Turn the conference over to Mr. Anthony Scali, Managing Director. Please go ahead.
Welcome to the results presentation for the first half FY. Looking at on page two of the summary, for the 80.5% versus prior year, revenue was [inaudible] AUD million, up 13% on the prior year. The gross profit margin was 61.5% on the first half and by 25. Net profit after tax was AUD 40 million, up AUD 10.6 million or 29% FY 2025 underlying and up AUD 12.5 million or 37% on the first half FY 2025 statutory. The U.K. revenue was GBP 17.6 million, impacted by store closures due to the rebranding program. GBP 6.7 million inconsistent with earlier GBP 17.6 million revenue.
The Nick Scali brand are up 32%. Gross profit margin, 9.2% compared to 45.1% first half. 16 stores refurbished and rebranded as Nick Scali by December. Loss after tax was AUD 5.6 million as per forecast. Profit after tax was AUD 41 million. Cash and bank deposits was AUD 91.6 million, and the interim dividend of 39 cents per share . Turning to page 3, as mentioned, the written sales are up 10.5% on the prior, with like-for-like written sales orders of 10.1%. The UK written sales orders were GBP 21 million, 8% on the prior comparable half.
Year-on-year presented as challenging due to the numerous store closures for refurbishments. The group written sales order total was AUD 256 million, 10.7% up. On the revenue side, revenue was AUD 251.7 million, up 13%. That reflected in the high written sales in May and June, FY 2025, which is up 6-- a strong first quarter, FY 2026, new growth. ANZ like-for-like revenue for the first half, 12.7%. For the year, AUD 210.6 million, that's down 38.5%. Low written sales over the quarter for FY 2025, caused by closures of numerous stores for lengthy periods for full store refurbishments .
Group revenue for the half is AUD 269.3 million, up 7%. Turning to page four, group financial performance. Profit margin was 65.9%, compared to 2024, 64.4%. Operating expenses increased by 5%, mainly attributable to employment bonuses and additional marketing in line with sales growth, yet continues to improve with Nick Scali product in place and the legacy SAG product now cleared. For FY26, gross margin was 59.2%, up from 45.1% in FY25. . Reported net of interest subsidy costs impacting margin. For the first half 26, operating expenses in the U.K. In local currency terms, expenses were in line with prior. And property costs offset by additional marketing. I'll now hand over to Kylie Archer, who will fill the cash flow and balance sheet.
Looking at the cash flow, slide 5 here. Our cash generated after deducting amounts due on operating leases was AUD 51.5 million for the half last year, with ANZ contributing AUD 53.4 million. The operational funding requirements for the period decreased as alignment reduces the refurbishments are completed, with net operating cash outflow to the UK of AUD 1.9 million. Property AUD 0.1 million include two property purchases in the period, the first being AUD 3.8 million for land acquired in South Australia, with construction due to commence this calendar year, and the second being AUD 7.9 million for Townsville.
In addition, fit-out costs were incurred for a number of share. AUD 28.2 million was returned to shareholders in the final FY 2025 dividends, and finally, the closing net cash as at end December versus AUD 15.9 million last year. We move on to the Inventory levels overall remain broadly consistent from the table on the right-hand side of the page, within slightly down on June 2025 levels of AUD 44.6 million. We've seen an increase of AUD 20 million to AUD 132 million due to, as mentioned on the previous slide. Borrowings remain unchanged in the period at AUD 74.3 million with AUD 43.7 million related to a 30% loan to value ratio. The balance of the borrowings relates to the tranche in the reporting period. I'll now hand back to Anthony.
Okay, UK summary. Sales orders continued to improve were rebranded. The four rebrands like for like in January 2025 showed growth of 32%. 59% net of interest free subsidy over the medium term. In the interim, distribution progress has been made in restructuring to reduce margin leakage. Further consolidation of UK head office roles with Australia and Corporate UK, driving greater efficiency across the group.
Teams in stores and evaluating and seeking new, looking at product, the best sellers in the UK and Australia. New product introductions based on Australian performance will be the norm going forward. The break-even position is GBP 51 million in sales revenue. New stores are critical to this increased brand awareness. A new Plush Home was opened in November 2025 in Bendigo. A fourth FY 2026 being planned to open, which will bring the total.
In the UK, the Lincoln store was closed. We believe it not suitable to rebrand. Optimization of the UK store network mostly complete, with 16 stores converted to the Nick branding and product range. A number of new store locations in the UK are under... Now turning to page 10. ANZ, the written sales for the month of January 2026 include written sales interest.
During the half, second half, a further 5 stores are planned for opening, with additional opportunities currently. In the UK, with store refurbishment now mostly complete. Margins compared to the prior period. Total January written sales were AUD 6.7 million, up 32% compared to last year, and most stores are currently in negotiation. Concludes our presentation, and, we're happy to.
Thank you. Can you please press star one on your telephone and wait for your name to be announced? If you wish to cancel, too. If you're on a speaker phone, please pick up the handset to ask your question. First question comes from Tom Kierath with Barrenjoey. Please proceed.
On January, I thought it might have been a bit stronger than, three percent in ANZ, just giving you lapping. Is there anything like in the promotional timing or the calendar reflection of, you know, a true reflection of how you're, how you're tracking at the moment?
Well, I think what's happening at month is getting stronger and stronger every year, so we're being very close to the Boxing Day Sales, but just seems a bit of a shift because of a lot of, I guess, forward orders you might have got in January. January by 7%, and sales are still up 3%, so conversion didn't... That's one. It maybe interest rates are maybe having an impact on that. I think March and over will tell that story.
Yep. Yep, and they make an order bank. So you did obviously more profit than you guided to at the AGM. What's the shape of the order bank like at the moment? Like, based on my math by about AUD 22 million in the half. I know you don't actually report that number, the order bank and kind of logistics and just, you know, how quickly you're getting product to customers.
Yeah, look, I think our lead probably increased by 3-4. So yeah, we're delivering a little bit quicker, but not... Yeah, we don't call out the order bank. I mean, at the end of the day, we, our revenue is based on, you know, for the FY 26, it's really about May to March sales or what it's written or gives you the like, yeah.
Is it fair to assume the order bank has re-
No.
Okay. All right. That's all I've got. Thank you.
Okay.
Our next question is from Francis Garkey. Please proceed.
Good morning, Anthony and Kylie. Thanks for taking my question. The margin performance was good. It does feel... Have you had to engage, or has that impacted your promotional activity in the markets? And then if you could just touch on FX and currency impacts, looking and when you expect those benefits come through in this half, or is that more of an FY 2027?
Yeah. First, the margin, that didn't, it did not impact our promotional activity. The effect on the FX side, cover that way, the benefit of the currency, if there is any, first half next year, next financial year. Being in a competitive environment, it's not necessary, we might pass it on with further promotion.
Terrific. And if I may, one more, just the tax rate in the half was up quite a bit. Could you just maybe... Was there anything in there that not allowed to deduct the U.K. losses or had something else? Was there another impact that we should be aware of?
Sorry.
So is it 30% tax rate or something?
Yeah. But traditionally, that has been the rate.
Thank you.
James Ferrier with Canaccord Genuity. Please proceed.
Good morning, Anthony and Kylie. Thanks for your time. Can I ask you, first of all, about the store sales? You've been on a bit of a journey there to improve the quality capability of that team. Where are you at?
Well, looking at the January, at the moment, so yes, good leadership in the UK and and they... I mean, it's always work on, better sales teams. It, it's ... There's never any point, there is, it cannot be never as bad. So I think we can see that from the January result.
Foot traffic conversion to sales orders, would you say it's now comparable-
Yeah, that's improving.
In Australia?
Yeah, Australian level, next scale in Australia anyway.
Yeah. Yeah, and that was marketing spend. Just in your earlier remarks, you mentioned that marketing spend in ANZ increasing loss, right? That would imply that you spent about AUD 500,000 in the UK. Does that sound about right?
It's yes, maybe marginally more, in fact. When you're converting Australian dollars, yeah. Yep.
Yeah, that's right. When you look forward now, Anthony, and you sort of see the landscape as it is, sales trends, things like that, what are in the ANZ business through the rest of the year? Do you sort of see it sort of pretty stable, or do you see an opportunity to invest some of that stronger gross margin? What are your plans on that marketing spend?
Yeah, look, it's managed on a month-to-month basis, to be honest. So depending on, you know, on the strength and the traffic into stores, we in certain promotions where we think we've got a strong offer, may increase this. But if we do increase, it's managed. You know, we're trying to ensure we don't waste to get the result, and we continue to invest, able to invest more as we open more of the whole brand.
Yes. Yeah, and then just lastly, same topic, but for the UK, how quickly do you see the trajectory for marketing spend as a percentage of sales to, to maybe not to 10%, but towards 10%?
Yeah, 10%'s a lot. I'm not sure we want. Well, depends, you know, the marketing gets more efficient with more stores, and clearly, at the moment, we have quite a bit of waste. We've only got 16 stores, and they're spread across. Not a lot of opportunity for localized advertising. It's mainly national. You know, our, we're aggressively pursuing more in the short term, so we can then increase the spend in marketing, which does two things: helps the same store sales improve and a larger store network.
Yeah. That's, that's helpful. Thanks.
Your next question, Chami Ratnapala with Bell Potter Securities. Please proceed.
Good morning, Anthony and Kylie. Just the first question is, on the UK like-for-likes, I mean, with those four rebranded stores that were trading last year as well, the 32%, does it give you on, firstly, the break-even position and sort of where some of these stores are referred to versus some of the Australian stores?
Yeah, well, yes, certainly gives us, you know, that January number on the like-for-like stores was a great uplift. The whole January result, clearly, we need to continue that momentum, but, you know, particularly, well, yeah, you know, sooner to the break-even point in the short term. But look, I'm not sure the short term, whether it's a small loss is, what's really relevant is that we open new stores and have a conviction to continue to open stores and improve, which we are doing, but yes, on the whole, really encouraging result for January.
And, you talked a bit about, you know, earlier, it came up here in Australia, but margins have been very solid. Turning to UK, 59%, I mean, how did that... To the rest of the second half, how will that balancing act of work as the brand awareness increases?
Look, the first thing is, obviously, is helping us have prices even on promotion that are very, very competitive and yet be able to... And that, and that's particularly because of our lounge volumes across Australia. So we are very confident that we're gonna be more than this margin. And as I said earlier, look, in the, that margin will improve in the UK. There's the interest-free subsidy cost that pulls in the margin, which is not better.
Perfect. Thanks for that.
Your next question comes from Sean Shu with CLSA.
Hello, can you hear me?
Yes, yep, can hear you, Sean.
Thank you. Thanks, Anthony. I was just hoping to do a follow-up question on your business. Could you please tell me what's the implied GP margin performance for your order bank compared to the same time last year?
Implied margin on the order bank. Well, it's gonna be slightly higher, given, given what our margin has been delivering.
Cool, thank you.
We don't expect our margin to be consistent with the first half to the second half, is what I expect. On external factors that may potentially impact it like, at the moment, that's the order bank is in line with the first half margin.
Got it. Another follow-up. So this is the same question I asked you on this, so because my understanding is this excess manufacturing capacity in China by your supplier in Vietnam to cater for the U.S. export business. I guess I just want to have this position to negotiate or renegotiate a more favorable supply term with some of your partners in Asia, please.
So that has been occurring already. Yes. Yeah, I mean, production for the U.S., well, all the production in the U.S. has moved to Vietnam from many of the China factories. And yes, we've got more capacity in China, but so I think, and we've had good support from the factories, but I don't see in respect of that.
Okay. Thank you.
We have reached the end of our question-and-answer session. Over to Mr. Scali for the closing remarks.
End of presentation, and so to provide a good result for the first half and the full year. Thank you.
You may now disconnect.
Goodbye.