Annual turnover was up $9\mathrm{.}1\%$ over $2022$ to R$8\mathrm{.}9$ billion, whilst operating profit increased $5\mathrm{.}1\%$

to R$1071$ million. The group operating profit margin was $12\mathrm{.}0\%,$ compared with $12\mathrm{.}5\%$ last year.

Turnover from the consumer$-$related products segment was up $3\mathrm{.}7\%,$ whilst its operating profit

decreased $10\mathrm{.}4\%.$ On the other hand, engineering consumables$$ turnover increased by $14\mathrm{.}9\%,$ and its

operating profit increased by $23\mathrm{.}7\%.$ Sales analysis by market sector shows increases in the wholesale

and retail, mining and manufacturing and alternative energy sectors$.$

Headline earnings per share, which in $2022$ included COVID$-19$ insurance claims, increased by $7\%,$

whereas comparable earnings per share increased by $10\%.$ Return on equity is healthy at $19\mathrm{.}9\%,$ and

the cash$-$generative nature of Hudaco$$s businesses was evident, with cash generated from operations of

R$902$ million.

The final dividend has been increased by $12\%$ to $700$ cents per share, resulting in a total dividend for

$2023$ of $1025$ cents per share, up $10\mathrm{.}8\%$ on $2022.$ Comparable earnings cover the total dividend

$2\mathrm{.}1$ times, which falls within our long$-$term dividend policy range of paying between $40\%$ and $50\%$ of

comparable earnings.

Financial position

The financial position remains strong. We invested R$171$ million in acquisitions, R$33$ million in

purchasing the property occupied by FHS$,$ R$112$ million in share buybacks and allocated R$392$ million

more to working capital, mainly inventory, which contributed to an increase in bank borrowings from

R$621$ million to R$1013$ million. Importantly, operating profits covered interest payments almost ten

times, which compares favourably with our internal benchmark of at least five times. We still have

significant additional bank borrowing facilities, so there is capacity for good acquisitions should we find

them.

Inventories at year$-$end of R$2693$ million are R$338$ million up on $2022,$ mainly due to the $13\%$ increase

in the cost of stock due to the devaluation of the Rand, the acquisition of Brigit Fire and the strategic

investment in our alternative energy businesses.

$2$ Condensed results $2023$

Consumer$-$related products

The consumer$-$related products segment consists of $12$ businesses. In $2023,$ it comprised $50\%$ of

Hudaco$$s sales and $50\%$ of operating profit. In $2022,$ this segment contributed $52\%$ of the group sales

but $58\%$ of the operating profit.

With consumers feeling the pressures of load$-$shedding, near record$-$high fuel prices, inflation, rising

interest rates, unemployment and a depressed economy, volume sales and gross margins declined,

and most businesses in this segment were down on $2022$ but still produced good results under the

circumstances. As part of our growth strategy, we invested heavily in our alternative energy businesses,

in both people and stock; unfortunately, with the oversupply of panels and batteries in the market

from around mid$-$year and reduced load$-$shedding for a while, the budgeted growth in sales did not

materialise. The security division and CADAC had another year of good growth in sales. Our traction

battery business, with a new management team now in place, achieved a strong turnaround, with more

to come in $2024.$

Segment sales increased by $3\mathrm{.}7\%$ to R$4\mathrm{.}43$ billion, operating profit decreased by $10\mathrm{.}4\%$ to R$592$ million,

and the operating profit margin was a healthy $13\mathrm{.}4\%.$

Engineering consumables

The $19$ engineering consumables businesses comprised $50\%$ of group sales and $50\%$ of operating

profit. Last year, this segment contributed $48\%$ of group sales and $42\%$ of operating profit.

The segment increased turnover by $15\%$ to R$4\mathrm{.}49$ billion and operating profit by $23\mathrm{.}7\%$ to R$581$ million.

The two most significant market sectors in this segment are mining and manufacturing, and we saw

good growth in these sectors again in $2023.$ Consequently, most of the businesses in this segment

performed well, with outstanding performances coming from our businesses supplying diesel engines,

gear pumps, filtration, bearings and power transmission, modular belting and our electrical businesses.

Brigit Fire has been included in these results for three months and has integrated well into Hudaco. The

operating profit margin increased from $12\%$ to $12\mathrm{.}9\%.$

Repurchase of shares

Capital allocation is always an essential consideration for Hudaco. During the $2023$ financial year, in

the absence of suitable acquisitions and given the prevailing price of Hudaco$$s shares, the company

repurchased and cancelled $695000$ shares at an average cost of R$159\mathrm{.}99$ per share before transaction

costs. The total cost was R$112$ million.

Acquisitions

Brigit Fire

To invest in an industry with growth potential and to further diversify the revenue stream, on

$1$ September $2023,$ the group acquired the businesses of the Brigit Fire group for a maximum potential

consideration of R$315$ million based on future profits, with an initial payment of R$150$ million

What is gross profit of the company