Hercules Plc (LON:HERC) delivered a strong performance in FY25, with revenue growth, improved margins and strategic acquisitions helping to broaden the company’s market opportunity, according to the latest research note from SP Angel.
In the note, Research Analyst Simon Strong highlighted the company’s robust organic performance, supported by acquisitions that have widened Hercules’ reach across infrastructure-related services.
Simon Strong wrote: “Market conditions enabled Hercules to deliver a robust organic performance in FY25A complemented by acquisitions which materially expand the Group’s total addressable market.”
The latest research note from SP Angel reported that Hercules’ group revenue increased by 19% year-on-year to £121.2 million, which was 2% ahead of the broker’s forecast, excluding discontinued activities. The broker estimated that two acquisitions contributed around £9 million of revenue, implying organic growth of approximately 10%.
Adjusted EBITDA rose by 35% year-on-year to £6.4 million, while EBITDA margins improved by 60 basis points to 5.2%. This was achieved despite a £0.6 million adverse impact from higher national insurance contributions. Gross margin also strengthened, rising by 30 basis points to 15.0%.
FY25 highlights
- Group revenue increased 19% year-on-year to £121.2 million
- Adjusted EBITDA rose 35% year-on-year to £6.4 million
- EBITDA margin improved to 5.2%
- Group gross margin increased to 15.0%
- Labour Supply divisional revenue rose 27% to £106.9 million
- Labour Supply represented 88% of group income
- Net debt ended the year at £9.9 million, or £4.9 million excluding leases
- No final dividend was declared for FY25
A key area of strength was the Labour Supply division, which reported a 27% increase in revenue to £106.9 million. SP Angel noted that this represented around 88% of group income, an increase of six percentage points. The broker also highlighted that the divisional margin improved by 120 basis points to 14.4%.
The Civil Projects division saw revenue fall by 23% year-on-year to £13.5 million, with gross margin softening to 18.6%, as AMP7 wound down. However, the wider group performance was supported by growth in Labour Supply and the contribution from recent acquisitions.
SP Angel also discussed the delayed publication of Hercules’ FY25 accounts. The note stated that the delay related to difficulties in recreating an audit trail for a small amount of training and consulting expenditure. While the accounts were qualified, the items were not deemed material, and Hercules has invested significantly in upgrading its management information systems.
The broker noted that the group’s expansion has required additional investment in systems and processes. SP Angel had forecast £1.0 million of capital expenditure in 2025 to support this investment, of which £0.8 million was accounted for under IFRS as an exceptional cost in the FY25 accounts.
Looking ahead, SP Angel said the acquisitions of Advantage NRG and Lyons Power Systems have materially enlarged Hercules’ total addressable market. The broker believes these margin-accretive transactions should become visible in improved group-level financial performance over time.
There are some timing considerations, with the first half of 2026 seeing delays to the commencement of a number of key projects. However, SP Angel pointed to the visible, long-term nature of the infrastructure projects that Hercules serves, describing this as underpinning a strong multi-year opportunity. Trading in the first half showed total revenues increasing 8% year-on-year to £59.2 million.
In Summary
The latest research note from SP Angel presents Hercules Plc as a business that has delivered solid FY25 growth while investing for the future. Revenue, adjusted EBITDA and margins all improved, while recent acquisitions have expanded the company’s addressable market. Although project timing remains a factor, SP Angel’s note points to a clear long-term infrastructure opportunity for Hercules Plc.
