Okay. Good to go? Good morning, ladies and gentlemen, and welcome to our interim results presentation for our half year ended 30th of September last. The highlights, and most of you will have had a chance to look at the highlights this morning already, but we are 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 are second half-weighted, but nonetheless, there has 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 will talk about that. It is encouraging in DCC. We do not always get all divisions moving forward at the same time, but we were pretty pleased really about the performance of each of the businesses.
Overall, 33.3% operating profit growth, 26.5% on a constant currency basis. Obviously, we have benefited from the translation of primarily EUR profits into GBP, reflecting the weakness in GBP that everybody is aware of. We are increasing the interim dividend, as you will have seen, by 12.5%. Strong cash generation, which is, we like to think, a hallmark of DCC. It is not just about the reported profitability, but the cash generation has again been very strong. We are very pleased about that. It has also been a very active period for development, with some acquisitions announced this morning, resulting in total committed acquisitions spend year to date of GBP 181 million.
The acquisition of Gaz Européen, which we will talk about a little bit later, that extends our market position as planned, and we talked about that here 18 months ago when we announced the Butagaz acquisition, that one of the things that we wanted to do with Butagaz was leverage that business into the natural gas business. Natural gas is a market that we have operated in successfully for about 12 years, most particularly in Ireland. DCC Healthcare, I am pleased to say, also announced the acquisition this morning of Medisource, which extends DCC Vital's leading market position in Ireland and significantly increases the scale of our pharma business in Ireland as well. We are pleased about that. Again, the highlights. You will see there the constant currency.
When we used to report in EUR, we spent many years getting lost in constant currency reporting, and we thought we had actually got away from it, and here it is back again. Some of our finance people are very happy about that. Anyway, looking at the numbers, the revenue, and I think you know while 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. If we look behind that, energy volumes up just over 13%, and excluding DCC Energy, revenues elsewhere up 5%. Fergal will come back to that later on.
Again, I don't think there's an awful lot to say on that slide that you haven't seen, just pointing out the operating cash flow up from GBP 121 last year to GBP 141 million in the current year. I talked about the fact that 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 DCC Energy, DCC Technology and environmental and good growth in DCC Healthcare. If you look at that 33% growth, as I said, 26.5% constant currency and approximately 9% organic growth. Again, Fergal will come back and talk in a little bit more detail about some of that later on. Acquisitions and capital expenditure. You obviously saw the announcement of Gaz Européen this morning.
Medisource is the main part of the DCC Healthcare spend, in fact almost all of it really, DCC Technology includes the Hammer 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 DCC 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 DCC Technology division, most particularly the new national distribution center that we're building up in the north of England near Burnley. That accounts for a lot of the GBP 16.5 million in DCC Technology that you'll see.
Just in looking a little bit more detail at the DCC Energy business itself, really another excellent performance from DCC Energy with good organic profit growth and as I 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 Butagaz. We stood here, as I said, 18 months ago, and it was 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. I have to say it has 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. On the back of that, as I said earlier, 18 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 Butagaz brand at that time. Actually, the Butagaz brand has proven to be probably a stronger brand even than we expected, and it's not just in the LPG segment. Research has shown that Butagaz is the number one gas brand, whether it be LPG or natural gas. People perceive it as the number one gas brand.
We have done a lot of work, actually. The team in Butagaz has done a lot of work about developing this business organically, and they're well advanced in that regard. This acquisition came along, and the work that we've done will actually be complementary. This acquisition came along, Gaz Européen, 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 to competition, and been growing entrepreneurially. Two guys own the business who are no longer involved in the day-to-day management of the business. The guy, you'll see that there's a small management stake left in Gaz Européen, and he's the guy that's been running the business for some time, and he tied in for quite a period of time.
Based on performance, he will do quite well out of that as well. We're really pleased about that acquisition, and we think it has good potential for growth, that Gaz Européen business, moving forward. Our retail and fuel card business performed very well. Our larger businesses in France and Sweden were very strong. That business that we bought from ExxonMobil, the Esso 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. That's operated very smoothly, and the performance 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. Again, just to remind you that the oil business in Britain is very second half-weighted.
We did find in some of the non-heating areas in the first half, a little bit more competition, if you like, in the market or more margin competition. That had some impact on the business. 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. That business will be further strengthened by the acquisition of Shell's former commercial and the aviation business, which actually you'll see in the statement completed in recent weeks as well. 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 Gaz Européen business at the moment as well. Healthcare. Profits up 7%. Good performance.
I suppose that 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. That's the one business, the healthcare business here in the U.K. 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. The Medisource acquisition, as I say, 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. 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. 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 MA 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. 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 or five years, particularly good performance in the nutritional products area. Also there have been a small number of acquisitions there, most recently the Design Plus 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 DCC Healthcare in the first half. Technology, we're pleased about this. Again, it's a little bit the law of small numbers.
You see 32% profit growth, 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. 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. Also we have benefited from the CUC acquisition in France, and that business has performed very strongly. The U.K. business, as we say there, delivered as anticipated, strong growth, with a good growth in the professional audiovisual area, and that acquisition that's 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. The mobile computing and smartphone market, as everybody would expect, and certainly we expect, that has remained weak, but not weaker than we would have expected. 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 unfortunate. That's a business literally located just around the corner in Basingstoke from our main office here in the U.K. and technology distribution. 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. As a market, we're in a small way, and this takes us into the higher end of that market.
So far, we believe that that business, while it hasn't actually completed yet, 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 DCC Technology here in the U.K. Strong growth in the continental European business, the CUC business has been a good acquisition, and we've had good organic growth in our business in Sweden. Ireland was strong, 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, we think we see further growth in that as well. 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, sometimes it has been hammering, and it's been our heads against the wall at times, 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, our Irish business really has been very strong. Some of that is benefiting from recovery in the Irish economy being ongoing in the construction sector, et cetera. Just underlying growth has been really good. While returns have eked up a little bit in recent years in the business, we would've said that clearly they weren't where we wanted them to be, we hope to see a decent step up in returns in the current year.
That would certainly be the plan. We're pleased with how things are going there in environmental. It's taken a little bit of time, I think it's getting there. 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 finally give you some additional color on some of the key metrics within the business. Just moving straight into the revenue line. Clearly within energy, revenue in a value sense isn't as important because of the movements in the price of oil. We more look at volume. Volume up 13.3%, up 0.4% organically. Selling prices on average on a constant currency base is down just over 5%, primarily due to the price of oil. Revenue excluding DCC 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 penny per liter basis, again, on a constant currency basis as well, up from GBP 0.0455 up to GBP 0.0544. That's really predominantly driven by the increase in mix of LPG within the business, the energy business.
We've got six months of Butagaz this year versus one month of Butagaz 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 higher amount of fixed capital infrastructure to service the business. Very pleasingly, our gross margins excluding DCC 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 GBP 115 million. Acquisitions accounted for GBP 91 million of that. Organically, we are flat year-on-year, or like-for-like we are flat year-on-year, currency increased the number by GBP 24 million. Looking into the detail of that, again, operating costs within DCC Energy, GBP 4.38 up from GBP 3.64.
Again, it's this increasing mix of LPG, which is a higher cost to serve business. Actually, if you exclude Butagaz from the cost per liter, it's down slightly from about GBP 3.4 to about GBP 3.35. Excluding DCC Energy, our operating costs as a percentage of revenue moved up from 9.1% to 9.8%. What does all of that mean? It means our operating profits came out at just shy of GBP 118 million, up 33% or 26.5% on a constant currency basis. Roughly one-third of that was organic. Our finance cost moved up by about GBP 2 million. That's down to a technical thing, really. When we bought Butagaz, it came with a number of liabilities, which were part of the EUR 464 million that we paid for the acquisition, that were deferred. In other words, they would monetize over an extended period of time.
We're required to put those liabilities on our balance sheets on a discounted basis, and then accrue an interest charge to bring them back up for their ultimate payment amount. That's the main reason for the increase in our finance cost from GBP 14.4 million to GBP 16.4 million. 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 Gaz Européen acquisition in as well, we see that the effective tax rate for the year more like 17.5% versus your expectation of 17%. We're really pleased with the operating cash flow within the business, GBP 141 million versus GBP 121 million last year. Our working capital metrics were pleasing. That negative number of 2.3 days increased to about 2.9 days at the end of September.
Thanks, Fergal. The outlook statement this morning, we said that we expect both operating profit and adjusted earnings per share for the full year to March next, that they will be significantly ahead of the prior year. We do believe that it'll also be ahead of current market consensus expectations, or certainly what were current market expectations as of Friday. 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. We believe, as I said in the statement this morning, we believe that the results in the first half are a reflection of that strategy. Organic growth, cash generation, and reinvestment back into the business at what we hope will prove to be high returns as well and hopefully create some value.
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, then perhaps you could comment on how competitive the process was for Gaz Européen. The second question, you've had an improvement in working capital days. Do you think that's sustainable for the full year? Thank you.
Maybe I take the first part of the question on pipeline, then Donal just to talk specifically about the Gaz Européen acquisition. The pipeline is, 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 fierce about this. People would've been saying to us through the summer, "Well, it's been very quiet. No acquisition activity." I promise you, we didn't contrive to keep these acquisitions until the announcement of these results. In fact, we've pushed 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.
Activity has been very strong in the first half, and some of these things this morning are a reflection of that. 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've said about the strategy, Josh. If you asked 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 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. You asked a question about if we've seen 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 healthcare 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, et cetera. I don't know that an awful lot has changed where most of our acquisition spend has been the sort of up to GBP 50 million area. We've also talked about the petrol retailing business here in the U.K., that that's an area that has become very attractive particularly to the PE sector. There's been some impact on pricing there. We haven't seen that in all markets.
I don't think there's an awful lot really changed, and as I say, we remain positive about the opportunities to deploy capital. We don't think anything has changed. Donal, you want to say just a couple of words on the Gaz Européen 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 Butagaz 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 Butagaz had a brand recognition, and this is something that the more time we spend in France and the more time we spend around the business, the brand recognition is just phenomenal for Butagaz. A 92% prompt to brand recognition, 6% unprompted brand recognition, 54% prompt to 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.
We said that we wanted to leverage the brand, leverage the capability within Butagaz to go and grow into the natural gas market. We've been building a natural gas business in Ireland, originally started back in 2004, but really started to ramp it up from 2009. We now have 26% market share in the B2B natural gas market in Ireland. This is a business that we know really well. It's very similar to the process that we have as a sales and marketing business within both our LPG and our oil businesses. On the back of that, we started to build organic plans to grow a natural gas business in France, leveraging the Butagaz brand.
In parallel, we started to look to the market to see was there any acquisition opportunities out there that would bring us the supply skills, that would bring us the trading skills, that would bring us the systems to both accelerate that growth and a bit de-risk the growth in building our own organic business. We came across, there was a number of businesses, one being Gaz Européen, which wasn't in the market. We approached the team in Gaz Européen and managed to get into bilateral discussions with them. The competition wasn't there, particularly on the transaction itself. It was our approaching them that led to the deal.
Justin, on the working capital piece. Absolutely. We see that on a like-for-like basis, that working capital position maintaining itself. If you actually look at page 33 of the announcement, we actually set out what the value of that net negative working capital is. It's about GBP 100 million negative at the end of September. We see that broadly being maintained, you then have to factor in, we have just announced the acquisitions of Hammer, Medisource, and Gaz Européen, which come with a positive working capital profile. They've come as part of an acquisition, there won't be any outflow from a working capital point of view. As a days number, that negative will come down because you're introducing into the mix now some businesses with a positive working capital profile.
Rob, I think you had your hand up.
Questions, please. How integrated will Gaz Européen be into Butagaz, or do you have to keep them slightly separate? Energy in Britain, you mentioned on the non-heating side, more competition, something you've mentioned before, is that intensifying and has there been any Brexit impact on demand?
The Gaz Européen, it's very much obviously a standalone business. The skills, the capability, everything that we have within the Gaz Européen business, we're going to leverage, bringing the brand to it to drive growth within the natural gas business. It'll be a subsidiary, if you like, of the Butagaz business. We don't want to impact on the LPG business, and distract from the LPG business. We'll run it alongside the Butagaz business, but very much leveraging the brand and leveraging that capability of the brand from a gas perspective within France. I think on the Brexit impact, I don't think we've seen any particular impact on fuel demand within the market 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.
It's not material in the first half of the year, but it was. People remember September was a particularly mild month. When you have an impact on heating demand, it has an ongoing impact on margin within the market.
Justin?
Thanks. Justin Jordan at Jefferies. Staying on the theme of organic and M&A, 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, another M&A? Similarly, I guess, can 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 2018?
First of all, on the split. It was roughly two thirds acquisition, one third organic, when you looked at it over the course of the year, with the results from CUC were about GBP 2 million this year. That includes a 16% organic growth. CUC itself has performed very well. We're very happy with it so far. 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'll start doing in the new year is moving bulk stock into the facility, we will continue the commissioning of it throughout the course of the summer, and would hope to have it, not fully operational, but broadly well utilized as we enter peak season next year.
Good morning. 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.
Thanks, George. We had thought that, just 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. Moving into next year, we think that maybe there's just a move of that number, that we might hold on to about GBP 5 million of it, and there will be a move of that loss, maybe of GBP 5 million into next year when we looked at our numbers in a general way.
Terry?
Hi, Terry Heneghan, Goodbody. 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?
Yeah. Specifically and precisely what I would've said was that this is not something that is a strategic objective that we must put a flag on a map or whatever within a certain period of time. That would clearly be dangerous, not terribly sensible. What I 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 an idea overnight. I think, we have, and we've had a peep at one or two things that would be outside of Europe. We haven't done them for whatever reason. That continues to be the case. I think there will be. It's most likely, if we do something outside of Europe, that it will be in the energy side.
Something could come along, I think over a period of time, it's sort of inevitable that we will. The profile of DCC, clearly with the energy companies and with, I suppose, M&A houses around the world as well, if they're selling something, has risen. The Butagaz and Esso business in France helped that a bit. We'd be getting calls about different things. Some of them are just absolutely not relevant. As I say, I don't want people to get unduly focused. I'm not trying to hang that out as a big area of excitement or whatever, but I just think it's inevitable in the growth of our business that that will happen. If it's going to happen in the next 12 months or 18 months, I don't know. Andrew, you're trying to get in for a while.
Andrew. Can you just talk about if there's the same level of appetite from oil majors to divest assets? Secondly, on environmental, the improvements that you've seen there, does that make it more or less likely that you'd have a divestment effect?
Dealing with the first part, I think, Donal probably should say a few words on this. I don't think anything has changed. 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 business has been maybe more valuable to them than they might have thought a few years ago. 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. Again, not getting drawn into the pipeline question, but are we looking at other things? We're looking at other things, of course we are. We're always looking at things, but are we looking at things that involve oil majors? Absolutely, we are.
I don't think, Donal, I don't know whether you want to add any.
No. I think there has been structural programs within the oil majors to divest out of different parts of the downstream activity. They look at it from an integrated value chain perspective. If they do not see it from, I suppose, the field to the pump, that might not be something that they are going to remain in long term. Those programs are ongoing. The one thing that we always say is we cannot influence. We would like to be able to influence when they happen, but we cannot really influence when they happen. There has 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. In the end of the day, they each year look at the management of their portfolio.
Each year, they pick the assets that they are going to divest. They work through that on a very structured basis. We do not 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 Esso business in France.
In relation to the second part of your question, Andrew, on the environmental business, obviously I am not going to comment on any business in terms of disposal or anything else in a public way. That business, we have got to go and do it. It is not done yet. We think you will see, hopefully, a fairly material return in our improvement in the returns in that business this year. That is, in fairness to everybody concerned, that is being driven by the good organic growth performance and a real discipline and focus on capital in the business. That is a pretty good story. We will see. Alan
Thanks. Yes, Alan from Davy. I just have a question on each of the divisions, please. Firstly, on energy. Donal, could you help us understand the potential in the French natural gas market? Also how much investment do you think will be required over the next couple of years to scale up the business? Secondly, DCC Technology. To the extent that you can, could you comment about how the business with your largest tech vendor is developing that had been a headwind. If you cannot talk about the customer, maybe about the different verticals that are trending. Finally, for Conor, Vital. Clearly, the organic growth has been somewhat subdued. You referenced input costs. Could you just help us with how the revenue line for Vital is developing on an organic basis?
Thanks, Alan. Donal, do you want to-
Okay. I was looking at segmenting the natural gas market in France. The overall market, and we've got to learn some new terms with this. The business last year sold 5.1 terawatt hours of natural gas. The overall natural gas market in France was 445 terawatt hours last year. Of that, 122 is in the B2C sector and 177 is in the B2B sector. The rest of it, the balance, is very large industrial customers. The business itself is only operating today in the B2B sector and, in fact, in a sub-sector of the B2B sector, which is mainly supplying into collective housing, so things like apartment blocks, office blocks, and so on.
Over time, clearly we see the opportunity to build a scale business across the natural gas market in France, not in the very high industrial side, but within both the B2B and, over time, within the B2C sectors of the market. 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 Gaz Européen business because not only 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 product from all the suppliers into the market within France.
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. We'd be pretty confident that we can build a scale business in the sector in France over time. Again, while this business has been growing very strongly, as we start to invest to grow into other sectors, that'll impact for a little while, as it would if we were investing and building this business organically. It'll be a step to leverage the growth. We get that within a period of time, and the structure of the earn-out is aligned effectively to do that for, and give the benefit of that to the management.
Probably shouldn't talk specifically about any one supplier. We take the vertical route.
I would make the point, I think, in the past, we probably got a bit overweight on a particular vendor or particular product sector. I'm much happier in terms of the scope of the portfolio. There's no vendor that's more than 10% of our revenues in the first half. Our leading vendor actually was a PC vendor. As we've mentioned, the market was a bit flat this year, 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. In fact, we've had some very good organic growth with other vendors in the top five. Overall, it's performed pretty well.
Conor, Vital?
Vital. In overall terms, very modest sales growth in Vital, but just looking at the analysis of that, by geography and by channel, we've good mid-single-digit growth in Ireland. In Britain, in the hospital channel and the GP channel, we 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 to focus on products where we have IP, and we de-listed quite a number of products last year. Our revenues in that area were as planned down on last year. I think in a kind of an underlying sense, the performance was decent.
Chris, I think you were trying to get
Just following up on that, Conor, when do you expect it kind of annualize out, the kind of product rationalization? Is that now complete or will that last longer?
It happened really in Q4 last year. It's going to take the full year this year to wash through.
Follow me there.
Yeah.
Is there any structural difference for IP less interested in Europe? If so, is there the risk that if not, they become more interested in that market?
I don't know, Chris. We can only talk about what we have seen. I'm not sure that there's any particular structural issues. There's no doubt that in the U.K., it was certainly driven by a belief that they could sell more cups of coffee, the convenience retailing bit. A number of these companies all have the same strategy. Donal, do you want to add anything on that in terms of structure?
I think when you look at the types of assets that are for sale. As Tommy said, I think a lot of the PE interest was around the retail side, the convenience retail side, as opposed to the fuel retailing side. 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, convenience retailing isn't at the forecourt. You look at others, it is at the forecourt. 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 because if you look apart from the fact that the Esso business was an unmanned business, clearly didn't have that convenience retailing piece to attract them. At the end of the day, I don't know whether Esso are listening or not, but I wouldn't underestimate the importance of DCC as a partner for them. We buy 1.4 billion liters of product from them. We're a pretty good customer to have in terms of balance sheet, et cetera. We have got a pretty long-term right to operate their brand. 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.
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 strength, and those transactions in the U.K. were largely with non-oil major-owned businesses.
Right. Got you.
Hi. Rory from UBS.
Sorry, Rory. Hi.
You helped us with the mix impact, Fergal, on the energy business. You say as the seasonality gets tougher through H2, the mix impact on the pence per liter on the EBIT margin, how do you expect that to evolve with the M&A? It feels like on the gross margin operating costs, how would that annualize out?
It's an honest question.
It's an honest question in terms of GP for the year overall. Bringing it down to on a constant currency basis, net margins, what they were about GBP 1.60 last year, maybe moving to GBP 1.70, something like that.
And then in terms of the-
170.
Okay. Then just, I probably going to ask about the weather. With a coming polar vortex, potentially, any panic buying?
Sorry, I beg your pardon, with?
A coming polar vortex, potentially. Any panic buying from volumes yet, or?
No. Obviously, the polar vortex would be just great news. No, there's no panic buying. The weather, October was a mild month, and our outlook statements are in the context of having had the benefit of seeing what October was like. November started a bit colder. Look, nothing's changed of it. I suppose as our business has grown, while we clearly still have an exposure to weather, and it's not unimportant, but proportionately it hasn't probably grown in proportion to the size of the business, and we have taken steps. We'll be hoping for a cold winter, all right, but it's not the be-all and end-all anymore.
Can I ask about the Gaz Européen business model? I think they've only got 31 people.
Yes.
Can you talk about the business model and exactly how they work and all that kind of thing?
Yes. While actually the end consumers, if you like, it's a kind of a B2B2C business in some respects because there's lots of apartments or end users of the product underneath the customers that we have. They've 10,000 customers. Effectively, you don't have a huge customer base, so it's not like your big call center selling to domestic or to B2C customers. It has a small management team. It's got a trading capability, a supply capability, a technology capability, and the vast bulk of people are B2B salespeople, so out in the regions. 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. It doesn't need a lot of people to drive that.
Now, 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. We have a lot of that infrastructure already within the market in France. It really is a win-win situation.
Thanks. Just following up on that question, Donal, you referenced trading capability a few times. What extent does Gaz Européen take risk?
Good question, George. It doesn't, is the answer. 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. 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. That's the capability that is within the business. That's important in this type of business because you have fixed price contracts with your customers, you need to make sure that you have, on a month-by-month basis, the appropriate either hedging products in place to de-risk that.
Okay. Do we want to see if there's any questions online?
Thank you. Ladies and gentlemen, if you wish to ask a question over the phone, please press star one on your telephone keypad. We will now take our first question from Gerald 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? Just following up on Gaz Européen. 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. Thanks.
Hey, Gerald. Maybe, Donal, you address those two questions?
Yeah, sure. On the LPG organic growth, 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 balance that. 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. The underlying market isn't growing, and in fact, in some markets, and we talked about it when we bought the Butagaz business, the French market, a lot of the LPG markets in Europe are in modest decline.
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. We're pretty confident that we're growing our underlying market shares. Gaz Européen has actually been growing quite strongly over the last number of years. While it's been in the market since started off in 2005, as the B2B sector started to get deregulated, it was a relatively modest business for a number of years.
I suppose some of that change kind of 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. The last couple of years have been driving pretty strong growth, and hopefully, that'll continue. As I say, we can then augment it by the strength of the Butagaz brand.
Thank you.
Thanks.