Vp (VP) Investor Update summary

Strategic and operational highlights

• Launched Vp Rail to unify and streamline rail sector offerings, providing a single point of contact and leveraging group-wide expertise for major projects and maintenance, aiming to drive growth and divisional collaboration.

• Refreshed strategy focuses on simplifying operations, enhancing divisional collaboration, and targeting growth in infrastructure, especially rail, water, and transmission, supported by digital transformation and ESG priorities.

• Completed the acquisition of CPH in Ireland, expanding specialist access services and entering a buoyant market, with integration progressing well and further M&A focused on UK or adjacent markets.

• Continued investment in fleet and digital roadmap, with over 50% of H1 fleet purchases being zero-emission at point of use, and pragmatic IT upgrades to support pricing and data-driven decisions.

• Maintained a strong balance sheet, robust cash generation, and uninterrupted dividend record, with capital allocation prioritizing organic growth, selective M&A, and shareholder returns.

Financial and market performance

• H1 revenue and profit were broadly in line with the previous year, with strong performance in infrastructure and energy, but ongoing challenges in general construction and house building.

• Return on capital employed (ROCE) remained strong at 14.7%, reflecting earnings quality and disciplined capital allocation.

• Net debt increased by £15 million due to fleet investment and working capital outflows, but financial covenants remain well within limits and significant headroom is maintained.

• Interim dividend of 11.5p per share declared, consistent with last year, continuing a 30+ year track record.

• Growth in water and transmission sectors offset slower rail activity due to CP7 transition and delays, with optimism for future rail opportunities.

Operational initiatives and outlook

• Centralized management of major strategic customers and rehire activities to improve efficiency and customer access across divisions.

• Ongoing self-help measures include process improvements, cost control, and digital enhancements, particularly in underperforming divisions like Brandon Hire Station.

• Inflationary pressures from National Insurance and minimum wage changes expected to cost £4 million, with mitigation efforts focused on pricing and efficiency.

• House building remains subdued, with improvement expected in the next financial year as planning reforms take effect.

• Full-year performance expected to be in line with market expectations, with continued focus on growth, operational excellence, and disciplined capital allocation.