Strong demand for construction workers helps labour supplier Hercules power ahead

Supplying skilled workers to major infrastructure projects such as HS2 and the Sizewell C nuclear power plant helped build better-than-expected growth at construction industry labour supply firm Hercules Site Services.

The Gloucestershire-based group’s annual revenue has increased by an average of 48% since it listed on the London Stock Exchange’s AIM market three years ago, chairman Henry Pitman told its AGM.

The expansion was fuelled by increasing demand for its services – which includes working with major construction clients such as Costain, Kier and Balfour Beatty – as well as the successful execution of its strategic plan.

A key driver of Hercules’ growth has been a multi-year contract with HS2 Phase 1 – its northern section – which is one of the largest construction projects in Europe. At one time last year it had around 550 operates on site.

In anticipation of a significant number of years work linked to the Sizewell C project, it last year opened a small office near Ipswich while it also hopes to benefit from the Government’s acquisition of another nuclear site in Wylfa, Wales.

Just over a year ago the firm, which has its headquarters in South Cerney, launched its own construction academy in Nuneaton, Warwickshire.

Situated close to the HS2 northern section sites, the academy is a long-term strategic project for the firm to help it maintain its reputation with its blue-chip clients and has already trained 1,100 people.

Henry Pitman told the AGM that the firm’s labour supply business had experienced record levels of demand and delivery, with a 35% increase in the average number of operatives deployed.

“Overall, we delivered labour resources to more than 40 clients and 300 different project locations, resulting in a 28% rise in revenue and 34% increase in adjusted EBITDA,” he said.

“Given the broader economic challenges facing UK businesses, this achievement is especially commendable.”

He said a highlight of its 2024 financial year had been the completion of its first acquisition – London and Brighton-based Future Build Recruitment – which expanded its presence in the construction sector, particularly in the white-collar and permanent recruitment markets complementing its existing blue-collar infrastructure offering.

With the Construction Industry Training Board forecasting that the UK will require almost 225,000 additional construction workers by 2027, he said the firm anticipated that its academy would also be a good source of future income growth as demand for training and upskilling workers increases.

The firm sold its Suction Excavator business in January, which immediately reduced its debt and lease liabilities and strengthened its balance sheet.

The disposal is also expected to enhance free cashflow, improve profit before tax and increase earnings per share, he added, while streamlining the business to focus on our successful labour supply offering.

A £8m fundraise last September would also provide funds to pursue a range of “compelling growth opportunities, both organically and through selective acquisitions”, he said.