Lycopodium Limited

Good morning everyone and welcome to the Lycopodium First Half FY26 results call. I'm Sam Wells from NWR Communications and joining me from the company today is Managing Director and CEO Peter DeLeo as well as CFO Justine Campbell. Following a brief summary of the results released to the market this morning, investors and research analysts will have an opportunity to ask questions. There will be the choice of two options. First, analysts and investors can either raise your hand should you wish to ask a verbal question of the management team, and you can also submit a written question via the Q&A function at the bottom of your Zoom screen. We'll endeavor to get to the majority of questions asked, in some cases combining submitted questions on the same or similar topic. And for those analysts asking verbal questions, we kindly ask that you keep your questions to no more than two or three live questions on today's call. Thank you, and over to you.

Thank you, Sam, and welcome. Thank you for your attendance at our full presentation for the first half of FY26. As Sam said, I'm joined this morning by Justine, our CFO, and Bron Lennon, our Chair. This morning I'll be, or we've done for many of you, I'll be just running through our typical just a presentation covering off a little bit about the company, providing an update on the financial highlights for the period, touching on operational highlights for the period, then addressing outlook and guidance. And we also provide as part of the presentation, although I won't be running through any detail this morning, an appendix which contains a lot of Lycopodium remains a leading global engineering and project delivery group working across mineral resources, industrial processes and infrastructure industries with an extensive book of quality clientele and 18 offices across the world. I speak to our clientele. We have an amazing bunch of clients across all those industries I mentioned. through very large clients, mid-tiers and junior explorers and miners. And we're very grateful for that client level. As a project-focused organisation, it's of significant importance and to our benefit to have involvement with projects from a very early stage, hence our involvement in scoping, and feasibility studies in the evaluation phase of projects, through to the full engineering and project delivery as a full service provider in that space, and then also onto optimisation and expansion phase works, enables Lycopodium to benefit from a project's full life cycle. It's been something we've focused on over the years, both in broadening the services which we provide, but also in broadening the time in which we're involved projects. We maintain a high workload with a strong current order book of studies and delivery phase activities on a broad range of quality projects. Committed contracts are valued at $415 million, that's up on last period, and also revenue opportunity pipeline is $1.3 billion, also up on last period, which really indicates, and I'll talk more about it obviously later, the outlook for the business, but indicates that we're continuing to see a busy market, enjoy a busy market, see a busy market. By the way, our financial highlights, Lycopodium did $174.5 million worth of revenue for the period, and $18.3 5% impact margin, which is in line with our expectations for impact, so achieving our impact target. The board, the directors declared 22 cent per share fully franked dividend for the half year. Again, returning to our traditional sort of dividend policy or dividend expectation. Cashit Bank at the heart here. The company enjoys excellent diversification across a broad range of commodities, clientele, and geographies. Those of you that have seen the slide previously may note that we continue to achieve more balance in support of this diversification across these metrics, and we are striving to continue to do this In particular, it provides a surety and strength moving forward. From an operational perspective, we've recently awarded a number of FEED, or Front End Engineering and Design briefs. These include the Winnu Copper Project for Rio Tinto, the Acetro-Dibibango Gold Project for Endeavour Mine, which is their next development project, the Doropano Gold Project for Resley, and a number of others, including, most recently, the Kilgoura Plant Expansion Lithium Project here in Western Australia. We've also started initial work on two material prospects, being to be able to transition onto a larger project at Blackwater, an expansion project, and await news on that, which we believe may be imminent. I'll note, however, there has been a shift to the right on these projects, particularly sort of coping on Blackwater from a timing perspective, probably about a three to four minute shift from what we previously expected and forecast, and it has impacted our financials and forecasts. However, we continue to invest in building capacity in anticipation of these and a swathe of other material opportunities. And this is really important. We are in a competitive labour market across the world for our people and we've retained our people and continue to grow our people count and also our capacity in terms of office space and just general corporate capacity from what we'll see is strong. And those that have been on our calls previously have seen this slide in particular, which tries to demonstrate our early phase work, our work which is midstream and in the middle of its delivery and then that stuff that's been completed in recent times. And you can see there's quite a number of new opportunities We've also got a really strong portfolio on projects which are called heavy delivery, including Kone, in fact, the wire and the cool copper in Oman, and a number of other projects which are listed there, of course, and the projects which are already included. So, you know, we're very, very happy with the number of studies that we've got, and that's traditionally the key metric for the businesses we're working on. of what we'll be doing next. Our focus on people continues as we seek to maintain and enhance our status as an employer of choice and a place where people can develop excellent careers, advance themselves personally and professionally and enjoy growing with the company. Our approach to keeping our people and those on our managed sites safe is demonstrated in our exceptional safety track record. So on to outlook. Demand for our services remains very high based on our excellent track record and performance on all of our most recent projects, as well as market conditions, which generally sees commodity prices at strong, if not high levels, obviously gold being very, very strong. also across the Americas. Silver being another commodity which we've seen a number of projects we've started to work on the PFS or Unico silver in Argentina supported obviously with our investment in Saxon. We're also seeing on the basis of our expansion across the Americas lots But we also continue to invest in building capacity and capabilities globally with the last 12 months. We have planned for the next 12 months to increase the capacity in Perth, Toronto and Cape Town, in Lima and Manila, and that's in preparation for the work and the prospects which we continue to see, and we see that this will bear fruit in such We've revised guidance, primarily due to the shift right of a number of those major prospects. I spoke about the two main ones, which are expected to contribute particularly to our forecasts. We have provided guidance of group revenue between $370 and $410 million, an impact between $37 and $41 million, along with our target impact expectation of around 10%. We'll obviously continue material changes or any material awards, but we consider that the second half will be strong to achieve those, that guidance that we provide. We remain as a secure, stable and sustainable business, doing great work globally. This is based on the deep engineering expertise you know, growing teams and keeping teams of exceptional high-calendar personnel. And we provide lots of what I call value in the services which we provide globally. We have a long track record And, you know, again, leveraging experiences we've owned over the years. We have a very strong history of execution of projects and execution of business generally. We have a strong alignment with management and our shareholders. We still have around 30% of the company's ownership held by board and management. We have a very capital-like approach, so we're not an organisation that requires to spend a huge amount of capital to generate our returns, and we continue to pursue business in that fashion. I've touched on, I mean, the appendices which you can go through your ledger, The quantity of work that we do is in the form of big business for clients, new projects for existing clients and the like. Strong commodity diversification. I spoke around that earlier. I think we're continuing to strike a good balance there. Even in the light of a very strong gold price, we're still busy in lithium, we're still busy in uranium, copper and a bunch of other commodities. And the geographic diversification, I think, for us is key. We continue to expand geographically. The Americas has been, you know, a fantastic geographic expansion for us. The acquisition of Saxon, you know, the polymer office, the hamburger office, et cetera. We're seeing tremendous number of opportunities coming through. Again, it's fairly early days. America in particular, but also in North American corporations that continue to see a level of inquiry which is unprecedented. So I think certainly the word is out about lycopodium As I said, we also provide some additional informative content as an appendix to the presentation to further explain and illustrate the strength and quality of our business. So I'm not going to go through that this morning. I welcome you to walk through it. If, as ever, after this presentation, if any of you have any questions, please feel free to reach out to us with those questions and we can answer them on the appendices. But thank you for attending our webinar and I welcome any questions you may have.

Thanks very much, Peter. As a reminder, you may ask questions by submitting a written question via the Q&A function or covering research analysts are invited to raise their hand via Zoom and I'll endeavour to get to you shortly. First question comes from Oliver Porter at Euros. Ollie, please go ahead.

Hey, Pete, just saying thanks for taking my question. Just a quick one. You mentioned adding capacity and headcount. kind of across the board globally, can you just talk to how you're finding the labour market and perhaps if by geography you're having any particular challenges or how that sort of is going to look over the next six to 12 months? Thanks.

Thanks, Ollie. Yeah, the availability of good talent is always challenging. in South Africa in particular where the large operational hubs are. But we continue to recruit good people and bring good people in. And again, talking about, I touched on our focus on people and our focus on careers and our focus on providing people new, exciting and diverse work. I mean, it's something which we sell and we don't, you know, we never have people come to like us. value very much. To that point, I mean, across the last blank part of

Right, thanks. And just with Saxon, it's been a slightly slower start than you initially expected, but can you speak to how the opportunity pipeline as it stands today compares to your expectations when you made the application?

Yeah, you're right. Their performance in their own right has been particularly Latin America, that enabled us to access clientele and opportunities that we hadn't been previously. We won the clock back 18 months. You know, Lycopodium wasn't bidding anything in Latin America. It was aware of, I'm sure, lots of opportunities. And we're now sort of much more across and attuned to and enabling and able to pitch for opportunities our group and supported by, in that case, supported by our American officers and presence teams. We're currently a bit in a threshold of interest with sacks for business. But in that respect, it's going exactly to plan integration of the business as it could, and it's occurred really well. There's no issues there, no concerns there. The traditional cement market is slower than we would have liked to have seen, and they would have liked to have seen, of course. And

Great.

Thank you. That's it for me.

Thank you. Thanks, Ollie. Next question comes from Steven Scott at Veritas. Steven, please go ahead.

Thank you very much. Just on slide four, all the green dots, just notice that Europe and also maybe Middle East, maybe have presences there. Do you have any thinking about that in perhaps the medium term? Thank you.

Thank you, Stephen. Europe is not on our radar per se. It's not a huge matter. We're currently working on the Encore project in Oman. need to and do find the level of prospectivity in that region increases to such a point that we consider it important to have an operation there we can activate that. Certainly, I think we Thank you.

Thanks, Stephen. The next question, we have a couple of questions on the shifting timelines. Are there any specific factors that caused the delays to Tilakapi and Blackwater? And are there any second-order impacts on these delays? And specifically, there's a couple of questions around, you know, how much extra cost did you have to carry during the half that are associated with those? and is that visible in, you know, increased project expenses as a potential forward indicator?

It's not related to additional project expenses, but what it relates to is the first part of the question, and that is around timing project delays and all that. Unfortunately, the reality of our world is that we don't control basis, but the timing when a project starts, when it gets funded, when it gets permitted, some of those nuances around when a project has a full green light is not something we can control. I'll give you an example. We did a project last year, early last calendar year, a quality talent project in Arnold, Canada. We do our best to forecast and to do a likelihood and probability of a project going and then a likelihood and probability of us skewing that project and then what that might mean for our business size, our capacity, our capabilities and all that business planning that we do. But unfortunately, we don't control the timing of projects. And two that we've sort of singled out in our presentation today, Um, we singled out because our material contracts potentially, um, And, you know, when things don't keep up necessarily exactly as per our forecast, you have to, you know, rep costs being coming through our hoops. So as we've seen, our project costs and on the equipment side, we've started a business about 18 months ago called Podco. We sell some OEM products, leveraging our So the last part, are we seeing, you know, have those project delays caused us to incur costs? Well, in one respect, yes. What happens with project delays, we start seeing a softening in utilisation of our personnel because you bring on 40 people and they're not fully occupied to the level you'd like to see them occupied. That can happen. If you're doing better than that utilisation, then you'll make more profit. If you're doing less than the utilisation, you'll start really growing into your target products.

Thank you. Thank you. And maybe just as a follow-up to that, can you comment on first-half 26 utilisation, particularly in the second quarter against PCP, and what would your expectations be for the H2 balance?

We expect to see utilization increase. Utilization was reasonably high through the first quarter of this financial year. It softened across the second quarter, as I said, certainly some of our operational sensors. Q3, Q4 of this financial year. But certainly beyond that, we expect, based on our forecast, that we'll see utilization increase into Q27 as well, and not only increase, but we expect probably bigger numbers, bigger headcount in due course. Obviously, evidence by, you know, we're taking on more office space and the like, so that's kind of the plan.

Okay, great. Thank you. And in regards to the number of studies being currently undertaken by Likert Podium, how much would that be up on perhaps a 12-month range?

That's a bit of a tough question. Studies in terms of total content is probably there or thereabouts, maybe a little higher. Africa as well, so it's probably up.

Thank you, and maybe just the last question this morning. Can you give us a sense of the conversion rates you currently see through the life cycle of project development, i.e. for each client that commences a scoping study, do they utilise Lycopodium for delivery and operations?

Often yes, sometimes no. I'd say most of the project workers and we expect that you, or we know that you have an advantage if you deliver the feasibility study, whether it be PFS, DFS, often if you're doing scoping you generally roll into PFS and DFS and so on and so forth, but what I will say is taking a project from scoping call it, that side of the fence at the moment.

Okay, great. Thank you. I think that's all the time we have for live questions today. If there are any follow-ups, please feel free to email me and or Justine and we'll endeavour to get back to you. And maybe just with that, Peter or Justine, I'll pass it back to you guys for any closing comments.

Thank you very much. Nothing else to add other than we're very happy of Justine and try to help you out with answers.

And thank you very much for your attendance. Thank you very much for joining today's Lycopodium First Half Results Call. Enjoy the rest of your day. Goodbye.