Repeating PR as News

Check out this press release from Burger Fuel announcing a $454k net profit before tax:

The directors of Burger Fuel Worldwide Limited (BFW) are pleased to report that the unaudited net profit before tax (NPBT) is up 102% to $454,356 for the six months to 30 September 2012.

This compares with a NPBT of $224,554 for the same period last year.

Prior year tax losses in NZ have now been fully utilised and in FY13 it is necessary to carry a tax provision. The Group reported a net profit after tax (NPAT) of $308,372 to 30 September 2012.

Total unaudited BurgerFuel Worldwide system sales are $22,056,829 (excl GST) up 26.5% on the same period last year.

Then the TVNZ “news” item with the cool headline:

Kiwi gourmet burget chain BurgerFuel Worldwide has announced a doubling in its profits for the six months to September 30.

Unaudited net profit before tax (NPBT) is up 102% to $454,356 for the six months to 30 September 2012, in comparison with a NPBT of $224,554 for the same period last year.

Total unaudited BurgerFuel Worldwide (BFW) system sales are $22,056,829 (excluding GST), up 26.5% on the same period last year.

So that “supersized” half year profit of $454K is unaudited, before tax and comes from the operation of thirty NZ stores, one Australian store and various Middle Eastern startup outlets? Off $22m in revenue?

And this is an example of a NZ franchising success story… how?

TVNZ just took the press release, repeated it and added some embellishment.

One single restaurant at the Viaduct would pull in more profit than this entire outfit. The directors of Burger Fuel should all resign in shame, along with the twits in the media who fail to hold them to account for their shameless spin.

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  • In Vino Veritas

    NPAT 1.4% on turnover. You’d have to ask yourself why you would bother. Unless you are pulling massive salaries andor directors fees I suppose.

    • Patrick

      Isn’t that the object of the exercise, massive share rights issue to the directors – pump the results, pump the shares, directors sell shares & cash in big time, shares fall through the floor & Mum & Dad investors ar left holding what is left of the baby.

      Directors ride off into the sunset with wads of cash, the regulators are too thick (or comprimised) to ask the hard questions, directors lay low & think up a new scheme to rape more money from Kiwis.
      Round and round we go – where it stops nobody knows

      • In Vino Veritas

        Patrick, to get the share price up, returns to shareholder would need to be far, far better than they are. These guys have margin problems. I think you are being pretty damned hard on Directors. They only collect Directors fees, not salaries like management. Also, Directors are responsible for the strategic direction of the company and have senior management create and implement a plan to advance that strategy.

  • blazer

    At least they make a profit I guess.Watch Moa do a 44 Below …never make a profit…all the hype and spin under the sun.Punters tire of it after awhile like Rakon…WDT …rosy projections…never delivered.

  • cows4me

    Sounds like there may be a few with their hands in the till or perhaps they practice creative accounting and post as low as surplus as possible, make the taxman spew. Item on the BBC on how Starbucks bring in billions in pommie land but pay piss all tax , poms aren’t happy. Taxation will continue to become a big issue as borders are just lines on paper when it comes to shifting money.

    • JimboBug

      A fast growth company isn’t necessarily a profitable company – as money is spent on marketing, legal agreements, new assets (which may be depreciated quickly early on) and without the same focus on cost-control as a more established business (mostly as management attention is, rightly, focused on revenue growth).

      Profit is a reasonably irrelevant way of measuring the value of a business anyway and is mostly there for journalists and “mum and dad investors”. The cash-flow is pretty much the only financial statement with any relevance – are the generating more cash than they are spending?

      It is also in the interest of any listed company to increase its profit rather than keep it low as that adds to marketability (given that journalists will build a good news story out of profit growth). And a listed company involved in tax avoidance in New Zealand is just being stupid as its investors will have to pay the tax anyway due to our, actually pretty clever, imputation credit system.

      • blam

        Probably not so much cashflow but Net Operating Surplus after Tax ( adding back interest and non cash deductions) as the cashflow can be increased if the bills are not paid.This may be the basis of the Dividend policy and for the valuation of the business ( coupled with Working Cost of Capital, as a traditional valuation, no doubt there are others)

        And don’t forget, this is only for six months as the busy Christmas period kicks in. Best also to compare with other fast foods, not the Viaduct restaurants (WTF ???)

        • Bunswalla

          Yes and I’d like to see a Viaduct restaurant make a profit of $454k over the same 6-month period (April to September, not the busiest time).

    • blam

      You’ve speculated on Fraud, Improper Accounting and now Tax Evasion.

      Care to elaborate more on how you got to these conclusions ?, i’m intriqued

      • Bunswalla

        He’s a cow cockie mate – they wrote the book on minimising tax, maximising subsidies and handouts, rorting the accounts and generally fucking up the environment.

  • Zephyr Cobalt

    Editor: Research says we need more business stories. Why on earth do people want to read about business when we can do a story on Kim Dot Com calling John Key a liar?

    News Editor: But we know nothing about business! We’re public servants.

    Editor: Here’s a press release from someone called Burger King. Cut and paste that – no one will ever know.

  • tarkwin

    I get a better return from the TAB.

    • A-random-reader

      Did you put 22 million dollars of revenue through the TAB in the last 12 months?

      I didn’t think so…

  • Hagues

    Agree that the repeating is pretty shameless. Difficult to make too much judgment on the profit without seeing the expenses (probably shitloads on advertising?), but do see they have moved from making losses to small profit and still growing.

  • Bunswalla

    Not sure if you had a bad burger experience or if you’re just pissed off at what you consider poor journalism, but in the prevailing economic conditions this is an encouraging result. Bear in mind that BF is a listed company so they have to regularly report what’s going on, hence the press release.

    Sales increased by 26% over 6 months, which any business would be delighted with. Profit increased by 102% over the same period, which shows they’re getting better at extracting profit from the business – all very positive things that shareholders and analysts want to know about.

    Burger Fuel is an ambitious small New Zealand company with big ambitions – their listing was fairly audacious given the size and short trading history, but investors must have seen something they liked. Expansion is difficult, expensive and risky, and setting up new stores is very capital-intensive. Doing it in different countries adds to the challenge (Australia less so but the Middle East is much harder than New Zealand), and growing into new markets requires a lot of marketing, PR, promotion etc.
    I think they’ve done bloody well to have achieved all that and now being profitable.

    Compare that with the sharemarket darling that is Xero – never made a bean yet and no immediate forecasts suggesting they’ll break even, let alone make a profit, let alone recoup the 10s of millions burned to date. And their share price is more than 6 times what it listed at!

    Disclaimer – I have no relationship with Burger Fuel or Xero, and I hold no shares in either. I do find Burger Fuel burgers delicious, though.

    • ElizaDoolittle

      Kind of missing the point with your PR style response here. TVNZ has done a cut and paste with little if any brainpower applied to it. Companies that go out to market with cherrypicked, but nonetheless patently absurd, “glory” headlines to their press releases need a dose of reality. Yes they may have doubled profit, but its still an abysmal profit and it should hardly be the central focus of their announcement. You cannot honestly feel that an aftertax profit of around $10K per store, which is what we are talking about here assuming BFW actually pays tax in NZ and not just fat salaries, is something to focus a press release and ensuing media fanfare on. And it didn’t happen by accident, BFW spun this story in this way and the journos lapped it up. Its laughable. The vast majority of NZ’s media has been progressively captured by hype.

      • Bunswalla

        I think you’re kind of missing the point with your glass-half empty style response. Keep on knocking, I’m sure you’re a real success in your own life.

        • ElizaDoolittle

          Calling for honesty and reality in news reporting is knocking is it? Success comes from not wearing rose-tinted glasses and not trying to suck people in using poorly crafted spin. The gulf between us is therefore very wide.

          • Bunswalla

            Their profit has doubled in 6 months. They have a duty to report what’s happening to the business as they are a listed company. How then is the reporting of a 26% increase in revenue, and a 102% increase in profit “patently absurd”?

            Can’t see anything dishonest or unreal in that, but then I’m more of a creator than a knocker. I agree about the gulf, and happy which side of it I stand on.

          • Callum

            Less important than profit doubling is HOW it doubled. As a franchisor you could double fees short term but suffer long term.

            By the way XERO is a dog I wouldn’t touch with a 40 foot barge pole. If you bought in early sell out know.

          • Bunswalla

            You sure about that? I doubt very much that the franchise agreement has anything in it about doubling franchise fees at the stroke of a pen, and given it’s most likely a small part of the overall revenue I don’t see how they can increase revenue by 26% ($4.5m in 6 months) just from franchise fees.
            Interesting comment re Xero, investors clearly see long-term value and I know they’ve been growing their customer base by a much faster rate in recent years. $1 at listing would get you over $6 now so if that’s a dog I’d like to see a good stock!

          • Callum

            Xero did well early on because no one else was in that market, the entire growth in their share price is based on future earnings potential that is yet to materialise. Bigger competition is starting to enter the market which will impact them heavily. That is why I say sell now, good stock is a company that has the financial results to back its hype rather than a share price climbing because people are jumping on the bandwagon.
            Don’t get me started on the security flaws in some of these online programs (including Xero), some scarily big holes that simply are not being addressed.

          • Patrick

            Listed company I worked for reported their WIP (work in progress) as profit, kept that up for a while as well as recording leased computer equipment as an asset rather than a liability, through those & other mechanisms they boosted the share price above where their big bonuses kicked in. All four directors coined it big time & when the house of cards folded they were nowhere to be seen having jumped of the sinking ship just before the iceberg hit. Will never forget the old boy that had been with the company for years & had spent his entire savings buying the companies shares, 70 years old bawling his eyes out. The directors were supposed to be his mates too.

          • Bunswalla

            You can’t report WIP as profit – it’s either an expense or an asset. Perhaps you mean they recorded it as an asset ro appear to reduce their costs. This is a reasonable thing to do but there are rules around the treatment of WIP that I very much doiubt a listed company could flout, but you haven’t said which one it is so I can’t comment.
            In any case I’m not sure of the relevance – what WIP could a food company have – uncooked burger buns? Salads made up but not yet used? Chips in the deep-fryer at midnight on 31 March?

          • Callum

            With WIP you can scam it by reporting jobs as completed and booking the profit when they are still underway. That whole story indicates straight out fraud though, if it was widespread it should have been picked up at audit. We ALWAYS look at the drivers behind performance bonuses as a fraud risk area.

          • Bunswalla

            I still don’t see what possible relevance this has to Burger Fuel – they have no WIP which you can verify by reading their Annual Reports.

          • Callum

            With Burger Fuel I would personally be looking at store renovoations and the lifespan put on store fitout if I was looking at risk areas (not saying there are any issues there). Turnover is up due to more stores and and store relocations, you often find in these type of businesses a refit will boost sales initially but spread the cost of the refit of a long timeframe.

          • Bunswalla

            Then go and have a look at their Annual Report, like I did. No WIP on the balance sheet or mentioned anywhere in the report. No work done or scheduled on renovations or fitouts – only acquisition of plant and machinery as part of new store openings. No new stores opened in the 2011/12 year but they did sell the Australian-owned store to a franchisee, taking a hit. They opened one new store in Cuba St in April, that’s the only increase. I think you’re just making shit up.

          • Callum

            It is a GENERAL comment, so how am I making shit up? The press release specifically talks about new and relocated stores during the 6 months under discussion. As I said if I was looking for issues that would be where I would start, I also said I wasn’t saying there were actual issue with Burger Fuel in those areas.

          • Bunswalla

            Your comment wasn’t general it was specific – “With Burger Fuel I would personally be looking at store renovoations and the lifespan put on store fitout” and “Turnover is up due to more stores and and store relocations, you often find in these type of businesses a refit will boost sales initially but spread the cost of the refit of a long timeframe.”
            There was nothing in the Press release, ot their Annual Report, about refits or refurbishments – you just made that up. You can’t have it both ways – talk specifically about irrelevant and made-up “issues” and then say it was only a general comment. Well you can – you can say anything you want, but it does look like you’re making shit up.

          • Callum

            People were querying the results, I pointed out areas I would look at if concerned (I don’t actually give enough of a shit though). But just to keep you happy this is direct from the linked press release –

            “The Hamilton region store locations were reviewed with the subsequent closure of our central city site and the opening of a new site at The Base shopping centre in the burgeoning northern suburbs.”

            “Manukau was relocated ”

            “Our newer sites feature our latest store designs that we intend to roll out to existing sites in the coming months.”

            Wow, really looks like I just made shit up? Did you even read the press release?

          • Bunswalla

            Yes I did, and their Annual Report. In neither does it say anything about refits as per your areas of concern. No refits, no renovations, nothing about lifespan of store fitouts in the 6-monthly result. You completely made that up.
            The PR quotes a net increase of ZERO stores – closed one and opened one in Hamiltron and relocated one in Manukau. It talked about rolling out new store designs “in the coming months”.
            In other words, none of the factors you cite for increased revenue over the last 6 months are in play, and none of your fantasy factors for hiding costs (WIP, amortise refit costs over a long period) are in play.
            In other words, you’re making shit up. For someone who doesn’t give much of a shit about this, you sure talk plenty. Out.

          • Callum

            I was going to go into a long explanation but basically “get fucked”.
            I was simply talking about the risk areas an investor should consider when looking at an investment. The only mention I made of WIP was where someone else gave an example situation. Nowhere did I say it applied to Burger Fuel.
            Interestingly you state a supposedly growing business shows a net ZERO increase in stores and you see that as a positive?
            Bottom line if looking at an investment anyone with more than two braincells should look at the repeatability of sales. What are up front franchise fees as opposed to ongoing revenue? What profit did they make from the “fitout” sold to the Egypt licensee? If you can’t answer those questions for yourself then keep yuor money in your pocket.
            You can dump all of your own money you want into Burger Fuel, why are you trying to tell people not to consider the risk areas?

          • Bunswalla

            “I’m not going to go into a long explanation”
            Nek minute – goes into a long explanation. What a wanker.

          • Callum

            Guess your worried about your investment, too bad.

          • Bunswalla

            No but I am worried about you.

          • Callum

            I am sure you could find something far more useful to do than worry about me.

          • Bunswalla

            It’s my calling. You don’t get to choose these things, you know

      • JimboBug

        If it pays no salaries then the company’s increased profits would be taxed at 28%. If it pays big salaries then it makes corporate tax savings of 28% but the people earning the salaries are taxed on them at 33%.

        So big salaries = more tax … not less.

  • truthinblogging

    This is about as bad as repeating PR as a blogpost,

    At least TVNZ aren’t being paid by the PR firm.

    • Travis Poulson

      How about some putty to fill in that chip on your shoulder Deb.

    • WayneO

      FFS you keep banging on the same stuck record. Prove it. That’s all I ask. A factual and evidential proof the Cam is paid to run certain blog posts.

      In future don’t bother posting, I will insert a random comment on every 7th of Cam’s posts saying “How much did you get paid for this?” and you can go and do something useful with your life like choosing what colour socks to wear with your sandals.

      You are as predictable as the Zimbabwean Lottery results.

  • blam
  • Mike Smith

    Have look at the first ;ferry strike’ articles at the weekend. The DomPost/Fairfax just rehashed, UNCRITICALLY, the KiwiRail press release. I thought journalism was more than rewriting PR, I really did. Naive in the extreme I guess.

  • GeorgeRomero

    They can shove their islamic approved halal burger up their collective dihmmie asses.,
    Hell, even their bread and mayo has to be approved by some asslifting devil worshipper and they didn’t even tell the NZ buying public , but mind that even the dopes serving that crap up don’t even know what halal stands for eg: furthering sharia.

    • UglyTruth

      Bread and mayo have nothing to do with Quranic halal, Judaic kosher, and first century messianism all prohibit eating blood and eating the flesh of strangled animals.

      Do you know a few asslifting devil worshippers, or are you just slandering Burge Fuel out of prejudice?

      • GeorgeRomero

        Do you support sharia? , and just ignorant of halal certification?.Do you subscribe to the postion that infidel food is unclean and everything must be in adherence to an imams fatwa?Obviousy you are in with burgerfuels crowd and are defending muslim supremisim.

        • UglyTruth

          Obviously, meaning in your deluded opinion.

          I do not support the Muslim Brotherhood, the verse is about religious tolerance.

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