Hercules PLC Expands into Power Sector with Majority Stake in Lyons Power Services

Valuation take – is Hercules getting a good deal?

On the numbers disclosed, it looks sensible. Paying £702,800 for 70% implies a total equity value of roughly £1.00 million. Against LPS’s last-year revenue of £1.39 million and profit before tax of £287,000, that equates to about 0.72x sales and roughly 3.5x PBT. The PBT margin sits around 20.7% – healthy for a specialist services business.

We do not have EBITDA (earnings before interest, tax, depreciation and amortisation) for LPS, so we cannot compute an EV/EBITDA. Net assets were £245,000, meaning Hercules is paying around 4.1x book value – not unusual for a service business with know-how and customer relationships.

Bottom line: the multiple looks undemanding for a profitable, niche operator in a growing sector. That suggests potential for earnings enhancement if the business continues to perform, though integration and scaling always carry execution risk.

Share issuance, dilution and admission to AIM

The consideration shares – 965,915 at 36.38 pence – will be admitted to AIM on or around 17 October 2025 and rank pari passu, which means they have the same rights as existing shares. Post-admission, Hercules will have 80,585,543 shares in issue.

On our maths, the new shares equate to roughly 1.21% dilution, which is modest. The 12-month lock-in followed by a 12-month orderly market agreement helps reduce near-term overhang risk.

Partnership Agreement and future buyout mechanics

The vendor can sell the remaining 30% between the seventh and tenth anniversary of completion. The price is set at 4x the average EBITDA achieved by LPS in the two years before that sale, paid half in cash and half in Hercules shares. After year ten, Hercules can compel the purchase on the same basis.

This structure keeps the entrepreneur invested for the long run and aligns incentives to grow profits. The trade-off is that if EBITDA grows strongly, the eventual price for the minority could be higher – and there will be some future cash and share consideration to fund it. EBITDA for LPS is not disclosed today, so we cannot estimate that future outlay.

Why this matters for Hercules shareholders

Strategically, this is another building block in Hercules’ power and energy push, following Advantage NRG. LPS brings specialist substation and switchgear capability, a roster of blue-chip clients, and a profitable track record. Cross-selling between Advantage NRG and LPS looks plausible: lines, substations and commissioning often sit on the same project timelines.

Financially, the price looks fair, the dilution is small, and the cash element comes from existing resources. On the face of it, that is shareholder-friendly. If Hercules can help LPS scale without eroding margins, this could add meaningful value over time.

The balanced view – positives and watch-outs

• Positives:
  • Exposure to a structural upgrade cycle in UK power networks, with £58 billion of National Grid-related investment flagged.
  • Sensible valuation multiples and a profitable target with a ~20.7% PBT margin.
  • Clear fit with Advantage NRG and a broader energy services proposition.
  • Low immediate dilution and vendor lock-in reducing near-term selling pressure.
• Watch-outs:
  • Integration and scaling risk – adding headcount and systems without denting quality or margins is never automatic.
  • Customer concentration typical in power infrastructure – large clients can be demanding; pipeline visibility is not disclosed.
  • Future minority buyout set at 4x EBITDA could be chunky if growth accelerates, with part of the consideration in new shares.
  • EBITDA and order book for LPS are not disclosed, limiting visibility on run-rate performance.

What to watch next

Keep an eye on admission of the consideration shares around 17 October 2025 and any early commentary on integration with Advantage NRG. Updates on contract wins in the power segment would help validate the cross-sell thesis. Any disclosure on LPS’s EBITDA or order book would also improve clarity on the future minority buyout quantum.

Overall, this looks like a tidy, strategically aligned deal at a fair price in a market with tailwinds. Execution now matters – but Hercules is quietly assembling a focused platform in UK power infrastructure, and that should interest investors looking for growth in essential networks.