Just before I start, I think most people know me at this stage, Donald Murphy, Chief Executive of DCC, just to introduce my colleagues, the closest meet for Claude Dwire, Chief Financial Officer, Eddie O'Brien, Managing Director of our Retail And Oil division Henry Cavan, Managing Director of our LPG division, Conor Costigan Managing Director, our health care division and Tim Griffin, Managing Director of our Technology Division. So later on, the guys will answer all the hard questions. As we get into Q And A. So 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 4 divisions.
Virgil 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'll talk some of the development activity because it has been another active period from a development perspective, with $370,000,000 of capital committed tax positions during the year, and then we'll summarize and open it up to Q And A. So just starting with the performance for the year. So it really has been an excellent performance group operating profit up 20.1 percent to 1,000,000 pounds.
When you consider the challenging global economic environment that we're operating in and also the challenges of weather in the year, which was a pretty mild year. I think the results were, results have been very strong. So we're very pleased with the with the performance, particularly pleased that all divisions have delivered very strong profit growth during the year. So all four divisions delivering strongly. Our adjusted earnings per share on a continuing basis up 12.8 percent to 358.2p reflecting the equity placing that we did last September.
There's very few companies I think that could demonstrate a track record in dividend growth like DCC. So the board is proposing a 12.5% growth in our dividend. So it'll be our 25th consecutive year of dividend growth since we went public in 1994 We had the cash as king for us and for every business. So we're very pleased with the cash flow performance, free cash flow conversion of 94% And the key metric for DCC is return on capital employed. So our return on capital employed remaining strong at 17%.
So it's a very strong result for the year. As I said earlier, it's been a very active period from a development perspective. In the 12 months are up to up to now, including commitments that we announced today of 1,000,000, we'll have committed 1,000,000 to acquisitions across all of our divisions, and I'll come back and talk about the development activity a little bit later in the presentation. So 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 4 divisions has delivered for us. I think the other thing that has delivered very strongly for us during the year has been diversity And we are committed to diversity within DCC and diversity has clearly worked in the results that we're presenting here today.
So just to look at the businesses in a little bit more detail, so 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 are operating profits up 17.6%, DCC Technology operating profits up 35.1% and DCC Healthcare operating profit up 11.1%. So all our division delivering very strong growth. The change in mix a little bit now, 44 percent of our profitability coming from our LPG activity, 29% from our retail and oil activities, technology 14% and health care 13%.
And I suppose the most significant change over the last number of years has been diversity in terms of our geographic footprint So now, you know, the UK 41 percent of our profitability, Continental Europe, 45% of our profitability, 10% in the rest of the world. So significant growth outside of the core markets where DCC started being the UK and Ireland and Ireland representing 4% of the profitability of the group. So 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 1,000,000. 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 are at the start of the current financial year. So the business, the retail west business in the U. S, the Tega business in Germany, and the Shell brand the 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 both 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, Budapest, across, unmanned sites and retail sites, including rolling those out. And some of you will have seen when we at our Capital Markets Day, one of those facilities, on an SO branded site down in, down in Marseille. So we've been rolling those out, in the country. We have 200 now in issue.
We're building a little wood pellets business, so starting to grow into the renewable energy area within France. And then we've been continuing to invest in the natural gas and electricity business, all of these leveraging the strength of the Bout gas France in France. In Britain and Ireland, against 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. So the business now in LPG, we're in 10 countries on three continents we have a very strong position to continue to deploy capital, and we announced this morning the acquisition of a business called Pacific Coast energy, which is our first, notable acquisition, bolt on acquisitions, the retail west business that we took over in April and I'll come back and talk about that a little bit later in the presentation. Moving on to 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, 12.2000000000 liters of fuel, very much driven by the mild weather. That we encountered during the years. And whether in the retail and oil business has 2 impacts and people will recall back to last spring and summer, it was very hot very dry. So that impacted on demand for agricultural fuels.
And then during the winter months, in the heating segment of the market impacting on demand, for, for heating products. So 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 car business, that has delivered strong organic growth within our business in Britain and Ireland.
Our business is 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. And while the market has remained challenging in Norway, we have been implementing changes within that business, which is delivering business improvement. So again, Scandinavia has been a very strong performer for us in the year.
We entered into a partnership with Shell, which an interesting development for us. As part of the business we bought a couple of years ago from Cushdard in Denmark, we took on the market leader in the aviation sector of the market. So 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 all the airports Copenhagen is the hub airport for Scandinavia. So it was an important access point for Shell as well.
So that's our 1st 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. So that impacted some hot on our volumes, but the underlying organic profit growth has been good in France. So the retail and oil story, as I say, notwithstanding some of the challenges of protests and weather, has been, has been very strong during the year and, pleased with the performance there. Moving on to look at our Technology division.
Operating profits up 35 0.1% in the year. That was 2 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 UK and Ireland. We're calling out the return on capital employed within the Technology Division, which was back on prior year, 2 factors there impacting the returns. Obviously, 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 and the investments that we've been making in our warehouse and operational infrastructure in the UK, in France and in the Nordics, and we're going to start to see the benefits of those investments flowing through in the current financial year.
Business in the UK and Ireland, this is the largest part of our technology division, continues to grow organically very strongly. We're really pleased. We've been growing our market shares under particular strong growth within the mobile products area within data center products. And that's a big growth area, the whole data center segment in 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. So we spent in total or committed in total, 3.10 1,000,000 to development activity in technology, significantly strengthening our position within the European market and obviously making our 1st acquisitions and 1st 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. So a really, a really strong performance within our technology division, and we're really pleased with the investments in scaling up our technology business. Finally, healthcare, and again, a very strong performance, operating profit up 11.1 percent in the year. About half of that is organic and the Healthcare division has consistently delivered strong organic growth, our Vitol business, our business supplying products and services into health care providers.
So the hospitals and the GPs continue its 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 high hospitals and into the GP sector of the market. We had 2 bolt on acquisitions in the prior year.
We had the benefits of those going through and actually an under the bolt on acquisition in that sector as part of our acquisitions today. So 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. So 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, in the U. S. The nutrition business, a 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, within the nutritional business.
And our beauty business again continued its strong organic growth growing with our existing customers and indeed, leveraging on some new customers into that business. So continued track record 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 soft gels business down in Wales, and you'll see that within our CapEx commitments And indeed, we're very committed to developing the business further into both into the U. S. And into the European markets through acquisition. So really see that as a very interesting growth area for us going forward. So I'll hand over to Fergal take you through some more detail on the financials.
We're thinking a little bit about our results is that we're not calling out any constant currency numbers. The main sort of impact on translation of our numbers come from the euro sterling exchange rates. It was broadly unchanged at 113 for both years. So we can save ourselves a trouble of having to call out a constant currency number, along with a reported number. Overall, operating profits up 20%, the reasonable amount of moving we look at the overall organic growth number, clearly the weather was not our friend and also we've had continued investment in our natgas business in France.
On an absolute basis, the organic number for the group overall would be between 1% 2%. But when you strip out the weather in impact and the impact of the increased investment in our natgas business in France, it's up the order of just around 5%. Our finance costs, they're up from 35,000,000 to 46,000,000. Our average debt is roughly 200,000,000 on the prior year, really driven by 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% of that to get you the adjusted earnings per share of 12.8%. The dividend per share, up 13.7% for the final dividend given an overall increase of 12.8%. As Don says, 25 years of an unbroken record of dividend growth.
Overall, our compound growth rate over that 25 years is 14.4%. And return on capital employed very, very strong at 17%. So what drives that return on capital employed? It's the operating profit performance of and it's also the cash flow and capital efficiency that we have within the business. So let's have a quick look at just the operating cash flow, the free cash flow performance of the business in the year just ended.
The numbers on the right are a 25 year number because we kind of keep tabs to ourselves as to where we go year on year. Won't get into it. I'll just leave it there for the moment, but overall, our cash conversion during the 25 years has been 101%. In the year, just ended really, 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 percent.
We had cash inflow of nearly 1,000,000 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 60 something million ahead of our depreciation as we continue to invest in the organic growth of our businesses. Particularly, you know, within the LPG division, we have the initial development of our AIVENDA storage facility. We've got oil to gas conversions that require CapEx.
Within the retail and oil business, we've got continued, you know, forecourt development and new forecourt acquisitions that are ongoing within the healthcare space, particularly, Dom has already called out the enhancements that we're looking at within our Health And Beauty business. And when it's 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 100,000,000 deficit in our cash flow. But because of the GBP 600,000,000 or so equity raised that we had during the year, we end up with a net cash inflow of 1,000,000, leaving us with net debt at the end of the year of practically 0 or just 1,000,000 of net debt. So we'll go into the year to March 20 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. CCC, you obviously have started to review this to the just to to step back for a second, the new IFRS 16 on leases to be technical about it requires broadly what we were previously regarded as operating leases be taken on the balance sheet as right of use assets. And on the other side of the balance sheet, to put a lease creditor on your balance sheet, okay? That standard will come in from 1st April 2019. So it will be on our balance sheet at 31 March, 2020.
We have done our review and we would be if we were doing it at 31 March 2019, we would be capitalizing roughly 2000 leases with roughly 700 lessors. So it's not like we've got 1 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 5 years. So what will it mean? We'll roughly take 120,000,000 of right of use assets onto our balance sheet.
And then the other side of our balance sheet set up a lease creditor of around 320,000,000. The opposite number. It would impact our operating profit if we introduced it for the year to March 20, which we will by around 6,000,000 upwards, it would increase our finance costs by roughly 8,000,000 upwards. So the overall impact on our adjusted earnings per share would be quite small, very modestly around 2P. It impacted our reported returns in capital would have would be up the order of 1.6%.
But you need to stress that it's got absolutely no change to our underlying cash flows, business or our operating model.
Thanks, Virgil. I think actually the IFRS 16 is actually a full point for DCC because we've always kind of focused on any time we enter into obligations, anytime 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. So I think it's going to it's pretty modest for ourselves, but I think it just demonstrates that we've really been focused on this over many years. So just to touch on our development activity, and again, a very active period for development, spending 1,000,000 or committing 1,000,000 to acquisitions and 1,000,000 that we announced today.
We have a very clear development strategy, but our number one priority in the DCC group is to grow our businesses organically. 1st and foremost, it's all about driving organic growth and then complementing that through acquisition. So the year has been has been a strong period, building scale into the markets that we operate within and then growing into new geographies. So our development strategy, get our leadership positions in the markets we're in, and then start to build out and take that capability into new markets. And I think we can demonstrate that in the year just gone.
So 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. So in the LPG division, We bought the retail West business. We took it over on the 1st 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.
So 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, in Oregon. It has 6 facilities, it's supplying product, into both residential customers and into commercial customers and is very synergistic with our existing business. We have 3 states where we have very strong positions in Indiana, in Illinois and in Kansas.
And we have a modest, there are more modest presence in 7 are the states before we announced this acquisition. So 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. So it's a million acquisition.
So it's material enough in terms of a first step within building and consolidating that U. S. Market. And just to remind people like the 4000 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.
So this plays very much into DCC's sweet spot of acquiring, integrating, extracting synergies out of energy businesses. So 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 Dubai, 80 dealer, retail dealer network, leveraging the Esso brand. So 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, within the lubricants market here in Britain. I don't know if 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 and maybe just to call those out. So our first acquisition in North America was stampede, 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. Had some business in Europe, which has been integrated already into our existing business here in Europe. That was a business that had sale $280,000,000 in the year before we acquired it. So 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 Condor condor as a business that supplies mobile accessories, supplies audio products into the retail and retail 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 and pro audio segments of the market. So indeed, it's a world leader in both music instruments and pro audio.
A business that had $320,000,000 of revenue in its last financial year. So those two businesses in the U. S, we now have 600,000,000 revenue in the technology sector in the U. S. And a real platform for further growth.
So that's been a very material development step. For the Technology Division. And then today, really pleased to be announcing 2 further acquisitions in technology, Comtech and Omnicom. Comtech is a business, in main operation is in Germany. Specializing again in the professional AV segment of the market and IT products, selling products into systems integrators, into installers, into into resellers, businesses operations in Germany, in Austria, in Switzerland, in Italy and in Spain.
Had 1,000,000 of revenues in its last financial year. So further strengthening that ProAV segment of the market and the specialism that we have within the proAV sector. Anamicon is a business that supplies, IT, consumer electronics, AV products into the e tail and retail sector within the Netherlands, but as a very slick IT platform that it uses to integrate directly within its retail customers and support, its suppliers, selling products, truth to the retail channel and that technology is something that we'll be able to leverage throughout the rest of our business. So 2, you know, decent acquisitions today further strengthening our position in Europe, on the back of a very strong performance in building out the Technology division over the last 12 months. And 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 and people that 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 That's the way it is in terms of the different sectors as well. So we're very active in looking for opportunities across each of the 4 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. And I think year just gone is a further demonstration of that. So, diversity works.
So in summary, we feel our 25th year as a public company, really is an excellent year in terms of performance and growth. So 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 negating factor for us.
And in terms of where we sit today, we see the year to March 20, the current year that we're in now, on which 2 months into it has been an early 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, it's worth just pausing on it for a minute. Over 25 years, 14.6 percent year on year growth in our operating profit, only one blip in that record and that's as I used to always get reminded, it 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, and this unbroken dividend growth record over 25 years, 14.4 percent year on year growth in our dividend.
And then a free cash flow conversion on average over that 25 years 101%. Very high returns on capitals during that. And as Virgo pointed out earlier, a balance sheet that is extremely strong with lots of capacity for further growth. So 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 ECC into a global leader in our chosen sectors. Thank you.
Morning all. It's Rory McKenzie from UBS. Firstly, on LPG, the profit per tonne was up 9% despite the investments in the 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.
And then similarly actually in retail and oil, the bridge between the gross margin impact an increase in SG And A per unit and the mix, please. I've got one more about acquisitions.
Well, the margin, the gross margin is up on the conversion of gross margin into net margin. Is also within both retail and oil and within LPG. The margin is up in the LPG space because once 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, your like for like costs are up 1%. So we've had some productivity increases.
There are spots where it was inefficient. I mean, the Julienne will have caused 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. So your bridge on the SBG side is, yes, our margins are up.
Decent margin manager plus also we had the benefit of better, better cost of product. And on the oil, retail and oil side, again, we had good margin performance in the UK, UK business. But as you know, Roy, the oil market is near perfect market. So happened to buy some oil today will reflect this out pretty quickly in inter selling prices. But 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.
And I think, Rory, as well, like we mix effect as well, we'd like to take a business coming in, which is a very high margin business coming into that. And on
the retail and all side, clearly, we have an increase in mix now of retail. Retail volumes, which is higher margin, but there's a lot more capital required to run returns.
And just just on the LPG, net 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 over a couple of years and we've been very pleased with how the overall marketplace has responded. The beauty gas brand is is very strong and is allowing us to attract customers to our business. Our investment in the business is predominantly around obviously the IT in structure, but also around the customer acquisition and we're very pleased with how that's going so far. So we're looking for a couple of years more of investments and then we should be seeing some good results coming through.
And then just one on the acquisition, in the U. S. Great to see the second LPG business there. And you talked about the sort of 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 that you've seen in Europe?
Within LPG specifically. Yes, do you want to take that, Henry?
Yes, I mean, 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 the DCC Propane, and we have a pretty strong management team based there. They're based in Robertson which is about an hour and a half south of Chicago.
And 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 to Kansas across into Indiana and then across into the other states. So they have a history of acquisitions. They have a very clear business model, a very decentralized business model. So each facility that they have has a certain amount of autonomy in terms of market reaction, market response. And we have a pretty well established kind of integration program where we bring the businesses in.
So 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 out as we go forward.
Think the scenario already is that we have a particular capability and in BCC 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. And that is a core competency that we have. So 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 structure that we put into the business in the U. S.
So we're building our capability to build a scale business. Within the U. S. And that starts with management as with within any of our businesses.
Annalise from Morgan Stanley. Just two for me, just on the return on capital, particularly on the tech division, was that purely from acquisitions? Because in LPG obviously had acquisitions as well, but the return on capital was more stable. So is there a difference there in the initial return on capital or is it just a longer integration process or anything except by that?
But 2 factors really on the return on Capital 1. The acquisitions and so does the entry level, and we bought them obviously in the latter part of some of the middle part of the year. You've got the entry level coming in. So we'll build that over time. But 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 UK.
And we're only starting to see the benefits of that flowing through. And we've obviously had our investments in our enterprise SAP system in the business. Here in the UK, 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. So there's it's really the 2 factors coming together.
Okay. Thank you. And then on just following up on the cost control, you talked 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? Easy to talk about my point ones of a penny and the focus that we always bring to continuous improvement across the energy. But that is, it's it's one of our core competencies as a group, constantly driving operational efficiency across the businesses. And Henry, there's plenty of things going on within LPG every day of the week to continue to drive those improvements across the business. So managing your assets, driving the efficiency within your businesses.
So I think that just continues to deliver.
Thank you.
Donald, hi. The equity partnership with Shell, what's the backdrop with us?
The backdrop, I think we care for probably now getting into too much detail on this, but we have, Shell is a global player in the aviation market. Clearly, when that business was originally a shell business, they sold, they exited out of the country everything was part of that package when the exit is out of it. I think, subsequent to exiting the out of it, I'd say they kind of saw Scandinavia in particular as a big gap in their global, in their global market. So 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. So it gives us it's a real win win situation, Jerry. It gives us the ability to leverage their global network. So we're able to leverage the Shell brand, 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. And as I say, hopefully, maybe start a bird of things that we could do. We'll certainly keep knocking on those doors as we always do.
Would that be just for the chill or would it be other measures know
we've great relationships with pretty much all the majors and brand relationships with plenty of them as well. So there's, we don't leave too many stones unturned in terms of trying to find commercial opportunities that are win win situations. Oh, Alan, we're going from the back, Chris.
Yes, hi guys. Alan, it's Alan and Dave. Just two quick ones for me. So firstly, some asset price, I think there's been pockets have elevated asset pricing in Ares and LPG and in the retail space over the last couple of years. So any color on how that backdrop has evolved to be useful.
Just a housekeeping one then for Ferro. How should we think about CapEx for this year if the business stays as it is? Thanks.
You did the housekeeping side and then I'll come back in.
Aaron yet, CapEx, again, about $160,000,000 to $170,000,000, we're going to have continued investment hopefully in new forecourt. Within the retail and oil space, we will have then the further development of our AviMed facility coming in. So and again, the business is growing organically. So typically, we would run at 1.2% because we're growing organically, but on top that then, we'll be adding new forklifts and the Avon, the start of the further development of our Avonema facility.
I think, Alan, the asset prices, you know, you see this from time to time. 1, we're not seeing any material change. We talked previously, probably about asset prices, particularly in the retail sector, been choppy in some markets. And again, I think it comes back to the diversity piece. That notwithstanding what's happening in different segments, we really have the opportunities to deploy capital across a range of business and a range of opportunities.
So the discipline around return on capital is for us. Really, we focus on all the time within the group. So we could have 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 deployed capital elsewhere within the business. So the opportunity set it there, I don't think there's anything that has changed in terms of asset prices for 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 just plenty of opportunities for us to deploy capital in the business across all four sectors. So I don't see it as been an issue.
Sam Bland from JP Morgan. But 2 please. First one was related to that CapEx question. Obviously, in this year, CapEx Fairway ahead of depreciation sounds like it'd be the same for next year. Whether some more of these kind of discretionary type product projects, could they be sort of a slightly more permanent feature there, whether that's a new avenue to deploy capital alongside M and A going forwards.
And how do you assess the return on capital from those kind of growth CapEx type projects Is it similar to how you assess it for M And A or in a slightly different way?
We've asked a question and sort of answered it as well. Sam, absolutely, we assess any deployment of any capital in the same way as what the returns are going to be. So Yes, I mean, we typically we've been running from a development point of view as our businesses grow organically, maybe 1.2,1.3 times. Depreciation. And then on top of that, you've got, from time to time, capacity increases that are required, significant capacity increases are required maybe in technology within the warehousing, and IT space and then maybe within health and beauty on the manufacturing capacity side.
So it is, but it's 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 health care sector. So while we haven't deployed much capital from an acquisition perspective, we deployed a fair bit of capital and we're deploying kind of a fair bit of capital in expanding the capacity within our facilities and maybe it's worth just touching on that a little bit, Connor. Yes.
I mean, we've built a very nice position in Europe in Softgel. Contact manufacturing for the nutritional sector. And we've had some really interesting technology developments. So we're with the leader in Europe and vegetarian softgels, which is a big, big trend. Everyone will be familiar with the trend to vegan.
And we've also just manufactured the world's 1st organic vegetarian, soft ale capsule, which is very nice development as well and good interest in some European markets in particular. And we have a new technology in slow release capsule. So with our expanded capacity coming on stream in Q2 this year, we'll be able to leverage all those technology developments.
It's doing a bit more of that. Like, we're in some markets that are very strong organic growth markets, tech, as well. And our ability to add products, add services, greater capability to integrate with our customers and suppliers. Those investments, we get very strong returns on. So see us continuing to do those.
And second one was on the GBP 90,000,000 of acquisition spend announced today. 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
Yes, no, no, I think we'd see it pretty similar, Sam, that we'll kind of entry levels at kind of 13%, 14% and we'll grow from there. I'd say the Pacific Coast energy is actually a higher return than the retail west business as an entry point 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 that once the buy bolt on and use that as a mechanism, to obviously improve returns across that business. And clearly, that takes time because they're more modest. It takes a bit of time. I think the technology, the technology sector in particular is a growth market.
The areas that we've been investing in are all growth areas that we've a very strong position now in the whole ProAV sector. So Comtech coming in, adding to that leveraging the vendor relationships. So, we're pretty, pretty positive that we'll be getting those returns well up to both 15%.
A couple if I may. With the impact of FRS 16, are you thinking of adjusting your current capital targets in any way to reflect that?
Well, we've always, again, Chris, when we've looked at acquisitions, okay, anything that came with a very long lease with upward, you know, with no break clauses or something like that, we, you know, if it walks like a debt and looks like debt, it probably is debt. So we treated it from a returns point of view as as capitalized sort of debt from that point of view. So nothing's changed in the way we look at acquisitions. In terms of reported Roche yet, it'll pull down the Roche by 1.6%, but it's not changing our psyche in terms of how we look at things in any shape or form.
And with regard to technology, obviously, the increase in the element of service led helps improve the margin, just if you could have a flavor of some of the things you're doing there, and how far that could go over time?
Yes, so it's all improved margins and that's a function of cost and mix into AV, but also the addition of our value added services. And that really focuses around 3 broad areas, one around lifecycle management and so our NTR acquisition really starting to look at 2nd life and now, 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 NOK capabilities to provide back to our reseller to white label those, remote management capabilities. And then the 3rd is really around deployment, and installation capabilities that we provide to our integration partners. And so those 3 broad areas are areas that we'll continue to spend and invest in as well as acquire.
Some of the mix change as well within the technology business. So The Jam business is a much higher margin business. It's like the Comtech business, again, a lot of value added products and services, the dinners would be a higher margin business. So as we grow more in those areas, that will be beneficial from a margin perspective.
Thank you.
James Levine from Jefferies. I'm just wondering two things on 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 but I'm wondering if the mix shift in the business that's occurred over specifically last 12 months has done anything to materially change the sort of medium term baseline expectation of about a $25,000,000 outflow per year. And then secondly on just the overall EBIT weather impact of this year having quite significantly, I believe, about 11 or 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?
On the working capital, I mean, no, there's been no fundamental change in the overall structure of our working capital mix technology is, more working capital intensive than our other divisions. But 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. But going forward, we would revert to a more traditional 25,000,000 dollars, $30,000,000 outflow in working capital in the year, which we're growing organically.
The weather bit it's not an exact science. So we, obviously, depending on the way of profile, the way it falls, it's it's an estimate, but it's kind of in the order of kind of 10,000,000 to 12,000,000 will be where we see the impact in the year.
A couple of 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. And 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 nothing necessarily quantitatively, but just in terms of what are they expecting out of distributors such as you?
Yes. So 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 the margin on it and we're selling it on to our customers. So we become a price taker in the market. So kind of 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 kind of export, we've a little bit within our health and beauty business, but we're typically buying product in market for the market. So 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, but it doesn't have a direct impact on our business, particularly. The organic piece, I suppose the organic piece is there's 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. So if you just out for those, our organic is kind of in line with what we've been talking about over our long term trend of the goods of a third of our 14.6% been organic.
So it's kind of
half is your organic number? Between 3% 4%.
In the second half. Any other questions here? Might try it, no, on the line? No, on the line. Okay.
That's it. Just to thank everyone for being here today. And again, for all the support, not all over the 25 years. So we've been a public company, but some of you for a long time and some of you for for a shorter time. So thank you all.