Good morning, everybody, or good evening, depending on where you are in the world. I'm Stephen Cross, Chairman of Bidcorp. It's a pleasure to welcome all of you to the Bidcorp results presentation. As a board, we are very proud of the executive management, David and Bernard, and all their management teams around the world, you know, for the achievement in what was a more difficult environment, delivering EPS growth of 15.5% and a dividend growth of 16%. The Bidcorp philosophy of running an entrepreneurial, decentralized business model in multiple geographies, driven by organic growth and bolt-on acquisitions, and supported by a strong culture that focuses on our people, customers, and stakeholders, and is committed to strong governance and ethical behavior, continues to show positive results.
Before I hand over to Bernard and Dave to present, I'd like to thank both of them and their executive teams and all twenty-nine thousand employees for their continued dedication, drive, and enthusiasm that has enabled these results. I'd also like to thank Ashley and her support structures for ensuring continued focus on governance without damaging entrepreneurial spirit, as well as having our full reporting suite ready for the release of these results. I'd also like to thank our founder, Brian Joffe, for his continued support, challenge, and guidance, as well as the chairs of our various board committees: Helen Wiseman on Audit and Risk, I don't know what we would do without a strong Audit and Risk Committee. Tasneem Abdool-Samad on Environmental, Social, and Ethics, again, an area that requires a lot of focus and attention.
Nigel Payne, our Senior Independent Director and Chair of our RemCo. Paul Baloyi, our Chair of the Acquisitions Committee, and Keneilwe Moloko and Cliff Rautenbach, who serve on these committees. I'm now gonna hand you over to Bernard and Dave to present the results. Thank you.
Thank you very much, Stephen. Thank you, everybody, for attending, and for letting us share this one hour with you. I'll try to keep this as brief as possible, which is quite difficult for me, as you all know. The format is gonna be the same as we've done in the past. I'll give you an overview. David will talk about the numbers, then we'll do Q&A. You can submit your Q&A through the normal Zoom question format. We'll get them and answer the questions as best we can. I'd just like to echo Stephen's sentiments of thanks. He has mentioned the team, so I won't go through everybody by name, but thank you to everybody for their continued guidance and support.
These results, I believe, are very, very admirable, strong, commendable, whatever words, positive words you wanna use, these results are that. In a very challenging economic environment. I'm not saying it's a terrible economic environment, but it's a challenging economic environment. There's way more negative than there is positive. So at the outset, I need to thank the 29,000 Bidfood people out there in five continents, over 35 countries, who made this possible. It's certainly not about David or myself, but it's a collection of twenty-nine thousand people, ably guided by their leadership teams across the world, who have performed and will continue to perform for all of us in the years ahead. I think what's most pleasing is our continued growth.
So these numbers are very strong, but they're no flash in the pan. They're a continuation of the trend, and as somebody said, we're a steady compounder, and that's what we intend to do, and that's what our strategy is. We won't give you fancy slides on what we are going to do that's different, that's going to somehow move the needle or change the trajectory, because we believe we're on the right path. The trajectory is correct. The business is exceptionally well structured, and poised for continued growth, and we're very enthused about where the business is, where our teams have taken us, and the journey still ahead of us. Like I say, we are a collection of 35 countries, 21 different businesses, and each has its own unique challenges, opportunities, threats, issues.
They're at different stages of development, and sometimes a question is difficult to answer because a question will be asked on a generality, and at the end of the day, we manage each business on its own. No matter how big or how small the business is, they're all important to us. And although over 50% of our businesses only contribute 4% of the profits, those businesses are the future levers of growth. And out of those will be the emerging... I'm not saying they're emerging markets, but they will be the emerging businesses that we talk about in three years' time or five years' time or two years' time or eight years' time. So it's not like we rest on our laurels.
Obviously, it's great that the big businesses continue to perform, and that's important, but we've always got this pipeline of development happening in the background, which is very, very important to us. On an overall basis, we saw revenue going up 15.1% in rand terms, bearing in mind there's about a 6% tailwind from rand weakness over last year. So in constant currency, revenues went up by, I think the number was 7.6%. There are a lot of numbers in my head at the moment, I'll get some of them wrong. But a 7+% increase in revenue, we think is highly commendable in an environment where inflation dropped dramatically.
At the beginning of the year, there was very high food inflation. At the end of the year, there was zero food inflation, and in many geographies, there was negative food inflation. That creates a minefield of challenges that our businesses navigated exceptionally well. Let's bear in mind that the financial year we've just completed comes off an exceptionally high base the previous year. This time last year, I did say I was concerned on the look forward, based on the very high level we were backing off, and it looked challenging ahead, but the team have delivered and have continued to grow phenomenally. When we talk about the prospects, I'll probably give you a very similar story.
So of that 7.6%, I think it was 7.6% constant currency growth in revenue, which is real growth. There is a little bit inflation in that, but we believe there's real growth of . . . and we don't know the numbers. It's impossible to measure. Maybe we've got 4%, 5%, 6% volume growth, which I think shows probably market share gains, because the economies around the world have been tepid, negative, anemic, nothing really special going on, and if you look at retailers' results around the world, the retailers have all shown a fair amount of growth, which they say has come as a result of a decline in the out-of-home market. So if that's correct, I think any growth that we've seen bucks the trend and shows some real market share growth.
We don't have data to support that. We're just talking hearsay, conjecture, what our suppliers tell us, what our marketing intelligence tells us on a market-by-market basis. But on that 7.6% increase in revenue, we've managed to grow profits by 10%, which is a remarkable achievement. So as inflation has unwound itself, food inflation has unwound itself, we've somehow managed to maintain our margins. In fact, we've improved our margins a little bit, our gross margins, and we've kept our cost base under relative control, which is difficult because cost inflation is running hotter than food inflation. So although headline inflation is running 3%-4% in many geographies, food inflation, as I said, is tending towards zero or minus. And wages comprise the biggest component of our cost base, approximately two-thirds of our cost base.
There certainly is wage pressure that we've had to contend with. Not only have we had to contend with wage pressure, and this is anomalous and I can't explain it, there are still labor shortages in most developed markets that we operate in, so although economies are tepid, there's still strong employment out there, and therefore, you have to pay to retain good staff, and that's just an investment we make, but somehow we've managed to get the balance right, so our cost of doing business has gone up slightly, but our overall margin has improved, so our trading margin has marginally improved from 5.3% to 5.4%, which we're very, very pleased about in this environment.
The one thing we haven't really spoken about, which I did allude to at half year, is the fact that we continue to invest for growth. So we spent ZAR 6 billion in the last year on CapEx, of which a substantial chunk of that is real estate. It's warehouses, it's freezers and infrastructure for future growth. And a big component of that is expansion CapEx. And in many geographies, we're opening additional warehouses, additional distribution centers, so we're not replacing with larger. Yes, we are replacing with larger, that's part of what we do. But in many geographies, we're actually opening brand new facilities, greenfields operations in geographies that we need to be. In the UK, there were two of those.
One's in Glasgow, in Scotland, the other one is in Bedford, sort of in the center or somewhere of the UK. In Australia, in Perth, we've got a very, very successful business, which was running at full capacity, so we had to open a second facility in Perth. Obviously, when you open a second facility from a facility that's operating at 110% capacity, you're not gonna make more money in day one, but you're obviously setting the runway for future growth. In Italy, we've opened a large distribution center in Rome. Our major infrastructure was in the north, near Milan, which was running at full capacity, and we probably deferred the decision too long to open up in Rome.
But we have opened up, and that went live in July, with a very, very large distribution center in Rome, which gives us a huge infrastructural capability into the center and the southern parts of Italy. What those four that I've mentioned have done is they come at a cost. They come at start-up costs and additional costs of running new infrastructure. The impact on those four facilities alone is over 3% profit growth. So if we were in this thing for the short term, we wouldn't have done that. But we know that in the long term, you've got to invest for growth, and we'll continue to do that. We'll highlight to you what we've done, but we make no apologies for it, and we'll continue to do that.
But 3%, had we not made those investments, theoretically, our trading profits would be 3% higher. But that's not the, that's not the way to run a business for the long term, and we like to find the balance between investing for growth and actually reaping the rewards of that growth. In terms of acquisitions, we only made four acquisitions in the year. I think we only spent about ZAR 400 million, which is below our average. It's just one of those years. They're not terribly large acquisitions. There was one in Australia, in regional, New South Wales, there was one in South Africa, there was one in the UK of an ice cream manufacturer, and there was another one somewhere else, which will come to me. David? Where was the fourth one, David?
Christian.
David's not listening. It will come to me. There was one in South Africa, one in Australia, one in the UK, and the fourth one will come back to you. But they're not large acquisitions. Since year-end, we have completed another two. A fairly large one in the UK, with annualized revenues approaching GBP 100 million. This is in FY 2025, so July 2024. A wholesaler in Latvia, in the Baltics, and we're pretty close to doing another few. We've got competition approval for an acquisition in Belgium, which has been announced, which will go live, I think it's about September, and that's about EUR 50 million worth of revenue.
There's something in Turkey we are pretty close on, there's something in South Africa we're pretty close on, and there are a few others. So there's no doubt that the M&A landscape has changed, has improved, and hopefully we'll see an uptick in activity there. However, we remain disciplined, and we will only make the right acquisitions. It's not a case of the acquisitions drive the growth, it's a case of organic acquisition is one part of what we do, and we've made eighty acquisitions since I think it's eighty acquisitions over the last five years or something. So it's absolutely part of the DNA of what we do, and some years there's more, some years there's less.
So the year that was was a great year, I think, to show real growth like we have shown, with our balance sheet being as strong as it is, and David will talk more about that, and intact, able to generate the cash we have, able to pay you the dividends we've paid. I think that puts us in great stead going forward. I just wanna unpack the numbers a little bit from a geographical point of view, and maybe head off a few questions, and we'll start off in Australasia, Australia and New Zealand. An amazing result once again. Trading margins have gone up from 8% to 8.6%. I know one of the questions will be: do you think they can go higher, and I'll answer it the same way that I always do.
The teams in both New Zealand and Australia have performed exceptionally well. Sales growth, relatively muted, but they've pulled the levers where they can. I think what we're seeing in these both these businesses is what happens when you get all the building blocks in the correct space. Where you move from being a box mover to being a trader, to being a house brand business, to being an importer, to being a manufacturer, and having a degree of vertical integration. It's all of those elements working in sync that actually gives you the ability to make a margin. This is an EBIT margin of 8.6%. At an EBITDA level, this is over 10%. And we continue to invest for growth.
So there's beautiful new facilities opening up with a huge amount of capacity for continued expansion. Australia has gone through a large expansion phase, that will probably slow down for the next few years, but New Zealand now needs to go through it. They've opened a new facility in Taupō in July, which is a brand-new facility, which obviously comes at a cost. There's another one opening in Waipapa, which is up the north of the North Island, will open shortly. We've got a new Wellington site that's being constructed, and we're breaking ground on a large meat processing facility in Christchurch to replace an aged one, which is actually constraining our growth of a very strongly performing business. So Australia and New Zealand both did exceptionally well in a challenging macro environment.
New Zealand, in particular, I think have been through a few quarters of recession. Whatever metric you look at in New Zealand isn't pretty. The consumer's doing it tough. Yeah, the anecdotal evidence is that volumes are down 10%-20% at restaurants. I think they say the ski fields were 30% down on volume this year, and that had nothing to do with the quality of the snow. The snow was good. Clearly, people's ability to spend money. Tourism hasn't recovered to pre-COVID levels. There is a new government in New Zealand. I think they've been around for less than a year. The interest rates have started to track down, and hopefully we'll see an improvement in the economic condition.
But I've got every confidence in our team there, who have delivered year after year after year after year. But I think they are facing the toughest economic conditions that we've seen in our 2024 history in New Zealand. Australia also, the economy's yeah, flat at best. It is flattered by migration. The core economy is not doing all that great. The cost of living crisis is biting. Morale, consumer sentiment isn't great. So yeah, I think under the circumstances, the team have done an absolutely awesome job again. And we look forward to growth from both those businesses. But yeah, I do put an element of caution on that, that they are performing exceptionally strongly, and they are performing in...
They are operating in economies that aren't particularly full of good news and joy at the moment. If we move on to the, whoever's next. Click on the slide, and the UK is next. Yeah, I think this is a story of two halves. At the half year, we were down about 15%, I think it was, in constant currency, and we ended the year flat in constant currency. So that clearly tells you that the second half was substantially better than the first half, and the first half was severely impacted by the cost of opening of the two new depots in Glasgow and Bedford.
But I think it's fair to say that a lot of the work we put in in the previous year or eighteen months, in terms of the customer wins and putting things in place in the horrible environment that the U.K. was faced with, are now starting to come through. So it's where we said things will improve. We are seeing that things are improving. Having said that, the U.K. economy is showing some green shoots of improvement. Our business is certainly seeing that. But by no stretch of the imagination is the U.K. out of the woods yet.
And, you know, I don't think the weather in their summer has been terribly fantastic, and there are a few socio-political issues bubbling under the surface, which are impacting consumer confidence and people's moods. So, you know, I think there are a few. There's still a few hurdles in the UK, but we're very, very comfortable with where our business is, and we can absolutely see that we're on the upward path. You know, we're very comfortable with the fact that in a not great environment, our team absolutely are delivering at the pace that they said they'd deliver, and we are seeing the improvements that we thought we would see. And, yeah, it might take a little bit longer, it might not take a little bit longer.
When consumer sentiment turns, our business benefits very quickly, so we're still getting the customer wins. We still seem to be, you know, on the positive side of that equation. We are gaining market share, and I think our revenue in pound terms is something like 13% up year-on-year, and there's a bit of acquisition from 2023 that impacts that in 2024. But there's a big chunk of organic growth, which we will convert to a more profitable business as time goes on, so I think, you know, we've made substantial progress in the UK. The team are absolutely on the right track. They've done a great job under the circumstances.
Yes, you could say it's disappointing that our trading margin has dropped from 3.3% from 3.7%, but they're absolutely convinced they understand where the other businesses are and the pathway to get there. Like I say, we bought an ice cream business in June, I think it was, to bulk up our existing ice cream business, and that's all part of the manufacturing pillar that we set up successfully in many other countries, which we're rolling out equally successfully in the UK. So let's move on to Europe. Another star performance from Europe in the year, off a very high base the previous year. You can see our margins are slightly up 5.4% compared to 5.3%.
Europe is in a generality. Europe's not great from an economic point of view. When you look at any economic data coming out of Europe, it's pretty ordinary. Notwithstanding that, our businesses have grown very well and have performed well. That's once again a collection of the individual businesses who've contributed to that. I think it's almost every business in the European cluster that has delivered an improved performance except for two. The European cluster is now our largest cluster out of the four, which probably it should be, based on the potential size in terms of population. That one's probably the correct positioning. The UK should be the second.
So, you know, Andrew and his team are certainly up to the challenge and, you know, I'm sure they'll strive for that. When we unpack the European numbers a little bit, and I'm not gonna go through each one in detail, we had a good summer last year. So the July, August, September of 2023 were reasonable summer months, but the start to summer this year, the April, May, June, was very ordinary. It was wet, cold, and summer came late. I think Easter was very early, so a lot of places didn't open for Easter. So we weren't a great beneficiary of good luck in the segment in terms of weather. Notwithstanding that, the businesses have done great. Our Dutch business continues to grow $1 billion....
a billion euro revenue, making very acceptable margins, and room for continued growth. The Belgian business, if we exclude the, I think it's about EUR 250 million of logistics business that we still have, which we've got contractual obligations to continue doing for a period of time. If we exclude that, the Belgian business is operating at world-class margins, no different to its peers. Our Czech Slovakian business continues to outperform, and does fantastically. They've also started a small greenfield in Hungary, which is profitable. Very small, but profitable. Poland continues to grow. They grew on their previous year.
Their previous year was positively impacted by the effect of the Ukraine War, whereby a lot of the staging of NATO troops and American troops and a lot of the aid came through Poland, of which obviously we benefited, you know, in an indirect way from the activity that happened in Poland. As activity normalized in the current year, our team managed to still generate growth. The Baltics, we're now doing EUR 100 million in the Baltics, population of 6.2 million across all three countries. We've now made a reasonable acquisition in Latvia, so we've got a proper business in Lithuania, Latvia, and Estonia, so we're enthused about where that's gonna go. Italy has done exceptionally well on the top line.
I don't know what the number was, but 19%, our revenue grew by 19% in euros, which is a phenomenal number in the year. Unfortunately, it didn't relate to the same number in profits, and they were impacted by two issues. One of them was the startup costs of Rome, which we take on the chin. We don't try to pretend that they're something else. And we also had a tax claim of some Social Security taxes that a third-party contractor never paid on to the government, that we potentially have an obligation to pay. So we've taken the conservative view and provided for that. So the Italian business at an operating profit level is relatively flat, but at an underlying level is substantially up.
We're very comfortable where Italy is. Spain, we've spoken about that being an issue before. We're not gonna speak about them being an issue. We're gonna talk about that as a great opportunity. Currently 100 million profitable at the correct levels, and we've got ambitions to be 500 million in a reasonable amount of time. We're working on that. There are a few acquisitions we're looking at. Portugal is a great business, but it's been hamstrung by its infrastructural capability, its infrastructural size. We got tied up in red tape in terms of some expansion opportunities. That is happening now, which will enable us to grow that business. We need to make some acquisitions, but Portugal is a nice market. The fundamentals of it look good for us.
Yeah, we've got a nice business there, a nice base, and we'll grow off that. Germany remains the one that's a little bit challenging for us. They've gone backward year on year. We're a very small player in a very large market, and that continues to get the attention that it needs. It's not causing us any problems. Yeah, it's a break-even, small profit type of proposition, but clearly, yeah, it needs a little bit of more closer thought and attention. So that's the European cluster. Moving on to emerging markets, which is a collection of many different businesses. So yeah, overall, we saw some reasonable growth, trading margin up to 5.5% from 5.1%.
The standout performance, and I don't want to upset any of my team who are on the line, and I know there are lots of them on the line from all over the world, so you've all done fantastically. But one of the real standout performers that we have got is our South African business. Talking to a lot of people on the call who are based in South Africa, I don't need to talk to you about the negatives of South Africa and the difficulty of the environment in the year that's just finished. Notwithstanding that, our business in South Africa showed a 23% increase in profitability, which is absolutely phenomenal because we spoke about how strong their performance was last year, which was spoken about how strong it was compared to the year before. So they've really done phenomenally well in a tough environment.
They've adapted to the circumstances. They don't really listen too much to the negative noise, and they make their own story and do it phenomenally well. So we really, really are proud of what the South African business has achieved, and we look forward to much more of it. Just moving around the place a little bit, in the Middle East, they've had a good year, notwithstanding some external factors they couldn't control, which is mainly to do with the boycott of some Western brands. Like Starbucks is a major customer of ours in Saudi. Consumers are boycotting Western brands. Starbucks is a recipient of that boycott action. So clearly, our volumes to somebody like a Starbucks is lower than it was a year ago.
We see that it's improving, that position is improving. Many of our businesses have also been impacted by delays in shipping as a result of the Red Sea shipping difficulties, and the fact that they have to reroute around the Cape, which is a lot more costly and takes three weeks longer. So that has impacted on stock holdings to a degree although you can't see that in the numbers, but it's also the timing that it takes to get product to market. So it does create a little bit of disruption, but our teams are navigating that challenge, and it's just another issue we put up with. Turkey had an investment year, so we have invested in that business. We'll continue to invest in that business. I like to think of this as our startup.
If we're in the IT environment, this would be the ideal startup. It's consuming a little bit of cash. It's growing its revenue at a phenomenal rate. Profitability is not all that flashy at this point in time, but that's part of the startup. And you can't have all these things at once. So you do have to make the investment upfront, which we have done. Our facilities are awesome. There's a picture of one of them there. And they all look pretty good. Turkey's a big place, nice economy, lots of tourism, lots of eating out, and we've got the infrastructure in place. We just have to grow into it now.
And we did this for not one year or two years, but it's a five-year program, and hopefully in five years' time, these large facilities are too small, and we'll roll out bigger. So we remain enthused about the prospects of Turkey. South America, let's see what's on the next page. Okay, let's just talk about South America first. The economies there are quite challenged. Brazil's economy is tough, and we've sort of performed at a flat level, which we're okay with. We've seen some of our competitors perform at much lower levels. You know, on a relative basis, we're doing fine. Chile had a better year than the year before. We're still nowhere near our potential, and that's a work in progress, but it'll...
Once again, we've invested, we've got the facilities, we've got nationwide coverage, we've got good infrastructure, we've got good people, and it's just a matter of time until we get the correct volumes through that business that will see an exponential acceleration of margins. Argentina, we're only at, I think it's 47% ownership at this stage. We are looking at increasing that to control. Has performed phenomenally well in a, what's the right word to describe Argentina? In an interesting economy.
The profitability is good, the cash generation is good, and, you know, one of the intangibles about having a business in a place like Argentina is you can actually learn how to manage a business in an unpredictable, volatile, constantly shifting market with high inflation, lower inflation, high interest rates, change in government policies. And I guess, you know, I think that talks maybe to the South African business as well, that you focus on the fundamentals and what you're doing, you don't listen too much to the noise out there, and you do what you do well, you can actually perform remarkably well under the circumstances. Asia has been a little bit more challenging for us. Hong Kong and China, it's tough.
All of you who have anything to do with China or read about China will see that it's tough in China. Consumer sentiment is low. Demand is low. So we're battling that one. Hong Kong also is a different Hong Kong to what it was a few years ago. International tourism numbers just haven't recovered at all. There's generally a net migration of people out of Hong Kong at the first opportunity, you know, long weekends, summer holidays, et cetera. So the landscape in Hong Kong has changed. Notwithstanding that, we're still profitable. We're still making reasonable returns out of our business, and we still remain positive that things will turn. We will change the strategy of our business. We will change the trajectory a little bit, and we'll be fine.
It's not a big exposure in our business. It's not a big position, should be bigger, but doesn't cause us a whole lot of grief. New management team there have done phenomenally well under the circumstances, cleaned up a whole lot of things that needed to be cleaned up, are changing tack quite dynamically and responding to the market accordingly. So you know, we remain confident. Singapore, we had a management change in September last year. We went through a little bit of difficulty at first, but Justine moved from New Zealand. Justine looked after BidOne before, and was up for a new challenge. I don't think she quite realized how big the challenge was, but she's certainly risen to that, and we're in a good position. We've been through the worst of it.
We've made the changes we've had to make. We've said goodbye to the people we had to say goodbye to. We've exited brands we needed to exit. We've repositioned ourselves, and in fact, we've rebranded from Angus to Good Food. And that's the truck you can see there in front of the Marina Bay Sands. Malaysia is a lovely business. Relatively small footprint still, but we are quite enthused about Malaysia. I've said it before. Our business is very focused on the bakery channel. Does exceptionally well in that segment, but there's a much bigger market there for us now that we have the confidence of that. So that, I think, covers all four channels, the corporate, the center stuff, the support stuff, is...
The support stuff, we do what we do in BidOne, we do what we do in our PPC procurement business, which all support the greater good, but we keep that all relatively tight and relevant, and supporting the business. I suppose the most important thing of what I need to talk about is the future outlook, and I have covered off on that. Yeah, I think it would be remiss of me if I sat here and said, "Yeah, it's all positive ahead of us, and it's easy, and it's, yeah, it's gonna be a walk in the park." It's gonna be tough. The conditions we're in are tougher than they were a year ago, which were tougher than they were the prior year. So, you know, we've got toughness on toughness.
We've got several geographies that are recessionary, coming out of recession. We are seeing interest rates ticking down in some areas, which will hopefully stimulate demand. But we remain - we absolutely remain optimistic. We absolutely are budgeting for continued growth, and that's the way our people think. And as we said at the bottom, one of Brian Joffe's favorite mottos, and this goes back to the late 1980s, early 1990s in South Africa, he had carpet mats printed at Steiner at the time, and sent to every operation, that when you walk through the front door, you cleaned your shoes on the front doormat, which said, "We are not participating in the recession." And I think that's exactly right. We're not participating in the recession. There's a lot of market share out there.
Of course, yeah, our competitors say the same thing. We have to be a little bit better, but there is market share. We are very lucky that people do eat, people do eat out, and fundamentally, our business is in a good space, good people, good infrastructure, strong financial background, and so we remain enthused that we'll continue on the trend we are on. We have given you a relatively high-level sales update. For the first eight weeks, we're tracking somewhere between 4% and 5% up in constant currency on revenues, which we think is a great result under the circumstances. There's not too much impact of acquisition in that once again.
So we think there's almost no inflation, and there might even be negative inflation. So whatever growth we're seeing is real growth in a tough market. So we're pretty comforted by that. And our look forward is cautiously optimistic. We'll always be glass half full. We acknowledge the difficulties, but there are enough levers for us to pull to ensure we can make the most of the situation that we find ourselves in. So I'm gonna hand over to David to take you through the numbers in detail.
Thanks, Bernard, and morning to everyone. Maybe just a few introductory comments from my side. As always, the numbers are audited, and thanks to PwC, the IFRS compliance, and then no change in the accounting policies. As you heard, we've tried something a little bit new, and thanks to massive effort by our very small team, we've released a full set of reporting requirements, sustainability, governance, annual integrated report, and the like, all at once, and it's taken a massive effort. But my thanks go out to Ashley in particular for making it happen. It contains a lot of information, and I would request that you look at it, because we don't want to do all this work just for the JSE and for PwC to look at.
To our finance people generally around the world, they've done a great job in terms of reporting as always, but in particular to the corporate team that put it all together and produced the numbers and the reporting that we released today. So particularly Shane, a little bit Charlie, and certainly Michael and Justin, as well. I think in the context of the results, as you've heard, I think they are pretty good in terms of the quality. And I'll give you a little bit more granularity on that. And I'll only really go through the highlights, just to cover off some of the more particular areas. There's a little bit of repetition.
You've seen it in something, some of the stuff that Bernard said, but I'll try and give you a little, maybe a little bit more granularity on that. So in terms of the financial highlights, revenue up to ZAR 226 billion, 15.1%. Constant currency, as you've heard, 7.5%. Gross margin up thirty-three basis points to 24.1%. EBITDA is maintained at 6%, and that EBITDA is as we measure it, which is the old way, excluding the impacts of IFRS 16. The trading margin slightly up at 5.4%. HEPS at 15.5%, and on a constant currency basis, 9.1%.
We did give you the impacts of what we call a normalized HEPS, but that's really just excluding the impacts of hyperinflation in Turkey, and that was up 15.4%. Working capital, I'll go into a little bit, just to give you some color on it, but that's six days better than what it was in the comparative period. And our working capital as a percentage of revenue, which we use as an alternative measure at 3.2%, slightly up on the 3% of last year. Free cash flow, ZAR 2.3 billion, a little bit lower than the ZAR 3.4 billion of last year. But I think in the context of the investments that have been made, and the working capital, a good result.
Unmodified opinion on Bidcorp from an audit perspective, and a final dividend of ZAR 5.65 per share, which you take the first half dividend as well, the interim dividend, gives a 16% increase on the dividend of last year, and in line with the group cover of around 2.2 x, coverage. In terms of the P&L, I guess, as Bernard indicated, a much more normalized environment that we've seen this year. Particularly good growth out of the UK at 13% in local currency. But, you know, Australia, probably a little bit low. I think you need to take it in context also that there were some sizable contracts that came out in October of 2022, but I think if you look at those on a like-for-like basis, Australia was up about 3% and New Zealand, 8%.
Good performance in very tough economies, and the emerging markets up 7%, and as you've heard, a little bit lower low generation out of China, but offset by the excellent performance that we've seen in South Africa. Food inflation, and this is as we measure it on our basket; it's not exactly a replica of what we see in each territory. We do weigh it, and that in the last 15 months has dropped from 15.2% to 1.7%. Consistently now tracking below core inflation of 3%.
So, in the context of, you know, core inflation moderating over the same period from about 8.5% to 3%, I think one's got to understand the result, which is, you know, the revenue being impacted and the cost of sales being impacted by a far more moderated or quickly moderating inflation number than what the cost base has as well. GP up, as I said, 30 basis points. I think some of the gains that we saw last year from the accelerating inflation certainly haven't been reversed in this period. And I think, you know, we are obviously, we're a trading business, and in a number of cases, people take decision to sacrifice a bit of margin for volume.
So, you know, combined with that, the UK's, you know, growing exposure the last little while to a more national, customer base, and that's obviously had some impact on their gross margins, but that's been offset by particularly good impact or improvements we've seen in Australia, Australasia, and Europe. Cost of doing business up a little bit, but I think, you know, in the context of, of the top line, you know, well controlled, and that's really being driven by the, you know, rising employment costs, which Peter, alluded to earlier. But I think if you look at it on a constant currency basis, we've seen that rise by 8.6%, but gross profit, you know, dollars, rands, as we say, you know, whatever it is, rising by 8.7%.
We're still making sure that we are growing the net top line by more than what the cost base is going. Group trading profit, up to a record ZAR 2.2 billion, and the trading margins, as I said, slightly improved to 5.4%. And certainly what we've seen, as I said, the improvement in the gross margin has offset the higher cost of doing business. I think really on this slide, just to really talk about maybe the tax rate, because that has been one of the, I would say, negatives, it is what it is. But there have been a few drivers to it increasing, simply because of, I guess, Brexit.
We are paying some dividends, withholding taxes on some of the dividends coming out of Europe, and that's something that's going to be embedded, and not something we can get away from. Obviously, the change in mix from the Australasian contribution, as well as the European contribution, comes at a slightly higher tax rate. Those are the real contributors in this period. I think just to note that the effective rate is likely to track up a little bit. The U.K. did raise their tax rates to 25%, and you know, with a new government, maybe that's gonna go up further. Certainly we haven't seen the U.K. contribution over the last two years impact that yet, but we are expecting that to have some impact going forward.
Currency volatility obviously is an issue, being us reporting in rands, but we obviously give you the constant currency impact. But, you know, that was 6.4% on the year positive. The first half was about 11.8%, so we've seen significant rands in impacting the results into the second half. On the cash flows, and I'll talk a little bit about working capital. We've some absorption, but I think, you know, in the context of the later trading and what we try and do, we've had some, you know, discussions around what's the most appropriate measure of working capital. What we've come to is that we measure it on a net three months basis, so turning our inventories pretty quickly, you know, we're getting our debtors to pay.
So, you know, on a net six days basis, on three months averages, gives us a good indication of, I guess, working capital over the last recent quarter's trading activity. And that's where we get to the six and seven days, but it is better, and we're in a better position than have been. You know, come to a better position in the last quarter, as opposed to what we were a year ago. Net working capital, as I said, as a percentage of annualized revenue, once again, measured on the same basis, and it's up a little bit, but absolutely, you know, under control. We do obviously have a the best position that we have from a working capital perspective in the last quarter of the year.
So, you know, where we track into the first half, that does slip a little bit, and we run somewhere between 4% and 5% in the period. The cutoff this year in terms of June 30 was on a Sunday. It was complicated to manage, and that did have some impact on the ZAR 1.6 billion absorption versus where we were last year. But there is no issue with our working capital management. Always opportunities to improve, but you know, that's the opportunity. In terms of our receivables, we're conservative. I've shown you the provisions there, 5.6% of the book, which is down a little bit, but we think appropriate for the view that we have, you know, the look forward we've got.
Inventory is, you know, well under control, and in absolute terms, a little bit lower than where we were last year. But provisioning is consistent with the, as a percentage as to where we were last year. Payables have normalized if you go to pre-COVID, but we did see some benefits in the pandemic period, which I guess is a little bit is unwinding us a little bit. I think the real issue here is suddenly the cost of money is expensive, and people are focusing on that a whole heap more. So there is pressure, you know, in the payables a little bit. We are doing more importing through a lot of the businesses, which you've heard from Bernard.
And therefore, we're carrying more of the credit period and the payables days than we were previously when we were buying from, I guess, in-country suppliers. There's been a legislation change, which I think we alluded to at the half year in Europe, and it does have a little bit of an impact on the payables in terms of having to pay certain suppliers a little earlier. In terms of the investing activities, we've alluded and went through some detail as to where the cash has gone. Depreciation is below our maintenance CapEx, and I guess the key driver of that is really just the cost of replacement equipment compared to what it was a few years ago.
It's significantly up, and likewise, the cost of new capacity, building new facilities, is significantly higher than what it was a few years ago. I would just reiterate our intention is once again to own our own facilities where they are feasible, where it is feasible and they're strategic. And we own about 73% of our portfolio. Our net debt is up a little bit, but I think in the context of the higher investments into, you know, CapEx, capital investments, and the working capital, you know, in the year, you know, it's up about ZAR 1 billion, and therefore, you know, still pretty low in terms of gearing across the group, but, you know, relatively up a little bit from last year.
We've got headroom, significant, about ZAR 24 billion. I think, you know, the covenants, our covenants are absolutely in line, and, you know, nowhere near the top levels. And I think just to put it in context, in order for us to get anywhere near our banking covenants, we need to have a net debt of about ZAR 33 billion. So we are conservative, but that's how we've run the group, and it's served us in good stead, you know, over many years. On the balance sheet, still strong, and that's the way we like it. Nothing really to add other than, you know, going forward, there will be some refinancing and capital raises. We anticipate into the new year, we've got one or two facilities rolling over.
But we, you know, those shouldn't be any issue in terms of getting it done. No change to risk management, and all the solvency ratios, as you can see, are all well under control. Going forward into the new year, obviously very difficult to predict, and there is some, I would say, forecasting risk, but, you know, we aren't, we don't have a glass ball that we can see into the future. Bernard spoke about the July and August sales, so I won't cover that up. We think the financial strength of the group is very supportive of the business growth.
Inflation is likely to remain muted and maybe even go slightly backwards, but I think the key thing is core inflation appears to remain sticky at this point in time. There's hopefully quite a lot of acquisition activity, and so we do anticipate stretching the balance sheet a little bit more into the period ahead, and as I've said, we've got a few debt maturities, which we will undertake, which may require refinancing and/or new capital to be raised. In terms of our ESG, it's obviously something that you all can read through our sustainability.
Very, you know, top of mind, but it's set a target of the group achieving 25% reduction by 2025, in terms of, an activity ratio in terms of our carbon footprint, and that, the group has achieved a year earlier. So we're looking at seeing, you know, what is the targets we can set for the next periods ahead. But it is forward, you know, in the top of our minds, and, you know, something that the businesses across the world take very, very seriously. No change to our philosophies in terms of naturally matching our assets and liabilities, so that stays.
Currency volatility, as I've spoken, we are, you know, rand-denominated, but obviously, we give you the, the, non, ZAR, and constant currency, activities of the group, so you can see that. And, you know, I think if you, if you look at the, the first sort of month into, into the new year, we've actually seen the constant currency growth as a, at a greater rate than, what our, our nominal rand, growth is. So, that's just a, an indication of, of where the, the currency has strengthened. We started, July has started out as, as expected. We're obviously excited about the opportunities, but, you know, as Bernard indicated, cautious on the broader environment, and are budgeting for, for real growth going into, you know, the full financial year.
So on that basis, I don't have too much, you know, further to add, and I'll hand back to you, Bernard, for Q&A.
Thanks, David. Appreciate that. I just wanna spend one minute on ESG, particularly the environmental component of that. We do take that very seriously. However, we take it very seriously in a pragmatic, view. We don't wanna be cavalier and pay lip service to it. We actually want to address those issues that we actually can have an impact on, and are confident that there's a path to achieve. As David said, in 2018, we set a target of reducing our Scope 1 and 2 emissions by 25% on an activity basis by 2025. We've actually achieved a 33% reduction by 2024. We've now stretched that to say we want another 25% reduction off the 2024 numbers by 2034, bearing in mind, we've done what's easy.
Yeah, there's a lot of low-hanging fruit in the environmental carbon footprint sphere, and it starts becoming a lot more difficult. What we're also doing is we're stating that we want to be carbon neutral. We're aspirational to be carbon neutral by 2050. Now, we're saying we wanna be aspirational because we actually don't know the path to getting there, and let's be pragmatic, nobody does. So you have to be a real hero to go say you're gonna be carbon neutral by 2050, when you don't know how you're gonna do it. I have no doubt that technologies will improve, that will enable the path to get closer to zero by 2050. Technologies will be developed, invented, whatever it might be, but as we sit here at the moment, let's be totally practical and realistic.
We run warehouses which store food at varying different degrees of temperature. Some is ambient, very easy, some of it is chilled, a little bit more difficult, some of it is frozen, even more difficult. We run tens of thousands of trucks around the world, and trucks, at this point in time, generally utilize fossil fuels because the, the electric capability of trucks hasn't evolved yet to where they can actually carry a payload that's sufficient, at a distance that's sufficient, and at a temperature that is sufficient. So the technology just isn't there quite yet. As soon as the technology is there, we'll invest in it. We can recycle through our fleet in five years, not a problem. So, you know, we'll certainly go down that path.
Electric vehicles also aren't the answer to everything, because you've gotta charge the vehicles, and you can have a certain amount of solar infrastructure, but you're still relying on grids for electricity. In many geographies we operate in, particularly in the emerging market sectors, the electricity that's produced by the grid is exceptionally carbon heavy. Until governments, in many jurisdictions, actually get their act together and reduce their carbon footprint in terms of the grid electricity they supply, we're held to ransom and can do very little, even if we transferred over to electric vehicles. Our vehicles work during the day, meaning they need to be charged at night, where you are far more reliant on grid electricity than during the day. This is a journey.
I know there are many people out there who are very theoretical about it, who are very passionate about it, and so we should be, because we should be trying to save the environment. But at the same time, we have to be pragmatic and find the balance of what's achievable and what's a pipe dream. So we will continue down this path with great passion, enthusiasm, and gusto, balanced with reality. I'm gonna go through the questions relatively quickly, because we are running out of time. So just forgive me, I'll go through them relatively quickly. United Kingdom showed a strong turnaround with second half trading profit margins improving to 3.8%. Is this margin sustainable in FY 2025? We certainly hope so. That's the way we're looking at it at the moment.
We've been through some of the difficulties in the first six months. The second six months was a lot better. We've got the benefit of the acquisition that we've made in July, which will certainly help a little bit. The acquisitions from 2023 are starting to come through. So we're confident about the UK moving their margins up in the medium term, up to that 5% level. I'm not saying 5% this year, but in the medium term, in one, two, three, four years, we certainly should see the UK at a 5% level. Can you provide a guide feel for where weighted food inflation will be in the year ahead across the group? I don't have the foggiest clue, and if anybody can give me that answer, I'll send you $100.
As we sit at the moment, there's zero inflation in food. It might trend negative, it might come back again. But there are a whole lot of factors that will impact this: supply, demand, agricultural issues, shipping delays, shipping costs. We're not expecting food inflation to go back to the 10% and 15%. So we're hopeful that it bounces around the 0%-3%. We're, yeah, we're maybe expected to be a little bit deflationary for a while, but not for too long. In terms of your financial guidance, you talked to stretching the balance sheet a little bit more in Fiscal 2025 . Can you unpack this further? Do you expect larger, more acquisitions than usual? We have spoken about the fact that we are seeing more acquisition opportunities out there. We're not really sure why.
Maybe operators feel that the top of the market is now, they can get a good price based on historical results. I don't want to be cynical, but it's my nature. I'm not sure. But there are some acquisitions out there, and I think if they come off, and I'm not saying they will, because we've got to go through due diligence, and we have to do the right deals, we will stretch the balance sheet a little bit more, and the quantum, the size of the acquisitions will be a little bit chunkier than we have done, but they might come to nothing as well. We'll let you know. Please comment on how Bidcorp manages in a high inflation environment such as Argentina and Turkey. This always baffles me.
Yeah, I think people adapt to reality, and your operators in those markets operate in those markets, and that's the reality that they deal with. So they're making decisions based on the reality of where they are, and it's amazing to see it. Yeah, they just adapt to the circumstances, which is very different to how you run a business in Europe, for example, where 2% movement, you know, creates a little bit of panic. In Turkey or Argentina, they say, "2%, you know, give us something to talk about." Congratulations to the team on a great set of results. Although there have always been M&A, the tone seems to have turned somewhat more optimistic in terms of the number of opportunities out there. What has changed, or why are there seemingly more opportunities out there?
It's a combination of declining food inflation, sticky cost base, and competitors being subscale. I'm not really sure. Like I said, maybe people have just recovered from COVID. They realize that their businesses are performing relatively well after the COVID bounce back. Now is the time. Quite a few of the businesses we're seeing are generational change, where you've got older owner-operators who are looking to sell. They're not... It's not really institutional selling, it's more family-type businesses. Can you kindly provide guidance on the direction of EBITDA margin, short to medium term, as well as long term? We're aspirational to do better than we've done. We're at 6%, and we think we can move that up.
Not only can we move it up by getting the lower performers, like the UK, up to the average, but we're constantly looking to move everybody up 0.1%, 0.2%, 0.5%. So we don't want to give guidance, other than we don't think that there's a magic number as to where you stop. You start becoming creative as to how you can squeeze a little bit more out of it. Can you double earnings in five years? I can't answer that. I hope we can more than double earnings in five years, but I've got no clue. Yeah, we sort of take each month in reality, and we can do what we can do. We don't know what market conditions will be.
But if you compound 10% a year, I think you double in seven years, if the rule of seventy-two apply. So yeah, with a, with a little bit of luck and strong economies, who knows what could happen? What exactly happened to accounts payable? Was that a normalization from last year? LAMP was cyclically in nature from a working capital perspective. Yeah, the reality is we're not talking about a lot here. I know it's a lot of rands or, or, or pounds, but you're talking about a change of one or two days in accounts payable, and some of that has to do with cut-off, and some of that has to do with the fact that suppliers are getting tougher. In a higher interest rate environment, you're getting suppliers who want to be paid a little bit quicker.
I think the corollary of that is if you look at our receivables book, our days have shortened as well. So we're applying the exact same logic on the other side. So it's certainly nothing to panic about. We're talking about one or two days. It's really marginal on the side, and what you might actually find is if you pay your suppliers a little bit quicker, they might look after you a little bit more, and some of that might be reflected in margin. Yeah, they'd rather sell to people who are gonna pay them than people who aren't gonna pay them. Good day. We're at Risk Insights, ranked Bidcorp on ESG, and have noted your strong reporting on environmental metrics over the years. Do you have plans on expanding your reporting to include a water recycle metric as you have for waste recycled?
The answer to that is probably no, because we can't. When you look at our water consumption, the bulk of our water consumption goes into refrigeration, and the refrigeration process, believe it or not, works on the principle of creating heat and putting gas under pressure by using heat, and water is used to cool the heat, to reheat it, to create refrigeration. So the bulk of our water goes into operating things called evaporators, which actually evaporate the water, cooling the heat that makes the cold. The bulk of our water consumption actually evaporates into the atmosphere. The amount of water we use outside of refrigeration is negligible. All our new builds absolutely have gray water recycling, have rainwater catchment. Our trucks are washed with recycled water, with rainwater, with grease traps and all the rest of those things.
So we do what we can on the controllable element of water, but the big component is actually just evaporated into the atmosphere as part of the refrigeration process. "Your largest peer in Australia appears to be gaining share at your expense. Is this due to your focus on customer quality upgrading?" It's an anonymous attendee. I guess I should ask that question of our largest competitor. I actually don't know what their sales breakdown is. I think they reported today that their sales were up 9%. I think they're also reporting on a 53-week year, not a 52-week year, which gives you about a 4% boost. I don't know if that's correct or not.
Yeah, all I know is when we look at our metrics in our business, our customer count is up, our basket metrics for our customers are satisfactory, and our losses to anybody are relatively measured other than those that we were happy to exit. You know, I'm not really sure I can answer that question, other than we focus on our business, not really on our competitors. "Do you believe Bidcorp can improve trading margin again in FY 2025, given low food inflation but still high wage costs? If so, what are the drivers?" Look, I've spoken to that. We constantly strive for a little bit more, and that's on the building blocks.
We've spoken about the building blocks, and more of those building blocks you can build on and elevate your position, the more leverage you have on your operating margin. So I think I've got a few more questions. "Good morning. Are you able to expand the trading margins of Australasia on the same capital base, or will any margin expansion require additional capex investment?" It's not gonna require any more capital investment than it would've got otherwise. And I think what you're seeing in the Australasian business is a constant improvement in the trading margin because we have invested over many years, and we will continue to invest over many years. Now, I spoke about the investment going into Christchurch, in our meat processing facility. That's a NZD 50 million investment over two years. But that's going to...
I don't know what the number is. It's more than quadruple the capability we have out of that business, which will absolutely help us expand margins at some point in time. "Can you elaborate on what facilities are due for refinancing in FY 2025, David?
Well, not specifically, but I mean, you know, it's about 88% of our long-term facilities, core debt, is fixed. So it's probably, I don't know, maybe 10 or 15% of that, that's due for refinancing.
Thank you. "Can you please talk through private label penetration, perhaps contrasting best-in-class regions with others?" Look, there's always a balance as to how much private label should be. We think the sweet spot is somewhere between 30%-40%. I think our overall average is in the high 20s. We don't know that 40% might be a little bit on the high side. But the market's changing as well. Retailers are redefining the private label landscape as well. So this is an evolving sphere, and a lot of the private label question goes to manufacturing as well. Because private label can be bought, it can be imported, it can be locally sourced, or it could be manufactured. Sorry, I'm getting a little bit confused with all these questions. "We are not participating in the recession.
Are there geographies that you think might be in recession?" Oh, absolutely. New Zealand's probably in recession. The U.K. was in recession. Some of the European economies have been in recession, in and out. I think in South America, Brazil probably had negative growth. So look, I'm not an economist, I don't know that, but there certainly are economies that just have zero growth or negative growth. Okay, sorry, I've just got a few more here. Excuse me. So we've spoken about private label. "I saw the Netherlands had some EV vehicles. How have these been performing?" Very average. They're expensive. You don't get the range. You don't get the payload. The capital cost is expensive, and we're forced to do it because many cities in the Netherlands won't allow fossil fuel vehicles in past a certain date.
But the technology certainly isn't great. Your payload is relatively small. Your range is relatively limited. But we're trying as hard as we can, and we're working with what we have. "Stretch the balance sheet?" Look, I wouldn't worry too much about this. Our debt is currently 0.2 x EBITDA. We're certainly not saying we're going to 2x EBITDA, and what we have in the pipeline probably is not going to take us out of the point-somethings of EBITDA of debt either. So it's not a major stretch. I always like compliments. "Well done on a great set of results in a tough environment in the UK." Sorry, environment full stop. Thank you. "In the UK, you mentioned that successful price reviews were implemented, restoring wholesale customer margins to more acceptable levels.
Is second half more reflective of those margins, or there's still more to go?" Overall, in the margins of the UK business, there's still more to go. As I said, they're running at three point-somethings, and they should be in the fours and fives, and then we'll talk about, you know, what comes next. I think, let me see what I haven't answered here. I think I haven't answered Nick Webster's 42 questions. Here we go. Moderating inflation will clearly lower top line growth, but how do you think about this dynamic from a benefit to margin perspective? In Belgium, for example, you commented that trading profit benefited from lower inflation. There are many ways you can look at inflation, and if you're a good operator, you'll make the most out of both situations.
Very high food inflation was fine where you could pass it on, but it wasn't great where you couldn't pass it on. Lower food inflation is easier to pass on, but there's not as much of it, so you know, where you can pass it on, that's great, but you can maybe pass more on in a higher inflationary environment. So it's on average, it moves around a little bit. I actually can't give you an answer on that, other than in the months, the later months of the year, where we saw much lower inflation, our gross margins held up reasonably well. So, you know, we aren't seeing this low inflation having too much of an impact. Deflation will have an impact if that's what happens, including deflation, but we're relatively comfortable we can manage the dynamics.
The UK revenue growth suggests stronger national account growth relative to hotel restaurant. Is that still a drag on margins despite the much better H2 performance? Do you see this mix changing in FY twenty-five? Yes, you are correct. We've had some very good wins in national accounts. You take them when you get them, and generally, they're quite chunky, which changes the balance again. But it's something we're always looking at and trying to find the balance between the two. We like the volume that we've acquired. It fits into the estate well. It helps us with the expansion plans on the infrastructure we have. It enables the growth in the free trade, semi-national type of environment. So all of these things have an interrelationship. Nothing is totally binary. Nothing is good, bad.
It's good for a purpose, it might be bad for a purpose. So you have to look at all of these things with a little bit of a creative view. What's the weighted wage growth percentage increase for the group you're currently seeing? It's moderated significantly, but bear in mind, we've got issues like in Poland, there was an 18% increase to minimum wages in January of this year. But in Belgium, the legislated index increase in January this year was less than 1%. In the U.K., I think we're gonna see increases. There was quite a big increase to the minimum wage last year, and I have no doubt with the new government, we're gonna see big increases. Whatever the...
I don't know what the weighted average is, because we actually don't have a look at it, but you've got to look at it in our cost of doing business, where 2/3 of our cost base, I think it's close to 70%, is people cost. And our cost of doing business has gone up marginally, and that's primarily out of people cost. So it's probably no different to the average inflation that we're seeing, a little bit more. The challenge going forward absolutely is that wage inflation, as we see it now, is higher than food inflation. And we're gonna have to get some productivity gains, some efficiencies out the business to offset one against the other, and we're relatively comfortable with that. Yeah, there are a few levers you can pull. You know, we don't want to do anything drastic.
We've increased our headcount. You have to retain good staff, but there are some areas of efficiency that we can look at maybe extracting some benefits out of. You mentioned a sizable acquisition in Belgium. Can you quantify, and what does it bring to the business? It's about a EUR 50 million revenue acquisition. It's actually very interesting because it's a hybrid business that's cash and carry and delivery. What it does do is it gives us access to cash and carry. It's a different type of cash and carry to our major competitors in Europe. It's very much a specific HoReCa-focused cash and carry. It is not for the hobby chef. It's not somewhere that you go that's got 50,000 different beautiful things.
It's a very functional cash and carry that specializes in center of the plate. There's a delivery component to it as well. What it does do in Belgium, which we found very attractive, is it gives us access to center of the plate procurement capability, which we haven't had up until now, which we can bolt onto the rest of our business. So not only is it a great business we're acquiring, but it gives us synergistic procurement capability in a very important component of the product range. Does the fivefold increase in revenue in Spain ambition include significant acquisition, acquisitive growth? Absolutely. We will get there with acquisitive growth. There's no ways we'll get there purely on organic growth. Having said that, we're going through a substantial investment in Barcelona.
We're fitting out a new facility, which probably gives us 5x the capacity of what we've currently got in Barcelona. The cost differential actually isn't all that much because of efficiencies and things that we gained from it, so we will be able to get some acquisitive growth through range expansion, customer expansion, organic growth, but acquisitive growth is what's gonna drive us. There's still a few more here. Will the debt refinancing impact cost of debt? If so, what could the impact beyond interest costing FY 2025E from refinancing. David?
As I said, I mean, I think it's probably 10%-15% of the you know core debt. It may go up. It depends, obviously, what we can negotiate, but you're not about tens of percent. You're talking about maybe 1.5%, and hopefully we'll get some offset on declining interest rates on the floating interest rate portion of the debt. My guess is probably very little.
I think also the other component is interest rates are coming down anyway. So globally, euro rates are down a little bit, pound is down a little bit, New Zealand dollar is down a little bit. So yeah, I'm not sure that there's gonna be a major differential. Two questions: There was a mention of favorable price negotiations in the UK. Do you think this will have a positive impact on UK margins in FY twenty-five? I think we've covered that off, and the second six months were much better than the first six months, and hopefully, that's a more sustainable and upward trajectory trend. Understandably, the increased number of distribution centers, warehouses, depots positions you well for future growth, but can you contextualize the impact this could have on costs in FY 2025?
We haven't really looked at it, because we take the view we're gonna grow into this infrastructure. So those that we've invested in, we'll cycle through that. So in the current year, we're not gonna have the same 3.2% cost drag that we had on those facilities going forward. They'll probably be positive because they're not gonna be negative. I don't know if that makes sense. Yeah, even if you break even, you're gonna be ahead, because you're not losing money in the startup costs, and you're gonna pull them with good business and get them operating more effectively. However, you're gonna have new facilities that come on, that have a drag effect. So it will probably be, you know, like for like, it has no impact.
You've got those from last year that are now neutral, positive, and now you've got new ones that are gonna be a bit of a drag. But there's nothing going in this year that's any more scary than what went in last year. Okay, I think, I'm thinking that we've answered all those wonderful questions. If I haven't, please forgive me. It is getting late here. I haven't had dinner. So once again, I just wanna say thank you to the team out there. Yeah, they make it happen. David and I might get the kudos for it, but we really do very little. I mean that seriously.
And it's the team out there, they're a great twenty-nine thousand people, led by a fantastic management team, who will we will be getting together for a global conference in Vietnam in a couple of weeks' time, to thank them for all the efforts on your behalf, for the wonderful dividends that they've managed to pay you, and the wonderful strength of business that they've managed to develop for you. The one thing I'll come back to is the fourth acquisition was a very small bakery product type acquisition in Germany. It is very small, and that's why it slipped my mind, so I apologize for that. Ashley, am I done? Are there more?
I think you're done. There's no more.
No, there's one more. There's one more. Will the growth of AI, and it being very much a buzzword, and what is the future potential for AI usage in Bidcorp? I think we're a very fortunate business in terms of AI, because we're very data rich. If you think about it, we're dealing with hundreds of thousands of customers, with hundreds of thousands of products, with tens of millions of pricing permutations. And we're not running a retail business. We're running a business where every customer gets a different price for a different product. So the amount of data we have and the amount of insight that we can get is phenomenal. And we're absolutely convinced that AI will give us some benefit, primarily in the sales side, in understanding customer behavior, predictive behavior, pricing, quoting, et cetera.
It will also give us a whole lot of insight in procurement. David mentioned that we're only carrying, I don't know what it is, about 30 days worth of inventory, so it's turning over very quickly over a huge number of SKUs, and if you can bring a little bit of efficiency into that, you save a lot of money, and efficiency actually might mean stocking more, so that you're handling the product less often, so you might actually carry a little bit more inventory, which, well, will cost you more money, and all the finance people will be blowing smoke out their ears at this point in time, but from an operational point of view, you're actually gonna save a whole lot of money, because you're only handling a pallet of product once a month, not a layer of product 8x a month.
AI will help us unlock a lot of those things, which sound very simple, but when you're dealing with tens of thousands of products from thousands of suppliers in each country, it's quite a complex operation. We're not investing significant amounts of AI in the center. In true Bidcorp fashion, we've decentralized this, and we've tasked our teams around the world with finding solutions to various problems. We've got very, very good results coming forward from that.
What we will do is harvest the knowledge that we have that comes out of that and see how we can deploy that across all the businesses for everybody's benefit. Which we obviously have the BidOne platform, the BidOne capability in the center, to be able to deploy the learnings, the knowledge, the insights, the systems, whatever it might be, to the rest of the businesses. So we're enthused by it. We absolutely see that there's a whole lot of potential, but we're not gonna go talk about the fact that it's gonna revolutionize our business, and we're gonna invest 14 billion ZAR in the next three months, buying some NVIDIA chips and supercomputers. It's very much embedded into what we're doing. We've got these huge amounts of data-rich resources that we're trying to...
That we are mining deeper and more meaningfully to drive the business forward. So I think we're covered off. Once again, I know I've said it a few times, and I can't say it enough times: Well done to my team out there. They really are phenomenal. They've done us all proud. I don't think we can thank them enough. It's a fantastic result. Thank you to David, to Ashley, Charlie, to Shane, to Michael, whoever. I'm gonna upset somebody by not saying something. The fact that the full integrated report, all the reporting is fully done on the twenty-eighth of August, is an absolute testament to the team, and this is a global business in 35 different countries. So well done to everybody. Thank you all, and we look forward to updating you in November, I think.
So thank you very much.
Goodbye.