REG - Hercules Site Svcs - Interim Results
08/06/2022 07:00
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RNS Number : 0561O Hercules Site Services PLC 08 June 2022
8 June 2022
Hercules Site Services plc
("Hercules" or "the Company")
Interim Results
Hercules Site Services plc (AIM: HERC), a leading technology enabled labour
supply company for the UK infrastructure sector, is pleased to announce its
unaudited half year results for the six months ended 31 March 2022 ("H1
2022").
Highlights:
§ Revenue increased year-on-year by 42% to £19.9m (H1 2021: £14.0m)
§ Gross profit increased year-on-year by 62% to £4.0m (H1 2021: £2.5m)
§ Loss before tax of £383,000 (H1 2021: £739,000 profit), after exceptional
IPO costs of £414,000
§ Adjusted EBITDA* of £650,000 (H1 2021: £1.2m), ahead of management
expectations
§ Significant investment in people and systems in H1 have prepared the
business for expected growth in H2
§ Labour supply to HS2 Phase 1 (northern section) ramping up
§ AIM listing completed on 4 February 2022, raising £4m gross for the
Company
§ Interim dividend of 0.6p declared
*Adjusted EBITDA definition - earnings before interest, tax, depreciation,
amortisation, profit/loss on sale of fixed assets, exceptional items and
R&D expenditure.
Brusk Korkmaz, Chief Executive Officer, commented:
"2022 has so far been a year of positive change for Hercules. As a trusted
provider of services to the construction and infrastructure sectors, our
Company is well positioned to take advantage of the highly favourable market
conditions in these industries. We are already executing on the exciting
opportunities available to us and H1 2022 has seen us investing for growth,
positioning Hercules to create value for all our stakeholders in the months
and years ahead.
"We expect to deliver continued growth in H2 2022 through the ramp up of
operatives on HS2, the delivery and monetisation of seven more suction
excavators, and maintaining the significant momentum built up by the civil
projects team.
"We intend to pay an interim dividend for the six months ended 31 March 2022
in August 2022 and I would like to thank our shareholders very much for their
support during this exciting time in the Company's growth journey. We look
forward to updating the market over the coming months."
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 / Harry Davies-Ball (Corporate Finance)
Grant Barker / Rob Rees (Sales and Broking)
SEC Newgate (Financial PR) +44 (0) 20 3757 6882
Elisabeth Cowell / Ian Silvera / Max Richardson Hercules@secnewgate.co.uk
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.
Chairman's statement
I am pleased to announce our unaudited interim results for the six months
ended 31 March 2022.
Continued growth across all areas of our business
2022 is a year of transformation for Hercules. Following a solid recovery in
2021 after the pandemic year of 2020, we are excited to deliver the further
step-up in growth that we expect across all our income streams over the next
12 months and beyond.
We are extremely proud to have joined some of the world's leading businesses
by listing on the AIM market of the London Stock Exchange in February 2022 and
believe this will turn out to be a significant milestone in our growth
journey.
Labour supply
We provide labour to some of the top construction and infrastructure projects
in the country and this core business unit has experienced continued growth in
H1 2022. A key driver of this has been the multi-year HS2 Phase 1 (northern
section) contract, and during the period we started to supply labour to this
project, which is the largest construction project in Europe. This is an
exciting and important milestone for Hercules, which has prompted significant
investment in people and systems in our business during H1 2022. The
commencement of the contract was later than we expected, but the ramp up that
has now started is progressing well. At the time of writing, we have 180
operatives on site and we are providing additional labour every week in
response to increasing demand.
In tandem with this, we have also advanced our relationships with new and
existing clients. During the period a successful tender process led to the
Company's acceptance onto the Kier Group plc ("Kier") framework, which enables
us to work as a supplier of labour to any Kier site across the UK. In
addition, contracts secured by our civil projects team helped us gain two new
labour supply clients in Tilbury Douglas and MMB (Mott McDonald Bentley),
further illustrating how our model of complementary services can successfully
deliver cross-selling opportunities for our business.
At the end of H1 2022 we are pleased to report that Hercules has a significant
pipeline of projects stretching well into the future.
Suction excavators
The high utilisation we are experiencing for our suction excavator fleet is
extremely positive and we invested part of the IPO funds raised during the
period to expand our fleet to meet demand. Four more vehicles were delivered
in H1 2022, with seven more expected in H2 2022, albeit later than expected,
due to supplier issues.
While our original plan was to double our suction excavator to 20 vehicles,
post period end in April 2022, we took the decision to acquire an additional
ten suction excavators, which will expand our fleet to 30 vehicles by March
2023. This will make it one of the largest fleets in the UK.
We have supplied our suction excavator services to 21 new clients in the last
six months and have embarked on a key new relationship with Wales and West
Utilities. This is our first direct engagement with the main water companies,
and the relationship is set to expand further as we receive additional
vehicles.
Civil projects
Our civil projects team has responded brilliantly to what is a huge level of
demand following the recovery from Covid 19. AMP7 (Water industry Asset
Management Period) is a five-year programme now requiring delivery in three
years. The team has had a very successful H1 2022, with £3.2m extra revenue
compared to H1 2021, and seven new clients (Enviromontel, Affinity Water,
Flynn's, Ross-shire Engineering (RSE), @one alliance (new civils framework),
NHS and Lightning Fibre) added since the year end. The civil projects team
continues to be very busy into H2 2022.
Digital
We have achieved differentiation in the market thanks to the strength of our
proprietary apps, digital capabilities and bespoke data, which enables
Hercules to facilitate rapid, local placement of operatives. In turn, we can
provide clients with more efficient and effective results. We continue to
invest in the development of our apps to help maintain our competitive edge.
As stated at our IPO, our discussions in the industry have highlighted the
opportunity to monetise our digital capabilities and during the period we
further developed the commercial aspects of our digital division. We expect to
announce updates in respect to the monetisation of some of our products in the
months ahead.
Interim dividend and timetable
The Board is pleased to declare an interim dividend of 0.6p per share.
Hercules Real Estate Limited, the Company's 71% shareholder, has waived its
entitlement to this payment. The interim dividend will be paid on 24 August
2022 to shareholders on the register at close of business on 22 July 2022. The
shares will go ex-dividend on 21 July 2022.
Financial results show strategic progress in line with expectations
Revenue for the period grew by 42% to £19,958,000 (H1 2020: £14,048,000).
All income streams increased, each with their own individual drivers, but all
are underpinned by the huge demand in the infrastructure sector.
§ Labour supply revenue 27% up on H1 2021
§ Civil projects revenue 80% up on H1 2021
§ Suction excavator services revenue 124% up on H1 2021
Gross profit increased 62% to £4,046,000 (H1 2021: £2,499,000), while gross
profit margin increased from 17.8% to 20.3% due to an increase in suction
excavator revenue at higher margins.
Loss before tax of £383,000 (H1 2021: £739,000 profit), after non recurring
expenses of £414,000 (H1 2021: £58,000) which refer to the costs of
obtaining an AIM listing.
Adjusted EBITDA was £650,000 (H1 2021: £1,299,000). In line with
expectations, we anticipated that H1 2022 would be less profitable than H1
2021, due to the major investment in people, systems and assets required in H1
2022 to prepare for the expected growth. This explains the increase in
administrative expenses from H1 2021. We expect to obtain the benefits of this
investment as we progress through H2 2022.
Basic loss per share was £0.01.
The Company's comprehensive loss for the period was £123,000 (H1 2021: profit
of £121,000), this loss was due primarily to exceptional listing costs of
£414,000. The comprehensive profit for the period before exceptional costs
was therefore £291,000. (H1 2021: £179,000).
£1,650,000 cash was held at the end of the period (H1 2021: £973,000). In
December 2021, with the major growth impact of HS2 ahead of us, we increased
our confidential invoice discounting facility with Investec from £4m to
£10m.
Outlook
Given the solid progress made in H1 2022, the Board has confidence that
Hercules is well positioned for the step-change in growth we highlighted at
the time of the IPO. We expect to deliver continued growth in H2 2022 through
the ramp up of operatives on HS2, the delivery and monetisation of seven more
suction excavators and maintaining the significant momentum built up by the
civil projects team.
Henry Pitman
Non-executive Chairman
Hercules Site Service PLC
Condensed Statement of Comprehensive Income
6 Months Ended 31 March 2022
Unaudited Audited Unaudited
6months to Y/ending 6months to
31-Mar-22 30-Sep-21 31-Mar-21
£000 £000 £000
Revenue 19,958 32,754 14,048
Cost of sales (15,912) (26,067) (11,549)
Gross profit 4,046 6,687 2,499
Other operating income - 217 156
Recurring administrative expenses (3,396) (4,466) (1,356)
Adjusted EBITDA 650 2,438 1,299
Non-recurring administrative expenses (414) (898) (58)
EBITDA 236 1,540 1,241
Depreciation (452) (725) (331)
R&D Expenditure (3) (18) (14)
Profit/(loss) on sale of fixed assets 6 (11) -
Operating profit/(loss) (213) 786 896
Finance costs (170) (270) (157)
Profit/(Loss) before tax (383) 516 739
Taxation 260 (572) (618)
Total comprehensive profit/(loss) for the period (123) (56) 121
Earnings per share:
Basic profit/(loss) per share (£) (0.01) (2.66) 60,500
Audited
Y/ending
30-Sep-21
£000
Unaudited
6 months to
31-Mar-21
£000
Revenue
19,958
32,754
14,048
Cost of sales
(15,912)
(26,067)
(11,549)
Gross profit
4,046
6,687
2,499
Other operating income
-
217
156
Recurring administrative expenses
(3,396)
(4,466)
(1,356)
Adjusted EBITDA
650
2,438
1,299
Non-recurring administrative expenses
(414)
(898)
(58)
EBITDA
236
1,540
1,241
Depreciation
(452)
(725)
(331)
R&D Expenditure
(3)
(18)
(14)
Profit/(loss) on sale of fixed assets
6
(11)
-
Operating profit/(loss)
(213)
786
896
Finance costs
(170)
(270)
(157)
Profit/(Loss) before tax
(383)
516
739
Taxation
260
(572)
(618)
Total comprehensive profit/(loss) for the period
(123)
(56)
121
Earnings per share:
Basic profit/(loss) per share (£)
(0.01)
(2.66)
60,500
Hercules Site Service PLC
Condensed Statement of Financial Position
31 March 2022
Unaudited
Audited
Unaudited
As at As at As at
31-Mar-22 30-Sep-21 31-Mar-21
£000 £000 £000
Non-current assets
Property, plant & equipment 12,360 9,236 9,416
Current assets
Inventories 8 2 4
Assets at fair value through profit or loss 312 271 259
Trade and other receivables 10,794 8,293 6,230
Current tax recoverable 83 83 117
Cash and cash equivalents 1,650 1,465 973
Total current assets 12,847 10,114 7,583
Total assets 25,207 19,350 16,999
Equity and liabilities
Equity attributable to equity holders of the parent
Share capital 59 50 -
Share premium 3,417 - -
Retained earnings 3,264 3,387 3,614
Total equity 6,740 3,437 3,614
Non-current liabilities
Deferred tax liabilities 188 448 505
Lease liabilities 9,317 6,503 7,080
Total non-current liabilities 9,505 6,951 7,585
Current liabilities
Trade and other payables 3,534 4,520 4,330
Provisions 325 260 199
Borrowings 3,142 3,139 173
Lease liabilities 1,961 1,043 1,098
Total current liabilities 8,962 8,962 5,800
Total liabilities 18,467 15,913 13,385
Total equity & liabilities 25,207 19,350 16,999
Audited
As at
30-Sep-21
£000
Unaudited
As at
31-Mar-21
£000
Non-current assets
Property, plant & equipment
12,360
9,236
9,416
Current assets
Inventories
8
2
4
Assets at fair value through profit or loss
312
271
259
Trade and other receivables
10,794
8,293
6,230
Current tax recoverable
83
83
117
Cash and cash equivalents
1,650
1,465
973
Total current assets
12,847
10,114
7,583
Total assets
25,207
19,350
16,999
Equity and liabilities
Equity attributable to equity holders of the parent
Share capital
59
50
-
Share premium
3,417
-
-
Retained earnings
3,264
3,387
3,614
Total equity
6,740
3,437
3,614
Non-current liabilities
Deferred tax liabilities
188
448
505
Lease liabilities
9,317
6,503
7,080
Total non-current liabilities
9,505
6,951
7,585
Current liabilities
Trade and other payables
3,534
4,520
4,330
Provisions
325
260
199
Borrowings
3,142
3,139
173
Lease liabilities
1,961
1,043
1,098
Total current liabilities
8,962
8,962
5,800
Total liabilities
18,467
15,913
13,385
Total equity & liabilities
25,207
19,350
16,999
Hercules Site Service PLC
Condensed Statement of Changes in equity
6 Months Ended 31 March 2022
Share capital Retained earnings Total equity
(Unaudited) (Unaudited) (Unaudited)
£000 £000 £000
At 1 October 2020 as previously stated - 6,787
6,787
Dividend paid - (3,294) (3,294)
Total comprehensive income for the period - 121
121
Balance at 31 March 2021 - 3,614
3,614
Share capital Retained earnings Total equity
(Unaudited) (Unaudited) (Unaudited)
£000 £000 £000
At 1 October 2021 as previously stated 50 3,437
3,387
New Share Capital 9 9
-
Share Premium 3,417 3,417
-
Total comprehensive loss for the period - (123)
(123)
Balance at 31 March 2022 3,476 6,740
3,264
Hercules Site Service PLC
Condensed Statement of Cash Flow
6 Months Ended 31 March 2022
Unaudited Audited Unaudited
6 months to Year ended 6 months to
31-Mar-22 30-Sep-21 31-Mar-21
£000 £000 £000
Cash flows from operating activities:
Profit/(loss) for the period (123) (56) 121
Listing costs 414 - -
Taxation (260) 572 618
Finance costs 170 232 102
Fair value movements (40) 38 51
Depreciation expense 452 725 331
Profit on disposal of property, plant and equip (6) 11 -
Increase in trade and other receivables (2,502) (2,982) (457)
Decrease in trade and other payables (207) (116) (364)
Decrease/(Increase) in inventories (6) 4 2
Cash generated from operations (2,108) (1,572) 404
Tax paid - (29) (52)
Net cash generated from operating activities (2,108) (1,601) 352
Cash flows from investing activities:
Purchase of property, plant and equip 277 (358) (254)
Proceeds on disposal of property, plant and equip 199 20 31
Net cash flows from investing activities 476 (338) (223)
Cash flows from financing activities:
Interest paid (130) (123) (48)
Dividends paid - - (3,294)
Payment of lease liabilities (1,029) (1,283) (486)
(Repayment)/Drawdown of bank borrowings (37) 2,794 (172)
IPO Proceeds 4,000 - -
IPO Costs to share premium account (574) - -
Listing costs (414) - -
Amounts advanced on parent co loan 1 - 2,828
Net cash outflow from financing activities 1,817 1,388 (1,172)
Net (dec)/inc in cash and equivalents 185 (551) (1,043)
Cash and equivalents at start of period 1,465 2,016 2,016
Cash and equivalents at end of period 1,650 1,465 973
Cash and equivalents at end of period comprises:
Cash at bank and in hand 1,650 1,465 973
Audited
Year ended
30-Sep-21
£000
Unaudited
6 months to
31-Mar-21
£000
Cash flows from operating activities:
Profit/(loss) for the period
(123)
(56)
121
Listing costs
414
-
-
Taxation
(260)
572
618
Finance costs
170
232
102
Fair value movements
(40)
38
51
Depreciation expense
452
725
331
Profit on disposal of property, plant and equip
(6)
11
-
Increase in trade and other receivables
(2,502)
(2,982)
(457)
Decrease in trade and other payables
(207)
(116)
(364)
Decrease/(Increase) in inventories
(6)
4
2
Cash generated from operations
(2,108)
(1,572)
404
Tax paid
-
(29)
(52)
Net cash generated from operating activities
(2,108)
(1,601)
352
Cash flows from investing activities:
Purchase of property, plant and equip
277
(358)
(254)
Proceeds on disposal of property, plant and equip
199
20
31
Net cash flows from investing activities
476
(338)
(223)
Cash flows from financing activities:
Interest paid
(130)
(123)
(48)
Dividends paid
-
-
(3,294)
Payment of lease liabilities
(1,029)
(1,283)
(486)
(Repayment)/Drawdown of bank borrowings
(37)
2,794
(172)
IPO Proceeds
4,000
-
-
IPO Costs to share premium account
(574)
-
-
Listing costs
(414)
-
-
Amounts advanced on parent co loan
1
-
2,828
Net cash outflow from financing activities
1,817
1,388
(1,172)
Net (dec)/inc in cash and equivalents
185
(551)
(1,043)
Cash and equivalents at start of period
1,465
2,016
2,016
Cash and equivalents at end of period
1,650
1,465
973
Cash and equivalents at end of period comprises:
Cash at bank and in hand
1,650
1,465
973
Notes
1. Notes to the Financial Information
Basis of preparation & accounting policies
The financial information for the six months to 31 March 2022 is unaudited and
was approved by the Board of Directors on 7 June 2022.
The interim financial statements do not include all of the information
required for full annual financial statements and should be read in
conjunction with the financial statements for the year ended 30 September
2021.
The interim financial information for the six months ended 31 March 2022,
including comparative financial information has been prepared on the basis of
the accounting policies set out in the last annual report and accounts.
The preparation of the interim financial statements requires management to
make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expense. Actual results may subsequently differ from those estimates.
In preparing the interim financial statements, the significant judgements made
by management in applying the company's accounting policies and key sources of
estimation uncertainty were the same, in all material respects, as those
applied to the financial statements for the year ended 30 September 2021.
Going Concern assumption
The company meets its day to day working capital requirements through its cash
balance. During the period the Company has increased its Investec facility
from £4m to £10m.
Consequently, after making enquires, the Directors have a reasonable
expectation that the company has adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they continue to adopt the
going concern basis of accounting in preparing the interim financial
statements.
Information extracted from the Company's 2021 Annual Report
The financial figures for the year ended 30 September 2021, as set out in this
report, do not constitute statutory accounts but are derived from the
statutory accounts for that financial year.
The statutory accounts for the year ended 30 September 2021 were prepared
under IFRS and have been delivered to the Registrar of Companies. The auditors
reported on those accounts. Their report was unqualified, did not draw
attention to any matters by way of emphasis and did not include a statement
under Section 498(2) or 498(3) of the Companies Act 2006.
2. Earnings per share
The calculation of earnings per share is based upon the loss after tax for the
respective period. The weighted average number of ordinary shares used in the
calculation of basic earnings per share is based upon the number of ordinary
shares in issue in each respective period.
3. Share capital
58,650,206 ordinary shares were admitted to trading on AIM on 4 February 2022.
4. Availability of interim results
The interim results will not be sent to shareholders but will be available at
the Company's registered office at Hercules Court, Lakeside Business Park,
Broadway Lane, South Cerney, Cirencester GL7 5XZ
and on the Company's website: www.hercules-construction.co.uk
(http://www.hercules-construction.co.uk) .
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