Just before I start, I think most people know me at this stage, Donal Murphy, Chief Executive of DCC. Just to introduce my colleagues the closest to me, Fergal O'Dwyer, Chief Financial Officer, Eddie O'Brien, Managing Director of our Retail and Oil division, Henry Cubbon, Managing Director of our LPG division, Conor Costigan, Managing Director of our Healthcare division, and Tim Griffin, Managing Director of our Technology division. Later on, the guys will answer all the hard questions as we get into Q&A. Just the agenda for today, take you through a little bit of the highlights of the results, a little bit more in the business review, talking through the four divisions. Fergal will take you through a little bit of detail on the financial summary and take us through a little bit on IFRS 16 and the implications of that on the business.
I will talk you through some of the development activity because it has been another active period from a development perspective, with GBP 370 million of capital committed to acquisitions during the year. Then we will summarize and open it up to Q&A. Just starting with the performance for the year. It really has been an excellent performance. Group operating profit up 20.1% to GBP 460.5 million. When you consider the challenging global economic environment that we are operating in, and also the challenges of weather in the year, which was a pretty mild year, I think the results have been very strong. We are very pleased with the performance. Particularly pleased that all divisions have delivered very strong profit growth during the year. All four divisions delivering strongly.
Our adjusted earnings per share on a continuing basis up 12.8% to GBP 3.582, reflecting the equity placing that we did last September. There are very few companies, I think, that could demonstrate a track record in dividend growth like DCC. The board is proposing a 12.5% growth in our dividend. It will be our 25th consecutive year of dividend growth since we went public in 1994. Cash is king for us and for every business. We are very pleased with the cash flow performance, free cash flow conversion of 94%. The key metric for DCC is return on capital employed. Our return on capital employed remaining strong at 17%. It is a very strong result for the year. As I said earlier, it has been a very active period from a development perspective.
In the 12 months or up to now, including commitments that we announced today of GBP 90 million, we will have committed GBP 370 million to acquisitions across all of our divisions. I will come back and talk about the development activity a little bit later in the presentation. Standing back from it, DCC's strategy is delivering our strategy of significantly growing our profits, of turning those profits into cash, and redeploying that capital across our four divisions has delivered for us. I think the other thing that has delivered very strongly for us during the year has been diversity. We are committed to diversity within DCC, and diversity has clearly worked in the results that we are presenting here today. Just to look at the businesses in a little bit more detail.
As I say, really pleased that we've had strong performance across each of our four divisions during the year. LPG operating profits up 20.5%. Retail and Oil, our operating profits up 17.6%. DCC Technology operating profits up 35.1%, DCC Healthcare operating profits up 11.1%. All our divisions delivering very strong growth. The change in mix a little bit now, 44% of our profitability coming from our LPG activity, 29% from our Retail and Oil activities, Technology 14%, and Healthcare 13%. I suppose the most significant change over the last number of years has been diversity in terms of our geographic footprint. Now, the U.K., 41% of our profitability, Continental Europe, 45% of our profitability, 10% in the rest of the world.
Significant growth outside of the core markets where DCC started being the U.K. and Ireland representing 4% of the profitability of the group. Just looking at the LPG business in a little bit more detail. I'd say very pleased with the performance in the year. Operating profit up 20.5% to GBP 201.8 million. This was a really strong performance when you consider the weather challenges that we had during the year. Our volumes were up 10.8%, reflecting the acquisitions that we completed at the end of last year and at the start of the current financial year. The business, the Retail West business in the U.S., the TEGA business in Germany, and the Shell branded business in Hong Kong and Macau. All those businesses have been fully integrated into the group and have performed in line with or ahead of our expectations.
Modestly, volumes were behind, driven by the mild weather during the year. Our operating profit in the division on an organic basis, as anticipated, was behind due to the investments that we've been making in our natural gas and electricity business in France and due to the mild weather that I mentioned earlier. The French business, which is the largest part of our LPG division, performed very well during the year. We continue to diversify that business out. We've been growing, and if you recall back to May 15, when we announced the acquisition of that business, it was principally a B2C business in both the cylinder and the bulk markets. We have been building that business out into the commercial sector of the LPG market, continue to make good inroads into that. We have been building out little bits of innovation into our business.
We have deployed 200 click and collect automated cylinder distribution machines to sell Butagaz cylinders across unmanned sites and retail sites, including rolling those out. Some of you will have seen when we had our Capital Markets Day, one of those facilities on an Esso branded site down in Marseille. We've been rolling those out in the country. We've 200 now in situ. We're building a little wood pellets business, starting to grow into the renewable energy area within France. Then we've been continuing to invest in the natural gas and electricity business. All of these leveraging the strength of the Butagaz brand in France. In Britain and Ireland, again, strong performance, good underlying volume growth within the business, leveraging our leadership position in the oil to LPG sectors, where we have been growing strongly in the commercial segment of the market.
The business now in LPG, we're in 10 countries on three continents. We have a very strong position to continue to deploy capital. We announced this morning the acquisition of a business called Pacific Coast Energy, which is our first notable acquisition, bolt-on acquisition to the Retail West business that we took over in April. I'll come back and talk about that a little bit later in the presentation. Moving on to retail and oil. Again, a very strong performance in the year, operating profit up 17.6%. Pleasingly, a third of that growth was organic growth within the retail and oil business. Our volumes were modestly behind the prior year, 12.2 billion liters of fuel, very much driven by the mild weather that we encountered during the year. Weather in the retail and oil business has two impacts.
People recall back to last spring and summer, it was very hot, very dry. That impacted on demand for agricultural fuels. During the winter months, in the heating segment of the market, impacting on demand for heating products. Notwithstanding that, we had a very strong performance within the retail and oil business. Business in Britain and Ireland. We've been very focused on growing our business in premium related products, in differentiated fuels, value-added products and services such as our lubricants business, our fuel card business. That has delivered strong organic growth within our business in Britain and Ireland. Our businesses in Scandinavia, again, performed well. We had strong underlying organic growth. The Danish business, in particular, performed very strongly. Good growth in our commercial sector, good growth within our retail sector.
While the market has remained challenging in Norway, we have been implementing changes within that business, which is delivering business improvement. Again, Scandinavia has been a very strong performer for us in the year. We entered into a partnership with Shell, which is an interesting development for us. As part of the business we bought a couple of years ago from [Kulstad] in Denmark, we took on the market leader in the aviation sector of the market. We've entered into a branding and distribution partnership with Shell in Denmark. We're now the largest supplier of aviation fuels in Denmark, supplying all the airports. Copenhagen is the hub airport for Scandinavia, so it was an important access point for Shell as well. That's our first equity partnership with Shell, and hopefully will lead to other opportunities into the future.
Business in France, again, performed well, notwithstanding the regular protests within the market. That impacted somewhat on our volumes, but the underlying organic profit growth has been good in France. The retail and oil story, as I say, notwithstanding some of the challenges of protests and weather, has been very strong during the year, and particularly pleased with the performance there. Moving on to look at our technology division. Operating profits up 35.1% in the year. That was two factors, really. The acquisitions that we completed, some smaller acquisitions in the prior year, but the acquisitions completed earlier this year, and a very strong organic performance within our business in the U.K. and Ireland. We're calling out the return on capital employed within the technology division, which was back on the prior year. Two factors there impacting the returns.
The initial returns on the acquisitions, and we'll see those grow as we both integrate the businesses and drive the organic growth within those new acquisitions. The investments that we've been making in our warehouse and operational infrastructure in the U.K., in France, and in the Nordics. We're going to start to see the benefits of those investments flowing through in the current financial year. Business in the U.K. and Ireland, this is the largest part of our Technology division, continues to grow organically very strongly. Really pleased.
We've been growing our market shares, and there's particular strong growth within the mobile products area, within data center products, and that's a big growth area, the whole data center segment of the market, and then AV products, and that's been a particular focus for us as we've been building out our business in the AV area. Record period for development within the Technology division. We've spent in total, or committed in total, GBP 310 million to development activity in Technology, significantly strengthening our position within the European market, and obviously making our first acquisitions and first investment in the very large and very fragmented North American market. The two businesses, Jam and Stampede in North America, have both been integrated into the group now, and again, performing in line with our expectations.
A really strong performance within our Technology division, and we're really pleased with the investments in scaling up our Technology business. Finally, Healthcare. Again, a very strong performance, operating profit up 11.1% in the year. About half of that is organic, and the Healthcare division has consistently delivered strong organic growth. Our Vital business, our business supplying products and services into healthcare providers, so the hospitals and the GPs, continue this track record of strong growth. Good growth in our medical products area into hospitals. We're the market leader in the GP sector here in Britain. We continue to grow that sector, so both selling into branded products and our own branded products into the hospitals and into the GP sector of the market. We had two bolt-on acquisitions in the prior year.
We had the benefit of those going through, and actually another bolt-on acquisition in that sector as part of our acquisition today. Good growth in the GP sector of the market. The stellar organic growth business within DCC over a number of years has been our health and beauty business, and that continued in the year just gone. We had very strong organic profit growth, and we had the benefit of the first-time contribution from Elite, which we acquired January 12 months ago, which in the U.S. The nutrition business, very strong organic growth, benefiting from the growth that we're able to provide to our customers to grow their businesses. International growth, some of our customers growing strongly into China and into Scandinavia, and our products and our services supporting their growth, and the development of nutritional liquids within the nutritional business.
Our beauty business, again, continued its strong organic growth, growing with our existing customers and indeed, leveraging on some new customers into that business. A continued track record of really strong organic growth within the health and beauty business. The dynamics in this business are very positive. We're very keen to deploy capital within the health and beauty business. We have committed capital to extending our infrastructure within the business. We're in the process of doubling the capacity within our softgels business down in Wales. You'll see that within our CapEx commitment. Indeed, we're very committed to developing the business further both into the U.S. and into the European markets through acquisition. Really see that as a very interesting growth area for us going forward. I'll hand over to Fergal to take you through some more detail on the financials.
Thanks, Donal. First thing you'll notice about our results is that we're not calling out any constant currency numbers. The main sort of impact on translation of our numbers comes from the euro-sterling exchange rate. It was broadly unchanged at 113 for both years, so we can save ourselves the trouble of having to call out a constant currency number along with a reported number. Overall, operating profits up 20%. A reasonable amount of moving parts when you look at the overall organic growth number. Clearly, the weather was not our friend, also we've had continued investment in our Nat Gas business in France. On an absolute basis, the organic number for the group overall would be between 1% and 2%.
When you strip out the weather impact and the impact of the increased investment in our Nat Gas business in France, it's of the order of just around 5%. Our finance costs, they're up from GBP 35 million to GBP 46 million. Our average debt is up roughly GBP 200 million on the prior year, really driven by the heavy level of acquisition spend we had in both the prior year and in the current year. We also did a private placement funding in September, or halfway through the previous year, which impacted on the carry costs of our interest. Our effective tax rate is unchanged at 17%. Adjusted earnings per share up 12.8%. Overall, our adjusted earnings are up in excess of 18%, but the equity raise of 10% halfway through the year takes broadly 5% off that to get you an adjusted earnings per share of 12.8%.
The dividend per share up 13.7% for the final dividend, giving an overall increase of 12.8%. As Donal says, 25 years of an unbroken record of dividend growth. Overall, our compound growth rate over that 25 years is 14.4%. Return on capital employed, very strong at 17%. What drives that return on capital employed? It's the operating profit performance, obviously, and it's also the cash flow and capital efficiency that we have within the business. Let's have a quick look at just the free cash flow performance of the business in the year just ended. The numbers on the right are our 25-year numbers, because we kind of keep tabs to ourselves as to where we go year on year. I won't get into it. I'll just leave it there for the moment.
Overall, our cash conversion during the 25 years has been 101%. In the year just ended, we're really pleased with the overall free cash flow development of the group. Up nearly a third on the previous year, and a free cash flow conversion of around 94%. We had cash inflow of nearly GBP 38 million on the working capital line, driven in the main by a reduction in the working capital of some of the businesses that we bought last year and in the current year, particularly within the technology space. Our CapEx is roughly GBP 60 something million ahead of our depreciation as we continue to invest in the organic growth of our businesses, particularly, within the LPG division, we have the initial development of our Avonmouth storage facility. We've got oil to gas conversions that require CapEx.
Within the retail and oil business, we've got continued forecourt development and new forecourt acquisitions that are ongoing. Within the healthcare space, particularly Donal has already called out the capacity enhancements that we're looking at within our health and beauty business. Within the technology space, we've been enhancing our logistics and warehousing capability. When you take acquisitions into account and our dividend payment, you would expect us to have a roughly GBP 100 million deficit in our cash flow. Because of the GBP 600 million or so equity raise that we had during the year, we end up with a net cash inflow of GBP 510 million, leaving us with net debt at the end of the year of practically zero or just GBP 18 million of net debt. We go into the year to March 2020 with an extremely strong, well-funded, and highly liquid balance sheet.
Just a word on leases, because a lot of companies are talking about leases. DCC obviously has done this review. Just to step back for a second, the new IFRS 16 on leases, to be technical about it, requires broadly what we would have previously regarded as operating leases to be taken on the balance sheet as right of use assets. On the other side of the balance sheet, to put a lease creditor on your balance sheet. Okay? That standard comes in from 1st of April 2019. It will be on our balance sheet at 31 March 2020. We have done our review, and if we were doing it at 31 March 2019, we would be capitalizing roughly 2,000 leases with roughly 700 lessors.
It's not like we've got one big institutional landlord sitting on top of DCC that's got one lease with DCC for large amounts of property with upward only rents and no break clauses or whatever. The average maturity of our leases is around five years. What will it mean? We'll roughly take GBP 320 million of right of use assets onto our balance sheet, and on the other side of our balance sheet, set up a lease creditor of around GBP 320 million, the opposite number. It would impact our operating profit if we introduced it for the year to March 2020, which we will, by around GBP 6 million upwards. It would increase our finance cost by roughly GBP 8 million upwards. The overall impact on our adjusted earnings per share would be quite small, very modest at around GBP 0.02.
Its impact on our reported returns on capital would be of the order of 1.6%. Just need to stress that it's got absolutely no change to our underlying cash flows, business, or our operating model.
Thanks, Fergal. I think actually the IFRS 16 is actually a bullet point for DCC because we've always kind of focused on any time we enter into obligations, any time we enter into investments, we look at the lease obligations in any of the businesses as well, and we take that into consideration ultimately in terms of our returns that we're going to generate. I think it's pretty modest, as Fergal says, it just demonstrates that we've really been focused on this over many years. Just to touch on our development activity, and again, a very active period for development. We're spending GBP 370 million or committing GBP 370 million to acquisitions and GBP 90 million that we announced today. We've a very clear development strategy, our number one priority in the DCC group is to grow our businesses organically.
First and foremost, it's all about driving organic growth complementing that through acquisition. The year has been a strong period, building scale into the markets that we operate within, growing into new geographies. Our development strategy, get our leadership positions in the markets we're in, start to build out and take that capability into new markets, and I think we can demonstrate that in the year just gone. Maybe taking you through a couple of the highlights and going back to the strategies that we outlined for each of our divisions in Marseille back in September. I think we've clear kind of demonstration of that strategy in action. In the LPG division, we bought the Retail West business. We took it over on the 1st of April, just gone.
Buying that business was not to get 0.6% share of the highly fragmented U.S. LPG market. It was to buy a platform that we could start to consolidate further on. We've been busy building relationships, working those relationships as we typically do to find acquisition opportunities. Very pleased to be announcing Pacific Coast Energy today. That's a business operating in the northwest of the U.S. It's in Washington and Oregon. It has six facilities. It's supplying product into both residential customers and into commercial customers, and is very synergistic with our existing business. We have three states where we have very strong positions in Indiana and Illinois and in Kansas, and we have a more modest presence in seven other states before we announced this acquisition.
Part of the strategy within the U.S. is to build out into new markets, into new regions, and then obviously infill acquisitions in the markets that we're already in or within the states that we're already in. It's a GBP 30 million acquisition. It's material enough in terms of a first step within building and consolidating that U.S. market. Just to remind people, there's 4,000 players within the market. It's very fragmented. There's a small number of larger players, and there's lots and lots and lots of smaller players. This plays very much into DCC's sweet spot of acquiring, integrating, extracting synergies out of energy businesses. Very pleased with that acquisition. In the retail and oil, I talked about the aviation partnership with Shell, which hopefully will lead to other opportunities with Shell and others indeed, going forward.
A couple of other ones just to call out. In our retail business, we completed a bolt-on acquisition within France, a company called Dubreuil, 80 retail dealer network, leveraging the Esso brand, kind of further strengthening our position within France and leveraging that brand partnership that we have with Exxon. We have a very strong position in our retail and oil business here in Britain in lubricants, and we bought a couple of lubricants blending businesses here in the market, again, giving us further scale and capability within the lubricants market here in Britain. I suppose the stellar performance in terms of development activity during the year has been within our Technology division. We have a number of acquisitions this year, growing and significantly strengthening our business here in Europe, and indeed then building our business out into North America. Maybe just to call those out.
Our first acquisition in North America was Stampede, a specialist distribution business in the professional AV sector of the market. It gives us a decent presence within the AV market in the U.S. It had some business in Europe, which has been integrated already into our existing business here in Europe. That was a business that had sales of $280 million in the year before we acquired it. It was a very material step for us in building our business out into that very large, very fragmented North American market. In July as well, we announced the acquisition of Kondor. Kondor is a business that supplies mobile accessories, supplies audio products into the retail and e-tail sector across Europe. Very complementary to our existing business here in Britain, our Exertis business. In September, we announced the acquisition of Jam.
Jam was a very material further development for us in building our business in North America. Jam is a market-leading specialist business supplying products, services into the consumer electronics, musical instruments, and pro audio segments of the market. Indeed, it's a world leader in both musical instruments and pro audio, a business that had GBP 320 million of revenue in its last financial year. Those two businesses in the U.S., we now have GBP 600 million of revenue in the technology sector in the U.S. and a real platform for further growth. That's been a very material development step for the Technology division. Today, really pleased to be announcing two further acquisitions in technology, COMM-TEC and Amacom.
COMM-TEC is a business, main operation is in Germany, specializing again in the Pro AV segment of the market and IT products, selling products into systems integrators, into installers, into resellers. Business has operations in Germany, in Austria, in Switzerland, in Italy, and in Spain, and had GBP 90 million of revenues in its last financial year. Further strengthening that Pro AV segment of the market and the specialisms that we have within the Pro AV sector. Amacom is a business that supplies IT, consumer electronics, AV products into the e-tail and retail sector within the Netherlands, but has a very slick IT platform that it uses to integrate directly within its retail customers and support its suppliers selling products through to the retail channel. That technology is something that we'll be able to leverage throughout the rest of our business.
Two decent acquisitions today, further strengthening our position in Europe, on the back of a very strong performance in building out the DCC Technology division over the last 12 months. I think when you stand back from that acquisition activity, again, it demonstrates that diversity is working for DCC and our ability to deploy capital across the different sectors. People that have followed us for a while, some of the acquisition activity is a little bit like the buses, that they come at similar times, and sometimes there's gaps, and that's the way it is in terms of the different sectors as well. We're very active in looking for opportunities across each of the four divisions. As we talked about then at the Capital Markets Day, we very much have the platforms now across the 17 countries and three continents that we operate within.
We have the opportunities within those markets to build out our business, and we have the capability to go and execute on this. I think the year just gone is a further demonstration of that. Diversity works. In summary, we feel our 25th year as a public company really is an excellent year in terms of performance and growth. We're really pleased with the trading performance, really pleased with the fact that all four divisions performed very strongly during the year. The active development activity, but much more important, the platforms, the opportunities, and the capability that we have to continue to deploy capital. We have a strong balance sheet. We want to use that balance sheet wisely to deploy capital across each of our sectors at high returns on capital, and that's always the gating factor for us.
In terms of where we sit today, we see the year to March 2020, the current year that we're in now almost two months into it, as being another year of growth and development for the group. We always put up this slide, but I think today, on our 25th anniversary, I think it's worth just pausing on it for a minute. Over 25 years, 14.6% year-on-year growth in our operating profit. Only one blip in that record, and that, as I used to always get reminded, was my fault because we went from the coldest year to the mildest year in record when I was running the energy businesses. 13% year-on-year growth in our earnings. This unbroken dividend growth record over 25 years, 14.4% year-on-year growth in our dividend. Then, a free cash flow conversion, on average over that 25 years of 101%.
Very high returns on capital during that. As Fergal pointed out earlier, a balance sheet that is extremely strong with lots of capacity for further growth. We feel good about the year just gone. We feel good about where we're positioned as a group. We think we have those platforms, those opportunities, and the capabilities to continue to build DCC into a global leader in our chosen sectors. Thank you. We'll take questions now. Rory.
Morning all, it's Rory MacKenzie from UBS. Firstly, on LPG, the profit per ton was up 9%, despite the investments into France. Can you help us bridge all the mix differences happening in the division? Any gross margin improvement you'd flag, and then the increase in costs that gets you back to that profit per ton increase? Similarly, actually, in retail and oil, the bridge between the gross margin impacts and the increased net generate per unit and the mix, please. I've got one more about acquisitions.
Fergal, do you want to take it off maybe? Henry come in on the
The gross margin is up, and the conversion of gross margin into net margin is also up within both retail and oil and within LPG. The margin is up in the LPG space because whilst we had a rising cost of product at the start of the year, product price did fall off in the second half of the year where we were a beneficiary. On the cost side, overall as a group, our costs are up, like-for-like costs are up 1%. We've had some productivity increases. There are spots where it was inefficient. The gilets jaunes would've cost us a bit from a cost point of view, in terms of how we operated our business. It was a bit more difficult to operate the business. The margin performance overall was pretty okay. Your bridge on the LPG side is, yeah, our margins are up.
Decent margin management, plus also we had the benefit of better cost of product. On the retail and oil side, again, we had good margin performance in the U.K. business. As you know, Rory, the oil market is near perfect market, so what happens to the price of oil today will reflect itself pretty quickly into selling prices. Overall, we're pleased with the margin performance on retail and oil side. Notwithstanding what was going on in France, our margin performance was okay.
I think, Rory, as well, mix effect as well.
On retail side
the likes of the TEGA business coming in, which is a very high margin business coming into the LPG activity.
On the retail and oil side, clearly we have an increasing mix now of retail volumes. Which is higher margin, but there's a lot more capital required to run a retail business.
Thank you. Just on the LPG, the Nat Gas investment in France, your expectations for the kind of payback there and the profits in the year ahead? Or how that starts to then turn?
The investment in France has been running now for a couple of years, and we have been very pleased with how the overall marketplace has responded. The Butagaz brand is very strong and is allowing us to attract customers to our business. Our investment in the business is predominantly around, obviously, the IT infrastructure, but also around the customer acquisition. We are very pleased with how that's going so far. We are looking for a couple of years more of investments, and then we should be seeing some good returns coming through.
Just one on the acquisition in the U.S. Great to see the second LPG business there. You talked about the useful overlap. Can you talk about the process of integrating these businesses in the U.S. and any learnings or challenges you see as you try and build a pan-U.S. network, like you have seen in Europe?
Within LPG specifically?
Yeah.
Do you want to take that, Henry?
Yeah. The LPG business we have in the U.S., we bought it from NGL a year or so back. It was called Retail West at the time. We renamed it DCC Propane. We have a pretty strong management team based there. They're based in Robinson, Illinois, which is about an hour and a half south of Chicago. The business itself, even when it was within NGL and before, was based on a number of acquisitions coming through from originally starting up in Illinois, but stretching into Kansas, across into Indiana, and then across into the other states. They have a history of acquisitions. They have a very clear business model, a very decentralized business model. Each facility that they have has a certain amount of autonomy in terms of market reaction, market response.
We have a pretty well-established integration program where we bring the businesses in. We don't see a huge amount of difficulty there. In fact, we see a lot of opportunity through our business model and through the management team to continue to add and build ours as we go forward.
I think that an area, Rory, that we have a particular capability in DCC as a group, we've been acquiring and integrating businesses in the energy sector, certainly for as long as I've been in the group. That is a core competency that we have. As Henry said, the team in the U.S., it's helpful because they have that skill set within the business, clearly being complemented by the resources that we have within the group. We have invested a new development director within the business, in the U.S. We have a new finance director that we put into the business in the U.S. We're building our capability to build a scale business within the U.S., and that starts with management as within any of our businesses.
Thank you.
Henry.
Analisa Mule from Morgan Stanley. Just two for me. Just on the return on capital, particularly on the Technology division, was that purely from acquisitions? In LPG, obviously, you had acquisitions as well, but the return on capital was more stable. Is there a difference there in the initial return on capital, or is it just a longer integration process, or anything to say about that?
Two factors really on the return on capital. One, the acquisitions, there's the entry level, and we bought them obviously, in the latter part of, or some of them in the latter part of the year. You've got the entry level coming in, we'll build that over time. We have had a significant amount of capital investment, within the Technology division, in both our warehousing infrastructure in France and the Nordics and in the U.K. We're only starting to see the benefits of that flowing through. We've obviously had our investment in our enterprise SAP system in the business here in the U.K. We have the first part of that live, in the year just gone, and the rest of that will go live in the current financial year, but we won't see the benefits of it coming through until FY 2021.
It's really the two factors coming together.
Okay. Thank you. Then on just following up on the cost control you talked about in LPG, was that purely the lower cost of product, or are there other things you were doing there in terms of efficiency or productivity or anything like that?
You give me the opportunity to talk about my point ones of a penny and the focus that we always bring to continuous improvement across the energy. That is one of our core competencies as a group, constantly driving operational efficiency across the businesses. Henry, there's plenty of things going on within LPG every day of the week, to continue to drive those improvements across the business. Managing your assets, driving the efficiency within your businesses. I think that just continues to deliver.
Thank you.
Chris.
Donal, hi. The equity partnership with Shell, what's the backdrop for that?
The backdrop, I have to be careful probably now getting into too much detail on this, but Shell is a global player in the aviation market, clearly. When that business was originally a Shell business, they sold the exited out of the country. Everything was part of that package when they exited out of it. I think, subsequent to exiting out of it, I'd say they kind of saw Scandinavia in particular as a big gap in their global markets. They had an interest in coming back into the market. We have a very strong relationship with them. We own the business. We had the market leadership position. It's a real win-win situation, Jerry. It gives us the ability to leverage their global network.
We're able to leverage the Shell brand, to leverage their reach into the global airline sector, some of their capability on trading within the business while managing the business locally within that market. As I say, hopefully that may be the start of other things that we could do. We'll certainly keep knocking on those doors as we always do.
Would that be just with Shell, or would it be other majors as well?
We've great relationships with pretty much all the majors and brand relationships with plenty of them as well. We don't leave too many stones unturned in terms of trying to find commercial opportunities that are win-win situations.
Okay, thanks.
Chris. Oh.
Alan.
We're going from the back first.
Yeah. Hi, guys. Alan Smiley and Davy. Firstly, some asset pricing, I think there's been pockets of elevated asset pricing in areas in LPG and in the retail space over the last couple of years. Any color on how that backdrop has evolved would be useful. Just a housekeeping one then for Fergal. How should we think about CapEx for this year if the business stays as it is? Thanks.
You do the housekeeping, Fergal, then I'll come back in.
Alan, yeah, the CapEx, again, about GBP 160-GBP 170. We're going to have continued investment, hopefully, in new forecourts within the retail and oil space. We will have then the further development of our Avonmouth facility coming in. Again, the business is growing organically. Typically, we would run at 1.2 because we're growing organically. On top of that then, we'll be adding new forecourts and the start of the further development of our Avonmouth facility.
I think, Alan, on the asset prices, and you see this from time to time, one, we're not seeing any material change. We talked previously probably about asset prices, particularly in the retail sector, being toppy in some markets. Again, I think it comes back to the diversity piece, that notwithstanding what's happening in different segments, we really have the opportunity to deploy capital across a range of businesses and a range of opportunities. The discipline around return on capital is what really we focus on all the time within the group. We could've deployed lots of capital in the retail sector, but it would have been at much lower returns. We didn't think it's right. We don't do it. We deploy the capital elsewhere within the business. The opportunity set is there.
I don't think there's anything that has changed in terms of asset prices particularly, and certainly nothing that we've seen things that have been expensive in the past. Some of those still probably do remain expensive in some areas, but as I say, there's plenty of opportunities for us to deploy capital in the business across all four sectors. Don't see it has been an issue, Sam.
Back to Chris.
Morning, it's Sam Bland from JPMorgan. I've got two, please. First one was related to that CapEx question. Obviously, in this year, CapEx far ahead of depreciation. Sounds like it'll be the same for next year. There's some more of these kind of discretionary type projects, could they be sort of a slightly more permanent feature there, where that's a new avenue to deploy capital alongside M&A going forwards? How do you assess the return on capital and from those kind of growth CapEx type projects? Is it similar to how you assess it for M&A or in a slightly different way?
You've asked the question and sort of answered it as well, Sam. Absolutely, we assess any deployment of any capital in the same way as what the return's going to be. We've been running from a development point of view as our businesses grow organically, maybe 1.2, 1.3 times depreciation. Then on top of that, you've got from time to time, capacity increases that are required, significant capacity increases that are required maybe in technology within the warehousing and IT space, and then maybe within health and beauty on the manufacturing capacity side. It is absolutely assessed in the same way as an acquisition as to what the absolute return is going to be on that investment.
I think this year is a really good example in the healthcare sector. While we haven't deployed much capital from an acquisition perspective, we've deployed a fair bit of capital, we're deploying kind of a fair bit of capital in expanding the capacity within our facilities. Maybe it's worth just touching on that a little bit, Conor.
Sure. Yeah. We've built a very nice position in Europe in softgel contract manufacturing for the nutritional sector. We've had some really interesting technology developments. We've been the leader in Europe in vegetarian softgels, which is a big trend. Everyone will be familiar with the trend to vegan. We've also just manufactured the world's first organic vegetarian softgel capsule, which is a very nice development as well, and good interest in some European markets in particular. We have a new technology in slow-release capsules. With our expanded capacity coming on stream in Q2 this year, we'll be able to leverage all those technology developments.
You'll see us doing a bit more of that. We're in some markets that are very strong organic growth markets, tech as well. Our ability to add products, add services, greater capability to integrate with our customers and suppliers. Those investments, we get very strong returns on. You'll see us continuing to do those.
Sure. Second one was on the GBP 90 million of acquisition spend announced today. Just talk a little bit about across that piece, the sort of returns on capital you expect from that. If it's particularly different from historic, why, et cetera?
I think we'd see it pretty similar, Sam, that we kind of entry levels at kind of 13%-14%, and we grow from there. As I say, Pacific Coast Energy is actually a higher return than the Retail West business as an entry point, and obviously there's some synergies that we'll be able to extract out of that, and that's in line with what we said when we acquired Retail West. We wanted to buy bolt-on acquisitions and use that as a mechanism to obviously improve returns across that business. Clearly, that takes time because they're more modest. It takes a bit of time. I think the technology sector in particular is a growth market. The areas that we've been investing in are all growth areas.
We've a very strong position now in the whole Pro AV sector, COMM-TEC coming in, adding to that, leveraging the vendor relationships. We're pretty positive that we'll be getting those returns well up above 15%. Pardon me, Tim.
To ask questions via the phone, please press star one on your keypad.
A couple if I may. With the impact of IFRS 16, are you thinking of adjusting your return capital targets in any way to reflect that?
Well, again, Chris, when we've looked at acquisitions, okay? Anything that came with a very long lease with no break clauses or anything like that. If it walks like a debt and looks like debt, it probably is debt. We treated it from a returns point of view as capitalized sort of debt from that point of view. Nothing's changed in the way we look at acquisitions. In terms of reported ROACE, yeah, it'll pull down the ROACE by 1.6%, but it's not changing our psyche in terms of how we look at things in any shape or form.
With regard to Technology, obviously there's the increase in the element of service-led help to improve the margin. Just if we could have a flavor of some of the things you're doing there and how far that could go over time.
Yeah. You saw improved margins, and that's a function of cost and mix into AV, but also the addition of our value-added services. That really focuses around sort of three broad areas. One, around lifecycle management, and so our MTR acquisition really starting to look at second life, and how we expand by giving our vendors and our customers an opportunity to have a second life. The second is around remote capabilities, and we've got TAC and NOC capabilities to provide that to our resellers to white label those remote management capabilities. The third is really around deployment, and installation of capabilities that we provide to our integration partners. Those three broad areas are areas that we'll continue to expand and invest in as well as acquire.
Some of the mix change as well within the Technology business. The Jam business is a much higher margin business. Like the COMM-TEC business, again, a lot of value-added products and services within it will be a higher margin business. As we grow more in those areas, that'll be beneficial from a margin perspective.
Thank you.
Okay.
Hi. James Leonard from Jefferies. Just wondering two things. One, on the working capital, obviously the inflow or outflow in any given year kind of depends heavily on the sort of businesses you buy. I'm wondering if the mix shift in the business that's occurred over, specifically the last 12 months, has done anything to materially change the sort of medium-term baseline expectation of about a GBP 25 million outflow per year. Secondly, on just the overall EBIT weather impact of this year having quite significantly, I believe, about 11 of the last 12 months have been warmer than historic. If we operate under the baseline kind of assumption of a more normal weather this year, if you could quantify the impact that you would expect to reverse this year.
I'll let you take the working capital.
On the working capital, no, there's been no fundamental change in the overall structure of our working capital mix. DCC Technology is more working capital intensive than our other divisions. Even with the recent acquisitions, it doesn't move the dial significantly. We did manage to reduce the working capital within some of the recent acquisitions during the period on the review. Going forward, we would revert to a more traditional GBP 25 million-GBP 30 million outflow, in working capital in a year, which we're growing organically.
We've always said, James, the weather bit, it's not an exact science. Obviously, depending on the way it profiled, the way it falls, it's an estimate, but it's in the order of GBP 10 million-GBP 12 million, will be where we'd see the impact in the year.
Thanks.
A couple, if I may. Rajesh Kumar from HSBC. Just on the organic growth, if you could give us some color on how the trends in organic growth were in the second half of the year. The second one is on the supplier side, when you're having discussions with your suppliers for next year, given what is happening with trade and ties in technology, healthcare, what is the nature of that discussion? Not necessarily quantitatively, but just in terms of what are they expecting out of distributors such as you?
Take the second one first, and maybe come back then. As a distributor, most of the markets, and indeed as a retailer, as we are in the energy markets, we're buying commodities or we're buying third-party products. We're putting a margin on it, and we're selling it on to our customers. We've become a price taker in the market. Nothing changes really from that perspective. The price of the underlying product may go up, but we pass it on through into the market. We do very little export. We have a little bit within our health and beauty business, but we're typically buying product in market for the market. Whatever happens obviously in terms of demand for those products, if there's a dampening of demand, we're not going to be immune to that.
It doesn't have a direct impact on our business, particularly. The organic piece? I suppose the organic piece, there's pluses and minuses in it because obviously we've had, if we look at it from a group perspective, we've had the weather impact, and we have the investment in the nat gas and electricity. If you adjust for those, our organic is in line with what we've been talking about over our long-term trend of the guts of a third of our 14.6% been organic. It's that-
Between three and four in the second half is the organic number.
%. Between three and 4%.
Between three and 4% in the second half, yeah. Any other questions here? I might try on the line. None on the line. Okay. Let this just to thank everyone for being here today. Again, for all the support. Not all over the 25 years that we've been a public company, but some of you for a long time and some of you for a shorter time, so thank you all.