The Bidvest team has performed exceptionally well over this past financial year, reporting a very strong operating and financial result, notwithstanding the ongoing impacts of COVID-19. Management's actions to stimulate trading, manage margins, contain operating costs and convert profit to cash have been remarkable, resulting not only in enhanced returns to all stakeholders, but also ensuring a stronger balance sheet that positions us well for continued organic and acquisitive growth.
The low point over the year, has of course been turmoil that the COVID-19 pandemic continues to place on our society. On behalf of our board of directors, we extend our sincere condolences to the families, friends and colleagues of the 122 Bidvest employees who sadly succumbed to the pandemic. Losing our colleagues has been another sad, and stark reminder of the chaos and pain that the virus has brought to millions of people around the world. Over the last 18 months, the Bidvest Group has provided various levels of assistance to ensure that our employees, communities and our country have some form of support. We have dispersed R230 million to support employees and communities in the wake of the pandemic and we have also provided meaningfully to the most vulnerable in our society through numerous support packages ranging from the distribution of over 37,000 food hampers, personal protective equipment and other donations, and assistance with a televised, senior school learning programme.
The progress of vaccination programmes globally, and including our key operating territories of South Africa, the United Kingdom, and Ireland, is very positive. We have introduced a Group-wide awareness programme to encourage all employees to be vaccinated and we are improving access to the vaccine through the use of mobile clinics.
About 98% of our employees are back at work, from 75% who were unable to work in April 2020, and our over 250 businesses continue to implement COVID-19 health and safety protocols, which will remain a normal way of working.
The significant changes to our operating environment, and the degree to which risk has changed, cannot be ignored. To ensure that Bidvest remains cognisant of our transitioning world and the Group is positioned to continue making a positive contribution to the three Ps - People, Planet and Profit - it is pleasing that we have also been able to significantly enhance our Environmental, Social and Governance (ESG) Framework. Our ESG priorities have been amplified and have been cascaded into the divisions, and further into our numerous individual businesses. We have introduced ESG-specific targets into our incentives for the 2022 financial year.
The social unrest protests that occurred in KwaZulu-Natal and parts of Gauteng in mid-July 2021, dealt South Africa a devastating blow. The Group was fortunate to have suffered no loss of life, and minimal damage to facilities with limited disruption to operations. It was encouraging to see how business quickly assembled with a common cause to amplify the fight against poverty, inequality and unemployment. This was an example of how, as business, we are capable of doing more to fight the poverty plague by creating additional opportunities wherever possible.
Financial performance powers ahead
Group revenue at R88.3 billion increased by 15.4% from R76.5 billion in the previous year, and trading profit was 47.8% higher at R7.9 billion. The trading margin improved from 7.0% to 8.9%.
Highest-ever performances were produced by Commercial Products, Services, Automotive and Branded Products. Freight and Financial Services delivered strong second half performances. PHS, which is now included for the full 12-month period, exceeded expectations, delivering a double digit increase in constant currency. Noonan's scale in the United Kingdom has been boosted following four bolt-on acquisitions made during the past year.
Group headline earnings per share (HEPS) from continuing operations at 1,183 cents is up 114.0% and normalised HEPS, from continuing operations, increased by 25.6% to 1,292 cents. Our normalised HEPS indicator is important because this shows the underlying performance of the business, assuming that we didn't have COVID-19. For the Group to deliver a 25.6% increase in normalised HEPS is encouraging and is a sign that most of our markets are operating at, or close to, normality.
Cash generated by operations at R13.6 billion was higher by R4.5 billion mostly due to the increase in operating profit, and a significant working capital release. Cash conversion improved to 144.5%.
The balance sheet remains very strong and ROFE improved to 31.6% against 23.0% in the prior year. Our ROIC at 14.1% is comfortably above our WACC which is 10.5%.
A final dividend of 310 cents has been declared, bringing the total dividend for the financial year to 600 cents, up 112.8% on the prior year.
The Bidvest journey continues
The Group has made significant strategic strides since the unbundling of the foodservices businesses in 2016. At that time, we defined a very focussed and simple strategy, which has been well executed.
The Group has grown organically, and all businesses have been rightsized for current demand. We remain confident that as demand and volumes increase, we won't need to increase the cost base significantly.
The portfolio has also been streamlined and simplified. We diluted our interest in Comair and sold our interests in Mumbai International Airport, our listed operations in Namibia, as well as BidAir Services and Bidvest Car Rental. Through this portfolio clean-up, we have received proceeds of R1.2 billion in the current financial year from the disposals, and cumulatively since 2016 we have been able to monetise R4.0 billion.
Over this medium-term period, we deployed approximately R21.0 billion, which includes the acquisitions of PHS and Noonan, through a strategy of increasing our international footprint in selected niche operating areas of facilities management and hygiene services. We are building scale in these two areas, and we are broadening our products and services in various divisions, while also investing in freight and storage infrastructure in South Africa. We have also increased our shareholding in Adcock Ingram.
When Noonan was acquired in 2017, it was the number one facilities management operator in Ireland with one office and a very small market share in the United Kingdom. Soon after the transaction concluded, Noonan acquired Ultimate Security, Future Cleaning, Axis, and Cordant, in quick succession and today Noonan has 17 offices across the United Kingdom. This consolidation, in a somewhat fragmented market, has built the scale we wanted, becoming a top 5 company in security, and a top 10 facilities management business in the United Kingdom. In Ireland, Noonan remains the number one facilities management company.
Our strategic imperative of continuing to enhance the diversification of the Group has advanced. At a trading profit level, 62% of our businesses are in business services and 38% in trading and distribution. The United Kingdom and Ireland are now material geographies for us, delivering 19.8% of trading profit this past year.
Post financial year-end, Bidvest, through its offshore subsidiary The Bidvest Group (UK) plc, successfully issued an inaugural US$-denominated senior unsecured five-year bond of US$800 million.
Divisional performances encouraging
Bidvest Services' revenue, its trading profit and margin increased significantly from last year. ROFE at 205.9% is more than double last year's 85.0%. A key divisional highlight is that trading profit from international operations is already half of the division's total profit. Compared to 2019, the division increased trading profit by 50.1%. The Services team delivered an extraordinary set of results bolstered by additional months of PHS and the Noonan bolt-on acquisitions, as well as strong underlying organic growth. Services' businesses in South Africa delivered good growth despite the year-on-year decline in the travel cluster and BidAir lounges.
Branded Products' revenue, trading profit and margin is higher than the prior year. ROFE at 24.4% is up from 23.2%. Compared to 2019, this division increased trading profit by 55.4% driven primarily by the consolidation of Adcock Ingram. It has been a solid performance from the Branded Products team over this past year, given the continued domination of the pandemic fallout, which resulted in a very complex and unpredictable business environment.
Bidvest Freight's revenue was lower, but trading profit was up on last year, and the trading margin increased slightly. ROFE at 30.8% is up from 28.9% in the prior year. The division decreased trading profit by 6.6% compared to 2019. The team delivered a good result following increased bulk agricultural and commodity volumes and an eight-month contribution from the Liquid Petroleum Gas (LPG) terminal, which is operating well, and where volume is exceeding expectation.
Commercial Products' revenue increased, and trading profit was up 135% while the trading margin at 6.6% doubled from the prior year. ROFE at 25.5% is significantly up from 9.5% in the prior year. The division increased trading profit by 25.3% compared to 2019. The Commercial Products team has produced a superb set of results. This performance is largely due to significant market share gains in all key markets in which we operate, outstanding gross margin and expense management, restructuring and optimisation of the electrical cluster, and excellent inventory management.
The Automotive division's revenue, trading profit and margin were higher than last year. ROFE at 37.6% was excellent, up from 7.0% in the prior year. Compared to 2019, the Automotive division increased trading profit by 22.6%. This division's results reflect strong strategic and operational achievements in a very challenging period. The team's focus on margin rather than volume yielded material benefit.
Financial Services revenues were flat, with the trading profit margin higher than the prior year. ROFE at 9.1% is disappointing despite it being higher than the 8.2% in the prior year. Trading profit comparison to 2019 reflects a 43.3% decline. The 2021 financial year was exceptionally difficult for this division. Notwithstanding the negative impact of the pandemic and a cautious approach to accounting for expected credit losses, the division executed a very strong second half reversal, turning a 39.3% decline in trading profit at half year into a 8.9% full year increase in trading profit, which is commendable.
Strategic agility intact
This past year's excellent results have proven that our decentralised structure, where management teams are empowered to make decisions with autonomy, is critically important during times of change and challenge.
While we continue to provide Group businesses with strategic guidance, capital to deliver an agreed growth plan, operational autonomy to execute their growth strategy and a functional governance structure, our entrepreneurial leadership philosophy provides Group leadership with the agility and flexibility to make decisions quickly and be decisive on calls to respond rapidly to our changing environment.
We don't expect any major changes to be made to our portfolio. We will grow the facilities management and hygiene service businesses globally, while we will also consider acquisition opportunities in the plumbing and plumbing-related wholesale area.
Innovation remains key, and our focus on technology and in particular digital assurance is important. We have introduced call centre, and process robots, and we have elevated digital assurance with ALICE, our internally developed Artificial Intelligence platform that is crucial to our Internal Audit function and cyber security defences. There are also many other exciting technological developments that are happening across the Group.
Committed citizenship
We are continuing our deep-rooted corporate citizenship in South Africa, as we engage in community development initiatives focused on enhancing social inclusion, education, health, economic advancement and diversity. In the year ended 30 June 2021, we spent approximately R27 million on socio-economic development projects.
Throughout the Group, we participate in a range of corporate social responsibility projects and initiatives to support the communities and the environments in which they operate and leverage their respective operational capabilities in furthering these projects. Investing in communities and human capital is critically important as it affords Bidvest the opportunity to operate, do business in, draw skills from and support local communities and businesses in their growth aspirations.
Across our businesses, 52% of local procurement spend is with suppliers holding a B-BBEE Level 4 and better rating. We spend R20 billion annually in procuring materials, product and services in South Africa. Every subsidiary is expected to transform in their own right and fully integrate B-BBEE in its operations. 88% of Bidvest businesses have a Level 1-4 rating and 58% Level 1-3. The Group intends to continue to drive positive social change alongside its business activities.
We have a deeply entrenched functional governance structure that places significant reliance on the ethical behaviour of all employees, and our Code of Ethics continues to underpin the culture within Bidvest. We continually work to make sure that we live our values of honesty, integrity, accountability and respect, and ethical behaviour is part of the way that we run this business, even when no-one is looking. ESG is definitely getting a far more heightened focus, and for the right reasons. It's an imperative for us to create value, and it's also important for us to be cognisant of how we do business and that is why we have elevated ESG.
Looking into the future
As an executive team, we remain very optimistic about the 2022 financial year, and there are identified areas for additional organic growth in each of the divisions, which are being pursued.
As the global vaccine programme advances, the world will start gravitating towards a more normalised way of living and working, and this will definitely increase demand and volumes in sectors where recovery has lagged, which will benefit parts of our Group. Increased infrastructure spend is critical for the growth of our trading businesses. We have already seen private sector spend increase as mining operations upgrade existing plants and facilities. There are also many exciting opportunities as independent power producers come on stream, which is being driven by the recent announcement by the South African government that the "cap" on self-generation without a licence will be raised to 100 MW. This will undoubtedly catalyse capital expenditure projects, providing further opportunities for our trading businesses.
One of the unknowns, is the pace of recovery in international travel, which is urgently needed for Bidvest Bank and our travel cluster. The recent announcement that South Africa is off the United Kingdom's "red list" is encouraging.
The second unknown is the extent to which occupancies in the professional services segment will improve from the current 10% to 15% occupancy we are seeing, specifically in South Africa. I doubt 85% of any workforce working from home is sustainable, and we are expecting some level of increase. How much and when remains unknown.
Global supply chains have been materially disrupted and we're seeing significant shortages across various parts of the business. We are actively managing the supply chain throughout the Group.
Appreciation
My sincere thanks and gratitude is extended to the Group's executive team for delivering a spectacular set of results. The business did not only rebound from the 2020 financial year but demonstrated the resilience of the Bidvest business model of diversification and decentralisation. During good times all businesses do well. It's in the bad times that business models are truly tested. And these results bear testament that at Bidvest we have a formula that works and remains relevant, even after more than 30 years of operation.
I also express my deep appreciation to my fellow board members for their sound guidance and advice, often during challenging times. From a diversity perspective we have made good progress in just 12 months. Diversity not only brings a wealth of benefit that should not be underestimated, but it also contributes to a Bidvest that is relevant, innovative and future fit. Our board today is 80% Black and 70% female, while our executive team is 50% Black and 42% female. And that has set the tone for the rest of the Group.
A special thanks to our shareholders for their commitment and support, we are confident that we can continue serving your interest in the best possible way.
More importantly, these results are not only an indication of the Group's financial strength, but a reflection of the dedication and commitment of the Bidvest family. We would not have been able to produce these results if our employees were not confident that they were working in COVID-19 safe environments. We couldn't produce these results if our management teams, across all territories, hadn't provided our employees reporting for work with a safe working environment. And for me that's by far our biggest achievement this past year.
To our over 120,000 employees in Southern Africa, the United Kingdom, Ireland and Spain, I thank you for your significant contribution.
Mpumi Madisa
Chief executive