Hello, and welcome to the DCC plc Interim Results, 30th September, 2023. My name is Elliot, and I'll be coordinating your call today. If you would like to register a question during today's event, please press star followed by one on your telephone keypad. I'd like to hand over to Donal Murphy, Chief Executive. The floor is yours. Please go ahead.
Thank you, Elliot. Good morning, and welcome to DCC's interim results presentation for the six months ended 30th of September 2023. I'm Donal Murphy, Chief Executive of DCC, and I'm delighted to be joined by Kevin Lucey, our Chief Financial Officer. Here's our standard disclaimer, and thankfully, I don't have to read it. It's there for your notice. On our agenda for today, I'll cover off the highlights of the first half of the year, which was another period of strong growth and development activity for the group. Kevin will take you through the performance review. I'll give you an update on our strategy and our development activity, and we'll finish with our outlook statement and a summary before we open up the session for questions. So let's get started with the highlights for H1 FY 2024.
It was an excellent start to the year, with strong growth and operating profit for the group and an excellent period of acquisition activity. On our financial performance, we delivered strong growth in the seasonally less significant first half of our financial year to the 30th of September 2023. We were really pleased with the performance, given the ongoing challenges in the macroeconomic environment. Group adjusted operating profit increased by 12% to GBP 247.6 million, driven by an excellent performance in DCC Energy, and partially offset, as anticipated, by a decline in both DCC Healthcare and DCC Technology. We were particularly pleased with our organic growth of 4.4% during the period. The board proposes to increase the interim dividend by 5% to GBP 0.6304 per share.
The strong performance of the group during the period, yet again, demonstrates the resilience in DCC's business model, the benefit of our diverse sectors of energy, healthcare, and technology, and our strong market positions, and most importantly, that we invest in what the world needs every day. From a development perspective, we made really good progress in delivering on our strategy. Since our results in May 2023, DCC has committed approximately GBP 310 million to new acquisitions in DCC Energy, including, as announced separately this morning, the synergistic acquisition of Progas for GBP 140 million, a nationwide distributor of LPG in Germany, Europe's largest energy market. The acquisition is subject to competition clearance. The acquisition of five energy management services businesses, further expanding our offering in this high-growth sector.
These acquisitions demonstrate the progress we are making on the execution of our Cleaner Energy in Your Power strategy, and more about this later. We enable people and businesses to grow and progress, and we are future-focused. We are embedding our strategic and sustainability agendas across the group. At our Energy Insights event on the sixth of September, we publicly set our ambition to reduce our Scope 3 emissions by 50% by 2030, and to Net Zero across Scope 1, 2, and 3 by 2050 or sooner. We are well on track to achieving these goals. We announced today that for the first time in our history, DCC has been issued with a public credit rating by S&P Global Ratings and Fitch. We have been rated BBB, a solid investment grade rating. Finally, our preparations are well in hand for CSRD.
I'll hand you over to Kevin now, who will take you through the performance review. Kevin?
Thanks, Donal, and good morning, everybody. I'll run through the first half performance at a group and a divisional level. As Donal mentioned, the first half in DCC is seasonally less significant from an activity and profitability perspective, typically accounting for about 35% of our profits on an annual basis. Notwithstanding that, it's good to be reporting strong growth in first half operating profits and in line with our expectations overall. Revenue was GBP 9.6 billion in the first half, and as you well know, revenue is not always the most relevant metric for DCC, given the operating model in our Energy division. I'll talk, talk through the divisional metrics in a, in a few moments, but at a group level, the revenue delta the prior year was substantially driven by the lower cost of energy commodities during the first half.
You'll remember that the comparative period saw really elevated prices due to the energy security concerns at the time. So, as Donal mentioned, group-adjusted operating profit was GBP 247.6 million, 12% ahead of the prior year, and a modest constant currency headwind, so 12.2% ahead on a constant currency basis. We'll come back and talk about the divisional contributions to that. But with a strong organic performance in energy, operating profit was organically up 4.4%. Adjusted EPS growth was 1.9%, with the delta to operating profit growth being driven by a modestly higher effective tax rate of 20.3%. So this reflects our expectation for the full year and is a little higher than prior year as the group grows internationally.
Obviously, we've also seen a number of jurisdictions increase corporation tax rates over the last 12 months. As expected, our increased interest costs accounted for the majority of the delta. Clearly, the interest rate environment has changed materially versus the prior first half of the prior year, and we saw that come through very much in H2 last year, and so H1 this year has also seen it. Interest costs were modestly higher than H2 of the prior year. The board has increased the dividend, the interim dividend by 5%, which again, will hopefully be welcomed by shareholders this morning. In terms of balance sheets and cash flow, working capital was in line with expectations in the prior year at GBP 440 million. We saw our typical seasonal outflow in working capital.
On a like-for-like basis, the utilization of supply chain financing in DCC Technology was lower than the prior year by about GBP 35 million. So we're pleased with the performance from a working capital perspective generally. And on a rolling 12-month basis, the free cash flow conversion of the group remains very strong at 86%. Net debt, excluding leases, was approximately GBP 1 billion. The increase in prior year is really all due to acquisition activity. Most of the prior year acquisition activity from a cash flow perspective was in the second half of the year. We spent GBP 300 million in H2 of the prior year, with GBP 150 million in H1 this year. So GBP 450 million in acquisition spend since this point last year. A couple of other quick points on the balance sheet.
So I suppose we set out a number of years ago to improve the efficiency of the balance sheet and to also add to our funding options over time. During H1, we repaid GBP 235 million in private placement notes from cash resources. We're holding about 50% less cash relative to our EBITDA than we did three years ago. Just under 60% of our debt is now at fixed rates. This has increased from about 30% four years ago. We've had great support from the private debt market since 1996, and we continue to enjoy their support today. Strong investment-grade credit ratings from S&P and Fitch, that Donal mentioned earlier, provides us with further optionality in terms of group financing into the future.
We would expect the acquisition of Progas to close before the end of the financial year, following the competition process, but we expect that to be late in the financial year, so we're not expecting much, if any, of a profit contribution until FY 2025. And we'd expect to finish the year on the basis of the announced acquisition activity to date, with about 1x net debt EBITDA, so pretty similar to prior year. I won't dwell on this slide for too long, as we'll get into the detail of each division in a moment. But as you can see on the right-hand side, DCC Energy accounted for 69% of operating profit in H1, with DCC Technology and DCC Healthcare together accounting for 31%.
Looking to the table on the left, you will see that at group level, we had a very modest constant currency headwind of just 0.2%, with reported growth of 12%. And given where currencies are at today, relative to the prior year, we continue to see an FX headwind of just over 1% to group operating profit for the year as a whole. So pretty much the same as we did in, in May when we were guiding. In terms of reported profits, DCC Technology declined by 15% to GBP 38.7 million. DCC Healthcare declined by 11%, 11.3% to GBP 38.3 million, and DCC Energy was up 28.9% to GBP 170.6 million.
So now we look at what drove the performance across each of the divisions on the next couple of slides. Operating profit growth in DCC Energy increased by 28.9% to GBP 170.6 million, an excellent performance. Looking at the right-hand side of the slide, you will see the, that the Energy Solutions business represented 61% of profits in the first half, with mobility contributing 39%. On a relative basis, Solutions would contribute more to to relative profits as usual in the second half. In terms of headlines, organic profit growth was just over 20%, with M&A contributing almost 8%. The trajectory we've seen in recent years of an increasing proportion of our profits coming from Services, Renewable & Other products, continued in H1, up 7% on the prior year to 46%.
This metric is quite impacted by seasonality, as most of our traditional heating business occurs in H2. But nonetheless, the direction of travel is instructive. We would expect the full year metric. Profit growth was strong across the Energy Solutions business, 33.3% ahead of prior year. The strongest performing regions were Continental Europe and the Nordics. We had good organic growth across our SRO product offerings, and of course, most of our acquisition activity over the last 12 months also falls into that product category. Donal will pick up on that later in the presentation. The natural gas and power market was a drag on performance in the prior year, and we saw good recovery in that area during the first half.
Cost inflation continued to be a feature during H1, but the teams around the division did a very good job on ensuring that costs were minimized and recovered where necessary. The Mobility business also performed well in H1, with profits up 22.5%, all organic. We saw solid performances across all markets, really, with the stronger regions being in the Nordics and the U.K. Our French business performed well in a challenging operating environment, with some disruption from strikes early in the year, and also difficult market conditions more recently. Our digital and fleet service business areas also performed well and delivered good growth. So albeit smaller seasonal numbers in H1, a very strong performance overall from DCC Energy. In DCC Healthcare, we had operating profits of GBP 38.3 million, 11.3% below the prior year.
DCC Vital delivered strong growth in H1. At a divisional level, the organic decline in profits was driven, as expected, by the fall in profitability in DCC Health & Beauty Solutions. The strong growth in DCC Vital included the benefit of the first-time contribution of Medi-Globe and good growth in medical devices and in Ireland. The integration of Medi-Globe has gone well and the business has also performed well. In Primary Care, performance was mixed, with a good performance in the DACH region, but we experienced weaker demand in the U.K., where there was some impact from funding constraints in the NHS. As expected, the Health & Beauty market was difficult. The last 12 months have been characterized by a significant element of destocking, both in our brand owner customers, in retail, and at a consumer level....
As the producers of the product, you know, this has been painful for the contract manufacturing sector generally. The trends globally have been consistent, and we have experienced similar market conditions in the U.K. and the U.S. It's fair to say that it was a little more difficult than we were expecting during H1, with lower customer demand. However, we have seen green shoots in more recent weeks. Our order intake has begun to pick up, order books are building, and the market statistics at a consumer level are improving now. We have not seen any material customer attrition during the period, and we are seeing increased interest from and engagement with our customers on new products. Given the difficult market conditions, we were obviously very focused on our cost base.
We did consolidate manufacturing of two sites into one location in the U.S., reflecting that focus. We've also been investing in our infrastructure across the last couple of years, and this continued in H1. So while we were reducing costs where we could, costs were up due to inflation and the relatively higher fixed cost environment in the Health & Beauty segment, and most materially, the investments we are making in new capabilities, such as in our new state-of-the-art gummy line in Florida. So just to summarize, strong performance in DCC Vital, with a decline in Health & Beauty. In terms of the divisional operating margin, all of the decline was driven by the organic decline in Health & Beauty and the increased costs we saw there.
But the investments we are making reflect our continued confidence in this long-term growth sector, and we believe it remains a very strong growth opportunity for the group. And finally, for this section of the presentation, DCC Technology. Operating profit declined by 15%, or 13.4% organic constant currency, to GBP 38.7 million. Revenues were back almost 10% organically, reflecting weaker demand for consumer technology. Again, our Pro Tech activities, where we have increased our presence in recent years, performed well, with a particularly strong performance in Pro Audio products in North America. The weakest demand we experienced was really for consumer tech products, and that's relevant in our Info Tech and Life Tech channels in Continental Europe and the U.S. Despite the weaker demand experienced, our large U.K. business, which is in the Info Tech segment, performed well and delivered good growth.
We've been very focused on this over the last 12 months, and it's pleasing to see some good operational improvements coming through now. Across DCC Technology, given the backdrop, we remain very focused on costs. Costs were flat across the first half, which reflected some good cost reductions and then inflationary impacts. So finally, and to reiterate, strong growth in profits overall in the seasonally less significant first half. There's clearly lots of macroeconomic uncertainty around, but DCC remains very well positioned to continue its growth and development. I'll hand back to Donal now.
Thanks, Kevin. At DCC, we invest in what the world needs, and now I'll give you an update on our strategy and development activity and the progress we are making with the implementation of our Cleaner Energy in Your Power strategy. DCC is always focused on building a growing, sustainable, and cash-generative business, which consistently produces returns on capital employed well in excess of our cost of capital. This has been successful over many years because we always look to the future for growth opportunities. We seek out the growth potential in our sectors. We operate our businesses well and help them to grow and progress, and we allocate capital across our sectors to improve and scale our businesses.
We invest and reinvest in essential solutions, solutions the world needs today and into the future, which underpins our sustainable growth and supports our purpose of enabling people and businesses to grow and progress. We invest to grow our businesses organically. We invest in our sectors through M&A, which strengthens and scales our businesses, and we invest in our people to enable them to grow and progress. We operate and invest in sectors where we can see a very clear purpose, solving real needs and with macro trends that provide us with growth opportunities. In the Energy sector, we believe there is a real need for progress to cleaner Energy Solutions that are secure, affordable, and sustainable. In Healthcare, we see the world's necessity for people to live longer and healthier lives, and in Technology, we bring to market the products and services to make a progressive world a reality.
By pursuing our group strategy and deploying capital in the higher growth segments of our sectors, the size and shape of DCC will be very different by 2030. By 2030, we will have more than doubled the size of the group, and approximately 70%-75% of our profitability will come from Energy Services & Renewables, Healthcare, and Technology. We are making really good progress against this objective, and to demonstrate this, I'd like to pick out a few of the developments from H1 FY 2024. In DCC Energy, at our Energy Insights Day on the sixth of September, we outlined in detail how we will double our profits while halving carbon emissions by 2030 through the implementation of our Cleaner Energy in Your Power strategy. We doubled the sales of HVO biofuel volume to just under 50 million L.
We expanded our energy management services business through five acquisitions and organically, and we completed the development of our Avonmouth LPG storage facility. In DCC Healthcare, in order to drive greater operational efficiencies, we consolidated two of our U.S. nutritional contract manufacturing facilities. We completed a state-of-the-art gummy line in the U.S., and are now manufacturing for our first customer in this high-growth, innovative format. We've made really good progress with the integration of Medi-Globe, and we continue to invest in the technology and digital platforms in primary care to accelerate our growth. Finally, in DCC Technology, we are really pleased with the progress we are making in the operational improvement project in our U.K. Info Tech business, and we have invested in and improved our online marketing in our Life Tech fulfillment business in the U.S.
If you didn't have the opportunity to join us for our Energy Insights Day on the sixth of September, or to listen to the recording of the event yet, I would encourage you to do so. The recording of the event can be accessed on our website, www.dcc.ie. I'd just like to briefly summarize our energy strategy and highlight some of the progress we have made during the first half of the year. The world needs cleaner energy for everyone that is secure, affordable, and sustainable, and our Cleaner Energy in Your Power strategy will deliver this for our customers. Our vision is to double our profits while halving carbon emissions by 2030. We will do this by, firstly, reducing the carbon intensity of the essential liquid fuels we supply to our customers, our molecules business.
Secondly, by building a complementary, decentralized, electron-based business to enable our customers to self-generate electricity from renewable sources. To deliver on our objective in our molecules business, we will become a leader in biofuels. We will accelerate the growth of LPG as a transition fuel, while increasing the percentage of renewable LPG in our mix. We will minimize our activities in high carbon intensity products, and we will maximize the returns from our Mobility business. To deliver on our objective in our electrons business, we will continue to consolidate the highly fragmented solar installation market, becoming a Pan-European leader in solar solutions. We will buy and build an energy management and services business, providing a broad range of recurring revenue, energy management services to our customers, and we will continue to expand our services offerings, including heat pump and hybrid solutions.
Our customers are at the heart of our strategy, and by implementing our strategy, we will expand the range of products and services we are providing to our existing 1.7 million direct Energy Solutions customers, to support them on their journey to Net Zero. We will also acquire new customers as we continue to consolidate the LPG market, the highly fragmented solar and energy management services sectors, and with our combined offering, we will accelerate organic customer growth. The net result of this is that we will grow our direct solution customers to more than 2 million by 2030, and we will increase the lifetime value of our customers by 1.4x - 4 x as we go forward. This is why we are so convinced that Cleaner Energy in Your Power is a winning strategy, both commercially and for the planet.
Here's our bridge to 2030, outlining the material steps in how we will double our profits to GBP 830 million from 2022. We made great progress during the first half of the year. In LPG, not only did we drive strong organic profit growth, but we also acquired two LPG businesses, a synergistic bolt-on in the U.S., and the strategically important acquisition of Progas in Germany, a leading distributor of LPG in the German market, for an enterprise value of GBP 140 million. The acquisition is subject to competition clearance. The synergistic acquisition of DCC Energy's largest to date in Germany, Europe's largest energy market, and considerably expands DCC Energy's customer base in the market to over 100,000 customers. DCC Energy will now accelerate its Cleaner Energy in Your Power strategy for German customers by selling additional solutions into the future.
In biofuels, we increased our sales of HVO in H1 2024 to 48 million L from 27 million L in the prior year. And finally, in H1 2024, we acquired five energy management and services businesses, including Centreco, the leading solar PV installer in the commercial and industrial sector in Britain. Solcellekraft, a leading solar PV installer in Norway. Isolatiespecialist, a leading provider of energy efficiency and installation services in the Netherlands. We now have leadership positions in solar in five countries in Europe. So just before we open up to Q&A, our outlook for FY 2024. DCC continues to expect that the year ending 31 March 2024, will be another year of operating profit growth in line with our expectations and continued development activity. So in summary, DCC delivered strong growth in operating profit in the seasonally less significant first half of FY 2024.
We had excellent acquisition activity, with GBP 310 million committed to acquisitions in DCC Energy. We continue to be focused on the future, executing our strategy and embedding sustainability across the group. Thank you all for listening, and we look forward to answering your questions.
Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted openly. First question comes from Annelise Vermeulen with Morgan Stanley. Your line is open.
Hi, good morning. I have three, please. So firstly, on your M&A pipeline, into the second half, clearly, with what you've spent already in the first half, you've delivered most of your annual target already. Could you give us a bit of color on how the second half of the year you expect to develop, whether you have more deals in the pipeline, and whether we can expect further announcements before the end of your fiscal year? And then secondly, just on Technology. You've commented, you know, in Health & Beauty, that you're seeing some green shoots and improvements in volume. I'm just wondering if you're seeing any of that in consumer yet within the Technology business.
I'm assuming not, but if you, again, have any insights on, well, you know, how and when you expect that to pick up, it would be great to hear them. And then lastly, just a quick one on Germany. You know, with the acquisition that you announced today, can you comment on what that takes your market share to in Germany and LPG? And can we expect more deals here in German LPG as you, you know, continue to consolidate your position? And can we expect that you'll achieve a comparable market share position, you know, as your other more mature LPG markets? That's all. Thank you.
Time. It's not about the deals that we've done, but it's about the opportunities going forward. So we have, you know, we've opportunities to deploy capital across all our sectors. You never can call when M&A happens, but I think we'd be pretty confident that there'll be more deals to be done in the current year, and a good pipeline going forward. You know, particularly, you know, particularly pleased really with the activity in the growth in the Services and Renewables side of our business, and that's a, that's an area that we continue to build capability and capacity as we expand out into the European countries and take leadership positions in in more markets. On Tech, I think you answered the question, Annelise, yourself, really.
It is, it's difficult to call, you know, the, as Kevin said, our, you know, our Pro business, our B2B business was pretty robust. You know, the consumer side is more difficult. Spend is discretionary on the consumer side, and, you know, it's probably hard to see the consumer getting any easier, certainly in the short term. But as you know, the, the peak kind of trading period is coming up now over the next number of weeks. And when we, when we give our interim update in February, you know, we'll have a, we'll obviously have better insight into, into where the consumer is and the, and, and the Christmas trading period. So I think that's really, that's really the, the, the time for, for an update on, on tech.
You know, and then, you know, say, like, the acquisition of Progas, really, really important for us. You know, we had a more modest business in LPG through our TEGA business, and it really puts us on the map with a nationwide business in Germany. We're now one of the top five players within the market, and it's a really, it's a really good platform for us to build on, not only in further consolidation within the market, but particularly to build out our energy management services offering within Germany going forward, and to bring Cleaner Energy in Your Power to German customers.
Our next question comes from Colin Grant with Davy. Your line is open.
Great. Good morning, everybody, and thanks for doing the call. Just a couple of questions from me. Firstly, on SRO, obviously very strong growth, as you've outlined there. And within the, I suppose, the bridge that you gave on the 6th September, you'd been hoping to try and get to around GBP 100 million in the services, for SRO on a kind of recurring basis for fiscal 2030. And I'm just wondering if you can give an update on kind of what you're seeing, on the services part of the SRO in terms of recurring side of things. And then secondly, just on Energy Mobility, you mentioned in the press release there had been some, competitor activity that had impacted an element of that.
I wonder if you could just give us a bit of color on what's impacting that. Thank you.
Thanks, Colin. No, look, SRO is going really well, and the services element of it in particular. So, you know, we've actually, you know, as we outlined and Kevin talked about earlier, like we had good growth in all parts of SRO in the first half of the year. And, you know, with 46% of our contribution in the first half coming from SRO activities. But the services element is where we have been deploying the capital, Colin, and, you know, we're very pleased with the acquisitions, not just the five we announced in September, but the acquisitions from last year all performing well. You know, we now have leadership positions.
When you look at it, you know, we're the number one player in solar installation and C&I in the U.K. We're the number two player here in Ireland. We're the number one player in Norway. We've a leading position in the Netherlands now, and we're the largest player with a full nationwide coverage in France. Not bad in a couple of years of work. So, you know, we really see the growth in this area being accelerated over the coming years as we deploy more capital. So, really pleased with the activity there.
You know, on the Mobility side, we're talking about the challenges in the French market, and in the first half of the year, we had some strikes, and there, the market is particularly competitive at the moment with some of the competition effectively. But, you know, we've been through those situations in the past, and our team always find a way to win. So, we're not in any way concerned about that. It's just, it's just to flag it as it was a factor in the first half of the year.
Thanks, Colin.
We now turn to David Broxton with Numis. Your line is open.
Good morning. Two questions from me, please, based on healthcare. You flagged sort of green shoots and sort of improving orders starting to come through in Health & Beauty. How long before those translate into profits, and we start to see sort of the division return to sort of its historical growth rate? That's the first. And then the second question related to Healthcare. I think you flagged there that obviously margins have been impacted by some of the investments you've made. Can you just talk about sort of the path to seeing an improved margin perspective there as sort of those initiatives bear fruit? Thank you.
Yeah, look, David, and you know, I think on the Health & Beauty side, and I think we're fed up talking about destocking, you know, but it has been, it has really been a feature of the industry over the last number, actually, of reporting periods. But you know, we absolutely believe that that has bottomed, so we won't be talking about destocking going forward. We're seeing our order books building, and that translates very quickly into profit growth. So you know, we're confident as we go into the second half of this year.
I think the investments that we've been making, and we have, you know, through the period, we've obviously managed our costs tightly, but we've also made significant investments, which obviously is impacting us on a leverage perspective at the moment. But, you know, we'll see the benefit of that flowing through, particularly as we get into FY 2025, where we'd expect very strong growth within our Health & Beauty business. And, you know, particularly pleased that we have the gummy capability now live and, you know, our first customer in production mode on that in the U.S. So, you know, a good forward outlook. And the macro trends in nutrition are obviously very positive. Kevin might talk about the.
Yeah, the only other point I would add, maybe, David, and it's more to kind of the, you know, the 25 and beyond period, is that, you know, I mentioned in my commentary earlier that the sector has been having a tough time because what we've experienced is not unique, and it's kind of pervasive. And I think, you know, DCC, thankfully, is in a very strong and robust financial position. We have been able to make those investments through this cycle. And, you know, I think competitively, you know, we have. We see a lot of our, you know, a lot of leverage has probably gone into the sector through private equity activity over recent years.
You know, I think our strategy has always been, Conor Costigan always talks about this: Our strategy has always been to have well-invested facilities, to have best-in-class operations, and, you know, being able to invest in that is a differentiator for us. So I think, you know, if anything, through a period like this, which has been really tough and painful for our business and for our people, but actually coming out the other end of it with a lot of, you know, debt leverage in the sector and a lot of, you know, maybe a lot of distress, you know, that, that feels like a pretty good position to be in competitively.
So, you know, I think that strategy of investing through cycles and continuing to build and doing the right thing whilst, you know, keeping an eye on the cost base, but looking through the cycle, will bear fruit over the coming years, really. And on the operating leverage point, you know, David, obviously, it's been, you know, I think the second half, we should see an improvement in that clearly as volumes and profitability recovers. The cost base, you know, eventually, we lap some of those investments into next year as well.
So I think, you know, as Donal outlined, I think FY second half, we see some improvement clearly in that as order books rebuild and we produce, particularly in the fourth quarter of the year, and then into FY 2025, we'd expect the, you know, the operating margin in our Health & Beauty business to pick up substantially. And just to reiterate the point, the operating margin in DCC Vital, you know, it was not a factor in the divisional performance at all. So DCC Vital performing very much in line with expectation and delivering operating margins in line with what it would have in the prior year.
Thanks, David.
As a reminder, if you'd like to ask a question, please press star one on your telephone keypad now. We now turn to Rory McKenzie with UBS. Your line is open.
Good morning. Well, it's Rory here. Three questions, please. Appreciate it's the seasonally smaller half year, and there's a lot of mix changes. But wanted to ask what we can learn from the strong H1 Energy profits about the run rate into H2. So firstly, your Energy profit share of SRO being up seven percentage points implies the absolute profits there are up 50% year-over-year. So can you give us more detail on what's in that, and how to think about versus operating efficiencies versus mix? And then I wanted to ask about Progas. Let's take those two first, please.
The Progas, just say that again, Rory?
I'll come back on Progas.
You'll come back on Progas.
Well, do you wanna just ask it, Rory? Because I, I think the way the structure of the call works is that—yeah, is that they'll—
Yeah.
They'll probably.
Queue you.
Queue you. After the, after the question, so...
Okay. Okay, cool, thanks, guys. So on Progas, is that a pure LPG business, or does it have a broader portfolio?
Yeah.
I remember when you bought TEGA, that came with, I think, some refrigerants also just wondering if they themselves have an energy management business, or whether that's something you'll be developing yourself?
Sure. Sure, sure. No, good, good question. Okay, well, look, let's run through them all. I think on the Services and Renewables, Rory, like, that has been, you know, it has. Your math are absolutely right. It's been very strong growth, very strong growth in the first half of the year, but a flow-through from acquisition activity in the prior year, and contribution from the five acquisitions that we acquired this year and announced in September. So there's a fair bit of acquisition activity within it, but there's really strong underlying organic growth within it as well, so.
Yeah, and Rory, just for color or for context, I mean, I suppose on the split, if you like, of the growth in SRO is kind of one-third acquisition, two-thirds organic. Most of that organic growth is obviously because it's positioned in a higher growth sector, Rory. There is a little bit of bounce back on the renewable power side. So within the product category there, you will have renewable electricity sales that we make to corporate customers. In particular, we help them with corporate power purchase agreements and things like that. So, you know, we would have seen some volatility in that area in H1 last year. So you see some normalization within the organic performance as well. So just to call that out.
You know, very strong underlying organic growth, a little bit of bounce back on the renewable power side, and then, as I said, a third of the growth coming through from acquisition activity.
I think one of the important things, Rory, with this, and this is, you know, something that we've been focused on for many years within the Energy business, is to kinda get the weighting a little bit removed from being so second half-weighted. And, you know, the good thing about the Services and Renewables business, many, many parts of that are very well spread throughout the year. In fact, some of the more installation based activities are probably more skewed to the first half of the year when you have actually better weather conditions. So again, it gives us probably a better balance in the year. And you'll have seen that over the last couple of years, you know, in terms of just the split of our Energy profits.
So, we see that, we see that being beneficial. When we look to the year as a whole, you know, and because it is skewed to the first half, you know, that 46% from 39% last year, you know, we certainly see it well north of 30% in the full year, up from 28% last year. So we're making, we're making really good progress in growth there. I think on the Mobility side, there's lots of factors at play. It's been pretty noisy over the last couple of years because, you know, through COVID, we had obviously a lot of volume disruption on the retail side.
And, you know, one of the, the really encouraging factors for our retail business is, notwithstanding the volume going through the sites, you know, because everyone in the industry is focused on profitability at a site level, you know, you drive your performance through your non-fuel activities and, and obviously through your fuel activities. And, you know, we have, we have, you know, seen good margin performance across that business, over the last, over the last couple of years. You know, and that margin is, is coming not just from fuel, but it's coming from, clearly coming from, from, from non-fuel services as well. So, you know, the resilience in the Mobility business, I think, speaks for itself.
And then we've been, you know, growing at a fair clip, which goes into, you know, that organic growth performance, our digitally based fleet services business. And that's, you know, that is a high growth area for us, and one that we have been investing in to improve the services. You know, on Progas, you know, this is, you know, I think a really material. It's not the most material, clearly, in terms of size acquisition, but it's a very material acquisition for us in terms of positioning within the German market. The German market, you know, is the largest energy market in Europe, and we had, you know, a relatively small share of the market.
You're absolutely right, you know, when we bought TEGA, probably 50% of that business was in the refrigerant gas sector, and 50% of it was in the LPG area and the LPG activity. So, you know, Progas is 100% an LPG business. It has some, but limited other services for its existing customer base. So when you combine our two businesses, and then you bring our capability in the energy management services to it, you know, we're really well positioned to bring our Cleaner Energy in Your Power solutions for German customers. So we see this as a material step forward for us in building a really scale business in the largest energy market in Europe.
I think an important acquisition for us and, one that we look forward to getting part of the group. As Kevin said earlier, you know, it is subject to competition clearance, so we don't see it being part of the group really, or contributing to the group until into FY 2025. Thanks, Rory. Any other questions?
This concludes our Q&A. I'll now hand back to you, Donal Murphy, Chief Executive, closing remarks.
Super. Well, okay, thank you everyone for joining us today. I think we're really pleased with the performance in the group in the first half of the year, notwithstanding the pretty challenging macro environment that we're operating within. We have a really good and clear strategy, and we're well on track to deliver against that. So we look forward to seeing many of you over the coming days as we go through our roadshow. So thank you all for your time, and see you all soon. Bye-bye.
Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.