I'm good to go.
Great, thank you. Welcome to our Annual Shareholders' Meeting. I am My Food Bag's Independent Chair, Tony Carter. Today's meeting is being conducted in person and online. We're very pleased to welcome those of you participating online through the virtual meeting platform. I'll provide you further instructions as we progress through the meeting. For those of you attending virtually and encountering technical issues, please refer to the virtual meeting guide, or you can phone the helpline on 0800 200 220. Before we formally begin, I'd like to acknowledge my fellow board members: Jen Bunbury, who is Chair of our Audit and Risk Committee; Cecilia Robinson, who is Chair of the Marketing Committee and obviously one of the founders of My Food Bag; Sarah Hindle; and Mark Powell. Mark chairs our Nomination and Remuneration Committee and will be helping chair the meeting during my re-election.
We also have My Food Bag's leadership team in attendance, including Mark Winter, our Chief Executive Officer; Louise Newsome, our Chief Financial Officer; and Olivia Clark. Olivia is going to help with the Q&A later in the meeting. Our auditors, EY, are in attendance, represented by Lloyd Bunyan, our audit partner. Lloyd will be available to address any questions regarding the conduct of the audit when we get to that section of the meeting. Finally, you will notice that we're in the offices of our share registrar, MUFG Pension and Market Services, and members of their team are available today to conduct the vote and act as our scrutineers. I have had it confirmed to me that the notice of meeting has been sent to shareholders and other persons entitled to receive it. I have been advised that we do have a quorum present, so we're all good to go.
On that basis, I am pleased to formally declare the meeting open. As always, shareholders are given the opportunity to attend the meeting and vote or to appoint a proxy to vote on their behalf. Proxies have been appointed for the purpose of this meeting in respect of approximately 56 million shares, representing about 22% of our total shares on issue. My fellow directors and I intend to vote all discretionary proxies we have received in favor of the three resolutions that are set out in the notice of meeting. Turning to the agenda, following my address, Mark Winter will provide a business update before we move on to the more formal agenda items regarding the acceptance of the 2025 Financial Statements and our three ordinary resolutions regarding the re-election of myself as a director, Cecilia Robinson as a director, and a pro forma one around the Auditor's Remuneration.
We will then have an opportunity for questions and answers. As always, I will encourage shareholders to exercise their right to vote and ask questions online. You can send through your questions at any time through the online portal by clicking the Ask a Question button, and I'll encourage you to do so as soon as possible, as this will allow us to answer those questions at the appropriate time in the meeting. This financial year has seen My Food Bag return to growth, reflecting our unwavering focus on growing active customers by prioritizing convenience, quality, and innovation. As more Kiwis seek out simpler, healthier meal solutions, we continue to evolve to meet their changing needs, reinforcing our position as New Zealand's leading provider of meal solutions.
Our focus throughout the year has been on enhancing customer experience, expanding our product range, and strengthening the appeal of our portfolio of brands. We have made significant strides in developing our offerings, capturing operational efficiencies, and ensuring that every meal we deliver exceeds customer expectations. During the year, we launched the My Food Bag shop. The shop utilizes our strengths and assets to establish a more flexible operating model, allowing New Zealand households to purchase one-off meal solutions with shorter lead times. The current range features care packages, gifting bundles, and ready-made meals, all delivered nationwide. It is pleasing to see the growth in the early stages of the My Food Bag shop, and we continue to focus on initiatives to drive awareness and sales for that.
The combination of customer improvements in the meal kit business and the establishment of the shop put My Food Bag in a stronger position to capture a larger share of the growing online food market. Throughout the year, free cash flow allowed for further debt reduction, with net debt decreasing to NZD 6.9 million at the end of FY 2025, and that was down from NZD 11.8 million at the end of the previous financial year. This further strengthens the balance sheet, better positioning the company with flexibility for capitalizing on growth opportunities in the future. While reducing debt, the board also remained fully committed to shareholder returns and were pleased to declare a fully imputed final dividend of NZD 0.85 per share, bringing the total dividends for FY 2025 to NZD 1.5 per share. My Food Bag demonstrated its resilience through FY 2025 with strong cash flow generation during a tough economic cycle.
Revenue growth, tight cost management, and low capital investment requirements have all contributed to this. In FY 2026, the current financial year, growth has continued, with sales up 3.8% over the first four months of trading versus the same period last year. This has been a pleasing result with the ongoing economic environment remaining challenging. While we remain confident in our ability to manage inflationary cost pressures, we do expect the gross margin for the first half to close below the prior year as our price increases that we have put through have lagged that through price inflation. The Board expects to continue to pay dividends in FY 2026 based on the strong cash flow generation. We will provide a financial update when we release our interim results in November.
I'd like to finish by acknowledging and thanking all our team at the My Food Bag business for their continued efforts and passion for our business. I'd also like to thank you, our shareholders, for your continued support. I will now hand over to Mark to do his address. Thanks, Mark.
Thank you, Tony. [Foreign language], welcome. Thank you to everyone here today. It's always nice to meet with our shareholders, and we appreciate this opportunity to provide an update. Today, I'll be outlining the progress and the outcomes My Food Bag has delivered over the past 12 months as we continue to concentrate on our objectives of growing leadership in meal kits and expanding into the wider online food market. Starting with our financial performance, we reported EBITDA of NZD 16.1 million for the 12 months ended 31 March 2025.
These earnings were generated off NZD 162.1 million of revenue and reflected a return to growth in the second half of FY 2025, building off a stable performance in a challenging retail environment. Our net profit after tax was NZD 6.3 million, 5% up on the prior period, FY 2024, while free cash flow in FY 2025 more than doubled to be NZD 7.6 million. Over the past year, we have strengthened our customer offering and improved operational efficiency, translating into renewed growth and sustained business performance. Some of our key initiatives to support this were the launching of the My Food Bag shop, offering one-off purchases and shorter lead times without the need for a subscription, growing appeal in the wider online food market. We upweighted our brand investment, growing consumer awareness, and driving active customer growth.
We redesigned our user experience and customer buying journey in both our app and our website, increasing personalization and convenience for our customers. We also implemented various procurement initiatives, including moving the sourcing of our produce direct to grower to help mitigate inflation and improve our gross margins. We further built employee engagement and retention through a positive culture, which increased employee satisfaction scores. With our strategic objectives of growth in meal kits and expansion into the broader online food market, we are focused on growing active customers through offering flexibility, convenience, and great value.
Central to this focus are four key pillars: building our brand to drive higher customer advocacy and loyalty, enhancing convenience for our customers across all our brands to make lifestyles easier, such as shorter lead times, faster recipes, and growth of ready-made meals, offering more personalized solutions so customers have more flexibility and choice to meet their individual needs, and introducing new customers and audiences to My Food Bag by unlocking new segments and occasions, like the introduction of the My Food Bag shop. These pillars are underpinned by an efficient operating model, an ongoing investment and priority into our people, supply chain, and data and technology. Our portfolio of brands continues to be a key enabler for us in growing active customers. 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 pillars of providing a seamless customer experience and personalized solutions have seen us develop our offerings to ensure they align with the evolving tastes, lifestyle needs, and dietary preferences of New Zealanders. A highlight for us this past year was My Food Bag's partnership with the New Zealand Olympic team for the 2024 Olympics. This partnership drove passionate engagement with our customer base and beyond. We also successfully reintroduced our gluten-free offering with the support of Celiac New Zealand. In April this year, we launched our diabetes plan with the support from Diabetes New Zealand to tackle one of New Zealand's fastest growing health challenges, Type 2 diabetes. Bargain Box continues to be New Zealand's most affordable meal kit, offering convenience for more budget-conscious consumers.
We're focused on product enhancements such as expanding our low-carb offerings and continue to demonstrate its accessibility for Kiwi households with a currently 6.3% cheaper than an equivalent online supermarket shop. Fresh Start has continued to help Kiwis achieve their weight loss and wellness goals with calorie-controlled, nutrient-rich meal options. We have seen strong engagement with the optional 8-week reset program. Fresh Start also had product enhancements through the year, such as the introduction of new high-protein recipes. During the financial year, we invested in our full user experience redesign and re-platform of both our website and our 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. As a business, we continue to embrace new technologies, such as artificial intelligence, to drive both customer experience improvements as well as productivity gains.
We also continue to expand our delivery network by opening up more than 7,000 new addresses and introduce new delivery windows to provide our customers with greater flexibility. Our focus on customer experience across the board has resulted in multiple areas of improvement. For example, our Net Promoter Score was up 7 percentage points year -on -year, and customer compensation continued to trend down. As Tony touched on in his address, we were excited to launch the My Food Bag shop in late November to target new audiences and unlock new segments and occasions. The shop currently offers one-off ready-made meals, foodie gifts, meal solutions, and care packages for existing customers, as well as attracting new customers who want a one-off purchase without a subscription. The shop further expands our offering into the wider online food market, utilizing our existing network and platform, and leverages our strong brand credentials.
This new flexible operating model allows us to reach a broader audience, including corporate clients, and provides a greater 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 continue to enhance the shop offering, digital experience, and communications through FY 2026. 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. From an environmental impact perspective, we've continued our efforts towards circular packaging solutions, including transitioning toast suppliers from cardboard to reusable crates for ingredients delivered into our distribution centers. In November 2024, we also hosted our inaugural Supplier Awards, where we celebrated with awards in three categories of Quality Excellence, Service Excellence, and Innovation.
In FY 2025, we also continued strengthening our culture and capability for the future, and this shows in our strong employee engagement score. Our commitment to our people was recognized when we won the 2d egrees Supreme Employer of the Year Award in Auckland in April this year. We've also continued to support our community through Supported Life in Auckland and Skillwise in Christchurch, which helps provide opportunities for people with learning disabilities. As we are moving well into FY 2026, we continue to make great progress and deliver on our strategy. Some examples of recent activity include for Bargain Box, we've launched our Bargain Win campaign with a strong focus on value, affordability, and quality, while continuing to highlight the savings compared to an equivalent shop at the supermarket.
With My Food Bag, we have continued to build on our strong connection with Nadia Lim, with new seasons of Nadia's Farm Kitchen, along with continuing to run the Dinner, Done Better advertising and the highly successful Dinner with Nadia content. With the recent arrival of GLP-1 weight loss medications into New Zealand, we have launched our GLP-1 support plan under our Fresh Start brand to help New Zealanders eat well and stay nourished while they are taking these weight loss medications. We have also further built out our diabetes plan from launch. In the My Food Bag shop, we continue to invest in raising awareness and meeting new occasions with our product range, including our high-quality ready-made meals, which consistently receive very high customer feedback ratings and NPS .
Wrapping up, as we progress further into FY 2026, we remain focused on continuing to build on the results of the past 12 months, concentrating on growing active customers and delivering growth and innovation initiatives aligned to our strategic objectives of growing leadership in meal kits and expanding into the online food market. I look forward to providing an update on our progress and our interim results in November. Thank you again, shareholders, for the opportunity today and for your continued support. Thank you.
Thanks, Mark. We now come to the more formal part of the meeting, which is the resolutions. The first resolution is to formally receive and consider the Annual Report for the Financial Year ended 31st March , 2025, including the financial statements, the Auditor's Report, etc. Copies of the annual report have been made available to shareholders before the meeting and are available on the investor website. As a reminder, there will be an opportunity to ask general questions shortly. However, this is the opportunity to ask questions specifically on the financial statements, the Auditor's Report, and the company's 2025 Annual Report. Can shareholders present in the room please wait until a microphone is provided to you? It's important because the people online have got to hear you. Please clearly state your name and whether you're a shareholder or a proxy holder.
Are there any questions from shareholders in the room in relation to the financial statements? I am not seeing any. Are there any questions online, Liv?
No questions online.
Cool. Okay. We'll then move on to item four on the agenda, which are the resolutions. The first resolution relates to the re-election of myself. The second one, the re-election of Cecilia, and the third one is the approval for the directors to set the auditor's fee. A poll will be held on each resolution, and each resolution is required to be approved by an Ordinary Resolution. That means that it's a simple majority of the votes cast by shareholders entitled to vote. Shareholders will be able to cast their vote either in person or online. Shareholders joining us today, you will have been given your Shareholder Voting Card. If you're a shareholder and did not register on arrival and wish to vote, please make your way to the registration just outside this room for assistance.
Please mark your voting intention for each resolution, and the voting cards will be collected close to the conclusion of the meeting. Shareholders voting online will be able to cast their vote using the Electronic Voting Card. To vote, you will need to click Get Voting Card within the online meeting platform. You will be asked to enter your shareholder or proxy number to validate. Then please mark each of your voting cards in the way you wish to vote, which is for, against, or abstain on their voting card. Once you have made your selection, please click Submit Vote on the bottom of the card to lodge your vote. Voting will remain open until five minutes after the conclusion of the meeting, and the results of the polls will be announced after the meeting on the NZX platform. Resolution 1 relates to the re-election of myself as a director.
I will hand over to Mark Powell, Chair of the Nomination and Remuneration Committee, to chair this part of the meeting. Mark.
Thank you, Tony.
[Foreign language] . Tony joined the board of My Food Bag in January 2021 and was appointed Chair at that time. He has a broad range of experience in governance across the consumer, industrial services, infrastructure, and energy sectors. Tony moved into governance following a successful executive career, where he served as Chief Executive and Managing Director of Foodstuffs for 10 years. Tony is currently Chair of Datacom, TR Group, the Interiors Group, and The Skin Institute, and also sits on the Board of Ravensdown and The Warehouse Group. He was formerly Chair of Air New Zealand for six years, Chair of Fisher & Paykel Healthcare for eight years, a Director of Fletcher Building for nine years, and a Director of ANZ Bank New Zealand for 10 years.
In 2020, Tony was made a Companion of the New Zealand Order of Merit for services to business governance. Tony Carter retires and, being eligible, offers himself for re-election. The Board recommends, I probably understate it, the Board totally recommends Tony Carter to you as a Director of My Food Bag and unanimously supports his re-election. Invite Tony to address this meeting now on his proposed re-election. Thank you, Tony.
Thanks, Mark. I want to say a few words to ask for your support for my re-election to the Board of My Food Bag. Mark has already detailed my background, so I won't repeat it. I joined the Board of My Food Bag in January 2021. The reason I joined was I believed in the business and felt it had a great future. I still do. I am aware that many shareholders feel disappointed by the share price performance since we listed, and I share that. However, the business model was new and untested in a post-COVID environment, and also how the business would react to a recessionary environment. When demand started to soften in 2022, the Board and the Management worked to right-size the business, and we're seeing the benefits of those actions. We've been consistently profitable, and it's wonderful to see the business back in growth.
I believe we have an excellent board that has a range of skills and experience that are appropriate for My Food Bag. I continue to be excited by this business and the opportunities we have, and I ask for your support for my re-election. Thank you.
Thank you, Tony. I move as an Ordinary Resolution that Tony Carter, who retires at the annual meeting and is eligible for re-election, be re-elected as Director of My Food Bag. Are there any questions from the floor on this resolution? As we did last time, firstly, we'll look for questions in the room. One question.
Hi, my name is [Sari Chen]. I'm the shareholder. Regarding page 64 of the annual report, I'm not too sure why it's not available that you attend any of the Marketing Committee meetings because you are an independent Chairperson. I'm not too sure the reason why that's the case or.
The Marketing Committee was set up specifically to help management with marketing matters. It's a sort of a functional committee that has a lot of marketing expertise with Sarah, Mark, and Cecilia. I don't think I can add a lot of value. It's not my strength as marketing, and I think the committee works better in a smaller group to be able to assist management with the marketing of the business. That's the reason I don't attend.
Okay, thank you.
Thank you.
Any more questions in the room? One question here.
Thank you. Good morning, Roger Clark's my name. I'm a shareholder. Just a question for you, Tony. The share price is currently less than 1/7 of where the company floated just over four years ago. Is there anything you think you can do better going forward than what you've done in the last four years since the company listed?
I think there's always things you can do better, and we strive for that every day. It clearly floated at a very optimal time for the existing shareholders. I mean, it was coming out of COVID, and like a lot of businesses, it got a big lift from a COVID environment that we thought at the time might be a permanent change. Obviously, our deliveries are less than what we were doing during that time. I think we are where we are, and we've got to do the best with what we've got. I think it's pleasing that the share price is up, what, over 40% over the last 12 months. There is some positive movement in the share price over the last 12 months. I can't wave a magic wand and get it back to what it was at the IPO.
Any other questions in the room? I'll check with Olivia at the back. Any questions online?
No questions on this matter. Thanks, Mark.
If there's no further questions from shareholders online, I think now there appears to be none. I'll hand back to Tony as Chair, and we'll move on to the next board resolutions. Thank you.
Thanks, Mark. All right. Resolution 2 relates to the re-election of Cecilia. Cecilia co-founded My Food Bag in 2012, was co-CEO until 2018, and served as a Director of the company prior to its public listing in 2021. Cecilia has significant institutional knowledge about My Food Bag. Her entrepreneurial background and innovative drive complement the existing skills of the Board and have helped support My Food Bag for a challenging period and see the business return to growth. Cecilia is also founder and co-CEO of Tend Health and is a member of the Institute of Directors and a Board member of Pie Funds.
Cecilia has been recognized for her contributions to business and entrepreneurship with several awards, most recently as the New Zealand Innovator of the Year Award in 2024, Supreme Winner of the 2017 Women of Influence Awards, NEXT Magazine's Businesswoman of the Year 2014, and the EY Entrepreneur of the Year in 2013. Cecilia retires and, being eligible, offers herself for re-election, and the Board again unanimously and strongly recommends Cecilia to you as a Director of My Food Bag and supports her re-election. Cecilia.
[Foreign language] , everyone. It's a pleasure to speak with you today and to put myself back for re-election for the Board. For those I haven't met, I co-founded My Food Bag and have returned to the business post-IPO, and I'm currently co-CEO of Tend Healthcare. I'm deeply personally invested in My Food Bag's success and remain confident that the value we've built will be recognized over time. It's been great seeing My Food Bag regain momentum, and I'm proud of the progress that we've made, in particular over the last 12 months. A personal highlight for me has been chairing the Marketing Committee, where we've worked to really sharpen our customer proposition, our brand experience, and in reinvigorating the brands. While we've made strides, we still have work to do in evolving with our customer needs, building loyalty, and delivering on long-term value for our shareholders.
I extend my thanks to our leadership team for their dedication, to my fellow Board members for their guidance and support. It's a privilege to work alongside you all. Thank you.
Thanks, Cecilia. I move as an Ordinary Resolution that Cecilia, who retires at the annual meeting and is eligible for re-election, be re-elected as a Director of My Food Bag. Are there any questions from the floor on this resolution? I am not seeing any. Are there any questions online, Liv?
No, no questions on this matter online.
Cool. Okay. We'll now move on to Resolution 3 , which is the Auditor's Remuneration. This is a procedural resolution that you'll see at all annual general meetings. The current auditor of My Food Bag, EY, will be automatically reappointed at this annual meeting under our governing legislation. There is a requirement for the auditor's fees and expenses to be fixed at the annual meeting or in the manner that the company determines at that meeting. Shareholder approval is therefore sought for the directors of My Food Bag to fix EY's fees and expenses for the ensuing financial year. The Board unanimously supports this resolution and recommends you vote in favor of it. I now move as an Ordinary Resolution that the directors of My Food Bag be authorized to fix the fees and expenses of the auditor of My Food Bag for the ensuing year.
Are there any questions on this specific resolution? Liv?
No, no questions online either.
Cool. Okay. At this time, I'd like to advise the outcome of the proxy votes that were lodged in advance of the meeting and on those resolutions, and they are shown on the screen. For those shareholders online, please note that you can continue to submit your vote online if you have not already done so, and voting will be open until five minutes after the conclusion of the meeting. For shareholders in the room, members of the MUFG Pension and Market Services team will now move through the room and collect your voting cards, and I see them coming around, so it will be great. That then leads us on to general business, and I'd like to invite shareholders the opportunity to ask questions, whether in relation to the presentations given today, the annual report, management of My Food Bag, just basically anything you want to ask.
Shareholders online can continue to provide questions through the portal, and we will also request questions from the room. When I call for questions, can shareholders present in the room please use the microphones provided and clearly state your name before asking the question? I ask in the interest of fairness to all shareholders attending this meeting that anyone wishing to ask a question does so in a concise manner as possible and be considerate to other shareholders wishing to ask questions. I will endeavor to answer your questions myself or probably more appropriately direct them to Mark. Moving first to a question that has been submitted in advance of the meeting, and the question is from Edna Mark Costello. Does the Board consider the share price undervalues the company, and if so, has consideration been given to its buyback before?
I think the market will value the company, and it's very hard for the Board to express a view as to what the fair share price should be. I did note in my earlier response to a question that the share price has materially increased over the last 12 months, which is pleasing to see, and I think that is a sign that the market is getting more confidence in the company, which is great. In terms of a share buyback, we have considered it. However, I'd make a couple of points. First, the company does have surplus imputation credits, and the most tax-efficient way to distribute surplus funds from the company is by a fully imputed dividend, and we are obviously doing so. The second thing is the evidence on share buybacks is pretty mixed.
In the past, there are several companies that have bought back shares, and while it provides some short-term sugar hit, over time, it does tend to go back to the true value, underlying value of the company. At this stage, it's not something that's under active consideration. Cool. Okay, questions from the room now. Sir.
Richard Jenkins, shareholder.
Hi, Richard.
Hi. I've just been looking on Trustpilot, where your reviews are 3.8, which is hardly stellar. The most recent review, which I can show you, which was posted today, is a customer who changed their address and contacted My Food Bag a week before the parcel was to be delivered to get the parcel sent to the right address, and My Food Bag said nothing could be done, and the parcel went to the wrong address and the food was presumably wasted. Hardly great customer engagement. I can show you the review if you're curious.
I am, and I'll ask Mark to respond to that because it's probably more of a management.
Happy to follow up on the specifics of the customer. From our perspective, you know, we obviously look at our customer feedback daily and weekly, and we've continued to see it trend up. Our customer satisfaction scores and our Net Promoter Scores continue to be positive year -on -year. With regard to flexibility around deliveries, our policies allow customers to make changes, you know, post-subscription commitments, usually within 24 hours. The fact that this occurred a week before the delivery seems like an exception, but more than happy to follow up on it.
Okay, thank you.
Thank you, sir. Perhaps, Liv, have you got any questions online?
Yeah, we've had a couple of questions online. We've actually had a couple of questions in relation to food price inflation and managing margins. I'm just going to take a representative question on that. Given food price inflation, do you have any plans to increase the price of your products in the next year to match inflation?
Yeah. Food price inflation obviously is impacting all of us, including My Food Bag. As a business, we have a number of considerations that go into how we set our price, including the cost of inputs like food. We think about not only those input costs, but we think about the associated value of our product that we're offering and all the other kind of features associated with it. We're tracking food price inflation very closely. We're working very closely with our suppliers, both in terms of actual and sort of forecast movements. As we have to date, we'll take action where it sort of makes sense to increase prices.
It's probably worth noting we did put through a modest price increase on the My Food Bag from the beginning of July. Question, sir?
Hi, sir. My name is [Sari Chen] again, the shareholder. I have two questions. The first one is, have you considered food delivery by zones?
By drones.
Those pilotless planes or aircraft, for example, or those driverless vehicles and those more of the higher tech products. My second question is regarding the employments and diversity. Do you have to practice manband in order to show a very good diversity according to the NZX standard?
The first question, in terms of drones, I think it's too early. In a New Zealand context, it's not something that we're actively investigating today. There are obviously some pilots that people like Amazon are running, but they have slightly deeper pockets than ours. It's something that, you know, again, I suspect in a decade's time it would be different. In terms of diversity, perhaps I'll throw that one to Mark as Chair of the committee.
In terms of diversity?
Yeah.
Do we discriminate against men? I think was the question. To make our numbers look good? The answer's no.
That's why I was wondering about the question. We certainly don't. Otherwise, I don't think myself or Tony would be sitting here either. Look, diversity is important, you know, and we treat it seriously, but we don't treat it in a way that does it just to get numbers that make us look good. It's about the performance of the company. It's about helping people achieve their potential with no unconscious bias getting in the way. That's applied very practically in this company and applied well to make sure that we're looking at, are there any data that suggests that there may be anything that is getting in the way of people achieving their potential? That's how we apply it. We certainly don't discriminate against men.
Okay, thank you. Liv, any questions online? I'll alternate, I think, make it easy.
Yeah, this question is from James Davies. I am a My Food Bag customer and a HelloFresh customer. When a HelloFresh recipe includes one cup of corn, I receive one cup of corn. With My Food Bag, I receive half a kg of corn for the same one cup requirement. This is an example, but the same happens with peas, pastas, noodles, etc. This is great for the customer, but as a business, are we providing more food than what is being paid for? Would a supply chain more like HelloFresh save us money?
The reality is, in that specific example around corn and peas, it actually works out cheaper for us to source a bigger volume and provide the customer with more than it does to individually pre-portion it. That's the case. We get a lot of positive feedback about the fact that, in general, My Food Bag, across all of its brands, the volume and quality of the meals that are provided are usually a lot bigger than what people expect. Net-net, we see this as a really positive thing, but procurement opportunities and getting the right portion sizes remains still central to what we do. You can see that in a range of other ingredients we provide, including sauces and dry goods and so forth.
Okay, thank you, sir.
Hello everybody, my name is Uri Selz, shareholder, and sorry for my lateness. I'm not sure if I missed it, as I missed a part, if you commented on current trading. It's a few months and I've come along, and maybe you can comment on that as deep as you can.
What we said earlier in the meeting is sales year to date are up 3.8% for the first four months of the year. The other guidance we gave was that our ingredient margin is under pressure due to food price inflation, which we just talked about. We anticipate that our margin for the first six months of the year when we report will be below last year. That's the guidance we're given. I really can't give any more, I'm sorry.
Thank you. The second one is, yesterday I Googled New Zealand or Auckland and then food kit, and your company came up as number six, I think, with Woop and other ones beforehand. Is that normal, and is that actually important?
Good question.
Yeah, look, it's certainly important. It's not necessarily normal. I don't know exactly what you Googled and what that looked like, but from our perspective, we drive a lot of investment into what we describe as search engine optimization, SEO. We do that across all of our brands and all of our various products, obviously to promote our products to the top of the likes of Google and other search engines, obviously to drive conversion.
Thank you. Lastly, have you, I heard you know New Zealand, I'm a pretty young shareholder, but I'm from Germany. I know HelloFresh, they own the market very well. Have you actually disclosed your market share at a certain stage?
No, we have not. I'm not sure that that's widely available. I mean, there's no real data, you know, published data around market share. I think it's fair to say that we believe we've increased data. HelloFresh are our main competitor, and they release their reports every 12 months on the Companies Office website. We look at those, and they declined quite materially in the last reported results. We don't have the data ourselves.
What would you estimate your market share is?
At the end of the day, we play in a pretty wide online food market. When it comes to the definition of that, not only are we talking about HelloFresh, we're talking about a range of players, you know, with the likes of Woolworths and New World and a number of others that are in there as part of that. Tony's point is that HelloFresh specifically, we've not seen their numbers, you know, for now close to 18 months in terms of their filing. They're very much out of date. Specifically, the last time they filed, in a relative sense, you know, they sat, you know, at a lower market share or a lower revenue than what we're turning over at that point in time.
Okay. Another last one, please. What about market dynamics? Is the market relatively rational at the moment, or do you see some irrationalities regarding pricing or how aggressive some players are?
My observation of the market is that it is rational at present and has been probably for the last 12 months, in that all of the participants in the wider market have more standardized type offerings out there to incentivize consumers.
Okay, [Matthew], thank you.
Thank you. Perhaps we'll go to Liv and ask for it, and then we'll come to you. Liv.
W hat considerations have around offering alcohol into the product mix have there been? I suspect this has been considered, however, decided against. I'm interested to hear any feedback on this. This is a question from Geoffrey Henderson.
Could you just repeat the question? I didn't quite catch that.
Sorry. What considerations around offering alcohol into the product mix has there been? I suspect this has been considered, however, decided against. I'm interested to hear any feedback on this.
Yeah, look, we certainly recognize that alcohol and wine and beer often is a nice pairing with meals. In many respects, as an adjacent category, it certainly holds some appeal. We have piloted offerings in the past, but what we've seen is that we have seen very limited uptake in conversion. In fact, we've found that a lot of New Zealanders are very particular with their wine, and offering a sort of generic red or a generic white doesn't necessarily hold appeal. There's a whole lot of complexity as well, obviously, from a supply chain perspective around offering alcohol. It's not something that's immediately on the horizon for us, but certainly, long term could present an adjacent category opportunity.
Thank you, Madam.
Barbara O'Connor from the New Zealand Shareholders' Association, also an individual shareholder. I guess my question is similar to that about the customer growth. I noticed the increased figures in the last 12 months. To me, they look quite modest. Do you think that's come from your new product range, or do you think you're taking that away from competitors?
That's a good question, and the reality is it's a bit of both. I think we're probably taking share. At the same point, we know through a lot of our new products that we've developed, sort of the likes of our gluten-free offering or our diabetes plan, you know, that has also introduced new people to My Food Bag. It allowed us to grow as well. In terms of our customer base, I think one of the things that we've put a lot of effort into over the last 18 months is about improving the overall health. By health, what I'm talking to is the frequency or the number of orders that individual customers are taking. We've seen that increase. The other point is the amount of money that customers are spending with us in terms of their average order value or transaction value. Again, we're seeing that increase.
Those are sort of important drivers in addition to customers supporting our top line.
Okay, my next question relates to something, I can't remember which year it was, that you had quite a lot of faith in improvements that were done from the opening of the Christchurch warehouse. Have you got any idea that you can tell us what the impact that has been on the business, or is it given where the company's gone since that time? Is it now redundant?
Mark, do you want to comment and perhaps come back to Liv as well?
Yeah, look, the reality is the new facility we moved into in Christchurch in 2022 with the purpose-built design layout allowed us to be more efficient and productive in the way that we complete our supply chain, which did translate into less labor hours being required, reducing our assembly costs per unit effectively. As Tony's touched on, it also coincided with the implementation of light automation around our picking assets. That saw a material step change in terms of the reduction in labor hours required to complete our weekly assembly cycle, which again reduced that per unit cost.
It was also, we did have another facility in Auckland, so we had two facilities in Auckland where we were able to consolidate in Brigade Road as a consequence of that Christchurch development as well.
With the Christchurch development, has that had any impact on the number of customers, active customers in the South Island? Positive or negative?
Look, to be very honest with you, it's difficult to discern that by moving to a new facility, we've seen direct customer growth. We had an existing facility within Christchurch, so it was a case of shifting within Christchurch as such. What it's allowed us to do is, from a quality and customer experience standpoint, and with the Pick-to-Light technology also, deliver a far more consistent, more higher- quality product. We've seen our retained portion of our active customer base grow because customers are having a better experience and they're therefore taking orders more regularly.
Okay, thank you.
My third question, if I may.
You may.
Is about your distribution channels. I'm impressed to see that you've got a 48-hour turnaround from an order to the delivery. I know that in 2022, there was a risk factor for your reliance on New Zealand Post. We know what's happened to New Zealand Post since those days. Can you comment on how you're achieving such a good distribution channel if you're still relying on New Zealand Post?
We continue to partner with New Zealand Post. In terms of our key performance indicators associated with delivery, we're achieving well in excess of +99.5% around orders associated with the shop, and we're very pleased with that.
Thank you. Perhaps go back to Liv online, and then we'll come to you, sir.
We've had a question from Simon Todd. Will My Food Bag continue to reduce the NZD 6 million of debt?
Yes. I mean, we're obviously, I think it was NZD 11.8 million at the end of FY 2024. We are down to NZD 6 million at the end of, so we've basically cut it in half. The view is that we'll continue to allocate between distribution to shareholders and reduction of debt. The short answer, yes, we will continue to reduce our debt. Then I'll come to you.
Roger Clark again. Look, I've got two or three questions about the performance rights that I think are very important that shareholders understand the cost of those. There were 5.9 million shares issued. I am just referring to NZX releases on the 1st July this year. Now, I understand that effectively that is a cost of the company at the exercise, at the value of the shares at the time they were issued. So NZD 0.23 a share at the time. There is NZD 1.36 million worth of bonuses paid to senior management. When I look at the financials, I see the company sort of trending down and then sort of finding a floor and stabilizing. Your net profit before tax was identical FY 2024 to FY 2025. Your 2025 profit only went up because your tax went down by an identical amount of NZD 0.3 million.
Why is the company paying shares, which I understand are free, aren't they?
It is part of the remuneration structure we put in place for management. It is very important that we incentivise management to perform. That was part of the mix. I think we've probably had previous questions along similar lines that, if we don't reward our management, we won't have them to drive the improvement in performance. We have every confidence in the management we've got, and we want to see them fairly rewarded for their efforts.
The package last year that you got, Mark, was worth about NZD 600,000. I assume with the issue of these new shares, it's going to be considerably higher this year, which is obviously a cost to the company. We're going to see a significant increase in employee costs in FY 2026, aren't we?
I don't believe so.
I don't believe so. I mean, ultimately, it is what when you're looking at cost horizons, and you know, I think you've got the questions got to consider those horizons and performance, particularly over the last 18 months when it comes to Mark since his appointment. In terms of the plans we've got in place, they will be based on performance and will fund themselves in that sense. I think the plans we put in for the future are sensible based on performance, and to be achieved, they will have to perform.
If you don't mind, I'll just refer to the NZX release on the 7th of July. We've issued another 6.9 million performance rights, giving a total of NZD 13.27 million worth of performance rights. That is a current outstanding value if they're all exercised today of NZD 3.32 million. To me, the company is struggling in a very tough economy.
It's really important you keep your costs down. What I see here is a pretty gold-plated performance bonus system for a company that's struggling to get back into growth mode. What benchmarking did you do against other similar companies when you came up with a scheme like this?
I'd say the first key thing is their performance rights. They're based on performance metrics being hit overall, and they're part of a remuneration package of fixed pay and variable pay in a market that's broader. With our current management team, I would say over the last two years, who I would argue have performed exceptionally. The question was asked against relative performance versus HelloFresh, for example, and the current performance in the general market. I think, and sorry, I'm not being critical, but this 3.8% in our current market in New Zealand is not meager in any retail environment. They're performance-based. Yes, that's what's achieved if we get a full performance, but that performance has got to be earned. Those performance targets, if they are achieved, will mean they are earned. Yeah.
I guess my concern, Mark, is that if the company does perform better in FY 2026 and FY 2027, that's ostensibly a function of the economy recovering, not anything specific that management have done.
I disagree with that. I would disagree as well. Look, there's always an economic picture, but I don't think it is just a function of the economy performing. I think if we hit the targets that have been set there, it will have been performing better than the economy performing.
As Mark mentioned, the performance rights, they're actually self-funding because you take the cost of those out of the KPIs that they're measured against. They are self-funding as well, sir.
All right, I hope you set tough KPI targets.
I think Mark would have thought we have.
Good question. It's a fine line. We've got to look at keeping people who are good performers in a market where other companies would look at people, but you want performance as well. They're not gimmes, and I assure you they're certainly not gimmes.
Thank you. Good question.
Yeah.
Liv, anything online?
Yes. Have you thought about promoting My Food Bag as From Kiwis for Kiwis, i.e., promoting the fact that My Food Bag is a New Zealand company? This is asked by Simon Todd.
We've certainly thought about it and continue to do that in our brand messaging. The example I gave earlier in the speech around supporting the New Zealand Olympic team was an example of that. Some of our messaging associated with that sponsorship was very much around the fact that it is, you know, a New Zealand business supporting the New Zealand Olympic team. It's part of our identity and we'll continue to promote that.
Cool.
Sir, John White, Century Group. Just a query on research coverage. Could you, I think we've only got one major broker covering your company. Could the Board please do something to either pay someone else or encourage someone else to cover you research-wise?
Yeah, it is disappointing. It's certainly something where we did originally have three, I think, four-bar crates. Obviously, with these changes in the market, they're reducing their coverage of smaller-cap companies. We are down to Jarden. It's certainly something I know Morningstar do provide a service that you can pay for to get it. Something practical we should consider. Good point, sir. We'll take that into consideration.
Thank you.
Liv.
This is a question from Awateer Investments Ltd. What is your current dividend policy?
What is our current? It's a good question.
The guidance that we've been providing over the last 12 months has been looking at the free cash flow and effectively splitting that 50/50 between dividend and debt repayment.
I think that is the case in that I'm not sure we've formally articulated that to the market, but that was the driver. When our debt gets down to zero, obviously we'll have to reconsider our dividend policy. It's probably a method that's temporary in terms of the strong free cash flow getting our debt down very quickly.
Cool.
Sir.
Thank you. Yes, I have another one. My son, maybe six months ago or nine months ago, he ordered your food bag for the first time. It was massively discounted. I think it was 50% or so, not sure exactly. The interesting thing, however, was that he managed to do that also in many, many weeks, if not a few months after his first order. This is a price where I assume this is EBITDA negative or even maybe gross margin negative. I'm not sure. I'm not sure how he did it with changing accounts or whatever. I'm not sure if to call that smart or abusive. That's not my question. Are you aware that this is happening? Is that why? I mean, that's burdening your EBITDA. Is that widespread, that behaviour? Can you actually control that? Thank you.
I'm surprised to hear that. It is very much against our terms and conditions. We have a series of controls and checks in place to mitigate the scenario you've described. That means understanding who is ordering the product, not just name and address and cell phone information to sort of mitigate that. There will always unfortunately be exceptions of promotional fraud out there in any business. We're very focused in on chasing out that waste. Certainly, from my perspective, over the last 18 months, we've made a huge effort in improving, to my comment earlier, the health of our customer database to remove a lot of that.
Cool. Thank you, Liv.
Oh, we've got a question from Hamish Jamieson, which is a follow-up on the question around the price increases. They just felt like they needed a clearer answer. Do you have any further plans to increase price in the next year as food price inflation is clearly impacting on margins?
Fair to say, we had a board meeting prior to this, and it was something that was discussed. No conclusion has been reached. It's certainly under active consideration. It's probably the fairest way of answering that question. There's obviously a competitive element to that that we've got to be careful of. Cool. Any questions in the room? Sir?
Good morning. I'm a single shareholder. First of all, I'd like to thank you. Thank you all. You are my heroes. The dividend is certainly appreciated. When the share price collapses, if there's a bit of cash coming in, that is appreciated. Other heroes of mine are our chefs. I don't hear a great deal generally comment about our chefs. I'm also a recipient of lovely meals, which my wife has done with the help of your chefs. That has been one of my enjoyments. I think it is one of the selling points of My Food Bag, that many people learn to get new experiences, new ideas of how to cook. I don't know if you've played enough of that in the past.
It's a good point. I mean, I think there is a wider purpose to My Food Bag rather than being purely financial. It is about helping Kiwis eat more healthily. I think that is something that we have certainly as a board accomplished. I know the management, I saw Trish, our Marketing Manager, nodding strongly with that. Probably our chef, yeah. It's a good point, and it's something that we should continue to reinforce. Cecilia, do you want to?
I absolutely agree with you. I think there's a lot that we can continue to do in terms of developing that proposition and telling the story. We've heard those customer stories for years, for the past 13 years. I absolutely agree with you. Likewise, for my family, I've got my 13-year-old cooking, and that's quite a joy. We'll take that away to the Marketing Committee and discuss it further.
I'd like to make one comment. Sorry, Bob. This is a really great question. I mean, I came on this board. I was a raving fan customer for a long time. I caught up with Tony and said, if you're ever looking for a new director, put me into the search process. The product and the chef, Chef Dad, right [ Polly]'s in the room. It's a fantastic product. It's great, and that's part of the reason I was so keen to want to.
of this company. Yeah.
Liv.
Got a question from Brendan James Kelly. Have you considered some kind of loyalty program to help retain customers?
Good question, Mark.
Yeah, we do run various loyalty initiatives. Bargain Box has a spend and save program, which is based on order frequency and associated credits based on that. It is certainly one of the kind of features that we have around retaining customers and incentivizing purchase, and we'll continue to develop that.
Great, thank you. Any questions in the room?
Roger.
Sorry, me again. Look, on the dividend thing, Tony, and look, you've done a really good job on reducing debt, and I think that's acknowledged by the market. Do we really need to be so aggressive on reducing debt going forward, such that we're paying 50% of free cash flow, or...
It's temporary, Roger, as I pointed out. We've got an interim dividend coming up that we'll have to make a decision on. When we get to the year end, our forecast is that debt will be well reduced, and that's a point when I think we can reconsider what we do with that surplus cash.
I'd just like to give you some feedback. There are a lot of shareholders I know are hoping the dividend will go up to NZD 0.02 per share this year.
No comment. The point I would make is a lot of our institutional shareholders were very strongly of the view that we should focus on reducing debt, and we've tried to strike a balance between the need to reward our retail shareholders and that feedback from our institutional. I think we've got the balance roughly right at the moment, but that will change.
Investors out there, Tony, who'll look at the yield, and that'll drive the share price. If you can provide a 10% yield, that'll drive demand for the shares. That's the other comment I'd make.
It's a fair comment, Roger. I'm certainly aware of it.
Cool. Any other questions? Liv.
Yeah, we've still got a few more questions online. One from Hamish Gervin: A major meal kit company in the U.S., Blue Apron, this week announced that they were doing away with subscriptions. Is this something My Food Bag may look at as another option? The My Food Bag shop is more ready-made meals versus meal kits, as a comment as well.
Yeah, look, I think at the end of the day, this business model is built on subscription, and subscription provides a recurring revenue stream, which is fundamental to My Food Bag. It works well, and the feedback from our customers is subscription is just another part of the convenience that the My Food Bag proposition represents. The shareholder's right. We offer both. We offer a subscription model, and we also offer a one-off model in the shop. We're sort of playing at both ends of the market.
Cool. Thank you. You're on a roll, Liv.
Okay, cool. Another one from Jennifer Enon. It seems wrong that management feel they need such high incentives to do what they are employed to do. Have you considered the amount you pay the workers and ensure they're all well remunerated?
Yes, we do. I mean, we have a remuneration policy. I think it's published on our website, and it's something that we benchmark against similar roles in other organizations. I mean, our policy is we pay fairly and reward performance. So, yeah.
Cool. Just one more question from Simon Todd. Have you considered being in a position in the future to take over another company, e.g., WOOP or Eat My Lunch, etc., to increase the customer base?
M&A has been something that has been considered from time to time. It becomes more possible as your earnings improve. We were at a point where our share price was such that any acquisition would be earnings dilutive. That is now starting to change. It is something that we'll continue to consider opportunities if they become available.
Cool. Any other final questions?
Cool, thank you. That formally concludes the Annual Shareholders' Meeting. I'd like to thank all our shareholders, both in the room and online, and we look forward to providing you a further update at our half-year results in November. For those of us attending in person, we do have some light refreshments outside, which we'd love to join you. Unfortunately, we can't offer that to those online, you have to go and make your own cup of tea. Thank you, everyone. Well done. Cheers.