REG - Hercules Site Svcs - Final Results
13/01/2025 07:00
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RNS Number : 9877S Hercules Site Services PLC 13 January 2025
13 January 2025
Hercules Site Services plc
("Hercules", the "Company" or the "Group")
Final Results
Hercules Site Services plc (AIM: HERC), a leading technology enabled labour
supply company for the UK infrastructure and construction sector, is pleased
to announce its audited results for the year ended 30 September 2024 ("FY
2024").
As announced on 6 January 2025, the Suction Excavator business results are
presented as discontinued operations as the Company proposes to divest this
division. The results for the year ended 30 September 2023 ("FY 2023") have
also been adjusted on this basis to enable like for like comparison. Results
summary:
Year ended 30 September 2024 Year ended 30 September 2023
£m Continuing operations Discontinued operations Total Continuing operations Discontinued operations Total
Revenue 101.9 5.1 107.0 79.8 4.9 84.7
Gross Profit 15.0 2.4 17.4 14.1 2.3 16.4
Adjusted* EBITDA 4.7 0.4 5.1 3.5 0.6 4.1
Adjusted** pre-tax profit 2.6 (1.3) 1.3 1.8 (0.9) 0.9
Adjusted*** EPS (pence) 3.47 (2.01) 1.46 2.86 (1.48) 1.38
Continuing Operations - Financial Highlights:
· A further record year with Hercules delivering ahead of market
expectations, with growth achieved across the Group's Labour Supply and Civil
Projects business:
o 28% increase in revenue
o 34% increase in Adjusted* EBITDA
o 43% increase in Adjusted** pre-tax profit
o 173% increase in EPS from 2023 reported EPS of 1.27p supporting decision
to divest Suction Excavator business
o Cash generated in the year £7.5m (2023: £3.3m)
o Lease/debt liabilities of £9.4m relate to discontinued operations
· Successful equity fundraising of £8m to support organic growth and
acquiring other labour supply companies in the infrastructure market
· Proposed final dividend of 1.12 pence per share (2023: 1.12p) (following
0.6p interim dividend paid March 2024, total dividend 1.72p (2023: 1.72p))
Corporate Highlights:
· Labour Supply: Record demand and delivery, supplying labour resources to
over 40 clients and 300 different project locations during the last year
o 35% increase in the average number of operatives deployed by the Labour
Supply business to 1,150 (2023: average of 850)
o Labour Supply to HS2 (Birmingham section) increased from c.425 operatives
at 30 September 2023 to c.630 at 30 September 2024
o Acquisition of Future Build which established the Company's white collar
and permanent recruitment offering
o App downloads (Recruitment and Onboarding) increased year on year to c.
16,000 (2023: c.11,500)
o Strong foundations for FY 2025 growth laid in Rail with client base
diversified and increased
· Construction Services: Continued Civil Projects growth and Construction
Academy delivered first revenues
o Civil Projects leveraged its water sector experience to win significant
levels of repeat work, mainly for key delivery partners for AMP 7
o Anglian Water Civils Framework continued at pace, with sizeable projects
being allocated to Hercules
o Construction Academy opened in January 2024 and has started to deliver a
diverse range of accredited courses
· Martin Tedham appointed to the Board as Non-Executive Director
*Adjusted EBITDA definition - adjusted for profit/loss on sale of fixed
assets, exceptional items and R&D expenditure.
**Adjusted pre-tax profit definition - same adjustments as for EBITDA but also
excluding extraordinary impairment.
***Adjusted EPS definition - same adjustments as for pre-tax profit but also
excluding prior year tax charges.
Brusk Korkmaz, Chief Executive Officer, commented:
"We have yet again exceeded the market's expectations and achieved another
record year, delivering growth across all our core performance metrics. In
doing so, our revenue growth for the last three years since listing has
averaged 48% (CAGR), a performance of which we are incredibly proud.
Cross-selling has continued to be a strong feature, and we have broadened our
ability to maintain this trend having delivered our first acquisition during
the year. This has provided us with a solid footing in the white-collar and
permanent recruitment market, complementing our blue-collar labour supply
services.
"Looking ahead, our confidence for FY 2025 is fuelled by a strong pipeline and
a positive start to trading in Q1. We anticipate further organic growth across
our continuing operations, while our recent equity raise of £8m provides us
with a strong balance sheet with which to fund our ongoing, targeted M&A
strategy. Add to this the fact that the outlook for the infrastructure sector
remains buoyant and we are positive that we are well positioned for the year
ahead."
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.
Retail Investor Webinar
Brusk Korkmaz, CEO, and Paul Wheatcroft, CFO, will deliver a live presentation
relating to the Full-Year Results via the Investor Meet Company platform this
morning at 11.00am GMT.
The online presentation is open to all existing and potential shareholders.
Questions can be submitted pre-event via the IMC dashboard up until 9.00am or
at any time during the live presentation via the "Ask a Question" function.
Although the Company may not be in a position to answer every question it
receives, it will address the most prominent within the confines of
information already disclosed to the market. Responses to the Q&A from the
live presentation will be published at the earliest opportunity on the
Investor Meet Company platform.
Investor feedback can also be submitted directly to management post-event to
ensure the Group can understand the views of all elements of its shareholder
base.
Investors can sign up to Investor Meet Company for free and add to meet
Hercules via:
https://www.investormeetcompany.com/hercules-site-services-plc/register-investor
(https://www.investormeetcompany.com/hercules-site-services-plc/register-investor)
Investors who have already registered and added to meet the Group will be
automatically invited.
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 Broker) +44 (0) 20 3470 0470
Matthew Johnson / Adam Cowl (Corporate Finance)
Grant Barker / Rob Rees (Sales and Broking)
Cavendish Capital Markets Limited (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 / Nina Renata Pop Hercules@secnewgate.co.uk
CHAIRMAN'S REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2024
Hercules has had another very productive and successful year with revenue from
continuing operations increasing by 28% to £101.9m over the previous year
(2023: £79.8m) which once again means we are surpassing market expectations.
Following a strategic internal review of future activities and expected market
demand and likely returns, the Board decided to focus on the Group's core
labour supply and construction services divisions, and therefore decided to
seek a buyer for our suction excavator services subsidiary. As such, the
results of the suction excavator services division have been treated as
discontinued activities within the results for the year. This strategic change
will, when it concludes, reduce our debt significantly, enhance earnings and
provide greater capacity to finance the future expansion of our core
activities. Total revenue including that from discontinued operations was
£106.9m (2023: £84.7m).
It was also pleasing to see our Construction Academy open its doors January
2024. We expect this facility to underpin our labour supply chain and training
needs for many years to come. During the period, we have started building a
number of relationships with both local (Warwickshire area) and national
educational and training bodies as well as increasing the commercial training
offering at the Academy.
Strong market dynamics
In terms of the wider market, interest rates have not yet shown significant
reductions. Despite this, Hercules will continue to benefit from significant
investment in infrastructure spending, which is high on the agenda for the new
government. We also note that the election of the new government in July 2024
is not expected to have any impact on our existing contracts, nor our outlook
for 2025 and beyond.
Whilst inflationary pressures affected the business in FY23, particularly pay
levels, these challenges reduced during FY24, and we have continued to
demonstrate our ability to regularly renegotiate increased pay levels with our
clients. Looking ahead, it is also worth noting that the majority of the
National Insurance cost increases announced in the recent government budget
can be passed on to our clients. There is only a relatively small amount of
the tax increase, relating to the management and administration functions,
that has to be absorbed by the business.
Dividend
The Board is pleased to propose a final dividend of 1.12 pence per share
(2023: 1.12 pence). The dividend will be paid on 21 March 2025 to shareholders
on the register at close of business on 21 February 2025. The shares will go
ex-dividend on 20 February 2025.
Outlook
After a year of significant growth, the outlook for Hercules remains very
positive. Revenue growth has averaged 48% (CAGR) over the last three years;
our pipeline for 2025 looks robust and we have experienced positive trading
across all areas for the first three months of our current financial year. We
entered the 2025 financial year with a strong balance sheet following a
substantial equity fundraising of £8m and an invoice discounting debt
facility for up to £15m, with which to fund our continued expansion and
ongoing working capital needs. As part of the post-period-end fundraise, we
were delighted to welcome two successful entrepreneurs to our register,
testament to their shared belief in the trajectory and potential of Hercules.
One of these individuals, Martin Tedham, has also been appointed as
Non-Executive Director and we look forward to benefitting from his vast
experience in growing successful companies in the years ahead.
We are progressing positively but selectively on the acquisition front with
several early-stage discussions ongoing. We look forward to updating the
market when appropriate.
Once again, I would like to thank our shareholders and advisers for their
support during the year, and the Hercules team for continuing to successfully
deliver a range of operational growth milestones.
We are anticipating another productive financial year ahead with exciting
opportunities and initiatives on which the Company will focus.
Henry Pitman, Non-executive Chairman
10 January 2025
CHIEF EXECUTIVE OFFICER'S REVIEW FOR THE YEAR ENDED 30 SEPTEMBER 2024
We have yet again exceeded the market's expectations and achieved another
record year. This has been achieved despite operating in an environment that
was not without its challenges, with interest rates still relatively high.
Revenue from continuing operations has increased by 28% year on year to
£101.9m (2023: £79.8m). This included £1.5m of growth from the acquisition
we made during the period. Total revenue, including discontinued operations,
was £106.9m (2023: £84.7m).
Adjusted EBITDA from continuing operations for the year was £4.7m (2023:
£3.5m), representing growth of 34%. Total adjusted EBITDA including that from
discontinued operations was above market expectations at £5.1m (2023:
£4.1m).
Revenue growth was accompanied by strong cash conversion and effective credit
management. Net cash generated from continuing operations during the year was
£7.5m (2023 £3.3m).
Our positive results have been achieved through growth across our Labour
Supply and Civil Projects businesses, and we are pleased that cross-selling
has continued to be a strong feature in 2024. This takes determination and
coordination across our talented teams and given the challenges that all
businesses have had to navigate this year, the Hercules team has worked
incredibly hard and shown dedication throughout the year, and for that they
have my sincere thanks.
The infrastructure and construction sectors are still experiencing continued
buoyancy providing a supportive backdrop for our growth. Pleasingly, post the
July 2024 election and the recent Budget, there is no evidence that there will
be any reduction in infrastructure investment in the next few years. The Board
believes that investment in infrastructure will increase.
Given the labour shortages experienced by the sector, and the effectiveness of
our digital tools in placing operatives on projects, we are well placed to
benefit from ongoing government investment in the months and years ahead.
Demand for our range of complementary services has been strong and our
pipeline is very robust.
Labour Supply
Labour Supply is our core business, and we have a strong track record of
working in partnership with blue chip construction companies to deliver key
infrastructure, civil engineering, utilities, groundworks, highway and railway
projects. It represented 82% of Hercules' revenue for the year ended 30
September 2024 (FY 2023: 80%).
This is our third year working with the Balfour Beatty Vinci Joint Venture on
the HS2 (Birmingham section). This is our largest ever contract and the
Company is now playing a huge part in the delivery of one of modern history's
greatest legacy projects. We are the leading labour supplier on the
six-supplier labour desk, now with circa 630 operatives on HS2 sites. This
growth is expected to continue for the next 5-7 years with FY 2025
requirements expected to be greater than those in 2024.
During the year to 30 September 2024 the Labour Supply business has continued
to achieve month-on-month growth, having supplied between 850 and 1,300
workers (average of 1,150). Compared with the FY 2023 monthly average of 850
this represents year on year growth in operatives deployed of circa 35%. We
have supplied labour resources to over 40 clients and 300 different project
locations during the last year. Our ability to deliver for our clients
irrespective of their size, location or duration of their requirements has
driven repeat business and built sustained trust in our delivery capability.
As shown by the contracts referenced above, we have traditionally supplied
blue collar personnel. Having tested the white-collar market through organic
initiatives, our 60% acquisition of Future Build Recruitment Ltd ("Future
Build") during the period has provided exposure to the growing white-collar
and permanent recruitment market. With minimal overlap between clients, the
acquisition enhances the service offering we are able to provide to our
existing customer base and creates new cross-selling opportunities which are
already starting to deliver.
The rail department, the newest part of the Labour Supply portfolio, had a
relatively slow start to 2024. We carefully built a team from scratch and as
such, income was slow in the early part of the year with a focus solely on the
newly awarded Balfour Beatty Rail Framework. This coincided with the end of a
control period (CP6), which meant there was time to focus on getting the
appropriate structure in place and formulate the required processes, in a very
compliance heavy part of the industry.
In the second half of the year, under the new control period of CP7 which
comprises of £46 billion of planned investment, the rail department has
flourished and started to gain traction due to all the early hard work and
planning. As a result, we are expecting FY 2025 to show steady growth and
development within the department. We have managed to diversify and increase
our client base providing rail staff to Kier, Beaver Bridge and Octavius in
the second half of the year, as well as strengthening our position with
Balfour Beatty.
FY 2024 has been a successful year for our other sectors as well, having begun
supplying labour at Sizewell C, we anticipate increases in workforce
requirements heading into 2025. Within the water sector, we have supplied
labour predominantly within the Thames Water, Severn Trent, Anglian, Southern,
and Bournemouth Water regions. With £96 billion of planned investment through
AMP8 (Asset Management Plan 8), starting in April 2025, we plan to expand our
water specialism into new regions.
Our innovative mobile recruitment and onboarding apps give us a strong
competitive edge and have been core to our success. Not only do they ensure
that we supply the right person to the right location on time to fulfil client
requirements, they enable us to source local labour, which often is a
stipulation in government-funded projects. Indeed, our 'Hercules Construction
Jobs' recruitment app, launched in October 2019, has more than 16,000
downloads and more than 8,265 registered users at the time of writing (FY
2023: 11,500 and 6,250 respectively).
I am pleased to report that we have a healthy pipeline which extends beyond
2025, so we look forward to delivering further growth in our Labour Supply
business.
Civil Projects
Hercules' Civil Projects division partners with some of the UK's top
contractors to provide end-to-end project delivery for civil engineering
contracts. Revenue for Civil Projects grew by 12% to £17.5m (2023: £15.6m),
accounting for approximately 16% of group revenue for the year ended 30
September 2024 (2023: 18%).
With the water industry facing enormous challenges, which have been well
documented in the media, our Civil Projects team has leveraged its experience
in this space to win significant levels of repeat work, mainly for key
delivery partners for AMP 7. The Anglian Water Civils Framework continued at
pace, with some sizeable projects being allocated to Hercules. The framework
was also formally extended by two further years, taking the current end date
well into AMP 8. Activity levels were high again this year, with an increase
in size of project having a positive impact on revenue. One particular scheme
for Thames Water was over £5m. Eight projects with individual values over
£1m were started or completed in the year at various sites for clients such
as Galliford Try, MWHT, Costain and the @one Alliance. Projects were spread
across the Anglian, Severn Trent, Thames, and Southern Water regions.
Additional site management staff were recruited to supplement the existing
teams to cover the larger, more complex projects. The business unit operated
with an average of 150 operatives across all their sites, the largest number
to date. They work closely with the Labour Supply division to cope with
variances in workload. Overall, the Civils team is well positioned as the
industry moves into the AMP 8 cycle.
Divestment of the Suction Excavator business
As our Chairman notes in his Statement, the Board has decided to focus on core
labour supply and civil projects, and therefore to seek a buyer for our
suction excavator services subsidiary. This business has progressed well but
is very capital intensive, unlike the rest of the Group's services. With this
in mind, the results of the suction excavator services division have been
treated as discontinued activities within the results for the year.
Additional growth initiatives
Hercules provides a range of services for its clients, which increases the
total value of the Group to its clients and provides the business with a
diversified range of revenue streams.
Construction Academy
The Academy, which was opened on 31 January 2024, was established to address
the well documented skills shortages facing the infrastructure and
construction industries. By providing excellent facilities in a strategic
location, the Academy will not only serve the Hercules workforce (and thus
reduce external training costs) but will also deliver specific training for
clients across the infrastructure and construction industries. As such, we aim
to attract new talent and upskill the current national workforce.
The Academy is expected to eventually deliver training to all of the existing
Hercules clients, as well as new clients who are currently not using our other
services.
During the period, we have been delivering a diverse range of accredited
courses that cater to aspiring professionals and industry personnel alike.
These include specialised technical training in areas such as plant operation,
health and safety, utilities and other bespoke courses. The facilities
replicate the modern construction site giving learners a safe environment to
train and qualify to be site-ready. Local Authority funded training is also
being delivered at the Academy via bootcamps for new entrants to the
construction industry. Some of these new entrants were able to gain themselves
a position on our sites, thus closing the loop of 'find, train, employ'.
Looking ahead, as well as short duration courses, the Academy will run and
manage NVQ assessments and apprenticeships. The Academy has commenced delivery
of funded Skills Bootcamps in partnership with City & Guilds Training (a
nationally recognised training provider). It was also awarded and benefitted
from Local Authority funding which has helped introduce and upskill local
unemployed residents to the Construction sector.
With these funded initiatives there is huge potential for the Academy to help
the wider sector with its skills shortages, as well as providing an internal
training function that supports Hercules Site Services PLC with their existing
and future labour-force.
With further areas for development available at the site, the Academy
facilities have an opportunity to grow and evolve as the industry develops and
introduces further use of technology. This will allow Hercules to continually
upskill its current workforce for the future.
Digital
This year we focused on advancing key digital initiatives to support our
strategic goals. A significant highlight was the complete rebuild of our
recruitment application, designed to improve user experience, streamline
processes, and attract operatives more effectively. The SEE Everything portal
continues to provide reliable value to customers and allows them to maintain
strong engagement with their supply chains. Our investments in enhancements in
cloud technology and cybersecurity have strengthened our operational
resilience and safeguarded critical systems. These targeted advancements
reflect our commitment to leveraging technology to drive operational
excellence and deliver meaningful value to stakeholders.
Creating positive social value
Apart from our core business, we continue to help deliver positive social
value outcomes in and around our clients' projects, often working
collaboratively to achieve the best results. The culture at Hercules is one
which is very much centred around teamwork, and we are all guided by our core
values and mission statement, dedicated to delivering a world class service to
our clients, workforce and now our investors.
Our team strives to encourage the next generation into our industry, so
engagements in schools and further education colleges are vitally important.
We also endeavour to source candidates from diverse channels such as
ex-military, ex-offenders, BAME and other hard to reach communities. Our
success with hiring from the ex-military community has been rewarded with the
coveted ERS MOD Gold Award.
In 2024, the Hercules health screening trailer has continued to provide
support nationwide, delivering on-site health and wellbeing services to our
clients and their projects in a wide range of construction sectors. Among its
deployments, the trailer has supported Blackwell Earthmoving at the EKFB
section of HS2, Skanska at the A428 Highways project and Galliford Try for
Thames Water initiatives.
Through our Hercules health screening trailer, we offer an array of medical
services which can be tailored to the needs of our clients. Fitted out with a
waiting area and two private consultation rooms, we offer vision and hearing
tests, vaccinations, mental health support, safety-critical medical
assessments, heart and blood pressure monitoring, lung function tests, and
drug and alcohol testing. It also discreetly monitors modern slavery concerns
and serves as a platform to enhance awareness of health and safety matters,
fostering a culture of proactive care and compliance. This on-site capability
eliminates the need for off-site visits by the workforce, thus minimising
disruption to site operations whilst at the same time reducing the carbon
footprint associated with workforce travel. As the trailer embarks on another
busy year, it underscores Hercules commitment to improving wellbeing in
construction.
Outlook
We enter 2025 with an excellent foundation for further growth, having exceeded
market expectations and developed an array of accretive commercial workstreams
which will continue to expand our business and deliver additional revenue and
profits.
The first quarter of FY 2025 has again been successful, with a strong pipeline
of new business across our divisions. Organic growth is also anticipated to be
delivered through the Construction Academy, as well as continued development
of our rail and white-collar labour supply offerings. When combined with the
continued growth we intend to achieve through targeted acquisitions, we
believe that the outlook for Hercules in the infrastructure sector remains
buoyant.
As we move through and beyond the next reporting period, we will maintain that
growth mindset which has served us well over the past 17 years.
Brusk Korkmaz, Chief Executive Officer
10 January 2025
CHIEF FINANCIAL OFFICER'S REVIEW FOR THE YEAR ENDED 30 SEPTEMBER 2024
Introduction
This year we are now a group with several subsidiaries, so the annual report
is a consolidated one for the first time. In addition to this, the proposed
divestment of the suction excavator services subsidiary requires us to
distinguish between continuing and discontinued operations. This we have done
in the key schedules and notes.
The Group made a pre tax profit on continuing operations of £2.2m (2023
restated: £1.5m). Post tax on continuing operations was £1.6m (2023
restated: £1.7m). The slight reduction in these post tax profits was solely
down to tax - a deferred tax swing from a credit of £129k in 2023 to a debit
£558k in 2024, and a write off of £53k corporation tax from 2021.
As part of the proposed divestment, we have taken an impairment charge of £2m
as part of the discontinued operations loss of £3.3m (2023: £0.9m loss)
anticipating the likely book loss on completion of the transaction. This moved
the "All operations" profit into a loss of £1.7m (2023: £0.8m profit).
The year ended with inflation at manageable levels, much improved on the
situation a year ago. Interest rates have in comparison not yet reduced in a
similar manner from their peak. Inflation may rise a little in FY2025, but
hopefully stabilise after that. Interest rates are unlikely to return to their
previous low levels, but we don't see this affecting the level of work in the
infrastructure sector in the next decade.
We expect the increase in employers national insurance contributions from
April 2025 will be covered mainly by clients, but there will be a relatively
minor additional cost in relation to office based management and staff.
The Directors anticipate continued growth for the Group driven by further
significant investment in infrastructure as outlined post election by the new
UK Government.
Financial Performance
In the year ended 30 September 2024, revenue from continuing operations
increased to £101.9m (2023: £79.8m) representing a 28% increase
year-on-year.
Year ended 30 September
2024 2023
£000 £000
Labour Supply 84,125 63,818
Civil Projects 17,535 15,656
Other 274 296
101,934 79,770
Discontinued operations 5,055 4,895
Total all operations 106,989 84,665
Adjusted EBITDA from continuing operations (see below) - increased by 34% to
£4.7m (2023: £3.5m).
Net cash generated from operations of £7.5m in the year (2023: £3.3m) and
labour supply debtor days reduced slightly to 39 (2023: 40) days.
Administrative costs from continuing operations were £11.6m (2023: £11.6m).
As expected, cost levels have been kept under control following a few years of
increases driven by the need to build up the internal infrastructure to
support significant growth. Keeping control of administrative costs has been a
major achievement in 2024.
During the year on continuing operations the Company delivered:
Pre-tax profit - increased 21% to £2.2m (2023: £1.5m)
Pre-tax profit before exceptional non-recurring items - increased by 33% to
£2.4m (2023: £1.8m)
Discontinued operations (suction excavator services subsidiary):
The results of the suction excavator business have been disclosed separately
within these accounts, and we have taken into account an expected book loss on
disposal of £2m, to reflect an impairment as at 30 September 2024.
This is included in the discontinued operations line in the income statement.
Year ended Year ended
30 September 2024 30 September 2023
£000 £000
Adjusted profit from continuing operations 3,372 2,479
Added back
Depreciation & amortisation 974 720
Research & development 5 4
Loss on sales of assets 210 43
Exceptional items (see below) 112 231
Share based payment expense 38 29
Adjusted EBITDA from continuing operations 4,711 3,506
Discontinued operations 364 633
Adjusted EBITDA all operations 5,075 4,139
Exceptional items related to:
Acquisition costs 108 -
Employment settlement 9 7
HMRC Consultancy 19 7
Bad Debt (17) 92
CID planning - 37
Partnership preparation - 17
Adjudication (12) 71
Academy launch 5 -
Total 112 231
The Group categorises non-operational and development costs such as those
above as exceptional.
Statement of Financial Position
As of 30 September 2024, the Group's net assets were £11.7m (2023: £8.7m) of
which £6.4m (2023: £4.2m) were cash and cash equivalents.
Non-current assets at 30 September 2024 were £9.8m (2023: £20.8m). Current
assets at 30 September 2024 were £25.9m (2023 (restated): £25.2m).
Net current assets at 30 September 2024 were £2.8m (2023 net assets: £1.5m).
The change in share premium in 2024 over 2023 reflects the net proceeds
received from an issue of new shares of £5.8m on 10 September 2024.
Group loans & borrowings were £7.3m as at 30 September 2024 (2023:
£10.0m). This is the balance utilised on a working capital facility provided
by IGF of £15m that was introduced in November 2023.
Paul Wheatcroft, CFO
10 January 2025
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Re-stated
Year ended Year ended
30 September 2024 30 September 2023
Continuing operations Note £000 £000
Revenue 6 101,934 79,770
Cost of sales (86,961) (65,698)
Gross profit 14,973 14,072
Other operating income 7 - 10
Administrative expenses (11,601) (11,603)
Profit from operations 8 3,372 2,479
Finance income 59 -
Finance costs 12 (1,184) (939)
Profit before tax expense 2,247 1,540
Tax (charge)/credit on profit 13 (611) 129
Net profit for the year 1,636 1,669
Discontinued operations
Loss for the year 33 (3,307) (899)
Total (loss)/profit for the year (1,671) 770
Earnings/(loss) per share 4
Continuing operations - basic & diluted 2.55p 2.74p
There are no further items of comprehensive income other than those shown
above.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Re-stated
30 September 2024 30 September 2023
Note £000 £000
Non-current assets
Tangible assets 17 7,430 20,799
Intangible Assets 15 2,322 -
9,752 20,799
Current assets
Inventories 30 51
Trade and other receivables 19 19,482 20,909
Current tax receivable 28 83
Cash and cash equivalents 6,393 4,151
Total current assets 25,933 25,194
Disposal group assets held for resale
33 11,833 -
TOTAL ASSETS 47,518 45,993
Equity and liabilities
Equity attributable to equity holders of the parent
Share capital 25 75 62
Share premium 10,757 4,995
Other reserve 107 69
Retained earnings 769 3,531
Total equity 11,708 8,657
Non-current liabilities
Deferred tax liabilities 14 750 158
Deferred contingent consideration 1,037 -
Lease liabilities 22 1,316 13,496
Total non-current liabilities 3,103 13,654
Current liabilities
Trade and other payables 20 11,755 10,233
Loans and borrowings 21 7,295 9,960
Lease liabilities 22 4,057 3,489
Total current liabilities 23,107 23,682
Disposal group liabilities held-for-sale
33 9,600 -
TOTAL LIABILITIES 35,810 37,336
TOTAL EQUITY AND LIABILITIES 47,518 45,993
COMPANY STATEMENT OF FINANCIAL POSITION
Restated
30 September 30 September
2024 2023
Note £000 £000
Non-current assets
Tangible assets 17 5,951 20,799
Investments in subsidiaries 18 2,570 -
8,521 20,799
Current assets
Inventories 30 51
Trade and other receivables 19 19,137 20,909
Amounts owed by group undertakings 283 -
Current tax receivable 28 83
Cash and cash equivalents 6,163 4,151
Total current assets 25,641 25,194
Disposal group assets held-for-sale (investment)
2,592 -
TOTAL ASSETS 36,754 45,993
Equity and liabilities
Share capital 25 75 62
Share premium 10.757 4,995
Other reserves 107 69
Retained earnings 1,313 3,531
Total equity 12,252 8,657
Non-current liabilities
Deferred tax liabilities 14 764 158
Deferred contingent consideration 1,037 -
Lease liabilities 22 1,021 13,496
Total non-current liabilities 2,822 13,654
Current liabilities
Trade and other payables 20 11,526 10,233
Loans and borrowings 21 7,295 9,960
Lease liabilities 22 2,859 3,489
Total current liabilities 21,680 23,682
TOTAL LIABILITIES 24,502 37,336
36,754 45,993
TOTAL EQUITY AND LIABILITIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Share premium Share based payment reserve Retained earnings Total Shareholder's equity
£000 £000 £000 £000 £000
Balance at 1 October 2022 59 3,417 40 3,322 6,838
Total profit for the year - - - 770 770
Issue of shares 3 1,578 - - 1,581
Share based payment - - 29 - 29
Dividends - - - (561) (561)
Balance at 30 September 2023 62 4,995 69 3,531 8,657
Total profit for the year - - - (1,671) (1,671)
Issue of shares 13 5,762 - - 5,775
Share based payment - - 38 - 38
Dividends - - - (1,091) (1,091)
Balance at 30 September 2024 75 10,757 107 769 11,708
Share capital Share premium Share based payment reserve Retained earnings Total Shareholder's equity
£000 £000 £000 £000 £000
Balance at 1 October 2022 59 3,417 40 3,322 6,838
Total profit for the year - - - 770 770
Issue of shares 3 1,578 - - 1,581
Share based payment - - 29 - 29
Dividends - - - (561) (561)
Balance at 30 September 2023 62 4,995 69 3,531 8,657
Total profit for the year - - - (1,671) (1,671)
Issue of shares 13 5,762 - - 5,775
Share based payment - - 38 - 38
Dividends - - - (1,091) (1,091)
Balance at 30 September 2024 75 10,757 107 769 11,708
Share premium represents the amount raised on the proceeds of share issues in
excess of the par value of those shares, net of issue costs.
The share-based payment reserve represents the accumulated entries to equity
arising from the recognition of share-based payments in accordance with IFRS
2.
Retained earnings represent the accumulated profits and losses of the Group,
less distributions, and similar items, since its incorporation.
Dividends were paid to the Company's shareholders during the year in two
instalments - in March 2024 and August 2024. The first was a final dividend
for the year ended 30 September 2023 of £710,000, 1.12p per share (FY 2022:
£187,575), and the second an interim dividend for the year ended 30 September
2024 of £381,000, 0.06p per share (interim 2023: £374,568).
Hercules acquired 60% of FutureBuild Recruitment Ltd in November 2023.
However, due to the nature of the acquisition and its associated partnership
agreement, the acquisition has been treated in these accounts as 100%. This is
the first partnership arrangement (which kicks in following the acquisition)
the Group has entered in to, and it is cash generative.
COMPANY STATEMENT OF CHANGES IN EQUITY
Share capital Share premium account Share based payment reserve Retained earnings Total equity
£000 £000 £000 £000 £000
Balance at 1 October 2022 59 3,417 40 3,322 6,838
Profit for the year - - - 770 770
Issue of shares 3 1,578 - - 1,581
Share based payment - - 29 29
Dividends - - - (561) (561)
Balance at 30 September 2023 62 4,995 69 3,531 8,657
Loss for the year - - - (1,127) (1,127)
Issue of shares 13 5,762 - - 5,775
Share based payment - - 38 - 38
Dividends payable - - - (1,091) (1,091)
Balance at 30 September 2024 75 10,757 107 1,313 12,252
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 30 September Year ended 30 September
Note Re-stated
2024 2023
£000 £000
Cash flows from operating activities:
Profit after taxation on continuing operations 1,636 1,669
Taxation Charge/(credit) 611 (128)
Finance income (59) -
Finance costs 1,184 938
Share based payment charge 26 38 29
Depreciation of property plant and equipment 941 795
Impairment of intangible assets 33 -
Loss on disposal of Tangible assets 16 201 43
(Increase)/decrease in inventories (4) 1
Decrease/(Increase) in trade and other receivables 1,408 (4,692)
Increase in trade and other payables and provisions 1,481 4,612
Net operating cashflows generated from continuing operations 7,470 3,267
Net operating cashflows (used in)/generated from discontinued operations
(1,396) 559
Net cashflow generated from/(used in) operating activities 6,074 3,826
Cash flows from investing activities:
Purchase of tangible assets (327) (63)
Proceeds from disposal of tangible assets 119 172
Acquisition of subsidiaries (net of cash acquired) (1,188) -
Interest received 59 -
Net investing cashflows (used in)/generated from continuing operations
(1,337) 109
Net investing cashflows (used in)/generated from discontinued operations
(76) (317)
Net cashflow (used in) investing activities (1,413) (208)
Cash flows from financing activities:
Payment of lease liabilities (1,522) (1,838)
Interest paid 12 (934) (726)
Net cash flows (to)/from invoice discounting facility (2,665) 3,431
Dividends paid (1,091) (562)
Net proceeds from issues of shares 5,773 1582
Net financing cashflows (used in)/generated from continuing operations
(439) 1,887
Net investing cashflows (used in) discontinued operations (1,679) (2,565)
Net cashflows (used in) financing activities (2,118) (678)
Net increase in cash and cash equivalents 2,543 2,940
Cash and cash equivalents at the start of the year 4,151 1,211
Cash and cash equivalents at the end of the year 6,694 4,151
Cash in discontinued operations (301) -
Cash and cash equivalents in continuing operations at end of year
6,393 4,151
COMPANY STATEMENT OF CASH FLOWS
Year ended 30 September Year ended 30 September
Re-stated
Note 2024 2023
£000 £000
Cash flows from operating activities:
Profit/(Loss) after taxation (1,126) 1,669
Taxation Charge/(credit) 725 (128)
Finance income (59) -
Finance costs 1,095 938
Share based payment charge 26 38 29
Depreciation of property plant and equipment 767 795
(Profit)/loss on disposal of Tangible assets (223) 43
(Increase)/decrease in inventories (4) 1
Decrease/(Increase) in trade and other receivables 1,404 (4,692)
Increase in trade and other payables and provisions 1,400 4,612
Net cashflow generated from/(used in) operating activities 4,013 3,826
Cash flows from investing activities:
Purchase of tangible assets (394) (63)
Proceeds from disposal of tangible assets 530 172
Acquisition of subsidiaries (net of cash acquired) (2,037) -
Interest received 59 -
Net cashflow (used in) investing activities (1,842) (208)
Cash flows from financing activities:
Payment of lease liabilities (1,259) (1,838)
Interest paid 12 (921) (726)
Net cash flows (to)/from invoice discounting facility (2,665) 3,431
Dividends paid (1,091) (562)
Net proceeds from issues of shares 5,773 1582
Net cashflow (used in) financing activities (163) (678)
Net increase in cash and cash equivalents 2,012 2,940
Cash and cash equivalents at the start of the year 4,151 1,211
Cash and cash equivalents at the end of the year 6,163 4,151
NOTES TO THE FINANCIAL STATEMENTS
Net debt
Group
FY2023- FY2024 At 30 September 2023 Cash flow Non-cash movement At 30 September 2024
£000 £000 £000 Reclassification to disposal group £000
£000
Cash and cash equivalents
Cash 4,151 2,543 - 6,393
(301)
Debt
Bank loans (9,960) 2,790 - (125) (7,295)
Lease liabilities (16,985) 3,603 (1,357) 9,366 (5,373)
Financing liabilities (26,945) 6,393 (1,357) (12,668)
9,241
Net debt (22,794) 8,936 (1,357) (6,275)
8,940
Non-cash movements represent new liabilities and finance charges recognised
under IFRS 16 in respect of leases.
At 30 September 2022 Cash flow Non-cash movement At 30 September 2023
FY2022- FY2023 £000 £000 £000 £000
Cash and cash equivalents
Cash 1,212 2,940 - 4,151
Debt
Bank loans (6,529) (3,431) - (9,960)
Lease liabilities (12,931) 4,403 (8,457) (16,985)
Financing liabilities (19,460) 972 (8,457) (26,945)
Net debt (18,248) 3,912 (8,457) (22,794)
Non-cash movements represent new liabilities and finance charges recognised
under IFRS 16 in respect of leases.
Company
FY2023- FY2024 At 30 September 2023 Cash flow Non-cash movement At 30 September 2024
£000 £000 £000 £000
Cash and cash equivalents
Cash 4,151 2,012 - 6,163
Debt
Bank loans (9,960) 2,665 - (7,295)
Lease liabilities (16,985) 1,259 11,846 (3,880)
Financing liabilities (26,945) 3,924 11,846 (11,175)
Net debt (22,794) 5,936 11,846 (5,012)
Non-cash movements represent new liabilities and finance charges recognised
under IFRS 16 in respect of leases.
FY2022- FY2023 At 30 September 2022 Cash flow Non-cash movement At 30 September 2023
£000 £000 £000 £000
Cash and cash equivalents
Cash 1,212 2,940 - 4,151
Debt
Bank loans (6,529) (3,431) - (9,960)
Lease liabilities (12,931) 4,403 (8,457) (16,985)
Financing liabilities (19,460) 972 (8,457) (26,945)
Net debt (18,248) 3,912 (8,457) (22,794)
Non-cash movements represent new liabilities and finance charges recognised
under IFRS 16 in respect of leases.
1 General Information
The Group incorporates a number of companies owned by Hercules Site Services
plc, all limited by share capital incorporated and domiciled in England and
Wales. The principal activity of the Group is that of general construction and
civil engineering.
The address of its registered office and principal place of business is:
Hercules Court
Lakeside Business Park
South Cerney
Cirencester
GL7 5XZ
2 Summary of significant accounting policies
Statement of compliance
The financial statements have been prepared in accordance with UK-adopted
international accounting standards.
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of the financial
statements are set out below. These policies have been consistently applied to
all the years presented, unless otherwise stated.
Basis of preparation
The financial statements have been prepared on the following basis:
· The financial information for the Group for the years ended 30 September
2023 and 30 September 2024;
· Using the historical cost convention except for, where disclosed in the
accounting policies, certain items shown at fair value.
The financial statements are presented in Pounds Sterling, being the
functional currency of the Group. The preparation of the financial statements
in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the
process of applying the Group's accounting policies. These are disclosed in
note 3.
Changes in accounting policy and disclosures
(a) New and amended accounting standards
New Standards applicable for the year were as follows:
- IFRS 17 Insurance Contracts (1 January 2023)
- Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of
Accounting Policies (1 January 2023)
- Amendments to IAS 8 : Definition of Accounting Estimates (1 January
2023)
- Amendments to IAS 12 : Deferred Tax related to Assets and
Liabilities arising from a Single Transaction (1 January 2023)
None of these amendments to Standards had a material impact on the Group's
results for the year.
(b) Future standards
At the date of authorisation of the financial statements, the Group has not
early adopted the following amendments to Standards and Interpretations that
have been issued but are not yet effective:
- Amendments to IFRS 16 : Lease Liability in a Sale and Leaseback (1
January 2024)
- Amendments to IAS 1 : Non-current Liabilities with Covenants (1
January 2024)
- Amendments to IAS 12 : International tax reform (1 January 2023
for disclosure requirements)
- Amendments to IAS 7 and IFRS 7 Supplier Finance (1 January 2024)
- Amendments to IAS 21 : Lack of Exchangeability (1 January 2025)
- Amendments to IFRS 9 and 7: Classification and Measurement of
Financial Instruments (1 January 2026)
- IFRS S1: General requirements for disclosure of sustainability
related financial information (1 January 2024) not yet endorsed for use in the
UK
- IFRS S2: Climate related financial disclosures (1 January 2024) not
yet endorsed for use in the UK
- IFRS 18: Presentation and Disclosure in financial statements (1
January 2027)
- IFRS 19: Subsidiaries without Public Accountability: Disclosures (1
January 2027)
These Standards and amendments are effective from accounting periods beginning
on or after the dates shown above. The directors do not expect any material
impact as a result of adopting the standards and amendments listed above in
the financial year they become effective.
Going concern
The directors have prepared a core forecast up to January 2026 using prudent
assumptions, and assuming the Group will continue as a going concern. Under
the going concern assumption, an entity is ordinarily viewed as continuing in
business for the foreseeable future. In assessing whether the going concern
assumption is appropriate, management has considered the Group's existing
working capital and management are of the opinion that the Group has adequate
resources to undertake its planned programme of activities for a period of at
least 12 months from the date of approval of these financial statements. The
Group's new working capital facility is now capped at £15m (but the directors
believe could be extended if required) and is on a 3 month notice period on
either side. A good relationship exists between the Group and the provider;
therefore, the Directors do not believe the facility will be terminated within
the going concern assessment period.
The directors have undertaken assessments of revenue streams from key
contracts, growth in several areas, overheads, cash levels, cash facilities
where required, tax projections etc. This core scenario provides a very
healthy view of the Group's cash position. A further "poor" scenario test with
5% lower sales than FY2024, and margins reduced below FY2024 levels by 2.3%
still provides sufficient (but reduced) cash levels in the 12 months ahead.
This is before considering likely mitigating actions (overhead reductions etc)
the Group would take should such an unlikely scenario become reality.
The Group increased its turnover by 28% in the year and exceeded its forecast
turnover and EBITDA. The Group is one of six labour suppliers selected for the
Northern Section of HS2 (Birmingham section), which is currently the largest
construction project in Europe. This will continue to underpin and grow
turnover over the next few years. In addition, the Group raised funds to
purchase another fourteen suction excavators, which further boosted turnover
from discontinued operations. Civil projects are expected to be similarly
busy, due to the requirements of AMP7 being squeezed into three years rather
than five, and the well documented pressures on the water industry.
Based on the current status, the Directors have a reasonable expectation that
the Group will be able to execute its plans in the
medium term such that the Group will have adequate resources to continue in
operational existence for the foreseeable future. This provides the Directors
with assurance on the Group's ability to continue as a going concern, and
therefore adopt the going concern basis of accounting in preparing the annual
financial statements. Cash at the end of FY2024 was £6.4m (FY2023 £4.2m), as
a considerable increase in liquidity
has been achieved during the year following the significant equity fund raise
September 2024. Following the fund raise in September 2024, a further
4,467,215 ordinary shares of 0.1p were issued at 49.5 pence per share, raising
gross proceeds of £2,211k. The ordinary shares have attached to them full
voting, dividend and capital distribution rights (including on winding up).
They do not confer any right of redemption.
Basis of consolidation
The Consolidated financial statements consolidate the financial statements of
the Group and its subsidiary undertakings drawn up to 30 September 2024.
As permitted by section 408 of the Companies Act 2006, no profit and loss
account is presented for the Company.
A subsidiary is an entity controlled by the Group. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group or, if
created directly, the subsidiary has been incorporated. The Group obtains
control over an entity when it has:
a) power over the entity
b) exposure, or rights, to variable returns from its involvement with
the entity
c) the ability to use its power over the entity to affect the amount of
the Group's returns
Where applicable, the results of subsidiaries acquired during the period are
included in the consolidated statement of comprehensive income from the
effective date of acquisition. Where necessary, adjustments are made to
the financial statements of subsidiaries to bring their accounting policies
into line with those used by the Group.
The acquisition method of accounting is used to account for business
combinations that result in the acquisition of subsidiaries by the Group. The
cost of a business combination is measured as the fair value of the assets
given, equity instruments issued, and liabilities incurred or assumed at the
date of exchange. Identifiable assets acquired, liabilities and contingent
liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date. Any excess of the cost of the business
combination over the acquirer's interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities recognised is
recorded as goodwill. No goodwill has arisen on consolidation of subsidiaries.
Inter-Group transactions, balances, and unrealised gains on transactions
between the Group and its subsidiaries, which are related parties, are
eliminated in full.
Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the executive
directors that make strategic decisions. The Group operates from one location
but, in the Directors' opinion, has three reportable segments: Labour supply,
civil projects, and other activities.
Revenue
Revenue arises from the provision of construction and civil engineering
services under fixed price contracts. Contract duration can vary and can range
from the supply of labour only to the provision of fully managed construction
and engineering projects. Where variations are requested, prices are agreed as
soon as practically possible. Variations are exactly that - changes or
additions to initial requests. Discounts, rebates, refunds, credits, price
concessions, incentives, performance bonuses, penalties are rarely
encountered, but if any of them are, they are not material.
To determine whether to recognise revenue, the Group follows the 5-step
process as set out within IFRS 15:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied
Certain fixed price contracts span more than one accounting period and can
have a duration of more than one year. The Group's accounting policies for
these projects require revenue and costs to be allocated to individual
accounting periods and the consequent recognition at period-end of contract
assets or liabilities for projects still in progress. Management apply
judgement in estimating the total revenue and total costs expected on each
project. Such estimates are revised as a project progresses to reflect the
current status of the project and the latest information available to
management. The project teams regularly review contract progress to ensure the
latest estimates are appropriate. The carrying amounts of contract assets and
liabilities are stated in Note 19.
The key judgements and policies in respect of revenue from the Group's various
activities are described further below.
Labour Supply
This represents the provision of labour to customers. The amount of revenue is
based on agreed contractual hourly rates with customers. The customer
simultaneously receives and consumes the benefits provided by the Group's
performance under these contracts and the performance obligation (being the
provision of labour) is therefore satisfied over time. In the majority of
cases, the Group invoices customers monthly in arrears for the hours of labour
supplied during that month. Amounts invoiced but unpaid at the balance sheet
date are included within trade receivables.
In some cases, the monthly invoice will not correspond with a calendar month,
and the Group is therefore required to include an amount within contract
assets in the Statement of Financial Position, for revenue relating to periods
for which labour has been provided but not yet invoiced.
Civil Projects
This represents work performed under contracts with customers to undertake
construction and/or civil engineering works. These contracts contain several
individually identified services. However, the directors consider that the
services being provided are highly interdependent and interrelated and
therefore should not be considered to be separate performance obligations
under IFRS 15. Furthermore, the services provided by the Group either enhance
an asset that the customer controls and/or do not create an asset with
alternative use to the Group and there is an enforceable right to payment for
performance completed to date. The Group therefore considers the delivery
under these contracts to be a single performance obligation that is satisfied
over time.
Each contract has its own assessed view. Contract modifications are recognised
when the Group considers that they have been approved. The estimation of final
contract value includes the assessment of the recovery of variations, claims,
and compensation events. The estimate made is constrained in accordance with
IFRS 15 so that it is highly probable not to result in a significant reversal
of revenue in the future. Where the change in scope results in an increase to
the work to be performed that is distinct and reflects the stand-alone selling
price of the good/service, it is treated as a separate contract.
Under these contracts, the Group produces a monthly 'application' to the
customer detailing the work performed to date and requesting payment
accordingly. Within a period of one to two months (in the majority of cases)
the customer will confirm agreement to the 'application' and remit the
necessary funds to the Group. Historically, the Group's experience is that
instances of customers materially disagreeing with the 'application' are rare
and that this is therefore a reliable method by which to recognise revenue
earned ("output method"). There have been no new 'output' method projects
started since March 2021, and internal valuations made under this method in
the year ending 30 September 2023 would not change the position in any
material way.
At the balance sheet date, the Group includes a balance in receivables for the
amount of revenue receivable on contracts based on the work performed. The
Group used the output method for all projects still in operation at the end of
March 2021 (until those projects are completed), but all new projects since
then use the input method, based on costs incurred to date, to estimate the
amount of revenue earned and includes an amount in contract assets within
receivables. The input method is based on costs incurred at the balance sheet
date compared to expected costs to be incurred throughout the life of the
contract.
Other
Revenue from the sale of software products is recognised at a point in time,
being when the software is delivered to the end customer. Likewise, the
revenue from the health trailer (where nursing services are provided) is
recognised, at a point in time, when the services have been delivered to the
end customer. Payment terms are typically 30 days.
Other operating income
Work done for Hercules Real Estate Ltd and reclaims of training costs from ex
employees are included here, but are only applicable for FY2023.
Taxation
The tax expense or credit for the period comprises current and deferred tax.
Tax is recognised in the income statement, except that a change attributable
to an item of income or expense recognised as other comprehensive income is
also recognised directly in other comprehensive income.
The current tax charge or credit is calculated on the basis of tax rates and
laws that have been enacted or substantively enacted by the reporting date in
the United Kingdom, where the Group operates and generates taxable income.
Deferred tax is recognised on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial
statements and on unused tax losses or tax credits available to the Group.
Deferred tax is determined using tax rates and laws that have been enacted or
substantively enacted by the reporting date and that are expected to apply in
the period when the liability is settled, or the asset realised.
Deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. The carrying amounts of deferred tax assets are
reviewed at each reporting date and a valuation allowance is set up against
deferred tax assets so that the net carrying amount equals the highest amount
that is more likely than not to be recovered based on current or future
taxable profit.
Deferred tax assets and liabilities are only offset against each other when
there is a legally enforceable right to set off current taxation assets
against current taxation liabilities and the deferred tax assets and
liabilities relate to income taxes levied by the same tax authority on either
(a) the same taxable entity, or (b) different taxable entities which intend to
settle these on a net basis, or to realise the assets and settle the
liabilities simultaneously. In the Group's accounts all taxes are levied by
H M Revenue and Customs. Management reviews the offset of deferred tax
assets and liabilities to ensure such an offset is appropriate.
Tangible assets
Property, plant, and equipment is stated in the statement of financial
position at cost, less any subsequent accumulated depreciation and subsequent
accumulated impairment losses.
The cost of property, plant and equipment includes directly attributable
incremental costs incurred in its acquisition and installation.
Depreciation
Depreciation is charged so as to write off the cost of assets over their
estimated useful lives, as follows:
Asset
class
Depreciation method and rate
Plant and machinery 10% reducing
balance
Fixtures, fittings and equipment 20% reducing
balance
Right-of-use assets
Cars
Straight line over the term of the lease
Vans
10% reducing balance
Property Straight
line over the term of the lease
Plant & Machinery 8.3% reducing balance
Intangible assets
Goodwill arises on business acquisitions and represents the excess of the cost
of the acquisition over the Group's interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities of the entity
recognised at the date of acquisition. Goodwill is initially recognised as
an asset at cost and is subsequently measured at cost
less accumulated impairment losses. Goodwill is held in the currency of the
acquired entity and revalued to the closing rate at each reporting period
date. Negative goodwill arising on an acquisition is recognised on the face of
the balance sheet on the acquisition date and subsequently the excess up to
the fair value of non-monetary assets acquired is recognised in profit or loss
in the periods in which the non-monetary assets are recovered.
No amortisation is provided on goodwill in FY2024, but amortisation of some
intangible assets (arising on the acquisition of Future Build) has been
included. This is the brand, and is being amortised over 10 years.
Impairment of non-financial assets
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately independent cash inflows (CGU). All
non-financial assets or CGUs are tested for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable.
An impairment charge is recognised for the amount by which the assets or CGUs
carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of fair value, reflecting market conditions less costs to sell, and
value in use. All assets are subsequently reassessed for indications that an
impairment loss previously recognised may no longer exist. Value in use is
assessed by discounting the estimated future cash flows that the asset is
expected to generate throughout its useful life.
Discontinued operations
Hercules has decided to dispose of its suction excavator services business.
This disposal meets the definition of a discontinued operation as stipulated
by IFRS 5. Based on the expected net proceeds of sale the group made an
impairment charge of £2m in FY2024.
Financial instruments
The Group classifies financial instruments, or their component parts, on
initial recognition as a financial asset, a financial liability, or an equity
instrument in accordance with the substance of the underlying contractual
arrangement. Financial instruments are recognised on the date when the Group
becomes a party to the contractual provisions of the instrument. Most
financial instruments are initially recognised at fair value. Trade
receivables are held in order to collect the contractual cash flows and are
initially measured at the transaction price as defined in IFRS 15. Financial
instruments cease to be recognised at the date when the Group ceases to be
party to the contractual provisions of the instrument.
Financial assets are included on the balance sheet as trade and other
receivables or cash and cash equivalents. Financial liabilities include
borrowings, trade payables and accruals.
(a) Trade receivables
Trade receivables are amounts due from customers for services performed in the
ordinary course of business. They are recognised initially at the amount of
consideration that is unconditional. The Group holds the trade receivables
with the objective of collecting the contractual cash flows and therefore
measures them subsequently at amortised cost using the effective interest
method, less provision for impairment. A provision for impairment of trade
receivables is established based on the expected credit loss. The Group
applies the IFRS 9 simplified approach to measure expected credit losses that
uses a lifetime expected loss allowance for all trade receivables, which are
grouped based on shared credit risk characteristics and the days past due. The
amount of the provision is recognised in the balance sheet within trade
receivables. Movements in the provision are recognised in the profit and loss
account in administrative expenses. Any change in their value through
impairment or reversal of impairment is recognised in the income statement.
Default is defined as non-payment - there is no specific write off policy, but
disputes are settled by discussion as is common in the industry.
(b) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other
short-term highly liquid investments that have a maturity date of 3 months or
less, are readily convertible to a known amount of cash and are subject to an
insignificant risk of change in value.
(c) Borrowings
All borrowings are initially recorded at fair value. Borrowings are
subsequently carried at amortised cost, with the difference between the
proceeds, net of transaction costs, and the amount due on redemption being
recognised as a charge to the income statement over the period of the relevant
borrowing. Interest expense is recognised on the basis of the effective
interest method and is included in finance costs.
Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at least 12
months after the reporting date.
(d) Trade payables
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Accounts payable
are classified as current liabilities if the Group does not have an
unconditional right, at the end of the reporting period, to defer settlement
of the creditor for at least twelve
months after the reporting date. If there is an unconditional right to defer
settlement for at least twelve months after the reporting date, they are
presented as non-current liabilities. Trade payables are recognised initially
at fair value, and all are repayable within one year and hence are included at
the undiscounted amount of cash expected to be paid.
(e) Contract assets
A contract asset is recognised within receivables where the Group has earned
the right to revenue through performance under contracts. Contract assets are
also potentially subject to credit losses and are therefore subject to a
provision for expected credit losses in the same way as trade receivables as
described above.
(f) Leases
The Group as lessee
Short term leases (up to one year) or leases of low value (up to £500) are
recognised as an expense on a straight-line basis over the term of the lease.
The Group recognises right-of-use assets under lease agreements in which it is
the lessee. The underlying assets comprise property, plant and machinery and
motor vehicles, and are used in the normal course of business. The
right-of-use assets comprise the initial measurement of the corresponding
lease liability payments made at or before the commencement day as well as any
initial direct costs and an estimate of costs to be incurred in dismantling
the asset. Lease incentives are deducted from the cost of the right-of-use
asset. The corresponding lease liability is included in the statement of
financial position as a lease liability.
The right-of-use asset is depreciated on a straight-line basis over shorter of
the asset's useful life and the lease term and where impairment indicators
exist, the right of use asset will be assessed for impairment.
The lease liability shall initially be measured at the present value of the
lease payments that are not paid at that date, discounted using the rate
implicit in the lease or, where this cannot be determined, the Group's
incremental borrowing rate. The lease liability is subsequently measured by
increasing the carrying amount to reflect interest on the lease liability
(application of the effective interest method) and by reducing the carrying
amount to reflect the lease payments made. No lease modification or
reassessment changes have been made during the reporting period from changes
in any lease terms or rent charges.
Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Group will
be required to settle that obligation and a reliable estimate can be made of
the amount of the obligation.
Provisions are measured at the directors' best estimate of the expenditure
required to settle the obligation at the reporting date and are discounted to
present value where the effect is material.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at
the fair value of the cash or other resources received or receivable, net of
the direct costs of issuing the equity instruments. If payment is deferred and
the time value of money is material, the initial measurement is on a present
value basis.
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the Group has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Contributions to defined contribution plans are recognised as employee benefit
expense when they are due. If contribution payments exceed the contribution
due for service, the excess is recognised as a prepayment.
Share-based payment
The Group applies IFRS 2 to share-based payments. The Group operates a share-based payment compensation plan, under which the entity grants key employees the option to purchase shares in Hercules Site Services Plc at a specified price maintained for a certain duration. The Group has also issued warrants to certain key suppliers with similar characteristics which are accounted for in the same way as the options.
The fair value of the services received in exchange for the grant of the
options is recognised as an expense. The total amount to be expensed is
determined by reference to the fair value of the options granted:
• including any market performance conditions (e.g. an entity's
share price);
• excluding the impact of any service and non-market performance
vesting conditions (e.g. profitability, sales growth targets and remaining an
employee of the entity over a specified time period), and
• including the impact of any non-vesting conditions (e.g. the
requirement for employees to save).
Non-market performance and service conditions are included in assumptions
about the number of options that are expected to vest. The total expense is
recognised over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied. At the end of each financial
period, the Group revises its estimates
of the number of options that are expected to vest based on the non-market
vesting conditions. It recognises the impact of the revision to original
estimates, if any, in the Consolidated Statement of Comprehensive Income, with
a corresponding adjustment to equity. When the options are exercised, and the
Group issues new shares to meet that obligation, the proceeds received net of
any directly attributable transaction costs are credited to share capital
(nominal value) and share premium.
3 Critical accounting judgements and key sources of
estimation uncertainty
In the application of the Group's accounting policies, management is required
to make judgements, estimates and assumptions about the carrying value of
assets and liabilities that are not readily apparent from other sources. The
estimates and underlying assumptions are based on historical experience and
other factors that are considered to be relevant. Actual results may differ
from these estimates. The estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate
is revised if the revision affects only that period, or in the period of
revision and future periods if the revision affects both current and future
periods. The key sources of estimation uncertainty that have a significant
effect on the amounts recognised in the financial statements are described
below. The impact of climate change are at present considered to be not
material.
The Group has considered the nature of the estimates involved in deriving
balances on long term contracts, and concluded that it is possible that
outcomes within the next financial year may be different from the Group's
assumptions applied as at 30 September 2024 and could require an adjustment
(but not considered to be material) to the carrying amounts of these assets
and liabilities in the next financial year. However, due to the level of
uncertainty, combination of cost and income variables and timing across the
Group's portfolio of contracts at different stages of their contract life, it
is impracticable to provide a quantitative analysis of the aggregated
judgements that are applied at a portfolio level.
Key judgements
Lease discount rate
IFRS 16 requires the carrying value lease liabilities and the corresponding
right of use assets to be calculated using the net present value of future
lease payments. This calculation inherently requires a discount rate to be
applied, which requires judgement. The Directors have used the Group's
incremental borrowing rate for property leases where the rate implicit in the
lease cannot be determined. The incremental borrowing rate applied is based on
the interest rate applied to the bank loan disclosed in note 24.
Key sources of estimation uncertainty
Revenue recognition (Civil projects)
In order to determine the profit and loss that the Group is able to recognise
on its Civil projects in the accounting period, the Group has to estimate the
total costs expected to be incurred under each project. While the costs
incurred to date are known, the estimation of costs to complete for each
project requires judgement. Management assesses the degree of completion by
measuring the value of costs incurred as a percentage of the estimated total
costs of the project. This is considered the most appropriate measure of
completion of projects as revenue is invoiced based on the value of work
performed. This represents an 'input method' under IFRS 15. Such estimates are
revised as a project progresses to reflect the current status of the project
and the latest information available to management. The project teams
regularly review contract progress to ensure the latest estimates are
appropriate. Further information is disclosed in note 2 under 'Revenue' and
the carrying amounts of contract assets are stated in Note 6. There will
always be some estimation uncertainty in the recognition of revenue owing to
the estimate of cost to complete.
The Group recognises recoveries of claims from clients as revenue where clear
entitlement has been established, such as through dispute-resolution
processes. This includes the recovery of costs (such as delays to the contract
programme) to the extent it is highly probable not to result in a significant
reversal of revenue in the future.
Impairment of intangible assets
The group has goodwill arising on a business combination. The group tests
annually whether goodwill has suffered any impairment in accordance with the
requirements of IAS 36, Impairment of Assets. The recoverable amounts have
been determined based on value-in-use calculations reported in continuing
operations (see note 15).
The recoverable amounts of all cash generating units classified as
discontinued operations have been valued at fair value less cost to sell.
Investments
The company has investments in subsidiaries which are shown at cost, less
provisions for impairment. Investments in subsidiaries are reviewed for
impairment annually or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired. The recoverability of
investments is dependent on value-in-use calculations of the White Collar
business and achieving the revenue growth and EBITDA within these forecasts,
the actuality of which is not certain. The sensitivities to these cash flows
are considered in the impairment of intangible assets note 15.
4 Earnings per share
Year ended 30 September Year ended 30 September
Restated
2024 2023
£000 £000
Basic and diluted
Profit from continuing operations 1,636 1,669
Loss from discontinued operations (3,307) (899)
(Loss)/profit from all operations (1,671) 770
Basic and diluted weighted average number of shares in issue 64,062,371 60,803,022
Basic and diluted profit/(loss) pence per share:
Continuing operations 2.55 2.74
Discontinued operations (5.16) (1.48)
(Loss)/profit from all operations (2.61) 1.27
The reduction in the basic eps was solely down to tax - a deferred tax swing
from a credit of 129k in 2023 to a debit £558k in 2024, and a write off of
£53k corporation tax from 2021.
Restated
2024 2023
£000 £000
Adjusted* basic and diluted
Profit from continuing operations 2,225 1,738
Loss from discontinued operations (1,290) (899)
(Loss)/profit from all operations 935 839
Adjusted* basic and diluted profit/(loss) pence per share:
Continuing operations 3.47 2.86
Discontinued operations (2.01) (1.48)
(Loss)/profit from all operations 1.46 1.38
The Group has share options and warrants in issue as disclosed in note 26.
However, the average share price during the period since issue was lower than
the exercise price, therefore the potential shares arising are not dilutive.
*Adjustments refer to exceptional/non-recurring costs, and under provisions of
corporation and deferred tax in previous years.
5 Segmental reporting
The Group's management have identified three continuing operating segments:
labour supply, civil projects, and other services. The segments are monitored
by the Group's chief operating decision makers and strategic decisions are
made based on the segments' operating results.
Segment information for the year ended 30 September 2024 is as follows:
Continuing operations
Labour supply Civil projects Other Total
£000 £000 £000 £000
Revenue (all from external customers) 84,125 17,535 274 101,934
Cost of sales (72,985) (13,819) (157) (86,961)
Gross profit 11,140 3,716 117 14,973
Administrative expenses (2,215) (1,514) (364) (4,093)
Operating profit from segments 8,925 2,202 (247) 10,880
Administrative expenses
not attributable to segments (7,508)
Profit from operations 3,372
Finance income 59
Finance costs (1,184)
Profit before tax 2,247
Other services include digital products, health trailer services, Academy
training.
Segment information for the year ended 30 September 2023 is as follows:
Labour supply Civil projects Other Total
£000 £000 £000 £000
Revenue (all from external customers) 63,818 15,656 296 79,770
Cost of sales (53,192) (12,410) (96) (65,698)
Gross profit 10,626 3,246 200 14,072
Administrative expenses (1,961) (1,455) (226) (3,642)
Other operating income 10 10
Operating profit from segments 8,665 1,791 (16) 10,440
Administrative expenses
not attributable to segments (7,961)
Profit from operations 2,479
Finance income -
Finance costs (939)
6 Revenue
The total turnover of the Group has been derived from activities wholly
undertaken in the United Kingdom, being the operation of construction and
engineering contracts, and other services. The Groups revenue from each
activity is shown below and is all derived in the United Kingdom.
2024 2023
Restated
£000 £000
Labour Supply 84.125 63,818
Civil projects 17,535 15,656
Total from construction services 101,660 79,474
Other 274 296
101,934 79,770
Discontinued operations 5,055 4,895
Total all operations 106,989 84,665
The Group derives its income from two main activities, both of which are
linked to the principal activity of the delivery of construction and civil
engineering services, being the provision of labour and services provided
under construction and/or civil engineering contracts. These are referred to
internally as 'labour supply' and 'civil projects' respectively.
Significant customers
In the year ended 30 September 2024 one customer represented 41% (£49.2m) of
revenue (2023 one customer 36% (£33.7m)), and another customer represented 9%
(£11.1m) of revenue (2023 one customer 8% (£7.9m). These customers were
primarily labour supply customers. No other customers represented more than 8%
of revenue in either year.
Contracts with customers
The Group has contract assets relating to revenue earned from the supply of
labour and construction services. Due to the nature of this revenue, balances
defined as contract assets will vary and depend on the number, timing and
nature of the contracts in progress at the balance sheet date. The relevant
balances are shown as contract assets in note 19. The decrease in contract
assets compared to the prior year represents the decreased level of activity
at the year end.
Contract balances
The nature of the Group's revenue recognition is such that the only contract
balances arising relate to accrued income, which is shown as a contract asset.
The balance at 30 September 2024 was £3.0m (2023: £6.1m).
Significant changes in contract assets
The Group has many contracts for services underway at any point in time, and
these are a mix of large and small contracts, generally with monthly
invoicing. The level of contract assets therefore fluctuates depending on the
mix of contracts and the stage of contract completion at the balance sheet
date by reference to costs incurred to date.
7 Other operating income
Other operating income arises from the receipt of government grants for
training costs. Since this is not considered to be part of the main revenue
generating activities, the Group presents this income separately from revenue.
Year ended 30 September
2024 2023
£000 £000
Inter-Group sales - 3
Reclaim of training costs - 7
- 10
Inter-group sales in 2023 (£3k) were to Hercules Real Estate Ltd, the parent
company.
8 Profit from operations
Operating profit is stated in the income statement after charging:
Year
ended 30 September
2024 2023
£000 £000
Depreciation - owned assets 17 108 135
Deprecation - right-of-use assets 17 833 584
Loss on disposal of fixed assets 209 43
Amortisation of intangibles 33 -
Research and development costs 6 4
9 Auditors' remuneration
No non-audit services have been provided in the year.
Year ended 30 September
2024 2023
£000 £000
Fees payable to the current auditors for the audit of the group financial
statements including subsidiaries
121
Fees payable to the previous auditors for the audit of the group financial
statements including subsidiaries
80
10 Staff costs
Group
The aggregate employee benefit expenses were as follows:
Year ended 30 September
2024 2023
£000 £000
Wages and salaries 40,096 26,991
Social security costs 4,525 2,887
Defined contribution pension costs 553 467
45,174 30,345
The average monthly number of employees for the Group during the year was as
follows:
Year ended 30 September
2024 2023
£000 £000
Site based operatives 635 426
Administrative and Managerial 123 91
758 517
Company
The aggregate employee benefit expenses were as follows:
Year ended 30 September
2024 2023
£000 £000
Wages and salaries 38,792 26,991
Social security costs 4,443 2,887
Defined contribution pension costs 528 467
43,763 30,345
The average monthly number of employees for the Company during the year was as
follows:
Year ended 30 September
2024 2023
£000 £000
Site based operatives 633 426
Administrative and Managerial 102 91
735 517
11 Key management remuneration
Key management of the Group are the directors. Remuneration paid to the
directors (statutory and non-statutory) of the Group by the Group is set out
below:
Year ended 30 September
2024 2023
£000 £000
Salaries and benefits 1,283 641
Pension contributions 81 94
1,364 735
During the year retirement benefits were accruing to 2 directors (2023: 2) in
respect of defined contribution pension schemes.
Amounts paid to the highest paid director were as follows:
Year ended 30 September
2024 2023
£000 £000
Salaries and benefits 394 278
Pension contributions 10 60
404 338
12 Finance costs
Year ended 30 September
2024 2023
£000 £000
Lease finance costs 201 142
Interest on loans measured at amortised cost
49 70
Invoice discounting interest 934 726
1,184 938
13 Income taxes
Year ended 30 September
2024 2023
£000 £000
Current tax:
UK corporation tax - -
Adjustments to prior periods 53 -
Total current tax charge 53 -
Deferred tax:
Origination and reversal of timing differences 349 (62)
Adjustments in respect of prior periods 209 (67)
558 (129)
Tax charge/(credit) on profit on ordinary activities 611 (129)
Tax on profit on ordinary activities for the year is lower than the standard
rate of corporate tax in the UK of 25%, (2023: 22%).
The differences are reconciled below:
Year ended 30 September
Continuing operations 2024 2023
£000 £000
Profit on ordinary activities before taxation 2,247 641
Tax at the UK rate of 25% (2023: 22%) 562 141
Effect of:
Expenses not deductible for tax purposes (122) 46
Fixed asset temporary differences 8 (242)
Adjustments in respect of prior periods* 262 (66)
Transfer of trade (93) -
Remeasurement of deferred tax for change in tax rates - (7)
Group relief (6) -
Total tax charge/(credit) 611 (129)
*£53,000 Corporation Tax and £209,000 Deferred Tax were underprovided for in
2021 and 2023 respectively. However, as per usual practice prior years have
not been restated and affect FY2024. These adjustments have been taken into
account when adjusting profit after tax results and thereby earnings per share
calculations (see p56).
14 Deferred tax
Group
Deferred tax balances are analysed as follows:
Deferred tax balances before offset 30 September 2024 30 September 2023
£000 £000
Deferred tax liability (869) (3,833)
Deferred tax asset 119 3,675
Total deferred tax liability (750) (158)
Deferred tax balances after offset 30 September 2024 30 September 2023
£000 £000
Deferred tax asset - -
Deferred tax liability (750) (158)
Total deferred tax liability (750) (158)
The amounts reflect the differences between the carrying and tax amounts of
the following balance sheet headings as at each year end.
Credits/(charges) during each year are as follows:
Short term Fixed asset
Temporary Temporary Business
Tax losses differences differences combinations Total
£000 £000 £000 £000 £000
At 1 October 2022 1,709 2 (1,998) - (287)
asset/(liability)
Tax credit/(charge) 1,893 71 (1,835) - 129
in respect of current year
At 30 September 2023 3,602 73 (3,833) - (158)
asset/(liability)
Discontinuing operations (3,163) - 3,230 - 67
Under provision charged (439) (41) 271 - (209)
to profit and loss
Tax credit/charge in respect 115 (28) (437) - (350)
of current year
Deferred tax on business - - - (100) (100)
combinations
At 30 September 2024 115 4 (769) (100) (750)
asset/(liability)
The current year rate of 25% arises from changes to legislation enacted during
2021. The main rate of corporation tax in the UK increased from 19% to 25%
with effect from 1 April 2023.
In June 2023 Finance Act (No.2) 2023 was substantively enacted in the UK,
introducing a global minimum effective tax rate of 15% in line with the OECD
Pillar Two model rules. The legislation implements a domestic top-
up tax and a multinational top-up tax, effective for periods starting on or
after 31 December 2023. The new rules are not expected to have a material
impact on the Company's operations or results
Deferred tax
Company
All balances represent deferred tax liabilities. There are no deferred tax
assets.
The amounts reflect the differences between the carrying and tax amounts of
the following balance sheet headings as at each year end.
Credits/(charges) during each year are as follows:
Short term Fixed asset
Temporary Temporary
Tax losses differences differences Total
£000 £000 £000 £000
At 1 October 2022 - asset/(liability) 1,709 2 (1,998) (287)
Tax credit/(charge) in respect of current year 1,893 71 (1,835) 129
At 30 September 2023 - asset/(liability) 3,602 73 (3,833) (158)
Discontinuing operations (3,163) - 3,230 67
Under provision charged to profit and loss (439) (41) 272 (208)
Tax credit/charge in respect of current year - (28) (437) (465)
At 30 September 2024 - asset/(liability) - 4 (768) (764)
15 Intangible assets
Group
Brand value Goodwill Total
£000 £000 £000
Cost
Arising on business combinations 399 1,956 2,355
Disposals - - -
At 30 September 2024 399 1,956 2,355
Amortisation
Charge 33 - 33
Disposals - - -
At 30 September 2024 33 - 33
Net book value
At 30 September 2023 - - -
At 30 September 2024 366 1,956 2,322
Goodwill arose on the acquisition of Future Build as set out in note 16. The
directors have utilised the provisions of IFRS 3 in respect of determining
fair values on business combinations provisionally, and will adjust goodwill
accordingly in the year ended 30 September 2025 for any amounts arising from
the finalisation of those fair value within 12 months of the respective
acquisitions.
Impairment testing
The directors consider that the Group comprises three single cash generating
units ('CGU's) for its UK entities.
The Group tests goodwill, intangibles and company investments for impairment
annually, using the value-in-use basis. This involves deriving a value for
goodwill based on the net present value of future cash flows of the CGU. The
directors used forecasts up to 2039 as the basis for the cash flow
projections. The headroom, i.e. amount by which the cash generating unit's
recoverable amount exceeds its carrying value in the impairment test for
goodwill, is £379,496. The key assumption driving the recoverable amount
estimate is revenue growth in the years ending 30 September 2025-2029. The
table below sets out the impact of reducing the projected revenue growth
estimates whilst holding EBITDA margins constant.
Reasonably possible changes in revenue growth and impact on recoverable amount Projected revenue growth in measurement of recoverable amount Revenue growth level that would trigger impairment Percentage reduction in projected revenue growth required to trigger
impairment
Year ending 30 September 2025 17% 11% 35%
Years ending 30 September 2026-29 10% 5% 50%
16 Business combinations
On 30 November 2023, Hercules Site Services plc acquired 60% of the issued
share capital of Hercules Site Services (White Collar) Limited (formerly,
Future Build Recruitment Limited), in turn obtaining control. However, due to
the nature of the acquisition and its associated partnership agreement, the
acquisition has been treated in these accounts as 100%. This is the first
partnership arrangement (which kicks in following the acquisition) the Group
has entered in to, and it is cash generative.
As part of the acquisition a partnership agreement was entered into with the
owners of the remaining 40%, containing:
1) a call option allowing the group to acquire their remaining shares (if
not already acquired) 10 years after the acquisition.
and
2) a put option allowing the owners to sell their remaining shares to
Hercules at specified points within a 10 year period post acquisition.
Therefore the business combination has been treated as Hercules Site Services
plc acquiring 100% of the issued share capital of Hercules Site Services
(White Collar) Limited.
Hercules Site Services (White Collar) Limited contributed £1.4m revenue and
£Nil profit to the group's profit on continuing operations for the period
between the date of acquisition and the balance sheet date.
The amounts recognised in respect of the identifiable assets acquired and
liabilities assumed are as set out in the table below:
Fair Value
£000
Assets and liabilities acquired
Financial assets 461
Tangible assets 3
Financial liabilities (148)
Intangible assets - brand value 399
Deferred tax provision (100)
Total identifiable assets 615
Goodwill 1,956
Total consideration 2,571
Satisfied by:
Cash 1,001
Equity 250
Working capital 282
Contingent consideration 1,038
Total consideration transferred 2,571
Cash flow analysis:
Cash consideration 1,533
Less: cash and cash equivalent balances acquired (345)
Net cash outflow arising on acquisition 1,188
17 Tangible assets
Group Plant and machinery Fixtures & office equipment Right-of-use assets Assets Motor Vehicles Total
under construction
£000 £000 £000 £000 £000 £000
Cost
At 1 October 2022 269 587 15,605 - 707 17,168
Additions 143 143 7,764 78 16 8,144
Disposals (34) (22) (123) - (225) (404)
At 30 September 2023 378 708 23,246 78 498 24,908
Discontinued operations
(144) (26) (14,028) (272) (14,470)
Additions 11 219 1,982 180 - 2,392
Arising on business combinations - 3 - - - 3
Disposals - - (2,080) (78) (173) (2,331)
At 30 September 2024 245 904 9,120 180 53 10,502
Depreciation
At 1 October 2022 82 326 1,920 - 198 2,526
Charge for the year 23 100 1,604 - 45 1,772
Disposals (15) (22) (60) - (92) (189)
At 30 September 2023 90 404 3,464 - 151 4,109
Discontinued operations
(12) (4) (1,541) - (66) (1,623)
Charge 16 83 833 - 9 941
Disposals - - (279) - (76) (355)
At 30 September 2024 94 483 2477 - 18 3,072
Net book value
At 30 September 2024 151 421 6,643 180 35 7,430
At 30 September 2023 288 304 19,782 78 347 20,799
At 30 September 2022 187 261 13,685 - 509 14,642
Certain right-of-use assets are pledged as security on the lease agreements to
which they relate.
Company Plant and machinery Fixtures & office equipment Rights of-use assets Assets under construction Motor Vehicles Total
£000 £000 £000 £000 £000 £000
Cost
At 1 October 2022 269 587 15,605 - 707 17,168
Transfer 143 143 7,764 78 16 8,144
Disposals (34) (22) (123) - (225) (404)
At 30 September 2023 378 708 23,246 78 498 24,908
Additions 11 201 393 180 - 785
Disposals (144) (34) (16,166) (78) (444) (16,866)
At 30 September 2024 245 875 7,473 180 54 8,827
Depreciation
At 1 October 2022 82 326 1,920 - 198 2,526
Charge for the year 23 100 1,604 - 45 1,772
Disposals (15) (22) (60) - (92) (189)
At 30 September 2023 90 404 3,464 - 151 4,109
Charge 16 79 663 - 9 767
Disposals (12) (4) (1,840) - (144) (2,000)
At 30 September 2024 94 479 2,287 - 16 2,876
Net book value
At 30 September 2024 151 396 5,186 180 38 5,951
At 30 September 2023 288 304 19,782 78 347 20,799
At 30 September 2022 187 261 13,685 - 509 14,642
18 Investments
Company
As at As at
30 September 2024 30 September 2023
£000 £000
At 1 October - -
Hive down from Company 2,088 -
New investments in the year 2,570 -
Capital contribution 2,504 -
Impairment charge (2,000) -
Disposal group assets held-for-sale (2,592) -
At 30 September 2,570 -
Details of undertakings
Details of the investments in which the Group holds 20% or more of the nominal
value of any class of share capital are given below. All subsidiaries are
100% owned in both the current unless otherwise stated. See disclosure below
table for registered addresses of UK entities.
Undertaking Country Holding Company number
Subsidiary undertakings
Hercules Site Services (White Collar) Limited* England and Wales Ordinary 07235347
Hercules Site Services (Suction Excavators) Limited England and Wales Ordinary 14975649
Hercules Site Services (Training) Limited England and Wales Ordinary 14975482
The registered address for all subsidiaries registered in England and Wales
is, Hercules Court, Broadway Lane, South Cerney, Cirencester, GL7 5XZ.
*Hercules Site Services Limited owns 60% of the share capital in Hercules Site
Services (White Collar) Limited at 30 September 2024.However, in the accounts
they are treated as 100% (see Note 16).
As part of the investment above, Hercules Site Services Limited transferred
£2.1m of assets as a capital contribution to Hercules Site Services (Suction
Excavators) Limited. A £2m impairment charge has now been debited to the
income statement to reflect the likely sale price of this business.
19 Trade and other receivables
Group
Restated
As at As at
30 September 2024 30 September 2023
Amounts falling due within one year: £000 £000
Trade receivables 11,080 10,328
Other receivables - 49
Contract assets 2,957 6,137
Prepayments and accrued income 5,445 4,395
19,482 20,909
Company
Restated
As at As at
30 September 2024 30 September 2023
Amounts falling due within one year: £000 £000
Trade receivables 10,842 10,328
Other receivables 14 49
Contract assets 2,957 6,137
Prepayments and accrued income 5,324 4,395
19,137 20,909
Prior Year Restatement
During the preparation of the financial statements for the year ended 30
September 2024, it was identified that accrued income balances had not been
accurately recorded in the statutory accounts to 30 September 2023. An
adjustment to increase prepayments and accrued income by £3,812k has been
made, with an equal adjustment to reduce contract assets recognised at 30
September 2023. This adjustment has had no impact on the loss for the year
ended 30 September 2024.
Expected Credit Loss Provision
Trade and other receivables and contract assets above are stated net of
expected credit loss ('ECL') provisions where necessary, which are calculated
using the simplified approach grouping trade receivables and contract assets
on the basis of their shared credit risk characteristics.
Trade receivables are regularly reviewed for bad and doubtful debts. The
Group's policy is to include a provision for impairment based on estimated
credit losses. This includes an assessment where relevant of forward-looking
information on macroeconomic factors that may affect the ability of customers
to settle receivables. Trade receivables are written off where there is no
reasonable expectation of recovery, for example where the customer has entered
insolvency proceedings or where a customer has failed to make contractual
payments for an extended period. As part of this assessment, the Group also
considers the likelihood of any credit losses occurring in future based on
previous experience and knowledge of the respective customers.
Trade and other receivables are all current and any fair value difference is
not material. Trade and other receivables are assessed for impairment based
upon the expected credit losses model. In order to manage credit risk, the
Directors set limits for customers based on a combination of payment history
and third party credit references. Credit limits are reviewed on a regular
basis in conjunction with debt ageing and collection history.
The Group believe the credit risk attached to its customer base is minimal,
however at 30 September 2024 an amount of £17k was included as an ECL
provision (FY 2023 Nil). This was based on an analysis of customers and debt
ageing.
In addition to any provisions required for ECL, the Group also includes a
provision against trade receivables and contract assets for disputed items.
During the year ended 30 September 2024 the Group recorded a credit to the
income statement of £72k in respect of changes in the dispute provision
(2023: credit of £17k).
As at 30 September 2024 the balance of the dispute provision was £98k (2023:
£170k).
The maturity analysis of trade receivables (stated gross of provisions) is
shown below:
< 1 month 1-2 months 2-3 months > 3 months Total
£ £ £ £ £
30 September 2024 5,162 4,939 1,546 (567) 11,080
30 September 2023 (restated) 4,631 4,728 440 529 10,328
The expected credit loss rate on all ageing columns above has been assessed as
being immaterial.
20 Trade and other payables
Group
Restated
As at As at
30 September 2024 30 September 2023
Amounts falling due within one year: £000 £000
Trade payables 969 331
Amounts owed to parent undertaking - 39
Social security and other taxes 5,301 4,630
Other payables 4,554 4,781
Accrued expenses 931 452
11,755 10,233
Company
Restated
As at As at
30 September 2024 30 September 2023
Amounts falling due within one year: £000 £000
Trade payables 888 331
Amounts due to subsidiary - 39
Social security and other taxes 5,217 4,630
Other payables 4,534 4,781
Accrued expenses 887 452
11,526 10,233
Trade payables are all current and any fair value difference is not material.
Prior Year Restatement
During the preparation of the financial statements for the year ended 30
September 2024, it was identified that certain balances had not been
accurately recorded in the statutory accounts to 30 September 2023. An
adjustment to increase payables by £1,688k has been made, with an equal
adjustment to increase receivables at 30 September 2023. This adjustment has
had no impact on the loss for the year ended 30 September 2024.
21 Loans and borrowings
Group
As at As at
30 September 2024 30 September 2023
£000 £000
Included within current liabilities
Bank loans 7,295 9,960
Included within non-current liabilities
Bank loans - -
Company
As at As at
30 September 2024 30 September 2023
£000 £000
Included within current liabilities
Bank loans 7,295 9,960
Included within non-current liabilities
Bank loans - -
The Company
The loan is a revolving facility with a 3 year term, is secured on trade
receivables and attracts interest at a rate of 2.75% over base rate. The
facility is currently capped at £15m, but can be increased as the business
grows.
22 Leases
The Group leases certain vehicles, properties and items of plant and
machinery. With the exception of short-term leases and leases of low value
underlying assets, each lease is reflected on the balance sheet as a
right-of-use asset (Note 17) and a lease liability.
The Group had recognised 43 vehicle leases in 2024 (2023 - 56), 57 plant and
machinery leases (2023 - 28) and 6 property leases (2023 - 1)
All future cashflows are included. The property leases are subject to rent
reviews every five years. The nature of the rent reviews is such that annual
rentals are adjusted to prevailing market rates unless that would lead to a
reduction. In accordance with IFRS 16, any future increases in annual rentals
arising from rent reviews are not included in the calculation of the lease
liabilities. Any future increases in annual rentals will result in prospective
adjustments to the lease liabilities at the point of the rent review.
Amounts recognised in the Statement of Financial Position relating to leases,
categorised by underlying type of asset, are:
Group
Leasehold property Plant and machinery Motor vehicles Total
£000 £000 £000
£000
Net book value
At 1 October 2022 5,248 7,109 1,328 13,685
Adj to PY - (3) - (3)
New leases recognised in the year 86 6,540 1,138 7,764
Leases terminated in the year (38) - (22) (60)
Depreciation charge for the year (310) (923) (371) (1,604)
At 30 September 2023 4,986 12,723 2,073 19,782
New leases recognised in the year 1,575 - 407 1,982
Discontinued operations (1,320) (11,004) (164) (12,488)
Leases terminated in the year (1,130) (587) (84) (1,801)
Depreciation charge for the year (329) (94) (410) (833)
At 30 September 2024 3,782 1,038 1,822 6,642
Maturity analysis
As at As at
30 September 2024 30 September 2023
£000 £000
Due within one year 1,455 3,489
Due within two to five years 1,998 10,562
Due after five years 3,099 6,260
Future finance charges (1,179) (3,326)
5,373 16,985
Amounts recognised in the Statement of Comprehensive Income
The statement of comprehensive income shows the following amounts relating to
leases:
2024 2023
£000 £000
Depreciation charge of right of use asset 833 635
Interest expenses (within finance costs) 250 212
1,083 847
Amounts recognised in the Statement of Cash Flows
The statement of cash flows shows the following amounts relating to leases:
2024 2023
£000 £000
Net cash outflows 1,522 1,838
Low value leases and short-term leases
The Group has no leases for which the low value or short-term exemptions of
IFRS 16 has been applied.
Company
Leasehold property Plant and machinery Motor vehicles Total
£000 £000 £000
£000
Net book value
At 1 October 2022 5,248 7,109 1,328 13,685
Adj to PY - (3) - (3)
New leases recognised in the year 86 6,540 1,138 7,764
Leases terminated in the year (38) - (22) (60)
Depreciation charge for the year (310) (923) (371) (1,604)
At 30 September 2023 4,986 12,723 2,073 19,782
New leases recognised in the year 10 - 382 392
Discontinued operations (1,320) (11,004) (164) (12,488)
Leases terminated in the year (1,136) (587) (114) (1,837)
Depreciation charge for the year (178) (94) (391) (663)
At 30 September 2024 2,362 1,038 1,786 5,186
Maturity analysis
As at As at
30 September 2024 30 September 2023
£000 £000
Due within one year 1,055 1,446
Due within two to five years 1,422 2,870
Due after five years 2,004 4,534
Future finance charges (601) (1,521)
3,880 7,329
Amounts recognised in the Statement of Comprehensive Income
The statement of comprehensive income shows the following amounts relating to
leases:
2024 2023
£000 £000
Depreciation charge of right of use asset 663 608
Interest expenses (within finance costs) 147 202
810 810
Amounts recognised in the Statement of Cash Flows
The statement of cash flows shows the following amounts relating to leases:
2024 2023
£000 £000
Net cash outflows 1,259 4,403
Low value leases and short-term leases
The Company has no leases for which the low value or short-term exemptions of
IFRS 16 has been applied.
23 Financial instruments
Group
Restated
As at As at
30 September 2024 30 September 2023
Financial assets held at amortised cost: £000 £000
Trade receivables 11,080 10,328
Other receivables - 49
Cash and cash equivalents 6,393 4,151
17,473 14,528
Group
Restated
As at As at
30 September 2024 30 September 2023
Financial liabilities held at amortised cost: £000 £000
Bank borrowings 7,295 9,960
Trade payables 969 331
Amounts owed to parent undertaking - 39
Other payables 4,554 4,781
Accrued expenses 931 452
Lease liabilities 5,373 16,985
19,122 32,548
Company
As at As at
30 September 2024 30 September 2023
Financial assets held at amortised cost: £000 £000
Trade receivables 10,842 10,328
Other receivables 14 49
Cash and cash equivalents 6,163 4,151
17,019 14,528
Company
As at As at
30 September 2024 30 September 2023
Financial liabilities held at amortised cost: £000 £000
Bank borrowings 7,295 9,960
Trade payables 888 331
Amounts owed to subsidiary - 39
Other payables 4,534 4,781
Accrued expenses 887 452
Lease liabilities 3,880 16,985
17,484 32,548
24 Financial Risk management
The Group uses various financial instruments. These primarily include bank
borrowings, cash and various items, such as trade receivables and trade
payables that arise directly from its operations. The main purpose of these
financial instruments is to finance the Group's operations.
The existence of these financial instruments exposes the Group to a number of
financial risks, which are described in more detail below.
a) Market risk
Market risk encompasses three types of risk, being currency risk, interest
rate risk and price risk.
Exposure to interest rate risk is considered further below. There is no
exposure to currency risk as the Group operates entirely with the United
Kingdom and all transactions are denominated in Pounds Sterling.
Interest rate risk is limited to interest paid on the Group's variable rate
bank borrowings and interest received on cash deposits. Due to the relatively
low level of borrowings and the low rates of interest on cash deposits, the
impact of any changes in interest rate is not considered significant.
A change in interest rates of 1% would add additional cost of between £65,000
and £100,000 per year depending on the likely average level of the use of the
invoice discounting facility.
b) Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is
available to meet foreseeable needs by closely managing its cash balance. The
Group has significant levels of cash reserves available and continues to
generate profit before taxation. In this context, liquidity risk is therefore
considered to be low.
The Group's borrowing facilities are continually monitored against forecast
requirements and timely action is taken to put in place, renew or replace
credit lines.
A new invoice discounting facility was implemented in November 2023, with an
initial cap of £15m. The only relevant covenant is the Group needs to keep a
minimum headroom of £0.5m.
The Group acquires items of property, plant, and equipment on lease agreements
where appropriate to assist in managing liquidity risk by avoiding the
depletion of cash on large capital purchases. The Group also manages its
liquidity needs by carefully monitoring cash outflows due on a day-to-day
basis.
The Group's financial liabilities comprise bank borrowings, trade payables,
other payables, accruals, amounts due to related parties and lease
liabilities. The maturity of lease liabilities is disclosed in note 22 above.
All other financial liabilities are expected to be settled within 12 months of
the balance sheet date.
Where the balances are due within 12 months the contractual undiscounted cash
flow is considered to be their carrying value as the impact of discounting is
not significant.
c) Interest rate risk
Interest rate risk is limited to interest paid on the Group's variable rate
bank borrowings and interest received on cash deposits. Due to the relatively
low level of borrowings and the low rates of interest on cash deposits, the
impact of any changes in interest rate is not considered significant.
d) Credit risk
The Group's principal financial assets are cash and trade receivables. Credit
risk is also attached to contract assets that represent accrued income. The
credit risk associated with cash is limited, as the counterparties have high
credit ratings assigned by international credit-rating agencies. The credit
risk associated with trade receivables is minimal as invoices are based on
contractual agreements with long-standing customers. Debt levels with all
customers are closely monitored, and a process involving informal and then
formal communications is used where payments a re delayed. New customers are
carefully assessed using the usual credit risk agencies.
Credit losses in the last few years incurred by the Group have consequently
been immaterial, other than two bad debts incurred in the years ended 30
September 2021 and September 2023 of approximately £691,000 that the
directors consider to be fairly exceptional. These arose due to the unexpected
business failures of one major and one minor customer.
Notwithstanding the lack of historical credit losses, the Group maintains a
provision against receivables. However, this is not necessarily linked to
credit risk and the ageing of receivables is not the most relevant indicator
to determine the potential impairment of a receivable. The nature of the
Group's operations is such that misunderstandings or minor disagreements may
arise during the course of contracts, which may sometimes require an
adjustment to be made to achieve settlement.
Further details regarding expected credit losses can be found in note 19.
Capital management
The Group's capital comprises total equity and net debt. The Group's capital
management objectives are:
- To ensure its ability to trade as a going concern; and
- To provide an adequate return to shareholders.
The Group monitors capital based on the carrying amount of equity and net
debt. Adjustments are made as necessary based on the Directors' assessment of
the needs of the business and external factors such as the Group's industry
and the wider economy. The Group has traded profitably and therefore generally
levels of debt have been low. More recently a revolving credit facility has
been increased to assist with working capital.
The Group's gearing has therefore reduced considerably. The group raised
further equity in September/October of 2024 from a number of key new strategic
investors.
The Directors are able to maintain and adjust the capital structure by
adjusting dividends, issuing new shares or selling assets to reduce debt.
A summary of the Group's gearing is shown below.
30 September 2024 30 September 2023
£000 £000
Total equity 11,708 8,657
Net debt 6,275 22,794
Total capital 17,983 31,451
Gearing ratio (net debt / capital) 35% 72%
25 Share capital
Issued capital
As at As at
30 September 2024 30 September 2023
Allotted, called up and fully paid £000 £000
Ordinary shares of £1 each 75 62
Share rights
The ordinary shares have attached to them full voting, dividend and capital
distribution rights (including on winding up). They do not confer any right of
redemption. In the FY2024, two tranches of new ordinary shares of 0.1p each
have been issued by the Group:
December 2023 994,431
September 2024 11,729,998
Gross consideration of £6,056k, which amounted to £5,775k after issue costs.
26 Share based payments
As part of the Company's flotation on the Alternative Investment Market of the
London Stock Exchange on 4 February 2022, the Group issued a number of share
options and warrants to key employees and suppliers. 293,250 further options
were granted during the year.
The number of options and warrants granted is shown in the table below.
Options Warrants
Number Weighted average exercise price Number Weighted average exercise price
At 1 October 2023 3,225,754 51.0p 716,379 50.5p
Lapsed (293,250) 51.0p - -
Issued on 14 February 2024 493,250 35.4p - -
3,425,754 48.8 716,379 50.5p
At 30 September 2024
Options
The weighted average remaining contractual life of the share options
outstanding at 30 September 2024 was 3 years and 4 months. The options have a
fixed exercise price based on the market price at the time of grant.
The options may be exercised between 4 February 2027 and 3 February 2029. No
specific criteria is involved other than to be on the payroll for the period
up to the start of the expected life of the options (see below).Any option
holder leaving the employment of the Group before then forfeits the options.
The issue of these options is not part of the remuneration package for the
individuals concerned.
The fair value of the options is estimated at the grant date using a
Black-Scholes option-pricing model that uses assumptions noted in the table
below. All options were valued using the following assumptions:
Date of grant of option 14 Feb 2024 4 Feb 2023 4 Feb 2022
Expected life of options (years) 5 years 5 years 5 years
Exercise price 35.4p 56.5p 50.5p
Market value of share at date of grant 35.4p 56.5p 50.5p
Risk free rate 3.97% 3.15% 1.43%
Expected share price volatility 57% 42% 20%
Expected dividend yield 2.5% 6.31% 3.36%
Fair value per option 14.31p 9.20p 5.18p
Total fair value of options £56,000 £27,000 £121,000
Charged to profit and loss in year £7,760 £6,747 £24,298
Expected life of options
The expected life of the options was estimated based on the average of the
minimum and maximum life under the option agreements respective.
Risk free rate
A risk free rate of 3.97% (2023 options : 3.15%) was assumed in the option
pricing model, based on the yield from dividend strip government bonds with a
similar life to the options issued as close as possible to date of grant.
Dividend yield
This is based on the level of dividends paid by Hercules Site Services plc
since testing.
Exercise price
The exercise price was fixed at the market price at the date of grant.
Volatility
Volatility was based on the share price of Hercules Site Services plc. The
Directors consider this the most appropriate method of assessing expected
volatility as there is no comparable listed Group from which to draw data.
Taking into account factors such as liquidity and performance, this is
expected to be a reasonable reflection of the expected volatility throughout
the expected life of the options.
The cost relating to each tranche that has been charged to profit and loss was
included in staff costs. The total fair value of the options as shown above is
being spread over the vesting period of 5 years in each case.
Warrants
The weighted average remaining contractual life of the warrants outstanding at
30 September 2023 was 2 years and 4 months. The options have a fixed exercise
price based on the market price at the time of grant.
The warrants may be exercised at any time from the date of grant (31 January
2022) to 31 January 2025 at the option of the warrant holder.
The fair value of the warrants is estimated at the grant date using a
Black-Scholes option-pricing model that uses assumptions noted in the table
below. All options were granted on 4 February 2022 and were valued using the
following assumptions:
Expected life of warrants (years) 3 years
Exercise price 50.5p
Market value of share at date of grant 50.5p
Risk free rate 1.43%
Expected share price volatility 20%
Expected dividend yield 3.36%
Fair value per option 4.11p
Expected life of warrants
The estimate for the expected life of the warrants is based on the warrant's
contractual life.
Risk free rate
A risk free rate of 1.43% was assumed in the option pricing model, based on
the yield from dividend strip government bonds with a similar life to the
options issued as close as possible to date of grant.
Dividend yield
This is based on the level of dividends paid by the Hercules Site Services plc
in the year.
Exercise price
The exercise price was fixed at the market price at the date of grant, being
50.5p.
Volatility
Volatility was assumed to be 20% on average. The directors based this
assumption on the share price of Hercules Site Services plc throughout the
year. Taking into account factors such as liquidity and performance, this is
expected to be a reasonable reflection of the expected volatility throughout
the expected life of the options.
The cost that has been charged to profit and loss in respect of share options
was £23,575. The charge was included within administrative expenses. The
warrants vested immediately, therefore this charge represents the full
calculated fair value of the instruments and no further charge to profit and
loss will be required.
27 Defined contribution pension scheme
The Group operates a defined contribution pension scheme. The pension cost
charge for the year represented contributions payable by the Group to the
scheme and amounted to £553k ( 2023: £503k). Contributions totalling £55k
(2023: £196k) were payable to the scheme at the end of the year and are
included in other payables.
28 Related party transactions
Ultimate controlling party
The ultimate Parent Company is Hercules Site Services plc.
At 30 September 2023 the controlling party was Hercules Real Estate Ltd with a
share holding of 67.1%, however at 30 September 2024 Hercules Real Estate Ltd
held 47.7% of the shares, as such there is no overall controlling party.
Key management personnel compensation
Key management personnel remuneration has been set out in note 11 to the
Financial statements.
Transactions between key shareholder and subsidiary
The following transactions occurred between Hercules Real Estate Limited
('HRE') and Hercules Site Services Plc ('HSS'):
2024 2023
£000 £000
Lease payments (HSS to HRE) 565 390
Payment for building services (HRE to HSS) - 3
Lease liability between HSS and HRE as at 30
September
5,152 5,102
Outstanding balances arising from sales/purchases of goods and services
The following balances are outstanding at the end of the reporting period in
relation to transactions with related parties:
Group As at As at
30 September 2024 30 September 2023
Current (payables)/ receivables £000 £000
Hercules Real Estate Limited - 39
- 39
Company As at As at
30 September 2024 30 September 2023
Current (payables)/ receivables £000 £000
Hercules Real Estate Limited - 39
- 39
29 Capital commitments
At 30 September 2024, the Group had orders committed to a value of £159k
(2023: £74k).
30 Post Balance Sheet Events
The Board is pleased to propose a final dividend of 1.12 pence per share
(2023: 1.12 pence). The dividend will be paid on 21 March 2025 to shareholders
on the register at close of business on 21 February 2025. The shares will go
ex-dividend on 20 February 2025.
31 Further issue of shares
Following the fund raise in September 2024, in October 2024, a further
4,467,215 ordinary shares of 0.1p were issued at 49.5 pence per share, raising
gross proceeds of £2,211k. The ordinary shares have attached to them full
voting, dividend and capital distribution rights (including on winding up).
They do not confer any right of redemption.
32 Provisions and contingent liabilities
As at As at
30 September 2024 30 September 2023
£000 £000
At 1 October - 304,951
Payments made - (304,951)
Additional provision for the year - -
At 30 September - -
In 2021 the Directors identified a potential underpayment of National
Insurance contributions in respect of payments made to subcontractors.
Following extensive professional consultation and advice, the Directors
considered the roles for all subcontractors provided by the Group. Whilst the
Directors consider that many of the roles were outside the scope of the Agency
legislation, there were several that were potentially considered within the
scope of the rules.
The Group immediately commenced the process of voluntary disclosure to HM
Revenue & Customs in this regard. A provision of £305k was made in 2022
and was fully paid in FY2023. This provision and payment was based on those
roles that the Directors deemed were inside the scope of the Agency
legislation. Any adjustment to this settlement, however, currently remains
uncertain. The directors have not provided for a penalty which may be
between 0% and 30% of any liability arising from the disclosure, on the basis
that they are making a voluntary disclosure to HM Revenue & Customs. The
Directors have used their best estimate based on the advice provided and their
analysis of the potential underpayments.
HMRC have made progress in relation to this process in recent months and have
confirmed:
1) They will no longer seek to review roles that the
Directors considered outside of the Agency Legislation.
2) They are now solely focussed on reviewing a sample of
sub-contractor tax returns for the relevant years.
At the time of writing HMRC have not responded with any final thoughts on this
sampling exercise. The maximum figure is £510k plus any interest applicable,
less the £305k already paid (£205k net). However, this will be reduced by
any amounts under the right of set off, namely employees NIC and PAYE. The
Directors are confident this set off will be close to the £205k.
33 Discontinued Operations and Assets Held for Sale
Hercules has decided to dispose of its suction excavator services business.
This disposal meets the definition of a discontinued operation as stipulated
by IFRS 5. Based on the expected net proceeds of sale the group made an
impairment charge of £2m against fixed assets in FY2024.
The results of the Suction excavator services discontinued operation are
presented below:
Suction excavator services FY2024 FY2023
Restated
£000 £000
Revenue (all from external customers) 5,055 4,895
Cost of sales (2,621) (2,642)
Gross profit 2,434 2,253
Administrative expenses (3,156) (2,672)
Loss from operations (721) (419)
Impairment charge (2,000) -
Finance costs (586) (480)
Loss before tax (3,307) (899)
Taxation - -
Loss after tax (3,307) (899)
The major classes of assets and liabilities classified as held for sale as at
30 September 2024 are, as follows:
£000
Assets
Tangible assets 10,016
Inventories 71
Trade & Other receivables 1,445
Cash & cash equivalents 301
Assets held for sale 11,833
Liabilities
Deferred tax liabilities (67)
Trade & other payables (293)
Borrowings 125
Lease liabilities (9,365)
Liabilities held for sale (9,600)
Net assets held for sale 2,233
d
34 Ultimate parent and controlling party
The ultimate Parent Company is Hercules Site Services plc.
At 30 September 2023 the controlling party was Hercules Real Estate Ltd with a
share holding of 67.1%. At 30 September 2024 Hercules Real Estate Ltd held
47.7% of the shares, however, it is still deemed the controlling party.
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