Hercules Site Services plc (LON:HERC) has marked a year of remarkable growth and strategic advancements, significantly outperforming expectations with a 71% revenue growth in FY23. This growth is not only a testament to their resilience but also a clear indication of the potential in the UK’s infrastructure sector. Hercules’ strategic investments, like the expansion of their suction excavator fleet and the acquisition of Future Build, underscore their commitment to innovation and excellence. The launch of a training academy further emphasizes their dedication to nurturing talent and contributing to the industry’s future. Despite the challenges of increased interest charges, Hercules maintains a positive outlook for FY24, underpinned by new revenue streams and a robust pipeline of new business. This narrative not only highlights their financial success but also underscores their role in driving forward the UK’s construction and infrastructure sectors.
James Tetley, Analyst at Equity Development said, “In our view, Hercules’ share price performance does not reflect recent strong progress. Hercules is trading on an FY25 P/E rating of c.16x and a dividend yield of 7% with scope for good earnings growth over the medium term.“
His report states:
A year of significant growth and strategic progress
Hercules’ results confirm a successful conclusion to FY23, the Group’s first full year as a listed company. The results are comfortably ahead of our expectations (adjusted EBITDA 11% ahead of forecast), even though we upgraded at the time of October’s full year trading update. Revenue growth of 71% (all organic) is highly impressive, sustaining the momentum of recent years.
Positive outlook for FY24
The outlook statement strikes a positive tone, highlighting new revenue streams which should make a positive impact in FY24. These include the training academy in Nuneaton (now operational and formally opening this month) and the new “live track” rail offering, which was announced right at the start of the new year in early October. Further organic progress therefore looks well underpinned and November’s Future Build acquisition (Hercules’ first deal) adds another leg to the growth story.
“We enter 2024 with an excellent foundation for further growth, having exceeded market expectations and developed an array of accretive commercial workstreams which will expand our business and deliver additional revenue and profits. The first quarter of FY 2024 has been successful, with our first acquisition completed and strong pipeline of new business across our divisions, and the outlook for the infrastructure sector remains buoyant.”
Hercules Site Services is a leading supplier of labour to the Construction industry in the UK. The business was founded in 2008 by CEO Brusk Korkmaz, and has achieved significant growth since then, reporting revenue of £84.7m in FY23.
The business floated on AIM in 2022 to provide access to capital to support the next stage in the Group’s growth plans.
