - 5,269 - 5,269 Opening retained Total liabilities 991,616 1,102,077 177,549 177,549 earnings - - - - - (547,051) (547,051) (Loss) for the period ended 31 March Net assets 3,876,441 4,634,395 8,293,896 8,360,479 2008 - - - - - (2,149,067) (2,149,067)
)RUDQGRQEHKDOIRIWKHERDUGZKRDSSURYHGWKHVHÀQDQFLDOVWDWHPHQWVIRULVVXHRQ-XO\ Balance as at 31 March 2008 8,000,002 (13,565) 184,799 (223,432) 5,269 (3,318,678) 4,634,395
Director Director 7KHDWWDFKHGQRWHVIRUPSDUWRIWKHVHÀQDQFLDOVWDWHPHQWV 7KHDWWDFKHGQRWHVIRUPSDUWRIWKHVHÀQDQFLDOVWDWHPHQWV
35 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 36 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED STATEMENTS OF CHANGES IN EQUITY CASH FLOW STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
PARENT Group Parent 2009 2008 2009 2008 12 Months 9 ½ Months 12 Months 9 ½ Months 2009 Note $ $ $ $ Foreign &DVKÁRZVIURPRSHUDWLQJDFWLYLWLHV currency Share Share translation Merger IPO capital option Retained Cash was provided from capital reserve reserve costs reserve earnings Total equity Receipts from customers 7,320,744 4,235,567 38,169 - $ $ $ $ $ $ $ Interest received 166,171 232,989 823,508 538,124 Taxes received 118,687 - 1,796 - Balance as at 7,605,602 4,468,556 863,473 538,124 1 April 2008 8,000,002 - - - 5,269 355,208 3,860,479 Cash was applied to (Loss) for the year Operating expenses (8,689,664) (6,657,317) (538,353) (98) ended 31 March 2009 - - - - - (66,583) (66,583) Interest paid (20,158) (44,200) (673) - Taxes paid - (110,455) - (44,448)
Balance as at 31 (8,709,822) (6,811,972) (539,026) (44,546) March 2009 8,000,002 - - - 5,269 288,625 8,293,896 1HWFDVKÁRZVSURYLGHGIURP DSSOLHGWR operating activities 25 (1,104,220) (2,343,416) 324,447 493,578
Foreign currency Share &DVKÁRZVIURPLQYHVWLQJDFWLYLWLHV Share translation Merger IPO capital option Retained Cash was provided from capital reserve reserve costs reserve earnings Total equity Foreign exchange gains 19,787 34,464 - - $ $ $ $ $ $ $
Cash was applied to Balance as at 14 June 2007 2 - - - - - 2 Advances to franchisees (133,783) (143,539) - - Issue of ordinary Advances to shareholders - (11,313) - - shares 8,000,000 - - - - - 8,000,000 Share option reserve - - - - 5,269 - 5,269 Acquisition of intangible assets 14 (125,927) (46,856) - - 3URÀWIRUWKHSHULRG Acquisition of property, plant & equipment 11 (561,388) (449,881) - - ended 31 March (821,098) (651,589) - - 2008 - - - - - 355,208 355,208 1HWFDVKÁRZDSSOLHGWRLQYHVWLQJDFWLYLWLHV (801,311) (617,125) - -
Balance as at 31 &DVKÁRZVIURPÀQDQFLQJDFWLYLWLHV March 2008 8,000,002 - - - 5,269 355,208 8,360,479 Cash was provided from Cash Proceeds from issue of shares - 8,000,000 - 8,000,000 Loans from related parties 299,682 - - 299,682 8,000,000 - 8,000,000 Cash was applied to
Cash paid in relation to IPO capital costs - (223,432) - - Loans to related parties - (22,443) (2,036,277) (5,695,938) 5HSD\PHQWRIÀQDQFHOHDVHV (31,981) (2,068,289) - (31,981) (2,314,164) (2,036,277) (5,695,938) 1HWFDVKÁRZSURYLGHGIURP DSSOLHGWR ÀQDQFLQJDFWLYLWLHV 267,701 5,685,836 (2,036,277) 2,304,062
7KHDWWDFKHGQRWHVIRUPSDUWRIWKHVHÀQDQFLDOVWDWHPHQWV 7KHDWWDFKHGQRWHVIRUPSDUWRIWKHVHÀQDQFLDOVWDWHPHQWV
37 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 38 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED CASH FLOW STATEMENTS (CONTINUED) NOTES TO THE CONSOLIDATED FOR THE YEAR ENDED 31 MARCH 2009 FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009
Group Parent 1) REPORTING ENTITIES AND Basis of Measurement 2009 2008 2009 2008 12 Months 9 ½ Months 12 Months 9 ½ Months STATUTORY BASE 7KHÀQDQFLDOVWDWHPHQWVKDYHEHHQSUHSDUHGRQWKH EDVLVRIKLVWRULFDOFRVWZLWKWKHH[FHSWLRQRIÀQDQFLDO Note $ $ $ $ Burger Fuel Worldwide Limited is a public company LQVWUXPHQWVWKURXJKSURÀWRUORVVZKLFKDUHPHDVXUHGDW Net movement in cash (1,637,830) 2,725,295 (1,711,830) 2,797,640 registered under the Companies Act 1993 and is listed fair value. with the New Zealand Alternative Stock Exchange on the Opening bank balances 3,154,899 429,604 2,797,640 - NZAX. The company is an issuer in terms of the Financial Use of Estimates and Judgements Closing bank balances 1,517,069 3,154,899 1,085,810 2,797,640 Reporting Act 1993, the Securities Act 1978, and the 7KHSUHSDUDWLRQRIÀQDQFLDOVWDWHPHQWVLQFRQIRUPLW\ZLWK Securities Markets Act 1988. NZ IFRS requires management to make estimates and Cash consists of: 7KHÀQDQFLDOVWDWHPHQWVSUHVHQWHGDUHWKRVHRI%XUJHU assumptions that affect the reported amounts of assets Fuel Worldwide Limited (the ‘Company’ or the ‘Parent DQGOLDELOLWLHVDWWKHGDWHRIWKHÀQDQFLDOVWDWHPHQWVDQG Cash at bank 1,517,069 3,154,899 1,085,810 2,797,640 Company’) and its wholly owned subsidiaries Burger Fuel the reported amounts of revenues and expenses during International Limited, Burger Fuel Limited and Burger Fuel the year. Actual results could differ from those estimates. Five Cross Roads Limited (the ‘Group’ or ‘Burger Fuel’). The principle areas of judgment in preparing these Burger Fuel Australia Pty Limited is a wholly owned subsidiary ÀQDQFLDOVWDWHPHQWVDUHVHWRXWEHORZ of Burger Fuel (Australia) Pty Limited, which is a wholly Fair value estimation owned subsidiary of Burger Fuel International Limited. 7KHIDLUYDOXHRIÀQDQFLDODVVHWVDQGÀQDQFLDOOLDELOLWLHV Burger Fuel operates as a franchisor of gourmet burger must be estimated for recognition and measurement or UHVWDXUDQWVDQGLVDSURÀWRULHQWHGHQWLW\LQFRUSRUDWHG for disclosure purposes. The nominal value less estimated and domiciled in New Zealand. credit adjustments of trade receivables and payables are 2) BASIS OF PREPARATION assumed to approximate their fair values. The fair value RIÀQDQFLDOOLDELOLWLHVIRUGLVFORVXUHSXUSRVHVLVHVWLPDWHG Statement of Compliance E\GLVFRXQWLQJWKHIXWXUHFRQWUDFWXDOFDVKÁRZVDW 7KHÀQDQFLDOVWDWHPHQWVKDYHEHHQSUHSDUHGLQ the current market interest rate that is available to the accordance with New Zealand Generally Accepted &RPSDQ\DQG*URXSIRUVLPLODUÀQDQFLDOLQVWUXPHQWV Practice (“NZ GAAP”). They comply with the New Zealand equivalents to International Financial Reporting Standards (“NZ IFRS”), and other applicable Financial Standards, as DSSURSULDWHIRUSURÀWRULHQWHGHQWLWLHV7KH&RPSDQ\LVD SURÀWRULHQWHGHQWLW\7KH&RPSDQ\LVDUHSRUWLQJHQWLW\ for the purposes of the Financial Reporting Act 1993 and LWVÀQDQFLDOVWDWHPHQWVFRPSO\ZLWKWKDW$FW7KHÀQDQFLDO statements of the Group also comply with International Financial Reporting Standards (“IFRS”).
The Company was incorporated on 14 June 2007; the ÀQDQFLDOVWDWHPHQWVFRYHUWKH\HDUIURP$SULOWR 31 March 2009, with a prior period comparison of 14 June 2007 to 31 March 2008. The Company incorporated Burger Fuel Five Cross Roads Limited on 2 March 2009 as the operating entity of the Five Cross Roads store in Hamilton.
7KHVHÀQDQFLDOVWDWHPHQWVDUHSUHVHQWHGLQ1HZ=HDODQG dollars ($), which is the Company’s functional currency.
7KHÀQDQFLDOVWDWHPHQWVZHUHDSSURYHGE\WKH%RDUG of Directors on the date set out in the Annual Report on page 3.
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39 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 40 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
2) BASIS OF PREPARATION (CONTINUED) Allowance for Doubtful Debts 3) SPECIFIC ACCOUNTING POLICIES 2WKHU,QFRPH
Use of Estimates and Judgements (Continued) The Group maintains an allowance for estimated losses (CONTINUED) $OORWKHULQFRPHLVUHFRJQLVHGZKHQVLJQLÀFDQWULVNVDQG expected to arise from customers being unable to rewards have been transferred to buyer, there is loss of a) Basis of Consolidation (continued) Valuation of Financial Assets make required payments. This allowance takes into effective control by the seller and the amount and costs Management performs an assessment of the carrying DFFRXQWNQRZQFRPPHUFLDOIDFWRUVLPSDFWLQJVSHFLÀF The acquisition of the subsidiaries was accounted for can be reliably measured. FXVWRPHUDFFRXQWVDVZHOODVWKHRYHUDOOSURÀOHRIWKH using the pooling of interests method. The pooling of YDOXHRIÀQDQFLDODVVHWVDWOHDVWDQQXDOO\,QDVVHVVLQJ c) Accounts Receivable whether there has been impairment, consideration is Company and Group’s debtors’ portfolio. In assessing interests method of accounting involves allocating the JLYHQWRWKHÀQDQFLDOSHUIRUPDQFHRIWKHLQYHVWHHDQG the allowance, factors such as past collection history, cost of the business combination to the transfer of shares Accounts receivable are stated at cost less allowances other factors impacting management’s expectation of the age of receivable balances, the level of activity in of Burger Fuel Limited and Burger Fuel International for impairment. An estimate is made for impairment recovering the value of the investment. This assessment customer accounts, as well as general, macro-economic Limited owned by the JCR Investment Trust and the based on a review of all outstanding amounts at period also requires management to make judgements about trends, are taken into account. Mason Family Trust in exchange for shares in Burger Fuel end. Bad debts are written off during the period in which Worldwide Limited which owns Burger Fuel Limited and WKH\DUHLGHQWLÀHG,IWKHVHGHEWVDUHVXEVHTXHQWO\ WKHH[SHFWHGIXWXUHSHUIRUPDQFHDQGFDVKÁRZVRI $FFRXQWLQJIRU,QFRPH7D[ the investee, and an appropriate discount rate, in order Burger Fuel International Limited. collected then a gain is recognised in the Income 3UHSDUDWLRQRIWKHDQQXDOÀQDQFLDOVWDWHPHQWVUHTXLUHV Statement. to determine the fair value of investments based on b) Revenue Recognition management to make estimates as to, amongst other GLVFRXQWHGH[SHFWHGFDVKÁRZVRILQYHVWHHV G ,QYHQWRULHV things, the amount of tax that will ultimately be payable, Revenue shown in the Income Statement comprises those Accounting for Property, Plant and Equipment and the availability of losses to be carried forward and the amounts received and receivable for goods and services Inventories are stated at the lower of cost and net )LQLWHOLIH,QWDQJLEOH$VVHWV amount of foreign tax credits it will receive. Actual supplied to customers in the ordinary course of business. realisable value after due consideration for excess results may differ from these estimates as a result of DQGREVROHWHLWHPV&RVWLVEDVHGRQWKHÀUVWLQÀUVWRXW In accounting for the creation of items of property, Franchise Fees SODQWDQGHTXLSPHQWDQGÀQLWHOLIHLQWDQJLEOHDVVHWV reassessment by management or taxation authorities. principle and includes expenditure incurred in acquiring judgements must be made about whether costs incurred Franchise fees for the provision of continuing services, the inventories and bringing them to their existing 3) SPECIFIC ACCOUNTING POLICIES relate to bringing an asset to working condition for whether part of the initial fee or a separate fee, are condition and location. Net realisable value is the its intended use, and therefore are appropriate for 7KHIROORZLQJLVDVXPPDU\RIVSHFLÀFDFFRXQWLQJ recognised as revenue as the services are rendered. estimated selling price in the ordinary course of business, capitalisation as part of the cost of the asset, or whether policies adopted by the Group in the preparation Fees charged for the use of continuing rights granted by less estimated selling expenses. they should be expensed as incurred. In capitalising RIWKHÀQDQFLDOVWDWHPHQWVWKDWPDWHULDOO\DIIHFWWKH the agreement, or for other services provided during the costs for internally constructed assets, judgements must PHDVXUHPHQWRIÀQDQFLDOSHUIRUPDQFHFDVKÁRZV period of the agreement, are recognised as revenue as be made about the likelihood of project success. Such DQGWKHÀQDQFLDOSRVLWLRQ the services are provided or the rights used. MXGJHPHQWVFDQEHGLIÀFXOWZKHUHWKHSURMHFWLQYROYHV a) Basis of Consolidation Royalties the application of unproven technology. Subsidiaries Royalty income is recorded when it is probable that The determination of the appropriate useful life for HFRQRPLFEHQHÀWVZLOOÁRZWRWKHHQWLW\DQGDPRXQWV a particular asset requires management to make Subsidiaries are entities controlled, directly or indirectly, can be reliably measured. It is calculated on an judgements about, among other factors, the expected by companies in the Group. Control exists when any of accruals basis in accordance with the substance of the period of service potential of the asset, the likelihood of the companies in the Group has the power to govern agreement. the asset becoming obsolete as a result of technological WKHÀQDQFLDODQGRSHUDWLQJSROLFLHVRIDQHQWLW\VRDV advances, and the likelihood of either the Company and WRREWDLQEHQHÀWVIURPLWVDFWLYLWLHV,QDVVHVVLQJFRQWURO Training Fees Group ceasing to use the asset in its business operations. potential voting rights that presently are exercisable Training fee income is recognised when the outcome of DUHWDNHQLQWRDFFRXQW7KHÀQDQFLDOVWDWHPHQWVRI Assessing whether an asset is impaired may involve the transaction involving the rendering of services can be VXEVLGLDULHVDUHLQFOXGHGLQWKHFRQVROLGDWHGÀQDQFLDO estimating the future cash flows the asset is expected reliably estimated. statements from the date that control commences. to generate. This will in turn involve a number of $GYHUWLVLQJ,QFRPH assumptions, including rates of expected revenue growth ,QSUHSDULQJWKHFRQVROLGDWHGÀQDQFLDOVWDWHPHQWVDOO or decline, expected future margins and the selection of inter entity balances and transactions, and unrealised Advertising income is recognised when the outcome of DQDSSURSULDWHGLVFRXQWUDWHIRUYDOXLQJIXWXUHFDVKÁRZV SURÀWVDQGORVVHVDULVLQJZLWKLQWKHFRQVROLGDWHGHQWLW\ the transaction involving the rendering of services can be are eliminated in full. reliably estimated. Construction Management Fees
Construction management fees are recognised when the outcome of the transaction involving the rendering of services can be reliably estimated.
Dividends
Dividend income is recorded in the Income Statement when the right to receive the dividend is established.
41 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 42 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
3) SPECIFIC ACCOUNTING POLICIES Available for Sale Financial Assets 3) SPECIFIC ACCOUNTING POLICIES Repurchase of share capital (CONTINUED) Assets in this category include: (CONTINUED) When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly H )LQDQFLDO,QVWUXPHQWV Cash and cash equivalents H )LQDQFLDO,QVWUXPHQWV FRQWLQXHG attributable costs, it is recognised as a deduction from These comprise cash balances and call deposits. 1RQGHULYDWLYHÀQDQFLDOLQVWUXPHQWVFRPSULVH +HOGWR0DWXULW\,QYHVWPHQWV HTXLW\5HSXUFKDVHGVKDUHVDUHFODVVLÀHGDVWUHDVXU\ investments in equity and debt securities, trade and Loan and other receivables shares and are presented as a deduction from equity. Assets in this category are measured at amortised cost. other receivables, cash and cash equivalents, loans and These are recorded at amortised cost using the effective 7KH&RPSDQ\DQG*URXSKDYHQRWFODVVLÀHGDQ\DVVHWV h) Other Reserves borrowings, and trade and other payables. interest rate method, less any impairment. as Held to Maturity at 31 March 2009 or 31 March 2008. Other reserves relate to retained earnings brought in 1RQGHULYDWLYHÀQDQFLDOLQVWUXPHQWVDUHUHFRJQLVHGLQLWLDOO\ Due from Subsidiaries and Franchisees )LQDQFLDO/LDELOLWLHVDW)DLU9DOXHWKURXJK3URÀWRU/RVV prior to the acquisition of Burger Fuel by the original at fair value plus, for instruments not at fair value through This includes all amounts due from Subsidiaries and shareholders. SURÀWRUORVVDQ\GLUHFWO\DWWULEXWDEOHWUDQVDFWLRQFRVWV Franchisees. Liabilities in this category are either held for trading or are managed with other assets and liabilities which are $ÀQDQFLDOLQVWUXPHQWLVUHFRJQLVHGLIWKH*URXSEHFRPHV Other assets accounted for and evaluated on a fair value basis. Fair a party to the contractual provisions of the instrument. Other assets include the accrual of fees receivable. YDOXHUHSRUWLQJRIWKHVHDVVHWVDQGOLDELOLWLHVUHÁHFWV Financial assets are derecognised if the Group’s Burger Fuel’s risk management process, which includes FRQWUDFWXDOULJKWVWRWKHFDVKÁRZVIURPWKHÀQDQFLDO utilising natural offsets where possible and managing the DVVHWVH[SLUHRULIWKH*URXSWUDQVIHUVWKHÀQDQFLDODVVHW overall risks of the portfolio on a trading basis. to another party without retaining control or substantially all risks and rewards of the asset. Purchases and sales Other Financial Liabilities RIÀQDQFLDODVVHWVDUHDFFRXQWHGIRUDWWUDGHGDWHLH 7KLVFDWHJRU\LQFOXGHVDOOÀQDQFLDOOLDELOLWLHVRWKHUWKDQ the date that the Group commits itself to purchase or WKRVHDWIDLUYDOXHWKURXJKSURÀWRUORVV/LDELOLWLHVLQWKLV sell the asset. Financial liabilities are derecognised if the category are measured at amortised cost and include: *URXS·VREOLJDWLRQVVSHFLÀHGLQWKHFRQWUDFWH[SLUHRUDUH discharged or cancelled. Due to Subsidiaries This includes all amounts due to Subsidiaries. Cash and cash equivalents comprise cash balances and call deposits. Other Liabilities These are recorded at amortised cost. They represent )LQDQFLDOLQVWUXPHQWVDUHFODVVLÀHGLQRQHRIWKHIROORZLQJ liabilities for goods and services provided to Burger Fuel categories at initial recognition: Financial Assets at Fair SULRUWRWKHHQGRIWKHÀQDQFLDO\HDUWKDWDUHXQSDLGDQG 9DOXHWKURXJK3URÀWRU/RVV$YDLODEOHIRU6DOH)LQDQFLDO arise when Burger Fuel becomes obliged to make future Assets, Loans and Receivables, Held to Maturity, Financial payments. These amounts are unsecured. /LDELOLWLHVDW)DLU9DOXHWKURXJK3URÀWRU/RVVDQG2WKHU Financial Liabilities. Loans and borrowings All loans and borrowings are initially recognised at cost, Where Burger Fuel has assets and liabilities with offsetting being the fair value of the consideration received net market risk, it uses mid-market prices as a basis for of issue costs associated with the borrowing. After initial establishing fair values for the offsetting risk positions and recognition, interest-bearing loans and borrowings are applies a bid/offer spread adjustment to the net open subsequently measured at amortised cost using the position as appropriate. effective interest method. If changes in these assumptions to a reasonably possible I ,QYHVWPHQWV DOWHUQDWLYHZRXOGUHVXOWLQDVLJQLÀFDQWO\GLIIHUHQWIDLU value this has been disclosed with a range of possibilities. ,QYHVWPHQWVLQVXEVLGLDULHV
)LQDQFLDO$VVHWVDW)DLU9DOXHWKURXJK3URÀWRU/RVV Investments in subsidiaries are held in the Company’s ÀQDQFLDOVWDWHPHQWVDWFRVW7KHFDUU\LQJDPRXQWRIWKH Assets in this category are either held for trading or investment is reviewed at each balance sheet date to are managed with other assets and liabilities and are determine if there is any evidence of impairment. accounted for and evaluated on a fair value basis. Fair YDOXHUHSRUWLQJRIWKHVHDVVHWVDQGOLDELOLWLHVUHÁHFWV g) Share Capital Burger Fuel’s risk management process, which includes Ordinary shares utilising natural offsets where possible and managing overall risks of the portfolio on a trading basis. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity.
43 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 44 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
3) SPECIFIC ACCOUNTING POLICIES to-day servicing of property, plant and equipment are 3) SPECIFIC ACCOUNTING POLICIES experience and general option holder behaviour), (CONTINUED) UHFRJQLVHGLQSURÀWRUORVVDVLQFXUUHG (CONTINUED) expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market Property, plant and equipment is stated at cost less L )LQDQFH,QFRPHDQG([SHQVH O ,QWDQJLEOH$VVHWV performance conditions attached to the transactions are accumulated depreciation. The following depreciation not taken into account in determining fair value. )RUDOOÀQDQFLDOLQVWUXPHQWVPHDVXUHGDWDPRUWLVHG rates have been used: 7KH*URXS·VLQWDQJLEOHDVVHWVKDYHÀQLWHXVHIXOOLYHVDQG cost, interest income and expense is recorded at the are stated at cost less accumulated amortisation. n) Taxation - Motor Vehicles effective interest rate, which is the rate that exactly The intangible assets are amortised in the Income 18% - 36% diminishing value Income tax expense comprises current and deferred discounts estimated future cash payments or receipts Statement on a straight line basis over the period during tax. Income tax expense is recognised in the Income WKURXJKWKHH[SHFWHGOLIHRIWKHÀQDQFLDOLQVWUXPHQWRU - Leasehold Improvements ZKLFKEHQHÀWVDUHH[SHFWHGWREHGHULYHGZKLFKLV Statement except to the extent that it relates to a shorter period where appropriate, to the net carrying 9% - 26.4% diminishing value years. Where there has been a permanent diminution items recognised directly in equity, in which case it is DPRXQWRIWKHÀQDQFLDODVVHWRUOLDELOLW\7KHFDOFXODWLRQ in the value the balance has been written off in the - Property, Plant and Equipment recognised in equity. WDNHVLQWRDFFRXQWDOOFRQWUDFWXDOWHUPVRIWKHÀQDQFLDO Income Statement. 9.6% - 60% diminishing value instrument (for example, prepayment options) and Current tax is the expected tax payable on the Subsequent expenditure is capitalised only when it includes any fees or incremental costs that are directly The depreciation expense calculated on a diminishing taxable income for the year, using tax rates enacted or LQFUHDVHVWKHIXWXUHHFRQRPLFEHQHÀWVHPERGLHGLQWKH attributable to the instrument and are an integral part value basis would not be materially different from the substantively enacted at the reporting date, and any intangible asset to which it relates. All other expenditure, of the effective interest rate, but not future credit losses. expense as calculated using the rates as allowed by the adjustment to tax payable in respect of previous years. including expenditure on brands is recognised in the The adjusted carrying amount is calculated based on the Income Tax Act 1994. Income Statement when incurred. Deferred tax is provided using the balance sheet original effective interest rate and the change in carrying Where an asset is disposed of, the gain or loss method, providing for temporary differences between amount is recorded as interest income or expense. P (PSOR\HH%HQHÀWV recognised in the Income Statement is calculated as WKHFDUU\LQJDPRXQWVRIDVVHWVDQGOLDELOLWLHVIRUÀQDQFLDO 2QFHWKHUHFRUGHGYDOXHRIDÀQDQFLDODVVHWKDVEHHQ the difference between the sale price and the carrying 6KRUWWHUPEHQHÀWV reporting purposes and the amounts used for taxation reduced due to an impairment loss, interest income amount of the asset. purposes. Temporary differences are not provided for the 6KRUWWHUPHPSOR\HHEHQHÀWREOLJDWLRQVDUHPHDVXUHG continues to be recognised using the original effective initial recognition of assets or liabilities that affect neither k) Leased Assets on an undiscounted basis and are expensed as the interest rate applied to the new carrying amount. The DFFRXQWLQJQRUWD[DEOHSURÀW7KHDPRXQWRIGHIHUUHG related service is provided. Group recognises interest revenue on an accruals basis Operating and Financing Leases tax provided is based on the expected manner of when the services are rendered using the effective A provision is recognised for the amount expected to be realisation or settlement of the carrying amounts of assets Leases in terms of which the Group assumes substantially all interest rate method. SDLGXQGHUVKRUWWHUPFDVKERQXVRUSURÀWVKDULQJSODQVLI and liabilities, using tax rates enacted or substantively WKHULVNVDQGUHZDUGVRIRZQHUVKLSDUHFODVVLÀHGDVÀQDQFH the Group has a present legal or constructive obligation to enacted at the balance sheet date. A deferred tax asset j) Property, Plant and Equipment OHDVHV$VVHWVDFTXLUHGE\ZD\RIÀQDQFHOHDVHDUHVWDWHG pay this amount as a result of past service provided by the is recognised only to the extent that it is probable that initially at an amount equal to the present value of the Recognition and measurement employee and the obligation can be estimated reliably. IXWXUHWD[DEOHSURÀWVZLOOEHDYDLODEOHDJDLQVWZKLFKWKH future minimum lease payments, and are depreciated as asset can be utilised. Deferred tax assets are reduced to Items of property, plant and equipment are measured at GHVFULEHGDERYH/HDVHVWKDWDUHQRWÀQDQFHOHDVHVDUH Share options gifted the extent that it is no longer probable that the related cost less accumulated depreciation and impairment losses. FODVVLÀHGDVRSHUDWLQJOHDVHV2SHUDWLQJOHDVHSD\PHQWV The fair value of options gifted to employees, excluding WD[EHQHÀWZLOOEHUHDOLVHG are recognised as an expense in the periods the amounts Cost includes expenditures that are directly attributable the impact of any non-market vesting conditions such are payable in the Income Statement. to the acquisition of the asset. The cost of self- DVSURÀWDELOLW\RUVDOHVJURZWKWDUJHWVLVUHFRJQLVHGDV constructed assets includes the cost of materials and an employee expense, with a corresponding increase in direct labour, any other costs directly attributable to equity over the period in which the employees become bringing the asset to a working condition for its intended unconditionally entitled to the options. The amount use, and the costs of dismantling and removing the UHFRJQLVHGDVDQH[SHQVHLVDGMXVWHGWRUHÁHFWWKH items and restoring the site on which they are located. actual number of share options that vest. Purchased software that is integral to the functionality The cost of equity settled transactions is recognised, of the related equipment is capitalised as part of that together with a corresponding increase in equity, over equipment. WKHSHULRGLQZKLFKWKHSHUIRUPDQFHLVIXOÀOOHGHQGLQJ When parts of an item of property, plant and equipment on the date on which the relevant employees become have different useful lives, they are accounted for as entitled to the award. separate items (major components) of property, plant Fair value and equipment. The fair value of employee share options is measured Subsequent costs by using the Black-Scholes formula. Measurement inputs The cost of replacing part of an item of property, plant include share price on measurement date, exercise price and equipment is recognised in the carrying amount of of the instrument, expected volatility (based on weighted WKHLWHPLILWLVSUREDEOHWKDWWKHIXWXUHHFRQRPLFEHQHÀWV average historic volatility adjusted for changes expected HPERGLHGZLWKLQWKHSDUWZLOOÁRZWRWKH*URXSDQGLWV due to publicly available information), weighted average cost can be measured reliably. The costs of the day- expected life of the instruments (based on historical
45 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 46 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
3) SPECIFIC ACCOUNTING POLICIES translated at the exchange rate at the end of the period. 3) SPECIFIC ACCOUNTING POLICIES The Group also operates in three geographical segments (CONTINUED) Non-monetary assets and liabilities denominated in (CONTINUED) – New Zealand, Australia and the Middle East. foreign currencies that are measured at fair value are R ,PSDLUPHQWRIQRQÀQDQFLDODVVHWV retranslated to the functional currency at the exchange r) Cash Flow Statement (continued) 4) NEW STANDARDS ADOPTED AND rate at the date that the fair value was determined. INTERPRETATIONS NOT YET ADOPTED 7KHFDUU\LQJDPRXQWVRIWKHJURXS·VQRQÀQDQFLDO Netting of Cash Flows: &HUWDLQFDVKÁRZVKDYHEHHQ Foreign currency differences arising on retranslation are assets, other than inventories and deferred tax assets, netted in order to provide more meaningful disclosure, $WWKHGDWHRIDXWKRULVDWLRQRIWKHVHÀQDQFLDOVWDWHPHQWV UHFRJQLVHGLQSURÀWRUORVV are reviewed at each reporting date to determine DVPDQ\RIWKHFDVKÁRZVDUHUHFHLYHGDQGGLVEXUVHG the following Standards and Interpretations were in issue whether there is any indication of impairment. If any such Foreign operations RQEHKDOIRIFXVWRPHUVDQGUHÁHFWWKHDFWLYLWLHVRIWKH but not yet effective: indication exists then the asset’s recoverable amount customer rather than those of the entity. The assets and liabilities of foreign operations arising New Standards is estimated. For goodwill and intangible assets that on acquisition are translated to New Zealand dollars (i) Cash is considered to be cash on hand and current KDYHLQGHÀQLWHOLYHVRUWKDWDUHQRW\HWDYDLODEOHIRUXVH NZ IFRS 8 Operating Segments, effective for annual at exchange rates at the reporting date. The revenue accounts in banks, net of bank overdrafts. recoverable amount is estimated at each reporting date. periods beginning on or after 1 January 2009. This and expenses of foreign operations, excluding foreign (ii) Investing activities are those activities relating to standard was adopted in the period ended 31 March An impairment loss is recognised if the carrying amount RSHUDWLRQVLQK\SHULQÁDWLRQDU\HFRQRPLHVDUHWUDQVODWHG the acquisition, holding and disposal of property, plant 2008. of an asset exceeds its recoverable amount. Impairment to New Zealand dollars at average exchange rates. and equipment, investments and loans and advances. losses are recognised in the Income Statement. Amendments to Standards Foreign currency differences are recognised in the Investments can include securities not falling within the The recoverable amount of an asset is the greater of foreign currency translation reserve (FCTR). When a GHÀQLWLRQRIFDVK NZ IAS 27 Consolidated and Separate Financial its value in use and its fair value less costs to sell. In foreign operation is disposed of, in part or in full, the Statements, effective for annual periods beginning on (iii) Financing activities are those activities, which result DVVHVVLQJYDOXHLQXVHWKHHVWLPDWHGIXWXUHFDVKÁRZVDUH relevant amount in the FCTR is transferred to the Income or after 1 July 2009. in changes in the size and composition of the capital discounted to their present value using a pre-tax discount Statement. structure of the Group. This includes both equity and debt UDWHWKDWUHÁHFWVFXUUHQWPDUNHWDVVHVVPHQWVRIWKHWLPH NZ IFRS 3 Business Combinations, effective for annual r) Cash Flow Statement QRWIDOOLQJZLWKLQWKHGHÀQLWLRQRIFDVK'LYLGHQGVSDLGLQ YDOXHRIPRQH\DQGWKHULVNVVSHFLÀFWRWKHDVVHW periods beginning on or after 1 July 2009. UHODWLRQWRWKHFDSLWDOVWUXFWXUHDUHLQFOXGHGLQÀQDQFLQJ Basis of Preparation: The Statement of Cash Flows has In respect of other assets, impairment losses recognised in activities. 1HZ,QWHUSUHWDWLRQV EHHQSUHSDUHGXVLQJWKHGLUHFWDSSURDFKPRGLÀHGE\ prior periods are assessed at each reporting date for any netting of certain items as disclosed below. (iv) Operating activities are the principle revenue- NZ IFRIC 11, IFRS 2 – Group and Treasury Share indications that the loss has decreased or no longer exists. producing activities of the entity and other events that Transactions, effective for annual periods beginning An impairment loss is reversed if there has been a change Cash and Cash Equivalents: Cash and cash equivalents DUHQRWLQYHVWLQJRUÀQDQFLQJDFWLYLWLHV on or after 1 March 2007. in the estimates used to determine the recoverable UHÁHFWWKHEDODQFHRIFDVKDQGOLTXLGDVVHWVXVHGLQGD\ amount. An impairment loss is reversed only to the extent to-day cash management of the entity. s) Earnings Per Share NZ IFRIC 12 Service Concession Arrangements, that the asset’s carrying amount does not exceed the effective for annual periods beginning on or after 1 The Group presents basic and diluted earnings per share carrying amount that would have been determined, net January 2008. (EPS) data for its ordinary shares. Basic EPS is calculated of depreciation or amortisation, if no impairment loss had E\GLYLGLQJWKHSURÀWRUORVVDWWULEXWDEOHWRRUGLQDU\ NZ IFRIC 13 Customer Loyalty Programmes, effective been recognised. shareholders of the Burger Fuel Group by the weighted for annual periods beginning on or after 1 July 2008. p) Goods and Services Tax (GST) average number of shares outstanding during the year. 1=,)5,&,$6 ²7KH/LPLWRQD'HÀQHG%HQHÀW 'LOXWHG(36LVFDOFXODWHGE\DGMXVWLQJWKHSURÀWRUORVV The Income Statement has been prepared so that all Asset, Minimum Funding Requirements and their attributable to ordinary shareholders and the weighted components are stated exclusive of GST. All items in the Interaction, effective for annual periods beginning average number of ordinary shares outstanding for the Balance Sheet are stated net of GST, with the exception on or after 1 January 2008. effects of all dilutive potential ordinary shares, which of receivables and payables, which include GST invoiced. comprise convertible notes and share options granted Improvements to IFRS’ was issued in May 2008 and The operations of the Company and Group comprise to employees. contains numerous amendments to IFRS which the both exempt and non-exempt supplies for GST purposes. IASB consider non-urgent but necessary. No changes t) Segment Reporting q) Foreign Currency to accounting policies are expected as a result of A segment is a distinguishable component of the Burger these amendments. Foreign currency transactions Fuel Group that is engaged in providing related products The Directors anticipate that the adoption of these Functional currencies of the entities within the Group and services, which is subject to risks and rewards that Standards and Interpretations in future periods will have are translated at exchange rates at the dates of the are different to those of other segments. QRPDWHULDOÀQDQFLDOLPSDFWRQWKHÀQDQFLDOVWDWHPHQWV transactions. Monetary assets and liabilities denominated Burger Fuel operates in two business segments. Industry of the Group. in foreign currencies at the reporting date are A’s operations are made up of franchising fees, royalties, retranslated to the functional currency at the exchange sales of certain proprietary goods to franchisees and rate at that date. The foreign currency gain or loss on store income from company owned Gourmet Burger monetary items is the difference between amortised cost Restaurants. Industry B is not engaged in any substantive in the functional currency at the beginning of the period, business activity other than the holding of trademarks adjusted for effective interest and payments during and other intangible assets. the period, and the amortised cost in foreign currency
47 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 48 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
5) REVENUE Group Parent 7) INCOME TAX Group Parent 2009 2008 2009 2008 2009 2008 2009 2008 12 Months 9 ½ Months 12 Months 9 ½ Months 12 Months 9 ½ Months 12 Months 9 ½ Months $ $ $ $ $ $ $ $ Sales 4,006,440 2,616,078 - - 3URÀW /RVV EHIRUHLQFRPHWD[H[SHQVH (710,282) (2,149,067) (66,583) 532,757 Franchising Fees 645,350 16,281 - - Tax effect of amounts which are not Training Fees 60,000 - - - deductible in calculating taxable income: Royalties 1,383,318 988,018 - - Amortisation of intangible assets 27,073 19,503 - - Advertising Fees 937,203 694,346 - - 50% entertainment 14,590 10,297 - - Construction Management Fees 31,667 58,500 - - Share options - 5,270 - 5,270 Foreign Exchange Gains 88,513 38,379 - - Make good provision 1,147 5,548 - - Dividends - 1,860 - - Loan Provision - - 400,000 - Subvention Payment 538,027 - - - IPO Costs - 431,070 - - Holiday pay not paid out within 63 days 24,453 - - - Other income 163,539 64,141 48,935 - Other - - 538,027 - 7,854,057 4,477,603 48,935 - 67,263 471,688 938,027 5,270
7D[DEOHSURÀW ORVV (643,019) (1,677,379) 871,444 538,027 6) EXPENSES Group Parent 2009 2008 2009 2008 12 Months 9 ½ Months 12 Months 9 ½ Months Subvention Payments Received / (Paid) - - (871,444) - $ $ $ $ Operating expenses include: Prima Facie Taxation @ 30% (2008: 33%) - - - 177,549 Rental and operating lease costs 575,159 251,118 - - Allowance for impairment - - - - Tax losses for which no deferred income Loss on disposal of property 18,407 580 - - tax was recognised (643,019) (1,677,379) - - Directors’ fees 144,039 138,333 - - Wages and salaries 2,060,898 1,546,889 - - Total income tax expense per income Key management personnel costs: statement - - - 177,549 6DODU\DQGRWKHUVKRUWWHUPEHQHÀWV 646,380 490,029 - - Auditors remuneration – Audit Services – Taxation expense is represented by: Staples Rodway: Current Tax - - - 177,549 $XGLWRIÀQDQFLDOVWDWHPHQWV 40,773 35,142 - - Deferred Tax - - - - - Other services - 1,980 - - - - - 177,549 Donations 210 100 - - Other expenses 4,941,839 4,174,935 938,353 5,367 8,427,705 6,639,106 938,353 5,367
The above key management personnel costs include remuneration of the Chief Executive and the members of the The Group has unrecognised losses of approximately $1,782,571 available to be carried forward and to be offset against executive team. taxable income in the future (2008: $1,677,379). The tax effect of these losses at 30% is $534,771 (2008: $503,214). The ability to carry forward these losses is contingent upon continuing to meet the requirement of the Income Tax Act 2007.
The weighted average tax rate of the Company and Group is effectively 30% based on operating in New Zealand and Australia.
49 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 50 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
8) IMPUTATION CREDITS Group Parent 11) PROPERTY, PLANT & EQUIPMENT 2009 2008 2009 2008 2009 12 Months 9 ½ Months 12 Months 9 ½ Months Motor 2IÀFH Furniture and ,7 $ $ $ $ Vehicles Equipment Fittings Opening Balance 81,312 21,853 44,448 - Group $ $ $ $ Add Cost Resident Withholding Tax 46,225 68,742 42,652 44,448 Balance 1 April 2008 285,091 25,712 250,837 126,463 Imputation Credits Attached to Dividends Received - 614 - - Acquisitions 70,167 - 148,324 49,990 46,225 69,356 42,652 44,448 Disposals - - (11,603) (599) Deduct Foreign exchange movement 408 101 6,869 1,050 Income Tax Refund Received 65,607 9,897 44,448 - Cost at 31 March 2009 355,666 25,813 394,427 176,904 65,607 9,897 44,448 - Net Book Value
Closing Balance 61,930 81,312 44,652 44,448 Balance 1 April 2008 175,196 9,956 163,985 30,936 Depreciation charge (70,383) (3,439) (40,323) (31,120) Additions 70,167 - 148,324 49,990 9) TRADE AND OTHER RECEIVABLES Group Parent 2009 2008 2009 2008 Disposals - - (11,603) (599) $ $ $ $ Foreign exchange movement (1,566) 50 5,882 572 Net Book Value at 31 March 2009 173,414 6,567 266,265 49,779 Trade receivables 852,348 408,834 10,766 - Less allowance for doubtful accounts - - - -
Prepayments 47,853 46,566 - - Kitchen Leasehold Total Income tax receivable 47,223 79,458 42,652 44,448 Equipment ,PSUV Group $ $ $ GST receivable 668 23,921 - - Sundry receivables 82,710 5,005 - - Cost 1,030,802 563,784 53,418 44,448 Balance 1 April 2008 231,352 456,939 1,376,394 Acquisitions 85,792 207,114 561,387 Receivables denominated in currencies other than the functional currency comprise 23.6% of the trade receivables (2008: 6.4%). Disposals - (10,261) (22,463) Foreign exchange movement 9,462 11,068 28,958 10) INVENTORIES Group Parent Cost at 31 March 2009 326,606 664,860 1,944,276 2009 2008 2009 2008 $ $ $ $ Net Book Value Balance 1 April 2008 148,317 337,047 865,437 Raw materials 151,721 90,740 - - Depreciation charge (39,529) (48,745) (233,539) Additions 85,792 207,115 561,388 Disposals - (10,262) (22,464) Foreign exchange movement 9,697 10,476 25,111 Net Book Value at 31 March 2009 204,277 495,631 1,195,933
51 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 52 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
11) PROPERTY, PLANT & EQUIPMENT 12) INVESTMENT IN SUBSIDIARIES (CONTINUED) The Parent company’s investment in the subsidiaries comprises shares at cost.
2008 Motor 2IÀFH Furniture and ,7 Subsidiary Companies &RXQWU\RI,QFRUSRUDWLRQ ,QWHUHVW+HOG ,QWHUHVW+HOG Vehicles Equipment Fittings 2009 2008 Group $ $ $ $ Burger Fuel Limited New Zealand 100% 100% Burger Fuel International Limited New Zealand 100% 100% Cost Burger Fuel Five Cross Roads Limited New Zealand 100% - Balance 14 June 2007 124,796 19,645 135,040 111,200 Burger Fuel (Australia) Pty Limited New Zealand 100% 100% Acquisitions 160,295 6,067 115,797 15,263 Burger Fuel Australia Pty Limited Australia 100% 100% Cost at 31 March 2008 285,091 25,712 250,837 126,463
The principal activities of the subsidiaries are: Net Book Value Burger Fuel Limited – Franchise systems – gourmet burger restaurants. Balance 14 June 2007 72,946 7,484 72,616 40,105 Burger Fuel International Limited – Holds patents, trademarks and licences. Owns the Burger Fuel Australia operation. Depreciation charge (58,045) (3,595) (24,428) (24,432) Burger Fuel Five Cross Roads Limited – Trading operation of the Five Cross Roads store in Hamilton, New Zealand Additions 160,295 6,067 115,797 15,263 Burger Fuel (Australia) Pty Limited – Non Trading Burger Fuel Australia Pty Limited – Franchise systems – gourmet burger restaurants in Australia. Net Book Value at 31 March 2008 175,196 9,956 163,985 30,936
13) LOANS Group Parent 2009 2008 2009 2008 Kitchen Leasehold Total $ $ $ $ Equipment ,PSUV Loan to Harakoa Pty Limited 339,639 341,328 - - Group $ $ $ Loan to Pari Mutuel Limited 194,980 213,615 - - Loan to Fuel Race Team Limited 140,288 132,255 - - Cost Loan to Xotic Burgers Limited - 254,892 - - Balance 14 June 2007 104,120 246,022 740,823 Loan to Burger Fuel Limited - - 7,589,215 5,695,938 Acquisitions 129,153 210,917 637,492 Loan to Burger Fuel International Limited - - 143,000 - Disposals (1,921) - (1,921) Loan from Morgan Monrad Limited (31,111) - - - Balance at 31 March 2008 231,352 456,939 1,376,394 Loan to Janeron Limited 38,000 - - - Loan to VLJK Limited 94,395 - - - Net Book Value 776,191 942,090 7,732,215 5,695,938 Balance 14 June 2007 42,210 151,933 387,294 Depreciation charge (20,545) (25,804) (156,849) Provision against intercompany loan - - (400,000) - Impairment loss (580) - (580) Total loans 776,191 942,090 7,332,215 5,695,938 Additions 129,153 210,918 637,493 Disposals (1,921) - (1,921) Current 90,557 34,255 - - Net Book Value at 31 March 2008 148,317 337,047 865,437 Non-current 685,634 907,835 7,332,215 5,695,938 776,191 942,092 7,332,215 5,695,938 Leased motor vehicles
0RWRUYHKLFOHVDUHOHDVHGXQGHUDQXPEHURIÀQDQFHOHDVHV$W0DUFK WKHQHWFDUU\LQJDPRXQWRIOHDVHG Loan to Hakaroa Pty Limited equipment included within Motor Vehicles was $88,288 (2008: $135,665). Harakoa Pty Limited is a registered Australian company. The loan is secured by way of a guarantee by Jack Ngawiki Tuhi and Hetty Jane McLennan and is subject to an interest rate of 10% p.a. if requested (as at balance date interest had not been requested) by the sole discretion of the franchisor and subject to certain terms and conditions of the franchise agreement. The loan is repayable on demand.
53 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 54 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
Agreement. The loan is repayable over the term of the 13) LOANS (CONTINUED) 14) INTANGIBLE ASSETS franchise agreement and is repayable on demand. Loan to Pari Mutuel Limited 2009 Loan to VLJK Limited This is an advance to assist in setting up a franchise in July 2004. The loan is unsecured, has an interest rate of The loan is unsecured, has an interest rate of 8.5% p.a., 10% p.a., and subject to certain terms and conditions of and subject to certain terms and conditions of the Group Key Money Domain Name Patent Trademarks Total the Franchise Agreement. The loan is repayable in equal franchise agreement. The loan is repayable over the $ $ $ $ $ instalments over the remaining term of the Franchise term of the Franchise Agreement and is repayable on Agreement and is repayable on demand. demand. Cost Loan to Fuel Race Team Limited 3URYLVLRQDJDLQVW,QWHUFRPSDQ\$GYDQFH² Burger Fuel Limited to Burger Fuel Australia Pty Limited Balance 1 April 2008 - 6,972 20,776 145,791 173,539 The loan is unsecured, has an interest rate of 10% p.a., Acquisitions 67,500 2,022 - 56,405 125,927 and subject to certain terms and conditions of the A provision has been made against the loan from Burger franchise agreement. The loan is repayable over the term Fuel Limited to Burger Fuel Australia Pty Limited for Balance at 31 March 2009 67,500 8,994 20,776 202,196 299,466 of the franchise agreement and is repayable on demand. $400,000. While the intention is to repay the loan once WKH$XVWUDOLDQRSHUDWLRQUHWXUQVDSURÀWDSURYLVLRQLV Net book value Loan to Xotic Burgers Limited necessary in light of the Australian entities trading results Balance 1 April 2008 - 2,445 10,780 106,297 119,522 This was an advance to assist in setting up a franchise in during the year under review. March 2008. The loan was unsecured and it was required Additions 67,500 2,022 - 56,405 125,927 WREHUHSDLGGXULQJWKHÀUVW\HDUIURPWKHGDWHWKHRXWOHW Amortisation (19,488) (2,215) (2,078) (25,327) (49,108) LVFRPPLVVLRQHGDQGFRPPHQFHVEXVLQHVV$IWHUWKHÀUVW year the Franchisee could decide to continue to run the Net Book Value at 31 March 2009 48,012 2,252 8,702 137,375 196,341 store of which a term of either three, six or twelve months will be mutually agreed. During this period the loan will be 2008 interest free. After this period the Franchisee was required to repay the loan advance over the remaining term of the Franchise Agreement based on the Franchisee being Group in agreement to continue owning the store and will be Domain Name Patent Trademarks Total subject to an interest rate of 10% p.a., and subject to $ $ $ $ certain terms and conditions of the Franchise Agreement. The franchisee exercised the right to return the store to Cost %XUJHU)XHO/LPLWHGXSRQWKHH[SLUDWLRQRIWKHÀUVW\HDU$ company Burger Fuel Five Cross Roads Limited has been Balance 14 June 2007 3,988 20,776 101,919 126,683 acquired to operate this store. Acquisitions 2,984 - 43,872 46,856 Loan to Burger Fuel Limited Balance at 31 March 2008 6,972 20,776 145,791 173,539
Burger Fuel Limited is a subsidiary company. The loan is unsecured and repayable on demand. Interest on this Net book value DGYDQFHLVÀ[HGDWSD Balance 14 June 2007 3,141 10,553 78,476 92,170 /RDQWR%XUJHU)XHO,QWHUQDWLRQDO/LPLWHG Additions 2,984 - 43,872 46,856 Burger Fuel International Limited is a subsidiary company. Amortisation (3,680) 227 (16,051) (19,504) The loan is unsecured and repayable on demand. Net Book Value at 31 March 2008 2,445 10,780 106,297 119,522 ,QWHUHVWRQWKLVDGYDQFHLVÀ[HGDWSD
Loan from Morgan Monrad Limited
The funds were received from the above franchisee prior to the year end for a deposit on a potential site in the Cuba Street mall. This is refundable should no suitable site be located.
Loan to Janeron Limited
The loan is unsecured, has an interest rate of 5% p.a., and subject to certain terms and conditions of the Franchise
55 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 56 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
15) TRADE AND OTHER PAYABLES 17) CONTRIBUTED EQUITY Number of Share 2009 Shares Capital 2009 2008 2009 2008 Group Parent Opening ordinary shares on issue 53,000,000 45,000,000 8,000,002 2 Group 2009 2008 2009 2008 $ $ $ $ Shares issued 27 July 2007 - 8,000,000 - 8,000,000 Ordinary shares on issue at 31 March 2009 53,000,000 53,000,000 8,000,002 8,000,002 Trade payables 535,632 688,083 - - Payroll liabilities 17,400 53,442 - - Less: IPO Capital Costs (223,432) (223,432) Accrued expenses 81,943 17,465 - - Contributed Equity 7,776,570 7,776,570 634,975 758,990 - - Burger Fuel Worldwide Limited was listed on the New Zealand Alternative Stock Exchange on the 27 July 2007. The Company has 53,000,000 fully paid ordinary shares on issue. All shares have equal voting rights and share equally in Payables denominated in currencies other than the functional currency comprise 30.1% of the trade payables dividends and any surplus on winding up. The shares have no par value. The Company has issued options as per Note 20. (2008: 9.5%).
Group Parent 16) PROVISIONS 18) RETAINED EARNINGS Group Parent 2009 2008 2009 2008 2009 2008 2009 2008 $ $ $ $ $ $ $ $ Store Closure Provision Retained Earnings/(Accumulated Losses) Opening balance 36,730 33,248 - - Opening balance (3,318,678) (547,051) 355,208 - Provisions made during the year 6,672 7,412 - - Pre-acquisition reserve - (622,560) - - Provisions used during the year (3,809) (2,081) - - 1HWVXUSOXV GHÀFLW IRUWKH\HDU (710,282) (2,149,067) (66,583) 355,208 Provisions reversed during the year (5,171) (1,849) - - Closing balance (4,028,960) (3,318,678) 288,625 355,208 34,422 36,730 - -
Holiday Pay Provision Opening balance 136,940 97,398 - - Provisions made during the year 123,175 141,194 - - Provisions used during the year (73,565) (101,652) - - Provisions reversed during the year (1,767) - - - 184,783 136,940 - -
Total provisions 219,205 173,670 - -
Non-current 184,783 70,965 - - Current 34,422 102,705 - - Total provisions 219,205 173,670 - -
Store Closure Provision
This is the make good provision that is set aside to cover the costs of returning premises that are occupied by Burger Fuel back to their original condition, after taking into account the natural wear and tear of these premises.
Holiday Pay Provision
This is the allocation of the 8% annual leave entitlement that each Full-time and Part-time employee is entitled to as part of their employment, which is accrued throughout the year.
57 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 58 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
19) RESERVES Group Parent 20) SHARE OPTIONS (CONTINUED) 2009 2008 2009 2008 Options to Staff $ $ $ $ (DFKVWDIIPHPEHUWKDWUHFHLYHGJLIWHGVKDUHVRQWKHÁRDWLQJRIWKH&RPSDQ\ZHUHDOVRJLIWHGRSWLRQVDWWKHVDPH WLPHRQWKHEDVLVRIRQH2SWLRQIRUHYHU\ÀYHVKDUHVWKDWZHUHJLIWHG6WDIIDUHGHÀQHGWRLQFOXGH,QGHSHQGHQW Foreign Currency Translation Reserve Directors, Company Secretary, Existing Franchisees, Burger Fuel Worldwide Employees and System Staff. Opening Balance (13,565) - - - Movements (47,672) (13,565) - - 2009 Number Expiry date Exercise Fair value at price balance date Closing balance (61,237) (13,565) - - $ $ $ $ Options to Shareholders Other Reserves Allotted during the year - 26 / 2 / 09 1.00 - Opening Balance 184,799 - - - Options to Staff Movements - 184,799 - - Allotted during the year - 26 / 2 / 09 1.00 - Closing balance 184,799 184,799 - - Outstanding at 31 March 2009 - -
Share Option Reserve The Company had no legal or constructive obligation to repurchase or settle the options in cash, hence they lapsed at Opening Balance 5,269 - 5,269 - 26 February 2009. Movements - 5,269 - 5,269 Closing balance 5,269 5,269 5,269 5,269 2008 Number Expiry date Exercise Fair value at price balance date $ $ $ $ Total Reserves 128,831 176,503 5,269 5,269 Options to Shareholders Allotted during the year 1,600,000 26 / 2 / 09 1.00 - Nature and purpose of reserves Options to Staff Foreign Currency Translation Reserve Translation differences arising on the translation of the results of subsidiaries with functional currencies other than New Allotted during the year 188,487 26 / 2 / 09 1.00 5,269 Zealand dollars are recognised directly in the Foreign Currency Translation Reserve. The cumulative amounts are Outstanding at 31 March 2009 1,788,487 5,269 released to the income statement upon disposal of these subsidiaries.
Other Reserves The fair value of the options is determined using the Black-Scholes formula. The model inputs were: the share price of This reserves consists of retained earnings prior to the acquisition of Burger Fuel Worldwide Limited. $0.45, the exercise price of $1.00, expected volatility of 60% percent, a term of 1.5 years and a risk free interest rate of 6.36% percent. The fair value of the liability is remeasured at each reporting date. The Company has no legal or Share Option Reserve constructive obligation to repurchase or settle the options in cash. This reserve takes into account the fair value of share options that have been issued to staff of the Group, but lapsed during the year. 21) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT 20) SHARE OPTIONS 6LJQLÀFDQWDFFRXQWLQJSROLFLHV
Options to Shareholders 'HWDLOVRIWKHVLJQLÀFDQWDFFRXQWLQJSROLFLHVDQGPHWKRGVDGRSWHGLQFOXGLQJWKHFULWHULDIRUUHFRJQLWLRQWKHEDVLVRI PHDVXUHPHQWDQGWKHEDVLVRQZKLFKLQFRPHDQGH[SHQVHVDUHUHFRJQLVHGLQUHVSHFWRIHDFKFODVVRIÀQDQFLDODVVHW The shares issued under the Initial Public Offering and those transferred by the Founding Shareholders, were issued ÀQDQFLDOOLDELOLW\DQGHTXLW\LQVWUXPHQWDUHGLVFORVHGLQQRWHWRWKHÀQDQFLDOVWDWHPHQWV together with 1,600,000 Options to subscribe for further ordinary shares in the Company. Investors received one Option IRUHYHU\ÀYHVKDUHVDFTXLUHG+ROGHUVRIWKH2SWLRQVDUHHQWLWOHGWRVXEVFULEHIRURQHIXOO\SDLGRUGLQDU\VKDUHIRUHYHU\ one Option held, on payment of the exercise price of $1.00 per share subscribed for. No payment is required to be 2008 Group Parent made in respect of the Option unless an Option is exercised. 2009 2008 2009 2008 $ $ $ $ On 27 July 2007, 1,600,000 options were allotted, and on 20 November 2007 another 200,000 were issued (of which 188,487 have been allotted) and may be exercised during a one month period that starts on 27 January 2009 and ends Financial assets one month later. They have subsequently lapsed as they were not exercised during this period. Loans and receivables (including cash and cash equivalents) 3,228,986 4,534,749 8,828,791 8,493,578 Financial liabilities Trade Payables 535,632 688,083 - -
59 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 60 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
21) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED) 21) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
Financial risk management objectives ,QWHUHVWUDWHVHQVLWLYLW\DQDO\VLV
0DQDJHPHQWSURYLGHVVHUYLFHVWRWKHEXVLQHVVFRRUGLQDWHVDFFHVVWRGRPHVWLFDQGLQWHUQDWLRQDOÀQDQFLDOPDUNHWV The sensitivity analysis below has been determined based on the exposure to interest rates for both derivatives and PRQLWRUVDQGPDQDJHVWKHÀQDQFLDOULVNVUHODWLQJWRWKHRSHUDWLRQVRIWKH&RPSDQ\DQG*URXSWKURXJKLQWHUQDOULVN QRQGHULYDWLYHLQVWUXPHQWVDWWKHEDODQFHVKHHWGDWH)RUÁRDWLQJUDWHOLDELOLWLHVWKHDQDO\VLVLVSUHSDUHGDVVXPLQJ reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency the amount of liability outstanding at the balance sheet date was outstanding for the whole year. A 100 basis point ULVNIDLUYDOXHLQWHUHVWUDWHULVNDQGSULFHULVN FUHGLWULVNOLTXLGLW\ULVNDQGFDVKÁRZLQWHUHVWUDWHULVN increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates. 7KH&RPSDQ\DQG*URXSVHHNWRPLQLPLVHWKHHIIHFWVRIWKHVHULVNVE\XVLQJGHULYDWLYHÀQDQFLDOLQVWUXPHQWVWRKHGJH WKHVHULVNH[SRVXUHV7KH&RPSDQ\DQG*URXSGRQRWHQWHULQWRRUWUDGHÀQDQFLDOLQVWUXPHQWVLQFOXGLQJGHULYDWLYH If interest rates had been 100 basis points higher or lower and all other variables were held constant, the Group’s ÀQDQFLDOLQVWUXPHQWVIRUVSHFXODWLYHSXUSRVHV operating result for the year ended 31 March 2009 would decrease/increase by $1,374 (2008: $1,694). This is attributable WRWKH*URXS·VH[SRVXUHWRLQWHUHVWUDWHVRQLWVYDULDEOHUDWHERUURZLQJVRQÀQDQFHOHDVHV The management reports quarterly to the Company’s audit committee, an independent body that monitors risk and policies implemented to mitigate risk exposures. Credit Risk
Market risk Credit risk is the risk that the counter party to a transaction with the Group will fail to discharge its obligations, causing WKH*URXSWRLQFXUDÀQDQFLDOORVV7KH&RPSDQ\DQG*URXSKDYHDGRSWHGDSROLF\RIRQO\GHDOLQJZLWKFUHGLWZRUWK\ 7KH*URXS·VDFWLYLWLHVH[SRVHLWSULPDULO\WRWKHÀQDQFLDOULVNVRIFKDQJHVLQIRUHLJQFXUUHQF\H[FKDQJHUDWHVDQGLQWHUHVW FRXQWHUSDUWLHVDQGREWDLQLQJVXIÀFLHQWFROODWHUDOZKHUHDSSURSULDWHDVDPHDQVRIPLWLJDWLQJWKHULVNRIÀQDQFLDOORVV UDWHV0DUNHWULVNH[SRVXUHVDUHDQDO\VHGE\VHQVLWLYLW\DQDO\VLV7KHUHKDVEHHQVLJQLÀFDQWFKDQJHWR%XUJHU)XHO·V from defaults. The credit ratings of its counterparties are continuously monitored by management and the aggregate exposure to market risks or the manner in which it manages and measures the risk, other than the opening of a USD value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by account in April 2009 for the receipt of USD royalties and franchise fees expected for the Middle East. counterparty limits that are reviewed and approved by the audit committee annually. Foreign currency risk management Financial Instruments that potentially subject the Group to concentrations of credit risk consist principally of cash, trade The Company undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate GHEWRUVIUDQFKLVHHORDQVDQGDGYDQFHV7KHFDUU\LQJDPRXQWRIÀQDQFLDODVVHWVUHSUHVHQWVWKH*URXS·VPD[LPXP ÁXFWXDWLRQVDULVH credit exposure; however the Company and Group consider the risk of non-recovery of these accounts to be minimal.
Foreign currency sensitivity analysis 7KH&RPSDQ\DQG*URXSGRQRWKDYHDQ\VLJQLÀFDQWFUHGLWULVNH[SRVXUHWRDQ\VLQJOHFRXQWHUSDUW\RUDQ\JURXSRI FRXQWHUSDUWLHVKDYLQJVLPLODUFKDUDFWHULVWLFV&RXQWHUSDUWLHVDUHGHÀQHGDVKDYLQJVLPLODUFKDUDFWHULVWLFVLIWKH\DUH The Group is mainly exposed to Australian dollars. The following table details the Group’s sensitivity to a 10% increase related entities. Concentration of credit risk did not exceed 15% of gross monetary assets at any time during the year and decrease in the NZ$ against the Australian currency. 10% is the sensitivity rate used when reporting foreign currency ended 31 March 2009 or 31 March 2008. The credit risk on liquid funds is limited because the counterparties are banks risk internally to key management personnel and represents management’s assessment of the reasonably possible with high credit-ratings assigned by international credit-rating agencies. change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at year end for a 10% change in foreign currency rates. 7KHFDUU\LQJDPRXQWRIÀQDQFLDODVVHWVUHFRUGHGLQWKHÀQDQFLDOVWDWHPHQWVZKLFKLVQHWRILPSDLUPHQWORVVHV represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained. The sensitivity analysis includes external loans as well as loans to foreign operations within the Group where the The maximum credit risk exposures are: denomination of the loan is in a currency other than the currency of the lender or the borrower. A positive number EHORZLQGLFDWHVDQLQFUHDVHLQSURÀWZKHUHWKH1=VWUHQJWKHQVDJDLQVWWKHUHOHYDQWFXUUHQF\ Group Parent 2009 2008 2009 2008 10 % strengthening 10 % weakening $ $ $ $ Group Parent Cash and Bank Balances 1,517,069 3,154,899 1,085,810 2,797,640 2009 2008 2009 2008 $ $ $ $ Loans, Advances and Receivables 1,628,539 1,350,924 7,742,981 5,695,938 3URÀWRU ORVV 6,240 2,642 (6,864) (3,229) Maximum exposures are net of any recognised provisions.
In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year Cash HQGH[SRVXUHGRHVQRWUHÁHFWWKHH[SRVXUHGXULQJWKH\HDU The Company and Group places all cash deposits with ANZ National Bank Limited in New Zealand, and ANZ Bank in Australia.
Receivables
The Company and Group has a credit policy, which is used to manage its exposure to credit risk. As part of this policy, OLPLWVRQH[SRVXUHVKDYHEHHQVHWOHQGLQJLVVXEMHFWWRGHÀQHGFULWHULDDQGORDQVDUHPRQLWRUHGRQDUHJXODUEDVLV
61 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 62 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
21) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED) 21) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
,QWHUHVW5DWH5LVN ,QWHUHVW5DWH5LVN &RQWLQXHG
,QWHUHVWUDWHULVNLVWKHULVNWKDWWKHYDOXHRIWKH&RPSDQ\DQG*URXS·VDVVHWVDQGOLDELOLWLHVZLOOÁXFWXDWHGXHWRFKDQJHV ,QWHUHVW5DWH5LVN3URÀOH &RQWLQXHG in market interest rates. Both the Company and the Group are exposed to interest rate risk primarily through its cash balances and advances. PARENT Weighted average 2009 There are no contractual rights in respect of interest rate re-pricing on its assets and liabilities that expose either the effective Variable Less than 1 Non interest Company or the Group to any material risk interest rate % interest rate % year bearing Total ,QWHUHVW5DWH5LVN3URÀOH $ $ $ Financial assets GROUP Weighted Cash and cash equivalent 3.15% - 1,085,810 - 1,085,810 average 2009 Related party receivables 10.00% - 7,732,215 - 7,732,215 effective Variable Less than 1 Non interest interest rate % interest rate % year bearing Total 8,818,025 - 8,818,025 $ $ $ 2008 Weighted average Financial assets effective Variable Less than 1 Non interest Cash and cash equivalent 1.66% - 1,517,069 - 1,517,069 interest rate % interest rate % year bearing Total Loans to franchisees 8.90% - 777,912 - 777,912 $ $ $ Trade and other receivables - - 983,579 983,579 983,579 Financial assets Current tax receivables - - 47,223 47,223 47,223 Cash and cash equivalent 8.52% - 2,797,640 - 2,797,640 3,325,783 1,473,446 3,325,783 Related party receivables 10% - 5,695,938 - 5,695,938 Financial Liabilities 8,493,578 - 8,493,578 Finance leases 12.25 - 13.81% - 137,437 - 137,437 Trade and other payables - - 634,993 634,993 634,993 Liquidity Risk 772,430 634,993 772,430 /LTXLGLW\ULVNLVWKHULVNWKDWWKH&RPSDQ\DQG*URXSZLOOHQFRXQWHUGLIÀFXOW\LQUDLVLQJIXQGVDWVKRUWQRWLFHWRPHHW FRPPLWPHQWVDVVRFLDWHGZLWKÀQDQFLDOLQVWUXPHQWV7KH&RPSDQ\DQG*URXSPDLQWDLQVVXIÀFLHQWIXQGVDQGIDFLOLWLHVWR 2008 Weighted PHHWWKHFRPPLWPHQWVEDVHGRQKLVWRULFDODQGIRUHFDVWHGFDVKÁRZUHTXLUHPHQWV7KHH[SRVXUHLVEHLQJUHYLHZHGRQ average an ongoing basis from daily procedures to monthly reporting. effective Variable Less than 1 Non interest interest rate % interest rate % year bearing Total Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity $ $ $ risk management framework for the management of short, medium and long-term funding and liquidity management requirements. Liquidity risk is managed by maintaining adequate reserves, banking facilities and reserve borrowing facilities, Financial assets E\FRQWLQXRXVO\PRQLWRULQJIRUHFDVWDQGDFWXDOFDVKÁRZVDQGPDWFKLQJWKHPDWXULW\SURÀOHVRIÀQDQFLDODVVHWVDQGOLDELOLWLHV Cash and cash equivalent 7.86% - 3,154,899 - 3,154,899 Capital Management Loans to franchisees 10.00% - 345,870 - 345,870 The Company and Group’s capital includes share capital, reserves and retained earnings. The Company and Group Loans to franchisees - - 596,220 596,220 596,220 DUHQRWVXEMHFWWRDQ\H[WHUQDOO\LPSRVHGFDSLWDOUHTXLUHPHQWVRWKHUWKDQWKRVHLPSRVHGE\WKHEDQNIRUÀQDQFLQJ Trade and other receivables - - 484,326 484,326 484,326 Policies in respect of capital management and allocation are reviewed regularly by the Board of Directors. There have Current tax receivables - - 79,458 79,458 79,458 been no material changes in the management of capital during the period. 4,660,773 1,160,004 4,660,773 Fair Values
Financial Liabilities 7KHFDUU\LQJDPRXQWRIFDVKDQGDGYDQFHVUHÁHFWWKHLUWUXHYDOXHV7KHUHDUHQRRII%DODQFH6KHHWÀQDQFLDO Finance leases 12.25 -13.81 % - 169,417 - 169,417 instruments, to which the Company or Group is a party, in place at balance date.
Trade and other payables - - 758,990 758,990 758,990 7KHIROORZLQJPHWKRGVDQGDVVXPSWLRQVZHUHXVHGWRHVWLPDWHWKHIDLUYDOXHRIHDFKFODVVRIÀQDQFLDOLQVWUXPHQW 928,407 758,990 928,407 (a) Cash, Bank Balances and Trade Creditors
The carrying amounts of these balances are equivalent to their fair value.
(b) Receivables
Each loan has particular circumstances that determine its fair value. The carrying amounts of the loans net of allowances best represent their fair value.
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63 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 64 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
21) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED) 21) FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
Liquidity Risk (continued) Liquidity Risk (continued)
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GROUP Designated at Loans & Other Total carrying PARENT 2009 fair value receivables amortised cost amount Fair value Designated at Loans & Other Total carrying 2009 fair value receivables amortised cost amount Fair value $ $ $ $ $ $ $ $ Assets Assets Advances - 685,634 - 685,634 685,634 Advances - 7,732,215 - 7,732,215 7,732,215 Total non-current assets - 685,634 - 685,634 685,634 Total non-current assets - 7,732,215 - 7,732,215 7,732,215 Trade and other receivables - 983,579 - 983,579 983,579 Other investments 2 - - 2 2 Cash and cash equivalents 1,517,069 - - 1,517,069 1,517,069 Trade and other receivables - 53,418 - 53,418 53,418 Advances - 90,557 - 90,557 90,557 Cash and cash equivalents 1,085,810 - - 1,085,810 1,085,810 Total current assets 1,517,069 1,074,136 - 2,591,205 2,591,205 Total current assets 1,085,812 53,418 - 1,139,230 1,139,230
Total assets 1,517,069 1,759,770 - 3,276,839 3,276,839 Total assets 1,085,812 7,785,633 - 8,871,445 8,871,445 Liabilities Liabilities Finance leases - 101,252 - 101,252 101,252 Trade and other payables 177,549 - - 177,549 177,549 Total non-current liabilities - 101,252 - 101,252 101,252 Trade and other payables 634,993 - - 634,993 634,993 Total current liabilities 177,549 - - 177,549 177,549 Finance leases - 36,184 - 36,184 36,184 Total current liabilities 634,993 36,184 - 671,177 671,177 Total liabilities 177,549 - - 177,549 177,549
2008 Total liabilities 634,993 137,436 - 774,429 772,429 Designated at Loans & Other Total carrying fair value receivables amortised cost amount Fair value 2008 Designated at Loans & Other Total carrying $ $ $ fair value receivables amortised cost amount Fair value Assets $ $ $ $ $ Advances - 5,695,938 - 5,695,938 5,695,938 Assets Total non-current assets - 5,695,938 - 5,695,938 5,695,938 Advances - 907,835 - 907,835 907,835 Other investments 2 - - 2 2 Total non-current assets - 907,835 - 907,835 907,835 Trade and other receivables - 44,448 - 44,448 44,448 Trade and other receivables - 484,326 - 484,326 484,326 Cash and cash equivalents 2,797,640 - - 2,797,640 2,797,640 Cash and cash equivalents 3,154,899 - - 3,154,899 3,154,899 Total current assets 2,797,642 44,448 - 2,824,090 2,824,090 Advances - 34,255 - 34,255 34,255 Total current assets 3,154,899 518,581 - 3,673,480 3,673,480 Total assets 2,797,642 5,740,386 - 8,538,028 8,538,028 Liabilities Total assets 3,154,899 1,426,416 - 4,581,315 4,581,315 Trade and other payables 177,549 - - 177,549 177,549 Liabilities Total current liabilities 177,549 - - 177,549 177,549 Finance leases - 137,436 - 137,436 137,436 Total non-current liabilities - 137,436 - 137,436 137,436 Total liabilities 177,549 - - 177,549 177,549 Trade and other payables 758,990 - - 758,990 758,990 Finance Leases 31,981 31,981 31,981 Total current liabilities 758,990 31,981 - 758,990 758,990
Total liabilities 758,990 169,417 - 928,407 928,407
65 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 66 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
22) COMMITMENTS 22) COMMITMENTS (CONTINUED)
Lease Commitments ,QGHPQLW\*XDUDQWHHV
Operating leases relate to the phone system, motor vehicle rental and store leases. Non-cancellable operating lease Burger Fuel has term deposits in place to cover certain commitments the banks have provided: rentals are payable as follows: GROUP 2009 2008 $ $ 2009 2008 Lease of premises at Bayfair Shopping Centre 17,977 17,977 GROUP Total future Total future Datacom – Burger Fuel Five Cross Roads Limited 7,500 - minimum minimum Datacom – Burger Fuel Limited 50,000 - payments payments Carnet de Passage (Ford Fairmont) - 19,250 $ $ NZX Bond 15,000 15,000 Less than one year 1,372,725 1,465,743 Bond for Newtown Premises 31,158 29,682 %HWZHHQRQHDQGÀYH\HDUV 3,916,519 3,858,220 Bond for Kings Cross Premises 37,283 35,517 0RUHWKDQÀYH\HDUV 789,959 1,482,188 Bond for Shell Card 2,421 2,306 6,079,203 6,806,151 161,339 119,732
Payments made under operating leases are recognised in the Income Statement on a straight line basis over the term of the lease. Burger Fuel holds the head lease over all of its Franchisee sites with the exception of Takapuna, and in turn 23) RELATED PARTY TRANSACTIONS licenses each of these sites to its Franchisees under the same terms and conditions. ,QWHUHVWVRI'LUHFWRUVLQ&HUWDLQ7UDQVDFWLRQV
Finance leases relate to motor vehicles and are payable as follows: Certain Directors have relevant interests in a number of companies with which Burger Fuel has transactions in the normal course of business. A number of Burger Fuel’s Directors are also non-executive Directors of other companies. 2009 2008 Any transactions undertaken with these entities have been entered into on an arms-length commercial basis. GROUP Total future Total future Transactions with Related Parties minimum minimum The following are related entities to the Group: payments ,QWHUHVW Principal payments ,QWHUHVW Principal Relationship Nature 2009 Closing Balance 2008 Closing $ $ $ $ $ $ of transaction Value of Receivable/ Value of Balance Less than one year 51,181 14,997 36,184 51,181 19,200 31,981 transactions (Payable) transactions Receivable/ %HWZHHQRQHDQGÀYH\HDUV 114,427 13,175 101,252 51,181 14,997 36,184 during the As at 31 March during the (Payable) 0RUHWKDQÀYH\HDUV - - - 114,427 13,175 101,252 year 2009 year As at 31 March 2008 165,608 28,172 137,436 216,789 47,372 169,417 Common RHH Limited Directorship Advance - - 2,505,644 - Capital Commitments Common Total capital expenditure contracted for at balance date was as follows: JCR Capital Limited Directorship Advance - - 32,162 - Jocargl Holdings Common Lease of 2009 2008 Limited Directorship +HDG2IÀFH 205,000 - 170,000 - GROUP Total future Total future Common minimum minimum Redmond Enterprises Directorship Consultancy 120,000 - 80,000 - payments payments Common Marketing Key Money - Taupo - 50,000 Redmond Enterprises Directorship Consultant - - 74,796 - Kitchen Equipment - Satellite - 15,450 Common Redmond Enterprises Directorship IT Consultant 44,583 - 27,921 - IT - Ponsonby - 7,400 Burger Fuel Furnitur & Fixtures - Admin - 2,700 International Limited Subsidiary Advance 143,000 143,000 - - - 75,550 Burger Fuel Limited Subsidiary Advance 1,199,019 6,491,375 5,292,356 5,292,355
At 31 March 2009, capital expenditure amounting to $Nil (2008: $75,550) had been committed under contractual Interest arrangements with substantially all payments due within one year. Burger Fuel Limited Subsidiary Received 694,257 1,097,840 403,583 403,583
All of the above are related parties of the Group. Other than the entities listed above, there are no additional related parties with whom material transactions have taken place.
67 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 68 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
24) CONTINGENCIES 26) SEGMENT REPORTING (CONTINUED)
There were no contingent liabilities at balance date. (2008:NIL) 2009 ,QGXVWU\$ ,QGXVWU\% Consolidated 25) NET CASH FLOWS APPLIED TO OPERATING ACTIVITIES 12 Months 12 Months 12 Months $ $ $ Group Parent Revenue 2009 2008 2009 2008 Sales 4,006,440 - 4,006,440 12 Months 9 ½ Months 12 Months 9 ½ Months Royalties 1,383,318 - 1,383,318 Franchising Fees 645,350 - 645,350 1HWVXUSOXV GHÀFLW DIWHUWD[ (710,282) (2,149,067) (66,583) 355,208 Training Fees 60,000 - 60,000 Add: Non-cash items Construction Management Fees 31,667 - 31,667 Amortisation 49,108 19,504 - - Advertising Fees 937,204 - 937,204 Depreciation 233,539 156,849 - - Foreign Exchange Gain 88,513 - 88,513 Issue of options - 5,269 - 5,269 Sundry Income 701,565 - 701,565 Loss on sale of property, Interest Income 161,171 - 166,171 plant and equipment 18,407 580 - - Total Revenue 8,020,228 - 8,020,228 Unrealised exchange loss / (gain) (88,513) (38,379) - - Loan Provision - - 400,000 - Segment Result (679,160) (31,122) (710,282) 212,541 143,823 400,000 5,269 Add: Working capital movements Segment Assets 4,719,727 148,330 4,868,057 (Increase) in trade and other receivables (522,505) (206,624) (8,970) - (Increase) in inventories (60,981) (21,450) - - 2008 ,QGXVWU\$ ,QGXVWU\% Consolidated Increase / (decrease) in taxation payable 118,687 (110,455) - 133,101 9 ½ Months 9 ½ Months 9 ½ Months Increase in accounts payable and accruals (141,680) 357 - $ $ $ (606,479) (338,172) (8,970) 133,101 Revenue Sales 2,616,078 - 2,616,078 1HWFDVKÁRZVSURYLGHGIURP DSSOLHGWR Royalties 988,018 - 988,018 operating activities (1,104,220) (2,343,416) 324,447 493,578 Franchising Fees 16,281 - 16,281 Construction Management Fees 58,500 - 58,500 26) SEGMENT REPORTING Advertising Fees 694,346 - 694,346 Business Segments Foreign Exchange Gain 38,379 - 38,379 The Group operates in two industries – Industry A and Industry B. Industry A’s operations are made up of franchising fees, Sundry Income 66,001 - 66,001 royalties, sales of certain proprietary goods to franchisees and store income from company owned stores. Industry A is Interest Income 232,989 - 232,989 in the business of Franchise Systems – Gourmet Burger Restaurants. Industry B’s operations are made up of Intellectual Property holdings which do not amount to any substantive business activity and the segment result is due to the Total Revenue 4,710,592 - 4,710,592 amortisation of intangible assets. Segment Result (2,129,563) (19,504) (2,149,067)
Segment Assets 5,616,950 119,522 5,736,472
69 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 70 BURGER FUEL WORLDWIDE LIMITED BURGER FUEL WORLDWIDE LIMITED NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2009 FOR THE YEAR ENDED 31 MARCH 2009
26) SEGMENT REPORTING (CONTINUED) 27) SUBSEQUENT EVENTS
Geographical Segments There are no subsequent events post balance date. (2008: On May 5 Burger Fuel Worldwide Limited announced that a master license agreement had been signed between Burger Fuel and Dubai based Alphamed Group, a subsidiary of The Group operates in three geographical segments – New Zealand, Australia, and the Middle East. All the segments the Al Khayyat Group.) operations are made up 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. 28) ACQUISITION OF SUBSIDIARIES
2009
2009 New Zealand Australia Middle East Consolidated On the 2nd March 2009, the Company acquired the share capital of the Burger Fuel Five Cross Roads Limited. 12 Months 12 Months 12 Months 12 Months The share capital has been acquired by Burger Fuel Worldwide Limited with the deemed consideration for this $ $ $ $ acquisition being $297,914. The Net assets of the company at this time were off set with a loan from Burger Fuel Limited Revenue to cover this acquisition. The assets and liabilities as of 2nd March 2009 arising from the acquisition are as follows: Sales 2,958,475 1,047,965 - 4,006,440 Acquiree’s Royalties 1,313,960 69,358 - 1,383,318 carrying amount Franchising Fees 135,000 - 510,350 645,350 $ Training Fees 60,000 - - 60,000 Inventories 11,689 Construction Management Fees 31,667 - - 31,667 Property, plant and equipment 289,968 Advertising Fees 891,054 46,150 - 937,204 Trade and other payables (3,743) Foreign Exchange Gain - 88,513 - 88,513 Term Loans (297,914) Sundry Income 701,281 284 - 701,565 Net Assets - Interest Income 159,004 7,167 - 166,171 Total Revenue 6,250,441 1,259,437 510,350 8,020,228 This is represented by: Issue of ordinary shares 1,000 Segment Result (694,258) (294,290) 278,266 (710,282) Unpaid Capital (1,000) - Segment Assets 3,721,196 934,597 212,264 4,868,057
2008 New Zealand Australia Consolidated 9 ½ Months 9 ½ Months 9 ½ Months $ $ $ Revenue Sales 2,159,095 456,983 2,616,078 Royalties 938,315 49,703 988,018 Franchising Fees 16,281 - 16,281 Construction Management Fees 58,500 - 58,500 Advertising Fees 649,082 45,264 694,346 Foreign Exchange Gain - 38,379 38,379 Sundry Income 64,785 1,216 66,001 Interest Income 228,752 4,237 232,989 Total Revenue 4,114,810 595,782 4,710,592
Segment Result (1,752,793) (396,274) (2,149,067)
Segment Assets 4,804,410 932,062 5,736,472
71 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 72 BURGER FUEL WORLDWIDE LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) BURGER FUEL WORLDWIDE LIMITED FOR THE YEAR ENDED 31 MARCH 2009 COMPANY DIRECTORY AS AT 31 MARCH 2009
28) ACQUISITION OF SUBSIDIARIES (CONTINUED) 5HJLVWHUHG2IÀFH 2008 Grant Thornton Auckland Limited On the 14 June 2007, the Company acquired the share capital of the Burger Fuel Group. The acquisition of these 152 Fanshawe Street subsidiaries has been accounted for using the pooling of interests method of accounting as detailed in note 3 (a). Auckland The deemed consideration for this acquisition was $2 due to each of the individual companies within the Burger Fuel Group having a negative Net Asset position. Company Number
The assets and liabilities as of 14 June 2007 arising from the acquisition are as follows: 1947191
Acquiree’s 'DWHRI,QFRUSRUDWLRQ carrying amount 14 June 2007 $ Cash and cash equivalents 429,604 Directors
Trade and other receivables 263,905 Peter Brook Inventories 69,289 Alan Dunn Christopher Mason Property, plant and equipment 387,295 Josef Roberts Loans 798,551 Intangible assets 92,171 Board Executives Trade and other payables (774,841) Paul Devereux (Company Secretary) Provisions (161,760) $QGUHZ.LQJVWRQH &KLHI)LQDQFLDO2IÀFHU Shareholders advance account (11,313) Accountant Lease liabilities (19,090) Grant Thornton Auckland Limited Term Loans (2,068,290) Level 4 Net Assets (994,479) 152 Fanshawe Street, Auckland
Bankers This is represented by: ANZ Bank Issue of ordinary shares 2 National Bank Foreign currency translation reserve (9,669) Pre-acquisition reserve (622,560) Solicitors Merger reserve 184,799 Kensington Swan, 18 Viaduct Harbour Avenue, Auckland Opening retained earnings (547,051) Howard-Smith & Co, PO Box 33 339, Takapuna (994,479) Business Headquarters
38 Ponsonby Road, Ponsonby, Auckland
Auditor Staples Rodway Level 9, Tower Centre 4XHHQ6WUHHW$XFNODQG
Jamie Barrow - BurgerFuel Guy in the Sky
73 BURGER FUEL WORLDWIDE LIMITED ANNUAL REPORT 2009 74 AS PART OF THE BURGERFUEL ENVIRO-MENTAL PROGRAMME, ALL EFFORTS HAVE BEEN MADE TO NOT KILL A TREE BY DISTRIBUTING THIS ELECTRONICALLY. PLEASE CONSIDER MOTHER EARTH BEFORE PRINTING.