MFB - My Food Bag

[Basil]

Yeah, lots of weasel words and more after the meeting.  Incentive schemes now endemic in the system with senior employee remuneration packages was the excuse after the meeting from Mark, head of the remuneration committee.  Not convinced with the answers.

Margin compression is a first half story and has been partially addressed with a price increase on 1 July and they are considering another one.

Those who tuned in would have heard what I had to say about the dividend and there was more afterwards in discussions with several directors.  I made the point loud and clear that the share price and dividend level are inextricably linked and most investors saw it as an income stock, (which is the reason I brought in).

I had a good chat with Tony after the meeting and suggested they had made very good progress already with debt reduction and perhaps a 60/40 split between cash dividends and debt reduction is now appropriate. I think he broadly agreed with that.  What is clear is the business is kicking out a LOT of cash flow.  Depreciation, (a non cash item) at $5.9M is nearly as much as profit after tax itself so they are certainly capable of knocking that debt on the head completely by the end of FY27 and paying MUCH higher dividends thereafter  As those of you who watched will have noticed I made it crystal clear I'd like to see 2.0 cps in FY26.  Looking further out once they have debt repaid I think somewhere in the range of 3-3.5 cps fully imputed from FY28 is quite a realistic assumption.

I think they are doing okay in a VERY weak economy.  I bought this for dividend income and growth in dividends in the years ahead and I think the investment case remains very robust indeed on that basis.  I think its clear they have established a baseline to their business and they are pleased with that.  Whether this is capable of growth...I think the jury is out but we are at the bottom of the economic cycle and the cost of living crisis is chronically acute for many people so as the economy, hopefully, gradually improves, hopefully that translates into a gradual improvement in earnings.

Other brief thoughts from discussions after the meeting.  Cecelia seemed quite keen on the idea of including pet food in the mix.  I suggested she get Nardia's Labrador dog Winston more involved in the advertising in much the same way as Genesis do with their Beagle advertisements or ASB do with their St Bernard adds.  Gives a warmer family feel to the advertising and engenders a warmer emotional connection with the brand.  As head of the marketing committee she seemed to like that idea.

Metrics: I think 1.75 - 2.0 cps fully imputed is on the cards for FY26.  At the mid point 1.875 / 0.72 = 2.6 cps gross which gives a gross yield of 11.3% on a share price of 23 cents.   In my opinion the chances of that rising slightly in FY27 is good and quite a lot more from FY28 onward is very good.
That's all for now.  Happy to hold a modest position for increasing income in the years ahead.

[Basil]

Businessdesk article. 
My Food Bag expects margin loss as prices lag inflation
Gregor Thompson | Wed, 13 Aug 2025

My Food Bag chair Tony Carter and its chief executive, Mark Winter. (Image: Supplied)

My Food Bag says it expects to take a margin hit as food inflation outpaces its ability to raise prices.

In his address at the meal-kit delivery firm's annual meeting on Wednesday, chair Tony Carter said sales rose 3.8% over the first 4 months of the financial year compared with the same period last year.

Carter added the firm expects first-half gross margin "to close below prior year as our price increases have lagged food price inflation".

During questions, one shareholder asked if the company expected to match prices with inflation going forward. 

Chief executive Mark Winter said My Food Bag closely tracked food price inflation and had a number of considerations when it came to price setting.

"We're working very closely with our suppliers, both in terms of actual and forecast [price] movements. We'll take action where it makes sense to increase prices."

Shares dipped 8%, or 2 cents, to 23 cents after the initial market announcement before stabilising at 24 cents in the afternoon.

Shareholder questions

Carter, who was up for reelection at the meeting, faced questions about the performance of the company's share price, which has fallen by over 85% since the company listed in 2021.

"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?" one shareholder, Roger Clarke, said.

Carter said that the company can always do better and acknowledged that the listing took place at a time when My Food Bag's prospects looked positive.

"It clearly floated at a very optimal time for the existing shareholders," he said. "It was coming out of covid-19. And like a lot of businesses, it got a big lift from an environment that we thought at the time might be a permanent change.

"I can't wave a magic wand and get it back to what it was at the [initial public offering]."

Clark followed up by drawing attention to management incentive schemes, which he argued were excessive given his view of the company's performance.

My Food Bag posted full-year revenue of $162.1m for the 12 months ended March 31, down slightly on the prior year. Net profit after tax (npat) rose 5% year-on-year to $6.3m.

"What I see here is a pretty gold-plated performance bonus system for a company that's struggling to get back into growth mode."

He highlighted that the company issued 5.9 million shares on July 1 to senior management when the share price was 23 cents and nearly 7 million performance rights on July 7.

"I see the company trending down and then finding a floor and stabilising. Your net profit before tax was identical FY24 to FY25," he said. "Why is the company paying $1.36m in the bonus shares, which I understand are free, aren't they?"

In response, Carter said issues are a "very important" part of the remuneration structure.

"We incentivise management to perform, and that was part of the mix ... 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 have got, and we want to see them fairly rewarded for their efforts."

Dividend policy

Having paid a 1.5-cent full-year dividend, the board reiterated guidance that it expected to pay dividends in 2026 "based on strong free cash flow generation".

During the meeting, an investor asked what the current dividend policy was, given it cannot currently be found in the company's annual report.

Winter said that over the last 12 months, the company has based dividends on splitting free cash flow between dividends and debt repayment.

Carter highlighted the company had managed to reduce debt to $6.9m from $11.8m between 2024 and 2025.

"When our debt gets down to zero, we'll have to reconsider our dividend policy," he said.

"It's probably a matter that's temporary. In terms of the strong free cash flow, are getting our debt down very quickly."

[Red Baron]

Shareholder questions

Carter, who was up for reelection at the meeting, faced questions about the performance of the company's share price, which has fallen by over 85% since the company listed in 2021.

"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?" one shareholder, Roger Clarke, said.

I zhink I know zhat 'Roger Clark' and zhis link confirms eet.
https://www.rogeralbertclarkrally.org/roger-clarke-how-to-leave-a-legacy-when-your-career-is-over.html

He vas a top British rally driver who 'vaked hees death', to live out ze rest of hees life quietly een New Zealand.  And yes I can zee ze appeal of 'My Food Bag' to heem.    Drive to ze end of a rally ztage and ztop ze clock.   Zhen get a 'my food bag' tossed to ze co-driver zo zhey can both 'lunch out' on the following touring stage, before zerious competition ztarts again.

Makes perfect zense!   

Zounds like Chair Tony vould have liked to issue heem vith a speeding ticket though?

RB

[KW]

But on the important stuff, did you get a feed Beagle?  

[Basil]

Pretty decent spread of finger food.  Some interesting quiche and other similar type stuff that looked like Nardia had made it.  Always conflicted after meetings like this as I want to talk as much as possible to the directors and not appear to be a fat scoffing Beagle at the same time.  Its a delicate balancing act lol 

[lorraina]

You need to make use of your doggie bag.

[bulltrap]

I tuned in for the giggles, especially Tony's response to question about repurchases: he declined to give an opinion on what the shares should be worth, but then suggested that after a repurchase 'sugar rush' the shares would tend to go 'back down' to their real value.

Freudian slip perhaps, and maybe I'm misquoting - anyone have a recording link or transcript?

Disc: Still holding

[Shareguy]

Pretty decent spread of finger food.  Some interesting quiche and other similar type stuff that looked like Nardia had made it.  Always conflicted after meetings like this as I want to talk as much as possible to the directors and not appear to be a fat scoffing Beagle at the same time.  Its a delicate balancing act lol 

Great questions Basil. Unless they increase their offering then I don't see much growth past incremental in an improving economy. We get MFB and the boxes have a lot of unused space.

Not a holder at moment but will look at this again once we have sold the do up property.

[lorraina]

NBR Headline..

NBR
 
Investment

 

My Food Bag director defends management share plan

 

Shareholder accuses the 'struggling' company of having a 'gold-plated performance bonus system'.

[Minimoke]

Pretty decent spread of finger food.  Some interesting quiche and other similar type stuff that looked like Nardia had made it.  Always conflicted after meetings like this as I want to talk as much as possible to the directors and not appear to be a fat scoffing Beagle at the same time.  Its a delicate balancing act lol 

When a "Special Dividend" is on offer at AGM's it is every shareholders responsibility to make full use of that offer. Might be worth more and be more enjoyable than the dividend that arrives in the bank account.

[winner (n)]

Question at ASM was about them getting some analyst coverage

Usual 'we'll have a look at' non-committal response

No brainer, pay Forbar to do a 25 page rave and a 60 cent target

That'll get market interested

 

[Basil]

NBR

The board of My Food Bag has defended issuing performance rights to senior managers, saying they deserved to be fairly rewarded for their  efforts.
A shareholder at the meal kit company's annual meeting today raised the topic, referring to a market update on July 1 which reported 5.9 million new shares had been issued.
The shareholder noted the rights were worth 23 cents per share at the time they were issued, effectively adding $1.36 million in bonuses for management. He questioned why the company was paying that much, given its financial performance.

My Food Bag chair Tony Carter, who was up for re-election, said the rights were part of the remuneration structure put in place for management.  "It's very important we incentivise management to perform, and that was part of the mix. 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 goal, and we want to see them fairly rewarded for
their efforts."
The shareholder highlighted a $600,000 package issued to My Food Bag's chief executive Mark Winter, and said he assumed it would be "considerably higher" in FY26.
According to the FY25 annual report, Winter's base salary of $546,000 was topped up with more than $57,000 in short-term and long-term incentives, as well as $22,000 in 'other' benefits. The total added up to $625,000. Independent director Mark Powell said the plans in place were sensible and would be based on performance. "To be achieved, they will have to perform."
'Gold-plated' system
 The shareholder also noted a subsequent market update on July 7, reporting that more than 6.9 million additional performance rights had been issued for FY26, taking the total performance rights on issue to 13.27 million. "That has a current outstanding value, if they were all exercised today, of $3.32m. 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 in growth mode." Powell defended the performance of management and the broader company by pointing to a 3.8% increase in sales over the first four months of FY26. "Yes, that's what's achieved if we get a full performance, but that performance has got to be earned," he said.
The shareholder replied: "I guess my concern, Mark, is that if the company does perform better in FY26 and FY27, that's ostensibly a function of the economy recovering, not anything specific that management had done." The comment earned a quick "we might disagree" from Carter, and Powell said he also disagreed. "There's always an economic picture, but I don't think it is just a function of the economy."
My Food Bag director Mark Powell.
 Carter added that the performance rights were self-funded, being derived from meeting KPI targets.
"Right, well, I hope you set tough KPI targets," the shareholder said. 
Powell said it was a good question and 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."
 Trading update and re-elections
 In its presentation to shareholders, the company said it remained confident it could manage inflationary cost pressures, and expected the gross
 margin for the first half of FY26 to be lower than the prior year, as price increases hadn't kept up with inflation.
 The board confirmed it expected to continue paying dividends, and shareholders were told cash was being split equally between paying down debt
 and dividends. The company's dividend policy would be reconsidered once debt had been eliminated.
Over the past few months, My Food Bag has launched a new campaign for its Bargain Box, and launched a new meal plan (GLP-1 Support) driven
 by the arrival of new weight loss medications in the New Zealand market. It has also extended its diabetes plan.
Carter and My Food Bag co-founder Cecilia Robinson were both re-elected to the board.
My Food Bag is expected to report interim results for the first half of FY6 in November.

I need to stay on their case. and keep hounding them about this.

[lorraina]

I take it no one on the top table paid $1.60 for their shares.?

[Basil]

I take it no one on the top table paid $1.60 for their shares.?

Don't think so.  In  discussions after the meeting Cecilia Robinson mentioned to me that the share price got down to 12 cents at one point and she was buying and asked me what I had paid, (just under 20 cents).

I met a dear old lady there who I bumped into while getting a cup of tea who bought shares at the IPO. She said she felt that with it being a food company and Nardia Lim's involvement that she would do alright.  Poor thing, I expressed my sympathy to her and said its really quite scandalous what the promoters listed this company for.  She agreed and said she felt as if she was duped.   She told me at last years annual meeting she stood up and reminded the directors that they had a long way to go to get back to the listing price and admonished them on how far the shares had fallen.  Good on her I reckon...she was pretty old and a bit frail looking.   

A big thank you to you mate for highlighting this whole performance share rights issue to me in the first place.  It somehow slipped under my nose...I had a pretty bad flu in early July from memory, so my nose for sniffing out problems probably wasn't working properly at that time.

[lorraina]

You have put in the hard yards.
Certainly focussed their attention..lol
Pity they did not listen to the old lady at last year's agm.