Welcome to shareholders, investors, and other interested parties joining us for the half year ending 31 March 2022 results presentation. This is a pre-recorded results presentation. I would ask you to start sending questions as soon as you are ready, and we will try our best to answer all of them at the end of the results presentation, or we'll follow up with you on any specific matters we are unable to handle appropriately. The presentation of our half year results could take about 45 minutes. I am supported by our Financial Director, Graeme Sim. Today's agenda is on the screen covering strategy milestones, operational updates, financial performance, segmental reviews, certain balance sheet movements, and ending with an update on the TFC Properties disposal and the PEG acquisition. After which, questions will be handled. The group structure currently on the screen and shareholding has changed since our previous presentation.
With the disposal of TFC Properties and the acquisition of the remaining 40% minority shareholding in Partridge Building Supplies, which we call Forge. The TFC Ops BEE ownership status is 47.2% on a modified flow-through basis, and 40.2% on a direct black ownership basis, well above the current requirement of 25% as required by the Liquid Fuels Charter, although this requirement is expected to increase soon. For those seeing the presentation for the first time, please note that KAN, Kaap Agri Namibia, is a 50/50 venture with Pupkewitz in Namibia. This slide depicts all our trading brands used by the different divisions. On the left-hand side, we have all our company-owned brands, and on the right-hand side, all the non-owned brands being deployed in the business.
The convenience retail store and quick service restaurant brands are all linked to retail fuel sites, which are operated by the fuel company, TFC Ops. This slide remains relevant to understanding how we differentiate the business in terms of income streams and the trading brands within each one of those income streams, and excludes the corporate division. The largest division on the left-hand side is still our trade division, consisting of 145 business units, up from 136 in the prior year, contributing 74.6% to profit from operations and includes the Agrimark brands, New Holland Agency business, Forge Brands, and FarmSave, which was added late last year.
The second-largest division is TFC, the fuel company, consisting of 48 units, of which 44 are retail fuel service stations, with one site added since last year, contributing a further 11.8% to profit from operations and now operate all major oil co-brands in South Africa. It is also within this division that we concluded the sale of the TFC Properties disposal consisting of 21 properties owned by TFC on a sale and leaseback, as highlighted to shareholders in previous communications. Our grain services division, Agrimark Grain, consists of 15 silo and seed complexes, which focuses on silo grain handling as well as wheat and potato seed processing and trading. The last division is the manufacturing division, consisting of five business units hosting Agriplas, which focuses on the manufacturing of irrigation products as well as Tego, which focuses on manufacturing large injection molded products.
Our supply chain division acts as a support service for the acquisition, distribution, and logistics of products for the group. All the above are supported by our corporate and financial service departments, with two offices and 13 financial services units spread throughout South Africa. In total, there are currently 228 business units in 120 locations in South Africa and Namibia, having added two units in the last six months, being Agrimark Sitari and a new TFC site in the Western Cape. We have added an additional statistic on the top right-hand side. This is a comparison of channel trading profit contribution and gives clear insight into the result about our diversification strategy, which we have been following for the last number of years.
It is important to note that about 60%-65% of fuel trading profit contribution is also retail-based, given the TFC footprint expansion. Therefore, our trading profit contribution from retail-based activities is around 54% for the year. This has been a successful transition from a highly agri-based trading activity business to a more balanced contribution between agri, general retail, convenience retail, and fuel retail. It is also important to note that although the agri trading profit contribution has dropped from 45%-27%, the fact is that agri trading profit in value has also grown by over 10% on a compound annual growth rate basis over the last 10 years, given our market share gains in that channel. We believe that this is a unique retail combination in South Africa, which will be further enhanced with the PEG transaction, which we will discuss later.
This slide is your geographical heat map of all the business units. On the left, the whole Kaap Agri Group. On the right-hand side, just the TFC business units. The concentrated exposure in the Western Cape is diminishing year on year, as a result of footprint expansions in the rest of the country, while exposure in the rest of the country remains low, which bodes well for further strategic footprint growth. The group now operates 107 retail fuel licensed sites in RSA and Namibia, of which TFC operates 44 in South Africa. While the Agrimark footprint has largely been focused on water-intensive areas of South Africa, the TFC footprint has focused on clusters in specific provinces in order to achieve economies of scale in terms of management and support services to their network. The TFC network will change significantly post the big transaction.
We continue to grow our footprint with most of the business unit growth since 2015 being in the Agrimark and TFC divisions, indicated by the blue and the red bar graphs, having grown to 193 business units of the total of 228. Further to note that with our creation of the fuel company, we migrated 20 retail fuel service stations from the trade division under the Agrimark's to the fuel company in 2017. We have since added 24 additional retail fuel service stations, bringing the total TFC retail fuel business units to 48, of which 44 are retail fuel service stations. Undoubtedly, our significant achievement during the first half of financial year FY 2022 has been the market share growth during this abnormally high inflationary period.
While the overall retail fuel sector fuel liters are down between 5%-8%, depending on which role player you speak to, our group liters were only down 1.3%, coming from commercial and farmer volumes, which are up while commuter volumes were down and highway volumes being stable and recovering. Secondly, we note certain role players in the building material sector sales are down, while our comparative category sales are up by 7.5% in the first quarter of FY 2022. Thirdly, a good indicator on the health of our agri growth is the relatively high percentage of new customers we have granted credit facilities compared to the prior year, with new customers accounting for 30% of increased credit facilities for agri customers in value terms.
Other milestones and trends we'd like to highlight are real group revenue growth of 6.6% achieved on top of very high inflation of 20.1%, with only TFC still COVID affected during the period under review. It is evident that sales volumes are under pressure due to the high inflation being experienced in mainly fuel, fertilizer, and chemical commodities, which are overshadowing the inflationary increases in other categories. The 26.7% group revenue growth has come from agri at 25% growth, general retail, including convenience, stable at 6.8% growth, and fuel growth, inflationary-driven growth of 36.3%. It is also notable that the inflation has been our friend in terms of stock revaluations as price increases occurred in fuel.
This growth has been supported by DC value throughput growth of over 13% in the period at a lower cost to serve and we intend expanding our DC offering by approximately 10% on the same premises. Agrimark Grain Services, as expected, has increased profitability on the back of, again, a re-record wheat harvest. Our New Holland agency business has increased profitability once again. Our support service cost to serve is slightly up by 0.1% of GP against the comparative period last year. Although agri inflation assisted agri gross profits in the first half, the overall trading profit contribution from retail offerings was still highest at 54%. From a working capital point of view, stock and debtors value growth remained lower than revenue growth, which assisted us in only having to moderately increase net interest-bearing debt by 5.7%.
Please note that the proceeds of the sale of the TFC Properties was only partially received by end of the first half. Finally, we are extremely proud that our recurring headline earnings per share growth comparing H1 FY 2022 over pre-COVID H1 FY 2020 was 41.8%. A compound annual growth rate for the period of 19.1%, showing a high level of resilience through extremely challenging times. More detail on the announced PEG transaction will be handled later in the presentation. This slide is a group quarterly turnover year-on-year trend graph for the last quarters. The blue graphs being our retail quarterly sales trends and the green graphs being our agri quarterly sales movements and inflationary trends.
Firstly, in terms of retail, the DIY boom of 2021 has come off, mainly in cement and DIY categories, and sales growth has been sluggish. It would seem our low growth is still above sector trends, however. In terms of TFC, new and non like-for-like sites have contributed to staying in positive territory from a growth point of view. Inflation, while still subdued in our retail categories, is starting to rise. In terms of agri, a very strong performance to date, with COVID impact relatively low, except for logistics in harbors for exports. There were lower animal feed sales due to drought in prior year not repeating. We have seen market share gains in fertilizer and packaging materials, while very high inflation has been experienced in those commodities. In general, economic factors still weigh heavily on the trading environment.
Although some confidence uptick is experienced in some of our sectors we have exposure to, the CPI is increasing, especially in all categories. Fuel is now at record high levels, and the South African rand seemingly range bound at this stage and very difficult to predict. Land reform uncertainty remains what it is, uncertain, and the sector is getting used to that as a new normal. The first half of the FY 2022 financial year has been driven by. Starting on the right-hand side of the graph, as mentioned, group revenue has grown by 26.7% overall. This has been off the back of inflation of 20.1% and therefore a 6.6% real growth. Given the challenging environment, a stable performance.
This was off the back of growth from like-for-like business units of 22.9%, increasing transactions and increasing market basket size. The inflation excluding fuel price impact was also a high 9.2% for the period. As can be seen on the graph, the 26.7% group revenue growth has been made up of a strong growth contribution from all divisions, albeit highly impacted by inflation. Firstly, from the left, the trade division grew by 22.7%, that coming from agri growing at 23.7% and retail of 5.7% growth. TFC, while the business unit is still affected by COVID, delivering revenue growth of 31.7%. Grain services growth of 38.1% off the back of record wheat, and manufacturing declining revenue of 8.6%.
I'll now hand over to Graeme to take us through the highlights for the year and the financial performance.
Thanks, Sean. Looking at the highlights for the period, we believe the group has once again delivered a strong trading performance under continued challenging trading conditions. Revenue grew 26.7%, with like-for-like comparable sales increasing by 22.9% and the number of transactions increasing by 7.7%, driven by new and non-like for like contributions, mainly from TFC. EBITDA increased by 13.0% to ZAR 398.3 million. Prior to September 2021, EBITDA was calculated by including interest received but excluding interest paid. The calculation of EBITDA has been changed to exclude both interest received and interest paid, as this is deemed to be a better reflection of the true operational performance of the group and an improvement in disclosure. Comparable EBITDA performance has been updated with this improvement in methodology.
Recurring headline earnings has grown 14.6%, with recurring headline earnings per share of ZAR 3.5111 growing by 15%. As a reminder, we consider recurring headline earnings per share to be a key benchmark to measure performance and to allow for meaningful year-on-year comparison. Group fuel volumes decreased by 1.3%, with TFC volumes decreasing by 4.7%. We are experiencing a slow and continued post-COVID recovery in retail fuel volumes, with fuel site convenience and quick service restaurant performance also improving. Market share gains have been made in non-TFC fuel volumes due to our ability to deliver and our product availability. As mentioned, the number of transactions increased by 7.7%, with trade increasing by 4.4% and TFC increasing by 9.6%.
An interim dividend of ZAR 0.46 per share has been declared, being 15% up on last year's interim dividend of ZAR 0.40 per share. Regarding segmental performance, you'll see trade and grain services had a strong first six months, while retail fuel and convenience showed marginal profit before tax growth and manufacturing ended below last year. The largest segment within the group remains the trade segment, and this segment is also the greatest income and earnings contributor. Trade income grew 22.7%, with PBT increasing by 19.9%. The retail fuel and convenience segment remains the segment most impacted by COVID due to various lingering travel restrictions and economic conditions resulting in lower footfall. Despite reduced fuel volumes, income grew by 31.7% off the back of high inflation and PBT increased by 1.7%.
The increase in gross and net assets reflects the net impact of the disposal of TFC Properties. The inflow of the partial proceeds as at 31 March, as well as the sale and lease back IFRS 16 accounting entries relating to the right of use asset and lease liability raised. Grain services delivered strong results courtesy of a very good wheat harvest and higher wheat prices. This segment grew revenue by 38.1% and operating profit before tax by 9.1%. It must be noted that grain services has seen a heavy weighting of full year profitability in the first six months of the year, and this performance will not reoccur in the second six months. Manufacturing has been impacted by the curtailment of infrastructure spend due to COVID-related uncertainty and cash flow challenges due to unfavorable weather conditions in Limpopo and Mpumalanga.
Manufacturing income reduced by 8.6% with operating profit before tax reducing by ZAR 3.8 million. The corporate division, which includes the cost of support services as well as other costs not allocated to specific segments, reduced from 0.7% of revenue to 0.5% due to the inclusion of the profit on disposal of TFC Properties. Just as a reminder, in the operating segments, gross assets include stock trading, fixed assets and debtors, while net assets reflect the impact of trade creditors and borrowings. With regard to corporate, gross assets include corporate fixed assets, while net assets reflect the impact of group borrowings relating to corporate assets only. This is a graphic representation of the previous slide, showing contributions by segment.
The contribution trends have not changed since our year-end results, and it's evident that trade is still the core of the business. Retail, fuel and convenience growth has been impacted by COVID, but still contributed 12.8% to group PBT. Grain services contribution was significant for the period and remains strategic in maintaining strong customer relationships, and manufacturing remains the smallest segment contributor to group PBT. Looking at the income statement, as mentioned, revenue grew by 26.7%. Gross profit increased by 14.2%. GP has grown at a slower rate than revenue, in particular due to the high inflation experienced in fuel prices. Margin growth was generated across retail categories, while agri categories experienced a slight margin decrease, mainly related to a change in the mechanization sales mix.
Cost control remains a management focus area, especially given increased inflation and trading margin pressures, with a large focus on the optimization of salary related expenditure and associated costs. Operating expenditure grew by 12.7% and 9.1% on a like-for-like basis, with distribution center cost to serve as a percentage of GP reducing. EBITDA grew 13%. Recurring headline earnings grew 14.6% with recurring headline earnings per share of ZAR 3.5111 growing by 15%. Return on equity being only six months return on full equity increased to 10.3%, up from 10.0% last year. An interim dividend of ZAR 0.46 per share has been declared up 15% from ZAR 0.40 per share last year.
The three graphs again illustrate the continued strong five-year performance of the business, albeit that performance was impacted by COVID during 2020. With regard to the balance sheet, non-current assets are similar year-over-year and include the reduction in properties due to the disposal of TFC Properties and the commensurate increase in right-of-use assets due to the leaseback of these properties, as well as additional CapEx covered in a later slide. ZAR 380 million of the anticipated ZAR 444 million has been received to date with the disposal of TFC Properties with the balance expected in May. Working capital has been managed effectively. Trade debtors grew 21.1% with debtors not within terms as a percentage of trade debtors reducing from 9.2% last year to 8.0% year-over-year.
Stock value has grown at a slower rate than revenue growth due to the impact of higher contributions of quick moving retail and fuel stock and the continued increased participation of our centralized distribution center. Creditors days have reduced slightly due to the mix of creditors. Net interest-bearing debt increased by only 5.7%, reflecting the growth in debtors balances and the inflation impact on stock holding, offset by the partial proceeds received to date on the disposal of TFC Properties. The group debt to equity ratio improved to 55.8% from 63.1% last year with an interim debt to EBITDA ratio of 3.9 x compared to 4.2 x last year. Interest cover was 7.9 x compared to 8.2x last year.
Net asset value per share continues to increase, albeit that assets are at historic values. In summary, the balance sheet has remained strong throughout the challenging COVID and economic slowdown periods. Gearing has improved in line with expectation. Working capital is well positioned and there's sufficient headroom available to fund identified growth opportunities. This slide reflects the recurring headline earnings waterfall between half year 2021 and half year 2022. Gross profit growth was strong, growing by ZAR 121.9 million year-on-year. Expenses increased largely due to inflationary pressures and the inclusion of expenditure from new and non-like-for-like sites, the TFC sites. Interest received increased due to a combination of higher debtors balances driven by revenue growth and increased interest rates.
Interest paid to banks increased by 14.5%, combination of higher interest rates and slightly higher average borrowings for the period. The Kaap Agri Namibia joint venture has shown improvement year-on-year. Headline earnings adjustment mainly relates to the profit on disposal of TFC properties and as mentioned earlier, in total recurring headline earnings grew by 14.6%. We added in this slide for the first time at our last year-end to illustrate the items impacting earnings to calculate headline earnings and recurring headline earnings. Headline earnings adjustment relates to profit on disposal of TFC properties as well as various low return generating or non-essential assets. Non-recurring items include costs associated with the disposal of TFC properties, new business development, as well as certain legal costs. Furthermore, adjustments for the remeasurement of put option liabilities exercisable by non-controlling subsidiary shareholders are also added back.
Recurring headline earnings per share grew by 15% year on year. Lastly, as you'll see, recurring headline earnings grew by a compound annual growth rate of 19.7% and recurring headline earnings per share by a compound annual growth rate of 19.1% when compared to March 2020 pre-COVID levels. We've previously indicated that we have prioritized return on invested capital or ROIC and EVA as key performance indicators to measure our efficiency of allocating capital within the group, and this methodology is being firmly entrenched throughout the business. Through 2018 and into 2020, we invested significantly into the business, both in upgrades and expansions as well as acquisitions. During this time, we experienced an economic slowdown which reduced returns, particularly in our like-for-like space. Added to this, we had COVID in 2020.
Invested capital has largely generated the desired returns, except for Tego, which experienced challenges as we refined the design of our footprints. We also indicated previously that the decision to acquire properties within TFC was problematic from a return perspective and that this would be addressed. Collectively, all the above factors contributed to a reducing ROIC trend till September 2020, albeit that ROIC remained above our weighted average cost of capital. The curtailed CapEx in 2021 aided the increase in ROIC, and our half year ROIC position for 2022 has improved year on year. Our cautious approach to capital spend is yielding benefits, and together with strong trading performance, as well as the ZAR 205 million partial proceeds received on the disposal of the TFC properties entity has resulted in improved debt levels and an improvement in ROIC.
We are committed to driving organic growth from capital already invested throughout the group and on freeing up underperforming capital. I'll hand back to Sean for the segmental reviews.
Thank you, Graeme. The next few slides will inform you of our segmental strategy, reviews, and outlook. Firstly, our trade division, which includes Agrimark's New Holland Agency Services and the Forge operations in Natal. In terms of the H1 2022 review, strategy will remain focused on growth from organic market share, selective footprint expansions, optimization efforts, and maximizing supply chain opportunities. Sales of agri inputs shows market share growth in fertilizer, good sales growth of packaging materials off the back of a high fruit export volume, while animal feeds continue to experience lower sales than prior period due to good rains in the animal feed areas.
Retail sales growth was moderate at 5.7% in this division, experiencing strong growth of 11.5% in building materials, which, as previously commented on, is higher than the sector, while achieving 7.6% in pool and garden categories, while the retail irrigation category was down by 5.5%. The New Holland Agency sales growth of 33.4% was still very healthy for the first half of the year. Forge increased profitability by 34.6% in the period under review, albeit off a low base and not affected by the KZN floods at this stage.
All in all, bringing the whole division to a 22.7% increase in revenue off the back of OpEx growth and of a high 15.5% due to new sites and non-like for like additions, and therefore growing profitability at 19.9%. The OpEx was mainly driven by non-salary and wage cost increases. In terms of the outlook for this division, we will continue our market share drive supported by our business-to-business digitization initiatives. The fruit sector volume outlook remains very positive. However, price and input cost pressures will most likely weigh heavily on farm profitability. Wheat is also expected to experience lower profits in the second half of this year than in the first half. We therefore expect farm infrastructure spend to be lower on the back of these high input cost pressures experienced by farmers.
Retail diversification will continue, and we expect the trend of cash contribution at 26% contributing 40.5% of divisional GP to continue even during this high agri growth period. We also expect continued retail margin improvements due to our continued focus on central pricing, assortment, replenishment, and other optimization initiatives. Tego Agency sales are expected to be similar to the prior year. In terms of the retail fuel and convenience division, the half year 2022 review, which for the purpose of this review includes the fuel company operations and not TFC properties, which was disposed of in March 2022. This division operates 44 retail fuel sites and four additional QSRs and convenience stores on those same premises. The strategy has remained consolidated to the onboarding of PEG due to the transaction. Additional COVID recovery has been experienced, and a medium-term selective footprint growth will be processed.
Only one new retail fuel operation was acquired in the period and onboarded in March this year. COVID continues to have an impact on TFC Ops due to restrictions experienced on cross-border traffic and continued lower QSR footfall, which is slowly recovering. TFC Ops liters declined by 4.7%. Although marginally better than the retail fuel sector per se, the price of fuel is having a significant impact on mainly commuter traveling patterns. Although volumes declined, TFC Ops PBT grew by 11.6%, assisted by opportunity profits realized during price increases on fuel. At the end of half one, the average site tenure remains high due to half the properties rented by TFC Ops still being owned by Kaap Agri Group and situated on Agrimark sites within its network, which are deemed to be evergreen sites in the calculation.
This site tenure measure will change post the TFC Props and the PEG transaction, so as to handle all TFC Ops sites in a similar fashion. In terms of the retail and fuel division outlook, the PEG transaction is due to be completed and executed. More detail on that later in the presentation. Pipeline investigations will be kept low in line with the strategy and focus in terms of onboarding of PEG. Therefore, our forward-looking liter growth is expected to be in excess of 100% in the next 12 months, off the back of COVID recovery, a site annualizing, and the PEG transaction at an additional nine months that will be expected in the next year, as well as considering the current price pressures experienced. The forward-looking liters in this instance is there for the next 12 months to the end of March 2023.
We will remain focused on expenses in this division during this financial year. Our strategically structured black ownership of 40% should increase to 50.98% by our financial year-end post the PEG transaction. Our average forward-looking site tenure is expected to be about 13 years post the PEG and TFC Props transactions. A high majority of sites have favorable lease renewable terms. We have once again included this slide to consider the fuel price impact on the retail fuel division as well as the group. Starting on the right-hand side of the table, it is quite evident that fuel prices have increased substantially year-on-year, both diesel and petrol. Whereas TFC has capitalized on opportunity profits in the short term, increasing prices per se do not drive profitability.
For example, in the table below as well as the information on the right-hand side, TFC Ops has benefited during the first half by ZAR 11.7 million versus ZAR 4 million in the prior year based on those opportunity profits of the price increases. It is, however, important to note that this still only represents about 12.5% of the TFC Ops profitability over the last two years on average. What does drive profits in this division is fuel volumes. As can be seen in the table below the graph, as at 31 March, if the petrol price of 95 unleaded was ZAR 21.60 on an inland basis, with a regulated petrol gross profit of ZAR 2.29 per liter set at the time, this would result in TFC earning a 10.6% GP margin.
With an increase of ZAR 1 in the petrol price, this would result in TFC earning still ZAR 2.29 per liter, yet the gross margin drops to 10.1%, with TFC making the same rand profitability if volumes stay the same. The reversal happens when a price decrease is affected on petrol. It therefore is not the price of fuel that drives profitability, it is the volumes. We have had a number of questions regarding the potential, yet unconfirmed, deregulation of petrol unleaded 93. This product only represents 7.9% of TFC's current volumes. It therefore would be quite unwise to forecast the impact at this stage, as the industry is taking steps to have this proposal reviewed. This low percentage of 93 unleaded makes up the total fuel retail volumes and even lower when considering total fuel sector volume.
It is therefore unlikely to give much, in fact, hardly any relief at all to petrol consumers, making the proposal quite economically unjustifiable when considering the number of jobs in the retail fuel sector which could be lost due to this very unwise proposal. Moving on to the Agrimark Grain division. In terms of the first half review, strategy has remained unchanged from our last update. We continue to invest where it makes sense. It can be seen on the graph on the top right. The wheat intake exceeded previous year and was the highest in over a decade again. The division has also been able to increase the volume of grain contract facilitation year to date, as indicated in the graph on the bottom right-hand side.
All in all, therefore, an increase of 9.1% in profitability for the division on top of a previous record year. This high grain intake year is actually quite challenging in terms of maintaining a balance between income and expenditure rates. Outlook for this division is that both wheat and canola planting should be similar to the prior year. However, if the financial year 2023 volumes are unlikely to match the 2022 volumes due to rain starting later. It is also unlikely that the division's second half of the financial year will be as profitable as the second half in the prior year. This division should remain a solid profit contributor to the group. In terms of our manufacturing division, which is made up of Agriplas and Tego. Agriplas producing irrigation products for the agricultural sector, in particular, the fruit sector.
Tego currently producing bins for harvesting and storage in the same sector, as well as contract manufacturing of alternative injection molding products. In terms of the review, our strategy is unchanged. We will be focusing on market share increases, new products optimization, non-woven plastic and fruit sector. Agriplas had a very slow quarter one due to very high rainfalls in Limpopo and Mpumalanga. There has been a huge improvement in quarter two. Still, however, ending half one profitability down 28%. Tego, although maintaining prior year volumes, profitability is still under pressure and in line with prior year, therefore not yet contributing to group growth yet. In terms of the outlook, Agriplas is expected to increase exports in the second half with a significant order book improvement happening into quarter three. Second half should exceed first half.
In terms of Tego, the new extra volume pome bin tailored to the pome sector is expected in September 2022. Maximizing alternative contract manufacturing options will continue, and although we still believe a subdued FY 2021 will continue into the financial year 2022, the sales of the EVP bin is expected to kick off in first quarter of financial year 2023. I'll hand over to Graeme to cover the highly positive feedback on cash flow, capital spend and debtors.
Thanks, Sean. Moving on to the cash flow performance for the six months. From the graph, one can see that the group continued to generate strong cash flows from operations through improved cash profits. Although effectively managed, working capital has increased. Inventory value has grown at a slower rate than revenue growth due to the impact of higher contributions of quicker-moving retail and fuel stock, and the continued increased participation of our centralized distribution center. Trade debtors also grew at a slower rate than revenue, with debtors not within terms as a percentage of trade debtors reducing from 9.2% to 8.0% year-on-year. With regard to creditors, important to note, as in previous years, is that seven months of supplier payments are made in the first six months due to the timing of our year-end supplier payments.
This normalizes again across the full year when reduced supplier payments are made in September. A net ZAR 59.7 million was generated through investment activities. This included an outflow of ZAR 150 million related to CapEx and acquisitions, set off by ZAR 205 million partial proceeds received from the disposal of TFC Properties. Interest paid was higher than previous periods due to the increase in interest rates, as well as a slight increase in average net interest-bearing debt. Lastly, the final dividend paid relating to the 2021 financial year amounted to an outflow of ZAR 85 million. In summary, a very healthy cash position for the period, showing similar trends to last year, except for the larger increase in working capital, which is being closely monitored. Moving on to capital expenditure.
Capital spend during the period returned to more normalized levels. During the period, we spent ZAR 150 million on CapEx, including acquisitions. Of this amount, 53.7% went towards expansions, 6.7% to replacement and upgrades. 10% was spent on the acquisition of a further 25% shareholding in Forge, and 29.7% on the acquisition of a new TFC retail fuel site. Capital allocation is in line with our growth and diversification strategy, and as such, the bulk of spend was within the trade and TFC segments. Let's take a look at our debtors position, and as per usual, give some detail on the book for those that are less familiar with our credit approach and the performance of our debtors book.
We have a clear and committed strategy to grow our debtors book through responsible credit extension to enable revenue growth by increasing our credit customers' ability to purchase from our various offerings. As you know, credit granted can only be used for purchases at the various trade and retail fuel and convenience outlets. We provide production credit and not consumer credit. Our credit vetting process takes into account a number of variables, including a range of financial and non-financial considerations, as well as the nature and value of any securities available. The resulting credit rating is used to determine the size of the facility that is approved, as well as the interest rate charged on the account. Our debtors book grew 21.1% during the period, driven by revenue growth and totals almost 16,000 accounts.
Roughly 21% of these accounts are seasonal, with payment periods linked to the cash flow cycle of the underlying product. These seasonal accounts could have repayment terms up to 12 months. Debtors by product type remain similar to last year and vary according to the time of the year. We have seen good growth in the fruit book, a combination of volume and inflationary growth. Lastly, our bad debt write-off bears testimony to the robustness of our credit model and the quality of the underlying accounts, with only 0.07% of the debtors book being written off during the period and 0.17% over the last five years.
If we take a look at our out of term debtors, in other words, debtors that are overdue, this graph shows the monthly five-year trend of overdue debtors as a percentage of total debtors and highlights the following. Annual monthly trends are similar year on year, except for April to July 2020, reflecting the increase in wine grape overdues resulting from COVID lockdown restrictions on alcohol sales. July 2020 saw late payments being received from certain Western Cape table grape farmers who were waiting on exporter payments. 2021 was a good year from an overdue collections perspective, and the current year has continued in this vein, with out of terms as a percentage of debtors reducing by 1.2% of debtors, the lowest out of terms percentage in five years. The recent season's above-average wheat harvest has assisted wheat farmers' cash flow positions.
In summary, our book has been resilient during the past few years, and we believe our book is in a very healthy state, is well secured by various securities. We are well-positioned to support our customers given the stable to positive agri conditions being experienced in most of our areas. Sean will close out from here.
As you would have seen in the SENS announcement on 4 October, we have disposed of TFC Properties to an outside party. This disposal has no impact on the trading of TFC Operations. This disposal included 21 properties on which new long-term net leases have been entered into. The rationale for this disposal has been shared previously and is a result of our ongoing strategic review of return on invested capital. As such, the decision was made to free up underperforming capital in this investment. Kaap Agri Limited will be receiving ZAR 444 million from this disposal, and this cash will be used to settle debt in the short term and to provide funding for future value-enhancing opportunities. To date, ZAR 380 million has been received, with the balance payable against transfer estimated during May. The disposal was fully implemented on 1 March.
The PEG acquisition was communicated via SENS on 19th January. It is an exciting acquisition and the culmination of more than two years' worth of engagement, partly due to the COVID-related delays. TFC will purchase the share and loan plans of PEG Retail Holdings, which operates 41 fully retail service stations, including convenience and QSR. The majority of these sites are national highway sites and represent all the major oil brands. The graphic shows the existing TFC sites in red on the right-hand side and the newly acquired PEG sites in blue. Post this transaction, TFC will clearly have a very good national presence, albeit still a relatively small percentage of the national retail fuel market. As you can see from the table, while KAL's ownership of TFC will decrease, the post-transaction position of TFC will increase significantly when looking at BEE sharing, both direct and including modified flow-through.
This will result in TFC being one of the BEE leaders in the retail fuel industry and should bode well for future growth opportunities. This acquisition will be funded through bank funding at TFC level and existing cash resources, with no need to issue any shares to fund this transaction. The usual CPs are being attended to in terms of this transaction. A shareholder circular was distributed on the fourth of May concerning more details on the transaction to be voted on at the shareholders' meeting on the sixth of June. The targeted effective date is 1 July 2022, with the PEG transaction expected to contribute three months' performance to the current financial year. In conclusion, we can therefore summarize the first half of the year in that it was a very high inflationary cycle.
We have gained market share in various parts of the business and continue our diversified growth. The growth has mainly come from both agri and retail within Agrimark's agency, Agrimark, and Forge businesses. TFC has made it through a period of declining sector volumes, has taken price change opportunities well, and our DC continues to operate at high levels, and our support service cost to serve has remained in control. We have continued our digitalization initiatives with good progress on our ERP modernization as well as business-to-consumer online offering, as well as our business-to-business data-driven approach. CapEx normalized in the period. Debt levels grew only moderately with this high inflationary cycle, and we continued to improve our ROIC and our EVA. We are also adequately positioned for potential fuel price decreases, which could reverse opportunity profits that we achieved in the first half during the second half.
From an outlook point of view, as stated, wheat and canola harvests at the end of 2021 are highly unlikely to match prior records at the end of 2022. The largely positive outlook in the agri sector bodes well for farm incomes, but with current high input cost inflation, farm profitability will be pressured. We will continue our market share initiatives to counter these pressures. The TFC pipeline will be more focused on onboarding of PEG and very selective high return sites. While Tego's performance will remain subdued in FY 2022, Agriplas is expected to maintain momentum for the rest of the year. Although the economy is expected to remain sluggish, we will capitalize further on changing consumer behaviors to our favor and to enhance shareholder value. Our expectations on the rest of the year, therefore, have not changed since our trading update and our AGM.
We expect to reach the upper end of our medium-term growth targets in FY 2022. Finally, we will continue to focus on volume and value enhancements for our shareholders. We thank you for your time, and we'll move forthwith to any questions that have been sent in. Thank you for all the questions that have come through. The first question I'd like to highlight is related to our Agrimark Grain division. What are the drivers of revenue versus the drivers of profits and margin in this division? What I can say there is that obviously in the Agrimark Grain division, revenue is highly impacted by the wheat prices, which are obviously very volatile and especially in this year. I wouldn't watch revenue in this division to determine profitability. It is still volume throughput through the silos as well as storage days which drive profitability.
When we do have record wheat tonnages going through the silos, we expect profitability to be higher than when we have lower weather impacted years where the harvests are lower. The second question is, what level of capacity utilization the silos currently have? In the 2021 year, we had about a 99% capacity utilization of wheat capacity available. In this last year, we had a 109% of wheat capacity utilization in the silos. It's very high, and I think the question stems from the fact that we've mentioned that sometimes when the harvest is too large, it actually costs us money to handle it.
In this last year or two, we've found that a better level would be around 90%, given that some are overfull and some are slightly less full. Although it costs us money, we have also found that even at a very high level of silo utilization, there is a marginal contribution. Yes, if I had to give you a number on what the perfect level is, probably 90%. The capacity CapEx replacement cycle for the Agrimark Grain division is really quite low, actually. Probably around ZAR 10 million every two years. At quite low it makes up a very small portion of our total CapEx, whether it be for replacement or for growth purposes or capacity increases. We're currently increasing one of our silos capacity.
That doesn't happen every year. The next question is, what do we see as our longer-term relevance of fuel sites and electrification? You know, I suppose this all depends on who you speak to. If you speak to an electric vehicle guy, he'll tell you that in five years there won't be any fossil fuels left in South Africa. We doubt that is a very realistic view. One can also speak to the fossil fuel guys that are starting to invest into greener technologies, and you'll find that their view is more 15-year to 20-year. I suppose a 12-year to 15-year level or period to get us to a point where there is a similar number of fossil engine vehicles versus electric/hydrogen, you know, driven vehicles.
We're looking at about 2035-2040, 2040 where electric vehicles and hydrogen vehicles might exceed the number of vehicles in South Africa still driven by fossil fuel. I think our country has a number of challenges as regards to that in terms of electricity. The cost of conversion to these new greener technologies is very high. I'll give you an example. If you were running a highway site and you wanted to park 100 trucks on the site which all had to charge between 11:00 P.M. and 1:00 A.M., which is when they want to charge, you would need 100 charging stations at least ZAR 500,000 a shot. It just gives you the level of.
An indication of the level of cost of conversion to more greener technologies. We're not quite sure how that will happen. Currently, there are service providers trying to get into that market, and we are testing that as we speak at some of our sites. Obviously our highway sites now and post the PEG transaction would be a good network of charging locations for the different OEMs that would like to release electric vehicle engines. Our view is 12 years-15 years before fossil fuels becomes less than alternative driven engines. Then there's another question, are there scale benefits to operating more fuel sites? I think in anything in life there is scale benefit.
I think what we have achieved is we've achieved that balance between our agricultural gross profit contribution, our general retail gross profit contribution, our fuel gross profit contribution, and our convenience retail gross profit contribution. Our growth going forward in the fuel side, having now post-PEG got to 85 sites, is probably a lot more selective. You know, more probably just to be enhancing to our current network.
I think where the scale benefit comes in is that in the past the sector has been driven that a site is a Pty, and it is a company on its own, and therefore has probably a less efficient overall support service cost in terms of audit fees, insurance fees, you know, general controls, administration, HR functions, et cetera, which are being duplicated on all these sites. We do believe that there is a more efficient business model which one can apply to a number of sites so that you can actually make them, you know, more efficient from a support service cost point of view. The next question, thank you, is that depreciation added to on the cash flow versus replacement CapEx is about ZAR 150 million on slide 25.
What's the difference between the two? Graeme, will you please just take us through that on slide 25?
Yeah. Thanks, Sean. If you look at that CapEx, ZAR 150 million consists of about ZAR 44 million acquisition of operations, ZAR 15 million for subsidiaries, rightly as mentioned, ZAR 10 million for replacement, of which there's depreciation. Over and above that, there's about ZAR 80 million which was spent during the period on expansions, and there's depreciation calculated on that expansion element of the CapEx as well. That makes up the difference. The other question is around a level of replacement CapEx. If we go back over the last few years, FY 2020 we really held back on CapEx, so our replacement CapEx in that year was very low. Last year our replacement CapEx was around about ZAR 32 million. To Sean's point, the grain services replacement CapEx was only about ZAR 3 million in that period.
Our current half year replacement CapEx is around about ZAR 10 million. I mean, in terms of a normalized replacement CapEx number, I think it's fair to look at somewhere between ZAR 30 million-ZAR 50 million, probably the higher of the two numbers being a more normalized replacement CapEx cycle.
Thank you, Graeme. The next question we have here is what is the lead time when ordering new equipment from New Holland, which is our New Holland agency service, and then what is the split between the aftermarket sales and new equipment sales for the period? With all the logistics challenges, being one of the largest New Holland agents in South Africa, working with the OEM in Italy, we've had to increase our order lead times from nine to 12 months. It's not yet that bad, but we have had to make more complete orders already this year for next year's requirements. It is a collaboration between us and the OEM. We don't foresee any risk within that.
The new equipment sales are always at least 70% of the sales for that little division and always drive. If you're not selling new tractors, you won't sell aftermarket workshop sales and parts and stuff. But as such, the labor component of workshops is a low turnover number in total. It is driven by new equipment. There's a very good question on the proposed changes to fuel price regulation and what impact this could have on Kaap Agri. Thank you, Peter. This is an interesting thing that's happened in South Africa. Obviously the profitability of service stations is reliant on the current regulated petrol market. As such, because of that, we are able to continue employing a lot of petrol attendants in South Africa, about 90,000.
Obviously, you know, if one influences the profitability of a service station, the service station owner would have to reconsider the ability to have such a large component of its operational cost linked to labor cost, which is petrol attendants. Having said that, Petrol 93 is what is suggested to be capped soon. I know that the Fuel Retailers Association will be taking that up with the government. I suppose the important thing here is that the economics is as follows. Only about 7%-8% of the total network in South Africa runs on Petrol 93. Secondly, only about 35% of the total retail network runs on petrol per se.
The other thing to note is that Petrol 93 is only produced by Sasol, and is therefore only available in a limited part of the South African network, and mainly in Gauteng. We therefore find it quite difficult to understand how a cap on 93 would in fact assist consumers in South Africa. To a large extent, most people are gonna realize that, the impact is very little. Now, it is not something that we are taking lightly. We obviously are watching the developments in this regard, because it could obviously have an impact on the pricing of 95 over time.
I suppose from a profitability point of view, the other oil majors that are producing 95 or importing even better than 95 would have to come to the party from a wholesale point of view and put the service stations in a similar profitability position. As well as those service stations probably doing a bit of margin creep on diesel to make up for any margin reductions because of this 8% of 93 unleaded being sold at a capped rate. There's another good question, and Graeme, if you can handle this. How much headroom is available for growth? And what is the company's appetite for acquisitions? And what assets are of interest? I'll maybe add on to that when you're done.
Yeah. Thanks, Sean. I think from a headroom perspective, as we've always mentioned, we have a cautious approach to debt. We've kept a keen eye on our debt levels over the last few years. I think we've managed them well, specifically through the COVID period. If we look at our debt to equity at half one, sitting at 55.8% last year this time 63.1%, and we don't have the full benefit of the TFC property disposal proceeds in these numbers yet. On that, as we've mentioned before, we reducing our debt through the disposal of the properties in TFC Properties. Our debt levels, however, will increase with the PEG transaction. You would've seen in the circular, if you do the calculations in there, you'll see our debt levels get up to.
Our debt to equity gets up to about 61%. We have indicated previously that the upper end of our comfort level on debt to equity sits at about 75%. We don't wanna go close to that at the moment. We're keeping an eye on the inflationary impact on our working capital, which is quite significant. You would've seen debtors have grown 20-odd%, stock by a similar number, and a big part of that is being driven by inflation. We're keeping an eye on our funding being impacted by inflation. Yeah, I think even after the PEG transaction, our debt levels are very comfortable against our internal comfort levels.
That said, we definitely keep an eye out and are constantly engaging on ROIC enhancing expansion and acquisition opportunities. But I think from a pure debt perspective, with the focus in the short term being for one to three years, I think is on paying down the PEG debt and, or PEG related debt, and on bedding down that acquisition. If you wanna add anything, Sean.
Yes. Thanks, Graeme. You know, appetite for growth is what we live by, and we have very strong targets and that is what we have done. We've grown the company by more than 50% on a compound annual growth rate of recurring earnings per share over the last 11 years. What assets would be of interest for us is similar ones. Firstly, we will try and steer away from bricks and mortar. Excuse me. Therefore, we will be looking at very selective expansions of our current footprint as well as growing our market share. I still am of the opinion that even after so many years that we've been in agriculture, we still have a very healthy growth trajectory on market share within that sector.
We've only just started in the last three to four years to diversify the business into building materials, retail, as well as convenience retail. We will certainly see that growing going forward. I think one also has to ask, who would be your preferred bidder in a process on fuel stations? Obviously, with our BEE credentials in TFC, we would believe that we would hopefully be a preferred bidder on very good quality sites. There's another question here. Could you please repeat what your medium-term goals are? There's a reference back to a range, obviously. Thank you for that.
When one looks at our strategy document, in terms of our medium-term goals, we obviously would like to, over time, over the medium term, every five years, double the company, which gives you a 15% compound annual growth rate. In some years, one could be hit by COVID or something like that, and you don't grow as much as what you'd like to. If you recall, in our COVID year, first year, we still grew the company by 1.5%. The 15% compound annual growth rate includes mergers and acquisitions. Every now and again, like you have this year with the PEG transaction, you're gonna overshoot the 15%, or you well, really hope so, that we do overshoot it.
The range is probably going to be an 8%-22% or 11%-19%, and then the average should be at about 15%. When we speak about the upper end of our medium-term financial targets, then in this year as well as next year, due to the transactions that we've gone through, we would expect to reach the upper end of that growth range. I hope that answers the question. Graeme, this is probably gonna be you and me together. What is our ROIC target for the medium term? That's. I think, just think about that. I mean, I think the thing about ROIC is that we wanna improve that over WACC, and that EVA must grow over time.
That's the important part. Graeme, think about that. Secondly, is there any impact you're currently observing from La Niña conditions on harvesting activities? The short answer is no, not at this stage. La Niña might have an impact going forward in the next four or five months on lower rainfall in the Swartland area, which is the wheat producing area, which could impact the harvest slightly. We do not therefore expect La Niña to have any major impact. What is the sort of strategic split between agri and fuel business in five years from a revenue perspective, given ongoing acquisitions? Again, I would highlight to all the investors out there that to use revenue as something that you know is an indicator of profitability would be problematic.
One needs to, as I said earlier, just, yeah, concentrate on that gross profit contribution. Because, I mean, if fuel is at ZAR 40 a liter in five years from now, then the turnover will be extremely high, but it doesn't necessarily mean that the profitability for the fuel business will be that high. I think what we're trying to achieve going forward, and we've now post PEG will have achieved that dream of ours is really, you know, having it within around about 1/4 of agricultural gross profit contribution, 1/4 of building materials and general retail contribution, 1/4 from convenience retail, which is your QSRs and your convenience stores at the fuel stations, and then the rest from fuel, petrol and diesel per se.
That balance is probably going forward, what we will try and continue to achieve. I think it is a strong cash generating offering that we then put on the table because your working cycles are very low in terms of convenience retail and fuel, and therefore high cash generation. While on the agricultural side and building materials, you need a little bit more of CapEx and invested capital to generate growth on that side. It would be a very well-balanced offering, going forward if we stick to that. You know, I suppose in three years, four years from now, anything could happen, but we do believe that the company will continue on its trajectory. Graeme, would you like to add anything on the ROIC?
I mean, at the end of the day, ROIC on its own without looking at WACC going up or down.
Sure.
The result in EVA doesn't really mean much. Just explain what we do there.
Yeah. Okay. From a ROIC perspective, over the last probably two to three years, we've really entrenched ROIC in our business, not only at a senior level, but even down at an operational level. There's a key ROIC focus in our business. If you look at the slide on slide 18, you'll see that our FY 2021 ROIC grew from FY 2020. For the half year, our current half year, our ROIC has grown on half year last year. Clearly the initiatives that we're doing are contributing to a growth in ROIC. As Sean mentioned, you know, we need to measure our ROIC against WACC, and our WACC sits at about 10.5%.
Our weighted average cost of capital at the moment is about 10.5%. In terms of a target, I think it's not a simple answer. The ROIC targets we set are quite project specific and deal with the underlying risk of the potential investment or expansion or project. As an example, in the fuel space, we would push that required ROIC up to about 18%, maybe even slightly higher. Whereas in some of the other areas, down to about 15%. Ideally we're targeting about a 15% weighted ROIC, if I can call it that, on any form of new project or expansion.
Yeah, I mean, applying that to the work and doing the EVA calculation, making sure that EVA number is growing year on year. I think that's the core focus and drive at the moment from that perspective.
Thanks, Graeme. A very good question there from Chris. To what degree has your shareholder base grown following the Zeder unbundling, and have you noticed greater investor interest? Okay, there's a few little questions there. To what degree has the shareholder base grown? We've grown from. Graeme can confirm about 4,000 shareholders to 12,000 shareholders, or is that more, Graeme?
That's from 6,400 shareholders-15,100 shareholders.
Okay. I got the increment right, but not the starting point right. Yes, a much larger shareholder base now, following the Zeder unbundling and a lot of shareholders with 10 shares and less. It would probably be in our interest to have a look at trying to clean up the tail end there. Secondly, have we noticed greater investor interest? I would certainly think so, in that we now have shareholders that we didn't have before that are institutional shareholders and investors, and we have had interactions with them since the unbundling just to start getting the interaction with the management and them going. I know that some of them are on the call today and that some will be joining us on our roadshows over the next two days.
We have also noticed probably a double-up on the liquidity. Now that might be short-term because of a bit of an overhang in terms of certain mid-cap investors having to exit from their positions. We'll have to see how that runs over time. I think as that settles down, one would probably run into the PSG unbundling later in the year, and one could have a bit of an overhang again at that time. I think it's an opportune time for consolidation of positions. Yes, the greater investor interest is exciting for us. It's exactly why we listed to at some stage have an event where there was more liquidity in our share and maybe a lower block of ownership over time.
We're ready for it as a management team. This has not changed our strategy. We wanna continue growing the company significantly, grow value from a volume point of view, as well as a value point of view for our shareholders, going forward. Thank you for that question. There's another question here. How many retail outlets do you target to have in five years' time? I would imagine the Western Cape market is well covered, which would make it difficult to build new stores. Is it possible to add new outlets through the acquisition of other co-ops? There's two elements to that. Retail outlets, including Agrimark, will continue growing steadily over time. I think, however, that 60% of our agriculture or growth will come from market share in business-to-business digital transactions, which are not bricks-and-mortar based.
We are well away down the track in terms of enabling our teams and operational teams to tackle that market share growth through a business-to-business interaction rather than building stores all over the place. Yes, the Western Cape market is well covered. We will not see much bricks and mortar going up in this area. We do, however, feel that there are other water-intensive areas where the government will be investing in infrastructure, providing water, additional water to underdeveloped areas of the country, over the next five to 10 years, and we will hopefully be able to capitalize on those opportunities. Acquisition of other co-ops. I think one's got to the point in South Africa where acquiring a co-op is highly unlikely to happen. Almost all of the co-ops are very well-run businesses.
I say most, technically. But yeah, they're good companies, strong companies. You're not gonna just walk in and acquire them like it happened eight to 15 years ago. So there are now only seven or eight really big co-op companies or ex-co-op companies. But I do think that consolidation will happen over time and, you know, we will be a part of investigations and yeah, discussions on the matter going forward most certainly. Let me just check if there are any more questions. There don't seem to be any more questions. Thank you very much for all those questions. Very comprehensive. Thank you very much for your attendance. Goodbye.