Good morning, everybody from around the world. I'd just like to welcome you to the Bidcorp results for the half year ended December 31, 2021. I think these results reflect a very strong organization with a very diversified geographic spread and demonstrate the kind of resilience coming through a particularly difficult time over the past two years. I think that management have performed excellently in this period. I think it just goes to the strength of the leadership, the culture, the resilience, and the flexibility of the Bidcorp team. I'd specifically like to thank Bernard Berson, David Cleasby, and the management team from all over the world who represent the Bidcorp culture and values and enable Bidcorp to be what it is today.
I'd also like to thank our board, in particular, the Chairman of our audit committee, Helen Weir, our Senior Independent Director, Nigel Payne, all the other board members who play a magnificent role in terms of helping guide Bidcorp and ensure that it delivers to all its stakeholders. I'd also like to recognize our founder, Brian Joffe. He's stepped down from the organization a number of years ago, but the culture that he created is still very prevalent and the strength of the organization is arising from that culture. I'm gonna hand you over to Bernard Berson, who's going to give you a rundown on how the organization performed and you know, in his typical style, I'm sure you'll enjoy that. Bernard, please take over.
Thank you, Stephen. Good morning, good evening, good night, everybody, wherever you may be. Thanks for taking the time to come listen to our story for an hour. We're gonna follow the same format that we have in the past. I'll run through some of the narrative. David Cleasby will then run through the financial detail, and then we'll have a Q&A session. As before, if you could send your questions through the provided forum on the webinar, and we will then get them and be able to answer them at the end. Please feel free to send the questions whenever you can, so that we can collate them and answer as many as possible. Thank you, Stephen, for the kind words.
Yeah, I'd just like to reiterate my thanks to the fantastic team we have around the world. We operate in 35 countries on five continents, and we have 25,000 people around the world who have performed, in our opinion, exceptionally well in very, very difficult circumstances and in very volatile and changing times. We all know that the world we live in is a very fluid, dynamic, interesting place and probably will continue to be so. I think going forward, the challenges aren't gonna be COVID all that much. It's going to be the legacy and the inflation issues, the supply chain issues, the geopolitical issues that might arise out of what we see going on now, which all creates uncertainty and difficulty and opportunity for businesses.
We thrive on those opportunities that we identify, even in tough times. We challenge ourselves, and we've got a really motivated, enthused, experienced team of people around the world who've guided this business to where it is today, and I think it's in an exceptionally strong position. Whatever we see and reflected in the numbers is absolutely testament to the hard work of the team we have around the world. Just without going through too many numbers, I'll let David do that because I always get them wrong. I think the business has performed remarkably well in the six months, and what we saw is a bounce back to pre-pandemic levels relatively quickly.
From July to the first week or two of November, we were tracking ahead of last year on a consolidated aggregate basis. We were traveling ahead of our peak at that point in time. The Omicron strain started appearing and COVID made a reappearance in Europe and put a very quick dampener on that. Omicron had an impact, and that dampened November and significantly dampened December, which is a very important trading month with the festive season and Christmas and New Year celebrations, et cetera. We saw a far more subdued December than the momentum was suggesting. Just looking a little bit forward, we saw that continue through January, although it's progressively got better.
Where we're sitting at the moment is almost every geography is back to that high level of operation. I'm gonna say every operation has performed reasonably well in the six months, which is an amazing feat considering the breadth and depth of our operations around the world. I don't wanna pick on too many because the achievements are phenomenal. In the six-month period, bearing in mind we've had COVID through this full six months, so everything has been impacted and things weren't back to normal. You know, the lens that we look with backwards isn't the same lens we're looking at in the six months that actually happened. There were a relatively changeable six months. There was lots of different moving parts.
There was a lot of negativity still. There was a lot of COVID impact still. Notwithstanding that, if I can just run through a list of countries where in the six-month period, I'm not talking in the four-month period to November, but in the six-month period to December, we operated at an all-time high in their local currency. At an all-time high. In no particular order, Chile was at an all-time high. Brazil was at an all-time high. South Africa operated at an all-time high, which is absolutely phenomenal considering the riots that happened in July and the impact that that had for many weeks. I think they are 14% ahead of their all-time high. The Middle East is at an all-time high, and every country in the Middle East is at an all-time high.
Turkey is at an all-time high. Our Baltic operations are at an all-time high, notwithstanding the fact that Latvia was in a total lockdown from late October, early November. Singapore, Malaysia, Vietnam, Greater China were all at all-time highs. Poland was at an all-time high. Italy and Czech Republic were, for all intents and purposes, at an all-time high. They were a margin of a percentage point off all-time highs. You know, that's just a. I hope I haven't left anybody out. If I have, forgive me. But that just reflects the strength that we're seeing in the global rebound. And the absences from that list are all very explainable. Australia and New Zealand were in lockdown for a substantial portion of the six-month period.
Notwithstanding that, we still generated very healthy profits and returns out of our Australia and New Zealand business. Holland, the Netherlands, was in lockdown from, I think it was the middle of November. Very, very severe lockdown with all hospitality closed. Belgium felt the impact of that and had, you know, limited restrictions. In the U.K., they went to Plan B sometime in December, and that, although it wasn't a lockdown, was a self-imposed lockdown. Notwithstanding that, we still performed admirably well. You know, I can only say that our teams around the world have delivered fantastically in tough times with lots of challenges, not just COVID, and we'll talk about those a little bit, but have continued to follow the path that we set ourselves and continued to refine many years ago.
That, I think, is what's put us in good stead. We rebalanced our customer portfolio, and there's no doubt that that has put us in an exceptionally strong position. We have a broad portfolio of customers. We altered our course on procurement and determined how to maximize our procurement operations through house brand, through importing, through manufacture, through value add, and all those other good components. On the selling side, we refined what we do. All of this is welded together with technology, and we continue to invest in technology. We continue to utilize technology to leverage what we can in the business. Technology is not gonna be revolutionary in what we do. It's absolutely evolutionary. It's not about magically changing things. You know, at the end of the day, what do we do?
We take an order from a customer for product that's in a warehouse that needs to get physically picked, could be mechanically picked, needs to be put on a truck, and it needs to be delivered to a customer. You know, at the end of the day, the technology is the overlay around that. We've made huge strides in our digital interaction with customers, in our penetration, in our retention, in the basket size. More importantly, in the ability that we've harnessed in terms of the analytics. We're a high transactional volume business. We deal with many customers with many different products, with seasonality, with volatility, with variation. There's a huge amount of data.
Yeah, we've harnessing the power of this data, using it smartly, using big data to enhance our decision-making, which no doubt has contributed to what we do. This is happening across the world. Obviously, some countries are further advanced down the path than others, but it's a very important enabler and will continue to be in our business. The other important thing about technology, what we're recognizing, is it's not just about what the technology does for our business. It's how that technology integrates with others and how you can maximize the outcome of what we have to offer by integrating technology with other providers. Those providers are across multiple different aspects of the business.
I don't wanna go into too much detail about that, but a lot of the push in technology now is how to simplify the journey. How to simplify the customer journey, how to simplify the supplier journey, how to take the friction points out of it, how to become the easy alternative to, "I need product in my restaurant. This is the way to do it." It ends up in the restaurant when I want it in the right form, and somehow it ends up in my back of house, my back of house system, my back of house IT, so that the customer can use that data properly. It also ends up on the supplier side in the way that that then generates, you know, supply-side efficiencies that filter through to our suppliers.
The business has, I think, performed relatively well on every metric that we look at. Obviously , there's room for improvement, and obviously there's things that can be done better. When we look at what has been achieved. Our working capital is in a very strong position. Our cash generation is strong. We're investing in capital expenditure for the future. We continue to take our environmental responsibility relatively very seriously. A lot of the investment that we make, a lot of the CapEx we make, shouldn't actually be called expansion CapEx or maintenance CapEx anymore. We need to have sustainability CapEx. We're talking about state-of-the-art refrigeration and new technology type vehicles and solar and all those other things that not only are environmentally important, but are becoming more economically important.
There's no doubt there's a huge amount of cost pressure in the energy side. We've seen that in Europe, in the U.K. Now we're seeing fuel prices across the world escalating pretty rapidly, and we don't know where that's gonna end up. It's a problem that everybody has. We are making those investments to minimize both our environmental impact, but also there is an economic rationale for doing what we're doing. We've continued to make small bolt-on acquisitions, which is what we think we do very well. There were seven of them in the six-month period. There are a few more on the drawing board in multiple geographies. All of those aren't gonna shift the needle in the short term.
When you aggregate them, and you look in the rearview mirror a few years later, you have an issue where suddenly you've got a business where you might not have had a business before. If you look at Chile, you know, before it was a greenfield start-up, we made one or two small acquisitions. Now suddenly six, seven, eight years later, there's a proper business in Chile of size and of scale. Overall, we're relatively happy with the numbers. Like I say, we were tracking at an all-time high beginning of November. Unfortunately, Omicron came and had other ideas. You know what they say about COVID. It's the gift that keeps on giving. Hopefully, it's stopped giving as much. We have seen an improvement. January wasn't exactly up to where it should be.
It wasn't terrible but wasn't back. February is definitely showing more positive signs. I think what I'll quickly do is run through each of the geographies and just give a little bit of color on the geography. Australasia up first. Bearing in mind that last year in the six months, Australia, New Zealand contributed 50% of the group profitability. This year, it's down to a more reasonable 29%, and that's probably where it should be. They did underperform. That's the wrong word to use. The numbers are down on the previous year. I don't think they underperformed at all. I think they had a superb performance in a tough lockdown environment.
About 60% of Australia was in lockdown from July through to late October, and that was a tough lockdown with all hospitality closed. In New Zealand, they went into a total lockdown. I think it was in the middle of August. Then Auckland, which is about 40% of the population, was in lockdown until the middle of December and some of the surrounding areas. It hasn't been a great trading period in terms of availability of the customer base. Notwithstanding that, the businesses have done phenomenally well to still produce a 6.1% trading margin under a COVID-impacted period. I think is phenomenal. Everything is in place in those businesses. They'll continue their good momentum. I have no doubt this is a blip, which is absolutely COVID-based.
In Australia, for example, December, which wasn't COVID-impacted, all the restrictions had been lifted, and Omicron only really started in Australia in late December. Our December blew everything out the water. It was just at a record level, which is obviously a great sign for the future. New Zealand's a little bit more subdued. They've had a little bit of a tougher time reopening borders. They're only very slowly opening up in March. It's an economy that is highly dependent on tourism, so they've had a little bit of a tougher time. I have no doubt in a few months' time, they'll be back to normal. The U.K. has been very interesting, in that it bounced back exceptionally strongly, bearing in mind that COVID restrictions only eased, I think it was the thirteenth of July.
They missed out a little bit of the summer with some COVID restrictions, but it came back very strongly. The cost pressures were most probably most acutely felt in the U.K. through energy costs, through fuel pricing. It was probably the U.K. and, to a degree, Belgium are the countries that we still have the highest level of this national contractor type business, where you don't have the same levers to pull in the same timeframe that you do on a more fragmented, smaller customer base. We will get the price increases, but they're far more rigid in the way that the price increase mechanism works, and you do only get that price increase in a three-month or a six-month or a nine-month or an annual type of review process.
There is a bit of a lag effect there, and the cost pressures are relatively high in the U.K., compounded by the staff issues. The staff issues are relevant across many jurisdictions, where we're seeing very high wage pressure, wage inflationary pressure, and lack of availability of people willing to work in freezers, willing to work in driving trucks, willing to work as salespeople. It sorta goes across the board. We're not special. The economies generally are feeling that, and it's like that in many economies. The Bidfood business in the U.K. are definitely scoring some runs. They got quite a long list of customer wins recently, which we'll see the benefit of coming through. The price increases are filtering through.
We continue to invest in infrastructure, we continue to invest in our people, we continue to invest in technology. Yeah, our U.K. business will bounce back in a period of time. It's not gonna be in the immediate short term to those very high levels. The fresh business is certainly out of ICU from our point of view. It was profitable in the six months, notwithstanding the fact that its customer base is far more hospitality driven. It's far more restaurant, hotel, and the upper end of the mid to upper end of the market with not a lot of institutional base to rely on. We're happy with what we've achieved there. The seafood business, the legacy seafood business in that, is performing at record levels. You know, that's back to where it was.
We've got a little bit of work still to do on the produce and meat business, but we're very happy with the progress there. Well done to the team in the U.K. I think we're tracking very well. Europe was a star performer coming off a horrible base in the previous year. I'm not really sure it's relevant to look at the previous year because it was heavily COVID impacted. Like I say, many geographies are at all-time highs. Our Spanish business is slightly profitable, which is a lot better than being loss-making, and we've established a platform from which we will grow. The Portuguese business is nicely profitable and primed to be much bigger than it is. There's a rollout strategy there.
Holland, the Netherlands, was doing exceptionally well until November when they went into total lockdown, and we took the decision, and it's the correct decision, to retain all our staff on full pay because we knew that the restrictions would ease and we'd need those staff to do the work. Because if you don't have staff, you can't do any work, and a new workforce is expensive and inefficient. We made substantial losses in Holland in November, December, January. There was some type of government support, but that government support covers a few of the costs and certainly doesn't put you in a level of profitability. It's very welcome, so don't get me wrong, but it by no means makes up for the 60% drop in revenue that you witness.
Belgium has been a little bit slow in getting its HoReCa business back, its leisure and hospitality, and we've seen reasonably good sales growth. It's come out of the QSR and it's mainly the QSR chain type of business, which is a very low profit contributor and, you know, it's not the core of where we need to be or a driver of profitability in the business. I've spoken about Czech and Slovakia being at all-time highs. We've started a greenfields operation in Hungary out of managed out of the Czech Republic, and that will be good in the future. Poland is performing admirably. We've spoken about that for years, how we were investing ahead of the curve. Guess what? We are full.
We're bursting at the seams, and we need to invest ahead of the curve again. Great problem to have. Italy operated in the six-month period almost at all-time highs, so that momentum has continued. They had a very good tourism season. All things are good. Germany is a work in progress. It's not burning a hole in our budget, in our pocket. It remains a work in progress, and it remains one of those future opportunities. You always need those. I don't think you can fire on every cylinder all the time. Emerging markets, fantastic performance. You can see the trading margin of 5.8%, notwithstanding the fact, and I go back to it, there was still COVID, and there was still all the disruption. That's remarkable.
South Africa, full credit to the team being 14... I think it's 14% up, overall, across the two businesses, Bidfood and Crown, in a very tough environment. I think that's just phenomenal. We're not talking up on the previous year; we're talking up on an all-time high. That came off a high base at an all-time high. That business was performing and has continued to perform well. Full credit to the South African team for managing a difficult environment. Those days in July weren't pretty. I'm sure all of you in South Africa, you know, remember it well and, you know, it certainly did cost us a lot of disruption, a lot of cost, a lot of damage, et cetera.
Our Greater China business also has performed phenomenally well, notwithstanding the fact that borders have been 100% closed in Hong Kong and in the PRC. Our businesses have done extraordinarily well and have operated at all-time highs. You know, their volumes are strong. They've found new channels. Local expenditure has been fine. People are going out. We had a very good six months. I will add a note of caution that I think the next period is gonna be very, very challenging for Hong Kong in particular, and maybe for China. Hong Kong have a stated policy of zero COVID cases. They're currently running at 4,000 or 6,000 a day, and they're saying that they've got to get back to zero.
You know, I'm not sure how that happens other than an exceptionally draconian lockdown, which will be very disastrous for our Hong Kong business. We know the drill. You go into lockdown for two months, and you come out of it and it's a spring that springs back into action again. I wouldn't panic too much about it. I am just putting a word of caution out about it that we are gonna have a rough time in Hong Kong based on their COVID management plan. Greater China are following the zero strategy, and that seems to be working in China, and our business is holding up fine. Cities go into lockdown for a week, two weeks, three weeks at a time. Cities of 15 million, 20 million people.
They seem to achieve what they want and, you know, business deteriorates for a period of time and then bounces back. We're happy with our presence and our infrastructure and our people, and now it's purely just an environmental issue that we have to cope with. I spoke about Singapore, Malaysia, Vietnam. You know, they all bounce back very well. Vietnam is very small. For us, it's break even, which is an all-time high, but that is a greenfield start-up for us. You know, maybe we need to talk about start-ups and fundraisings for start-ups. But for us, you know, to get to a zero is a wonderful event. South America has done really good work, and I think Brazil is gonna be exciting moving forward.
We've made a few acquisitions. We're now getting significant scale. Chile is on a very strong trajectory. Argentina is a little bit challenged. They've got hyperinflation. It's not an easy place, but it's a small investment for us, and we're still comfortable that one will work out okay. Middle East is doing very, very well. Expo's helped in Dubai, but that's only one component of the business. You've got Saudi, Bahrain, Oman, Jordan. We're looking at a few other countries. The Middle East business is certainly scoring some big runs. Turkey's a great story, where we've now got a large food service business that deals primarily...
It does have an element of imported product and liquor distribution, and a very large portion of domestic foodservice distribution to tourism, leisure, hospitality, business type market. It's done phenomenally well in the six-month period. You know, the trading margins we're seeing out of that are up there with the best of the rest of them. That was a business that didn't look all that great a few years ago. Turkey is another one of those challenged countries with hyperinflation and an uncertain political, economic landscape, but we'll manage that as best we can. You know, we're very comfortable and excited about what Turkey presents for us. I've spoken in brief terms about the outlook.
We're very positive about the future, and we think it's gonna bounce back, continue to bounce back very strongly. We're in a good position to take as best advantage of that as we can. There are challenges, and it's not gonna be a straight line, and it is gonna be a bumpy road. We don't know what issues are gonna get thrown up at us, but we just have to adapt to those accordingly. We do have food inflation, we do have cost inflation, we have wage pressures, we have all of those issues, but so does everybody else. We believe our greatest ability to manage our way through that as best we can is because of our strategic initiatives that we took many years ago in rebalancing our customer portfolio.
I'd far rather have hundreds of thousands of customers of a nice size, of the correct size, rather than having 10 or 100 or 1,000 customers of a very, very large size. We know where the balance of power sits. It's not a case of being exploitative or anything else. It's a case of being fair and, you know, both sides getting out of the relationship in a win-win type of way as opposed to a win-lose type of way, which is often what happens when you have a disproportionate relationship. We've got competitors around the world. We've got very good competitors who compete with us in our core sphere.
They do it exceptionally well, which is fantastic for us because it makes sure that we do it well, and it keeps us in check and keeps us competitive and keeps on raising the bar. It's not like we've got an open slather to do what we like. We fight for our market share, but I think our guys do it fantastically well around the world, so full credit to them. The leisure market is gonna come back again. The international business travel market is gonna come back again. The cruise market is coming back. Sporting events are coming back. All these things are gonna come back, and they'll be just like the good old days. Although there are lots of people who disagree with me and say it will never be like it was. We've had a few months which are...
They're correct. It won't be like it was. It was actually better. The amount of desire for people to spend money out of the home was phenomenal, and we're a beneficiary of that. I'll let David carry on with the financial detail, and then we'll take Q&A afterwards. Thank you very much.
Thanks, Bernard, and morning to all. I think firstly, just to cover off some of the admin, some may call it bureaucracy, but the results are prepared in terms of IFRS, and there's been no change to the accounting policies. Just to note that the comparatives have been restated, and that really is to do with the Miumi fraud. The impact of that on the comparison is about ZAR 0.10. So, not material, but just to note that it has been done. Secondly, I think the quality of the earnings is good. There are very little capital items. I will go through some of those.
There are no incremental COVID costs that we've accounted for in this particular period. I'm certainly just ready to obviously, as Bernard said, thank all the teams around the world, particularly the finance teams who've put all this information together. In the appendices to the presentation, you will see in the booklet a significant amount of additional information. I would encourage you to look at that. Just really from a highlights perspective, as Bernard said, we had a record Q1 performance that decelerated Q2 as the impacts of Omicron spread. Revenue was up 18% to ZAR 71.6 billion. I think encouragingly, if one looks at it on a constant currency basis, was up 26.1%, and basically back at the pre-COVID levels.
Gross margins were maintained at pre-COVID levels and certainly above the comparative period. The cost inflation is evident, and we'll talk a little bit about that. Cash flow from operations positive at ZAR 4.5 billion and significantly above. That's before working capital above the comparative period. Average working capital days at five days was better than the comparative period of six days and better than the whole of FY 2021, worked out on an average basis. That's despite the cyclical absorption we've seen in the period. Our receivables provisioning has largely been maintained, and we believe that's a conservative estimate. CapEx has gained momentum, and that's obviously ahead of activity levels returning and in anticipation of future growth.
Our debt is up at ZAR 2.4 billion, better than it was a year ago in the comparative period, but obviously has increased from June, and I'll talk a little bit about that. Headline earnings up at ZAR 2.2 billion, 75% up. Headline earnings per share up 75% as well at ZAR 6.68. The board's declared an interim dividend of ZAR 0.03 per share, which is 2.2 times covered, which is in line with basically the group's policy. Moving on just to the P&L. Revenues and gross margins have normalized, but there is some cost impact from inflation.
I think if you look at the revenue, and I'd refer you back to the table we've put in the appendices, you can see the impact of Australasia in terms of their lockdowns, August through October, mostly, I guess, as Bernard said. Probably was July through October in Australia. New Zealand, you know, has dealt with the impacts from mid-August through, I guess, almost until today. Europe, you can see the impact in November and December on the sales from COVID. Emerging markets as well, well ahead of the pre-COVID levels. Overall, from a group perspective, we're absolutely back at the pre-COVID levels. As I said, the GPs have held up well, even compared to the pre-COVID levels, so we're above those and well above the comparative period.
Operating expenses have been well managed in the circumstances. I think if we look through the expenses, they've increased 22% off a revenue increase of 26%. They are well managed, but there is significant inflationary pressure. The cost of doing business has decreased to 19.2% in the period versus 19.8% in the comparative period but is above the pre-COVID levels of 18.6%. I guess the key drivers here, we have seen gains and efficiencies from actions taken through COVID the last two years. Those are being dissipated, I guess, by inflationary pressures, particularly in labor and energy. If one looks through and, you know, we look through obviously the cost in absolute.
Cost increases in absolute terms over the last two years, they aren't out of line with normal inflation. I think the mix of what is increasing and the efficiencies we've gained in other categories is certainly changing. There's no, as Bernard said, no material employment assistance other than in the Netherlands. That largely, just to remind everyone, is not a benefit to the company. It's a flow-through and in most cases, doesn't make up for the actions we've taken, you know, in terms of keeping people employed. It contributes, but it doesn't cover all the costs. As I said, no real additional COVID-related costs in the period. Interest is down, and that's despite our investment in working capital and in higher CapEx.
There were a little bit of capital losses of ZAR 42 million pre-tax, and those really relate to mostly impairments of PPE in terms of the closures of two depots. Our tax rate has normalized at around 25% as we've guided over many years. As Bernard indicated, the contribution from Australasia last year at 50% drove it higher to 29% in the comparison. In terms of the cash flows, we're seeing a normalization of our cash flow cycle. The big thing here, I guess, is really just to talk about the working capital. It looks a big number in isolation at ZAR 1.8 billion. But I think one needs to look at it in the context of the activity levels of the group.
If we look at it from an average working capital days, it's at five days versus six previously and seven in FY 2021. Looking at it from another perspective, in terms of the working capital invested in relation to sales, it's sitting at 3.4% versus 3.1% previously. Last year was at 2.5%, which we recognized as being pretty exceptional. Activity levels hadn't returned to what we've seen in the first six months. All in all, I think working capital, although it seems a large number, it is what we do. We do absorb working capital in the first half and generally generate in the second half, and we don't believe that, you know, in this period it's gonna be any different.
It's not bad. Receivables are well-managed. Our days are out slightly versus a year ago. As I said, our provisioning at 7.9% of the book, we still think is relatively conservative. Bearing in mind that, you know, the world's not necessarily out of the woods as yet. You know, COVID and the economic impacts thereof may well still manifest in our industry. Payables, we guess they're largely normalized. In some cases, we have taken advantage of securing product because of supply chain issues. In terms of paying those a little bit early, we've been able to also access some of the benefits of the discounts. Inventory days are up in absolute terms about ZAR 1.1 billion.
That's really to a certain extent, you know, a conscious decision to stock up to try and mitigate any supply chain issues in terms of accessing product. Obviously in an inflationary environment, it gives us some benefit on pricing and when we sell that product. The investing activity is ZAR 1.4 billion cash outflow versus an inflow last year. Just to remind everyone that we had some, I guess, one-off proceeds of sale in these spec transactions included in the comparative period. You know, we really are starting to reinvest into expansion in this period, particularly in Australia, the U.K., and Czech Republic. There's more to come. That's absolutely in terms of anticipated growth.
As I said, net debt was up a little bit to ZAR 2.4 billion. That's as I explained, it really is driven by the working capital position, which we will unwind going into the second half as the normal CapEx. Just a reminder, where we did pay a final dividend in respect of FY 2021 of ZAR 1.3 billion in October. Cash and cash equivalents of ZAR 7.5 billion still very healthy. In terms of financial position, really just to remind everyone that the balance sheet has grown. Some of that is FX, and the FX rates against sterling and euro are up about 9% and 6% respectively compared to June 2021. One would expect the overall balance sheet to look a little bit larger.
In terms of liquidity management, we do have quite a lot of short-term debt. A number of refinancing from a group perspective are underway. Those were long-term facilities and obviously are rolling off. We are engaged in a number of initiatives to roll those over in the next few months. We did raise a EUR 300 million RCF in September. That's to create headroom, you know, for anticipated opportunities, as well as obviously to try and improve the efficiency of the overall group funding. We have some ample liquidity available from a group perspective at ZAR 18.6 billion. There's no change to risk management. All the ratios from a solvency and liquidity perspective are very healthy.
Net debt to EBITA of 0.31 times, notwithstanding the absorption of working capital that we've seen. That's versus a very good position, almost zero debt as of June 2021 of 0.1 times. In terms of interest cover, 25.4 times. If you look at that in relation to our covenants, which is you know anything greater than 5 times, we're significantly healthy. The net debt to EBITA covenant of 2.5 times is you know versus the 0.3 times, is very healthy as well. I think just going forward, the balance sheet and certainly the state of the group is in a good position to support the businesses, as we believe you know normalization is gonna come through.
I spoke a little bit about the generation of working capital into half two, and that is our anticipation what will happen. We have a liquidity focus. As I've said, we're rolling over some short-term facilities. I guess just from our perspective, I mean, funding market conditions are volatile at the moment, not only because of, I guess, overall interest rates are rising worldwide, and there's a lot of talk about when and how and how many times it'll happen. I mean, that's obviously the one driver, but the other driver is obviously geopolitical issues, you know, in the world that are particularly prevalent at the moment. The labor market is our anticipation will ease. Not sure exactly when. Inflation I think is here for some time.
We're not really sure the long-term impacts, whether it's transitory or structural. I think some of it is one or the other. That will have an impact. As Bernard said, I think the business is as well positioned as it can be to deal with the changes in the cost base and making sure that we can, as best as we can, pass those onto the market to strengthen our group's financial position. We do believe is good and will provide that cushion, and as we've seen over the last two years, for whatever, you know, unpredictability lies ahead. There will be more CapEx. Some of it's just continuation of what we're spending.
We certainly believe that, you know, through the cycle, our group guidelines of 1.5%-2% of revenue is what we need to continue to invest to grow the business and take it forward. There's no change to our risk management in terms of naturally hedging our assets and liabilities. Forecasting is difficult as one can anticipate, but we do believe that the markets are getting progressively better, and we are conservatively provisioned, I guess, for a worst-case scenario that potentially could arise. Currency volatility absolutely will continue to be something that we're gonna have to contend with, but hopefully we provide enough information in terms of constant currency as to, you know, how the group is performing.
We obviously manage our businesses in their home currencies. What we get in rand is what we get in rand, and there's no control over that. More importantly, it's how the businesses are performing in their home currencies. Our international shareholder base is stable. I mean, there's obviously some churn in and outs from people, but that has been relatively stable for some time. We're not providing growth projections, but obviously from a management's perspective, our desire in the near to medium term is obviously to return to pre-COVID earnings levels and, as we've now outlined, that's notwithstanding the many challenges that we're seeing at the moment. From my perspective, it's. Thank you, and back to Bernard for Q&A.
Sorry, it's gone a little bit brighter cause I had to put some lights on, since late at night. Not really late at night, but it's night. We've got some questions which I'll just run through. Some of them are repetitive, so don't be offended if I don't answer your question because it might have been in the previous one. I'll just take these as they came in. Please remind us what percentage revenue is coming from hospitality at present and what levels of pre-COVID revenue this sector is running at. I don't know what the definition of hospitality is. But our business primarily is a HoReCa-focused business, not too much QSR, any institutional business left in it. But a lot of it is running at higher than
is running at higher levels than it was historically. Some of that's also there's inflation, so we haven't unpacked that in terms of volume as opposed to value, and that's quite a difficult exercise to do. We've certainly seen that rebound in the leisure market, the hospitality, the travel, the tourism bounce back exceptionally strongly. The laggards are certainly the inner-city CBD office catering environment. Large governmental bodies of bankers and financial institutions need to come back into the city, fill it up for that to happen. A little bit of business travel hasn't really got back to where it should be. Some shipping, some cruise line activity hasn't got back to where it should be. Sporting events haven't got back to where it should be.
Many segments are running at 100% and plus. Please talk to your gross margin improvement in H1, and the drivers. Is performance sustainable for the full year? It becomes more challenging, obviously, as you go on, because there does become a little bit of wariness from the customer point of view in terms of passing on this inflation. Yeah, I think the reason that margins have improved slightly is a mix issue, firstly. It also is the ability to trade in an inflationary environment. I've often said, if you've got inventory, you can sell it. It's not just about the logistics in the middle of how you move the product, it's actually what you're buying in order to sell so that you can buy more to sell more.
The dynamic of all of that, if you know how you can trade, will result in high margins. Like I said, it's going to get tougher going forward because this inflation is a relatively large beast. It's not particular to us by any means. Let's not get too panicked about it, but to everybody. There's gonna be some inflation fatigue at some point in time. Please, can you highlight your key cost pressures and trends at present? Can you keep operating cost growth below revenue growth in the second half? I think I've touched on that. It becomes more of a challenge. Every cost is a problem, not a problem, but a challenge. We're seeing cost increases almost everywhere. In the U.K. alone, in the six months, there were...
Just in the food business, not in the fresh business, there was a GBP 5.5 million increase in our energy and fuel cost, and the bulk of that was actually in energy. It's not 'cause we're using more energy, it's purely to do with the supply crisis of energy in the U.K. Five and a half million pounds is a big number in the cost base to pass on, and that's gonna carry on for a while. Like I said, I think we're very well positioned to pass those increases on. The increases are in wages, which is our biggest component. It's in fuel, it's in electricity, it's in equipment supplies. Forklifts are more expensive than they used to be. Rentals are going up.
Although when you own your own property portfolio, that's great. Building costs are going up, which means future occupancy costs are going up. This inflation's a beast that we're all gonna have to come to terms with and manage as best we can. I think the structure of our customer base, of our business puts us in a very strong position to manage that as best you can. What growth did you see in house brand revenue in half one, and what percentage of revenue is it currently? Is it a gross margin driver for you? Yes, it is a gross margin driver. We obviously would go down that path. We do go down that path because it is beneficial for us and for our customers, by the way.
They're getting a value product and probably at a cheaper price. For us, it's margin accretive. I don't know what the number is of percentage of house brand. Like I say, there's different penetration levels in different countries. There's a sweet spot as well. You can't push it too high. The sweet spot differs by country and the product offering. I think David can maybe endeavor to find that number, but I'm not sure what it is. We have seen growth in house brand. Would you still be comfortable in aiming to beat pre-COVID earnings for the full year as a first port of call, as you mentioned in the last results presentation? Let me just go back.
I did caveat that, and I said the first four months were fantastic, and then Omicron came along. We have lost that momentum in half of November, half of December, all of December. January, February is trending back. If you can guarantee me that there won't be any more COVID issues and you know that things will remain relatively stable, we'd be relatively happy to make that call. Naturally, we can't. You know, the Dutch lockdown, for example. I think that the net cost of that to us was about EUR 5 million. Totally out of the blue. One day people are in restaurants, the next day, boom, they're closed. These impacts are big. All things being equal, we're very comfortable with where the business is and how strong the bounce back is.
Could you please elaborate on the U.K. margin? Constant currency revenue was only 5% lower than pre-COVID levels, but margin reduced from 5% to 3%. Bernard did comment on the cost pressures facing the region. Is this lower margin just a timing effect, and that price increases will get the margin close to pre-COVID levels again or are there other reasons as well for the lower margin? How confident are you getting back to the 5% level under normal trading conditions? Under normal trading conditions, we're totally confident about getting back to those levels. We had a great few months start in the U.K., and then November, December got very difficult.
Once again, the cost base was fixed because you don't have the ability to pull the cost out 'cause you know it's gonna be required going forward again. January in the U.K. was a very good month again for a January. We did have some price increases that took effect in January, and we certainly saw the benefit of that. Having said that, there are cost pressures, and you know, we can only manage them as well as we can. All things being equal and in a normal environment, I think we can get to that 5% relatively soon. Not this year, hopefully next year. Yeah, that's still five, six months away and who knows what's gonna happen in the world. Cost inflation at Q1 update was indicated to be plateauing.
Has the cost pressure at least stopped growing at a rapid pace? You have mentioned a lag in terms of recovering cost inflation to national accounts. Is it fair to expect better passing on of inflation over the second half? Bidcorp had previously indicated FY 2020 as the earnings of profit base that you wanted to target FY 2022. With Omicron impact and cost inflation, is there still possibility to achieve the base of FY 2020? I'll answer the last question first. It's actually FY 2019 that we're basing on, 'cause FY 2020 was a high watermark at December in the six months, and then we had COVID starting in January in Wuhan, in China, in January of 2020. So, the FY 2020 numbers aren't the base. We have to go back to FY 2019 to have a reasonable comparable base.
I know it's confusing, but that's the way it is. All things being equal, we think we can get pretty close to it. Like I say, there's so many factors out there that are, you know, that can derail this. Who knows what's gonna happen with this Eastern European issue? Yeah, there's just too many unknowns. Is COVID gonna make a comeback? Is Hong Kong, China gonna go into some type of crisis? We just don't know. All things being equal, we're still very, very comfortable, which I guess give us a lot of poetic license that things our business is operating at above FY 2019 levels. It's just these exogenous factors that are out there that we have very little control over. We have to manage the impact as best we can.
Is the cost base, the cost pressures moderating? It did look like they were for a period of time. Obviously, you've got the flare up now, which is gonna push energy and fuel prices up again. I don't know, I really don't know what that cycle's going to do. Like I say, all we can do is, it's the old story. You can't change the hand of cards that you've been dealt. All you can change is the way you play those cards. I think we're in a reasonably good position to play a decent hand of poker. In terms of the lag in cost recovery, it's gonna be a, it's a.
I think it's a constant chase your tail story until inflation moderates. You do have these three-month, six-month annual review windows, so you're always gonna be chasing your tail until you catch it. Then when you catch it, I'm not sure you know what to do with it. It's not something that just fixes itself once. Is it fair to assume that Bidcorp has taken market share given the record high levels achieved by various geographical locations? If so, who have we taken this market share from? I actually can't answer that question. There isn't enough data for us to form that opinion. It's a lot of, yeah, subjectivity. We could all, you know, beat our chests and say we've done a phenomenal job at the expense of our competitors.
I actually don't know that, but I think it is fair to say we have taken market share from a multiplicity of competitors. We were in a fortunate position that we could retain our staff to a large degree, that we could continue to invest in the business, that we could invest in inventory to sell through the supply chain disruption. We are a very reliable supplier in the industry, and I think that's stood us in good stead. The hearsay is, I think, against our peers, we're doing better. You know, to us, we don't really measure against our peers. We measure ourselves against our own set targets.
What we hear from some of our competitors, particularly in the U.K., Europe space, is we're probably doing a whole lot better than they might have done over the last two years. Let's just reiterate, we've been profitable throughout. We might not have been at the high levels of anticipated profitability, but we've been profitable. You know, we're very confident that we have grown market share, but we don't know. We can't answer that scientifically. Staff numbers are 13% lower versus pre-COVID levels. Is this sustainable given your revenue is close to pre-COVID levels? i.e. are these efficiencies permanent? I'm not really sure where that 13% has come from, and I'm actually going to just put a question mark on that because I don't know if it's totally correct.
What we are seeing is that the efficiencies that we got out of COVID, we've given away pretty quickly as a result of the cost pressures and the lack of availability of staff in most jurisdictions. I don't know where that number comes from, and I'm not sure it's correct. I don't think we're operating with 13% less people. There might be a change in the definition of a full-time employee, and we're not measuring apples with apples or there's been a shift to a contractor type of model in certain geographies. Do you expect the general inflation to have a negative impact on consumer spend eating out habits? Are there any signs of this yet? There's no signs of it yet, because I think people are so fed up.
I was gonna use an Afrikaans word, but I thought I better not. They are so fed up with being stuck at home and not being able to do what they wanna do, that it's this wound-up spring, that people are spending a lot of money. You know, we're not the only beneficiary. You look through the market at hotels and restaurant chains and things like that; there's a lot of money being spent. In fact, there's capacity constraints that I think our sales growth would have actually been better. A lot of our customers are facing the same pressures, if not worse than we are, that they can't get kitchen staff, they can't get chefs, they can't get cooks, they can't get waiters and waitresses and maîtres d's. They're not operating at full capacity.
Hotels are operating at less than full capacity 'cause they can't get cleaners. So, there's an element of inefficiency on our customer side, for the same reasons, for the same factors that we face. Once that starts unwinding, I think we'll continue to see strong demand. How are your customers doing as government support is withdrawn and reopening taking place? Are they passing on inflation? What percentage of OpEx is fixed? Then there's a question for David: What rates are you currently seeing with respect to the new refinancing the term debt? Okay, well, I wouldn't answer David's question. Customers are doing fine, and I think that's reflected in our debtors book that we're not seeing, by and large, too much stress in our debtors book.
Having said that, we're not through this Omicron phase yet, and we don't know what the impact of that is gonna be. We'll know that in the next few months as restrictions ease and things get back to normal. At this point in time, we're not seeing a great deal of stress in the debtors book, which indicates that customers are doing fine, which indicates that they are coping without government assistance and are bouncing back. Like I say, in many geographies, the customers are struggling not without government. They're struggling not for a lack of government support, but for a lack of staffing in order to operate at totally efficient levels and you know, recoup some of their costs of the previous year.
Once that labor market reestablishes some type of equilibrium, and I don't know when that's gonna be, yeah, I think that will be very good for our customer base. Generally, you know, there was lots of talk that this is the end of the restaurant industry and you're gonna see huge amounts of bankruptcies and closures. There has been a slight uptick, that's right. That's created a whole lot of opportunity as well for new players. You know, on average, it's pretty average. It's pretty stable and the customer base looks good out there and the opportunities look good. I'll let David answer the question on the rates.
I mean, in reality, we haven't concluded any financing as yet. I mean, if you look at the three-year swap rates in euros, they're up about 40-50 basis points. You know, compared to where they were pre-December-ish. It's anticipation that the rates will be a little bit higher. Obviously, you know, credit strength of the business plays some part, and obviously demand from the market plays some part in determining what your final rates are. I think if one is to predict, I think that rates are up, and some of the short-term money or long-term money. Very low rates is obviously going to be sucked out the system, you know, in the medium term and even maybe in the long term.
Okay, we've got our last question in which: Where six months ago, how confident are you on getting Spain, Germany to normal margin levels? Apart from COVID restrictions, are there other issues that still need to be sorted out? When will you be in a position to grow these markets through M&A? I'm sure Nigel and Grant are listening to this, and I'll answer it on their behalf and I'll say, I'm totally optimistic that we'll get them right and always have been. Yeah, we just need to get the right pieces in the right place. It's a bit of a jigsaw puzzle. You need the right, a few things to fall your way. We are looking at some opportunities, some M&A opportunities.
We're gonna hasten a little bit slowly on them, just to make sure we can put it together right. There's nothing fundamentally different on the Spanish market compared to the Baltic market or the German market compared to the Italian market. Obviously, there are differences. They're fundamentally the same. You got lots of customers out there who need lots of product. The product is all very similar. The middle distribution components are all very similar with the same challenges. You know, we will at some point in time build a reasonable business in both of those. These things take time. I can't put a time on it. It's frustrating, but we'll get there. Revenues of pre-COVID levels in constant.
Where are volumes, as clearly some pricing increases are included in revenue? I said at the beginning, I actually don't know the answer to that, because we don't have a one-off measurement of what volume actually is. Because sometimes it's measured in kilograms, and sometimes it's measured in cubic meters, and sometimes it's measured in things, and sometimes it's measured in cartons, and sometimes it's measured in pieces. So, you can move the measurement. I'm not trying to be smart, but you can move the measurement. Our gut feel is that volumes are pretty consistent to where they were before. And there hasn't been huge inflation through the system yet, but volumes are also, yeah.
The volumes have kept in place, that's kept the sales number where it is in constant numbers. Bearing in mind those parts of the economy that aren't back yet, we're still missing a portion of our revenue base. Of the revenue base that we got back, the volumes were strong. In some instances, they're stronger. I know that wasn't a really great answer, but we do feel that the volumes are, you know, at the levels they were before, and we're seeing that through the procurement side, I suppose is the right answer to that.
That most of our suppliers on a global basis seem to be pretty happy with us, that we do seem to be outperforming the market, and are an attractive supplier. I think there might be one more question here which came through. Okay, there was a question about employees, that employees are down 13% from 2019. Thank you, Charlie, for getting me the numbers. They are. In 2019, we had that discontinued operation, which was the logistics operation in the U.K., that did the PCL book distribution and some of the KFC and Burger King stuff. We'll eliminate that and answer the question, but my gut feel is that on a like for like, apples for apples basis, they're gonna be pretty similar.
Oh, these questions are coming in fast and furious. Your balance sheet is strong, world is recovering, no major M&A. Would you reconsider the dividend policy? David.
Well, it's not our decision, and I think my personal answer is no. I think there's a balance between return to shareholders. There's obviously growth and you know it's a balance and we've run the business conservatively for many years and that's the way we're gonna continue to do so.
I guess we're also facing the environment now of increased interest rates, and at some point in time, interest rates aren't going to be nothing. Those businesses that are highly leveraged are gonna be in a world of pain. I don't think it's the smartest thing in the world to gear up a business at this stage on the anticipation that interest rates are gonna remain, you know, at zero forever. Having said that, you're totally correct. We have a very conservative balance sheet, and that has served us well and has managed, you know, put us in a position to navigate crisis and take advantage of opportunity. You say there's no M&A. We don't know how long that's gonna be for.
Let's rather have some powder dry that we can do some significant M&A when the opportunity arrives, and that opportunity will arise at some point in time. There's just no doubt there's lots of moving parts and there's lots of change happening. We're comfortable with our overall position. Last question and then we're calling it a day. What proportion of the revenue base is still missing due to COVID? Is it 10%, 20%? Now, once again, that's a country-by-country question. But if you look at the U.K., they're missing quite a big component of the city of London because Canary Wharf is empty, and that goes through the whole city. Obviously, there's a benefit elsewhere in the regional places, but the cities are missing.
You've got these other avenues that are missing as well, like, you know, and I've spoken about them, David's spoken about them, cruise ships, sporting stadiums, conventions, conferences, business travel. If I had to put a number on it, I'd probably say it's about 10%, but there's no science to that whatsoever. You know, I'm just giving you a gut feel based on what we see in various different geographies. There're still big chunks that are yet to come back to normal. When they do come back to normal, it will impact some of the others as well. There's been a benefit to other places. You know, regional areas have boomed, and at the expense of CBDs.
When the CBDs, the cities start coming back to life, maybe that will be at the expense of the regions and there'll be a bit of a rebalancing. There definitely is a little bit of our customer spend that's missing. More importantly, like I've harped on, is the capacity that is missing out of our customers with hotels running at less than full occupancy because they don't have the staffing, not because they don't have the demand. We live in interesting times. Thank you, everybody. I do appreciate your attendance and your interest in us and our story. Like I say, we're very enthused about our positioning, where we are.
Two years ago, I was in Cape Town, up at the Investec offices, and we did this presentation, and we were talking about this thing that was happening in China, this thing called COVID that nobody really knew about. You know, it was impacting China and I made the comment that, "Well, we don't know what's gonna happen, but clearly this thing's gonna have some more repercussions for the rest of the world." Yeah, a lot's happened in two years. It hasn't been a great two years for everybody. We think that as far as we see it, we're through the worst of it. Our business is in great shape. We've had a great team of people who've guided us through this and steered us through this.
I haven't seen the team around the world for two years, and maybe that's why they've done great. Maybe we should continue that. It does, you know, create challenges. They've really performed well. I can't stress enough what a good position we are in because of the people we have. We've lost nobody in terms of senior management through this. We've got the same team in place doing what they do and doing it exceptionally well. Yeah, full credit to them. My gratitude to the team around the world. They do a phenomenal job and certainly make my life a whole lot easier and more pleasant. Thank you, everybody. Maybe I'll even see you all in South Africa in August. Thank you.