Okay. Good morning, ladies and gentlemen, and welcome to our interim results presentation for our half year ended September 30 last. The highlights and most of you will have had a chance to look at the highlights this morning already. But we're very pleased with the performance of the group in the first half. I do remind you that the first half is the seasonally less important half in DCC.
We're second half weighted. But nonetheless, there's been really strong performance across the group, driven by a combination of good contribution from acquisitions that were really made in the prior year and also from organic growth, and we'll talk about that. It's encouraging in DCC. We don't always get all divisions moving forward at the same time, but we were pretty pleased really about the performance of each of the businesses. So overall, 33.3% operating profit growth, 26.5% on a constant currency basis.
Obviously, we have benefited from the translation of primarily euro profits into sterling, reflecting the weakness in sterling that everybody is aware of. And we increasing the interim dividend, as you will have seen, by 12.5. And strong cash generation, which is we like to think a hallmark of DCC, it's not just about reported profitability, but the cash generation has again been very strong. We're very pleased about that. It's also been a very active period for development with some acquisitions announced this morning, resulting in total committed acquisition spend year to date of $181,000,000 The acquisition of Gas European, which we'll talk about a little bit later, that extends our market position as planned.
And we talked about that here eighteen months ago when we announced the BudaGas acquisition, that one of the things that we wanted to do with BudaGas was leverage that business into the natural gas business. Natural gas is a market that we've operated particularly in Ireland. And DCC Health Care, I'm pleased to say, also announced the acquisition this morning of Medisource, which extends DCC Fatale's leading market position in Ireland and significantly increases the scale of our pharma business in Ireland as well. So we're pleased about that. So again, highlights, I mean, you'll see there the constant currency.
We when we used to report in euro, we spent many years getting lost in constant currency reporting. And we thought we'd actually got away from it, and here it is back again. So some of our finance people are very happy about that. So anyway, looking at the numbers, the revenue and I think you know, well, revenue up 10.5, 5.8% constant currency. Most of you know that just looking at the headline revenue number is not the most meaningful thing in DCC given that oil prices move around and can have a material impact.
So if you look behind that, energy volumes up just over 13%. And excluding DCC energy, revenues elsewhere up 5%. We'll talk a little bit Ferg will come back to that later on. So again, I don't think there's an awful lot to say on that slide that you haven't seen, just pointing out the the operating cash flow up from $121,000,000 last year to $141,000,000 in the current year. So I talked about the fact that it isn't it's not something we've always managed to achieve, that all the businesses really went forward at the same time, which they did.
And really, very strong growth in each of energy, technology and environmental and good growth in health care. If you look at that 33% growth, as I said, 26.5% constant currency and approximately 9% organic growth. And again, Ferg will come back and talk in a little bit more detail about some of that later on. Acquisitions and capital expenditure. You will obviously saw the announcement of Gas European this morning.
Medisource is the main part of the health care spend, in fact almost all of it, really. And DCC Technology includes the HAMR acquisition that we announced about six weeks ago and a smaller acquisition that we've talked about in the statement this morning, Medium, which is a professional audiovisual distribution business and a good bolt on for our technology distribution business here in The U. K. Not too much to say on the CapEx, except we've talked to you before about the development expenditure that is ongoing at the moment in our Technology division, most particularly the new national distribution center that we're building up in the North Of England near Burnley. So that accounts for a lot of the $16,500,000 in DCC Technology that you'll see.
And just then looking a little bit more detail at the Energy business itself, I mean really another excellent performance from DCC Energy with good organic profit growth and as you said, the benefit of the prior year acquisitions. Volumes were up organically just by 0.4%, and we had a particularly strong performance in LPG. We had good organic growth in the business and a continuation of some of the things that you've heard us talk about in recent years with commercial industrial customers and oil to LPG conversions. We're particularly pleased with Buddha Gas. We stood here, as I said, eighteen months ago with the biggest acquisition by some distance that DCC has done.
And it was very important that it integrated smoothly and very important that it performed. And I have said it's performed at least to our expectations. We're just very pleased with that in all respects, not just the financial performance, but the team that we have inherited there. And I think that augurs well for the future, really. And on the back of that, we said, as I said earlier, eighteen months ago, I think the number one, if you go back and look at the presentation, the number one development priority that we had for the business was the development into the natural gas area.
We talked about the strength of the Buda Gas brand at that time. Actually, Buda Gas brand has proven to be probably a stronger brand even than we expected. And it's not just in the LPG segment, but research has shown that Buda Gas is the number one gas brand, Whether it be LPG or natural gas, people perceive it as the number one gas brand. So that we have done a lot of work actually. The team in Buda Gas has done a lot of work about developing this business organically, and they're well advanced in that regard, then this acquisition came along.
And the work that we've done will actually be complementary. But this acquisition came along, Gas European, and it's largely a B2B business in France, marketing natural gas into the larger cities. It's been in existence since 2005 when the market effectively deregulated the competition and been growing entrepreneurially. Two guys own the business who are no longer involved in the day to day management of the business. But the guy you'll see that there's a small management stake left in Gas European, and he's the guy that's been running the business for some time, and he's tied in for quite a period of time.
And based on performance, he will do quite well out of that as well. So we're really pleased about that acquisition, and we think it has good potential for growth, our gas European business moving forward. Again, our retail and fuel card business performed very well. Our larger businesses in France and Sweden were very strong. And again, that business that we bought from ExxonMobil, the Esser Retail business in France, that was pretty important to us because that actually was our second largest acquisition when we made it.
And it's important that it performed well. And again, that's operated very smoothly and performed really very good in the first half. If we look for something that was more challenging, we'd point to the oil business in Britain. Now again, just to remind you that the oil business in Britain is very second half weighted, but we did find in some of the nonheating areas in the first half a little bit more competition, if you like, in the market or more margin competition. So that has some impact on the business.
But on the other side, our Danish oil business, which has grown in size quite a bit through some corporate activity over the last couple of years, we had a strong performance there. And that business will be further strengthened by the acquisition of Shell's former commercial aviation business, which actually, if you'll see in the statement, completed in recent weeks as well. So in an overall way, we're really pleased at the momentum in the Energy business, pleased with the acquisitions historically that have been integrated and are performing, and we're excited by the Gas European business at the moment as well. Health Care, profit's up 7%. Good performance.
I suppose in Vital, we've had that ongoing focus that we've talked about for some period of time. We have an agency distribution business in there as well, but the business has been increasingly focused on the sale and marketing of own products, and we've made good progress in that in the first half. Good growth in the hospital sector in both Britain and Ireland and in the GP sector, where we're the leading supplier of medical products into the GP sector in Britain. So that's the one business the health care business here in The UK is the one business where we have had some negative impact, if you like, from exchange rate movements. A number of our input costs in that business have been impacted, but underlying the performance has been strong.
And the Medisource acquisition further, as I said, further strengthens our pharma business in Ireland. That's a specialist business in the procurement of what are called EMP, exempt medicinal products, pharma products, typically products that have a very small market. I mean, it can be a couple of examples are, if you've been overseas and you come back to Ireland and you've been on a particular medication and it's not available, it's not licensed in Ireland, your GP or your hospital are entitled to prescribe that for you if it's licensed in another market. And only certain businesses, we're licensed to import those products into Ireland. Similarly, there's lots of products.
I mean, there's up to 10,000 different products that they have sold in recent times. A lot of those are products that the market is too small for anybody to maintain an actually in Ireland. And the MA has either not been sought or maybe there's been an MA in the past but just decided not to maintain it. That's a growing market. And it's bolted on to our pharma business, and it will be whenever it's completed.
And we think that's a nice extension of our Pharma business. The Health and Beauty business really has been very strong. And a lot of that growth is driven by they've a very strong organic profit growth record over the last four, five years, particularly good performance in the nutritional products area. And also, there have been a small number of acquisitions there, most recently the DesignPLUS acquisition. And that's gone well, been integrated into the beauty business in particular, and has provided a range of additional growth opportunities for the business.
So in an overall way, we feel good about the performance of ECC Health Care in the first half. And technology, and this, we're pleased about this. Now again, it's a little bit the law of small numbers. You see 32% profit growth, but this business is not quite as much but very significantly weighted not quite as much as our Energy business, I should say, but significantly weighted towards the second half. But the performance has been very strong.
You know we had a difficult year last year, and good to see that some of the actions that we said we were going to take and did take have borne fruit. And also, we have benefited from the CUC acquisition in France, and that business has performed very strongly. The UK business, as we say there, delivered as anticipated strong growth, with a good growth in the professional audiovisual area. And that acquisition, that small but that bolt on medium that we've talked about today, that will further strengthen our market position in that area, some of the smart home technologies that we have talked to you about in the supplies area. And the mobile computing and smartphone market, as everybody would expect and certainly we expect that that has remained weak, but not weaker than we would have expected.
And the business also benefited, say, from actions that we took in the business, cost reductions that were implemented last year. The acquisition of Hammer is unfortunately, that's a business literally located just around the corner in Basingstoke from existing our main office here in The U. K. In technology distribution. And that takes us more strongly.
We're already in the market, but takes us more strongly into the server and storage products and provision of services to the cloud and data channels. Now that's a market we're in a small way, and this takes us into the higher end of that market. And so far, we believe that that business, while it hasn't actually completed yet, but we do think that business is going to be a good and I suppose a larger acquisition than the medium business, and it's going to give us a new platform for growth in VCC technology here in The U. K. With strong growth in the Continental European business, as I say, the CUC business has been a good acquisition, and we've had good organic growth in our business in Sweden.
And Ireland was strong, and we have I think we've talked about it before, we've had a small business in The United Arab Emirates for some time. It is small, but it actually was an important contributor in terms of the growth in the period, and we think we see further growth in that as well. And our Supply Chain business performed in line with expectations. The Environmental business, all that growth is organic. We have been hammering away at that business, as you will be aware, for three or four years.
And sometimes it has been hammering, and it's been our heads against the wall at times. But it's actually starting to bear fruit. We've really had a good performance across the business. Britain has recorded a very strong performance, particularly in the hazardous sector. And our Irish business really has been very strong.
Some of that is benefiting from recovery in the Irish economy being ongoing in construction sector, etcetera. But just underlying growth has been really good. And while returns have eked up a little bit in recent years in the business, we would have said that clearly they weren't where we wanted them to be. But we hope to see a decent step up in returns in the current year. That would certainly be the plan.
Pleased with how things are going there in environmental. It's taking a little bit of time, but I think it's getting there. So I'll maybe just hand over to Fergal for a few minutes to take you through just some of the more detailed financials.
Thanks, Tommy. At this stage, we just want to give you some additional color on some of the key metrics within the business. So just moving straight into the revenue line. Clearly, within energy, revenue in a value sense isn't as important as because of the movements in the price of oil. We more look at volume.
Volume up 13.3%, but up 0.4% organically. Selling prices on average on a constant currency basis down just over 5%, primarily due to the price of oil. Revenue, excluding D and C Energy, is more relevant, up 1.8% on a constant currency basis, really driven by acquisition. Moving then to the gross margin line. Gross margins within Energy on a pence per liter basis, again, on a constant currency basis as well, up from 4.55 up to 5.44.
Really that's really predominantly driven by the increase in mix of LPG within the business, the energy business. We've got six months of Budagas this year versus one month of Budagas last year. Just to remind you, LPG is a higher gross margin business. It needs to be because there's a higher cost to serve within the business. It also requires a higher amount of fixed capital infrastructure to service the business.
Very pleasingly, our gross margins, excluding PCC Energy, were 12.6% versus 11.6% last year. I'm pleased to say across all of the divisions, it increased predominantly due to product mix. Our operating costs, on the face of it, up $115,000,000 Acquisitions accounted for $91,000,000 of that. Organically, we are flat year on year. Our like for like, we are flat year on year.
And currency increased the number by €24,000,000 Looking into the detail of that. Again, operating costs within Decency Energy, euros 4,380,000,000.00, up from 3.64 Again, it's this increase in mix of LPG, which is a higher cost of their business. Actually, if you exclude lutogast from the cost per liter, it's down slightly from about 3.4 to about 3.35. Excluding the Energy, our operating cost as a percentage of revenue moved up from 9.1% to 9.8%. So what does all of that mean?
It means our operating profit came out at just $518,000,000 up 33% or 26.5% on a constant currency basis. Roughly one third of that was organic. Our finance cost moved up by about 2,000,000. That's down to a technical thing, really. It's it's when we bought Budagas, it came with a number of liabilities which were part of the $464,000,000 that we paid in euro terms that we paid for the acquisition that were deferred.
In other words, they were monetized over an extended period of time. We're required to put those liabilities on our balance sheet on a discounted basis and then accrue an interest charge to bring them back up to their ultimate payment amount. So that's the main reason for the increase in our finance cost from $14,400,000 to $16,400,000 Profit before exceptionals, up a healthy 37%. Our effective tax rate, some of you might have been expecting around 17%. With the better performance in Continental Europe and that increase in mix in Continental Europe bringing the Gas European acquisition in as well, we see that the effective tax rate for the year is more like 17.5% versus your expectation of 17%.
We're really pleased with the operating cash flow within the business, dollars 141,000,000 versus $121,000,000 last year. Our working capital metrics were pleasing. That negative number of two point three days increased to about two point nine days at the September.
Thanks, Fergal. So the outlook statement this morning, we said that we expect both operating profit and adjusted earnings per share for the year, for the full year to March next, that they will be significantly ahead of the prior year. And we do believe that it will also be ahead of current market consensus expectations or certainly what were current market expectations as of Friday. So that's we feel pretty good about where the business is. I won't dwell on this.
The strategy is exactly consistent with what we've said for some period of time. There's nothing new in that. And we believe, as I said in the statement this morning, we believe that the results are a reflection the results in the first half are a reflection of that strategy, organic growth, cash generation and reinvestment in back into the business at what we hope will prove to be high returns as well and hopefully create some value. So that's it. We're happy to take any questions that you might have.
Josh?
Good morning. It's Josh Puddle from Berenberg. Two questions, please. Firstly, can you talk about the acquisition pipeline? And in particular, if you are seeing a change in competition for deals?
And then perhaps you could comment on how competitive the process was for Gaz European. And then the second question, you've had an improvement in working capital days. Do think that's sustainable for the full year?
Okay. Well, maybe I'll take the first part of the question on pipeline, and then Donovan just to talk specifically about the Gas European acquisition. I mean the pipeline is and again, I sometimes think that we're very good at talking for three or four minutes about this and saying nothing, but maybe that's a skill in itself. Look, the pipeline is we don't get too feared about this. Know, people would have been saying to us through the summer, well, it's been very quiet, no acquisition activity.
And I promise you, we didn't contrive to, you know, keep these acquisitions until the announcement of these results. In fact, we push pretty hard on these things when we make up our mind to get them done. I'm telling a lie if I didn't say it's pretty helpful to have the deadline nonetheless to get everybody, particularly on the other side, focused on these things. But activity has been very strong in the first half, and some of these things this morning are a reflection of that. I just all I can say we're not going to talk obviously about the detail of pipeline, but all I can say is that I just don't think anything has changed in DCC in terms of what I said about the strategy, George, do I believe if you ask me genuinely, do I believe there are going to be more opportunities for us to deploy capital into the business and that we will do it at attractive rates and that those things will be good for the development of the business?
Absolutely, absolutely I do. I can't promise people as to what week or what month clearly they're going to come. But you asked the question about if we're seeing a change in pricing. I think we've talked a bit about, given where cost of capital is at the moment, I think that the health care sector, as you start to look at bigger acquisitions, I think that's an area where there's perhaps more price competition. It's probably not changed particularly in the last few months, but over the last year or two, there's more competition in that higher end of the market, the things like we've announced this morning, Medisource, etcetera.
I don't know that an awful lot has changed, that that sort of for most of our acquisition spend has been the sort of up to $50,000,000 area. We've also talked about the petrol retailing business here in The UK, that that's an area that has become very attractive to particularly into the PE sector. So there's been some impact on pricing there. We haven't seen that in all markets. But I don't think there's an awful lot really changed.
As say, we remain positive about the opportunities to deploy capital. We don't think anything has changed. Roland, do you want say just a couple of words on the gas European process?
I suppose just maybe to put it into a little bit of context, I will answer the question, Josh. When we announced the acquisition of Budget Gas back in May 2015, one of the development opportunities that we put on the board that day was to grow into the natural gas market. We said at the time that Budagas had a brand recognition, and this is something that is, the more time we spend in France and the more time we spend around the business, you know the brand recognition is just phenomenal for Budagas. A 92% unprompted brand recognition, 92% prompted brand recognition, 92% unprompted brand recognition, 54% prompt brand recognition within France as a gas brand, not as an LPG brand, but as a gas brand. Stronger than any other gas brand within the market.
So you know, we said that we wanted to leverage the brand, leverage the capability within Budagest to go and grow into the natural gas market. We've been building a natural gas business in Ireland, originally started back in 02/2004, but really started to ramp it up from 02/2009. And we now have 26% market share in the b to b natural gas market in Ireland. So this is a business that we know really well. It's very similar to the process that we have.
It's a sales and marketing business within both our LPG and our oil businesses. So on the back of that, we started to build organic plans to grow a natural gas business in France, leveraging the Budagas brand. In parallel, we started to look to the market to see whether any acquisition opportunities out there that will bring us the supply skills, will bring us the trading skills, that will bring us the systems to both accelerate that growth and a bit de risk the growth in in in building our own organic business. We came across a number of businesses, one being Gas European, which wasn't in the market. So we approached we approached the team in Gas European and managed to get into bilateral discussions with them.
So the competition wasn't there, particularly on the transaction itself. It was our approach even that led to the deal.
Discussion on the working capital piece? Absolutely. We see that that's on a like for like basis that working capital position maintaining itself. You actually look at page 33 of the announcement, we actually set out what the value of that negative working capital is. It's about 100,000,000 negative at the September.
We see that broadly being maintained, but you then have to factor in. We have just announced the acquisitions of Hammer, Medisource and Gas European, which come with a positive working capital profile. So they've come as part of an acquisition, so there won't be any outflow from a working capital point of view. But as a day's number, that negative will come down because you're introducing into the mix now for businesses with a positive working capital profile.
Rob, thank you. Hi, Gerard. Hand up.
Questions, please. How integrated will Gas European be into Bruticast? Or do you have to keep them slightly separate? And also, Energy in Britain, you mentioned on the nonheating side,
more
competition, something you've mentioned before, but is that intensifying? And has there
been any Brexit impact on demand?
Yes. The Gas European, and it's very much obviously a stand alone business, but the skills, capability, everything that we have within the Gas European business, we're going to leverage bringing the brand to it to drive growth within the natural gas business. So it will be a subsidiary, if you like, of the the Buttegas business, both run, you know, not we don't want to don't want to impact on the LPG business, you know, and distract from the LPG business. So we'll run it, we'll run it alongside the Budagas business, but very much leveraging the brand and leveraging that that capability of the brand from a gas perspective within France. I think it's the Brexit impact, I don't think we've seen any particular impact on fuel demand within the markets in Britain.
In fact, commercial volumes have been okay. The impact that Tommy talked about really was more on the margin side, and we've seen this from time to time. We don't want to it's not material in the first half of the year, but it was and people remember September was a particularly mild month. When you have an impact on heating demand, it has a knock on impact on margin within the market.
Justin?
Justin Jordan, Jefferies. Staying on the theme of organic and M and A, but switching divisions. Just in technology, Niall, obviously, very strong operating profit growth. Can you give us some idea of the split of that between organic and, I guess, the contribution from CUC and other M and A? And similarly, I guess, you give us an update on Burnley and just how that construction is building and then just obviously the impact that may have in fiscal 'eighteen?
First of all, I mean the split, it was roughly twothree acquisition, onethree organic when you looked at this over the course of the year with CUC contributing about the results from CUC were about 2,000,000 starting this year. That includes a 16% organic growth. So CUC itself has performed very well. We're very happy with it so far. Yes, in relation to Burnley, we're making very good progress on Burnley.
We're in the middle of commissioning the materials handling equipment there. What we will start doing in the New Year is moving bulk stock into the facility, and we will continue the commissioning of it throughout the course of summer. And would hope to have it not fully operational, but broadly well utilized as we enter peak season next year.
George Gregory from Exane BNP Paribas. Just one quick one, probably for Fergal. On the LPG tailwind and the extent to which that reverses this year, just give us an update on where you see it, well, where you saw it in the first half and where you now see it on a full year basis?
We sort of, we had thought that, speaking on an annual basis, that the margin tailwinds that we had last year would move away from us in the current year, we probably see that we've held on certainly in the first half to more than we had anticipated. And moving into next year, we think that maybe there's just a move of that number, that we might hold on to about €5,000,000 of it and there will be a move of that loss, maybe €5,000,000 into next year when we look at our numbers in a general way.
Hi, Terry Hennigan. Good morning. Tommy, you mentioned in the past about expansion opportunities beyond the current sphere of influence, particularly in North America. Can you just comment on where you see that at the moment?
Yes. We would say I mean, specifically and precisely what I would have said was that this is not something that is a strategic objective that we must put a flag on map or whatever within a certain period of time. And that would clearly be dangerous, not terribly sensible. But what it did say was, and because these things come along, don't want people to get a surprise and think we've just woken up and had and an idea overnight. I think, you know, we have, and we've had a peep at one or two things that would be outside of of Europe.
We haven't done them for whatever for whatever reason. And, you know, so that's continues to be the case. Think there will be. I mean, it's most likely, if we do something outside of Europe, that it will be in the energy side. And something could come along.
And I think over a period of time, it's sort of inevitable that we will the profile of DCC with clearly with the energy companies and with, I suppose, M and A houses around the world as well, if they're selling something that's risen. I mean, the Buda Gas and Esso business in France helped that a bit. And so we'd be getting calls about different things. Some of them are just absolutely not relevant. So as I say, I don't want people to get unduly focused.
I'm not trying to hang that out as big area of excitement or whatever, but I just think it's inevitable in the growth of our business that, that will happen. Is it going to happen in the next twelve months or eighteen months? I don't know. So Andrew, sorry if you're trying to get in for a while.
Andrew, if
you can
always tell me. Can you just
if there's the same level of appetite from oil majors to divest assets? And then secondly, on environmental, the improvements that you've seen there, does that make it more or less likely that you'd have the divestment of that business?
Well, dealing with the first part, mean, I think and Donald probably should say a few words on this. I don't think anything has changed. I mean, certainly, there has been no lessening of, as we can see it, of their appetite. There's one or two oil companies, but I won't be specific, that have said that their marketing businesses may be more valuable to them than they might have thought a few years ago. But we don't think actually any of those businesses have changed in terms of either a desire or maybe a need in some cases to realize capital to do other things.
So again, not getting drawn into the pipeline question, but are we looking at other things? We're looking at other things. Of course, we're always looking at things. But are we looking at things that involve oil majors? Absolutely, we are.
So I
don't think, Donal, I don't know whether you want
to add anything. Right. Like I think the there has been structural programs within the oil majors to divest out of different parts of the downstream activity. You know, they look at it from an integrated value chain perspective. And if they, you know, they don't see it from, you know, I suppose, the field to the pump, that that might be something that they're going to remain in long term.
So those programs are ongoing. The one thing that we always say is we can't influence, we'd like to be able to influence when they happen, but we can't really influence when they happen. There's probably been more of a focus over the last number of years in the very low oil price environment that their balance sheets have been under a little bit more pressure. But in the end of the day, they each year look at the management of their portfolio. Each year, they pick the assets that they're going to divest, and then they work through that on a very structured basis.
And we don't see any of that changing. I think what has changed is our capability to do these things, and particularly the capability now that we can demonstrate in the retail sector on the back of the ESO business in France.
In relation to the second part of your question, Andrew, on the environmental business, I mean, obviously, I'm not going to comment on any business in terms of disposal or anything else in a public way. But that business, we've got to go and do it. It's not done yet, but we think you'll see hopefully a fairly material return in our improvement in the returns in that business this year. And that's in fairness to everybody concerned, that's been driven by the good organic growth performance and a real discipline and focus on capital in the business. And that's a pretty good story, so we'll see.
Alan?
Thanks. Yes, it's Alan from Davies. Just have a question on each of the divisions, please. Firstly, in Energy, Don, could you help us understand the potential in the French natural gas market? And also how much investment do you think will be required over the next couple of years to scale up the business?
Secondly, Nile and Technology. To the extent that you can, could you comment about health business with your largest tech vendor developing that has been a headwind? If you can talk about the customer maybe at a different vertical, how they're trending? And finally, for Conor, Natal, clearly, the organic growth has been somewhat subdued. You referenced kind of input costs.
Can you just help us with how the revenue line Natal is developing on an organic basis? Be helpful.
Thanks, Colin. Donald, do you want Okay.
So I was kind of looking at segmenting the natural gas market in France. So the overall market, and you've got to we've got to learn some new terms with this. So the business last year sold 5.1 terawatts of natural gas. The overall natural gas market in France is 445 terawatts last year. Of that, a 122 is in the B2C sector and a 177 is in the B2B sector.
And then there's the rest of it, the balance is very large industrial customers. The business itself is only operating today in the b to b sector, and in fact, you know, in a sub sector of the b to b sector, which is mainly supplying into, you know, collective housing, so things like apartment blocks, office blocks, and so on. You know, over time, clearly, we see the opportunity to build, you know, a scale business across the natural gas market in France, not in the very high industrial side, but within both the b to b and and over time within the b to c sectors of the market. You know, the investment is purely a working capital investment because the infrastructure is all scalable, and that was one of the real advantages in buying the gas European business because, you know, not only are we, you know, are we acquiring a management team who have a lot of expertise and experience within the sector, we're buying the supply capability and they're buying products from all the suppliers into the into the market within within France. And we're buying the trading capability, and we're buying the technology that they have put in place, which is a scalable platform.
And that was something we spent a fair bit of time looking at during the due diligence as well that we have a scalable platform to build from. So, you know, we'd be pretty pretty confident that we can build a scale business, in the sector in France over time. So we'll be, you know, and and again, you know, while this business has been growing very strongly, you know, as we start to invest to grow into other sectors, that will impact for a little while, as it would if we were investing and building this business organically. So it will be a step to to leverage the growth, but we get that in period of time. And the structure of the earnout is aligned effectively to do that for and give the benefit of that to the management.
David, you probably shouldn't talk specifically about any one supplier, so particularly the vertical route.
But I would make the point, I think, in the past, we probably got a bit overweight on a particular vendor or a particular product sector. So I'm much happier in terms of the scope of the portfolio. So there's no vendor that's more than 10% of our revenues in the first half. Our leading vendor actually was a PC vendor. And as we've mentioned, the market was a bit flat this year.
So we're actually kind of that we were in line with the market on that. In terms of other vendors that may be impacted by certain product issues and things like that, overall, our portfolio has performed well. We're in fact, we've had some very good organic growth with other vendors in the top five. So overall, it's performed pretty well.
And Conor, Vital, so in overall terms, we had very modest sales growth in Vital. But I was just looking at the analysis of that, we had by geography and by channel, we had good mid single digit growth in Ireland. And then in Britain, in the hospital channel and the GP channel, had good mid single digit growth. In the community pharmacy area, where we've done, we talked about this last year, quite a bit of product range rationalization to streamline our business more, focus on products where we have IP. And we delisted quite a number of products last year.
So our revenues in that area were as planned down on last year. I think,
a kind
of an underlying sense, the performance was pretty decent.
Chris, I think you were trying to get
Just following up on that, Connor. When do you expect kind of annualized out kind of product rationalization? Is that now complete or will that last longer?
Well, it happened really in Q4 last year, so it's going to take the full year this year to wash through.
Yes.
No, it's not. Do you think that is there any structural difference to why PE is less interested in Europe? And if so, is there a risk that they then if not, they become more interested in that market?
I don't know, Chris. We can only always talk about what we have seen. And I'm not sure that there's any particular structural issues. I mean, there's no doubt that the in The UK, it was certainly driven by a belief that they could sell more cups of coffee. And the convenience retailing bit was where and a number of these companies all have the same strategy.
But Donald, do you want to add anything on that in terms
I of think when you look at the types of assets that are for sale, as Tommy said, it's I think a lot of the PE interest was around the retail side, the convenience retail side as opposed to the fuel retailing side. So clearly something like our business in France, which is predominantly an unmanned network, wasn't something that the PE investors were interested in. When you look at some of the European markets, you know, convenience retailing isn't at the forecourt. You look at others, it is at the forecourt. So I'd say, over time, you'll probably find them around assets where there is a convenience retail play as opposed to where that's a smaller part of the retail forecourt activity.
Also,
certainly, I wouldn't like people to get too focused on them. But because if you look apart from the fact that the Esso business was an unmanned business, and clearly didn't have that convenient retailing piece to attract them. But at the end of the day, I wouldn't underestimate I'm not sure whether that's who are listening or not but I wouldn't underestimate the importance of DCC as a partner for them. We buy 1,400,000,000 liters of product from them. We're a pretty good customer to have in terms of balance sheets, etcetera.
We have got a pretty long term right to operate their brand. And again, they're very careful about who operates that brand and that the brand isn't going to get flipped in two or three years' time. So just point and some of those transactions in The U. K, I'm not saying that these guys can't transact with the oil majors, but we have some strengths in those transactions in The U. K.
Were largely with non oil major owned businesses.
It's Rory from UBS. On the you helped us with the mix impact, Virgil, on the Energy business. Any sales and seasonality gets tough through H2? So the mix impact on the pence per liter on the EBIT margin, how do expect that to evolve with the M and A? So we're back on the gross margin operating costs, but how would that annualize out?
It's an honest question. It's an honest question in terms of GP for the year overall. Probably see just bringing it down to, you know, on a constant currency basis, net margins, what they were about 160 last year, maybe moving to 170 something like that.
Then in terms of one the 70. Yes. And then just someone asked about the weather. But with the coming polar vortex potentially, any panic buying
Pardon me, pardon me?
A coming polar vortex potentially. Any panic buying from volumes yet? Or
No.
Obviously, the polar vortex would be just great news. But no, there's no panic buying. I mean, the weather October was a mild month, and all our outlook statements are in the context of having had the benefit of seeing what October was like. November started a bit colder. So look, nothing changed of it.
And I suppose our business is as our business has grown, where we clearly still have an exposure to weather and it's not unimportant. But proportionately, it hasn't probably grown quite in size in proportion to the size of the business, and we have taken steps. So we'll be hoping for a cold winter all right, but it's not the be all and end all anymore.
I'll ask about the gasoline this model. So I think we've only got 31 people. You talk about the business model and exactly how they work and all that kind of thing?
Yes. So while actually the end consumers, if you like, it's a kind of a B2B2C business in some respects because there's lots of there's lots of apartments or, end users of the products underneath the customers that we have. But they have 10,000 customers, so effectively, you've you don't have a huge customer base, so it's not like your big call center selling to to domestic or to b to c customers. So it has, you know, a small management team. It's got a trading capability, supply capability, technology capability, and the vast bulk of people are b to b sales people, so out in the regions.
And you know, they have, you know, they've just built a very strong position within that collective housing sector of the market. The customer service levels are really high within the business. The quality of the relationships that they have with their customers are really strong. But it doesn't need a lot of people, to drive that. The corollary clearly, as you start to grow into the broader part of the market is you've got to invest in capability and people to do that.
But we have a lot of that infrastructure already within the market in France. It really is a win win situation.
Thanks, Anne. Just following up on that question, Donald. You referenced trading capability a few times. To what extent does Gas European risk?
And it doesn't, is the answer. But the nature of the contracts with the customer, you've got to have back to back trading capability so that you don't take that risk. So very similar to our existing businesses where we lock in product pricing with our customers over a period of time, we absolutely back to back that so that we don't take any product price exposure. So that's the capability that is within the business. But that's important in this type of business because you have fixed price contracts with your customers.
So you need to make sure that you have on a month by month basis the appropriate, you know, hedging products in place to derisk that.
Okay. We don't see if there's any questions online.
Thank you. We will now take our first question from Jared Moore from Investec. Please go ahead. Your line is open.
Hi, good morning gentlemen. Just a couple of follow-up questions on the Energy business from me, please. During the period, LPG achieved 1.3 organic volume growth. Would you have an idea of how much ahead of the market that was? And really what initiatives drove that outperformance?
And would you expect kind of a similar level of outperformance to continue? And then just following up on Gas European. Obviously, it's a relatively young company, but maybe just give us a feel for what type of growth they've achieved over the last two or three years, please.
Hey, Jorg. Maybe, Don, will you address those two questions?
Yes, sure. And on the LPG, organic growth, and we've been talking over, I suppose, the last number of results announcements about the capability that we've put in place, particularly in this, oil to LPG, conversion sector. Now we smile about it because we're obviously in the oil business and we're in the LPG business, so we have to to balance that. But that has been a good growth area for us and that is very much a solution sell to our customers and something that we have built a lot of capability in the market. So the underlying market isn't growing some markets and we talked about it when we bought the Budagas business, the French market, you know, a lot of the LPG markets in Europe are in modest decline.
So we're definitely not just growing organically, but we're growing and growing market share. And we can see that in the market share figures for pretty much each of the markets that we operate in where we're taking out market share. They are modest market share growth and the nature of the LPG market. It is a kind of a creeping market share gain. So we're pretty confident that we are growing our underlying market shares.
Gas European has actually been growing quite strongly over the last number of years. And while it's been in the market since it started off in 2005 as the b to b sector started to get deregulated, it was, you know, a relatively modest business for a number of years. You know, I suppose some of that change kinda came in the last number of years with the new management in place, a bit of funding that they brought in at the time to help support and drive the growth in the business, implementing new systems within the business as well. So the last couple of years have been driving pretty strong growth. And hopefully, that will continue.
And as I say, we can then augment it by the strength of Futilegas brand.
Thank you.
Thank you.