Thank you. Welcome to the interim results presentation for Pepkor for the six months that ended on March 31, 2025. As per the usual agenda, I've been restricted to two slides by my team, and I'll just do a quick overview of the results. Riaan will take you through the financial performance, and Sean will get into the meat of the strategic implementation of our business. Finally, I'll be back for the outlook, and then we'll take some questions. On the results, we are leading with 18.9% growth in normalized HEPS earnings. For those of you who would have noticed that last week we had to put out a SENS announcement that actually showed a higher number than that, but that was compulsory in terms of some of the capital charges that we had to put in the similar timeframe last year.
In terms of measuring the actual results of Pepkor, 18.9% is what we believe reflects the normalized growth in earnings, which is certainly very pleasing for us. We, like always, solve the customer's needs, and in solving the customer needs, we have got a proposition that is ultimately also beneficial to shareholders. The good news is we have been consistent in our performance and in our communication to the market since our capital markets day, and every season that we report our earnings, we have managed to perform against the same metric. We have had a great performance in the retail section, very good strategic execution in the financial services or fintech part, underscored by strong cost management again. Just on the right, there are some slides of how the business has moved from 2022 to 2025, especially as far as the financial services and informal market segments go.
Without further ado, Riaan will take you through the financial performance for the period.
Thank you, Pieter. Morning, everybody. As Pieter said, I'm going to take you through the financial performance for the period. To start off with, very pleased to announce a very good 12.8% revenue growth, taking us up to almost ZAR 50 billion in revenue for the period. That's really underpinned by very strong like-for-like numbers for the group overall from a sales perspective, 7.8%. Still stores opening, continuing our store opening program that we've announced the last couple of years. That really is, we've seen the last two years really supported by really fantastic financial services and fintech growth. Our gross profit, again, the same trend we've seen the last year or so, steady gross profit number from the retail side, really remaining at the same level.
Again, with the assistance of financial services and specifically FoneYam, really now coming to the party and also A Plus, we were pleased again to show an improvement in our gross profit up by 15.9%. This all translates into operating profit of 13.3%, again supported if you take out the debtors' cost increase, which is obviously again above average because of the growth in the books. That has been compensated for by the growth in gross profit on financial services. If you take true expense growth versus top-line growth, very nice leverage resulting in that 13.3% operating profit growth versus the top line of 12.8%. We then move down to the HEPS line, 84.3 cents, 12.4% growth.
You have to remember, last year and the last two years, we really had the impact of the SAS settlement we had in the 2023 financial year, where we had release of provisions in the tax line in the 2023 and 2024 years. If you normalize that, our real growth in HEPS is 18.9%, predominantly supported by the fact that our finance costs only increased by 0.9%. Cash conversion on a 12-month average, still very good, although for the six months, we obviously had some challenges with inventory growth and investment in the books, as we have seen the last couple of years. Again, very happy to report that on an overall return on net assets, we have also seen an improvement for the same period last year.
Just again, as a reminder, these numbers and all the numbers I'm going to quote in the rest of the presentation are on a continuing operations basis. Hence, the comment from Peter's side on a total operations basis last year still included the building company as a discontinued operation. That is why earnings per share on the total operations increased by 23.3%, the reason for the trading statement we had to do about two weeks ago. Just to confirm again, the normalized HEPS, why we really look at normalized HEPS as the key indicator for us for the period, and that is what we measure ourselves again. As I mentioned, HEPS overall for the statutory accounts on a continuous basis went up from ZAR 0.75 to ZAR 0.84, which is a 12.4% increase.
If you take into account those benefits I mentioned over the last two years, the release of the tax provision, and last year it was ZAR 115 million or ZAR 0.041, last year's base was really ZAR 0.709, giving us the overall HEPS growth of 18.9%, which we think, taking the current environment into account, is really a phenomenal number. If we look at just breakdown the revenue growth a bit further, as I mentioned, the 12.8% taking us close to the ZAR 50 billion. As I mentioned in the past, our target on like-for-like sales is always around about 5%-6%. Very happy to say we've way exceeded that with the 7.8% for the group. We'll just try and get about a 3% increase in space.
For the period, it was 2.1, getting us to a 10% sales growth roughly for the group, but really with the fantastic performance from financial services, pushed us up to that 12.8%. The breakdown of that, needless to say, 34.5% of the growth comes from the fintech segment, now making up 60% of the overall group, really showing a very strong growth over the last couple of years. Still, we are seeing very good growth in sales from both the clothing and general merchandise segment, but also from the furniture and appliance, both of them falling just short of a 10% overall revenue growth. On the clothing and general merchandise, mostly supported by Pep and Ackermans, and on the furniture and appliance, mostly driven by the home segment or the furniture part of the Pepkor Lifestyle Group.
If we look just at where it's coming from, from credit, a lot has been said over the last year or so of the growth in the A Plus book and some of the other books. Again, we see good growth from the A Plus book, supporting the overall sales growth and revenue growth number. Credit growing by almost 29%, and 15% of the overall revenue for the group is now done through either some form of card in A Plus or in the Connect book. That's up from 13% in the previous year. Steady growth, and we were still very comfortable with that. If you specifically break it down to the clothing and general merchandise segment, revenue up 9.5%, as I mentioned, overall sales growth up by 10.2%. The difference between those two is because of ongoing revenue from the cellular networks that we receive.
I'll unpack that a little bit later in more detail. As I mentioned, at the end of last year, we had a renegotiation of one of the contracts with the network, which meant we had to reset the tiers, which impacted the last six months of last year and the first six months of this year. At the end of March, that base is now normalized. We do anticipate positive growth for the rest of the year. For the first six months of the year, we had a negative like-for-like or negative growth on ongoing revenue of about 3.5%. Still good sales growth, 10.2% like-for-like, as I mentioned, for this segment, 8.1%, predominantly driven by Pep and Ackermans. Pep close to 12%, Ackermans just short of 10% like-for-like.
Also good like-for-like growth in Speciality with all the brands really showing positive like-for-like, except for shoes that showed a negative growth. We have also seen, we reported for the first quarter, not so good like-for-like sales in Avenida. That has improved in the second quarter. Africa, in constant currency, still very good like-for-likes. Unfortunately, on actual rates, when you take it back into ZAR, it is not as positive as the rand strengthening against those currencies. Similar trend on the credit side because of A Plus that supports all the sales of Pep, Ackermans, and Speciality with interoperability. The same trend, now 16% of the segment on credit, so still majority a cash business. That was also 13% last year, so 31%-32% growth. Furniture and appliance segment, similarly, really very good performance, 9.1% up in revenue, 9.2% up in sales.
As I mentioned, mostly driven by the home segment, the furniture side of it, like-for-likes above 10%, double digit, but still a good growth from tech with heavy competition at the moment in the market from some of its main competitors, still able to maintain a positive like-for-like, which is very good. Also, we saw for the first time a very slight increase in credit contribution in the furniture and appliance. Overall, still 12% of sales is done on credit. On the furniture side, it is now 21% of sales is done on credit, where last year this time it was 20%. We have seen a very slight increase. Still, we are very low non-performing loans in this specific area. Very pleased to see an improvement on the steady improvement in the credit sales. The star performer, the fintech segment, as I mentioned, up 34.5%.
Where did that come from? Really predominantly from financial services. Really with FoneYam really shooting a large RTO last year, we had still only started with this. Now a year later, you can see it makes up 20% of the revenue in the segment, growing by more than 100%. Further supported by A Plus, as you can see, the A Plus and Connect making up 39% of the overall revenue in the segment with close to 33% growth. The Capfin still making a strong contribution. The Abacus sales does look lower than anticipated, and that's really because of the change in the accounting convention from IFRS 4 to IFRS 16. That will correct itself over the next six months and the next year. Fortunately, as you will see later on, it had no impact on profit.
On informal market Flash, again, very strong performance, although we measure them more on throughput than on revenue because of the type of products that they've got. Still, a 17% growth for the last period, now close to ZAR 4.5 billion in revenue in this specific business, really a phenomenal performance. If we move then onto the gross profit side of things, as I mentioned, overall improvement in GP driven by the financial services. On the clothing and general merchandise side, the two big bits of Pep and Ackermans really maintaining their GP percentage. Because of the impact of Avenida and also the African countries where the currency has strengthened, that has had an impact. Unfortunately, we really bring it back or the rand has strengthened against those currencies. It has to have an impact when you bring it back into rands.
It shows a negative growth. As I mentioned earlier, ongoing revenue, unfortunately, down by 3.5%. That also sits in this GP number. Those are being the two main reasons. Furniture and appliance segment doing very well with tough competitors, like I said, in a competitive environment, still maintaining their GP. Really on the fintech side, specifically FoneYam, driving that improvement in GP because the GP in FoneYam is slightly higher than what you would see in normal credit products. It is a true GP. It is not just finance cost and fees, but also supported by still the growth in the A Plus book, pushing up that number even higher, showing a 670 basis point improvement in this specific segment. Really a very, very good performance. Cost of doing business, always, as I mentioned in the past, very important to us.
We did have a slightly higher growth in operating expenses if you exclude debtors cost and forex that we used to. That is predominantly due to some once-off investments in some of the businesses that we want to grow, specifically in Abacus, around resources systems, similarly in FoneYam because of the growth that we have seen there. Also, canvassor costs going up because of the acquisition of accounts, A Plus accounts, Capfin accounts, etc. Also, around some of the M&A activity, we have already invested some cost in that. If you strip out those project costs, the once-off costs, normalized expenses grew by 7.8%. Similarly, on the salary cost, same if you strip out those specific salary costs relating to those projects, it increases by 7.9%. Taking into account that includes still the new stores as well.
Property costs, as always, we're still seeing slight reductions in rentals on renewals. Very pleased to say, and escalations is very much in line with what we've seen in the past. Very happy to say, including new stores, rentals only going up by 6.6%. Maintaining our cost structure, you can see our cost of doing business really staying at the same level compared to the same period last year. That then brings us to the operating profit. You'll see the margin improvement up from 11.8% to 11.9%. As I've communicated in the past, we really want to hit the 12% margin. That's really our first goal. Then take it further. We just fell short of that, really due to the increase in the debtors cost, which exceeded our targets because of the growth in the books. Overall, you'll see operating profit increasing by 13.3%.
Where did that come from? Again, predominantly 85.6% growth in fintech. I'll unpack that a little bit later. On the clothing and general merchandise side, you'll see a 6%. Although Pep and Ackermans both grew their operating profit around the 10% or just above that, Ackermans specifically, it really was down to the investment in Ayana, which obviously are operating at a loss at the moment, shoes are not performing. As I mentioned, both Avenida and Africa that we had to, when we translated back into rand, unfortunately showed negative growth on last year because of the rand strengthening against those currencies.
On the furniture and appliance, although the GP was good and top line was good, as I mentioned earlier, there's some investments in projects that we're doing there with the acquisition that's almost finalized and also other group projects that they're investing in, which Sean will talk about later around Scrooge, Darkstore, etc. Hence the reason why the growth is around the 3% there. As I said, if we move on then to the fintech side and break it down further, Flash growing by continuing the good growth the last year or so, again growing profit by 30%, and financial services growing by more than 100%, predominantly driven by FoneYam, but also insurance to a lesser extent. If I then break that down into the different components, as I mentioned, FoneYam is now profitable, contributing a significant amount of profit to the segment.
I'm sure you'll all remember last year and even at year-end, FoneYam was still in a small loss-making situation. Very pleased to report that we are already generating quite a significant profit from that business. Abacus, as I mentioned, very good profit growth of 63%. As I've always mentioned in the past, from A Plus and Connect, we do not really want to make a big profit. It is there to enable sales. As long as we make a profit, we're happy. That is still the current philosophy and strategy. Capfin still reducing the majority of the profit in the segment and continuing that trend. Specifically focusing on cellular, because we've had a lot of questions the last year or two on cellular, and I spoke about OGR. Where are we with the cellular income statement?
Because of the very good performance from FoneYam, because we're selling higher-end handsets at a higher value. You can see the growth in revenue on handsets specifically. Airtime and data, although in the retailers, we're maintaining a level of airtime sales because we started with aggregation in the Flash business, really helping that increase in airtime sales. As I mentioned, ongoing revenue decreasing slightly during this period by 3.5%. As I mentioned, the reason is really because of that one contract that was reset last year, which we've now inverterized, which should now start to grow again. The current trend is it is growing for the rest of the year. It means gross profit grows slower than top line at 11.4%.
The fortunate thing is, and we communicated this already at the end of last year, the fact that we now can lock devices, handsets because of the software technology that we've got. We've seen a significant drop in armed robberies, burglaries, insurance claims, etc. around cellular handsets and cellular devices. The benefit of that is that it results in an operating profit of 23.2% for the cellular business in the group overall. Just a reminder, the majority of this profit gets made in the retail businesses because that's where we sell the handsets and enable the SIM card. An improvement in operating profit, and there's still lots to come in the next year or so with further improvement expecting an operating profit margin. The books, spoken a lot about the books.
Again, pleased to say, although the A Plus book is now up to ZAR 8 billion, you'll see that non-performing loans are still very much in line with this period time last year and slightly higher than year-end. It's a trend that we always see, that it increases slightly at the end of March because of most of the spend happening in December and October. It improves again towards year-end. Still very comfortable with non-performing loans and the provision there. As I mentioned earlier, the Connect book very well managed, even with the slight growth. You'll see there up to 2.2% and additional spend in the furniture and appliance business. The provision and non-performing loans showing a downward trajectory, giving an opportunity to open that up slightly more.
On Brazil, on Avenida, the current state of the consumer there and the economy, we decided a year ago already to slow down the granting of credit there. It has helped to bring our non-performing loan down and the provision down. We are continuously monitoring that. It has probably come at the expense of some sales, but we decided to rather be a bit more cautious. Capfin, as I have always mentioned in the past, standalone book, not a sales enabler, is all the other three books earlier, still performing well, still growing because we have granted our very best customers, taking them from a 12-month loan to a 24-month loan.
It helps with the NPL over time, staying at the same level and coming down slightly, which meant that at the end of last year, we could drop our provision to 17% and still very happy to keep it at that level. As communicated in the past, still getting a very good return on capital employed in that business. The new book, the rental book, as I said, exceeding all our expectations, the 1.7% way above the budget and target that we had for the book of the first six months. Non-performing loans still at the 13%-14% level we saw at the end. Because this product is selling so fast and we almost cannot keep ahead in supplying it, we have decided to be extra cautious and increase that provision up to the 25%.
We do hope with some of the interventions that we've put in place, or we know that over time that provision should come down again. For the time being, we've rather decided to increase it, and then it's easier to bring it down again later. When a lot of those initiatives that are around scorecard initiative, the embedded insurance collections, etc., that we've implemented all starts to show results and bring it down. That means on the overall debtors cost, up by 67%, as I said, driven by the increase in those books, specifically A Plus, as you would have seen, and FoneYam as well. The fact that I've pushed up the provision percentage on FoneYam, taking it from 1.2% to the ZAR 2 billion, still very much in line with the levels that we are comfortable with and that's acceptable to us.
Inventory levels is up on last year. Two main reasons really for it, as we communicated at the end of last year with the challenges we had exactly a year ago on the ports, congestion, supply chain challenges, container challenges. We are building two weeks of additional stock on the clothing and general merchandise segment. That has proved to be very successful from a sales perspective, as you would have seen, but it does mean that we hold extra stock. Similarly, on the cellular side, with the phenomenal growth in FoneYam, meant that we have to buy in a lot more stock, specifically on some of the higher-end phones, to keep ahead of the supply and the demand that we have currently got. Of course, as always, we are still rolling out stores, contributing to that increase. From an aging perspective, we are still very comfortable with the level of stock.
This all resulted in the books, with the investment in the books and additional investment in inventory. We're still very pleased to say that with that, our net debt is still down, so it's still good cash generation, as you would have seen. I'm still below my internal target of a 1-ton net debt to EBITDA, so still got flexibility around making investments and investing in the books. We had a very successful bond placement in March this year with a further private placement on bonds to the total of ZAR 3.3 billion at very good rates. We also refinanced at the same time some of our term loans also at better rates. It means from a debt repayment profile, you'll see it's all moved out to really from FY2028, and it is at much better rates than what we previously had on all of this.
This needless to say plays out in my finance cost line. You will see on the finance cost paid to banks and to bondholders, that number is actually down on last year, which is obviously a fantastic result. We are anticipating, hopefully, there will be further interest rate drops, which will support that line even further. As I mentioned earlier, this really assisted in the growth in the HEPS % of the 18.9% that you saw, and a slight increase on the IFRS 16 component because of the additional stores that we have increased. This all plays out in cash generation. As I mentioned, on a 12-month rolling basis, 82%. You can see that increasing inventory, fortunately offset by an increase in trade variables, but then the additional investment of about ZAR 4.7 billion in the different books, specifically A Plus and on FoneYam.
That has obviously assisted us in enabling all those sales and additional profit that we've generated. Overall, if you compare it to last year, cash is up by 36% despite all of that. As I mentioned, with that investment in the books and the fact that FoneYam is now profitable, it has meant that over a 12-month rolling basis, RONA has improved. I did indicate this to you last year that we do anticipate it. We're hoping we'll be closer to a 25% now already, but because of A Plus still growing faster than what we anticipated, we're just short of it. The good news is that it is trending in the right direction, and all indications are we should be there at year-end above the 25% RONA. Again, just a reminder, we always get this question, why do we look at RONA and not return on equity?
The answer is just to remind everybody, because of the goodwill and intangible assets of ZAR 49 billion that is on my balance sheet that I inherited at the listing that used to be with the acquisition of Steinhoff, now IBEX of Pepkor. It is still sitting on my balance sheet. That is why it is difficult to look at return on equity. Last but not least, again, confirming the capital allocation, how do we look at it at the moment? Again, the biggest % of it really goes into new store and new refurbishment. You will see it is very consistent the last couple of years. We do anticipate that % to go up for the full year because of the investment in some of the new acquisitions where we do anticipate further investment on DCs and stores and IT equipment to facilitate that transition.
Again, to confirm, as I said earlier, the ZAR 4.7 billion investment in the books. We do anticipate that to slow down slightly in the second half because we sort of evened out on a number of A Plus accounts. Although we have implemented shadow limits where we do still increase the limits of individual customers, there will be a slight slowdown, although on FoneYam, we are still growing at a phenomenal rate. A big part of our cash generation obviously goes in there. The three M&A or acquisitions that we have announced early in the year. Just to confirm, Choice Clothing is being concluded from a compound perspective, all approved. Implementation date the 1st of June. OK Furniture, waiting for final. I think Pieter also mentioned that competition tribunal approval, we are hoping that is imminent.
Legit, we started the process anticipating early implementation after the financial year-end. Last, just to confirm, as always, we do not declare an interim dividend. We only declare a dividend at the full year. Our dividend policy is, however, still the same with a three-times earnings cover, which, as I communicated in the past, the reason why we get that level is because of high interest rate and because of the M&A activity that we were investigating at that stage, which has now played out. Very happy to report that because of that policy, we have sufficient funds and funding available to fund those acquisitions just from normal cash and debt. That is the results for the period. As I said, overall, very, very pleased with it. Compared to the rest of the market, really phenomenal performance.
I'll now hand over to Sean to take you through some of the strategic implementation. Thank you.
Thank you, Riaan. Good morning, everybody. As Riaan mentioned, I'll go through a sort of operational update of each of the business units. Before we get there, I think it's worth just reminding ourselves about the Pepkor Strategic Model. Both Riaan and Pieter alluded to this. Just as a reminder, the Pepkor Strategic Model is really simple, built around a deep understanding of customer needs, built around trying to execute and meet those customer needs, and in doing so, monetize the meeting of those needs by creating revenue streams and profit streams. The result of that process means that Pepkor is a group that trades across a number of different customer and market segments, across a number of different product categories, and across a number of different channels.
All of that strategic ecosystem is underpinned by the group scale, by significant investments in data and technology, and by our amazing 50,000 colleagues across the business. I think the other thing to remember is that Pepkor has always been fundamentally a growth business, and that's no different right now. It is worth talking you through how we think about growth. At the base of our growth plans, it's really about maintaining the momentum on existing businesses and initiatives that have been around for quite a while. We call this entrenching our core. We have then identified a number of strategic initiatives and levers across the four pillars of our business. Firstly, in traditional retail, it's about new and underweight market and customer segments. It's about new and underweight product categories, and it's about new geographies. In financial services and connectivity, it's about extending our retail credit offering.
is about leveraging our insurance license, and it is about continuing to grow our very successful cellular business. In omnichannel, it is really about establishing a greater presence in the informal market, as well as establishing deep and meaningful digital relationships with our customers. Finally, in terms of leverage and efficiency, it is about using the scale of our group from a sourcing perspective and looking at leveraging our very extensive supply chain that we have across all of our retail businesses. That is how we think about growth, and that is how I will try and take you through each business unit. I would encourage you to keep your eye on the little icons that you see next to entrenching our core and the growth levers, as it might make it a bit easier when we get to the detailed slides.
Without further ado, into traditional retail, starting with Pep, we had a fantastic first half in terms of momentum in what is our largest business unit and our largest profit contributor. We opened 43 stores, with more than half of those stores being in the Pep Home format. As Riaan mentioned, exceptional like-for-like growth of 11.9% in H1 and six months of consecutive double-digit like-for-like growth in the Pep business. That performance from a sales perspective led to market share gains across all of the key categories in babies, kids, school, adults, and home. There is no question those sales were enhanced by our credit offer. The Pep credit customer base is now over 1 million people.
As Riaan explained, our credit mix lifted to 11% of sales, which is a function of new accounts added as well as the interoperability strategy that I'll talk about a little bit later. In terms of customer engagement, this was exceptionally high in the digital channels. There were 150 million views of the hashtag Pep Finds and 180 million views of the hashtag Pep Home Finds. Those hashtags are used by customers on social media to show off about the amazing deals and products that they've encountered in Pep or in Pep Home. In terms of entrenching the core, very, very good H1 performance from Pep. In terms of future growth, as Riaan mentioned, the Choice Clothing transaction is now completed, implemented from the 1st of June.
As a reminder, this gives Pep entry into the fast-growing off-price segment and really is a combination of giving us the ability to open more stores. Choice Clothing comes with just over 100 stores and then leveraging the Pep assets and capabilities that we have. Moving on to Ackermans, this is clearly a story of entrenching the core. Ackermans a business that's been around for some time. The recovery momentum we've been talking about in Ackermans was clearly evident again, strong like-for-like performance of 9.6%, including positive unit growth. Like-for-like growth not only coming out of RSP inflation. We opened only 19 stores in the first half. Majority of the focus of the property team was on exiting the women's standalone stores, which I'll talk about shortly. That sales performance meant that we gained market share in both babies and womens.
If you remove the Cube impact, we gained market share in kids wear as well. What do I mean by that? The introduction of Cube meant that a number of children's sizes in older kids were placed into the Cube range, which is sized as adults. Those sales are now recorded in adult divisions or adult segments rather than in kid segments. If you back the appropriate sizes back into kids wear, Ackermans gained market share in kids wear too. Credit continues to be a very important tender type within Ackermans, up 200 basis points year on year in terms of contribution and now contributing 21% of sales. Strong online growth of 20%.
The team replatformed the transactional website during Q1, and we saw a great result in Q2 in terms of increased activity on that website, increased online sales both through click and collect and through home delivery. As I mentioned, the exit is now complete of the women's standalone stores, so around about 60 stores that we exited. The focus has now shifted to growing women's wear within the multi-category Ackermans bigger box. As you see from the market share gains, that strategy is playing out well. The team have launched men's wear in 80 stores as a test. We did sell men's wear in Ackermans previously reasonably well. The team believe they'd like to try and see whether men's wear is a category that customers will look to again in the future. Initial reaction from customers and sell-offs are very encouraging.
Again, Ackermans, in terms of its recovery momentum, well on the way to full recovery. Moving on to the Speciality division, clearly this is a division that we have high growth aspirations for. Starting with the underlying core, we opened 67 stores during H1, predominantly Refinery stores and Cube stores, and that brings the store base up to 972 stores. Like-for-like sales was ahead of the market, but a little disappointing at 4.2%. This was impacted by a severely negative Shoe City result. If you exclude the Shoe City sales, that takes the like-for-like sales up closer to 5% at 4.8%.
Underlying solid performance in the core brands of Duns, Refinery, and Code, and particularly pleasing to see an improvement in Techitown, not only through the strategic intervention of growing clothing as a category within Techitown, but also an improvement in the underlying performance of some of the third-party footwear brands such as Nike and Adidas. This particular division continues to be a real beneficiary of the interoperability strategy. Credit mix up 400 basis points to 17% and online sales growth of 33%, predominantly growing through Refinery and Refinery Junior. That sales performance did mean that we gained market share in the adult wear category overall. With the introduction of Refinery Junior, we now have market share in kids wear within specialty. The underlying Pepkor Speciality business had reasonable momentum during H1. In terms of the growth levers, there are a number in this specific business unit.
In Q1, we launched Refinery Junior, a reminder that went into eight stores as an Emporium solution. In those eight stores, sales lifted by 50% with the introduction of Refinery Junior merchandise. We have a lot of confidence in the ability to scale that category further across the Refinery brand. As I mentioned earlier, we launched Ayana into 32 of the old Ackermans women's sites. A reminder, Ayana is pitched more at the middle market, a far more fashionable customer. Initial reaction from customers, both in the digital space and in terms of sales, has been very positive, particularly in the high fashion items that Ayana stocks. The team will continue to develop that proposition and learn the lessons we need to learn. Upon seeing that there is a real runway ahead of us, we will expand that brand.
The most significant growth lever is clearly the acquisition we announced earlier this year, which was the Retailability acquisition of the brands Legit Style, Swagger, and the Boardman's brand. Reminder, that's about 460 stores. It gives us far more significant market share within adult wear and particularly women's wear through the Legit brand. We've made good progress in terms of the CPs of the transaction, and all of the relevant applications have been made to the competition authorities. Whilst we can't predict these things exactly, we would expect to complete this transaction during FY2026. Moving on to Pepkor Lifestyle. Again, in terms of entrenching the core lifestyle business, a good performance in what is always a difficult market. We added 27 stores during the period. Majority of those were Sleepmaster and Incredible Connection.
Solid like-for-like growth of 6.3%, underpinned by a very strong home performance at 10.8% like-for-like and the tech division trading at 2.4% like-for-like. All of that growth coming out of unit growth, very little inflation whatsoever. That performance in terms of sales meant that the Lifestyle business gained market share in all of their key categories, mainly computing, large and small appliances, cellular, television, and audio. Credit mix stable at around 12% of sales. Good online growth of around 16% with a real lift in home online sales of 67%. The underlying Pepkor Lifestyle business, again, strong H1 performance. In terms of growth levers, Riaan mentioned this. The comp-com process is now in its advanced stages. All of the other CPs are pretty close to being finalized. Whilst we can't be specific, we would expect this transaction to complete in the second half of this financial year.
A reminder, this is a significant transaction in terms of Pepkor Lifestyle's business. It adds real scale, more than 450 stores. It adds between ZAR 7 billion and ZAR 8 billion worth of turnover, and really gives Lifestyle the ability to leverage the infrastructure that they've built, particularly from a supply chain perspective and from a credit and insurance perspective. Finally, Avenida. Clearly, Avenida is regarded as a growth lever and falls within our international expansion strategy. We have continued to open stores, albeit slower. We opened 12 stores in the period, lifting the store base to 193 stores. Like-for-like sales were disappointing at negative 1.8%. The base stores were negative 0.4% during the period. I think what's really encouraging is to see the improved momentum in the like-for-like. If you look at the graphs, in Q4 of last year, we were in excess of negative 5% like-for-like.
Q1 was at - 2.7%. Q2 was about flat at - 0.3%. In April, a strong performance of 4.6%. You see the same trajectory in the base stores. That is a function of some of the targeted interventions that the team have put in place in terms of the assortment, in terms of allocation systems and processes, and in terms of pricing, with particular focus in KVIs, home, and footwear. There is no question that the sales remain impacted by a very conservative credit-granting policy. Our approval rate is down 400 basis points year on year, and that has certainly impacted sales. We still have 3.5 million customers on our account base, and credit still represents 42% of the sales within Avenida.
New store performance continues to have a negative impact in the year that the store anniversarizes, and that is having an impact on the overall like-for-likes, as you can see on the graph. The team continually working on finding ways to change that maturity profile of the stores going forward. Finally, just to mention our Tudo Avenida loyalty program. That has 5 million registered customers now. I will just dwell on that. If we have less than 200 stores and 5 million customers on your loyalty program, it just demonstrates the size of the Brazil market and therefore the size of the opportunity that Avenida presents for Pepkor in the medium to long term. What is also encouraging is that the team have managed to take all of the data from that Tudo Avenida program and run some very successful direct marketing campaigns using that database. That is traditional retail.
Moving on to financial services and connectivity. Before we go to the individual business units, again, I wanted to stress that we report this as a separate business unit, as Riaan mentioned, but you have to remember that the financial services business is enabled by the physical store network and the retail business. That happens in a number of ways. Firstly, in terms of acquisition, our retail stores are the primary channel through which we acquire credit customers, FoneYam customers, insurance customers, and cellular customers. If you look at some of those data points on the slide, 100,000 new accounts are opened through our stores. That is the ones that are open. There are 300,000 applications that are processed through our stores. There are 165,000 FoneYam contracts that are put in place in our stores. There are 60,000 Capfin loans that originate in our stores.
There's a million handsets that are sold. There are 780,000 SIM cards, all of that contributing to our OGR. And there's 20,000 funeral policies. As an acquisition channel, our stores are critical to the financial services component of our business. The second thing the stores give us is a payment channel. If you look at 2 million out of our 3.1 million credit customers, they choose to pay their accounts in our stores. 590,000 of the 1.5 million FoneYam customers choose to pay their accounts in our stores. We sell 10 million airtime and data vouchers, and we process 4 million bill payments. What this does is it certainly has the result of a better collection ratio on our own books, as well as creating revenue streams through things like bill payments and ongoing revenue from airtime and data.
On top of those payments, it enables other financial services transactions which earn Pepkor revenue streams. We do 2 million money transfers every month. We do 500,000 cashbacks every month, and as we have mentioned before, 500,000 parcels. Really, the message is without the 5,000 store network that we have, we would not be able to build and maintain the financial services and telecoms business that we have. The other thing that is important to stress is all of our stores are now fully Wi-Fi enabled and biometrically enabled, so we can do both fingerprint and facial recognition biometrics. That obviously creates opportunities to do additional financial services transactions that might have a higher KYC component to them, and it positions us well should there be any changes in regulation that require more strict FICA or RICA requirements. On to the actual detailed areas.
A Plus or retail credit, a very, very significant part of entrenching our core. Again, another strong period in terms of acquisition and leveraging our credit base. We opened 564,000 new accounts. That is a growth of 18% up year on year. That brings our account base to 3.1 million customers, which is, to my knowledge, one of the largest credit bases in South African retail. Our conservative approach is evident again in the approval rate. Similarly to Avenida, down 400 basis points to 29%. Customers in good standing and able to buy still constant at 71%. In terms of the interoperability strategy, we have spoken about this before. This is proving to be very, very valuable to customers. You can see ZAR 1.8 billion of the credit spend was done in the form of cross-shopping behavior. What do we mean by that?
We mean that's where a customer spends some of their credit open to buy in one of the Pepkor retail brands outside of the initial brand where they signed up for credit. That is an Ackermans customer shopping in Pep or Speciality, or a Pep customer shopping in Speciality or in Ackermans. You can see now that about 40% of our credit spend is spent outside of the initial brand where the customer obtained their credit. Phenomenal performance from the retail credit team. Moving on to cellular, clearly connecting South Africans is an absolute core part of our business. We sold 6.8 million handsets during the period. That is up 17% year on year and expands our market share on prepaid handsets in excess of 80%. Smartphone penetration continues to grow. Two years ago, that was at about 50%.
It's now running at 65% of the handsets that we sell are smartphones. Very strong growth in private label. Private label up 23% year on year and now contributing 20% of our total handset sales. Interestingly, the Stylo brand, which is Pep's private label, now has an 18% share of all prepaid handsets sold in South Africa. That is both feature and smart. Our SIM base lifted 5% up to 30 million active customers, and that is clearly crucial to our ongoing revenue. As Riaan mentioned, ongoing revenue, whilst negative, was well ahead of expectations. Cellular is moving in a very, very strong position. No doubt underpinned by FoneYam, which Riaan mentioned earlier. Clearly, this is a massive growth lever for us, and customer demand shows no sign of reducing. You see that in the growth. 994,000 rental contracts written during the period.
That's nearly five times the number of contracts that were written in the same period last year. We're now averaging around about 165,000 contracts every month. This brings our total active customer base to 1.5 million customers if you have a handset that is financed through the FoneYam rental program. That growth is fueled by adding more stores to the distribution base. We've introduced additional canvases and now have coverage in 3,500 stores, and also by adding new OEM brands. Not just Samsung, but some of the other OEM brands have been added to the FoneYam solution, and that's what's driven the growth. Samsung continues to dominate, however, with 55% of all the Samsungs that we sell in the group going through the FoneYam rental contract. Finally, digital channels as an acquisitional channel continue to grow.
15% of the activations in FoneYam came via digital channels as opposed to in-store canvases, and that has a very positive impact on our acquisition costs and the overall profitability of the FoneYam product. Moving on to insurance. Again, in terms of entrenching the core, this offer is really about embedding and bundling insurance into existing products and existing services and brands. To that end, we embedded 3.3 million taxi parcels with insurance during the period. 95% of the book on Capfin loans is covered by Credit Life. There is ZAR 2 billion worth of cover that was written for single asset insurance in the Pepkor Lifestyle business. As a group, a total of ZAR 7.5 billion worth of Credit Life cover. That is up 16% year on year and ZAR 2.8 billion worth of funeral cover that was written during the period.
That's in terms of the existing core products. A growth lever that was instituted in November last year, we started to embed FoneYam products with insurance. We now have 840,000 devices that have an insurance policy covering them. That not only gives Pepkor additional revenue streams, but really gives customers greater peace of mind in knowing that their device is now covered in terms of theft or damage. We really believe that in the medium to longer term, this could have an impact on some of the NPL behavior of customers. If I go back to the original slide, given the size of our customer base, given the extensive retail footprint that we have, and this unique ability to acquire customers and take payments, insurance remains a very significant growth lever for us going forward. Moving on to omnichannel.
We have said this time and time again, in our mind, omnichannel in South Africa means physical retail stores. It means the informal market, and it means digital channels. We are really focusing on all three of those channels in terms of our strategy. Starting with the informal market and Flash, Flash continues to be a core part of the Pepkor business and a core part of the fast-growing informal sector in South Africa. Just a reminder, Flash has really compelling fintech capabilities and solutions that digitize cash and empower traders and ultimately customers to transact seamlessly no matter where they are in the market. In addition, they have an aggregation business that uses its scale and its buying power to onsell commodities like airtime, data, electricity, and vouchers on a B2B basis. The Flash business overall throughput is up 24% to ZAR 29 billion.
The trader business expanded its trader base to 175,000 traders and increased their acquiring device footprint by 32%. That drove a 48% increase in the value of tap-to-pay through the Flash ecosystem and lifted that to in excess of ZAR 10 billion. The cellular business continues to be a very important part in terms of SIM distribution and maintaining a SIM base in the informal market, and that base stayed constant at 3.1 million customers. In terms of the aggregation business, throughput up 64%, underpinned by growth in airtime, in vouchers, and in electricity. The partner base, so the B2B partner base, has been expanded to 67 active partners, and the voucher growth particularly has been strong through our banking partners who use both Flash OneVoucher products and the Flash voucher platform to manage their own voucher products.
In terms of OneVoucher, we saw 177 million voucher redemptions in the period. That's up 36% year on year. Flash, again, very strong performance during H1 and growing its presence in the informal market. In terms of digital channels, we've always said that our Plus More program is our primary group-related workstream on opening up digital channels with our customers and remains a key growth lever for us going forward. We now have 10 million customers who've joined the Plus More program. Nearly 2.5 million of those are newly contactable customers, so clearly that is an opportunity in terms of direct marketing. Customer engagement continues to increase, so active users up 63% on a monthly basis and an increase of 47% in app downloads during the period.
However, the primary registration channel remains USSD, and we think that's a function of not only your customers who don't have smartphones, but just the nature of how cost-conscious our customers are and are using the cheapest channel possible to register. The brands all have access to the data that sits in Plus More, so they're able to see how customers shop across the brands, and they've been able to use that data to construct some very successful direct marketing campaigns based on the singular view of the customer, which is exceptionally important when you consider that 84% of our sales come via cash transactions. Moving on to online, clearly as customers become more digitally connected and enabled, online becomes more critical.
As a group, we saw an 18% increase in our online sales growth, really driven by Speciality, as I mentioned earlier, 33% up year on year, particularly Refinery driving a lot of that, as well as Techitown. Interestingly, all of the brands that are online at the moment, their online store is within their top 10 stores in terms of size and revenue. That is really encouraging to see how that is moving. Those are the existing businesses. The big growth lever going forward is that Pep Home will become available online from later this financial year. What we have seen from Pep Home online in terms of their digital customers, there is a high demand for Pep Home to go online. There are high engagements. I mentioned the 180 million Pep Home funds views earlier, and we really expect a very strong customer reaction.
In terms of leverage and efficiency, cost and efficiency is really part of our DNA, and we continue to use our scale to drive this down and maintaining our cost of doing business at around 27%. That's well ahead of any of our peers. We continue to leverage our group sourcing capability. We saw a 31% increase in the order book via our own sourcing office in the Far East, and this is something that we continue to grow. In terms of new initiatives, there are a number of them. Firstly, in terms of distribution, we are looking to try and leverage the group distribution capabilities that we have. One of the primary ways of doing that is through PAXI. Currently, most of the PAXI parcels, the fulfillment and distribution of those are done by external couriers.
We are shifting that volume into Pepkor Lifestyle to use their existing internal courier base that they have. That will unlock not only savings for the Pep and the PAXI business, but create real economies of scale through their distribution network. The second project is a group dark store. At the moment, all of the brands that trade online have their own dark store solution. Again, we're looking to bring this into a singular facility managed by Pepkor Lifestyle, given their exposure on their tech business in terms of online. That, again, will provide economies of scale and reduce the fulfillment costs for all of the brands that are selling online.
In terms of investment in AI and technology, a lot of really interesting use cases that we saw progress in during H1, a lot of investment in customer segmentation and marketing using AI, the use of AI in price and markdown optimization, the use of generative AI in product design and product development in our specialty brand, and the use of LLMs in terms of document vetting, not only in our credit business, but across our properties division as well. With that, I'll hand you back to Pieter to give you a forward-facing outlook. Thank you.
Thank you, Sean. We now will just go to my second slide, which is talking about the outlook for the business. Last year, at the same time, in May last year, we were literally sweating because winter had not arrived in South Africa.
We were anxious about what our winter sales would look like. This year, we're not sweating because May has been cold, and that's certainly been reflected in our sales so far in South Africa. We've got a few big tickets to land, the biggest one being the integration of the so-called acquisitions that we've announced, the OK Furniture one being the big one, and we're just waiting for the clearance from the Competition Commission to effect that. The other businesses are, as per normal plan, or the other business, as we've been communicating to the market, and we keep on with our normal store opening program. Thanks for joining. All the best.
Morning again. Yeah, I'm going to try and answer a couple of the questions, and then I'll hand over to Sean and Pieter to answer the rest.
The first question that we received was around the acquisition of OK Furniture, and that's already included in the results. As per my last slide, no, we're still in the process of getting final Competition Tribunal approval. It has been approved by the Competition Commission in South Africa and Namibia, just waiting for the approval by the Competition Tribunal in South Africa. If everything goes according to plan, it should be included in the second set of results of this year. When we get to the end, it will be there. The second question was around, again, the inventory growth, the 13% up. Is that a cut-off issue, and how do we see that playing out the rest of the year? No, remember last year and this year, Easter was in April.
The only difference that we had last year, there were some challenges around port congestion and supply chain. Most of our inventory last year, quite a big percentage of inventory last year was sitting in goods in transit, where this year it was in stores, but not a major impact. The main reason, as I explained in the presentation for the growth in inventory, is purely around now building in buffer stock so that does not happen again what happened last year. There are two weeks in really in all our businesses, probably only excluding furniture and appliances, we were building two weeks of additional stock in our lead time. That is the reason for the increase.
As you would have seen from the FoneYam results and the growth that we are getting there, it is really exceeding all our expectations, gaining market share, and that is why we have upped the stock cover on cellular specifically. It is higher value handsets that we are selling than what we used to sell in the past, more smartphones on FoneYam, which obviously also come at a higher value. Very comfortable with the stock value at the moment. It is helping our sales. We do anticipate on the last question that it will sort of normalize a bit more towards the end of the financial year because it will come out to like-for-like because we already included additional stock at the end of last year. There is a question on the growth of the books. We are always specifically on A Plus. Do we see that flattening out?
I think just to confirm, as we've communicated in the past, we on A Plus specifically, as long as the customer can afford it, as long as it's past our scoring criteria, we will continue to grow the A Plus books specifically. You would have seen that our approval rate is down for the period, down to 29% compared to it was high in the past. Yes, the scoring criteria is getting a bit more stringent, but we're still approving the same number of accounts that we saw last year. No, there's no cap on it. As we sort of indicated in the past, we do think sales contribution and acumen will probably stabilize at about 25%. It's now 21%. Pep will probably be at 15%. It's now at about 11-12%. Speciality, probably around the 18-19%.
It's about 17% at the moment, but no specific cap on it. There is just a question on the tax uncertainty. Is that now all the issues resolved? Yes. Again, just a reminder, we had quite a significant tax settlement with SASH in the 2023 financial year. Subsequent to that, there were some further smaller issues that we resolved as well. Hence the reason why we have released those provisions in the 2023 and the 2024 financial year. That is now all out of the system, all resolved. Hence the reason why our tax rate is now back to 27.4%, which is as what I have guided in the past. It should be just higher than the 27%, which is obviously South Africa's tax rate. Over time, if our Avenida grows at a higher tax rate, it might go up again. We are comfortable with that level at the moment. Thanks.
I'll hand over to Sean now.
Thanks, Riaan. A couple of questions. First question, clearly one about supply chains and tariffs. Essentially, we've looked at our entire supply network already. Very, very little exposure, if any, to the U.S. market across our supplier base. There's unlikely to be any kind of impact of tariffs on those specific suppliers. That applies to China, Vietnam, and to some of the local countries like Lesotho. Generally, commodity prices, we saw them come down across our raw materials after the tariff announcements. They've recovered slightly since then, but we don't believe that there's going to be any inflation on the commodity side. In fact, it might show some deflation. Factory gate prices seem to be flat to slight deflation there as well. There will be benefit to our customers.
Just a reminder, we pass on any benefits on sourcing to our customers in the majority of our businesses. The one unknown impact is clearly shipping. If there is a change in shipping capacity by the tariff wars, that may have an impact on us. We've had no indication so far yet that there is anything in terms of inflation coming through on shipping. A question about Shoe City, what the underlying issues are and what the outlook is for Shoe City. Yeah, just a reminder, I mean, Shoe City is 100 stores. It has a very, very minimal impact on our group numbers overall. Underlying problem is really, I think the format itself is quite a challenged format. It's a small box. It's value, footwear only play, and it has no brands within it. That's always a hard proposition in the South African market.
There were some issues around product and pricing that the team are busy addressing. A question around banks and their online channels and the threat to our financial services business and our cellular business. I think clearly that relates to the onsale of value-added services and the onselling of insurance. There is no question banks have an advantage in that they get the customers' deposits and salaries going into their accounts. However, the way we look at it is in line with our omnichannel strategy. Our 5,000 stores, as we tried to demonstrate in the presentation, represent acquisition and payment channels. We have 175,000 traders in the Flash network that are able to onsell VAS to our customers. We are building digital channels all the time. Plus More is a program, I reiterate, 10 million people. We are continually enhancing that Plus More app.
There is no reason why in the future customers would not be able to buy VAS and transact through that app. Just a question about post-period sales. Generally, sales have been pretty good in the period post H1. We certainly are seeing a benefit now in the last few weeks with winter starting to kick in, particularly in the apparel businesses. Yes, generally trade strong. I will hand you over to Pieter.
Thank you, Sean. I will finish off with the answers for two last questions. Just to remind you, if you have any more questions, just send it on to Ian, and we will respond as best as we can. The last two questions, one was from Kobus from Fairweather, asking about insurance in some detail. Suffice to say that we have our own insurance license. We have indicated that to the market.
It used to sit in one of our divisions. We have centralized it to make it a core strategy for the group. We have very low market share in insurance products. I think less than 1% is the information that we have. There is an opportunity to grow. There is obviously some space for us to do that. Our strategy is to, now that we own the insurance license, we can design products and embed them mostly into our other products. That is what you would have seen in FoneYam. That is what you would have seen in Credit Life, in Capfin. That is our strategy going forward. Very excited about that strategy, and we have the enablers to do that.
Just the last question from Fabian, asking, I suppose in response to a SENS that Pepkor sent out a while ago about IBEX shares that had some restrictions put onto it by the South African Reserve Bank and whether that's got any impact on Pepkor's financial flexibility. Our view is that it does not. Pepkor is completely independent. It's a shareholder matter. We don't really have to take into account what happens between shareholders. Pepkor is well positioned in its own financial flexibility and strategic capacity to carry on. I'll end it there. Thank you very much for your attendance. Goodbye.