A big thanks will go to our executive team, Bernard and Dave, and their management teams all over the world who have done a great job in navigating the varying economic conditions in the geographies in which we operate. A special thanks also to our founder, Brian Joffe, who's still on our board, the chairs of all our board committees, Helen Wiseman, who looks after our Audit Committee, Nigel Payne, who looks after remuneration and is Senior Independent Director, Tasneem Abdool-Samad, who looks after Social and Ethics, and Paul Baloyi looks after the Acquisition Committee, as well as our other board members, Cliff Rosenberg and Keneilwe Moloko, all of whom make a significant contribution to our board and help support executive management.
Also, a special thanks to Ashley Biggs and Leigh Roos, who look after governance for the group and ensure that our processes are best in class. I'm now going to hand you over to Bernard Berson and Dave Cleasby, who will take you through the results. Thank you.
Thank you very much, Stephen, and good morning, good afternoon, good evening, everybody around the world, wherever you may be. Really, it's a pleasure to once again be talking to you in the context of what we have to talk about, and let's not for one minute forget how tough the world probably actually is out there in most geographies, and particularly in most of the geographies that we operate in. There's a lot more headwinds than tailwinds. There's a lot more challenges than opportunities, and the macro environment isn't great. Notwithstanding that our team around the world, our 29,000 team around the world, led by an exceptionally competent management team, leadership team, have once again delivered, I think, exceptionally strong results, particularly in the context of reality. Yeah, sometimes, and I've said it before, sometimes we make it look a little bit easy.
Then there becomes this expectation that you can just keep growing at a rapid rate all the time, and it's relatively easy to do, and it's not. I think if you look at some of our peers around the world, they're not achieving the same levels of growth. You look at these numbers in isolation, and they're coming off an exceptionally high base last year, which came off an exceptionally high base the previous year. We've built growth upon growth upon growth in a challenging environment. Full credit to the team out there. They really have delivered fantastic results. I stress that out. It's not often that I get totally enthused about numbers, the numbers we portrayed, because I always think we could do a little bit better. Under the circumstances, I think these numbers are really, really excellent.
Now, obviously, we [were] impacted by 4% strengthening in the Rand against our currencies. Bearing in mind, I think it's 91% of our earnings are non-South African Rand denominated. So that has an impact, and as always, we manage our businesses in local currencies because that's all you can manage them in. So we manage Chile in pesos, and we manage Poland in zloty. And that's the way we think. That's the way our management think. And whatever the Rands add up to is what the Rands add up to. The Rand will strengthen, the Rand will weaken, the Rand will stay the same. We don't try to guess at that one.
We'll talk about the constant currency concept, which is our attempt to portray the results as accurately as we can in a constant currency where we eliminate the effect of the Rand volatility, which, like I say, is a 4% negative on these results. It's been a positive in prior years. And we've always been consistent about trying to show things in constant currency. So at a revenue line, we've grown our revenue by over 7% in constant currency. And there's 2.3% of acquisition in there. And we'll talk a little bit more about the acquisition strategy. And there's about 5% of other growth. And that other growth, in our opinion, is fundamentally all volume growth. Food inflation, as measured separately from CPI across our basket, our view, our estimation on it is it's as close to zero as you can get. It might even be tipping into negative.
There might be deflation across the basket of food we sell, which isn't the same as published food inflation, which is across the retail basket. Our basket, obviously, is different based on the geographies and the type of products we sell. So we're seeing no food inflation in our business, and yet we've delivered 5% growth. That's real volume growth in markets that are pretty ordinary and pretty flat, and to us, that's a really important metric that we are growing. We believe we're growing our market share. We certainly don't see our markets growing by 5%, and that excludes our acquisitions. Therefore, it must be coming out of market share growth, which we're extremely pleased with. What's also pleasing about that is that our gross margins have held up, so we've seen food inflation come down from 15% maybe 18 months ago, a year ago, to zero.
Notwithstanding that rapid decline in inflation to zero, to deflation, we've managed to actually improve our margins a little bit, which once again talks to our strategy as to how we see the business and the levers we have to pull on the gross margin line. Our cost of doing business has gone up slightly, and that's totally unsurprising. There's no doubt that general inflation, CPI inflation, cost inflation is running ahead of where we see food inflation. In most developed markets, you've got wage inflation running at 2%, 3%, 4%. Then you've got energy costs, you've got capital equipment costs, you've got replacement costs, which are all running at an inflationary rate that's slightly higher than where the food inflation is running. But when you put that all through the mix, we've grown our trading profit by over 10%.
A 7.1% increase in revenue on a constant currency basis has given us almost an 11% increase in trading profit, which is really a phenomenal outcome in a world where there are challenges. It's just not easy out there. I don't want to overemphasize it, but sometimes our numbers don't, I think, give credit or credibility to how tough it actually is out there in most geographies. And I'll go through a few of them in a little bit more detail when we cover off. David will go through the financial issues in a little bit more detail. We're very satisfied with our cash generation, and we're very happy to declare a dividend of ZAR 5.60 a share, which is 6.7% up on prior year. And hopefully, our shareholders are satisfied with the dividend return that they're getting out of it.
Yes, our leverage has ticked up slightly, but we have continued to invest. We will continue to invest, and we have made eight acquisitions, of which one or two of them have been larger than what we've typically done over the last few years. From an ESG point of view, and I'll just cover off on it very quickly, we're committed to what we've committed to do. And there's a lot of negative talk. There's a lot of pushback. There's a lot of rollback of ESG initiatives around the world. We remain conscious of the fact that we do have an obligation, but at the same time, we've got an obligation to run a business, to deliver returns, to deliver stakeholder returns. And we balance that with what we can do from an ESG point of view. And we will continue to do what we can.
Our investments are environmentally responsible, and we are investing a lot. Our facilities are far more efficient than they used to be. Our fleet is far more efficient where it makes sense. We are moving to EV where it makes sense. It doesn't make sense in too many circumstances, and from a social and governance point of view, we're certainly continuing to go down the path that we were on before and will continue to go down that path, so overall, we're exceptionally pleased with where we are at the end of December. It is ahead of what I thought we would be. It's more or less in line with where we indicated at the end of November.
But I think our team have outperformed where my expectations were, which just speaks volumes to their capability and dedication and ability to make the most out of any circumstance, which I think bodes exceptionally well for the future because conditions will improve. There's absolutely no doubt about it. We've just done a win. And when they do improve, I think our business is in phenomenal shape to ride that wave even higher than we've been riding it up until now. So if we move on to the segments, and I'll go through those in a little bit of detail. So firstly, in Australasia. There we go. Australasia, which is our largest profit contributor. There's no doubt that the New Zealand economy is not great, and it's recessionary, and it has been for a number of months, if not a year or so.
Our business in New Zealand, over 20-something years, we're going in for 25 years now, has delivered us consistent growth and phenomenal growth over 25 years. This year, in a really, really tough year, in a really tough economy, we almost probably end up flat, which to some of you might be disappointing. To us, we think it's absolutely incredible that an economy in recession, a consumer in all types of dire straits, our business still has enough levers to pull to continue to operate at the world record levels that they operate in and come out with a relatively flat result. So we think it's a great outcome from the New Zealand team. We are seeing the customer, and this is a comment across many geographies. The customers are becoming exceptionally value conscious. It's a price-driven market.
It's very much that you're a price taker, no longer a price maker in our position. And we are seeing some pressure on margins, but we're absolutely firm on our belief that we'll maintain and grow our market share. We might have to sacrifice some margin in the short term. We'll hopefully find some procurement gains, some efficiency gains to offset that. The Australian business continues to perform, we think, very adequately. Muted sales growth of 2.5%, which is the result of real growth coupled with the exit of some business. And we talk about that every year. And that's a constant process of right-sizing the portfolio. But you've got a profit up 7%, which in Australian terms, you're certainly outperforming our peers. So we're very satisfied with Australia and the trajectory that's on. So our Australasian business, the trading margin improves slightly to 7.7% from 7.6%.
There's a slight increase in profitability at record high levels. Both exceptionally well-managed businesses, stable management teams. Lots of investment has been put into the business. Lots of investment will continue to get put into the business. And we remain very, very optimistic about the future for both Australia and New Zealand. And in particular, I think the New Zealand economy will start turning relatively soon. I hope I'm right. And we'll certainly see the benefit of that. Moving on to the U.K., and I'm sure I'll get lots of questions about the U.K. All I'll say at this point in time is I've told you so. We are on the right trajectory. Our trading margin has improved from 2.8% to 3.4%, which is a big increase in an economy that's pretty average.
For those of you who have been to the U.K. or read up on the U.K. or in the U.K., it's pretty gloomy, the economic outlook, but notwithstanding that, our business has performed well. Yes, there is some inflation in that, in terms of price, but even if we exclude that, the business would have been very satisfactorily up in profitability and in revenue, so clearly, some of the actions we've taken are bearing fruit. Some of the things we said were in place a year ago, two years ago, are now starting to filter through. Our team are very motivated. They've had some good wins on the sales side. That business is well poised to take advantage of market conditions. We are very nervous about what happens in April when the National Insurance increase kicks in.
We don't know what the impact on already fragile consumer demand is going to be. We don't know how much of it we'll be able to pass on. Obviously, our intention is to pass on as much as possible. Whether that comes to be or not, I'm not really sure. We're not that smart that we can understand exactly what the dynamics of the market are going to be, but it will be, I think it will be quite a jolt to the economy, not a positive jolt in the short term, maybe in the longer term. It will be beneficial. We're comfortable that we're on the right trajectory in the U.K. It's not going to take six months. It's not going to take a year. It's going to take two, three, four, five years to get this business to where its potential is.
We reiterate that this business is a 5%-6% business as currently structured. With a bit of luck and a bit of engineering, it could be a little bit more than that. You've got GBP 3 billion, which when we do get to the correct margin, has quite a material impact on the overall group. We're very confident that we're on the right path. Moving on to Europe. Both the U.K. and Europe had a very average summer from a weather point of view and from a tourism point of view. They had a terrible September. September in particular was exceptionally wet. There was flooding. We were actually impacted with flooding in one of our manufacturing plants in the Czech Republic. Many of our customers were flooded and wiped out. September was a really average month in Europe.
We thought, this isn't going to bode well for the rest of the year. Fortunately, it kicked back up again, and Christmas trading was relatively robust. All of our businesses in Europe have shown growth, both at the top line and bottom line, with the exception of Portugal. Portugal is very much a work in progress where we are putting the investment in now to take the business to the next level. That's a cost issue that we have to put the cost in order to grow the business and scale it up quite significantly. We have exited Germany. We're in the final throes of that. I think that settles on Friday. I could say that the German economy led us to do this and the dire straits that Germany's in, but that's not correct.
We just had the wrong business, and we felt that the investment required to get that business to scale was just not justified in terms of a competitive analysis of where the major players operate in Germany and the margins and the returns that they get. Clearly, there is just something fundamentally a little bit amiss in the German market that made it unattractive for us to make further investment. So we did exit the business. We have taken a capital loss on that that David will talk about, but we still own the freehold, which has an inherent uplift in it still, releasing that to the party who's bought the business from us.
So there will be a profit at some point in time, one day when we potentially sell the property, that more or less offsets a substantial part of the gain, the loss that we took on exiting. In terms of the rest of the businesses, the Dutch business continues to perform well and is reaching its potential. The Belgian business benefited from an acquisition, which is a very interesting acquisition because it operates in the cash and carry space, operates in a true Horeca foodservice cash and carry. We're learning a lot. We believe this has some type of benefit in other markets and in further expansion into Belgium, but it is early days. But it has worked out to be a good acquisition. And even if we exclude the acquisition, the Belgian business still did well. Portugal I've spoken about, work in progress.
That's a market that we are enthused about and are scaling up. Spain is tracking totally according to plan. The team there have done a great job. We've fixed the problems. We don't talk about them in terms of businesses on the watch list. They're now just part of the cohort operating at very acceptable margins with good upside. And we are actively looking to scale up that business. We're making a substantial investment into Barcelona, which will give us efficiencies, the ability to combine a few businesses and grow the product range. Once we've got Barcelona correct, there are many other geographies that we're not in Spain, and we think that's quite an attractive market. Our Czech and Slovakian business continues to perform exceptionally well. I think we're seeing Eastern Europe is slightly stronger than Western Europe, and that's reflected in our business.
The Czech business continues to deliver exceptionally strongly for us and our Slovak business. Hungary is very much almost a greenfield start. It's very, very small. We are looking to scale that up at some point in time, either by acquisition or by continued investment, but it really doesn't shift any metrics at this stage. Italy overall is relatively flat, and that's because we opened a very, very large depot in Rome, a new depot, which added about 40%, about 30% additional capacity to the overall Italian infrastructure, and that comes at a cost. You don't fill it in day one. It has come at an additional operating cost, but somehow we've managed to increase our sales quite substantially, and our profitability is basically in line with last year, and we should start seeing the like-for-likes improve because we did have some of the Rome opening costs last year.
We'll cycle through that. And by next year, Italy will have a whole new infrastructure from which to grow, and I think we're going to see some exciting things coming out of that. Poland continues to impress. We made those investments 10 years ago. Some of you questioned why we were investing, but we did. And we're now at the stage where we probably have to go again. We're operating at capacity in many cities, and that's exciting. It's a huge opportunity. Our Baltics business was also a small startup 10 years ago. I don't know when we got in 10 years ago, maybe 15 years ago, but we're now at EUR 120 million revenue. I think that will be EUR 150 million relatively soon. And with a few acquisitions, we'll probably be touching EUR 200 million in three countries where the population, and forgive me, remove us if I'm wrong.
I think across all three countries, I think the population is only about 4.5 or 5 million. So that's a reasonable size business now and operating at very acceptable margins at acceptable levels. Germany we've spoken about. We've exited that, so there's not much more to talk about. Emerging markets, once again, is a collection of many different stories. South Africa, once again, a phenomenal success, 20% up in Rands because they do report in Rands at the profit line. Revenues did perfectly acceptably across all three businesses: the Bidfood business, the Crown business, and the Chipkins business all contributed to that success, and we're very comfortable with the trajectory that our South African business is taking. We are seeing the mood in South Africa improve slightly, which maybe is benefiting consumer sentiment, and I think our teams have managed to get the benefit of that and continue to grow.
And for a few years now, we've been talking about phenomenal growth out of our South African business, and once again, they've delivered. The Middle East continues to perform well. So the region, the perception might be that it's going through some challenges, which I guess it is. But in the markets we operate in, which is primarily the UAE and Saudi, the business is growing. There's some exciting infrastructure projects going on, particularly in Saudi. And our team are delivering exceptionally well in that region, and we're seeing good growth. We were impacted a little bit. Some of our customers were impacted by consumer boycotts in those areas, and that will start cycling through. And I think they might be easing off a little bit. But overall, the Middle East business is doing good. Our Turkey business is one of those startups, profitable, great infrastructure.
And I think it's one of those that will look back in five or 10 years' time and say, "Wow, what a fantastic idea that was to invest into Turkey the way we did when we did." But we've just got to get through it. You have to invest to grow, as any startup knows. But I think we're doing a good job there and growing the business accordingly. Asia is a bit of a mixed bag. The standout performer is Malaysia. We've got a great business there. We are investing in infrastructure. We're building a large distribution center in KL, which will give us a whole lot more capability, particularly from the procurement side, which will enable us to get geographic expansion. The business is doing well, performed exceptionally strongly. Got an acquisition lined up there, which hopefully we can execute on relatively quickly and doing well.
Greater China, the economy remains a challenge. China, whatever efforts I've made to kickstart the economy haven't really worked, and the consumer is under phenomenal pressure. There's an absolute search for value. There's an anti-Western product bias, so there's a lot of negatives, but our team have delivered, so we're actually slightly up on the prior year on a like-for-like basis. We're profitable. The business runs at about a 3% margin. I think in the best years, we were somewhere in the fours. Maybe we could get back there, but it's tough going, and Hong Kong is really, really tough going. It's not the Hong Kong of five years ago, not of five years ago. We went into COVID five years ago. Let's not talk about that, of seven years ago or eight years ago, so tourism numbers are far lower than they were.
It's not the financial metropolis that it was. And it's more challenging, but we remain committed to our Greater China business. I think our management team now, our new management team, have been in the role about two years now. They've done a great job. And the business is well-structured, well-run. And when there is opportunity for upside, I have no doubt we'll be able to get our share. Singapore has been through a little bit of change. We had a change in management there. We've spoken about that just over a year ago. And Justine, who was running the New Zealand business, relocated to Singapore, was given a bit of a hospital pass in terms of having to clean up a little bit of mess, which she's done. And we've come out of that relatively well.
I think the future looks pretty bright in Singapore. The business is well-structured, well-focused on what's important. I did hear an interesting statistic that I didn't believe, and I checked it, and apparently it's true, that international arrivals into Singapore in 2024 were over 20% lower than they were in 2019. Singapore has also lost some of its pull, some of its attraction. Don't know why, but that's just the reality. You're not dealing in an absolute boom economy there, and it is a little bit of a challenge. Moving now just to South America. Argentina, we took from an associate to a subsidiary in, I think it was September or October. We moved from 40-something% to 60% of the business. Still small, but exceptionally interesting. A good business, profitable, generates cash in a volatile economy, which does seem to be moving in the right direction.
I was reading something in Bloomberg today that said that the economic results that they're seeing out of Argentina are way in excess of where their expectations were. Somebody had to get in and do the difficult stuff. Malaysia has certainly gone in there and tried his hardest, and it seems to be paying off. Chile, I think we're poised for good growth. We've seen good improvement off a relatively low base, but the potential there is phenomenal. We have the infrastructure across the country, and I think that will be one of those that we grow into. Brazil is another interesting market. We're doing okay. We haven't found the correct acquisition opportunities. We do need to scale Brazil up. There are 200, I think it's 230 million people in Brazil compared to, I think it's 16 million in Chile.
Brazil's a big, big country, and we're a relatively small player in a big country. So at some point in time, we do need to scale that up. So that, I think, gets you around the world. My overall message is I think our teams have performed exceptionally well. And when you look across the portfolio, almost every business has an improved performance on the previous year. One or two are flat, and one or two are below. And the one or two that are below are relatively small businesses, which won't shift the needle. So for the majority of our businesses to have shown growth in this environment is, we think, remarkable. So my thanks go out to my management team, to the 29,000 people who are out there.
I think, once again, they've delivered in spades for us and will continue to. And I'll talk about the prospects after David's gone through his financial stuff. So I'll hand over to David.
Thanks, Bernard. Good morning to all on the line. Thanks for taking the time to attend. Just, I guess, some admin, as I generally cover as always. These numbers are obviously in terms of IFRS. All our accounting policies have been consistently applied, and we think that the quality of earnings is very, very good. Thanks, as Bernard said. Thank everyone. I just want to make a particular reference to the finance people and particularly our corporate team. I would encourage everyone to read the booklet. We provide a huge amount of information, and reading that information will give you very good insights into the group and particularly into the businesses themselves. We have this mantra. We're not concerned about things we can't control.
As Bernard alluded to, the rand is one of those things that we can't. So we look at the businesses, obviously, in their home currencies, and that's the basis of performance evaluation. In terms of the trading performance and highlights, obviously, the rand was a little bit negative in this first half, but pretty good top-line growth, although even with acquisitions contributing about just over 2%. Gross margins held up well at 34.1%. Food inflation, as you've heard, has disappeared, but there remains cost inflation out there driven by labor costs and the latent impacts of supply chain disruptions, particularly in capital equipment and the like. The cash flow across the group was particularly strong, and obviously, we've used some of that to invest quite heavily.
Working capital days are up a little bit, and I'll talk a bit about that, but they remain better than when we went into the pandemic about five years ago. We are seeing a little bit more financial distress in the customer base, but that's being managed at a granular level and being watched. But we continue to believe that we conservatively and prudently provided to cater for eventualities. Capital investments, I'll talk a little bit about that, but they certainly are up. The net debt is up a little bit, but I think relative to the group, it's marginally up. So I think that's understandable in the context of the investments that have been made, and HEPS are up 6% in Rand and 10% in constant currency.
As Bernard alluded to, we declared a dividend of ZAR 5.60, up 6.7%, which is slightly ahead of the Rand, but largely in line with our dividend cover that we've applied for a number of years now and in line with the board's policy. In terms of P&L, yeah, I think it's obviously, from a macro perspective, a difficult trading environment. You've got very low food inflation or zero food inflation. You've got cost inflation. And I think the businesses have done a great job in terms of managing both those to deliver increased profitability and increased margins across the board. In terms of gross margins, I think, as Bernard alluded to, I mean, there have been some businesses and some positions taken where the businesses have, because of, I guess, economic circumstances, sacrificed some margin to maintain and grow market share. And some of those environments are more competitive.
But I think in the context of that, to be up 40 basis points basically at the gross margin level means that there are a number of businesses that have actually improved substantially, particularly across Australia and Europe. So good outcome there. Operating expenses are up a little bit, but I think in the context of increased gross margins, the group's managed to cover those off. And the trading profit has gone up by 10 basis points in terms of margin to 5.3%. Obviously, from an overall perspective, labor costs are two-thirds effectively of the cost base. And we are seeing, as we've heard, higher wage growth than what core CPI is and certainly, obviously, way above food inflation. Interest has held up relatively well. It's largely just up under 4% on a constant currency basis. That's excluding IFRS 16 interest.
I think, basically, in the context of working capital investments, ongoing capital investments, particularly PPE, and obviously acquisitions, which you can see is a sizable number in the scheme of things. I think the businesses have done well. We've replaced some expensive funding with more cost-effective funding. We've shifted some funding around to achieve that. And I think it's just a testament that generally the working capital through the group has been well managed. As we heard, the material items related to the non-cash disposal in Germany, principally the big item there is goodwill. And it's one of those things, non-cash, but the decision was taken to exit, and you've got to take the write-offs as you get them. The accounting gain, which offset that to a little bit extent, was really the accounting for the step-up of Argentina from an associate to a subsidiary.
But that has offset a little bit of the capital loss. The tax rate is, I guess, at the higher end of guidance. We've got somewhere between 26%-27%, but it's mixed related and not a lot we can do. It does depend on the contributions of the different segments. But I think from our perspective, 27%, we are good taxpayers around the world. We pay full taxes in each country. And with Pillar Two coming in, as we've alluded to, it's going to be very little potential extra cost from a group perspective because of the full taxes we pay in the majority of countries. Going on to the cash flows, I think if you look at the cash flow conversion metrics, they're all very positive and good.
Working capital, I think that year thing, it is up a little bit, and it certainly hasn't come in the receivable space. Those are well managed and largely flat, half year on half year. The book has come down a little bit, but that gets managed as we see fit in each jurisdiction. As I said, the credit risk continues to be carefully managed as we do, but we are prudently covered. Inventory days are also well managed and have been well managed, and that's despite, I guess, the change and the businesses doing more of their own supply solutions, and in those cases, we've seen some impact in the payable days. Those have come down a little bit because we don't get necessarily the same credit cover and credit period cover that we have done with using intermediaries. So there has been a little bit of pressure from suppliers.
I guess that's been driven, as we've said before, by the cost of capital across the world being obviously much higher today than it was a few years ago. But it's an area we need to continue to focus on and see where we can't improve from that perspective. The investing activities are up. The principal driver there is acquisitions, and Bernard spoke into that. Net debt I've spoken a little bit about and absolutely within expectations. And the cash is down a little bit, but that's just a function of us investing. From a balance sheet perspective, not a lot to add. I think the only thing really to add here is that in terms of our short-term debt, we do have some maturities that are taking place in the next period, and those largely have been refinanced already.
We'll see that short-term debt reduce as we go forward. And then in terms of the way we manage the group in terms of risk management and the solvency ratios. They are up a little bit, but from our perspective, absolutely well within our sort of metrics and absolutely well within our covenants. In terms of going forward, the sales into January and February are tracking within our expectations. And certainly, profitability into January has mirrored the trajectory that we saw into the first half. So we're happy with that. The group, we expect to remain cash positive or cash generative as we go forward. Working capital generation, as we reiterate all the time, we do have a cycle of absorption in the first half and generation into the second half. And we don't foresee that changing into the second half of the year.
I've spoken about the debt maturities, and those have been basically sorted. And we have nothing else in the next six-month period. Yeah, I think the forecasting, obviously, in the environment remains high. But I think we are generally well provided and conservatively provided for what are increasingly difficult conditions in many geographies that we operate in. Tax rate, we expect to remain within our guidance. Volatility from a Rand perspective absolutely will be there, but you get what you get in Rands. We don't manage the business on that basis. The international investor base is stable but has come down over a period of time. I think we're certainly seeing in our investor base that international investors are still risk-off.
And we're still forecasting real growth for the balance of the year and for 2025 as a whole. So on that basis, I'll hand back to Bernard for the outlook.
Thanks, David. As was explained, we're eight weeks into the new calendar year, so into quarter three. And sales are tracking more or less the same level as we've experienced for the first six months. But it's fair to say that January and February are relatively slow months because you've got Northern Hemisphere winter period there, which is traditionally our slowest trading period. So the next big test really comes in around Easter time, which I think this year is a little bit later than last year. I'm not sure what the implication of that is. It's probably. I'm actually not sure because last year, the season didn't really kick off when it was meant to kick off at Easter time and only kicked off later. So Easter, I think, is in the middle of April this year.
So obviously, for us, April, May, June are very important. And hopefully, the trend continues. Where we sit at the moment, yeah, I don't want to give too much guidance, but we see this continue. Our teams seem to manage the challenges that they get. It's probably not getting more difficult out there. And I put a big question on the U.K. because we just don't know what's going to happen in April with the NI and possibly Europe as well with the tariffs and whatever else might go on in Europe. But assuming everything continues as we are at the moment, we think our business is well structured to ride the wave. And we're very confident of the rest of the year and our look forward that we can continue to drive sales growth at above market growth rates, that we can maintain our cost base.
Obviously, you've got short-term challenges. I don't think it's worth panicking about the fact that our cost of doing business has gone up slightly. That's a very short-term impact, which will balance itself out over a period of time because I have no doubt we'll see a little bit of food inflation come back into the mix at some point in time. We'll see further downward pressure on wage growth going forward. Our acquisition pipeline looks relatively healthy in many geographies, and that's in the geographies we operate. I have alluded to before that there are one or two new country opportunities that we're at the very early stages of exploring. They may come to something. They may not. It's not worth going into them other than we'll retain our discipline and they'll need to meet the criteria that we set and the discipline that we set.
So overall, I'm exceptionally proud of what the team have achieved in very average to difficult conditions. And hopefully, we'll continue to achieve. Many of the wheels that we put in motion are what's driving the growth. And we've spoken about them, and we don't need to talk about them more because it's actually just what we do. It's those various activities of building the base of building your procurement capability, of your import capability, of your house brand strategy, your light manufacturing strategy, supplemented with bolt-on acquisition. And the net effect of those gives us what we have here, which we're able to take benefit of because we have a stable team. We're not inwardly focused and restructuring and getting consultants in to tell us how to run the business. Our people around the world know what they're doing.
They know how to adapt to the reality that they face. And I think once again, they've done a fantastic job. So the most important thing for me to do is to thank the team out there because it's really them who deliver these results. David and I just get to report on them. So well done to the team. What we're going to do is go to Q&A. I noticed that there are not many questions that have been submitted so far, which is fantastic. Please keep that up. And we'll answer them as quickly as possible and take it from there. Okay. Would you go back into Germany through another business acquisition? Are you excluded from that region through any restraint of trade agreement with the party that bought from you?
The reason we got out of it is structurally, we didn't see a great imperative for us to continue in that market, so unless something fundamentally changes, we're going to be in no rush to go back. We are under a restraint for a short-ish period of time for a matter of years, a few years, and I think there's no way we would go back in a few years anyway, so you can never say never, but it's certainly not right up there on our agenda to get back into Germany. I think we learned a lot of things, and there are many other markets that we believe we could have a better success rate in and make a bigger impact than the German market. Where are you in your value-add journey in terms of moving trading margin to optimal levels? You mentioned U.K. margin journey.
What about other geographies? Where do you see most margin upside? Over what period and what are the drivers? Now, that's an impossible question to answer because we don't actually know. So whatever we can drive the margins to is where we will. I'm not sure there's a utopian level because if you drive them too high, you must probably become uncompetitive. We always said that you have to find the balance, and how you derive those margins is important. The mix that comes out of pure distribution, out of procurement, out of cost efficiencies, out of light manufacturing, they all have different characteristics. So when you compare us to our global peers, our operating margins are pretty much right up there. And I think we're sort of seen as the leaders, not the followers.
And clearly, the U.K. moving up to the average of the rest of the businesses will have a marked impact on the overall group results. And then as for the rest of them, we'll incrementally increase them wherever we can. Each 0.1% is exceptionally hard-fought for. This isn't a spreadsheet exercise. I wish it was as easy as taking a spreadsheet and putting in some numbers. Every 0.1% is hard-fought. Okay. Let's move on. Sorry. What is the revenue contribution and trading profit loss contribution of Germany to Europe? This will allow us to strip out both and forecast the uplift to margin post-exit. I actually don't think it would make a difference. About EUR 65 million of revenue and about a EUR 1 million loss, I think it was, David, somewhere around that. You can put that in your spreadsheet.
That's on an annualized basis, Bernard.
On an annualized basis.
Loss is probably, yeah, ZAR 750,000.
It looks like New Zealand profits are down significantly. Expected flat for the year. Could you talk around that now? I don't think they are down significantly. They might be down significantly in rands, but certainly not in New Zealand dollars. They're almost flat. I don't know what the exact number is, but I'm not sure why you're getting that result that New Zealand is down significantly. Somebody will send me the answer. But I think in New Zealand dollars, New Zealand is relatively flat. Could you talk around the Italian potential in terms of timing? A 30%-40% capacity growth looks very exciting. Not sure. Our sales growth in Italy has been strong, and we will continue to see some strong growth out of there, hopefully. We're almost at EUR 1 billion of revenue in Italy.
That business, 10 years ago, was doing, I think, we bought it at 230-240 million. And there's been no acquisition, almost no acquisition in that. So organically, they've quadrupled the size of that business. And this now gives us the next impetus to grow the business. But if you look at Italy, I think there's 60-70 million people in Italy. And they love their food. And there's 30, 40, 50, 60 million tourists. I don't know what the number is. It's phenomenally large. So when you look at the potential of an Italian, what it potentially could be and the fragmentation in the market there, we remain very enthused about it. What do you see as the key drivers for the downward pressure on wage growth? Well, I'm not an economist, so I'm sure those amongst you who are economists can answer that much better than me.
But what we are seeing in the developed world is that it's easier to find staff than it was before. So don't ask me why. But it seems that there's less pressure. Our U.K., European, Australia, New Zealand businesses, economies are all actually running at full employment. But we are finding it easier to find staff. They are staying for longer in most instances. There seems to be a little bit of a shift towards a more normal work environment that people understand that you can't drive a truck from home. You actually have to get in the cabin and drive it. But I think it's just a natural cycle that the wage pressure is lagging. The wage increases are lagging food inflation, as we see it. And wage pressure is declining.
And you can see it in published statistics and wage negotiations around the developed markets that the rate of increase is dropping. Now, that is offset by many jurisdictions increasing minimum wages by substantially in excess of inflation. So what's happening in the U.K., it's happening in Poland. It's happened in New Zealand historically. There are various geographies where the minimum wage is being pushed upwards by government action. Now, that doesn't only impact the minimum wage. It obviously has a flow-through impact on everybody else. But it's one of those virtuous cycle things. Pay people more. Hopefully, they've got more disposable income. Hopefully, they go to the pub once more often and order a hamburger and chips once more often. So these things have a habit of being a benefit. But we do see wage pressure being downward, not upward.
Can you speak to the preferred route of scaling up in Spain? If acquisitive, what sort of acquisitions are you looking for? It's both. There's going to be organic growth, which we are growing pretty strongly. And there is going to be acquisitive growth. We have looked at a few businesses. We've made one acquisition. There's possibly one or two in the pipeline. But until those acquisitions happen, we'll continue to drive the business organically. And the easiest way to do that is through product expansion. We've got a few businesses in Spain. They've got different product portfolios. If we can get the cross-synergy, the cross-selling benefit of that, we'll drive our growth pretty significantly.
We're just very happy with where we've got to in Spain in a relatively short period of time, that the business is back on track and is doing what it's doing and is operating at very acceptable levels of profitability and all the metrics are fine. And now we'll focus on the growth. The answer on Germany is it's a 1.5% revenue contribution to the Europe segment. So it won't really make a difference. And the trading loss is a negative 0.4% contribution. So I call that a rounding error. What will the impact of the U.K. NI be on the U.K. profits on an annualized basis? The raw cost is somewhere in the region of £7-£8 million on an annual basis. How much of that we pass on, I don't know.
But the absolute cost to us will be £7-8 million starting from whenever that is, April. The answer on New Zealand, thank you very much, is New Zealand is down 2% in New Zealand dollars. Their operating profit is down 2% in six months on six months. And once again, where I come from, 2% is flat. So I think they've done a phenomenal job in keeping it flat. You mentioned that Poland's capacity with revenue was up 15%, trading profit up 22%. How high are margins versus European margins? They're trading higher than their Western European peers and lower than some of their Eastern European peers. So there's a little bit of competitive pressure on them to do something there. Sorry, I'm just trying to see where I'm at.
Have you seen a sharp increase in many food commodities over the past few months, including coffee, cocoa, dairy, palm oil, etc.? Can you talk about your expectations around food inflation and lag between commodity increases and end product inflation? Once again, it's a mixture. So yes, cocoa powder is through the roof. And that's part of the reason as to why Malaysian businesses don't grow. They are heavily weighted towards bakery-type products, which are obviously cocoa-based, and they've been great traders in that. But we've likewise seen many commodities come down significantly in price, and there's volatility. So we're still seeing a net zero to deflationary mix across the portfolio. Now, I don't want to go through each product by itself and what we've seen in the last month or two months or three months because there is volatility.
Our basket, though, on a year-on-year basis, is flat to negative on an inflationary basis. You've been in South America for some time now. Are you happy with the returns you're generating? And if not, what strategies do you have to improve the performance? Yeah, we've been there for quite a while. And I think we've done relatively well not to blow our dough, quite honestly. I think the school fees we've paid have been very small. We've got businesses that are profitable that are giving us adequate returns based on what we've invested in those businesses. But the potential is huge. So I don't think we've got any regrets about what we've done. It's just a case of when are we going to be able to take advantage of the potential that sits in those markets? And what strategies do you have to improve the performance?
That's what we've spoken about. Yeah, that's what we do all the time. And both Chile and Brazil have an improved performance, and hopefully, we'll continue on that trajectory. Okay. Let's just carry on. Do sellers of businesses have more appetite to sell now versus last year? More deals crossing your desk? Yeah, there actually does seem to be an increase. And I think that's possibly because the post-COVID blip has worked its way through the system. So I think vendors have realized where their businesses are and how stable they might be or what their profit trajectory looks like. So they're actually more saleable now because you have a predictable earnings profile. But we are seeing reality on vendors' expectations. So they've been through COVID. They've been through the recovery. They've seen a stabilization.
So we're doing deals at prices that we're happy with at multiples that make sense for us. The first half of FY25 U.K. margin was slightly below second half, FY24. Was this disappointing from a management perspective? Not at all. There's always that seasonality between H1 and H2 in the U.K. business. It's not a straight line. And we're pretty happy with where that's going. And like I say, management is confident in the U.K., subject to the fact that they're operating in a very challenging environment. And we just can't say we're comfortable with the macroeconomic position there. Okay. Three questions, please. CapEx through the cycle is guided to 2%. First half at 2.8%. Can you give us some guidance on when it would normalize? Yeah, I don't know. Normally, we spend more in the first half than the second half.
I don't know that there's anything big coming through in the next six months, but these things are lumpy. We're buying some land in the Netherlands at the moment. It's expensive, but we've got to buy it. We don't have a choice. We just have to do it, so these things are lumpy, and the investment is primarily real estate. As food inflation has come down, are you seeing volumes in the market picking up, excluding your market share gains? No. We're not seeing volumes. We're not seeing customer demand overall pickup, so the customer, the consumer, is under pressure, and when you read through the QSR results in many geographies we operate in, our competitors' results, retailers, etc., there's consumer pressure out there. Things aren't going forward in leaps and bounds. Things are probably going backward.
The fact that there's no inflation certainly isn't driving consumer demand and consumer volume. Can you give us some guidance on the cost of borrowing post-refinancing and when the next window of financing is coming up? That sounds like a David question.
I think post-this refinancing, we're probably just over 3%, certainly on our euro borrowings. The next window, I think, is in 2026.
Okay. How do we think about the buyer of the NCI interest in the Italy operations? We've been invested there for 11 years. 60% ownership, 40% is the family. It's a relationship that works. There's obviously contractual timeframes, which are negotiated and moved out. From both our perspectives at this point in time, the relationship works, and both parties are happy. We don't see that changing in the short term. It seems fine.
Looking at the acquisitions and annualized revenue of GBP 4.5 billion and trading profit of GBP 400 million, the margin looks really good and better than existing business. Can you touch on how these business models differ from the current business and how the margins are so good? Appreciate that's probably a mix, but some color would be helpful. Look, two of the large acquisitions, one's in the U.K., one's in Europe. The U.K. one operates in the independent space and doesn't deal with large national customers. It deals with smaller customers and therefore operates in the correct margin space for a business of that nature, which goes to our thesis on the customer mix. And the other large one is in Belgium, which is a cash and carry operator, which does operate at margin levels that are slightly higher than a distribution model.
And that's why we like the business, and we see the opportunity to, at a point in time, roll that out into other markets. Now, it's not simple. It's not just as easy as getting a warehouse and putting some product in and saying you've got a cash and carry because there's a huge amount of IP that goes into these cash and carries. They're not retail cash and carries. They're not intended for the consumer. They're absolutely focused on a specific segment of the foodservice business with a range that's very bespoke to foodservice operators. As a consumer, you'd walk in there and most probably think this is a terrible, messy store. It doesn't really tick too many of the boxes that you'd like.
But from a foodservice operator in that segment of the market, it's exactly what they want, led by center of the plate through the protein, meat, dairy, fish type of category. So it does operate at very attractive margins. What is the trading margin in the Netherlands? I'm not allowed to tell you, but it's more or less at the average of Europe. What is your optimal percentage mix between Free Trade and National Accounts in the U.K. to drive margin growth in the future? Would it be rude if I said 100%? So I won't. It's most probably you've got to get to somewhere of 70%-80% and 20%-30% on the other side. And we're a little bit on opposite sides of that in the core Bidfood business in the U.K. Independent businesses, however, are at the correct mix.
And our Fresh business is at the correct mix. So it's purely a case of getting the mix correct in the Bidfood business or making the Bidfood business less of an overall significant contributor to the total. China, why nothing has worked from the stimulus that the government tried to put through? Don't ask me that question. You guys are much cleverer than me. You're all fancy financial analysts and things. So I've got no clue. But it's just it hasn't. There's just no excitement. H1 profit trajectory continued into January. Do you mean growth is running at the same pace as 1H, or do you mean absolute level of Rand millions in sales? No, no. We mean the growth rates are running the same.
The percentage increases that we're seeing at the revenue line are running more or less at the same level as we've experienced in the first six months. At 8:05, we have no more questions. Thank you, everybody. I see the share price is under a little bit of pressure. I'm not sure why. I'm not sure what we really didn't deliver that we said we were going to deliver in November. Not sure why it came as a huge surprise. Anyway, we're exceptionally proud of these results. We think they are exceptionally strong in an average economy. We're enthused about the outlook going forward. Very comfortable with where our business is. Most importantly, I need to thank once again the team out there. They've done a phenomenal job. They'll continue to do a phenomenal job.
And I look forward to updating you in May with our progress to date. So thank you very much, everybody.