Hercules PLC FY Results: Growth Continues, Controls Tighten, and Infrastructure Opportunity Remains Significant

Hercules PLC entered FY2025 under the familiar expectations placed on a high-growth AIM company: deliver expansion, integrate acquisitions, preserve margins, and prove that operational scale can be matched by financial discipline. The year appears to have delivered a mixture of progress and pressure.

On the one hand, the group reported record revenue, stronger profitability, healthy cash generation, and continued momentum in labour supply, training, and strategic acquisitions. On the other, the year was also marked by delayed accounts, a qualified audit on a narrowly defined area, and an admission from management that internal controls had not kept pace with the speed of growth.

For investors, that combination matters. It means the Hercules story is still one of expansion into large UK infrastructure markets, but it is now equally a story about governance maturity, systems investment, and execution credibility.

This investor report examines the company’s FY2025 performance, its operational strategy, current trading conditions, acquisition activity, and the key questions that remain important for shareholders.

Table of Contents

• FY2025 headline performance
• A business built on labour supply, now broadening its platform
• Labour supply remains the main growth engine
• The academy model could become increasingly important
• Water work dipped, but AMP8 could change the picture
• Acquisitions are reshaping the group
• Governance and controls moved to the centre of the equity story
• Systems investment is not optional any more
• Current trading: delays, but not cancellations
• The infrastructure backdrop remains compelling
• Scotland is a strategic move, not just a regional office
• What investors should focus on next
• FAQ

FY2025 headline performance

Hercules reported a strong set of underlying financial results for the year. Management highlighted growth across revenue, EBITDA, profit before tax, earnings per share, and operating cash flow.

• Revenue: £121.2 million, up 19% from £101.9 million
• Underlying EBITDA: £6.4 million, up 35%
• Underlying profit before tax: £4.0 million, up 55%
• Underlying EPS: 4.74p, up 36%
• Operating cash generation: £7.6 million
• Year-end cash: £7.2 million

The balance sheet position also appears relatively robust. Hercules finished the year with £7.2 million of cash and access to a £16 million working capital facility, of which only £6 million was in use at year end. For a company still investing in systems, acquisitions and regional expansion, that level of liquidity provides a degree of flexibility.

Management’s message was clear: FY2025 was financially a good year, despite the disruption surrounding reporting and remediation work.

A business built on labour supply, now broadening its platform

Hercules remains, at its core, a UK infrastructure labour supply group. That division generated the majority of turnover and continues to be the main engine of growth. Labour supply contributed around 86% of group revenue, serving major infrastructure markets including highways, rail, nuclear, water, utilities, and power transmission.

The appeal of this model is straightforward. The UK faces a persistent infrastructure skills shortage at the same time as government and regulated investment programmes continue to support long-duration capital spend. Hercules positions itself as a specialist provider of skilled operatives to blue-chip contractors and infrastructure clients, then seeks to deepen those relationships through training and cross-selling.

Management noted that some client relationships now extend beyond 18 years, which is important in a labour-intensive market where trust, compliance, and delivery matter as much as price.

That said, Hercules is no longer presenting itself as only a labour provider. It is building out a broader infrastructure services platform with three principal additions:

• Construction services, particularly civil projects in the water sector
• The Hercules Construction Academy, which trains and upskills operatives
• Specialist energy capability through acquisitions in overhead lines and substation commissioning

This broader platform is strategically significant. It improves resilience, increases cross-selling potential, and offers a pathway to better margins than pure labour supply alone.

Labour supply remains the main growth engine

Within the group, labour supply delivered the standout operational performance. Revenue in that division rose from £84 million to nearly £107 million, representing 27% growth, alongside an increase in underlying operating profit.

Part of that uplift came from acquisitions, especially Advantage NRG, which added higher-margin exposure to the power transmission and distribution market. But management also pointed to organic growth from a healthy project pipeline and a broader client base.

Notable developments include preferred supplier positions and contract wins involving major names such as National Grid, SSE and Balfour Beatty Power and Energy. The number of operatives employed across sites rose to roughly 1,700, a record for the company.

Technology continues to support recruitment and fulfilment. Hercules said more than 20,000 people have now downloaded its recruitment app, up from around 15,000 a year earlier. That matters not only for sourcing labour, but for targeting local workforces around project geographies, which management sees as beneficial for productivity, retention, safety, and community alignment.

The academy model could become increasingly important

One of the more distinctive parts of the Hercules strategy is its in-house training capability. The Hercules Construction Academy has now trained more than 2,000 people, helping the business upskill and cross-skill its workforce.

That capability has both operational and commercial value.

• It helps address the UK’s infrastructure skills shortage
• It reduces reliance on external training providers
• It allows Hercules to prepare workers for specific project requirements
• It can support margin improvement over time

The acquisition of QTT assets was designed to strengthen this training proposition further by expanding course delivery capacity and adding staff expertise. If management executes well, the academy can become more than a support function. It could become a strategic moat in a market where labour availability is often the constraint.

Water work dipped, but AMP8 could change the picture

The civil projects division, which is mainly exposed to the water sector, saw a decline in revenue to £13.5 million. That weakness was tied to the transition between AMP7 and AMP8, the regulated five-year asset management periods that shape capital investment across UK water utilities.

Management described the first year of a new AMP cycle as typically slow, with activity building gradually before accelerating more sharply in later years. That pattern is familiar in the sector, and Hercules expects AMP8 to be materially larger than AMP7.

The numbers are significant. Management cited:

• AMP8 investment: £104 billion over five years
• AMP7 investment: £51 billion over five years

On that basis, the company believes it could be at least twice as busy over the next four to five years versus the previous AMP period. It has already secured around £14 million of FY2026 water-related work, with the pipeline still developing.

Hercules also emphasised the breadth of its water relationships, referencing Thames Water, Southern Water, Anglian Water, Severn Trent, Wessex Water and Yorkshire Water. If AMP8 deployment accelerates as expected, this should provide a meaningful support to revenue and utilisation.

Acquisitions are reshaping the group

FY2025 was a busy year for corporate activity. Hercules completed three strategic acquisitions during the year and later added a further specialist business after the period end. It also disposed of a suction excavator business.

The key acquisitions were:

• Advantage NRG, a provider of overhead linesmen to the power transmission and distribution sector
• QTT assets, which strengthen academy and training delivery
• Alliance Power Services, later referred to by management as Lines Power Services, supplying commissioning and electrical engineers to high-voltage and low-voltage substations
• Future Build Recruitment, acquired earlier, expanding white-collar recruitment capability

Advantage NRG appears especially important. Management described it as a high-margin business operating in a market with strong structural demand and limited specialist labour supply. Hercules inherited around 170 employees through the deal and sees substantial long-term potential as the UK expands transmission infrastructure.

The company stated that Advantage NRG was already accretive in FY2025, contributing approximately £9 million of revenue and around £2 million of post-tax profit in the four months it was owned during the year. Alliance Power Services is said to be performing ahead of pre-acquisition levels, even before substantial cross-selling benefits have been realised.

Management made clear that further M&A remains part of the growth strategy, but with an important qualification: future deals must be strategically aligned, profitable, easy enough to integrate, and supported by appropriate governance. That caveat is more important now than it might once have been.

Governance and controls moved to the centre of the equity story

The most sensitive issue in the FY2025 discussion was not growth. It was governance.

Management acknowledged that rapid expansion from around £25 million of revenue at IPO to more than £120 million today had outpaced some internal controls. The post-year audit identified gaps, mainly linked to onboarding and documentation processes involving training providers. Hercules brought in specialist accountants and lawyers, undertook remediation work, and stated that the issue was narrow, specific, and unrelated to the core trading numbers.

The company was keen to frame the audit qualification as limited in scope. Management stressed that it did not concern normal operating performance and that no improper expenditure was identified. The remediation plan is said to be virtually complete, with final steps expected over the coming months.

There was also clarification on a separate HMRC matter. Hercules said a voluntary submission had been made in 2022 concerning certain employee tax issues from earlier periods. After a lengthy process, the final settlement, including interest but no penalties, was £157,000, which has now been paid and treated as exceptional.

For investors, the key judgement is not whether the company encountered growing pains. Many expanding businesses do. The more important question is whether Hercules now has the systems, oversight, and discipline to support the next phase of scale without a repeat of delayed reporting or control weaknesses.

Management is clearly aware of that challenge and appears to be responding with heavier investment in infrastructure rather than minimising the issue.

Systems investment is not optional any more

Two major technology programmes are underway.

• A new pay and bill system, scheduled to go live in July
• A Microsoft Dynamics ERP implementation, targeted for April next year

These systems are intended to modernise the group’s operational and financial backbone. Management said the previous systems dated back to 2016, when the business was much smaller and private. Given the current scale and complexity of the group, particularly after multiple acquisitions, upgraded systems should be seen as foundational rather than discretionary.

The company also confirmed that these software and implementation costs are being funded from internal cash flow. That will reassure shareholders concerned about equity dilution at a depressed share price.

Current trading: delays, but not cancellations

Hercules acknowledged delays in the start of some infrastructure projects in the first half of FY2026. These have affected timing, particularly in water and energy frameworks, where movement from award into live delivery has taken longer than hoped.

Management’s position is that these are delays rather than cancellations, and that the issue is sector-wide rather than company-specific. It still expects revenue growth to continue in FY2026 and beyond, although the exact phasing of that growth may shift.

That distinction matters. In project-led businesses, delays can create working capital and utilisation pressure even if the long-term opportunity remains intact. Investors will want evidence over the coming periods that deferred activity is genuinely converting into live work.

The infrastructure backdrop remains compelling

The long-term market case for Hercules still rests on the scale of UK infrastructure spending. Management repeatedly pointed to a government infrastructure commitment of around £725 billion over the next decade, covering sectors where Hercules already has a presence or is building one.

Key demand drivers highlighted by the company include:

• Water: £104 billion AMP8 investment over five years
• Rail: £44 billion under Network Rail’s CP7 programme
• Nuclear: initial £14.2 billion linked to projects including Sizewell C
• Power and energy: major transmission and distribution buildout across Scotland, England and Wales

Power and energy may prove especially important. Hercules believes transmission and distribution work could become a major long-duration growth driver, particularly through Advantage NRG and its Scotland expansion. Management was notably bullish on the scale of overhead line and grid connection work required to support generation, renewables integration, and energy security.

Scotland is a strategic move, not just a regional office

The opening of a Scottish office is a significant step in that context. Management described it as a strategic expansion designed to support opportunities in power transmission, water and labour supply. Glasgow is intended as the operational base, with the ability to serve projects across Scotland, including more remote regions.

The rationale is clear. Scotland is central to future transmission infrastructure and grid reinforcement, particularly as renewable energy output requires stronger links into the national system. Hercules believes this could support substantial growth and even suggested that its energy activities could potentially double in scale over the next couple of years.

What investors should focus on next

Hercules enters the next phase with meaningful tailwinds, but also with a higher burden of proof. The business now needs to demonstrate that its strategic narrative can translate into consistent, well-governed execution.

The most important areas to monitor are likely to be:

1. Conversion of delayed frameworks into active revenue, especially in water and energy
2. Successful integration of acquisitions, including delivery of cross-selling opportunities
3. Evidence of margin improvement, particularly from specialist, higher-value energy work
4. Completion of remediation actions and a return to normal reporting discipline
5. Stability of cash generation while systems investment continues

Management was candid that FY2025 exposed the strains of growth. It was also confident that the company has emerged stronger, with more robust controls, broader capability, and a larger addressable market.

That may well be true. But in the current market, confidence alone is not enough. Investors will want milestones, delivery, and consistency.

For those following the company’s updates, Hercules provides registration for future company presentations through its investor registration page.

FAQ

What were Hercules PLC’s main FY2025 financial results?

Hercules reported revenue of £121.2 million, up 19% year on year. Underlying EBITDA rose 35% to £6.4 million, while underlying profit before tax increased 55% to £4.0 million. Underlying earnings per share reached 4.74p, up 36%, and operating cash generation was £7.6 million.

Why were the accounts delayed?

The delay was linked to audit work that identified gaps in onboarding and documentation processes involving training providers. Hercules said the issue was narrow and did not affect the core trading numbers, but the company undertook a thorough remediation process involving specialist accountants and lawyers.

Is the remediation work complete?

Management said the investigation itself had been completed, while the remediation plan is virtually complete. A small number of final actions are expected to be finished in the coming months.

How important is Advantage NRG to the group?

Very important. Advantage NRG gives Hercules specialist exposure to overhead transmission and distribution work, a market management sees as high growth and higher margin. The acquisition was described as accretive, contributing revenue and post-tax profit in its first partial year of ownership.

What is driving confidence in future growth?

The group is positioned across several infrastructure markets with substantial multi-year investment commitments, including water, rail, nuclear, and power transmission. Management highlighted around £725 billion of broader UK infrastructure spending over the next decade, alongside specific programmes such as AMP8 and CP7.

What are the main risks investors should watch?

The key issues are project timing, acquisition integration, margin delivery, governance execution, and the company’s ability to maintain reporting discipline after a difficult FY2025 process. The opportunity remains large, but execution quality will be closely watched.