Welcome to the Vp Interim Results. I'm Anna Bielby, and I'm joined today by our CFO, Keith Winstanley. I'll kick off with a brief summary and an update on our strategy. Keith will then cover the financial review, and I will talk through our operational performance. I'm sure many of you are familiar with our businesses, but to summarize, we are leaders in equipment rental with a key focus on being specialists. We operate in niche sectors in our end markets, which are infrastructure, construction, housebuilding, and energy. We have a resilient operating model and diverse revenue streams. We have a strong track record of high returns and an uninterrupted dividend track record. Our divisions are listed on the bottom of this slide, but we increasingly talk about our business in relation to our end markets, so moving on to the half one highlights.
Overall, our performance was robust, with revenue and profit broadly in line with half one last year. Our return on capital employed remained strong at 14.7%, demonstrating earnings quality. From a market perspective, infrastructure was strong, with particular demand from the water and transmission sectors, with a slower start in rail. Energy also performed well, but construction and housebuilding continued to be challenging. We remain committed to investing in our asset base. Fleet CapEx in the period was GBP 38.5 million, with a focus on growth areas and a continued transition towards cleaner, greener solutions. We continue to have a strong balance sheet, which allows us to invest and positions us well for future opportunity. Despite some headwinds in the first half, we are declaring an interim dividend of 11.5 pence per share, consistent with last year.
We have made good progress on our refresh strategy, including the early October acquisition of CPH. We expect full-year performance to be in line with market expectations. Moving on to our investment case, I've covered some of these points already, so I will just pick out the highlights. We are focused on being specialists. That is what differentiates us from others in our industry. It's served us well over the years, and it has provided resilience. We have exciting growth prospects. We are aligned to markets with significant investment and growth potential, particularly within infrastructure, and we have a number of self-help opportunities to improve our performance, which I'll touch on later. As I mentioned, our financial profile is strong, and overall as a business, we are well positioned, so moving on to our strategy. We set out our refresh strategy in June.
I'm not proposing to go through the detail again, but the key theme is around ensuring that Vp is a more straightforward business and greater than the sum of its parts. The main areas of the strategy relate to delivering growth, where we see key opportunities for our businesses to work better together, and driving operational excellence to do things in a more straightforward way. All of this is enabled by having the right team in place, investing in our digital roadmap, alongside a continued focus on ESG. One of the things we have done in the first half is commission some independent customer feedback. That feedback showed lots of positives around our specialism, our people, and our agility.
But it also highlighted what we already know, that we need to be more joined up in terms of how our divisions work with one another, and also how we approach and support our large strategic customers. Our work in the last six months has been focused on our divisions working better together. I think we've made good progress, and I will update you on the key points. From a divisional collaboration perspective, our senior teams are working more closely, and the work we are doing on our digital roadmap will facilitate this and make us easier to do business with. We are also increasingly thinking about our opportunities from an end market perspective. This is particularly important given the significant spend commitments and increases in spend commitments in major infrastructure projects.
To facilitate this, we have appointed our first end sector specialist, a director of Vp Rail, to lead our rail offering across the group. Continuing the growth agenda, we explained in June that M&A would be a key part of our growth story, and we were pleased to complete the acquisition of CPH, a specialist business in the Republic of Ireland, in early October, which Keith will talk about in a bit more detail shortly. Another important part of our progress is around our operating model, making sure that we are set up in the way that both best supports our customers, but also allows us to operate as simply and efficiently as possible. In the period, we have continued to make progress, and we are now transitioning certain functions to the center, for example, our rehire activities, the management of our major customers, alongside property and procurement.
To do all these things, we need to ensure we have the right team, and I'm really pleased that we have new leadership in IT, health and safety and sustainability, and also procurement. I mentioned our refreshed operating model on the last slide, and I think it is worth explaining this in a bit more detail. The changes that we are making are to ensure that we are set up in the best way to support our customers and operate efficiently. Our specialist divisions in the center of this diagram are the heart of our business, and we have no plans to lose our divisional structure or the individual agile teams that support our customers. But we know that we can unlock opportunities if we think about our business in a different way and listen to some of the feedback from our customers.
We are therefore moving to a model where the overall management of our major strategic customers and our rehire activities will sit centrally. This will give our customers simple access to all of Vp and will make it easier to do business with. This represents a change for Vp, and it will enable us to drive growth. As I mentioned, we are also increasingly thinking about the growth from the perspective of end markets to ensure that we are well positioned to take advantage of significant projects where we know that billion-pound spending commitments exist. Our appointment of a director of Vp Rail facilitates this. Our specialist divisions and our group-wide offering are then supported by efficient group functions using our scale and technology through our digital roadmap to do things in a simple and consistent way.
Some of these changes can be made immediately, and some will take a bit more time. Some of these changes will drive revenue, and some are about reducing cost. But overall, we see a big self-help opportunity from refreshing the way we work. I'm now going to hand over to Keith, who will cover our financial review.
Thanks, Anna, and good morning, everyone. We'll get straight into our financial highlights. As you can see, our key financial metrics are broadly in line with H1 last year. As Anna has already mentioned, the picture across our end markets is similar to that at the year-end, with infrastructure and Energy being generally supportive, but challenges remaining in general construction and housebuilding. The main change has been in rail. While we remain optimistic about the outlook in rail, the slower-than-anticipated start, CP7, has impacted the half, and therefore, to produce results in line with last year's H1 demonstrates the robust nature of our diversified business model. Return on Average Capital Employed, or ROACE, has improved slightly from the year-end at 14.7%, although this figure does include around 0.6% relating to the goodwill impairment we recorded at the end of last year. We haven't recognized any exceptional items in H1.
We do, however, expect some in H2 relating to corporate development and operating model changes, both of which we'll touch on later in the presentation. Onto the balance sheet. Our balance sheet remains strong and robust, which positions us well for future opportunities of investment. In fact, we increased the investment in our rental fleet from GBP 28 million to GBP 39 million in the period. The credit environment remains challenging, but I'm pleased to say that our focus in this area resulted in both an improvement of DSO and lowered bad debt write-offs. Net debt increased by around GBP 15 million, which I'll cover in a bit more detail over the next few slides. This slide shows the movement in net debt over the period. In terms of inflows, cash generation remains strong and consistent with the comparative period.
In terms of outflows, we continue to be disciplined in how we allocate our capital. We continue to invest for growth by investing back into our fleet. We pay interest and our taxes, and we return funds to shareholders via our dividend, which is uninterrupted for over 30 years. The working capital outflow in the period includes an element of seasonality. It also contains cash outflows relating to previously recorded exceptional costs and also a return of a large customer overpayment from the prior year. I expect some working capital improvement over H2. I wanted to remind everyone of our finance facilities. Including our overdraft, we have around GBP 190 million of facilities. These facilities include two fixed-rate low-cost private placements, the first of which matures in 2027. We also have a GBP 90 million revolving credit facility, which we've just extended for a further year.
This facility now matures in November 2027. Our facilities are subject to two financial covenants around interest cover and a net debt-to-EBITDA gearing ratio. We are operating well within these covenants and currently expect our net debt-EBITDA gearing to be around 1.5 times at the end of the year. We continue to operate with significant headroom and well within our covenants. We have the funds available, which we will continue to allocate with discipline. We are committed to maintaining a young and well-invested rental fleet. We increase our investment in the period both on a gross basis or considering investment net of disposals. We allocate capital in areas we believe will maximize our growth. Currently, the German transmission market represents a significant opportunity for the group. Between now and 2045, the German grid will be expanded and transitioned towards renewable energy sources.
During the period in Germany, we invested around GBP 7.5 million in steel panels to provide temporary access solutions to network locations. This investment is expected to be ROI accretive and is relatively low risk given the long lifespan and high residual values of the panels. We continue to consider environmental factors as part of our investment decisions, and that was no different here. From a logistical perspective, these panels were transported as close to customer sites as possible using boats and barges rather than the more typical and environmentally unfriendly road network. This also involved the creation of a temporary preparation station at Hanover Docks. More broadly, across the group, more than 50% of our H1 fleet purchases were zero emissions at point of use.
Moving on to our returns and dividends, I presented these two charts at the year-end, but I think they do a really good job of summarizing the financial strength of Vp. The top graph shows our ability to deliver remarkably consistent and strong returns over several years. The bottom graph shows our dividend story, with an uninterrupted dividend history stretching back over 30 years. And despite some headwinds in the first half, we're declaring an interim dividend of 11.5p, consistent with last year. Our growth strategy is a combination of organic growth and M&A. We've already touched on organic investment, and now I want to focus in on M&A. When we presented our refresh strategy in the summer, we set out the criteria for acquisitions and also that we would consider selective disposals in order to best deliver our strategy.
From an acquisition perspective, we said that we were looking for businesses which were specialists with growth potential, provided access or extensions to geographies, assets, or sectors, met strict financial hurdles, and fell well within risk appetite. Just after the period end, we were really pleased to acquire CPH for an initial consideration of EUR 12 million. CPH is a business that falls right in our sweet spot as it does one thing very well and focuses on very specific end markets, typically clean rooms within pharma, technology, and food and beverage. CPH has immediate opportunities to grow with its existing customers, and we are also looking forward to taking advantage of the booming Republic of Ireland market, which has strong growth potential both for CPH and also for the wider group. Eight weeks in, and the integration has been going very much to plan.
Existing management remain with the business, and both CPH and our other divisions are exploring ways to maximize the opportunity of having CPH as part of the group. This is likely to be the only acquisition we make this year that represents a new division. Any other activity in H2 is likely to be smaller bolt-ons to existing divisions. Quickly turning to divestment, we continue to look at options to rebalance the group's offerings, including opportunities for divestment. We continue to look at our businesses in terms of returns, growth potential, and alignment with the strategy, which is increasingly focused on divisional cross-collaboration and end market specialisms. So to summarize, we've seen robust financial performance in the half.
We've seen that we operate well within our finance facilities, but we've targeted investment where we see organic growth opportunities, and we've just seen progress against our strategy with a post-period end acquisition of CPH. And with that, I'm going to hand you back over to Anna.
Thanks, Keith. I'm now going to run through our operating performance for the first half, which will be focused on the end markets we serve. I'm going to start with infrastructure, which is our largest end market. Infrastructure is the area where performance has been strongest and where we probably see most potential. We categorize infrastructure as rail, water, transmission, and in rail, there is a significant market opportunity with GBP 45 billion of spend in CP7 and a number of major projects ongoing. Crucially, the government didn't cancel any significant projects as part of the recent budget. As I mentioned, we've appointed our first end sector specialist to provide leadership and coordination across our divisions in this important area. As well as supporting on major projects, we also work closely with Network Rail on the scheduled maintenance of the rail infrastructure.
Our performance in half one on rail was lower than the equivalent period last year due to the change from CP6 to CP7 and a level of further delay caused by the government change. Despite this, we remain optimistic about our opportunities in this important sector over the five-year control period. In water, at GBP 88 billion, AMP8 represents a significant spending commitment and an over 70% increase on AMP7, and we are well placed to take advantage of that with the focus on sustainability serving our specialist business as well. Our work on water supports a number of areas from pipeline construction, enhancements, and portable roadways through to highly specialized assets to perform surveys and testing. Our performance in half one was strong with an increase over half one 2024.
In transmission, there is a significant investment both in the U.K., where the National Grid has a £30 billion five-year commitment, and also in Germany, where €500 billion is expected to be spent between now and 2045. Our work is focused on portable roadways, groundworks alongside survey, test, and measurement. Again, in half one, we have seen growth as we've been able to take advantage of these market opportunities, and as Keith mentioned, a significant part of our half one CapEx has been made to support the transmission market. The next couple of slides showcase case studies demonstrating the work we're In rail and water. This case study is a multi-million pound rail track enhancement project which started last month, where five of our divisions are working closely together to offer a true group-wide solution to customers.
Our specialist divisions will provide all plant requirements for the project, supported by our people, who include an operational team, central hire desk, and centralized management. We're also working with the customer to ensure that our approach uses innovation and, where possible, promotes battery technology to be more sustainable. We expect to be involved in more of these group-wide projects, and our new operating model positions us well to deliver. This case study shows some of the work that we do within water, another end sector which represents a strong opportunity for us. Our Groundforce division was involved in this project with Scottish Water to ensure the continuous supply of fresh drinking water in Aberdeen. Our work in this area included both the technical design work and the assets needed for a modular propping solution.
As we move towards AMP8 with its significant increase in funding, we see opportunities across the group, and in rail, we expect our divisions to be working together to support our major projects. In construction, market conditions have been more varied. We categorize our construction activities between general and specialist. In general construction, conditions have continued to be tough, largely caused by wider economic headwinds. Our activities in this area relate to the hire of small plant tools and equipment over a broad customer base. From a divisional perspective, this mainly relates to our Brandon Hire Station division. In the first half of the year, we have seen a reduction in revenue compared with half one of 2024, and in Brandon Hire Station, improvements in business performance have been slower than anticipated.
Despite this, we are optimistic that things are moving in the right direction and the actions that we have taken to position us well to take advantage of the market recovery when it comes. These actions are around back to basics and focus, essentially ensuring we have the optimal physical footprints and we are focusing our efforts on customers in our sweet spot. We are also making control and process improvements helped by data and system enhancements as part of our digital roadmap. Alongside this, and as I've already mentioned when I spoke about our operating model, we are moving certain activities such as rehire and the management of strategic customers from Brandon Hire Station into the center. This will better support the wider group, and it will allow Brandon Hire Station to concentrate on its core business and recovery plan.
As a result of these changes, as Keith mentioned, we expect exceptional costs in half two and in FY26. Within specialist construction, the position is more positive with good levels of activity in areas such as refurbishments and fit-outs. In specialist construction, we have a more focused offering where we either have specialist niche products or we focus on more specialist end markets. In this area, we have seen year-on-year growth with redevelopment projects particularly strong. It's worth mentioning that our recently acquired CPH division is also in specialist construction, serving the clean room, pharma, and data center market. The other point to briefly mention in construction is the continued challenging credit conditions. We are pleased that our debt write-off in the period has improved on last year, but we have felt the impact both directly and indirectly of administrations in the sector.
I'm now going to run through a case study of one of the major redevelopment projects we have worked on. This case study showcases some of the work that our MEP division is doing in office redevelopment. The Canary Wharf project is one of the biggest refit projects in Europe, with over 1,000 contractors on site. Our work here is all around access and providing safe, innovative, and environmentally friendly solutions. We have over 500 assets on hire in this location, and we provide access to our entire fleet from our on-site hire center. We expect refits to continue to be an area of growth for the group. In house building, where we supply telehandlers alongside small plant and equipment, conditions remain challenging with a contraction in houseb uilding output in 2024.
We note the government's focus on house building, including targets and measures around planning reform, but we are yet to see improvements in activity levels. So moving on to Energy, within this end market, the majority of our activities relate to oil and gas, and conditions continue to be favorable, led by strong oil prices. We note the shift to cleaner fuels and our own environmental roadmap, but we expect continued high demand for oil over the short and medium term. In Energy, we support a number of upstream and downstream projects, both in the U.K. and overseas, and in the first half of the year, our performance has been strong with a good level of growth, supported by industrial shutdown projects. I'm now going to run through an Energy case study. This case study is another example of where our divisions have worked together on a major project.
Five of our divisions have supported a major industrial shutdown with an on-site facility. This project was 24/7 and included day-to-day operation and maintenance activities. We've used this model of bringing together our capabilities on other U.K. industrial sites. That's the end of our operating review. I think that significant market opportunity exists, and alongside the self-help measures I've spoken about, we are well positioned for the future. So in summary, we've reported a robust first half performance despite challenges in some of our end markets. We're also continuing to progress our strategy, including improving divisional collaboration and end sector focus, refreshing our operating model, and progressing our M&A strategy. We have a strong track record of navigating difficult markets, and we have confidence in the future despite some headwinds, including the cost increases set out in the government's Autumn Budget.
We expect full year performance to be in line with market expectations. Thank you.