A Gloucestershire company that supplies workers to major UK construction and power projects, including HS2, has disposed of a subsidiary for £2.4m in a bid to reduce its debt.
Cirencester-headquartered Hercules Site Services announced on Tuesday (February 11) it had sold its Suction Excavator business to SNC Holdings (NW).
According to the listed firm, the divestment will materially reduce the company’s debt and lease liabilities by around £9m.
The suction excavator business accounted for 88% of Hercules’ borrowings but less than 5% of its revenue in the company’s financial statements ended September 30, 2024.
Hercules, which supplies workers to projects such Sizewell C in Suffolk, said it expected free cash flow to increase following the disposal. The money, it added, will be used to focus on “high-growth opportunities”.
Brusk Korkmaz, chief executive of Hercules, said: “This is a hugely positive development for Hercules. As the UK carries out substantial construction and infrastructure upgrades within the nuclear, power and energy distribution, aviation, water, and rail sectors, our core labour supply business will now have greater resources to execute our strategy in these high-growth areas.”
Cash generated from the sale and associated debt reduction will also support the firm’s ongoing acquisition strategy, while delivering increased profit before tax and improved earnings per share, the company said.
“The disposal will streamline the business and simplify the company’s market position as a trusted supplier of skilled operatives for the many projects being delivered across the UK infrastructure and construction sectors,” a company spokesperson said in a statament.
In FY24, the suction excavator subsidiary generated revenue of £6.0m and a loss before tax of £0.4m (on a consolidated basis, the business had revenue of £5.055m and an adjusted loss of £1.3m).
As of September 30, the subsidiary had a gross asset book value of £11.8m and net asset value of £2.2m.
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