Hercules Site Services ends year as anticipated

Infrastructure-focussed labour supplier Hercules Site Services said on Monday that it expected results for the year just ended to be in line with market expectations, with revenue topping £45m.

The AIM-traded firm said that would represent an increase of 38% on the 2021 financial year’s result of £32.7m.

It said all of its income streams grew in the 12 months ended 30 September, each with their own individual drivers, underpinned by “substantial demand” in the infrastructure sector.

The company’s core business, its labour supply division, delivered “significant” year-on-year revenue growth following the ramp-up of the multi-year HS2 phase one contract.

It began supplying labour in January, and 260 Hercules operatives were currently on site, as the firm continued to provide additional labour in response to increasing demand.

During the period, Hercules also entered into a lease agreement with its major shareholder for an industrial site in Nuneaton, close to its HS2 operations, where it expected the first Hercules Training Academy to be constructed.

When operational, the academy was set to generate further income streams and enable the upskilling of operatives so they could fulfil additional roles on client sites, and provide a formal training campus to attract new trainees into the industry.

Hercules added that its civil projects team responded to “significant demand” in the sector during the year, following the recovery from the pandemic which saw many key infrastructure projects delayed in the 2021 financial year.

One example was the AMP7 water industry asset management period - originally a five-year programme starting in April 2020, which had now begun but required delivery in three years.

The team had a “very successful” year, during which seven new clients were added, including a contract with Lightning Fibre to lay broadband cables in Kent - a new activity which was expected to grow “significantly” in the year ahead.

Finally, in suction excavators, Hercules said it was seeing high utilisation rates, adding seven vehicles in the year in response to demand, with a further four expected before the end of the calendar year, bringing the total to 20.

Each vehicle was financed on fixed-rate terms.

In April, the company announced the acquisition of a further 10 suction excavators, which would expand its fleet to 30 vehicles by March next year, creating one of the largest fleets in the UK.

The board said the suction excavator services complemented its labour supply and civil projects businesses, adding that it continued to see cross-selling opportunities between divisions.

“2022 has been a fantastic year of growth and positive change for Hercules, including our successful AIM listing in February,” said chief executive officer Brusk Korkmaz.

“As a trusted provider of services to the construction and infrastructure sectors, we are well positioned to take advantage of the favourable market conditions in these industries.

“We continue to invest for sustainable growth in each of our business lines, and we are focused on positioning Hercules to create value for all our stakeholders in the years ahead.”

Korkmaz said the firm expected HS2 and other key infrastructure projects to continue to drive growth in its labour supply business in 2023, alongside its suction excavator fleet expansion, as well as additional contracts to lay fibre for broadband.

“As well as these near-term growth initiatives, our medium-term objectives continue to gain momentum.

“Our monetisation strategy for our digital tools is progressing well, and we look forward to updating the market on this, as well on the progress of our training academy in the near-term.

“While we are not immune to the macroeconomic situation, including inflationary pressures, we look forward with confidence to the new financial year and thank our shareholders very much for their support during this exciting and transformational time in the company's growth journey.”

Hercules said it would publish its full-year results for the 12 months ended 30 September in mid-January.

At 1020 BST, shares in Hercules Site Services were down 0.91% at 43.6p.

Reporting by Josh White at Sharecast.com.