Good day, and welcome to the Pepkor Annual Results presentation for the Financial Year ended 30 September 2023. My name is Pieter Erasmus. I'll be doing a quick overview of the results. Then Riaan Hanekom, our CFO, will follow with the financial performance indicators, and Sean Cardinaal, our COO, will give a brief update on... or more detailed update on the business performance. And then finally, I will close with an outlook, and then we'll take some questions. Just briefly, the environment that we are operating in, our customers keep on telling us that disposable income is under pressure. The social grant payment system, South Africa, still is disrupted from time to time. Unemployment numbers are, remains high, stubbornly high.
There has been some statistics showing a bit of a lower unemployment number, but certainly the environment that we experience or our customers experience is still high unemployment. The high cost of living, driven by food inflation, still very much a problem for our consumers or our customers. In addition to that, load shedding, which is now very much back in the news, is causing some disruptions for our customers' income. The ability of them to earn income while this extensive load shedding severely impacted. For us as a business, we lost about 845,000 hours, mostly in our JD and our building businesses, because PEP and Ackermans have got really good backup.
We also incurred extensive diesel costs, not as much as the food retailers who have to do the cold storage. So around about ZAR 140 million for the year, which is a big increase on last year, up to almost 70%. In addition to that, we find that the security environment of which our stores have to operate and our staff have to deal with quite a lot of robberies. The fact that we sell so many cellphones also exposes us a bit more maybe than some of the other of our peers. Infrastructure damage is also difficult. You know, it's difficult to get sometimes the roads, the deliveries of stores, et cetera. And then recently, being in the news, the port delays.
We are, like all other, South African businesses, reliant on stock flowing into our ports. At the moment, that's a particular difficult time. There's quite a lot of bottlenecks, especially in Durban, and that's disrupting our supply chain. So all of this, as a business, we have to be a bit more nimble. We cannot think about the business quite the same way as we used to. We have to react quite a lot different in some instances, but we remain firmly entrenched in the discount and value market, and we believe that we have the capability to deal with all this. Competition, obviously increasing in the discount and value market. Everyone sees our high market shares. It looks attractive, but we certainly are aware of the competition.
For the first time, we sort of make comments about Brazil. Clearly, it's a new market for that we've entered. Certainly on a macro basis, Brazil looks better than maybe what some of what I've mentioned before in South Africa. There seems to be a good much lower unemployment, and certainly after a bit of the political uncertainty earlier after the last elections, things have calmed down, and inflation seems to be on the right trajectory and as well as interest rates. So back to our numbers. Just the year in summary, we've had a strong second half. Our revenue in the end grew 7.7% for the year. It included an additional week, which Riaan will unpack for you. Sort of in line with what we guided the market on at half year.
We said the second half would be very similar to the first half, and that's why our normalized earnings down almost 7%, but that's in line with what we communicated before. Very happy that the second half was much stronger and that key market share gains that we called out was actually achieved in the second half. Very good working capital management, so that allowed us to have excellent cash flow generated, and because of that, we decided to keep our dividend policy the same, and recommended that dividend be declared at the normal three times cover. So just some other maybe interesting numbers before we go into the detailed financials. I spoke about our discount position. PEP stays very much the... in the discount market.
If you look at ZAR 48 being the average price point still in PEP, that if you remember, we sell a lot of handsets. As I said earlier, seven out of 10 at the bottom there of handsets, prepaid handsets in South Africa sold, just to indicate just how low that price point is. We've been very successful of opening new accounts, A+ accounts, almost 800,000, to help our customers bridge the payments that they need to make in order to buy the clothing and phones that they need. We've allowed interoperability and, Riaan will show you how the books have performed. Very, very happy with that initiative. We still remain very high market shares in babies.
Two out of three garments in South Africa are still coming out of a group, and in kids, out out of two still being bought from from the PEP group in South Africa. All of this culminated to 1.9 billion transactions that we processed for the year. A very high activity in the stores still, and hoping to build on that going forward. Some other interesting information, which may be not non-financial, which sometimes we don't communicate to the market, but we thought we will highlight this this year, is we remain very strong in our talent development strategy. Over 4,000 learnerships have been completed. We're heavily involved in the early child development programs. Over 20,000 kids have been supported through that.
And then, yeah, our code of conduct in our supply chain has been supported heavily by our suppliers now. Up to 94% of them have committed to that. And then on a wider scale, everyone's putting in solar, which is obviously environmentally friendly, but also good for business, especially in the current environment. And we've increased about 6 million MW for the year, over 8.5 million MW installed by now. And we have been included in the FTSE Responsible Investment Index for the last year or two, so very good progress on these, let's call it, non-financial issues. So now for the exciting stuff, Riaan will take you through the year's numbers and explain some of the once-off items. Unfortunately, they appear again this year. Thanks, Riaan.
Thank you, Pieter. Morning, all. As Pieter mentioned, I'm gonna take you through the financial results for this last financial year. To start off with just some high-level indicators to give you an overview of the results for the year. As Pieter already mentioned, revenue up by 7.7%. That was helped by the additional week, the week 53, that we had in the clothing and general merchandise segment, so that gives us additional 1.2%. If you take that out, the increase was 6.5%, taking us to the overall ZAR 87.4 billion for the last financial year. Very pleased to report that we could see a slight increase in our GP margin, up by 20 basis points.
I'll unpack that a bit later in a bit more detail, but the essence of that was that, again, as we've seen in the first six months, very good performance from our financial services businesses, specifically with the growth in the books and higher interest rates, assisting us to counteract the fact that on the retail side, we had a drop of 80 basis points in our retail margin. That was mostly to do with markdowns in Ackermans, but also, to a lesser extent, markdowns in PEP to clear out the stock we had, during the year that obviously did not sell. Very much again, in line with what we communicated for the first six months. OpEx, still pleased to say that we were able to control our OpEx growth, taking various unknown factors into account.
If you strip out all the anomalies, our normalized OpEx grew by 6.8%. That includes, again, a number of new stores. So very pleased that if you exclude Forex depreciation and also some other once-off items, that we could only grow by 6.8%. The one item that obviously is not included in this, debtors cost, and that, with the growth in the books, was up by 57.3%. So that is also the main reason, although we saw an improvement in gross margin, that our operating profit is down by 8.1%. The growth in the books, the additional increase in debtors cost, also depreciation that grew by more than 10%, resulted in that...
The fact that we dropped the operating profit by 8.1% to ZAR 9.5 billion, or on a normalized basis, down by 8%. Still pleased to announce that we could deliver HEPS of 149%. Slightly better than we initially anticipated, but very much in line with what we communicated again early on. Second half, very much in line with the first half, so HEPS down by 8.7. That despite the fact that we had a huge increase in finance costs because of the higher interest rates, that was offset by the drop in the tax amount payable, again, in line with what we communicated in the first six months. So normalized HEPS down by 6.7%, and I'll unpack that also a bit in more detail later on.
So if you look at more of the balance sheet indicators, how did we perform? Very strong cash generation during this period, up by 15.9%. Cash generated by operations, ZAR 13 billion, compared to last year's ZAR 11.1 billion, so really a fantastic result. Cash generated or cash conversion, 91% for this period. That despite the fact that we had to pay some suppliers earlier because of the extra week and cutoff being later, we still very pleased with the 91% cash conversion rate that we've achieved. Growth in the credit books, Pieter touched on it. Very much mostly driven by the growth in the Tenacity book, up by more than ZAR 1 billion. So overall, the investment in our credit books this year was ZAR 3.4 billion, and we opened almost close to 800,000 new A+ accounts.
Now, this was counteracted by the fact that we saw a drop in our inventory levels, again, across the board, but mostly from PEP and Ackermans, and also from the Flash businesses. So that helped to generate that cash of ZAR 13 billion, and also a slight increase in accounts payable. Very pleased to say that even with the investment in the books, and the fact that you only see the benefit of the investment in books two years after you started growing the books, we could still deliver a return on net asset of 27%. Our internal bench is always above 25%, so a very nice return on the assets that we invested. That was obviously helped by the drop in inventory, assisted that number.
The number that was already communicated, in the sense when we did the profit update and trading statement, the impairment of ZAR 6.6 billion, two components to it. As we communicated, the Pepkor General Merchandise being ZAR 5.9 billion, and then Tekkie Town cash generating unit, also an impairment of ZAR 700,000, making up to ZAR 6.6 billion. And as Pieter mentioned, very happy to say, with the strong cash generation, when we added back the impairment, we could still declare a dividend of ZAR 0.481 for the year, which is in line with our dividend policy. So just, some of the one-off items, there's quite a few of them, and I'll pack most of them, again, as the presentation goes on.
The first one, very pleased to say, after three years of including insurance recoveries and insurance payments from insurance, we've received the final amount this year for the flooding, ZAR 394 million that was included in this year's results. But yes, there was obviously a huge impact already in the 2021 financial year and also in the 2022 financial year, where we received firstly from the social unrest, ZAR 1.5 billion, and then our total amount we received from the floods was ZAR 790 million, in line with what we communicated earlier. Important to remember, you'll see that in three different lines on the income statement, the biggest impact being of, because of business interruption, ZAR 275 million included in that line, and other income.
It is important to remember that, yes, there was still, even in this year, expenses incurred at our DC in Durban, the Fibres Road DC, of roughly ZAR 130 million, that must be offset against that other, that other income for the year. We then, something new that we've communicated previously that we were planning on doing, and this is part of our future strategy, that we wanna focus a lot more on financial services and insurance. We've made a decision to now change the segments, so all the books, the credit books, have now been included in the Fintech segment. We previously, we only had Capfin, now the Tenacity book, the JD Connect book, and also our insurance business, which previously only served the JD business, Abacus. We also have plans that it will service other entities in the group.
It's already started with PAXI and on the PEP side. So we've decided to include that now, all going forward into the financial services and into the Fintech. Flash was previously there as well. Capfin was also there, so they remain part of it. It means that you've now got pure retail in the other segments, the clothing and general merchandise, furniture, and electronics, and also in building materials. There's no financial services. From a book perspective or insurance perspective, we still have other services that we render in stores, but that's under the other income line on the income statement. Revenue drivers, who performed well, who didn't perform? Overall, you're aware of the 7.7% growth that you communicated earlier. On the clothing and general merchandise segment, up by 11.1%.
That's really mainly driven by Avenida, which has really performed very well during this year. Also, it wasn't included for the full year. Last year, we also still saw good growth from the Africa business, and to a lesser extent, from the PEP business. Unfortunately, that was counteracted by underperformance on the Ackermans business and also the Tekkie Town business. Now, on the furniture side, very pleased to say, in difficult circumstances, only down by 0.7%. Again, electronics performing or tech section performing better than the home. The trend we've seen the last two years, and that also continued, especially in the first half of the year. The building material segment, basically level business, taking the market into account and some of the performance of competitors. Very commendable performance of really being on level with last year.
And then on the Fintech, now with the books included, the high interest rates that we saw this year meant that we have a growth there of 5.2%. That despite the fact that we still had a small negative growth of -2%, or a negative growth of -2% in the Flash business this year. But that has come down from the 12% that we presented in the first half, so we did see a positive revenue growth in Flash in the second half of the year. Again, just to break that down but in a bit more detail, if you take the extra week out, as I mentioned earlier, the growth was 6.5%. If you exclude Avenida, on a 53-week basis, the growth was 5.6%, on a 52-week basis, 4.3%.
As we communicated in the trading update, second half of the year, much better performance than in the first half of the year with the 8.8%. We are still predominantly a cash business, as we've always communicated. 90% of our sales are still done through some form of cash, although we have seen this year credit with the growth in, specifically in the Tenacity book and also Avenida in for the full year. The credit has now increased from 8% -1 0%, and the growth in credit was 35% for the group overall. Exclude Avenida, still 27%. So that just shows again, the impact of the consumer being constrained, but also the impact of the growth in our A+ card across the businesses. Again, the new breakdown of the segments, and where does the revenue come from?
We still saw an increase in the clothing and general merchandise, up from, up to 67%. Used to be 65%. Naturally, because of the inclusion of Avenida, like I communicated previously, and then really the Fintech also up to 11%. Previously, that was around about 10%. So a slight move in the breakdown there because of the change in the segments. Then something in the past, we've always received a lot of questions on: How do we make money from Cellular? What is the model? Obviously, the margin we make on the sale of handset, it's much lower than what we make on the sale of normal merchandise, and we've always communicated, you've got to include, obviously, ongoing revenue as well.
So we've now, with our future strategy, to focus a lot more on this area of the business as well, and some initiatives that we've got in place to grow this even more. We've now communicated—We decided to communicate to the market what the amount is, and you'll see for this year, from all four of the networks together, we received ZAR 1.9 billion in ongoing revenue. It is, however, important to understand there, there's two different sources of how we earn ongoing revenue. First one is in store, when we sell a SIM card with a handset, and that happens in PEP, Ackermans, Speciality and in the JD Group. When the customer loads money onto the SIM card, and they spend that again, either via data or airtime, et cetera, we earn a percentage of that spend from the different networks, and that's...
Part of it is ZAR 1.5 billion. The second part of it via Flash business, which is a distributor of SIM cards to our traders. We also, on those SIM cards that they distribute to the traders and the end trader on sell to customers, we also earn ongoing revenue on those SIM cards, being ZAR 393 million for this year. However, it's important to understand, we do share a portion of that three hundred and ninety-three with the trader, obviously, to compensate him or her for the fact that they sold the SIM cards via their spaza shop or their shop. We then move on to the breakdown. As I said, now, the new Fintech division, where does the revenue come from? Overall growth, already explained, up by ZAR 5.2 billion-ZAR 10 billion.
Flash in the past used to make 80% of the segment and Capfin 20%. That you'll see has now changed to 67%. As I mentioned, Flash for the year is still down by 2%, but for the second six months, we've seen a nice growth in revenue for Flash, and then very nice growth on revenue for Tenacity, specifically because of the increase in interest rates and the growth in the books. Similarly, on the Capfin and Connect side, and Abacus, we've also seen a good growth in number of policies and gross written premiums, which obviously assist in that business to grow it on an annual basis, and we do anticipate to see even further growth on that as we start selling more policies via that channel going forward.
Gross profit margin, as I communicated earlier, very pleased to say we had a 20 basis points increase, mainly driven, as already communicated, the higher interest rate, additional credit granting, the bigger books, and also from Flash. We've also seen improvement in their GP, meant that that counteracted the impact of the 80 basis points were down on the retail GP because of the markdowns process in predominantly Ackermans, but lesser extent to PEP. So very good news to see that up to 35.5, and we do anticipate that it will be roughly at that level in the new financial year as well. From other income perspective, very much impacted by the insurance payment, as I, as I mentioned earlier. So that obviously dropped this year with the final payment on the floods being made of ZAR 275.
So if we exclude that, there's still a growth of 1.3% in other income. Main growth coming from bill payments, so that's any type of payments we do in stores, DStv, normal municipality payments, et cetera. That's where we get 30% growth. The rest really from marketing rebates and other insurance products we sell in our stores. Cost of doing business, something that we're obviously very passionate about, and we've got huge focus continuously on how we can bring our cost of doing business down and create bigger efficiency.
Unfortunately, this year, with top line growing at a higher rate than our cost base, overall, or the lower base of our cost base, we have seen an increase of cost of doing business up to 26%, and as I mentioned earlier, the overall up by 8.7%, the OpEx number, excluding debtors cost and depreciation. If you normalize that, and exclude the impact of Avenida as the 6.8% that I showed you earlier, and Avenida did make quite a big impact because it wasn't in the full year last year, but also the second half of the year, with the real strengthening against the rand, that expense number increased.
But on our salary cost line, very happy to say with even additional stores opened, the sales or salary growth was still 6.4%, so just above inflation. And similarly, on a rental basis, pre- IFRS 16, we still saw 6.1%, again, with more than 300 stores gross that we opened during the year. Yes, we did also close some stores, but still a very good result taking the circumstance account, and this is our two biggest cost drivers to still be at a growth of around 6%. Now, I have to commend all the teams on their performance. So the one item we've obviously had lots of discussion in the past and had a huge impact on the numbers, is the lease modification because of a change in to IFRS 16. IFRS 16 being implemented.
We have in the past always communicated this number should come down over time, and we have definitely seen a big drop in normal lease modification, down from ZAR 767 million to ZAR 391 million this year. Yes, there is the one-off item on the PEP Hammarsdale DC, or Fiveways Road DC, where we're moving to the PEP Hammarsdale of ZAR 392. But as I said earlier, that's a once-off item. It won't repeat. ZAR 391 million is the number, the normalized number for this year, and we do anticipate that will come down even further in the next years.
Again, to confirm, that's mainly driven by store optimization, where we close unprofitable stores into the better rental agreements, or we still saw this year a drop of 2% on lease renewals, which is still above our expectation that we originally had at the beginning of the year. So if we look then, how does this all come together in operating profit? If you take all of that into account, as I said earlier, down by 8.1%. Yes, there is those one-off items this year and last year. Last year was the Steinhoff or Ibex settlement, which meant income of ZAR 459 million, which you have to add back. And this year is the DC lease modification of ZAR 392 million, that you have to add back.
So if you exclude those two, it's an 8% drop in operating profit. Where is the biggest impact? Really from the clothing and general merchandise segment, and that's really mainly driven by the Ackermans' performance, as we've communicated earlier in the year, with the huge markdowns they've had to process. They were significantly down on last year and also in the Tekkie Town business. That was offset slightly by the very good performance of Avenida and also extensive cost cutting from a corporate center perspective. Furniture segment still did, under circumstances, very well. Well done to manage the, the gross profit and contain the expenses. The fact that there was no growth on the top line, negative growth, to be only down 3.3%, is really a phenomenal performance, taking the market into account and the performance in home side.
Similarly, on the Building Company side, to show a profit growth of 1.3 with no top-line growth, again, confirms how well they've managed their expenses. Yes, there was a once-off insurance payment in there as well, but they still did very well compared to most of their peers, in the market. Fintech, still good performance, mainly driven again by Flash, which had above 20% profit growth. Yes, it was offset by a drop in profit from, Capfin and also by a small negative growth from, Tenacity, but that's mainly to do with the growth in the book and the provisions that you obviously have to increase when you grow your book. So that takes you to the ZAR 9.1 billion profit, normalized profit for the year.
Just from a segmental perspective, we used to generate 85% of the profit from the clothing and general merchandise. That dropped to 79%, again, mainly due to the performance of Ackermans, and then obviously the fintech improving to 10%, where it used to be 9% of profits from that segment. Then the item that obviously resulted in us doing a trading statement, the impairment, as we communicated, in the sense that we did at that stage, this was in the Pepkor General Merchandise cash generating unit, mostly driven by an increase in the WACC rate because of higher interest rate volatility in the market, et cetera, et cetera, which took the WACC rate up from 14.4%-15.7%, resulting in the ZAR 5.9 billion impairment.
If we had kept the WACC rate the same as the 14.4% for last year, there would not have been an impairment, but because of that jump to 15.7%, we had to do an impairment. Tekkie Town, a mixture of both: underperformance, but also due to the increase in the WACC rate, there was an overall impairment for Tekkie Town of ZAR 703 million for the year. Just quickly on the finance cost, I mentioned this earlier. Higher interest rate during the year. Our average debt for the year was very much on the same level as last year. So from a bank finance cost perspective, increased from ZAR 0.8 billion- ZAR 1.4 billion, so ZAR 500 million of that was purely due to the higher interest rate or the increase in the repo rate.
From an IFRS 16 component, you'll see they're very much at the same level the last three years, and no real increase because of, again, the changes to better rental agreements, closure of unprofitable stores, et cetera, et cetera. On the books, quite a big impact this year, especially on the Tenacity book or the A+ card, with us now opening accounts in PEP and in Ackermans, having interoperability between all the clothing and general merchandise businesses. We saw a big jump of ZAR 1.1 billion gross in that book, now sitting at ZAR 4.5 billion. Still very pleased to say, non-performing loans very much under control at 13%, and only a very slight increase in the provision level.
We already increased the provision in the previous financial year because we knew we were gonna grow that book in anticipation of a potential higher non-performing loan. Just to add a bit further around that, we've also dropped our approval rates on Tenacity, and we're also allocating smaller balances, so very prudent credit granting, hence the reason why we're very comfortable with the non-performing loans and the provision level then. Connect, very small growth in the Connect. Yes, we've seen a slight deterioration in non-performing loans. We've also seen that we've got two products on the JD side, the Connect side, the 24-month or the 36. So the average, where it used to be 27 months, it's now moved to 29 months. Again, confirming the customer's under pressure.
They wanna pay smaller amounts, and hence they're going for longer periods to pay that off. Capfin, we did see a slight increase in non-performing loans in Capfin. That's why we sort of pulled back on the growth in Capfin in the second half of the year. We saw an increase in write-offs, also in Capfin for this period, hence the reason that the provision is slightly up from 17%- 18%. As I communicated after the six months results, we do anticipate a small increase, but we're very much comfortable. We've got the non-performing loans more in line with what we would like to see going forward. And then Avenida, well managed. 42% of sales in Avenida is done on the book, so the guys there have done really well to manage non-performing loans.
We have quite a few new stores opening and dropping the provision rate down to 21%. So if you just look at the two components, where did that increase of 57.3% in data costs come from? From a bad debts component, up from ZAR 1 billion- ZAR 1.2 billion, and almost ZAR 200 million of that is bad debt write-offs in the Capfin book. Hence the reason, as I said, why we slowed down, and we do the write-off a lot earlier in Capfin and in out of the other books, so we know very quickly if it is a bad performing customer or not. On the provision side, up from ZAR 95 million- ZAR 475 million.
That's mostly driven by the increase in the Tenacity book, and the fact, according to IFRS 9, you have to load the provision up front and only see the benefit in two years' time. That has resulted in a 400% increase, but also, as you saw, a slight increase in the Capfin provision and the JD or Connect book provision. Just to illustrate that a bit better, if you look at the right-hand side, you'll see the credit book growth was over all the books grew by 22%, but the provision grew by 24%, again, indicating you have to upfront load the provision with, the growth of a new book like Tenacity, and you only see the benefit of that, bigger book in two years' time. Inventory levels, mentioned that earlier. Very pleased to say we're back to normalized inventory level.
Markdowns taken in PEP and Ackermans, very much comfortable with the level that we hit. Drop in the Flash airtime stock holding as well, so that's also assisted. Basically all our business is at a normalized level, the only exception probably being Tekkie Town, is slightly higher. So very much comfortable taking the new stores into account, the fact that we're still down on last year, well managed by the teams and means we set up for the new financial year to grow the business even further. That all resulted in cash generation. You'll see the investment of ZAR 3.3 billion in the credit books across all the books, but from a net working capital, taking into account we opened additional stores.
The fact that our inventory is down has really helped us, and that's where the majority of the cash generation came from during the year, ending up with the ZAR 13 billion that I mentioned earlier. And if you take off the fact that we had to pay ZAR 1.4 billion creditors before cut-off because of the extra week, if you eliminate that and work on a normalized basis like last year, our cash conversion rate was actually 101% versus the 91%. So phenomenal result for this period. This also plays out then in your net debt level. So very much after the first six months, we had a higher net debt level. The cash generation, and the inventory levels coming down, our net debt is down to ZAR 7.6 billion.
Net debt- to- EBITDA at 0.8x, which is very much in line with our target range of 0.5x-1 x net debt- to- EBITDA, so at a very comfortable level. Again, if you take that ZAR 1.4 billion out to normalize it compared to last year, the net debt would have been ZAR 6.2 billion, which is a 0.7 x net debt- to- EBITDA. And that's a comfortable level for us, taking high interest rates into account, and give us the flexibility to still invest in further growth or new opportunities that comes along.
Just on a net debt, or a payment, repayment profile, we did raise bonds again this year of ZAR 1.2 billion to replace the current ZAR 800 million that we had to repay at the end of March, and that was again done at more favorable rates than what we previously had in place. So from an overall perspective, the one key KPI I mentioned earlier that we do look at is from a returns perspective, the cash that we invest, what return do we get on that? And that's why we look at return on net assets. Can't really look at return on equity because of the ZAR 50 billion goodwill and intangible that we carry on the balance sheet. So we always want to achieve, as I said, a minimum of 25%.
So very pleased to say we still, even with the investment in the book, achieving a 27% return on net asset. So to conclude, capital allocation, we did invest 2.7% of revenue this year in CapEx, mostly again, around opening and refurbishment of stores. Also, the investment in the PEP Hammarsdale DC from a fit-out perspective, we do anticipate that going up to 2.9%, with a new Ackermans DC or a relocation of the Ackermans DC in Cape Town happening as a fit-out for that, and then quite a substantial investment, again, in new stores and refurbishment. The further investment in our IT system. We have made a decision because of the faster rollout of stores in Avenida.
We want to move from where traditionally we were planning on doing 20-30 stores a year, to 50 stores a year. Over a three-year period, we will invest another ZAR 1 billion in Avenida to accelerate the growth in that business because of the good results we've already seen. Continuously looking at, mergers and acquisitions opportunities, as we communicated previously, specifically around the CFH side, but also the Fintech. Any opportunity comes along that we feel will be complementary to the business, we do investigate, and we're planning on investing in it.
From a share purchase perspective, we have, again, just to confirm, we buy back shares in the market to make sure that shareholders don't dilute because of the share option scheme, and we are slightly ahead of the number of shares that we have to buy back, so we're not actively in the market at the moment, but that will be an ongoing basis. And to conclude, this all comes together in the payment of the dividend. We decided to stick to the 3 x earnings cover that we had last year and for the last couple of years. That result is a ZAR 0.481 cent dividend that will be declared and paid in January, compared to the ZAR 0.55 cents that was paid last year. So it's down by 13%, but still very pleased under the circumstances to be able to declare and pay a dividend.
On that note, I'll hand over to Sean to take you through the high-level business unit performance. Thank you very much.
Thanks, Riaan. Thanks, Pieter. I'll now give you a little bit more granularity across the different business units. There will be a little bit of overlap in terms of some of the numbers you hear, so apologies for that, but hopefully you get a clearer understanding of the individual business units. I think as both Rian and Pieter said, it certainly was a disappointing year, but definitely a year of two halves, and you'll see that in the second H2 performance. We definitely saw signs of improvement in the big business units towards the latter part of the year, which is encouraging, and we made good progress in the various value creation plans that we introduced into the business over the last, over the last 12 months.
So again, to reiterate, as Pieter said, we restructured our business into sort of four core segments, and we did that to enable the correct resourcing and focus on these areas. So traditional retail being the bricks-and-mortar stores at the center of it, financial services, telco, and the informal market as part of the Fintech segment, efficiencies, leverage, and central business units, sitting next to that, and finally, the customer unit as the fourth component. We've aligned our internal structures, we've set our KPIs up, we've aligned our plans in line with this, with this structure. So it is run on a divisional basis, but I think as Riaan pointed out, there are a larger number of interdependencies between these units, particularly between financial services and traditional retail.
So if we move into traditional retail, and one of the things you might notice is the numbers might differ slightly to Riaan. That's because I'm reporting on a 52-week basis, on 52, and I'm talking to you purely about retail sales, not total revenue. So the headline level across the retail segments, total sales growth of 6.4%. That materialized in a like-for-like of 0.7%, and as you can see, strong H2 at 3.9%, offsetting the negative 2.2% that we saw in H1. The CGM segment, total sales growth of 9.1%. If you exclude Avenida, that comes to 6.2%. Like-for-likes, marginally positive at 1.5%.
Again, very strong H2 at 5.7%, which offset the -2.1% that we saw earlier in the year. The furniture, appliances, and electronics, which is essentially the JD Group, unfortunately, top-line decline of 2.1%, sorry, 1.2% with a decline in like-for-likes of -2.1%. Again, a stronger H2 with about a flat like-for-like, but H1 really the problem at -3.7% like-for-like. And finally, building materials, which is essentially The Building Company, top-line sales growth of 0.1%. So essentially flat top-line revenue, like-for-likes at -0.8%, and a consistent, consistent performance during the year. But I'll unpack that in a bit more detail.
If we move to PEP, clearly the biggest unit, very pleasing top-line sales growth of 8.2%. The PEP Home division, particularly strong at nearly 22% top-line growth. Like-for-likes at 4.5%, underpinned by a very strong 9% growth in H2. And that was essentially driven both by an increase in the number of transactions as well as increase in the sales per customer. That sales performance meant that we saw some very pleasing movements in market share. So on a 12-month moving average basis, we saw increases in market share in home, in baby, and in menswear. And on a 6-month moving average basis, we've actually seen growth in all categories within PEP. So baby, kids wear, both younger and older, men's, ladies, and homeware.
And that really came about not just because of the maintenance of the BPL or Best Price Leadership position of 96%, but a real focus by the team on the execution of the product at the price point. So a lot of investment in fabrics, a lot of investment in product styling and underwear and the handstitching behind the garments, and the footwear really drove that performance. Sales clearly enabled by the credit mix that Riaan alluded to, so the mix up from 1% last year to 4% this year. And that was underpinned by not only the interoperability of the Ackermans card, but also the opening of just over 310,000 accounts in the PEP business over the course of the last 12 months.
In terms of stores, 96 stores opened across the PEP Home, PEP Cell, and PEP Core format. But as Riaan alluded to, the big decision there was the exit of the Deals format. You'll remember the Deals format was a discount variety business, which essentially sold a mixture of FMCG and general merchandise. Unfortunately, the underlying metrics at a store EBITDA level for this particular format weren't workable. The format relies on a high degree of disposable income with from the customer and the ability to build a basket. And unfortunately, in the current macro environment and with the situation a PEP customer finds themselves in, that wasn't workable, and the team made the decision to exit that, exit that business.
In terms of cellular, PEP maintains its market dominance, so nearly 8 million cell phones sold during the course of last year. About a 50/50 split as normal between smartphones and feature phones. We did see a slight move towards feature phones in the PEP business, and that was predominantly because we saw very high inflation on smartphone handsets in excess of 20% RSP inflation, driven by currency weakening during the year. And finally, from a financial services PEP perspective, one of the things the PEP team continually do is looking for ways to optimize the 2,600 store footprint that they have and finding ways of solving customers' problems through there, and PAXI is a very good example of this.
So the PAXI delivery, parcel delivery business, nearly 5 million units or parcels through the network last year, which represented a growth of around 18%. As well as, Riaan alluded to, one of the highlights last year was the commissioning of the new PEP distribution center in Hammarsdale, KwaZulu-Natal. This 150,000 sq m facility forms part of a greater Pepkor campus, in Hammarsdale, which houses an Ackermans and a specialty DC, as well. That 150,000 sq m will add about 45% more storage capacity, and that capacity is enabled further by some state-of-the-art picking technology, which means a reduction of about 50% in throughput and processing time at pick point. And that will enable further growth within the PEP business and obviously reduce cost to serve from a distribution perspective.
The other thing which we're very happy to report on, is that the, WMS system, Manhattan, was successfully implemented, and no hiccups experienced there, which is very pleasing from a, from a team's perspective. So we're currently running at about 2.5 million units a week. Full capacity is at 16 million, so the ramp up will continue over the next few months, but we certainly are very pleased with the progress there. As you would expect with an investment of this sort, a high focus on sustainability and efficiency, and so this facility is fully EDGE compliant and EDGE certified, and is self-sufficient, both from an energy perspective and from a water perspective, thanks to investments in solar and, water harvesting tanks. So a very nice, milestone in the PEP journey. Moving on to Ackermans.
We did manage to get some growth out of the business, so just 0.7% top-line sales growth. Unfortunately, like-for-like, still negative at 5.1% negative. But again, if you view that against the -8.3% like-for-like in H1, a marginally negative -1.1% like-for-like in H2 offset that performance and at least show that there is some trajectory change in the Ackermans business. That improvement came about by virtue of some of the short-term immediate actions that the teams took. That was in terms of correcting price points, unbundling some of the packs, and making changes to some of the marketing campaigns. But the real change in the Ackermans trajectory will come with the...
The execution of the product proposition, and given new teams and the product lead times, that's probably only likely to take full effect in winter 2024. I think the other thing to bear in mind when you look at the Ackermans sales numbers, 16% of the spend on the Ackermans card was in a PEP store. So there's no question that the interoperability decision, whilst good for the group, did affect the top line of Ackermans. And that will be felt until such time as the PEP book gets to the same level as the Ackermans book. So there is some context to the underlying performance of Ackermans. Encouragingly, we saw some gains in market share, particularly in school wear, younger girls and lingerie.
We are more recently seeing younger boys gain market share. However, the real focus of the team is how to extend that market share gain into the critical areas of boys wear and women's wear. Credit mix was up 1% to 18%, underpinned by sales growth on credit of 13%, despite the interoperability challenge that I mentioned, and that was to do with about 460,000 new accounts that were opened under the A+ card, as well as the fact that there was a cross-shop of about 25% of the PEP card into Ackermans. But bear in mind, the PEP card is of a much smaller base. But over time, Ackermans will start to benefit from that.
As you would expect with the challenging top line in sales, significant increase in markdowns, and markdowns were up 80% year-on-year, as the team acted to clear slow-moving stock and make sure that they managed the stock age profile correctly. And at a headline level, stock was down just under 6% year-on-year. So at least a positive outcome from the year is a relatively clean stock position, certainly from a summer and a winter perspective. Store-wise, 84 stores opened across the three formats, being the Ackermans core business, Connect and Ackermans Women's. What is worth noting is that we did cease the rollout of Ackermans Women's stores, so there's around 57 stores in existence now.
We want to give the team the correct opportunity to really build a compelling women's wear proposition that can sit alongside and complement the Ackermans Women's business inside of the core Ackermans store. So we've frozen the store rollout to give the team the opportunity to build that proposition to judge the metrics and the underlying commercials of the business, and once we see that's in good shape, we'll accelerate the rollout again. From a cellphone perspective, whilst not at the scale of the PEP business, still very commendable, 2.5 million cellphone handsets sold during the course of the year. Much higher mix of smartphones than PEP, up at nearly 80%.
and again, we saw high levels of inflation on smartphone handsets, and what was very encouraging within Ackermans was a nearly 80% growth in cellular accessories, and a smartphone handset being one that is very complementary to the accessories business and the ability to upsell the customer into other products. And finally, towards the latter part of the financial year, the Ackermans business launched the new Cube range. Cube is an internal brand focused, particularly at the teens market, between 10 and 16 years old. There's a really unique handwriting about it, a very unique interpretation of license and character merchandise, and brings together outerwear, footwear, and accessories into a complete capsule offer. And really, the early indications that we've seen have been very, very positive. Moving on to Speciality.
Just a reminder that the specialty division houses three types of business: mature businesses, which would be Tekkie Town, Shoe City, and Dunns; our growing business, which is Refinery; and then some of the new brands that we've launched, being Code and SPCC. At a headline level, very positive, at 8.7% total sales growth, reasonable like-for-likes at 4.5%, and a very strong H2 at 7.1%. If we talk about the individual business units themselves, as you will have seen from the impairment that was done, Tekkie Town had a challenging performance, with a like-for-like of -1.1%. Predominant problem in Tekkie Town is a very competitive, branded footwear market, and very negative growth in the canvas category across the entire market.
So the core underlying business of branded footwear under pressure. However, the team did a great job in terms of offsetting that with the introduction of clothing throughout the business. Both the Umbro brands, the Code brand in 100 shops, and the launch of Airwalk more recently, all offsetting some of that core core business challenge. Dunns very, very promising performance, 10.6% like-for-like in Dunns and growth in women's wear, menswear, and footwear market share. So very, very good performance from the team there. Refinery, at 12% like for like, so that business just consistently performs for us. We opened 22 stores, so that gets us to about 118 stores in total, with more than 30 basis points of market share added during the course of the year.
Really, our confidence levels in this business have just continued to grow, and so we'll be doubling down on the number of openings in the coming years, and the internal target for the team is around 40 stores next year. Finally, Code. About flat like-for-like, off a fairly limited store base, but the real growth for this brand coming through the expansion into the Tekkie Town, Tekkie Town format. And we'll look to expand that footprint over the coming months. PEP Africa, excellent performance from the team in Africa, a top-line sales growth of 11.8%, like-for-likes of 9.9%, and as you can see, exceptionally strong H2 at 14.1%.
As Riaan mentioned earlier, the decision was taken and executed to leave the Nigerian market, so that's 44 stores that come out of the base, and that was via a sale of the business, and that has all been completed. In line with the continued portfolio rationalization, there were another 10 stores that were closed across the other markets, so we end on about 227 stores in Africa now. Stronger performance from the Zambia, Angola, and Mozambique markets, more challenged in Nigeria and Malawi. Cash repatriation has really become consistent in this business unit now that so the team have really done a great job in bringing cash out of those countries, with the only real challenge being Malawi right now, where there is a shortage of foreign currency.
But very pleasing result from the team, and the strategy in Africa remains to optimize the existing footprint, drive the capital returns, drive efficiencies, and broaden the products and the services that we offer to our customers in Africa. And then for the final CGM business, Avenida, excellent results, not only from a sales and profitability perspective, but in terms of the, the progress that's been made on all of the strategic initiatives that were put in place, when we acquired this business.
Headline sales growth of 13.6%, like-for-likes of 7.8%, and those like-for-likes should be seen in the context of what was actually quite a challenged Q1, given the disruption of the Football World Cup last year, and the post-Bolsonaro election protests that took place in Q1, as well as the fact that we removed the cellular phone business from all of the stores during the course of this year, and that would have sat in the base. So the like-for-like performance of 7.8% was very, very credible. That sales performance was really underpinned by our KVI strategy. So we took the decision around about eight or nine months ago to introduce 30 key known value items for customers. Those 30 products, we had an average sales price deflation of 15%.
We bought significant volumes in those products, and the net result was about a 30% unit growth on those lines, which meant at a total level, a nearly 19% unit growth across the business. Those KVI lines now make up more than 30% of the total units sold in the business. A very, very good discounting strategy played out in Brazil. We've also managed to leverage a lot of the PEP product, so piggybacking on the back of PEP's winter range and summer range via our sourcing office in Shanghai, we saw great sell-offs and great results from that PEP product into the Avenida business, and particularly the use of licensed or character merchandise, where we saw a 250% year-on-year increase in the sale of those products.
The Avenida store is doing in excess of 200 units per store per week, which really measures up to as good as any of the Ackermans or PEP stores in South Africa. Credit mix remains stable at about 42%, and we still see a credit customer with a basket value of about 2.5, 2.5 x the normal cash customer, and NPLs, as Riaan alluded to, fairly stable. The sales line meant that we saw very nice improvements in some of the underlying store efficiencies, so trading densities, sales per FTE, units per FTE. And we also saw a great move forward in terms of store openings. So we had a budget of 10 stores in terms of new store openings.
We ended up opening 23 new stores last year with a further three conversions. So the team demonstrating the ability to accelerate store openings where required. As Riaan and Pieter alluded to, we took the decision to exit the Giovanna standalone footwear business. This was to make sure that we have a single format, singular focus business expanding in Brazil, and that was 17 stores that were closed and three that were converted into, into Avenidas, and that's all been executed, by the end of the financial year. And really, all of that put together has given us, real confidence in the underlying Avenida business and the Brazil market, and so our aspiration, as, Riaan alluded to, is to open 50 stores a year over the next, over the next three years. So that's the CGM segment.
Moving along to the JD Group. As I mentioned, top-line sales down 1.2%. That was essentially driven by home, which was at -3.2%, and tech at +1.5%. Like-for-likes constrained at -2.1%, with the biggest impact coming out of home at -4.4%. In terms of the categories, the weaker categories were certainly in areas such as television, where the market in general saw massive deflation. In this category, the demand for large appliances, given where the customer, customer situation sits right now, and both bedroom and lounge, lounge sets, being quite challenged. Stronger performances coming out of computing, out of audio, out of cellular, and some really nice progress in terms of the Orion private label that the business launched about a year ago.
Credit mix stable at about 11%, but a real increase in lay-buy sales, and I think that's a good indicator, not only of the pressure the consumer is under, but the fact that the JD Group is exceptionally conservative in their granting of credit, and that plays out in the fact that their collections are in excess of 95%. Forty-nine stores opened during the course of the year, and this included the launch of two new formats. Firstly, five Incredible Cellular stores. So the Incredible Cellular standalone store, very different to a PEP Cell or an Ackermans Connect, in that it targets premium brand, high-end smartphones, a lot of post-paid customers, and a lot of premium accessories. So very different format to the other two, and the team are very pleased with the results they've seen there.
Then the launch of three mega Incredible Connection mega stores, which is essentially a combination of a HiFi Corporation and a, and an Incredible Connection under one roof, and again, very pleasing results seen there. Then some experimentation in certain nodes with the consolidation of Bradlows and Russells into a single store execution, where the node is that small and, and can't sustain both businesses, but that was really just a test. Finally, The Building Company. I think as the results reported by a number of our peer groups tell you, this is an extremely tough market segment to operate in. Consumer confidence is very low. There's limited to no government infrastructure investment. Interest rates are impacting the consumer, and load shedding per se has a very real impact on this business.
Not only in our ability to run some of our stores, which have cutting-edge machinery, but in the actual end customer, being the Buco builder or the B2B customer. Their ability to produce or work on site is heavily impacted by load shedding, and those hours are not recouped, and that just plays out in terms of a reduced demand for raw materials from this business. So having said all of that, they ended up just flat at a total sales growth level and a negative like for like of 0.8%.
Across the three divisions, so GBM or the General Building Materials division, which houses BUCO and Timberc ity, actually a very positive performance of 1.7%, and there they are benefiting from a revised strategy, focusing more on a B2C customer, so investing in DIY categories, investing in things like garden centers and opening trade on Sundays, all impacting that performance. The SBM category, which essentially houses the business unit B-One, which is an equipment leasing business, actually performed quite well due to the high demand from events. And Tilet oria, having a particularly tough H2, given a drop-off in demand from some of the big trade customers.
So SBM at -1.9% growth, but the real pain being felt in the warehouse or wholesaling division, my apologies, at -9% in Brands 4 Africa, and that really is due to a big drop-off, not only in our large trade customers, some of whom are actually our competitors, but also in the independent customers that we have. So all in all, given the performance of the, the actual market and that segment, I think The Building Company doing a great job. Moving on to the Fintech piece, and I think as Pieter and Riaan alluded to, you know, this, this division was purposely created, to give effect to our Fintech strategy, and perhaps just to spend two minutes at a very high level talking about how we think about financial services and Fintech.
Essentially, in our mind, we have a large customer base. That customer base has a series of needs. Those needs can be needs related to connectivity, they can be needs related to the need to send a parcel from point A to point B, access to retail credit, access to micro-lending, access to insurance, et cetera. So you have that on the one hand, on the other hand, we have Pepkor, which has a series of assets and capabilities, and the ability to monetize and commercialize those needs into what are either products that enable sales in our business units, that enable additional revenue streams, such as ongoing revenue, or give us access to customer data. Essentially, the marriage of those two is what brings value to the group, and that plays out through a series of channels.
Those channels are either retail formats, the informal channel, or through a digital channel, and that plays out in a series of products, and those products are all housed within our fintech business unit, whether it's insurance, retail, credit, lending, or cellular, and the like. So that's how we try and think about fintech as a whole. If we look at the underlying business units per se, at a CGM credit level, sales growth of 39%, and the opening of nearly 800,000 new accounts. But as Riaan alluded to, we should bear in mind that credit only makes up 10% of the sales within the total Pepkor group, and the CGM account base makes up about 13% of all South African clothing retail credit accounts.
Even with this aggressive growth, we only made up 26% of the new accounts opened over the period. The account base now sits at about 2.1 million customers across eight CGM brands, and as Pieter mentioned, the drive towards interoperability across all of those brands continues. As I mentioned earlier, 16% of the spend on the Ackermans card happens inside a PEP. 25% of the PEP card spend happens within Ackermans, and if you look at the Ackermans card spend, about 40% of the spend there, that is incremental, happens in categories within PEP that Ackermans do not stock. So it is truly incremental in areas like menswear, homeware, and FMCG, for example. In terms of the quality of the book, Riaan already alluded to this.
You will see the approval rate down, and that really is given the team's prudent approach to granting credit and customers in good standing or able to purchase standing at 75%. And I should mention, that's based on a one payment missed measure rather than two, so that's quite a strenuous measure. So generally, the book in very, very good, very good health. On the cellular side, as I mentioned, customers certainly have a real need around connectivity, and access to a smartphone is probably one of the most pressing needs of all South Africans, particularly if you bear in mind that the network operators within South Africa, it is their intention over time to phase out of 2G and 3G networks.
Putting a smartphone in the hand of every South African is a critical need. Pepkor has 6,000 stores, and as Pieter alluded to, sells seven out of 10 prepaid handsets. So we are by far the dominant channel and the best chance of fulfilling that requirement from a customer perspective. The handset rental product enables a very, very low-risk credit opportunity to put a handset in the hands of our customers by virtue of the device locking software, where in the event of a customer not paying their installment, you have the ability to lock the phone. So we have executed this offer not only through our own product, which is FoneYam, housed within the Tenacity business, but also in a partnership with a third-party agency provider.
We're active in about 300 stores at the moment, and we've done in excess of 120,000 phones through this rental product with very high levels of approval, very low levels of bad debt, and we see this as a significant opportunity in the future. On the lending side, the Capfin business, as Riaan mentioned, we remain conservative in how we extend credit, given the noise in the market. Just over 300,000 loans issued during the course of the year. That's a growth of about 11%, 75% of these being 6-month loans, but as Riaan mentioned, a growth in 24-month loans. And to reiterate, those 24-month loans are granted and offered to customers who have originally had six month loans and have demonstrated good payment behavior.
The risk profile on those loans is actually quite low, and we continue to be conservative in our approach to this business. On the insurance side, so again, insurance in Pepkor is executed via two channels. One is through our own business called Abacus, and the other is through JV arrangements with some well-known third-party insurance providers. There are a number of Pepkor products, both physical and virtual, that enable the opportunity to embed insurance as part of that offer, and that's really where our focus has been. If you consider that we have a store network of 6,000 stores, a high degree of brand trust, and importantly, a mechanism in which to collect premiums, this represents a really significant financial services opportunity for us.
So as it stands, we have about 700,000 policies that have been written via those two channels that I mentioned, primarily the focus being on credit life, single asset insurance, and funeral, and recent new introductions of credit life embedded into Capfin, for example. So this, like the, handset rentals, we see as a, as a significant opportunity. And then finally, from an informal market perspective, I think as, as everybody knows, the informal market continues to be the channel that grows within South Africa as customers seek convenience of shopping close to home for both the, the goods and the services that they need. And the group, again, is in a significantly unique position here by virtue of its Flash business.
The Flash business saw growth of about 11.6% in total throughput, up to ZAR 37 billion, during the year, and that was enabled by a growth in the turnover per device, as well as two additional products that were added into the suite of value-added services and the rollout of some new multifunction devices, throughout the market. We did see a drop-off in certain value-added services, so electricity, airtime, and to an extent, remittances, but these are offset by areas such as data, the Flash 1 Voucher token product, and Pay with Flash. So, significant growth in this channel. The Flash business remains a large channel for the distribution of SIM cards.
So nearly 29 million SIM cards distributed during the course of last year, and that actually led to a positive ongoing revenue growth within the Flash business unit, despite the fact that at a group level, we were negative, negative on OGR. Aggregation continues to grow, 45% growth in aggregation turnover, and that's a function of a wider reach of customers, as well as some additional products that have been added into the aggregation suite. The 1 Voucher, which I mentioned earlier, significant growth there, thanks to additional products being added into the 1 Voucher itself. Finally, worth noting, Flash, by partnership with a specific party, has become a lender that can distribute SASSA SRD grant.
If you think about 6 million potential beneficiaries of that grant, this represents, again, a potential for a significant revenue stream going forward. So on that note, I'll hand over to Pieter to give you his view of, and outlook of the future. Thank you.
Thank you, Sean. Thank you, Riaan, for all that detailed feedback. Just one slide remains, which briefly deals with outlook and trading since the financial year is finished. Very relevant now, again, is load shedding. Generally as a group, we're well protected up to level four, so if it goes higher than that, you know, that will obviously impact, again, our customers, but also our ability to trade. Generally, PEP and Ackermans, of course, have got backup power and lesser and some of the other brands. One of the other things that's happened is the port congestion. Like other retailers have reported, we've got significant items or value items stuck on the sea at the moment, between one and two weeks late. Numbers around about ZAR 700 million.
We don't think the impact will be that big on our Christmas trade, bearing in mind we're more a basics business with a higher component of replenishment. But yeah, we, we think we will have to adjust our planning processes going forward. We don't know how long this will be take to sort out. Generally, the feedback we're getting is eight to 12 weeks, but, you know, this is obviously, no certainty around that. So this is an important quarter for us. We had Black Friday, which is now more Black November, not sponsored by Eskom, but, November, December, January, obviously a very important trading period for us. So, so we, we, we think we are correctly positioned. We have the right stock in order to, to, to trade through this period.
But yeah, externally, ports and power, you know, is making it a bit difficult, harder to trade. So we're certainly happy that the lower product inflation that we've indicated is actually materializing, sort of mid-single digits product inflation coming through, which makes it a bit easier for our customers to afford our products. And then, yeah, we follow methodology of value creation plans. We're gonna need more time to explain that to the market, so we have reserved a date towards the end of February next year, to take you through more detail of what we are busy with, when we have more time. So yeah, looking forward to that, and we will now take questions, and hopefully we can answer them.
Thank you very much for your attendance. Thanks.
Questions that have been posted during the presentation. I'll speak on a couple of the issues, Riaan will follow me, and then Pieter will wrap up. Question or a number of questions relating to credit, specifically, how are we thinking about credit? Why are we growing our credit book when other retailers seem to be holding back on credit? And what's a sort of an acceptable target or level of credit within the business? I think the first thing to think about is, as a discount value retailer, our average price points are obviously lower than a lot of the other credit retailers in the market, which means that we can issue much lower credit limits than other retailers would do.
So it means that there's a portfolio or a population of consumers out there that the other credit retailers don't really pay any attention to, and that represents an opportunity for us. I think we continue to be conservative. You saw our approval rate down about 400 basis points. So the team is being conservative, and I think the health of the book is shown in the fact that there is a 75% customer in good standing measure on a one-month default basis and 85% customer in good standing on a two-month payment default basis.
In terms of where do we see it ending, the reality is we will continue to cautiously grant credit to our customers, make sure that we adequately provide for any bad debts, but we don't have a specific target in mind, when it comes to credit. The next questions were about Black Friday, and some granularity on how Black Friday played out for the various retail businesses within the group. I think the first point to note is Black Friday is not a day event anymore. Black Friday is a month-long event, and we've seen that throughout the market, across all of the key segments, and really a mixed level of impact in our business.
The JD Group, clearly, Black Friday or Black November is a significant part of their trading calendar, and the result to date in November shows growth in that business year-on-year. So we are very pleased and satisfied with the performance of Black November in JD. In PEP and Ackermans, to a lesser extent, these are EDLP retailers, so we don't invest heavily in this area, but we did have a number of promotions across kids, multi-buys, and particularly character merchandise, and we saw an uplift there. cellphones and handsets were also promoted during Black November, and we saw very, very nice increases in volumes coming from that. And within the Speciality division, really, it was the Refinery and Code business that saw uplifts in specific targeted promotions.
The final question from my side really speaks to Shein and their impact on the competitive environment, both in the South African and the Brazil market, and I'll talk about those separately. I think Shein in South Africa, we have no real visibility of the impact because they don't, they don't sit within the population of the RLC. But however, all of the social media activity that we see and the anecdotal information that we pick up in the marketplace, and the reference that our peers make to Shein, there is no question that they are taking money out of the market. Our impression is that they have a bigger impact in fashion retail and particularly adult wear.... and most of our retail brands are more focused on kidswear and on non-seasonal or basic items.
In terms of customs activity, most of the retailers have been talking about this for some time. Again, we've seen no official position from government or trade and industry, or customs on clamping down on the abuse of import duty by these imports. However, anecdotally, again, across social media, we do pick up from customers that customs are being formal circumspect about these goods coming in. In terms of Brazil, Shein are definitely adopting an aggressive approach there. We hear that they have engaged with government in Brazil and are looking to set up a manufacturing base in the Brazilian market, which will service South America and potentially North America as well.
The reality is the cost base is going to be very different for them in that market if they choose to manufacture there versus the Chinese market, where most of their product comes from currently. So I don't think it'll be an easy run for them in terms of building a manufacturing base there. In terms of Avenida, their business focuses on core items. It's very aligned to a PEP type of proposition, and so it's less impacted than the pure play operators and some of the bigger fashion retailers like Hering, Renner, and Marisa. Right, I'll hand over to Riaan.
Thank you, Sean. Yeah, so I'm also gonna try and cover about three or four of the questions that was asked. The first question was asked around price inflation and basket inflation in the different segments. So firstly, from a clothing and general merchandise perspective, the inflation or price inflation, basket inflation we had for the last financial year was around about 7%. It was slightly lower on the Ackermans side, slightly higher on the PEP side, but that was the average for the year. We do anticipate, I think, as we've communicated previously, that in winter this coming year, that will drop to around about the 5% because of the drop in FOB prices and also lower container costs that we currently still are seeing coming down.
From a furniture and electronics perspective, there, the basket inflation was around about 3.5%, slightly lower on the home side and slightly higher on the electronic side. Second question, and this really leads into then the GP question as well, where we do anticipate the GP percentage for the group to be in the new year, and, and the reason also, again, for the drop in the retail side the last year. So again, as we communicated, the drop on the GP side, on the retail side, predominantly markdowns on Ackermans to clear the stock that wasn't selling, to a lesser extent in PEP. Yes, we do anticipate in our planning that it should, specifically on the Ackermans side, be less in the new financial year, but again, that's based on performance. We are a bit cautious, current environment.
We don't know what's gonna happen, that it might not improve back to the full 80 basis points, but yes, we do anticipate an improvement. On the financial services, you heard Sean speak, we are planning still on growing the books, so yes, we should also get that income again, but we do anticipate towards the latter part of the year, interest rates should start to come down, so that will have an impact. Hence, the reason why I commented, I do see it staying at the same level, but hopefully there's a bit of upside in that. So how does that play out in the EBIT margin? Do we see it back to the 12%, which is historically always our target? Yes, in the medium term.
However, for next year, we still anticipate, yes, there will be the recovery from Ackermans side, which will obviously assist, but with the growth of the books, and as we've seen, when you grow the books, you take the full impact of the higher provisions in the first year and only see the benefit later on. So we're only gonna really see the impact of the, of the growth in the books in year two and three. So we do anticipate next year we won't be back to the 12%, yes, but we will see an improvement on the EBIT margin compared to this last financial year. Then there are also one or two other like questions I see we've received. The one is on share buybacks. Do we anticipate to do more share buybacks in the new year than just cover the share issues?
No, our planning is still our share buybacks predominantly not to dilute shareholders, and we will continue just looking at buying back what we've issued in the market because of the share options. And under ZAR 1 billion investment we're gonna do in Brazil, predominantly, that is to accelerate, as I said, store rollout for the next three years. Well, that will cover our plans, growing from 20 to 50 stores over the next three years. That should more than cover it. After that, we feel the business will be self-sufficient. That obviously includes working capital and all that you need for those additional stores, and also an investment in increasing the capacity of the supply chain. Well, those are the questions. I'll then hand over to Pete.
Thank you, Riaan. Thank you, Sean. I've got two or three questions to answer, and we then will close off the session. The first one was around contract-... We actually direction. I have a specific call out on Ackermans because we communicated to the market that that was a miss, and we wanted to change the strategy from multipacks and iconic price points that was a bit high back to what we were used to in Ackermans. And sort of since August, which is sort of our summer season, our sell-offs in summer merchandise has increased substantially, which is sort of in the same trend as what we explained between half one and half two.
So I call out specifically on Ackermans, improvement on this season and, you know, the rest of the business following the market and the trend that we've communicated to you guys with the results. Then another question was on ongoing revenue or the so-called OGR. We haven't disclosed this in the past, so questions was, why was that going down? So first, to explain what ongoing revenue is, every SIM card that we as a group connect, when a customer phones on that card or uses data or another service, we get a commission. We work very closely with the networks to manage those customers. And so the revenue earned when the customer uses the phone and when they're actually connected, sometimes can be in different periods, it can be different reporting periods.
So when we do the capital markets day in February, we will unpack this much more. But just to specifically answer the question about the commission structures, that hasn't changed. These commissions and strategies are all supported by long-term contracts and actually long-term relationships with the various networks, and we work very closely with all of them in order to make sure that the customer behavior is understood. We obviously have what we believe is a specific capability, and that is the handset, and we spoke about the handset rental scheme or initiative that we've launched during the year, and that is yielding great success, and it's being scaled as we move forward, and we think that will actually impact this area of the business significantly.
Then the last, last question before I close is obviously on the ports. It's very relevant at the moment. We did say we've got about ZAR 700 million of stock that's literally on the water, and that's one to two weeks late. We don't know when the issue will be resolved, but generally, because we have a much lesser seasonal impact in our business, we've got a much larger component of replenishment stock. We're potentially being less affected than other people, but I can assure you, our teams are working on this daily. We have to find workarounds, and as in many other things, we have to be flexible in how we get the inventory into our stores and to our customers. People always ask, "Okay, was that back to school?
Is that gonna be influenced?" Because that is a big market share for us. If you remember, we have our own factory, and that raw material has obviously landed months ago, has been converted, so we should be okay. For back to school, there's maybe some components like shoes, et cetera, that maybe not come as quick, but, as I said, that's not under our control. But generally, we are working on this problem daily, and we don't see a massive impact through the Christmas trade and back to school at the moment. So far, I will close with that. Thank you very much for your attendance, and all the preparation. Thanks.