I would now like to hand the conference over to Mr. Mark Winter, Chief Executive Officer. Please go ahead.
Cool. Thank you, and Kia ora, and welcome, everyone. I am Mark Winter, the CEO of My Food Bag, and I'm presenting today with Louise Newsome, our CFO. Thanks for joining us for an update of our half-year results for the period 30 September 2025, which we'll refer to as half-year FY 2026. In terms of today, we'll cover three key areas. We'll provide a business update, a review of our financial performance, and our outlook for the second half of FY 2026. There'll also be an opportunity to take some of your questions at the end. Turning to slide four, today we're reporting revenue of NZD 85.4 million for the six months to 30 September 2025. This represents growth of 3.8% on last year. EBITDA came in at NZD 7.2 million, and net profit after tax was NZD 2.9 million compared to NZD 3 million net profit after tax in H1 last year.
In terms of the six months in review, it's been busy with a lot of focus on meeting the evolving needs of our customers, particularly in the health space. For example, we've recently introduced a diabetes plan and GLP-1 support meal kits. These have been really well received by our customers. We've continued to maintain a strong focus on quality and value, implementing price adjustments carefully to reinforce the value-for-money perception. These efforts help lift revenue year on year, driven by more active customers and improved purchasing frequency. The My Food Bag shop continues to grow, especially around seasonal occasions, and we've expanded delivery routes to make it even easier for more households to access our meal kits and shop products. Importantly, cash flows allowed us to reduce net debt to NZD 5.5 million, which puts us in a further solid position heading into the second half.
An interim dividend of NZD 0.75 per share, fully imputed, has been declared to be paid in December, and our dividend reinvestment plan will also operate for this interim dividend. Our purpose is helping Aotearoa New Zealand to eat and live well, and this continues to guide our customer-centric decision-making. It sets the scene for our strategy, which I'll talk to next. Our strategy is focused on growing active customers, with the objectives tied to being growing our leadership of meal kits and continuing to expand into the wider online food category.
Everything we've done this half year has been about reinforcing this via four pillars, which you see here: brand love and advocacy, which is about customer engagement and ultimately leveraging our brands to win meal kits; convenience, which speaks to key consumer trends around customers' busy lifestyles, for example, providing ready-made meals or faster recipes to make customers' lives easier; personalization, which is about creating a customer experience that provides flexibility to suit varying lifestyles or dietary needs; and finally, unlocking new customer segments. That is an area that enables My Food Bag to reach new audiences and new customers. In the coming slides, I'll talk to some of the initiatives we've delivered so far in the first half of FY 2026, which are underpinned by these pillars. Our brands continue to perform strongly, which has been a key driver in active customer growth.
My Food Bag's focus in the first half of the year has been on health and well-being. For example, we've continued to see growth in our gluten-free bag and low-carb meal options and have successfully launched the diabetes plan in partnership with Diabetes New Zealand. We've also strengthened family engagement through initiatives like our Dinner with Nadia series and our partnership with the Auckland Football Club. This has helped drive larger bag purchases. We're pleased that My Food Bag has been rated number one overall for meal kit delivery services in New Zealand by Canstar Blue. Bargain Box remains New Zealand's most affordable meal kit, supported by strong supermarket price competitiveness and the new Bargain Win advertising campaign. We continue to appeal to customers' sense of value by providing the everyday savers range of grocery extras available to add to customers' orders after selecting the recipes.
Fresh Start introduced GLP-1 support meals, which is a carefully curated selection of appetite-appropriate, nutrient-dense meals designed for people using weight loss medications like Wegovy. We're also working with a number of health professionals, influencers, and partner brands to highlight the taste and health credentials of Fresh Start and our other health-targeted offerings to new and existing customers. Moving over to the next slide, page 10. Customer experience and satisfaction are always a key focus for us. Some examples of initiatives we've undertaken so far this year include enhancements to the layout of our recipe cards in response to customer feedback and reconfiguring of our packaging to reduce waste by ensuring customers receive the right size box for their order. We've also implemented an AI tool within our customer service experience, delivering a more seamless and faster result for customers when they need to interact with us.
We're pleased to recently win the Excellence in AI Implementation Award and the 2025 Contact Centre CRM Awards for using innovation to create enhanced customer experiences. We've partnered with New Zealand Post to open up more delivery routes, with nearly 10,000 addresses being added in the past six months. That's more than what we added in all of last year and allows us to reach even more customers nationwide. Our investment in peak technology and continuous improvement programs continues to pay off, improving accuracy and reducing customer compensation costs further. This is reflected in improved NPS scores, which reflect high customer satisfaction and trust in our brands. My Food Bag shop continues to grow, offering care packages, gifts, and ready-made meal bundles designed to suit a variety of customer needs and occasions.
Seasonal events like Mother's Day and Easter have driven further growth and supported our expansion into the wider online food category. The shop is key to helping us reach new audiences and expand beyond subscriptions through a more flexible offering. It provides new customers with another way to interact with our brand, for example, by trying our ready-made meals or experiencing our gifting services as a one-off purchase with a shorter delivery cycle. We're pleased with how the shop is performing and, most importantly, the underlying capability we've developed as a foundation for future growth. We've continued investing in leadership development and capability across our business. We're focused on fostering a culture of curiosity and confidence around AI, supporting our people to explore how it can enhance productivity and create better customer experiences.
Engagement scores are at record highs, and we're proud to win the Two Degrees Supreme Award for Employer of the Year in April, reflecting our commitment to people, safety, well-being, and inclusion. Our DE&I and wellness initiatives remain a priority, with strong recognition across the business for efforts like celebrating Matariki and Mental Health Awareness Week. We've championed community initiatives like the Starship Foundation's Big Bake Off in June, where we created a special cake that customers could add to their order to donate instantly. We also launched our first winter food drive in partnership with New Zealand Post, enabling our customers to donate leftover food to city missions and other local charities across New Zealand.
Our procurement approach continues to be centered around local and sustainable sourcing, with over 98% of our fresh proteins and produce sourced from within New Zealand, reducing food miles and supporting local New Zealand growers. In addition, we've added new premium New Zealand fish species to the menu, including Snapper and John Dory. We prioritize trusted and ethical partnerships with Kiwi Supplies, as well as organizations like Diabetes New Zealand, Coeliac New Zealand, and the Heart Foundation, reinforcing our credibility and expanding our reach in the health space. That concludes the business update section of our presentation, and I'll now hand you over to Louise, who'll go into more detail on our financials.
Thanks, Mark. Turning now to our financial performance on slide 15. Overall, we've delivered a solid result in a challenging environment, balancing growth with disciplined cost management. Revenue is up 3.8% compared to the last year for the half, driven by an increase in deliveries and higher average order values. This uplift reflects customers gravitating towards the My Food Bag brand, as well as larger bag sizes and adding extras to their orders alongside modest price adjustments. Gross margin was 48.5%, down 1.2 percentage points due to food price inflation, which also impacted the contribution margin. EBITDA was NZD 7.2 million, alongside strategic investment in the shop to drive brand awareness and future growth. Our net profit after tax was NZD 2.9 million, which is broadly in line with the prior year.
Over the page on slide 16, active customers are up 2% year- on- year, and we've maintained strong loyalty with our retained customer base, which remains the greatest proportion of our active customers, consistent with last year. We continue to focus on rewarding quality customers through a targeted approach to incentives, which has led to lower churn rates and improved frequency. We've been very considerate in our approach to price adjustments, for example, deferring a price increase on Bargain Box until late September to support value perception. Brand campaigns such as highlighting Bargain Box's competitiveness with supermarkets and new health-focused products have also helped attract new customers to the brand. On slide 17, our deliveries grew by 1.5%, adding around 9,000 more compared to last year. This was driven by a strong response to our targeted offers and a varied menu, which continues to be rated highly by our customers.
Campaigns like our partnership with Auckland Football Club have also contributed, driving strong customer appeal, which we're seeing in the selection rates of the recipes connected to these campaigns. Product development, including GLP-1 support and the diabetes plan, have provided more flexibility for customers, and we're seeing these trends come through in delivery numbers. For example, we have seen incremental growth from our gluten-free offering. The average order value increased by 2.3% on last year. This was driven by customers choosing higher value brands such as My Food Bag, as well as selecting larger bag sizes, and reduced customer compensation, which has resulted from improved operating service levels, for example, in picking accuracy. Customers are also adding more extras than previously, a trend which we attribute to improvements in the product range and improved user experience in this area.
Modest price adjustments have also been implemented across My Food Bag and Bargain Box to support recovery of input cost pressures, particularly in ingredients. Turning to slide 19, gross margin came in at 48.5%, down from 49.8% last year, reflecting the food price inflation of 4.1% over the past 12 months, partially offset by a higher average order value, as mentioned on the previous slide. Last year provided a challenging benchmark to compare against, as it was a particularly favorable time for produce pricing due to positive growing conditions. Although food price inflation to September 2025 was 4.1% overall, the majority of our ingredients costs come from produce and meat, which rose by 5.8% and 6.4%, respectively, putting higher pressure on our cost base. We've mitigated some of these cost pressures through procurement initiatives like sourcing produce directly from growers, recipe development, and ingredient substitution.
Although these initiatives are providing some cost pressure relief, we are focused on maintaining consistent quality and value for our customers. Over on slide 20, the contribution margin declined by 1.4 percentage points versus last year, mainly due to distribution and labor cost increases from contractual adjustments. Packaging initiatives have helped offset some of these costs by reducing cardboard and packaging consumption. In addition, our pick-to-lite system continues to deliver efficiencies in labor, improving accuracy and pick speed. Moving on to our balance sheet now on page 21, we've continued to strengthen the balance sheet further, reducing net debt by NZD 1.4 million since March and NZD 4.2 million compared to September last year. Free cash flow has been used to pay down debt, and we've kept CapEx low with no significant purchases in the first half.
Over the page, looking at the summary cash flow, you will see that operating cash flow is NZD 5.8 million, slightly lower than last year, but supported by reduced CapEx spend. The board has declared an interim dividend of 0.75% per share, fully imputed to be paid in December. The dividend reinvestment plan is also available with no discount for those who choose to participate. I will hand you back to Mark now, who will talk to the outlook on the rest of the coming year.
Thanks, Louise. As mentioned earlier, our strategy is to remain focused on growing active customers and continue to expand into the wider online food category. Recent trading reflects the continuation of the trends seen in the first half of the year, with year-to-date revenue growth of 4.6%. This compares to year-to-date revenue growth of 3.8% as at the end of September. Following the price adjustments implemented as at the end of September, we've seen a positive impact on gross margins post-balance date. However, we're mindful that ingredient cost pressure will continue to remain. We expect full-year profitability to be broadly in line with prior year and CapEx requirements to remain low, with a continued focus on reducing debt. We're confident that the steps we've taken in the first half position us well for the remainder of FY 2026.
With that, I'll now pause and turn it over to the operator for any questions. Thank you.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Guy Hooper with Jarden.
Yes, good morning, please. Well done. A solid result. Could you talk a little bit about that post or the trading update and the strength in revenue post-balance date? It seems like you would have had a fairly strong October and into November. Can you give us a bit of a color around the drivers, whether or not it's just the price increases that you put through or whether or not you're seeing any sort of underlying change in activity?
Good morning, Guy, and thank you. Yeah, I've been really pleased with the momentum that's continued to build through September and then post-balance date. The reality is that within our portfolio, we're continuing to see growth on the My Food Bag brand, so delivery volumes increase and also a better bag mix within My Food Bag as well. That's obviously providing deliveries and AOV benefit, which has been great. Order frequency is also being pretty strong. To your point, we did move price on Bargain Box at the end of September, so that's also had a little bit of an impact. Underlying volume has sort of been the key driver there, supported with brand mix. Yeah, good momentum.
Great. In terms of the order frequency and maybe the customers that are growing into that My Food Bag brand, are they coming from within the sort of My Food Bag portfolio and they're just moving up in terms of the brand or are these sort of net new customers?
Yeah, these tend to be predominantly either new customers or lapse customers that are coming back and re-engaging with the brand. Sort of very limited migration within the portfolio. The two brands do tend to perform quite independently of each other. What's been pleasing for us is that it's meant more active customers that we're obviously interacting with.
Great. As we sort of think about growth generally as well, I mean, I think we're about 12 months on from when shop went live. Talk a little bit about the experience and growth that's seen in the period and sort of where you think you can take that.
Yep. Yeah. We sort of started to pilot shop around about this time last year. What we sort of have seen within this half is that shop has contributed just under 1% of revenue to the result within the half, which has been pleasing. From a contribution standpoint, it is more neutral. I think, as we have called out in the presentation, we have invested, particularly marketing spend, to build the awareness of the offering. We have really used this first 12 months to continue to test and learn and better curate our range of care packages, ready-made meals, and so forth, to get a better sense of what customers want.
More importantly, as I've spoken to, the capability to operate in parallel, a more flexible operating model, which is premised on a make-to-forecast capability that allows consumers and businesses to interact with My Food Bag through a one-off purchase and get delivery within the same day or next day has been the real priority for us. That obviously comes at an investment, but I'm a huge believer in its strategic importance in terms of those two objectives of not only leadership in meal kits and using the shop to capture new customers as leads to kind of bring them into meal kits, but also to allow us to continue to expand into the wider online grocery market by having a platform to compete on that level.
Okay. Thank you. Just one last one from me. The timing of the public and school holidays, from memory, would have been favorable for you guys during this period. Can you talk about whether or not you did see less disruption in terms of order frequency through that?
Nothing discernible, Guy. Yeah, like I think sort of over the six months, it sort of washes out pretty evenly. Yeah, we definitely see a dip in demand from some households through the school holidays, but nothing sort of materially different to what we've seen through other school holiday periods.
Great. Thanks. I'll pause there. Thanks for taking all the questions.
Cool. Thanks, Guy.
There are no further questions at this time. I'll hand the conference back to Mr. Winter.
All right. Thank you, everybody, for dialing in and for your support of My Food Bag. If you have any follow-up questions, please feel free to get in touch with us via our IR email or the contact numbers on the release. Have a great day. Thank you.