I would now like to hand the conference over to Mr. Mark Winter, Chief Executive Officer. Please go ahead.
Thank you, and Kia ora, and welcome everyone. I'm Mark Winter. I'm the Chief Executive Officer of My Food Bag, and I'm here with our Chief Financial Officer, Louise Newsome. Thank you for joining us today as we present our full year results for the period ending 31 March 2025, which we'll refer to as FY25. Today, we'll provide an update on the business for FY25. We'll provide a review of our financial performance for the year and talk a little bit to the outlook for FY26. At the end of the call, there'll be an opportunity to take some of your questions. Looking back at FY25, we're pleased to report revenue of NZD 162.1 million and an EBITDA of NZD 16.1 million, reflecting a return to growth in the second half of FY25 and building on a stable performance in what has been a challenging retail environment.
Our net profit after tax was $6.3 million. This was up 5% on the prior year, FY2024, with more than doubled free cash flow in FY2025 to be at $7.6 million. Turning to slide five, the year in review. Over the past year, we've certainly strengthened our customer offering and improved operational efficiency. This has translated into sustained business performance and renewed growth. Some of our key initiatives to support this included our focus on our products, providing more convenience and quality to our customers. We launched the My Food Bag shop, offering one-off purchases and shorter lead times without the need for subscription. We've continued to invest in our brand, and we've seen positive impacts on active customer growth as a result of this investment. We've redesigned our user experience and customer buying journey in our app and website, which increased personalisation and convenience for our customers.
We've strengthened our margin through procurement initiatives despite the inflationary environment. Our employee engagement and retention are higher than prior year, which speaks to the positive culture we continue to build and foster within My Food Bag. Strong free cash flow allowed for net debt reduction of NZD 4.9 million since March 2024. During the year, we refreshed our purpose of helping Aotearoa New Zealand eat and live well. This purpose is at the heart of everything that we do. It motivates us to deliver the best outcomes for our customers and reflects our commitment to their well-being. Alongside our values of teamwork, ambition, and customer love, this purpose is the foundation of the My Food Bag culture. I'll talk now a little bit just to the business update. On slide eight, our strategy demonstrates that our focus remains on growing active customers.
This is driven by leadership in the meal kit category and expansion into the broader online food market. We will do this by delivering greater flexibility, convenience, and great value. We have four key pillars to support this. The first one being building our brand to drive higher customer advocacy and loyalty. The second one being enhancing convenience for our customers across all our brands, such as shorter lead times, faster recipes, and growth of our ready-made meal range. The third one is around personalised solutions, so customers have more flexibility and more choice. The fourth one is about unlocking new customer segments and occasions by introducing new customers and audiences to My Food Bag. These pillars are underpinned by an efficient operating model and ongoing investment into our people, our supply chain, and our data and technology.
Our portfolio of brands continues to be a key driver for us in managing the current economic conditions. With My Food Bag, Fresh Start, and Bargain Box, we have a strong market presence that caters to a broad customer base. Throughout the year, our strategic focus on providing a seamless customer experience has seen us develop our offerings to ensure they align with the evolving tastes and dietary preferences of New Zealanders. A highlight for us this year was My Food Bag's partnership with the New Zealand Olympic team for the 2024 Olympics. This campaign was a huge success, with over 20,000 servings of our official supporters' burger delivered. This partnership drove passionate engagement with our customer base, as well as reinforcing our New Zealand credentials. We also successfully reintroduced our gluten-free offering in collaboration with Celiac New Zealand.
As the only meal kit offering with these credentials, we've built a loyal following. We also prepared the launch of our diabetes plan, which recently launched in April, with support from Diabetes New Zealand to tackle one of New Zealand's fastest-growing health challenges, type 2 diabetes. Finally, our ready-made meal range was rebranded under the My Food Bag brand to update the convenience of My Food Bag and strengthen our position in the ready-made meal category. The quality of our ready-made meals is a key factor in the growth and success of this range, and this quality was recognized in a number of awards during the year. Bargain Box continues to be New Zealand's most affordable meal kit, offering convenience for more budget-conscious consumers.
We've focused on product enhancements, such as expanding our low-carb offerings, as well as restaurant collaborations with brands like Lone Star, which customers interacted with very positively during the year. Fresh Start has continued to help Kiwis achieve their weight loss and wellness goals with calorie-controlled, nutrient-rich meal options. We've seen strong engagement with the optional eight-week reset program, with seasonal updates, a rewards scheme that keeps participation levels high. Fresh Start also had product enhancements through the year, such as the introduction of new high-protein recipes in response to the growing demand for this dietary preference. On the next slide, we show how we invested in a full user experience redesign and platform of our website and mobile app. This ensures a consistent and seamless experience for our customers while they navigate our expanding meal range, whether they're using our mobile app or our website.
The new experience means they can now access things like personalised meal recommendations and an ingredient checklist to easily see what staples are required for their recipes. As a business, we continue to embrace new technologies such as AI to drive both customer experience improvements as well as efficiencies. We also continued to expand our delivery network by opening up more than 7,000 new addresses during the year and introduced new delivery windows to provide greater flexibility for our customers. Our focus on customer experience across the board has resulted in multiple areas of improvement. For example, our net promoter score is up 7 percentage points year on year, and customer compensation continues to trend down.
Turning to slide 11, we're excited about the launch of the My Food Bag shop, which currently offers one-off, ready-made meals and care packages for existing customers, as well as attracting customers who want a one-off purchase without a subscription and shorter lead times. This new flexible operating model allows us to reach a broader audience, including corporate clients, and provides a great level of convenience with deliveries being made nationwide within 48 hours. The shop has received great feedback from customers, particularly for our fresh, ready-made meals and seasonal products. We'll continue to enhance the shop offering, digital experience, and communications through FY26. Our operational excellence program continues to drive efficiency across our operations, which results in better customer experience, and we can see this through our pick accuracy and delivery metrics.
The investment in our pick-to-light technology in 2023 enabled our customers to have protein choice for our Christmas range this year, which resulted in an overwhelmingly positive response from our customers, including improved satisfaction scores and growth in sales year on year. From an environmental impact perspective, we've continued our efforts towards circular packaging solutions, including transitioning two suppliers from cardboard to reusable crates for ingredient deliveries in our distribution centers, removing packaging where we can. We also have a strong commitment toward local sourcing, and we've consistently exceeded our 98% target of locally sourced produce and proteins. In November, we hosted our inaugural Supplier Awards, where we celebrated with awards in three categories: quality, excellence, service, and innovation.
In FY25, we continued strengthening our culture and capability for the future, and this is shown in our strong employee engagement score, as well as turnover being at an all-time low of 18%. Our commitment to our people was recognized when we won the 2degrees Supreme Employer of the Year awards for Auckland in April 2025. This award highlights our dedication to fostering a diverse and inspiring work environment and demonstrated focus on health, safety, and well-being, along with our commitment to employee and team development. We've also continued to support our community through a supportive life in Auckland and school lives in Christchurch, which help provide opportunities for people with learning disabilities. I'll now hand you over to Louise, who'll go into more detail on our financials.
Thanks, Mark. Turning to our financial performance, both revenue and EBITDA are in line with prior year, with the second half of the financial year, which I'll refer to as H2, showing positive trends for both deliveries and average order value. Revenue in H2 was up 5% on the prior year, when normalized for the different number of trading weeks between financial years, and up 1.9% on a straight half-on-half comparison. Our contribution margin remains strong at 23.3%, driven by our continued focus on operational efficiency, which is enabled by our pick-to-light technology. As Mark mentioned earlier, our net profit after tax was NZD 6.3 million, up 5% on FY24. Talking now to our delivery performance, deliveries stabilized year on year, back to pre-COVID levels, with growth of 3.7% on a normalized basis in the second half of the year.
Our order frequency is positive as a result of our targeted discounting approach, and we've seen incremental deliveries coming from new product areas, such as from the My Food Bag brand, Serve 6 option, and gluten-free range. Active customers held steady with the prior year, with the mix of customers highlighting improved customer retention. Our retained customer base has increased to 59% of the total base, reflecting our efforts to retain loyal, high-frequency customers. This has helped to improve our overall customer mix, with acquired and reactivated customers slightly down on prior year. Over the page on slide 18, average order value remained stable at NZD 130, supported by modest price increases across all our brands and the introduction of larger family-sized products, such as the higher price point Serve 6 offering, which have proven popular with our customers.
As Mark mentioned earlier, we've also seen continued improvements in areas like pick accuracy, quality, and delivery performance, which are resulting in reduced customer credits, contributing positively to maintaining average order value year on year. Our gross margin improved to 49.3%, primarily driven by produce pricing. We've seen favorable growing conditions throughout the year, and on top of this, procurement initiatives to purchase more directly from growers are enabling us to source more competitively priced ingredients. Our menu planning and recipe development also continues to play an important role in managing our ingredients costs whilst retaining consistent quality for our customers. The contribution margin was 23.3%, up from 22.6% in FY24, driven by the higher gross margin result.
With our continued focus on customer experience, we invested in improvements to packaging and have also seen the anticipated cost increases coming through in distribution, which partially offset the higher gross margin result. However, our previous investment in pick-to-light technology, the consolidation of the Auckland Assembly Centres in FY24, and the launch of the shop from within our current lease footprint continue to provide efficiencies across overheads and labor costs, which help to offset these cost pressures. Moving on to our balance sheet now on page 21, net debt continues to reduce with a reduction of NZD 4.9 million since March 2024. This results in net debt of NZD 6.9 million. During the year, we reduced our total debt facilities from NZD 30 million to NZD 20 million, and we reduced our CapEx spend, reflecting there were no significant capital purchases throughout the year.
Right-of-use assets and lease liabilities have reduced predominantly due to the consolidation of our Auckland Assembly sites. Over the page, looking at the summary cash flow, you will see that net cash flow from operating activities has improved by $3.4 million year on year, allowing the net debt reduction I just spoke about and the payments of dividends during the year. Free cash flow has increased to $7.6 million, up from $3.5 million at the end of FY2024. We've also been able to drive growth initiatives such as the launch of the shop and the investment in our digital user experience while reducing CapEx spend to $3.2 million. A final dividend for FY2025 of $0.0085 per share, fully imputed, has been declared to be paid in June. This represents a total FY2025 dividend of $0.015 per share, which is an approximate yield of 11%.
We've also launched a dividend reinvestment plan, which will operate for the upcoming final dividend. This will enable shareholders to incrementally increase their My Food Bag shareholding by reinvesting their dividend either partially or in full in My Food Bag shares. I'll now hand you back to Mark, who will talk to our FY26 outlook.
Cool. Thanks, Louise. Looking ahead to FY26, our strategy remains focused on driving growth and innovation. Our four strategic pillars that underpin this focus are strengthening our brands, enhancing convenience, driving personalization for our customers, and targeting new customer segments. We'll expand our health and wellness offerings and continue to invest in digital enhancements to improve the customer journey. Throughout FY25, My Food Bag has demonstrated its resilience, generating strong cash flow despite challenging economic conditions. Revenue growth, tight cost management, and low capital investment requirements have all contributed to this. In the first eight weeks of FY26, demand growth has continued, and despite inflationary cost pressures, we remain confident in our ability to continue to manage these costs effectively. Finally, the My Food Bag Board expects to continue to pay dividends in FY26. With that, I'll now hand it over for your questions. Thanks.
Thank you. Your first question comes from Guy Hooper with Jarden.
Yeah. Good morning, team. Well done on the ECO result. It's good to see the review base turning back into positive growth. I guess just on that, could you talk a little bit about how that progression occurred through, particularly into the second half, where you've gone to positive? And perhaps talk a little bit about the run rates, because given we were, I guess, negative in the first half, positive in the second, is it that the second half ended at a stronger level than the total?
Thanks, Guy. Yeah. So just probably just to get a little bit into that, I mean, what we've seen is we've seen a very consistent level of sort of prior year beats now over the last 26 weeks. In terms of those sort of prior year beats, that's obviously been at a delivery level, but also probably more so in the last 12 to, certainly since the beginning of the year, seeing that brand mix shift back towards My Food Bag a bit more, our core brand. With that, obviously, is a stronger average order value, which is sort of over and above the delivery. We're really pleased with both facts in terms of both the consistency in those prior year beats and also that sort of improvement in brand mix.
I think the key call-out from my perspective would be within that active customer graph within the investor deck. You can see there that the retained base is actually up year on year. That talks to the success of a lot of the initiatives that have been implemented over the last 12, 18 months, in that the quality of customer that we're seeing is tending to be retained, is tending to see a better order frequency. That sort of is underwriting the growth in the revenue line. We are feeling really positive as we head into FY26 with that sort of foundation over the last six months.
Yeah. Great. Thanks for that detail. You sort of preempted my next question just around the product mix. I mean, the improvements in mix towards My Food Bag, I mean, has that been driven by a conscious marketing push towards that brand, or is it just that you're seeing underlying improvements, I guess, similar to as the consumer backdrop deteriorated, you saw those shifts perhaps towards a more value proposition? Just keen to understand what's conscious and what might be consumer.
Yeah. Look, I think it's much more the former. I think it is a case of a number of initiatives layering up to create that positive momentum. I talked a little bit about some of the brand marketing activity, like the example being the sponsorship of the New Zealand Olympic team. What was so successful about that was that it played to a lot of our strengths and obviously our assets. Our New Zealand identity, the alignment around health and wellness, our ability in terms of our recipes. We went out for the black burger buns, for example. We leveraged trading tactics with promotional kind of activities that engaged audiences. There are a number of things across the whole business that kind of contributed to that. We had black boxes, was another example. I think that certainly played a role.
I think product innovation as well, Guy, has contributed. We're seeing the relaunch of our gluten-free offering, which has seen strong demand. There's some other sort of innovation activity that we've done, which has also built on that. Probably the other piece I want to call out has just been our relentless focus on the customer experience and the material improvement around our quality performance, around our pack accuracy, around our delivery service performance. We're seeing that in our net promoter score. That continues to track up month on month, year on year. All of these things are layering up, and our customers are buying more regularly. Evidently, they're also becoming advocates and speaking to their neighbours. In terms of the wider environment, I'm not so sure that it's necessarily improving.
I certainly don't think that it's getting any worse, but I still get the sense that it's tough out there in the consumer retail world.
Yeah. No, I certainly appreciate that. I guess one last one for me just around the marketing spend. From memory, there was a bit of a step up in marketing intensity in the first half associated with the launch of the shop. Could you talk a little bit about, I guess, how you're thinking about promotional intensity and the returns you're getting there and whether or not we can kind of look at the second half levels and say that's roughly where you think it will be going forward?
Yeah. I think that's right. There has been an element of brand investment to support the shop in the second half, albeit we recognize we need to further invest to build awareness and get more New Zealanders engaged in what is a different offering from My Food Bag, but an important offering to help reposition the business beyond meal kits into wider meal solutions. There's always going to be a role for discounting. Particularly, I think in this environment, consumers have certainly been kind of trained to sort of wait for a discount offer to jump in. We've been increasingly more focused around, I guess, the level of discount that we've been offering in the market. More recently, we've been pulling that back. We've been using more product incentives to engage with lapsed customers, and that's proven to be effective for us.
In terms of the general brand investment, I mean, I expect that to continue to be pretty consistent with the level we're at in FY25 as we head into FY26. We're certainly not looking to decrease that. If anything, it's a case of holding that and potentially being open to further investment if the opportunity warrants it.
Great. Thank you, guys, for taking the questions. Appreciate it. That's all from me.
Cool. Thanks, Guy.
There are no further questions at this time. I'll hand the conference back to Mr. Winter.
Thank you. Look, thank you, everybody, for dialing into the conference today. If you've got any further questions, please feel free to reach out to me on mobile or through the email. Have a great day. Thanks.