Today’s AGM update reiterates management’s confidence in the outlook for the current financial year, whilst reflecting on the substantial progress of the past 12 months. Having delivered c.70% revenue growth and c.80% EBITDA growth in FY’23, Hercules has made further strategic progress in the early months of FY’24 through the acquisition of Future Build Recruitment and the launch of its Construction Academy.
The update reflects on the successes of FY’23, the Group’s first full year as a listed company. To recap, FY’23 results were comfortably ahead of our expectations, showing revenue growth of over 70% to £84.7m and adjusted EBITDA growth of nearly 80% to £4.1m.
Hercules is a leading supplier of labour to the infrastructure sector, which remains well supported by committed investment in rail, water, roads and energy over coming years. Infrastructure activity has been a rare bright spot in UK construction recently, set against a more difficult economic backdrop.
In our view, the rating of Hercules’ shares is yet to reflect the Group’s growth momentum as they trade on a FY25 P/E rating of c.19x and a dividend yield of c.6% with scope for good earnings growth over the medium term. Our Fair Value / share estimate remains 55p.
