Burger Fuel 2010 Full Year Profit Analysis

I pointed out last week that Burger Fuel Worldwide [BFW.NZ] 2010 full year profit should be better than the 2009 result because of the surge in the growth of the fast food sector over the last couple of years and they have done better, with a narrower loss of just over half a million.

The vast bulk of revenue for this franchising company still comes via direct sales from company owned stores rather than royalties from franchisees but these royalties should rise as the company expands in the Middle East where it has done exceptionally well.

In New Zealand same stores sales for franchisee/company owned stores increased by just over 5%. When a new store in Mission Bay is included this increase amounts to over 12%. A good result but on a par with the likes of Restaurant Brands Ltd [RBD.NZ] which increased sales in the 2010 year by just under 5% (see 2010 Annual report for details)

No stores were opened in New Zealand during 2010 and it appears saturation point may have been reached with 27 stores a reasonable number given the size of the premium end of the fast food market that BFW operates in.

A big worry for Burger Fuel management will be its two beach-head stores in Sydney, Australia one of which is situated in Kings Cross.

There was much fanfare about the Kings Cross store being a hugely visible entry into OZ, with big expansion plans, with an emphasis by management on the marketing possibilities that the high exposure site had for foreign visitors to the "Cross" spreading the Burger Fuel word on a global scale.

Well that hasn't happened and as I pointed out in 2007 the store operating costs would be a huge burden on sustainable profitability and that, unfortunately, has turned out to be the case.

Looking at the 2011 year the company is set to grow in the Middle East but just get by in New Zealand.

Australia will be a big burden on such a small company and management will need to focus on costs or consider picking up sticks across the ditch. There is more and slicker competition in the gourmet burger business in Sydney than back on home turf.

Expansion of the company will be further hamstrung by its ever decreasing cash in the bank and as management have said they are relying on expansion of units rather than same store sales to get to profitability.

Shareholders can only hope.


Key Points from BFW 2010 Full Year

1. $552,983 loss - 22% better than last year.

2. $8,722,000 up 17% on 2009

3. Cash reserves down 25% to 1,159,000

4. Earnings per share -1.04c VS -$1.34 last year

5. 2 new stores in Dubai & Saudi Arabia doing well.

6. Australia failing to fire and with significant overheads mounting.

7. 210,000 shares issued to directors during the year.


Burger Fuel Worldwide @ Share Investor

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c Share Investor 2010

Long Term View: Port Of Tauranga Ltd

In this series of posts I am going to be looking at stocks listed on the NZX in relation to their returns to shareholders over the life of their listing -what shareholders would now see in their back pockets if they had invested in the company IPO. The calculation of returns includes dividends and tax credits.

Port of Tauranga Ltd [POT.NZ] has been exceptional to its shareholders in terms of returns since its Listing in May 1992 at an estimated $0.75c per share with $3.04c in net dividends (excluding the period 1992-1997) and 30% more in tax credits (see chart above) and a 2:1 share split in May 2002 gives POT a slightly more than 1475% return (see chart below for the share price percentage gain against the average of all NZX indexes - does not include dividends, tax credits and the share split in its calculation) over the nearly 18 year listing of POT, an approximate annual net return just over 81.%.

This is approximately a 500% better return when compared to the average of all NZX indexes.



Long Term View Series

Auckland International Airport
Air New Zealand
AMP Ltd
Briscoe Group Ltd
Contact Energy Ltd
Delegats Group Ltd
EBOS Group Ltd
Fletcher Building Ltd
Fisher & Paykel Appliances
Fisher & Paykel Healthcare
Freightways Ltd
Goodman Fielder Ltd
Hellaby Holdings Ltd
Mainfreight Ltd
Metlifecare Ltd
Pumpkin Patch Ltd
Restaurant Brands Ltd
Ryman Healthcare Ltd
Sky City Entertainment Group Ltd
Sky Network Television Ltd
Telecom NZ Ltd
Telstra Corp Ltd
The Warehouse Group Ltd


POT @ Share Investor

Port in a storm
Ports of Auckland put a shot over competitor's bow

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c Share Investor 2010

ASB Bank: Customer "Service"

You might recall my ups and downs over trying to negotiate new terms for our ASB Bank home loan earlier last year. Well, ups and downs of another kind have got me ruminating again. It appears that the prostitute that indirectly stole $2.5 million from the bank has negotiated a deal with the bank to presumably pay back some of the money she stole.

So let me get this right. First she doesn't have to pay back the entire $2.5 million and she is allowed to negotiate with the bank.

My bank wouldn't even entertain the idea of negotiation and they were going to charge me a fee if I changed the terms of the loan.

I wonder to myself if she is an ASB customer.

Gives new meaning to the word screwed from both sides.

This comes on top of an incident this morning over the phone with ASB where I was refused part of a term deposit up for renewal today because part of the deposit was being used as security for something else. There was a hold on the whole amount that I asked to be removed last Thursday and it has not been done, according to ASB Bank staff at the call centre - "but Darren you can call back on Monday and we might be able to do something then."

So I cant even use my own money when I want to now.

Screwed again.


More Banking Madness @ Share Investor

Bryce the Banker: The Final Insult
Banks not participating in Recession
Bank Guarantees: Time for banks to return the favour
The Return of Bryce
Banking Madness!

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c Share Investor 2010

NZX's Top 10 Dividend Returns

It is hard to get good returns from term investments and the property market at the moment with around a 3.5% real return from the former and similarly low results from investment properties, if you bought a house over the last 10 years.

The New Zealand Stockmarket has some good returns on selected stocks many are getting close to a 10% gross return. With this in mind lets take a look at the 10 best dividend players listed on the NZX.

Figures are gleaned from the NZX website and are based on figures calculated from market prices as of close of market on 9 June 2010. The gross returns are based on past profit performance.


The Top Ten

Telecom NZ Ltd [TEL.NZ] - 13.26%

Steel & Tube Holdings [STU.NZ] - 11.92%

Kiwi Income Property Ltd [KIP.NZ] - 9.92%

Vector Ltd [VCT.NZ] - 9.35%

Hallenstein Glasson Holdings [HLG.NZ] - 9.22%

Telstra Corp [TLS.NZ] - 9.08%

Freightways Ltd [FRE.NZ] - 8.41%

Air New Zealand [AIR.NZ] - 8.28%

Goodman Fielder Ltd [GFF.NZ] - 7.82%

Restaurant Brands Ltd [RBD.NZ] - 7.76%


While not guaranteed returns - the likes of TEL, TLS, KIP & AIR dividends will be under future pressure - even the minimum return from RBDs 7.76% is nearly twice the return of term investments and investment property.

Good to see I own 5 out of the top 10.

Disclosure I own FRE, GFF, HLG, KIP, STU in the Share Investor Portfolio


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c Share Investor 2010