Trading Update

RNS Number : 0015D

Hercules Site Services PLC

17 October 2022

 

17 October 2022

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 2022 ("FY22"), based on unaudited management accounts for the period.

The Company expects its FY22 results to be in line with market expectations, with revenue expected to be over £45 million. This represents an increase of c. 38% on the prior year ended 30 September 2021 ("FY21") (£32.7m). All income streams grew, each with their own individual drivers, underpinned by the substantial demand in the infrastructure sector.

Labour Supply

Hercules' labour supply division, the Company's core business, has delivered significant year-on-year revenue growth following the ramp up of the multi-year HS2 Phase 1 (northern section) contract. The Company began supplying labour in January 2022 and 260 Hercules operatives are currently on site. Hercules continues 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 the Company's HS2 operations, where it is expected that the first Hercules Training Academy will be constructed. When operational, the academy is expected to generate further income streams for the Company and enable the upskilling of operatives so that they can fulfil additional roles on client construction sites and provide a formal training campus to attract new trainees into the industry/profession.

Civil Projects

Hercules' civil projects team has responded to significant demand in the sector following the recovery from the Covid 19 pandemic which saw many key infrastructure projects delayed in FY21. One example is the AMP7 (Water industry Asset Management Period) originally a five-year programme (due to commence in April 2020), which has now begun but requires delivery in three years. The team has had a very successful FY22, during which seven new clients have been added. This includes a contract with Lightning Fibre to lay fibre broadband cables in Kent, a new business activity for the Company which is expected to grow significantly in the year ahead.

Suction Excavators

The Company continues to see high utilisation rates in its suction excavator business. In response to this demand, seven more vehicles were delivered in FY22 with a further four expected to be delivered before the end of the calendar year bringing the total to 20. Each vehicle has been financed on fixed rate terms. In April 2022, the Company announced the acquisition of a further ten suction excavators, which will expand the Company's fleet to 30 vehicles by March 2023, creating one of the largest fleets in the UK. The suction excavator services complement the Company's labour supply and civil projects businesses, and the Company continues to see cross selling opportunities between divisions.

The Company expects to publish its full results for FY22 in mid-January 2023.

Brusk Korkmaz, Chief Executive Officer, commented:

"FY22 has been a fantastic year of growth and positive change for Hercules, including our successful AIM listing in February. 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.

"We expect HS2 and other key infrastructure projects to continue to drive growth in our labour supply business in 2023, and our suction excavator fleet is set to expand to 30 vehicles by calendar Q1 2023 to meet client demand. We also expect that additional contracts to lay fibre for broadband will contribute to the momentum built up by the civil projects team during the last year.

"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 macro-economic 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."

For further information and enquiries, please contact:

Hercules Site Services plc Brusk Korkmaz (CEO) Paul Wheatcroft (CFO)	c/o SEC Newgate
SP Angel (Nominated Adviser and Broker) Matthew Johnson / Adam Cowl / Harry Davies-Ball (Corporate Finance) Grant Barker / Rob Rees (Sales and Broking)	[phone]
SEC Newgate (Financial PR) Elisabeth Cowell / Ian Silvera / Max Richardson	[phone] [e-mail]

 

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