ANNUAL REPORT 2020
CONTENTS
2020 Overview
Chairman’s Report
CEO’s Report
Financial Report
Directors’ Report
Review of Operations
Remuneration Report
Board of Directors
Executive Management Team
Independent Auditor’s Report
Directors’ Declaration
Financial Statements
I
II
IV
1
3
5
20
34
38
42
47
48
Supplementary Information
Corporate Information
104
BC
CORPORATE GOVERNANCE STATEMENT
Our Corporate Governance Statement may be found
at www.boartlongyear.com/corporate-governance
BOART LONGYEAR 2020 ANNUAL REPORT
BOART LONGYEAR 2018 ANNUAL REPORT
WHO WE ARE
Boart Longyear is recognised
worldwide as a leading provider
of drilling services, orebody-data-
collection technology, and innovative,
safe and productivity-driven drilling
equipment. With a rich heritage
dating back to 1890, the company
celebrated its 130th anniversary in
2020 and continues to build value for
customers all over the globe.
Boart Longyear’s mining and
exploration activities span a wide
range of commodities, including
copper, gold, nickel, zinc, uranium,
and other metals and minerals.
The company also holds a
substantial presence in the energy,
oil sands exploration, and
environmental sectors.
The Global Drilling Services division
operates for a diverse mining customer base
with drilling methods including diamond
coring exploration, reverse circulation, large
diameter rotary, mine dewatering, water
supply drilling, pump services, production,
and sonic drilling services.
The Global Products division offers
sophisticated research and development
and holds hundreds of patented designs to
manufacture, market, and service reliable
drill rigs, innovative drill string products,
rugged performance tooling, durable
drilling consumables, and quality parts for
customers worldwide.
The Geological Data Services division
utilises innovative scanning technology and
down-hole instrumentation tools to capture
detailed geological data from drilled core
and chip samples. This valuable orebody
knowledge gives mining companies the
ability to make timely decisions for more
efficient exploration activities.
*EBITDA, Adjusted EBITDA and Adjusted EBIT are non IFRS
measures and are used internally by management to assess
the performance of the business.
Cash from Operations excludes interest and tax.
Copyright © 2021 Boart Longyear. All rights reserved.
2020 OVERVIEW
2020 2019 2018
Revenue
US$657m
Adjusted Gross Margin
US$103m
Adjusted EBITDA
US$60m
Gross Margin US$98m
EBITDA US$40m
Net Profit After Tax
US$-99m
657
745
770
98
103
139
131
144
142
40
60
-99
67
87
54
81
-57
-44
Cash from Operations
US$58m
Number of Employees
5,168
Safety
TCIR 1.52
Safety
LTIR 0.10
58
77
5,168
5,194
24
4,637
1.52
1.37
1.90
0.02
0.10
0.10
Drilling Services
Revenue
US$456m
Drilling Services
EBITDA
US$50m
Products
Revenue
US$201m
Products
EBITDA
US$25m
456
516
534
50
90
83
201
229
237
25
31
31
Company Revenue
(Products and Services)
Company Revenue
by Region (Products
and Services)
Drilling Services
Revenue by Stage
Drilling Services
Revenue by Commodity
Surface Coring
Performance Tooling
Rotary/RC
Underground Coring
Drilling Equipment
Production Drilling
Other
25%
23%
19%
18%
8%
5%
2%
Asia Pacific
USA
Canada
EMEA
Latin America
25%
25%
21%
19%
10%
Development
(Near Mine/Brownfield)
Production (In-Pit)
58%
24%
Exploration (Greenfield)
13%
Non-Mining
5%
Gold
Copper
Other Metals
Non-Mining Water
Energy
Nickel
Other
Iron
67%
17%
6%
4%
4%
1%
1%
0%
I
BOART LONGYEAR 2020 ANNUAL REPORT GLOBAL LEADER
GLOBAL
$657m
PRODUCT SALES
DRILLING SERVICES
TOTAL REVENUE
EMPLOYEES
DRILL RIGS
80 Countries
15 Countries
US$657m
5,168
640
Boart Longyear Coverage
Headquarters
Regional Offices
Stocking Locations
Manufacturing
CANADA
21%
USA
25%
LATIN AMERICA
10%
II
BOART LONGYEAR 2020 ANNUAL REPORT
EMEA
19%
ASIA PACIFIC
25%
Boart Longyear Salt Lake City Headquarters
MAKING SAFETY PERSONAL
• Proven Safety & Reliability
• Focused Critical Risk
Management
• Customer Alignment
130 YEARS OF INNOVATION
• A Pioneer in Drilling Equipment
& Performance Tooling
• More Than 400 Patents &
Over 400 Trademarks
• Helping You Drill Better
TruScan™ dry core image
TruScan™ wet core image
Patented XQ™ wireline coring rod
Patented Longyear™ diamond bits
ENHANCED OREBODY KNOWLEDGE
• Scan Core & Chips Onsite
• Real-Time Results
• Lower Cost of Exploration
• Driller Deployable Digital
Technologies
BOART LONGYEAR 2020 ANNUAL REPORT
III
Dear Shareholders,
Having been involved with mining companies for some 40
years, I have witnessed firsthand the ups and downs of
the global mining industry and the continual fluctuations in
commodity pricing. The extreme conditions brought on by
the global pandemic have presented new challenges which
greatly impacted our business and dedicated employees.
Boart Longyear reacted quickly to offset the obvious impacts
and we have already seen the positive outcomes of our
resolve, despite the continued effects of COVID-19 rippling
through the world. As with any mining-industry cycle, we
have patiently worked through these obstacles, and we
expect to return to long-term success. We are already seeing
the silver linings as exploration is on the rise and mining
companies are accelerating exploration to replenish low
commodity reserves and resources.
Gold and base metals prices remain attractive and deficits
in copper and other non-ferrous minerals require more
investment. Capital raisings in the sector reached an eight-
year high in 2020. According to data collected by S&P Global
Market Intelligence, exploration budgets increased 3% in
2020 and gold allocations increased to US$4.3 billion. We
are also seeing an increase in stimulus from governments
and the emergence of green policies to support sustainable
energy sources and a growing electric vehicle demand.
To address business disruptions, the company implemented
a number of cost-reducing actions in the first half of 2020.
This included travel bans and restricted pay for overhead
personnel, with furloughs resulting in 75% pay reductions
for some, and 50% pay reductions to employees required
to remain on full time. Our executive team and board took
75–100% pay reductions during the same period. We were
able to renegotiate and defer or delay lease payments on
all Boart Longyear facilities and negotiate with customers
for assistance and fixed cost relief. These actions stabilised
the company, maintained liquidity for future growth, and
preserved value.
The company’s strength lies in its ability to navigate the
tough times through the expertise, experience, and resilience
of its employees, and the continual innovation of products
and services it offers. The company’s line of Longyear™
diamond coring bits saw 37% growth during 2020 which
testifies to their proven performance and successful adoption
in the drilling industry.
IV
IV
BOART LONGYEAR 2020 ANNUAL REPORT Customers are excited by the advancements we have
made with our geological data service offerings helping to
build knowledge of available ore-body deposits. In 2020,
we saw mining installations increase capacity of ore data
analysis by introducing multiple TruScan™ units to sites. By
enabling remote, in-field evaluation and analysis of retrieved
core samples, efficiency is increased, costs reduced, and
immediate feedback provided for improved exploration
productivity.
COVID-19 and its effects will continue to challenge us
as we move through 2021, but our board and executive
management team are encouraged by the progress we
have made in streamlining our business, reacting quickly to
market conditions, and maintaining respectable results. We
will continue to build on our success to bring value in the
long term to our investors and customers.
Sincerely,
Kevin McArthur
Board Chair
T
R
O
P
E
R
S
’
N
A
M
R
A
H
C
I
BOART LONGYEAR 2020 ANNUAL REPORT V
V
BOART LONGYEAR 2020 ANNUAL REPORT
T
R
O
P
E
R
S
’
O
E
C
Dear Shareholders,
Boart Longyear just completed a challenging year with a
global pandemic that not only affected our company, but
also the way we live, communicate, and conduct business.
Proactively working to keep all our operations safe is one
of our core values and our focus every day. Throughout
the year, we implemented additional cautionary measures
to keep our people safe, healthy, and we work hard to
reassure customers that we take our work and their
expectations seriously. We accomplished a major milestone
in 2020—hitting 130 years of exploration successes—again
proving Boart Longyear’s resilience.
Significant disruptions to our operations, as a result of the
global pandemic, made this a difficult year. As sites were
locked down, closed, and reopened due to the pandemic,
we experienced repeated mobilisations and demobilisations
on the same projects in multiple locations, which impacted
the top line of our business.
As you review the financial performance charts at the
beginning of this annual report, you will see revenue
declined in 2020 by US$88 million and EBIDTA by US$27
million, compared to 2019. Our business results improved
in the second half of 2020 but continued to be impacted
by COVID-19 in many areas around the world, with Latin
America being the hardest hit. Profit was impacted by non-
cash and non-recurring issues, primarily driven by debt
modifications, and restructuring charges.
Although the impacts of COVID-19 immediately caused
headline revenues and earnings to decline, we reacted
early and quickly to implement cost-reduction procedures in
all areas of the business to preserve business value. This
helped to maintain liquidity and to prepare for when normal
activity would once again resume. Reducing capital and
operating expenditures are always necessary actions and
included tough pay reductions affecting management and
employees around the world. My respect for our employees
has been reinforced by the sacrifices made to support the
business through this difficult time.
VI
VI
BOART LONGYEAR 2020 ANNUAL REPORT
BOART LONGYEAR 2020 ANNUAL REPORT
implement plans to overcome the pandemic.
Mines are opening again safely, commodity
supply deficits require more exploration activity,
and significant new investment into the sector is
happening. Boart Longyear’s people, innovative
products, ore-data-gathering technologies, and
drilling services are the best in the industry,
and we continue to deliver value for all of our
stakeholders.
Yours sincerely,
Jeff Olsen
President and CEO
The effects of the pandemic were most dramatic
in the months of March through June. However,
because of persistent and aggressive global
efforts, the business started a slow recovery in
the second half of the year. Operating cashflow
continued to improve and we achieved an
adjusted EBITDA of US$60 million, which is a
strong result given market conditions. When
analysing the numbers and adjusting for the
COVID-19 effect, we actually see a slight
improvement in the business year over year,
with fourth quarter 2020 results exceeding the
fourth quarter of 2019.
Our focus on safety remained strong and we are
proud to report a Lost-Time Injury Rate (LTIR) of
0.10 incidents per 200,000 man-hours and Total
Case Incident Rate (TCIR) of 1.52 per 200,000
man-hours. This is a significant achievement
particularly in the context of the many business
disruptions throughout the year. Boart
Longyear’s safety record is industry leading and
customers continue to see this record as a key
differentiator when evaluating how we stand
against the competition.
We are encouraged by governments taking
action to protect citizens, maintain health, and
VII
VII
BOART LONGYEAR 2020 ANNUAL REPORT T
R
O
P
E
R
L
A
C
N
A
N
I
F
I
BOART LONGYEAR LIMITED
A.B.N. 49 123 052 728
ANNUAL FINANCIAL REPORT
YEAR ENDED 31 DECEMBER 2020
1
1
BOART LONGYEAR 2020 ANNUAL REPORT
BOART LONGYEAR 2020 ANNUAL REPORT
CONTENTS
DIRECTORS’ REPORT
REVIEW OF OPERATIONS
REMUNERATION REPORT
BOARD OF DIRECTORS
EXECUTIVE MANAGEMENT TEAM
AUDITOR’S INDEPENDENCE DECLARATION
INDEPENDENT AUDITOR’S REPORT
DIRECTORS’ DECLARATION
CONSOLIDATED STATEMENT OF
PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
SUPPLEMENTARY INFORMATION
3
5
20
34
38
41
42
47
48
49
50
51
53
104
BOART LONGYEAR 2020 ANNUAL REPORT
2
2
BOART LONGYEAR 2020 ANNUAL REPORT
BOART LONGYEAR LIMITED ANNUAL REPORT 2020
DIRECTORS’ REPORT
The Directors present their report together with the financial report of Boart Longyear Limited (the “Parent”) and its controlled
entities (collectively the “Company”) for the financial year ended 31 December 2020 (the “financial year”) and the Independent
Auditor’s Report thereon.
Financial results and information contained herein are presented in United States (“US”) dollars unless otherwise noted.
DIRECTORS
The Directors of the Company (the “Directors”) in office during the financial year and as at the date of this report are set out
below.
Directors
Position
Kevin McArthur
Non-executive Chairman
Tye Burt
Kyle Cruz1
Jason Ireland
James Kern
Rubin McDougal2
Jeffrey Olsen
Robert Smith
Conor Tochilin3
Richard Wallman4
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Executive Director
Non-executive Director
Non-executive Director
Non-executive Director
(1) Kyle Cruz retired from the Board effective 17 January 2020.
(2) Rubin McDougal joined the Board of Directors as a Non-Executive Director effective 1 March 2020.
(3) Conor Tochilin joined the Board of Directors as a Non-Executive Director effective 17 January 2020.
(4) Richard Wallman retired from the Board effective 29 February 2020.
For a summary of experience and qualifications for each Director, see the Board of Directors section on page 34 of this
Report.
COMPANY SECRETARIES
Nora Pincus (appointed 13 August 2020)
Robert Closner (through 13 August 2020)
Philip Mackey
PRINCIPAL ACTIVITIES
Established in 1890, Boart Longyear is heading into its 131st year as the world’s leading provider of drilling services, orebody-
data-collection technology, and innovative, safe and productivity-driven drilling equipment. With its main focus in mining and
exploration activities spanning a wide range of commodities, including copper, gold, nickel, zinc, uranium, and other metals
and minerals, the Company also holds a substantial presence in the energy, oil sands exploration, and environmental sectors.
The Global Drilling Services division operates for a diverse mining customer base with drilling methods including diamond
coring exploration, reverse circulation, large diameter rotary, mine dewatering, water supply drilling, pump services,
production, and sonic drilling services.
The Global Products division offers sophisticated research and development and holds hundreds of patented designs to
manufacture, market, and service reliable drill rigs, innovative drill string products, rugged performance tooling, durable drilling
consumables, and quality parts for customers worldwide.
The Geological Data Services division, a segment of our Global Products business, utilises innovative scanning technology
and down-hole instrumentation tools to capture detailed geological data from drilled core and chip samples. This valuable
orebody knowledge gives mining companies the ability to make timely decisions for more efficient exploration activities.
3
BOART LONGYEAR 2020 ANNUAL REPORT These factors, combined with the Company’s global footprint, have allowed the Company to establish and maintain long-
standing relationships with a diverse and blue-chip customer base worldwide that includes many of the world’s leading mining
insignia and brand represent the gold
companies. With more than 130 years of drilling expertise, the Company believes its
standard in the global mineral drilling industry.
Boart Longyear is headquartered in Salt Lake City, Utah, USA, and listed on the Australian Securities Exchange in Sydney,
Australia (ASX: BLY). More information about Boart Longyear can be found at www.boartlongyear.com. To get Boart Longyear
news direct, follow us on Twitter, LinkedIn and Facebook.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
In March 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) outbreak a global pandemic. That
same month, as a result of the COVID-19 pandemic, the Company implemented its business continuity plan. The plan
included measures required to protect the health and well-being of employees while ensuring ongoing operational
sustainability; transitioning of corporate and regional office staff to work from home; and ceasing all non-essential international
and domestic travel. The plan also contained initiatives aimed at maintaining liquidity. The actions taken to conserve cash
included, but were not limited to, temporary salary reductions and amending the terms of the Company’s Senior Secured
Notes to satisfy interest payments due in respect of the notes on 30 June 2020 and 31 December 2020 by way of payment-in-
kind (“PIK”) rather than by payment in cash. See Note 21.
EVENTS SUBSEQUENT TO REPORTING DATE
As released on 7 January 2021, the Company has engaged Rothschild & Co. as an advisor to support the Company's
evaluation of potential options in anticipation of the maturation of the Company's debt facilities through the second half of 2022
including for refinancing or recapitalisation. At this time there are no material developments related to the strategic review;
however, the Company continues to explore various solutions to materially improve the capital structure of the business.
DIVIDENDS
No dividends have been paid during the financial year.
4
BOART LONGYEAR 2020 ANNUAL REPORT REVIEW OF OPERATIONS 1
1. Safety Performance, Market Conditions and Strategies
1.1 Overview
Boart Longyear is the world’s leading integrated provider of drilling services, drilling equipment and performance tooling for
mining and mineral drilling companies globally. We conduct our business activities through two segments, Global Drilling
Services and Global Products, which includes our Geological Data Services. Geological Data Services is a rapidly growing
segment of Boart Longyear that provides industry leading digital technologies to aid in understanding drilling and ore body
properties in real time.
We aim to create value for our customers through a comprehensive portfolio of technologically advanced and innovative
drilling services and products. We believe that our market leading positions in the mineral drilling industry are driven by a
variety of factors, including the performance, expertise and high safety standards of Global Drilling Services and the
innovation, engineering excellence and global manufacturing capabilities of Global Products.
Our operating and commercial priorities include solidifying our competitive advantages with sustained investments in safety
performance, productivity enhancements, and operating improvements in our Global Drilling Services division, while remaining
focused on the needs of our customer base. In the Global Products division, we draw current customers and future growth
from strong brands and a reputation of high quality, technical innovation, expertise, strong field support and value-added
products. Our engineering and product management teams pursue new products as well as continuous improvements to
benefit both the mining and construction markets in applications including exploration, blast hole, and sonic drilling. Some
recently introduced products continue to gain momentum globally. This includes the LF160 surface coring drill rig which, when
paired with our hands-free Freedom Loader, sets a new benchmark in productivity and safety. Our patented Longyear™
diamond coring bits demonstrate increased productivity by drilling faster, lasting longer, or both. Also patented, the innovative
XQ™ coring rod offers customers benefits from its preferred thread design thanks to ease of use, unsurpassed depth capacity,
and superior wear life. In percussive tooling for blast hole drilling applications, our line of DriftMaster™ drill rods is growing
both in product offering and customer adoption for underground mining applications. TruCore™ electronic core orientation
tools continue to expand geographically and are available globally. The TruShot™ electronic magnetic survey instrument is the
second offering in a future suite of tools. We are now using our TruScanTM geological sample field screening technology at
mine sites with several mining customers. We have also recently launched our TruSubTM drill rig performance monitoring
technology. TruSubTM is a digital drill sub technology that fits between the drill head and drill rods. TruSubTM allows for key
drilling parameters to be digitally recorded and viewed in real time to drive drilling productivity. We will be rolling out TruSubTM
with our Global Drilling Services and third-party party customers on several mine sites later this year. These instruments are
part of our strategy to be the global technology leader in providing subsurface resource information to mining companies
through our Geological Data Services business.
Our capital structure exposes us to a variety of market, operational and liquidity risks. As at 31 December 2020, cash flows
from operating activities was $49.4 million. This represents an improvement of $14.1 million over 2019 cash flows from
operating activities of $35.3 million and is inclusive of $6.2 million in funds received under the Canada Employee Wage
Subsidy program for COVID-19 relief. This significant improvement was achieved through the conversion of the 2020 interest
instalments for debt from payment in cash to payment-in-kind (“PIK”). In addition, improvements to cash from operations were
generated through cost control and capital management in the second quarter tied to the pause in activity levels caused by
COVID-19, as well as focused and sustainable long-term cost reductions, productivity enhancements and working capital
management.
(1) The Review of Operations contains information sourced from our audited financial statements as well as additional supplemental
information that has not been subject to audit or review.
5
5
BOART LONGYEAR 2020 ANNUAL REPORT 1.2 Safety Performance
Boart Longyear strives to continuously improve safety performance. Health and Safety is a core Company value along with
Integrity, Customer Focus, and Teamwork and is expected from our employees, and drives value for our customers and
stakeholders. Through our Company initiatives and robust safety programs, Boart Longyear builds trust with our employees,
customers, and all stakeholders.
For the year ending 31 December 2020, the Company’s world class performance on key indicators includes a Total Case
Incident Rate (“TCIR”) of 1.52 and Lost-Time Injury Rate (“LTIR”) of 0.10. Both TCIR and LTIR rates are calculated based on
200,000 hours worked. During the year ending 31 December 2020, our employees experienced 77 injuries that required some
medical treatment or job restriction; five of those injuries resulted in lost work time. The focus throughout 2020 has been on
our Environment, Health and Safety (“EHS”) management system elements: Critical Risk Management, EHS Fundamental,
EHS Standards and Competency Training Programs. In addition, a significant effort was put into our COVID-19 Management
Plan that provided guidance and allowed for business continuity throughout the global pandemic.
1.3 Impact of Market Conditions
In March 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) outbreak a global pandemic. That
same month, as a result of the COVID-19 pandemic, the Company implemented its business continuity plan. The plan
included measures required to protect the health and well-being of employees while ensuring ongoing operations
sustainability; transitioning of corporate and regional offices staff to work from home; and ceasing all non-essential
international and domestic travel. The plan also contained initiatives aimed at maintaining liquidity. The actions taken to
conserve cash included, but were not limited to, temporary salary reductions and amending the terms of the Company’s senior
secured notes to satisfy interest payments due in respect of the notes on 30 June 2020 and 31 December 2020 by way of
payment-in-kind rather than by payment in cash. See Note 21.
The exploration market, mining market, and construction market were materially impacted by the COVID-19 pandemic in
2020. The Company saw a decline in global customer activities due to government-imposed closures and customers choosing
to reduce exposure across their operations by delaying new projects. We have worked closely with our key customers to
continue operations where possible, while ensuring we protect our people and the communities in which they work. Boart
Longyear has demonstrated best practice in its active and consistent implementation of health and safety protocols to protect
our own workforce and those of our customers, as well as of the residents of the communities in which we operate. This
approach has significantly reduced the risk of unplanned stoppages or delays due COVID-19 outbreaks, allowing Boart
Longyear crews to maintain a solid operating rhythm and thereby continue to deliver results for our customers under
exceptional circumstances. While jurisdiction and customer-specific restrictions continue to impact normal operations, these
restrictions are, for the most part, predictable and manageable.
Once the COVID-19 pandemic subsides, and the industry returns to more normal operations and people movements, we
believe that mining companies will respond to the material increase in commodity pricing and underlying demand. While
COVID-19 materially impacted normal operations for several months, the strength in key commodity prices drove continued
capital raisings in the mining space, with $3.5 billion raised in the third quarter, the strongest quarter in eight years. This will in
turn drive exploration activity in the coming quarters, particularly as current COVID-19 related restrictions are eased. In
addition, the recovery of China’s economy is quickly driving demand for the key bulk commodities of copper, iron ore, and
nickel, while gold prices continue to hold well above the all-in sustaining cost for major mines. Adding to the China-driven
increases in demand are the twin emerging global trends of electrification of vehicle fleets and conversion to green energy,
further supporting the prospects for sustained growth in copper, nickel, and lithium exploration and production over the coming
years.
We continue to retire older drill rigs and add new upgraded exploration drill rigs to the drilling services fleet to meet the
demand and expanded budgets of our key customers in different regions around the world. We continually evaluate
opportunities where we can help our customers meet their exploration goals, utilising the latest technology improvements that
support both safety and productivity enhancements. The same is true for our Global Products business where we are working
to provide our customers technologies that help them both increase productivity and maintain safe operations.
As a result of the COVID-19 pandemic and ongoing finance costs associated with the Company’s debt facilities, the Company
reported a statutory loss for the year ended 31 December 2020 of $98.8 million.
6
6
BOART LONGYEAR 2020 ANNUAL REPORT Objectives and Strategies
In addition to our prime goal of returning our employees home safely each day, we continue to position the business to operate
more efficiently across all phases of the mining cycle. Key elements of this strategy include focusing more closely on cash
generation, achieving and maintaining sustainable earnings before interest, taxes, depreciation and amortisation (“EBITDA”)
margins, improving returns on capital through disciplined variable and fixed cost management and capital spending programs,
and maintaining a rigorous focus on working capital, particularly inventory and accounts receivable.
We are committed to driving long-term shareholder value by executing on several key initiatives to improve our commercial
practices. In our Global Drilling Services division, we are committed to improving safety, productivity, and profitability through:
•
•
•
•
focusing on operational efficiencies and productivity across the organisation, particularly at the drill rig level;
optimising the commercial organisation to drive value through the contracting and pricing processes;
leveraging the supply chain function across the business; and
controlling selling, general and administrative (“SG&A”) and other overhead related costs.
In the Global Products division, we continue to maintain our market leadership with the recent commercialisation of new
products such as our LF160 surface coring drill with the Freedom loader, our patented LongyearTM diamond bits, DriftMasterTM
drill rods for blast-hole applications, and our XQTM coring rods. These newer products complement the well-respected lines of
existing products that customers have come to rely on from Boart Longyear.
We are also pursuing market leadership in providing subsurface resource information to our mining customers in an
integrated, real-time, and cost-effective manner through our Geological Data Services business.
Ultimately, our goal is to help our customers build their ore body knowledge. Through our focus on operational excellence, we
will address the risks and challenges of the mining industry cycle while also preserving the significant upside that we may
realise in our operations as market conditions improve, combined with a significantly improved cost structure and operating
performance. We are also capitalising on longer-term growth opportunities through investment in technologies that will
broaden our customer offerings.
7
BOART LONGYEAR 2020 ANNUAL REPORT
2. Financial and Operating Highlights
Key financial data
Revenue
NPAT 1
EBITDA 2
Adjusted EBITDA 2
Operating (loss) profit
Cash provided by operations
Net cash flows generated operating activities
Capital expenditures (accrual)
Capital expenditures (cash)
Weighted Average number of ordinary shares
For the year ended 31 December
2020
2019
US$ Millions
US$ Millions
$ Change
% Change
657.3
(98.8)
40.3
60.1
(0.7)
57.6
49.4
32.0
32.1
88.0
745.0
(56.6)
66.5
87.3
27.2
77.0
35.3
52.3
50.7
87.7
(87.7)
(42.2)
(26.2)
(27.2)
(27.9)
(19.4)
14.1
(20.3)
(18.6)
0.3
-11.8%
-74.6%
-39.4%
-31.2%
-102.6%
-25.2%
39.9%
-38.8%
-36.7%
0.3%
-73.8%
-9.8%
-1.2%
Earnings per share (basic and diluted)
(112.3) cents
(64.6) cents
(47.7) cents
Average BLY rig utilisation
Average Fleet size
37%
683
41%
691
-4%
(8)
(1) The comparative information has been restated as a result of additional accreted interest recorded on the Senior Secured Notes as
discussed in Note 1.
(2) EBITDA is 'Earnings before interest, tax, depreciation and amortisation'. Adjusted EBITDA is 'Earnings before interest, tax, depreciation
and amortisation and before major restructuring initiatives, impairments of assets, and other significant and non-recurring transactions
outside the ordinary course of business'. These items are identified by management as not representing the underlying performance of
the business. See reconciliation in section 3.3 'Significant Items'.
3. Discussion and Analysis of Operational Results and the Income Statement
3.1 Revenue
Revenue for the year ended 31 December 2020 of $657.3 million decreased by 11.8%, or $87.7 million, compared to revenue
for the prior year ended 31 December 2019 of $745.0 million.
A majority of the revenue for both Global Drilling Services and Global Products is derived from providing drilling services and
products to the mining industry and is dependent on global mineral exploration, development and production activities.
Following the initial impacts of COVID-19 in March and April in the forms of project cancellations, deferrals, and stoppages, the
Company has seen a steady resumption of exploration activity, as well as an increase in bidding activity for such work. And,
while jurisdiction and customer-specific safeguards and protocols to prevent the spread of COVID-19 can often impact project
costs, timelines, and labor availability, we are factoring the cost of implementation of these safeguards and protocols into all
new bids. In addition, we are ensuring the commercial and legal terms in all new bids adequately cover the risk of COVID-19
related work suspensions or other stoppages. Looking forward, the anticipated economic recovery from the COVID-19
slowdown continues to support the demand key commodities, further strengthening the incentive for exploration, development,
and production.
8
BOART LONGYEAR 2020 ANNUAL REPORT
3.2 Cost of Goods Sold, Sales and Marketing Expense, and General and Administrative Expense
The following pro forma income statement shows the effects of removing significant items from their respective income
statement line. The adjusted balances will be used in the following narrative to reflect cost categories after removing the
impact of significant items.
For the year ended 31 December
2020
As Reported
Significant
Items
Adjusted
Balance
As Reported
2019
Significant
Items
Adjusted
Balance
Continuing operations
Revenue
Cost of goods sold
Gross margin
Other income
General and administrative expenses
Sales and marketing expenses
Significant items
Other expenses
Operating (loss) profit
657.3
(559.8)
97.5
5.8
(69.8)
(17.0)
-
(17.2)
(0.7)
-
5.5
5.5
-
5.5
0.5
(19.8)
8.3
-
657.3
(554.3)
103.0
5.8
(64.3)
(16.5)
(19.8)
(8.9)
(0.7)
745.0
(606.3)
138.7
6.8
(83.0)
(20.3)
-
(15.0)
27.2
-
5.2
5.2
-
15.6
-
(20.8)
-
-
745.0
(601.1)
143.9
6.8
(67.4)
(20.3)
(20.8)
(15.0)
27.2
Gross margin in 2020 decreased to 15.7% compared to 19.3% in 2019. The lower margin is directly related to the pause in
activity levels from the emergence of COVID-19. The Company implemented a number of measures to reduce the impact of
the lower activity levels; however, it was not able to mitigate the full impact from COVID-19 across its global regions.
The total of other income, general and administrative expenses (“G&A”), sales and marketing expenses (“S&M”) and other
expenses (adjusted for significant items) of $83.9 million in 2020 was 12.5% less than 2019 of $95.9 million. The lower cost
structure is driven by lower expenses as a result of initiatives implemented to match the workforce needs to the reduced
activity levels during the early stages of the COVID-19 pandemic.
9
BOART LONGYEAR 2020 ANNUAL REPORT
3.3 Significant Items
During the years ended 31 December 2020 and 2019, the Company incurred the following restructuring expense,
recapitalisation costs and impairment charges:
US$ Millions
EBITDA 1
Impairments
Property, plant and equipment
Intangible assets
Inventories
Employee and related costs
Legal provisions
Other restructuring expenses
Onerous lease
Total of significant and non-recurring items
Adjusted EBITDA 1
For the year ended 31 December
2020
2019
US$ Millions
US$ Millions
40.3
66.5
8.3
0.5
5.0
1.3
-
4.7
-
19.8
60.1
0.2
9.0
0.8
1.7
2.6
6.2
0.3
20.8
87.3
(1) EBITDA is 'Earnings before interest, tax, depreciation and amortisation'. Adjusted EBITDA is 'Earnings before interest, tax, depreciation
and amortisation and before major restructuring initiatives, impairments of assets, and other significant and non-recurring transactions
outside the ordinary course of business'. These items are identified by management as not representing the underlying performance of
the business. Adjusted EBITDA is not a comprehensive representation of all the significant transactions the Company recognised
throughout the year. For example, it includes government aid received throughout the business for COVID-19 relief as well as gains from
sales of assets. On the other hand, it excludes costs incurred to quarantine crews unable to work as a result of COVID-19, contract
termination costs, legal fees, and indirect tax write-offs.
10
BOART LONGYEAR 2020 ANNUAL REPORT
4. Discussion and Analysis of Cash Flow
Cash provided by operations
Net cash flows provided by operating activities
Net cash flows used in investing activities
Net cash flows used in financing activities
4.1 Cash Flow Provided by Operating Activities
For the year ended 31 December
2020
2019
US$ Millions US$ Millions
$ Change
% Change
57.6
49.4
(26.9)
(18.9)
77.0
35.3
(44.9)
(11.0)
(19.4)
14.1
18.0
(7.9)
-25.2%
39.9%
40.1%
-71.8%
Cash flow from operating activities for the year ended 31 December 2020 was $49.4 million, which is an improvement of $14.1
million compared to 2019 of $35.3 million. The primary reason for the improvement in cash flows from operating activities was
from the successful negotiation to convert the interest payments on the Company’s senior secured notes from payment in
cash to PIK. The Company also implemented a number of longer-term sustaining initiatives to improve its working capital
needs and received $6.2 million in funds in connection with the Canada Employee Wage Subsidy program.
The Company invested $32.1 million in capital equipment and research and development to support existing operations during
2020 and prepare it for the impending increase in demand expected through 2021. The investment was lower than the
comparable prior period due to the measures implemented by the Company to conserve cash while monitoring the impact of
COVID-19 on the business (2019: $50.7 million). The 2020 capital expenditures have been partially offset by proceeds from
the sale of property, plant and equipment of $5.2 million (2019: $5.8 million).
The increase in cash flows used in financing activities is primarily due to higher repayment of borrowings and lease facilities.
5. Discussion of the Balance Sheet
The net liabilities of the Company increased by $87.2 million, to $469.4 million as at 31 December 2020, compared to $382.2
million as at 31 December 2019. This increase resulted primarily from the group loss for the year of $98.8 million.
Total assets of $609.6 million were $32.3 million lower than 2019 of $642.0 million primarily as a result of impairment of
property, plant and equipment, reductions in tax receivables and a decrease in working capital balances offset by increases in
intangible assets and cash.
Total liabilities increased by $54.9 million to $1.1 billion compared to $1.0 billion in 2019. This is primarily driven by accreted
interest for the period.
11
BOART LONGYEAR 2020 ANNUAL REPORT
Liquidity and Debt Facilities
The Company’s debt is comprised of the following instruments:
Description
Principal
Outstanding
as at 31
December
2020
(millions)
Accreted
Interest as at
31
December
2020
(millions)
Debt
Modification /
Applicable
Premium10
Interest
Rate
Scheduled
Maturity
Security
Senior Secured Notes
(CUSIP: 09664PAJ1)
$216.4
$62.3
$42.9
Variable2
Dec-22
Second lien on the accounts receivable, inventories, deposit
accounts and cash (“Working Capital Assets”) of the Term Loan
B and Senior Secured Notes guarantors that are not ABL or
Backstop ABL guarantors, a third lien on the Working Capital
Assets of the Term Loan B and Senior Secured Notes issuer and
the other Term Loan B and Senior Secured Notes guarantors that
are also ABL or Backstop ABL guarantors, and a first lien on
substantially all of the other tangible and intangible assets (“Non-
Working Capital Assets”) of the Term Loan B and Senior Secured
Notes issuer and other guarantors, including equipment,
intellectual property, the capital stock of subsidiaries and certain
owned real property (in any case, excluding assets of BLY IP,
Inc.)
Senior Secured Notes
(CUSIP: 09664PAE2)
$0.6
$0.0
Term Loan – Tranche B
$159.8
$27.9
Nil
Nil
10%9
8%3
Dec-22
Same as Senior Secured Notes
Dec-22
Same as Senior Secured Notes
ABL8
$22.9 1
Nil
Nil
Variable4
Jul-22
Term Loan – Tranche A
$132.6 7
$23.1
Nil
8%3
Dec-22
First lien on the Working Capital Assets of the ABL borrower and
guarantors and a third lien on substantially all of the Non-Working
Capital Assets of the ABL borrower and guarantors, including
equipment, intellectual property and the capital stock of
subsidiaries (but excluding real property), and in any case
excluding assets of BLY IP, Inc., Boart Longyear Suisse Sarl and
Boart Longyear S.A.C.
First lien on the Working Capital Assets of the Term Loan A
guarantors that are not ABL or Backstop ABL guarantors, a
second lien on the Working Capital Assets of the Term Loan A
issuer and the other Term Loan A guarantors that are also ABL
and Backstop ABL guarantors, and a second lien on substantially
all of the Non-Working Capital Assets of the Term Loan A issuer
and guarantors, including equipment, intellectual property, the
capital stock of subsidiaries and certain owned real property (in
any case, excluding assets of BLY IP, Inc.)
Backstop ABL8
$45.0
$13.0
Senior Unsecured Notes
$88.9
$4.5
Nil
Nil
11%5
Oct-225
Same as ABL but including any real property required to be
pledged as security for the Senior Secured Notes
1.5%6
Dec-22
Unsecured
(1) Letters of credit of $5.8 million were issued in addition to the $23.0 million borrowings that were outstanding.
(2)
Interest is payment-in-kind from 1 January 2020 to 30 June 2020 at an interest rate of 12%. Interest is payment-in kind from 1 July 2020
to 31 December 2020 at an interest rate of 14.5%. Interest in cash at a reduced interest rate of 10% per annum from 1 January 2021.The
effective interest rate on a go-forward basis is 14.4%. Refer to Note 21 for additional information.
Interest is 8% payment-in-kind.
(3)
(4) Based on LIBOR + margin (grid-based margin is currently 3.25%).
(5)
Interest is payment-in-kind at 11% at the Company’s election or 10% cash. Maturity Date is October 2022 or 90 days after the ABL due
date.
Interest is 1.5% payment-in-kind at the Company’s election until maturity.
(6)
(7) The secured amounts under Term Loan A and Term Loan B are capped at the base principal amounts as agreed in the recapitalisation
(8)
2017 amendments.
In July 2019 the Company amended terms to provide the Company additional liquidity and extend maturities from July 2020 to July 2022
and from October 2020 to October 2022 for the ABL and Backstop facilities, respectively. See Note 21 for more information.
Interest in cash at an interest rate of 10% per annum.
(9)
(10) Refer to Note 21 for information on the debt modification and applicable premium.
12
BOART LONGYEAR 2020 ANNUAL REPORT
6. Review of Segment Operations
The following table shows our third-party revenue and revenue from inter-segment sales by our Global Drilling Services and
Global Products division. Segment profit represents earnings before interest and taxes.
Segment Revenue
Segment Profit
2020
US$ Millions
2019
2020
2019
US$ Millions
US$ Millions
US$ Millions
Global Drilling Services
456.3
516.3
8.5
58.3
Global Products revenue
Global Products third party revenue
Global Products inter-segment revenue 1
Total Global Products
Less Global Product sales to Global Drilling Services
Total third party revenue
Total segment profit
201.0
56.4
228.7
56.9
257.4
(56.4)
657.3
285.6
16.4
14.6
(56.9)
745.0
24.9
72.9
(1) Transactions between segments are carried out at arm’s length and are eliminated on consolidation.
13
BOART LONGYEAR 2020 ANNUAL REPORT
6.1 Review of Segment Operations - Global Drilling Services
For the year ended 31 December
2020
2019
US$ Millions
US$ Millions
$ Change
% Change
456.3
516.3
(60.0)
-11.6%
379.7
28.0
407.7
89.3%
41.7
9.1%
6.9
12.1
50.4
252
683
405.9
25.9
431.8
83.6%
76.9
14.9%
7.6
13.1
90.3
284
691
(26.2)
2.1
(24.1)
5.7%
(35.2)
-5.8%
(0.7)
(1.0)
(39.9)
(32)
(8)
-6.5%
8.1%
-5.6%
6.8%
-45.8%
-38.9%
-9.2%
-7.6%
-44.2%
-11.3%
-1.2%
Financial Information
Third party revenue
COGS
Materials/labor/overhead/other
Depreciation and amortisation
Total COGS
COGS as a % of Revenue
Contribution margin $
Contribution margin %
Business unit SG&A
Allocated SG&A
EBITDA
Other Metrics
Average # of Operating Drill Rigs
Average # of Drill rigs
Safety
The Global Drilling Services division’s TCIR for 2020 was 1.72, compared to 1.51 for the comparable period in 2019. The LTIR
for 2020 was 0.08 compared to 0.02 for the comparable period in 2019. Our focus is on quality Critical Control Verifications
and Inspections; applying meaningful corrective actions globally and in a timely manner; increasing vehicle monitoring and
improving driver behaviors; increasing supervisory and field level employees’ competencies through Competency Training
Programs; and reinforcing our EHST fundamentals via regular BITS training specific to regional risk profiles.
Revenue
Global Drilling Services’ revenue in 2020 was $456.3 million, down 11.6% from $516.3 million in 2019. The year-over-year
revenue decrease was driven primarily by the COVID-19 pause through the second and third quarters as governments and
customers restricted activities while developing safe work practices to protect employees from the transmission of the COVID-
19 virus. Canada, Australia, Asia, and Africa recovered more quickly from COVID-19 restrictions than the United States, Chile,
and Argentina. The majority of the year over year decrease in revenue is attributable to these three countries. Prices remained
relatively flat compared to the prior year and changes in foreign exchange rates resulted in a $0.5 million decrease in revenue
in 2020 compared to 2019.
Approximately 89% of Global Drilling Services’ revenue for 2020 was derived from major mining companies, including
Anglogold Ashanti, Barrick, Newmont, and Rio Tinto. Our top 10 Global Drilling Services customers represented approximately
52% of the division’s revenue in 2020, with no single contract contributing more than 10% of our consolidated revenue.
Margins
With revenues decreasing from $516.3 million in 2019 to $456.3 million in 2020, Global Drilling Services also saw a
corresponding decrease in contribution margin. The 2020 contribution margin was $41.7 million compared to $76.9 million in
2019, a decrease of $35.2 million. The decrease in margins is primarily attributable to COVID-19 impacts and not being able to
reduce costs as quickly as governments and customers temporarily delayed projects to develop plans to support safe work
practices to protect employees and communities from the transmission of the COVID-19 virus.
14
BOART LONGYEAR 2020 ANNUAL REPORT
6.2 Review of Segment Operations - Global Products
Financial Information
Third party revenue
COGS
Materials/labor/overhead/other
Inventory obsolescence
Depreciation and amortisation
Total COGS
COGS as a % of Revenue
Contribution margin $
Contribution margin %
Business unit SG&A
Allocated SG&A
EBITDA
Other Metrics
Manufacturing plants
Average backlog
Inventories 1
For the year ended 31 December
2020
2019
US$ Millions
US$ Millions
$ Change
% Change
201.0
228.7
(27.7)
-12.1%
148.9
1.8
4.1
154.8
77.0%
32.7
16.3%
16.7
12.6
24.9
6
33.4
158.3
170.9
0.9
3.7
175.5
76.7%
33.6
14.7%
16.2
14.7
31.0
6
29.5
163.1
(22.0)
0.9
0.4
(20.7)
0.3%
(0.9)
1.6%
0.5
(2.1)
(6.1)
-
3.9
(4.8)
-12.9%
100.0%
10.8%
-11.8%
0.4%
-2.7%
10.9%
3.1%
-14.3%
-19.7%
0.0%
13.2%
-2.9%
(1) Represents total Company inventories including Global Drilling Services, Global Products and Geological Data Services.
Safety
In 2020, the TCIR for the Global Products, including manufacturing, and Geological Data Services combined segment was
1.00 recordable incidents per 200,000 hours worked compared to 0.69 in 2019. The LTIR was 0.14, compared to 0.00 for
2019. As with the Global Drilling Services division, there was a focused effort on Leading Indicator programs.
Revenue
Revenue of $201.0 million in 2020 is 12.1% lower than 2019 revenue of $228.7 million for the Global Products segment.
Revenues generated from capital equipment, spares, and production tooling were the main drivers contributing to weaker
revenue in 2020 relative to the prior period. The decrease in revenues across these product lines were primarily a result of
decreased demand in the second and third quarters due to the COVID-19 pandemic that drove governments and customers to
delay project activity while they implemented safe work practices to reduce the transmission of the COVID-19 virus.
Margins
While revenue for Global Products was down compared to 2019, contribution margin for the year ended 31 December 2020
were marginally lower over the prior year. Product volume decreases were offset by the benefits achieved from disciplined
cost control in both variable and fixed SG&A and material cost decreases. We continue to operate our manufacturing facilities
at lean levels, only producing what is required to meet market demand. The Company continues to engage in ongoing cost
control and has benefited from COVID-19 related payroll reductions implemented through the first half of 2020.
15
BOART LONGYEAR 2020 ANNUAL REPORT
Backlog
At 31 December 2020, Global Products had a backlog of product orders valued at $44.6 million. This compares to $35.9
million at 31 December 2019. Average backlog during the second half of 2020 was $33.5 million compared to $33.2 million
during the first half of 2020. The increase in our backlog year over year, which we define as product orders we believe to be
firm, was driven by an increase in demand for consumables. It should be noted that an order shipped within the same month
the order is received does not show up in backlog. Also, there is no certainty that orders in our backlog will result in actual
sales at the times or in the amounts ordered.
Intellectual Property
We rely on a combination of patents, trademarks, trade secrets and similar intellectual property rights to protect the proprietary
technology and other intellectual property that are instrumental to our Global Products business. As at 31 December 2020, we
had 408 issued patents, 428 registered trademarks, 131 pending patent applications and 13 pending trademark applications.
We do not consider our Global Products business, or our business as a whole, to be materially dependent upon any particular
patent, trademark, trade secret or other intellectual property.
Research and Development
Our Global Products division employs engineers and technicians to develop, design and test new and improved products. We
work closely with our customers, as well as our Global Drilling Services division, to identify opportunities and develop technical
solutions for issues that arise on site. We believe that sharing best practices amongst our divisions accelerates innovation and
increases safety and productivity in the field. This integrated business model provides us with an advantage in product
development, and we believe it enables us to bring new technology to the market with speed and reliability. Prior to their
introduction, new products are subjected to extensive testing in various environments, again with assistance from our Global
Drilling Services network. New product development efforts remain focused on product changes that continue to drive
increased safety and productivity, so customers see real added value regardless of the business environment. Our recent
successes include the LF160 surface coring drill paired with our Freedom Loader which has set a new benchmark in
productivity and hands-free rod handling. Our patented Longyear™ coloured diamond bits continue to show improved
productivity by lasting longer and cutting faster. Commercial launch of the new XQ™ coring rod continues globally, featuring a
greater depth capacity than the RQ™ rod, and faster, easier joint make/breaks for higher productivity.
Under our Geological Data Services business, TruCore™ electronic core orientation tools continue to expand geographically
and are available globally. The TruShot™ electronic magnetic survey technology is the second offering in a future suite of
tools and is available globally. We have recently launched our TruSubTM technology. TruSubTM is a digital drill sub technology
that fits between the drill head and drill rods. TruSubTM allows for key drilling parameters to be digitally recorded and viewed in
real time to drive drilling productivity. We will be rolling this technology out at mine sites this year. We see value in this
technology and will continue to develop in this space.
Our TruscanTM matrix calibrated XRF and photo sample scanning technology is currently being used at several locations
globally with long term 24/7 utilisation producing results that are being used for real time decision making as part of the mine
site workflow by the mining client. TruScanTM continues to spread its footprint globally with additional units being deployed
within Australia as well as North and South America. New features utilising artificial intelligence and machine learning continue
to be integrated into TruscanTM ensuring it is well differentiated in the market.
These technologies are part of our strategy to provide real-time subsurface resource defining information to mining companies.
Inventories
The business consumed $3.8 million of cash through the provision of inventory in 2020. Our Supply Chain organisation had a
challenging year dealing with the impacts of COVID-19 which included variable demand levels from the customer base as well
as challenges associated with traditional logistic lanes (swing of transport lines from airfreight to shipping). Through the first
half of the year the business was able to generate cash through lowering the Company’s reorder points with demand falling
from COVID-19 slowdowns and shutdowns globally, as well as implementing a number of initiatives to improve the supply
chain process and carrying levels of inventory. For the year ended 31 December 2020, the business implemented a scrapping
program removing $1.8 million of obsolete inventory that will support a reduction in carrying costs going forward. In addition,
the Company reevaluated several key assumptions in the calculation of our allowance for excess or obsolete inventory
resulting in an increase to the current year obsolescence expense of $5.0 million and contributing to an overall increase to the
allowance balance of $23.5 million, up from the $20.3 million at 31 December 2019. With industry metrics improving and
customer demand increasing through the second half of the year the business reinstated and increased stocking levels to
support current and forecasted near term demand. The business will remain focused through 2021 to improve its inventory
turns and improve inventory health however we do anticipate the need to increase inventory levels to ensure continued
support through to our customers.
16
BOART LONGYEAR 2020 ANNUAL REPORT
7. Outlook
7.1 Our 2021 Priorities
Continue to eliminate job related injuries and significant safety risks by maintaining and enhancing our strong safety
and compliance record. Safety is critical to the Company, our employees and our customers, both in determining the
success of our business and in ensuring the ongoing well-being of our employees and others with whom we come into contact.
We are dedicated to providing a safe work environment for every employee and contractor and implementing state-of-the-art
safety tools and practices to become the safety leader in our industry. We are particularly focused on critical risks, continually
seeking ways to mitigate those risks and ensuring that, when significant incidents or high-potential near-misses occur, we
thoroughly investigate the root causes of those incidents and apply the lessons learned from them broadly. We also promote a
culture where employees and managers at all levels are actively engaged in promoting safe work practices.
The areas of focus for safety for 2021 will be the continuous improvement of the EHS Team Leading Indicator KPIs which
include: Critical Risk Management – Critical Control Verifications and Inspections, Boart Longyear Integrated Training System
(“BITS”) assigned training modules, In-Vehicle Monitoring System focused on Driver Behavior Improvements, and Corrective
Action closure metrics. A competency training program will be implemented to focus on developing and documenting our entry
level employee’s abilities to perform tasks safely.
Expand our mining and minerals drilling customer base by focusing on efficiency and productivity.
We remain focused on providing our customers with a full range of drilling services offerings. Our commitment is underpinned
by initiatives to improve the efficiency and productivity with which we deliver services and information to our customers.
Specifically, our goal is to increase our business with our existing customers and find new ways to partner with existing and
potential new customers to grow our business.
Effectively manage customer relationships, pricing and contract terms. Our Global Drilling Services and Global Products
businesses have implemented rigorous internal processes to ensure our products and services reflect the full value delivered
to our customers and to solidify and create lasting customer relationships.
Create new products and respond to new opportunities within a constrained capital budget. We will continue to pursue
disciplined investments in our business to drive returns and capitalise on high-value opportunities in which we can leverage
distinctive competencies. We will also continue to pursue strategic technologies and high value-added and more profitable
activities, such as expanding our product and services offerings to provide subsurface resource information to our mining
customers through our Geological Data Services business.
Improve cash generation in 2021, with the goal to continue to be cash positive, through careful management of
liquidity and costs. Ongoing improvement in cash generation in 2021 is a primary goal for the business, which we intend to
achieve through continued disciplined expense and capital management, opportunistic cost reductions and productivity
enhancements. We will continue to drive business initiatives focused on improving our fixed and variable cost structures in
keys areas of the business and we expect these benefits to improve liquidity in 2021 and beyond. Furthermore, we will
continue to focus on process improvements, streamlined working capital management and structural changes to improve
customer support and responsiveness and drive long-term efficiencies by embedding a cash return on investment metric
throughout the organisation.
7.2 Outlook and Future Developments
We are not providing an outlook for 2021 revenue or EBITDA. However, a stronger industry outlook, in combination with our
productivity and commercial initiatives are making a positive impact. We anticipate seeing ongoing gains from those identified
initiatives which we continue to actively manage.
The mining industry is cyclical and the latter half of 2020 showed encouraging signs pointing toward a period of sustained
demand growth in commodities, underpinned by:
•
•
•
continuing trend towards green energy production and consumption, driving demand for key commodities like copper;
increased traction of electrification of the world’s vehicle fleets;
continued industrialisation and urbanisation of developing economies, which are expected to support structural
increases in demand for minerals and metals broadly in line with global GDP;
• COVID-related government stimulus programs;
•
•
•
•
improving cash and balance sheet strength of our key customers;
reduced reserve to production ratios at many gold mines;
diminishing opportunities for major producers to replace reserves through acquisition; and
growing attractiveness of the commodities / mining sector as an investment asset class.
17
BOART LONGYEAR 2020 ANNUAL REPORT
As a result, we retain confidence in our belief that natural resources companies will continue to produce throughout the cycle.
This will continue to drive the need to both replace and supplement ongoing depletion of reserves and resources, driving future
investment in exploration, development and capital spending. As the leading global drilling services provider to the mineral
industry, we continue to drive operational improvements and technological innovation across our global fleet of assets, which
we believe will continue to benefit the business through increased market opportunities.
We remain focused on our core mining markets and intend to continue to invest in growth opportunities in a selective and
disciplined manner. We will continue to invest to develop the next generation of rod-handling solutions across our range of
drilling rigs and expand the provision of subsurface resource information to our mining customers through our Geological Data
Services business. In addition, we continue to pursue operational enhancements through safety and productivity
improvements to deliver value to our customers and improve bottom line operating performance of our business.
Further information about likely developments in the operations of the Company in the future years, expected results of those
operations, and strategies of the Company and its prospects for future financial years have been omitted from this report
because disclosure of the information would be speculative or could be prejudicial to the Company.
7.3 Key Risks
The Company maintains an Enterprise Risk Management (“ERM”) system by which we systematically assess the
consequences of risk in areas such as market, health and safety, environment, finance, legal compliance, and reputation. We
also identify and track appropriate mitigation actions for identified risks. A range of material risks have been identified, as
follows, that could adversely affect the Company. These risks are not listed in order of significance, nor are they all-
encompassing. Rather, they reflect the most significant risks identified at a whole-of-entity or consolidated level.
Market Risk. The Company’s operating results, financial condition and ability to achieve shareholder returns are directly linked
to underlying market demand for drilling services and drilling products. Demand for our drilling services and products depends
in significant part upon the level of mineral exploration, production and development activities conducted by mining companies,
particularly with respect to gold, copper and other base metals. In prior years we have experienced significant declines in our
financial performance as a result of the global contraction in exploration and development spending in the commodities sector,
and the subsequent impact on our mining customers. Mineral exploration, production and development activities remain
uncertain and could remain at current levels for an extended period of time or decline even further, resulting in adverse effects
on our operating results, liquidity and financial condition.
We seek to mitigate the risk associated with volatility and weak demand conditions in our core mining markets by selectively
pursuing opportunities in other markets, such as infrastructure and geotechnical applications for our Global Products business,
and new technology offerings such as our Geological Data Services business. In addition, our business priorities include
ongoing initiatives to further improve the underlying cost structure and simplify the business. We also seek to gain market
share and expand our customer base in our core mining market by improving the efficiency and productivity with which we
deliver services and information and improve commercial practices for better alignment with our customers’ needs.
Operational Risks. The majority of our drilling contracts are either short-term or may be cancelled upon short notice by our
customers, and our products backlog is subject to cancellation. We seek to strengthen customer relationships and lessen
retention risks through active customer selection, improved commercial practices and ongoing initiatives targeted at
strengthening our operational and safety performance. We also pursue contracting practices to minimise the financial cost
associated with the termination or suspension of customer contracts or orders. The degree to which we can allocate
termination risks and obligations to our customers remain somewhat limited by industry practice.
We have implemented significant cost savings, productivity improvements and efficiencies over the past five years, but our
future operating results, financial condition and competitiveness depend on our ability to sustain previously implemented
reductions and realise additional savings and improvements from ongoing and future productivity initiatives. We may not be
able to achieve expected cost savings and operational improvements in anticipated amounts or within expected time periods,
and, if achieved, we may not be able to sustain them. Accordingly, we have implemented a project management organisation
and rigorous monitoring processes around our key operational improvement programmes to track progress against project
objectives, quantify results that are being achieved and ensure process improvements are sustainable.
Risks Related to Liquidity and Indebtedness. At 31 December 2020, our net debt was $855.1 million, with $878.6 million in
gross debt and $23.5 million of cash on hand. The Company also has an additional $36.2 million of liquidity available through
the Asset-Based Loan (“ABL”) facility. The instruments comprising the Company’s debt and their terms are set out in detail in
Note 21 of the financial statements.
18
BOART LONGYEAR 2020 ANNUAL REPORT
The annual financial report has been prepared on a going concern basis, which contemplates the realisation of assets and the
settlement of liabilities in the ordinary course of business. The Directors reaffirm that current and expected operating cash
flow, cash on hand and available drawings under the Company’s asset-based loan facility provide sufficient liquidity to meet its
debts as and when they fall due. Refer to Note 1 of the financial statements for a more detailed discussion on the Company’s
ability to continue as a going concern. The long-term solvency of the company ultimately depends on the success of the
strategic review in reducing the company's debt levels.
Tax Risk. As previously disclosed and further detailed in Note 10 of the financial statements, the Company is contesting a
series of tax audits performed by the Canada Revenue Agency (“CRA”). We also are responding to audits that are underway
or anticipated to be performed by the CRA. The resolution of existing and potential assessments by Canadian tax authorities
may adversely affect our liquidity. While the timing and resolution of the Company’s appeals of the CRA’s assessments are
uncertain, we are pursuing strategies to mitigate the risks of an adverse outcome with the assistance of our external legal and
tax counsel.
Government and Regulatory Risk. Changes in, or failure to comply with, the laws, regulations, policies or conditions of any
jurisdiction in which we conduct our business could have a material adverse effect on our financial condition, liquidity, results
of operations and cash flows. Our operations are subject to numerous laws, regulations and guidelines (including anti-bribery,
tax, health and safety, human rights and modern slavery, and environmental regulations) that could result in material liabilities
or increases in our operating costs or lead to the decline in the demand for our services or products. We therefore carefully
monitor, and educate our employees and business partners about, legal requirements and developments to make sure our
operations remain aware of applicable laws and regulations at all times. Further, we have implemented various internal and
external resources and controls to promptly detect and address any potential non-compliance.
Climate Related Risks. The potential impacts of climate change may affect the execution and performance of business
strategies as well as the Company’s ability to operate and provide goods and services globally. The Company is currently
evaluating the potential impacts of climate change on our strategies, customers and markets in which we operate. However,
an assessment of these impacts on global markets, regulatory policies, and technologies are not clear due to the wide range
of issues and potential outcomes.
Information and Technology Risk: The legal, regulatory and contractual environment surrounding information security,
privacy and fraud is constantly evolving and companies that collect and retain information are under increasing attack by
cyber-criminals around the world. We are dependent on information technology networks and systems, including the Internet,
to process, transmit and store electronic information and, in the normal course of our business, we collect and retain certain
information, including financial information and personally identifiable information, from and pertaining to our customers,
partners, vendors, and employees. The protection of data is important to us, and we have information security policies to
protect our information and information systems. However, the policies and security measures that we put in place could prove
to be inadequate and cannot guarantee security, and our information technology infrastructure may be vulnerable to criminal
cyber-attacks or data security incidents due to employee negligence, error, malfeasance, or other vulnerabilities. Cyber
security attacks are increasingly sophisticated, change frequently, and often go undetected until after an attack has been
launched. We may fail to identify these new and complex methods of attack or fail to invest sufficient resources in security
measures. We have and will continue to experience cyber-attacks, and we cannot be certain that advances in cyber-
capabilities or other developments will not compromise or breach the technology protecting our networks.
Public Health Risk: The Company’s global operations, manufacturing facilities, employees, suppliers and customers have
been and may continue to be impacted by COVID-19 related issues. As a result of the evolving nature of the COVID-19
pandemic, as at the date of these financial statements, the Company is not is a position to reasonably estimate the continued
financial effects of the COVID-19 pandemic on the future performance and financial position of the Company.
7.4 Forward Looking Statements
This report contains forward looking statements, including statements of current intention, opinion and expectation regarding
the Company’s present and future operations, possible future events and future financial prospects. While these statements
reflect expectations at the date of this report, they are, by their nature, not certain and are susceptible to change. The
Company makes no representation, assurance or guarantee as to the accuracy of or likelihood of fulfilling any such forward
looking statements (whether express or implied), and, except as required by applicable law or the Australian Securities
Exchange Listing Rules, disclaims any obligation or undertaking to publicly update such forward looking statements.
19
BOART LONGYEAR 2020 ANNUAL REPORT
REMUNERATION REPORT
This remuneration report has been prepared in accordance with section 300A of the Australian Corporations Act 2001 (Cth)
and summarises the arrangements in place for the remuneration of directors, Key Management Personnel (“KMP”) and other
employees of Boart Longyear for the period from 1 January 2020 to 31 December 2020.
Changes in 2020
Each of the changes outlined below were carefully designed to support the key strategic, financial and human resources
objectives of the Company.
COVID-19 Impact on Compensation – In response to COVID-19 and its far-reaching economic consequences, Boart
Longyear made changes to compensation levels as a means to preserve jobs during this unprecedented time, as well as to
conserve cash. As part of the cost reduction measures, the Board, CEO and all Group executives elected to temporarily
reduce their cash remuneration by 75-100% collectively from April to June of 2020.
In 2020, the Remuneration Committee recommended to the Board of Directors that an uplift be applied to calculate Corporate
Bonus Plan (“CBP”) performance measures given the extenuating circumstances created by the pandemic, which were out of
management’s control, and to recognise management’s efforts to preserve value in the business despite a changing and very
uncertain external environment.
Changes in Executive Leadership – Mr. Robert Closner, Vice President, General Counsel & Company Secretary, ceased
direct employment with the Company on 15 February 2020; however, Mr. Closner retained his role as Company Secretary
through 13 August 2020. Ms. Nora Pincus joined Boart Longyear as Chief Legal Officer, General Counsel and Company
Secretary, effective 13 August 2020. Ms. Pincus serves on the Executive Committee and reports to Mr. Jeffrey Olsen, Chief
Executive Officer.
Furthermore, Mr. Brendon Ryan, Chief Business Development Officer, ceased employment as of 14 September 2020.
Introduction of the 2020 Equity Incentive Plan – Effective 30 July 2020, shareholders approved a Long-Term Equity
Incentive Plan (“Equity Incentive Plan”). The Equity Incentive plan allows the Remuneration, Nominations and Governance
Committee (“Remuneration Committee”) to grant incentive performance stock units to senior leaders, or others, as
appropriate. This Committee establishes performance metrics that management and senior leaders will have to achieve to
vest in these stock units. The Equity Incentive Plan will terminate 10 years after the effective date of 30 July 2020. No
performance stock units were awarded under the Equity Incentive Plan during the year ended 31 December 2020.
The role of the Remunerations Committee, amongst other duties, it to provide oversight and exercise discretion in the
administration of Executive and Board compensation. Given tumultuous times in 2020 related to COVID-19 and changing
market conditions that have impacted compensation, the Remuneration Committee will be assessing management
compensation challenges and responses in order to ensure our personnel are remunerated appropriately to retain our talent.
1. 2020 REMUNERATION OVERVIEW
The following principles guide our decisions about executive remuneration at Boart Longyear:
• Performance: Drive performance consistent with Boart Longyear’s strategic objectives.
• Alignment: Create shareholder value by aligning with shareholder interests.
• Culture: Establish a culture that promotes safety, diversity, retention and employee satisfaction.
• Market: Reflect market conditions of the business, geography and industry.
This Report sets out the remuneration arrangements in place for the KMP of the Company for the purposes of the
Corporations Act and the Accounting Standards, being those persons who have authority and responsibility for planning,
directing, controlling and overseeing the activities of the Company, directly or indirectly, including the Non-Executive Directors.
20
BOART LONGYEAR 2020 ANNUAL REPORT
1.2 DIRECTORS AND SENIOR EXECUTIVES
Directors and senior executives who were KMP during the year ended 31 December 2020 were:
Directors
Position
Senior Executives Position
Kevin McArthur
Non-executive Chairman
Jeffrey Olsen
President and Chief Executive Officer
Tye Burt
Kyle Cruz
Non-executive Director
Denis Despres
Chief Operating Officer
Non-executive Director (retired 17 Jan 2020)
Miguel Desdin
Chief Financial Officer
Jason Ireland
Non-executive Director
James Kern
Non-executive Director
Nora Pincus
Chief Legal Officer, General Counsel & Company Secretary (appointed effective 13 Aug 2020)
Robert Closner
Vice President, General Counsel & Company Secretary (ceased employment 13 Aug 2020)
Rubin McDougal
Non-executive Director (appointed effective 1 Mar 2020)
Kari Plaster
Chief Human Resources Officer
Jeffrey Olsen
Executive Director
Robert Smith
Non-executive Director
Conor Tochilin
Non-executive Director (appointed effective 17 Jan 2020)
Richard Wallman
Non-executive Director (retired 29 Feb 2020)
1.3 REMUNERATION OUTCOMES
Brendan Ryan
Chief Business Development Officer (ceased employment 14 Sep 2020)
The table below summarises actual remuneration earned by senior executives who were KMP. This information is relevant as
it provides shareholders with a view of the remuneration actually paid to executives for performance for the year ended 31
December 2020. This differs from the remuneration details prepared in accordance with statutory obligations and accounting
standards, which are reported on page 29 of this Report. The remuneration calculations reported there are based on the
Accounting Standards principle of “accrual accounting” and, consequently do not necessarily reflect the amount of
compensation an executive actually realised in a particular year.
Compensation represents base salary. Short Term Incentives (“STI”) represent the cash paid in respect of the executive’s STI
award earned for the prior year’s performance but paid in the current reporting year, Long Term Incentives (“LTI cash”) refers
to cash rights granted in 2017 which vested in 2020. See table 5.4 for movements in Cash Rights. “Other” represents benefits
such as US 401(k) retirement plan contributions, car allowances, relocation pay, tax preparation service reimbursements,
accrued and unused vacation as of the date of ceased employment, sign-on bonuses and other bonuses granted and paid in
2020.
Sr. Executive Remuneration
US$
Compensation1
STI 2
LTI cash
Other
Total
Jeffrey Olsen
Denis Despres
Miguel Desdin
Nora Pincus 3
Robert Closner 4
Kari Plaster
Brendan Ryan 5
558,173
330,769
351,923
120,000
46,380
255,144
228,462
494,775
184,800
168,960
-
81,802
92,104
165,840
132,755
66,378
-
-
-
-
66,378
34,053
26,245
29,850
41,435
7,388
27,132
21,824
1,219,756
608,192
550,733
161,435
135,570
374,380
482,504
(1) Due to COVID-19, the Senior Executives agreed to reduce their compensation as follows:
• Mr. Olsen and Mr. Despres received 50% of their agreed upon compensation for the two weeks ending 10 April 2020 and did not
receive any further compensation until 2 July 2020.
• Mr. Ryan received 50% of his agreed upon compensation for the two weeks ending 10 April 2020 and subsequently received 25% of
his compensation from that date until 2 July 2020.
• Ms. Plaster and Mr. Desdin received 63% of their agreed upon compensation for the two weeks ending 10 April 2020 and
subsequently received 25% of their compensation from that date until 2 July 2020.
(2) Represents the cash paid in respect of the executive’s STI earned for the prior year’s performance but paid in the current reporting year.
For further details of the STI plan, see section 3.2.
(3) Ms. Pincus was hired on 13 August 2020, as such, her actual remuneration reflects partial year of earnings from her date of hire. Ms.
Pincus was given a $75,000 sign-on bonus that will be paid in two installments, one payment of $30,000 upon her joining the Company
and a second payment of $45,000 to be paid on her first anniversary.
(4) Mr. Closner’s direct employment with the Company ceased on 15 February 2020; however, he retained the role of Company Secretary
through 13 August 2020. Therefore, Mr. Closner’s remuneration reported above reflects his earnings from 1 January 2020 to 15 February
2020 along with 2019 STI (paid in 2020) and his accrued and unused vacation is included in the “Other” category.
(5) Mr. Ryan ceased employment on 14 September 2020.
21
BOART LONGYEAR 2020 ANNUAL REPORT
1.4 EXECUTIVE REMUNERATION STRATEGY
The Board recognises that appropriate remuneration for BLY executives and other employees is linked to the attraction,
development, performance and retention of top-level talent and human capital. Given the current economic climate and the
ongoing skills shortage, it is essential that adequate measures are in place to attract, motivate, reward and retain the required
skills. In order to meet the strategic objectives of a high-performance organisation, the remuneration philosophy is positioned
to reward strong performance and to maintain that performance over time.
The primary objectives of Boart Longyear’s policy are to:
• attract, motivate, reward and retain key talent;
• promote the organisation’s strategic objectives, within its risk appetite;
• promote positive outcomes across the geographies where we operate; and
• promote an ethical culture and behaviour that are consistent with Company values and which encourages responsible
corporate citizenship.
2. REMUNERATION FRAMEWORK AND STRATEGY
This section outlines the Company’s remuneration governance framework and strategy and explains how the Board and
Remuneration Committee make remuneration decisions that underpin the remuneration for senior executives, including the
use of external remuneration consultants.
The diagram below illustrates the primary design features of the Company’s executive remuneration strategy and how the
components of overall remuneration have been designed to support them:
Attraction and Retention
Best Practice
Fairness and Alignment
Pay for Performance
Reward packages and
Remuneration Committee
The framework
Accurate and up-to-date
market information and
information on trends is a
crucial factor in
determining the quantum
of the remuneration
packages.
Remuneration levels are
competitive with similar
roles in the markets in
which the Company
competes for talent.
Fixed and at-risk
remuneration is
appropriately industry and
market competitive.
practices reflect local and
international best practice.
There is a significant
amount of total executive
remuneration which is at-
risk and dependent upon
achieving challenging key
business objectives and
safety targets.
Performance
management assists in
indicating the overall total
rewards for each
Executive Committee
member.
Long-term incentive
compensation provides
for meaningful retention.
Compensation is relevant
and meaningful to the
executive receiving it.
The long-term incentive
component is delivered
through the Management
Incentive Plan and equity
incentive plans.
regularly performs
executive compensation
benchmarking utilising
independent
compensation
consultants.
Reward measures for
executives are aligned
with, linked to and
influenced by the interests
and strategies of the
Company and its
shareholders.
The aspiration is that our
remuneration philosophy,
policy and practices, as
well as the processes to
determine individual pay
levels are transparent.
Where performance
achievements are
subsequently found to
have been misstated,
clawback provisions are
made for redress.
encourages consistency,
and allows for
differentiation where it is
fair, rational and
explainable.
Incentive based
compensation is designed
to reward executives for
delivered performance
against important
Company, safety,
financial and strategic
objectives.
Incentive plans utilise an
appropriate mix of
challenging performance
measures designed to
deliver value to
executives when
performance is achieved
over short and longer
terms.
Incentive based
compensation provides
for upside potential with
strong performance.
22
BOART LONGYEAR 2020 ANNUAL REPORT
2.1 HOW REMUNERATION DECISIONS ARE MADE
Board Responsibility
The Board acknowledges its responsibility for the remuneration arrangements of the Executive team and ensures that those
arrangements are equitable and aligned with the long-term interests of the Company and its shareholders. In performing this
function and making decisions about executive remuneration, the Board is informed by and considers input from management
but retains independent decision-making authority. To assist in making decisions related to remuneration, the Board has
established a Remuneration Committee.
Remuneration Committee
The Remuneration Committee has been established to assist the Board with remuneration issues and is responsible for
ensuring that the Company compensates appropriately and consistently with market practices. The Remuneration Committee
also seeks to ensure that the Company’s remuneration programs and strategies will attract and retain high-calibre Directors,
executives and employees, motivate them to maximise the Company’s long-term business and create value for shareholders,
and support the Company’s remuneration related principles.
The Remuneration Committee’s responsibilities include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
reviewing strategic objectives;
reviewing, monitoring and overseeing the implementation of the executive remuneration policy;
reviewing all aspects of remuneration of the CEO and the proposed remuneration of other KMP, including any
proposed change to the terms of their employment and any proposed termination payments;
reviewing executive incentive plans, including equity-based plans and including consideration of performance
thresholds and regulatory and market requirements;
developing performance thresholds for the CEO and reviewing proposed performance thresholds for other KMP;
reviewing and approving performance achievement relative to executive incentive plans;
overseeing strategies for recruitment, retention and succession planning for Directors and key executive positions;
reviewing the composition of the Board and monitoring the performance of the Board and the Directors;
overseeing the Company’s compliance and ethics program, including compliance with legal and regulatory
requirements other than those related to accounting or financial reporting (which are the responsibility of the Audit
Committee), and from time to time, discuss with management the Company’s compliance and ethics program, as well
as the status of pending litigation and/or investigations related to the compliance hotline as well as environmental
issues and other areas of oversight, as may be appropriate;
overseeing the Company’s policies and initiatives related to Corporate, Environmental and Social Responsibility and
General Corporate Governance;
overseeing the Company’s compliance with the Code of Conduct, including periodically reviewing and updating the
Code of Conduct, and evaluating any actual or potential conflicts of interest of directors, and management’s activities
to monitor compliance with the Code of Conduct;
identifying the qualities and characteristics the Board needs and drafting recruitment plans to draw qualified board
director candidates to them;
arranging for board trainings and development; and
reviewing and implementing board policies and procedures.
The charter of the Remuneration Committee is set out in full on the Company’s website at www.boartlongyear.com.
The Remuneration Committee members as at the date of this Report are Mr. Tye Burt, Chairman of the Committee, and
Messrs. Jason Ireland and Conor Tochilin. The CEO, the Chief Human Resources Officer and other members of senior
management attend meetings of the Remuneration Committee, as appropriate, to provide information necessary for the
Remuneration Committee to discharge its duties. Individual executives do not attend or participate in discussions where
recommendations regarding their own circumstances are determined.
Use of Remuneration Consultants and/or External Advisors
Where appropriate, the Board seeks and considers advice from independent remuneration consultants and external advisors.
Remuneration consultants are engaged by, and report directly to, the Remuneration Committee and support it in assessing
market practice so that base salary and targeted short-term and long-term compensation are in line with comparable roles.
When remuneration consultants are engaged, the Remuneration Committee ensures their independence, as necessary, from
Company management in accordance with the assignment or advice being sought. Thus, the Remuneration Committee may
determine that complete independence from management is required, or it may direct the consultant to work with Company
management to obtain relevant information or input to formulate advice or recommendations to the Remuneration Committee.
23
BOART LONGYEAR 2020 ANNUAL REPORT
The Remuneration Committee has also established a formal protocol that summarises the policy and procedures the
Company has adopted to govern the relationship between the independent remuneration consultant, the Remuneration
Committee and management. The protocol was developed in compliance with the obligations under Part 2D.8 of the
Corporations Act 2001 (Cth) and ensures that the remuneration consultant remains free from any undue influence by any
member of the KMP to whom the recommendations relate. Consultant remuneration recommendations are provided directly to
the Remuneration Committee.
In 2020, the Remuneration Committee relied on the external review of Certent as subject matter experts as well as key
Centerbridge Partners in the creation of the Equity Incentive Plan. While no awards under this plan were granted in 2020, the
new plan has been communicated to relevant employees and will be administered by Certent.
In addition, the Remuneration Committee continued to rely on the independent market review of KMP compensation obtained
from Mercer Consulting. The Company also utilises the AON Radford Network, FW Cook’s Director Compensation Report
Studies, and Egon Zehnder for global rewards benchmarking, workforce metrics and analytics.
2.2 REMUNERATION COMPENSATION STRATEGY
There are several components of an executive’s total compensation opportunity: fixed compensation, short and long-term
incentives as well as non-monetary benefits.
Fixed Remuneration: guaranteed package delivered as a cash salary and mix of compulsory and discretionary benefits
reflects market-relatedness in conjunction with the individual’s background, competence and potential. This component
provides:
• A predictable base level of compensation commensurate with the executive’s scope of responsibilities, leadership
•
skills, values, performance and contributions to the Company.
Targets near the median of the competitive talent market using external benchmarking data. Since the majority of the
Company’s executives (and a majority of the executive KMP) are located in the US, the competitive talent market is
determined to be the US market.
• Variability around the median based on the experience, performance, skills, position, business unit size and/or
complexity and unique market considerations, where necessary.
Short-Term Incentive Program: creates a high-performance culture by providing a cash bonus annually. This is determined
based on role and responsibility as well as achievement against predetermined performance metrics for business and
personal goals.
•
This component of compensation is “at-risk” and earned when certain performance metrics are achieved.
•
• Key performance metrics are determined annually, in alignment with the Company’s business strategy. They include
some measure of the following (or related) metrics: cash return on investment, adjusted EBITDA, safety performance,
and individual strategic goals.
These metrics are designed to reflect corporate as well as business unit level performance. This helps to ensure
rewards are relevant and affordable as well as reflective of performance. The metrics weight performance in areas
which build and promote safety and collaboration and ensure alignment to business strategy and shareholder
interests.
Individual strategic goals can include financial, operational, strategic or project-based targets. Examples include items
such as, milestone achievement, revenue growth, cost control goals, cash flow generation, geographic expansion,
and productivity programs.
The STI is awarded in cash and will either be paid all at once, or in a staggered fashion, dependent on key business
factors at the discretion of the Board.
•
•
Long-Term Incentive Program: based on the individual’s performance and value to the business. It is achieved through
achievement and alignment with shareholder interests.
•
•
This component of compensation is “at-risk” and earned only if challenging performance metrics are achieved and/or
continued service requirements are met over a multi-year performance period.
In January of 2018, the long-term incentive plan (“LTIP”) design changed, with the termination of the LTIP and
approval of the Management Incentive Plan (“MIP”). LTIP was replaced with the new MIP. The MIP is driven by Total
Enterprise Value (“TEV”). The MIP creates value for participants when specific criteria are reached for performance
as well as time vesting. The MIP enables cash and/or share releases to participants as and when its shareholders
monetise their shareholdings at various volumes.
• Effective 30 July 2020, shareholders approved a Long-Term Equity Incentive Plan (“Equity Incentive Plan”). The
Equity Incentive plan allows the Remuneration Committee to grant incentive performance stock units to senior
leaders, or others, as appropriate. The Remuneration Committee will set performance metrics that management and
senior leaders will have to achieve to vest in the stock units. The Equity Incentive Plan will terminate 10 years after
the Effective Date. No performance stock units were awarded under the Equity Incentive Plan during the year ended
31 December 2020.
24
BOART LONGYEAR 2020 ANNUAL REPORT
Other Benefits (Monetary and Non-monetary): provided to ensure executive compensation remains relevant and executives
are well cared for.
Non-monetary Benefits include: meaningful work, access to continuous learning and professional growth, recognition and
appreciation, career advancement and in some cases flex schedules and/or tele-commuting.
Additional Monetary Benefits include: various types of insurance: D&O, life, and regionally based health and welfare insurance
for employee and family members; as well as vehicle allowances and/or other regionally based perks.
3. COMPONENTS OF EXECUTIVE REMUNERATION
Total remuneration for the CEO and senior executives is made up of fixed remuneration (consisting primarily of base salary
and superannuation contributions (or the foreign equivalent, such as the United States’ 401(k) payments) and variable “at-risk”
remuneration. The variable remuneration has two “at-risk” components:
• STI – being an annual bonus granted under the performance-related Company’s CBP; and
•
LTI – being incentives which are tied to vesting conditions, such as EBITDA performance hurdles, and TEV.
The relevant proportion of fixed to at-risk components for senior executive remuneration during 2020 are shown below. The
table illustrates the annualised remuneration mix for executive KMP, including annualised fixed salary and target STI
(assuming 100% of target bonus performance is achieved).
42%
38%
58%
62%
31%
69%
21%
22%
79%
78%
100%
80%
60%
40%
20%
0%
J E F F R E Y
O L S E N
D E N I S
D E S P R E S
MI G U E L
D E S D I N
N O R A
P I N C U S
K AR I
P L AS T E R
Fixed
At Risk STI Potential
3.1 FIXED REMUNERATION
The fixed component of executive remuneration consists primarily of base salary. Senior executives also receive other
benefits, such as a vehicle allowance. In addition, the Company contributes to retirement programs, such as the United States’
401(k) defined contribution retirement plan.
Base salaries are reviewed annually by the Remuneration Committee (or, for the CEO, by the Board) and may be adjusted as
appropriate to maintain market competitiveness and/or to make adjustments based on merit in accordance with the CEO’s
recommendation. Base salaries are benchmarked against external data.
25
BOART LONGYEAR 2020 ANNUAL REPORT
3.2 SUMMARY OF THE SHORT-TERM INCENTIVE PROGRAM
The Short-Term Incentive program, or Corporate Bonus Plan (“CBP”), provides certain employees with the potential to receive
an annual bonus if the Company meets annual financial and safety objectives, which are reviewed and approved by the
Remuneration Committee.
Potential target incentives under the CBP range between 10% and 100% of an employee’s base salary depending on the
employee’s role. The actual bonus that an employee will receive under the CBP (if any) will vary depending on the Company’s
and the individual’s performance against established annual objectives and targets, as detailed more fully below.
There are four key Company performance components: (1) cash return on investment; (2) adjusted EBITDA; (3) Safety; and
(4) an individual component. Each component has a target level of performance and a maximum stretch level of performance
whereby superior results can drive a pay-out up to 200% of that component of the bonus. All bonuses awarded under the CBP
are paid in cash.
The CBP performance components for 2020 and their relative weighting are:
(1) Corporate Financial Target - Cash Return on Investment (“CRI”) - 25% of the Company’s CBP opportunity is linked to the
Company’s CRI performance. For the purposes of calculating CRI, the last twelve month adjusted EBITDA is divided by
Gross Fixed Assets plus net working capital (“NWC”). Gross Fixed Assets plus NWC is calculated by using fixed assets
balance at the first of the year and then adding current year capital expenditures plus closing trade receivables and
closing inventory. This amount is then reduced by current year sales of fixed assets and closing trade payables.
The CRI metric was selected to ensure appropriate focus on the critical need to generate cash to fund ongoing operations
and reduce debt.
(2) Corporate Financial Target – Adjusted EBITDA - 60% of the Company’s CBP opportunity is linked to the Company’s
Adjusted EBITDA performance. For the purposes of calculating Adjusted EBITDA, Statutory EBITDA plus significant
items, impairment of assets and other significant non-restructuring transactions outside the ordinary course of business
equals Adjusted EBITDA.
(3) Corporate Non-Financial Target - Safety - 15% of the Company’s CBP opportunity is dependent upon the Company’s
overall safety performance.
The Board and management believe that a component of the CBP based on safety results appropriately focuses
Company employees on adopting safe work practices, continuously identifying ways to reduce or eliminate hazards or
unsafe behaviours and getting employees home safely every day. Further, safety is paramount to the Company’s
customers, and the Company’s ability to secure or retain work is impacted by its safety performance.
For 2020, the Board agreed on the recommendation of its Audit, Safety and Risk Committee to use TCIR, LTIR, Critical
Risk Incident Rate and a set of leading indicators as the measurements of safety performance for the CBP.
(4) Individual Strategic Objectives - 100% of the Individual Strategic Objective CBP opportunity is dependent upon
performance against strategic objectives relevant to the employee’s operational or functional responsibility. Examples of
strategic objectives may include operational or functional cost targets, geographic or targeted market segment or
customer growth, new product introductions, leadership, talent retention and development and specific project or initiative
progress. Individual objectives carry individual proportions of 100%.
Strategic objectives are utilised to reinforce continued focus on critical initiatives and operational or functional priorities
that have a positive impact on current and/or future business performance. Stretch performance on strategic objectives
can be achieved to a maximum of 200% of the weighting of this component. Depending on the nature of the objective,
stretch performance can be defined when the objective is approved at the beginning of the year, or in some
circumstances be determined by the CEO and approved by the Board at the end of the year. The Board has discretion to
modify the amount of the strategic objective award up or down as appropriate.
26
BOART LONGYEAR 2020 ANNUAL REPORT
COVID-19 impact on 2020 CBP
Financial targets for the 2020 CBP were set prior to the onset of COVID-19, which had a material, negative impact on revenue
in all regions. In the Remuneration Committee’s opinion, management’s actions to preserve value in the business, in the face
of extenuating circumstances, warranted an uplift to the CBP. Leadership took swift and difficult decisions to reduce pay
across the business. The Executive Committee took pay-cuts from April to June of 2020 ranging from 75% to 100%. They also
instituted pay-cuts across the rest of the business, trying at all times to exclude field related employees.
These COVID-19 mitigation measures were taken by management to address operational delays and shutdowns as the
pandemic spread across the globe. The measures included entering new geographies, managing capital expenditures, and
reducing operating expenses whilst supporting ongoing activities of our key customers. The objective of the measures was to
preserve liquidity whilst recognising the longer-term fundamentals of the industry. Safety and environmental values were never
compromised.
The Remuneration Committee decided to increase the CBP performance payout to a company-wide 59% (compared to a
possible 200%) to better reflect the efforts and sacrifices of employees to preserve value. This outcome recognised a
performance achievement of both the CRI and EBITDA KPI’s at a minimal level of achievement, while reflecting actual
performance on safety and environmental KPI’s.
3.3 EXECUTIVE REMUNERATION CLAWBACK POLICY
The Company has an incentive compensation clawback policy applicable to current and former senior executives, including
the KMP listed in this report, as well as any other management of the Company who participated in the Company’s incentive
compensation plans. The policy is applicable to incentive compensation including bonuses, awards or grants of cash or equity
under any of the Company’s short or long-term incentive or bonus plans where bonuses, awards or grants are based in whole
or in part on the achievement of financial results. If the Board determines that a covered employee was overpaid as a result of
his or her fraud or willful misconduct that requires a restatement of the reported financial results, the Board may seek to
recover the amount of the overpayment by a repayment or through a reduction or cancellation of outstanding future bonus or
awards. The Board can make determinations of overpayment at any time through the third fiscal year following the year for
which the inaccurate performance criteria were measured.
4. PERFORMANCE AND RISK ALIGNMENT
Below is a summary of the year-over-year operating performance which underpins the compensation program.
Net debt excludes the impact of recapitalisation transactions, letters of credit, CRA & IRS obligations, strategic asset
acquisitions and disposals, equity raise, and potential asset backed loans. Dividends per share are calculated as basic EPS
divided by closing share price.
Financial
Year
Closing
Share Price1
$A
Dividend
p/share
US$
2020
2019
2018
2017
2016
0.43
1.63
1.20
3.00
37.50
-
-
-
-
-
EPS % 2
(343.3%)
(56.7%)
(69.8%)
(210.2%)
(185.6%)
Revenue
US$ millions
Adj. EBITDA 3
US$ millions
CRI
ROE 2
Net Debt
US$ millions 2
657
745
770
739
642
60
87
81
43
32
7.2%
(23.2%)
10.2% (16.1%)
(16.6%)
(50.6%)
(60.6%)
9.6%
4.8%
3.2%
855
781
689
600
681
(1) On 30 October 2019 the Company completed a consolidation of the issued capital on a basis that every 300 shares be consolidated into
1 share. Closing share price for each year has been adjusted for the share consolidation.
(2) The comparative information has been restated as a result of additional accreted interest recorded on the Senior Secured Notes as
discussed in Note 1.
(3) Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation, and before significant and other non-recurring items.
27
BOART LONGYEAR 2020 ANNUAL REPORT
4.1 PERFORMANCE AGAINST SHORT-TERM INCENTIVE MEASURES
As noted above, a combination of financial and non-financial measures are used to measure performance for STI awards.
Business and individual performance against those measures was measured on a weighted average basis. The average
proportion of STI awarded to KMPs, 2016 through 2020, is below:
% of target STI awarded
2016
90%
2017
53%
2018
103%
2019
72%
2020
65%
STI earned during the year ended 31 December 2020:
STI Earned in 2020
STI Earned
as % of
Target 1
STI Earned
US$
Target STI
US$
% of STI
Forfeited
Jeffrey Olsen
Denis Despres
Miguel Desdin
Nora Pincus 3
Kari Plaster
59%
74%
65%
65%
61%
398,250
206,500
155,760
32,450
70,493
675,000
280,000
240,000
50,000
116,000
41%
26%
35%
35%
39%
% of Max
STI
Forfeited 2
71%
63%
68%
68%
70%
(1) Calculated by multiplying the Individual Strategic Objective percentage achieved by the company-wide CBP performance payout of 59%.
(2) The maximum potential award assuming superior performance against all CBP metrics is 200% of target STI.
(3) Ms. Pincus’ earned STI was prorated from her start date of 13 August 2020 to 31 December 2020.
4.2 EMPLOYEE AND DIRECTOR TRADING IN COMPANY SECURITIES
Under the Company’s Securities Trading Policy, Directors and employees (including senior executives) are prohibited from
entering into transactions that limit the economic risk of holding unvested rights or options that have been received as part of
their remuneration. The Company treats compliance with this policy as a serious issue and takes appropriate measures to
ensure the policy is adhered to, including imposing appropriate sanctions where an employee is found to have breached the
policy.
Further restrictions also apply to Directors and senior executives with respect to their dealing in the Company’s shares and
other securities under the Securities Trading Policy, which may be found in the Corporate Governance section on the
Company website at www.boartlongyear.com.
28
BOART LONGYEAR 2020 ANNUAL REPORT
5. EXECUTIVE REMUNERATION IN DETAIL
Details of each senior executive’s remuneration during the years ended 31 December 2020 and 2019 are set out in the table
below. The remuneration calculations reported in this table are based on the Accounting Standards principle of “accrual
accounting” and, consequently do not necessarily reflect the amount of compensation an executive actually realised in a
particular year.
Short term benefits 1
Post-employment benefits
Other long-term benefits
Termination Benefits
Cash-based compensation
Compensation2
US$
532,212
675,000
315,385
400,000
336,539
384,616
Annual
bonus 3
US$
398,250
494,775
206,500
184,800
155,760
168,960
Other 4
US$
25,803
31,319
19,495
189,511
21,600
241,227
120,000
32,450
38,320
46,380
263,609
243,990
290,000
213,077
400,000
-
81,802
70,493
92,104
-
165,840
3,249
24,968
21,739
20,800
15,200
20,948
Jeffrey Olsen
2020
2019
Denis Despres
2020
2019
Miguel Desdin
2020
2019
Nora Pincus 7
2020
Robert Closner 8
2020
2019
Kari Plaster
2020
2019
Brendan Ryan 9
2020
2019
Super-
annuation
benefits 5
US$
Other
US$
Retention
Cash Rights6
US$
Perform-ance
Cash Rights
US$
Temination
US$
Other
US$
Total
US$
8,250
8,250
6,750
8,250
8,250
8,250
3,115
-
-
5,392
8,250
6,624
8,250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
550,685
-
-
-
-
-
-
77,439
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,139
-
-
-
-
-
964,515
1,760,029
548,129
782,561
522,149
803,053
193,885
53,768
447,818
341,615
411,154
234,901
595,038
(1) There were no non-monetary benefits provided.
(2) Compensation for 2020 was reduced for an agreed upon plan for COVID-19 effects. See more detail in Senior Executive Remuneration
table on page 21 and also in the Changes in 2020 on page 20.
(3) The 2020 amount represents cash STI payments earned by the executive during the year ended 31 December 2020, which are expected
to be paid in 2021 and were approved by the Board in February 2021. The 2019 amount represents cash STI payments earned by the
executive during the year ended 31 December 2019, which were paid in 2020.
Includes sign-on bonuses, automotive allowances, relocation and reimbursements of financial and tax preparation assistance.
Includes 401(k) plan matching contributions made by the employing entity in the United States.
In March 2017, Mr. Olsen, Mr. Despres, and Mr. Ryan received long-term retention cash rights. These vested and were paid during 2020.
(4)
(5)
(6)
(7) Ms. Pincus was hired on 13 August 2020, as such her reported remuneration received reflects a partial year of earnings from her date of
hire. The “Other” column includes the first of her two part sign-on bonuses of $30,000. (Ms. Pincus will receive an additional amount of
$45,000 on the anniversary of her hire date).
(8) Mr. Closner’s direct employment with the Company ceased on 15 February 2020 but he retained the role of Company Secretary through
13 August 2020. Therefore, Mr. Closner’s remuneration reported above reflects his earnings from 1 January 2020 to 15 February 2020.
The amount in Mr. Closner’s “Termination Benefits - Other” represents the payment for accrued and unused vacation for 2020.
(9) Mr. Ryan ceased employment on 14 September 2020.
29
BOART LONGYEAR 2020 ANNUAL REPORT
5.1 SERVICE CONTRACTS AND TERMINATION PROVISIONS
Name and
position held at
the end of the
financial year
Duration
of
contract
Notice
period by
Company
Notice
period by
executive
Chief Executive
Officer
No fixed
term
None
required
180 days
No fixed
term
None
required
90 days
No fixed
term
None
required
90 days
Chief Legal
Officer, General
Counsel and
Company
Secretary
Chief Financial
Officer;
Chief Human
Resources
Officer;
Chief Operating
Officer
Termination payments (where these are in addition to
statutory entitlements)
For termination with cause, statutory entitlements only
For termination without cause:
• 12 months’ salary
• Pro-rata bonus to termination date
• Waiver of medical insurance premiums for 12 months
For termination with cause, statutory entitlements only
For termination without cause:
• One month per year of service with a minimum of 12
months and a maximum of 24 months.
• Pro-rata bonus to termination date
• Waiver of medical insurance premiums for 12 months
For termination with cause, statutory entitlements only
For termination without cause:
• 12 months’ salary
• Pro-rata bonus to termination date
• Waiver of medical insurance premiums for 12 months
The executive employment contracts listed above contain a twelve-month non-competition and non-solicitation covenant in the
Company’s favour. The Company may, at its option, extend the term of the covenants upon an executive’s termination of
employment for up to an additional twelve months in exchange for monthly payments of the executive’s base salary at the time
of termination for the term of the extension.
5.2 SPECIAL STRATEGIC RETENTION AWARDS FOR KEY EMPLOYEES (including the KMP)
In 2018, the Board approved a one-time additional bonus incentive for certain members of senior leadership. This performance
bonus was payable upon the Company achieving specific performance metrics for the fiscal year ending 2020. As these
performance metrics weren’t achieved as of 31 December 2020, there will be no distributions to KMPs as a result of this
incentive award. Therefore, the Company did not recognise an expense or accrue a liability for this one-time bonus incentive.
30
BOART LONGYEAR 2020 ANNUAL REPORT
5.3 SHARE HOLDINGS
Shareholdings as at the end of the financial year and activity during the financial year, are as follows:
Balance
1 January 2020
Granted as
remuneration
Net other change
during year
Cessation as Executive
& Non-executive Director
Balance
31 December 2020
Balance
held nominally
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Kevin McArthur
Tye Burt
Kyle Cruz 1
Jason Ireland
James Kern
Rubin McDougal 2
Robert Smith
Conor Tochilin 3
Richard Wallman 4
Jeffrey Olsen
Denis Despres
Miguel Desdin
Nora Pincus 5
Robert Closner 6
Kari Plaster
Brendan Ryan 7
-
-
-
23,731
202,602
-
23,731
-
534,203
271,872
65,778
65,282
-
286
10,425
61,464
428,796
260,851
-
-
-
165,835
-
-
-
-
-
-
-
-
-
-
(1) Mr. Cruz retired 17 January 2020.
(2) Mr. McDougal was appointed effective 1 March 2020.
(3) Mr. Tochilin was appointed effective 17 January 2020.
(4) Mr. Wallman retired 29 February 2020.
(5) Ms. Pincus appointed effective 13 August 2020.
(6) Mr. Closner ceased employment effective 13 August 2020.
(7) Mr. Ryan ceased employment effective 14 September 2020.
5.4 CASH RIGHTS
-
-
-
-
-
-
-
-
(534,203)
-
-
-
-
(286)
-
(61,464)
428,796
260,851
-
23,731
202,602
165,835
23,731
-
-
271,872
65,778
65,282
-
-
10,425
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Cash rights as at the end of the financial year, and activity during the year, are as follows:
Name
Jeffrey Olsen
Brendan Ryan
Robert Closner
Denis Despres
Grant
date
15-Mar-17
15-Mar-17
15-Mar-17
Vesting date
15-Mar-20
15-Mar-20
15-Mar-20
15-Mar-17
15-Mar-20
Held at the
beginning of
the financial
year
Number of
Cash Rights
granted as
remuneration
Number of
Cash
Rights
vested 1
Value of
Cash Rights
vested
US$ 1
132,755
66,378
7,965
66,378
-
-
-
-
132,755
66,378
-
66,378
132,755
66,378
-
66,378
Number of
Cash Rights
forfeited
-
-
7,965
-
Value of
Cash
Rights
forfeited
US$
Held at the
end of the
financial year
-
-
7,965
-
-
-
-
-
(1) On 31 December 2017 the LTIP ceased. At that time, retention-based awards under the LTIP were calculated on a pro-rata basis as of
31 December 2017 and employees agreed to be paid the pro-rata retention-based awards on the original payment date per the award
agreement.
5.5 SHARE RIGHTS
At 31 December 2018, Robert Closner held 126,530 retention share rights. The rights were granted on 1 July 2015 and vested
on 15 March 2019. Robert received $385 in cash in consideration for his share rights. There were no outstanding share rights
as at 31 December 2019 or 31 December 2020.
31
BOART LONGYEAR 2020 ANNUAL REPORT
5.6 OPTIONS
Name
Effective
grant
date
Vesting
date
Fair Value
per Option
at Grant
Date
USD$
Held at the
beginning of
the financial
year
Number of
options granted
as remuneration
Jeffrey Olsen
1-Apr-14
1-Apr-17
0.25
1,081
-
Exercise
price per
option
USD$
96.00
Number of
options
forfeited
Options held at
the end of the
financial year
Vested and
exercisable
as at 31 Dec
2020
-
1,081
1,081
The options listed above vested on 1 April 2017 and expire on 1 April 2024.
6. NON-EXECUTIVE DIRECTORS’ FEE STRUCTURE
Non-Executive Directors (“NED”) are remunerated by a fixed annual base fee with additional fees paid for serving on Board
committees. NED who are also employees of Centerbridge or Ascribe do not receive any Director fees. The Chairman may
attend any committee meetings but does not receive any additional committee fees in addition to base fees.
The fees are determined within a maximum aggregate fee pool that is approved by shareholders. The approved fee pool limit
is US$2.0 million, which aside from changing the currency exchange rate at the 2015 general meeting, has not changed in
quantum since the Company’s initial public offering in 2007. During the financial year, US$1.0 million of the pool was utilised
for Non-Executive Director fees, being approximately 50% of the fee pool limit.
No share rights were awarded as remuneration in 2020.
6.1 COMPONENTS OF NON-EXECUTIVE DIRECTOR REMUNERATION
Component
Explanation
Board fees
Current base fees per annum are:
• US$160,000 for Non-Executive Directors other than the Chairman of the Board and the
resident Australian Directors;
• US$300,000 for the Board Chairman (paid in cash and shares); and
• AUD$200,000 for the resident Australian Directors.
Committee fees Current committee fees for Non-Executive Directors (other than the Chairman of the Board) are:
• US$7,500 annually for committee members; and
• US$15,000 annually for committee chairs.
Where the Board Chairman sits on a committee, he or she does not receive any additional fee.
Other
fees/benefits
Non-Executive Directors are entitled to be reimbursed for all reasonable out-of-pocket expenses
incurred in carrying out their duties, including travel costs. The Chairman of the Board also is
entitled to reimbursement for office and secretarial support.
Non-Executive Directors may also, with the approval of the Board, be paid additional fees for extra
services or special exertions for the benefit of the Company.
Non-Executive Directors are not entitled to receive any performance-related remuneration, such as
short-term or long-term incentives.
Post-
employment
benefits
Compulsory superannuation contributions for Australian-resident Non-Executive Directors are
included in the base fee and additional committee fees set out above.
Non-Executive Directors do not receive any retirement benefits other than statutory superannuation
contributions.
32
BOART LONGYEAR 2020 ANNUAL REPORT
6.2 REMUNERATION PAID TO NON-EXECUTIVE DIRECTORS
Details of Non-Executive Directors’ remuneration for the year ended 31 December 2020 and 2019 are set out in the table
below.
Non Executive Directors
Remuneration
US$
Marcus Randolph
2019 (up to 1 September 2019)
Kevin McArthur
Fees 1 (Including
committee fees)
Superannuation
Contributions
Shares
Total
319,983
2
1,154
-
321,137
2020
2019
Tye Burt
2020
2019
Jason Ireland
2020
2019
James Kern
2020
2019
Rubin McDougal
2020
Robert Smith
2020
2019
Richard Wallman
2020 (up to 29 February 2020)
2019
118,750
62,500
95,052
41,946
110,915
139,057
132,604
167,500
83,854
110,530
138,410
29,167
175,000
-
-
-
-
-
-
-
-
-
-
-
-
-
150,000
3
37,500
68,437
22,813
-
-
-
-
268,750
100,000
163,489
64,759
110,915
139,057
132,604
167,500
43,752
127,606
-
-
-
-
110,530
138,410
29,167
175,000
Mr. Cruz and Mr. Tochilin are not included in the table above as they are employees of Centerbridge Partners and therefore
did not receive Director fees.
(1) All Non-executive Directors agreed to receive no fees for the months of April and May and half of their fees for the month of June due to
COVID-19. Fees paid in shares were not reduced during 2020.
(2) Mr. Randolph’s remuneration for 2019 includes director fees of $225,000 and cash salary of $94,983 up to 1 September 2019 (date
retired).
(3) Mr. McArthur has received issued shares for $112,500 of his Board fees earned in 2020. The remaining $37,500 of the fees to be paid in
shares have been earned and Mr. McArthur is entitled to the shares as of 31 December 2020; however, the shares will not be issued until
he leaves the Board, as determined by an agreement between Mr. McArthur and the Company.
33
BOART LONGYEAR 2020 ANNUAL REPORT
Board of Directors
A brief summary of the Directors’ work experience and qualifications is as follows.
Kevin McArthur
Kevin McArthur was appointed as a Director of the Company and Chairman of the Board on 1 September 2019. As Chairman
of the Board, Mr. McArthur brings more than 35-years’ experience in the global mining industry and over 20 years in CEO and
Director positions. Most recently he held roles as the Founder, President and CEO of Tahoe Resources Inc. and prior to that
was the President & CEO of Goldcorp Inc.
Mr. McArthur is a graduate of the University of Nevada where he received a Bachelor of Mining Engineering.
Tye Burt
Tye Burt was appointed as a Director of the Company on 23 August 2019. Mr. Burt is Chair of the Company’s Remuneration
Committee and is a member of the Audit Safety and Risk Committee. Mr. Burt’s career includes more than 30-years’
experience in the global mining and finance industries in both executive management roles and serving on several boards.
From 2005 to 2012, Mr. Burt held the role of President and CEO of Kinross Gold Corporation. Prior to joining Kinross Gold, Mr.
Burt held the position of Vice Chairman and Executive Director of Corporate Development at Barrick Gold Corporation. Other
previous positions include: Chairman, Deutsche Bank Canada and Deutsche Bank Securities Canada; global Managing
Director, global metals and mining for Deutsche Bank AG; and Managing Director and Co-head of the global mining group at
BMO Nesbitt Burns.
Mr. Burt is a graduate of Osgoode Hall Law School in Toronto and a member of the Law Society of Ontario. He holds a
Bachelor of Arts from the University of Guelph.
Jason Ireland
Jason Ireland was appointed as a Director of the Company on 1 September 2017. He is a member of the Remuneration
Committee. Mr. Ireland is based in Sydney, Australia and is a Partner of McGrathNicol. He has over 25 years of experience in
strategic reviews and implementation of performance improvement and restructuring initiatives across a range of industries. In
the past ten years, he has spent considerable time in the mining services sector, advising boards and financiers on operations
in key mining regions around the world. Prior to joining McGrathNicol in 2005, Mr. Ireland was a Senior Manager at KPMG.
Mr. Ireland holds a Bachelor of Business from Charles Sturt University and is a member of Chartered Accountants Australia
and New Zealand and a Registered Liquidator.
James Kern
James Kern was appointed as a Director of the Company on 20 February 2018. He is a member of the Audit, Safety & Risk
Committee. Mr. Kern has served as Managing partner of Majestic Ventures 1 LLC, a consulting and investment partnership
focused on early stage growth companies, since 2014. In addition, he currently serves on boards of THL Credit Inc.
(NASDAQ), a middle market lending company, and Basic Energy Services (NYSE), an oilfield services company.
From 2010 to 2014, Mr. Kern was a Managing Director at Nomura Securities, serving as Head of Global Finance Financial
Institution Group (“FIG”) and Specialty Finance Investment Banking for the Americas. He previously served as Managing
Director at J.P. Morgan securities within the FIG practice and was focused on Asset Management and Specialty Finance
clients. From 1994-2008, he was a Senior Managing Director at Bear Stearns, where he held several positions, including Head
of Strategic Finance-FIG, head of Corporate Derivatives and was a founding member of the firm’s Structured Equity Products
group.
Mr. Kern has a B.S. from the Marshall School of Business at the University of Southern California.
Rubin McDougal
Rubin McDougal was appointed as a Director of the Company on 1 March 2020. Mr. McDougal joins the Board having served
on previous public and private company boards and has held both Audit and Risk Committee Chair positions. Mr. McDougal is
the Chair of the Company’s Audit, Safety and Risk Committee. He has also held several international company senior finance
positions including Chief Financial Officer positions.
Mr. McDougal has a master’s degree in Business Administration from Western Michigan University and a Bachelor of Arts in
Marketing from the University of Utah.
34
BOART LONGYEAR 2020 ANNUAL REPORT
Jeffrey Olsen
Jeffrey Olsen was appointed President and Chief Executive Officer on 1 March 2016 after serving as Chief Financial Officer
since 2014. Before joining Boart Longyear, he served as Chief Commercial Officer for Rio Tinto’s Iron & Titanium business
since 2010. Prior to that time, he was Chief Financial Officer for Rio Tinto’s Borax and Minerals divisions for approximately
eight years and held other financial roles at Rio Tinto. Mr. Olsen’s experience also includes financial roles at General Chemical
Corporation and Xerox Corporation in the United States.
Mr. Olsen holds a Bachelor of Arts degree from the University of Utah and a Master of Business Administration from the Simon
School of Business at the University of Rochester.
Robert Smith
Robert Smith was appointed as a Director of the Company on 1 September 2017. He is a member of the Audit, Safety & Risk
Committee. Mr. Smith is a Partner of McGrathNicol. Based in Melbourne, Australia, he specialises in business restructuring
and performance improvement and has led numerous complex assignments often involving prominent listed entities and/or
multi-lender banking syndicates. Mr. Smith’s experience covers a wide variety of industries, including mining and mining
services, energy, power and utilities, manufacturing, retail, media, information technology and financial services. Prior to
joining McGrathNicol in 2009, Mr. Smith was an Associate Director in Ernst & Young’s Transaction and Assurance divisions.
Mr. Smith began his career as an accountant with Arthur Andersen.
Mr. Smith is a member of Chartered Accountants Australia and New Zealand, a Member of the Australian Institute of Company
Directors and a Registered Liquidator. He holds a Bachelor of Commerce from the University of Melbourne and a Graduate
Diploma in Applied Finance and Investment.
Conor Tochilin
Conor Tochilin was appointed as a Director of the Company on 17 January 2020. Mr. Tochilin is a Managing Director at
Centerbridge Partners, L.P., a major shareholder in the Company. Centerbridge Partners, L.P. manages approximately $29
billion of assets with a focus on credit, special situations, and private equity. Prior to joining Centerbridge Partners, L.P., Mr.
Tochilin was an Associate at TPG-Axon Capital Management in New York and London and a Business Analyst in McKinsey’s
Corporate Finance Practice in New York.
Mr. Tochilin holds an A.B. in Economics and Philosophy, magna cum laude, from Harvard College, where he was elected to
Phi Beta Kappa, a J.D. from Harvard Law School, and an M.B.A. from Harvard Business School.
Company Secretaries
Robert Closner
Robert Closner was appointed Vice President, General Counsel in October 2017 and later appointed as Company Secretary
on 7 December 2017. He began his career as an associate at one of the leading law firms in Toronto, Canada and prior to
joining Boart Longyear served as the General Counsel and Corporate Secretary of Ivernia Inc. Since joining the Company in
2008, Mr. Closner has served in several key leadership positions including Regional General Counsel, responsible for the
Americas where he oversaw compliance matters, provided legal guidance and corporate commercial support. Prior to his Vice
President appointment, Mr. Closner held the position of Interim Chief Commercial Officer. Mr. Closner ceased employment on
15 February 2020 and was formally released from his role of Company Secretary on 13 August 2020.
Nora Pincus
Nora Pincus joined Boart Longyear as Chief Legal Officer, General Counsel and Company Secretary replacing Mr. Robert
Closner, with effect from 13 August 2020.
Ms. Pincus is an experienced corporate attorney whose practice prior to joining Boart Longyear focused on representing
domestic and international mining and energy companies in operational matters, mergers and acquisitions, financings and
capital market transactions. Prior to joining Boart Longyear, Ms. Pincus was a partner at the law firms Dorsey & Whitney and
Parsons Behle and Latimer.
Ms. Pincus holds a Bachelor of Arts in history and economics from the University of Utah and a Juris Doctorate from the
University of Denver.
Philip Mackey
Philip Mackey was appointed Company Secretary on 29 January 2016. He has over three decades of company secretarial and
commercial experience and is a member of the Company Matters’ secretariat team. Previously, he served as Company
Secretary of ASX & SGX dual listed Australand Group Limited and Deputy Company Secretary of AMP Limited. Mr. Mackey’s
commercial experience includes appointment as Chief Operating Officer (Specialised Funds) of Babcock & Brown and at
Bressan Group. He is a Fellow of Governance Institute Australia and a Graduate Member of the Australian Institute of
Company Directors.
35
BOART LONGYEAR 2020 ANNUAL REPORT
DIRECTORS’ MEETINGS
The following tables set out for each Director the number of meetings (including meetings of Board committees) held and the
number of meetings attended during the financial year while he/she was a Director or committee member. The tables do not
reflect the Directors’ attendance at committee meetings in an “ex-officio” capacity. The tables also do not reflect special or
informal meetings of the Board or its committees.
Board of
Directors
Held
Attended
Remuneration, Nominations
Audit, Safety
& Governance Committee
Attended
Held
& Risk Committee
Held
Attended
7
7
7
7
7
7
4
4
3
4
1
4
4
3
4
1
Tye Burt
Kyle Cruz 1
Jason Ireland
James Kern
Kevin McArthur
Rubin McDougal 2
Robert Smith
Conor Tochilin 3
Richard Wallman 4
Jeffrey Olsen
6
6
6
6
5
6
6
6
6
6
6
6
5
6
6
6
(1) Mr. Cruz retired 17 January 2020
(2) Mr. McDougal was appointed effective 1 March 2020
(3) Mr. Tochilin was appointed effective 17 January 2020
(4) Mr. Wallman retired 29 February 2020
DIRECTORS’ SHAREHOLDINGS
The following table sets out each Director’s relevant interest in shares, debentures, and rights or options over shares or
debentures of the Company or a related body corporate as at the date of this report.
Kevin McArthur
Tye Burt
Jason Ireland
James Kern
Rubin McDougal
Jeffrey Olsen
Robert Smith
Conor Tochilin
Fully paid
Rights offering
ordinary shares ordinary shares
Rights and
options
428,796
260,851
23,731
202,602
165,835
271,872
23,731
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,081
-
-
Total
428,796
260,851
23,731
202,602
165,835
272,953
23,731
-
The Board adopted a Non-Executive Director shareholding guideline which recommends that Non-Executive Directors acquire
and hold at least 30,000 Company shares within five years of their appointment. The target share amount was established to
be roughly equivalent to one year’s Directors’ fees and was based on the value of the Company shares at the time. The target
shareholding amount may be adjusted from time to time to track movements in the Company’s share price.
36
BOART LONGYEAR 2020 ANNUAL REPORT
GRANTS OF SHARES, RIGHTS OVER SHARES AND OPTIONS GRANTED TO DIRECTORS AND EXECUTIVES
At the Annual General Meeting of Shareholders held in May 2018, shareholders approved a Non-Executive Director share
purchase plan (the “NED Share Plan”) which allows current and future Non-Executive Directors to elect to receive up to 100%
of their director fees in shares in the Company in lieu of cash payments. The election of Non-Executive Directors to receive all
or a portion of their compensation in shares of the Company in lieu of cash pursuant to the NED Share Plan does not result in
any additional remuneration for the Non-Executive Directors. It is merely a mechanism for the Non-Executive Directors to elect
to invest some of the fees to which they are otherwise entitled in the Company.
If a Director elects to participate in the NED Share Plan, NED Shares are issued quarterly (or at other intervals in compliance
with insider trading laws and the requirements of the Company’s Securities Trading Policy) at predetermined dates throughout
the year. Following issue, Non-Executive Directors are not able to deal in the shares for a 12-month period. After this period,
they will be free to deal in the shares subject to the Company’s Securities Trading Policy and any minimum shareholding
requirements adopted by the Board.
The number of NED Shares to be allocated to Non-Executive Directors who elect to participate in the NED Share Plan each
quarter is calculated by dividing the amount of director's fees which the relevant Non-Executive Director has elected to
contribute to the NED Share Plan by the arithmetic average of the daily volume weighted average sale price of the Company’s
shares sold on ASX on the ordinary course of trading during the five trading days preceding the issue date of the shares.
During 2020, Mr. McArthur, Mr. Burt and Mr. McDougal participated in the NED Share Plan and received $150,000, $68,437,
and $43,753 of their director compensation in shares, respectively. The shares for $37,500 of Mr. McArthur’s fees will be
issued when Mr. McArthur leaves the Board.
During 2019, Mr. McArthur and Mr. Burt participated in the NED Share Plan and received $37,500 and $22,813 of their
director compensation in shares, respectively. The shares for these fees were issued in 2020.
Shares and rights granted to executives of the Company are included in the Remuneration Report. As of 31 December 2020,
Mr. Olsen held 1,081 of vested options. The options were granted on 1 April 2014 and vested on 1 April 2017. They have an
exercise price of $96 USD and expire on 1 April 2024. No shares or interests have been issued during the financial year as a
result of the exercise of options.
DIRECTORS’ AND OFFICERS’ INTERESTS IN CONTRACTS
Except as noted herein, no contracts involving Directors’ or officers’ interests existed during, or were entered into, since the
end of the financial year other than the transactions detailed in the financial statements.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND AUDITORS
The Directors and officers of the Company are indemnified by the Company to the maximum extent permitted by law against
liabilities incurred in their respective capacities as Directors or officers. In addition, during the financial year, the Company paid
premiums in respect of contracts insuring the Directors and officers of the Company and any related body against liabilities
incurred by them to the extent permitted by the Corporations Act 2001 (Cth). The insurance contracts prohibit disclosure of the
nature of the liability and the amount of the premium.
The Company has not paid any premiums in respect of any contract insuring Deloitte Touche Tohmatsu against a liability
incurred in the role as an auditor of the Company.
37
BOART LONGYEAR 2020 ANNUAL REPORT
EXECUTIVE MANAGEMENT TEAM
Jeffrey Olsen
Jeffrey Olsen’s experience and qualifications are summarised on page 35.
Miguel Desdin
Miguel Desdin was appointed the Company’s Chief Financial Officer in January 2019. Prior to joining Boart Longyear Mr.
Desdin served seven years as CFO and Senior Vice President of TPC Group, a two-billion-dollar chemical company based in
Houston, Texas where he also served as interim CEO. Previous to that, Mr. Desdin served as Senior Vice President and Chief
Financial Officer of Furmanite Corporation, and Corporate Controller of Celanese Corporation. Mr. Desdin’s career has led him
through several key executive and financial roles within the industrial chemicals and related industries including working for
Great Lakes Chemical Corporation and AlliedSignal, Inc. where he began his career in finance.
He earned his MBA in Finance from the Wharton School at the University of Pennsylvania, and a Bachelor of Science in
Industrial and Systems Engineering from the University of Florida.
Denis Despres
Denis Despres was appointed the Company’s Chief Operating Officer on 1 September 2016. He began his career with Boart
Longyear in 1981 and held various positions with progressive responsibility in the Company’s Drilling Services and Products
divisions over the next 26 years, including as Senior VP, Drilling Services. After leaving Boart Longyear in 2007, Mr. Despres
founded his own drilling business, which was acquired by Major Drilling in 2010. He most recently served as Major’s Chief
Operating Officer prior to rejoining Boart Longyear.
Mr. Despres studied in Ontario, Canada, and received a diploma in Mechanical Engineering Technology from Algonquin
College, a Bachelor of Engineering from Lakehead University and a Master of Business Administration from Queen’s
University, all of which are in Ontario, Canada.
Nora Pincus
Nora Pincus’ experience and qualifications are summarised on page 35.
Kari Plaster
Kari Plaster was appointed Chief Human Resources Officer on 30 October 2017. Most recently, Ms. Plaster served as CEO
and Founder of Kindling Potential, a private coaching and consulting business using brain-based strategies to help businesses
and people to thrive. Prior to this, Ms. Plaster held several senior HR roles within Rio Tinto including General Manager,
Leadership Model; VP HR, HSE Governance and External Relations; and Americas Director, Capability Development. She
has worked in many different locations and businesses including Kennecott Utah Copper, US Borax and Iron Ore Company of
Canada.
Ms. Plaster holds a Bachelor of Science Degree from Boise State University in Criminal Justice Administration and has
designed and attended several senior leadership programs for Rio Tinto in cooperation with Duke’s Corporate Education
Programs.
38
BOART LONGYEAR 2020 ANNUAL REPORT
AUDITOR
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is included on page 41 of this report.
NON-AUDIT SERVICES
Details of amounts paid or payable for non-audit services provided during the year by the auditor are outlined in Note 7 to the
financial statements.
The auditor of Boart Longyear Limited is Deloitte Touche Tohmatsu. The Company has employed Deloitte Touche Tohmatsu
on assignments additional to their audit duties where their expertise and experience with the Company are important. These
assignments principally have been related to tax advice and tax compliance services, the magnitude of which is impacted by
the global reach of the Company.
The Company and its Audit, Safety & Risk Committee (“Audit Committee”) are committed to ensuring the independence of the
external auditor. Accordingly, significant scrutiny is given to non-audit engagements of the external auditor. The Company has
a formal pre-approval policy that requires the pre-approval of non-audit services by the Chairman of the Audit Committee.
Additionally, the total annual fees for such non-audit services cannot exceed the auditor’s annual audit fees without the
approval of the Audit Committee. The Audit Committee believes that the combination of these two approaches results in an
effective procedure to control services performed by the external auditor.
None of the services performed by the auditor undermine the general principles relating to auditor independence as set out in
Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical
Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity
for the Company, acting as an advocate for the Company or jointly sharing economic risks and rewards.
The Directors are satisfied that the provision of non-audit services during the year by the auditor (or by another person or firm
on the auditor’s behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act
2001 (Cth) and are of the opinion that the services, as disclosed in Note 7 to the financial statements, do not compromise the
external auditor’s independence.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to
which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those
proceedings.
ROUNDING OF AMOUNTS
Boart Longyear Limited is a company of a kind referred to in ASIC Corporations (Rounding in Financial / Directors’ Report)
Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to the “rounding off” of
amounts in the Directors’ Report and Financial Report. Amounts in the Directors’ Report and the Financial Report are
presented in US dollars and have been rounded off to the nearest thousand dollars in accordance with that Instrument, unless
otherwise indicated.
39
BOART LONGYEAR 2020 ANNUAL REPORT
REMUNERATION
The Remuneration Report is included beginning at page 20 and forms part of this Directors’ Report.
Signed in accordance with a resolution of the Directors.
On behalf of the Directors
Kevin McArthur
Chairman
26 February 2021
40
BOART LONGYEAR 2020 ANNUAL REPORT
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
The Directors
Boart Longyear Limited
26 Butler Boulevard
Adelaide Airport SA 5650
Australia
26 February 2021
Dear Directors
Boart Longyear Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration
of independence to the directors of Boart Longyear Limited.
As lead audit partner for the audit of the financial report of Boart Longyear Limited for the financial year ended
31 December 2020, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
A T Richards
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
41
41
BOART LONGYEAR 2020 ANNUAL REPORT
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report
to the members of Boart Longyear Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Boart Longyear Limited (the “Company”) and its subsidiaries (the
“Group”), which comprises the consolidated statement of financial position as at 31 December 2020, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes
in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the Group’s financial position as at 31 December 2020 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our
report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material Uncertainty related to Going Concern
We draw attention to Note 1 in the financial report, which indicates that the Group incurred a loss after tax for
the year ended 31 December 2020 of $98.8 million (31 December 2019: $56.6 million as restated) and, as of
that date, the Group had net liabilities of $469.4 million (31 December 2019: $382.2 million).
Liability limited by a scheme approved under Professional Standards Legislation
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
42
42
BOART LONGYEAR 2020 ANNUAL REPORT
As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a
material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
Our procedures in relation to going concern included, but were not limited to:
•
•
•
•
Reviewing management’s assessment in relation to going concern and inquiring of management and
the Directors in relation to events and conditions that may impact the assessment on the Group’s
ability to pay its debts as and when they fall due;
Challenging the assumptions contained in management’s cash flow including the timing of expected
cash flows, and the status of progress in relation to the agreement with the Group’s debt providers to
remove the obligation to pay cash interest on the Senior Secured Notes;
Performing sensitivity analyses to evaluate the impact of changing key assumptions on the cash flow
forecast;
Reviewing papers submitted to and minutes of the Board and the Board sub-committees’ meetings
with particular regard to items related to the Group’s budget, forecast cash flow and status of
evaluation of options in regard to a future refinancing or recapitalisation; and
• Assessing the adequacy of the disclosures related to going concern in Note 1 to the financial
statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial report for the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have
determined the matters described below to be the key audit matters to be communicated in our report.
Key Audit Matter
Taxation
The Group operates across a large number
of jurisdictions, each with its own taxation
regime and is subject to periodic challenges
by local tax authorities on a range of tax
matters during the normal course of
business including application of transfer
pricing rules, indirect taxes, and transaction-
related tax matters as disclosed in Notes 10,
22 and 28.
As at 31 December 2020, the Group has
recorded an income tax expense of $5.3
million, current and non-current tax
receivables of $0.5 million and $1.6 million
and a net current tax payable of $8.3 million.
How the scope of our audit responded to the Key Audit Matter
Our procedures performed in conjunction with internal tax
specialists, included but were not limited to:
•
Testing key controls relating to the accounting for and the
disclosure of tax related transactions and matters.
• Obtaining an understanding of the process that management
has taken to determine the taxation balances recognised in
the financial statements.
• Assessing the appropriateness of the treatment of selected
specific transactions in the Group’s tax expense calculations
and the rationale on which deferred tax assets and liabilities
were recognized;
•
•
Evaluating the Group’s tax obligations;
Evaluating the appropriateness of management’s
assumptions and estimates in relation to the likelihood of
generating future taxable income to support the recognition
of deferred income tax assets with reference to forecast
taxable income;
43
43
BOART LONGYEAR 2020 ANNUAL REPORT
Key Audit Matter
Taxation (continued)
In notes 10, 22 and 28, the Group has
disclosed its assessment of tax-related
contingent liabilities and that the Group is
subject to certain tax audits that arise in the
normal course of its business.
As at 31 December 2020, the Group has
recorded a provision for tax contingencies of
$49.4 million.
Due to the number of jurisdictions and the
complexity in tax laws in those jurisdictions
significant judgment is required in
estimating tax exposures and/or contingent
liabilities
Impairment of assets
In the financial year ended 31 December
2020, the Group recognised an impairment
of $6.8 million against property, plant, and
equipment and leased assets in its Latin
American Drilling Services Cash Generating
Unit (LAM CGU) as disclosed in Note 16.
The Company has goodwill of $105.1 million
at 31 December 2020 which is split between
goodwill in the North American Drilling
Services Cash Generating Unit (NAM CGU) of
$100.9 million and goodwill in the Global
Data Services CGU (GDS CGU) of $4.2
million, as disclosed in Notes 16 and 18.
As part of the Group’s annual impairment
assessment management tested the NAM
CGU in accordance with the requirement of
AASB136 Impairment of Assets to test
goodwill at least annually.
The Group also tested the LAM CGU due to
the degree of uncertainty associated with
the impacts of COVID-19 in this region.
As disclosed in Note 16, significant
judgement is required in the determination
of the recoverable amount of property,
plant and equipment and lease assets.
Other Information
How the scope of our audit responded to the Key Audit Matter
•
•
Evaluating the consistency of the forecast used by
management to derive forecast taxable income to support
the recognition of deferred tax assets against the forecast
used for assessing the carrying value of intangible assets and
property, plant and equipment;
Challenging and evaluating management’s assessment of
uncertain tax positions including contingent liabilities and
conclusions on complex tax arrangements through the
review of assumptions and calculations by the Tax specialist,
enquiries of the Group Taxation department, and obtaining
and considering the Group’s correspondence with local tax
authorities; and
• Assessing the adequacy of the Group’s disclosures regarding
current and deferred taxes, uncertain tax positions and tax-
related contingencies.
Our procedures included but were not limited to:
• Updating our understanding of the Group’s processes and
controls over the assessment of the recoverable amount of
property, plant and equipment and lease assets.
• Assessing the identification and evaluation of cash-
generating units, allocation of assets and costs to these cash-
generating units.
•
•
•
Challenging the key assumptions used in the future cash flow
forecasts with reference to past performance, external data
and the assumptions made in relation to revenue growth and
gross margins in the Group’s forecasts.
Evaluating historical accuracy of forecast cash flows.
Involving our internal valuation specialists to assist us in
evaluating the models against AASB136 Impairment of
Assets.
• Assessing the accuracy of the Group’s discounted cash flow
model including testing the mathematical accuracy of the
impairment models.
•
Reviewing and challenging the appropriateness of the
Group’s sensitivity analysis in relation to key assumptions to
assess the extent of change in those assumptions that either
individually or collectively would be required for the assets to
be impaired.
• Assessing the adequacy of the disclosures included in Notes
16 and 18.
The directors are responsible for the other information. The other information comprises the Directors’ Report
and Review of Operations, which we obtained prior to the date of this auditor’s report, and also includes the
following information which will be included in the Company’s annual report (but does not include the financial
report and our auditor’s report thereon): Company overview, Chairman’s Report, CEO’s Report and Shareholder
Information, which is expected to be made available to us after that date.
44
44
BOART LONGYEAR 2020 ANNUAL REPORT
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information identified
above and, in doing so, consider whether the other information is materially inconsistent with the financial report
or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work
we have performed on the other information that we obtained prior to the date of this auditor’s report, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We
have nothing to report in this regard.
When we read the Company overview, Chairman’s Report, CEO’s Report and Shareholder Information, if we
conclude that there is a material misstatement therein, we are required to communicate the matter to the
directors and use our professional judgement to determine the appropriate action.
Directors’ Responsibilities for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
•
•
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
45
45
BOART LONGYEAR 2020 ANNUAL REPORT
•
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible for
the direction, supervision and performance of the Group audit. We remain solely responsible for our
audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 20 to 39 of the Directors’ Report for the year ended
31 December 2020.
In our opinion, the Remuneration Report of Boart Longyear Limited, for the year ended 31 December 2020,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
A T Richards
Partner
Chartered Accountants
Perth, 26 February 2021
46
46
BOART LONGYEAR 2020 ANNUAL REPORT
DIRECTORS’ DECLARATION
DIRECTORS’ DECLARATION
The Directors declare that:
(a) in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable;
(b) in the Directors’ opinion, the attached financial statements are in compliance with International Financial Reporting
Standards, as stated in Note 1 to the financial statements;
(c)
in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations
Act 2001, including compliance with accounting standards, and giving a true and fair view of the financial position and
performance of the consolidated entity; and
(d) the Directors have been given the declarations required by section 295A of the Corporations Act 2001.
(e) there are reasonable grounds to believe that the Company and the group entities identified in Note 29 will be able to
meet any obligation or liabilities to which they are or may become subject to by virtue of the deed of cross guarantee
between the Company and those group entities pursuant to ASIC Corporations (Wholly-owned Companies)
Instrument 2016-785. Refer to Note 1 for additional information.
Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations Act 2001.
On behalf of the Directors
Kevin McArthur
Chairman
26 February 2021
47
BOART LONGYEAR 2020 ANNUAL REPORT
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the financial year ended 31 December 2020
Continuing operations
Revenue
Cost of goods sold
Gross margin
Other income
General and administrative expenses
Sales and marketing expenses
Other expenses
Operating (loss) profit
Interest income
Finance costs
Loss before taxation
Income tax expense
Loss for the year attributable
to equity holders of the parent
Loss per share:
Basic loss per share
Note
2020
US$'000
2019
US$'000
(Restated1)
3
4
4
5
5
657,265
(559,753)
97,512
5,821
(69,847)
(17,049)
(17,116)
(679)
43
(92,877)
(93,513)
744,982
(606,326)
138,656
6,788
(82,997)
(20,331)
(14,962)
27,154
50
(75,364)
(48,160)
10
(5,253)
(8,456)
(98,766)
(56,616)
11
(112.3) cents
(64.6) cents
Other comprehensive loss
Loss for the year attributable to equity holders of the parent
Items that may be reclassified subsequently to profit or loss
Exchange gain (loss) arising on translation of foreign operations
Items that will not be reclassified subsequently to profit or loss
Actuarial gain (loss) related to defined benefit plans
Income tax on income and expense recognised directly through equity
Other comprehensive loss for the year, net of tax
23
10
Total comprehensive loss for the year attributed
to equity holders of the parent
(98,766)
(56,616)
8,629
(1,566)
3,140
(861)
10,908
(1,910)
(1,047)
(4,523)
(87,858)
(61,139)
(1) The comparative information has been restated as a result of additional accreted interest recorded on the Senior Secured Notes as
discussed in Note 1.
See accompanying Notes to the Consolidated Financial Statements included on pages 53 to 103.
48
BOART LONGYEAR 2020 ANNUAL REPORT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as of 31 December 2020
Consolidated Statement of Financial Position
As at 31 December 2020
BOART LONGYEAR LIMITED
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax receivable
Prepaid expenses and other assets
Asset classified as held for sale
Total current assets
Non-current assets
Property, plant and equipment
Goodwill
Other intangible assets
Deferred tax assets
Non-current tax receivable
Other assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Current tax payable
Loans and borrowings
Total current liabilities
Non-current liabilities
Loans and borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net liabilities
Equity
Issued capital
Reserves
Other equity
Accumulated losses
Total deficiency in equity
Non-controlling interest
Total equity
Note
2020
US$'000
2019
US$'000
(Restated1)
33
12
13
10
15
17
18
19
10
10
20
22
10
21
21
10
22
24
23,513
109,566
158,327
499
10,129
302,034
365
302,399
151,973
105,115
31,566
13,252
1,567
3,761
307,234
609,633
98,015
13,866
8,265
10,235
130,381
868,331
18,692
61,625
948,648
1,079,029
(469,396)
1,469,393
(117,560)
(128,790)
(1,692,944)
(469,901)
505
(469,396)
20,240
113,738
163,088
2,504
13,574
313,144
-
313,144
165,037
104,458
27,634
16,875
10,811
4,008
328,823
641,967
111,123
14,437
5,424
8,328
139,312
793,388
16,878
74,544
884,810
1,024,122
(382,155)
1,468,776
(117,797)
(137,182)
(1,595,565)
(381,768)
(387)
(382,155)
(1) The comparative information has been restated as a result of additional accreted interest recorded on
the Senior Secured Notes as discussed in Note 1.
See
See accompanying Notes to the Consolidated Financial Statements included on pages 53 to 103.
49
BOART LONGYEAR 2020 ANNUAL REPORT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as of 31 December 2020
D
E
T
I
M
I
L
R
A
E
Y
G
N
O
L
T
R
A
O
B
l
a
t
o
T
y
t
i
u
q
e
'
0
0
0
$
S
U
'
0
0
0
$
S
U
'
0
0
0
$
S
U
t
s
e
r
e
t
n
I
t
n
e
r
a
p
e
h
t
s
e
s
s
o
l
'
0
0
0
$
S
U
n
o
N
e
l
b
a
t
u
b
i
r
t
t
a
l
a
t
o
T
g
n
i
l
l
o
r
t
n
o
C
f
o
s
r
e
n
w
o
o
t
d
e
t
a
l
u
m
u
c
c
A
2
r
e
h
t
O
y
t
i
u
q
e
'
0
0
0
$
S
U
d
e
l
t
t
e
s
-
y
t
i
u
q
E
y
c
n
e
r
r
u
c
n
o
i
t
a
s
n
e
p
m
o
c
n
o
i
t
a
l
s
n
a
r
t
e
v
r
e
s
e
r
'
0
0
0
$
S
U
e
v
r
e
s
e
r
'
0
0
0
$
S
U
d
e
u
s
s
I
l
a
t
i
p
a
c
'
0
0
0
$
S
U
n
g
i
e
r
o
F
Y
T
I
U
Q
E
N
I
0
2
0
2
r
e
b
m
e
c
e
D
1
3
0
2
0
2
r
e
b
m
e
c
e
D
1
3
d
e
d
n
e
d
e
d
n
e
r
a
e
y
r
a
e
y
l
i
a
c
n
a
n
i
f
l
i
a
c
n
a
n
fi
e
h
t
e
h
t
r
o
F
r
o
F
n
i
y
t
i
u
q
E
S
E
G
N
A
H
C
F
O
T
N
E
M
E
T
A
T
S
D
E
T
A
D
I
L
O
S
N
O
C
s
e
g
n
a
h
C
f
o
t
n
e
m
e
t
a
t
S
d
e
t
a
d
i
l
o
s
n
o
C
)
6
1
6
,
6
5
(
)
3
2
5
,
4
(
)
9
3
1
,
1
6
(
-
-
-
-
)
7
1
8
,
2
(
)
6
1
6
,
6
5
(
)
6
1
6
,
6
5
(
)
3
2
5
,
4
(
)
9
3
1
,
1
6
(
7
1
8
,
2
)
7
5
9
,
2
(
)
3
7
5
,
9
5
(
7
1
8
,
2
-
-
-
-
-
-
-
-
-
-
)
6
6
5
,
1
(
)
6
6
5
,
1
(
-
-
-
-
)
6
1
0
,
1
2
3
(
0
3
4
,
2
)
6
4
4
,
3
2
3
(
)
9
0
8
,
8
3
5
,
1
(
)
2
8
1
,
7
3
1
(
8
0
0
,
1
1
)
9
3
2
,
7
2
1
(
6
7
7
,
8
6
4
,
1
)
5
5
1
,
2
8
3
(
)
7
8
3
(
)
8
6
7
,
1
8
3
(
)
5
6
5
,
5
9
5
,
1
(
)
2
8
1
,
7
3
1
(
8
0
0
,
1
1
)
5
0
8
,
8
2
1
(
6
7
7
,
8
6
4
,
1
1
d
e
t
a
t
s
e
r
s
a
-
9
1
0
2
y
r
a
u
n
a
J
1
t
a
e
c
n
a
a
B
l
1
d
e
t
a
t
s
e
r
s
a
-
d
o
i
r
e
p
e
h
t
r
o
f
s
s
o
L
s
s
o
l
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
o
l
a
t
o
T
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
c
-
n
o
N
x
a
t
f
o
t
e
n
-
d
o
i
r
e
p
e
h
t
r
o
f
s
s
o
l
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
O
t
1
d
e
t
a
t
s
e
r
s
a
-
9
1
0
2
r
e
b
m
e
c
e
D
1
3
t
a
e
c
n
a
l
a
B
)
5
5
1
,
2
8
3
(
)
7
8
3
(
)
6
6
7
,
8
9
(
8
0
9
,
0
1
)
8
5
8
,
7
8
(
-
-
2
3
3
5
8
2
)
6
9
3
,
9
6
4
(
-
-
-
-
-
-
2
9
8
5
0
5
)
6
6
7
,
8
9
(
)
8
6
7
,
1
8
3
(
-
2
3
3
5
8
2
)
2
9
8
(
8
0
9
,
0
1
)
8
5
8
,
7
8
(
)
5
6
5
,
5
9
5
,
1
(
)
2
8
1
,
7
3
1
(
8
0
0
,
1
1
)
5
0
8
,
8
2
1
(
6
7
7
,
8
6
4
,
1
1
d
e
t
a
t
s
e
r
s
a
-
0
2
0
2
y
r
a
u
n
a
J
1
t
a
e
c
n
a
a
B
l
-
-
-
)
6
6
7
,
8
9
(
9
7
2
,
2
)
7
8
4
,
6
9
(
-
-
-
-
-
-
-
-
-
-
2
9
3
,
8
)
2
9
3
,
8
(
)
2
9
8
(
-
-
-
-
-
-
-
9
2
6
,
8
9
2
6
,
8
-
-
-
-
-
2
3
3
5
8
2
s
d
r
a
w
a
d
e
l
t
t
e
s
-
y
t
i
u
q
e
i
d
e
s
c
r
e
x
e
n
u
f
o
n
o
i
t
a
r
i
p
x
E
0
2
0
2
r
e
b
m
e
c
e
D
1
3
t
a
e
c
n
a
l
a
B
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
c
-
n
o
N
s
s
o
l
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
o
l
a
t
o
T
s
r
o
t
c
e
r
i
d
o
t
d
e
u
s
s
i
s
e
r
a
h
S
d
e
u
s
s
i
s
e
r
a
h
S
x
a
t
f
o
t
e
n
-
d
o
i
r
e
p
e
h
t
r
o
f
i
n
a
g
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
O
t
d
o
i
r
e
p
e
h
t
r
o
f
s
s
o
L
)
1
0
9
,
9
6
4
(
)
4
4
9
,
2
9
6
,
1
(
)
0
9
7
,
8
2
1
(
6
1
6
,
2
)
6
7
1
,
0
2
1
(
3
9
3
,
9
6
4
,
1
.
s
d
r
a
w
a
d
e
l
t
t
e
s
-
y
t
i
u
q
e
d
e
s
c
r
e
x
e
n
u
f
o
i
n
o
i
t
a
r
i
p
x
e
e
h
t
d
n
a
7
0
0
2
n
i
y
n
a
p
m
o
C
e
h
t
f
o
n
o
i
t
a
e
r
c
n
o
e
v
r
e
s
e
r
i
n
o
i
t
a
s
n
a
g
r
o
e
r
’
s
y
n
a
p
m
o
C
e
h
t
s
t
n
e
s
e
r
p
e
r
y
t
i
u
q
e
r
e
h
O
t
.
1
e
t
o
N
n
i
i
d
e
s
s
u
c
s
d
s
a
s
e
t
o
N
d
e
r
u
c
e
S
i
r
o
n
e
S
e
h
t
n
o
d
e
d
r
o
c
e
r
t
s
e
r
e
t
n
i
d
e
t
e
r
c
c
a
l
a
n
o
i
t
i
d
d
a
f
o
t
l
u
s
e
r
a
s
a
d
e
t
a
t
s
e
r
n
e
e
b
s
a
h
n
o
i
t
a
m
r
o
f
n
i
e
v
i
t
a
r
a
p
m
o
c
e
h
T
)
1
(
)
2
(
.
3
0
1
o
t
3
5
s
e
g
a
p
n
o
d
e
d
u
c
n
l
i
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
d
e
t
a
d
i
l
o
s
n
o
C
e
h
t
o
t
i
s
e
t
o
N
g
n
y
n
a
p
m
o
c
c
a
e
e
S
.
3
0
1
o
t
3
5
s
e
g
a
p
n
o
d
e
d
u
c
n
l
i
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
d
e
t
a
d
i
l
o
s
n
o
C
e
h
t
o
t
i
s
e
t
o
N
g
n
y
n
a
p
m
o
c
c
a
e
e
S
50
BOART LONGYEAR 2020 ANNUAL REPORT
Consolidated Statement of Cash Flows
CONSOLIDATED STATEMENT OF CASH FLOWS
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
Cash flows from operating activities
Loss for the year
Adjustments provided by operating activities:
Income tax expense recognised in profit
Finance costs recognised in profit
Depreciation and amortisation
Interest income recognised in profit
Gain on sale or disposal of non-current assets
Other non-cash items
Shares issued
Shares issued to directors
Impairment of current and non-current assets
Non-cash foreign exchange loss (gain)
Changes in net assets and liabilities, net of effects
from acquisition and disposal of business:
(Increase) decrease in assets:
Trade and other receivables
Inventories
Other assets
(Decrease) increase in liabilities:
Trade and other payables
Provisions
Cash provided by operations
Interest paid
Interest received
Income taxes paid
Net cash flows generated in operating activities
BOART LONGYEAR LIMITED
Note
2020
US$'000
2019
US$'000
(Restated1)
(98,766)
(56,616)
5
6
5
6
5
5,253
92,877
40,964
(43)
(1,998)
12,545
285
332
8,825
1,550
5,291
(3,757)
59
(8,951)
3,097
57,563
(7,624)
43
(603)
49,379
8,456
75,364
39,348
(50)
(3,161)
(6,623)
-
-
9,972
(167)
2,184
6,415
1,161
7,798
(7,056)
77,025
(30,840)
50
(10,927)
35,308
(1)
The comparative information has been restated as a result of additional accreted interest recorded on the Senior Secured Notes as
discussed in Note 1.
See accompanying Notes to the Consolidated Financial Statements included on pages 53 to 103.
51
BOART LONGYEAR 2020 ANNUAL REPORT
Consolidated Statement of Cash Flows
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
BOART LONGYEAR LIMITED
2020
US$'000
2019
US$'000
(Restated1)
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Intangible costs paid
Net cash flows used in investing activities
Cash flows from financing activities
Payments for debt issuance costs
Proceeds from borrowings
Repayment of borrowings
Net cash flows used in financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on the balance
of cash held in foreign currencies
Cash and cash equivalents at the end of the year
33
(25,127)
5,214
(6,999)
(26,912)
(153)
62,521
(81,314)
(18,946)
3,521
20,240
(248)
23,513
(47,061)
5,815
(3,625)
(44,871)
(1,432)
31,350
(40,881)
(10,963)
(20,526)
38,942
1,824
20,240
(1) The comparative information has been restated as a result of additional accreted interest recorded on the Senior Secured Notes as
discussed in Note 1.
See accompanying Notes to the Consolidated Financial Statements included on pages 53 to 103.
52
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
1. GENERAL INFORMATION
BOART LONGYEAR LIMITED
Boart Longyear Limited (the “Parent”) is a public company listed on the Australian Securities Exchange Limited (“ASX”) and
is incorporated in Australia. Boart Longyear Limited and subsidiaries (collectively referred to as the “Company”) operate in
four geographic regions, which are defined as North America, Latin America, Asia Pacific, and Europe/Africa (“EMEA”).
Boart Longyear Limited’s registered office and its principal place of business are as follows:
Registered office
26 Butler Boulevard
Burbridge Business Park
Adelaide Airport, SA 5650
Tel: +61 (8) 8375 8375
Basis of Preparation
Principal place of business
2455 South 3600 West
Salt Lake City, Utah 84119
United States of America
Tel: +1 (801) 972 6430
This financial report is a general-purpose financial report which:
- has been prepared in accordance with the requirements of applicable accounting standards including Australian
interpretations and the Corporations Act 2001, Accounting Standards and Interpretations, and comply with other
requirements of the law. Accounting Standards include Australian Accounting Standards. Compliance with Australian
Accounting Standards ensures that the financial statements and notes of the Company comply with IFRS. The financial
report includes the consolidated financial statements of the Company. For purposes of preparing the consolidated
financial statements, the Company is a for-profit entity;
- is presented in United States dollars, which is Boart Longyear Limited’s functional and presentation currency. All values
have been rounded to the nearest thousand dollars (US’000) unless otherwise stated, in accordance with ASIC
Corporations (Rounding in Financial/Directors’ Reports) instrument 2016/191. The financial statements were authorised
for issue by the Directors on 26 February 2021;
- applies accounting policies in a manner which ensures that the resulting financial information satisfies the concepts of
relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.
These accounting policies have been consistently applied by each entity in the Company;
- is prepared by combining the financial statements of all of the entities that comprise the consolidated entity, Boart
Longyear Limited and subsidiaries as defined in AASB 10 ‘Consolidated Financial Statements’. Consistent accounting
policies are applied by each entity and in the preparation and presentation of the consolidated financial statements;
Subsidiaries are all entities for which the Company (a) has power over the investee (b) is exposed or has rights, to
variable returns from involvement with the investee and (c) has the ability to use its power to affect its return. All three of
these criteria must be met for the Company to have control over the investee. Subsidiaries are fully consolidated from
the date on which control is transferred to the Company until such time as the Company ceases to control such entity.
- all inter-company balances and transactions, and unrealised income and expenses arising from inter-company
transactions, are eliminated.
- does not early adopt Accounting Standards and Interpretations that have been issued or amended but are not yet
effective. Refer to Note 35 for further details.
The financial report has been prepared on a historical cost basis, except for the revaluation of certain financial instruments
that are stated at fair value. Cost is based on fair values of the consideration given in exchange for assets. The financial
report has also been prepared on the basis that the Company is a going concern, which assumes continuity of normal
business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
53
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
1. GENERAL INFORMATION (CONTINUED)
Going Concern
BOART LONGYEAR LIMITED
The financial report has been prepared on the going concern basis which contemplates the realisation of assets and the
settlement of liabilities in the ordinary course of business. The Directors consider that current and expected liquidity from
operating cashflow, cash on hand and available drawings under the Company’s Asset Backed Revolver Bank Loan will be
adequate to enable the Company to meet its debts and obligations as and when they fall due for the twelve months from
the date of issuance of this financial report, subject to the matters described below.
As at 31 December 2020 the Company had net liabilities of $469.4 million (31 December 2019: $382.2 million as restated)
and incurred a loss after tax for the year then ended of $98.8 million (31 December 2019: $56.6 million as restated).
The Company had total loans and borrowings at 31 December 2020 of $878.6 million (31 December 2019: $801.7 million
as restated) maturing in the period July 2022 to December 2022 (further details are set out in Note 21).
As described below, during the period to 31 December 2020, the Company was impacted by the COVID-19 global
pandemic with the slowing or in some cases ceasing of exploration activity. The Company implemented its business
continuity plan which included ceasing all non-essential international and domestic travel, temporary salary reductions for
employees, and amending the terms of the Company’s Senior Secured Notes to satisfy interest payments of $12.7 million
due at both June 2020 and December 2020 by way of payment-in-kind rather than payment of cash.
Despite the difficult trading conditions, the Company generated statutory EBITDA for the year ended 31 December 2020 of
$40.3 million (31 December 2019: $66.5 million) and net cash inflows from operations of $49.4 million (31 December 2019:
$35.3 million).
The majority of the Company’s debt facilities as set out in Note 21 of this report mature in late December 2022. The
Company’s ability to refinance or renew this debt when it becomes due will depend on a number of circumstances including
the Company’s ability to generate cash flows, its success in managing the matters identified below, and the prevailing
market conditions at the time the debt matures.
As announced to ASX on 7 January 2021, the Company engaged Rothschild & Co as advisor to support the Company’s
evaluation of potential options in anticipation of the maturation of the Company’s debt facilities through the second half of
2022 including for refinancing or recapitalisation. At the date of this report the evaluation of options is ongoing.
The Company has prepared detailed cash flow forecasts for the period to 1 March 2022 modelling the financial impact of
ongoing actions to improve operational performance and cash flows, financial results, and liquidity.
In preparing those forecasts the Company has used best estimate assumptions. The Directors have assessed the
Company’s cash flow forecasts and revenue projections based on the level of market activity across the Company’s
operations delivered in the months subsequent to June 2020 following the recovery from the low levels of activity
experienced in March, April and May 2020 as a result of COVID-19.
The cash flow forecasts contain certain assumptions which are inherently uncertain and are subject to variation due to
factors which are outside the control of the Company, the key assumptions being:
• Achieving the key assumptions underpinning the forecast EBITDA performance;
• Working capital movements in respect of inventory, receivables and payables;
•
•
That the timing and outcome of the tax audits detailed in Note 10 are in line with the Directors’ best estimates; and
There is no further significant slowdown or ceasing of exploration activity as a result of government imposed closures
or customers choosing to reduce their exposure across their operations by delaying projects as a result of COVID-19.
The Company’s cash flow forecast for the period to 1 March 2022 specifically assumes that cash interest due on the Senior
Secured Notes in June 2021 and December 2021 of $14.3 million and $14.5 million, respectively, is not paid on the basis
that either agreement is reached with the Senior Secured Note holders to satisfy the interest obligation through payment-in-
kind and/or deferral of payment to at least March 2022 or a broader refinance/restructure of the Company’s debt facilities is
agreed in a form acceptable to the Senior Secured Note holders such that the obligation to pay cash interest is removed.
In the Directors’ opinion, the ability of the Company to continue as a going concern is dependent on:
• Securing an agreement to remove the obligation to pay cash interest on the Senior Secured Notes in June 2021 and
December 2021; and
54
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
1. GENERAL INFORMATION (CONTINUED)
Going Concern (Continued)
BOART LONGYEAR LIMITED
•
The ongoing support of the Company’s debt providers, including negotiating a refinancing or recapitalisation of the
debt facilities, which currently expire in the second half of 2022.
The Directors believe that at the date of signing the financial report the Company will be successful in reaching an
agreement with the debt providers with respect to the removal of the obligation to pay cash interest on the Senior Secured
Notes through either a separate agreement specifically in relation to the interest payable on the Senior Secured Notes
and/or a refinancing or recapitalisation and accordingly have prepared the financial report on the going concern basis.
However, at the date of signing the financial report no agreement has been reached with the Company’s debt providers
and therefore a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going
concern and therefore whether the Company will realise its assets and settle its liabilities and commitments in the normal
course of business and in the amounts stated in the financial report. The financial report does not include adjustments
relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities
that might be necessary should the Company not continue as a going concern.
Impact of COVID-19
On 11 March 2020, the World Health Organization designated COVID-19 as a global pandemic. COVID-19 has surfaced in
nearly all regions of the world, which has driven the implementation of significant, government-imposed measures to
prevent or reduce its spread. As a result of the COVID-19 pandemic, the Company implemented its business continuity
plan. The plan included measures required to protect the health and well-being of employees while ensuring ongoing
operations sustainability; transitioning of corporate and regional office staff to work from home; and ceasing all non-
essential international and domestic travel.
Government Assistance
In response to the COVID-19 pandemic, many governments implemented legislation to help businesses experiencing
financial difficulty stemming from the pandemic. The Company has been successful in securing a number of government
relief packages which have improved liquidity and/or reduced operating expenses.
The Company recognised subsidies of $6.7 million under the Canada Employee Wage Subsidy program to cover a portion
of eligible employee wages in Canada for the year ended 31 December 2020. These subsidies were recognised as a
deduction to employee salaries reducing the Company’s current year operating loss. As of 31 December 2020, the
Company had received $6.2 million in funds under the Canada Employee Wage Subsidy program increasing the
Company’s cash flows provided by operations.
The Company also received payroll tax relief deferrals of $2.7 million in the United States in accordance with the
Coronavirus Aid, Relief, and Economic Security Act Employee Retention Payroll Tax Credit. Although the expense
associated with the payroll taxes was recognised during the year, the deferral of these payments has improved the
Company’s cash flows provided by operations.
Deferred Rent and Rent Relief
To preserve cash and improve liquidity, the Company was able to successfully defer rent payments and/or receive rent
abatements on several lease contracts. The Company has elected to apply the practical expedient offered by COVID-19-
Related Rent Concessions (Proposed amendment to AASB 16). Under this practical expedient, lessees are not required to
assess whether eligible rent concessions are lease modifications, and instead are permitted to account for them as if they
were not lease modifications. Rent concessions are eligible for the practical expedient if they occur as a direct
consequence of the COVID-19 pandemic and if all of the following criteria are met:
•
The change in lease payments results in revised consideration for the lease that is substantially the same, or less
than, the consideration for the lease immediately preceding the change;
• Any reduction in lease payments affects only payments originally due on or before 30 June 2021; and
•
There is no substantive change to the other terms and conditions of the lease.
The impact of applying this practical expedient was immaterial to the Company’s Condensed Consolidated Statement of
Profit or Loss for the year ended 31 December 2020.
55
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
1. GENERAL INFORMATION (CONTINUED)
Restatement of prior periods
BOART LONGYEAR LIMITED
Following the amendment to the Senior Secured Notes as announced to the ASX on 19 June 2020, the Company became
aware that it had not been accounting correctly for the Applicable Premium following its addition to the Senior Secured
Notes as part of the 2017 Debt Restructure. The Applicable Premium was negotiated into the terms of the Senior Secured
Notes as part of the settlement with First Pacific Advisors as announced to the market on 9 August 2017 and becomes
payable at the maturity of the notes due December 2022 (as well as in certain circumstances if the Senior Secured Notes
are redeemed prior to maturity). The Applicable Premium had not been considered in determining the finance costs and
Loans and Borrowings for the periods ended 31 December 2017 through to 31 December 2019. As a result, the Company
has restated affected comparative financial information in these consolidated financial statements.
The following tables illustrate the effects of this restatement on the Company's consolidated financial statements for those
line items affected (these revisions have no net impact on the Company's net cash amounts provided by or used in
operating, financing or investing activities for any of the periods previously reported):
Consolidated Statement of Profit or Loss and
Year ended 31 December 2019
Other Comprehensive Income
As previously
Finance costs
Loss before taxation
Loss for the period attributable
to equity holders of the parent
reported
Adjustment
As restated
(64,119)
(36,915)
(11,245)
(11,245)
(75,364)
(48,160)
(45,371)
(11,245)
(56,616)
Loss per share
(51.8) cents
(12.8) cents
(64.6) cents
Consolidated Statement of Financial Position:
Balance at 31 December 2019
Loans and borrowings (non-current)
Accumulated losses
As previously
reported
Adjustment
As restated
775,985
(1,578,162)
17,403
(17,403)
793,388
(1,595,565)
Loans and borrowings (non-current)
Accumulated losses
Balance at 31 December 2018
As previously
reported
Adjustment
As restated
720,268
(1,532,651)
6,158
(6,158)
726,426
(1,538,809)
56
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
1. GENERAL INFORMATION (CONTINUED)
Key Judgements and Estimates
BOART LONGYEAR LIMITED
In applying Australian Accounting Standards, management is required to make judgments, estimates and form
assumptions that affect the application of accounting policies and reported amounts of assets and liabilities and the
disclosure of contingent liabilities at the date of the financial statements, and the reported revenue and expenses during the
periods presented herein. On an ongoing basis, management evaluates its judgments and estimates in relation to assets,
liabilities, contingent liabilities, revenues and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under the circumstances, the results of which form
the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the respective periods in which they are revised if only those periods are affected, or in the respective
periods of the revisions as well as future periods if the revision affects both current and future periods.
The key judgments, estimates and assumptions that have or could have the most significant effect on the amounts
recognised in the financial statements, are found in the following notes:
Note 1
Note 10
Note 13
Note 16
Note 22
Note 28
Going Concern
Income Tax
Inventories
Impairment of Assets
Provisions
Contingent Liabilities
Foreign Currency
The Company’s presentation currency is the US dollar. The financial statements of the Company and its subsidiaries have
been translated into US dollars using the exchange rates at each balance sheet date for assets and liabilities and at
average exchange rates for revenue and expenses throughout the period. The effects of exchange rate fluctuations on the
translation of assets and liabilities are recorded as movements in the Foreign Currency Translation Reserve (“FCTR”).
The Company determines the functional currency of its subsidiaries based on the currency used in their primary economic
environment, and, as such, foreign currency translation adjustments are recorded in the FCTR for those subsidiaries with a
functional currency different from the US dollar. The cumulative currency translation is transferred to the income statement
when a subsidiary is disposed of or liquidated.
Transaction gains and losses, and unrealised translation gains and losses on short-term inter-company and operating
receivables and payables denominated in a currency other than the functional currency, are included in other income or
other expenses in profit or loss. Where an inter-company balance is, in substance, part of the Company’s net investment in
an entity, exchange gains and losses on that balance are taken to the FCTR.
Other Accounting Policies
Significant and other accounting policies that summarise the measurement basis used and are relevant to an
understanding of the financial statements are provided throughout the notes to the financial statements.
57
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
2. SEGMENT REPORTING
BOART LONGYEAR LIMITED
Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of
segment performance is based on the Company’s two general operating activities: Global Drilling Services and Global
Products. The Global Drilling Services segment provides a broad range of drilling services to companies in mining, energy
and other industries. The Global Products segment manufactures and sells drilling equipment and performance tooling to
customers in the drilling services and mining industries.
Information regarding these segments is presented below. The accounting policies of the reportable segments are the
same as the Company’s accounting policies. Segment profit shown below is consistent with the income reported to the
chief operation decision maker for the purposes of resource allocation and assessment of segment performance. Segment
profit represents earnings before interest and taxes.
Segment revenue and results
Segment Revenue
Segment Profit
Global Drilling Services
456,267
516,313
8,511
2020
US$'000
2019
US$'000
2020
US$'000
2019
US$'000
(Restated3)
58,289
Global Products revenue
Products third party revenue
Products inter-segment revenue 1
Total Global Products
Less Global Product sales to Global Drilling Services
Total third party revenue
Total segment profit
Unallocated costs 2
Finance costs
Interest income
Loss before taxation
200,998
56,407
228,669
56,898
257,405
(56,407)
657,265
285,567
16,381
14,554
(56,898)
744,982
24,892
72,843
(25,571)
(92,877)
43
(93,513)
(45,689)
(75,364)
50
(48,160)
(1) Transactions between segments are carried out at arm's length and are eliminated on consolidation.
(2) Unallocated costs include corporate general and administrative costs as well as other expense items such as foreign exchange
gains or losses.
(3) The comparative information has been restated as a result of additional accreted interest recorded on the Senior Secured Notes as
discussed in Note 1.
Other segment information
Global Drilling Services
Global Products
Total of all segments
Unallocated 1
Total
Depreciation and amortisation
of segment assets
Additions to non-current
assets
2020
US$'000
2019
US$'000
2020
US$'000
2019
US$'000
30,593
6,585
37,178
3,786
40,964
28,515
7,350
35,865
3,483
39,348
26,016
10,944
36,960
2,120
39,080
52,794
29,438
82,232
10,612
92,844
(1) Unallocated additions to non-current assets relate to the acquisition of general corporate assets such as software and hardware.
58
BOART LONGYEAR 2020 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
2. SEGMENT REPORTING (CONTINUED)
Geographic information
BOART LONGYEAR LIMITED
The Company’s two business segments operate in four principal geographic areas – North America, Asia Pacific, Latin
America and EMEA. The Company’s revenue from external customers and information about its segment assets by
geographical locations are detailed below:
Revenue from
external customers
2020
US$'000
2019
US$'000
291,489
170,548
66,865
128,363
657,265
341,041
172,001
97,555
134,385
744,982
Non-current assets 1
2020
2019
US$'000
US$'000
198,323
50,775
13,268
31,616
293,982
214,841
44,967
23,005
29,135
311,948
North America
Asia Pacific
Latin America
EMEA
Total
(1) Non-current assets excluding deferred tax assets and post-employment assets.
59
BOART LONGYEAR 2020 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
3. REVENUE
BOART LONGYEAR LIMITED
Boart Longyear operates two different business units throughout various geographical locations – Global Drilling Services
and Global Products, which includes our Geological Data Services.
Global Drilling Services
The Company performs various types of drilling services within the mining and minerals industry. Contracts entered into
can cover services which involve different processes and continuous drilling services activities in a sequential set of
mobilisation, drilling, and demobilisation activities which are invoiced to the customer as those activities progress. These
processes and activities are highly inter-related, and the Company provides a significant service of integration of such
activities. Where this is the case, these activities and processes are accounted for as one performance obligation.
Revenue from services rendered is recognised in the statement of profit and loss and other comprehensive income over
time. Boart Longyear has a contractual right to consideration from a customer for an amount that corresponds directly with
the value to the customer of the performance completed to date (for example, number of meters drilled). As a result, Boart
Longyear applies the practical expedient under AASB 15.B16 to recognise revenue at the amount which it has the right to
invoice.
Customers are generally invoiced on a fortnightly basis and revenue is recognised in the accounting period in which the
right to invoice is obtained. Payment is received following invoice according to standard payment terms, which are
generally between 30 to 60 days. There are no significant financing components. Most drilling services contracts do not
include variable payment terms. Where variable payment terms exist, these are usually in the form of penalties for late
completion. Variable consideration is only recognised to the extent that it is considered highly probable that such amounts
will not reverse in the future and is estimated using the expected value approach.
Global Products
The Company manufactures, distributes and sells equipment that is necessary for the mining and mineral industry. Sales
orders are completed across multiple geographies for products, such as large drill rigs, and drilling components, such as
bits and coring rods. Each product promised to the customer is distinct under the contract according to AASB 15.27 and
gives rise to a separate performance obligation. Revenue is recognised when control of the products has transferred to
the customer. Transfer of control happens at the point the products are delivered to the customer for drilling rigs and at
the point the products are shipped to the customer’s specific location for drilling components. The transaction price is
allocated to each product on stand-alone basis.
Payment is received following invoice according to standard payment terms, which are generally between 30 to 60 days.
There are no significant financing components and there is no significant reversal of variable consideration expected at
the point of revenue recognition.
The components of revenue are as follows:
Revenue from the rendering of services
Revenue from the sale of goods
2020
US$'000
456,267
200,998
657,265
2019
US$'000
516,313
228,669
744,982
There was one customer that contributed 12% of the Company’s revenue in 2020 and no customer contributed 10% or
more to the Company’s revenue in 2019.
60
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
4. OTHER INCOME / EXPENSE
The components of other income are as follows:
Gain on disposal of property, plant and equipment
Gain on disposal of scrap
Other 1
Total other income
BOART LONGYEAR LIMITED
2020
US$'000
2019
US$'000
1,998
570
3,253
5,821
3,161
610
3,017
6,788
(1) Other income includes a $2.0 million gain on the sale of a net smelter return royalty.
The components of other expense are as follows:
Amortisation of intangible assets 1
Value added tax
Loss on foreign currency exchange differences
Impairment of Latin America property, plant and equipment 2
Impairment of property, plant and equipment 2
Impairment of Intangible Assets 3
Other
Total other expenses
2020
US$'000
2019
US$'000
1,818
280
4,087
6,807
1,492
-
2,632
17,116
2,587
-
3,879
-
-
5,787
2,709
14,962
(1) Total amortisation of intangible assets for the year is $3.4 million, as presented in Note 19. Amortisation expense of $1.6 million for
development assets was recorded within research and development expenses, while $1.8 million of amortisation was recorded
within other expenses. In the year ended 31 December 2019 amortisation totaled $4.6 million, while $2.0 million was recorded in
research and development, and $2.6 million was recorded within other expenses.
(2) Fixed asset impairments of $8.3 million were recorded during the year ended 31 December 2020. These impairments were recorded
within other expenses. Impairments of $0.2 million in the year ended 31 December 2019 were recorded in general and
administrative expenses. See Note 17.
(3) Total impairment of intangible assets for the year ended 31 December 2020 was $0.5 million, as presented in Note 19. Patent
impairments of $0.4 million and development asset impairments of $0.1 million were recorded within general and administrative
expenses. In the year ended 31 December 2019, $2.5 million of patent impairments were recorded within general and administrative
expenses, and $0.7 million of development asset impairments were recorded within research and development expenses, while the
remaining $5.8 million of impairments were recorded within other expense. See Note 19.
61
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
5.
INTEREST INCOME / FINANCE COSTS
Interest income is as follows:
BOART LONGYEAR LIMITED
Interest income:
Bank deposits
Finance costs are as follows:
Finance costs:
Interest on loans and bank overdrafts
Debt modification2
Applicable premium
Amortisation of debt issuance costs
Interest on lease liabilities
Other
Total finance costs
2020
US$'000
2019
US$'000
43
50
2020
US$'000
62,496
11,786
13,729
1,148
3,191
527
92,877
2019
US$'000
(Restated1)
59,588
-
11,245
1,374
3,157
-
75,364
(1) The comparative information has been restated as a result of additional accreted interest recorded on the senior secured notes as
discussed in Note 1.
(2) See Note 21.
6. LOSS FOR THE YEAR
Loss for the year includes the following:
(a) Gains and losses
Loss for the year includes the following gains and (losses):
Gain on disposal of property,
plant and equipment
Net foreign exchange losses
2020
US$'000
2019
US$'000
1,998
3,161
(4,087)
(3,879)
Net change in bad debt expense
(564)
305
(b) Employee benefits expenses
Salaries and wages
Post-employment benefits:
Defined contribution plans
Defined benefit plans
Termination benefits
Other employee benefits 1
2020
US$'000
2019
US$'000
(215,825)
(244,125)
(9,867)
(1,374)
(1,911)
(56,635)
(285,612)
(9,046)
(1,514)
(3,222)
(64,025)
(321,932)
(1) Other employee benefits include items such as medical benefits, workers’ compensation, other fringe benefits and state taxes.
(c) Other
Depreciation of non-current assets
Amortisation of non-current assets
Rental expense
2020
US$'000
2019
US$'000
(37,591)
(3,373)
(18,179)
(34,764)
(4,584)
(16,491)
62
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
7. REMUNERATION OF AUDITORS
Company auditor's remuneration
Audit and review of the financial report:
Auditor of the parent entity
Related practices of the parent entity auditor
Non-audit services:
Tax Consultation
Tax Compliance
Tax Audit Support
BOART LONGYEAR LIMITED
2020
US$'000
2019
US$'000
783
710
1,493
44
199
196
439
833
771
1,604
96
269
298
663
Total remuneration to Company auditor
1,932
2,267
Boart Longyear Limited’s auditor is Deloitte Touche Tohmatsu. The Company has employed Deloitte Touche Tohmatsu
on assignments in addition to their audit duties where their expertise and experience with the Company are important.
These assignments principally have been related to tax advice and tax compliance services, the magnitude of which is
impacted by the global reach of the Company.
The Board and its Audit, Safety & Risk Committee are committed to ensuring the independence of the external auditor.
Accordingly, significant scrutiny is given to non-audit engagements of the external auditor. The Company has a formal
pre-approval policy which requires the pre-approval of non-audit services by the Chairman of the Audit Committee.
Additionally, the total annual fees for such non-audit services cannot exceed the auditor’s annual audit fees without the
approval of the Audit Committee. The Audit Committee believes that the combination of these two approaches results in
an effective procedure to pre-approve services performed by the external auditor.
8. KEY MANAGEMENT PERSONNEL COMPENSATION
The aggregate compensation made to key management personnel of the Company is set out below.
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Total key management personnel compensation
2020
US$'000
2019
US$'000
3,498
38
-
4
262
3,802
5,301
42
628
-
60
6,031
63
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
9. EMPLOYEE LONG TERM INCENTIVE PAYMENTS
BOART LONGYEAR LIMITED
In January of 2018, the long-term incentive plan (“LTIP”) design changed, with the termination of the LTIP and approval of
the Management Incentive Plan (“MIP”). LTIP was replaced with the new MIP. The MIP is driven by Total Enterprise
Value (“TEV”). The MIP creates value for participants when specific criteria are reached for performance as well as time
vesting. The MIP enables cash and/or share releases to participants as and when its shareholders monetise their
shareholdings at various volumes.
No trigger events have taken place since the implementation of the MIP, so no amounts have been recorded in the
financial statements from 1 January 2018 to 31 December 2020.
Effective 30 July 2020, shareholders approved a Long-Term Equity Incentive Plan (“Equity Incentive Plan”). The Equity
Incentive Plan allows the Company’s Remuneration Nominations and Governance Committee to grant incentive
performance stock units to senior leaders, or others, as appropriate. This Committee will set performance metrics that
management and senior leaders will have to achieve to receive their awards. The Plan will terminate 10 years after the
Effective Date.
No performance stock units were awarded under the Equity Incentive Plan during the year ended 31 December 2020.
As at 31 December 2020, the Company had 43,158 vested and unexpired options. The options have grant dates varying
from 15 March 2014 to 19 May 2014 and will expire on various dates in years 2024 through 2026. They have exercise
prices varying from USD $57.60 to USD $96.00. On 15 March 2020, 46,992 options were forfeited as the performance
conditions were not met.
As at 31 December 2020, the Company had no outstanding share or cash rights.
10. INCOME TAXES
Income Taxes
The Company is subject to income taxes in Australia and other jurisdictions around the world in which the Company
operates. Significant judgment is required in determining the Company’s tax assets and liabilities. Judgments are required
about the application of income tax legislation and its interaction with income tax accounting principles. Tax positions
taken by the Company are subject to challenge and audit by various income tax authorities in jurisdictions in which the
Group operates.
Judgment is also required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on
the Statement of Financial Position. Deferred tax assets, including those arising from unrecouped tax losses, capital
losses, foreign tax credits and temporary differences, are recognised only where it is considered more likely than not that
they will be recovered, which is dependent on the generation of sufficient future taxable profits. Assumptions about the
generation of future taxable profits and repatriation of retained earnings depend on management’s estimates of future
cash flows.
These judgments and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in
circumstances will alter expectations, which may impact the amount of deferred tax assets and tax liabilities recognised
on the Statement of Financial Position. In such circumstances, some or all of the carrying amount of recognised deferred
tax assets and tax liabilities may require adjustment, resulting in a corresponding credit or charge to the Statement of
Profit or Loss and Other Comprehensive Income.
Current and deferred taxation
Income tax expense includes current and deferred tax expense (benefit) and is recognised in Statement of Profit or Loss
and Other Comprehensive Income except to the extent that (1) amounts relate to items recognised directly in equity, in
which case the income tax expense (benefit) is also recognised in equity, or (2) amounts that relate to a business
combination, in which case the income tax expense (benefit) is recognised in goodwill.
Current income tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the
reporting date, and any adjustment to tax payable in respect of previous years. Management periodically evaluates
provisions taken in tax returns with respect to situations in which applicable tax regulation is open to interpretation. The
Company establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
64
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
10. INCOME TAXES (CONTINUED)
BOART LONGYEAR LIMITED
Deferred income tax is provided on all temporary differences for which transactions or events that result in an obligation to
pay more tax in the future or a right to pay less tax in the future have occurred but have not reversed at the balance sheet
date. Temporary differences are differences between the Company’s taxable income and its profit before taxation, as
reflected in profit or loss, that arise from the inclusion of profits and losses in tax assessments in periods different from
those in which they are recognised in profit or loss.
Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial
recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting
nor taxable profit, and differences relating to investments in subsidiaries to the extent that they likely will not reverse in the
foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse,
based on the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets are regarded as recoverable and therefore recognised only when, on the basis of all available
evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future
reversal of the underlying temporary differences can be deducted. Deferred tax assets are reviewed at each reporting
date and are reduced to the extent that it is no longer probable that sufficient taxable profit will be available to all or part of
the deferred tax asset to be realised.
Tax consolidation
The Company includes tax consolidated groups for the entities incorporated in Australia and the United States. The
Parent Entity and its wholly-owned Australian resident entities are part of the same tax-consolidated group and are
therefore taxed as a single entity. The head entity within the tax-consolidated group is Boart Longyear Limited.
Companies within the US group also form a tax-consolidated group within the United States.
Tax expense (benefit) and deferred tax assets/liabilities arising from temporary differences of the members of each tax-
consolidated group are recognised in the separate financial statements of the members of that tax-consolidated group
using the ‘separate taxpayer within group’ approach by reference to the carrying amounts in the separate financial
statements of each entity. Tax credits of each member of the tax-consolidated group are recognised by the head entity in
that tax-consolidated group.
Entities within the Australian tax-consolidated group have entered into tax-funding arrangements with the head entity.
Under the terms of the tax-funding arrangements, the tax-consolidated groups and each of the entities within the tax-
consolidated group agrees to pay a tax equivalent payment to or from the head entity, based on the current tax liability or
current tax asset of the entity. Such amounts are reflected in amounts receivable or payable to other entities in the tax-
consolidated group.
Uncertain Tax Positions
The Company is subject to income taxes in Australia and other foreign jurisdictions and the calculation of the Company’s
tax charge involves a degree of estimation and judgement in respect to certain items. In addition, there are transactions
and calculations relating to the ordinary course of business for which the ultimate tax determination is uncertain. As a
result, a provision is recognised in accordance with IFRIC 23 Uncertainty over income tax treatments for those matters for
which the tax determination is uncertain but it is considered probable that there will be a future outflow of funds to a tax
authority. The provisions are measured at the best estimate of the amount expected to become payable. The assessment
is based on the judgement of tax professionals within the Company supported by previous experience in respect of such
activities and in certain cases, is based on specialist independent tax advice. Uncertain tax items for which a provision is
made relate principally to the interpretation of tax legislation regarding arrangements entered into by the Company. Due to
the uncertainty associated with such tax items, there is a possibility that, on conclusion of open tax matters at a future
date, the final outcome may differ significantly. Provisions for uncertain tax positions and tax contingencies are presented
in non-current provisions. Refer to Note 22.
65
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
10. INCOME TAXES (CONTINUED)
(a) Income tax expense is comprised of:
Income tax expense:
Current tax expense
Adjustments recognised in the current year
in relation to the current tax of prior years
Deferred tax expense
BOART LONGYEAR LIMITED
2020
US$'000
2019
US$'000
(Restated2)
1,187
(49)
4,115
5,253
8,160
(1,597)
1,893
8,456
(b) Reconciliation of the prima facie income tax expense on pre-tax accounting profit to the income tax expense
in the financial statements:
Loss before taxation
Income tax benefit calculated at
Australian rate of 30%
Impact of non-Australia tax rates
Net non-deductible/non-assessable items
Net unrecognised tax losses and tax credits for the current year 1
Recognition of deferred tax assets arising in prior years
Other
Over provision from prior years
Income tax expense per the Consolidated
(93,513)
(48,160)
(28,054)
2,390
24,415
9,511
(1,211)
(1,749)
5,302
(49)
(14,448)
3,528
9,486
10,864
(90)
713
10,053
(1,597)
Statement of Profit or Loss and Other Comprehensive Income
5,253
8,456
(1) Due to the group being in a tax loss position in many jurisdictions during the current financial year, the Company has not
recognised a tax benefit for current period losses.
(2) The comparative information has been restated as a result of additional accreted interest recorded on the Senior Secured
Notes as discussed in Note 1.
(c) Income tax recognised directly in equity during the period:
The following current and deferred amounts were charged directly through equity during the year:
Deferred tax recognised in equity:
Actuarial movements on defined benefit plans
2020
US$'000
2019
US$'000
(861)
(1,047)
66
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
10. INCOME TAXES (CONTINUED)
(d) Tax assets and liabilities:
Tax assets:
Income tax receivable attributable to:
Other entities 1
Current tax liabilities:
Income tax payable attributable to:
Parent
Entities other than parent
and entities in the consolidated group
BOART LONGYEAR LIMITED
2020
US$'000
2019
US$'000
2,066
13,315
1,508
6,757
8,265
1,387
4,037
5,424
(1) The income tax receivable for 2020 is $2.1 million (2019: $13.3 million) of which $0.5 million is classified as current tax
receivable and $1.6 million is classified as non-current tax receivable (2019: $2.5 million and $10.8 million respectively).
(e) Deferred tax balances:
Deferred tax comprises:
Temporary differences
Unused tax losses and credits
(f) Provision for tax contingencies:
Provision for tax contingencies 1
(1) See Note 22.
2020
US$'000
2019
US$'000
(17,426)
11,986
(5,440)
(13,291)
13,288
(3)
2020
US$'000
2019
US$'000
49,427
63,792
67
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
10. INCOME TAXES (CONTINUED)
BOART LONGYEAR LIMITED
Opening Recognised
balance
US$'000
FX
in income differences disposed
US$'000
US$'000
US$'000
Acquired/ Recognised
2020
Deferred tax assets (liabilities)
temporary differences
Property, plant and equipment
Provisions
Doubtful debts
Other intangible assets
Accrued liabilities
Pension
Inventories
Investments in subsidiaries
Unrealised foreign exchange
Other
Unused tax losses and credits:
Tax losses
3,735
660
-
(17,378)
179
(1,546)
2,117
(240)
(1,163)
345
(13,291)
13,288
(3)
(2,043)
174
176
(2,005)
161
(173)
(113)
240
555
215
(2,813)
(1,302)
(4,115)
(314)
(56)
-
-
(15)
130
(178)
-
-
(28)
(461)
-
(461)
-
-
-
-
-
-
-
-
-
-
-
-
-
Presented in the statement of financial position as follows:
Deferred tax asset
Deferred tax liability
in equity
US$'000
-
-
-
-
-
(861)
-
-
-
-
(861)
-
(861)
Closing
balance
US$'000
1,378
778
176
(19,383)
325
(2,450)
1,826
-
(608)
532
(17,426)
11,986
(5,440)
13,252
(18,692)
(5,440)
Where deferred tax assets have been recognised, it is considered probable that the Company will generate sufficient future
taxable income to utilise the assets.
68
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
10. INCOME TAXES (CONTINUED)
BOART LONGYEAR LIMITED
Opening Recognised
balance
US$'000
FX
in income differences disposed
US$'000
US$'000
US$'000
in equity
US$'000
Acquired/ Recognised
Closing
balance
US$'000
2019
Deferred tax assets (liabilities)
temporary differences
Property, plant and equipment
Provisions
Doubtful debts
Other intangible assets
Accrued liabilities
Pension
Inventories
Investments in subsidiaries
Unrealised foreign exchange
Other
Unused tax losses and credits:
Tax losses
4,087
2,744
16
(16,471)
2,464
(346)
1,977
-
(275)
682
(5,122)
8,329
3,207
(257)
(2,020)
(16)
(907)
(2,228)
(161)
186
(240)
(888)
(321)
(6,852)
4,959
(1,893)
(95)
(64)
-
-
(57)
8
(46)
-
-
(16)
(270)
-
(270)
-
-
-
-
-
-
-
-
-
-
-
-
-
Presented in the statement of financial position as follows:
Deferred tax asset
Deferred tax liability
Unrecognised deferred tax assets
Tax benefit of unused losses 1
Tax benefit of unused capital losses 2
Unused tax credits 3
Tax benefit of temporary differences
-
-
-
-
-
(1,047)
-
-
-
-
(1,047)
3,735
660
-
(17,378)
179
(1,546)
2,117
(240)
(1,163)
345
(13,291)
-
(1,047)
13,288
(3)
16,875
(16,878)
(3)
2020
US$'000
2019
US$'000
279,420
508,434
13,842
45,938
847,634
282,843
388,707
15,939
49,526
737,015
(1) $49.9 million of the tax benefit of unused losses expire within 3-20 years and $229.5 million related to tax losses that do not expire
(2019: $79.0 million and $203.8 million respectively).
(2) The tax basis was established with reference to historic 2007 initial public offering values. Capital losses can only be offset against
capital gains in most jurisdictions.
(3) All of the unused tax credits of $13.8 million will expire within 1-10 years and remaining credits have no expiry date.
Canadian income tax audits
As previously disclosed by the Company, the Canada Revenue Agency (“CRA”) has reassessed the 2007 through 2016
tax years. The Company has resolved the 2007 through 2009 tax years, resulting in a final assessment of additional tax,
penalties and interest of C$7.4 million, all of which has been settled at the end of 2020. Tax years 2010 through 2017
remain in various stages of audit or appeal with the CRA or are proceeding under the mutual agreement procedure, which
is a negotiation between Canada and Switzerland on the allocation of taxable profits between the countries. The
remaining unsettled tax, penalties and interest for these years could result in a maximum remaining assessment of C$46
million. After the application of tax credits and payments, the maximum future cash outlay could be C$35 million for the
remaining 2010-2016 unsettled issues. The Company plans to vigorously dispute these reassessments. Due to the
uncertainty surrounding these audits, a provision for the estimated outcome has been recognised as a non-current
provision. Refer to Note 22.
69
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
11. LOSS PER SHARE
Basic loss per share
Basic loss per share
The loss and weighted average number of ordinary shares
used in the calculation of basic loss per share are as follows:
Loss used in the calculation of basic EPS
Weighted average number of ordinary shares for the purposes of
basic loss per share
BOART LONGYEAR LIMITED
2020
US cents
per share
2019
US cents
per share
(Restated1)
(112.3)
(64.6)
2020
US$'000
2019
US$'000
(Restated1)
(98,766)
(56,616)
2020
'000
2019
'000
87,974
87,656
(1) The comparative information has been restated as a result of additional accreted interest recorded on the Senior Secured Notes as
discussed in Note 1.
70
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
12. TRADE AND OTHER RECEIVABLES
BOART LONGYEAR LIMITED
Trade receivables are recorded at amortised cost. The Company reviews collectability of trade receivables on an ongoing
basis and provides allowances for credit losses when there is evidence that trade receivables may not be collectible.
These losses are recognised in the income statement within operating expenses. When a trade receivable is determined
to be uncollectible, it is written off against the allowance for doubtful accounts. Subsequent recoveries of amounts
previously written off are recorded in other income in profit or loss.
Trade receivables
Loss allowance
Goods and services tax receivable
Other receivables
The ageing of trade receivables is detailed below:
Current
Past due 0 - 30 days
Past due 31 - 60 days
Past due 61 - 90 days
Past due 90 days
2020
US$'000
2019
US$'000
98,589
(1,519)
10,924
1,572
109,566
102,054
(1,015)
10,183
2,516
113,738
2020
US$'000
2019
US$'000
93,676
1,787
819
602
1,705
98,589
90,525
8,655
1,325
480
1,069
102,054
The Company measures the loss allowance for trade receivables at an amount equal to lifetime expected credit losses.
The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default
experience of the debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to
the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the
current as well as the forecast direction of conditions at the reporting date.
The Company’s policy requires customers to pay the Company in accordance with agreed payment terms. The
Company’s settlement terms are generally 30 to 60 days from date of invoice. All credit and recovery risk associated with
trade receivables has been provided for in the statement of financial position. Trade receivables have been aged
according to their original due date in the above ageing analysis. No interest is charged on trade receivables.
Credit risk management
The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral,
when appropriate, as a means of mitigating the risk of financial loss from defaults.
Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas.
Ongoing credit evaluation is performed on accounts receivable. The Company holds security for a number of trade
receivables in the form of letters of credit, deposits, and advance payments.
The Company does not have any significant credit risk exposure to any single counterparty or any group of counterparties
having similar characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the
counterparties are banks with high credit ratings assigned by international credit-rating agencies. No derivative financial
instruments were entered into during 2020 or 2019.
71
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
13. INVENTORIES
BOART LONGYEAR LIMITED
Inventories are measured at the lower of cost or net realisable value. The cost of most inventories is based on a standard
cost method, which approximates actual cost on a first-in first-out basis, and includes expenditures incurred in acquiring
the inventories and bringing them to their existing location and condition. In the case of manufactured inventories and
work in progress, cost includes an appropriate share of production overhead expenses (including depreciation) based on
normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and selling expenses.
Allowances are recorded for inventory considered to be excess or obsolete and damaged items are written down to the
net realisable value. Due to the decline in the demand for products, and consumables used in our Global Drilling Services
business, and the high inventory balances across the group and the speed at which inventory is turning in the current
market, significant judgment is required in determining net realisable value of inventory. For the period ended 31
December 2020, the Company updated some of the key assumptions used to estimate the allowance for excess or
obsolete inventory, resulting in an increase to obsolescence expense of $5.0 million recognised in 2020. The impacts of
this change in estimate were recognised prospectively in the current period Consolidated Statement of Profit or Loss as a
component of COGS in accordance with AASB 8, Accounting policies, changes in accounting estimates and errors.
Raw materials
Work in progress
Finished products
2020
US$'000
2019
US$'000
19,244
6,960
132,123
158,327
28,938
5,404
128,746
163,088
The allowance for excess or obsolete inventory was $23.5 million and $20.3 million as at 31 December 2020 and 2019,
respectively The change in accounting estimate described in the preceding paragraph contributed to the increase in the
allowance.
14. FINANCIAL RISK MANAGEMENT
Capital risk management
The Company manages its capital to ensure that entities in the Company will be able to continue as going concerns while
maximising the return to stakeholders through the optimisation of the debt and equity balances.
The capital structure of the Company consists of debt, which includes the loans and borrowings disclosed in Note 21,
cash and cash equivalents and equity attributable to equity holders of the Company, comprising issued capital, reserves,
and accumulated losses/retained earnings.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset,
financial liability and equity instrument are disclosed throughout these notes.
Credit risk management
The Company reviews the recoverable amount of each trade debt on an individual basis at the end of the reporting period
to ensure that adequate loss allowance is made for irrecoverable amounts. In this regard, the directors of the Company
consider that the Group’s credit risk is significantly reduced. Trade receivables consist of a large number of customers,
spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial
condition of accounts receivable.
Of the outstanding loans and borrowings, Centerbridge Partners, L.P. accounted for $292.4 million of Term Loans
outstanding with $51.0 million of accreted interest. Centerbridge Partner, L.P., and Ascribe Capital hold $17.3 million of
the backstop ABL with $5.4 million of accreted interest. There are no significant concentrations of credit risk. The carrying
amount reflected above represents the Company’s maximum exposure to credit risk for trade and other receivables.
72
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
14. FINANCIAL RISK MANAGEMENT (CONTINUED)
Financial risk management objectives
BOART LONGYEAR LIMITED
The Company’s corporate treasury function provides services to the business, coordinates access to domestic and
international financial markets, and monitors and manages the financial risks relating to the operations of the Company
through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk
(including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk.
Market risk
The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
interest rates.
Foreign currency risk management
Company subsidiaries undertake certain transactions denominated in currencies other than their functional currency,
hence exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy
parameters. The Company did not utilise any derivative instruments during the years ended 31 December 2020 or 2019.
The most significant carrying amounts of monetary assets and monetary liabilities (which include intercompany balances
with other subsidiaries) that: (1) are denominated in currencies other than the functional currency of the respective
Company subsidiary; and (2) cause foreign exchange rate exposure, as at 31 December are as follows:
Assets
2020
US$'000
2019
US$'000
Liabilities
2020
US$'000
2019
US$'000
95,684
331
2,274
471,190
48,180
46
9,942
451,962
95,895
9,080
10,947
173,796
83,294
11,269
19,334
187,169
Australian Dollar
Canadian Dollar
Euro
US Dollar
Foreign currency sensitivity
The Company is mainly exposed to exchange rate fluctuations in the Australian Dollar (AUD), Canadian Dollar (CAD),
Euro (EUR) and United States Dollar (USD). The Company is also exposed to translation differences as the Company’s
presentation currency is different from the functional currencies of various subsidiaries. However, this represents a
translation risk rather than a financial risk and consequently is not included in the following sensitivity analysis.
The following tables reflect the Company’s sensitivity to a 10% change in the exchange rate of each of the currencies
listed above. This sensitivity analysis includes only outstanding monetary items denominated in currencies other than the
respective subsidiaries’ functional currencies and remeasures these at the respective year end to reflect a 10% decrease
in the indicated currency against the respective subsidiaries’ functional currencies. A positive number indicates an
increase in net profit and/or net assets.
Net profit
Net assets
Net profit
Net assets
10% decrease in AUD
10% decrease in CAD
2020
US$'000
2019
US$'000
2020
US$'000
2019
US$'000
1,701
18
4,428
3,191
792
792
1,013
1,013
10% decrease in EUR
10% decrease in USD
2020
US$'000
2019
US$'000
766
766
44
44
2020
US$'000
5,845
(27,036)
2019
US$'000
9,957
(24,072)
In management’s opinion, the sensitivity analysis is not fully representative of the inherent foreign exchange risk as the
year-end exposure may not reflect the exposure during the year.
73
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
14. FINANCIAL RISK MANAGEMENT (CONTINUED)
Forward foreign exchange contracts
BOART LONGYEAR LIMITED
There were no open forward foreign currency contracts as at 31 December 2020 or 2019.
Interest rate risk management
Most of the Company’s loan portfolio is at fixed interest rates, as such it has less exposure to variable interest rates than
fixed interest rates.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Company’s Treasurer and Board.
The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities
by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and
liabilities.
Liquidity risk
The following tables reflect the expected maturities of non-derivative financial liabilities as at 31 December 2020 and
2019. These are based on the undiscounted expected cash flows of financial liabilities based on the maturity profile per
the loan agreement. The table includes both interest and principal cash flows. The adjustment column represents the
possible future cash flows attributable to the instrument included in the maturity analysis which are not included in the
carrying amount on the balance sheet.
Weighted
average
effective
interest
rate
%
Less
than
1 to 3
1 month months
US$'000
US$'000
3 months
to
1 year
US$'000
1 - 5 years 5+ years
US$'000
US$'000
Adjust-
ment
US$'000
Total
US$'000
31 December 2020
Non-interest bearing
payables
Variable interest rate
instruments
Fixed interest rate
instruments
Leases
Equipment financing
31 December 2019
Non-interest bearing
payables
Variable interest rate
instruments
Fixed interest rate
instruments 1
Leases
-
68,648
29,367
-
-
3.7%
71
143
642
23,407
10.0%
8.7%
9.5%
-
216
69
69,004
-
23
137
29,670
28,825
9,128
657
39,252
947,132
21,632
2,549
994,720
-
-
-
5,622
-
-
98,015
(1,334)
22,929
(160,353)
-
-
815,604
36,621
3,412
976,581
5,622
(161,687)
-
76,338
34,785
-
-
5.3%
9.8%
6.6%
154
308
1,386
37,786
-
774
77,266
-
1,447
36,540
-
6,107
7,493
902,824
20,872
961,482
-
-
-
7,435
7,435
-
111,123
(4,733)
34,901
(170,639)
-
(175,372)
732,185
36,635
914,844
(1) The comparative information has been restated as a result of additional accreted interest recorded on the Senior Secured Notes as
discussed in Note 1.
74
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
14. FINANCIAL RISK MANAGEMENT (CONTINUED)
Liquidity risk (continued)
BOART LONGYEAR LIMITED
The following tables reflect the expected maturities of non-derivative financial assets. These are based on the
undiscounted expected cash flows of the financial assets.
2020
Non-interest bearing
receivables
Cash
2019
Non-interest bearing
receivables
Cash
Less
than
1 month
US$'000
1 to 3
months
US$'000
3 months
to
1 year
US$'000
Total
US$'000
59,300
23,513
82,813
38,545
11,721
-
-
38,545
11,721
109,566
23,513
133,079
56,586
20,240
76,826
45,269
11,883
-
-
45,269
11,883
113,738
20,240
133,978
The liquidity risk tables are based on the Company’s intent to collect the assets or settle the liabilities in accordance with
the contractual terms.
Fair value of financial instruments
The fair values of financial assets and financial liabilities are determined as follows:
• Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance
•
•
of the contractual arrangements.
The fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid
markets are determined with reference to quoted market prices.
The fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined in
accordance with generally accepted pricing models based on discounted cash flow analyses using prices from
observable current market transactions.
Management considers that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in
the financial statements materially approximate their fair values.
15. ASSETS CLASSIFIED AS HELD FOR SALE
Based on current market conditions and future outlook, the Company has classified certain property, plant and equipment
assets in the amount of $0.4 million as held for sale as at 31 December 2020 (31 December 2019: $0.0 million). These
assets consist primarily of excess rigs and ancillary equipment. The opportunity for a gain by the disposition of these
targeted assets allows the Company to rationalise its assets, raise capital and eliminate ongoing costs associated with
maintaining these assets.
75
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
16. IMPAIRMENT OF ASSETS
BOART LONGYEAR LIMITED
The Company’s property, plant and equipment and other non-current assets, including goodwill and intangible assets, are
reviewed at each reporting date to determine whether there is an indication of potential impairment.
During the half-year period ended 30 June 2020, the Company identified the global economic impact of COVID-19 as a
potential indicator of impairment. Accordingly, an impairment risk assessment was performed for the Company’s Cash
Generating Units (“CGU”) at 30 June 2020. As a result of the impairment risk assessments and analyses, the Company
recorded impairment charges of $6.8 million against property, plant, and equipment in the Latin America Drilling Services
CGU and recognised these impairment charges in other expenses as of 30 June 2020. The impairment charges recorded
at 30 June 2020 continue to be recognised in other expenses as of 31 December 2020.
Impairment by cash-generating units
Goodwill and intangible assets in the EMEA, Latin America and Asia Pacific Drilling Services CGUs have been fully
impaired. For the North America Drilling Services CGU and Geological Data Services CGU, the Company performed a
goodwill impairment test as at 31 December 2020. The recoverable amount of the North America Drilling Services CGU
exceeded its carrying amount by approximately 17.6% resulting in no impairment to the North America Drilling Services
CGU for the year ended 31 December 2020. The recoverable amount for the Geological Data Services CGU exceeded
the carrying amount by over 100% resulting in no impairment to the Geological Data Services CGU. Consequently, no
goodwill impairments were recorded for the year ended 31 December 2020 and 2019.
In addition to testing the North America Drilling Services CGU and the Geological Data Services CGU, the Company
performed an additional year-end impairment analysis on the Latin America Drilling Services CGU due to the ongoing
negative impacts of COVID-19 in that region. The recoverable amount of the Latin America Drilling Services CGU
exceeded its carrying amount by approximately 1.5% resulting in no additional impairment to the Latin America Drilling
Services CGU for the year ended 31 December 2020. The key assumptions considered in these value-in-use models are
included below.
Revenue growth rate. In determining the growth rates applied to revenue through the mining cycle, management
considered the following taking into account the best available information given the current uncertain economic
environment:
• Average revenue growth over previous mining cycles;
• Rates of inflation in the countries where the Company does business; and
• Price and volume expectations over the forecast period.
Discount rate and terminal growth rate. The Company used a post-tax discount rate of 14.1% for Latin America Drilling
Services and 10.8% for North America Drilling Services. These rates reflect an underlying global discount rate of 11.5%
adjusted for regional variations in the required equity rate of return. The terminal growth rate of 2.5% and 3.0% in North
America and South America, respectively, does not exceed the long-term average growth rate for the industry in these
regions.
Expenses. In determining gross margin and SG&A expenses, management has considered the impacts of recent
programs and other initiatives already taken within the business and similar future initiatives to reduce operational costs.
The recoverable value assessment of the Latin America and North America Drilling Services CGUs is based on gross
margin increasing as a result of the reduction in costs and improved market conditions.
Working capital and capital expenditures. Working capital and capital expenditure assumptions are in line with historic
trends given the level of utilisation and operating activity.
Other economic factors. As part of the impairment test, management considered several different scenarios that consider
the impact on the value-in-use calculations if key assumptions were to vary from those used in the calculations. These
change scenarios assessed the impact of a 20.0% decrease to revenue, a 10.0% increase to SG&A expense, a 2.0%
reduction to gross margin and a 1.0% reduction to terminal growth rate assumptions. The recoverable amount of the
North America Drilling Services CGU exceeds its carrying value under the 10.0% increase in SG&A expense and 1.0%
reduction to terminal growth rate scenarios; however, an impairment would be triggered under the 20.0% decrease to
revenue and 2.0% reduction to gross margin scenarios. In the Latin America Drilling Services CGU, the carrying value of
the CGU exceeds the recoverable amount under all change scenarios and each scenario would result in a further
impairment of the CGU.
76
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
16. IMPAIRMENT OF ASSETS (CONTINUED)
BOART LONGYEAR LIMITED
Each of the change scenarios tested assumes that a specific assumption moves in isolation while all other assumptions
are held constant. A change in one of the aforementioned assumptions could be accompanied by a change in another
assumption which may increase or decrease the net impact on the calculation.
17. PROPERTY, PLANT AND EQUIPMENT
The Company’s assets are held in various differing geographical, political and physical environments across the world,
therefore, the estimation of useful lives of assets is an area of judgment. Our current estimate has been based on
historical experience. In addition, the condition of the assets is assessed at least annually and considered against the
remaining useful life. Adjustments to useful lives are made when considered necessary.
Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Costs include
expenditures that are directly attributable to the acquisition of the asset, including the costs of materials and direct labour
and other costs directly attributable to bringing the asset to a working condition for the intended use. Purchased software
that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item
of property, plant and equipment have different useful lives, they are accounted for as separate assets.
Subsequent costs related to previously capitalised assets are capitalised only when it is probable that they will result in
commensurate future economic benefit and the costs can be reliably measured. All other costs, including repairs and
maintenance, are recognised in profit or loss as incurred.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each item of property,
plant and equipment. Leasehold improvement assets are depreciated over the shorter of the lease terms or their useful
lives. Items in the course of construction or not yet in service are not depreciated.
The following useful lives are used in the calculation of depreciation:
Buildings
Plant and machinery
Drilling rigs
Other drilling equipment
Office equipment
Computer equipment:
Hardware
Software
20 - 40
5 - 10
5 - 12
1 - 5
5 - 10
years
years
years
years
years
3 - 5
1 - 7
years
years
Depreciation methods, useful lives and residual values are reassessed at each reporting date.
77
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
17. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Land and
Buildings
US$'000
Plant and
Equipment
US$'000
Balance at 1 January 2019
Additions
Adoption of AASB 16
Disposal
Asset Classification Transfer
Transfer from CIP
Currency movements
Balance at 31 December 2019
Additions
Disposal
Asset Classification Transfer
Transfer from CIP
Currency movements
Balance at 31 December 2020
Accumulated depreciation and impairment:
Balance at 1 January 2019
Depreciation
Impairment
Disposal
Asset Classification Transfer
Currency movements
Balance at 31 December 2019
Depreciation
Impairment
Disposal
Asset Classification Transfer
Currency movements
Balance at 31 December 2020
Net book value at 31 December 2019
Net book value at 31 December 2020
49,041
-
-
(31)
(57)
1,280
364
50,597
-
(5,908)
1,135
336
1,261
47,421
(27,461)
(2,065)
-
31
259
(391)
(29,627)
(2,672)
(779)
5,735
(961)
(803)
(29,107)
20,970
18,314
649,408
2,921
-
(32,176)
(6,171)
31,741
(3,402)
642,321
1,207
(41,220)
1,843
32,941
14,706
651,798
(566,231)
(23,424)
(210)
29,656
-
3,025
(557,184)
(25,635)
(5,518)
37,775
(978)
(14,332)
(565,872)
85,137
85,926
Right of Use
Assets
US$'000
-
14,042
26,483
(785)
6,228
-
264
46,232
7,118
(23)
(2,978)
-
1,521
51,870
-
(9,275)
-
282
(259)
(1,375)
(10,627)
(9,284)
(1,645)
60
1,939
(423)
(19,980)
35,605
31,890
BOART LONGYEAR LIMITED
Construction
in Progress
US$'000
Total
US$'000
9,341
45,773
-
-
-
(33,021)
1,232
23,325
23,734
(376)
-
(33,277)
2,437
15,843
-
-
-
-
-
-
-
-
(376)
376
-
-
-
23,325
15,843
707,790
62,736
26,483
(32,992)
-
-
(1,542)
762,475
32,059
(47,527)
-
-
19,925
766,932
(593,692)
(34,764)
(210)
29,969
-
1,259
(597,438)
(37,591)
(8,318)
43,946
-
(15,558)
(614,959)
165,037
151,973
Property, plant and equipment is reviewed at each reporting date to determine whether there is any indication of
impairment. Assets are first considered individually to determine whether there is any impairment related to specific assets
due to factors such as technical obsolescence, declining market value, physical condition or salability within a reasonable
timeframe. The revised carrying values are then included in the assessment of the recoverable value of the relevant cash
generating unit to which the property, plant, and equipment relates. As a result of this exercise, the Company recorded an
impairment loss as at 31 December 2020 and 31 December 2019 of $1.5 million and $0.2 million, respectively, on
property, plant, and equipment. In addition, the Company recorded a $6.8 million impairment charge to property, plant,
and equipment in the Latin America Drilling Services CGU as disclosed in Note 16.
78
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
18. GOODWILL
BOART LONGYEAR LIMITED
Goodwill resulting from business combinations is recognised as an asset at the date that control is acquired. Goodwill is
measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the
acquiree, and the fair value of the previously held equity interest in the acquiree (if any) over the net amounts of the
identifiable assets acquired and the liabilities assumed.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill
is allocated to each of the Company’s cash-generating units expected to benefit from the acquisition. Cash-generating
units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an
indication that the carrying value of the unit may be impaired. If the recoverable amount of the cash-generating unit is less
than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to
the unit and then to the other assets of the unit. An impairment loss recognised for goodwill is not reversed in a
subsequent period.
Upon disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the gain or loss on
disposal.
Goodwill, intangible assets and property, plant and equipment
The Company determines whether goodwill is impaired on an annual basis and assesses impairment of all other assets at
each reporting date by evaluating whether indicators of impairment exist. This evaluation includes consideration of the
market conditions specific to the industry in which the group operates, the increase, or decline in demand for our drilling
services and rig utilisation rates, the political environment in countries in which the group operates, technological changes,
expectations in relation to future cash flows and the Company’s market capitalisation. Where an indication of impairment
exists the recoverable amount of the asset is determined. Recoverable amount is the greater of fair value less costs to sell
and value in use. Impairment is considered for individual assets, or Cash Generating Units. Judgments are made in
determining appropriate cash generating units. When considering whether impairments exist at a CGU, the Company
uses the value in use methodology.
The value in use calculation requires the Company to estimate the future cash flows expected to arise from a cash-
generating unit and a suitable discount rate in order to calculate present value. These estimates are subject to risk and
uncertainty; hence there is a possibility that changes in circumstances will alter these projections, which may impact the
recoverable amount of the assets.
Goodwill
Gross carrying amount:
Balance at 1 January 2019
Currency movements
Balance at 31 December 2019
Balance at 1 January 2020
Currency movements
Balance at 31 December 2020
US$'000
103,859
599
104,458
104,458
657
105,115
79
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
18. GOODWILL (CONTINUED)
Allocation of goodwill to cash-generating units
BOART LONGYEAR LIMITED
Goodwill has been allocated for impairment testing purposes to individual cash-generating units. The carrying amount of
goodwill by geographic segment allocated to cash-generating units that are significant individually or in aggregate is as
follows:
Goodwill by cash-generating units
North America Drilling Services
Geological Data Services ("GDS")
Total Goodwill
2020
US$'000
100,862
4,253
105,115
2019
US$'000
100,549
3,909
104,458
The carrying amount of goodwill is tested for impairment annually at 31 December and whenever there is an indicator that
the asset may be impaired. If goodwill is impaired, it is written down to its recoverable amount. See Note 16.
19. OTHER INTANGIBLE ASSETS
Trademarks and trade names
Trademarks and trade names recognised by the Company that are considered to have indefinite useful lives are not
amortised. Each period, the useful life of each of these assets is reviewed to determine whether events and
circumstances continue to support an indefinite useful life assessment for the asset. Trademarks and trade names that
are considered to have a finite useful life are carried at cost less accumulated amortisation and accumulated impairment
losses. Such assets are tested for impairment at least annually or more frequently if events or circumstances indicate that
the asset might be impaired.
Contractual customer relationships
Contractual customer relationships acquired in business combinations are identified and recognised separately from
goodwill where they satisfy the definition of an intangible asset and their fair values can be reliably measured. Contractual
customer relationships have finite useful lives and are carried at cost less accumulated amortisation and accumulated
impairment losses.
Contractual customer relationships are amortised over 15 years on a straight-line basis. Amortisation methods and useful
lives are reassessed at each reporting date.
Patents
Patents are measured at cost less accumulated amortisation and accumulated impairment losses. Amortisation is
charged on a straight-line basis over estimated useful lives of 2 to 20 years. Amortisation methods and useful lives are
reassessed at each reporting date.
Research and development costs
Expenditures on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and
understanding, are recognised in profit or loss when incurred.
Development activities involve a plan or design for the production of new or substantially improved products and
processes. Development costs are capitalised only if development costs can be measured reliably, the product or process
is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has
sufficient resources to complete development and to use or sell the asset. Capitalised costs include the cost of materials,
direct labour and overhead costs directly attributable to preparing the asset for its intended use. Other development costs
are expensed when incurred.
Capitalised development costs are measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised on a straight-line basis over the estimated useful lives, which on average is 15 years.
80
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
19. OTHER INTANGIBLE ASSETS (CONTINUED)
BOART LONGYEAR LIMITED
Gross carrying amount:
Balance at 1 January 2019
Additions
Disposals
Currency movements
Balance at 31 December 2019
Balance at 1 January 2019
Additions
Disposals
Currency movements
Balance at 31 December 2020
Accumulated amortisation:
Balance at 1 January 2019
Amortisation for the period
Disposals
Impairment for the period
Currency movements
Balance at 31 December 2019
Balance at 1 January 2019
Amortisation for the period
Disposals
Impairment for the period
Currency movements
Balance at 31 December 2020
Trademarks Patents
US$'000
US$'000
Customer
relationships
and other
US$'000
Software
US$'000
Develop-
ment
assets
US$'000
3,088
-
(1,140)
(1)
1,947
1,947
-
-
-
1,947
-
-
1,140
(1,140)
-
-
-
-
-
-
-
-
9,206
726
(1)
(3)
9,928
9,928
748
(143)
30
10,563
(2,372)
(1,036)
-
(2,479)
-
(5,887)
(5,887)
(415)
-
(387)
-
(6,689)
40,754
-
-
109
40,863
40,863
-
-
1,505
42,368
(36,018)
(1,019)
-
-
(108)
(37,145)
(37,145)
(1,019)
-
-
(1,502)
(39,666)
89,100
375
-
2
89,477
89,477
66
(323)
17
89,237
(88,092)
(532)
-
-
(4)
(88,628)
(88,628)
(384)
323
-
(17)
(88,706)
55,208
2,524
(12,486)
(184)
45,062
45,062
6,207
-
1,583
52,852
(33,111)
(1,997)
12,490
(5,332)
(33)
(27,983)
(27,983)
(1,555)
17
(120)
(699)
(30,340)
Total
US$'000
197,356
3,625
(13,627)
(77)
187,277
187,277
7,021
(466)
3,135
196,967
(159,593)
(4,584)
13,630
(8,951)
(145)
(159,643)
(159,643)
(3,373)
340
(507)
(2,218)
(165,401)
Net book value at 31 December 2019
Net book value at 31 December 2020
1,947
1,947
4,041
3,874
3,718
2,702
849
531
17,079
22,512
27,634
31,566
Other intangible assets are reviewed at each reporting date to determine whether there is any indication of impairment. As
a result of the Company’s review of specific intangible assets, the Company recorded an impairment loss as at 31
December 2020 and 31 December 2019 on trademarks, patents and development assets of $0.5 million and $9.0 million,
respectively.
The Company recognised $6.6 million of research and development expenses in the consolidated statement of profit or
loss and other comprehensive income for the year ended 31 December 2020 (2019: $8.1 million).
81
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
20. TRADE AND OTHER PAYABLES
BOART LONGYEAR LIMITED
Trade payables and other payables are carried at amortised cost. They represent unsecured liabilities for goods and
services provided to the Company prior to the end of the financial period that are unpaid and arise when the Company
becomes obligated to make future payments.
Current
Trade payables
Accrued payroll and benefits
Goods and services tax payable
Accrued interest
Accrued legal and environmental 1
Professional fees
Accrued drilling costs
Other sundry payables and accruals
2020
US$'000
2019
US$'000
59,412
21,387
7,446
245
637
3,100
2,502
3,286
98,015
65,177
23,655
4,457
420
6,339
3,242
2,538
5,295
111,123
(1) Accrued legal and environmental costs of $5.3 million as at 31 December 2020 were reclassified from Trade and Other Payables to
Provisions. See Note 22.
No interest is charged on the trade payables for this period. Thereafter, various percentages of interest may be charged
on the outstanding balance based on the terms of the specific contracts. The Company has financial risk management
policies in place to ensure that all payables are paid within the credit timeframe.
Goods and services tax
Revenue, expenses and assets are recognised net of the amount of Goods and Services Tax (“GST”), except:
• where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of
acquisition of an asset or as part of an item of expense; or
for receivables and payables which are recognised inclusive of GST.
•
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables.
Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from
investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as operating
cash flows.
82
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
21. LOANS AND BORROWINGS
BOART LONGYEAR LIMITED
All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable
transaction costs. Debt issuance costs are amortised using the effective interest rate method over the life of the
borrowing. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer
settlement of the liability for at least 12 months after the balance sheet date.
Unsecured - at amortised cost
Non-current
Senior notes
Accreted interest
Secured - at amortised cost
Current
Lease liabilities
Equipment finance
Non-current
Senior notes
Term loans
Accreted interest
Debt modification2
Applicable premium
Revolver bank loans
Debt issuance costs
Original issue discount
Lease liabilities
Equipment finance
Disclosed in the financial statements as:
Current borrowings
Non-current borrowings
A summary of the maturity of the Company's borrowings is as follows:
Less than 1 year
Between 1 and 2 years
Between 2 and 3 years
Between 3 and 4 years
More than 4 years
Original issue discount
Debt issuance costs
2020
US$'000
2019
US$'000
(Restated1)
88,882
4,547
9,372
863
217,035
292,441
125,600
11,786
31,148
67,929
(835)
-
27,249
2,549
878,566
10,235
868,331
878,566
10,236
848,111
7,142
5,213
8,699
879,401
-
(835)
878,566
88,882
3,159
8,328
-
217,035
292,441
68,240
-
17,403
79,904
(1,605)
(400)
28,329
-
801,716
8,328
793,388
801,716
8,328
6,897
772,447
4,436
11,613
803,721
(400)
(1,605)
801,716
(1) The comparative information has been restated as a result of additional accreted interest recorded on the Senior Secured Notes as
discussed in Note 1.
(2) Debt modification relates to the amendment to the Senior Secured Notes during the period.
83
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
21. LOANS AND BORROWINGS (CONTINUED)
Senior notes
BOART LONGYEAR LIMITED
Senior Unsecured Notes
The Company has $88.9 million of senior unsecured notes outstanding as at 31 December 2020 and 2019. These notes
carry an interest rate of 1.5%, per annum, which is payable-in-kind (i.e. non-cash) until maturity in December 2022. The
Company may redeem all or a portion of the notes prior to maturity subject to certain conditions, including in certain cases
the payment of premiums or make-whole amounts.
Senior Secured Notes
The Company has $217.0 million of senior secured notes outstanding as at 31 December 2020 and 2019. These notes
carried an interest rate of 12% per annum which was payable-in-kind until 31 December 2018 and thereafter in cash at
the reduced interest rate of 10% per annum with a scheduled maturity date of December 2022. The Company may
redeem all or a portion of the notes prior to maturity subject to certain conditions, including in certain cases the payment of
premiums or make-whole amounts.
On 19 June 2020 the Company received consent from the holders of the Senior Secured Notes and also received the
ASX relief necessary to implement amendments to satisfy the interest payments due in respect of the notes on 30 June
2020 and 31 December 2020 by way of payment in-kind rather than by payment of cash (PIK Notes). As a result of these
amendments, the Company recorded a modification loss of $11.8 million within finance costs in the Consolidated
Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2020 with an offsetting
increase to loans and borrowings in the Condensed Consolidated Statement of Financial Position as of 31 December
2020. These amendments were treated as a modification as the difference between the net present value of the cash
flows under the amended Senior Secured Notes compared to the net present value of the cash flows under the original
terms of the Senior Secured Notes was not considered “substantial” as defined by AASB 9 Financial Instruments. The
debt modification loss, recorded to comply with AASB 9, is an adjustment to the amortised cost of the Senior Secured
Notes. The adjustment equals the difference between the present value of the cash flows under the original terms and the
most recent modified terms, discounted at the original effective interest rate.
The current rate of interest applicable in respect of the notes is 10%. The interest entitlement for those noteholders who
agree to take interest by way of PIK Notes was 12% and 14.5% for 30 June 2020 and 31 December 2020, respectively.
Non-consenting Senior Secured Note holders will continue to receive interest in cash at the stated rate of 10% per annum.
The Senior Secured Notes include a premium, payable at the maturity of the notes due December 2022 (as well as in
certain circumstances if the Senior Secured Notes are redeemed prior to maturity). The premium is expressed as a
percentage of the principal redeemed or repaid and includes PIK Interest. The premium percentage increases over time
from 0.9% to 24.4% of the principal balance, depending on the timing of repayment. Together, the debt modification,
stated terms, and the applicable premium result in an effective interest rate on the Senior Secured Notes of 14.4% per
annum.
With respect to the senior notes issued by the Company, the indenture governing those senior notes includes covenants
that restrict the Company’s ability to engage in certain activities, including incurring additional indebtedness and making
certain restricted payments as well as a limitation on the amount of secured debt the Company may incur. The senior
notes contain certain provisions that provide the note holders with the ability to declare a default, and accelerate the
notes, should a default occur under either of the Term Loans that results in acceleration of such Term Loans. The senior
notes do not require maintenance or testing of financial covenant ratios.
84
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
21. LOANS AND BORROWINGS (CONTINUED)
Revolver Bank Loans
BOART LONGYEAR LIMITED
ABL
The Company has an asset-based revolver bank loan with an available facility of $75.0 million of which $23.0 million was
drawn as at 31 December 2020 ($34.9 at 31 December 2019).
ABL
Available facility
Drawn
Letters of credit
Availability block
Borrowing base adjustment
Minimum liquidity
Undrawn
2020
US$m
2019
US$m
75.0
23.0
5.8
10.0
10.0
8.3
17.9
75.0
75.0
34.9
5.6
10.0
-
-
24.5
75.0
As at 31 December 2020, $5.8 million (31 December 2019: $5.6 million) of outstanding letters of credit were drawn under
the facility. Interest on drawn amounts and letters of credit are based on a base rate plus margin (30-day USD LIBOR plus
3.5%).
The facility has an “availability block” of $10.0 million that will release when the business reaches certain Net
Debt/EBITDA leverage ratios. Borrowing on this facility is also limited to the lower of the Lender’s commitment or the
borrowing base that supports the Asset Based Loan. This “borrowing base” is made up of eligible receivables and
inventory. As of 31 December 2020, the borrowing base was $55.0 million which reduced collateral availability by $10.0
million.
The asset-based revolver bank loan also includes a “Springing Dominion”/Minimum liquidity covenant that requires the
Company to maintain on the last day of any month 15% of the lesser of “borrowing base” or “facility capacity” less the
“availability block” ($8.3 million at 31 December 2020). If a trigger event occurs the agent can provide an activation notice
that will allow them to access all funds deposited into “Blocked Bank Accounts.” These funds will become the property of
the agent and will be applied to outstanding advances.
The facility is secured by a first lien on the accounts receivable, inventories, deposit accounts and cash (“working capital
assets”) of the ABL borrower and guarantors, and a third lien over substantially all of the other tangible and intangible
assets (“non-working capital assets”) of the ABL borrower and guarantors, including equipment, intellectual property and
the capital stock of subsidiaries (but excluding real property).
Scheduled maturity date of the facility is July 2022. As at 31 December 2020 the Company was in compliance with all of
its debt covenants.
Backstop ABL
The term loan facility has an interest rate of 11% per annum payable-in kind or 10% per annum payable in cash at the
option of the borrower. It is secured by substantially the same collateral as the ABL credit facility and contains a maturity
of October 2022. As at 31 December 2020 and 2019, the amount outstanding under this facility was $45.0 million.
As at 31 December 2020, the Company was in compliance with all of its debt covenants (see page 86).
Term Loans
The Company has a term loan facility which is structured as Tranche A and Tranche B loans. As part of the
Recapitalisation in September 2017, the Company restructured its Term Loans. Interest on Term Loans A and B was
reduced from 12% to 10% payable-in-kind through to December 2018 and 8% payable-in-kind thereafter. Maturity was
extended until December 2022. The term loan tranches are structured to accrete interest, which is payable to the term
loan lender, Centerbridge Partners, L.P., a related party.
85
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
21. LOANS AND BORROWINGS (CONTINUED)
BOART LONGYEAR LIMITED
Since inception and until 31 December 2018, interest of $47.6 million and $34.8 million had accreted for Tranche A and
Tranche B loans, respectively. On 31 December 2018, the issuer of these loans was changed from Boart Longyear
Management Pty. Ltd. to BL Capital Management LLC and the accreted interest to 31 December 2018 was capitalised to
the principal balance. No changes to interest rates or maturity dates were made.
Tranche A
As at 31 December 2020 and 2019, the amount outstanding was $132.5 million, respectively. This tranche contains a
maturity of December 2022 and is non-callable for the first 4 years. It is secured by a first lien on the Working Capital
Assets of the Term Loan A guarantors that are not ABL guarantors, a second lien on the Working Capital assets of the
Term Loan A issuer and the Term Loan A guarantors that are also ABL guarantors, and a second lien on substantially all
of the Non-Working Capital Assets of the Term Loan A issuer and guarantors, including equipment, intellectual property,
the capital stock of subsidiaries and certain owned real property.
Tranche B
As at 31 December 2020 and 2019, the amount outstanding under Tranche B was $159.9 million, respectively. This
tranche contains a maturity of December 2022 and is non-callable for the life of the loan. It is secured by a second lien on
the Working Capital Assets of the Term Loan B and Senior Secured Notes guarantors that are not ABL guarantors, a third
lien on the Working Capital Assets of the Term Loan B and Senior Secured Notes issuer and the Term Loan B and Senior
Secured Notes guarantors that are also ABL guarantors, and a first lien on substantially all of the Non-Working Capital
Assets of the Term Loan B and Senior Secured Notes issuer and guarantors, including equipment, intellectual property,
the capital stock of subsidiaries and certain owned real property.
The Company’s Term Loans, ABL, and Backstop ABL require that obligors under the term loans account for at least 60%
of consolidated Group EBITDA and total Tangible Assets. This covenant is tested at each publicly released financial
report.
The Group’s position in relation to these metrics was as follows:
Metric
% of Consolidated EBITDA
% of Consolidated Tangible Assets
Target Range
Equal or more than 60%
Equal or more than 60%
2020
112%
67%
2019
71%
73%
86
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
21. LOANS AND BORROWINGS (CONTINUED)
BOART LONGYEAR LIMITED
Further details around the Issuer/Borrower and Guarantors of the Company’s debt instruments are included below:
Description
Issuer/Borrower Guarantors
Australia: Boart Longyear Australia Pty Limited, Boart Longyear Limited, Boart Longyear Investments Pty
Limited and Votraint No. 1609 Pty Limited
Canada: Boart Longyear Canada, Boart Longyear Manufacturing Canada Ltd. and Longyear Canada, ULC
Senior
Secured
Notes
Boart
Longyear
Management
Pty Limited
Chile: Boart Longyear Chile Limitada
Peru: Boart Longyear S.A.C.
Switzerland: Boart Longyear Suisse Sarl
United States: Boart Longyear Company, Boart Longyear Manufacturing and Distribution Inc., Longyear
Holdings, Inc., BLY IP Inc., BL Capital Management LLC, BLY US Holdings Inc. and Longyear TM, Inc.
Australia: Boart Longyear Australia Pty Limited, Boart Longyear Limited, Boart Longyear Investments Pty
Limited and Votraint No. 1609 Pty Limited
Canada: Boart Longyear Canada, Boart Longyear Manufacturing Canada Ltd. and Longyear Canada, ULC
Senior
Unsecured
Notes
Boart
Longyear
Management
Pty Limited
Chile: Boart Longyear Chile Limitada
Peru: Boart Longyear S.A.C.
Switzerland: Boart Longyear Suisse Sarl
United States: Boart Longyear Company, Boart Longyear Manufacturing and Distribution Inc., Longyear
Holdings, Inc., BL Capital Management LLC, BLY US Holdings Inc. and Longyear TM, Inc.
Australia: Boart Longyear Management Pty Limited, Boart Longyear Australia Pty Limited, Boart Longyear
Limited, Boart Longyear Investments Pty Limited and Votraint No. 1609 Pty Limited
Canada: Boart Longyear Canada, Boart Longyear Manufacturing Canada Ltd. and Longyear Canada, ULC
Term Loan
A
BL Capital
Management
LLC
Chile: Boart Longyear Chile Limitada
Peru: Boart Longyear S.A.C.
Switzerland: Boart Longyear Suisse Sarl
United States: Boart Longyear Company, Boart Longyear Manufacturing and Distribution Inc., Longyear
Holdings, Inc., BLY IP Inc., BLY US Holdings Inc. and Longyear TM, Inc.
Term Loan
B
BL Capital
Management
LLC
Same as Term Loan A
Australia: Boart Longyear Australia Pty Limited, Boart Longyear Limited, Boart Longyear Investments Pty
Limited and Votraint No. 1609 Pty Limited
Canada: Boart Longyear Canada, Boart Longyear Manufacturing Canada Ltd. and Longyear Canada, ULC
ABL
Boart
Longyear
Management
Pty Limited
Chile: Boart Longyear Chile Limitada
Peru: Boart Longyear S.A.C.
Switzerland: Boart Longyear Suisse Sarl
United States: Boart Longyear Company, Boart Longyear Manufacturing and Distribution Inc., Longyear
Holdings, Inc., BLY IP Inc., BL Capital Management LLC, BLY US Holdings Inc. and Longyear TM, Inc.
Backstop
ABL
Boart
Longyear
Management
Pty Limited
Same as ABL
87
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
22. PROVISIONS
BOART LONGYEAR LIMITED
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that
can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability.
Employee benefits
Liabilities for employee benefits for wages, salaries, annual leave, long service leave, and sick leave represent present
obligations resulting from employees’ services provided and are calculated based on rates that the Company expects to
pay as at the reporting date, including costs such as workers’ compensation insurance and payroll tax, when it is probable
that settlement will be required and they are capable of being reliably measured.
Liabilities recognised in respect of short-term employee benefits are measured as the present value of the estimated
future cash outflows to be made by the Company in respect of services provided by employees up to the reporting date.
Non-accumulating non-monetary benefits, such as medical care, housing, cars and free or subsidised goods and
services, are expensed based on the net marginal cost to the Company as the benefits are provided to the employees.
Provisions are recognised for amounts expected to be paid under short-term cash bonus or profit-sharing plans if the
Company has present legal or constructive obligations to pay these amounts as a result of past service provided by
employees and the obligations can be reliably estimated.
Warranties
The Company provides statutory product warranties through its contracts with customers and does not offer the option to
purchase warranties separately.
The Company maintains warranty reserves for products it manufactures. A provision is recognised when the following
conditions are met: (1) the Company has an obligation as a result of an implied or contractual warranty; (2) it is probable
that an outflow of resources will be required to settle the warranty claims; and (3) the amount of the claims can be reliably
estimated.
Legal contingencies
The Company has provided for certain legal contingencies to the extent they are probable to incur an outflow of economic
benefits to require the settlement of related obligations. Legal contingencies of $5.3 million are comprised of both legal
and environmental costs, which were reclassified from Trade and Other Payables as at 31 December 2020. See Note 20.
The following table reflects the provision balances:
Current
Employee benefits
Restructuring and termination costs 1
Warranty 2
Non-current
Employee benefits
Provision for legal contingencies
Pension and post-retirement benefits 3
Provision for tax contingencies
2020
US$'000
2019
US$'000
10,158
3,116
592
13,866
534
5,333
6,331
49,427
61,625
75,491
8,820
4,684
933
14,437
403
-
10,349
63,792
74,544
88,981
(1) The provision for restructuring and termination costs represent the present value of management’s best estimate of the costs
directly and necessarily caused by the restructuring that are not associated with the ongoing activities of the entity, including
termination benefits.
(2) The provision for warranty claims represents the present value of management’s best estimate of the future outflow of economic
benefits that will be required under the Company’s warranty program.
(3) Full actuarial valuations of the defined benefit pension and post-retirement benefit plans are performed annually by qualified
independent actuaries for the Company’s 31 December year-end closing. See Note 23.
88
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
22. PROVISIONS (CONTINUED)
The following table reflects the provision rollforwards:
Balance at 1 January 2020
Additional provisions recognised
Reductions arising from payments
Reductions resulting from remeasurement
Amounts reclassified from tax receivables
Foreign exchange
Balance at 31 December 2020
23. PENSION AND POST-RETIREMENT BENEFITS
Defined contribution pension plans and post-retirement benefits
BOART LONGYEAR LIMITED
Warranty
US$'000
Restructuring
and
Termination
US$'000
Tax
US$'000
933
50
(382)
-
-
(9)
592
4,684
-
(42)
(650)
-
(876)
3,116
63,792
1,251
(1,800)
-
(14,498)
682
49,427
A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity.
The Company has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets
to pay all employees the benefits relating to employee service in the current and prior periods. The amount recognised as
an expense in profit or loss in respect of pension costs and other post-retirement benefits is the contributions payable in
the year. Differences between contributions payable in the year and contributions actually paid are shown as either
accruals or prepayments in the statement of financial position.
Defined contribution plans
Pension costs represent actual contributions paid or payable by the Company to the various plans. As at 31 December
2020 and 2019, there were no significant outstanding/prepaid contributions. Company contributions to these plans were
$9.9 million and $9.0 million for the years ended 31 December 2020 and 2019, respectively.
The assets of the defined contribution plans are held separately in independently administered funds. The charge in
respect of these plans is calculated on the basis of contributions payable by the Company during the fiscal year.
Defined benefit pension plans
The Company’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the
amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit
is discounted to determine its present value, and the fair value of any fund assets is deducted.
The discount rate is the yield at the balance sheet date on high quality corporate bonds that have maturity dates
approximating the terms of the Company’s defined benefit obligations. The weighted-average maturity profile of the
defined benefit obligations in North America was 11.0 years for both 2020 and 2019, and in Europe was 19.8 and 14.7
years for 2020 and 2019. The calculation is performed by a qualified actuary using the projected unit credit method.
Actuarial gains and losses arising from experience adjustments and related changes in actuarial assumptions are charged
or credited to retained earnings.
The Company provides defined contribution and defined benefit pension plans for the majority of its employees. It also
provides post-retirement medical arrangements in North America.
The Company’s accounting policy for defined benefit pension plans requires management to make annual estimates and
assumptions about future returns on classes of assets, future remuneration changes, employee attrition rates,
administration costs, changes in benefits, inflation rates, exchange rates, life expectancy and expected remaining periods
of service of employees. In making these estimates and assumptions, management considers advice provided by external
advisers, such as actuaries. Where actual experience differs to these estimates, actuarial gains and losses are
recognised directly in equity.
89
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
23. PENSION AND POST-RETIREMENT BENEFITS (CONTINUED)
BOART LONGYEAR LIMITED
Full actuarial valuations of the defined benefit pension plans were performed as at various dates and updated to 31
December 2020 by qualified independent actuaries. The estimated market value of the assets of the funded pension plans
was $173.3 million and $207.9 million as at 31 December 2020, and 2019, respectively. The market value of assets was
used to determine the funding level of the plans. The market value of the assets of the funded plans was sufficient to
cover 90% in 2020 and 2019 of the benefits that had accrued to participants after allowing for expected increases in future
earnings and pensions. Entities within the Company are paying contributions as required by statutory requirements and in
accordance with local actuarial advice.
The majority of the defined benefit pension plans are funded in accordance with minimum funding requirements by local
regulators. The assets of these plans are held separately from those of the Company, in independently administered
funds, in accordance with statutory requirements or local practice throughout the world.
The majority of the defined benefit pension plans are closed to new participants. Under the projected unit credit method,
service cost will increase as the participant ages until retirement when it goes to zero. In addition, changes to the discount
rate can increase or decrease service cost.
Company contributions to these plans were $3.0 million and $2.7 million during the years ended 31 December 2020 and
2019, respectively. Contributions in 2021 are expected to be $2.4 million.
The principal assumptions used to determine the actuarial present value of benefit obligations and pension costs are
detailed below (shown in weighted averages):
Discount rates
Expected Average Rate Increases:
Salaries
Pensions in payment
Healthcare costs (initial)
Healthcare costs (ultimate)
2020
2019
North
America
2.5%
Europe
1.0%
North
America
3.3%
Europe
0.4%
3.5%
-
5.0%
5.0%
3.0%
1.5%
-
-
3.5%
-
5.0%
5.0%
3.0%
1.5%
-
-
Amounts recognised in profit or loss in respect of these defined benefit plans are as follows:
2020
Post-
retirement
Pension
Plan medical Plan
US$'000
US$'000
1,014
351
1,365
-
9
9
Total
US$'000
1,014
360
Pension
Plan
US$'000
1,088
415
1,374
1,503
2019
Post-
retirement
medical Plan
US$'000
-
11
11
Total
US$'000
1,088
426
1,514
Current service cost
Net interest expense
Total charge to profit
and loss account
For the financial years ended 31 December 2020 and 2019, charges of approximately $1.1 million and $1.3 million,
respectively, have been included in cost of goods sold and the remainder in general and administrative or sales and
marketing expenses.
90
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
BOART LONGYEAR LIMITED
23. PENSION AND POST-RETIREMENT BENEFITS (CONTINUED)
Changes in the present value of the defined benefit obligations were as follows:
Opening defined benefit obligation
Current service cost
Interest cost
Actuarial (gains) losses arising from
demographic assumptions
Actuarial losses arising from
financial assumptions
Assets distributed on settlements
Exchange differences on foreign plans
Benefits paid
Closing defined benefit obligation
2020
Post-
retirement
Medical Plan
US$'000
321
-
9
-
11
-
12
(50)
303
Pension
Plan
US$'000
217,974
1,014
5,273
(624)
10,362
(48,109)
4,923
(11,442)
179,371
2019
Post-
retirement
Medical Plan
US$'000
339
-
11
Pension
Plan
US$'000
201,885
1,088
6,363
Total
US$'000
202,224
1,088
6,374
Total
US$'000
218,295
1,014
5,282
(624)
168
-
168
10,373
(48,109)
4,935
(11,492)
179,674
18,285
-
2,110
(11,925)
217,974
11
-
14
(54)
321
18,296
-
2,124
(11,979)
218,295
Changes in the fair value of the plan assets were as follows:
Opening fair value plan of assets
Expected return on plan assets
Actuarial gains arising from
financial assumptions
Administrative expenses paid from the trust
Exchange differences on foreign plans
Contributions from the employer
Distribution of assets from settled plan
Benefits paid
Closing fair value of plan assets
2020
Post-
retirement
Medical Plan
US$'000
-
-
-
-
-
50
-
(50)
-
Pension
Plan
US$'000
207,946
5,038
13,275
(1,310)
4,887
2,916
(47,967)
(11,442)
173,343
Total
US$'000
207,946
5,038
13,275
(1,310)
4,887
2,966
(47,967)
(11,492)
173,343
Pension
Plan
US$'000
193,542
6,032
16,601
(1,215)
2,261
2,650
-
(11,925)
207,946
2019
Post-
retirement
Medical Plan
US$'000
-
-
-
-
-
54
-
(54)
-
Total
US$'000
193,542
6,032
16,601
(1,215)
2,261
2,704
-
(11,979)
207,946
Assumed healthcare cost trend rates impact the amounts recognised in profit or loss. A one percentage point change in
assumed healthcare cost trend rates would have the following effects:
One percentage point increase
Effect on the aggregate of the service cost and interest cost
Effect on accumulated post-employment benefit obligation
One percentage point decrease
Effect on the aggregate of the service cost and interest cost
Effect on accumulated post-employment benefit obligation
2020
US$'000
2019
US$'000
-
3
-
(3)
-
2
-
(2)
91
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
BOART LONGYEAR LIMITED
24. ISSUED CAPITAL
Ordinary shares
Share capital
2020
Shares
'000
US$'000
2019
Shares
'000
US$'000
Ordinary shares, fully paid
88,511
1,463,802
87,656
1,463,185
Movements in ordinary shares
Balance at beginning of year
Share consolidation1
Shares issued
Shares issued to Directors
Balance at end of the year
Total shares outstanding
Balance at end of the year
Issued Warrants
Warrants issued but not exercised
Share consolidation1
Balance at end of the year
Total ordinary, convertible
preference shares and warrants
87,656
-
-
855
88,511
88,511
88,511
1,463,185
-
332
285
1,463,802
1,463,802
1,463,802
26,296,215
(26,208,559)
-
-
1,463,185
-
-
-
87,656
1,463,185
87,656
87,656
1,463,185
1,463,185
2020
Warrants
'000
US$'000
2019
Warrants
'000
US$'000
2,440
-
2,440
5,591
-
5,591
731,082
(728,642)
2,440
5,591
-
5,591
1,469,393
1,468,776
(1) On 30 October 2019, the Company completed a consolidation of the Company’s issued capital on a basis that every 300 shares be
consolidated into 1 share.
92
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
25. DIVIDENDS
BOART LONGYEAR LIMITED
No dividend has been determined for 31 December 2020 or 31 December 2019. There are no franking credits available
for the years ended 31 December 2020 or 2019.
26. COMMITMENTS FOR EXPENDITURE
The Company has the following continuing operational and financial commitments in the normal course of business:
Capital commitments
Purchase commitments for capital expenditures
Lease commitment for short-term and low-value leases
27. LEASE COMMITMENTS
2020
US$'000
2019
US$'000
5,485
8,525
3,531
10,574
The Company has various lease agreements in place for facilities and equipment. The terms of the leases include periods
of free rent, options for the Company to extend the lease, and increasing rental rates over time, and vary by lease. These
lease obligations expire at various dates through 2030. When the rate implicit in the lease is not determinable, the
Company uses its incremental borrowing rate based on information available at the commencement date of the lease to
determine the present value of the lease payments.
As at 31 December 2020, the Company has ROU assets with a net book value of $31.9 million and corresponding lease
liabilities of $36.6 million compared to $35.6 million and $36.6 million as at 31 December 2019.
Payments for low-value and short-term leases are presented in the Consolidated Statement of Profit and Loss within
expenses contributing to Operating profit (loss). Payments for low-value and short-term leases as at 31 December 2020
totaled $9.0 million compared to $8.4 million as at 31 December 2019.
ROU assets and depreciation by asset type are as follows:
Balance at 31 December 2019
Leased Asset Cost
Leased Asset Accumulated Depreciation
Net book value at 31 December 2019
Balance at 31 December 2020
Leased Asset Cost
Leased Asset Accumulated Depreciation
Net book value at 31 December 2020
2019 Depreciation Expense
2020 Depreciation Expense
Land and
Buildings
US$'000
Plant and
Equipment
US$'000
Total
US$'000
29,516
(5,363)
24,153
32,412
(10,198)
22,214
5,474
5,055
16,716
(5,264)
11,452
19,458
(9,782)
9,676
3,801
4,229
46,232
(10,627)
35,605
51,870
(19,980)
31,890
9,275
9,284
93
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
28. CONTINGENT LIABILITIES
BOART LONGYEAR LIMITED
The recognition of provisions for legal disputes is subject to a significant degree of judgment. Provisions are established
when (a) the Company has a present legal or constructive obligation as a result of past events, (b) it is probable that an
outflow of resources will be required to settle the obligation, and (c) the amount of that outflow has been reliably
estimated. Balances for legal provisions are disclosed in Note 22.
Letters of credit
Standby letters of credit primarily issued in support of commitments or other obligations as at 31 December 2020 are as
follows:
Subsidiary
Australia
Australia
Australia
Australia
United States
United States
Purpose
Secure a facility rental
Secure a facility rental
Secure a facility rental
Secure credit facility
Secure DS bonding program
Secure insurance program
Expiration
Date
August 2021
September 2021
October 2021
April 2021
January 2021
August 2021
Amount
US $'000
526
474
61
294
2,670
1,743
5,768
Financial guarantee contract liabilities are measured initially at their fair values and subsequently at the higher of the
amount recognised as a provision or the amount initially recognised less cumulative amortisation in accordance with the
revenue recognition policies described in Note 3.
A summary of the maturity of issued letters of credit is as follows:
Less than 1 year
1 to 3 years
Guarantees
2020
US$'000
2019
US$'000
5,768
-
5,768
5,348
271
5,619
The subsidiaries of the Company provide guarantees within the normal course of business which includes payment
guarantees to cover import duties, taxes, performance and completion of contracts. In addition, the Parent and certain
subsidiaries are guarantors on the Company’s loans and borrowings. See Note 21.
Legal contingencies
The Company is subject to certain routine legal proceedings that arise in the normal course of its business. Management
believes that the ultimate amount of liability, if any, for any pending claims of any type (either alone or combined) will not
materially affect the Company’s operations, liquidity, or financial position taken as a whole. However, the ultimate
outcome of any litigation is uncertain, and unfavourable outcomes could have a material adverse impact.
Tax and customs audits
The Company is subject to certain tax and customs audits that arise in the normal course of its business. Management
believes that the ultimate amount of liability, if any, for any pending assessments (either alone or combined) would not
materially affect the Company’s operations, liquidity, or financial position taken as a whole. However, the ultimate
outcome of these audits is uncertain and unfavourable outcomes could have a material adverse impact. See additional
disclosure in Note 10.
94
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
28. CONTINGENT LIABILITIES (CONTINUED)
Other contingencies
Other contingent liabilities as at 31 December 2020 and 2019 consist of the following:
BOART LONGYEAR LIMITED
Contingent liabilities
Guarantees/counter-guarantees to outside parties
12,272
7,035
Except as detailed in the following table, the carrying amount of financial assets recorded in the financial statements, net
of any allowances for losses, represents the Company’s maximum exposure to credit risk without taking account of the
value of any collateral obtained. See Note 14.
2020
US$'000
2019
US$'000
Financial assets and other credit exposure
Performance guarantees provided, including letters of credit
Maximum credit risk
2020
US$'000
2019
US$'000
18,040
12,654
95
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
29. DEED OF CROSS GUARANTEE
BOART LONGYEAR LIMITED
Boart Longyear Limited, Votraint No. 1609 Pty Ltd, Boart Longyear Investments Pty Ltd. and Boart Longyear Management
Pty Limited are parties to a deed of cross guarantee (‘the Deed’) under which each company guarantees the debts of the
other. By entering into the Deed, the wholly owned entities have been relieved from the requirement to prepare a financial
report under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.
The above companies represent a “closed group” for the purpose of the Class Order, and as there are no other parties to
the Deed that are controlled by Boart Longyear Limited, they also represent the “extended closed group”.
Set out below is a consolidated statement of financial performance, a consolidated statement of comprehensive income, a
consolidated statement of financial position and a summary of movements in consolidated retained earnings for the years
ended 31 December 2020 and 31 December 2019 of the closed group.
a) Consolidated statement of comprehensive income
Other income
General and administrative expenses
Restructuring expenses and related impairments
Other expenses
Operating (loss) profit
Interest income
Finance costs
(Loss) profit before taxation
Income tax benefit (expense)
(Loss) profit for the year from
continuing operations
(Loss) profit for the year
2020
US$'000
2019
US$'000
-
(3,359)
41,984
(61,138)
(22,513)
296
(80,740)
(102,957)
659
(102,298)
(102,298)
169,193
(3,455)
38,349
(11,060)
193,027
4,083
(48,011)
149,099
(42,069)
107,030
107,030
Other comprehensive (loss) income
(Loss) profit for the year attributable
to equity holders of the parent
2020
US$'000
2019
US$'000
(102,298)
107,030
Dividends received from related parties
Other comprehensive loss for the year (net of tax)
-
-
55,321
55,321
Total comprehensive (loss) income for the year
(102,298)
162,351
96
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
29. DEED OF CROSS GUARANTEE (CONTINUED)
b) Consolidated statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Prepaid expenses and other assets
Other Current Assets
Total current assets
Non-current assets
Loans to related parties
Investment in subsidiaries
Other assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Other financial liabilities
Total current liabilities
Non-current liabilities
Loans from related parties
Loans and borrowings
Provisions
Total non-current liabilities
Total liabilities
Net liabilities
Equity
Issued capital
Other equity
Retained earnings
Total equity
BOART LONGYEAR LIMITED
2020
US$'000
2019
US$'000
395
2,936
137
-
3,468
61,382
493,815
69
555,266
558,734
2,963
516
1,082
4,561
214,008
512,613
213
726,834
731,395
(172,661)
3,219,853
491,631
(3,884,145)
(172,661)
433
3,088
115
4,135
7,771
55,042
456,973
63
512,078
519,849
1,512
1,253
527
3,292
164,751
448,387
213
613,351
616,643
(96,794)
3,219,236
465,817
(3,781,847)
(96,794)
97
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
30. PARENT ENTITY DISCLOSURES
Financial position
BOART LONGYEAR LIMITED
Assets
Current assets 1
Non-current assets 1
Total assets
Liabilities
Current liabilities 1
Non-current liabilities 1
Total liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
2020
US$'000
2019
US$'000
143
466,655
466,798
1,009
358,356
359,365
107,433
6,623
459,103
465,726
56,065
291,291
347,356
118,370
3,219,853
10,663
(3,123,083)
107,433
3,219,236
9,452
(3,110,318)
118,370
(1)
In 2020, the tax payables and receivables included in current assets and current liabilities for 2019 have been classified as non-
current assets and liabilities for 2020.
Financial performance
(Loss) profit for the year
Total comprehensive loss
2020
US$'000
(12,765)
(12,765)
2019
US$'000
60,232
60,232
Guarantees entered into by the parent entity in relation to debts of its subsidiaries
Other guarantees are described in Note 28.
Contractual obligations
As at 31 December 2020 and 2019, Boart Longyear Limited did not have any contractual obligations.
Guarantees entered into by the parent entity in relation to debts of its subsidiaries
The Parent has entered into agreements with the Canada Revenue Agency and Ministry of Finance for the province of
Ontario to guarantee the payment of all amounts finally determined to be due and payable by its Canadian affiliates in
respect of contested tax assessments for the tax years from 2007 through 2012. See Note 10. Other guarantees are
described in Note 28.
98
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
31. COMPANY SUBSIDIARIES
The Company’s percentage ownership of the principal subsidiaries are as follows:
BOART LONGYEAR LIMITED
Country of
incorporation
Business
31 Dec
2020
31 Dec
2019
Subsidiaries
BL Capital Management LLC
BL DDL Holdings Pty Ltd1
BL Group Holdings Inc.
BLI Zambia Ltd.
BLY Canada Inc.3
BLY Cote d'Ivoire S.A.
BLY Drilling Services and Products Mexico, S.A. de C.V.2
USA
Australia
Holding Company
Dormant
Cayman Island
Holding Company
Zambia
Canada
Ivory Coast
Mexico
Drilling Services
Holding Company
Drilling Services
Dormant
BLY EMEA UK Holdings Ltd.
United Kingdom
Holding Company
Gabon
Ghana
Guinea
USA
Drilling Services
Drilling Services
Dormant
Holding Company
Madagascar
Dormant
Mali
Senegal
Sierra Leone
USA
Cambodia
Drilling Services
Drilling Services
Drilling Services
Holding Company
Dormant
Dem. Rep. of Congo Drilling Services
New Zealand
Drilling Services
Australia
Australia
Canada
Argentina
Australia
Australia
Netherlands
Burkina Faso
Canada
Chile
Colombia
USA
Mexico
China
Dormant
Dormant
Holding Company
Drilling Services
Dormant
Drilling Services
Drilling Products
Dormant
Drilling Products and Services
Drilling Products and Services
Dormant
Drilling Products and Services
Drilling Services
Drilling Products and Services
Kazakhstan
Dormant
Eritrea
Canada
Germany
Thailand
Canada
Canada
Netherlands
Australia
Drilling Services
Holding Company
Drilling Products and Services
Dormant
Drilling Services
Holding Company
Holding Company
Holding Company
BLY Gabon S.A.
BLY Ghana Limited
BLY Guinea S.A.2
BLY IP Inc.
BLY Madagascar S.A.2
BLY Mali S.A.
BLY Senegal S.A.
BLY Sierra Leone Ltd.
BLY US Holdings Inc.
Boart Longyear (Cambodia) Ltd.2
Boart Longyear (DRC) S.A.
Boart Longyear (NZ) Limited
Boart Longyear (Vic) No. 1 Pty Ltd
Boart Longyear (Vic) No. 2 Pty Ltd
Boart Longyear Alberta Limited
Boart Longyear Argentina S.A.
Boart Longyear Australia Holdings Pty Limited1
Boart Longyear Australia Pty Ltd
Boart Longyear B.V.
Boart Longyear Burkina Faso Sarl2
Boart Longyear Canada
Boart Longyear Chile Limitada
Boart Longyear Colombia S.A.S.1
Boart Longyear Company
Boart Longyear de Mexico, S.A. de C.V.
Boart Longyear Drilling Products (Wuxi) Co., Ltd.
Boart Longyear Drilling Services KZ LLP2
Boart Longyear Eritrea Ltd.
Boart Longyear Finance Ltd.
Boart Longyear GmbH & Co., KG
Boart Longyear Holdings (Thailand) Co., Ltd.1
Boart Longyear I LP3
Boart Longyear Incorporated
Boart Longyear International B.V.
Boart Longyear Investments Pty Ltd
99
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
-
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
31. COMPANY SUBSIDIARIES (CONTINUED)
BOART LONGYEAR LIMITED
Subsidiaries
Boart Longyear Liberia Corporation
Boart Longyear Limitada
Boart Longyear Limited
Boart Longyear LLC1
Boart Longyear Management Pty Ltd
Boart Longyear Manufacturing and Distribution Inc.
Boart Longyear Manufacturing Canada Ltd.
Boart Longyear Netherlands BV
Boart Longyear Poland Spolka z.o.o.
Boart Longyear Products KZ LLP 2
Boart Longyear RUS1
Boart Longyear S.A.C.
Boart Longyear Saudi Arabia LLC2
Boart Longyear Sole Co., Limited
Boart Longyear Suisse Sàrl
Boart Longyear Tanzania Limited3
Boart Longyear Ventures Inc.
Boart Longyear Vermogensverwaltung GmbH
Boart Longyear Zambia Limited2
Cooperatief Longyear Holdings UA
Dongray Industrial Limited1
Geoserv Pesquisas Geologicas S.A.
Globaltech Corporation Pty Ltd
Inavel S.A.
Longyear Canada, ULC
Longyear DRC S.A.3
Longyear Global Holdings, Inc.
Longyear South Africa (Pty) Ltd
Longyear TM, Inc.
P.T. Boart Longyear
Patagonia Drill Mining Services S.A.
Votraint No. 1609 Pty Ltd
(1) This entity was merged or dissolved in 2020.
(2) This entity is currently in liquidation status.
(3) This entity was formed in 2020.
Country of
incorporation
Business
31 Dec
2020
31 Dec
2019
Liberia
Dormant
Brasil
Ireland
Russia Federation
Australia
USA
Canada
Dormant
Drilling Products
Dormant
Holding Company
Drilling Products
Drilling Products
Netherlands
Holding Company
Poland
Drilling Products and Services
Kazakhstan
Dormant
Russia Federation
Dormant
Peru
Drilling Products and Services
Saudi Arabia
Dormant
Laos
Drilling Services
Switzerland
Holding Company
Tanzania
Canada
Germany
Zambia
Drilling Services
Holding Company
Holding Company
Dormant
Netherlands
Holding Company
United Kingdom
Brasil
Australia
Uruguay
Canada
Dormant
Dormant
Holding Company
Drilling Services
Drilling Products
Dem. Rep. of Congo Holding Company
USA
Holding Company
South Africa
Drilling Products and Services
USA
Indonesia
Argentina
Australia
Holding Company
Drilling Services
Dormant
Drilling Services
100
100
100
-
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
-
100
52
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
52
100
100
-
100
100
100
100
100
100
100
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
32. RELATED PARTY TRANSACTIONS
Transactions with key management personnel
a) Key management personnel compensation
BOART LONGYEAR LIMITED
Details of key management personnel compensation are disclosed in Note 8.
b) Other transactions with key management personnel of the Company
None.
c) During the year the Company incurred the following interest expenses associated with the relevant parties
and corresponding debt facilities:
Balances at
31 Dec 2020
US$'000
Interest expense for the
financial year ended
31 Dec 2020
US$'000
155,740
187,743
17,282
287,618
6,061
67,782
42,543
12,048
14,524
1,805
4,410
633
12,190
632
Centerbridge
Term Loan A
Term Loan B
Backstop ABL
Senior Secured Notes
Ascribe
Backstop ABL
Senior Secured Notes
Unsecured Notes
33. CASH AND CASH EQUIVALENTS
Included in the cash balance as at 31 December 2020 is $0.2 million of restricted cash and as at 31 December 2019 $0.2
million of restricted cash. The Company cannot access these cash balances until certain conditions are met. These
conditions pertain to the Company’s ABL facility as well as restrictions to secure facility leases.
34. NON-CASH TRANSACTIONS
During the current year, the Company entered into the following non-cash financing transactions, which are not reflected
in the consolidated statement of cash flows:
•
$85.8 million of non-cash interest expense
101
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
35. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS
Standards and Interpretations issued, but not yet effective
BOART LONGYEAR LIMITED
At the date of authorisation of the financial statements, the Company has not applied the following new and revised
Australian Accounting Standard, Interpretations and amendments that have been issued, but are not yet effective.
Standard / Interpretation
Effective for annual reporting
periods beginning on or after
Expected to be initially applied in
the financial year ending
AASB 17 'Insurance Contracts'
1 January 2023
31 December 2023
AASB 2014-10 Amendments to
Australian Accounting Standards -
Sale or Contribution of Assets
between an investor and its Associate
or Joint Venture [AASB 10 & AASB
128]
AASB 2015-10 Amendments to
Australian Accounting Standards -
Effective Date of Amendments to
AASB 10 & AASB 128
AASB 2017-5 Amendments to
Australian Accounting Standards -
Effective Date of Amendments to
AASB 10 & AASB 128 and Editorial
Corrections
AASB 2020-1 Amendments to
Australian Accounting Standards -
Classification of Liabilities as Current
or Non-current
AASB 2020-3 Amendments to
Australian Accounting Standards -
Annual Improvements 2018-2020
AASB 2020-8 Amendments to
Australian Accounting Standards -
Interest Rate Benchmark Reform
1 January 2022
31 December 2022
1 January 2022
31 December 2022
1 January 2022
Editorial Corrections apply from
1 January 2018
31 December 2022
1 January 2023
31 December 2023
1 January 2022
31 December 2022
1 January 2021
31 December 2021
102
BOART LONGYEAR 2020 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2020
For the financial year ended 31 December 2020
BOART LONGYEAR LIMITED
35. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS (CONTINUED)
Standards and Interpretations issued and effective
The Company has adopted all the new and revised standards and interpretations issued by the Australian Accounting
Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period.
These standards and interpretations are set forth throughout the notes to the financial statements. The adoption of each
standard individually did not have a significant impact on the Company’s financial results or consolidated statement of
financial position.
Standard / Interpretation
AASB 2018-7 Amendments to
Australian Accounting Standards -
Definition of Material
AASB 2019-1 Amendments to
Australian Accounting Standards -
References to the Conceptual
Framework
AASB 2018-6 Amendments to
Australian Accounting Standards -
Definition of a Business
AASB 2020-4 Amendments to
Australian Accounting Standards -
COVID-19 Related Rent Concessions
AASB 2019-5 Amendments to
Australian Accounting Standards -
Disclosure of the effect of New IFRS
Standards not yet Issued in Australia
Effective for annual reporting
periods beginning on or after
Applied in the financial year ended
1 January 2020
31 December 2020
1 January 2020
31 December 2020
1 January 2020
31 December 2020
1 June 2020
31 December 2020
1 January 2020
31 December 2020
36. SUBSEQUENT EVENTS
As released on 7 January 2021, the Company has engaged Rothschild & Co. as an advisor to support the Company's
evaluation of potential options in anticipation of the maturation of the Company's debt facilities through the second half of
2022 including for refinancing or recapitalisation. At this time there are no material developments related to the strategic
review; however, the Company continues to explore various solutions to materially improve the capital structure of the
business.
103
BOART LONGYEAR 2020 ANNUAL REPORT
SUPPLEMENTARY INFORMATION
Additional information as at 18 March 2021.
1. Substantial shareholders
The substantial shareholders as disclosed to the Company in substantial holders’ notices are:
Holder
Centerbridge Partners group of Companies
(as set out in Form 604: Notice of change of interests of substantial
holder lodged 12 June 2019)
Ascribe group of Companies
(as set out in Form 604: Notice of change of interests of substantial
holder lodged 27 September 2017)
Number of Ordinary Shares in
which relevant interest held
*14,156,931,140
**5,497,572,395
Subsequent to completion of the 300:1 Share consolidation on 11 November 2019, the number of shares held by
each substantial shareholder is as follows:
Centerbridge Partners group of Companies*
Ascribe group of Companies**
2. Number of securities on issue and security holders
(a) Quoted Securities
i) Ordinary share capital
47,189,771
18,325,242
There are 88,511,800 quoted fully paid ordinary shares on issue under the ASX code “BLY”, held by 3,607
individual shareholders. Each Ordinary shareholder present at a general meeting (whether in person or
by proxy or representative) is entitled to one vote on a show of hands or, on a poll, one vote for each fully
paid ordinary share held.
ii) Warrants
There are 2,012,403 quoted warrants expiring 1 September 2024 held by 5,645 individual warrant holders,
that are publically traded on the ASX under the code “BLYO”. The quoted warrants do not carry rights to
vote.
(b) Unquoted Securities
i) Options
There are 43,158 unquoted share options on issue held by 13 individual option holders that are not
publically traded on the ASX under the code “BLYAA”. The unquoted share options do not carry rights to
vote.
ii) Warrants
There are 427,816 unquoted warrants expiring 1 September 2024 held by 9 individual warrant holders
that are not publically traded on the ASX under the code “BLYAC”. The unquoted warrants do not carry
rights to vote.
3. Distribution of holders of equity securities
Range
Holders - Fully Paid
Ordinary Shares
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
2,611
640
148
182
26
3,607
104
BOART LONGYEAR 2020 ANNUAL REPORT
SUPPLEMENTARY INFORMATION
Additional information as at 18 March 2021.
4. Unmarketable parcel of shares
The number of security investors holding less than a marketable parcel of 834 securities ($0.600 on 18/03/2021)
is 2,280 and they hold 399,529 securities.
5. On-market buy back
There is no current on-market buy-back of Boart Longyear shares
6. 20 Largest holders of quoted equity securities
a) Fully paid ordinary shares
No. Holder
HSBC CUSTODY NOMINEES (AUSTRALIA)
CS THIRD NOMINEES PTY LIMITED
1 CCP II DUTCH ACQUISITION - E2, B.V.
J P MORGAN NOMINEES AUSTRALIA LIMITED
2
3 CCP CREDIT SC II DUTCH ACQUISITION - E, B.V.
4
5
6 MR JZHONG-WEI MIAO
7 PACIFIC CUSTODIANS PTY LIMITED
8 MR ALLAN KEITH CLARKE
9 CITICORP NOMINEES PTY LIMITED
10 RIADIS HOLDINGS PTY LTD
11 MR CHRISTOPHER STUART KING
12 KEONG LIM PTY LIMITED
13 MR JEFFREY OLSEN
14 MRS GUIXING JIAN
15 MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LTD
16 MR MARK ANTHONY LEE
17 MR JAMES DOUGLAS KERN
18 RUSSELL INVESTMENTS
19 MR JIMMY YIP
20 MR PETER JOHN BELLGROVE
Fully Paid
Ordinary
Shares
29,544,846
23,629,927
13,467,607
5,827,476
1,264,037
1,203,000
920,048
430,000
425,807
420,000
330,023
278,847
271,422
268,688
224,166
216,426
202,602
202,444
198,241
150,480
Percent of
Issued Capital
Held
33.38
26.70
15.22
6.58
1.43
1.36
1.04
0.49
0.48
0.47
0.37
0.32
0.31
0.30
0.25
0.24
0.23
0.23
0.22
0.17
TOTAL FOR TOP 20
79,476,087
89.79
105
BOART LONGYEAR 2020 ANNUAL REPORT
SUPPLEMENTARY INFORMATION
Additional information as at 18 March 2021.
6. 20 Largest holders of quoted equity securities (cont.)
b) Warrants
No. Holder
J P MORGAN NOMINEES AUSTRALIA LIMITED
1
2 VFG ASSET MANAGEMENT PTY LTD
3 CITICORP NOMINEES PTY LIMITED
4 MR THEOFANIS & MRS DIMITRA PERDIKIS
5 PACIFIC CUSTODIANS PTY LTD
6 BNP PARIBAS NOMINEES PTY LTD – IB AU NOMS
7 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
8 OUTCOME POSITIVE PTY LTD
9 MRS SURANJITA MULVEY
10 MR TREVOR DURRANT
11 PACIFIC CUSTODIANS PTY LIMITED
12 BNP PARIBAS NOMINEES PTY LTD – SIX SIS LTD
13 BNP PARIBAS NOMS PTY LTD
14 DR SIL LIN TAN
15 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
16 MR BAREND JACOBUS STOLTZ
17 PACIFIC CUSTODIANS PTY LIMITED
18 STYX RIVER PTY LTD
19 BUDDY TRADER PTY LTD
20 RIADIS HOLDINGS PTY LTD
Quoted
Warrants
191,787
172,756
101,076
84,608
70,400
40,547
40,192
40,000
36,774
30,000
25,163
24,581
24,121
22,654
22,018
21,039
20,334
19,563
19,167
18,334
Percent held of
Quoted Warrants
9.53
8.58
5.02
4.20
3.50
2.01
2.00
1.99
1.83
1.49
1.25
1.22
1.20
1.13
1.09
1.05
1.01
0.97
0.95
0.91
TOTAL
1,025,114
50.94%
1. Holders of 20% or greater of unquoted equity securities:
a) Options
No. Holder
1 MR RICHARD O’BRIEN
TOTAL
b) Warrants
No. Holder
1 WATFORD RE LTD
2 CITICORP NOMINEES PTY LIMITED
TOTAL
Unquoted
Options
35,752
37,752
Unquoted
Warrants
188,750
140,240
328,990
Percent held of
Unquoted
Options
82.84
82.84%
Percent held of
Unquoted
Warrants
44.12
32.78
76.90%
106
BOART LONGYEAR 2020 ANNUAL REPORT
Listing
Boart Longyear Limited is listed on the
Australian Securities Exchange under the
symbol ‘BLY’
Share Registry
Link Market Services Limited
Level 12, 680 George Street
Sydney, New South Wales 2000
Tel: +61 1800 781 633
Website
www.boartlongyear.com
CORPORATE INFORMATION
Global Headquarters
2455 South 3600 West
West Valley City, UT 84119
United States of America
Tel: +1 801 972 6430
Fax: +1 801 977 3374
Registered Office
26 Butler Boulevard
Burbridge Business Park
Adelaide Airport, SA 5950
Tel: +61 8 8375 8375
Fax: +61 8 8375 8497
Auditors
Deloitte Touche Tohmatsu
Company Secretaries
Robert Closner
Nora Pincus
Phil Mackey
Shareholder Enquiries
Boart Longyear Investor Relations
2455 South 3600 West
West Valley City, UT 84119
United States of America
Australia: +61 8 8375 8300
Others: +1 801 952 8343
Email: ir@boartlongyear.com