REG - Hercules Site Svcs - Acquisition of Future Build Recruitment

Hercules Site ServicesAnnouncement

30/11/2023 07:15

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RNS Number : 1962V  Hercules Site Services PLC  30 November 2023

 

 

30 November 2023

 

Hercules Site Services plc

 

("Hercules" or the "Company")

Acquisition of Future Build Recruitment

 

Hercules Site Services plc (AIM: HERC), a leading technology enabled labour
supply company for the UK infrastructure sector, is pleased to announce that
it has acquired 60% of Future Build Recruitment Ltd ("Future Build"), a
specialist UK-based white-collar recruitment company operating in the UK
construction sector, for a total consideration of £1,251,000 (the
"Acquisition").

The transaction represents a significant milestone for the Company as the
first acquisition in Hercules' history, which will see Future Build
integrating into Hercules' Labour Supply division and providing the Company
with exposure to the white-collar recruitment market.

Acquisition Highlights

·    The transaction will expand Hercules' exposure to the white-collar
and permanent recruitment market within the construction industry, which
consists of around 2.1 million workers or 6% of the total UK workforce.

·    Brighton-based Future Build provides the Company with an established
presence in the Southeast of England, a region with good growth prospects for
the infrastructure and construction sectors. Future Build focusses on
permanent recruitment for main contractors, house building, high-end
residential, social housing and specialist sub-contractor sectors. Future
Build currently has 14 employees, with plans to expand the workforce to 16 in
January 2024.

·    With minimal overlap between clients, the Acquisition will enhance
the service offering to the Company's existing blue chip customer base, while
Hercules' current offering will provide complementary services to Future Build
clients.

·    Hercules' management team expects synergies of the Acquisition to
include cross-selling across white and blue-collar recruitment, the sharing of
digital recruitment tools and a stronger focus on permanent placement
recruitment.

·    The consideration comprises £1,001,000 in cash and the issue of
994,431 shares (the "Consideration Shares") at a price of 25.14 pence per
share, representing the 10 day volume weighted average price ending 28
November. The cash element is financed through the Company's existing cash
resources.

·    The Consideration Shares are subject to a 12-month lock-in agreement
followed by a 12-month orderly market agreement.

·    The vendors of Future Build (the "Vendors") can sell the remaining
40% minority interest in Future Build to Hercules, subject to the terms of the
agreement outlined below (the "Partnership Agreement").

·    In the year ending 31 December 2022, Future Build generated revenues
of £1,504,944 and produced profits before tax of £490,258. The assets
subject to the Acquisition had a net asset value of £379,574.

·    The Acquisition will complete on the admission of the Consideration
Shares to trading on AIM as described below.

Brusk Korkmaz, Chief Executive of Hercules, commented:

"The Acquisition of Future Build represents a major milestone for Hercules as
we continue to deliver on our strategy. When we floated on AIM in February
2022, we stated our intentions to grow organically and through acquisitions
which broaden our capabilities, accelerate growth and enhance our core
offerings. Having tested the market opportunity in white-collar recruitment
through organic growth initiatives, this deal expands our footprint in the
white-collar recruitment market by bringing a highly regarded business and
team into the Company.

"I believe that Future Build will prove to be an excellent addition to the
Company and that this move will be beneficial to both Hercules' and Future
Build's clients who will now be able to fulfil both white-collar and
blue-collar recruitment opportunities through the same provider. It also means
that the Future Build team will benefit from more exposure to the
infrastructure market, which is expected to grow substantially over the next
15 years. I look forward to welcoming the management team and all Future Build
employees to Hercules."

Simon Yates and Richard Smith, Future Build Directors, commented:

"We are delighted to be joining this ambitious company as it delivers its
long-term growth strategy. By joining our two extensive client portfolios we
will be able to provide both white-collar and blue-collar recruitment
services, creating a significant platform for growth, exciting opportunities
for our internal team and adding value to our combined customers and
shareholders.

"We would like to thank all of our colleagues for their support throughout
this process, and we look forward to working alongside Brusk and his team."

Partnership Agreement

Under the terms of the Partnership Agreement, the Vendors can sell their
remaining 40% minority interest to Hercules, between the 5(th) and 10(th)
anniversary of completion, at a consideration based on a multiple of 5.5x the
average EBITDA achieved by Future Build in the two years preceding the
minority interest sale. The consideration payable by Hercules for the
remaining 40% interest can be satisfied in cash or shares in the Company, with
a maximum of 68% settled in cash and capped at an aggregate cash payment of
£1 million. Following the 10(th) anniversary of completion, Hercules has the
right to acquire any remaining minority interest held by the Vendors, based on
the same calculation.

Application for Admission and Total Voting Rights

Application has been made for admission of the Consideration Shares to trading
on AIM ("Admission"). It is expected that Admission will be on or around 1
December 2023. The Consideration Shares will rank pari passu in all respects
with the Company's existing ordinary shares. Following Admission, the total
number of ordinary shares in the Company in issue will be 63,422,415. This
figure may be used by shareholders as the denominator for the calculations by
which they will determine if they are required to notify their interest in, or
a change to their interest in the Company under the FCA's Disclosure and
Transparency Rules.

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 which has been incorporated into UK law by the European
Union (Withdrawal) Act 2018.

 

For further information and enquiries, please contact:

 

 Hercules Site Services plc                                                             c/o SEC Newgate

 Brusk Korkmaz (CEO)

 Paul Wheatcroft (CFO)

 SP Angel (Nominated Adviser and Joint Broker)                                     +44 (0) 20 3470 0470

 Matthew Johnson / Adam Cowl / Harry Davies-Ball (Corporate Finance)

 Grant Barker / Rob Rees (Sales and Broking)

 Cavendish Securities plc (Joint Broker)                                           +44 (0) 20 7397 8900

 Adrian Hadden / Charlie Combe / Dale Bellis (Sales and Broking)

 SEC Newgate (Financial Communications)                                           +44 (0) 20 3757 6882

 Elisabeth Cowell / Ian Silvera / Matthew Elliott                      Hercules@secnewgate.co.uk

 

About Hercules Site Services PLC

 

Hercules is a leading tech enabled labour supply company for the UK
infrastructure sector. Founded in 2008, Hercules has an established track
record of profitability and fast-growth and has built a blue-chip customer
base which includes Balfour Beatty, Costain, Kier, Skanska, Dyer & Butler
and Volker Fitzpatrick. The Company has been appointed to provide labour for a
range of high-profile infrastructure projects, such as HS2, due to its agile,
innovative, digital first approach and complete service offering. It is
well-placed to benefit from any government increase in infrastructure spending
and its experienced management team has identified multiple opportunities for
growth.

 

 

About Future Build Recruitment

 

Future Build Recruitment is one of the leading construction recruitment
companies in the UK. The Company applies an ethical approach and a deep
knowledge of the market to identify and recruit well-suited candidates for
clients in the UK and overseas. Future Build's aim is to make a tangible
difference to its clients while enhancing candidates' careers. As an REC
accredited recruitment company, it is committed to upholding its standards of
best practice and professionalism.

 

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