Good morning, and welcome to Capital Limited Full Year 2025 results. Later, we will conduct a question answer session. If you wish to ask a question, we ask that you please do this via the webcast page using the Ask a Question button. Questions will follow after the presentation. I will now hand over to Jamie Boyton, Executive Chair, and Rick Robson, CFO, to start their presentation. Please go ahead, Jamie.
Thank you very much, and thank you everyone for dialing in, for the 2025 full year results presentation. If I could just please turn the slide to immediately to the introduction slide. I'm just gonna give a brief overview of Capital. If there are people on the phone call today excuse me, that are not familiar with the company. We're a multi-discipline service provider providing a range of drilling laboratories and mining services to exploration and mining companies, with a focus on Africa, the Middle East, and more recently, North America. The business has got three operating divisions, specifically a drilling, mining and laboratory business. Very broadly speaking, in terms of our operating revenue, the splits are broadly 60% drilling, 20% mining, 20% laboratories.
The drilling business is an end-to-end service provider from everything from exploration, drilling, through to in-pit services underground and more recently, we've actually added water bore drilling services to our repertoire. The mining business is a niche mining services provider operating a number of high profile large tonnage mining projects. In fact, with two currently in the portfolio in Egypt and Pakistan. Our laboratory business is our fast-growing part of our business at the moment. We've got a network of about 28 laboratories across Africa, the Middle East, and North America with a comprehensive range of geochemical analysis and the world leader in rolling out PhotonAssay technology through our platform. Those are the three operating businesses.
We also run an investment fund, Capital DI. It's the venture capital fund, which at the end of the period had about just under $100 million under management, quite complementary to our services business. In fact, its mandate is specifically tied to our services business. We have a development team within our platform under the banner of Capital Innovation, which are tasked with trialing new technologies and driving their adoption within our business, which we've had quite a bit of success with over the years. That's the brief introduction. If I could please turn to the next slide. The financial overview, a couple of highlights. I'll let Rick Robson go through the detail a little later in today's presentation.
Obviously, it was a bit of a tale of two halves for Capital in 2025. We had a fairly weak first half and a vastly improved performance in the second half of the year. When you wash that through on a full year basis, both our revenue and our adjusted EBITDA were pretty much essentially flat year-on-year, although we did get an improvement in our cash flow from operations. We did have a capital raising event in December last year, which saw us end in 2025 with a very modest gearing level and net debt of $31.8 million.
As I alluded to earlier, a very strong performance from our investment portfolio, which now constitutes about a quarter or more than a quarter of our current market capitalization. As I said, I'll let Rick go through the financials in a little more detail. If we could please turn to the next slide. The highlights for 2025, as I said, a tale of two halves. In the second half, we had a hiatus with our mining business with a couple of contracts ending in late 2024. As we entered 2025, we put the majority of that mining kit back to work in the second half of last year at the Reko Diq project in Pakistan.
That has brought that mining revenue back into our business, which is giving us good momentum into the second half of last year and into 2026. We're particularly pleased with the performance of MSALABS. We went through, excuse me, a fairly heavy investment period in 2023 and 2024, and in 2025, we started to see the positive results of that. While MSALABS had been a loss-making contributor to our group, it inflected to profitability in the second half of last year and has continued that into 2026. We're really pleased that the investment that we've made in that business is starting to show in the returns for the group. Early this year, we announced a new mining contract with AngloGold Ashanti, which is at the Sukari Gold Mine in Egypt.
We previously ran a waste stripping contract there, from 2021 through to 2024. We've recently just started operations there again, doing a waste stripping. Between that contract and the Reko Diq contract, pleased to say that our mining fleet is now fully utilized. Again, very strong performance from our investment portfolio. The standout really for the business in 2025. Again, as I alluded to, we successfully completed a capital raising in December. That capital raising was done at GBP 1 and GBP 1.07. Obviously the shares have performed particularly well since then. I think it's important to reiterate the rationale behind that capital raising. We are very positive and very bullish on the cycle at the moment.
There has been very strong cash flows from our client base and a lot of capital inflows into the sector. We saw it as being very analogous to what we saw in the previous bull cycle, which was right back in 2007-2008, running through to about 2012-2013. At that time, there became quite an acute shortage of availability of capital equipment. We took the opportunity in December last year, seeing the increased demand profile, to improve or to really give ourselves a bit more capacity in our balance sheet to enable us to move on some of our capital purchases ahead of time. You know, in the Q1 of this year, we've announced a number of significant long-term contracts. That capital raising has been put to good use.
If you could please go to the next slide. Couple of things I just want to highlight with respect to our revenues. You can see that we had a very solid growth period from 2020 up to 2024. Now we've actually mapped the CAGR up to 2025, but you can see 21% CAGR. Obviously we had flat revenue, 2025 and 2024. Again, I'll go into the details when we go into the guidance statement, but that growth, that 20%+ growth, we're back on track for that in 2026. We're very pleased with the demand outlook. A couple of things to bring out of this slide is that, you know, we have really diversified our business over the last five or six years.
Our non-drilling revenue has increased from 7% in 2020 to 31% in 2025. Obviously MSALABS and mining being the big contributors. I think something that's probably flying under the radar a little bit is our North American revenue has actually increased from 4% of revenue in 2020 to 16% in 2025. We're very pleased with both our geographic expansion and diversification, as well as the fact that we're back on a growth trajectory with our revenue. The other points, I think I'll skip over, you know, which we've largely covered, but we continue to see a very solid performance in the second half, and that's continued into the first half of this year across all our operating businesses.
If I could please go to the next slide. On that thematic, returns are rebounding. I think the important thing to pull from this graphic is just to have a look at our half-yearly performance with our adjusted EBITDA, which is our preferred reporting measure when we look at EBITDA cash accounting effectively for some of our right of use leases. You can see on the far right, obviously, that the second half of 2025, we're back to near record levels with respect to our adjusted EBITDA, which has obviously seen a solid inflection after a number of declining halves. Quite an aggressive bounce back into positive territory, and that's obviously starting to drive an improvement in our return on capital.
Last year's number was just a tad over 13%. It was about 14% the year before. I look at the four or five years before that, we were averaging a return on capital just over 20%. Again, we certainly have come through our business transition, and we've seen a pretty quick and rapid rebound in our profitability and our margins, which will obviously flow through into 2026. If we can please go to the next slide. A little more detail on our Capital DI, which is our venture capital fund. This has had a pretty outstanding return over the last couple of years, particularly in the second half of last year. The portfolio is valued at $97.5 million at December 31.
I should note that is after returning all the capital that was initially invested in the fund by the parent company. That all that capital has been returned and more back to the parent company. Overall, over the period since we incepted formalized this investment process, the fund itself has returned about 64% CAGR. An outstanding return. I think it would be remiss not to note, you know, that I think investments in the gold space have obviously done particularly well in the last couple of years.
I think the thing that differentiates our performance is that we've identified a number of opportunities very early in their life cycle, which has led to the discovery of two of Africa's next emerging gold mines, specifically Predictive in Guinea, and more recently, WIA Gold in Namibia, both of which were going to be green lit to move into mining. This isn't just a case of us being a beneficiary of a well-performing capital market in gold equities. We've actually had a very constructive input into the discovery of two of Africa's next gold mines. Continuing to drive this business in the years, this year and the years ahead.
If we can go to the next slide, please. Look, on the commodity prices, I think they're well understood just how strong the performance in particular of gold has been, which is the principal commodity exposure. Gold and copper represent north of 80% of our commodity exposure. I think it's also worth pointing out that gold and copper for the drilling industry in particular, represents about 75% of the drilling industry's revenue. So obviously a highly supportive commodity environment. In the bottom left, this is a thematic we often talk about, you know, how that flows through to capital markets activity. You can see that the level of activity in 2025, which has continued in the first couple of months of 2026, is now well above the previous peak cycle in 2011.
You then translate that into the top right. I think the particularly interesting point in this is the orange bar, which is the global exploration spend. You can see it's still well below the previous peak cycle. You know, we remain of high conviction of the opinion that with the cash flows that are being generated within our client base, with the access to capital that is now available within the broader industry, we are in the very early stages of a sustained multi-year strong demand cycle for services. We're certainly seeing that evidence and reporting that evidence through our contract wins that we've announced in the Q1 of this year. Next slide. Thanks. I'll hand over to Rick.
Thank you, Jamie. Welcome again everybody to this results call. Next slide please. Jamie's already touched on some of the headlines in the P&L here, but I think just starting with a point of note. We had a prior year restatement due to some historical payroll tax incorrect calculations across 2023 and 2024 in one of the countries of our operation. It resulted in a $1.3 million adjustment, a downward adjustment to the previously reported 2024 EBITDA. That's embedded in these numbers. Look, as Jamie has mentioned, the H2 performance and particularly at the EBITDA margin level was particularly pleasing at over 25%.
That's a level we anticipate continuing in 2026. The headline NPAT that we can see on the page is clearly flattered by the significant gain from the investment portfolio. If we pare back to the operational NPAT, that's broadly flat year-on-year due to higher tax offset by unmasking the better contract performance. On that tax, on a headline basis, the effective tax rate was again flattered by the gains on the investment portfolio. The headline rate there of 24%. If we pare that back to an operational effective tax rate, that has remained elevated and actually increased in 2024 to over 60% for the year.
What's behind that is driven by the tax charge for 2025, including a provision for higher revenue tax rates in Tanzania. This is where the tax authority won a recent court ruling increasing the applicable rates for mining services companies. With subdued profitability for the group in H1, the impact of this higher revenue tax was amplified, as was its effect on the tax rate. Looking forward, over the course of 2026, we anticipate that to moderate downwards towards the mid-thirties level, and particularly in view of the stronger profitability that we see ahead of us. Next slide, please. Cash flow from operations increased with the improved profitability that we've already discussed. We also had a favorable working capital movement.
The working cap movement was largely driven by mobilization and establishment payments received on the Reko Diq contract as we mobilized in record time over the course of the year. Higher debt payments or high debt repayments reflect a portion of the RCF being paid down with the raise proceeds, which can obviously be redrawn as we fund growth in 2026. Moving on. Next slide, please. This just shows the impact of the raise coming through, but that $40 million gross proceeds was completed in Q4 2025 to really support growth and give us that balance sheet capacity. Year-over-year, or year-end net debt rather, was obviously lower due to those raised proceeds being just come in.
Leverage at the year end, as at 0.4 net debt to adjusted EBITDA, is obviously lower than our previously reported at which was closer to 1x. We've got a nice amount of balance sheet capacity to really fund that growth that we see ahead of us. Next slide please.
On the divs, pleased to maintain the discipline of paying a dividend. We've got the strapline there, so it's 12 consecutive years of payments. Today we're declaring a final dividend of $0.013 per share, taking the total for the year up to $0.026 per share, which is in line with 2024. Back to you, Jamie, for guidance.
Okay, thank you. If we can just move to the next slide, please. Okay. So today we're announcing our guidance for 2026 consistent with prior years. We're guiding specifically for group revenue of $410 million-$440 million, which represents a tad over 20% year-on-year revenue growth. For our lab business, we're guiding for $85 million-$95 million, and within across the broader business, CapEx guidance of $55 million-$65 million. In terms of the outlook, similar to the thematic that I discussed earlier, this is a pretty interesting slide that has come from S&P, but it appeared on one of the brokerage firms and really caught my eye.
What we're looking at here is the mining sector free cash flow. I think this is really the crux of the thematic here. In October last year, we briefed the market, and that was ahead of obviously the December capital raising. One of the comments we made that there's a virtually almost a generational boom that's taking place. I mean, obviously, in gold's case, it's at historic highs. You can see that the last bull cycle, boom cycle for the mining industry was, you know, 2007 through to 12, 13, interrupted by the hiatus caused by the GFC. When you look at that contextually, that's sort of 16 odd years ago. It is really close to generational.
There is a noticeable difference between the two cycles, specifically looking at the free cash flow generation, because in the last cycle, we obviously saw elevated CapEx and elevated M&A activity. In this cycle, which has been running quite strongly for a couple of years now, there has been still, while there has been M&A activity, it hasn't replicated the levels of the previous cycle. Obviously, the gold price, in particular, is a lot stronger than the previous cycle. We really are seeing across our entire client base record cash flows, which bodes very well for the demand profile for service providers. One of the questions I often am asked is, you know, gold equities have run pretty hard, and obviously, gold is showing a little bit of volatility at the moment, as is the broader market.
In terms of the on the ground impact, we are seeing demand coming from all avenues, all of our operating businesses, across all of our jurisdictions. What's particularly pleasing is an increase in the number of long-term tenders that are opportunities for us. In the Q1 of this year, we've already announced a number of significant wins, which include particularly long-term lab build and operate contracts, long-term grade control contracts. The conditions for demand are as strong as we've seen them. We do feel that we are still very much at the front end of this demand cycle.
I go back to the previous slide where there's been very little exploration expenditure increase, and the majority that we've seen has been late-stage mine site-based exploration, while the mid-cycle and early cycle has not been prevalent at all. Across our client base, we're seeing significant increases in budgets year-on-year allocated to mine site development, mine site exploration, and a lot of mines going through the study phases to come on stream. In terms of the outlook increased in our revenue guidance, we're back on a growth trajectory. The business is very well positioned for that, having completed the capital raising in December, and we are quite adamant that we are at the front end of this demand cycle that we think has got sustained strength behind it.
I think on that note, I'll hand it back for Q&A. Thank you.
We will now start the Q&A session. If you wish to ask a question, please submit these through the webcast page using the Ask a Question button. I will now hand over to Ryan Dennis, Corporate Development and Investor Relations, to address the written questions. Please go ahead.
Thank you. We've received a handful of questions. Kicking off, Jamie, what is your assessment of the security situation at the Reko Diq and the general region?
Well, depends how broadly you want to talk about the general region, and I won't make comment about what is happening in the general region. In terms of the security situation at Reko Diq, we have not seen any changes to the protocols nor the disturbances at that site or entry to that site in the last three or four months than we have had since we've operated there, which has now been a couple of years now. We started back there with the drilling business, and we also operated in that region in 2007, 2008, 2009. I visited the site myself in, I think it was February, very recently. Security protocols are very strict, but you know, never at any stage felt unsafe and the business is performing particularly well.
Thanks. We have a question on Barrick's review of Reko Diq. Does Capital have any risk around that? Also, do you have a view on when Barrick's review will be completed?
I think, you know, I'm gonna be a little bit cautious and really guide the question and the audience to Barrick's public releases. Obviously they are looking at their options for a North American IPO. There have been significant management changes within the group. There is an expectation that there'll be news flow on that in the next six months period. Some suggestions it could be as soon as Q2, which obviously is approaching fast. Does it represent a risk to us? We don't think it does contractually. We're certainly seeing ample evidence. Well, the project is full steam ahead because we're on the project working and our scope is increasing and our volumes are increasing consistent with the contract.
There's definitely some uncertainty around what the final structure of Barrick will look like. You know, I just again reiterate this, we're operating in a world that consistently, I think there's a very strong consensus about a pending copper shortage. This will be one of the top five or six copper mines in the world. The project is progressing. It is world-class. You know, we remain optimistic on the asset.
Thanks. Onto our drilling business. Can you just comment on the tender pipeline and how you're seeing pricing?
As you'd expect, you know, I come back to the statement I made that, you know, you've had a couple of years of very strong performance from bullion itself and gold equities. The demand environment has really only started to, what I would say, significantly increase in the back end of last year. We are starting to see rate increases come through, and we are starting to implement some rate increases. The demand environment is really tightening up the supply. You know, I think again, I would say that we are, broadly speaking, at the front end of the demand cycle for the service providers.
In terms of the tendering pipeline, it's solid. I think probably the overriding statement I would make is just the quality. There is a lot of life coming back into the exploration market, but it certainly, while it's a service we provide, it's not the primary focus of Capital. Long-term, for example, we recently announced a five-year grade control contract. These long-term in-pit service contracts, that tendering market, the depth of it is improving. I would expect to be able to announce more news flow of a similar ilk over the next six months or so.
Thanks. A more general question here is, do you see any impact from higher energy prices on our business?
Not particularly. Fuel for Capital it's a small line item. You're talking sub $2 million across the entire business because almost exclusively, the contracts are. Fuel is included but, you know, provided by the customers. Very little impact on our profitability coming from any increase in fuel prices.
Thanks. A question on our investment portfolio. Any new investments or just a general comment on how that's going and what we're looking at?
Don't tend to use this platform to talk about new investments. We have done a private investment in Armenia region for a prospective copper company. More recently, we're already invested in a company called Apollo which recently raised money, and we've participated in that. That's a company with an asset in Gabon which also just secured a tungsten asset. We're actively reviewing about 10 at the moment. Fairly consistent with where we've been over the last three or four years. We're still being shown a lot of deal flow. I think the Capital DI brand, if you wanna call it that, is gaining more and more traction in the market.
Not a significant change to our portfolio, since the December year-end in terms of composition.
Thanks. Final question, does Capital have any plans for an expansion into South America?
Beyond our laboratory business, where we do already work in Guyana with a little bit of flow coming out of Suriname, a bit of work out of Ecuador and a bit of work out of Argentina. For our laboratory business, the answer is yes, that will continue to grow, but there's no immediate plans across our drilling or mining business.
Thank you. That's all the questions we have today.
Okay, great. Well, again, thank you everyone for dialing in. We look forward to providing the next update in due course. Thanks again.