A good morning, and welcome to the Pepkor results presentation for the six months ended in March. As per usual, we'll be three of us presenting today. I'll do an overview of the results. Riaan will look at the financial performance, and then Sean will discuss the business performance before I make some comments on the outlook and also take some questions at the end of the presentation. We're starting with our customer's reality today, mostly in the, in the clothing sector. We can see very high unemployment in South Africa, even higher under our women customers. There's still some disruption in the payment of social grants, and we have a large proportion of social grant customers. Customers are telling us that they have to pay a bigger portion of their monthly income to food and into transport.
Then, of course, the big elephant in the room in South Africa is load shedding. That's also disrupting our ability to trade, and for our customers, in many instances, it means that they earn lower incomes. With the disruption in getting to malls and different shops going down at different times, the spending patterns are also disrupted. That's the reality for our customers in today's world. We have to respond to that by making sure that the goods that we sell remains affordable. A lot of these goods are essential needs for our customers. In PEP, we have to target best prices, and we're happy that we're still achieving a 95% best price leadership.
Because of the probably lower sales that we're able to achieve, we have to also target cost reductions so that we can actually deliver these goods to our customers cheaper, and a little bit about that later. Pepkor's market share still exceeds the pre-COVID levels. There's a bit of noise in it, but, well, we're happy to say that in the last quarter, or few months, we've recovered market share or made market share gains, continued in Home and PEP, but also in Babies and Ladies. Ackermans had some market share gains in School and Lingerie, and also in our Electronics and Appliances in the JD Group, we managed to grow our market share. We're still providing connectivity to our customers, and as I said before, seven out of 10 prepaid handsets or cell phones in South Africa is sold by the Group.
Our strategy remains the same. We have to sell great products to our customers, products that they want and they need. We do it over a wide variety of market segments in terms of our different store formats. We make sure free accessibility, that our stores are close to our customers. In the physical space, we also have digital channels, and we also have exposure to the informal market or the informal traders via our Flash network. We make sure that our customers have got different options to pay, from credit to lay-by and obviously cash, which remains a big, big part of our business. Price, as always, as a discounter, very important for us, and we achieve those lowest prices by getting scale.
As I said, the same scale gives us the ability to do the cost of doing business at a lower rate than some of our competitors. Of course, we still try and interact as much and make a positive difference in our customers' lives. Some of the questions that we sometimes get is, What do we do about the energy? We're not just storing energy, where we try and keep our stores going. PEP, at about 100% of our store base are off the grid, so to speak, but we also have embarked on major initiatives to put some generation capacity in, mostly on our distribution center sites. There you will see some of the initiatives that's been launched in the last six months.
That enables our operations, but also, as we've seen in our PEP Clothing factory, people can work for longer, the shifts don't get disrupted, absenteeism come down, and people are able to earn a better wage with all that production going on. Just back to the results, which Riaan will unpack for us, and Sean will enlighten more in the operational reviews. We still managed to grow revenue. Pepkor grew to 4.3%. We maintained our cost growth at 3.6% normalized growth, but the result was an 11.7% decline in headline earnings and on a normalized basis of 8.6%. It's a bit of noise in the numbers, which Riaan will explain to you.
We still managed to open 168 stores in the six months, and we're very close to the 6,000 stores now. We're still expanding our informal market footprint. Very good news coming out of Brazil and Avenida, where our investment there is performing above expectations. As I said to the market last time, we keep on in this time to look at our portfolio and make sure we optimize all the capital that's allocated and correctly spent. Riaan will now take you through the financial performance, and over to Riaan.
Thanks, Pieter. As Pieter said, I'll be taking you through the financial key performance indicators for the six months under review. To start off with some key performance indicators for the period, as Pieter mentioned, revenue did grow by 4.3. Needless to say, that is below our expectations, I'll impact it a bit more in further later slides on the main reasons why that's below what we expected. Just to mention, two main factors impacting that number of 4.3, one being Avenida, which was not in for the full period last year. We only acquired Avenida in February last year. The second one being, again, Flash.
As we explained to you in the previous period, Flash, because of the change in product mix, still shows a negative revenue growth, that, again, had an impact on that 4.3%, making it a lower number than what it would have been under normal circumstances. From a gross profit perspective, that fortunately, we were able to maintain at 35.3%, compared to the same period last year. As I mentioned to you at the end of last year, we did actually expect that number to come down because of the anticipated markdowns that we needed to process to clear some of the stock during this period.
Fortunately, what has happened with the increase in interest rates and with us growing the books, specifically the Tenacity book, did generate more interest and fees, which did assist that Gross Profit to increase for the period. Our EBIT that was offset, as I said, by the lower retail margin, driven by the markdowns processed in specifically more so Ackermans, but also to a lesser extent in PEP. Expense growth, Pieter did touch on it. Guys, we're obviously still under these difficult circumstances to ensure that expenses only grew by 3.6%. That's if you exclude the growth in debtors costs, which is at a much higher percentage because of the growth in the books and also depreciation.
However, I think under the circumstances, to achieve that 3.6 with a top line, at around about the same level or slightly just below that, was really a very good performance under the difficult circumstances. It is something that we will obviously even focus on going into the next six months of the year. That meant specifically because of that higher debtors cost that I mentioned, which is up by 63%, which I'll show a bit later, meant that the operating profit then dropped by 9.8% to ZAR 5.1 billion. If you take that a level lower, taking finance cost and tax into account, the HEPS declined by 11.7%, again, mostly driven by higher finance costs because of the higher interest rates, but also with our net debt going up.
As I mentioned, that, we did get the benefit of a lower effective tax rate. We did, counteract it a little bit, but still not enough for it to not to drop to 11.7. Normalized, as we said, 8.6, and I'll show the reasons for the normalized growth of 8.6. Cash, still good cash generation of 3.6. As I've always explained in the past, the first six months is a very difficult period for us from a cash generation perspective, because at the end of September, usually are still building up for Christmas. Where at the end of March, depending on where Chinese New Year falls or where Easter weekend falls, always a very difficult period. Cash generation was below our normal standards for the period, but still a very good number.
Similar to that, return on net assets also dropped from our normal benchmark of above 30% to just below the 30%. Again, mostly driven by the investment in inventory and also by the book growth, but still very good number compared to most of our peers. During this period, with the increase in interest rates, we're at least fortunate to refinance quite a big component of the book. The one specifically was the ZAR 1.2 billion that we did in this six months at substantially better rates than what we previously had through the issue of our bond program. We move on to some of the more specific, as I said, the statutory HEPS growth was a decline of 11.7 down to ZAR 0.808. Two items impacting it.
Last year, if you all can remember, we had the start of global recovery, where we received ZAR 429 million, which is a once-off item. This year, we've got the anomaly with the exit of the DC in Isipingo, where we had an option for a 10-year period. We're not gonna exercise the full option, but only two years, because we're moving to the new Hammarsdale DC, meant that there was a credit release in January of this year of ZAR 392 million. If you take those two numbers into account, your normalized HEPS for this year, ZAR 0.73 or a drop of 8.6%, compared to the similar number last year. One of the factors that again impacted our results for this period was still insurance money that we received.
We're still at the, almost at the end of the receiving this outstanding money on the flood insurance. If you remember correctly, the last year, we already accounted ZAR 396 million of it, which we received in the previous financial year. For this period, we accounted for ZAR 250 million, which we moved most of that received during this period. We do anticipate the full number that we will collect from the insurance on the floods to be close to ZAR 780 million. That's why we anticipate there'll still be another ZAR 150 million at least, that will come through in the second half of this year, and we encounter from then.
At that stage, we will then be out of all the insurance money from either a flood perspective or the social unrest that happened, two years ago. Just a breakdown of the ZAR 250 million, as you see the impact on the income statement. ZAR 57 million went into cost of sales, means our GP is higher by 0.1%. BI, business interruption, ZAR 150 million, which in other income, we still had a small CapEx recovery of ZAR 43 million, which obviously falls under capital items on the income statement. If you move on to the revenue drivers and revenue growth for the six-month period, as I mentioned earlier, overall, up by 4.3% to ZAR 43.8 billion. As I mentioned, Avenida, not included for the full period, if you exclude that, up by 1.1%.
Flash, growing negative on revenue by close to 12%. Again, if you eliminate just the 12% from Flash on the 4.3%, it means that overall, the group would have grown by 5.8% had that not happened. Individual segments, Clothing and General Merchandise still performing the best. Mostly, as I said, also impacted by Avenida, which was not in for the full period last year, but showed very good results for this period. Good growth, and specifically in the Speciality division, also saw growth coming through. That number in the Clothing and General was offset by the underperformance of Ackermans. The 8% would have been higher.
Still good, steady performance from the furniture segment, although specifically on the furniture side, it performed below expectations, where the electronic side was still more in line, or the tech side was more in line with our expectation. The building company or the building segment did very well under very difficult circumstances, specifically during this period. Compared to that specific market segment, the fact that they could still maintain their top line was a phenomenal performance for them. As I mentioned earlier, the FinTech segment was down by 7.8%, mainly driven by the performance of Flash. Because of the change in product mix, which was down by 12%. Capitec, obviously, or Capfin, still showed good growth for the period. If you look at the segmental impact, how did that play out?
We have seen, because of that growth in Avenida, in addition of that, the Clothing and General Merchandise segments now go up to 68%, where it used to be 65. Just for noting, we do, as I anticipate on a full year basis, that Avenida will make up about 4% of total contribution. On the FinTech side, that obviously dropped down to 9% because of the underperformance of Flash. Just something to take note of, obviously, with the customer under pressure, as Pieter has already explained, it means most of them haven't got enough cash to pay immediately for the product. They have to look at other forms of tender to be able to pay for the product, either through a lay-by or through the card.
Means that our cash sales for the period grew by 2.6%, but credit sales overall grew by 36.7%. However, remember, that's also impacted by Avenida, which has got a higher contribution than what we have in the rest of the retail brands. Avenida runs at 43% of sales on credit, where Ackermans have now increased from 16% to 18%, and PEP has grown t to 3% of the sales is on credit. If you exclude Avenida, the credit sales was 23% for the period. Overall, our cash contribution has however declined from traditionally, where it was closer to 93%, now down to 91%. Just quickly back to the gross profit. As I mentioned, very fortunate that it was maintained at exactly the same level. Quickly, again,
as I said earlier, mostly driven by the group in our financial services products, specifically the books and Tenacity being one, with the high interest rate, more accounts being opened, more fees being charged. Also the fact that the Flash, the mix, as I explained earlier, changed. The GP percentage in Flash is now higher. That meant there was an increase in our GP. All of that was again offset by the additional markdowns that we had to process during the period, specifically, more so in Ackermans, to clear some of the excess stock that we had in the system during this period. Just quickly on other income. As I mentioned earlier, again, there's ZAR 150 million in this period's number from insurance.
The flood insurance number compared to last year's 132, which was still for the social unrest BI numbers. If you exclude that, other income declined by 2.9. If you include insurance, it increased by 1.1. If you specifically exclude the insurance component and look at the rest of the other income, you'll see commissions still make up the majority of it, and that's commissions received on bill payments, money transfer, DSD payments, et cetera. Where we have seen an increase in bill payments, but unfortunately, a decline in money transfers and also some rebates that we receive from suppliers, hence the overall decrease of 2.9% on other income. Move on to cost of doing business.
As I've always explained in the past, we're obviously very serious about maintaining our cost of doing business and keep it the lowest in the market. Hence, also why under these very difficult circumstances I explained earlier, if you exclude the growth in debtors cost and depreciation, OpEx still only grew by 3.5%. It does, however, meant because your expenses still grew faster than your top line or revenue, that our cost of doing business did increase from 24.3% to 25.6%. I think however, again, to just to take into account that Avenida was also not in for the full period last year. If you exclude Avenida further, but you add back the once-off credit we received from the ZAR 392 on the DC lease modification, that number then actually changes to 3.6%.
A very, still a very good number, and specifically one of our biggest expense items, salary costs, we were able to only grow at 6.9%. Take into account we opened 168 new stores. Overall, still only a salary increase of 6.9%, excluding Avenida for the period. On the lease modification point, as I raised earlier, again, we've had a quite a jump in this period, as you would have seen, and that is due to that once-off item, as I explained earlier, the ZAR 392, which is because of the move from the PEP Isipingo DC to the PEP Hammarsdale DC, where we haven't taken up the full period, so there's reversal. We are obviously running these two DCs now concurrent. The new DC will be hopefully fully commissioned in September of this year.
We will obviously wind down then the operation in the old DC until a handover happens. That, as you know, would have had a big impact on the overall lease modification. If you eliminate that, it did come down from ZAR 279 – 254, which is in line of what we communicated previously. We do anticipate this lease modification credit to come even down going forward over the next couple of years, as the rental reductions that we get on renewals reduce, and also as we get to a point where we fully optimize the store portfolio, because we have seen quite a bit of gain, specifically in Speciality and in JD over the last two years, because of the move from non-profitable stores more to profitable stores, where we then get a significant reduction on those numbers.
Just overall, if you look at the old method of accounting, IAS 17, our overall rental base, exclude Avenida, including those new stores, only increased again by 6.2, which is, again, below inflation. That's because of the good work that's been done on the past on rental renewals, that we're able to keep that number at a very low overall growth number. That all translates into your segmental operating profit. Again, similar picture, now 9.8%. I said earlier, if you eliminate the two once-off items, down by ZAR 9.9 to ZAR 4.7 billion. If you look at the split per segment, unfortunately, the Clothing and general merchandise is down by 12.4%, mainly driven by the underperformance in Ackermans. We had summer also to extend in winter.
It was slightly offset by the very good performance in Avenida and Speciality, but not nearly enough to counteract that performance by Ackermans. Similarly, on the furniture side, because of the drop in underperformance on the furniture side sales, that meant that the cost containment was not enough to compensate for the low sales growth. We saw a negative growth in operating profit. Building company, the building segment, similar. They did at least show a positive growth on top line, but expenses still grew faster than the top line. It means a negative growth in operating profit. The positive side is, on the Flash side, we still saw a profit growth of above 20%.
As I mentioned, the top line was not great, it does mean that we're now selling a more profitable product, which meant why the overall growth in profit in Flash still grew by more than 20, and Capfin just maintained its profit from last year, showing an overall 11.5%. Segmental. Here we see exactly the opposite from the revenue. Clothing and general merchandise declined from 85% to 81%, the FinTech has increased to 9%. Overall, unfortunately, our operating profit is down to 10.8%. Historically, it used to be closer to 12%, which is also our benchmark. Finance cost, as I explained earlier. The finance cost on IFRS 16, you'll see over the last couple of years, very consistent since we introduced it in 2020. We implemented in 2020, the same level.
Finance cost on bank cost, unfortunately, has gone up quite a bit because of the increasing interest rates. Remember, Avenida was only acquired in March last year, or the payment only happened in March last year, so there was no impact on the finance cost for the six months last year. With this year, we saw the full impact, and then our overall net debt has also increased over the period, which I'll unpack a bit later. That meant that non, or the banking side increased by 78% and overall by 31%. I mentioned, lower effective tax rate. Two reasons for that. Firstly, there was a defer tax on the electronic side of the JD Group that we recognized during this period.
Secondly, we reached a settlement with SARS late in March, on certain items dating back a couple of years. That has the fortunate benefit to us that we could release a component of our provision, which resulted in bringing the effective tax rate down to 20%. We also anticipate the effective tax rate will be 20% for the full year, because we still need to assess the full impact of that settlement on our provision levels. As I mentioned earlier, higher working capital, and specifically higher inventory levels, but also the growth in the books, specifically more so, you would see there on the inventory levels for PEP and Ackermans increased in this period compared to the rest of the group, which remains at the same level.
That's specifically on the Ackermans side, more to do with the underperformance, and to a lesser extent, on the PEP side as well. We also saw an increase in inventory levels for Avenida, that's in line with expense expectations, because we knew when we acquired them, the inventory levels was lower than optimal. We brought it back to the right level, we're not concerned about it. It's now really at the optimal level. For Ackermans, as we were seeing in the first half, there was markdowns process to clear some of the old stock. That will continue in the second half of the year to make sure that we clear the excess stock out of the system. There'll also be markdowns of PEP, but that will be to a lower level because, again, PEP has got to buy a replenishment component, and more non-seasonal product.
Your markdowns is really not that extreme because you can sell the product throughout the year, so it will clear through the normal sales process. Overall, on the credit books, I mentioned earlier, quite a bit of growth in the credit books, specifically in Tenacity, going from 3.2 to 4. Lesser extent growth in Connect and Capfin as well. All we still did that under the same credit granting criteria. You would have seen there is not a significant movement in any of the provision levels. Non-performing loans is also still in line with expectations. From an overall book health perspective, feel comfortable. The only area where we had a slightly higher growth in non-performing loans was on the Capfin side, but we did anticipate that.
We've also, subsequent to cut off, pulled back a little bit on the credit granting in Capfin. We are confident that our provisions in all those areas are still more than adequate to cover it for the full year, because we did over provide slightly at the end of last year in anticipation of the high interest rates and the pressure on consumers. Avenida, we've had a slight increase in the provision. That's because we've seen a growth in the credit contribution there, again, from 41 to 43. We just decided to be prudent and increase the provision for Avenida. Overall, as I mentioned earlier, debtors' cost had quite a big impact on the results for the period, up by 62.3%, up to ZAR 820 million.
If you break that down, you'll see the bad debts physically written off last year compared to this period, slightly up on last year, and that's just more driven by Capfin, which had to write off more, as you would have seen from the previous slide, on the higher non-performing loans. The pure movement in provision is purely because of the growth in the books, and according to IFRS 9, you have to provide more upfront. You'll see on the right-hand side, the credit book growth was 13%, but the provisions was up by 16% and higher than that. Overall, I think just to confirm, again, it's not that we've changed our credit granting criteria. We've just seen that our customer is under pressure.
They need the different forms of payment, tender types, so we've had a increase in demand for credit overall within the group, hence the reason, the growth specifically in Tenacity. Just to back to cash generation. Said earlier, it is below what we normally would expect, mainly driven by the increase in working capital requirements, so the inventory levels have increased, I showed you. Not fully compensated by the growth in creditors. Creditors grew negatively for the period, but also the growth in credit books meant is ZAR 1.7 billion that was invested in the credit book. Cash conversion, purely for the six months, is 44%, compared to last year's 53%.
As I said earlier, first six months of the year is never a good period for us from a cash generation perspective. Our estimate is on a 12-month basis, we still generated a cash conversion of 71%, which is more in line with our normal target at levels. Increase in net debt due to those factors already mentioned, with higher inventory, higher growth in the books, meant that our debt levels went up, so it's up to ZAR 11.6. From a net debt to EBITDA perspective, we're above our internal bench or target of one times net debt to EBITDA, up to 1.3. That's also driven by the drop in EBITDA, not only by the increase in debt. We are, however, confident that we should get back to normalized levels by the end of this year.
As I mentioned earlier, we also did some refinancing, raising ZAR 1.2 billion in bonds at significantly lower rates than what we previously had on those specifically debt. You'll have also seen we're in the fortunate situation, our debt profile, repayment profile, is very much spread over the next four to five years. No specific concern around repayment of debt at that specific period. CapEx, we do continue to invest in CapEx. We have now, as I mentioned earlier, reached the completion of the PEP Hammarsdale DC building, so the last amount's been spent there. We've yet to be fully commissioned September and October. On the CapEx, around the rest of investment, that went up from ZAR 0.7 billion to ZAR 1 billion.
There is ZAR 100 million in there, in that ZAR 1 billion, also relating to F&F for the PEP Amersfoort DC. Your real movement is really from 0.7 to 0.9. Again, as always in the past, the majority of our CapEx goes into new stores or refurbishment of stores. That trend has continued. That will also continue in the second half of the year because we still feel we get the best return there. We have, however, also started to invest more in IT, making sure that we can focus more on customer information, specifically going forward. Overall, CapEx investment, 2.2% of revenue, exclude the DC. That will increase slightly in the second half of the year. Just to summarize, what is our investment and capital allocation philosophy? Firstly, we'll still look primarily at organic growth.
That's where we still want to invest CapEx. Yes, it is difficult times, and we'll make sure that we still hit our hurdle rates when we open new stores. There might be slightly drop in number of new stores because of not hitting the hurdle rates, but we will still continue to open new stores. We're continuously looking at opportunities in the Clothing and general merchandise for M&A, more so specifically around adult wear opportunities, and then on the FinTech side as well, specifically in the informal market and financial services. We are also investigating opportunities there for potential acquisitions. Share purchase, again, just to reconfirm our philosophy on share repurchase, it's primarily to make sure we don't dilute investors on our share option scheme for executives, and we continue to buy in line with that.
We did buy 415 for the six-month period, and after the end of March, with the share price going down to ZAR 15 and ZAR 16 levels, we did buy another ZAR 66 million at those levels. To confirm, as always in the past, we don't pay any interim dividend during this period. Our earnings cover, as we confirmed at the end of last year, or the dividends cover, is still at 3 x earnings. We felt at that stage it was absolutely the right decision, taking the high increase in interest rates, the impact of load shedding, the way the economy is, that we'd rather not increase our dividend cover, keep it at the same level to see how it will work this period, and that proved to be the right decision.
Being able to service our debt at the moment, and for the foreseeable future, we still see that being our strategy. That's everything from my side. I'm now gonna hand over to Sean to take you through the business unit performance.
Thanks, Riaan. Morning, everybody. As Riaan and Pieter mentioned, I'll take you through a review of each of the operational units and try and add a bit of color and flavor to the numbers that you've seen. Just as a refresher, the way we think about our business is really in three clusters. Those clusters being traditional retail, which is where all of the bricks and mortar retail brands and fascias sit. Financial services and telco, which is where our insurance, financial services, and informal market business Flash sits. Our efficiency and leverage component, which is where all of our central services sit, where we try and leverage scale and efficiencies across the group. If we talk about traditional retail to start, and Riaan shared some of the revenue numbers, I'll fill in more from a sales perspective.
Top-line sales for the group at 4.8%, which is relatively healthy. If you back out the sales of Avenida, we end up at 1.9% total sales, and the most noticeable call-out is clearly the -2.2% like-for-like, indicating a very tough six months trading. What you will notice from the slide is that the South African businesses are the ones that are under the most pressure, and particularly the big units that trade in the discount and value segment. PEP at just over 0.5% like-for-like, Ackermans at -8.3% like-for-like, and The JD Group at -3.7% like-for-like. Those big business units really under pressure in the South African economy.
The Speciality business, more positive, nearly 7% total sales growth, driven mainly by store openings, and showing positive like-for-like of 2.4%. A slightly healthier picture because we trade in a slightly different segment of the market there. What you'll see is that the non-South African businesses traded much better. PEP Africa with a very credible 5.6% like-for-like, and the Avenida business in Brazil at 8.5% like-for-like. Clearly indicative of the tough trading conditions in South Africa. If we move to some of the detail behind each individual brand, starting off with PEP.
The encouraging thing about the PEP numbers is that the 4.8% top-line sales growth was driven by both an increase in the number of transactions as well as an increase in the sales per customer. That increase in SPC was driven by retail selling price inflation. What was encouraging is that they still maintained a best price leadership position of 95%. What does that mean? That means in 95% of the cases, when they measure their prices against competitor like-for-like product, they are cheaper or at the same price, so at least managed to maintain their price positionings. What that fed through, and Pieter mentioned that earlier, was some gains in the very critical segments of baby, ladies' wear, and home. The homeware is something that we've seen over a number of months.
Bear in mind, this is the last three months moving average that I'm talking about. Continued progress in PEP, as you would expect in store openings. 56 new stores opened during the period, and specific focus on the home format, and you can see that in the top-line sales growth of 19% in the PEP Home format. Continued great performance from that team. What you will find quite interesting is that the credit mix has increased to 3%. That was less than 1% last year, and that's come about by virtue of two things. One, increased effort on actually acquiring customers onto the PEP credit base, through acquisitions by canvases in stores, and secondly, a considered drive of interoperability of the Ackermans store card across the other formats.
You see that in the increase to the 3% credit mix in PEP. You'll also see that PEP continues to dominate the handset market, 4.1 million cell phones sold during the period, with a 50/50 split between smartphones and feature phones. PAXI, which is the parcel delivery business we've spoken about before, incredible growth of 16% there, delivering more than 2.3 million parcels in the six months. What we are seeing is a growing number of small entrepreneurs and small businesses that are using the PAXI network as part of their or their fulfillment of their business, and we believe there's an ongoing or future opportunity with a B2B strategy there, and we'll be exploring that. The last point to note in PEP, both Riaan and Pieter spoke about capital allocation.
We are continually looking at where we are allocating capital. The PEP business, as you know, has been experimenting with a new format called Deals, for the last number of years. Deals was a discount variety format with a combination of FMCG product and general merchandise product. The difficulty with that format is it relies heavily on a customer who has a high degree of discretionary spend. It relies on your ability to build a large basket, and it relies on high trading densities. With where our customer is right now, the team were just not able to make that format work. We made the decision to close all 17 stores and exit that format. That has been done, and we move forward to find new ideas. That's the PEP business. On to Ackermans.
The very disappointing 8.3% negative like for like we saw, was a function of both a drop in the number of transactions and in the average SPC. We saw less customers, and those customers that were there were shopping or buying less. That was slightly offset by some RSP inflation, but again, that was challenged by virtue of the markdowns that Riaan spoke about. It was encouraging, though, to see some market share gains, so they had a very good back to school period and showed gains in school wear, as well as in the lingerie segment. Continued rollout of stores, so 51 stores opened, of which 8 were womenswear stores, so the Ackermans Woman format, and 19 of those were Ackermans Connect or the standalone cellular format.
What you'll see from the slide is we now have more than 50 stores in both the Ackermans Woman and the Ackermans Connect format, which means we've got critical mass, and really the mandate to the team now is to focus on really refining the proposition to the point that we're happy that we can roll out at speed. The other thing you'll notice is credit mix of 18%. The actual growth of credit sales was 10.2%, which when you reflect against the negative top line growth in Ackermans, shows how well credit performed. That's 200 basis points up, so contribution this time last year was 16%, so up to 18%.
Again, that was driven by a number of new accounts, 237,000 accounts opened, again, driven by increased number of canvases in store, and the drive on interoperability of the card. Riaan alluded to this a little bit earlier. In terms of the underlying reasons for the underperformance, summer in the Q1 update, we, you know, we flagged that there were challenges in the product mix, both from a price perspective, a fashionability perspective, and from an overinvestment in packs, in multi-packs. We were unable to address any of that during summer. We have long lead times in the Ackermans business, and so to make changes in the merchandise is quite difficult, and unfortunately, some of those calls that were made for summer were made for the early parts of winter as well.
Some of those problems have flowed through into the early parts of winter, and we had challenging sales in Q2. What we have been able to do is put some tactical activity in, both in terms of addressing price points as well as the unbundling of packs, and certainly in the month of May, we've seen some quite good results of that and the customer responding well to those activities. We are very confident that summer 2023, all of those underlying issues have been addressed, and we should see a far better performance. The other thing I'd call out in Ackermans is two quite significant leadership changes. Firstly, we've decided to appoint and have appointed a CEO of the Ackermans Woman format.
Up until now, the Ackermans Woman format was run by the overall management team of Ackermans and wasn't really differentiated from the core Ackermans Woman offer. We believe to give that format a proper go, it needs a dedicated team with a dedicated CEO, and that appointment has been made. The second significant leadership change is the appointment of a new overall CEO for the Ackermans business, who comes with a very high pedigree and experience, both as a experienced retailer, and as a senior leader in very reputable retail businesses. That change has been made, and they are, they are in situ as we speak. Moving on to the Speciality division, and again, a reminder, the division's kind of made up of three different types of businesses.
The first are what we would call our mature businesses, and in that category, both Dunns and Shoe City showed very strong like-for-like performance. Tekkie Town continued with the challenges we called out in Q1, where Tier 1 franchises and the availability of Tier 1 franchise product proved to be problematic, continued negative growth in the very significant canvas category, and increased discounting overall on Tier 1 brands across the market. The team worked hard to try and offset some of those pressures, and continued to roll out the introduction of apparel into the Tekkie Town format, and both from a sales and customer re-response perspective, we've seen that adding to the proposition and certainly offsetting a lot of the negative growth in the footwear categories. In our semi-mature business, that's really Refinery, very strong like for likes there, continued rollout of new stores.
We're now well over 100 shops in this format. We see a lot of open runway ahead to open significantly more Refinery stores. A success story there. The two nascent brands being CODE and S.P.C.C, continued development, both from a propositional perspective and a store footprint. In terms of CODE, we've actually rolled that brand into Tekkie Town as well, as a store-in-store option, and that will give the brand much more traction and much more visibility across the marketplace, much more quickly.
All of that really rolled up to very nice gains in market share in nearly all of the brands in the, in the division, as well as growth and market share gains in all of the categories within that division, and some very pleasing online sales growth of nearly 40%, primarily in the Tekkie Town business as well as the CODE and S.P.C.C side. Speciality, a slightly healthier story to tell from a South African retail perspective. Moving on to PEP Africa, you will recall quite strong like for likes of 5.6% I mentioned earlier. That was really driven by both volume and customer growth in most of our markets, and what was very encouraging is to see the 8.3% like for like sales growth in the two primary markets of Zambia and Mozambique.
As a matter of interest, those two markets make up 60% of our sales, strong performance in the primary markets. The team has made a huge step forward in terms of the ongoing repatriation of profits from those countries, despite quite significant liquidity challenges. Good, good re-response to those challenges from the team. Again, getting back to capital allocation. We've been, over the last six months, reviewing every country that we operate in Africa with the Africa team, and we made the decision to exit the Nigeria business. That's 44 stores. The reason for that is Nigeria is just proving to be an incredibly complex market.
It has a different customer set, different seasonality, requires a different assortment, makes complexities in imports and supply chain. We made the decision to exit, and that will be complete by the end of this calendar year, 2023. On to Avenida, the Brazil business. As I shared with you, very credible like-for-like performance of 8.5%. What you will see is that the sales volume growth at 15.8% was ahead of the circa 13% value growth. That was due to the investment in known or key value items. We in-introduced discounted price points in a lot of key categories, and that drove a massive volume uplift. Pleasing also to see that trading density continues to improve, both in existing stores and particularly in the new stores.
Nearly 11% improvement in trading density year-over-year. As far as new stores go, we opened six new stores in the six months. We have a budget of 10 for the year. We are likely to exceed that exponentially, we think we'll open more than 20 stores during the course of this financial year, which is encouraging both from the perspective of the availability of sites and of the capability and capacity of the team to actually execute on store openings. The second thing to call out in terms of store openings is the closure of the five Giovanna stores. What you may recall is when we acquired the business, it came with 110 Avenida stores 20 standalone footwear stores called Giovanna.
It was our feeling that it's better to roll one format across the territory rather than try and roll two. We made the decision to close those 20 Giovannas, and that will be complete by the end of this financial year. The other thing to call out is the removal of cellular from the business. There were circa 70 stores that had cellular phones in them. The cellular market in Brazil is very challenging. It's low margin on the handsets. There's no real ongoing revenue opportunity as there is in South Africa, and most cell phones are sold on a 10 or 12-month zero interest basis by retailers. We feel we can get a far better return on space, and therefore, have removed cellular from 70 of those stores.
The other thing to call out is from a sourcing perspective, the first product that we bought out of the PEP range, and where we leveraged both private label and Disney contract merchandise, landed in late March, and we've seen exceptional sell-offs on that product. It's raised our confidence in terms of our ability to leverage our PEP South Africa business in Avenida. Those are the CFH business. Moving on to JD. As Riaan mentioned, you know, quite challenging sales in this area, negative 3.7% like for like. That really is a function of a highly restricted customer when it comes to discretionary items and spending in discretionary categories, and I think you see that mirrored in a lot of our competitors' trading updates.
As Riaan mentioned, the home segment under the most pressure in terms of negative like-for-likes. The tech business holding there or thereabouts in terms of last year's sales levels. As Pieter mentioned, we saw some very nice gains in the categories of computing, appliances, and audio. A lot of that actually driven by the team's focus on private label and the continual development of own label product, which is both sales and margin accretive. Continued store rollouts, so 22 stores rolled out during the course of the year or the six months. Interestingly enough, one of those stores was a standalone cellular store, under the Incredible Connection brand. It's important to note that proposition is very different to the group's other cell formats, which is the PEP Cell and the Incredible... sorry, the Ackermans Connect.
The Incredible Connect is really about higher price point, premium Tier 1 brands and handsets, accessories, and goes after a post-paid contract market rather than the prepaid market that we focus on. In terms of credit sales contribution up by about 110 basis points to 20% in home and 11% overall for the business. In terms of online now making up 10% of sales in the tech division. What's interesting to note is the team took a decision to discontinue investment in the Every shop, marketplace platform, and to switch all of their focus into HiFi Corporation, and their website and digital platform. They saw no reduction in sales whatsoever.
Customers were very happy to migrate onto the HiFi Corporation website and platform, this brought very nice efficiencies in terms of marketing costs by not having to fund the dual platforms. Finally, the building company, as both Riaan and Pieter mentioned, an incredibly tough environment to be trading in terms of this segment of the market, and I think it's highly commendable that the group got fairly close to flat like-for-likes for the six months. The issues in the market are very visible to us through our wholesale business, so we actually sell to a number of our large competitors and large independents in the group.
What we see in the wholesale division for the first six months, is some of those competitors are down by as much as 30% over the period, so clearly very constrained. Load shedding has a far bigger impact in this segment than it does in our other retail formats. It impacts our ability to trade, particularly in the General building materials area, where you're running big yards and cut and edge facilities, you just can't operate while load shedding is on. Obviously, from a customer perspective, most of our customers are small tradespeople or small builders who do not have the ability and the alternative power source to work when there's stage six load shedding. A very, very difficult environment to for Steve and the team in this business.
Having said that, they opened four new stores during the period. One of those stores is the first convenience format. It's a smaller box BUCO play. It's targeted much more at the higher margin DIY market. The initial sales indications are very positive behind that. Linked to that strategy was much more work done in range development, both in the element of private label, as well as looking at new categories, very much focused around the DIY market. All things being said, a very credible performance from the building company. Onto the financial services and telecom area. First business unit is Flash, which is our informal market business. Now, Flash has three- core revenue streams or three- core divisions.
The first is their trader business, and essentially what Flash does is enable that trader to sell value-added services to their customers, to take cash and payments into their ecosystem, and to pay their suppliers. There's 167,000 traders on book, but what's more important to note is that the turnover per device is up 10%. Really, the business of Flash is less about the quantity of traders you have and more about the quality of the trader and the turnover you do through the trader. The level of activity in the informal economy is highly visible by virtue of the fact that we did nearly ZAR 16 billion worth of cash that was digitized in the six months, and we saw a 26% increase in supplier payments made through the Pay with Flash facility.
Strong performance from the trader division. The second division or area is the cellular division, which is primarily about the distribution of SIM cards in the informal market. There we saw a 9% increase in activations year on year to our base, which bodes well in terms of future ongoing revenue income streams. The final area of the Flash business is the aggregation business, essentially where they bulk buy value-added services and onsell those to B2B customers, and we saw a very significant increase there of 51% in aggregation turnover. All in all, a very healthy performance from the Flash business. In terms of Capfin, Riaan's covered a lot of this. 15% growth in terms of loan disbursements, up to nearly 290,000 loans.
You'll see that the product mixes remained relatively consistent, so 75% of the loans that we grant are in the six-month category. You'll see that stores are still a very important component of our distribution channel. 46% of the loans activated came through our store network, proving the ability to use our store footprint to generate other revenue streams. Riaan also demonstrated there was a very conservative approach, both to the credit granting and the provisioning policies, and collections, and NPL are still within healthy levels.
In terms of looking forward a little bit, we believe that there's an opportunity to leverage our Abacus Insurance business that sits within the JD stable, and to look at pushing credit life products into the Capfin stable, and to overlay those on top of some of the loans that we are granting, and that could create quite healthy revenue streams for us going forward. Last but not least, the Tenacity business. Again, Riaan alluded to this. We have 1.8 million active accounts now, driven by 345,000 new accounts that were opened in the sixth month. That came by significant investment in canvases, in stores, and as I've mentioned, the drive on interoperability, which I'll refer to shortly.
Our conservative credit granting approach is highly visible in the fact that the, you know, the average credit limit granted is less than ZAR 3,000, and our customers in good standing is stable at around 85% of the, of the active, customer set. All in all, very healthy. From an interoperability perspective, we continue to drive that. You saw the benefit to PEP, 3% of sales there. What we've seen is essentially credit utilization in our existing base up about 200 basis points, and more than a quarter of our customers are now cross-shopping, across more than one brand within the group. That's the detail of the operating companies. I'll now hand you back to Pieter, to give you a forward outlook. Thank you.
Thanks, Sean. I'm going to just close off with a couple of slides on how we see the outlook for the rest of the financial year and how we've been performing since the set of results. We have not seen an improvement in the customers' environment. There's still a maybe even deteriorating environment. Our own trading has improved quite a bit in May as a result of sort of more internal initiatives that's bearing fruit. Inflation, as you know, maintained, is going higher still, and in a way, that is actually helping our elevated inventory levels, which is sort of becoming more expensive to replace. Usually, it would be the other way around. Every four years, retailers, those who are on a retail calendar, has got an extra week.
We will reorder another week's sales without actually incurring the costs in PEP and Ackermans, and that will certainly impact our results, and Riaan will has spoken about that. We'll continue to manage what's under our control. We can't control the macro environment, and our key focus will remain trying to entrench our position in our key product categories. Recover, as I said, the things that's under our control. We're gonna keep on expanding our ladies wear offering, especially with the Ackermans Woman proposition. We continue looking at our portfolio, making sure it's all efficient and the capital remains efficiently allocated.
As Sean mentioned about our informal market trade, that's one part of the economy in South Africa, certainly that seems to be holding up well and robust, so we're gonna increase our presence there and develop our products further. Cell ullar and financial services remain a core capability for the group. We do over 1.7 billion transactions outside of our stores per annum, as mentioned before. Very pleasing is the fact that we are learning to operate in different markets in Brazil, and that whole investment is still quite small in the group, but certainly the capabilities that we are building up there is bearing fruit. As always, we're sort of going to target a bit of austerity.
If we don't get the sales, we have to be more efficient with our costs and keep on leveraging our scale. That is it from us. We will now take some questions. Thank you.
Good afternoon, everyone. I've got a couple of questions here I'm gonna run through, and hopefully I can answer them. The first question we received was Avenida. What is the contribution of Avenida to the overall group revenue in the first half of the year? As I indicated in the presentation, it's about 4%. We do also anticipate it will more or less be the same for the full year. Do take into account that normally for Avenida, their first half is slightly stronger than the second half. Overall, we at the moment, until we're growing further, it will be about 4% of group revenue. Second question we received: Flash Revenue. Just again, explain the change in product mix, and then also, when do we think this will turn?
Again, as we explained last year, what happened in Flash is they used to sell airtime vouchers, either from, as an example, Vodacom, MTN, or electricity vouchers, and they used to sell it for obviously that specific network. We used to account for the full value of the voucher. What happened now, about 18 months ago, but more than a year and a half ago, is we started selling eeziAirtime, we sell as specific vouchers. It's not linked to a specific network. The customer can decide what do they wanna convert it to, either Vodacom, MTN, Telkom, or electricity voucher. Only when they convert it to a specific voucher or network voucher, do we account then only for the commission. That's the difference. We used to account for the full value of the sale, now we only account for the commission.
As I also indicated last year, this will now analyze at the beginning of this financial year. We're already starting to see in March that it's now on the working on the same basis last year. We do anticipate in the second half of the year that that negative growth that we saw in the first half will also still be negative, but it will be a lower negative amount as we start to see the change now and then working on the same base of last year. There was also a question is: What is the contribution? Just to confirm, again, 80%, 80%-90% of the sales in the FinTech segment is for Flash, and 10% on Capfin.
On profit side, about 60% of the profits comes from Flash and 40% from Capfin. Next question is on the insurance money that we received. Why don't we account for it as an abnormal item and add it back? As we've always done with all the money or the majority of the money that we received, previously from the social unrest and now also from the flood, you'll see it's money that we've received for business interruption, so it's purely a replacement of the profits that we've lost. We don't regard it as abnormal. We see this just as a replacement, as a new bottom line. We'd have lost profit. We now add it back to get the profit, hopefully back to the level it would have been had the floods and the social unrest not happened.
There was a question around operating profit percentage. Where do we see it long term? What's the impact of Ackermans on that? As I commented, normally we would see it running at about 12%. Now that including IFRS 16, we did now drop down to the 10.8%. Yes, the majority of that is to do with the drop in profit from an Ackermans perspective. We do anticipate that again next year, once Ackermans is back to normal performance levels, that we will get back to a 12% operating profit for the group. Needless to say, the Clothing and general merchandise obviously runs at a higher operating profit percentage. The last question was around inventory levels. Do we see it coming or returning to more optimal levels by year-end?
What is the impact on working capital? Yes, we do anticipate it dropping from the 11.7%. However, do take into account, as I mentioned in the presentation, we have got more stores open, and last year, inflation is running at a much higher % than what we used to have. Sorry, that was just quickly load shedding. Than what we used to have in the past. Take into account, as I commented, remember, a lot of the inventory we have in PEP is non-seasonal replenishment. With Ackermans side, it's slightly higher seasonal component. Hence the reason why we expect more markdowns in Ackermans to get it to a normalized level and a lower number on the PEP side.
We do anticipate it growing at a lower percentage than what you saw in the first half. For the full year, on working capital, that will obviously assist us with getting a better number working capital. However, take into account the second part of the reason why working capital requirement is higher than what it was last year is because of the growth in the books. We do anticipate that the Tenacity book will still grow in the second half of the year, probably not to the same extent as in the first half, but that will still have an impact on working capital. Overall, we do anticipate that our net debt level will come down to a more normalized level at the end compared to where we were for the six months. Those are the questions.
I'll now hand over to Sean to cover some of the other questions.
Thanks, Riaan. Hello again, everybody. A few questions from an operational perspective. The first question was some detail around how Tekkie Town is performing. I think as we mentioned in the slide, Tekkie Town had a fairly tough H1, mainly compounded by increased level of discounting and availability issues with Tier 1 brands, and some pressures around the canvas category, which continued to underperform. What we did see is the team managed to offset some of this performance through the introduction of apparel into more stores, and encouragingly, both April and May have seen an improvement in performance in Tekkie Town. Second question was around the level of markdowns in Ackermans and whether there was additional summer stock that would need to be marked down.
At a headline level, markdowns were about double what we would normally expect to spend and what the prior year had shown. Those markdowns were both from a tactical price correction perspective and performance markdowns. There will be some or a small amount of summer carryover stock that will probably need to be actioned at the beginning of next summer. If we look at where the currency is headed at the moment, I think from a costing rate perspective, automatically there will be markdowns on that product anyway. Question around PEP Home and a comparison between the PEP Home performance and the JD performance. You can't really compare them. PEP Home's product range is really around home dec, around living essentials, and soft furnishings, and the average price point is quite low.
JD, on the other hand, is big-ticket items in furniture and large and small appliances, and so you can't really compare the two in terms of market segment. Third question was a question about Ackermans Woman and whether we're going to relook the rollout of the Ackermans Woman format. I think as we mentioned, we're at 54 stores. We believe that's enough critical mass to now focus on getting the proposition right. As I mentioned, there's a dedicated leadership team that's now being placed into that business, and they will focus on improving the proposition before we aggressively roll that format out. There was also a question around some of the Ackermans initiatives or the initiatives behind resolving the performance. Again, I'll just highlight what we covered in the presentation, and that was the teams learned the lessons about fashionability.
They've learned lessons about price point and engaged in both tactical markdowns and fixing those price points going forward. We've made the relevant leadership changes in that business that we think will help the team galvanize it and improve performance. Another question about Ackermans was: How much of the Ackermans underperformance relates to own goals or missteps versus a highly competitive environment and an increasingly competitive environment? The reality is, I think the Ackermans performance has three components. One, as Pieter's mentioned, a consumer that's under severe pressure. Two, a more competitive marketplace, with improved competitors. Three, our own missteps or poor calls on product. The reality is, if you have a more competitive environment and a consumer under pressure, a misstep in your own range is gonna hurt you far worse.
The reality is, it's a bit of everything, but we believe the primary reason is still internally orientated, and it relates to all of the reasons that we've given around Ackermans' underperformance. The final question was really asking for more granular detail around the performance of CGM, and at a like-for-like level and inflation versus volume. Q1, as we reported, CGM was negative 1.5% like-for-like. You'll see in the, in the long form that H1 has deteriorated to 2% like-for-like on CGM, and that mirrors the PEP and Ackermans businesses. Both businesses saw volume decline, offset by RSP inflation. The shape of Q2 versus Q1, Q2 is primarily influenced by back to school in January.
That was good for both businesses, as we expected. The reality is that February was there or thereabouts. March was the month that saw a dramatic decline in like for likes, and we see that across the market. Both PEP and Ackermans in the last three weeks of March, feeling more pain than they had in the initial parts of the year. Those are my questions. I'll hand you back to Pieter.
Thank you, Sean. We have time for one more question, and we'll close off for today. Just, thanks for your participation. The question I'm gonna deal with is just a question about what is our target for credit sales. We don't really have a target, but we do recognize that our customers need some form of credit, especially in a tough environment, to pay for their kids' school uniforms or something, a bigger purchase. We are very deliberate about not writing bad credit. 85% of our customers are in good standing, and we have introduced interoperability in our business this year, which is a new feature for our customers, where they can use existing credit facility at different brands in the group.
That has helped, especially PEP, to increase some of their credit sales. We don't have a specific target, but we're very aware of what our customers needs and one of these payment mechanisms are credit, along with lay-by and traditional cash retailer. We feel a credit customer is a good customer. We have more information about them, but clearly, we don't want to put them in a difficult place by giving them credit they can't afford. That I'll end off with. Thank you very much for your participation, and see you again. Thanks.