Member Info for shychap

From the Investor Meet presentation intro:

"Hercules PLC (AIM:HERC) delivered record interim results for H1 2025, reporting an 18% increase in revenue to £54.6m, a 47% uplift in adjusted EBITDA, and a 26% rise in adjusted EBITA to £2.6m, all in line with market expectations. Operating in the UK infrastructure sector, Hercules continues to expand its core labour supply division - now contributing 86% of revenue - supported by strong organic growth and strategic acquisitions, including training provider QTT. With over 1,600 operatives deployed and a growing client base including Costain and United Utilities, Hercules is well-positioned to capitalise on a £750bn UK infrastructure investment pipeline across water, energy, nuclear, and transport. The company divested its suction excavator business, significantly reducing debt and strengthening the balance sheet, while maintaining a robust £9.8m cash position. Hercules’ in-house training academy, now enhanced by QTT, has upskilled over 1,500 workers and is a key pillar in addressing the UK's skilled labour shortage. The board reaffirms confidence in achieving full-year targets, underpinned by a healthy order book, strong margins, and accelerating momentum across all divisions. With a medium-term target of £500m turnover and £25m EBITDA, Hercules is pursuing a dual strategy of organic growth and targeted M&A in the fragmented labour supply market. The company also declared a consistent interim dividend, reflecting financial discipline and growth investment priorities. Hercules remains a strategic enabler in UK infrastructure, offering compelling shareholder value and long-term growth potential."

The timing may have more to do with getting a sign-off from the auditors without a going concern warning.

For all that the forecast 2025 revenues are allegedly in line with management expectations, they don't guarantee much, if any, profit and with Croda early-stage revenues difficult to forecast, it may be prudent to feather the nest now.

Given that £4m less fees would be a disproportionate amount of cash to support the SuperDrug deal and develop new Axis formulations, I suspect there is more to it.

It's also possible that IIs clamoured for a cheap 17p stock-up price ahead of re-rating news about the Croda deal. For that to be true, we would need to see several more good names among the subscribers.

And of course there's a possibility that Croda sales have been a flop so far which could force a rushed fundraise at 17p instead of waiting for the SP to drop lower on the results.

But it would be naive to applaud this as a "zero discount" placing: there has been plenty of evidence of forward selling since the SP was in the 20s so very possibly the 17p placing price was known about weeks ago, sparking a rush to sell in the knowledge that sellers would be able to buy back at 17p.

Or maybe SA has his eye on the next acquisition and needs some spare coin to make an offer.

But it's a crying shame that long-suffering PIs have been robbed of a certain SP boost on the SuperDrug news by SA's unexpected fund raise and I'm sure he has a better justification for it than an investment in a commercial deal which is never going to deliver that level of ROI.

"Wish you would keep all this 'substack' discussion to your 'substack'. I think you can discuss things on there?"

Indeed. Worse clickbait than the MailOnline headlines - without even the headlines because the deal is to get people to subscribe by trying to whip up fake excitement for a mystery PT Barnum theory which is, roll up, roll up, so good that you'll have to pay for it in order to find out what a letdown it is.

Methinks they must be losing subscribers since upsetting their former star circus acts. Pity because at least the boy is a good writer.

I report links to paywall sites. Every subscriber gets an email so presumably you're on commission to post the link to the great unwashed?

Less than 10% of HERC shares are in public hands, hence not a lot happens. One day, PIs will realise what the SP can do in a liquidity squeeze when a few start to buy – as may well happen soon.

Following a sparkling interims RNS this morning, there will be a HERC investor presentation via Investor Meet at 11am:

https://www.investormeetcompany.com/companies/hercules-plc

Toyin, agreed that £4m is too much to pay without any indication of returns. SA will be dancing on hot coals for years if we don't get some meat on the Superdrug bones very soon. But it is undeniably excellent news that we are in the door at Superdrug, and possibly for a lot more than AxisBiotix. But even dense PIs can't put up with being mushroomed for much longer. And my faith in SA will be severely shaken if this cash raise turns out to be for any other unstated purposes.

But in the big picture, Superdrug – and its parent, AS Watson Group with 16,500 health and beauty outlets in 28 countries – could be worth a lot more to us than the 10% dilution pain.

It's semantics, Toyin. Working capital is the known day to day costs of running the business while capex is investment in growing the business for next year and beyond. The RNS states that all of the cash is to "facilitate and support the Commercial Agreement and future formulation and packaging requirements" so it doesn't appear to relate to the current business at all.

The Superdrug deal was not expected this year and SA planned to budget for it next year. So bringing it forward counts as capex – especially bearing in mind the cost of new production plant and manufacturing processes.

Allegedly at least… If the cash should be diverted into current non-Superdrug related working capital then I would agree that would mean we have been misled.

Toyin, working capital is not the same as capex. This fundraise is, allegedly, not for working capital.

Imho it was inevitable that BTS would need capital investment to expand and it's good news that the expansion will be at least partly underwritten by a significant new contract. This morning's RNS says that all of the funds raised will be spent on developing the Superdrug production line; but £4m is surely too high an entry price into Superdrug, especially without a guaranteed rollout to all of their 900 stores, so I'm assuming that only part of this cash will be invested in the Superdrug production line.

But there could be more to come from this partnership. Superdrug is owned by AS Watson Group, the world's largest international health and beauty retailer by number of stores, with over 16,500 stores in 28 markets, primarily in Asia and Europe (says Wikipedia).

The UK chain has around 200 'special clinic' stores which may be where the AxisBiotix rollout will start. They are also a potentially huge customer for Zenakine-powered cosmetics products – and/or their own brand versions – so this contract should strengthen SBTX's hand in Croda negotiations and could open other doors for BTS.

But the timing of this fundraise may indicate that Croda revenues are taking longer to build than forecast. SA studiously avoids mentioning Croda in this morning's RNS when it wouldn't have broken the NDA to give a general update. He may just be keeping his powder dry but if he is, and Croda news next month causes a major SP rerate, then 17p in the placing/retail offer could turn out to be the bargain of the century. David Brierwood presumably thinks so and it will be interesting to see, tomorrow or shortly, which IIs have subscribed to the placing. Some may be known flippers so the fewer Macquarie's involved, the better.

It would be good to know when this placing was first whispered. If it was when the SP was 20% or even 50% higher than 17p then the flippers could have been busy forward selling for some time and driving the SP down, making the notion of "zero discount" a joke.

While £4m is a sizeable chunk of change for a company like SBTX, it looks like we had to settle for 17p in order to get it.

It would seem that SA believes that Superdrug will be worth a lot more to SBTX than the £4m we are allegedly investing in the production line. The thing is, will we ever be told – or will Superdrug be another NDA?

Bazzaman, we're all hungry for news but the half year report was less than three months ago and the full year trading update is due next month. Meanwhile, we have been assured that SBTX is trading in line with management expectations and that we are on target to meet revenue forecast, with no need to raise cash.

Surely SA has demonstrated by now that he either doesn't see your constant bleating or won't respond, so consider sparing the rest of us.

Not pumping, Toyin - just stating the facts. SA mis-spoke (possibly intentionally). The main/initial launch was over; the global/regional launch clearly continued.

Toyin, SA was referring to the Amsterdam launch. As you know, Croda have continued thereafter to stage regional launches around the world, eg https://www.instagram.com/croda_beauty/p/DJ1j2zIse0z/?locale=zh_CN

Neither Croda nor anyone else can complete a global launch at one event.

Https://www.theguardian.com/politics/2025/jun/10/rachel-reeves-to-unveil-39bn-housing-boost-in-spending-review-shake-up?CMP=Share_iOSApp_Other

Imho, the numbers to date are irrelevant unless they are surprisingly high (say, over £500k) or low (say, under £100k). The ball has only just started rolling and launches are still happening across the world. Croda's global salesforce, numbering 2,000 I read somewhere, are on the road with their shiny new sales presentations which will certainly be pushing the new ingredients. Big customers will certainly have placed orders already – probably before Croda even launched Zenakine in Amsterdam.

And all we need to do is chill and watch the story unfold.

SA has given us a timeline for news and no amount of impatient squawking here is going to change it.

Https://www.theguardian.com/politics/2025/jun/10/rachel-reeves-to-unveil-39bn-housing-boost-in-spending-review-shake-up?CMP=Share_iOSApp_Other

Croda's protectionist barriers are coming down:

"This will require a different type of partnership in which sharing data is an accepted norm and barriers between organisations throughout the supply chain become less cumbersome. That is going to require a level of cultural change within an industry that has historically taken a more protective and siloed approach."

https://www.croda.com/mediaassets/files/corporate/the-future-of-innovative-ingredients/vision-reportdesignweb.pdf?la=en-GB&hash=70C6EDA2B4AAA576AEFD7903C60ECD1E

From today's Ibstock trading update:

"Activity levels in the Group's markets have continued to be well above the prior year period, reflecting increased demand in residential construction markets. Accordingly, we continue to expect first half sales volumes in the core business to be materially above the prior year level."

Toyin, the bad news is that the NDA may never be lifted if companies like Apple are the template. See if you can check with any other Croda suppliers: it wouldn't be surprising if they were gagged during the life of their contract from revealing commercially sensitive details about Croda's current or future business with them. It's normal.

We will of course learn what revenues Croda have generated for us but we may not be allowed to forecast future revenue increases (or decreases); and almost certainly, we won't be allowed to talk about any new Croda lysate applications or formulations until Croda are ready to announce them.

We may have to get used to SBTX revenue forecasts which exclude Croda. Happy to be proved wrong though.

Jansy, SA earns the going rate for a job he seems to be doing pretty well, given the NDA restrictions. Not sure why he should take a pay cut when SBTX isn't strapped for cash.