All right. Ross? Okay. Ross? Okay. Good morning, everyone, and welcome to Zigup's interim results. I'm Martin Ward, CEO, and joining me today on the presentation is Philip Vincent, our CFO. Just in terms of agenda, if we look at the presentation, I'm going to give a very brief overview of the results for the period. I'm going to hand over then to Philip to do a deep dive into the financial review before coming back to me for a business update and then closing off with questions and answers. So if we just go to slide four, I just want to set the scene for the half-year results. So it's been a good interim period as we continue to invest in the delivery of our mobility strategy, and profit performance for the group is in line with market expectations.
Vehicle supply normalized, so there's no current issues, and the direction of travel for the rental fleet since the year-end is tracking upwards. So we expect to see growth in the VOH through to the full year. Disposal profits continue to trend downwards as expected, albeit these are still elevated in Spain, but we expect them to reduce over time. And our current investments in the fleet, as seen in the increase in assets on the balance sheet, will generate steady-state cash flows of over GBP 200 million in FY27, supporting both future growth and a sustainable dividend policy. Normalization of the supply chains in the claims and services area is driving down repair cycle times and hire lengths, but we saw revenue growth from additional mix of work, mainly repair volumes.
Some really good work being undertaken around customers, which is driving performance, and we're pleased to see our Trustpilot scores continue to be rated as excellent and support great customer outcomes, so based on the momentum we have to date, we are confident on the full-year market expectations. If I look at slide five, stand out for me is cash has been strong, enabling us to make investment and grow in the fleet, now with a book value of GBP 1.4 billion, and this investment in fleet assets continues to add balance sheet value while maintaining leverage well within our target range of one to two times and through a disciplined capital allocation policy. The forward visibility we have on cash is also supporting a growing and sustainable dividend in line with our policy.
If we look at rental, as I said, the direction of travel in the rental fleet is up, both in renewing customer contracts and securing new orders. Spain continues to power ahead, adding over 4,000 to the average VOH on a comp basis. We have seen further traction from cross-selling across the business verticals, which is a continually developing position, and I'll go into that in the second half. Installation agreements have been entered into with British Gas and ScottishPower for EV charging installation, both for domestic and commercial customers. Overall, we are looking at a strong pipeline going forward. In claims and services, we continue to grow repair volumes across our market sectors, which is an enabler to build out more crossover services. More digital connections are being made to support self-service and enhance our efficiencies.
And we've seen good uptake of cash protocols by insurers, which reduces costs and adds to our cash collection efficiencies. And if we look at sort of customer delivery as of March this year, the UK&I business is represented through one management team. You remember me saying that at the full year, which simplifies our customer engagement across the brands and delivers more market opportunity with strong positioning. Our Trustpilot and survey feedback from our laser focus on customers makes us a standout provider of services, and as I say, rated as excellent. And when you visit our branches across all of our territories, you can actually feel a palpable energy and purpose as a direct result of bringing customer feedback to the top of the KPI sheet, with every branch team having visibility over how they are performing.
Our ongoing investment, investing in new sites that are designed for efficient workflow and equipped with the latest tooling, as well as rolling out ADAS, Advanced Driver Assistance Systems, and repair and maintenance tech throughout our own sites to demonstrate a best-in-class operating model. This, in turn, is driving efficiencies and will improve margins over time. Ensuring we have next-generation technicians through our expanding apprenticeship scheme, which now numbers over 400, providing talent succession. We'll come back to have a further update on the business, but overall, we are pleased that with near normalization of residual values and supply chains, we are seeing some good outcomes which underpin our performance. On that note, I'm going to hand you over to Philip to cover the financial results in more detail.
Thank you, Martin. Good morning, everyone. So I'm going to start off by looking at the headlines. So if we turn to page eight, first of all, so the first thing to note is our overall group results are in line with what we expected for the half-year. Now, importantly, underlying revenues, excluding vehicle sales, were GBP 775 million. That's 5.6% higher than the prior year with growth across the business. Earnings before interest and tax decreased GBP 15.9 million, or 13.8% to GBP 99.1 million. Now, GBP 8.9 million of this decrease is due to the expected normalization of our disposal profits. And the balance is due to claims and services profits, which I will talk to in a moment. And the rental business has continued to perform very well. We have continued replacing our oldest vehicles and have been investing to grow the fleet to 132,500 vehicles.
We've done this whilst keeping our leverage flat at 1.6 times year on year. It's this investment that's going to generate significant cash in the future periods. Now, if we turn to slide nine, let's have a look at the revenue. We have seen the continued benefit of our integrated platform with revenue growth across the business. UK&I average VOH was 4.6% lower as it is cycling through a tougher H1 comparator given our VOH evolution, which I will explain on the next page in a minute. Supply has been good, and CapEx has been invested in replacing older vehicles as well as growing the fleet. Product extension and carefully managed pricing enabled rental revenues to grow 1.7% in the UK&I.
In Spain, continues to operate very well with strong demand and with good access to vehicles, enabling average vehicles on hire to grow 7.4%, which combined with pricing resulted in rental revenue growing 8.6%. Now, claims and services revenue grew 6.1% with good growth in direct repair revenue, partially offset by a reduction in credit hire revenue. And vehicle sales revenue of 128.7 million was, as expected, 48.8 million lower than the prior year, with fewer vehicles sold at lower residual values. So if we turn to page 10, I'll just explain the VOH trends in a little bit more detail. So these graphs are showing the VOH progression for the current half-year as well as last year. So if you look on the left-hand side, first of all, at the UK&I graph, you can see that H1 this year is comparing to a tough comparative last year.
You may recall at the year-end I explained that VOH in UK&Ireland had fallen during the year as vehicle supply was improving, but not at a rate required to replace our disposed fleet. We started this year 3,000 below May last year. As a result, average VOH declined 4.6% in H1. Now, I'm pleased to say that both supply and pricing available from OEMs has moved in our favor since April. By November, VOH has surpassed the prior year. We expect VOH in H2 to continue to increase, which is positive for the outlook. Now, the picture for Spain is different. The better access to vehicles last year meant that VOH grew through the year, and this growth has continued into the current year, with average VOH growing 7.4% year on year with continued strong demand.
Now, if we turn to page 11, we'll look at our group profits, so this chart bridges the prior year's underlying PBT of GBP 99.1 million to GBP 82 million this half-year, and as expected, this year sees us working through the previously flagged normalization impacts on vehicle and parts supply chains, and the headline figures in these results reflect this. Disposal profits, which you can see in the middle of the chart, are GBP 8.9 million lower as expected, with a reduction of GBP 4.3 million in UK&I and GBP 4.6 million in Spain. Residual values are normalizing in UK&I with a 14% reduction in H1, but with values flattening now in recent weeks.
Total volume sold decreased 7.4% year on year, with average LCV PPUs reducing from 3,500 last year to 1,600, reflecting the lower residual values, but also the fact we're selling older fleet and a different mix with a lower PPU. In Spain, residual values, sorry, I lost my script, in Spain, residual values saw an 11% reduction in H1 and average PPUs at 1,900, slightly lower than the prior year's 2,300. Now, average VOH fell 4.6% in UK&Ireland and increased 7.4% in Spain, as I said, with overall volumes increasing profits £2.7 million. Rental margins remained strong in both the UK&Ireland and Spain, with slight reductions, all in line with our expectations. UK&Ireland margin of 15.7% is ahead of our 15% medium-term guidance, and Spain is even higher at 19.3%.
Now, both businesses continue to deliver operational efficiency alongside improving procurement and sensible annual pricing increases. And Spain's translated results have also faced a currency headwind in H1, which has reduced their profits by GBP 1 million. Now, the increase in claims and services volumes in FMG and FMGRS was somewhat offset by lower credit hire volumes, delivering an additional GBP 1 million of profit. Now, claims and services EBIT margin at 4% is 230 basis points lower than the prior year. So in May, the business was the victim of a cyber incident. The incident resulted in a loss of around one week of referrals in May for Auxilus, and systems were offline in NewLaw for much of May and June while we carried a full burden of overhead costs but no corresponding revenue.
Now, this one-off incident in the first half reduced claims and services profits by GBP 4.2 million and reduced the margin by around 70 basis points. And in addition to that, we have treated GBP 2.8 million of third-party advisor and IT costs in relation to this incident as exceptional and outside of underlying PBT. Now, the remaining GBP 5.5 million reduction in margin is mixed, with more income from FMG and FMGRS and less from Auxilus due to, as expected, improved supply chains, which have benefited our rental business by reducing the amount of time vehicles have to spend in our rental workshops, and at the same time reducing the time to repair vehicles in our body shops, and so reducing the length of our credit hires. And second, the quieter summer with fewer incidents being managed with insurers reporting a 10% reduction in insurance incidents over the summer.
Interest costs increased GBP 1.2 million due to a higher average level of debt. Now, if we turn to slide 12, we'll look at cash flow. I'll start off by saying that our CapEx and cash flow is playing out as we expected and in line with what I explained at the year-end. EBITDA of GBP 228.6 million was GBP 8.6 million higher than the prior year, driven by the underlying performance of the business, and spend on net replacement CapEx increased GBP 75.4 million to GBP 178.9 million as both the UK&Ireland and Spain continue to replace their oldest vehicles. We had GBP 38.5 million inflow from working capital, reflecting the normal ebbs and flows of payments and receipts and the fact that around 70% of our claims and services insurers are now within protocol.
A reminder that protocol agreements with insurers lay out agreed settlement terms, mechanisms, and timing of payments, improving the efficiency and speed with which we collect our cash. And in the prior period, there was a working capital outflow as the business was investing in working capital for new contract wins. And we paid dividends of GBP 39.3 million and chose to invest a further GBP 53.5 million in new vehicles to grow the fleet in response to the customer demand that we saw. Now, total net CapEx spend in H1 was GBP 232 million. That's GBP 128 million higher than the prior year, which is reflecting the good vehicle supply that we now see in both Spain and the UK, and with the fleet now reaching 132,500 vehicles and no increase in leverage year on year at 1.6 times. GBP 5.3 million was spent on completing the share buyback program.
Now, I just want to cover a few points on CapEx. So I explained at the year-end in July, we will continue to replace the oldest vehicles in our fleet. And I said that I expect our total net CapEx to increase just over a third this year, but that could change depending on access to vehicles and demand. Now, vehicle supply is good in both the U.K. and Ireland and Spain, along with very strong demand for our services. We, therefore, will spend more CapEx this year to both replace the older fleet and grow with existing and new customers. And total net CapEx will increase more than that 30%, but we will remain within our prudent leverage range of one to two times.
I also explained that modeling on the basis of what we would like to achieve within the business and given our expectations of vehicle supply over the coming 24 months, it would suggest that the average age of the fleet would reduce to around 28 months in both Spain and the UK. That was on the basis that replacements go as planned and these residual values trend as expected. Now, the slide shows a reduction in average fleet age year on year. Also, since the year-end, the average fleet age in the UK&I has decreased two months to 32, and in Spain, has reduced one month to around 29. This investment in new replacement vehicles will generate significant cash over the next few years. We can decide whether to invest that cash for more growth or to reduce our debt as we go forward.
Remember that in the long term, we expect our net CapEx to reduce substantially with a corresponding momentum to cash generation principally driven by our appetite for fleet growth and where else we choose to invest. We carefully control that rate of spend on CapEx, managing our debt position and taking opportunities for growth. Both our cash flow and our operational KPIs benefit from this investment in new fleet through better hire rates, utilization, and lower maintenance. Now, whilst the additional CapEx initially reduces overall net cash flow generation, this will quickly turn around to strong, steady cash flow. I said in July that this could move from, say, GBP mid-100 million to GBP 200 million steady state cash flow from FY27, and then significantly higher thereafter, accelerating to well above GBP 200 million, everything else being equal. That view is unchanged.
So we're executing our CapEx plan and our overall capital allocation in line with that which we laid out earlier this year, taking the opportunity to invest slightly more given good supply, strong demand, and plenty of facility headroom. So now, if we turn to page 13, let's just have a look at the balance sheet. So our balance sheet continues to strengthen with over 132,000 vehicles now, a net book value of GBP 1.4 billion. That's up GBP 200 million compared to the prior half-year, and net debt only up GBP 27.5 million, and leverage flat year on year at 1.6 times. So our strong balance sheet has enabled us to raise a further EUR 190 million of loan notes across seven and 10-year tenors at an average rate of 4.4%, which provides additional headroom to invest in our business.
But it's also reduced our overall cost of borrowing with a cost falling year on year 30 basis points to 3.2%. And the chart at the bottom of the slide bridges our net debt as of April to October 2024, and our net debt closed at GBP 782.5 million with GBP 347 million of headroom. So we generated just under GBP 50 million of steady state cash, excluding lease payments. And that included a net GBP 178.9 million investing to replace our oldest vehicles. And we invested a further GBP 53.5 million, mainly growing the fleet in Spain. And then we returned GBP 44.6 million to shareholders in the form of dividends and share buyback. And then at the top right, I've got our chart we've included for the last few presentations, which shows our return since FY21, which is now GBP 240.5 million in dividends.
We've invested GBP 45.5 million in acquisitions, extending the products and services of our platform. And we've returned a further GBP 90.2 million to shareholders through the share buyback. So the business continues to generate good cash. It's being invested as planned in replacing and growing the fleet to generate sustainable returns. And as I said, our expectation of generating significant cash from these investments is unchanged. So thank you, and I now hand you back to Martin for the business update.
Thanks, Philip. So look, I mean, my takeaway from the financials is, you know, if we look at competitors in our market operating with a large fleet, they're normally leveraged at between three and three and a half times, and we're leveraged at 1.6 times. So it's very under-leveraged in terms of what we're doing. If you grow the business, if the rental side of the business grows, you're investing in the fleet. But don't forget, that's a corresponding asset on the balance sheet in terms of value, quite a liquid asset as well. And you've got all the future cash flows from that. I think Philip said it quite a few times, but, you know, I sort of nailed the colors to the mast on this. You know, when you're cycling the fleet and you're investing, you're going to be growing the fleet.
You're going to put in the cash into that. But it's all the future cash flows that come off the back of that. So the takeaway there was in FY27, £200 million plus steady state cash, and then growing beyond that. So we expect the business to be able to generate a lot of cash from the investment cycles that we are in now. Anyway, that was your last public presentation to analysts in the market in the PLC world.
It was.
How'd you feel?
I felt good. I'm not going to be here in July doing it again. No, I just, yeah, I was reflecting at the presentation at the weekend, and, you know, lots changed since we brought the two businesses together. They're fundamentally different. The business is different in terms of the products and services, much broader than they were when we went through the merger. But we operate them in a completely different way as well. They operate in a much more efficient way than they did pre-merger, I think, and that continues to get more efficient as we go forward. But then I was just looking at the numbers, you know, from our first reporting period, which was April 2020. You know, our net book value of our fleet has gone up by £500 million.
If you look at the consensus for profits for this year, that would have gone up GBP 100 million underlying PBT. Our leverage hasn't moved. 1.6 times, April 2020, 1.6 times now. So, you know, that's not a bad set of results overall over that period. I think, you know, we look at the balance sheet now, we just raised some more funding. We've got a really strong balance sheet.
As Martin said, you know, yeah, our absolute debt level has gone up a little bit, but our net book value of our fleet has gone up more. You know, our leverage is very prudent. So I believe I'm leaving the balance sheet in a really strong position to fund future growth as well. So sad to be leaving. Sad not to have all the conversations with you guys twice a year, but excited for me personally for a new opportunity.
Okay, well, before I move on, just to say thank you for your efforts. It's been a pleasure working with you over the last five years, Philip, and I sort of wish you well in your new pastures.
Thank you.
We're not quite done yet, so we're going to move on to the sort of business update then. So if we just look at slide 15, you know, our platform of integrated mobility services is a differentiated proposition. You know, we're combining products that were once commoditized and adding a layer of service wraps that, in combination, are creating value and efficiencies for our customers and our partners. You know, those structural trends that we talk about of usership over ownership and outsourcing remain favorable. And that's the theme of the discussions we're having in the market today. And the scale of our business supports longer-term thinking about the depth and the capacity on what we can do. You know, our markets, Philip mentioned it, our markets are reaching normalization, which is supply chain functioning as expected, which does create a clear view of those market opportunities.
We have a strong business model that is stable, and it's good to be operating in the mobility space, which is an essential enabler to the overall market economy. We have a strong financial position, as we've just been discussing, and we can invest in growth through the upcycles, with good levels of lending support, which generate sustainable returns well above the cost of our capital. But equally, you've got to remember, in down cycles, so we're in up cycle, we're investing. In down cycles, the business will throw off excess cash, as we did during the pandemic when we're not purchasing vehicles. If I turn to slide 16 and just look at the rental market overview.
Outsourcing to rental is the preferred option for our business users, as it provides flexibility without all the holding costs and without having to commit to large capital outlays to acquire a fleet. You know, the autumn budget, you know, delivered a lot of news for businesses. But on the upside, it announced an additional GBP 500 million of road maintenance spend alongside some larger transport infrastructure bills, which is a positive for a number of our customers. You know, van rental new business wins following better supply is at the highest level we have seen since 2019. And this is feeding the upward trend supporting H2 and beyond with high-quality selective customers. We are continuing to grow out our Auxilus sales like telematics, fleet and accident management, and EV packages, which supports our differentiated model. For example, there's been a 65% increase in active customers with fleet under management.
We have seen over 750 vehicles go out on rent through crossover opportunities between our different brands. While there has been a lot of recent public noise around EVs, the ZEV mandates, and the scale of charge infrastructure yet to be delivered, we continue to see a reasonable level of demand for eLCVs from an increasingly broad customer base, with our biggest single order of over 600 eLCVs received to date to be rolled out over the coming year. In Spain, you know, Spain has been a standout performer with a record fleet size, and our rental proposition is gaining further market share. The economy in Spain is strong, and demand is coming from a wide number of sources, which builds on the spread of market sectors that we operate in.
We've got new sites and service points adding to the scale of the operation in Spain, which supports future growth. For example, we've got two new service points coming online and one additional used vehicle sales outlet scheduled for the second half. If I turn to slide 17 and look at the UK, as we've covered, no current issues with securing new fleet, and we expect good pricing support for volume orders as manufacturers buy for market share. You know, residual values in the UK should become less of a talking point. Our car fleet RVs, residual values, have been stable throughout 2024 post H2 2023 decline, and LCV residual values have trended downwards as anticipated, and we expect these are now close to normal, and then if we think about Spain, you know, normal supply for new vehicles has been there for a while.
We've got a broadening relationship with a number of manufacturers, which spreads the concentration of risk when you've got a wide offering product to a selection of customers. As I said, residual values in Spain are still elevated, but they are moderating, and they are expected to continue to trend down as per the UK over time. Don't know what time, but over time. I mentioned the ZEV mandate, just to talk about that briefly. You know, the government-led consultation has been expedited to review what measures are needed to support further OEMs, to support the OEMs and the market with the EV transition. Just to be absolutely clear, there are no market participants seeking to change the 2030 date for alternatively fueled cars, but we are seeking, as a lot of the trade bodies are, the government to support the generation of demand.
So whether that's sort of subsidies or some way to create that demand to support that transition. Vans are still under review as to the date for transition, but it's clear that product viability and infrastructure to support eVans falls way short of the mark in present terms. So the outcomes of the ZEV consultation are important for establishing what supply manufacturers will provide into the U.K. Ultimately, manufacturers will determine how supply comes into the U.K., which in turn has implications for availability, pricing, and residual values. You know, Zigup has an advantage along with other large-scale operators of being able to support EV supply with demand for both eCars and eVans. And having the current fleet in excess of 132,000 is therefore a good upside risk to protect availability should supply become restricted.
So I'm just saying it's just one to watch out on the ZEV mandates in terms of sort of what comes in. Not asking to change the dates, as we said, but, you know, what is that demand going to look like? What is that supply going to look like? If I turn to slide 18 and look at claims and services. So as Philip mentioned, we had a quiet summer period than expected. So traffic volumes were recorded as being normal, but we saw 10% less incidents reported in those summer months. There's no hard evidence as to what caused this, but post-summer, there's been a return to a normal correlation to traffic and incidents. So as I say, it has normalized.
I mean, one thing to point out is that part of the Consumer Duty outcomes, insurers have been implementing changes, and they're trying to dial in the right approach across their business lines. So there has been some disruption in that process, which is now finding better direction. And as I said earlier, repair cycle times are improving following normalization of the supply chain, which in turn is, you know, reducing higher lengths. But what we're seeing is that's returning to historic norms. Net net, while this impacts our overall profitability, a faster journey through a claims process supports a good customer satisfaction outcome and faster cash collection, as we've seen in the cash collection during the first half, because there's less to contend with on a claim.
You know, and as the insurance market cycles through hard and soft periods a lot quicker these days, which shapes the cost of motor insurance premiums, so claim settlements form a big part of this. And gaining efficiency through that claims process is a fundamental driver that supports that front-end pricing for insurers. And our platform offers a best-in-class operating model and provides an advantage over a single-source product. So structurally, this should continue to support our momentum. And demand for services remains high, especially on repair capacity. And we inked a number of renewals during the period, and we feel positive around business development conversion from the pipeline. And as Philip mentioned earlier, you know, we had a cyber incident in early summer, which meant we had to briefly pause some of our business operations on a precautionary basis while we sought assurance.
Okay, turning to slide 19, just I want to focus on our people very briefly. Just to say, I am immensely proud of the team we have working in the business who deliver these great customer experiences and outcomes and strive to make Zigup a great place to work. We do invest substantially in our talent pool and our apprenticeships to ensure we have the best-in-class future leaders, technicians, and experts in our business. And we have been recognized across a number of industry events, both here and in Spain, for innovation, best rental company, new service, and environmental initiatives, which is testimony and recognition from outside agencies to the great work our people do. There were more awards, too many to mention, and I want to say thank you to all of our team for their efforts. And then turning to slide 20, touching on technology.
You know, technology is a growing part of what we do. You know, we've said before we use robotics, and we've got the early introduction of AI tools to support data analysis. We have a number of programs live and pending in the business that will continue to support an incremental drive for efficiencies and enhance our customer experience. So we are using that tech stack to win business and to enhance our overall efficiencies. We are disciplined in our technology investments, but like many businesses operating at scale, there is significant potential to drive a greater capacity and operational leverage through these tech developments, and we are on a journey to unlock these benefits. Okay, I'm going to go to slide 21, just touch on the outlook, so all everything that we've said today, I mean, these are strong foundations that we are operating in the business.
There's a good pipeline of orders and prospects, and there's that opportunity, as I say, to drive those new efficiencies. So based on the visibility we have, including the normalization of disposal profits and the positive trends for the group, our outlook for the balance of this year remains unchanged and in line with market expectations. So that concludes this part of the presentation, and we're now going to sort of move to take questions. Okay, David's got his hand up.
Good morning, it's David Brockton from Deutsche Numis. Can I ask a couple around the claims and services business, please? Firstly, can you just comment on whether you think credit hire lengths are now back to a normal level as suppliers improved, or is there further moderation that we should expect on the business there? Because obviously there's two sort of underlying impacts there in terms of both volume of claims, but also that normalization impact. And secondly, you might be able to correct me, but it doesn't feel like there were as many new contract wins, or you haven't talked about them as much as you have in previous results in respect of new claims customers. And just wonder if you can just comment on the pipeline there and what that looks like.
Yeah, okay, David. So do we think credit hire lengths are back to normal? I think what we're seeing in the business is they are close to normal with what we expect to see for this time of the year. So as we cycle through that sort of winter, we can see we believe they were back to normal. So we're not expecting further moderation. But as I say, we've got to get through that sort of winter period as well to prove that out.
On the second part, we've got a strong prospect pipeline. Does take some time to convert clients, new clients, new wins. I said before we've had very strong conversion in the business, and we do expect to be able to convert from that strong prospect pipeline that we talk about. We have mentioned some in there, not necessarily claims and services, but the ScottishPower contract, the British Gas contract. And as I said, there is a strong pipeline from which we are converting from. So we're confident on the visibility that we've got that supports not only this year, but sort of future growth as well. Okay. Alfonso?
Hi. Hi, good morning. It's Alfonso from Barclays here. I have three questions, if I may. The first one is on the supply dynamics you are seeing. Would you say that supply has fully normalized by now? And how should we think about fleet growth in the U.K. versus Spain as we head into the second half in fiscal 2026? The second one is on your commentary around the U.K. budget and expected investment in infrastructure. How creative do you think this will be in the second half? As I'm assuming this was mostly, you know, an impact for your fiscal 2026 year. And then one last one for Philip. As you've seen, I mean, as we wrap up your tenure at Zigup, you've seen a lot of transformation in the business over the last five years. Can you tell us what has surprised you positively over this period? And if you could go back, would you have done anything differently? Thank you.
Okay. I'm going to give Philip time to think about that one and so deal with the first question, Alfonso. Supply dynamics, are they fully sort of normalized on the fleet? Yes is the answer. You know, there are no issues in securing new fleet, both in the UK and Spain. I said and appreciated when you're doing the presentation, there's things that sort of pick out. You know, some of the manufacturers want volume in the market now as well. That brings about different conversations in terms of where your sort of negotiation leverages as well. That's a positive in terms of being able to place orders, large orders.
My watch out was just that ZEV mandate because, as you know, there's targets set around cars, 22% this year, 10% of vans have to be alternatively fueled. You know, manufacturers are paying close attention to what the government will do. So if there is not enough incentive that creates that demand that enables them to place EV or alternatively fueled vehicles into the U.K., you could argue that they're going to cut back on ICE supply as well.
Now, different manufacturers have got different positions. But if they fold their arms and limit supply to the U.K., that creates that dynamic again of limited supply, et cetera, et cetera. So we're watching very carefully, as I said. It's not about the date change. This is about what support will be there for EVs, and that's why we think, you know, having our fleet over 130,000, I think it's a strong position because that protects availability for your customers, and that gives you a sort of a good position in the market.
On question two, the UK budget infrastructure, do we expect that to feed in? It's hard to say when exactly that would feed in, but we have a lot of customers working in those sectors. So we've got the traffic management business, we've got Blakedale, we've got the Northgate sort of rental business that's got exposure into those sectors, infrastructure, construction, and maintenance. So, you know, we're seeing good demand coming from those sectors.
You know, they're normally quite big businesses. Some of them are publicly listed. So they've got good visibility on the sort of the projects that they're doing. So that feels quite buoyant at the moment to us. I'm not saying that we're penciling anything for H2. I think we just see how that sort of shows itself through the numbers. Hopefully that's given Philip enough time to think.
Yeah, so first one, what surprised me? I think it's cash flow. You know, we do generate a lot of cash as a business. We haven't always been able to demonstrate that because we're always investing for future growth. We know we make a good return on that. And ironically, what came out of COVID was no one knew what was happening across the whole economy. We switched off those growth taps.
We switched off CapEx spend, and we threw off a load of cash, even though there were no incidents or accidents happening on the roads. So we had no cash contribution from Redde at that point. And the rental side was just starting to throw off cash. And it threw off cash really quickly. Our lenders have got comfortable very quickly. We threw off like something like GBP 90 million in cash in six months. So it shows we do generate a lot of cash.
We choose to then invest that in future growth, and I think that even surprises how much cash does come off when you just switch off those taps. That and the fact that the rental product is so sticky as well. Remember, we only ever saw 6% of the fleet return. That was a surprise to everyone when, you know, 70% of the fleet is what we describe as a Flexi product broadly. Would I do anything differently?
That's a tricky one to answer. That does feel like an interview question. I think, look, when you look back, you always say, actually, could you have done things slightly quicker, but look, we've done a lot, as I mentioned earlier, since the merge. You can only move so quickly when you're trying to bring two companies together, so I don't think it's say there. What would I rather we didn't do? I'd rather we didn't change depreciation rates, to be frankly, because that's painful. But I think we disclosed that as clearly as we could. But yeah.
Thank you.
Thanks. Andrew. Yeah, good morning. Andrew Nussey from Peel Hunt. A couple of questions as well. First of all, just exploring the U.K. vehicles on hire, and if I sort of read the chart correctly, you're probably about 45,000 now on a very steep trajectory through the period. What will that look like through the second half? And secondly, it sounds like you're sort of a little bit nervous about what might supply look like over the next maybe 12 months, given the regulations.
Are you running a slightly lower level of utilization? I know it's a crude measure than perhaps would normally be the case to protect yourself from that point. Thirdly, on the cyber incident, has that impacted your conversion of new contract opportunities? Customers may be slightly nervous about what that might mean. Have you had a clean bill of health now? Okay, do you want to answer question one?
Yes, that was you. Sorry, I was reading another note that was passed to me. There's VOH growth in UK&Ireland, isn't it? Yeah.
Basically, a very steep trajectory in the first half. What will that look like to you?
Yeah, look, so look, the best we can see, and it does depend on the supply, and it also depends on how we choose to distribute our CapEx between UK&Ireland and Spain, because we watch our CapEx very carefully, and we're looking at that leverage very carefully as well. What I would say is I would expect it to continue to grow into the second half, such that by the time we get to the year-end, average VOH for the year is probably similar to what we were last year, on average, which means actually you're growing point to point slightly ahead of where you started the beginning of last year. That's probably the best way to describe it from what we see today.
On sort of utilization, are you sort of being able to?
Yeah, so I'm covering utilization. I mean, no, I mean, utilization is tracking up to exactly where we expect it to be. This time of the year, it's, you know, around about 92% now in the business. What we always want to leave a little bit of room to make sure we've got replacement vehicles for the emergency standbys for customers that sort of drop in on a Friday afternoon with a red light on and need a replacement vehicle, for example.
So we leave a little bit of room there. I wouldn't describe it as being concerned about supply, because I think the supply is there. The deals and the manufacturing has been there. That's all sort of programmed. It's sort of beyond the next 12 months in terms of the ZEV mandate. So, you know, we'll run utilization to the levels that we think are right for the business. So, as I say, no concerns there. On the cyber, no. What we did is we engaged all the outside agencies to provide us with the best advice that we could at the time.
We were quick to respond, to isolate and protect our systems. We wanted assurance. So that's why we paused what we did. We wanted assurance that there were no issues within our systems. And we got that assurance. We got that sort of clean bill of health fairly quickly for the majority of the business. As Philip said, our legal business was most impacted. And that, you know, is a smaller part of our business, but it's where the most impact was.
And we provided that assurance to the experts very quickly as well to our partners. So we're very transparent with our partners about sort of where we are. So, no, that hasn't affected conversion or anything like that. As I said, yes, we didn't trade for a week in that thing, but not in terms of new pipelines and so forth. And in fact, what happens is what doesn't kill you makes you stronger. Someone's already got the copyright on that, I know. But it makes sure you double back on everything. You gold plate everything. You just make sure, you know, that you don't leave yourself vulnerable.
Okay, thank you.
Hi, yeah, good morning. Andy Smith from Panmure Liberum. A couple of questions. One on rental prices within Spain and the UK for the hire. What's the trend there against the vehicle supply? And then just looking at the debt facilities. So you see net debt's gone up, but your debt headroom's also gone up. Is that because there's new facilities or what am I missing on there?
Okay, Andy, yeah.
Do you want to deal with question two first?
Yeah, okay, we'll do it. And I'm going to wrap up. We've got a question from James Barrow, who's on the line as well, on Barclays, saying, were we tempted to do more than the EUR 190 million raise? So, look, I think, so just on the debt, could we have taken more? Look, we did that deal directly with our existing lenders, and therefore we took what was sensible from them. So, you know, we weren't intending to take more.
That's exactly what we asked and exactly what we got. You don't want to take necessarily more than that because you end up with a high level of unutilized facilities as well. So, yeah, so, Andy, to your question, yeah, we did take more debt on board. It was private placement, seven and ten-year tenor rates, which were lower than what we borrow on the RCF. What we were able to do was to reduce the RCF and borrow fully on that private placement, which was in euros.
On the question on pricing, Andy, you know, so, look, we've guided on to the margins being around sort of 15% sort of midterm. We are seeing Spain higher than that in terms of what we're getting. You know, we've been able to pass pricing on through the inflationary increases over the sort of past periods. That demand is still strong. We're still seeing that pricing is very rational in the markets that we operate in. We expect to be able to maintain that guidance. I think when we get to the full year, I think we might review the 15% and ask ourselves whether it needs to be a little bit better than that. But we're confident on that 15% for sure, yeah?
Okay. Okay.
All right. I'm told we're sort of, we're not going to cut you out there, David, but I'm told we're running close to time.
Okay. I'll be quick then. Impact of National Insurance contributions next year on the business?
Yeah, there will be. Yeah, look, so we estimate about GBP 5.5 million impact on the business, but we've already got plans in place to mitigate that impact for next year.
Okay. Just wanted to kind of dig into kind of the performance of the body shop. I guess kind of goes counterintuitive with credit hire down, incidents down 10%. How come body shop is going up?
Yeah, so it's just the capacity, the work that we've created, the capacity, sort of the new sites that we opened that we talked about the full year, you know, a greater footprint, more capacity through what we can do. So, and there's plenty of work. We said before that, you know, body shop work is an enabler to other mobility services, that cross-sell. So, you know, we will take that work on. We know it's lower margin, but it does enable us then when contracts come up for renewal or coterminous that we can put mobility solutions into that as well. So it is, it's not a loss leader. It makes money, but it is growing.
And then final one, just in terms of the CapEx and the hike and saying it might be higher this year, are you expanding over a three-year view how much CapEx you're planning to put in, or are we accelerating into year one stuff that would have been done in year two and year three?
I knew you were going to ask that question, actually. So, yeah, look, I mean, it's hard to know because it depends on demand ultimately. I mean, from what I could look at today, I'd say a lot of that's probably accelerated, probably, because it's available now and the demand is there. But, you know, if demand continues to grow, and depending on what happens on the supply, and if we've got the headroom, we will take the growth because we're making good returns. As long as we're making returns that are above our weighted average cost of capital, we'll continue to grow because we know that's going to generate good cash.
I knew you were going to say that.
Yeah. It's our business model. That's what we do.
Okay. Have we got any questions that we've got to answer from the online audience as well? Just to...
We've answered, I think.
Yeah, we've covered that.
We've got one, yeah.
Okay, so I think we're in a wrap-up now. So I just want to sort of close in some summary remarks just to say, you know, the business continues to perform well as our markets continue to normalize. And the opportunity to build market share is definitely favorable. And the breadth of services across what we have with our customers is growing. I've talked about tech being that next enabler to deliver efficiencies. And we're confident, as I say, on delivering for the full year expectations. So, look, once again, thank you all for your time this morning. And again, thank you, Philip, for your services to the business and support from all the team. So, thank you.