Hello, and welcome to our discussion today on DCC's role in enabling energy transition. We are looking forward to talking to you over the next 90 minutes or so. DCC is very well positioned to enable energy transition and support our customers on their energy transition journey. As we will discuss today, This is something we are actively doing every day. It has been a little over 2 years since our last Capital Markets Day, and we wanted to dedicate some time beyond results announcements to talk with you about the resilience of our group strategy and the range of opportunities ahead of us across all of our sectors.
As I mentioned on our results call last week, we had hoped to have this conversation with you all alongside our year end results in May. However, we deferred it due to the dynamic COVID situation at the time. And while it would prefer to be with you all in person at the London Stock Exchange, or at one of our excellent sites for this discussion, we are absolutely committed to operating safely, so we've decided on a virtual session. We've all become very often at leveraging technology for these kinds of events, and I expect it to be a great interactive session, nonetheless. I am delighted to be joined here in Studio in Dublin by Kevin Lucy, Chief Financial Officer, and Eddie O'Brien, Managing Director of our retail and oil division.
Due to travel guidelines in place at the moment, we are also joined live from the UK by Henry Coven, Managing Director of our LPG division. To set the discussion in some context, we will begin by talking about DCC's group strategy and our purpose and then move on the discussion onto the particular focus today on enabling energy transition. I will discuss how our strategy and purpose positions us and drives us to enabling energy transition. Then, Henry, Eddie and Kevin will share with you what we are doing in this space today. In the markets and as a group and our view on the opportunities still to come.
We will then take live questions direct from our analyst community the remainder of the session. Before we get started, I want to take a moment to direct your attention to our standard disclaimer, which is on screen now. The material and recordings for this event will also be available on our website after we conclude today. Hopefully, it shouldn't happen, but if you have any technical questions as we go through the event, please email our team at investorrelations attcc.ai. So let's get started.
Since our flotation, we have pursued a consistent strategic objective of building a growing, sustainable, and cash generative business, which consistently provides returns and capital employed significantly ahead of its cost of capital. We achieved this 1st and foremost by building agile and customer focused sales marketing, distribution, and contract manufacturing businesses to go to market infrastructure of the sectors we choose to play in. We combine a depth of sector knowledge and experience to grow these businesses into businesses of scale in the resilient and enduring sectors of energy, technology and health care. These sectors have long term growth demand characteristics and strong fundamentals. They are dynamic sectors for changes are constant, and we have resilient and agile businesses as a result.
We focus on cash generative recurring revenue businesses with growth potential and strong returns, and geographies with reliable economies and high health and safety and compliance standards. All of our businesses operate under a consistent strategic framework that drives real excellence and value through our group. This framework includes creating market leading positions driving operational excellence, creating a culture of innovation, extending our capability into new geographies developing our people and maintaining a strong financial position throughout. We spent sometime earlier this year just before the pandemic struck to consider our purpose as an organization, our purpose enabling people and businesses to grow and progress is core to who we are as an organization and what we have stood for since our founding. Our purpose directly bills upon our core values, which help shape the culture of our group and how we execute our strategy, safety, integrity, partnership, and excellence.
Purpose is how we see ourselves as part of something bigger, no matter what her role is. It speaks to our genuine role as an enabler of the sectors we operate in, of the customers we serve, and of the key partners that we work with. It reflects our focus on adding value in everything we do to make a positive impact within the environments we operate. As the pandemic took hold earlier this year, we saw daily demonstrations of our role as part of something bigger. On our year end results call in May, we shared some examples of how our businesses had played an essential role in enabling their sectors, their customers, and their communities to adapt and change during the pandemic.
There is no better example of how our purpose ingrained in the fabric of our businesses. There is a trend in many businesses on purpose today, we are entering a time where the role of corporates in society must be viewed more holistically. I think the current challenges we see in the world at this moment only compound this view. Our business partners and B2B customers expect to collaborate with sustainable long term oriented companies. B2C customers are increasingly savvy and informed researching the companies and the brands that they support, and our employees want to build careers that serve a higher purpose.
But the purpose is only real if we act against it. Our role in enabling energy transition, which we will speak about today is directly influenced by our purpose. We all know that climate change is one of the greatest challenges facing society today It is a complex challenge requiring every person in every part of the world to make difficult choices. The choice to adapt our consumption of energy is one of the most important steps we will take on this journey. Understanding these choices and getting access to real solutions is difficult and complex for people and businesses around the world.
DCC is well positioned to enable them to make real progress through their energy transition journey. Our strategy, our purpose, our values, all of this has real impact. It has created real value and enabled us to build leading sales marketing, distribution, and contract manufacturing businesses in our core sectors. Each of our divisions has grown from relatively humble beginnings in the UK and Ireland to multinational businesses of real scale with leading market positions. And our sectoral diversity, which I have spoken about previously, allows us to invest and grow behind positive trends as they emerge.
The fundamentals of these sectors have not changed, and we are very optimistic about the opportunities presented by the trends in these sectors today. In health care, people are living longer and healthier lives. They are increasingly conscious of looking and feeling good. Healthcare systems are also evolving to meet the needs of society with longer lives. In technology, devices and service are playing an increasingly important and pervasive role in all of our lives as the tools that enable access to increasing amounts of data and digital applications.
In energy, fundamentally, there is a growing global energy demand that is essential to power progress and growth across societies. The energy transition is about continuing to meet this energy demand or more while helping customers to use energy in an efficient and smarter way. As we will go on to talk about the nature of the energy or fuel may change as a result, but the fundamental need for energy remains. All these trends have ebbed and flowed, but DCC has consistently delivered disciplined growth over time. As the world shifts, DCC's agility, experience, and core infrastructure enables evolution with change.
Be that in technology from on premise to cloud or health care from tablets to soft gels to gummies, or in energy from fossil to lower carbon or renewable. DCC responds well to shifts and will continue to do so. While the specifics of the products and services that we provide will continue to evolve and change as it has in the past, The demand for energy, technology, and health care products and services will continue to grow into the future. Throughout these trends, we are clear on our strategy and our financial and capital discipline to support it. I will now hand over to Kevin Lucey to talk more
crucial to DCC's consistent delivery remains financial discipline, our capital deployment framework, and a clear focus on long term and sustainable returns on capital employed are key metric. All growth opportunities we consider are approached in this context. This context is also a critical backdrop to our conversations about the future. Our approach has delivered strong financial performance, cash generation and robust capital deployment. Over 26 years, DCC has delivered very strong growth in our in profits in a very resilient and consistent fashion.
Approximately 1 third organically, 2 thirds through acquisition. We focus on realizing this growth in cash flow, which becomes the enabler for our continued growth to report the continued resilience of this approach despite extraordinary circumstances when we shared with you our first half results. We reported that group operating profit increased by 8.3%, approximately half of which was organic. DCC delivered another good free cash flow performance with free cash flow generation up $90,000,000 on prior year. We reinvested approximately 90,000,000 cash flows into new acquisitions, each of which in turn increased the scale and capability of the group.
Importantly, the group exited our first half with an extremely strong balance sheet, with just over $100,000,000 of net debt and with over 1,500,000,000 of cash on the balance sheet. This first half performance and our long track record demonstrates the real resilience of DCC and our really strong financial position would continue to drive our growth going forward. As Donegal has mentioned, our core strategic objective remains generating sustainable returns on capital well in excess of our cost of capital. We will execute against our strategy in line with our capital allocation principles for deploying development capital. Development spend supports our growth in two ways.
Firstly, in deploying development capital to improve and grow our existing business organically. We invest in integrating more closely with our customers or developing new product capability as new energy, technology, or healthcare products emerge. This includes, for example, where we support the investments our customers are making on their sites in new commercial and industrial LPG infrastructure, where we invest in our digital capability in our retail business to enable greater customer loyalty or payment options. As we have talked about previously, it includes our significant digital investments in our UK Technology business, which will drive greater efficiency and customer solutions. And it drives increases in organic production capacity to really scale our excellent capabilities in the health and beauty space.
Secondly, we deploy development capital in acquisitions, where we are focused on adding new capability to our businesses, allowing us to enter new product or geographic areas, or to scale up a more modest presence to drive greater returns. This capital deployment and acquisition leverages an excellent M and A skill set and capability from origination through execution and on into integration. This skill set and capability has been honed over the years in the more than 300 acquisitions we have completed We have also demonstrated our ability to add significant value to our acquisitions. How we have deployed our development capital has evolved in line with how growth trajectories change or new opportunities present. If we look at our evolution over 10 years, or even in the last 5 years, our capital base has been evolving.
There is no significant geographic diversity in the group. Just 10 years ago, we were really concentrated on the UK and Ireland with just a very modest presence in continental Europe. 5 years on, we had more than doubled our relative presence in Continental Europe. Today, Continental Europe and the UK and Ireland are equally important but perhaps even more notably over the last two and a half years, DCC has successfully entered North America and has a modest presence in Asia. North America now accounts for almost 20% of our capital employed.
We have excellent growing businesses in North America, And just as importantly for our conversations about the future, these provide further opportunities for consolidation for DCC just as our UK and Ireland and Continental European platforms do. In terms of capital deployment optionality, this really is a significant development relative to where we were just 3 years ago. The growth in the group has been very significant across the last 10 years. And we've also become more focused, as you can see from the exit of the 2 smallest divisions of the group. We have clearly invested significantly across the last 5 years in building these with the LPG division in particular scaling into a real international leader in its sector, as well as supporting its growth into the adjacent gas power and specialty gas markets.
Since 2018, we have made further substantial investments in particular in LPG Technology And Healthcare. In recent years, and as we always have, we have leveraged the diversity in the group to ensure we are reflecting the trends which Donald mentioned and competitive landscape to where we could most valuable deploy our capabilities to build sales, marketing, distribution, and contract manufacturing businesses of scale. Our sectoral diversity means that when acquisitions in a particular area become relatively too expensive, as has been the case in recent years with retail assets, We continue to be able to deploy capital at good returns in other areas, whilst pursuing organic growth in all areas. I think it is notice notable that since 2018, we have deployed 70% or thereabouts of our acquisition spend into health care and technology. Currently are 2 smallest divisions.
Even in this disrupted environment, DCC remains confident of carefully deploying capital and acquisitions. We have robust processes in place around the DCC group to ensure we maintain our acquisition spend. We have capable and experienced management teams across Europe and North America and in certain other markets, where together with our divisional and central development teams, we can continue to originate development opportunities for the group. Those same management teams have been successfully integrating acquisitions into the DCC group over many years. Our processes around executing and integrating acquisitions are crucial to our continued ability to bring great businesses into DCC.
These have not changed. The rigor of our discipline and other processes, our diligence and other processes continues to be fundamental to our execution. Today, we have approximately capital will most likely grow and evolve over time given our ambition to deploy our balance sheet and recurring cash flows in value creating M and A and development CapEx opportunities and continue our track record of consolidating and compounding. If we imagine deploying incremental investment capital on acquisitions and net CapEx in excess of depreciation combined of say, for example, 400,000,000 per annum and also assume no increase in the scale or ambition of the group in terms of that level of spend. The business as it is today will likely represent just 40% or so of the group in 10 years' time.
I make this point really just to illustrate that, just as has happened over the last 10 years, the business model in DCC will likely mean that the group will adapt to emerging trends, identify opportunities where we can add real value, build further confidence in new products and services for our customers, and continue to scale up in terms of both our operations and geographic diversity and we have the financial strength resilient cash flows, and most importantly, the diversity of opportunity across the health energy, health care, and technology sectors to believe in that level of capital allocation. That is important because the agility and diversity we have in our business operations is matched by the agility and optionality we have in capital deployment. Overall, we continue to have real confidence in our strategy and our business model in DCC. And we believe our diverse, resilient, and growing business, the strength of our cash flow and our clear capability to continue to consolidate and compound within our sectors presents a compelling investment case. The financial strength we enjoy today has arisen due to the very strong financial performance of the group over its 26 years as a public company.
And from the backing DCC has had both from our shareholders and the debt investors who have helped fuel our growth. Our 26 year unbroken dividend growth record showcases our progressive approach to dividend and is another part important part of our financial strategy. Enables by the excellent financial and cash flow performance. I am confident that our financial performance will remain strong and that we will remain agile and disciplined in our deployment of capital supporting the best growth opportunities across our health care, technology and energy sectors. With that, I will hand back to Donald to introduce our focus on enabling energy transition.
Thanks, Kevin. We believe that DCC is very well positioned for the future. We are guided by a consistent long term group strategy and an enduring group purpose. We have a track record of scaling, high quality, resilient sales, marketing, distribution, and contract manufacturing businesses in our core sectors. While the specifics of the products and services that we provide will continue to evolve and change as it has in the past.
The demand for energy, technology, and health care products and services will continue to grow into the future. In addition, our focus on cash generation and financial discipline ensures we are focused on redeploying capital for the most promising growth opportunities. And we have plenty of capital optionality and development opportunities in the sectors that we play in. Over our 43 years in the energy sector, we have built businesses of scale in key energy markets. We have built leading market positions innovated in the customer experience and offering and driven real operational excellence across the business.
All of our businesses across energy, whether in LPG or retail and oil, have grown and changed over time. In many cases, what began as transactional fuel delivery businesses have evolved into customer focused agile multi energy businesses. Just 11 years ago, DCC was only selling oil and LPG products in Britain and Ireland. A year later, we entered Denmark and Austria and have grown significantly since then. Today, we sell oil premium fuels, HBO, GTL, LPG, LNG, biomass, electricity, natural gas, and others to around 8,000,000 customers in 12 countries on 3 continents.
And we have built substantial sources of non fuel contribution including our lubricants business, free telematics solution, energy services to home, HDV services, and so on. This steady development of our business now means that we operate a full spectrum of energy businesses serving the breadth of customer's ultimate energy requirements. Take a residential customer in Ireland, for example. We cater for the energy needed for their home. The home heating solutions, be it oil, gas, or electric, their patio and outdoor energies and their renewable electricity.
And we cater for their mobility energies, be that through the fuel card in their wallet or through our network of unmanned retail sites. Likewise, we pro provide a full range of energies for businesses. Again, to use Ireland as an example, DCC Businesses provide B2B customers with the energy's necessary for powering and heating their sites or premises, including renewable alternatives such as biomass. We provide the fuels and solutions for moving their fleets be they solutions for energy at depots, fuel cards for field workforce, or through the fuels at our retail network. And we provide the energies and associated products that our business customers need to help grow their own businesses.
Be that energy is for heating and cooking and hospitality businesses, energies to enable construction activities, lubricants to enable large machineries such as wind turbines, or the energies to enable important agricultural activities. How the world consumes energy has been an evolution over many decades. For many years, we have witnessed significant changes in energy consumption. From the expansion of natural gas grids, the increased adoption of efficiencies across homes, vehicles, and businesses. EU vehicle efficiency and biofuel measures, and the shift in the importance of electricity as wind, solar, and other renewable generating allergies become commercialized.
Still, the pace of change and the imperative to decarbonize must continue to accelerate. The coming years in the energy transition are the most critical and the most challenging for societies. Having achieved significant decarbonization in centralized power, the world will have to now balance the jewel complexity of moving to sustainable fuels in decentralized hard to evade uses, while also making the transition equitable and affordable. Part of the challenge for societies in the energy transition is the absence of a single replacement for fossil fuels. The renewable electron has been a remarkable achievement in many markets over the past decade or so and is now well positioned as a clear part of the energy mix.
However, there are many energy uses that cannot be effectively served by the electron and require new, renewable, and low carbon innovations. In home heating, significant retrofitting over many many years will be required for the electron to become the preferred heating solution. And when that happens, DCC will have the businesses providing that solution. In the meantime, we need to focus on helping improve the efficiency of existing solutions, introducing biofuels, and enabling genuine carbon offsets. In transport energies, the promise of electric vehicles is excellent We are at the leading edge of EV adoption in markets like Norway, which have incentivized the switch.
And we have been growing our lubricants business, supporting the efficient running of EVs. However, there is a significant proportion of passenger car users who will take time to switch, and the jury is out on the most effective way to decarbonize other transport sectors. We are ready to support customers with the range of their energy, transport energy solutions and in the meantime, we are working to offer choice of energy, greater biofuel penetration and supporting efficiencies. In commercial fuels, there are a wide range of energy uses that are so intensive that the electrons are unsuitable or too costly. When you consider running a construction site, a farm, or even heating a network of large schools or public buildings, the requirement for high intensity portable energies is clear.
Over time, electricity biogases, hydrogen, or even existing solutions combined with carbon capture use and storage will drive net 0 journeys for these activities. We will be ready to support these of lower carbon energy solutions, increased penetration of biofuels, and we are innovating to help the customer with their overall energy requirements through energy engineering solutions, digital solutions, and efficiency solutions. All of this also needs to be achieved while ensuring an affordable and equitable transition. The transition to renewable energies as it is today would require every person to retrofit their homes purchase renewable electricity, trade in their vehicle for a battery electric vehicle, and accept the increased cost of everyday goods and services created through renewable energies. The reality is quite different.
As a result, for every person and business, this will continue to be a difficult and complex journey. It is one, however, that DCC is well positioned to lead on. By leveraging our customer relationships, our technologies, our talented workforce, our disciplined approach to capital, and our growing scale we can have a genuine positive impact for our customers as they transition towards a healthier society and planet. Our growth strategy and energy transition is therefore built on 3 pillars: customer focus, enabling choice, and operational and capital discipline. Customer focus is core to how our businesses have grown in the past and will continue to grow into the future.
The breadth and quality of our energy business today is down to how they have achieved around understanding our customer's energy needs. As we continue to evolve through the transition, we believe we will maintain and build on these customer relationships creating choice is a fundamental to the role as an enabler of the energy system. It is our role to work with energy producers and other industry partners to help create the demand for them to innovate in lower carbon fuels. And it is our role to work with partners and emerging energy technologies and products to bring our capabilities to bear in helping them to create a market. Our capital light model ensures that we are agile in adapting to the emerging energy mix.
We have never been nor planned to be a producer of energy with significant long term capital commitments. We will leave that to our supply partners. Instead, we have a very strong cash generative well run businesses today that provides us with time and capital to make careful choices about the future. This plays into our agility as a business being able to be patient when necessary and disciplined in making the right moves in any of the sectors at the right time. Our focus will remain on running our business as well innovating to grow those businesses and carefully redeploying capital for future growth.
This strategy of enabling energy transition is aligned with our capabilities as an organization. It is aligned with our purpose, values, and culture, and it is aligned with real opportunities to further grow our business. As energy technologies evolve over the next 10 years, we will be ready to support our customers on their energy transition journey, be it solar power for homes, heat pumps, electric vehicle charging, hydrogen solutions, or innovations in carbon capture use and storage. We will be agile and innovative if it is a solution for helping our customers in their transition. With one eye on the future, we need to remain grounded in enabling energy transition today.
Energy, just like health care and technology, is and will remain an essential part of people's lives and part of the fundamental needs of growing businesses. In fact, This energy transition is made complex by the inescapable dependency of society and energy. As a result, energy is a dynamic place to play just as it has been over the past 43 years. It will take time for truly 0 carbon solutions to be fully available, and we will be ready when they are. In the meantime, people and businesses are looking for carbon savings and sustainable actions that they can make today.
This is why remaining customer focus, providing choice, and ensuring our operational and capital discipline is how we are enabling energy transition today. Our energy businesses are leading providers of the fuels that are needed today and we will be leading providers of the fuels that are needed in the future. DCC is enabling energy transition. So for DCC, our mantra is where there's energy, there's us.
Progress doesn't happen by chance. It is driven. At DCC, we invest in energy, but we drive progress, whether it's opportunity we explore, breaking ground in new territories. When there is inefficiency, We innovate, streamlining solutions wherever we go. Whether it's demand, we deliver, to apply clean energy and bringing it further than ever before.
Whether our problems, we find solutions, helping customers reduce their carbon footprint. And when technology emerges, we grow into non fossil energy, smart tech, biofuel, and beyond. At DCC, we do not just talk about progress. We run on it. And because energy never waits, night the degree.
DCC, Weather's Energy. There's us.
I am delighted now to hand over to Henry and Eddie to tell you more about how we are enabling energy transition today. Let's start with the LPG division. Henry?
Thank you, Donald. It's great to have the opportunity today to talk about how DCC LPG is leading customers through the energy transition. But before I jump into what we're doing today, I want to expand briefly on the breadth and depth of the DCC LPG business. Some of you will have heard me talk about how our business started as one truck in a small town outside Dublin many years ago. Since then, we've come a long way, not just in the scale of the business, but also in how the quality of the business is fundamentally different.
First, I'm proud of the range of businesses we have under the LPG umbrella. Our operations stretch from our European home for a sizable and growing North American business. We also have an excellent operation in Hong Kong that creates good medium term optionality in the Asia Pacific market. Across that footprint, our businesses have a range of capabilities in energy sales and marketing, technical services, and liquid gas distribution, serving customers predominantly in rural areas off the gas grid. So what began as a local supply business in Ireland has progressed to be an international customer centric multi segment solution orientated business.
We now supply over 740,000 customers directly, plus an estimated 5,000,000 customers buying our cylinders from our channel partners. And to make this happen, we have some 3000 employees and operate some 220 storage and distribution depots. But we are more than just an LPG distributor. We have developed organically and through acquisition, so Nick's significant natural gas and power retailing operations in Ireland and France. In Ireland, we have around 25 percent of the B2B market and have added some 100,000 B2C power customers through the recent acquisition of Budget Energy.
We also have a leading position in the supplier of specialist aerosol and refrigerant gases in Europe and a leading position to supply medical gas to the ambulance services in Britain. And we are constantly innovating and look to bring more value to our customers. For example, our lightweight cylinders are sold through automatic dispensing machines in France, and these have proved very popular during the COVID crisis, and we see this convenience winning over the medium term. We're also connecting digitally with B2C and B2B B2B customers who are supplied through our rented propane tanks through telemetry and demand forecasting technologies. This allows us to improve the customer experience, remotely manage their stock, and optimize our supply chain.
And we deploy specialized technical service teams who support energy consumers in their move from other fuels to LPG, where we provide a turnkey installation of propane storage, vaporizing, and pipe work equipment. To make this happen, our businesses in the LPG division are led by very capable customer focus and agile management teams. And this is where the DCC devolved model wins every time and why I have great confidence in our ability to continue to grow and develop LPG and adjacent sectors in the coming years. And it is vital that we do this. The energy provided by these businesses absolutely critical to enabling our customers and the rural communities in which they operate navigate the energy transition.
We must not forget that LPG is a fundamentally important enabler of the energy transition, both as a lower carbon and emission solution today, but also as a technology that can be 0 carbon in the future. LPG is a clean burning fuel, emitting almost 0 particular very low levels of nitrogen oxides, and sulfur dioxide, and 20% less CO2 than heating oil. Off grid consumers can make significant carbon reductions and air quality improvements by switching to LPG. As such, each of our businesses are actively embracing the opportunities presented by a new transition by promoting LPG and developing additional products and services. For example, in the UK, as in many of our markets, there is an opportunity to switch commercial oil consumers to LPG.
From our analysis in UK, this represents an opportunity of 2,400,000 tons of LPG. Compared to a total UK LPG market today of 1,000,000 tons. Our UK business leads the market in this area and has grown its commercial business by 25% by pursuing a well honed strategy to convert businesses using fuel oil to both LPG and LNG. And this is not just good business. It's a real enabler of carbon reduction in the UK.
And so far, we have generated an annual saving of nearly 36,000 tons of CO2, and there is much more to come. This has largely been achieved in targeted sectors, which range from food processing companies, building materials companies, and the whiskey distillery in Scotland. Here, for example, we converted the NOK2 distillery from oil to LPG, creating a CO2 savings of approximately 20% and a reduction in the whisky distilleries overall energy cost. Taking this further, we've introduced LNG as an alternative to oil for heavy process orientated industrial customers. Here, the capital cost to switch is higher than LPG but the unit cost is more competitive on larger volumes.
Plus, the customer has the option of utilizing Bioenergy at scale today. Going further in driving CO2 reductions with LPG, we've also developed lightweight barbecue cylinders to help people move away from charcoal. And in France, we've partnered with hypermarkets to launch a range of lightweight BioLPG cylinders. Now BioLPG is molecularly identical to LPG, but he's produced with renewable feedstocks at converted refineries, a little bit more of that later. Besides LPG, our gas and power businesses in France, has developed an offer based on the supply of renewable natural gas and is providing an energy management service to customers where proven savings are shared between us and the customer.
In the UK, we are marketing Bioenergy for industrial and road fuel use and customers in Ireland following our acquisition of Budget Energy will have access to power generated by wind, solar, and anaerobic digestion plants. This is all core to enabling energy transition, and we are doing more now to prepare for the future. There will be more bio LPG available in the future as energy producers convert refineries to bio and as new technologies for processing organic waste develop. Bio LPG being identical to LPG requires no adaptation for our customers or for us in our operations. And provides an easy pathway to full carbon reduction.
We will extend our natural gas and electricity presence into new markets particularly where we can leverage our existing customer base to cross sell products and services. And we're actively monitoring other key industry trends such as the development of other biogases such as biodme, carbon capture use and storage, and how we might distribute hydrogen. Finally, we are working closely with our industry partners, firstly, to advocate within the European Union and national regulators. On how LPG is having an impact immediately today by enabling energy transition. And secondly, we're positioning how LPG, combined with Bio LPG, will play a key role in the longer term energy mix in the off grid market.
Our industry in Europe has an ambition to be 0 carbon by 2050 dependent on both EU policy support and the availability of Bio LPG. So in summary, LPG is very much part of the energy transition story as a cleaner lower carbon and versatile energy source in rural communities. As such, we're looking to invest further by expanding from our strong platforms in Europe and the USA where with our financial discipline, we will add value. We will also build our scale and digital connectivity with customers and thereby improve both the customer experience and our supply chain efficiency. Looking forward, we will extend beyond LPG with easy to to deploy Bio LPG and develop other biogases.
Along with the addition of power and related services, we'll add value to customers and lead them through their energy transition journey. This is consistent with DCC's ambition and position to enable energy transition. We are customer focused, providing choice, and remaining fully focused on operational and capital discipline. Thank you. I'll now hand back the studio to Dublin and to Eddie who's going to talk about his journey in retail and oil.
Eddie?
Thanks, Henry. As hen Henry mentioned, adapting and developing our business is not new to DCC. And in the retail and oil division, we believe we have the skills and capability to lead an energy transition. We have demonstrated over many years the ability to drive growth through our agile business model capital discipline and the growth mindset of our teams. Retail And Oil is a diverse business, serving array of sectors and their energy needs.
This includes fuels for domestic heating, fuels and services for passenger cars, commercial and heavy goods vehicles. As well as lubricants for all sectors of the economy. We are constantly innovating across our businesses. To increase customer loyalty and intimacy, to become the energy partner of choice for major commercial customers. And to evolve our automated retail sites.
We are offering customers more convenient services and a broader range of energies. Building on those diverse and innovative foundations, we are evolving our business to enable our customers, manage their energy requirements, achieve efficiencies, lower carbon intensity, and ultimately reduce their costs. We want to be a leading provider of low carbon liquid and sustainable energies in all sectors of our markets. A good example of how we are doing this is in our domestic heat and oil business. Which has been on the energy transition journey for the last 10 years.
For many of our customers, financially viable alternatives to heat and oil are limited. So we've been helping those customers through the energy transition by successfully offering cleaner and more efficient fuels and at the same time, increasing our customer intimacy by offering a range of maintenance and energy management services to the home. In our Austrian and Danish businesses, we have been innovating over many years, starting with more efficient fuels and more recently, bundling carbon offsets for customers. These innovations have both greater customer loyalty and with the growing availability of biofuels, we are confident of transitioning these customers to lower carbon or 0 carbon fuels in the future. As you know, many of our customers are in the heavy transport sector, and we are providing them with transitionary solutions too.
In our Swedish business, we have a brand partnership with Neste, selling Neste MY, our renewable diesel. Over the last 5 years, we have grown the penetration of this product and other high blend biofuels to 40% of our total diesel demand. Reducing the greenhouse gas emissions of our transport fuels by 30%. In Denmark, our aviation business is working on a pilot project with our partner Shell to introduce sustainable aviation fuel to the Danish market with the potential of significantly reducing emissions. So as you can see, we are building the capabilities to succeed and we are building supply partnerships in mature low carbon markets that we will expand into our other markets as these products become more available.
Providing sustainable fuels is not only about reducing carbon emissions. Reducing air pollution and providing environmentally safe products are also important. We have grown our gas to liquid fuels business which significantly improves air quality and reduces the risk of pollution to 30,000,000 liters across three markets and by 20% in the last 12 months. We have partnered with major construction companies in the to reduce their impact of their projects and local air quality in major urban settings such as London. GTL is also biodegradable, making it a safe fuel for environmentally sensitive applications.
As a result, we have enabled businesses in activities such as snow grooming in the Alps, our marine activities in the Austrian Lakes to switch the GTL. Sourcing and offering customers a choice of low carbon liquids and sustainable energies is just one part of our role in the energy transition. Folding on our long term customer relationships and acting as a trusted energy advisor to major energy consumers is fundamental to how we lead in energy transition. In our UK business, our team have taken a consultative approach to working with our larger customers. They are looking at the customer's entire energy demand with the aim of helping them reduce the total cost of energy.
The team recently retained the business of a national parcel delivery company through this approach by demonstrating real cost saving potential. This win win approach creates sticky customers as well as attracting new customers for DCC across our energy businesses. Across our retail and truck networks, we are enabling our customers to make better choices. As electrification grows in our markets, we are investing in EV charging where we see the opportunity for good returns in capital now and into the future. Our first steps in this direction have been in Norway, the U.
K. And France. We have made good progress in the last 18 months with over 100 superchargers installed in our networks and doubling in the last 6 months. These initial rollouts will be followed by projects in Denmark and in our recent partnership with Tesco under the certe brand in Ireland. Our network in Norway gives us great insight into the potential of EV charging.
From this we have learned, there is a commercial opportunity and fast charging. Our urban locations have the potential to offer fast charging opportunities through the redevelopment of our locations. And the fossil fuel volumes gradually reduce margins increase and the low price on demand sector of the market remains attractive to value conscious consumers. In the long term, we will continue to explore ways of transitioning our network focusing on new business models in urban sites suited to mobility and convenience, while ensuring we maximize the profit growth and cash flow opportunity that will remain by being a low price, low cost operator of fuel networks, particularly in rural and transient locations. We are also diversifying our networks with investment in truck stops, truck parking services, and ensuring our motorway and truck sites are evolving with investments in Adblue, CNG, and LNG facilities.
Pulling on our strong customer base in these sectors. We are increasing the share of customer wallet by providing parking services, reselling transport management, and access to fast charging. Through Snap on our fuel card businesses. We will also ensure our sites enable the commercial and HDV sectors transition to lower carbon energy by supplying renewable diesel, LNG, hydrogen, or fast charging as our customer fleets evolve through the energy transition. Consistent with what you have heard already today, all these efforts are focused on our strategy of enabling energy transition through customer focus, providing a choice of energies and effectively market or managing our existing hydrocarbon business.
This is a clear focus across the DCC group I will now hand back to Kevin to talk more about the group perspective.
While our energy divisions are clearly focused on enabling the energy transition through their customer focus, choice of products, and continued operational and capital discipline. We know that as a large industrial group, we can play a significant role in leading the energy transition. Whilst energy transition has been core to our customer proposition for some time, it is important to us that we put energy transition at the heart of our culture. We believe that playing our part in For that reason, we have adopted a net 0 2050 target for our group scope 1 and 2 emissions with an interim target of a 20% reduction by 2025. We have worked closely with our businesses in planning for and adopting this target.
Throughout, we have had a high degree of engagement from leaders across the entire business on the topic. They each have individual business plans aligned to this emissions reduction. And have greeted the challenge with real enthusiasm. This is an example of the mindset and culture that is embedded around the group on energy transition. Our people are actively engaged today in helping to enable energy transition.
Not only is carbon reduction good for the planet, It is also good business. As you would expect, amongst the board and senior management, there continues to be also regular engagement on the topic of energy transition and the broader sustainability agenda in DCC. For a long time, DCC has worked closely with our investors and proxy agencies to ensure we had best in class governance where clear guidance and best practice emerged over time. Now with the emergence of multiple ESG rating agencies, we are committed to being best in class. As these new requirements evolve and mature.
You can expect DCC to increase its reporting and transparency in this area. Whilst we are rated highly today by some agencies, such as our AAA ESG rating with MSCI, we know we have more opportunity to improve in reporting on the great initiatives taking place already within the DCC group. We have established regular governance forums across senior management including the board, governance, and sustainability committee chaired by our chairman, John Maloney, and the executive sustainability committee chaired by Donald. Together, these forums oversee the group's overall sustainability approach, including our Scope 1 and 2 emissions targets. Separately, Don will chair the executive energy transition steering group, which coordinates across our energy divisions, on our overall approach to enabling the energy transition for our customers.
Finally, back to capital deployment for a moment. Given our focus on building long term sustainable returns, our capital deployment processes integrate energy transition considerations short, medium, and long term trends for development capital, as I mentioned earlier, and carbon impact for our CapEx processes. We are very lucky in DCC to have great businesses and capability in the Energy Healthcare And Technology sectors. As a core part of our business model is capital deployment, we are also fortunate to have the diversity of opportunity to deploy capital across those same sectors and throughout their extensive geographic footprint. Clearly, a lot of our focus here today has been on the energy sector.
Where we believe there will be lots of opportunity in the years to come. That should not detract from our excitement for the opportunities to deploy capital into the fragmented and growing healthcare and technology sectors. In addition to our strong positions in Europe, our relatively recent entry into the North American market in both these divisions has significantly expanded our development options to build on the successful growth businesses we have built in that market in just a short period of time. In DCC Healthcare, we believe we have 2 really strong platforms for growth and to deploy development capital to build a time. In DCC Health And Beauty Solutions, we have leading capability in a market that is growing globally by 5 to 6% per annum.
This market growth is driven by people continuing to look for more and more ways to look and feel good. We now have strong, growing businesses in both North America and Europe, and we are excited by the potential to deploy more capital in this large and growing market. The quality and breadth of the services and specialist contract manufacturing capability we provide across nutrition and beauty products allows us to build lasting trusted relationships with our customers. As we consolidate in this fragmented market, expand our customer base and bring more product and service capability into the business, we can create real value by helping our customers expand their product offerings. Over the last number of years, we have really sharpened the focus of DCC VITAL, where we provide products and services to healthcare systems.
Following this repositioning, we are really excited about the potential to build this business into a leading European medical products business from its existing strong base the UK and Ireland, where we also still have plenty of room to continue our growth. Again, the market characteristics are good here. Demographic trends mean there was more and more health care to be provided. Government policy generally is for more of this health care to be provided in more cost effective settings outside of the acute care hospital setting. A health care system with more treatment and patient care points will require solutions from businesses such as ours to meet the needs of patients.
As in many DCC markets, our business here also operates a market that is fragmented from a competitor perspective, creating opportunities for us to consolidate in this market. In technology, we are one of the few businesses who are distributing and providing route to market specialist capability Across the breadth of the technology supply chain and product offering. We supply the technology that we use in our homes on the move in the office and into the data center. As technology becomes increasingly pervasive and essential, we are again well positioned to deploy capital into this growing and fragmented market from our strong existing platforms in Europe and North America. We are enabling the e tailers, retailers, resellers, and system integrators to help their customers people and businesses to grow and progress.
I'll hand back to Donnel to summarize our discussion today and lead us into Q And A. Donald?
Thanks, Kevin. It has been great to have the opportunity to update you all today on DCC and particularly our role in enabling energy transition. So in summary, DCC's strategy of building a growing, sustainable, and cash generative business, which consistently provides returns and capital employed significantly ahead of its capital has delivered superior growth for our stakeholders over our 26 years as a public company. We fundamentally believe that this strategy will continue to deliver in the decades to come. And enduring sectors of energy, technology, and health care.
These sectors have long term growth demand characteristics and strong fundamentals. They are dynamic sectors where change is a constant, and our resilient and agile businesses will grow and adapt to ensure that we continue to enable people and businesses to grow and progress. Our I believe that this mindset is core to everything we do, and there have been plenty of examples throughout the session on our focus on enabling others to grow and progress. This is embodied in our approach to energy transition. We are focused on the energy transition from the point of view of our customers, understanding their sectors, their challenges, and their priorities Our role is to help our customers to decarbonize.
We know that a mix of new technologies are required for the effective world to effectively decarbonize. Every customer is likely to need a combination of products and services to meet their energy needs. This is a fantastic opportunity for our agile experienced multi energy businesses to be leaders in this space. Backed up by our scale and industry partnerships. As Henry and Eddie have already outlined, this is not a new direction for us.
This is a path our businesses have been on for some time now. As we outlined earlier, we have made significant progress to date. We've created a leadership position in oil to LPG conversions, significantly expanding our LPG business, but more importantly, saving our customers up to 20 percent of their carbon emissions. We have created a leadership position in biofuels And in Sweden, today, biofuels account for 40% of our overall diesel demand, reducing the overall greenhouse gas emissions of our transport fuels in the country by 30%. We are investing in our retail network to support the electrification of the passenger car fleet.
To date, we have installed over a 100 EV superchargers across our retail network with more planned We continue to grow our business through acquisitions. We recently expanded our Gas And Power business in Ireland, adding over a 100,000 customers and increasing our penetration in the renewable electricity market. It is not just about the impact in our markets. We have an impact as a large diversified group. In particular, our focus on reducing our emissions from operations to net 0 by 2050 20 percent by 2025, which is driving more innovation and solutions into our businesses, and we will continue to innovate and adapt as new technologies emerge.
Our energy businesses are leading providers of the fuels that are needed today, and we will be leading providers of the fuels that are needed in the future. In summary, we believe that DCC is very well positioned for the future. Thank you for your attention so far. And I'm now delighted to take questions from our analyst community who have joined us today. So let's take our first question from Sam from JP Morgan.
Sam, how are you?
I don't have very well. Thanks for the presentation. I've got, two questions if I can. The first one is, you know, I guess the group had a very good track record of basically growing profitability even in years where organic volume's been flat or even slightly down. Just wonder if you could kind of talk through the main reasons for that and the sustainability and durability of those, unit market increases over time.
And I guess the second question was, on this, VIO LPG product here. It sounded quite interesting. Are we right in thinking that that's You've got similar energy content to LPG and yet is a renewable source of energy. So in which case, obviously, quine drink for longer term. Thank you.
Sure. Thanks, Sam. Thanks for the question. Maybe just to to start in terms of, you know, our performance, volume, versus profit performance over the, over the long term. And, you know, DCC actually has quite a a strong track record of volume growth, within our energy businesses over over many, many years, as you rightly say, Sam, there's some years obviously, that, volume growth hasn't been to the same level.
But, you know, our consistent growth and profitability has been has been the key factor for for for DCC overall that period. And maybe if I if I take an example of our LPG business, you know, we've been in the LPG sector for over 43 years. You know, During that period in the LPG sector, you have had the rollout of natural gas grids, which have, impacted on demand within the for the product, within the sector, yet all the way through that, that growth in the or rollout of the natural gas grid, DCC has actually grown its profitability. And in fact, it's a much more profitable business for DCC today, even though the volume of LPG of grid would be would be lower. So our ability to grow our profits in markets, even if they're if they're in decline is actually well proven over many years.
But, you know, it's a focus not just in terms of margin across the the sector, but in terms of the excellence that we bring, into our operational, activities across the organization. People have often heard me talking about the point 1 of a penny. The point 1 of a penny that we focus on in terms of improving our operating metrics, be that in terms of the routing and scheduling our fleet, getting greater customer density, purchase of product from the various suppliers that we have. Each point 1 of a penny across our energy businesses deliver 16a half 1000000 of profit growth straight to our bottom line. So so that focus on excellence across, our operating metrics, the way we run our businesses drives that profitability as well.
So you know, and that's something that that that just won't change. Maybe in terms of the question on the bio product, the last, Henry, if, if he'll he'll talk about bio LPG.
Yeah, Donald, just a quick one on that. The, the energy content of Bio LPG is exactly the same as traditional LPG. In fact, I used the word there, molecularly identical. The, the chemical composition of LPG C3H8 for those of you who did chemistry at school, and, BioLPG is exactly the same. It's just the original feed source, which is, you know, original source of product that goes into manufacturer, which is different.
But the chemical is exactly the same. So it has an identical, burning and energy characteristics of traditional RPG.
Now our next question is coming from, Alan from Davies. Alan, hi.
So, hi, guys. I have two questions, please, on, retained oil, either for Donald, or for Eddie. The first question, relates to fossil fuel alternatives and specific biofuels. You gave some really interesting stats for Sweden. And I'd be interested in how much biofuels you're selling in total across the division and what you think the drivers or buyers of increased adoption are?
And the second question relates to retail forecourt valuation all aware of the private equity have been very active in this space in recent years. I've been willing to pay your reasonably full evaluations. So I'd be interested in your perspective on why you think this is the case. Thank you.
Well, maybe Eddie, do you want to take the question on bio?
Yeah. Thanks, Alan. Across, across retail and oil at the minute, we're pretty close just under 9% penetration of biofuel in total and about 13% actually of our transport fuels and as I talked about in the presentation, one of the things you see in the more mature markets maybe that have been on a a sustainability agenda for a long time, like the, like Sweden and Norway, there's actually higher penetration, you know, up to 30% reduction in GHG in Sweden on our own bulk, diesel and even in Norway where you know, over the last, probably 5 years, the government have seen a bigger reduction in emissions from just bio blending into the diesel fleet where you know, by 30% of diesel, it's actually now, has bio content. I think for us, you know, the opportunity really is as much supply as we can get, we can sell. So we see that basically in in Sweden, you know, a 100% of the high blend is actually HVO 100.
And if we had more of that, we could sell more of it, one of the really interesting things is, you know, when we have the products like GTL or the or the high blend biofuels getting really strong engagement with our customers, and that's allowing us to have a having a broader discussion, with commercial customers about the transition in the fleet. And clearly, our own emissions target reductions, you know, and, Donald talked about those targets earlier, you know, we need more of this product to really reduce our own fleet emissions. And my expectation is when the product comes to market, we'll have the customers and we have the opportunity and the capability to sell it.
And maybe taking the, the the the question.
Yeah. Yeah. And just on the, I mean, I think, Alan, the, the PE guys are as interested in the business as we are. We think it's a, you know, really good opportunity because the characteristics of the business are very strong in terms of cash flow and robust profitability you know, we've been very pleased with the, performance of retail business over the last number of years. And I think that's because of, a number of things, one strong location.
Right, and, you know, there's heavy traffic on these locations because of their proximity to customers. And if you look at the emergent trends and convenience or click and collect grocery even in the pandemic, and the emerging trends over time. I think, you know, they're very strong locations in terms of driving opportunity into retail forecourts. If you look at the longer trends, I think with the same customers, there's a need to transition whether that's EVs. And I think we have the opportunity to change our business model in time.
And really drive out strong profit growth from the location. So I guess that's why they're as interested in the businesses as we are.
And, Alan, we have, we have, obviously competed with private equity, on a number of occasions for for for retail assets, but it's not just about private equity, you know, in terms of evaluations, Kevin, you might like to add something.
Yeah. No. And it just, I mean, I think it's relevant to Eddie talked about the, the great locations, Alan. And obviously, if you've got great locations, that means you probably have very good kind of real estate. And I think one of the, you know, I think we, since we began our journey into retail, I think we've spent just over approximately £400,000,000 on our building our retail business, you know, when we look across that real estate that we've accumulated over that time, I mean, we have We've at least that in, in real estate value, actually, in terms of underlying, and supporting the, the the asset backing of of the business.
And I guess, you know, clearly, business is producing very good returns today, very good cash flow today, but, you know, that that asset backing is is is somewhat relevant in terms of the optionality for the future and and just you know, the the the EV transition and and and how we think about that. So, you know, very good asset backing in the business and and the final thing I was gonna mention don't it was just you know, it's not just the private equity guys. I mean, this is a very well rated sector. If I look across if I look across our peers in this sector in terms of the listed retail players, fuel players, fuel card players, Alan, you know, they're all pretty well, they're all well rated companies. So, you know, it's say it's not it's not just something we see in the in the private markets.
It's also something we see in the, in the public markets, which is, which I think is pretty interesting.
Super. Thanks. Thanks, Alan, for the question. We'll move across to Jerry from Goodbody. Jerry, welcome.
Hi, Joel. Just on on that previous question with regard to, real estate value or terminal value, how many how many hot proportion of the retail stations that you, operate do you actually own? And and also, if you're putting a little better proportion of, AV chargers into some of these retail networks, do you foresee becoming more involved in the convenience or the backcourt side of it? And then maybe just on the on the LPG side of things, that, you know, do you see a risk there in terms of, and, obviously, you're you're operating more from a rural point of view, but do you see a risk if there's a center provided for heat pumps and how would you address that kind of market?
Sure. Thanks, Sherry. Kevin, do you want to talk about the retail assets?
Yeah. I'm I'm Jerry, just in in a broad brush way, you'll know that we have about 1100 retail forecourts in in our portfolio. And we own about just over 40% of those, about 40 42%, are are owned. I think, actually, the the percentage shifts well over 50% if you exclude our Swedish network, and that Swedish network is a mix of urban and then quite rural sites where, you know, we're serving the rural communities in Sweden across a very large landmass. Doesn't make a huge amount of sense to to own that real estate.
So you'll find that that that there is a is a much higher least proportion. So I'd say 40% 42% overall. And then if you exclude that, that Swedish retail network, it's well over 50% of the underlying, I guess, 4 courts we actually own.
And Kevin, just maybe talk a little bit about the asset value within those within those four courts.
Yeah. Well, I think, Donna, we we do get asked quite a bit about about this. And obviously, we're very focused on you know, on the, on growing the profitability out of these locations and the long term potential that they have. But I guess, you know, when I, when I think about, some of the questions we do get sometimes, on, on, you know, terminal values, Jerry, you mentioned, I mean, I think we're we're very confident in our business model. We're very confident in our ability to grow the profitability as Donald mentioned over time, but I guess you know, as I think about some of that longer term optionality, the fact that, you know, we we probably have, real estate value across that 50% that that we own well, in excess of what we paid for those assets, probably that, you know, that that's of some comfort.
And and, and, I guess, points to the fact that these are very, very good locations and where people want to be, and that gives us an ability over time to kind of think about the potential for backcourt and and and further services, which is probably more in Eddie's domain than mine, Don?
Super Eddie. Talk a little bit about the evolution of the, of the forecourt and the services that we provide on those forecourts.
And Jerry today, but, I think about 25% of the 1100 Forecourts Kevin talked about already have convenient softwares on them. And as you know, you know, in in most of our markets, we've chosen to partner with some world class retailers like 711 in Denmark, our Norbous Norbous group in the Norway, and actually in the UK, we're actually operating about, you know, a quarter of those C stores ourselves. So we have, a mix of capabilities, either in partnership or direct operation, which you know, we can switch over time as we see the opportunity. And probably in France, you know, we have an opportunity to increase the the capacity of operations, so to speak, and we're exploring partnerships with Carrefour and different different operators. I think over time, you know, there is a clear trend towards convenience and, you know, we will move in line with that that convenience trend, whether it's on car wash and whether it's on click and collect grocery, you know, in interest and dialogue, with Tesco and Ireland right now, but them needing a bigger network as they see the digitization of their own grocery business, you know, and we'll add services as we see the need.
And I think that's the real opportunity on our business is we have the customers. We have the locations. And now we've got to developer capability and grow the offers as we see customer this customer need growing. So, yeah, I think it'll increase over time.
Jerry, as as as we talk, I think, through the presentation, and we've talked about, actually, over the last number of years, like, we see very significant opportunities to grow organically our LPG business. And, you know, while there's, you know, there's threats in every part of the business, you know, there's way more upper opportunities for us as, hopefully, we've outlined, during the presentation today. And, you know, one of the things, and I think was tried to to put some some scale on it in the slide was looking at the opportunity actually on the oil to LPG conversion side And when you think there's an opportunity, just taking the UK market to potentially, you know, that addressable market will more than double the overall, LPG market just shows the scale of the opportunity for us within LPG. But maybe, Henry, you'd like to you'd like to add a few comments to, on on on LPG opportunities and specifically any threat in in relation to the the sector.
Sure. Thank you, Donald. I mean, just specifically, we do see government support looking to come across a mix of technologies for home heating. So it's not not going to be just one one size fits all, and we are engaging with them, in the UK as an industry. I mean, heat pumps, firstly, actually, you can you can power a heat pump with LPG, and, we supply the refrigerant gas into the manufacturer heat pump we're kind of winning a little bit that way.
But heat pumps are effectively more relevant to the, the 200,000 or so new builds that take place in the UK where the, the rig building regulations, and insulation requirements as such that the heat load is relatively low. But when you look at the the large housing stock in Britain, for example, 25,000,000 Houses. We see LPG and BioLPG is really having a key role going forward where the gas boiler is actually critical in managing to to to produce if you like the right heat load that's required for such old buildings. So we do see opportunity, in the, in the home heat area, alongside the commercial piece that, Dental mentioned earlier, where we see significant oils for LPG operate opportunity.
Thanks, Henry. We'll now have Kate from UBS. Kate welcome.
Hi, everyone. I just wanna ask a question on, you know, potential future energy sources. Given your existing infrastructure, where do you see the greatest opportunity you mentioned hydrogen a couple of times. Is this somewhere that you think you could be big, big player in? And then sort of following on from that, Do you think this would require a big pickup in CapEx in order to adapt your existing infrastructure?
Thanks, Kate. And you know, I suppose as we we we talked about earlier, Kate, there's, you know, there's many products out there and the energy transition you know, is going to be a challenging journey for everyone. So, I wouldn't pick one area, as I see thing kinda this is going to be the this is going to be the big area or this is going to be the big winter winner. It's going to be a combination of energy gonna be a combination of fuels. It's going to be an evolution actually of the products that we have today to to more and more bio.
It makes an awful lot of sense for everyone if we can reutilize actually the existing infrastructure. So actually being able to take product through and Henry's discussion earlier on, you know, BioLPG, and I won't get into the chemistry of it because I'm gonna get it wrong if I try and get the chemistry of it. But but actually been able to take a product that you have today that's a fossil product and be able to convert that into a bio and ultimately a non fossil product but put it through the same infrastructure. You know, that's clearly the best answer for the globe because we don't have to actually change lots of infrastructure. We don't have to invest in in in lots of new, new sources of energy.
We're we're we're able to to take you know, the u the kinda bio energies or lower carbon energies through the existing infrastructure. You know, as we go forward, we don't see actually very dramatic changes from a CapEx perspective. And, Kevin, maybe you'd like to just add a little bit to that.
Yeah. No problem, Donald. I mean, supposedly put it in context in the first place. I think, you know, that that sort of longer term, you know, exactly where the CapEx will be. Peace, I think some of that comes back to the context that we were trying to pick up in the presentation a little bit about, you know, about the DC group of the future and the shape of the group being perhaps a little a little different over time and therefore, the CapEx requirements being different over time.
I mean, I don't think we the way we think about the the CapEx piece case isn't fundamentally, we're not going to become a producer of these energy products. Okay? Our focus is going to continue to be acid light, distribution, and retailing of, of energy products. And so I think what we see in terms of, you know, the the path forward from a from a CapEx perspective is is broadly. I mean, I think you know, in terms of our asset base or our tangible capital across both our energy businesses, I mean, both are reasonably similar.
They both have about 400,000,000 LPGs slightly higher, maybe 430,000,000 of fixed assets in in in terms of, in terms of the backbone of the business, We spend in both of them about 70,000,000 per annum on CapEx. And I think, you know, I think what we see going forward, Kate, is that as new trends emerge and new products emerge, you know, clearly we will be adapting, you know, that kind of 6 to 7 year sort of investment cycle that we have in a in our fixed asset base, you know, I think you'll find some of that spend being diverted towards newer products and, you know, the spend on maybe some of the more traditional products abating over time. But I guess the reason we see it over time is that, you know, all of this journey is going to take time. And so, you know, there will be incremental spend on new products, but there will be probably diminishing spend in in other areas. And I think overall, we don't see the asset light model of DCC changing over time.
We're not a producer. We're not a manufacturer. We don't have to take those decisions of multi decade investments in capital. So you know, I think it would have all been changed, but fundamentally, the asset base of DCC will remain relatively light.
Thanks, Kevin. Our next question is from Chris from Peel Hunt. Chris, welcome. How are you?
I'm good. Thanks. How are you, Donald?
Good.
A couple of questions about me. What percentage of the fuel volumes come from fuel and non fuel products introduced over the past 10 years going back to an early slides and early margin enhancing? And secondly, could you please elaborate on the differences of the financial model between the kind of pure EV retail station and the carbon fuel 1? Thank you.
Sure. Well, Chris, you know, it has been a focus of ours for some time to, to increase our non fuel contribution, but the the the the the largest part clearly, of our profitability comes from our fuel activities, you know, roughly about 10% actually, of our contribution is coming from non fuel activities. And that's that has been that has been growing, over the last decade. You know, areas that we've been investing in such as our such as our lubricants business become a big part and a growing part of our business. You know, Eddie talked an awful lot about the the services that we're providing for HDVs, the services that we're providing, for our customers, those engineering services.
We've been in the boiler maintenance. Business for for for quite some time. So we have a broad range of non fuel income coming through, and that's something that you're going to see growing as part of our overall profit mix going forward. And and they are very profitable activities, all our all our non fuel activities. Eddie, do you want to talk a little bit about the, you know, the evolution of EV, state stations?
Yeah. Chris, I think it's It's an interesting question. I think, you know, in terms of equipment replacement, what we actually see in Norway is actually the the equipment to charge is relatively inexpensive. And we see that as something, you know, we can invest in particularly in urban locations. So not a big imbalance between fossil fuel and EV.
I think one of the complexities is the further away from the grid you get, the more expensive. So we've chosen to partner on particular locations with, say, Audity and people like that. Where they're investing in the in the connections. I think over time, what we've seen even an EV charging is as it becomes more pervasive in markets like Norway and more it actually gets cheaper. I think if you look further out into hydrogen, things like that, they're relatively more expensive.
So I think EV charging equipment per unit cost compared to a fossil fuel pump. It's not that different today, even, and and clearly will become more in balance. So we see that more as a replacement of in CapEx over time as the evolution takes place on our forecourt, particularly in urban settings and and places where we can see a return. And even in Norway today, we're we're pretty satisfied with the returns we're seeing in those, commercially viable locations. So it's definitely not a drag on on CapEx or return in in the short or medium term.
Thanks, Eddie. Now go to Annalise from Morgan Stanley. Annalise, how are you?
Good. Thank you, Donald. How are you?
I'm great. Thanks. Good to see you.
Good. Thank you for the for the presentation. A couple of questions for me as well. So given it's sort of related actually to the previous point, but given the announcement that we've had in the UK on car sales moving away from petrol and diesel by 2030, does that change, or has that changed your view of the rapidness of EV adoption, I suppose, particularly in the UK and and across Europe and I'm just wondering if I look at the future of the business, could the the retail and oil segment in particular become retail oil and electricity, for example, or could that be an entirely separate new division for you? And then related to that, what kind of returns do you target on those investments that you've made in the superchargers already?
Are you already able to deliver the same kind of returns that you've seen when you've made investment in the retail and all division over over the years. And then, my second question was on, on ESG. Do you think the market needs to understand better where you fit into the energy supply chain. And other than the increased reporting on the metrics, as you discussed earlier in the presentation, what else can you do here to increase the education, I suppose, of of, of the broader market?
I think I think Annalise was about 5 in the, in the first question. So hopefully we'll, we'll we'll pick them all up. I think though, you know, and today's announcements, in the UK, and I I think these are all very it's it's it's really very important part point because, you know, we really encourage, actually, and our and our encouraged by governments getting much more involved and and setting targets and and trying to drive the energy transition because as I said earlier, the energy transition, you know, is a very complex and difficult change to make, and it needs, you know, huge alignment between governments, between industry players, and, ultimately, the consumer to affect the change. And we're going right back to our purpose and all the things I've talked about earlier, in this session. You know, we fundamentally believe that this needs to happen and we want to play our part in driving it.
So so the announcements today, we we greet actually very positively. You know, we will, as we talked about earlier, we will evolve, you know, our, own business so that we are providing the energies to the customers customers need, but we can't do all that ourselves. So the demand has to be there and the supply options have to be there as well. And that that that will evolve and electricity and the electron is going to become a big part of our business. It is a big part of our business today and a growing part of our business today, but we will grow within that And that's not, you know, just a retail and oil, and it's not a purely an LPG thing.
That's a DCC energy piece that electricity is gonna be a key part of the energy mix, and DCC will be a a key provider of that. And we've been investing in growing our electricity business, and we don't see that actually as, going to impact on our returns. In fact, over time, we see that as being a returns enhancing, investment for us. So it's gonna be gonna be a key part of our business. Eddie, do you want to add in terms of the the the supercharger piece
Yeah. I mean, I look, I think on the previous question I talked about, I talked about Norway in particular, where we're seeing, you know, And I think it is a context as well. I mean, Norway has been accelerating. It's bev, and it's still only a 10% penetration. And what we see is actually the use case is changing in in urban settings, you know, if you think that probably predominantly people thought 80% of the charging would be at home and 20% on the road, actually in urban, we potentially see it the other way around.
So we actually see pretty good returns because customers in Norway are frustrated with the fact they have to queue up, and we see a deficit. You know, I think there's some search published. There's a deficit about 7 and a half 1000 super charges in Norway today. Never talk about what will be needed in the future. So consumers are looking for convenience.
They don't like spending 2 hours in the queue and also they want shorter times, and clearly, they're willing to pay for time. So that's driving the margin up in terms of the service. And that's the things that we like in retail is basically the location and the opportunity to provide convenience, whether that's sort of short a tune time for EVs or food on the go or clicking, you know, that will drive or return probably that's very similar to what what we do today, especially as customer demand grows.
And, Annalise, I think the the the question on ESG actually is a very good question. And, I suppose, in ways, you know, I'm disappointed actually in in some respects that, you know, we didn't have this set earlier, you know, we had planned on having this session, back in May after our results, in May, because, you know, I think there is, you know, there's obviously growing focus on ESG. There's growing focus out there in the markets, on energy transition. You know, and we have such a good story to tell but we needed to tell that story now. I think for for, you know, shareholders and people that know DCC well, you know, know where we're positioned, know how well we're positioned, to deal with the energy transition, how, you know, for what focus we give to the overall, ESG area but I think to the broader market, you know, we needed to really reinforce that.
So hopefully today, is a good step in that journey. And, you know, you'll keep seeing us talking more and more, not just about energy transition, but, you know, a better whole ESG approach and, you know, you'll see us you'll see us providing more metrics on that. I don't know, Kevin, if you'd like to add anything to that.
Yeah. No. I I think the only thing I would add, Donald, is and and Lisa, obviously, this is this is an area of focus for us, and we know we we have, you know, we we can further educate the market. I think you know, we do think we're on a bit of a journey with the ESG piece and the ratings, and I I think that will mature a little bit over time. I think it will become a bit more nuanced in its assessment of companies.
And and actually, you know, our own belief would be that over time, you know, we've seen much more focus on the enablers of energy transition being important in the ESG journey and and the people who have the customer relationships like DCC being in a really, really good place to help the customers transition And hopefully, you know, the, the ESG scorecarding and everything that goes on will slowly begin to evolve in that direction where they're actually looking at the real practical steps that some businesses are taking to to kind of, to to certainly help on on the ESG and broader sustainability agenda. So, you know, I think I think that's about it. Yeah.
Thanks, Kevin. I think we're getting pretty tight on time. So, we have, we'll take the next question from James from Jefferies. James, good to see you.
Hey. Good to see you guys. Thanks for the presentation and taking the questions. I just had I'll try to limit it to, but if we do have time, love to loop back in. The, my first one was the main focus of the EV discussion, regarding retail and oil was around urban locations.
And I'm wondering if you could provide a breakdown of, you know, what percentage of your number for courts you considered to be in this urban percentage, and therefore, you know, most likely the the first ones to benefit from this EV investment and switch. And then 2, on the on the new emissions targets, wondering if you could give a bit more color on other things that you're looking to do to reach these targets other than just, you know, mix and and fostering a change in towards more single fuels. And if there's any discussion in linking these potentially to management compensation.
Thanks. Okay. Thanks, James. Eddie, do you want to to talk about the
I think it's different on in different networks. And Kevin touched on Sweden where we have a predominantly rural network. But if you look at our other key networks in France and Norway, we have a very good mix probably across the mix of locations in in Norway and France. Actually, we have a a pretty strong urban focus in the major city. So it's a mixed bag.
I think we've got real good opportunity within the network, as you say, to take an early opportunity in the urban transition. And over time, we'll understand further what the opportunity is in transient and rural.
And, Kevin, maybe talk just a little bit about our, you know, our approach to our emissions reduction. And I'll take the rent piece.
Yeah. Yeah. So I I think, James, I suppose, right across the business, we have, you know, got good engagement from the management teams, you know, everywhere. About how they are focused on it. And it's not just in our energy businesses.
Clearly, that's in our in our health and beauty businesses or health care businesses or technology businesses where obviously, the mix of energy required is a little different. You know, we're looking at everything James. We clearly sell renewable power in DCC today to our customer base. So that's something we're looking at right across right across our business. So, you know, we've got renewable power.
We've got greater use of bio components in the fuels that powers our logistics fleets in, in the 2 energy businesses. Being, you know, they're really, really essential part of that. So they'd be, they'd be kind of 2 of the main things or initiatives that we have, I'd say, pervasively across the group, if you like. And then, clearly, there's local initiatives everywhere as well, dry aimed at, driving out those targets.
Yeah. And I look, I think as we go forward and there's, I'm sure lots of, REM experts on, on on on the line with us today. You know, I think ESG is going to become, you know, very much part of, REM, discussions going forward, and, DCC is going to be no different than that. So look, we'll take one more. I know we're, we've run a little bit over time, but we have, we have so many questions.
It's, it's really great. So we'll take We'll take our final, our final question, and it's coming from George from Exane. George, welcome.
Apologies if my, connection breaks. I'm, I'm struggling a bit struggling a bit with my Internet today. I had, I had a couple and, and apologies. My my line cut out halfway through. So, apologies if these have already been been answered.
But but my first was on, was on heat pumps, clearly governments incentivizing the use, the grid use of of heat pumps. Just wondered whether you think we'll see a similar migration across industry or rather whether you think industry will, migrate to alternatives where, you you might play a more their role in the physical distribution. And secondly, just on, going back to the point on, EV charging, do you see, in the longer term, a structural impediment to, to fast charges at home and, and work settings, clearly at the moment, the the charging infrastructure in in urban areas is not sufficient to to to to to to achieve that Thanks.
Thanks, George. And I think we did talk a little bit about the heat pumps a little bit, a little bit earlier But I think, you know, as as as we said, you know, the the opportunities, are very significant, for for for not just Bio LPG, actually, but for for LPG. And, I think some of the, some of the stats that that Henry Truett earlier really go to demonstrate that. So, we think there's far far more opportunity, than than any threat in it. And as Henry said earlier, heat pumps can be powered, by LPG as well.
So don't see that as a as a as a significant issue. You know, maybe the the the the the piece, you know, around charging and where where will charging happen. And actually Norway, and it and it is really fantastic for us to be present in the market in Norway, which is the highest and I think nearly global kind of penetration of EVs so we can see these trends in action. And, you know, clearly, the demand for fast charging at forecourt is very significant. So, Eddie, just the the final point on that.
Yeah. George, I I think, I mean, you know, I've explained the urban and it's clearly understandable that on on street charging or people living in residential houses. Clearly, the need in urban is not at home. It's it's in fast charge. And I think I think the thing that I actually see in Norway now is I think as fast charging times come down, there's going to be a trade off between people wanting to plug their car in at home seven times a week.
Or going for a fast charging service as part of their commute or their coffee rum or their food to go run. And I know personally if if I could fast charge my future electric car, in a short space of time and maybe pay €5 for that as opposed to remembering to plug it in seven times every night I go home. I probably in the 50% of the laziness. So, you know, my own view probably as Norway, we see Norway now, I think we'll get into a fiftyfifty situation between urban untransient and people who just maybe forget to charge or don't want to charge when it's raining or snowing and actually plug in for a 5 minute fast charge you know, I think that's a real opportunity into the future, and we obviously know more in 10 years' time.
And, clearly, there's lots of people living in facilities and buildings, whether it's in apartment blocks, whether it's, you know, along along the side of the road where actually they don't have the capability to fast charge at home or to charge even at home. And, again, we're seeing that in, in the large urban areas, and and Oslo is, is a great example of that. I think you could talk for hours about the challenges of people trying to to to to fight to get access to the, to the fast chargers on the sites, which is, you know, which is, an order issue that, that needs to be solved. Look, we have, I think we've we've we've really run out of time. So, I'd just like to say many thanks to everyone for for joining us here today.
I particularly like to thank all of our analysts for their continued coverage and interest in DCC and for the excellent questions today. We believe that DCC is very well positioned to continue to grow and develop through the energy transition. DCC's diverse agile, and resilient business model, the essential nature of the group's products and services, our strong balance sheet, and our upper optionality in terms of capital deployment, ensure that the group is very well placed to continue its growth and development into the future. Many thanks to you all for joining, and please stay safe. Thank you.