Ladies and gentlemen, thank you for holding and welcome to the Sligro Food Group event call. At this moment, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. I would like to hand over the conference to Mr. Rob van der Sluijs. Please go ahead, sir.
Thank you. Welcome everybody to the call on our annual figures for 2019. I will start as usual with an elaboration based on the sheet presentation that you can download from the company website. I will refer to the pages I'm elaborating on. After that, I'll try to keep it to a 20-30 minutes introduction. There's room for questions. I would like to start with page number three of the presentation and dedicate a few words to the development of the net sales. These were already published early January, of course, so no major deviations in that respect to those figures here. We see a picture where the sales in the Netherlands have increased with 1.9% and in Belgium with 3.8%. In the Netherlands, we had a tough year because organic sales were down and in that respect, below market developments.
That was compensated by the turnover we added as a result of the acquisition of De Kweker for EUR 17 million and the combination of that led to growth in the Netherlands. Specifically in the Netherlands, we had some pressure within the customer group that came to Sligro as a result of the deal with Heineken, so a specific drinks segment. The reason for that is basically twofold. We decided to part from the earlier wine supplier that Heineken always used because Sligro is used to having a direct import with all the wineries. We had an intermediate situation with the supplier. We decided to split. At that moment, still a number of the customers were tied to the former supplier, and we lost approximately 2/3 of the sales at that specific moment in time, and that was in April of 2019.
We have regained quite a lot of those customers, and I think we have 2/3 of the portfolio back with Sligro, and that trend is still increasing. That's a positive development. During the year 2019, we lost approximately 40% of the wine sales to those specific customer groups, and that is more or less EUR 12 million on a yearly basis. On the other hand, of course, we are working together with Heineken on a situation where the customers can have one order, one truck delivery, and in the end, also one invoice for the combined deliveries. Many of the customers are very happy with that situation, that is still the to-be situation. In the intermediate period, some of the customers have chosen to go for a different supplier than Sligro.
In the end, they are confident that once we have everything in place, they will return. In the meantime, we have lost quite a lot of turnover with those customers. We are confident that we can regain. In Belgium, it is fully organic the growth over there. Of course with a new outlet opened in November 2018 in Antwerp. It's steadily growing. We had planned to migrate the customers that we supply from the Dutch base into Belgium in 2019. We did this only very limited because still the operational performance of Belgium in combination with supply chain arrangements with some major suppliers, there's still work to be done to create a stable situation in Belgium. In that situation, we don't want to migrate customers, but we will do our best to accomplish this in 2020.
With that, generate more volume in Antwerp, and that will have a positive effect also on the operational performance there in the next year. In the mix, we see already for a long time a shift towards delivery and a decline in cash and carry in the market. We also see this in the figures of Sligro. This year we remain stable, and that's because the acquisition of De Kweker added more than average to the cash and carry sales. We stabilized the split 1/3 cash and carry, 2/3 delivery for the year 2019. If I now move on to the next sheet for gross margin. We see again, a nice improvement of the gross margin percentage, specifically in the Netherlands.
In the Netherlands, it was the result of adding De Kweker, which had at the start already a better gross margin profile than the other business of Sligro. With the harmonization of the purchasing conditions between De Kweker and Sligro, we added another nice part to the gross margin there. In the mix, that explains the increase in the Netherlands, both in the absolute terms and in the percentage. Ongoing in the Netherlands is of course our effort to valorize the data that we have in the organization together with our suppliers, resulting in better promotional margins and better gross margins. In Belgium, there are a number of effects that are depressing gross margins. One is the aforementioned startup of Antwerp as a new outlet, a big store with, of course, starting from zero turnover in a scale-up phase, means that the level of shrinkage is quite high.
That means that in the startup phase, we were actually operating on negative gross margins. We are far beyond that period now, this in total depressed the gross margins overall in Belgium for quite a bit. The other effect is more technical one. In the Netherlands, all the fresh produce groups, so fruit and vegetables, meat, and game and poultry, are handled by our fresh partners, in which we have a share in the company. They also took over operations in 2019 in Belgium on behalf of us. For the whole of the group, we use the same partners, but that means that they get a part of the gross margin, but they also bear the cost, for instance, of the staffing. That's a technical shift, but led to a more depressed gross margin in Belgium.
If I now move on to other operating income on sheet number five. Relatively speaking, quite high figures for other operating income for Sligro. That's all to do with the service fee that we got from EMTÉ. When we sold the EMTÉ business, we agreed that we would service the new owners for a period of maximum 12 months for all the central operations of finance, IT, HR. For that, we got a fee in return, and that was reported under other operating income in the second half of 2018, that amounted to EUR 8 million. In 2019, in the first half, that was still EUR 5 million. These are, of course, relatively big amounts under operating income. As of the second half of 2019, these services and, of course, the resulting fee have stopped. That's going to zero in the next year.
We sold quite a bit of the remaining properties that we are not using anymore. Part of it had to do with retail, so we got rid of that in 2019. As a result, we had a bit of a good profit on the sale of those items. These are the main elements in the other operating income that I would like to elaborate on. If we go to sheet number six, it is about the cost structure, and there has been a lot going on in that cost structure. I'll take some time to elaborate. Of course, we have a consolidation effect of De Kweker that adds cost to all the lines in absolute terms. We had some one-offs as well with De Kweker. One-off is, of course, the acquisition related cost, which we already disclosed at a half year of approximately EUR 1 million.
As announced, we are doing an integration effort with De Kweker, which means that we will dismantle the headquarters and will reduce the headcount over there accordingly. That meant that we took on a restructuring provision in the figures of 2019 to execute that in 2020. That was another EUR 2 million involved. Of course, and this is hard to quantify, we are in the midst of integrating Sligro and Heineken in one distribution center structure. That means that a lot of time and effort of the people in the distribution centers has been absorbed in moving around, in reshelving, in repacking, and actually moving and preparing for the integration. We have worked for quite a lot of time still in a very inefficient situation in all the locations of Heineken, in all locations of Sligro, with double transportation costs, et cetera.
A very inefficient situation. We are happy that in the course of 2020, we expect to finalize that phase to a large extent, and that we can start banking on the advantages that it will bring once everything is put together. I will speak about that a little bit later on. In one of the next slides, I will elaborate on the impact of overheads on food service as a result of the disposal of retail. Also on the IT cost. Of course, take in mind that last year in the cost structure, there was a 70 million restructuring cost to provision for the headquarters. Transportation cost, we spoke about quite frequently over the last year. Prices went up significantly, which led to an overall pressure of roughly 7% on transportation.
Half of that price increase we could offset by further efficiency measures. Of course, we will continue to do that in 2020. Net effect of this price increase and the efforts of getting more efficiency was a EUR 4 million pressure on results. The technical effects of IFRS 16 are also elaborated in one of the following sheets. Of course, our ongoing investment in infrastructure has led to higher depreciation charges, which is a logical result of the past. Moving on to sheet number 17. I think it will be a bit tricky to explain it through the phone. I'm going to do an attempt to do that. Basically, what this sheet says, if we go to the left, we see 2017, that was the situation where still food retail and food service was combined.
In that period, out of the central overhead cost and central distribution center, EUR 19 million was allocated to food retail. As such, the coverage of those costs was borne by food retail in complete. In 2018, still the same level of cost, no savings and reduction of headcount at that moment, we had a half year of coverage from the business when it was still under our ownership. In the second half, we received the EUR 8 million in fees from the service agreement that we had with the new owners of EMTÉ, resulting in a EUR 1 million additional cost on food service. In 2019, of course, this service agreement came to an end. As you see in the before last line of this graph, we only received EUR 5 million of fees in the first half of the year.
Of course, we already started to reduce headcount as well on our central infrastructure, meaning a cost reduction of EUR 5 million, netting out to pressure on food service of EUR 9 million. That will continue further in 2020, where we have no fees anymore, but we will get the full year effect of the headcount savings program in place. In the end, it results for now in a dis-synergy of roughly EUR 8 million on costs. As we explained a few years ago, we estimated a EUR 15 million-EUR 20 million dis-synergy as a result of dismantling of EMTÉ. In terms of cost, this is more or less in line with what we expected at that moment. We don't think that this will be an ongoing pressure because over the longer run, things are more flexible.
The best way to compensate this EUR 8 million additional cost is by growing. The example I just mentioned with De Kweker, where we're going to dismantle the headquarters and don't have to scale up in the central infrastructure in Veghel, means that by growth, we compensate this type of cost. An important impact on the figures, which is explained over here. Another one is IT cost on the next sheet number eight. There we see that, of course, we are in the midst of our implementation and build of the new IT environment. Program is nicely on schedule, in timing, in budget, and also in scoping. We're happy about the progress there. We carefully planned it, and that is paying off in this phase. That's okay.
Still, we know that at the end of the line, it will cost us EUR 60 million to do the one-off implementation. The other part is, of course, that while we are doing this and also scaling up a new support organization, we still have to maintain the current systems. Basically, we are not able to scale down the old support organization yet, and we are scaling up the new organization already. That means that costs are increasing for a period of time. That's shown in the graph below on this sheet. We see in the light gray means that costs in the combination for the support organization are going up.
Of course, what is going to be on top of that is the amortization of that EUR 60 million or EUR 53 million, as mentioned above, CapEx, which will pass through the P&L over a period of seven to nine years in the coming period. That only starts in 2020 because that's when we have SAP in use in Belgium for the first time, and that's the moment when we start amortizing these costs. That is how the total picture of IT will look like in the next couple of years, and it will give you an idea about the levels of cost and when it is going down again after the implementation period. The impact of IFRS 16 is elaborated on sheet number 19.
In terms of cash, nothing happens, but in terms of P&L impact, we have some impact, specifically on the EBITDA, EBIT, and also net profit lines. Pretax profit is only EUR 1 million down as a result of the application of this new standard, but the big shift is from expenses, lease expenses now to depreciation and financing expenses, as explained in this graph. A lot of disturbance in the P&L, and we are hoping for a bit of stability on that front that will improve the visibility of our results the next couple of years. Technical effect, no impact as such. On the finance income and the taxes on page 10, we see the additional financing expenses as a result of IFRS. As just explained, we see that our participations results are also a bit down, has to do with two effects.
EMTÉ was also a big customer for one of our big fresh partners, of course, with the sale of EMTÉ, they also lost a big part of their business, and they had to readjust. On the other end, our partners have started up surfacing as in Belgium as well, which is combined with some startup losses for them. Also the results in associates has come down a bit in 2019 compared to 2018. For taxes, no specific effects other than mentioned in the last bullet that, of course, we use all kind of facilities, specifically involving energy-friendly equipment, et cetera. For that, we get fiscal grants.
The size of that has not increased drastically compared to last year. Of course, in a year where we have a relatively low profit before tax from regular business, these facilities depress the percentage of tax burden a more significant way. Looking at the operating profit development, as we call it, on page number 11. If we look through the cost of Sligro and the P&L, we take out the more or less non-recurring or the synergy effects, we see what the actual business is doing. Still the overall conclusion is that we had a relatively disappointing year in that sense. We took on a lot of big projects. We made a lot of progress and put a lot of things in place that will bring the success in the next couple of years. Little to show for it in 2019 in terms of results.
On the right-hand side, I think it's a summary of what was just explained, the major elements causing the decline in the results in 2019. That leads to a net profit per share on page number 12 of EUR 0.75. Of course, last year we had the big profit of retail in it. This year, mostly continued operations. EUR 0.75 earnings per share. We do understand, and of course, fully appreciate that in the longer term, dividend should always be based on solid results development and free cash flow projection. We are confident that we have everything in place to see that through in the next couple of years.
Based on that confidence, we have decided to maintain dividends at the same level as last year at EUR 1.40 per share, knowing that this year it is not fully supported by results and the free cash flow. Again, based on the confidence that our plans in future will make sure we have the recovery reflecting this decision. On the next sheet, the cash flow statement. I think I mentioned a lot of the elements. We do have a lot of technical influences there, both from IFRS presentation, but also last year, if you remember, in 2018 in the deal with EMTÉ, we also got a compensation for working capital with this, in this presentation, still part of the investing cash flow, and should be corrected to cash flow from operating activities.
Otherwise, the operating activities are increasing significantly, and that is, of course, not completely in line with the results development. That is more of a technical shift in there. I think what is worthwhile mentioning here specifically is, of course, the major investments that we've done. Gross CapEx of EUR 129 million offset by the inflow of some divestments. That level of CapEx is the highest in the company ever. We expect that will significantly reduce as of 2020 and the years thereafter, more towards our long-term net CapEx target of roughly 2.5% of sales. That will, of course, help besides recovering results, also less CapEx will result, of course, in a better free cash flow generation profile for the next period.
Of course, in a year where results are a bit under pressure and where you invest a lot, then of course, that is reflected also in the debt position of the company, specifically as we maintain dividends on the level that we are doing. We see that by the end of the year, we already brought down the net debt EBITDA ratio to 2.2, coming from 2.5, 2.6 around the summer. Also there we are back in the right track to reducing this covenant. We are not close to any dangerous covenants. In all of the documentation, we have provided for the impacts of IFRS, which can be excluded from the calculation. We think that we took a good step already there in the second half of the year.
Of course, we'll go back to more normalized levels for Sligro Food Group in the years to come. I will skip the segment figures and the segmented cash flow. I think these both reflect what has been elaborated in the previous sheets. Going through the highlights of the Netherlands on sheet number 17, we see the developments in the major indicators for us. Both consumer confidence and the unemployment rates are important leading indicators for where our business is going. This is shown in the third graph at the bottom of this sheet where the FoodService Instituut Nederland has shown the correlation between, for a long period of time, between consumer confidence and the growth in the food service sales.
What we've seen in the Netherlands in the end of 2018, consumer confidence really came down hard to levels that we hadn't seen since 2015. That also explains why there is a slowdown in the market in the growth percentages. It seems to stabilize, which also bodes for 2020 that we will have a more of a less flat situation in the market. That's at least our expectation for now. If we then look at the market developments a bit further on sheet number 18, we see the overall market development and the growth in the specific segments.
Keep in mind that we had VAT increase in the Netherlands, which accounts for approximately 2.3%-2.4% growth just based on the VAT, which is included in the figures on consumer spending on the left-hand side. We then look at what it meant for the development of the wholesale, so the market in wholesale value, then the FoodService Instituut estimates that the total market had grown with 2.4%. We mentioned before that we were growing with 1.9% in the Netherlands, so that explains the slight decline in our overall market share. Compared to the figures presented last year, we will see that there is a step down of roughly 1% on Sligro compared to the reports for the previous year. That's because the FoodService Instituut has redefined their view on the market to include also retailers and logistic service providers to the market.
That's an addition which we think is worthwhile because there's more blurring and more impact of those markets. They also excluded, for instance, tobacco from the market definition. Although it is consistently applied, keep in mind that in the meantime, almost a quarter of the food service sales of Sligro is now excluded from this market definition. Still, it is consistently done. We are still by far market leader in the Netherlands, and with a bit of decline over there. We see that HANOS, one of the local competitors, is growing. That is acquisition related and expansion related. The new players added, we think that is a worldwide addition to the market because they're also playing in that area. If we look to the developments at Sligro ourselves at the sheet number 19. We've had a lot of focus on our strategic programs.
I mentioned most of them, Heineken, IT, Next Gen Cash-and-Carry stores, et cetera. Although we are happy on the progress that we made on those elements, of course, that took eyes off the ball on the normal operations. That had some impact, of course, also on customer appreciation. That's something we have to restore in 2020. IT implementation is running on schedule. Of course, a lot of attention is going in the shift from cash and carry to delivery. We know that in market, the delivery business is growing, but we believe in the combination of the two, but think that cash and carry has to be reinvented and put into the context of the new positioning in the market. That's what we call the Next Gen Cash-and-Carry program.
Following, we explained some of the elements that a part of this program and both is changing the physical environment of the cash-and-carry in the network. On the other hand, introducing a lot of digital features and services for our customers. The combination of the two should make the cash-and-carry strong, also in the future where sales might go down further in the cash-and-carry environment. As explained on sheet 21 graphically, we have a true omnichannel proposition for our customers with the combination of online delivery and cash-and-carry in combination and all kind of digital features and services. Allow to skip to sheet number 23, an update on the Heineken partnership. The partnership is strengthening year after year.
We're very happy about the relationships that we are building between the sales forces of the two companies, and really feel that we are close to putting the value on the collaboration. Of course, last years have been all about investing and setting up the infrastructure for that. We have rebuilt a number of, and expanded a number of the distribution centers of Sligro to be able to absorb all the volumes of Heineken. In 2019, we already closed down three locations of Heineken and integrated there. In those locations, we are at least already able to supply the customer in one truck. It's still two orders, it's still two roll cages, and customers still have to order on two different platforms.
That we will remedy in the first half of 2020, and then we have fulfilled our promise to the customers, and we can start optimizing the situation for them and also, of course, for ourselves. Looking ahead, we are going to complete the integration in 2020, go back to the service levels and the quality of the process that customers are accustomed to with us, but also start to take some of the benefits in terms of cost savings and upsell potential. On the next slide, you see where we are on this physical integration. Rotterdam, Holland, and Enschede were done in 2019. In the meantime, at the beginning of this year, in the northern part of the Netherlands, in the city of Breda, we merged the Heineken and Sligro bases. In the next couple of weeks, a lot will be done, including Amsterdam.
Once that is done, then 80%-85% of the job is done. In those locations, we can start the optimization process, which will bring us a lot of benefits in the next couple of years. It will be a gradual process. We have to convert 35,000 customers in the Netherlands onto our new online platform, which will be launched in the second quarter of the year, and renegotiate payment terms, renegotiate drop times, drop moments, et cetera. In the meantime, try to generate upsell and concentration of their business with Sligro. A very interesting time, where we can really start reaping the benefits from this deal. Then a few words on the De Kweker acquisition on page 25. In the summer, we were able to acquire the De Kweker, a very strong, very nice player in the heart of Amsterdam.
We bought the company for a EUR 15 million cash and debt-free price, including a lot of real estate in value of EUR 19 million. The good thing is that already EUR 12 million out of that real estate is already resold in 2019. That was a good thing. De Kweker contributed already EUR 17 million to net sales in 2019. Keep in mind that they report on 13 four-week periods, and seven out of those were reported in the second half of the year.
Of course, also for De Kweker, the holiday season, fourth quarter is the best one of the year. For next year, we expect another EUR 55 million to EUR 60 million in sales from De Kweker in the first half of the year as non-organic sales growth. The integration process is running smoothly. We already announced and planned the dismantling of the headquarters of De Kweker.
We took the provision in the 2019 figures, but we'll execute that in 2020. We harmonized purchasing conditions which gave a nice uplift to the gross margin percentages of De Kweker. The integration of the cash and carry is being prepared and also the delivery, and we will move that in the course of 2020 under the Sligro umbrella, at least on the back end, because on the front end, we want to keep De Kweker as a name and as a proposition in the market because of its strong position in the specific area of Amsterdam. You can see our building activities on the next slide 26. Number of cash and carries we converted, number of delivery service outlets that are converted or rebuilt on page 27. On page 28, you see the summary of the five key priorities for the Netherlands in 2020.
We are finalizing a lot of the big programs. There's a bit of a relief also in the company and amongst our employees, which is very important because we need a year or a period at least to focus again on customer satisfaction and on improving the results of the group. These, I think, are very nicely presented in these five priorities. Moving on to Belgium. In Belgium, we see similar market developments on sheet number 31. There, consumer confidence coming down, but unemployment still relatively low. There we also think stabilization is the way forward. Figures on the market, page 32, are still not as consistent and frequently available as they are in the Netherlands, with a lot of changes during the year.
Over the first three quarters, a -3 was reported to end up with a +3 the year overall with a new definition and a new view on the market. We can't really base ourselves on these kind of figures. We know that the market for 1/3 is in wholesalers and for 1/3 the buying of professionals is still done in the supermarket and fresh specialist channel. Given these numbers, we estimate that our market share is roughly 3.5% and that in 2019 we were able to outgrow market. More detailed analysis than that and more proof I don't have at this moment. We still see that the market is really fragmented. We see that the big players, besides Sligro Food Group, Makro, Metro, Colruyt, Bidfood, Trendy Food Solutions, are all more or less of the same size still.
That means that there's still a lot of opportunity to grow and consolidate in this market and to strengthen our position. We spent our time, as shown on sheet number 33, of course, Sligro Antwerp to grow the business, also support the operational performance, specifically more dominant from the Netherlands as of the fourth quarter, to make sure that also with these lower levels of sales, we are able to operate at a higher profitable level, which is really important. We made a lot of adjustment to the infrastructure to make sure that we can grow also in delivery in Belgium, which is important. We prepared for the IT integration. In the second half of 2020, we have the first go live of our SAP platform in Belgium, and that will help to overcome a lot of the challenges that they are facing today.
We are maintaining three different ERP systems. It means three different pricing systems, three different promotional flyers for customers. Customers that have to order on three different platforms, et cetera. It will help a lot if we convert all the business onto one platform in 2020. That will bring us also some cost savings in the headquarters of Belgium. Of course, very important for that was the simplification of the organizational structure. With the acquisitions that we've done, we had a lot of different entities in Belgium. We merged them all into one Sligro Food Group Belgium, and only one associate there, the production company. That helps to simplify on our way to SAP. Also in daily business, it's much easier to show yourself in the market as one Sligro Food Group Belgium. On Antwerp on sheet 34, we see the revenue development.
We didn't hold on to the line that we expected at the half year figures. One major reason for that is that we postponed the transfer of the Dutch base service customers in Belgium. That is EUR 150,000-EUR 200,000 a week, which closes the gap to break even quite significantly. As explained before, we can only do that if there is a stable situation and if all the suppliers in the market are willing to service us also in Belgium in central structure. We are on our way to achieving that, but we're not there yet, and we want to have a stable situation before we do the migration. It is expected that we can do this in the course of 2020. On the network in Belgium, physically, we're going to move further towards a Sligro look and feel.
Then we will first do the SAP implementation and then the full-scale rebuilding of the outlets that are still under the ISPC brand. We will do that later in 2021. For 2020, it's important that we get the look and feel in the same way, that we get the SAP up and running. That's also summarized on sheet number 36 and 37 under the same theme, the five key priorities for Belgium. If I now move to the outlook for 2020 on page number 39, this is the last sheet. We think stable markets comparable to 2019 in terms of market development, driven by price, but volumes in decline, as a result, a bit of growth in the market. Cost inflation on transportation is normalizing again to the levels we saw before. We're happy about that. Still a considerable wage increase to come.
Negotiations are still ongoing, but we expect to make a 3.5% wage increase in 2020, which we have to absorb as we are used to, but that is still a significant cost impact to take into account. Of course, the focus will be on the 5 priorities as described, and given the uncertainty in the market still today, we are, of course, optimistic about that our plans are going to contribute to an improvement of our results, and we expect in a stable market to be able to do that. That's too dangerous to make specific forecasts for the year. We're not going to do that for the year.
For the longer term, then looking through the cycles that are typical for our market in upside and downside over the cycle, we think that based on the plans that we have today, we should be able to go for a long-term recovery to an EBITDA percentage of sales of around 7.5%, which is more or less equal of the previous guidance that we gave on the EBITDA of 5% before IFRS impact, et cetera. Based on all the information that we have today in the accounting system that we use today, this is the reported number that we are working towards. We are confident that the plans we have in place today and all the things we set in motion eventually could lead to this kind of profitability. That's my part of the elaboration of the sheets.
Now there is room for questions if there are any.
Thank you, sir. Ladies and gentlemen, we will start the question and answer session now. If you have a question or remark, please press star one on your telephone. Go ahead, please. Star one for questions. For questions or remarks, please press star one. There are no questions, sir. Please continue.
Okay, thank you. I would like to thank everybody for dialing into this call. I hope we gave everybody a view on what happened in 2019 and the positive view we have on 2020 on our way to recovery. Thank you for listening now, and I know that I will speak to some of you at a later stage. Thank you, and hope to speak to you again. Bye-bye.
Ladies and gentlemen, this concludes the Sligro Food Group event call. You may now disconnect your line. Thank you.