Good morning. Welcome on behalf of myself and Deon to our end February 2023 financial results presentation hosted from our Midrand offices. I'm sure you're all familiar with us now, particularly Deon and I, but Nelly will also be joining us for Q&A a little bit later in the session. Thank you for the interest you've shown to register for this live audio webcast. A special welcome to the board members of Famous Brands that are joining us and to the Famous Brands family who are also joining us on this audio webcast. We're confident our journey continues on improved disclosures yet again. Based on feedback from shareholders, potential shareholders, and the IFRS specialists, Nelly has brought an extra effort and focus to this and our improvement journey continued over the past 12 months.
We know you'll always be curious, we have to balance competitive advantage, and we will continue to listen and adjust in our disclosures. The same applies to the integrated annual report, which gets released towards the end of June. We're glad we're able to focus a lot more this year on the business with only a few distractions versus last year when we were talking primarily around COVID-19 and civil unrest. Just a reminder that in our slides deck, there will be a supplementary section which will be in the section that is uploaded. There's a lot of information that you may have covered before that has been relegated to the supplementary section. The supplementary section has grown over the years and still contains some valuable information that you may be wishing to find.
Moving on to our agenda for the morning, I'm gonna be covering the operating context and Deon will cover financial results. I'll come back and do performance overview. Myself, Deon and Nelly will handle Q&A, which will be chaired by Ntando, our Group Risk Executive. From my perspective, we're gonna try and aim to get completed in 50 minutes and then have 10 minutes for questions and answers. I typically have stolen some of that time in the past, so we'll work hard to make sure there's enough time for Q&A given the environment out there. From our perspective, you can also ask your questions on the portal, which should be on the top left of your screen. You can also make your screen a full screen.
Just before we get into the detail, I think it's important to just highlight some of the strategic initiatives for the year and the progress that we've made. We'll get into a little bit more detail, but these are the six things that we are very proud of this year. After, you know, three years of COVID, we remain the leading branded food services franchisor in Africa. Our business model has been stress tested, as have us as management, and the business remains a growth business, as you can see from these highlights. There's been a strong recovery in our Leading Brands. We've had excellent new restaurant growth and revamp activity considering the environment that we trade in. It could always be better. We have entered some new markets in Africa and Middle East.
Very, very exciting, we've launched 13 new retail products, which again is a follow on from last year. We're really building momentum with our retail strategy. Our logistics strategy, which we've been talking about for many years, has taken a big step forward this year, and we're very proud that the team has worked hard across the board throughout the business in achieving Level 2 BBBEE status. In terms of the operating context, it's really quite difficult to talk through everything, but there's three particular points that I'd like to just talk through in terms of our particular context. In really summarizing where we are in the terms of the geopolitical and socioeconomic side of things, we've obviously had negative impact from all of those, and high inflation affects the restaurant industry and consumers. There's no denying that.
We're no different to most consumer-facing businesses. Of course, the dreaded load shedding conversation is really creeping up on all of us, with this past year being a significant contributor to disruptions, particularly in the second half of the year. At our interims, we weren't reporting on as much of that in the first half. Of course, we mustn't forget the flooding in parts of KwaZulu-Natal that caused disruption last year, not just from a business, but from a socioeconomic perspective. The competitive landscape remains fierce, with less new entrants coming in. We're all seeing input costs rising, and having to increase menu prices more frequently and apply different strategies.
There are positives coming through in that there are strategic new sites available in favorable terms as the landlord environment changes, and the property environment changes, creating opportunity for us. Of course, technology continues to be a part of the landscape with third-party ordering platforms being part of the competitive mix, as well as us working together with them. On the consumer's behavior side, I mean, the big win for us has been the return to sit-down dining. If you think back three years, there was a lot of naysayers out there that said, you know, sit-down dining would never return. Yes, there's some shine that's been taken off and there are pockets of challenges and some of that is around the macro.
By and large, our business has been boosted by people getting out again, human connections, enjoying themselves and having fun. That's balanced with, you know, what people have learned through COVID around healthy choices and also indulgent choices. There's a balance of both. Of course, we need to be mindful that the consumer is also driving environmental friendly efforts. In-home consumption continues to grow, and we think that that's positive for our business. It's not just around buying from a grocery, it's also about ordering in from our operations. In terms of the restaurant industry specifically, I'll just try to unpack that a little bit more for you.
I mean, essentially, we're talking about pressure on margins, which is, you know, fairly obvious given what everybody's going through and around how can we pass that through to the consumer, within reason. Load shedding is not just problematic in terms of cost, but it's highly disruptive in terms of trying to run a business, particularly for our franchisees and making it definitely more challenging for single operators who have less resources and become under a lot more pressure around their own time and efforts. Frequent menu price increases, again, you know, creating a little element of disruption through the business. We've had consistency over the years. As an example, in a brand, you know, we had to take four increases in one particular year.
Of course, consumers have a right, and they're shopping around for value, and we need to make sure that we are there for them. From our perspective, you know, we've driven the restaurant footprint growth to make sure that we are, you know, in the place where people need us to be. We're trying to capitalize on the new locations. We have had to increase our inventory holdings in our logistics side of things to make sure that we mitigate the supply challenges, and Deon will talk about that later. Looking at menu engineering around value offerings and of course, just continue to manage our cost base, and that means really just watching everything we can. Obviously people being our biggest input cost has made it challenging.
Of course, our consumer-facing technology roadmap continues to gain momentum, but it's not easy. We also need to be mindful that we are not a tech company and not need to overinvest in something that's not our core competency. I'm really delighted that in logistics we've made big strides this year, and we'll talk about that a bit later. Of course, load shedding is the conversation piece, and I'm sure there'll be lots of questions around that. You know, even in our own world we've seen, you know, a 957% increase in diesel costs, you know, up to ZAR 14.8 million, which is just simply in our supply chain, and most of that driven in the second half. We felt that across the business.
There's absolutely no doubt that, you know, there's impacts across the board. At Stage 6, we would be running generators for ±40 hours per week. There's absolutely no doubt that restaurants are highly exposed. We're working with our franchise partners. There's an element of lost revenue. We still have a portion of our network that doesn't have access to alternative power through a variety of reasons, and it just won't be possible. We need to manage the food safety risks. Of course, you know, the OpEx and capital costs for franchise partners we're having to work with. As anybody will tell you know, it creates the risk of instability within the environments that we operate.
Just in terms of that increase in diesel, it's just to really give you a sense of the difference between H1 and H2. I mean, we know that obviously going into the first half of this year that that would be, you know, much more of a norm. You know, you're not seeing a normalized number yet, and we're heading towards that quite quickly. But really just giving you a sense of our internal numbers and what we're managing across logistics and manufacturing for non-fleet usage. In terms of our response on those issues, we've had to do what everybody else is reporting that they're doing, so we're no different.
We've had to invest in larger, more efficient generators to increase our capacity, try and reduce our diesel costs. We have made some investment for solar. We have been a little bit slower than we would've liked, but we are continuing on that journey, and we have another plant going in in the next couple of weeks. Clearly focusing on energy efficiency in the supply chain across all spheres. You know, the group risk team focusing on the contingency planning because we're all facing the uncertainty of what may or may not happen in the event of a total grid collapse. We are in the process of registering for the fuel rebate scheme. Sad to say that that's not turning out to be as easy as it was made out to be unless we're doing something wrong.
We haven't had any relief yet from that rebate scheme on our manufacturing operations as we speak. Of course, you know, it all starts at restaurants. Nothing happens in our business unless there's something going on in a restaurant. We've done a lot of work again and sped that up this year with focusing on restaurant design and trying to help our franchise partners. Not that they always need a lot of help, they're very entrepreneurial, but trying to help them with some of the science on alternative energy and how we mitigate some of those risks. I'm gonna hand over to Deon now to take you through the financial numbers, and I'll be back to give you a bit more color into some of the issues that I've just raised in the opening.
Thank you, Darren. Good morning, ladies and gentlemen. It's a real pleasure for me to present Famous Brands annual financial results. We believe it's a great set of results indeed. Our results present performance of two halves. I'll unpack that to a certain extent later. First half, we still, as Darren has indicated, the lingering impact of COVID. The second half, we're seeing growth in an operating environment characterized by global upheaval. I think all has experienced that. The environment created significant challenges due to the uncertainty. It's always difficult to operate in uncertainty. We had to navigate some material events. I'll just give you some flavor of these events that impact our business. Lower growth expectation and consumer confidence. That impact the economic recovery as well as consumer spending. That's important for us.
We've seen a rising inflation with food inflation hitting 13.6% in February 2023, and that impact our cost of inputs, you'll see that in the numbers as well. Load shedding, which requires now significantly higher investment to continue to operate, also interest rate increases of 325 basis points. Last but not least, general countrywide civil disruption. This is unpredictable and impacts specifically our delivery channels. However, I'm pleased to announce that these results reveal a further recovery to pre-COVID levels, and our operating profit increased by 37% to ZAR 861 million. As a result, we had a strong recovery, and we were able to increase our dividend significantly. As indicated by the slide, we have stabilized the business, we feel we're in a good position at this stage.
Our four-year performance illustrates the recovery of the business. The good financial performance has enabled us, as such, to grow our total dividend to ZAR 3.63, which is 82% growth on last year's dividend, and a dividend yield of 5.5% based on February 28, 2023 share price of ZAR 66.50. If one just looks back to 2016, our dividend at that stage was ZAR 4.06. If we look at the highlights, our revenue increased by ZAR 968 million as a result of two things. Firstly, improved volumes and pricing to ZAR 7.4 billion, compared to ZAR 6.5 billion in 2020.
As a result, our net debt to EBITDA continued to improve by 14% to 1.14x compared to 2.06x in 2020. This has enabled us to declare a final dividend of ZAR 2.33, which take our total dividends for the year to ZAR 3.63. If we focus on the highlights, revenue increased by 15%, which enable our operating profit to improve by 37% to ZAR 861 million. This is an increase of ZAR 247 million. The overall performance increased our operating margin from 9.7% to 11.6%. If we exclude the GBK liquidation dividend, it was 10.6%. Margins, however, has not fully recovered to pre-COVID levels, except for logistics at this stage.
Our EPS increased by 37% to ZAR 4.88 as a result of three things. Firstly, improved volumes, pricing, as well as Darren had indicated already, cost savings. We have, however, seen pressure on our gross margins since the interims. Cash generation rated from operations improved by 10% to ZAR 961 million. If we review the income statement, the main contributor to our revenue growth was logistics, contributing ZAR 653 million. As I indicated, our gross profit margins reduced from 45% - 43% year-over-year as a result of costs that we have not passed through to our franchisees. Other income increased mainly as a result of the ZAR 75 million GBK liquidation dividend, as well as a ZAR 14.4 million insurance claim.
As we know, it's a difficult operating environment, our focus was specifically how do we manage costs more effectively. Administration expenses decreased by 3% due to the lower communication and legal expenses. Marketing expenses, as you would expect, increased by 5%, mainly as a result of the increased activity. If we look at operating expenses increased by ZAR 104 million. This was mainly as a result of an increase of ZAR 144 million in employee expenses, which include a 4.5% increase, as well as increase in employees approximately 6%, and third-party contractors, which increased by ZAR 29 million. We also invested in interns, and the investment there was ZAR 11 million, and the bonus pool also increased by ZAR 50 million.
This was partly offset by amortization and the remeasuring of the put option of ZAR 7 million each. Our U.K. business, however, is experiencing what we would call as perfect storm, with cost of living crisis, including inflation above 10%. We have considered these negative events to the best of our abilities in terms of information that's available to us, but also the outlook in the future. We have also partly impaired our loan in our associate in Nigeria by ZAR 18 million due to a challenging economic environment similar to the rest of the world. Net finance charges improved by 24% due to three factors. First one, the result of the renegotiation of our debt facilities, which improved our margins. We made some voluntary repayments during the year, and we've seen higher interest rates, and higher cash balances that impacted this.
Furthermore, with unwinding of the interest rate hedge that we've taken out on the previous date, we made a gain of ZAR 12 million. Tax increase as a result of the increased profits of 50% and the lower tax rate is as a result of the non-dedu-taxable income of ZAR 75 million of GBK. If we look at the bottom line, profit increased by 56% to ZAR 555 million. We have now compared also H1 versus H2. I referred in my introduction to a performance of two halves. This clearly illustrates that. Revenue increased by 8%. However, if we look at gross profit, reduced by 2%, confirming the cost pressures, including the impact of load shedding.
On the other hand, we've seen some good savings in administration operational expenses and operating profit increased by 47% and profit for the period second half compared to the first half increased by 38%. I'll now unpack the revenue a little bit more. The revenue breakdown provides a view after elimination of sales. This is our customer, the franchisee. Overall good performance driven by volume growth as well as price, seeing benefits increasing revenue by 15%. If we look at manufacturing, you will see it reduced by 21% as a result of own, which reduced by 75% as a result of retail products that were sold directly from manufacturing in 2022. The revenue loss, as we've indicated at the interims as well, due to the closure of the bakery to the value of ZAR 70 million.
Logistics revenue improved by 16%, driven by volume as well as pricing to ZAR 4.7 billion. If we look from logistics side, 66% of the revenue is as a result of our own manufacturing and the balance relate to third parties. Previously, that was 60%. Company stores improved 26% or ZAR 117 million contribution. Lastly, franchise fee revenue increased by 17% or ZAR 156 million, of which Leading Brands contribute 95% of the improvement. Looking at the segment and segment focus on the revenue pools before eliminations, all segments contributed to revenue growth, that's a good story for us. Revenue increased by ZAR 968 million, as we've seen strong recovery across all segments, it's higher than February 2020.
Key contribution to the segment is the increase in Logistics with ZAR 653 million, Leading Brands SA with ZAR 131 million. We also continue to see good growth in retail of 23%. If we look at the segment operating profit, operating profit increased by ZAR 231 million, with the key contributors being Leading Brands SA with ZAR 90 million, Logistics by ZAR 54 million, and happy to say as well, Signature Brands with a contribution of ZAR 22 million improvement year-over-year. At this stage, Leading Brands SA and Logistics have recovered to pre-COVID levels. However, the mix is different.
Based on our improved financial performance, our balance sheet continued to be strengthened and group leverage improved to 1.14x from 1.32x last year, and our net asset value improved by 35% to ZAR 9.74 per share. As one would expect, and Darren touched on it already, inventory holding increased further. From interims, the increase was 20%. Now it increased by 30% as a result of a couple of items. Firstly, increased pricing, as we would expect. Stock-up on specific production products like chicken, oil, bulk beef, tomato paste, as well as a change in mix in support of the increased volumes. Trade receivables increased by 12% in line with the revenue increase.
We look at the total category, that increased by 19% as the result of an increase of ZAR 24 million in sundry debtors and an increase in prepayments of ZAR 26 million due to marketing incentives as well as properly related cost increases. We had strong cash flow, we were able to do a couple of things. Firstly, as you would have seen, pay dividends of ZAR 356 million, as well as invest in properties to the value of ZAR 181 million, also, as I indicated already, investment in our inventories to the value of ZAR 123 million. We renegotiated our debt facilities, improve our margins as well as tenure, this actually provide us the current flexibility to operate comfortably in this current difficult operating environment.
We look at trade and other payables, it's higher by a hundred by sorry, ZAR 82 million, mainly due to an increase of costs of sales items of ZAR 90 million. Marketing ZAR 16 million, as well as services of ZAR 8 million. CapEx, we continue to invest in our key revenue drivers, which is our brands as well as our supply chain. The bulk of our investment, as you can see, was for expansion to the value of ZAR 135 million. Our budget for the year was ZAR 238 million, which we reduced at the interims to ZAR 200 million due to the challenging operating environment. The last six months, we continue with our circumspect CapEx investment and to focus only on critical investments to the value, total value now for the year of ZAR 162 million.
If we unpack that a little bit, the key investments were in company stores of ZAR 37 million, commercial and passenger vehicles of ZAR 32 million. We've also established in KwaZulu-Natal a new warehouse to the value of ZAR 15 million, as well as raw material warehouse and automated cleaning system of ZAR 12 million. Last but not least, energy solutions of ZAR 5 million. Budgeted CapEx for 2024 will be approximately ZAR 405 million, which will include the further property development. Again, we will be circumspect with our investments from a CapEx perspective. If we look at net working capital. Net working capital increased as a result of increased inventory by 30%, mostly due to pricing, change in mix, as well as stocking up on certain items, which were in line with additional requirements to support the increased revenues.
Trade and other receivables and trade and other payables increased due to the increased activity. That lead us to cash flow, which is the most important part in a business. The cash flow exclude restricted cash. Our cash from operations improved by ZAR 90 million to ZAR 961 million. This enabled us to invest in financing activities of ZAR 78 million. We also invested ZAR 355 million, which were mainly for property, plant, and equipment of ZAR 142 million, and then the Steers and Halamandaris properties of ZAR 181 million. After all the investments, we still have a healthy cash balance of ZAR 233 million. As already indicated throughout the presentation, we have now stabilized the business. We set for growth.
With the current uncertain and difficult operating environment, we will maintain and be very selectively grow in this market in our different segments. Darren, over to you.
Great. Thank you, Deon. Some insights now around our performance. I mean, I just wanna start off with three key themes that we're gonna be talking through. The first one, I'm not gonna dwell on too much, I think, on the back of what Deon has said. I mean, our strong financial position has been well communicated, and we really do have some momentum, and we're starting to move the business in a different shape and sense around risk management. Continue to get new store openings, which is a key driver of the business. We think the business is making good headway along the financial side. In terms of what I'm most excited about is really making progress against the strategy. We keep, you know, we keep reminding you of this in our presentations.
We're a very simple business, but we continue to just keep ourselves focused on what it is that we need to do. You know, technology remains a part of it. Keeping people and attracting people is a key part of what we have to do. We like anybody else in the SA context are finding that skills are leaving, and that's also happening across the African space as well. Our investment in manufacturing efficiencies continues. We've got a lot of runway that we can still push. You know, we want to be a world-class manufacturer at all times, and we think that we're achieving that, and we don't wanna be left behind in anything we do. If not, then we must exit it. We've made a lot of progress on our logistics strategy.
For those of you who've been following what I call Project Decade, I'll recap on that just now, but really getting towards the end of that project, and a lot of the hard yards have been done. Retail is very exciting, and we continue to be excited about what lies ahead. Of course, all this has to be done in line with sustainability and the changing environment around you, which I think is quite critical. We are confident that we are responding to that in our business. So despite the challenging environment, we think these are solid results, and it comes as a result of a strong performance across all the divisions. Everyone has pulled their weight.
you know, there's always pockets of excellence in some versus others, but generally, we've had a good performance across the board. Our operating profit margin is still under pressure. We still think that there's some runway in terms of what we wanna achieve. just as every time you get, you know, on track in the SA context, there's something to nibble away at it, but we're still confident in our ability to leverage our scale. We still remain excited about the opportunities in South Africa, our home market, but also in Africa and Middle East markets. Obviously, cautiously, but we're always reminded how people love our brands in these markets, particularly Steers and Debonairs Pizza, and we continue to be excited about the prospects of cautiously expanding into Africa.
Then, of course, you know, load shedding has impacted in the year. I showed you some details early, particularly H2. So we have navigated some of that risk in H2, you know, even though it was in H1, but September was a particularly difficult time, and it was our first December with load shedding, going through a peak season. You know, we've learnt a lot and ready for the year ahead. We think the results are pretty good given the environment that we've been trading in. Really trying to focus on the key aspects of our business, I mean, the first being brands. Again, just a reminder, you know, that nothing happens in our business unless a sale is made at the front end.
Brands are the heart of what we do. They drive our business. Their performance drives right through the business, and they're 24/7, 365, and they cut across borders. They keep us on our toes, and it's the work that we have to do. We continue to clearly define our brand portfolio. All of our brands other than PAUL and Mr Biggs are SA-born brands, and the others are under license. We're very proud of the fact that we have a local heritage and, you know, when we open outside of SA, we're actually exporting our intellectual property. Our growth in advertising has been under less pressure this year due to, you know, less COVID breaks, and that has eased, and that certainly has stopped in the year that we're currently trading in.
In the numbers we're reviewing, there obviously was COVID relief in there. We've got good momentum in the SA context. I think that the revenue growth at restaurant level of 14.9 and systemwide and 13.5 like-for-like is commendable. We know it's been driven by food inflation, we'll talk about that a little bit later. Again, you know, we've been able to take that tailwind and move with it. We understand that there's always risk with the consumer, but we think we've navigated that particularly well. Tourism has improved, but certainly still below pre-pandemic levels, and I'll show you a few key points that indicate that.
In terms of the driver of our business being Leading Brands, just again to give you a sense of that performance like for like and system-wide across the provinces, I think there's always a key nuance in our business around this. We trade across the country. We are very geographically driven. We distribute to every restaurant in our in this portfolio, and we have management teams across the country. You can see the recovery on the right there in the Western Cape, both at like for like and system-wide. I mean, it's not a surprise to you given what you're hearing about tourism in the Western Cape. That is an anomaly.
We're not seeing the recovery in Mpumalanga to the same degree as what we had before, and we are seeing some slowdowns in some places that we think benefited quite significantly from the staycation trend, when COVID was impacted. Like the Northwest, as an example, and Limpopo, where our like for like is not down, but it's certainly not at the levels of others with our system-wide, which would be driven by new restaurants or changes, is a different indicator. Definitely changes going around in the SA context. You know, all provinces performing to some degree, and getting momentum. This is something that we watch carefully and we, you know, we wanna make sure that we where the consumer is, and that will be our drive across the business.
If you take the same snapshot, looking at H1 versus H2, I get it's a busy graph, what we're trying to illustrate there is the black and gray lines is H2 versus H1. I mean, clearly the revenue growth in H2 wasn't as, you know, H1 given the COVID recovery. Still, you know, again, food inflation and managing to keep our momentum going. As much as there's a lot in there, you know, across those provinces, we're comfortable. Again, you can see the nuances around the Western Cape, which is really steaming ahead quite nicely. Okay. Well, the key issue around pricing, it's always a question, I mean, is, you know, how are we managing to pass these prices on to consumers, we do it very carefully and cautiously.
The black line there is the food inflation line as we get it from published data. Our weighted RSP index essentially is what we are passing through across the portfolio. The other, the gray and the burgundy line are the steps within that. The weighted index indicates that we are managing to keep up with food inflation, which we have to do in our business. I'm not saying it's easy, but we're not necessarily seeing a consumer switch as we manage that. If it continues this year, which it's likely to, then one doesn't know how much the consumer can handle.
At this stage we're feeling fairly confident having gone through this year that we've pushed that through in a responsible manner, and certainly not being arrogant about it. You know, if you can't, you can't absorb margin all the time, and, you know, franchisees have a business to run, and they're managing those businesses, you know, with our guidance on pricing. In terms of just a quick snapshot, I mean, we give you this data, but if you just looked at that weighted RSP increase, you can see the difference in this past year versus where we have been. You know, we've really had to push pricing through.
Again, you know, given that our cost base at restaurant level probably escalates at 7%, I'd far rather be in this position than where we were in 2020, even though 2020 was obviously turbulent for different reasons. In terms of our Signature Brands, again, we've had some momentum there around restaurant openings, but we have had some closures too. We're getting momentum in this particular business as consumers have returned to sit-down dining special occasions, so we're very chuffed with that. The hospital trade, which is within this business, has improved significantly as normality has returned. We're seeing the kind of normal activity with visitation, et cetera, in there. Of course, opportunities abound with rental terms and strategic sites becoming available.
That's got to be managed in the context of, you know, reduced consumer spending, which has impacted Signature Brands. We're definitely seeing trade, is much earlier at night, and we're not seeing late night trade coming back the way it used to. In this particular business, we do find it more difficult to attract new franchise partners. The CapEx ticket is much higher. The skill set is very, very different, particularly in the fun dining side. Less of a challenge on the hospital side. Then, of course, on PAUL and the company stores, we do that ourselves. Again, a good recovery in this business, but we've still got a way to go. We said to you we're gonna be reviewing it this year, and we're gonna continue with that process.
We've got lots of work still to do in this portfolio. Again, just giving you a sense there of the provincial side of it, and that, again, I think what it says to you is around the KZN, sorry, the Western Cape, uptick around tourism, and we're definitely seeing that. In our own business in KZN, we've had some challenges with some store closures, and that has driven our system-wide number down, and that is an operational issue more than anything else. We have a like for like there that is ticking along quite nicely. Again, in terms of the recovery there, a very nice picture around this business, which is what you'd expect given the return to sit-down dining.
Again, I'll flip through that quickly, but it's, you know, just giving you the same picture, H1/ H2 a lot of activity in there. A little bit more of a, of a normalized picture in that the recovery was definitely strong in H2 as well in this particular portfolio. In terms of Africa, Middle East, we've had a lot of activity this year. I mean, Africa is finding recovery post-COVID, I think, slower than what we're experiencing in markets like South Africa. The macroeconomic conditions with high inflation and interest rates are challenging, and we're seeing that and also creating Forex stresses. There's still an, you know, a strong adoption of home delivery channels in several of the markets which we like, and we happy to participate there.
You know, there are some highlights around firsts for us in terms of Domino's Pizza opening Oman and the Kingdom of Saudi Arabia, we're very chuffed with that. We also opened the first Steers in the UAE. Again, we, you know, we're seeing lots of interest from South African franchise partners around investing in the region, which is encouraging for us. We're also seeing the continued growth of company-owned restaurants in that particular region. We've had quite a busy year in Nigeria with resetting the base there as we, you know, not committing to franchising and driving the company store growth to reset the base. We also had some new store openings in Botswana.
We haven't opened any more in Kenya at present, but Botswana and Nigeria have been where the growth has come in the company restaurants. The U.K., as Deon alluded to around impairments, has been quite challenging. We're still comfortable with how our business is moving along. We don't think that there's phenomenal changes that we need to make right now, but, you know, we know that the economy is tough around rising prices. Food, electricity, fuel, you name it, they've had those challenges. And now, you know, really that's translating into cost of living crisis. We've seen home delivery sales across the board come down, but, you know, we've had the benefit of recovery in sit-down sales, as you've seen in the SA context. We have continued to assist with the supply chain challenges there.
Although we're not directly involved in the supply chain, we have a unique model. Our supply partner has been phenomenal, and the team are doing what they can to make sure that we work through that, but we're also facing the same kind of price increases. Again, where we need to invest in inventory and manage pricing, we've done that. Unfortunately, the net numbers have gone backwards there. We've opened five quality restaurants and again, you know, where franchisees essentially haven't been able to revamp or reinvest, it's landed up in closures. But we're very, very happy with the quality of the restaurants that we are opening. It's slow and steady, and we think that's gonna continue to win the race.
On our supply chain business, you know, Deon unpacked that, and a lot of it has been around responding to the marketplace and what's happening. In terms of the bakery plant, that's really what's suppressing the numbers on there because, you know, if you added that back, the numbers would be a lot more flattering. The team has managed the cost base very well. We've invested in technology where we can to enhance processes, and that process continues. You can't there's high input costs due to ingredients and packaging increases. Packaging has been quite a robust increase process this year, so it's not just food ingredients as you would be imagining. The team has done well to mitigate that, working with the franchise team, and particularly Leading Brands as to how we can mitigate those costs.
Of course, you saw in the earlier slide food inflation peaking at 13.6%, and there is no denying that. We've had to work through and manage that process. Of course, as I mentioned earlier, you know, the reliance of diesel for our own generation is starting to bite. You saw that in the numbers and that continues. Just to add to that, you know, not just driven by load shedding, but regular water shortages in some areas is problematic, and that's becoming quite a regular occurrence. We have backup, but we continue to invest in that backup. You know, before three or four days was material, now you're looking at seven days. We need to continue to do some work there.
Overall, you know, manufacturing contributing well to the supply chain, and we are very comfortable with what is happening there, and particularly given the rise in production volumes effectively putting through more cases. Logistics has performed particularly well this year. You know, obviously they've had the tailwind of the improved trading conditions, which does boost their revenue and of course, the case volumes and that's been assisted by inflation. We've been mindful about that, 'cause they've also had to offset the dramatic increase in the price of diesel, so they haven't had it all their own way. We operate on a percentage model, so we're not able to just, you know, effectively recover diesel costs as and when we see fit.
The highlight for the team was the relocation to our new facility in KZN, which has really ticked, you know, all of the boxes in terms of what we're trying to do around a world-class facility. We went through peak season. We did have sort of two-three weeks of difficulty transitioning into the facility, more because of the warehouse management system that we've implemented, and we had some teething challenges. That was the first site, not so much because of the move, but very proud of what the team has done and that, you know, the groundwork on that new warehouse management system has now been done. We think that that's gonna deliver a lot for the team over the next 12 months as we roll it out to other depots.
We continue to watch the SKUs as we manage them and really making sure that we work with our colleagues in Leading Brands as an example, to make sure that they're managing the number of SKUs going into the franchisee's back door, as we do menu management and innovation. Innovation is the biggest driver of this, it also needs to move the needle. The case volume is interesting because, you know, we're up 6.2%, without retail, that number would've been 5.7%. Retail is definitely serving our business well. You know, we'll talk about that just now, in terms of manufacturing and logistics, it really does have a nice pull-through effect for them.
I spoke about Project Decade, and this slide was very, very busy, you know, quite a few years ago, and we've ticked off a lot of projects on here. Really, in terms of the blue, all we have left to do is to consolidate our frozen distribution facility with our Midrand campus, which was the whole reason for getting involved in the property, in terms of the Midrand campus. Then we are running a bit behind, but to put a cross- dock in Mthatha, which we had hoped to have done sort of around now, but we, you know, we're finding a little bit more challenging to get the right premises, so we don't wanna make a mistake and the team are working on that.
In the next 18 months, we'll be able to close out this project as we, you know, finish off the WMS system, finish off Gauteng and get Mthatha going. Again, this would've been, you know, a difficult project, I suppose, for investors to stomach as we've gone along, but I think we've managed it fairly well, particularly given, you know, the setbacks during COVID. In terms of retail, as I mentioned, retail continues to be something that's exciting for us. We've seen, you know, how that pulls through. It's not necessarily a massive profit contributor. We take a very small defined margin up front, and we're seeing the benefit in our, in our logistics and manufacturing businesses. It still needs to contribute, that operating profit we do believe can contribute.
We're still aiming for a 2% margin at least in that particular market. We've been quite hard hit this year from product write-offs, which we spoke about in H1. There aren't any new write-offs. We've actually seen a recovery in that profit in H2. Some really exciting products come through, and we're very excited about what we can do this year. The picture there just gives you a sense of some of those products that we've launched into the market. Retailers, you know, are embracing them. We have had to invest in listing fees, which is in our CapEx number, but, you know, looking good and really comfortable about how we drive forward.
As I said, trying to drive all of this in the context of ESG and acknowledging our obligation to consider practices that create sustainable products and also focusing on, you know, reducing waste and resource usage. You know, we've continued to take this very seriously. I'm sure, you know, we can always be criticized for progress and in a year like we've had with challenges with water and electricity, it's not always easy. We continue to be very focused around food loss and waste and being signatories to commitments. Our targets are running ahead on cage-free eggs. We're improving our commitment to solar again with another plant coming online fairly shortly.
Our brand packaging is recyclable which has been a long process to get to, and we can still do a lot more there around international standards, but we've set a new benchmark. We've set targets for United Nations Sustainable Development Goals, which we're very proud of. We have relationship with nonprofits to make sure that we're distributing food close to its expiry date. I mean, that's really a key part of reducing food waste, is to make sure that you actually get it to people who can use it if you're not able to sell it. We remain committed. In terms of that focus, again, I think it builds into our outlook.
I think from 2024, I'm not sure many people know what the outlook is, so we've taken a stab at what we think it will be for our business, because we know that there's a lot going on in the SA context, but we're not just an SA business. You know, we acknowledge the chance of South Africa entering a recession is high, particularly given the load shedding through winter. We're anticipating that. We also anticipate, you know, interest rates and inflation will remain elevated. We obviously hope that particularly inflation not at these levels on food particularly, but we can't be naive about the challenges that we're going to face.
We remain a growth company, we remain excited about growth, and we think that our diverse menu options, strong brands and resilient franchise partners and I don't think we thank our franchise partners enough for the work they do, and I'd like to take this opportunity to do that. You know, despite the economic headwinds out there, you know, they make progress every single day, and we'd like to think it's, you know, as a result of our support, but they really need to be focused and have a resilient attitude to do business in the SA context. We continue to expand our brands in the SA context as well as the rest of Africa and Middle East, and you will see, you know, more focus around the Middle East going forward as well.
Again, we'll be sensible around that focus. Our franchise partner sustainability, as I said before, you know, they get up every day, and really, you know, get these restaurants going, and we need to make sure that we are providing them the support across the board, but also as we did in COVID, that we are not overstressing them from a financial perspective. We will be providing and have done in March and April, providing some relief on sales that are generated during load shedding periods, and I'll talk about that just now. We expect our U.K. partners to remain under pressure as the macro environment there is very, very difficult. I'm not sure there's as much we can do there as we're able to do in the SA context.
You know, we're confident that in a first world environment, things will move a lot quicker. In terms of strategy, you know, our strategy remains rock solid. We have said to you, and we said it last year, that we need to think about Signature Brands, how does that fit? We're still considering the role of Signature Brands. It's taken us a lot longer as the recovery has been slower. As we've seen now a year of recovery, we know what our options are and what we can do in terms of that portfolio. We think there's just too much complexity in that portfolio, and we need to think about how we can simplify that, and there's already some action underway within that, in terms of some conversions, et cetera, that we're embarking on.
I spoke about relief to franchisees. We've really developed a model in terms of how we can assist them that we think is fair to all. We think that this is a first, certainly in the industry that we've seen. We don't think our competitors have moved on this. We are using a calculation, using available data from Eskom as to what sales are generated during load shedding periods, and we would be providing relief on those sales and those sales alone. That has been done in March and April, and we're gonna be very cautious about how we do that. I mean, of course, you know, franchise partners are thankful, but I'm sure they also, you know, maybe don't believe it's enough. From our perspective, we need to find that balance.
We need to find what is right for the macroeconomic environment we're in. As we move to a diesel economy, in effect, we need to be balancing that. Interestingly enough, this data is very similar on Signature Brands. As much as they serve a different consumer, they trade at different times, the data is not substantially different. I mean, you know, March and April, different load shedding months, different seasonality, still showing you similar kind of trends. This is the basis of our relief and assistance to franchisees. We believe it's the right way to go, we'll continue to do that. I must stress, it's a guideline only. There's a lot of complexities in this, including the price of diesel.
You know, every kilowatt hour generated by franchisees as alternative power is different. There is no standard. It's, you know, driven by lots of different factors. We're cautious around this. We're cautious around how much we share around this because it's a journey that we're embarking on, but we definitely will take the market along with us as we embark on this journey. We believe that this is the right model because we will be benefiting from those sales as we move forward. It's not all doom and gloom. Closing out and not wanting to cut on Q&A time, really just a quick recap on our priorities. You know, operational growth and financial. From an operational perspective, we continue to protect the sustainability of our franchise partners, as I've just spoken about.
You know, managing our margins and really unlocking efficiencies in manufacturing. You know, getting out of things that aren't moving the needle and continue to execute our logistics strategy, completing Project Decade, as I've spoken about, and getting those margins where they need to be. In terms of growth, as I said, we remain a growth business. We're excited about growth, and we continue to look at opportunities, but we're also mindful of opportunities that we have that we need to make sure we're leveraging them, such as Signature Brands. Retail remains a very exciting part of our business, and we're gonna continue to grow that distribution and the range of products. We think that that journey has got a long way to run. I won't, you know, talk too much about what Deon has said. I mean, they're really summarizing.
We need to continue to manage our costs tightly. We need to, you know, finalize the bond funding for the Midrand campus. As we've got into this property thing, we don't want it to impact our overall, you know, debt access and making sure that we've got enough working capital to fund the business. Of course, continue to deliver attractive shareholder returns. I mean, ultimately, you know, that's the role of a listed business, but you still got to manage your strategy within that. We think that there are many ways to drive innovation and growth, and we don't just think that we're gonna continue doing the same thing. Through our trading formats, technology and product development, you know, we can do that. Those are key drivers of our business.
They may seem fairly simple to most, but that's essentially the heart of our business and how we go about things. Although there's lots of moving parts that drive that. I'm gonna pause there and head straight into Q&A. My colleague, Ntando, is here, and I think he's gonna read out those questions, which between myself, Nelly, and Deon, will manage.
Thank you, Darren. Morning to all. Deon, I mean, a strong set of results. Well done. Nelisiwe, welcome to the hot seat.
Thanks, Ntando.
Okay. I mean, we do already, Darren, have a couple of questions that we'll go through. You, as you know, I mean, load shedding will be the big elephant in the room, we'll probably have to tackle that question. We'll jump into others. I mean, both Sandile, you know, from Umthombo Wealth and AGC Man from ProGrind Capital would like us to expand a bit. We'll tackle that question if you want. If we assume load shedding will continue in the next two-three years at this rate, we can agree that operating a franchise would be economically difficult. You know, as a business, how are you planning against this possibility?
Yeah. Look, I think the first thing we've said is we're gonna assist, so. That is part of it. Of course, what that means is that we've got to, you know, effectively give up something, which is what you've said. We do think, though, based on some experiences in Africa, that the model will evolve too, and that as you move to power being a bigger part of your cost base, that over time, that'll have to pass itself through into pricing. We've been, I suppose, in some ways lucky now that you've had it through food inflation. When that's not coming through food inflation, that'll be the next step. We agree, the next two-three years are gonna be challenging.
We think that that's going to create some pressure on probably some marginal restaurants as alternative power becomes more expensive. Yeah, we're not naive, but I'm not sure, you know, we have all the answers. I think hence why the questions. We're gonna have to. If someone can tell me what the diesel price is gonna be, what the kilowatt price is gonna be, and the levels of load shedding, we could probably give a better answer, but, you know, each day is uncertain for us too.
Thank you, Darren. The next question I'll take is from Tinashe from SBG Securities. Can you comment to what extent you're optimistic about on-premises dining in South Africa over the medium term, and what strategies you have in place to attract more traffic, particularly in your casual dining restaurants?
Look, I think the COVID recovery is enough reason to be optimistic if you think about where it was, and generally people have written it off. We remain confident just in what we've seen through COVID. We've also seen that load shedding has, you know, created a node for the, if you wanna call it the entertainment dwelling. We've seen recovery of feet in shopping centers where people are going, yes, of course, to shop, but they're also going to dwell. We think that that will be beneficial. I mean, I'm not saying that it's all gonna be driven by load shedding, but we think that that kind of comfort experience, people getting out of home, and of course, properties getting smaller, interest rates getting higher, makes it more challenging.
We think that, you know, will be a growth driver, but we still think that QSR will still be a stronger driver of growth than casual dining.
Okay. Thank you for that, Darren. Just going back to Sandile from Umthombo Wealth, can you provide further insights on Western Cape uptick? Is this domestically driven or mostly international tourism?
Look, I probably don't have that level of insight. Certainly from our observations, it's both. Definitely international. Again, I'm not quite sure of the split because of the levels of where we were. It seems like the Western Cape is getting a greater share. Domestic tourism, you know, the Western Cape is successfully hosting events, particularly, and that does attract the domestic market. You know, my answer would be that it's both. I couldn't give you the exact split.
Thank you, Darren. I mean, believe it or not, I mean, that's all the questions I have on the deck at this point. Thank you.
Wow. You're lucky then. Nelly got away very lucky. Must be all those new disclosures.
Absolutely.
Yeah.
Okay. I mean, if there are no further questions, I mean, I'm happy to hand back to you, Deon.
Great. Thank you, Ntando. I mean, just from a wrap-up perspective, from our perspective, really just to thank, you know, everybody who's made this happen. The team at KPMG, Nick, Menorka, Yusuf. For those of you noticed, our results came out a lot earlier this year, and that's put some pressure on the team, so thanks to them. I'm sure investors are appreciative of the results coming out earlier. To Nedbank, you know, ongoing support, as you've seen, refinanced again, thank you to them. Our sponsors, Standard Bank, for the ongoing support. Really to everybody at FB, the team who are on this call, and to our franchise partners, this business wouldn't be anywhere without yourselves.
I have to thank the board and executive colleagues for their personal support, thank you for all of that. Again, a special thanks to Santi, who's always there as our chairperson, not just for me, but for the board and always goes above and beyond the call of duty. Of course, you know, getting all this stuff together, making it happen, Celeste, Laura, the GMF team, Yolandi, thank you very, very much. Back in six months' time.