REG - Hercules Site Svcs - Trading Update

Hercules Site ServicesAnnouncement

17/10/2023 07:00

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RNS Number : 2823Q  Hercules Site Services PLC  17 October 2023

17 October 2023

 

Hercules Site Services plc

 

("Hercules" or "the Company")

 

Trading Update

 

Hercules Site Services plc (AIM: HERC), a leading technology enabled labour
supply company for the UK infrastructure sector, is pleased to provide a
trading update for the year ended 30 September 2023 ("FY23").

 

The Company expects both its revenue and adjusted EBITDA for FY23 to be ahead
of market expectations (consensus* revenue of £73.1m and consensus adjusted
EBITDA of £3.4m). Revenue is expected to be over £80 million, representing
an increase of c. 60% on the prior year ended 30 September 2022 ("FY22")
(£49.5m). The average annual revenue growth for the last three years is over
50%.

 

Each of Hercules' three divisions delivered increased organic revenues,
underpinned by the Company's ability to capitalise on continued growth in the
infrastructure sector.

 

Labour Supply

 

Hercules' Labour Supply division, the Company's core business, has again
delivered significant year-on-year revenue growth, benefitting from the
ramp-up of the multi-year HS2 Phase 1 (London - Birmingham) contract. The
Company began supplying labour to this project in January 2022 and 430
Hercules operatives are currently on HS2 sites. Hercules continues to provide
additional labour in response to increasing demand.

 

The Company acknowledges the current UK government's recent announcement about
the future of HS2. The decision has no impact on the Company's contracts on
the Phase 1 section of HS2 between London and Birmingham.

 

New revenue streams have been introduced in FY23, with the supply of
white-collar and site security personnel. Post year end, the Company has also
launched its "live tracks" Rail offering, signing a five-year contract with
Balfour Beatty Rail Limited. The Board of Hercules is confident that these new
services will drive additional revenue and EBITDA moving forward.

 

Civil Projects

 

Hercules' Civil Projects team has utilised its extensive experience in the
water sector to secure a significant portfolio of work as companies in this
space focus on resolving a range of well-documented issues. With UK water
companies pledging to invest £10bn over the next seven years to 2030,
Hercules is well positioned to meet increasing demand for its services, while
also contributing to a cleaner, sustainable and safer infrastructure network.

 

Since 1 May 2023, the Civil Projects division has been awarded contracts with
a combined value of over £3.1 million to deliver critical work for two major
clients relating to nine wastewater treatment and water management projects.

 

 

Suction Excavators

 

The Company continues to see solid utilisation rates in its Suction Excavator
business. In response to increased demand, the fleet has grown by 14 vehicles
over the period, creating one of the largest fleets in the country. The
Suction Excavator Services complement the Company's Labour Supply and Civil
Projects businesses, and Hercules continues to leverage cross selling
opportunities between divisions.

 

The Company expects to publish its full results for FY23 in mid-January 2024.

 

Brusk Korkmaz, Chief Executive Officer, commented:

 

"We are delighted that our average annual revenue growth over the past three
years has been 50%, and we are also pleased to report that we expect both our
revenue and EBITDA for FY23 to exceed market expectations.

 

"All areas of our business have experienced substantial growth during the
period, and we are observing significant opportunities for the year ahead. Our
Training Academy in Nuneaton is expected to soft launch in November before its
official opening early next year, thereby providing an additional revenue
stream in 2024 and helping address a skills shortage in the infrastructure
industry and wider economy.

 

"Further new revenue streams will also be delivered through our new Labour
Supply specialisms, which are well aligned with industry trends. For our
Civils business, we are working with our clients in the water space to upgrade
sewage and water treatment works.

 

"We have delivered a strong financial performance and progressed a range of
strategic initiatives, which positions us well for the year ahead as the
infrastructure sector grows from strength to strength."

 

*An average of current forecasts from SP Angel, Cavendish Securities Plc and
Equity Development.

 

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.

 

 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)

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

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

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

 Elisabeth Cowell / Ian Silvera / Matthew Elliott                      Hercules@secnewgate.co.uk (mailto:Hercules@secnewgate.co.uk)

 

 

About Hercules Site Services plc

 

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

 

 

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