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.