Hercules PLC Reports Record Revenue but Auditor Qualification Casts Shadow Over Results

Hercules has finally got its FY2025 numbers out, and that matters for one simple reason: the suspension of trading in its AIM shares is expected to be lifted at 7.30 a.m. on 22 May 2026. For investors, that is the immediate practical takeaway.

Under the bonnet, this is a mixed update. The trading numbers are strong, with record revenue and a solid jump in underlying profit, but the accounts come with a qualified audit opinion – meaning the auditors signed off the accounts except for one area where they could not get comfortable. That is the bit the market is likely to fixate on.

Hercules PLC final results: the key FY2025 numbers investors need to know

Metric	FY2025	FY2024
Revenue	£121.2m	£101.9m
Underlying EBITDA	£6.4m	£4.7m
Underlying pre-tax profit	£4.0m	£2.6m
Statutory PBT from continuing activities	£0.9m	£2.2m
Underlying EPS	4.74p	3.47p
Cash generated in the year	£7.6m	£7.5m
Year-end cash	£7.2m	£6.4m
Loans and borrowings	£12.1m	£7.3m
Net debt	£9.9m	£6.3m

Those headline figures are good. Revenue rose 19% and underlying EBITDA – earnings before interest, tax, depreciation and amortisation, adjusted for certain items – climbed 34%. That tells you the core business grew and margins improved, even if the statutory profit number looks weaker.

Record Hercules revenue growth shows the infrastructure strategy is working

The business is getting bigger, and not just by luck. Labour Supply revenue rose to £106.9m from £84.1m, while the group expanded into Power and Energy through the acquisition of Advantage NRG in June 2025.

Operationally, there are signs of broader reach too. Hercules supplied labour to 65 clients in FY2025, up from around 40, and across around 540 project locations, up from around 300, excluding Advantage NRG. The average number of operatives deployed rose to 1,230 from 1,150.

That matters because Hercules is pitching itself as a service provider to long-cycle UK infrastructure spend rather than a one-project wonder. Management points to at least £725bn of government funding over the coming decade across power, water, transport and nuclear, and the water market alone is set for £104bn of AMP8 investment.

There is also a training angle here. The Hercules Academy has trained more than 2,000 individuals since opening in January 2024, and the QTT acquisition should increase capacity further. In plain English, Hercules is trying to control more of the labour pipeline rather than just compete for scarce workers.

Why the qualified audit opinion is the real story in these Hercules results

Here is the uncomfortable bit. The auditor issued a qualified opinion because it could not verify certain historical training and consultancy costs involving a limited number of suppliers.

The auditors said they were unable to confirm that proper supplier onboarding had been followed, unable to confirm whether the companies were bona fide suppliers, and unable to confirm that the training or consultancy services were actually provided in the way recorded. That is not trivial.

Worse still, the audit report says management decided against further investigative work before signing the accounts, and the Board did not remove that limitation. The auditors explicitly said they were therefore unable to determine whether any adjustments to the figures or disclosures were needed, or whether there had been any breaches of applicable laws or regulations.

That is the sort of wording investors should read twice. It does not mean fraud has been proven, and the Board says the queried expenditure was properly incurred and that no single item was individually significant. But it absolutely does mean confidence in controls and governance has taken a hit.

My take: the underlying trading story is decent, but markets rarely brush off a qualified audit opinion. Trust is part of the investment case, especially on AIM, and Hercules now has rebuilding to do.

Underlying profit up, statutory profit down: what the gap actually means

Hercules reported underlying pre-tax profit of £4.0m, up from £2.6m, but statutory PBT from continuing operations fell to £0.9m from £2.2m. The difference comes from amortisation of acquisition-related intangibles, share-based charges, acquisition-related items, IT system implementation costs and business development spend.

That means the business was profitable on an adjusted basis, but expansion came with a bill. Administrative expenses jumped to £16.4m from £11.6m, with higher acquisition costs, employer National Insurance costs, IT upgrade spending and business development all feeding through.

I would not call that a disaster. Growing businesses often spend ahead of revenue. But it does mean investors should not just look at the shiny adjusted numbers and ignore the cash cost of expansion.

H1 2026 trading update: revenue is rising but project delays are slowing momentum

The first-half update was decent, not dazzling. Unaudited revenue for the six months to 31 March 2026 rose to £59.2m from £54.6m.

There were some positives behind that. Civil Projects benefited from AMP8-related water spending, and Advantage NRG has added new exposure to power and energy. But Hercules also said delays to some key infrastructure projects hit the Labour Supply division, even if that was partly offset by widening the client base.

That is a fair summary of the near-term picture: growth is still there, but timing risk is very real. Management also said Labour Supply margins have faced some pressure, so the second half will matter a lot.

Hercules balance sheet, debt and dividend: solid cash generation but less breathing room

On the positive side, operating cash generation held up well at £7.6m and labour supply debtor days improved to 33 from 39. Gross profit margin also edged up to 15.0% from 14.7%.

But debt rose. Group borrowings were £12.1m at year end, including £6.1m drawn on the IGF working capital facility and a £6.0m loan from Wasdell Holdings, a related party connected to non-executive director Martin Tedham. Net debt increased to £9.9m from £6.3m, and gearing rose to 45% from 35%.

That is not a balance sheet blow-up, but it does mean the company has less room for error while it integrates acquisitions and fixes control issues. Add in the fact that one customer accounted for 54% of revenue and another 11%, and there is clear concentration risk too.

There is no final dividend for FY2025. The Board blamed continuing acquisition activity and investment in systems. Sensible, probably, but income-focused investors will not love it.

What Hercules shareholders should watch after AIM trading resumes

• Whether management can fully complete remediation work by 30 September 2026, as indicated.
• Whether the interim results in mid-June 2026 show profit progression as well as revenue growth.
• How well Advantage NRG and Lyons Power Services are integrated.
• Whether project delays unwind in H2 2026.
• Whether debt stays under control while IT and growth spending continue.

My verdict on Hercules PLC after these final results

Strip out the audit issue and these are the numbers of a business with real momentum. Record revenue, stronger underlying profit, better operational reach and exposure to some very large UK infrastructure markets – that is the good case in a nutshell.

But you cannot strip out the audit issue, because the market will not. A qualified audit opinion tied to supplier legitimacy and missing audit trail evidence is a serious blot, and it will probably overshadow the operational progress until Hercules proves the fixes are real and the controls are robust.

So this RNS is both positive and negative. Positive for growth, cash generation and market opportunity. Negative for trust, governance and near-term share price confidence. When trading resumes, I would expect volatility, because investors now have to decide which side of that argument matters more.