Welcome to Bidcorp Annual Results Presentation. We are pleased to report decent growth in earnings and headline earnings, both per share in rand and in constant currency. This was, as everyone would be aware, quite a difficult operating environment around the world. It's a credit to Bernard, Dave and their teams and people around the world who were able to navigate the volatility and uncertainty to produce these results. The strategy of driving the businesses organically, supported by bolt-on acquisitions, continues to generate growth and has proven year in, year out to be successful. Bernard and Dave will unpack the results for you. Before I hand over, I would just like to thank Bernard, Dave and their teams around the world for their continued dedication and commitment in enabling Bidcorp to deliver on its promise.
I'd also like to thank Ashley, Lee and their teams for providing unwavering support to the executive and the board to ensure that Bidcorp is soundly governed. Finally, I'd like to thank our founder, Brian Joffe, for his continued insight and support. To the chairs of our various board committees, Helen Wiseman, Tasneem Abdool-Samad, Paul Baloyi and Nigel Payne, for ensuring we stay on top of the details and fully compliant. For other board members, Cliff Rosenberg and Kanil Mallorca, who serve on all these committees, for their continued support and commitment to the organization. I'm now going to hand you over to Bernard, followed by Dave to take us through the results. Thank you very much for attending.
Thank you very much, Stephen, and welcome everybody. I'm here with David in Johannesburg. We'll go through these numbers. I'll give you more of a narrative. David will go through the actual numbers. I'll try to give you a flavor for what's happened. More importantly, after David unpacks some of the numbers, we'll talk about the future, because the past is the past and I think what's still to come is more important than what has been. Firstly, thank you to the support that we have had from our board, from everybody else. David will go through in detail the people who put all these numbers together in a short period of time. I think they do a great job.
More importantly, I'd like to thank my team around the world, my executive team who run the businesses and our 30,500 strong people team around the world, in 31 countries, five continents. They are what makes this business great, continue to make this business great, and will continue to be an important part of our success going forward. Stephen alluded to the fact that the past year hasn't been easy and it hasn't. We don't want to harbor on the negative too much, but it certainly hasn't been a picnic out there. Macroeconomic conditions have been more skewed towards uncertain and difficult than towards positive. Positive economic news. Consumers are generally still struggling with cost of living crises around the world. Food inflation has come off exceptionally quickly, did come off exceptionally quickly in the year from prior years. We are seeing a slight uptick in that moving forward.
Cost inflation has remained higher than food inflation, which is always a tricky area to navigate. That's just the reality. There still is a labor shortage in most geographies that we operate, particularly in Australasia and Europe and the UK, but that is getting slightly better. Most of the economies we operate in strangely are operating at full practical employment, which does make it challenging. Overall we're very satisfied with these results I think on a continued basis when you look at them. When we spoke to you last year we spoke about coming off an all-time high and how pleased we were with the results. This year we've continued to grow at a very acceptable pace bearing in mind the macro circumstances within which we operate. The rand has had a slight impact. I think it's about 3%. The rand is the rand. We have no control over that.
It will strengthen, it will weaken, and it might do all of those in one day. For us, that's not of any relevance. What is important is to manage each business in its local currency and to maximize each business for its own local conditions. Whatever that adds up to in rands at the end of the day is what it adds up to in rand. To me, I'm way more concerned about what the constant currency numbers look like. On that, we're talking about a constant currency increase in headline earnings of almost 10%, which in a very, very benign inflation environment I think is a remarkable achievement, particularly considering the high base that we are coming off. Our operating margins ticked up slightly from 5.3%, I think it is, to 5.5%. At a trading margin level, it's in the 6%.
At an EBITDA margin level, our revenue base was up by 6.8% in constant currency around the world. There is some acquisition in that, but if we strip out the acquisition to the best ability to understand exactly what's acquisitive growth and what's organic growth, we've still shown real organic growth in the mid 4%, which we're very happy with under the circumstances. We continue to do what we do. We believe we're on the right path. I think at the end of the day, the numbers prove that. When you look at the graphs of our HEPS growth over the last 10 years, it certainly tells a very admirable story other than a couple of years of COVID. When you look at the compound growth over 10 years in all metrics, we certainly are, I think, delivering and continue to deliver. I still think there's room for upside.
I'm not going to say for improvement because I think our people around the world manage these businesses exceptionally well. I think it's wrong to say there's room for improvement because they're doing it exceptionally well. What there's always room to do is to perfect the model even better. That's what we continue to do. We look for these opportunities. We add a little bit here, a little bit there, and now it is a case of 0.1% here, 0.1% there, which will all compound and add to what we're trying to do. Our cash generation has been strong. Some of you might criticize us for spending money on capital investments. I won't call it expenditure, it's absolutely investments for future growth. Some of this is timing related. There was a delay as a result of COVID, which we're now catching up on.
Some of it is ESG related where we have to transition to electric vehicles, which have a purchase price that's triple that of ICE vehicles. We have no choice. We do have to make those investments. Our working capital remains exceptionally well managed. Bearing in mind that we do have supply chain issues, which means we're moving inventory around the world. As you will know, there are significant supply chain disruptions and shipping disruptions, and there's a little bit of chaos out there in many parts of the shipping world. We have to navigate that because, as I've always said, if you don't have the inventory, you can't sell it. We don't take a long position on anything. If there isn't an elevation in inventory, it is very, very small and it is opportunistic. We believe that our returns are very good.
I know some of you will say that coming down. That's pretty obvious. As you make the investment in the short term, your returns do come down. If you don't make the returns in the investments in the short term, you're not going to get the long term growth. We own 73% of our property portfolio, and we believe it's a very important component of what we do. We've always said we want to be within 30 minutes of 90% of our customer base. We continue to try to achieve that and do what we need to do in order to get closer to our customer, which enables us to have a very high service offering, which enables us to command the margins that we do and run the business in the way that we do. We don't believe that volume is the answer to everything.
Sometimes volume is in fact the cause of problems as opposed to the solution, just depends on the circumstance. You need the correct volume in the correct place for the correct customers. From a sustainability point of view, it's something we continue to take very seriously. However, we operate in a practical manner. We do run lots of vehicles and we do operate lots of warehouses, which have lots of refrigeration, which requires a lot of electricity to keep things frozen. We have seen a 5% reduction in our baseline emissions in terms of the methodology we've adopted to measure that in terms of an efficiency ratio. We absolutely are on track to achieve our stated targets by 2032, I think 2034. That's an important part of what we do, but it's done in a totally pragmatic and fit for purpose manner.
What you generally find is these investments generally make sense. You have to invest in new facilities, they are going to be far more efficient and use zero emission type refrigeration, but they are going to be at an elevated cost to your 20 or 30 year old infrastructure that you're replacing. That's just the reality. We do continue to take our ESG commitment seriously, not only the E component, but also the S and G. We do report on that very comprehensively and we share as much detail as we can, bearing in mind we are a decentralized business and each country is at a different point in their country's journey in terms of what they can offer or not offer. It's interesting, for example, from an emissions point of view, our use of electricity is one of the major contributors to emissions.
Obviously, the electricity that's produced in certain geographies is a whole lot cleaner than in other geographies. As long as you're going to operate in certain geographies you need electricity and it's going to be at a high emission if it's a high emission generating country. Our emerging markets segment, for example, operates at a 50% carbon efficiency ratio compared to Europe or the UK, that's just a reality. Most countries in the, not all, most countries in the emerging market cluster are dirty emitters and there's very little we can do because we are obviously by necessity we have to purchase our energy in local markets. We do put solar on where necessary, but refrigeration runs 24 hours a day and the sun doesn't shine necessarily the whole time. I think in order to unpack the numbers we need to look at it on a geography by geography basis.
At the end of the day we are an aggregation of 31 countries, 20 businesses, I think it is across 31 countries and the number at the end of the day is an aggregation of all of those businesses. Australasia, comprising Australia and New Zealand, has been the powerhouse for probably the last 20 years of the growth in our food service business. This year for the first time in 20, 25 years have taken a bit of a breather talking to New Zealand. First, the economy's in recession, it's a pretty ugly environment out there at the moment and I think our teams have done remarkably well to show a top line that's ostensibly flat and a decrease in profitability of only 5%. I say only 5% because it's only 5% on a record high base.
For years and years and years we've spoken about New Zealand increasing their profitability and every year the question's asked when's it going to end? When's it going to end? When's it going to end? I don't believe it is going to end, however it is going to take a little bit of a breather and I think the fact that we are only down 5% in an off year is a true testament to our management there and their ability to adapt to change circumstances. We are seeing New Zealand improving. It's not improving rapidly but we certainly are over the worst and we do anticipate it will, it will improve this year. Probably be quite a difficult year but you know, we're not, we're not expecting it to get worse than it is and hopefully the growth will follow after that.
Australia's from an economic point of view is probably a little bit less negative than New Zealand but still pretty ordinary. We've got a big base there which from a revenue point of view we grew about 3% and I think it was about 3.5% with a similar increase in profitability. Australia is operating at record levels. Trading margin in both Australia and New Zealand remains at world beating levels. Both businesses are actively moving along the continuum, absolutely moving down the house brand, the import and the value add manufacturing, the vertical integration strategy, which is absolutely benefiting those businesses. In the context of the group, in a total, the Australasian segment in constant currency was flat year on year, which I think means that the 10% growth that we got across the business is a remarkable achievement across the rest of the business.
We anticipate continued growth out of the Australasian business. They're remarkable businesses, exceptionally well managed by their local teams, doing everything right, and we are confident that the trajectory will resume and they will continue to not only be an important contributor, but an important contributor to growth going forward. Moving over to the UK, we have seen quite a substantial improvement in our margins there, from 3.3% last year to 3.7% this year, which in the context of the UK economy, is a remarkable achievement because the UK economy is flat, average, negative, unexciting. I'm just trying to think of words to explain it, but there's certainly nothing joyful, positive, exuberant coming out of the UK. It's a hard, hard slog and it's quite unpredictable. You have a few good trading weeks and then you have a few flat trading weeks and nobody can tell you why.
There is very little enthusiasm or positivity on a macro level that comes out of the UK. Our business, however, is a totally different animal and we saw some great growth. Yes, some of it is from acquisition. We purchased the Turner Price business July last year, so it's in for a full year. Notwithstanding the acquisition, if we strip it out, our underlying growth in the underlying business was in double digits in profitability. We're very happy with the progress that continues to be made in the UK business. We continue to refine the model, we continue to pull cost out, we continue to look for efficiencies, we continue to look for some acquisitions and refine our model, refine our customer base. There is a large customer being onboarded. I think it's in September, October, which will certainly help top line, hopefully will help the bottom line as well.
It's a customer who fits into the sweet spot of where we need to be. We have invested a lot in the UK over the past years and we will see the benefit of that in the years ahead. Before you ask the question, I'm not sure if the question has come through. Where do we see the margins for the UK and when we still believe it's a 5% - 6% trading margin business in the next 2, 3, 4, 5 years. I can't be more specific than that. If any of you can tell me exactly how much the economy is going to grow and are prepared to commit to that, I'll commit to some timing on our margin growth. A lot of it is up to the economy now and hoping that it doesn't fall into a heap and does actually start improving.
We're very happy with the UK and the progress we've made there. Europe was also a star performer again in the group, margins increasing from 5.4% to 5.5%, which is a reasonable amount of growth. There still is a fair amount of upside in the European segment. We're seeing growth across all our European businesses, with the exception in this year of Portugal, which is absolutely in an investment phase and was very much by design that we need to increase our capacity, we need to increase our infrastructure, we needed to change the customer model. It was a year of investment and we are starting to see the benefits of that in Portugal. The rest of the businesses all performed admirably well, and there was real growth, both the top line and bottom line in every business across our European cluster.
They all contributed to that pretty sizable increase in trading profit, which really, with the UK, helped underpin the results that we saw. We're very satisfied with where we are in our European business. We continue to invest where necessary in markets that are smaller. We've got some mature markets where the investment is obviously less. Notwithstanding that, even the large markets like the Czech business, we do continue to put substantial investment in, and we have continued to get adequate growth out of that. We're very pleased with that. It's very pleasing to see our Polish business coming of age, and they're certainly contributing at or above the average of the European segment. We're very confident that business has huge growth potential, large population, rapidly economically advancing, and we're pretty excited about our prospects there. The Italian business probably was a little bit muted in the year.
We still increased our profitability, and that once again was absolutely by design as we added approximately 40% capacity to our infrastructure with the opening of Rome, which was a big investment for us. It was a big move, was disruptive, went live July 1, 2024, so we've had it in for the full year. It was a negative contributor for the first many months, and then we saw that change towards the end of the year, and that will certainly enable us to get more national growth. When I say national, I'm talking about geographic growth in Italy than we were able to in the past. The Italian business is now about a €1.1 billion a year business, so it's a sizable component of our group.
We've spoken about the closure of Germany, which happened effective in December, and I don't think we need to talk any more about that. The emerging markets segment once again is a mixed bag, which isn't unexpected because it is a collection of very disparate businesses. Star performer, absolutely. The South African businesses once again, 15% growth in profitability off an all-time high base last year. Those businesses are exceptionally well managed, they are mature, but they continue to fashion growth in a very difficult environment. I don't need to tell most people how tough the environment is in South Africa, but there's opportunity and our guys seek out the opportunity in all three components of the business. Bidfood, Crown, and Chipkins Puratos performed exceptionally well during the year and continue to be well managed, attention to detail focused, and have just really shot the lights out once again.
Well done to them. The Middle East has performed very satisfactorily. We are going through a few, maybe I call them growing pains, particularly in Saudi. We're exiting a major customer in September who's primarily a QSR low margin customer, and that will take a few months to work through the system. The UAE business is exceptionally solid and growing now, and we need to get the Saudi business into that same position. The market potential in Saudi is incredibly positive and strong, and we're still at the early stages of that exciting journey. Turkey remains a startup work in progress. Never easy when you are starting from a very small base. It is a challenged environment, high inflation, a little bit volatile, expensive now, and it's got its own internal challenges.
We are profitable at a trading level, but it's one of those things that we do have to fund the growth and hopefully one day we'll get to a position where the business is self-funding and self-sustaining. It is in that startup phase. South America, we've seen good growth out of Brazil. I think they went through their economic woes in the prior year. Chile as well. We're not at the levels we want to operate at in South America, particularly Chile. We've got a lot of work to do there, but we do have a great national infrastructure. The building blocks are all in place. We just now have to extract the benefit of that and get that business to perform where it needs to perform. Argentina, we now consolidate. I think we own 63% of that business.
Argentina is an exceptionally interesting case study from a macro point of view. There's a lot of turmoil, a lot of change. Notwithstanding that, our business is operating very, very well. Totally self-sufficient, generates enough cash to fund its own activities and grow. We think that Argentina, once they get through their challenges, will be a nice market. Moving over to Asia, I think that's been a challenge for us. The positive is Malaysia, where we've performed exceptionally well. We did benefit from the fact that our business is very strong in the bakery channel, and there was quite a lot of upward price movement on chocolate in particular, which our operators were good enough to take advantage of from a trading perspective and traded cocoa and chocolate very, very well, which helped see them to record year. Singapore's work in progress. New management has been there about 18 months.
I think it has made huge, huge strides. The business is totally different to what it was 18 months ago and certainly trending the right way. We're very happy with the way that's going. Greater China, on a like-for-like basis, we were pretty flat with the prior year, which under the circumstances I think is admirable. Greater China is now less than 1% of the total group. We're just not seeing the growth coming out of Greater China. It's a tough environment. Tourism numbers are down. Western tourism in particular is down. Bearing in mind we're primarily an importer or a distributor of Western style products, there is this change going on in the market. It is a challenge not just for us but for all operators in the market. We have pulled cost out where we can, streamlined the business where we can.
It is tough going, and we're not convinced that there's going to be a short-term turnaround. We think it's going to be pretty tough going there for the next year or two or three, I think. I've taken you through all the businesses. Obviously, we've got our central businesses that support our IT infrastructure, our IT stack, our technology stack, our procurement capabilities, which add benefit to the whole group. As we said, our greatest strength, our greatest synergy, is the IP between the businesses, and there's no doubt that that's worth a lot. Our businesses learn from each other. We only have to make a mistake once, not 31 times, although sometimes we make it more than once. The developments that we see through the group are phenomenal. From a tech point of view, there's some really cool things going on.
From an AI perspective, we're not an AI business. We don't pretend to be an AI business, but AI will facilitate a whole lot of efficiency and insights into the business and does already, and we're seeing the benefit of that in multiple different areas. We've got numerous projects on the go, some of which will give benefit, some of which won't. Those that give greater benefit will be rolled out to the whole group. This thing's very live and very much part of what we're doing at the moment and seeing what role AI has and implementing it very quickly in the business, and that's happening as we speak. Technology is a very, very important part of the business going forward. It's not going to revolutionize the business, absolutely not, because at the end of the day we are still a bricks and mortar business.
We still have to run warehouses, we still have to run trucks. Technology is only going to help on the 0.1% efficiencies that we're going to get, all the margin accretions, and how you do things. We're pretty excited about that. Going to hand over to David to talk you through the numbers, and then I'll talk about the outlook after that. Thank you.
Morning to all. If I can just start with some, I suppose, technical disclaimers. The disclaimers, but the accounts are obviously prepared in terms of IFRS, all the accounting policies, there's nothing new in the accounts and PwC have issued a new and unmodified opinion, so that's good from my perspective. Personal thanks to firstly all the 30,000 plus people around the world, but also to the financial people and more in particular Lamarne, Shane, and Justin in South Africa. Nikita and the one lady that puts it all together. Yes, it is a team of one and that's to Ashley who puts the whole reporting package together. It is an aggregation of 54 different entities across 31 countries. The fact that we produced our integrated report and issued it is a great achievement and we're proud of it. I would encourage everyone to read it.
There's a lot of good information about our great businesses around the world, so please use the opportunity. Bernard's spoken about constant currency. Just as a reminder, it is the true representation of how we look at the group and how we manage it and it really is current year earnings or Fiscal 2025's earnings at last year's average exchange rate. It gives us a good comparison as to how the businesses are performing. Just going on to some highlights. I won't go through them in any real detail, revenue growth was up 6.8% in constant currency and I think if you consider that, as Bernard indicated, a fair chunk, which is the Australasia business, didn't really contribute to the top line. The result is good. Yes, there's some acquisition in there, but I think there's still some very good real growth and market share gains. Our GPs were up.
Some of that is mix and a bigger contribution from the likes of the UK. I think one's got to consider that in the context of some of the businesses and some of the bigger businesses sacrificing margin to deal with probably slightly tougher environments in their markets, and generally the fact that they've increased and held up is particularly pleasing. Trading profit was up and I think, obviously, I'll speak a bit, a little bit about it, but obviously the cost basis has kicked up and that's not unexpected because 60% plus of our cost base is people and you've heard that, you know, there is still, even in countries that are struggling a little bit, relatively full employment and that's obviously driving up the. The wage basis and wage costs are up 9.6% in constant currency and I think that's a great performance.
Dividend growth up 6.4% which is in line with our policy and in line with the earnings growth of the group. Return on funds employed at 53.4% is down a bit and I'll talk a little bit about that but I guess not unexpected given the investments both into working capital and just increasing capacity across the group. It was absolutely within our expectation that would happen. Consequently, the free cash flow is down a bit but when you're investing both in acquisitions and into capital investments it has to come from somewhere and consequently also again net debt up a little bit but absolutely still at relatively low levels and in line with our conservative view on how we manage the group. In terms of the P&L, I guess nothing really to add.
I think the one area is that, you know, we talk about margins being better, there's been relatively low or no food inflation in the geographies and certainly across our baskets for a period of time now. That obviously makes the fact that you've got core inflation still pushing ahead, the businesses don't have that ability to push through that product inflation and the fact that most have held or increased margins is really testament to the great ability that they have to trade in whatever circumstances present themselves. Gross profits, I think the, as I said, the cost of doing business was up mainly wage costs but I think we maintained because of the ability to grow margins we've maintained our operating leverage where gross profit was up 8.6% and in constant currency the costs were up only 8.4%.
Just talking to some of the lines below, I guess trading profit interest line was up by 8.6% to ZAR 637 million in constant currency, not unexpected. We did obviously take on additional debt to fund the investment so I think the interest line is all relative and explained. The effective tax rate was down a little bit compared to our guidance. What we've said, 26% - 27%, some of that was investment allowances that we get a one-off benefit for so we still guide to the 26% - 27%. I think one of the interesting exercises we undertook in the year because we had to was this Pillar Two, this OECD Pillar Two tax exercise where all companies, multinationals I guess, are required to pay a minimum tax of 15% across all their jurisdictions. We are a full taxpayer in almost all our jurisdictions around the world.
There are two that have tax rates below 15%, but having completed that exercise, there's very little impact on the group. I think it's around ZAR 300,000, which we've obviously had to provide for at a group level, but it was a satisfying exercise and confirmation that we are a full taxpayer in all the jurisdictions we operate in. Capital items, as has been indicated, was the exit of Germany in December. If you look through the capital items, there is a benefit profit on the disposal of an associate, or there are some weird accounting rules where you have to revalue your piece of the associate prior to buying the business at the rate that you, or the price that you're paying for the other pieces, and that gave us an increase or profit of about ZAR 113 million. That also makes up part of the capital items.
There's a little bit of hyperinflation, slightly up on the prior year at ZAR 27 million. We have now two hyperinflationary jurisdictions, Turkey and Argentina. I think in both cases it looks like inflation is on the wane. Not sure how long it'll take to come off, but my guess is that those two jurisdictions will be hyperinflation accounted for a little bit of time to come. Currency volatility was negative in the period by 3.1% on headline earnings per share, and as Bernard indicated, we obviously manage these businesses in constant currency. The rands, what you get in rands is what you get in rands. A final dividend of 0.600, which is 6.2% up on the final dividend of 2024. Overall, 6.4% up. As I said, in line with earnings on the cash flows. I think generally the businesses have done a good job.
Obviously, we've invested a lot on the working capital. A little bit of absorption compared to prior year. I think generally the receivables, notwithstanding that the market in some jurisdictions more than others, I guess, is under pressure and you are seeing pressure in the customer base. Generally, receivables have been very well managed and continue to be. Inventory days, as you heard from Bernard, if you haven't got stock, you can't sell it. They are a little bit up, but largely due to intentional stocking up due to supply chains. The more we go down the importing activity route, obviously the supply chains and the length of the supply chain is longer. That has a little bit of an impact. Payable days, generally with imports you get reduced terms and we have clawed back some terms from suppliers.
As you do more importing, you are building up new supplier relationships and those terms and relationships do take some time to benefit us. Obviously, it's top of mind and we continue to try and improve those. There's always room to do better. I think generally the businesses have done a good job investing. Most of the investment of ZAR 6.3 billion has gone into expansion, ZAR 3.8 billion of new capacity. That bodes well for the future. The acquisitions cost on a cash basis, about ZAR 2.5 billion, which was about 2.3% of revenue and about 3.8% of trading profit. Net debt is up a little bit at 6.2%. If you look at it relative to the size of the group, it has increased a little bit, but very, very small relative to the covenants that we've got. I think it's at 0.4 versus covenants of around 2.5 times.
Going straight into that just reflects the very strong balance that we've got. We've got optionality for growth. It is conservative and that's the way we like it and I guess hopefully will be the way it'll remain. We do have sufficient headroom and I think if you look through the solvency and liquidity metrics, generally it reflects the strong balance sheet and the conservative methodologies by which we manage the businesses and management manage the businesses across the group. Going forward, just looking at what we see and into the future, we obviously don't have a crystal ball. I think the one thing that is changing a little bit is food inflation.
We are starting to see that come back a bit and that's, from our perspective of being a trading business, primarily that does bode for a better trading environment than I guess we've seen over the last little while. Core inflation, our view on life is likely to remain sticky. A lot of these wage increases are being driven by regulatory or government increases and there's nothing from our perspective that we can do. It flows all the way through the wage scales. Our working capital anticipation is likely just to be the normal trading cycle. We'll absorb into the first half and generate into the second half. We don't have any material debt maturities going forward. We do have an RCF facility which matures in around about a year and we'll obviously start working on that.
There's further CapEx planned across the group going forward in a number of jurisdictions. It's our sort of anticipation that after a period of what we think is relatively sustained investment, we would see that moderate down to the normal sort of levels of 1.5% - 2% of revenue. There's no change to our philosophies in terms of how we manage the group. As I indicated, the returns have slipped a little bit, and as I said, not unexpectedly, but there will be a big focus on restoring them into the next one to two or three years. July trading has started off well and solidly from our perspective, so that's good. From our perspective, we are budgeting for further growth into 2026. On that basis, I'll hand back to Bernard.
Thanks, David. I suppose the most important part of what we need to talk about is the outlook because, like I say, what has happened has happened. You can analyze it till the cows come home. It's not going to change. Where do we sit at the moment? Where do we think this business is at? We're very, very comfortable. We think the business is in a very strong position in almost every geography we operate in. We still see opportunity in almost every geography that we operate in. Please don't ask me to elaborate what almost means, but when you've got 31 countries, maybe one or two of them give you a little bit of cause for concern. That would certainly be on the smaller side and not the larger side. We're very comfortable where the business is and where our strategy sits.
You can see the sustained sequential growth that we've delivered over the last many years, obviously interrupted by COVID, but coming out of COVID, certainly there's been a phenomenal amount of growth out of the business in what's been a low inflationary environment over the last few years. From the acquisitions point of view, we believe that making these bolt-on, in-geography acquisitions are exceptionally important and an important component of the growth engine. You don't necessarily see the full benefit in year one. Sometimes you do, but often you don't. You only see the benefit after a period of time when you can extract the synergies, do what you need to do from a strategic point of view, which takes a little bit of time. There's no doubt that the growth we see going forward comes from acquisitions that were made in the past.
You can't have too much of a short-term focus on the acquisitions. It's not a case of what are the acquisitions going to do from the moment of acquisition onwards. You have to have a look at it through the lens of what are those acquisitions going to strategically do to the business over a three to five year window. Don't get too fixated on the immediate impact of what the acquisitions mean. We've made four small acquisitions so far this year. One in South Africa, one in Italy, one in Malaysia, and one in the UK. The largest is in the UK, but still relatively small. I think the annualized revenue out of that one was about £30 million. It's a regional player in the seafood fresh type of industry. We can bulk up our fresh presence from a national point of view.
In the first eight weeks of this financial year, our revenue on a constant currency basis is up 6.2%. That's a very significant number because there's a lot of acquisition from the prior year that has filtered through. Some hasn't yet, but we think a 6.2% rate in the current environment is particularly pleasing and continues the trend of where we saw last year. Tracking the European summer has been mixed. There have been a few good weeks, and many very, very average weeks. We're not shooting the lights out from a weather point of view in the Northern Hemisphere. That's certainly not giving us any huge tailwind. The underlying performance, we're very happy with that 6.2% we talk about. We're confident of future growth. I do know there's a few questions exactly what that means. That means exactly what we say. We're confident of continuing the growth.
As David says, we don't have mirror balls that we can have a look into and see what the future looks like. We only know what we know. Where we sit at the moment, two months into the year, we're happy that the trajectory is pretty similar to where it was last year. There certainly are a few levers that have been pulled and the businesses are tracking in the direction we want them to track. There's not too much that's causing us concern at this point in time. Like I say, economies are volatile, economies are a little bit negative in certain jurisdictions. It's not a wonderful environment out there.
When that does change to the upside, and I want to be positive and think it will improve to the upside, I think we'll see growth accelerate, but we've got no idea when that will happen and to what extent. I just want to cover off a little bit on this inflation issue because I know a few of you get fixated about that. What we saw two years ago was food inflation at ridiculous levels like in the 10% - 15% levels on average throughout basket. We saw that come down to zero, even deflation over a short period of time. What we're seeing now is the pendulum moving very slightly, and I emphasize very slightly, to an inflationary mode. We're seeing some inflation in some markets of low single digits. We're not going back into this 10% - 15% overall type of environment.
We're just seeing the pendulum swing slightly towards a more nuanced inflationary environment, not a flat to negative inflation environment. To be fair, we probably saw in the last month or two of the financial year we just reported on, inflation doesn't wait for the 30th of June to tick up. These things are very real and alive and happen as they happen. We don't see that as a negative. Moderate inflation in a trading type of business is a positive if managed correctly. The only caveat I want to put on that is we are faced with a very competitive environment in many, many markets and a customer base who's under a lot of pressure. A lot of our customers aren't making the returns out of their businesses that they used to.
There's far more focus on pricing than there might have been two or three years ago when we had the COVID boom. Once your customers are in that mode, pricing becomes far more difficult, far more critical, and it's not as easy as it might have been a few years ago to raise prices and pass all the inflation on. However, that's just a reality that us and all our competitors will face the same issue. If the price of eggs goes up, the price of eggs goes up. There's not much anybody can do about that. That just has to get passed on to our customers. They have to pass it on to their customers in a period of time. That's where we are.
I'm positive, I continue to be positive with obviously the qualifications of we don't have a crystal ball to gaze into and we are in volatile times, we live in interesting times. Overall, I've got full confidence in our management team, our executive team around the world, our 30,000 people, in our strategy, in what we do, in the way we execute, and we will continue to do that. We'll continue to trim the sails as we go to make changes, very slight changes because there's no need to make any radical changes. We're heading in the right direction. The business is strong, it's cash generative. We're investing where is correct, we're focusing where is correct. We're looking at acquisitions in multiple of our existing geographies. There are no new geographies on the agenda at the moment. As we've always said, those are opportunistic, they only happen when they happen.
I think we have learned from some negative experience that if you're going to go into new geography you need to do it at scale and not do it from a startup type of operation. That's just long, hard, difficult management, time intensive difficulty to do that. Where we are at the moment, we can see real, real growth, we can see some acquisitive growth. We're very happy with our business. My thank you to the teams out there. They continue to deliver the results. It's actually phenomenal when you see what they do on an individual basis and look at them in comparison to their peers where you can look at their peers and I'm sure some of you do look at that and we certainly are outperforming our peers by quite a significant quantum. I think that's full credit to them.
As I've said, sometimes our performance is boring because we deliver what we say we're going to deliver on and we hopefully will continue to do that. Boring is beautiful. If we can compound at 10% a year, I think that's a good base case from which to build the business. We're at sizable scale in many markets. There's still many markets that we can scale up and achieve much larger, much larger bases. What I'm going to do is go through the questions that we do have. Some of them we've answered, some of them we won't answer. If anybody's got any questions, please just send them through on the normal Q&A mechanism and I'll just go through these one by one. Excuse me, but I do have to look at my phone. There's a question about inflation and what does that mean.
I think we have discussed that and elevated is only in single digits on food price inflation, low single digits in most markets. We don't see that as a negative. That's probably a positive for us. There's a question about the acquisition in the UK. We have made that acquisition. We spoke about that. There is another acquisition in the broad range food service business that we are at a very preliminary stage of looking at. I'm not sure of the timing of that. It probably won't be this financial, this calendar year. It might be this financial year, but we don't really know. You can't hurry these things. There's a question about is it easier to do bolt-on acquisitions in South Africa now than it was five years ago. I don't think the environment's changed. We have made a few in South Africa over the last year.
There are maybe one or two more in the pipeline. The environment's the same and the acquisitions we're looking at are strategic. None of them are particularly large, but they add a strategic element to our business. For whatever reason, we determine that strategic issue to be. Comment on the growth trends in Q1 2026. We've spoken about that 6.2% on a constant currency basis. We are budgeting to continue delivering real growth in the year ahead. Yes, that's correct. We don't give guidance. We haven't given guidance. We do update the market on a quarterly basis, and I saw some research that came out today that said our numbers were in line with expectations, which you'd expect that to be when we updated at the end of May and sort of guided the market as to where we were. We think that's a positive.
We don't think that's a negative. We do try to be as transparent and communicative as we can with our shareholder base. Supply chain disruptions. There's a question of where the supply chain disruptions are, they're anywhere where you have to ship product in, and they're different in different economies. It hasn't really cost our business anything other than we have elevated levels of stockholding in certain businesses. We're not going to say we've lost sales because of supply chain disruptions. I'm sure we have, but it's of no real consequence. We'll find alternative products, and generally we've tried to preempt that by having high levels of inventory in our business. We've spoken about the UK acquisition. Why has nobody asked about the UK margins? I'm shocked. Can you comment more on the level of imports across businesses? In which countries are the key importers and types of product?
That's an impossible question to answer because almost every market imports product, and they import them from different places depending where they, you know, what they operate in. The Italian business imports a lot of seafood, so some of it comes from Italian waters and a lot of it doesn't come from Italian waters. Do the Dutch importing product from Italy, do we call that an exporter or an import or not? No markets are self-sufficient. None of the markets we operate in are self-sufficient from a supply point of view. The world is becoming a smaller place. The world is our shopping trolley. We can purchase product to a large degree from wherever it suits us to import the product for whatever the reasons are, subject to generally quarantine, veterinary type of issues in certain geographies. That's the real barrier that exists on the importation issue.
Certain countries make it difficult to import product from other countries. From our point of view, we like to have as many options as possible because that's our job. We need to buy the correct product most cost effectively, introduce new products into the market, and therefore we move our supply chain around the world as necessary. There's a very complicated question on Rafi which I'm going to let David answer because it's way too complicated and I'm just downloading a few of these other questions, so just give me a few seconds. I don't know why I'm not downloading them. Just hold on. Please be patient. Telecoms don't work so well here. There's a question on CapEx. I'm going to let David talk about that. In Australia, you mentioned environment of heightened competition and pricing pressure is relating to some strategically lost margin. Houses change post year end.
It hasn't really. I mean, June 30 is an irrelevant number. As I say, these things are dynamic. They evolve over a longer period of time. The Australian business saw stronger performance towards the end of the year and that we're hopeful will continue for the rest of the new financial year. Insight on how you're integrating AI in your operations practically, do you think you are there or still a long way to go in that regard? Whoever thinks they're there on AI is totally misguided because the world doesn't know where this AI thing is going to go. It's evolving at such a rapid rate that to take any bet on any particular AI technology at this point in time I think is foolish.
There are lots of things we're doing with AI, from margin optimization to inventory optimization to routing optimization to warehousing to employee engagement, to onboarding of employees to recruitment of people. AI is going to impact every aspect of everybody's job to some degree. There's no one big item that we think is where we need to place the investment. A lot of little things and a lot of understanding that AI is going to change the world. We just don't know. Eurostat data shows more off season travel to particularly Southern Europe. Please expand. How lower cyclicality is better for your business in terms of capacity utilization? If that is the case, I'm not sure I understand the question. Off season, lower cyclicality, I suppose lower. If the question is is lower cyclicality better for our business?
I suppose overall, if the market is going to grow, we'd rather it grew across all 12 months. It's far easier to cope with a flat market over 12 months than doing 70% of your revenue in 40% of the time, which puts a whole lot of pressure on the business. I think that's what that question is asking. I'm not really sure. The seasonality in the business is less than it used to be because not all our business is related to tourism. A fair amount of our business is in the non-discretionary market, in education, in schools, in military, universities, airlines, business travel, etc. I think there is this misunderstanding that it's all tourism related. It's not. There's an element of tourism which maybe gives you the cream, but it's certainly not the base. Can you please talk through the competitive environment in Australia?
Is the lower margin a function of negative leverage or is it having to price more aggressively? Australian margins are up, not down. Australasian margins are down because the New Zealand margin is slightly down, as their revenue is flat and their profitability is 5% down. The full amount of margin decline in the Australasian segment, plus a little bit more, is from a New Zealand point of view, not an Australian point of view. The Australian business has held its own remarkably well under the circumstances. You mentioned a sizable new contract in the UK. Please really give us an idea of its size, product mix, and if this is incremental or replacement. It's incremental. I think it's approximately £150 million on an annualized basis. £150 million out of £3 billion in the UK. It will take a few months to fully mobilize.
The product base is ostensibly regular product, and we think it will be positive once we've rolled through the mobilization, which doesn't give you the benefit on day one. There is a way to go before you get the benefit out of the contract. In Italy, new capacity comes with significant short-term incremental costs, and it takes a few years to realize operational efficiencies. You also mentioned that you saw the negative contribution change towards the end of the year. How far is Italy below European margins? It actually is operating at standard European margins, but it should be at superior margins. There's no doubt that there's still a cost out and an efficiency to be garnered out of our Italian business.
Bearing in mind that we grew that business out of the north of Italy and we're handling all of Italy out of the north, from a sales point of view, we're doing exceptionally well. It was costing us a lot of money to distribute through the whole country. Now Rome certainly fixes a lot of that. We bought a business in full year last year, and we bought another business in Sardinia this year, this financial year, which all helps that geographical footprint. That's not going to give us benefit today, although we are starting to see the benefits. It takes a year or two to get the full benefit because you need to move customers around, you need to move the product around, you need to get a whole lot of things in your ducks lined up before you make your moves.
It certainly gives us this footprint of getting close to the customer, which will enable us to grow the top line and will enable us to be far more efficient in how we service the market in the Italian context. David, I'm going to hand over to you to answer those very complicated ROFI questions. CapEx coming back to.
ROFE excludes goodwill, but includes intangibles. The targets are set, you know, based on, I mean it's not against a 35% target, it's obviously against a realistic target if you back out that particular element and you also take out the impact of properties. That's why those levels, if you look at them on an absolute basis, you know, ROFE at 55% is pretty good, but it is because they have been adjusted for those particular issues. The number of shares, the negligible amount of shares that have been increased into the system over the years, is as a result of basically settling share incentive schemes. I have no idea why the share price is under pressure today.
because We delivered according to what we said we would. You get marked down for delivering according to expectation. There you go. There was a CapEx question. Will CapEx to sales be above the guided range of 1.5% - 2% in FY 2026?
Yeah, that's the kind of level that we are looking at, certainly into the next year.
There was a question about will we consider a procurement office in India? That's a very interesting question because India is taking over from where China was maybe 10 or 15 years ago in terms of food production, but they are still a few years behind. We do import a sizable amount of product out of India into many geographies and it's not the type of product you think it is. There's a lot of value add product. The quality is certainly improving, the consistency is certainly improving. India from a procurement point of view is absolutely part of what we do. We will extend our BPC presence and we have extended our BPC presence to incorporate the opportunities that come out of the Indian procurement opportunity. Like I said, the world is our shopping basket. We move our procurement and our potential procurement to where the opportunities are.
You correctly point out that India is the next place from a food manufacturing point of view. Are there any large upcoming refinancing requirements, David?
No, as I said, there's no material refinancings in the next 12 months. The only thing that we do have is our standby RCF facility, which becomes due, and we are looking to roll it over. That's only by September 26th.
Okay, I think those are all the questions we have. Thank you everybody for your attendance and for your interest, and I'm sure David will be happy to answer any other questions you have. Just to wrap it up, thank you to our teams around the world. They've delivered fantastically. Apparently, I've got another question, which is optimizing.
In Australasia, must have been very strong. Half on performance given, half on performance. NZ at 7.4% for the full year. Is that seasonal or reflecting strong operations?
I think if you go back year on year you'll see exactly the same trend. It's the way that rebates and supply rebates, customer rebates are accounted for in June and growth rebates, et cetera. It's absolutely regular, in line with the trends of previous years, and not anything that's different to what we've done before. Just getting back to it, thank you. We're excited about the future. It looks very bright. We'll continue to grow this business, we'll continue to make changes necessary. I've got a great group of people we work with who innovate, who are entrepreneurial, who are passionate, and who make our jobs very, very pleasant, and I think contribute and don't contribute, they make the success of this business. It's an exceptionally strong performance, an extremely strong business with great future prospects. Thank you very much, everybody, and see you in a few months' time.