Good day. Welcome to the results for Pepkor, the interim results for the six months ended 31 March 2026. As per usual, I'll just make a few opening remarks. Riaan will take you through the financial results. Then Sean and Garth will talk about what drives the business. Then we'll close with an outlook of how trading has been since the reporting period. Then allow for some questions and answers. We're very happy to give a result of 12.1% in normalized HEPS growth for the six months. As we communicated to the Capital Markets Day a couple of weeks ago, the environment remains tough. Unemployment, cost of living, competition, still similar to what we saw a couple of weeks ago. Our strategy with customer focus continues to deliver the type of results that we can report. Just some highlights for the six months.
First of all, our retail platform or our store base increased to 6,657 stores, which is 89 new stores. We successfully implemented our targeted acquisitions. Our financial services continues to grow exponentially, especially driven by FoneYam, with 1.3 million activations during the period. As we discussed at the Capital Markets Day, we've got approval for our banking license, and hopefully, we can report back on that later this year. Lastly, before I hand over to Riaan, the informal market platform, which is now disclosed separately, continued to perform very well at a throughput of 20.3% for the six months or ZAR 34.7 billion. With that in hand, I'll invite Riaan to come and take you through the six months results. Thanks, Riaan.
Thanks, Pieter. Morning, everybody. As Pieter said, quickly run you through the results for the six months period. To start off with, maybe just again, as a reminder, as I told you during the Capital Markets Day, obviously, these results will include a lot of different activities, and a lot has happened in the last six months. Firstly, from a discontinued perspective, Shoe City is treated as a discontinued operation, so we'll only be focusing on the continuing operations. Secondly, as we communicated previously, quite a few M&A transactions that happened in the first three months or the first quarter already of the year, plus the implementation and the build of the initial bank has already commenced, and that also impacts the results for the six months.
To start off from the top, from a revenue perspective, very happy to say close to ZAR 55 billion, which is a 13.2% increase. As I mentioned, very much impacted by the M&A activity in the last year. If you exclude that, the top-line growth is around 8.5% off a very high base in the previous year. Also, still very happy as we've seen the last three years, gross profit margin, again improving, mostly driven by financial services, but I'll unpack that in a lot more detail later. This obviously falls through to specifically, firstly, the EBITDA line, and I've highlighted this specifically in this presentation to point out the difference between the EBITDA and the EBIT line or operating profit line, very much impacted by the investment we've made over the last six months to a year and all the different projects that we're running.
Also the M&A obviously playing out in depreciation. If you exclude the depreciation, not only from an IFRS 16 perspective, but also CapEx depreciation, the growth is 11.6%. If you include the depreciation, the growth goes down to just below the 10% at 9.4%. Again, however, if you exclude the impact of all the M&A transactions and the investment we've made so far in PlusB, we do hit a 10% operating profit growth, getting us to the ZAR 6.3 billion. If you continue from a HEPS perspective, very pleased to say we did achieve just over a 10% HEPS growth, 10.3%, getting us to the ZAR 0.93 for the period. However, again, as Pieter pointed out, if you exclude the M&A transactions and the PlusB impact in investment, we do get to a 12.1% normalized growth.
EPS also impacted in this period because of the acquisition of OK Furniture and House & Home in the non-RSA countries. This has resulted based on IFRS 3, on a bargain purchase of ZAR 123 million. That obviously will impact our earnings per share amount, and it has pushed it up, meaning the growth there is 12.1%. Cash generation, as we've reported in the past, always difficult to measure in this period because of the impact of Easter where it lands. This year being no exception, although we have seen improvement in pure cash generation up by 15.1% compared to the same period last year. However, I'll unpack the cash generation again slightly down later in the presentation, slightly down on our target of 80%. Similarly, on the return on net assets, at the end of last year, we ended up on 24%.
As I guided you previously, this will come down, and it has come down because of the investment specifically in quite a few of the M&A, but also the projects that we're running, where in year two and three, we do see that getting closer to the 25%, if not higher. As a refresher, to remind all of you, did unpack this at the Capital Markets Day around the new disclosure, the new segments, moving from the three segments to the four segments. To indicate what have we moved. We basically firstly moved the two retail credit books because they're sales enablers out of the FinServ segment into either the Clothing and General Merchandise segment or into the Furniture Appliance segment. We furthermore have split up the financial or the previous Fintech segment into Financial Services and the Informal Market.
Flash is now on its own, in its own segment, to give you more disclosure around operations of the informal market and Flash. Now obviously with the acquisition of CloudBadger and the process to get our bank, we are now disclosing PlusB separately. Just as a reminder, what are all the different M&A activities that happened in this last six months that are included in these segments. Style, Legit, and Swagga sits in the clothing and general merchandise segment in Pepkor Speciality. The OK Furniture businesses outside of South Africa sits with Pepkor Lifestyle, and then CloudBadger is the software platform to support our banking ambitions that obviously sits in our financial services segment to support PlusB.
If we move on to that, to give you a bit more detail around the revenue growth, and as I said, everywhere I will give an indication of what the revenue growth looked and all other indicators, including the M&A and excluding M&A, so you can understand at least what it would look on a like-for-like basis. Here we've done the same. Firstly, to start off, the 13.2% I've showed you, really driven by fantastic growth again from the financial services segment, and I'll unpack that in a bit more detail later, but mostly driven by Abacus, but also by Capfin and FoneYam to a lesser extent. On the clothing and general merchandise, more again driven by the acquisitions last year Choice, but also again in this financial period by Style, Legit, and Swagga.
On the furniture appliances, obviously the acquisition of the OK Furniture outside of South Africa, if you eliminate those, the growth then drops slightly on quite a few instances to 7.2% on clothing and general merchandise, 5.1% on furniture appliances. Financial services are not impacted. That's purely the insurance sale that we acquired as part of the OK Furniture business outside of South Africa that sits in there, so not a big impact, but in total it gives you the 8.5% growth that I showed you on the first slide. Again, you've got to remember taking the high base of last year into account, where the growth was 13%, mainly driven by the two-pot retirement payouts that happened in October, November, in the previous financial year.
If you take an average for the two years excluding M&A, we hitting the 10.7%, which is still above our guideline of always getting to a 10% top-line growth. If we unpack each of those components a bit further, firstly on the retail side and the sales numbers in the two retail segments. Purely looking at the sales growth, excluding other revenue, sales growth was 11.2% for this period, again boosted by the M&A activity. If you exclude the M&A and taking it on an average for the two-year period, it is 8%, which is very much in line with our guidance that we always want to grow like for like by 5% and new stores or space growth by about 3%.
If you look at like for like, again, because of the high base last year, like for like this period was at 3.6%, which is below our 5%, but on a two-year basis, we are above the 5%, still running at 5.7%. Break it down a bit further from a credit perspective, from a tender perspective, where did the growth come from? As you've seen over the last two years, credit's still growing faster than cash. Credit contribution now for the group is up to 17%. The same period last year it was at 15%, again, mostly driven by the growth in the A+ book, which supports PEP, Ackermans and Speciality.
Cash did show a 9% growth, which is slightly higher than the past, but that was assisted again by some of the new businesses that we've acquired, specifically Style, Legit, and Swagga, that runs at a higher cash component, a lower credit component. If you take that out, you'll see that the cash then do drop more than the credit contribution because of that lower credit contribution in those new businesses acquired. Look specifically at clothing and general merchandise. Secondly, if you break down the revenue a bit further, again, firstly, just as a reminder, excluding the M&A at 7.2%. If you look at specifically where is that coming from, PEP, again, a very steady performance, growing revenue by 6.6% off a very high base last year. Both PEP and Ackermans were really the two divisions that were mostly impacted in the previous period by the two-pot system.
Unfortunately, Ackermans did not have such a good growth from a top-line perspective and also from a like-for-like perspective. Sean will unpack that later in his presentation. Speciality with the inclusion of Style, Legit, and Swagga obviously had a very high growth. Even if you exclude the new acquisitions, still grew at 10.3%. With various performances by the different brands in that division, which Sean will also give you a bit more color on. The good news, as I said, is that Avenida really performed very well in the first half of this year, continuing from how it started in the previous financial period at 19.7%. Africa also performed very well. The one change, as I showed you previously, the A+ book is now included in the segment. That still grew by 31% revenue on that.
Again, similar to what I showed you on the first slide, also the credit contribution here increasing from 16% to 18%, very much in line with growth for the group. Overall cash and credit also including M&A, cash likely higher. If you exclude M&A, it drops slightly lower, again, because of Style, Legit, and Swagga, and Choice as well, running at a lower credit contribution. Overall, this segment now contributes 72% of all revenue to the group. Furniture and appliances, 14% of the group, including M&A, the 5.1% that I showed you. If you look at the breakdown there, very good performance from Tech, also assisted by the acquisition of the new OK Furniture, non-R.S.A. If you exclude the M&A, Tech still doing very well at 8%, even with very tough competition from Amazon and Takealot in this space specifically.
HOME, you'll remember last year, had a very good growth also due to the two-pot retirement system. That growth has slightly slowed down in this period, but still very good performance to show positive growth during this period. Similarly, on the credit side, you'll see 30% that's aided by the new book from OK Furniture that's included. However, even if you exclude it, a very steady 12%. Overall, not a big change in credit in Lifestyle. It was 12.5% last year, it's up to 13%. We have started to see a bit of improvement in credit sales in Lifestyle, where in the past we've been very conservative in this segment, specifically on credit granting. You see cash and credit very much in line, even if you exclude the new OK Furniture business. Credit still growing slightly higher than cash, but very much in line with expectations.
If we move on to the two new segments, first one being financial services. You can see there, growth, as I commented earlier, very much going from Abacus growing by more than 100%, now making up 24% of the segment. Capfin still showing good growth. That's mostly because of the further rollout of 24-month product, which has resulted in revenue growth of ZAR 28, now making up 37%. FoneYam did with the introduction of the new 18-month product, did still show good growth at 16%. You can see there, FoneYam now making up 38%, the biggest portion of revenue in the segment only after two years of having this product. Last, you'll see there is a small contribution from PlusB, and that's because of the CloudBadger system platform currently still provides services to Standard Bank Eswatini.
That is a very small component, but that's at the moment still in place. As I mentioned earlier, again, if you exclude the insurance book, the growth there is 38.7%. On the informal platform segment or Flash, we're very pleased that it did grow by 10.4%. I did guide you at the capital markets. We do actually anticipate this to drop below 10% because of the move more to aggregation in this business. Very pleased that across the board, we still saw an improvement here resulting in a revenue growth of 10.4% and a very nice improvement in profitability. Linking then onto that, as I mentioned earlier, very nice improvement in gross profit, up 170 basis points, mostly driven, as I said, by financial services being insurance and the FoneYam side.
We did also see an improvement in the GP margin for Flash based on those new products that's been rolled out. The best indicator and the area where we're the most impressed about is on the improvement on GP for the retail side, mostly coming from Avenida, but also from Africa, with small contributions from PEP and from Lifestyle as well. In PEP, this is despite having a higher cellular mix in PEP and in Ackermans, which normally comes at a lower GP. Very pleased with that improvement of 60 basis points on the retail side. Our challenge, obviously, at the moment is our growth in OpEx with all the projects running. I did communicate this to you previously that with the investment we're making at the moment, that's why you won't see an efficiency gain in this financial year.
That's already played out in the first six months. Expense growth at 21.8%, excluding data costs, obviously much higher than top-line growth. This is mainly driven, as I'll unpack for you in a lot more detail, by the M&A and the projects that we're running. If you break the two biggest cost drivers out being salary costs and property costs growing by 19.9% and 11.7%. Again, if you exclude the M&A activity and the special projects that we're running for salaries, that's down to 9.3%, which is basically salary increases plus new stores. Similarly, on the rental side, it's 7.7%, which is also your normal escalation of between 5% and 6%, plus the new stores being added.
Just to take note of, we have reduced these, still see a very small reductions on rentals on renewal, but by large, that is something of the past, and we're now starting to see increases on rental renewals. Just as I said, if I break that down a bit further, the investment on the new M&A around OpEx and also in PlusB, if you eliminate that, the 21.8% goes down to 14.1%, and that's the number we've used to calculate the normalized HEPS that you saw earlier, normalized operating profit. If you break it down, a further component on one of the investment that we've made in the different projects, distribution capability is around the group dark store and group courier capability and lifestyle financial service investment in Abacus.
Customer acquisition is the additional canvasser cost, and also a further investment in +more, and then corporate costs around some of the M&A activity that we've done, that we're still busy implementing. Overall, a 9.5%, still slightly higher than normalized top line growth, revenue growth of 8.5%, but very much in line with what we expected. The investment and the benefit of this, we expect to see the full benefit only in year two and three, as I've previously explained. The one question we obviously got on several times at the Capital Markets Day is around the magical ZAR 1 billion that we say we're going to spend in total to build a bank. Nobody believed us, I thought I'll just break it down for you in a bit more detail where we are on that.
Currently, depending on when we get the final Section 17 from the Prudential Authority, we want to launch the bank to the general public around about April next year. In the previous financial year, we spent ZAR 55 million in OpEx. In this financial year to date, we've spent ZAR 76 million in OpEx. Both of those are mostly around people cost, a bit of rental, and then other consulting fees and professional fees. On the CapEx side, we did do the acquisition of CloudBadger, and we've already spent ZAR 15 million around integrating CloudBadger, either into some of our systems, but also some external financial services platforms. That's obviously an ongoing process. Our current forecast, as we stand here today, is that we will spend not more than ZAR 920 million in total cash flow.
That's OpEx and CapEx combined, until the 1st of April next year when we're planning on launching the bank. Hopefully, it's even slightly less than that. This all falls down through into operating profit. Again, the profit driver, as you saw last year, the top one is around financial services, mainly driven by FoneYam and by insurance, Abacus. Also very pleased to see that although Flash is top line, I've said in the past always, you can't measure Flash on statutory revenue. That's why it's again confirmed that the bottom line is growing by above 20%, as we've indicated, 23.5%. With the investments and the M&A activity in both the clothing and general merchandise and the furniture and appliances, as I indicated, that's why the growth in OP is lower for them in this period.
We have while been investing and implementing, we're expecting to see the full benefit of only in year two and three. Again, if you take out the M&A, you can see the impact of that on operating profit, with financial services being slightly higher. That's because of the PlusB investment, very much in line on the clothing and general merchandise and the furniture appliance segments. One thing that you have to take note of, we previously remember the two sales enabler books were sitting in financial services. It's now sitting in the two retail segments. If you exclude specifically the A+ book, which because of a challenge we had in December in collections, which I'll unpack a bit further, the A+ book profitability did go backwards.
In the first six months, if you eliminated the pure retail performance in the clothing and general merchandise segment is 5.1% growth. Again, mostly driven by Avenida. Good solid performance from PEP. Unfortunately, not such a positive performance from Ackermans, as you would've seen based on their top line, that will be unpacked in more detail later on. The two areas I always get questions on that we see as the top profit drivers at the moment, the one being Abacus Insurance. You can see the revenue going up by more than 100%. If we look at the profitability, firstly in Abacus itself, EBIT increasing from ZAR 70 million to ZAR 245 million.
If you take total contribution in the group, that is fees and service fees, IP fees, and other claims that gets paid to the other retailers in the group, being ZAR 121 million for this period into account, total overall profitability for the group, that has increased from ZAR 176 million-ZAR 366 million. There's also still sales support in the lifestyle segment. That's claims paid to customers that they can come and spend again in our stores to buy new goods and services for them. Just as a reminder, that ZAR 366 million, I did indicate to you at the end of 2024 that we want to get total group contribution in three years' time to ZAR 1 billion. Very much still on track to achieve that ZAR 1 billion by the end of next year, and hopefully even overachieve on that ZAR 1 billion based on current indications.
The second one, we always get lots of questions obviously on FoneYam and on cellular performance and how we're doing. Just again to confirm, cellular itself revenue grew by 7.9%. That's the sale of all handsets, accessories, SIM cards, et cetera, in the group. FoneYam revenue, that's from the income we earn from the rental product, that increased by 16%. Cellular increased by 7.9%. Also very pleased to say that OGR still improved and increased by 13.4% after a very challenging year in that regard in the previous financial year. Look at the profitability, overall, FoneYam really being the star performer again there. We're going up from just over ZAR 100 million profit last year to over ZAR 300 million profit this year.
Still expecting to see good growth there in the rest of the year as some of the efficiencies that we have been talking about last year around claims on insurance side, but also better scoring starting to implement, and you will see the impact on the provision later on on that. Also still a good steady performance in profitability on cellular. This despite seeing significant deflation in handset sales in this period, which obviously impacts your overall profitability on cellular sales. 21.4%. On top of that, it says that our OP margin on cellular in totality, if you take all the components up from 10.2% last year to 11.5%, which is exactly in line with the overall group OP margin of 11.5%. It is not dilutive overall to the group.
If we move on to the books, as I indicated earlier, the A+ book still did grow this period, although at a slower rate because the base is now higher and Rand value you can see is very much in line with the previous period, up to ZAR 11 billion. As I mentioned, we did have a challenge in the call center in December, both from a collection perspective and a system perspective, which did sort of create, unfortunately, a case that not all collections happened in time. We do estimate the impact of that issue around about ZAR 180 million-ZAR 200 million, which will play out in bad debts during this financial year. Some of it's already been included in the first six months, it'll play out in the second six months.
It does mean that our overall non-performing loans did go up at the end of March. However, because of measures we've implemented and also dropping the approval rate after January, we are very confident by year-end we'll be back to our normal between 13% and 14% NPLs. That's the reason you'll see also why I have not dropped the ECL or the provision level at this stage, but kept it in line with where it was at year-end, because we are very confident that at year-end we should still be around the 18.5%-18.6%. On the lifestyle side, with the implementation of the OK Furniture book, and that historically running at a much higher provision in NPL than what we're used to on the lifestyle side, that has pushed up the overall provision and NPL.
The teams, that's one of their key deliverables is to bring that down over the next year. We're fairly confident we can deliver it. Just to be cautious, we've kept the provision at the same level for now, and we'll monitor it as we get closer to year-end. Hopefully, it will come down more than what we've and get it back to our normal rate as we've seen in the past. Avenida, I mentioned to you last year, we went through a period because of the state of the economy and the challenge the consumers had there that we had to be a lot more cautious on granting credit. We dropped the approval rate. That has played out very well, and you'll see the NPLs are significantly down, hence the reason we started to increase our credit granting again in the last couple of months.
Very comfortable with NPLs and also that the provision level will be at the same at year-end. We move on to the two standalone books, being Capfin and then the rental product being FoneYam. Capfin, very much in line with what I communicated to you at the end of last year. We had a challenge around the implementation of DebiCheck that became compulsory in August last year. That did have an impact on our NPLs at the end of last year. That has also played out into the first six months of this year. We have, however, implemented now that all new products must have DebiCheck in place and not just a normal debit order. At the end of September, we were at 75% of all customers being a DebiCheck. We're already just below 90%, and we want to get that closer to 95%.
On the FoneYam side, very good improvement in their NPLs. As you can see, the book also starting to leveling out more at around about a 2.6%. We anticipate that to go up to probably about 2.9% by the end of the year, but not the significant growth we've seen in the past on the book overall, because it's a 12 and 18-month product. Because of the measures we've put in place from either better scoring or also with insurance claims, you'll see there that NPLs is coming down, expected to come down even further slightly, which has resulted in a lower provision. Again, we anticipate the provision level also to be around about that level by the end of the financial year or slightly better. If you break it down, the question we always get, why the high growth in debtors costs?
I did indicate to you at the Capital Market that should start to slow down now because our base is bigger, and also because Capfin initially grew very quickly, but because it's a 12 and 18 month, it's now more at a continuous state and the growth will be slower, as you would have already seen there in the revenue. From a provision level, that is now starting to come down because the growth is not as steep in the books as anymore as it was a year or two ago. Last year, debtors costs increased by 67%. At year-end, it was above 40%. Now it is at 26%. I think I did guide you at the Capital Markets that it will be around about the 25%-26%, very much in line with that.
You can see the bad debt in A+ and Capfin playing out in the numbers. As you can see, that's why they've got big increases. FoneYam was because of the growth in the book. That's why by more than 100. That will also now start to normalize a lot more. Very comfortable with our bad debts and our overall debtor costs in line with what we previously communicated. On net debt to EBITDA, we've always managed it since post-COVID between the 0.5x and the 1x . I did indicate at the end of December it was still below the 1x time. Because of the dividend payment and some other final payments we had to make to Brazil, to Avenida, we had to invest another ZAR 2.5 billion, so our net debt has gone up to ZAR 14.9 billion.
Very much in line with expectations, and we are fairly comfortable by year-end, we will again be below the 1x net debt to EBITDA. This is really a temporary spike that we've seen, and over the next couple of months it will rectify itself. On the cash side, I did mention to you earlier, cash conversion still below our target of 80% at 68%, but again, very much driven by FoneYam, which grew faster than what we anticipated in the last quarter of the previous financial year, but similarly in the first quarter of this financial year. That's why if you eliminate that, similar to what we did at year-end, cash conversion goes up to 79%, closer to 80%.
Also looking forward, we still anticipate that for the full year, it should be back to the 80% cash conversion now that all of that has really played out in the numbers. Overall, just a reminder, these are the three M&A activities that was concluded in this six months period, and the amounts that we paid, just to take note of, although we paid ZAR 564 million to Shoprite for the non-RSA business, the real cash flow impact for us was ZAR 306 million because we did not pay for creditors. Shoprite paid for creditors. The activities that we're still busy with, the SA component of the OK Furniture is still outstanding. We're hoping if everything goes according to plan that the Competition Tribunal will rule on that in July, and hopefully we can then take that further.
As previously communicated, we're still investigating M&A opportunities in the informal market, that will complement Flash. Similarly, if the right opportunity comes around from international perspective, we will obviously investigate that as well. Just as a reminder, as we've done in the past, we don't declare an interim dividend. It will be similar this year. Our dividend policy is however still a 3x earnings cover, and as I indicated, it will probably still in place, same place for the next two years. We really want to get it back to a two times earnings cover. Last but not least, just as a reminder on everything that I communicated to you at the Capital Markets Day. This is a bit of my scorecard, a bit of a public performance discussion.
Just to again confirm, we did indicate there will be double-digit top-line growth. If you take that over a two-year period, including M&A, we did achieve that. Like-for-like sales, again, on average, were between 5% and 6%. We've hit that at 5.7%. Financial services growth above 20% at 41%. Even if you exclude the M&A activity, it's above 38%. Then informal platform, we did say 7%-10%, but fortunately, we've overachieved. Gross profit, getting close to the top end, sort of the range that we've guided, and that's really because of the overperformance of the insurance. Operating profit, exclude M&A, we did hit the 10%. Operating profit margin has come down. Last excluding Shoe City, it was 11.7%, and I did indicate to you it will come down to 11.5%.
It will come down slightly further towards the end of the year before we see the improvement in year two and three. Then HEPS coming in above the 10%, normalized HEPS at 12.1%. Overall, to summarize, under the current economic environment, a really strong performance. We're really, very pleased with it. On that high note, I'll hand over to Sean. Thank you.
Thanks, Riaan. Good morning, everybody. As Pieter said, I will take you through an update of the underlying performance of the operating business units and try and color in some of the numbers that he shared with you. You should have predicted by now that we will always start with our strategic model and a brief review of that. As you have heard many times before, it is a very simple model. It is centered around us understanding our customers' needs and our customers' pain points. We then work out whether we can execute and solve those customer needs and pain points, and if we are able to do that, how do we generate revenue and monetize the meeting of those needs?
The result of that is that we trade across a number of different categories, we operate across a number of different market and customer segments, we operate and serve our customers through a number of different channels, and we operate across a number of different geographies. This entire strategic model is underpinned by our very significant scale, our data and technology, and our people. One of the other things which we shared in a lot of detail at the Capital Markets Day, and we've said all along, is that Pepkor is absolutely a growth-orientated business, and we think about four core growth engines within the business. The first core growth engine is our retail platform. That's where all of our traditional retail businesses sit, and that's about category expansion, it's about segment expansion, it's about geographic expansion. The second growth engine is our financial services and connectivity engine.
There, the levers of retail credit, insurance, our very formidable cellular business, and our recent foray into banking sit. The third growth engine is omnichannel. That's where we look to maximize our physical footprint. We look to increase our penetration from a digital perspective, and we look to expand our scope and our reach in the informal market. The final growth engine is really about leverage and efficiency, and that's where we look to use our scale in areas like logistics, sourcing, data and technology, and people, to try and drive operating efficiency through the business. These four growth engines are all built on a platform that relies on us having a healthy existing business, and those growth engines are powered by a combination of organic initiatives as well as very strategic and very specific M&A activity.
Now, given that we covered leverage and efficiency in a lot of detail at our Capital Markets Day, we won't be covering that today. We'll cover it again at our financial year-end results. I'll take you through the retail platform, and then I'll hand over to Garth from a financial services, connectivity, and informal market perspective. Some of these numbers do repeat what Riaan said. Forgive me for that. At a headline level, sales growth of 11.2%. As Riaan pointed out, a lot of noise of M&A in there. If you extract the M&A, 5.8% total sales growth for the half. At a like-for-like level, we were at 3.6% like-for-like growth. Three considerations to think about.
The first is we have a very high base of 7.9% like-for-like in the previous year, so we think it's more appropriate to look at a two-year CAGR basis, and that is the 5.7% that you see on the slide. The second consideration is really that we saw very poor market growths in the RLC. If you look at a six-month moving average basis, RLC growth at total was sub 3%, and that clearly has an impact on all of our CFH sales. The final consideration is really in terms of Botswana. Botswana represents 2% of our sales, and because of the economic contraction we've seen in the country overall, our sales contracted by more than 11% during the half.
If we move on to the Southern African part of our business, like-for-like growth of 2.9% off a significant base of 9.6%, hence the CAGR on a two-year basis of 6.2%. Again, the Botswana effect very prevalent here. That sales performance did still see us gain market share across a number of our business units and across a number of categories, and I'll unpack that for you in a little bit more detail. Some of the other key call-outs, Pieter made reference to the fact that we had successful integration of all of the three M&A transactions that we did. We saw a very nice step on in terms of online sales. Online sales up 31% year-on-year in our business.
From a +more perspective, that loyalty base expanded to 17 million members, which is really giving us a very deep data set and pool of information that we can use to understand how our customers shop within our brands. From an international perspective, overall like for like, just sub 10% at 9.9%. That's made up of Africa at about 9.3%. Then, as Riaan said, a very pleasing result from Avenida like for likes of 10.3%. Let me unpack each one of the individual business units in a little bit more detail for you. Starting with PEP, a very strong H1 across all of the components of the business. We opened 38 new stores, lifting the footprint to 2,725 stores. Those 38 stores were made up of 19 PEP HOME, 11 PEP stores, and nine PEP Cell stores.
Like-for-like sales growth of 4.3% despite the very high base of nearly 12% in the prior year. That gives PEP a very healthy 8% two-year CAGR like for like basis. Unsurprisingly, that sales result meant that they gained market share in nearly all of their categories, but particularly the ones that count for them being babies, kids, adult, and homeware. Sales were assisted to an extent by credit growth. Credit mixed up 200 basis points to 13%, but that 13% is still substantially lower than a number of our other business units within the group. Overall, very pleasing performance from PEP at a headline level. You'll remember at the Capital Markets Day, we spoke a lot about our retail businesses as platforms for a lot of our financial services products.
Some of the call-outs there. PEP moved or sold nearly 5 million handsets during the course of H1. That was up 4% year-on-year. What's interesting is that smartphone growth was 16% year-on-year. You see a significant shift of customers moving away from feature phones to smartphones. That was clearly enabled by the success of FoneYam. Another 750,000 rentals activated during the half within PEP. That's up 42% year-on-year. Paxi, another very good six-month period, 3.9 million parcels, which is up 21% year-on-year. From a new accounts perspective, we opened just over 440,000 new A+ accounts within PEP. That lifts their credit base to 1.6 million customers and an incredible 41 million identifiable transactions. These were transactions that had a +more scan behind them. That's up about 227% year-on-year.
Again, PEP is building an incredibly deep data set that gives them real insights into how their customers are shopping. They are using that data not only to drive their direct marketing campaigns and to work out personalization campaigns, but also looking at ways of actually monetizing that data through the formation of retail media networks. From a strategic initiatives perspective, all of the focus was really around online. As we shared with you during Q1, PEP HOME and PEP Back to School went online. Since then, we've activated Baby, and the ambition is to have all of the PEP categories available to customers online by the end of this calendar year. Since we went online in H1, we processed more than 50,000 online orders. From a digital prevalence perspective, we can see customers continue to brag about the amazing deals they found at PEP.
Nearly half a billion #pephomefinds or #pepfinds in the half as customers brag about the amazing deals that they're finding. A very pleasing result from the core PEP business. Moving on to Choice Clothing. Just a reminder, this was our entry into the off-price segment, a transaction that concluded late in Q4 of FY 2025. Since we acquired the business in H1, we opened an additional 15 stores. 14 of those were on one day. That came about thanks to the closure of Shoe City and our ability to repurpose those stores into Choice Clothing. From a headline sales perspective, like for likes up 6.2%. It was always our strategy to increase trading density in the existing stores, that's moved along very nicely in the half.
As we shared at the Capital Markets Day, most of the focus is really around building a solid foundation to substantially grow this business over the next few years. To that end, we implemented a new ERP system, much more robust and suitable for a business that's going to scale. We moved the distribution center, moved into a new facility, which is much more efficient and again, has capacity for growth. All of the Choice Clothing stores have now been integrated into the Pepkor Properties data set and into the property tool, which Leon shared with you at the Capital Markets Day. We are able to apply the same degree of science and data insight into opening Choice Clothing stores as we are with any of our other group stores.
We remain very confident that this is a business that will be 300+ stores over the next few years. Moving on to Ackermans. In terms of the metrics, opened 18 new stores during the half, a mixture of Connect and normal Ackermans stores. That lifts the store base to 1,045 stores. Like for likes at - 0.5% off a very high base of 9.6%. That gives you a two year CAGR of 4.4%. Despite those soft sales, we did gain some market share in school and in footwear and in the beauty area. Credit sales remain healthy, up about 300 basis points to 25% of sales. Credit has always been and continues to be a significant part of the Ackermans business. In terms of online, very strong growth at 72%.
This is something the team have been working on for quite some time in Ackermans, re-platforming the website, changing the UX, and devoting a lot of marketing money to driving online sales, and the results have been very pleasing. Now, needless to say that it's a disappointing performance from our perspective in terms of Ackermans. It's certainly a bit of a blip on what has been a very nice trajectory over the last few years for Ackermans, but there's a few underlying things that we've identified that impacted this. The first is a very distinct change in customer shopping behavior when it comes to lay-bys as a tender type. lay-bys are very significant in the core months of October, November, and March, which are the months that precede summer and winter season.
In those months, historically, lay-bys has been more than 20% of our sales. What we saw this year was they contracted by more than 20% in those months. That effect is particularly pronounced in babies and kidswear. The second area of concern was really insufficient attention paid to RSP inflation. I think we've always said that a business like Ackermans needs somewhere between 3%-5% RSP inflation on a regular basis to try and drive your top line sales. What we saw during H1 was basically flat RSP inflation in clothing, footwear, and home without any real elasticity in terms of unit growth. That impacted the sales line quite significantly.
I think by the team's own admission, we could have been better at managing our assortment width and our price tiering to introduce or engineer some inflation during the period. Thirdly, a few missteps in terms of the product mix within the transitional period of each season. I think we went too summery too early and too heavily winter too early in winter. That is really exacerbated when you look at the drop in the lay-by contribution. Finally, we do see a continued move of Ackermans customers who have credit facilities, that they spend more money outside of Ackermans than they used to in the past. What we've seen, for example, is an average Ackermans customer will spend 43% of their credit spend will happen in a different Pepkor business outside of Ackermans.
If you compare that to PEP, for example, only 22% of the spend of a PEP customer happens outside of a PEP store. There's definitely more openness to cross shopping when it comes to an Ackermans customer than PEP, and that, whilst it's good for the group, does impact the Ackermans sales line. Overall, a disappointing performance, but the team are hard at work in finding solutions to these. We are testing alternative payment types like buy now, pay later, for example, to offset the lay-by issue, and being much more deliberate about how we manage inflow inflation in the seasons that lie ahead. From a platform perspective, across those 1,045 stores, we sold 1.6 million handsets. That was up 6.2% year-on-year with smartphone growth of 10%. FoneYam activated another 530,000 odd cellular rentals. That's up 14% year-on-year.
We opened just over 345,000 new A+ accounts. That lifts the credit base in Ackermans to 2.2 million customers, which is up nearly 14% year-on-year. 6.5 million +more scans at till point, that's a 261% growth year-on-year. From a strategic initiatives perspective, if you refer back to Capital Markets Day, menswear continued to trade very well in the 80 stores, and the team are well along the road to expanding that to 250 stores. By the end of winter, we should have menswear in all 250 shops. In the beauty intervention, where we put a dedicated beauty department into 400 of our Ackermans stores, the net result of that is we basically doubled our total beauty sales in Ackermans and have picked up somewhere in the region of 250 additional basis points of beauty market share, according to RLC. Moving on to Pepkor Speciality.
Clearly, Speciality is the business that has quite a lot of noise in terms of M&A. What we'll do is we'll split the feedback into the existing business units and then talk a little bit about what's happened since the M&A transaction. From an existing business perspective, we opened 34 stores on an organic basis, driven by brands like Refinery, CODE, and to a lesser extent, Dunns. If you include the SLS transaction, we now have nearly 1,350 stores in our Speciality division, so two year CAGR at just on five. Very nice to see market share gains in all of the strategic categories, particularly menswear, womenswear, and some nice growth in kids, thanks to Refinery Junior.
The credit mix was relatively flat at 17%, but what's interesting is if you look at the total credit spend within Pepkor, 14% of total credit spend happens inside a Speciality store at this point. Online growth exceptional, 81% growth up, fueled by brands like Tekkie Town, SPCC, and Ayana. From a platform perspective, we're now talking about 1,350 stores. That's 300 stores more than Ackermans. Clearly the store base is significant as a platform and an enabler. If you think about the different customer profile that we have in our Speciality division, equally very important for the group. From a handset perspective, 225,000 handsets sold through Dunns. That number might seem insignificant when you compare it to the millions of phones in Ackermans and PEP. If you break that down to a per store level, that's 1,100 handsets per store.
That compares to about 1,500 in an Ackermans. If you consider the higher footfall in Ackermans, we think Dunns is certainly punching above its weight when it comes to cellular handsets. To that end, we've taken FoneYam live late in Q2. Already done 35,000 rentals on the FoneYam basis through Dunns. We expanded the Paxi parcel network into about 300 stores in Tekkie Town. We processed 70,000 units of Paxi parcels through the network. Opened just on 50,000 new A+ accounts in H1, which is substantial if you think the base is only around 200,000 accounts, and 1.4 million scans of +more. That's up 64% year-over-year. From an organic strategic initiative perspective, Refinery Junior has now annualized. Those 10 stores that we opened and the online proposition, we saw like-for-like sales growth of 23%. Clearly, this is a proposition that's resonating incredibly well with customers.
We are hard at work at trying to find opportunities to expand the Refinery Junior format as quickly as we can across as many locations as we can. Refinery 2.0, which is the big box Refinery store that has the normal Refinery range, Refinery Junior and Ozmo, the activewear brand. Those seven stores and the online proposition, again, making good progress, learning more and more about what the customer wants out of that proposition. In our three-year plan, again, plans to open more of those larger box Refinery stores. From an Ayana perspective, that's the 33 stores, Ayana being the very fashion-forward womenswear brand that we launched just over a year ago. We saw a very nice step on in Q2, both in terms of trading densities and in terms of margins. The jury is still out on the commercial scalability of this brand.
By the end of winter, we should have a clearer read on that, then we'll be able to decide whether from a capital allocation perspective, we want to start to grow that business faster. Moving on to the M&A piece, clearly significant work done post the completion of the transaction of Swagga, Legit and Style. We did share a lot of detail with you at the Capital Markets Day, but a brief reminder, three assets here. Legit, about 250 stores of a value-based womenswear specialist store. Here, our value creation plan was around driving trading densities up in the existing stores, expanding the footprint, leveraging our sourcing and supply chain capability, and introducing credit into Legit. Swagga, which is about 100 odd stores of a menswear specialist business.
There, the plan was simply to convert those locations into our existing brand called CODE, which is a casual menswear fashion brand, and then to consolidate the balance of the Swagga footprint. Style, which is a sort of mixed merchandise value player with a lot of footprint in Namibia and Botswana. There, the plan was to move that into the Choice brand, and again, ultimately to consolidate the Style brand as well. We have to be cognizant of the Competition Commission and the various constraints that were placed on us in terms of the deal approval. So we have to be very deliberate about how we eke efficiencies out across those two businesses. In terms of an update, H1, Legit traded very strongly, sales up 13% year-on-year. That translates to double-digit like for likes. We did introduce interoperability.
The credit mix already at the end of Q2 was starting to get to around 6%, which is very encouraging. All of the teams and the systems have been onboarded, and we're very pleased with the progress on Legit since the transaction concluded at the beginning of H1. Swagga and Style, we've brought all of the teams on board. We've brought all of the systems on board. The first three conversions of a Swagga store into CODE have been completed, and the first three conversions of a Style store into Choice have been completed. In both instances, they are trading really well, and we're very encouraged by that. Our plan is to have the full Swagga conversion completed by the end of the calendar year.
The Style business, it'll take a little bit longer, given their footprints outside of South Africa, as well as the fact that the Choice business is still quite immature and we're still wrapping our arms around that. Moving on to Lifestyle. Equally, and a bit of noise here from an M&A perspective, so again, we'll separate the feedback into two parts. From an existing business perspective, we opened 19 new stores. Those were predominantly from an in-home format, and that lifts the Lifestyle store base to 1,001 stores. Like for likes were 3.6% off a prior year base of 6.3%, so two-year CAGR of 5.7%. Credit mix up slightly, 100 basis points to 13%, both credit growth in home and in tech. Online sales up 20%, 25% in tech. Online now represents about 10% of sales in the tech business and about 6% across the entire Lifestyle business.
From a category mix perspective, bedding very good results in H1. Large appliances and small appliances traded well, and a nice recovery in television. From a platform enablement perspective, 140,000 handsets. That's up 12.4% through HiFi Corp and Incredible Connection. FoneYam is in the process of going live during May, and we believe that will enable a lot of the cellular sales in those businesses. About 300,000 active credit accounts, predominantly in the home segment, and 1.1 million scans on +more, which has doubled in the past 12 months. From a strategic enablement perspective, there were three focus areas here. You'll remember we spoke about our Jet Park facility. That's where we intend to put all of our online orders and our Paxi Skooch parcels through. It's a full automation of the Jet Park facility.
We're about 2/3 of the way through, and that should complete at the end of July and will be an absolute game changer when it comes to efficiency. You'll recall we spoke about the dark store and the opportunities there. At the moment, the group has quite a fragmented dark store setup, each individual brand running its own dark store and its own last mile fulfillment. We believe putting all of that together into a singular dark store makes sense for the group, and the first step of that was bringing Pepkor Speciality brands into the Pepkor Lifestyle facility in Rosslyn in Johannesburg. That has been onboarded, and we've seen a very nice improvement in SLAs and fulfillment. If you remember, 82% growth in online within Speciality means that we are starting to do some very significant volume through there.
We spoke about our Skooch Courier. We mentioned that we're spending hundreds of millions of Rand on third-party couriers, not only to fulfill on Paxi but to fulfill on online. We believe that bringing that capability in-house made sense. During H1, we added a lot of courier delivery vehicles to our fleet in Pepkor Lifestyle. We onboarded all of the Paxi Slow service. That's about two of the 4 million parcels that went through the business during that period. We're looking to extend that courier capability even further across the group. From an M&A perspective, Riaan mentioned this in a lot of detail. The acquisition of the non-RSA component of the Shoprite Furniture business. 67 stores came across into the mix. All of the IT infrastructure and onboarding and re-platforming has been completed from point of sale to back office to ERP.
The credit book has been fully onboarded into Pepkor Lifestyle's credit business. That includes acquisition, scoring, and collections. The insurance cell has been fully migrated into the Abacus business. All of the staff in those stores have all been trained, and that all took place in Q1 during our busiest trading period. Very pleased with the progress that was made there. As Riaan mentioned, from a South African transaction perspective, that is still making its way along the Tribunal process for the second time around. We really believe we'll see finality before the end of the financial year in terms of being able to move forward. Moving on to the international part. PEP Africa, as we said at our Capital Markets Day, this is really not a massive growth engine for us. This is about driving efficiency.
It's about improving the profitability and about repatriating funds out of the various markets. Unsurprisingly, we only opened one store in Zambia. Our intention is to hold that store base relatively flat at the 220 odd shops. Like-for-likes of 9.3% up against a prior year of in excess of 20%, which was a very high base, and we see a two-year CAGR of 15.2%. 400 basis points of gross margin expansion. A lot of that is simply coming through price markups that we perform when the local currencies devalue, we adjust our prices in the market. Obviously, you get the benefit on the existing stock that's there. Not to be outdone by Dunns, our Africa business sold 250,000 handsets during the course, again, with a nice growth in smart, although there's a high prevalence of feature phones in PEP Africa. Finally, Avenida.
As Riaan said, very nice progress here in H1. In terms of the number of stores, we opened four and closed four, keeping the store base flat at about 200 odd shops. That was by intent. We mentioned previously, as our sales started to slow down, we wanted to pause the rollout of new stores until we were happy that the proposition was fixed. The team did an immense amount of work from a product execution and an assortment planning perspective. Our price positioning, we introduced a second distribution center. Credit management has been improved, and all of that is really playing out in what you see started in Q4 of last year with a recovery in like for likes, and then moving into double-digit like for like both in Q1 and Q2, and we're seeing that continue in the post-reporting period as well.
Very nice to see the Avenida business certainly back on the boil. You can see from the slide that all of the improvement is across all of the categories. There's not one specific category that are completely shooting the lights out. Pleased to see the KVI products up 35%. They now make up about 20% of the mix. What is really encouraging is all of that sales growth came on the back of a 200 basis point improvement in gross margin, and that's really come about through better sourcing and better pricing methodology. Lastly, credit participation up 300 basis points to 45%, but I think as Riaan would have mentioned, the credit book is in a very healthy state. The team have a very unique use of biometrics in the business. We use biometrics in our stores, facial recognition technology.
We are able to score a customer while they stand in the queue. By the time they get to the till point, we've scored them, we've generated a potential credit limit for them, and we're able to offer them credit at till point, which means the acquisition cost is obviously significantly lower than in other parts of our business. All in all, very good performance there. Needless to say, our confidence levels are a bit higher than they were 12 months ago in terms of Avenida, and we will look to start or restart the expansion engine as we showed at Capital Markets Day. I'll now hand you over to Garth to cover the financial services and informal piece.
Thank you, Sean, and good morning, everyone. From a financial services and connectivity point of view, we'll start with FoneYam. Riaan spoke to continued good growth in FoneYam overall. Really been driven by a couple of things.
Firstly, expanding the range, so being able to add a few more devices to FoneYam in terms of a customer offer. We now have FoneYam available in 3,900 stores, and we've gone live in Dunns, as Sean's outlined just now. FoneYam is now making up 18% of all handsets sold, and about 52% of Samsung handsets sold in our stores are through FoneYam. Very encouraging for us is we launched an 18-month contract in August last year, and we're sitting at about a 37% take-up rate of all customers who offered an 18-month contract are taking it up, so very positive for us. 18-month contracts make up about 20% of our new activations at the moment, which is very encouraging. We're now sitting with over 2 million active customers. That's a 53% growth on last year and very positive for us going forward.
Moving on to retail credit. On the A+ side, we managed to open 838,000 new accounts in the period, really driven by an increase in the number of canvassers across the store base, with A+ now available in pretty much all of our stores. We managed to drive ZAR 2.5 billion in cross shop for the half year, which is, again, just speaking to our strategy of interoperability and customers now being able to use A+ across all of our retail brands. We have close to just over 4 million active A+ customers, and we look to continue to grow this. Focus for us on the A+ side, I think Riaan's spoken about the NPLs and just controlling those to get them back to within the range.
From a cost of acquisition, we still see an opportunity there to bring down our acquisition costs in terms of how much it costs us to acquire customers. On the Pepkor Lifestyle side, Pepkor Lifestyle Financing managed to open 30,000 new accounts for the half year. Through the successful onboarding of the OK Furniture's book, we added 63,000 new accounts, that brings our total number of active accounts to just under 300,000. I think good progress and nice growth on the lifestyle side. Moving on to Capfin. Strong growth in terms of number of active loans, we're 11% up on last year. We had 32% growth in new loan disbursements and 11% growth in reloan disbursements. I guess from a customer service point of view, we've seen quite a nice increase in our Google score on customer satisfaction, which is very pleasing.
If we look at just the split of loan activity, you'll see the bulk is still the six-month product, making up almost 2/3 of our new loans. We have managed to increase the 24-month loans as well, sitting at just around 16%. On the insurance side, very pleasing results. Riaan's called out more than 100% growth in insurance revenue. We now cover just under 4 million parcels for Paxi, 1.3 million cellular devices covered under FoneYam. On the bundle side, very strong growth in our Credit Life offering. ZAR 8.5 billion in Credit Life cover on the Capfin side and ZAR 2.3 billion cover in the Pepkor Lifestyle side. In the half year, we've seen very good growth in funeral, predominantly out of PEP, but also strong growth in Ackermans. Our funeral cover is now over ZAR 31 billion for our customers.
A key focus for us is to continue driving funeral across the business. On FoneYam, we are relooking the cover for cellular devices. The claims ratio is a little higher than we'd like there, so a bit of work around how we think about the cover. Overall, very pleasing results from an insurance point of view. Moving on to the informal market platform side. Riaan's called out the top-line growth of Flash, as well as the over 20% growth in operating profits. If you look at the four different parts of the business that we shared with you at Capital Markets Day, trader business, the trader numbers are relatively flat at 176,000 traders. What has been very encouraging is the growth in acquiring devices to now just under 80,000 acquiring devices. That's a 25% growth in the half year.
Tap value in the trader business growing at 28%. We're seeing a lot more acquiring devices and customers using cards in the informal markets. Cellular, a nice growth in ongoing revenue at 8.3%. We distributed just under 20 million SIMs. That's a 27% growth on last year. Our active SIM base at 3.1 million. Aggregation, this has been the fastest growing part of the business, just under 60% growth and turnover now at ZAR 15.5 billion. We've increased the number of active partners, and we now have 85 active partners. We believe this business will continue to grow in the second half. On the consumer side, we had over 232 million vouchers redeemed in the half year, which is a 31% growth on last year. The turnover in this segment has grown by 51% to just under ZAR 17 billion.
I think overall, pleasing half year performance from Flash, as well as the rest of the fintech and connectivity business. I'll now hand over to Pieter for the outlook.
Thank you, Garth. Things have not slowed down in the world, fortunately, that includes our like-for-like sales, which is marginally better than what we've reported in this period. Again, against a high base, that was up to the 16th of May. It's been a bit colder, which we're always happy for here in South Africa. The geopolitical landscape, depending on which news source you follow, has also not abated. Might be done next week if you follow the one news source, we're not planning on that. We are concerned about the inflationary pressure on our customers, mostly, of that ticking up, especially food inflation. In the supply chain, the cost pressures have also come, especially on fuel, nothing compared to load shedding, for instance, we have not seen cost pressure on the import side of containers yet.
We'll keep on implementing our strategic priorities as communicated to the shareholders at the Capital Markets Day. It's still in line for our 200 stores. That meets all our investment criteria, which is a sort of a high hurdle in payback. It's a big six months for us in terms of the banking project, as we wait for the Prudential Authority to give us clearance. It's also, hopefully, we can get going on the last part of the M&A for the furniture business, and then the informal market platform and financial services. We'll just expand on what we're currently doing. Nothing, no new news, but certainly things seems to happen faster. This is without AI. There's a lot happening, of course, with AI that speeds up the business, all the system requirements and all of us having to deal with a new world that we live in.
Very happy with our performance for the first six months, and hopefully, we can report back in the second six months in a similar vein. We will now open the floor for questions. Thank you very much for your attention.
Morning again. I'm going to answer three of the questions. The first one being around expense growth, the second will be around the books, and then just on, again, on HEPS guidance. Firstly, on expense growth. The question was, yes, will we continue to see a high expense growth or will it slow down the second half? The answer around it is, yes, it will slow down in the second half.
Remember, as I already guided you at the end of last year, and again at the Capital Markets Day. I did say expense growth for the first part of this year and also going to second part will be higher than GP growth while we're investing. That's why I indicated that we will definitely for this year, for the first six months and the full year, have negative leverage. As I again said yesterday, yes, the EBIT margin will go down. It's all in line with expectations and as I guided you at the Capital Markets Day. Firstly, on expense growth, yes, it will slow down because you remember at year-end I already indicated we started investing in the dark store and in insurance, and we've already seen the canvasser growth. Now with the book slowly slowing down, obviously, the canvasser cost is now normalizing.
Similar insurance, we've done quite a bit of the investment, you're seeing the growth in the insurance side coming through. The bottom line is growing faster even though the investment we've done, and we expect that to continue into the next year. Similar with some of the dark store and so on. Quite a few of that investment's already been made. Yesterday, Sean indicated delivery of Jet Park will be in June, July. Most of it is starting to come through. Similarly, on the M&A, remember, Choice we already implemented last year, so that's coming up anniversary. As we obviously go through the year, the impact of the M&A transactions and that cost base coming in will be less than what it was for this first six months, where obviously the impact is much higher. Yes, we do anticipate it to slow down.
Again, as I guided, we still overall for this year, expense growth will still be higher than GP growth. I just want to reiterate that again. On the books, on the book growth. Yes, we did maybe on the two instances that occurred, that I did communicate in the presentation, but let's just refresh everybody's memory. There was two once-off instances we had on the two different books. The one was on the Capfin side. As I indicated at the end of last year, already highlighted to you there with the implementation of DebiCheck had an impact. Not all our customers were on DebiCheck. Quite a big portion still on debit order. The way it now works, DebiCheck customers get priority on deduction from the statement. That impacted us at the end of last year already.
That continued into this year because we could only over the next three to four months start making sure that all new customers were transferred onto DebiCheck. Your existing customers, obviously, you can't transfer immediately. That's what's taking us four to five months to get to below 90%, and why we will be before the end of the year at 95% of our customers on DebiCheck. That's why that bad debt, which by the way is about ZAR 30 million-ZAR 40 million, will wash through. Some of it already in the first six months, some of it in the second six months. Again, to confirm, we did not change any credit granting criteria on Capfin. We just did now for the last six months slow down on the 24-month product until we get back to normality, and then we'll review it again.
Otherwise, our credit granting criteria is still exactly the same. Similar on A+. Again, just to confirm, we communicated in detail at the Capital Markets Day what is the process we follow with credit granting. None of that has changed. We did not change our approval Criteria at all. We're still throughout the period about 32%, 33% before the intervention in December.
To be very clear, there was two issues that happened in December. Firstly, we had a staffing challenge in our call center in December. We did not have the normal staff complement because of various reasons. Secondly, we had a system issue with a dialer that we have in the call center that did not work optimally through that period to make sure we do the necessary corrections in that period. There's a once-off system glitch and people glitch. That credit bubble just needs to wash through the system. As we indicated, it's about ±ZAR 200 million.
Some of it already came in the first six months, some of it will come in the second six months because we write off bad debts after nine months, as I've indicated to you in the past. Again, we did temporarily drop the approval rate on the A+ book from the normal 32%, 33% to 24%. That happened from January onwards, and we'll be keeping that level until we're happy that it's back to normal levels, which we do anticipate the NPLs to be back to normal around about July, August of this year. We will review again what we do going forward. On the bad debt rate, very much in line, exactly on target what I guided you. I did indicate it was going to be 25% growth this year on debtors cost.
You have seen it's 26%, and we still anticipate that to be around the 25% unless, as I guided you at the end of last year and at the Capital Markets Day. Lastly, on HEPS guidance, again, remember I told you at the Capital Markets that growth in HEPS for the next three years we anticipate to be between 10% and 15%, but for this year, it will be closer to 10%. We're in year two and three, it will be closer to 15%, and that is specifically because of the investments we've made in various areas, not only in M&A, but on the rest, I did indicate to you this year will be closer to 10%, which is exactly what we delivered in the next six months, and we still anticipate to deliver HEPS growth of 10% for this year. All of it in line with guidance.
I'll now hand over to Sean to answer some of the other questions.
Thanks, Riaan. Good morning again, everybody. A few questions. The first was around the downward guidance on store openings. I think as we stressed at the Capital Markets Day, this is a medium-term guidance, and that's fundamentally because of the acquisitions that we've done. If you put all three of the completed M&A together, that's an ingestion of 540 odd stores. If the Shoprite Furniture or OK Furniture transaction completes, that'll add about another 330 odd stores. That's a massive amount of new stores brought into the mix that will impact some of the openings in the brands that are aligned to those stores that came through the M&A. We've essentially pulled back on new store openings for the next couple of years, and then one would anticipate that to go back to normal.
A question around beauty and menswear in Ackermans and whether we would consider extending into more stores. I think at a general level, the ability to extend those ranges into other stores has a couple of elements to it. The one is, do we just have available space in the existing stores? What sort of return do we get on the space from those categories? Obviously, what's the customer profile and the location profile of the stores that don't have those categories in them? In terms of beauty, as I said, the 400 stores have traded really well. We are certainly looking at how we can extend that into further stores, I wouldn't say that we'll be able to go right through to 1,000 shops. Menswear, we need to see how that performs now in the 250 odd shops.
If that proves to be successful, then again, we would look to try and stretch that further, but I wouldn't go as far as to say that we will put it into all of the stores immediately. A question on Ayana. As we said in the presentation, the jury is out on the commercial scalability of that. What does that mean? It means that we're unlikely to open more than the 33 stores. We might relocate one or two of them where we feel like the location is compromised. If we can't prove the scalability, the reality is we would exit that business, either by closing it down or disposing of it. A question on lay-bys and whether we understand why customers have shifted away from lay-bys, and do we expect that to continue.
The reality is we don't know the exact answer. We think there are a few moving parts here. Firstly, I think some customers have moved from lay-by to credit. We see that in our own credit book. Some customers have moved from lay-bys to buy now, pay later as a tender type. That's why we're testing that in some of the regions. Some of the customers have moved to cash. I think where those customers move to cash, they are probably spending less because they are buying the product at the time of need rather at the beginning of the season. They are actually spending less. From a trend perspective, we have seen lay-bys coming down over the last three or four years. It was just this year that it was a very pronounced drop-off.
It probably is likely to decline again, but I don't think it'll decline by the same degree that we saw in this reporting period. The final question, just in terms of the impact of Easter trade on our post-reporting period numbers. The question was whether it would be safe to assume whether the rate of growth in April was better than May because Easter sat in May.
Remember, Easter was at the beginning of May, so the actual sales related to Easter and the buildup would have reflected in March, which would've meant our April sales were up against quite a high base because Easter was later in April last year. Ostensibly what we saw was slightly softer sales in April, and the May sales were stronger than April, despite the fact that there was a higher base. That was up to the two weeks of the post-reporting period. If you forecast to the end of May, our expectation would be that May's sales would probably be pretty much in line with where April ended. I now hand you over to Garth.
Thanks, Sean. Just one question from my side. It was from Nick Wilson around the bank and medium-term guidance on how many customers we're targeting. Nick, at Capital Markets Day, we outlined by year five, we hope to have 1.8 million primary banked banking customers. You referenced the bank being digital. I think I want to reiterate, firstly, that customers will be able to transact across all of our stores, so 6,500 or more stores. Secondly, we think it will be a combination. We have said in the past we do a significant amount of banking transactions already in our stores. We have highlighted the ZAR 22 million odd cash in, cash out transactions we do a year. We have highlighted the 4 million bill payment transactions we do a year.
In our banking strategy, we believe it will be a combination of digital as well as customers using our physical store because of the access we can give them. Thanks. I will hand over to Pieter.
Thank you, Garth. I'll close off with the last two questions. The first one that I'll deal with is a question about what the strategy would be for our Lifestyle business if the OK Furniture South African part, for some reason, gets declined. In other words, if we can't do the transaction. That is always a possibility. As you can see in the results from Lifestyle, without that transaction in, they've performed exceptionally well. We've also integrated quite a bit of that business into the rest of the group. As far as Sean explained yesterday, the Skooch Paxi project where we combine our courier businesses in the group, so Lifestyle very much a part of the wider group. They also do quite a bit of dark store services for the rest of the group, especially in Speciality at the moment.
Yeah, they've got a great strategy, and performance is really good. If that transaction doesn't come through, we will carry on as what we did before. There's obviously a lot of time spent on that transaction, so the quicker we get clarity, the better we can refocus because the team is really tied up with all the goings on there. Just the last question is what the latest update is on offshore expansion. I see it's got a lot of press in some of our competitors' lives, but I can communicate to the market that there is no live offshore project at the moment in Pepkor. Of course, we will communicate to the market if there is any such plans. Thank you for your attendance. Thank you for your questions, and I'll close it off there. Thank you very much.