Ahead of full year results next week, Hercules has provided a strategic update. The Group plans to divest its suction excavator business, which is now deemed a non-core activity. The proposed divestment, when completed, will materially reduce Hercules’ debt levels and improve free cash flow. It is also expected to contribute to higher profit before tax and EPS, plus enhanced returns for shareholders. In the 12 months to 30th September 2024, the suction excavator business accounted for less than 5% of Group revenue but 88% of consolidated debt excluding invoice discounting. No terms have yet been disclosed for the proposed divestment. In our view, this looks like a sensible strategic decision, which will support the transition to a capital-light model and enable the Group to maximise opportunities in the core labour supply business. We await details before refreshing our forecasts after next week’s results and for now our Fair Value/share remains 70p.