The conference is now being recorded. Ladies and gentlemen, thank you for holding, and welcome to the S withdrawal Food Group Event Call. At this moment, all participants are in a 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 Fondersliers. Please go ahead, sir.
Thank you. Welcome everybody to the call on our annual figure 2019. I will start as usual with a, a collaboration based on the, sheet presentation that you can download from, from the company website, I will refer to the pages I'm, I'm elaborating on. And then after that, I'll to keep it to 20, 30 minutes introduction, there's room for questions. Then I would like to start with the Page number 3 of the presentation and, dedicated 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% in Bellevue, the 3.8 In the Netherlands, we had a tough year, because organically 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 the Quaker was BRL 70,000,000 and the combination of that led to growth in the Netherlands. Specifically in the Netherlands, we had some pressure with, in the customer group that came to fleet row as a result of the deal with, with Heineken, so specific drinks segment. And the reason for that is basically two folds we decided to, depart from the earlier wine supplier that Hank can always use because sligro is used to having a direct imports with all the wine, the wineries. And we had an intermediate situation with the supplier.
So we decided to, to split, but at that moment, still a number of the custom were tied to the former supplier, and we lost approximately 2 thirds of the sales at that specific moment in time. And that was in April of 2019. In the meantime, we have regained quite a lot of those customers, and I think we have, 2 thirds of the portfolio back with Sigro and that trend is still increasing. So that's a positive development, but during the year, 2019, we lost approximately 40% of the wine sales to those specific customer groups. And that is more or less 12,000,000 on a yearly basis.
And on the other hand, of course, we are working together with Heineken, on a situation where the customers can have 1 order, 1 truck delivery and in the end also one invoice for the combined deliveries. Many of the customers are very happy with that situation, but that is still the 2b situation. And in the intermediate period, some of the customers have chosen to go for a different supplier than Seadrill. In the end, they are confident that once we have everything in place, they will return But, yes, in the meantime, we have lost quite a lot of turnover with those customers, but we are confident that we can regain And in Belgium, this is fully organic, the growth over there, of course, with a new outlet opened in November 2018 in Antwerp, it's steadily growing, and we have plans 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, and in that situation, we don't want to migrate customers.
But we will do our best to accomplish this in 2020. And with that, generate more volume in Antwerp, and that will have a positive effect also on the operational performance there in the next year. And then in the mix, we see already, for a long time, a shift from the towards delivery and a decline in cash in carry in the market. We also see this in the figures of Seagro. This year, we remained stable, and that's because the acquisition of the Quaker added, more than average, through the gas and carry sales.
So we stabilized the split 1three, cash and carry, 2 thirds delivery for the year 2019. If I 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 was the result of adding the Greek, which had a, at the start already better gross margin profile than the other business of Slingro. And with the harmonization of the purchasing conditions between the grape and Slingro, we added another nice parts to the gross margin there. So in the mix, that explains the increase in the Netherlands, both in the absolute terms and in the percentage.
And 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, the aforementioned startup of Antwerp as a new outlet, a big store with, course, starting from 0 turnover in a scale up phase means that the level of shrinkage is, is quite high. And, yes, that means that the started phase we were actually operating on negative gross margins, while we are far beyond that, that period now, but this in total depressed the gross margins overall in Belgium for quite a bit. And the other effect is more technical one in the Netherlands, all the fresh produce groups. So food and vegetables, meat, and, again, poultry, are handled by our fresh partners, in which we have a share in the company.
And they also took over operations in 2019 in Belgium on behalf of us. So for the whole of group, we have, 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. So that's a technical shift, but let to a more depressed gross margin in Belgium. If I move on to other operating income on sheet number 5, relatively speaking, quite high figures for other operating income, income for, for Seadrill, that's whole to do with the service fee that we, that we got from N Pay. When we sold the N Pay business, we agreed that we will service, the new owners for a period of maximum 12 months for all the central operations of finance, IT, HR, And for that, we got a fee in return, and that was reported on the upper operating income in the second half of twenty eighteen that amounted to EUR 8,000,000 in 2019 in the first half.
That was still EUR 5,000,000, but these are, of course, relatively big amounts under operating income. And as of second half of twenty nineteen, these services and, of course, the resulting fee has stopped. So that's going to 0 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.
And as a result, we had a bit of a book profit on, on the sale of those those items. So these are the main elements in the, in the other operating income that I would like to elaborate Then if we go to number 6, it is about the cost structure. And there's been a lot going on in that cost structure. So I'll take some time to elaborate. Of course, we have a consolidation effect of, the cracker, that adds costs to all the lines in absolute terms And we had some one offs as well with the Quaker.
1 off is, of course, the acquisition related cost which we already closed at half year of approximately CHF 1,000,000. But as announced, we are doing a an integration with the quaker, which means that we will dismantle the headquarters, and we'll reduce the headcount over there, accordingly And that meant that we took on a restructuring provision in the figures of 2019 to execute that in 2020. And that was another $2,000,000 involved. Then of course, and this is hard to quantify we are in the midst of integrating sligro and Heineken in one distribution center structure. And that means that a lot of time and effort of the people in the distribution centers, has been absorbed in, moving around in, retail in repacking and actually moving and preparing for the integration.
And we have worked for quite a lot of time still in a very inefficient situation all the locations of Heineken in all the locations of, of hydro, with, double transportation costs, etcetera. 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 advantage. She said it will bring once everything is, is put together. But I will speak about that a little bit later on.
Then in one of the next slide, I will elaborate on the impact of overheads on food servers as a result of the disposal of retail also on the IT costs, of course, they can mind that last year in the cost structure, there was a EUR 70,000,000 restructuring cost of provision for the headquarters. Transportation costs, 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. And of course, we will continue to do that in 2020.
But a net effect of this price increase and the efforts of getting more efficiency was a 4,000,000 pressure on results The technical effects of IFRS 16 are also elaborated in one of the following sheets, and, of course, our ongoing investment in the infrastructure has led to higher depreciation charges, which is a logical result of the past. Then moving on to sheet number 17, I think it will be a bit tricky to, explain it through the phone, but I'm gonna do an attempt to do that. Basically, what this sheet says, if we go to the left, I think, 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, $19,000,000 was allocated to food retail. And as such, the coverage of those costs was borne by Food Retail in Complete. In 2018, still the same level of costs, no savings and reduction of headcount at that moment, but we had a half year of coverage from the business when it was still under our ownership.
And in the second half, we received the 8,000,000 fees from the service agreement that we had with, the new owners of MTech. Resulting in a 1,000,000 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 5,000,000 of fees in the first half of the year, but of course, we already started to reduce headcount as well. On our central infrastructure, meaning a cost reduction of $5,000,000. So netting out to a pressure on food service of 9 and 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.
But in the end, it results for now in a dissynergy of roughly 8,000,000 on costs. And as we explained a few years ago, we estimated, a $15,000,000 to $20,000,000 this year, as a result of dismantling of N Pay 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 of the longer run things are more flexible, but the best way to compensate this 8,000,000 additional cost is by growing. And the example I just mentioned with the cranking where we're going to dismantle the headquarters and don't have to scale up in the central infrastructure in Vectal means that by growth, we compensate this type of cost. An important impact on the figures, which is explained over here.
And then another one is IT cost on the next sheet, sheet number 8. That 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. So we're happy about the progress there.
We carefully planned it, and that is paying off in this phase, so that's okay. But still, we know that at the end of the line, it will cost us CHF 60,000,000 to do the one off implementation. That's, that's one part. The other part is, of course, that we, while we are doing this and also scaling a new support organization, we still have to maintain the current systems. So basically, we are not able to scale down the old support organization yet, and we are scaling up in the organization already.
So that means that court are increasing for a period of time. And that's shown in the, 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. And of course, what is going to be on top of that is the amortization of that $60,000,000 or $53,000,000, as mentioned above CapEx, which will pass through the P and L over a period 79 years, in the coming, the coming period. And 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 these costs. So that is how the total picture of IT will look like, in the next couple of years, and we'll give you an idea about the levels of costs and when it is going down again after the implementation period?
Then the impact of IFRS 16 is elaborated on sheet number 19. In terms of cash, nothing happens, but in terms of P and L impact, we have some impact specifically on the EBITDA EBIT and also net profit lines pre tax profit is only, 1,000,000 down as a result of the application of these new standards, but the big shift is from expenses, lease expenses now, to depreciation and financing expenses as explained in this graph. So a lot of disturbance in the P and 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. Then on the finance income and the taxes, on Page number 10, we see the additional financing expenses as a result of IFRS as just explained, we see that our parts, patients, results are also a bit down as CB2 effects Ante was also a big customer for one of our big fresh partners.
And of course, with the sale of Entte, they also lost big part of their business and to really adjust And on the other hand, our partners have started at servicing us in Belgium as well, which is combined with some start up loss for that. So also, the results in associates has come down a bit in 2019 compared to 2018. And for taxes, no specific effects, other than convincing the last bullet that, of course, we use all kind of, facilities, specifically, involving energy friendly, equipment, etcetera. And for that, we get fiscal grants. The size of that has not increased drastically compared to last year, but of course, in the year where we have a relatively low profit before tax from regular business.
This facility depressed the percentage of tax burden and more significant risks. Then looking at the operating profit development, as we call it, Page number 11, if we look through the, the cost of, of Fugro in the P and L, and we take out the, well, more or less nonrecurring or dis synergy effects, we see what the actual business is doing And then still, the overall conclusion is that we had a relatively disappointing year in that sense. We took on a lot of, 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. But a little to show for it in 2019 in terms of results.
And 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 12 of of, of course, last year, we had the big group profit of, of retail in it. This year, mostly continued operations, and so $0.75 earnings per share. We do understand and of course, really appreciate that, in the longer term, dividend should always be based on solid results development and free cash flow projection.
And we are confident that we have everything in place to, to see that through in the next couple of years. And based on that confidence, we have decided to maintain a difference at the same level as last year and EUR 1.40 per share. Knowing that this year, it is not fully supported by results and the free cash flow. But again, based on the confidence that our plans in future, we'll make sure we have the recovery, reflecting this decision. Then on the next She's 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 Empe, 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 because otherwise, the operating activities are increasing significantly and that is, of course, not completely in line with the results development. So that's a more of a technical shift in there. I think what is, mentioning, worthwhile mentioning here specifically is a 40 major investments that we've done So our growth CapEx of $129,000,000 offset by, the inflow of some divestments but that level of CapEx is the highest in the company ever. And we expect that, 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. And 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.
And of course, in a year where results are are on the 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. But we see that by the end of the year, we already brought down the net debt, EBITDA rate yield to 2.2 coming from 2.5to.6 around the summer. So also there, we are back in the right track to reducing this covenant. We are not close to any dangerous covenants And in all of the documentation, we have provided for the impacts of IFRS, which can be excluded from the calculation.
So we think that we took a good step already there in the second half of the year. And of course, we'll go back to more normalized levels for Fleetro Food Group in the years to come. Then I will skip the segment figures and the segmented cash flow but I think these both reflect, what has been elaborated in the previous sheets. Then going through the highlights of the Netherlands on sheet number 17, we see the developments in the major, indicators for us. So both consumer confidence and the unemployment rates are important leading indicators for where our business is going.
This is shown in the 3rd graph at the bottom of this seat there where the food service institute in the Netherlands has shown the correlation between half or long period of time between consumer confidence and the growth in the food service sales. And what we've seen in the Netherlands, in the end of 2018 consumer confidence really came down hard to, to levels that we hadn't seen since 2015. So that's also pleased why there is a slowdown in the market in the growth percentages. And it seems to stabilize, which also both for 2020 that we will have a more or less flat situation in the market. That's at least our expectation for now.
And if we then look at the, 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%, two point four percent growth just based on the VAT, which is included in the figures on the consumer spending on the left hand side. If we then look at what it meant for the development of the, of the wholesale, so the market in wholesale value Then, the Foodservice Institute 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 a 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 swigro.
Compared to the reports figures previous year. That's because the Food Search Institute has redefined their view on the market to include also retailers and logistics 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, but they also excluded for instance, the backhoe from the market definition, and although it is consistently applied, keep in mind that by the meantime, almost a quarter of the food service sales of sligro is now excluded from this market definition. But 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 And the new players added, we think that there's a world worth, while addition to the market because yeah, they're also playing in that area. If we look to the developments at Smidro ourselves at the seat number 19.
Well, it, we've had a lot of focus on our strategic programs I mentioned most of them are Heineken, IT, next generation, cash and carry stores, etcetera. And, 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, and that had some impact, of course, also on customer appreciation. And that's something we have to restore in 2020. IT implementation is running on schedule. And of course, our, a lot of attention is going in a shift from cash and carry through delivery.
We know that in market, the delivery business is growing, but we believe in the combination of the 2, but things that cash and carry has to be reincented and put into the context of the new positioning in the market. And that's what we call the next gen cash and carry program. On the sheet following, we explained some of the elements that are, part of this program. And so both is changing the physical environment of the cash and carry in the network on the other end, introducing a lot of digital features and services for our customers. And the combination of the two should make the case in carry, strong, also in future where, sales might go down further in generic environment.
And then as explained on C21 graphically, we have a true omnichannel proposition for our customer with the combination of online delivery and cash and carry in combination and all kinds of digital features and services. Then I'd like 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 force of the 2 companies and really feel that we are close to, putting the value on the collaboration. Of course, last year's has 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 Figuero to be able to absorb all the volumes of Heineken. In 2019, we already closed down 3 locations of Heineken and integrated there. And in those locations, we are at least already able to supply the customer in one truck. It's still 2 orders. It's still 2 roll cages.
And customers still have to order on 2 different platforms, that we will remedy in the first half of twenty twenty, 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. So looking ahead, we are going to complete the integration in 2020, go back to the service levels and the quality the process that customers are accustomed to with us, but also starts to take some of the benefits in terms of cost savings and upsell potential. And on the next slide, you see where we are on this physical integration. So lots of them host an entry they were done in 2019.
In the meantime, at the beginning of this year, in the northern part of the Netherlands, in the city of Kraken, we merged the Heineken and Sigro day sales And in the next couple of weeks, a lot will be done, including Amsterdam. And once that is, is done, then 80 to 85% of the job is is done. And in those locations, we can start the optimization process, which will bring us a lot of benefits in the next couple of years. There 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 homes, etcetera, etcetera.
But in the meantime, try to generate upsell and concentration of their business with with Slinguo. So a very interesting time, where we can really start reaping the benefits from this, from this deal. Then, a few words on the Quaker acquisition on page 25. So in the summer, we were able to acquire the Quaker. A very strong, very nice player in the heart of Amsterdam.
We bought the company for 52,000,000 cash and debt free, price, including a lot of real estate and value of 19,000,000. The good thing is that already 12,000,000 out of that real it's already resolved in 2019. So that was, that was a good thing, and the cracker contributed already $17,000,000 to net sales in 2019. Keep in mind that they report on 13 4 week periods and 7 out of those were reported in the second half of the year. And of course, also for the Cricket holiday season, fourth quarter is the best one of the year.
So, for next year, we expect another $55,000,000 to $60,000,000 in sales from the Quaker in the first half of the year as non organic sales growth. The integration process is running smoothly. We already announced and planned dismantling of the headquarters of the Cricket We took the provision in the 2019 figures, but we'll execute that in 2020. We harmonized the purchasing conditions, which gave an a cliff to the gross margin percentages of the cracker. And, the integration of the cash in carry, is being prepared and also the delivery and we will move that, in the course of 2020, in, under the Seagro umbrella, at least on the back end, because on the front end, we want to keep the the crate as a name and as a proposition in the market because of its strong position in a specific area of, of Amsterdam.
You can see our building activities on the next slide, 26, the number of case you carried, we converted number of, delivery service outlets that are converted or rebuild on page 27. And on page 28, you see the summary of the 5 key priorities for the Netherlands in, in 2020. We are finalizing a lot of the big programs. So there's a bit of a relief also in the company and with a 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. And these, I think, are very nicely presented in these 5 priorities.
Then moving on to Belgium. In Belgium, we see similar market developments on seat number 31, also their consumer confidence coming down, but unemployment still relatively low. So 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. So over the first three quarters, minus 3 was reported to end up with a plus 3, the year overall, with a new definition and a new drama market.
So, well, we can't really base ourselves on these kind of figures. We know that the market for 1 third is in wholesalers and for 2 thirds the buying of professionals is still done in the supermarket and fresh specialist channel. So given these numbers, we estimate that our market share is roughly 3.5% and that in 2019, we were able to outgrow market but more detailed analysis than that and more proof I don't have at this moment. We still see that market is really fragmented You see that the big players, besides video food groups, so Marco Metro, Conway, did food, cranny food solutions, are, all more or less of the same size still. So that means that there's still a lot of opportunity to grow and consolidate in this market and to strengthen our position.
And we spent our time as shown on CD number 33, of course, Sligwa Antwerp to grow the business, also support, the operational performance, specifically more dominant from the Netherlands as of 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 And 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. And so in the second half of twenty twenty, we have the 1st 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 3 different ERP systems But it means 3 different pricing system, 3 different promotional flyers for customers, customers that have to order on 3 different platforms, etcetera.
So it will help a lot if we convert all the business onto one platform in 2020, and that will bring us also some cost savings in the headquarters of Belgium. And 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 merge them all into, into 1, swedwarfuku Belgian. And only one, associate there, the production company, but that helps to simplify on our way to SAP, but also in daily business.
It's much easier to show yourself in the market as one small group of algae. Then on Antwerp on C34, 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, they serviced customers in Belgium, that is 1,000,000 to 1,000,000 a week, which closes the gap to breakeven quite significantly. But as explained before, we can only do that if there's a stable situation and if all the suppliers in the market are willing to, services also in Belgium in central structure. And we are on the way to achieving that but we're not there yet, and we won't have a stable situation before we do the migration.
It is expected that we can do this in the course of 2020. Then on the network in Belgium, physically, we're going to move further towards a once we grow a look and feel but then we will first do the SAP implementation and then the full scale rebuilding of the outlets that are still under the IHPC brand. We will do that later in 2021. And for 2020, it's important that we get the look and feel in the same way and that we get the SAP up and running. And that's also, summarized on sheet number 36 in 37 under the same theme, the 5 key priorities for Belgium.
If I then move to the outlook 2020 on Page number 39, and this is the last sheet. We think stable markets comparable to 2019 in terms of market development, driven by price about volumes in decline and as a result, a bit of growth in the market. Cost inflation on price per patient is normalizing again to the levels we saw force, so we're happy about that. Still, the considerable wage increase to come, negotiations are still ongoing. But we expect 3 to maybe 3.5 percent, which increase, in 2020, which we have to absorb as we, 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 a, improvement of our results And we expect in a stable market to be able to do that, but, that's too dangerous to make specific forecast for the year. So we're not going to do that for the year. For the longer term and then looking through the cycles that are typical for our market in upper, upper side and down side over the cycle. We think that based on the plans that we have today, we should be able to go for 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 EBITDA of 5% before IFRS impact, etcetera, etcetera.
So based on all the information that we have today and the accounting system that we use today, this is the reported number, that we are working towards and we are confident that the plans we have in place today and all the things we set in motion are eventually could lead to this kind of profitability. That's my, my part of, collaboration of the sheets. And now there is room for questions if there are any.
There are no questions, sir. Please continue.
Okay. Thank you. Then I would like to thank everybody for dialing into this, to this call. I hope we, we gave everybody a view on, on what happened in 2019 and, the positive review we have on 2020 and on our way to recovery. So thank you for listening in 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 CFO Food Group event call. You may now disconnect your line. Thank you.