My Food Bag: revenue still fading, but NPAT up 17.8% on lower costs and...

What changed

Revenue slipped 1.9% to $82.2m, the second consecutive HY decline (HY24 was –11.2%). Despite the softer top line, profit before tax rose 17.5% to $4.1m and NPAT rose 17.8% to $3.0m, with the effective tax rate essentially unchanged (28.1% vs 28.3%). Management cited EBITDA up 5.7% to $7.8m in the release commentary, although no formal reconciliation was provided. Operating cash flow improved 27.0% to $6.3m and capex fell to $1.8m from $2.5m, lifting pre-lease free cash flow to $4.5m from $2.4m. The balance sheet strengthened materially: cash rose to $1.8m, gross borrowings fell to $11.5m, and estimated net debt reduced to $9.7m from $14.1m. An interim dividend of 0.65 cps was declared (no HY24 interim comparable disclosed).

What matters

• Cost-out, not top-line, is doing the work. PBT grew 17.5% on revenue –1.9%. With average order value only marginally lower ($128.00 vs $128.50) and active customers described as "stabilised", the earnings uplift is driven by cost and margin rather than volume recovery.
• Leverage has been repaired quickly. Net debt fell roughly $4.4m half-on-half to $9.7m, taking implied net debt / prior-year EBITDA from about 1.9x to 1.2x. Combined with a return to dividends, this signals management are comfortable the worst of the demand reset is behind them.
• Cash conversion genuinely improved. FCF pre-lease / NPAT stepped up from 97.5% to 150.9%, helped by a $1.6m inventory drawdown (inventories $0.3m vs $1.9m). That working-capital release is not repeatable at the same scale.

Expectations

No forward guidance or stated FY25 targets were supplied. The HY24/FY24 anchors imply no meaningful second-half weighting pattern in either direction, so a simple annualisation of HY25 revenue gives $164.4m versus FY24's $175.7m — still about 6.4% below the FY24 run-rate. The release does not support a return to revenue growth on the disclosed data; it does support a claim of margin stabilisation and balance-sheet recovery.

Quality of result

Underlying quality is mixed. The tax line is clean, so the 17.5% PBT growth is a fair read on operating improvement, and higher OCF with lower capex is a genuine positive. However, part of the cash and working-capital gain is timing: inventory fell from $1.9m to $0.3m, contributing materially to the $1.3m OCF uplift, and that benefit cannot recur at the same magnitude. The 65% NPAT payout (43.1% of pre-lease FCF) looks covered this half, but is sensitive to any reversal in the inventory release. No non-recurring items were disclosed to flag against the reported numbers.

Unresolved

• EBITDA of $7.8m is asserted in commentary but not reconciled to the $4.1m PBT in the supplied materials — the bridge (D&A, finance costs, lease treatment) is not visible.
• Gross margin, segment revenue (My Food Bag vs Bargain Box vs Fresh Start) and active customer count at period end were not in the supplied extract, so the source of the margin improvement cannot be attributed.
• No FY25 revenue, EBITDA or dividend guidance was provided, and there is no prior HY interim dividend to anchor payout intent.
• Post-lease free cash flow is not calculable from the supplied data, so true distributable cash after lease servicing is unclear.

This briefing cannot assess valuation, competitive positioning versus supermarket meal-kit substitutes, or the durability of the inventory-led working-capital benefit into H2.

Key metrics

Analytical metrics

This analysis was generated using Annolyse, an AI-powered tool that analyses NZX company announcements. The analysis is based on available company filings and standard Annolyse calculations. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.