ANNUAL REPORT 2021
WHO WE ARE
Established in 1890, boart Longyear
is the world’s leading provider
of innovative drilling services,
manufacturer of productivity-driven
drilling equipment, and developer
of orebody-data technology that is
revolutionising the future of mineral
development. With its rich heritage
from 132 years of operations, the
Company continues to build value for
customers worldwide.
Drilling Services is the industry-leading
global provider of drilling services to the
mining sector as well as the world’s largest,
specialised, and diversified driller.
Global Products offers the most advanced
technology tooling and drill rigs, specifically
engineered for long life and high
performance while boasting world-class
safety features.
Geological Data Services (GDS) is
redefining the future of mineral exploration
by providing customers with secure,
accurate geological data to confidently make
critical development decisions faster and
more cost effective on site.
CONTENTS
2021 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
II
IV
VI
1
3
5
19
31
36
40
45
46
Supplementary Information
107
CORPORATE GOVERNANCE STATEMENT
Our Corporate Governance Statement may be found
at www.boartlongyear.com/corporate-governance
*EbITDA and Adjusted EbITDA are non-IFRS measures
and are used internally by management to assess the
performance of the business.
Cash from Operations excludes interest and tax.
BOART LONGYEAR 2021 ANNUAL REPORT
b BOART LONGYEAR 2018 ANNUAL REPORT
Copyright © 2022 boart Longyear. All rights reserved.
BOART LONGYEAR 2021 ANNUAL REPORT
THREE DIVISIONS DRIVING LONG-TERM GROWTH
GLOBAL PRODUCTS
• Offers the most advanced technology tooling
and drill rigs, specifically engineered for long
life and high performance while boasting
world-class safety features
• Manufactures drill rigs, drill string products,
performance tooling, drilling consumables,
and quality parts for customers worldwide
• Sells products in 91 countries, has almost
950 employees and six manufacturing
sites around the globe
DRILLING SERVICES
• Industry-leading global provider of drilling services
and largest, specialised and diversified driller
• Focused on copper, gold, nickel, lithium, zinc,
and uranium
• Drilling methods include diamond coring
exploration, reverse circulation, large diameter
rotary, production, sonic, mine dewatering, water
supply drilling, and pump services
• Operates in 17 countries with almost 4,050
employees who operate more than 310 rigs
GEOLOGICAL DATA SERVICES
• Revolutionising the future of mineral exploration
through in-field disruptive technologies providing
customers with the right insights at the right time
in the right way so they can safely, rapidly and
accurately make critical development decisions in
a cost-effective manner
• Utilises innovative scanning technology and down-
hole instrumentation tools to capture detailed
geological data from drilled core and chip samples
• More than 65 employees worldwide
I
BOART LONGYEAR 2021 ANNUAL REPORT 2021 OVERVIEW
2021 2020 2019
*US$ in millions
Revenue
$921m
Adjusted EBITDA
$112m
EBITDA $84m
Net Profit After Tax
$-57m
Net Debt
$164m
921
657
745
84
60
40
112
67
87
-99
-57
-57
164
855
781
Cash from Operations
$27m
Number of Employees
5,314
Safety
TCIR 1.31
Safety
LTIR 0.06
27
58
77
5,314
5,168
5,194
1.31
1.61
1.39
0.06
0.02
0.10
Drilling Services
Revenue
$615m
Drilling Services
EBITDA
$94m
*
Products
Revenue
$307m
Products
EBITDA
$62m
615
456
516
50
94
90
307
201
229
62
25
31
*Includes GDS revenue
Company Revenue
(Products and Services)
Company Revenue
by Region (Products
and Services)
Drilling Services
Revenue by Stage
Products Revenue
by Category
USA
Asia Pacific
Canada
EMEA
Latin America
24%
23%
21%
20%
12%
Development
(Near Mine/Brownfield)
Production (In-Pit)
53%
27%
Exploration (Greenfield)
15%
Non-Mining
5%
Exploration Tooling
Production Tooling
Drilling Equipment
Capital Spares
E&I Tooling
36%
25%
14%
14%
11%
Performance Tooling
Surface Coring
Underground Coring
Rotary/RC
Drilling Equipment
Production Drilling
Other
26%
25%
18%
17%
7%
4%
3%
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BOART LONGYEAR 2021 ANNUAL REPORT
130+ YEARS OF INNOVATION
We have a proud pioneering history based
on more than 130 years of operations and
innovations, which includes more than 400
patents and over 400 trademarks
MAKING SAFETY PERSONAL
Our goal is to add value with zero harm –
leading our industry with our employees
returning home safely each day and
performing our work with minimal impact
to our neighbours and the environment
REVOLUTIONARY
OREBODY TECHNOLOGY
We utilise innovative scanning technology
and down-hole instrumentation tools to
capture detailed geological data from
drilled core and chip samples
BOART LONGYEAR 2021 ANNUAL REPORT
III
to take advantage of the many opportunities
“ boart Longyear is reinvigorated and ready
presented by industry growth.”
Dear Shareholders,
It’s an honour for me to be recently appointed chair of
the board at boart Longyear. Since joining the board two
years ago, I have witnessed tremendous strides taken
to successfully navigate the simultaneous challenges of
robust growth, a global pandemic and recapitalisation. boart
Longyear is reinvigorated and ready to take advantage of the
many opportunities presented by industry growth.
Exploration budgets are on the rise, something we expect
to continue in 2022. This very positive news follows from
high commodity prices, increasing demand for minerals,
and improving operating conditions as pandemic restrictions
ease. This is also contributing increasing funding into junior
and intermediate exploration companies, further increasing
demand for the quality services and dependable equipment
that boart Longyear brings to the industry.
The company’s management team made great strides during
2021 to grow the business. Working with our respected
lenders, we achieved overwhelming support and completed
a comprehensive recapitalisation in September. Growing
revenue, improved operating costs, lower interest expense,
and a significantly delevered balance sheet all contribute to
enhance the company’s liquidity and place boart Longyear in
a much stronger position.
We are encouraged by the increased demand and stronger
ore prices seen throughout last year with continuing
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BOART LONGYEAR 2021 ANNUAL REPORT CHAIRMAN’S REPORT
momentum in 2022. boart Longyear’s global
footprint, experience, expertise, and cutting-edge
products, place the company in a prime position to
assist mining companies in their exploration and
production activities.
The board works closely with Boart Longyear’s
management team to ensure continual investment
in the development of innovative equipment and
technology. We are also constantly looking for
better ways of doing things while driving profitable
revenue growth and improving stockholder value.
Enhanced safety is always at the forefront of the
company’s efforts to make sure that our team
always returns home safely.
The exploration industry’s acceptance and
response to our company’s Geological Data
Services and instrumentation offerings is exciting.
These innovative tools have proven their ability
to change the way mining companies define
and understand their ore bodies. Combined with
the company’s specialised and targeted drilling
techniques and faster, longer-lasting drill rods
and bits, geologists are able to quickly access
accurate orebody data and provide precise
recommendations to mining companies. The
speedy capture and turnaround of essential
geological data lessens disturbance to the
environment, increases exploration efficiencies,
informs decisions, and reduces the costs of
exploration operations.
We have also enhanced our environmental, social
and governance (ESG) programs and are looking
forward to issuing our first standalone ESG report
shortly. Our ESG work is evolving, we have a
positive story to tell and plan to continuously
improve.
We are proud of what the company has
accomplished this past year and are anticipating
continued success for boart Longyear for many
years to come.
Sincerely,
Rubin McDougal
board Chair
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BOART LONGYEAR 2021 ANNUAL REPORT CEO’S REPORT
Dear Shareholders,
boart Longyear reached a pivotal point in its
history during 2021. Through the diligent efforts
and support of our employees, partners, and
shareholders, the company is now in a much
stronger position for sustainable growth.
In September, approval of the recapitalisation
process cleared the way for restructuring the
company’s US$795 million of debt into 98.5%
of our equity. With a substantially reduced
net debt of US$164 million at year’s end, the
company now enjoys a strong balance sheet
and enhanced liquidity.
Additional advantages were gained with the
completion of the re-domiciliation of boart
Longyear’s legal entity to Canada. Now with a
simplified corporate structure, this cost-saving
move provides access to a broader investment
pool and aligns with the increasingly North
American shareholder base where our global
headquarters are located.
And of utmost importance, we are proud
of the exceptional safety performance we
have achieved again over this last year. The
company’s Lost Time Incident Rate (LTIR)
of 0.06 was the company’s second lowest in
history, which indicates our commitment to
ensuring our people are properly trained, remain
safe and healthy, and are always protected.
Although the far-reaching impact of a global
pandemic has presented challenges on
many fronts, business operations have been
performing well with growth in all parts of our
business. Supply chain issues, labor shortages,
and inflation have been challenging which
required us to adjust for cost and wage increases
while maintaining high customer satisfaction.
We’ve experienced renewed investment in the
mining and exploration industries and greater
demand for our products and services. The
results are encouraging as we saw a 40%
increase in revenues over the prior year, bringing
the total revenue to US$921 million in 2021.
by the fourth quarter of 2021, Drilling Services
showed volumes approaching levels last seen in
2013 and ended the year with a 35% increase in
revenue growth. The growing demand for drilling
equipment grew Global Products revenues by 53%,
which created a healthy average backlog of US$66
million. Increased acceptance of Geological Data
Services offerings grew revenues 85% over 2020
for TruCore™ and TruShot™ products, and 100%
revenue gain for TruScan™ technology.
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BOART LONGYEAR 2021 ANNUAL REPORT “ The business is strong and we are
confident in the company’s direction.”
The business is strong, and we are confident in
the company’s direction. With our global team
of hard-working employees, we will continue
to bring value to our customers and to our
stakeholders for many years to come.
Yours sincerely,
Jeff Olsen
President and CEO
The company’s reduced debt, encouraging
revenues, and greater optimism in the industry
due to higher demand and promising metals
prices, have all placed boart Longyear in a strong
position to take advantage of market opportunities.
At year end, our liquidity reached $47 million
comprised of cash balances totaling US$26
million and a further US$21 million available
under the company’s asset-backed loan facility.
The company’s financial stability supports future
growth and has allowed us to invest US$58 million
into equipment and facility upgrades.
Completing 2021 with so many achievements
has given us a better foundation upon which to
build. boart Longyear is well positioned as the
most respected drilling company leader in the
mining and exploration industries and provider
of drilling products. Our new technologies are
quickly gaining acceptance and will provide a
new foundation for growth for boart Longyear.
We have a solid track record of safety; we
have a global presence close to our customers;
we have innovative products and equipment
that are industry-leading; and we have top-
notch service which helps customers meet and
exceed their objectives.
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BOART LONGYEAR 2021 ANNUAL REPORT T
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BOART LONGYEAR GROUP LTD.
A.R.B.N. 652 848 103
ANNUAL FINANCIAL REPORT
YEAR ENDED 31 DECEMBER 2021
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BOART LONGYEAR 2021 ANNUAL REPORT
BOART LONGYEAR 2021 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
19
31
36
37
40
45
46
47
48
49
51
107
BOART LONGYEAR 2021 ANNUAL REPORT
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BOART LONGYEAR 2021 ANNUAL REPORT
BOART LONGYEAR LIMITED ANNUAL REPORT 2021
DIRECTORS’ REPORT
The Directors present their report together with the financial report of Boart Longyear Group Ltd. (the “Parent” or "Boart
Longyear") and its controlled entities (collectively the “Company”) for the financial year ended 31 December 2021 (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
Rubin McDougal1
Kevin McArthur2
Tye Burt
Lars Engström3
Jason Ireland2
James Kern2
Paul McDonnell3
Jeffrey Olsen
Thomas Schulz3
Robert Smith2
Conor Tochilin
Bao Truong3
Position
Non-Executive Chairman
Non-Executive Chairman
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
Non-Executive Director
(1) Rubin McDougal was appointed Non-Executive Chairman of the Board effective 16 November 2021.
(2) Kevin McArthur, Jason Ireland, James Kern, and Robert Smith stepped down from the Board effective 16 November 2021.
(3) Lars Engström, Paul McDonnell, Thomas Schulz, and Bao Truong were appointed to the Board effective 16 November 2021.
For a summary of experience and qualifications for each Director, see the Board of Directors section on page 31 of this Report.
COMPANY SECRETARIES
Alex Nikolic (appointed as interim secretary 5 November 2021)
Nora Pincus (through 5 November 2021)
Philip Mackey (through 10 December 2021)
PRINCIPAL ACTIVITIES
Established in 1890, Boart Longyear is heading into its 132nd year as the world’s leading integrated provider of drilling
services, drilling equipment and performance tooling for mining and mineral drilling companies globally. 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 business, included within our Global Products 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.
These strategic advantages, 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 companies. With more than 130 years of drilling expertise, the Company believes its
represent the gold standard in the global mineral drilling industry.
insignia and brand
_______________________________________________________________________________________
3
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BOART LONGYEAR 2021 ANNUAL REPORT 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
Recapitalisation and Re-domiciliation
As announced to the Australian Securities Exchange Limited ("ASX") on 24 September 2021, Boart Longyear implemented a
previously announced Creditors' Scheme ("Recapitalisation") that substantially reduced the Company's debt, strengthened its
balance sheet, lowered interest expense, and enhanced the liquidity of the Company to support operations and future growth.
Pursuant to the terms of the Recapitalisation, $829.7 million of debt and accrued interest costs were cancelled in exchange for
the Company's equity.
On 8 September 2021, the re-domiciliation of the Company to Canada was approved by the Company's shareholders. In
accordance with the terms of the re-domiciliation, on 5 October 2021, Boart Longyear Group Ltd. acquired all the issued
shares in Boart Longyear Limited from existing Boart Longyear Limited shareholders and subsequently listed on the ASX. For
financial statement purposes, this transaction has been accounted for as a continuation of the existing business.
COVID-19
On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. During the second quarter of
2020, the Company’s business was significantly impacted by the COVID-19 pandemic due to government-imposed measures
to prevent or reduce its spread. As a result, beginning in March 2020, the Company implemented its business continuity plan
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.
For the year ended 31 December 2021, the Company has seen improvements to the business and a return to pre-COVID-19
activity. While the Company believes the worst of the impacts of COVID-19 on the business have been felt, there remains a
level of uncertainty.
DIVIDENDS
No dividends have been paid during the financial year.
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BOART LONGYEAR 2021 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.
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.
The global reach and full breadth of drilling discipline offerings of our Global Drilling Services division has made it a leading
drilling partner for many of the world’s major mining companies and junior explorers alike. We complement over 130 years of
drilling experience with rigorous safety and training programs to ensure that we continue to develop and retain safe,
knowledgeable, and productive drilling teams. Through ongoing investment in our fleet, we deliver results with modern, safe,
productive rigs that are suited to the specific environments and geographies in which we operate. While we maintain a base of
operations in the majority of the world’s most prospective jurisdictions, we remain committed to supporting our customers as
they pursue exploration opportunities in new areas.
In the Global Products division, supply to our current customers, new customers and future growth are driven by strong
brands, technical innovation, expertise, strong field support and value-added products to meet customers' varied drilling
applications. 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 with added
features in 2021 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 continues to expand in the market and demand is growing 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 expanding both in product offering and customer adoption for underground mining applications.
In Geological Data Services, TruCore™ core orientation tools continue to expand geographically and are available globally.
The TruShot™ magnetic survey instrument is the second offering in a future suite of tools and is expanding globally. We are
using our TruScanTM geological sample field screening technology at several mine sites with several mining customers and the
demand for this technology continues to grow as demand for digital technologies associated with logging and geochemistry
grows from our mining customers. In 2021 we 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 direct digital measurement of key
drilling parameters that can be viewed in real time at the drill site and in the cloud to drive drilling productivity for both the
drilling contractor and the mining client. We are currently operating our TruSubTM technology at mine sites and will be further
rolling out this technology with our Drilling Services division and third-party customers later this year. In the first half of 2022,
we will be entering the gyro borehole survey space with our TruGyro technology. TruGyro offers significant advantages over
other technologies in the market and should quickly gain market adoption in 2022. These instruments are part of our strategy
to be the global technology leader in providing unified orebody knowledge 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 2021, cash flows
from operating activities was $3.2 million. This represents a decrease of $46.2 million over 2020 cash flows from operating
activities of $49.4 million. This decrease is primarily due to increases in inventory caused by global supply chain challenges
and restructuring fees related to the Recapitalisation offset by increased cash generated from higher revenues and earnings.
(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
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BOART LONGYEAR 2021 ANNUAL REPORT 1.2 Safety Performance
Each year Boart Longyear strives to continuously improve safety performance. Health and Safety is a core company value at
Boart Longyear along with Integrity, Customer Focus, and Teamwork which is not only expected from our employees, but also
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 2021, the Company’s world class performance on key indicators includes a Total Case
Incident Rate (“TCIR”) of 1.31 and Lost-Time Injury Rate (“LTIR”) of 0.06. Both TCIR and LTIR rates are calculated based on
200,000 hours worked. During the year ending 31 December 2021, our employees experienced 82 injuries that required some
medical treatment or job restriction; four of those injuries resulted in lost work time. The 2021 focus has been on leading
indicators, critical control verifications and empowering employees to utilise our Environmental, Health, Safety and Training
fundamentals.
1.3 Impact of Market Conditions
Global nonferrous exploration budgets grew 35% in 2021, to $11.2 billion. The price of gold and base metals, which
traditionally drive the bulk of exploration spend, remained at healthy, elevated levels throughout the year, contributing to a
2022 forecast of further, if moderated, 5% to 15% growth in global nonferrous exploration budgets, according to S&P Global
Market Intelligence.
One of the primary drivers of demand for base metals has been the growing shift to “green” energy. This is particularly evident
in the increasing market traction of electric vehicles (“EVs”), with nearly all major automobile manufacturers having, within the
past year, announced plans for major investments in EV development, and racing to secure long-term supply contracts for the
key metals required for EV production. This race for supply is seen in the price of lithium—a key EV battery metal—which rose
5x in the second half of the year, and is a harbinger of the growing demand for copper, nickel, and other key battery metals.
Analysts are increasingly voicing the need for a significant and sustained increase in exploration spend in order to discover
and develop the supply to meet this growing demand.
Boart Longyear prioritizes the health and safety of our employees, the employees of our customers, and of the members of the
communities in which we work. Throughout the COVID-19 pandemic, we have actively engaged with each of these
constituencies and implemented measures to safeguard their health. While the Company and its customers have largely
adapted to operating safely in an environment of ongoing COVID-related risks, the uncertainty around the timing and location
of outbreaks, and the restrictions imposed by various jurisdictions in an effort to manage such outbreaks, continues to create
challenges to efficient operation. However, the Company continues to work closely with its employees and customers to
ensure the safe continuity of operations to the degree possible at each site.
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BOART LONGYEAR 2021 ANNUAL REPORT 1.4 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 on cash generation,
achieving and maintaining sustainable EBITDA-to-revenue 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 its added capabilities in 2021 with the Freedom loader, our patented
LongyearTM diamond bits, DriftMasterTM drill rods for blast-hole applications, other new products in our Production Tooling
product line and our XQ coring rods for exploration drilling. 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 unified orebody knowledge to our mining customers in an integrated, real-
time, and cost-effective manner through our Geological Data Services business.
Ultimately, our goal is operational excellence to help us 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 change and our operating
leverage improves as a result of our 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.
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BOART LONGYEAR 2021 ANNUAL REPORT 2. Financial and Operating Highlights
For the year ended 31 December
2021
US$ Millions
2020
US$ Millions
(except share data)
(except share data)
$ Change
% Change
Key financial data
Revenue
NPAT 1
Non-IFRS EBITDA 2
Non-IFRS 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 3
Loss per share (basic and diluted)
921.4
(57.4)
84.2
112.0
35.7
26.6
3.2
59.0
58.2
83.5
657.3
(98.8)
40.3
60.1
(0.7)
57.6
49.4
32.0
32.1
264.1
41.4
43.9
51.9
36.4
(31.0)
(46.2)
27.0
26.1
4.4
79.1
(68.7) cents (2,245.2) cents 2,176.5 cents
40.2 %
41.9 %
108.9 %
86.4 %
5,200.0 %
(53.8) %
(93.5) %
84.4 %
81.3 %
1,797.7 %
96.9 %
Average BLY rig utilisation
Average Fleet size
48%
647
37%
683
11%
(36)
29.7 %
(5.3) %
(1) NPAT is 'Net profit after tax'.
(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. 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. Refer to 3.3 'Significant Items' on Page 10.
(3) On 23 September 2021, the Company completed a consolidation of issued capital on a basis that every 20 shares be consolidated into 1
share. The comparative information has been restated as a result of share consolidation as discussed in Note 2 and Note 12.
3. Discussion and Analysis of Operational Results and the Income Statement
3.1 Revenue
Revenue for the year ended 31 December 2021 of $921.4 million increased by 40.2%, or $264.1 million, compared to revenue
for the prior year ended 31 December 2020 of $657.3 million.
A majority of the revenue for both Global Drilling Services and Global Products is derived from providing drilling services and
products to the mining industry and is dependent on mineral exploration, development and production activities. Those
activities are driven by several factors, including anticipated future demand for commodities, the outlook for supply and mine
productive capacity, the level of mining exploration and development capital and the availability of financing for, and the
political and social risks around, mining development.
As exploration spend in the industry has continued to rise, the Company has witnessed very strong revenues during the year
ended 31 December 2021. Some of those volume increases also stem from post-COVID returns to normalcy across the globe.
The Company has seen a steady resumption of exploration activity as well as an increase in bidding activity. While constraints
on cash and capex to support demand continue to be concerns, we remain confident in and vigilant of projections as we plan
and bid for new contracts.
_______________________________________________________________________________________
8
8
BOART LONGYEAR 2021 ANNUAL REPORT
3.2 Cost of Goods Sold, Sales and Marketing Expense, and General and Administrative Expense
The following pro forma income statement shows the effects of removing significant items from their respective income
statement line. The adjusted balances will be used in the following narrative to reflect cost categories after removing the
impact of significant items.
For the year ended 31 December
2021
US$ Millions
2020
US$ Millions
As reported
Significant
items
Non-IFRS
adjusted
balance
As reported
Significant
items
Non-IFRS
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
921.4
(747.6)
173.8
20.6
(125.0)
(20.6)
—
(13.1)
35.7
—
(0.1)
(0.1)
921.4
(747.7)
173.7
657.3
(559.8)
97.5
—
5.5
5.5
657.3
(554.3)
103.0
(15.4)
42.6
0.5
(27.8)
0.2
—
5.2
(82.4)
(20.1)
(27.8)
(12.9)
35.7
5.8
(69.8)
(17.0)
—
(17.2)
(0.7)
—
5.5
0.5
(19.8)
8.3
—
5.8
(64.3)
(16.5)
(19.8)
(8.9)
(0.7)
Gross margin in 2021 increased to 18.9% compared to 15.7% in 2020. The improvements in gross margin were a result of
increased demand as a result of industry exploration rising. The Company has also implemented strategic initiatives around
pricing, capex, and hiring in order to sustain higher volumes, while also remaining vigilant of costs in raw materials and labour.
The steps taken during 2021 by the Executive team have been measured to ensure that Boart Longyear will continue fulfilling
customer needs and demands.
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 $110.2 million in 2021 was 31.3% more than 2020 of $83.9 million. The higher
costs compared to 2020 is a result of increased selling, general and administrative (“SG&A”) cost to meet higher activity levels
as well as normalisation after the 2020 COVID response plan reduction.
_______________________________________________________________________________________
9
9
BOART LONGYEAR 2021 ANNUAL REPORT
3.3 Significant Items
During the years ended 31 December 2021 and 2020, the Company incurred the following restructuring expense,
recapitalisation costs and impairment charges:
US$ Millions
Operating profit (loss)
Depreciation Expense
Amortisation Expense
Non-IFRS EBITDA 1
Recapitalisation costs 2
Impairments
Property, plant and equipment
Intangible assets
Inventories
Employee and related costs
Other restructuring expenses
Fair value adjustment on warrant liabilities
Other non-recurring items
Total of significant and non-recurring items
Non-IFRS Adjusted EBITDA 1
For the year ended 31
December
2021
2020
US$ Millions US$ Millions
35.7
43.0
5.5
84.2
37.7
—
0.5
—
—
1.0
(11.6)
0.2
27.8
112.0
(0.7)
37.6
3.4
40.3
—
8.3
0.5
5.0
1.3
4.7
—
—
19.8
60.1
(1) Non-IFRS EBITDA is 'Earnings before interest, tax, depreciation and amortisation'. Non-IFRS 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. Non-IFRS 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.
(2) Recapitalization costs are shown net of a $3.7 million restructuring gain recorded on the Recapitalization. See Note 2.
Significant items increased to $27.8 million during the year ended 31 December 2021 (2020: $19.8 million for the
comparable period). Although no significant impairments charges were required through 31 December 2021 the increase is
predominately due to Recapitalisation charges of $41.4 million for advisory fees, legal fees, independent expert fees and other
administrative fees associated with the Recapitalisation offset by the gain on the debt recapitalisation of $3.7 million. See Note
2. Total significant items were partially offset by an $11.6 million gain related to the fair value adjustment on warrant liabilities.
See Note 25.
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10
10
BOART LONGYEAR 2021 ANNUAL REPORT
4. Discussion and Analysis of Cash Flow
Cash provided by operations
Net cash flows provided by operating activities
Net cash flows used in investing activities
Net cash flows provided by (used in) financing activities
4.1 Cash Flow Provided by Operating Activities
For the year ended 31 December
2021
2020
US$ Millions US$ Millions
$ Change
% Change
26.6
3.2
(52.5)
52.7
57.6
49.4
(26.9)
(18.9)
(31.0)
(46.2)
(25.6)
71.6
(53.8) %
(93.5) %
(95.2) %
378.8 %
Cash flow from operating activities for the year ended 31 December 2021 was $3.2 million, which is a decrease of $46.2
million compared to 2020 of $49.4 million. The primary reasons were increases in inventory due primarily to global supply
chain challenges, increased receivable balances resulting from strong year-over-year sales, and restructuring fees related to
the recapitalisation offset by increased cash generated from higher EBITDA and payables balances.
The Company invested $58.2 million in capital equipment to support existing operations during 2021, which is more than the
comparable prior period (2020: $32.1 million). Of the 2021 amount, $16.9 million was spent on new rig purchases, $23.4
million was spent on refurbishing current rigs and other support equipment, and $17.9 million was spent on product
development activities, including Geological Data Services, engineering and patent maintenance. Capital expenditures in 2021
have been partially offset by proceeds from the sale of property, plant and equipment of $5.7 million (2020: $5.2 million). The
Company continues to place significant emphasis around the capital allocation and approval process in order to meet demand.
The increase in cash flows provided by financing activities is primarily due to borrowings related to the recapitalisation and to
facilitate increased revenues.
5. Discussion of the Balance Sheet
The net liabilities of the Company decreased by $739.9 million, to net assets of $270.5 million as at 31 December 2021,
compared to a net liability of $469.4 million as at 31 December 2020. The change from net liabilities to net assets resulted
primarily from the reduction in debt related to the Recapitalisation and an increase in accounts receivables and inventories.
Total assets of $708.6 million were $98.9 million higher than 2020 of $609.6 million primarily as a result of the increase in
accounts receivables, inventories and property, plant and equipment that resulted from improved market conditions.
Total liabilities decreased by $640.9 million to $438.1 million compared to $1.1 billion in 2020. This is primarily driven by the
reduction of debt related to the Recapitalisation partially offset by the addition of a new term loan.
_______________________________________________________________________________________
11
11
BOART LONGYEAR 2021 ANNUAL REPORT
Liquidity and Debt Facilities
The Company’s debt is comprised of the following instruments:
Principal
outstanding as
at 31 December
2021
US$ Millions
Original
issue
discount
Description
Interest
rate
Scheduled
maturity
Security
ABL 1,3
$40.0
Nil
Variable 2
12 May 2025
Exit Term Loan
$115.0
$(3.3)
11.0% 4 08 September
2026
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
guarantors that are not ABL guarantors, a second lien on the
Working Capital Assets of the Term Loan issuer and the
other Term Loan guarantors that are also ABL guarantors,
and a second lien on substantially all of the Non-Working
Capital Assets of the Term Loan issuer and guarantors,
including equipment, intellectual property, the capital stock of
subsidiaries and certain owned real property.
(1) Letters of credit of $8.2 million were issued in addition to the $40.0 million borrowings that were outstanding.
(2) Based on USD LIBOR + margin (grid-based margin is currently 3.25%).
(3)
(4) Based on USD LIBOR (1% LIBOR Floor) + margin (grid-based margin is currently 7.5%).
In 2021 the Company amended terms to provide the Company additional liquidity and extend maturities from July 2022 to May 2025.
6. Review of Segment Operations
The following table shows our third-party revenue and revenue from inter-segment sales by our Global Drilling Services and
Global Products division. Segment profit represents earnings before interest and taxes.
Segment revenue
Segment profit
2021
US$ Millions
2020
US$ Millions
2021
US$ Millions
2020
US$ Millions
Global Drilling Services
614.8
456.3
60.6
8.5
Global Products revenue
Global Products third party revenue
Global Products inter-segment revenue1
306.6
73.7
201.0
56.4
Total Global Products
380.3
257.4
54.6
16.4
Less Global Product sales to Global Drilling
Services
Total third party revenue
Total segment profit
(73.7)
921.4
(56.4)
657.3
(1) Transactions between segments are carried out at arm’s length and are eliminated on consolidation.
115.2
24.9
_______________________________________________________________________________________
12
12
BOART LONGYEAR 2021 ANNUAL REPORT
6.1 Review of Segment Operations - Global Drilling Services
For the year ended 31 December
2021
2020
US$ Millions US$ Millions
$ Change
% Change
614.8
456.3
158.5
34.7%
499.8
32.8
532.6
379.7
28.0
407.7
120.1
4.8
124.9
86.6%
89.3%
(2.7) %
73.0
11.9%
9.2
13.8
94.5
41.7
9.1%
6.9
12.1
50.4
31.3
2.8%
2.3
1.7
44.1
31.6%
17.1%
30.6%
(3.0) %
75.1%
30.8%
33.3%
14.0%
87.5%
311
647
252
683
59
(36)
23.4%
(5.3) %
Financial information
Third party revenue
COGS
Materials/labour/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 2021 was 1.51, compared to 1.72 for the comparable period in 2020. The LTIR
for 2021 was 0.08 compared to 0.08 for the comparable period in 2020.Given the large number of new employees hired and
trained in 2021, we feel satisfied with the outcome of our safety statistics; although, we certainly recognise there is room to
improve. We continue to focus on our key safety initiatives, which include critical control verifications, applying corrective
actions globally, increasing employee competencies through training, reinforcing hazard assessments, and quality drill rig
inspections.
Revenue
Global Drilling Services’ revenue in 2021 was $614.8 million, an increase of 34.7% from $456.3 million in 2020. The year-over-
year revenue increase was driven primarily by COVID-19 impacts in 2020 as customers and governments restricted activities.
Secondarily, an increase in overall market demand and commodity prices has significantly increased year-over-year volume.
Prices have also steadily increased throughout the year as we have seen inflation and wage pressure. Overall price increases
for the year ended 31 December 2021 are up $15.6 million compared to the year ended 31 December 2020.
Approximately 87% of Global Drilling Services’ revenue for 2021 was derived from major mining companies, including Barrick,
Newmont, Rio Tinto, Oz Minerals, Anglogold Ashanti, and Freeport. Our top ten Global Drilling Services customers
represented approximately 56% of the division’s revenue in 2021, with no single contract contributing more than 10% of our
consolidated revenue.
Margins
With revenues increasing from $456.3 million in 2020 to $614.8 million in 2021, Global Drilling Services also saw a
corresponding increase in contribution margin. The 2021 contribution margin was $73.0 million compared to $41.7 million in
2020, an increase of $31.3 million. The increase in margins is primarily attributable to the increase in revenue which flows
through at the field gross margin rate. Minimal additions to overhead and support staff also allowed Global Drilling Services to
leverage our fixed cost base on the increased volume.
_______________________________________________________________________________________
13
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BOART LONGYEAR 2021 ANNUAL REPORT
6.2 Review of Segment Operations - Global Products
Financial information
Third party revenue
COGS
Materials/labour/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
2021
2020
US$ Millions US$ Millions
$ Change
% Change
306.6
201.0
105.6
52.5%
208.8
(0.2)
6.4
215.0
148.9
1.8
4.1
154.8
70.1%
77.0%
70.3
22.9%
21.3
15.7
62.3
32.7
16.3%
16.7
12.6
24.9
6
66.4
208.0
6
33.4
158.3
59.9
(2.0)
2.3
60.2
(6.9) %
37.6
6.6%
4.6
3.1
37.4
—
33.0
49.7
40.2%
(111.1) %
56.1%
38.9%
(9.0) %
115.0%
40.5%
27.5%
24.6%
150.2%
—
98.8 %
31.4 %
(1) Represents total Company inventories including Global Drilling Services, Global Products and Geological Data Services.
Safety
In 2021, the TCIR for the Global Products, including manufacturing, and Geological Data Services combined segment was
0.35 recordable incidents per 200,000 hours worked compared to 1.00 in 2020. The LTIR was 0.00, compared to 0.14 for
2020. We continue to focus on programs to reinforce the Company’s Environmental, Health, and Safety management system
across all operations. Tracking and educating our employees on our proactive safety systems will drive continuous
improvement.
Revenue
Global Products revenue of $306.6 million for the year ended 31 December 2021 is 52.5% higher than 2020 revenue of $201.0
million. Revenues generated from mining and exploration tooling consumables, capital equipment, and production tooling were
the main drivers contributing to stronger revenue in 2021 relative to the prior period.
Margins
Global Products contribution margin of $70.3 million for the year ended 31 December 2021 is 115.0% higher than 2020
contribution margin of $32.7 million. Contribution margin as a percentage of revenue increased by 6.6% relative to the prior
period. The increase in contribution margin is primarily driven by better plant utilisation from higher volumes, continued cost
control measures, benefits recognised from manufacturing improvements along with a return to pre-COVID-19 activity and
price increases implemented during the year to help offset significant increases in raw material costs.
Backlog
At 31 December 2021, Global Products had a backlog of product orders valued at $68.1 million. This compares to $44.6
million at 31 December 2020. Average backlog during the 2021 was $66.4 million compared to $33.4 million during 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 mining and exploration tooling consumables and capital equipment. 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.
_______________________________________________________________________________________
14
14
BOART LONGYEAR 2021 ANNUAL REPORT
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 2021, we
had 447 issued patents, 411 registered trademarks, 138 pending patent applications and 21 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 quality. Prior to their
introduction, new exploration drilling 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 with further advancements in 2021 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.
Under our Geological Data Services business, TruCore™ core orientation tools continue to expand geographically and are
available globally. The TruShot™ magnetic survey technology is the second offering in a future suite of tools and is available
globally and growing. In 2021 we 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 directly and viewed in real time
to drive drilling productivity. We are operating at mine sites with this technology and will be rolling this technology out further
this year. We see value in this technology and will continue to develop in this space. We will be rolling out our TruGyro
borehole survey technology in the first half of 2022. This technology offers significant advantages over any technology in this
space and should rapidly gain market adoption.
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 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.
7. Outlook
7.1 Our 2022 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 2022 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 Behaviour Improvements, and Corrective
Action closure metrics. A competency training program has been implemented focused on developing and documenting our
entry level employee’s abilities to perform tasks safely.
Advancing our Environmental, Social and Governance ("ESG") programme further demonstrating our commitment to
sustainability. We have a growing ESG programme that is key to reinforcing our industry-leading position and building a
sustainable future for the Company and our stakeholders. During 2022, we will continue operationalising our ESG programme
enabling us to maximise the positive impact we have on our employees, customers, local communities, host governments,
natural environments, and shareholders.
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.
_______________________________________________________________________________________
15
15
BOART LONGYEAR 2021 ANNUAL REPORT 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 2022, with the goal to continue to be cash positive, through careful management of
liquidity and costs. Ongoing improvement in cash generation in 2022 is a primary goal for the business, which we intend to
achieve through continued productivity enhancements, disciplined expense and capital management, and opportunistic cost
reductions. 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. Furthermore, 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 2022
and beyond.
7.2 Outlook and Future Developments
We are not providing an outlook for 2022 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 2021 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;
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.
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.
_______________________________________________________________________________________
16
16
BOART LONGYEAR 2021 ANNUAL REPORT 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.
With regards to our Global Products division and Geological Services business, there is a risk that our intellectual property
may be replicated or challenged, resulting in a potential loss of business.
Risks Related to Liquidity and Indebtedness. At 31 December 2021, our net debt was $163.9 million, with $189.4 million in
gross debt and $25.6 million of cash on hand. The Company also has an additional $26.8 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 22 of the financial statements.
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.
Tax Risk. As previously disclosed and further detailed in Note 11 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.
_______________________________________________________________________________________
17
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BOART LONGYEAR 2021 ANNUAL REPORT
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 in 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.
_______________________________________________________________________________________
18
18
BOART LONGYEAR 2021 ANNUAL REPORT REMUNERATION REPORT
This Remuneration Report has been prepared voluntarily in accordance with section 300A of the Australian Corporations
Act 2001 (Cth), as the parent is not an Australian registered company, 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 2021 to 31 December 2021.
Senior Management Changes in 2021
Each of the changes outlined below were carefully designed to support the key strategic, financial and human resources
objectives of the Company.
During 2021, Patrick Nill, Vice President of Global Products, and Mike Ravella, Vice President of Geological Data
Services, were appointed to the Executive Committee. The addition of these employees strengthens the Company's
executive management team. Both Global Products and Geological Data Services groups are key engines for BLY's
future growth.
In November of 2021, Nora Pincus, Chief Legal Office ceased employment with BLY. Consistent with Ms. Pincus'
employment agreement, Ms. Pincus became entitled to the following benefits:
•
•
•
•
Severance payments equal to twelve months of her base salary;
Pro-rata payment of her 2021 short term incentive plan to her ceased employment date;
Additional severance payments equal to two months of base salary; and
Pro-rata cash payment of 2021 long-term incentive plan to her ceased employment date.
COVID-19 Impact on Compensation
In 2020, in response to COVID-19 and its far-reaching economic consequences, Boart Longyear made changes to
compensation levels as a means to preserve jobs and 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. Compensation for executives in 2021 appears higher on an average year-over-year basis due to the
temporary remuneration reductions measures taken in 2020.
SENIOR MANAGEMENT REMUNERATION OVERVIEW
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.
1. EXECUTIVE REMUNERATION - FRAMEWORK AND 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. 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;
Reward achievement of 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.
_______________________________________________________________________________________
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BOART LONGYEAR 2021 ANNUAL REPORT
1.1 REMUNERATION FRAMEWORK
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
• 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.
•
Long-term incentive
compensation provides
for meaningful
retention.
• Reward packages and
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.
• Management assists in
establishing the overall
total reward metrics for
each Executive
Committee member.
• Compensation is
relevant and
meaningful to the
executive receiving it.
• Benchmarked against
relevant peer groups.
• Remuneration
Committee 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.
• The framework
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
safety, financial and
strategic objectives.
Incentive plans utilise
an appropriate mix of
challenging
performance measures
designed to deliver
value to executives
when performance for
the Company and
individual is achieved
over short and longer
terms.
Incentive based
compensation provides
for upside potential
with strong
performance.
1.2 REMUNERATION STRATEGY
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, Nominations and Human Resources Committee (“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 objectives and framework.
_______________________________________________________________________________________
20
20
BOART LONGYEAR 2021 ANNUAL REPORT
The Remuneration Committee’s responsibilities include:
•
•
•
Developing and reviewing executive remuneration plans, including annual bonus plans and long-term incentive
plans, including equity-based incentive plans;
Establishing performance objectives for the CEO and his direct reports and reviewing performance against those
objectives;
Reviewing the composition of the Board and monitoring the performance of the Board and the Directors
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 Tye Burt, Chairman of the Committee, Paul
McDonnell, 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.
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 2021 and 2020, the Remuneration Committee relied on the external review of Insight software as subject matter experts
as well as key Centerbridge Partners in the creation of the Long Term Incentive Plan. In addition, the Remuneration
Committee continued to rely on the independent market review of KMP compensation obtained from Alvarez and Marsel
Consulting. The Company also utilises Willis Tower Watson, Culpepper, World at Work, and PayScale for global rewards
benchmarking, workforce metrics and analytics.
2. REMUNERATION COMPONENTS
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 salary package delivered as a cash salary and mix of compulsory and discretionary
benefits reflects market-relatedness in conjunction with the individual’s background, competence, potential and the
particular role. 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
Company’s executives are located in the US, the competitive talent market is determined to be the US market
with adjustments for industry and local factors.
Variability around the median based on the experience, performance, skills, position, business unit size and/or
complexity and unique market considerations, where necessary.
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.
Variable Remuneration: Annual variable remuneration appraises each KMP’s contribution toward the achievement of
predetermined, specific and measurable targets. Variable remuneration is composed of both short-term and long-term
incentive plans.
_______________________________________________________________________________________
21
21
BOART LONGYEAR 2021 ANNUAL REPORT Short-Term Incentive Program (“STIP”) or Corporate Bonus Plan (“CBP”): supports a high-performance culture by
providing certain employees with the potential to receive an annual bonus if the Company meets annual financial and
safety objectives. This is determined based on role and responsibility as well as achievement against predetermined
performance metrics for business and personal goals.
Performance metrics are designed to reflect corporate as well as business unit level and individual 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.
Potential target incentives under the STIP 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. The CBP is awarded in cash and will be paid at the discretion of the Board depending on key business factors.
There are four key 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 2021 and their relative weighting are:
(1) Corporate Financial Target - Cash Return on Investment (“CRI”) - 20% 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
business re-investment as well as to 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 - 20% 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 2021, the Board agreed on the recommendation of its Audit 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.
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. The STIP 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 (“LTIP”): In 2020, BLY shareholders adopted a Long-Term Equity Incentive Plan. The
LTIP allows the Company’s Remuneration Committee to grant incentive performance stock units to senior leaders, or
others, as appropriate. The LTIP awards are tied to performance measures established by the Remuneration Committee
that management and senior leaders have to achieve to receive their awards. The LTIP will terminate 10 years after the 30
July 2020 Effective Date. Refer to Note 9 and below for additional information.
_______________________________________________________________________________________
22
22
BOART LONGYEAR 2021 ANNUAL REPORT No shares or performance stock units were awarded under the LTIP in 2021; however, the Remuneration Committee
approved and announced the 2021 LTIP Plan. The payment of this award may either be in cash shares at the discretion of
the Remuneration Committee.The 2021 LTIP Plan is a two-year program that will be phased in over two cycles. The
details of the 2021 LTIP Plan are outlined below:
•
•
•
•
•
Duration of 2021 LTIP Plan: 1 January 2021 - 31 December 2022. Target Bonus: 35% of Base Pay
◦
◦
Duration of Cycle One: 1 January 2021 - 31 December 2021. Target Bonus: 17.5% of Base Pay
Duration of Cycle Two: 1 January 2022 - 31 December 2022.. Target Bonus: 17.5% of Base Pay
Date of Performance Criteria Being Set
◦
◦
Cycle One: February 2021
Cycle Two: Early 2022
Cycle One Performance Criteria: Achievement of Adjusted EBITDA of $98.0 million
Payment Type: Cash or shares at the discretion of the Remuneration Committee
Payment Curve: Cycle One of the 2021 LTIP Plan was awarded using a payment curve with the following
thresholds for minimum and over-achievement targets:
◦ Minimum Achievement of $73.0 million Adjusted EBITDA earns a 75% payout
◦ Maximum Achievement of $147.0 million Adjusted EBITDA earns a 150% payout
Management Incentive Plan ("MIP"): The MIP was implemented in January 2018 and cancelled in 2020 without any
awards being granted under the plan.
Other benefits (monetary and non-monetary): provided to ensure executive compensation remains relevant and
executives are compensated fairly.
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 telecommuting.
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. REMUNERATION OUTCOMES
Directors and senior executives who were KMP during the year ended 31 December 2021 were:
Directors
Position
Senior
Executives
Position
Kevin McArthur
Rubin McDougal
Non-Executive Chairman (retired 16 Nov
2021)
Non-Executive Chairman (effective 16 Nov
2021)
Jeffrey Olsen
President and Chief Executive Officer
Denis Despres Chief Operating Officer
Tye Burt
Non-Executive Director
Miguel Desdin
Chief Financial Officer
Lars Engström
Non-Executive Director (effective 16 Nov 2021) Nora Pincus
Chief Legal Officer, General Counsel & Company Secretary
(ceased employment 5 November 2021)
Jason Ireland
Non-Executive Director (retired 16 Nov 2021)
Kari Plaster
Chief Human Resources Officer
James Kern
Non-Executive Director (retired 16 Nov 2021)
Patrick Nill
Vice President Global Products (effective 8 July 2021)
Paul McDonnell
Non-Executive Director (effective 16 Nov 2021) Mike Ravella
Vice President Geological Data Services (effective 8 July
2021)
Jeffrey Olsen
Executive Director
Thomas Schulz
Non-Executive Director (effective 16 Nov 2021)
Robert Smith
Non-Executive Director (retired 16 Nov 2021)
Conor Tochilin
Non-Executive Director
Bao Truong
Non-Executive Director (effective 16 Nov 2021)
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 2021. This differs from the remuneration details prepared in accordance with statutory obligations and
accounting standards, which are reported on page 25 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.
Base salary compensation represents base salary. STIP represent the cash paid in respect of the executive’s STIP award
earned for the prior year’s performance but paid in the current reporting year, Recapitalisation Award represents bonuses
paid to certain Senior Executives upon completion of the approved comprehensive recapitalisation initiative, “Other”
represents benefits such as US 401(k) retirement plan contributions, car allowances, relocation pay, severance pay, tax
preparation service reimbursements, vaccine and patent bonuses, accrued and unused vacation as of the date of ceased
employment, sign-on bonuses and other bonuses granted and paid in 2021.
_______________________________________________________________________________________
23
23
BOART LONGYEAR 2021 ANNUAL REPORT Sr. Executive
remuneration
US$
Jeffrey Olsen
Denis Despres
Miguel Desdin
Nora Pincus 3
Kari Plaster
Patrick Nill
Mike Ravella
Base salary
compensation
STIP 1
Recapitalisation
incentive 2
Other
686,306
412,500
405,000
256,731
297,250
271,062
262,692
398,250
206,500
155,760
32,450
70,493
57,872
66,080
400,000
150,000
250,000
250,000
150,000
42,600
41,250
37,672
31,843
29,750
180,185
28,184
26,707
19,926
Total
1,522,228
800,843
840,510
719,366
545,927
398,241
389,948
(1) Represents the cash paid in respect of the executive’s STIP earned for the prior year’s performance but paid in the current reporting
year. For further details of the STIP, see section 3.2.
(2) This incentive was awarded to members of leadership who played a significant role in the Recapitalisation and is included in
Recapitalisation costs.
(3) Ms. Pincus ceased employment as General Counsel & Company Secretary as of 5 November 2021. Included in the compensation
above is a paid severance amount of $101,538. Other includes the second instalment of Ms. Pincus' sign on bonus. Ms. Pincus was
given a $75,000 sign-on bonus to be paid in two instalments: one payment of $30,000 was paid in 2020 and a second payment of
$45,000 was paid in 2021.
The relevant proportion of fixed to variable components for senior executive remuneration during 2021 are shown below.
The table illustrates the annualised remuneration mix for executive KMP, including annualised fixed salary and approved
target STIP and LTIP (assuming 100% of target bonus performance is achieved).
100%
80%
60%
40%
20%
0%
55%
45%
48%
46%
45%
41%
37%
37%
52%
54%
55%
59%
63%
63%
Jeffrey
Olsen
Denis
Despres
Miguel
Desdin
Nora
Pincus
Kari
Plaster
Patrick
Nill
Mike
Ravella
Fixed
At Risk STIP & LTIP Potential
_______________________________________________________________________________________
24
24
BOART LONGYEAR 2021 ANNUAL REPORT
3.1 EXECUTIVE REMUNERATION IN DETAIL
Details of each senior executive’s remuneration during the years ended 31 December 2021 and 2020 are set out in the
table below. The remuneration calculations reported in this table are based on the Accounting Standards principle of
“accrual accounting” and, consequently do not necessarily reflect the amount of compensation an executive actually
received in cash or shares in a particular year.
Cash-based compensation
Short term benefits 1
Post-employment
benefits
Other long-
term
benefits
Termination
benefits
Compensation
US$
STIP 2
US$
Other 3
US$
Super-
annuation
benefits 4
US$
Other
US$
LTIP
US$
Termination
US$
Total
US$
686,306
1,296,945
428,972
532,212
398,250
25,803
412,500
529,421
173,143
315,385
206,500
19,495
405,000
468,195
271,050
336,539
155,760
21,600
256,731
206,250
312,600
120,000
32,450
38,320
297,250
270,807
171,050
243,990
70,493
21,739
8,700
8,250
8,700
6,750
8,700
8,250
8,431
3,115
7,134
5,392
—
—
—
—
—
—
—
—
—
—
135,252
—
80,149
—
80,149
—
—
—
—
—
—
—
2,556,175
964,515
1,203,913
548,130
1,233,094
522,149
48,105
388,385
1,220,502
—
—
193,885
58,108
—
—
—
804,349
341,614
271,062
202,617
62,078
7,229
—
51,721
—
594,707
Jeffrey Olsen
2021
2020
Denis Despres
2021
2020
Miguel Desdin
2021
2020
Nora Pincus 5
2021
2020
Kari Plaster
2021
2020
Patrick Nill
2021
Mike Ravella
2021
262,692
192,423
52,476
8,700
—
50,093
—
566,384
(1) There were no non-monetary benefits provided.
(2) The 2021 amount represents cash STIP payments earned by the executive during the year ended 31 December 2021, which
are expected to be paid in 2022 and were approved by the Board in February 2022. The 2021 amount represents cash STIP
payments earned by the executive during the year ended 31 December 2020, which were paid in 2021.
Includes recapitalisation bonus, sign-on bonuses, automotive allowances, relocation and reimbursements of financial and tax
preparation assistance and other various given bonuses.
Includes 401(k) plan matching contributions made by the employing entity in the United States.
(4)
(5) Ms. Pincus ceased employment as General Counsel & Company Secretary as of 5 November 2021. Refer to page 19.
(3)
3.2 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 wilful 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.
_______________________________________________________________________________________
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25
BOART LONGYEAR 2021 ANNUAL REPORT
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$
Dividends
per share
US$
EPS 1
US$
Revenue
US$ Millions
Adj. EBITDA 2
US$ Millions
CRI
ROE
Net Debt
US$ Millions
2021
2020
2019
2018
2017
2.47
8.70
32.60
24.00
60.00
—
—
—
—
—
(0.69)
(22.45)
(10.35)
(9.93)
(97.58)
921
657
745
770
739
112
60
87
81
43
12.6 %
7.2 %
10.2 %
9.6 %
4.8 %
(57.7) %
(23.2) %
(16.1) %
(16.6) %
(50.6) %
164
855
781
689
600
(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. On 23 September 2021 the Company completed a consolidation on a basis that every 20 shares be consolidated into 1
share. Closing share price and EPS for each year has been adjusted for the 2019 and 2021 share consolidations.
(2) Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation, and before significant and other non-recurring items.
4.1 PERFORMANCE AGAINST SHORT-TERM INCENTIVE MEASURES
As noted above, a combination of financial and non-financial metrics are used to measure performance for STIP awards.
Business and individual performance against those metrics was measured on a weighted average basis. The average
proportion of STIP awarded to KMPs, 2017 through 2021, is below:
% of target STI awarded
2017
53%
2018
103%
2019
72%
2020
65%
2021
174%
STIP earned during the year ended 31 December 2021:
STIP Earned in 2021
Jeffrey Olsen
Denis Despres
Miguel Desdin
Nora Pincus 3
Kari Plaster
Patrick Nill
Mike Ravella
STIP Earned
as % of
Target 1
180 %
168 %
172 %
150 %
170 %
178 %
175 %
STIP Earned
US$
1,296,945
529,421
468,195
206,250
270,807
202,617
192,423
Target STIP
US$
% of STIP
Forfeited
% of Max STI
Forfeited 2
720,225
315,000
273,000
165,000
159,500
113,600
110,000
0 %
0 %
0 %
0 %
0 %
0 %
0 %
10 %
16 %
14 %
38 %
15 %
11 %
13 %
(1) Calculated by multiplying the Individual Strategic Objective percentage achieved by the company-wide CBP performance payout of
171.5%.
(2) The maximum potential award assuming superior performance against all CBP metrics is 200% of target STI.
(3) Ms. Pincus’ earned STIP was prorated from 1 January 2021 to the date of ceased employment of 5 November 2021.
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.
_______________________________________________________________________________________
26
26
BOART LONGYEAR 2021 ANNUAL REPORT
5. SERVICE CONTRACTS AND TERMINATION PROVISIONS
Name and position held
at the end of the
financial year
Chief Executive Officer
Duration of
contract
No fixed
term
Notice period
by Company
None required
Notice
period by
executive
180 days
Chief Legal Officer,
General Counsel and
Company Secretary
No fixed
term
None required
90 days
No fixed
term
None required
90 days
Chief Financial Officer;
Chief Human
Resources Officer;
Chief Operating Officer;
Vice President Global
Products; Vice
President Geological
Data Services
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:
• 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:
• 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.
_______________________________________________________________________________________
27
27
BOART LONGYEAR 2021 ANNUAL REPORT 5.1 SHARE HOLDINGS
Shareholdings as at the end of the financial year and activity during the financial year, are as follows:
Net other
Consolidation
Cessation as
Balance
Granted as
change
January 1, 2021
remuneration
during year
of share
capital 1
Executive & Non-
Balance
Executive Director
31 December 2021
nominally
Balance
held
Name
Rubin McDougal 2
Kevin McArthur 3
Tye Burt
Lars Engström 4
Jason Ireland 5
James Kern 6
Paul McDonnell 7
Thomas Schulz 8
Robert Smith 9
Conor Tochilin
Bao Truong 10
Jeffrey Olsen
Denis Despres
Miguel Desdin
Nora Pincus 11
Kari Plaster
Patrick Nill
Mike Ravella
165,835
428,796
260,851
—
23,731
202,602
—
—
23,731
—
—
271,872
65,778
65,282
—
10,425
26,380
218
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
12,096
—
—
—
(157,543)
(407,356)
(247,808)
—
(22,544)
(192,471)
—
—
—
(21,440)
—
—
(13,283)
(10,131)
—
—
12,096
(22,544)
(13,283)
—
—
—
—
—
—
—
—
—
—
—
(258,300)
(62,489)
(62,017)
—
(9,903)
(25,061)
(207)
—
—
—
—
—
—
—
—
—
8,292
—
13,043
—
—
—
—
—
—
—
—
13,572
3,289
3,265
—
522
1,319
11
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(1) On 23 September 2021, the Company completed a consolidation of the issued capital on the basis that every 20 shares be
consolidated into 1 share.
(2) Mr. McDougal appointed Chairman effective 16 November 2021
(3) Mr. McArthur retired 16 November 2021
(4) Mr. Engström appointed effective 16 November 2021
(5) Mr. Ireland retired 16 November 2021
(6) Mr. Kern retired 16 November 2021
(7) Mr. McDonnell appointed effective 16 November 2021
(8) Mr. Schulz appointed effective 16 November 2021
(9) Mr. Smith retired 16 November 2021
(10) Mr. Truong appointed effective 16 November 2021
(11) Ms. Pincus ceased employment effective 5 November 2021
5.2 OPTIONS
The options listed below vested on 1 April 2017 and expire on 1 April 2024.
Effective
grant
date
Vesting
date
Name
Fair value
per option
at grant
date
US$
Held at
the
beginning
of the
financial
year
Number of
options
granted as
remuneration
Consolidation
of share
capital 1
Exercise
price per
option
A$
Number
of
options
forfeited
Options
held at
the end
of the
financial
year
Vested and
exercisable
as at 31
Dec 2021
Jeffrey Olsen
1-Apr-14
1-Apr-17
0.25
1,081
—
(1,026)
1,920.00
—
55
55
(1) On 23 September 2021, the Company completed a consolidation of the issued capital on the basis that every 20 shares be
consolidated into 1 share.
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 $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, $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 2021.
_______________________________________________________________________________________
28
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BOART LONGYEAR 2021 ANNUAL REPORT
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$310,000 for the Board Chairman (paid in cash or shares); and
A$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$15,000 annually for committee chairs.
Where the Board Chairman sits on a committee, he or she does not receive any additional fee.
Other fees/
benefits
Non-Executive Directors are entitled to be reimbursed for all reasonable out-of-pocket expenses
incurred in carrying out their duties, including travel costs. The Chairman of the Board also is
entitled to reimbursement for office and secretarial support.
Non-Executive Directors may also, with the approval of the Board, be paid additional fees for extra
services or special exertions for the benefit of the Company.
Non-Executive Directors are not entitled to receive any performance-related remuneration, such as
short-term or long-term incentives.
Post-employment
benefits
Compulsory superannuation contributions for Australian-resident Non-Executive Directors are
included in the base fee and additional committee fees set out above.
Non-Executive Directors do not receive any retirement benefits other than statutory superannuation
contributions.
_______________________________________________________________________________________
29
29
BOART LONGYEAR 2021 ANNUAL REPORT 6.2 REMUNERATION PAID TO NON-EXECUTIVE DIRECTORS
Details of Non-Executive Directors’ remuneration for the year ended 31 December 2021 and 2020 are set out in the table
below:
Non-Executive Directors remuneration
US$
Fees (Including
committee fees)1
Shares
Total
Kevin McArthur 2
2021 (up to 16 November 2021)
2020
Rubin McDougal
2021
2020
Tye Burt
2021
2020
Lars Engström
2021
Jason Ireland
2021
2020
James Kern
2021
2020
Paul McDonnell
2021
Thomas Schulz
2021
Robert Smith
2021
2020
Richard Wallman
2020 (up to February 2020)
275,000
156,250
197,507
83,854
182,500
95,052
30,417
138,446
110,915
153,542
132,604
30,417
29,167
138,808
110,530
29,167
—
112,500
—
43,752
—
68,437
—
—
—
—
—
—
—
—
—
—
275,000
268,750
197,507
127,606
182,500
163,489
30,417
138,446
110,915
153,542
132,604
30,417
29,167
—
138,808
110,530
29,167
Mr. Tochilin and Mr. Truong are not included in the table above as they are employees of Centerbridge Partners and
therefore did not receive Director fees.
(1) During 2020, 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. McArthur retired from the Board effective 16 November 2021 and was paid $275,000 in cash for his 2021 board fees. In 2020,
Mr. McArthur accrued fees of $150,000 to be paid in shares. In 2020, McArthur received shares for $112,500 of those fees. The
remaining $37,500 were to be paid in shares when he left the Board (as determined by an agreement between Mr. McArthur and the
Company). However, no shares were issued upon his retirement and the $37,500 was paid in cash instead; therefore, his 2020
remuneration figures have been updated to reflect this change in payment methodology.
_______________________________________________________________________________________
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30
BOART LONGYEAR 2021 ANNUAL REPORT
Board of Directors
A brief summary of the Directors’ work experience and qualifications is as follows.
Rubin McDougal
Mr. McDougal joined the Board of Directors on March 1, 2020, as Audit Committee Chair and was appointed Chair on
November 16, 2021.
Mr. McDougal held senior executive experience across manufacturing, marketing and logistics industries in Asia, Europe and
the Americas. McDougal was CFO of Great Wolf Resorts from 2018 to 2021. Prior experience includes roles as Chief
Financial Officer of CEVA Logistics, then NYSE listed CNH Global NV, and Whirlpool Europe. He held diverse roles ranging
from leading product development to heading up global business units. He is currently on the boards of Element Fleet
Management and Speedcast, LLC.
Mr. McDougal holds a Master of Business Administration degree from Western Michigan University and a Bachelor of Arts
degree from the University of Utah.
Tye Burt
Mr. Burt joined the Company’s Board on August 23, 2019 and serves as Chair of the Remuneration, Nomination and Human
Resources Committee and is a member of the Audit and Risk Committee. His 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. Mr. Burt has held several public and private company directorships and
currently sits on the board of directors of ArcelorMittal.
Lars Engström
Mr. Engström was appointed a Director of the Company on November 16, 2021 and serves as Chair of the Audit and Risk
Committee and is a member of the Governance, Safety and Sustainability Committee. Mr. Engström has more than 30 years
of senior management experience at leading Swedish mining and industrial companies. He is currently the Chairman of the
Board of Botnia Exploration Holding AB and Örebro Hockey Club as well as a board member of Samhall AB, Normet Group Oy
and Alcadon Group. From 2016 to 2019, Mr. Engström was the Head of Sandvik’s Mining and Rock Technology business
segment and Head of Mining business segment from 2015 to 2016. From 2014 to 2015, he served as the acting CEO and
President of BE Group. In addition, from 2006 to 2014 Mr. Engström was the CEO and President of Munters AB. Prior to 2006,
he held a number of leadership positions with Atlas Copco and Seco Tools.
Mr. Engström holds a Master of Science in Industrial Engineering and Management from the Linköping Institute of Technology
and a Mechanical Engineering Degree from Rinmanskolan, Eskilstuna.
Paul McDonnel
Mr. McDonnell was appointed Director of the Company’s Board on November 17, 2021 and serves as Chair of the
Governance, Safety and Sustainability Committee and is a member of the Remuneration, Nomination and Human Resources
Committee.
Mr. McDonnell has over 25 years of experience in the Construction Equipment Rental Industry and is the Chief Executive
Officer of Maxim Crane Works. He previously served as Executive Vice President and Chief Commercial Officer at United
Rentals from 2019 to 2020. From 2018 to 2019, he was Executive Vice President, Sales and Specialty Operations and from
2016 to 2018 he was Senior Vice President Sales & Specialty Operations. From 2008 to 2016, Mr. McDonnell was Senior Vice
President, Specialty Operations. His previous roles at United Rentals include Regional Vice President and District Manager.
Mr. McDonnell joined United Rentals in1999 through the acquisition of D&E Steel Plate Rental.
During his tenure at United Rentals, Mr. McDonnell led the growth of the Company’s specialty segment to the largest network
of its kind in the world.
Jeffrey Olsen
Mr. 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.
_______________________________________________________________________________________
31
31
BOART LONGYEAR 2021 ANNUAL REPORT 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.
Thomas Schulz
Mr. Schulz was appointed a Director of the Company on November 16, 2021, and is a member of the Audit and Risk and the
Governance, Safety and Sustainability Committees. Mr. Schulz brings more than 30 years of mining and construction
experience and a Ph.D in mining. From March 1st, 2022, Mr. Schulz will be Group Chief Executive Officer of BILFINGER SE
(Germany). From 2013 to 2021, he has been Group Chief Executive Officer of FLSMIDTH (Denmark). Mr. Schulz brings more
than 30 years of mining and construction experience and a Ph.D in mining. Since 2016 he is a Non-Executive Board Member
of HYDRO A/S (Norway). From 2001 to 2012, Mr. Schulz held several leadership positions at SANDVIK (Sweden), including
President - Construction, Senior Vice President, Chairman of SJL SHAN BAO (China), SRP AB (Sweden), Sandvik Extec
(UK), Sandvik Fintec (UK), President - Construction Segment, Senior Vice President / Chairman of SRP AB (Sweden), Sandvik
Extec (UK), Sandvik Fintec (UK). From 1998 to 2001, he was Business Area Manager, Department Crushing, Screening,
Grinding, Pyro at Swedish manufacturer SVEDALA INDUSTRI (Sweden).
Mr. Schulz was awarded the Borchers Medal for extraordinary performance in Science from the Technical University of
Aachen. He holds a Ph.D. in Mineral Mining and Quarrying and an Engineering Diploma in Mineral Processing from the
Technical University of Aachen.
Conor Tochilin
Mr. Tochilin joined the Board of Directors of Boart Longyear on January 17, 2020 and is a member of the Remuneration,
Nomination and Human Resources Committee. He is a Managing Director at Centerbridge Partners, L.P., the Company’s
largest shareholder and investor. Since joining Centerbridge in 2013, his focus has been on investments in the Industrial
sector. His prior experience includes being an Associate at TPG-Axon Capital Management in New York and London, and a
Business Analyst in McKinsey & Company’s Corporate Finance Practice in New York.
Mr. Tochilin earned his Bachelor of Arts degree from Harvard College where he was elected to Phi Beta Kappa and graduated
magna cum laude. He continued with his graduate studies and holds a Juris Doctor degree from Harvard Law School and an
M.B.A. from Harvard Business School. Conor serves on the boards of American Bath Group, LLC, IPS Corporation, KIK
Custom Products, Inc. (and affiliated entities) and Mauser Packaging Solutions (formerly known as Industrial Container
Services).
Bao Truong
Mr. Truong joined the Company’s Board on November 16, 2021 and is a member of the Audit and Risk Committee. Mr. Truong
is a Senior Managing Director at Centerbridge Partners, L.P., Boart Longyear’s largest shareholder and investor. He joined
Centerbridge in 2010 and focuses on investments across a range of industries. From 2004 to 2010, Mr. Truong was a
Managing Director and Partner in the credit business of Fortress Investment Group LLC where he was a Senior Member of the
Corporate Securities Group that was engaged principally in public market investments across the corporate capital structure,
with a focus on distressed and special situations. Previously, Mr. Truong was a member of the Distressed and High-Yield
Research and Trading business of Lehman Brothers Inc. He serves on the Board of Directors of Ambrosia Holdings L.P. (the
holding company of TriMark USA), BGI Inc., Genco Shipping and Trading Ltd., Penhall Holding Company, Seitel Inc., and
Speedcast Parent L.P.
Mr. Truong holds a Master of Business Administration from Harvard Business School, a Bachelor of Science degree, magna
cum laude, from the Wharton School of the University of Pennsylvania, and a Bachelor of Science degree, magna cum laude,
from the University of Pennsylvania.
Company Secretaries
Nora Pincus
Ms. Pincus joined Boart Longyear as Chief Legal Officer, General Counsel and Company Secretary with effect from 13 August
2020. Ms. Pincus' employment with the Company ceased on 5 November 2021.
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. Ms. Pincus ceased employment on 5 November 2021 and was formally released from her role of
Company Secretary.
Alex Nikolic
Mr. Nikolic was appointed interim Company Secretary on 5 November 2021. Alex is a partner with Fasken Martineau DuMoulin
LLP. His law practice is focused on corporate and securities law. He regularly advises issuers, their boards or special
committees, investment dealers, private equity and other investors in capital markets and mergers and acquisitions
_______________________________________________________________________________________
32
32
BOART LONGYEAR 2021 ANNUAL REPORT transactions. Frequently assisting clients on debt and equity financings, both domestic and cross border, Alex’s M&A practice
focuses on public market take-over bids and plans of arrangement as well as private M&A acquisitions and divestitures. He
also provides advice on reorganizations and restructurings across a broad range of industries, as well as assisting with
disclosure and governance matters, stock exchange requirements, corporate and other regulatory matters.
Philip Mackey
Mr. Mackey was appointed as a Company Secretary on 29 January 2016 which ceased on 10 December 2021 after the
Company was redomiciled in Canada. Mr Mackey remains an Advisor to Boart Longyear to date. 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.
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
Remuneration, Nominations &
Human Resource Committee
Held
Attended
Held
Attended
Audit & Risk Committee
Attended
Held
Tye Burt
Lars Engström 1
Jason Ireland
James Kern 2
Kevin McArthur 3
Rubin McDougal 4
Thomas Schulz 5
Robert Smith 6
Conor Tochilin
Bao Truong 7
Jeffrey Olsen
12
12
12
12
12
12
12
12
12
12
11
10
11
12
12
12
5
5
5
5
5
5
5
5
5
5
5
5
5
5
1
4
4
1
4
1
(1) Mr. Engström appointed effective 16 November
(2) Mr. Kern retired 16 November 2021
(3) Mr. McArthur retired 16 November 2021
(4) Mr. McDougal was not a member of he Audit & Risk Committee for the December 2021 meeting
(5) Mr. Schulz appointed effective 16 November 2021 effective 16 November 2021
(6) Mr. Smith retired 16 November 2021
(7) Mr. Truong appointed effective 16 November 2021
_______________________________________________________________________________________
33
33
BOART LONGYEAR 2021 ANNUAL REPORT 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.
Name
Fully paid
ordinary shares
Rights offering
ordinary shares
Rights and
options
Total
Rubin McDougal
Tye Burt
Lars Engström
Paul McDonnell
Thomas Schulz
Conor Tochilin
Bao Truong
Jeffrey Olsen
Denis Despres
Miguel Desdin
Kari Plaster
Patrick Nill
Mike Ravella
8,292
13,043
—
—
—
—
—
13,572
3,289
3,265
522
1,319
11
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
8,292
13,043
—
—
—
—
—
13,572
3,289
3,265
522
1,319
11
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.
_______________________________________________________________________________________
34
34
BOART LONGYEAR 2021 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 $112,500; $68,437;
and $43,753 of their director compensation in shares, respectively.
Shares and rights granted to executives of the Company are included in the Remuneration Report. As of 31 December 2021,
Mr. Olsen held 55 vested options. The options were granted on 1 April 2014 and vested on 1 April 2017. They have an
exercise price of $1,920 per option 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.
_______________________________________________________________________________________
35
35
BOART LONGYEAR 2021 ANNUAL REPORT EXECUTIVE MANAGEMENT TEAM
Jeffrey Olsen
Jeffrey Olsen’s experience and qualifications are summarised on page 31.
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 re-joining 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 32.
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.
Pat Nill
Pat Nill was appointed to the Executive Committee in June 2021. Pat joined the company as the Vice President of Global
Products in January 2018. His career has led him through several key executive roles within mining products organizations.
Prior to BLY, he worked at Dyno Nobel Inc. where he held several positions including VP New Product Management and
Development, Global General Manager, Electronics, and General Manager of the Eastern Region. He has also previously held
positions with DetNet International as Vice President of Sales and Marketing and The Ensign-Bickford Company as Director,
Commercial Sales. Pat earned his Bachelor of Science degree in Business Administration from Rockhurst University.
Mike Ravella
Mike Ravella was appointed to the Executive Committee in June 2021 and is the Vice President Geological Data Services
(GDS). Mike began his career with BLY in March 2008 and held various positions with progressive responsibility in the
company including Director of GDS, North American Regional Manager Aftermarket, Drilling Services Western Australia Base
Metals Zone Manager, and E&I Northeast US Zone Manager. Prior to Boart Longyear, Mike was a contaminant hydrogeologist
for ten years where he ran large dynamic site investigation drilling programs with real-time data.
Mr. Ravella earned his Master of Arts degree in Earth Sciences from Boston University and his Bachelor of Science degree in
Geology from Keene State College.
_______________________________________________________________________________________
36
36
BOART LONGYEAR 2021 ANNUAL REPORT AUDITOR
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is included on page 39 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 8 to the
financial statements.
The auditor of Boart Longyear Group Ltd. 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 & 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 8 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 Group Ltd. 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.
_______________________________________________________________________________________
37
37
BOART LONGYEAR 2021 ANNUAL REPORT REMUNERATION
The Remuneration Report is included beginning at page 19 and forms part of this Directors’ Report.
Signed in accordance with a resolution of the Directors.
On behalf of the Directors
_______________________________________________________________________________________
38
38
BOART LONGYEAR 2021 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 Group Ltd
333 Bay Street
Suite 2400
Toronto Ontario M5H 2T6
CANADA
25 February 2022
Dear Directors
Boart Longyear Group Ltd
I am pleased to provide the following declaration of independence to the directors of Boart
Longyear Group Ltd and its subsidiaries.
As lead audit partner for the audit of the financial report of Boart Longyear Group Ltd for the
financial year ended 31 December 2021, I declare that to the best of my knowledge and belief,
there have been no contraventions of the auditor independence requirements of the Australian
Code of Ethics for Professional Accountants (including Independence Standards), issued by the
Australian Professional and Ethical Standards Board (APES) 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 Touche Tohmatsu Limited
__________________________________________________________________________________________
39
39
BOART LONGYEAR 2021 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
www.deloitte.com.au
Independent Auditor’s Report to the members of Boart Longyear Group Ltd
Report on the Audit of the Financial Report
Opinion
We have audited the financial of Boart Longyear Group Ltd (the “Parent”) and its subsidiaries (the “Company”) which
comprises the consolidated statement of financial position as at 31 December 2021, the consolidated statement of
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 gives a true and fair view, of the Company’s financial position as at 31
December 2021 and of its financial performance and its cash flows for the year then ended in accordance with Australian
Accounting Standards.
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 Company in accordance with 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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.
Key Audit Matter
Recapitalisation and Re-domiciliation
On 23 September 2021, Boart Longyear Limited
completed a Recapitalisation that substantially reduced
the Company’s debt in exchange for equity.
As set out in note 2 of the financial report all of the
Term Loan A, Term Loan B, Senior Secured notes
(“SSN”), Applicable Premium on the SSN, Senior
Unsecured Notes (”SUN”) and all accreted interest up
to and including the date of conversion amounting to
$829.7 million was extinguished in
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
©2022 Deloitte Touche Tohmatsu
How the scope of our audit responded to the Key Audit
Matter
Our procedures performed included but were not limited to:
• Evaluating management’s accounting policy against the
requirements of relevant accounting standards;
• Assessing the competence and objectivity of management’s
experts who prepared valuations which formed the basis of
management’s determination of the fair value of equity
instruments issued;
________________________________________________________________________________________
40
40
BOART LONGYEAR 2021 ANNUAL REPORT •
In conjunction with our valuation specialists, challenging
the fair value of the equity instruments issued by:
◦
◦
considering the valuation methodologies inputs and
assumptions used to determine the appropriate fair
value for equity instruments; and
reviewing other indicators of value including the
market capitalisation of the Company and quoted
market prices;
In conjunction with our valuation specialists, evaluating
management’s valuation of the warrant liabilities on the
date of issue and as at 31 December 2021;
Testing on a sample basis the transaction costs incurred as
part of the debt recapitalisation;
In conjunction with our US, Canadian and Group tax
specialists we:
◦
◦
challenged management’s assumptions of the
deductibility of the transaction costs for tax purposes
in the US, Canada and Australia;
evaluated the appropriateness of management’s
assessment that there were sufficient available losses
to absorb any gain arising from the recapitalisation in
the US and Australia.
Challenging the appropriateness of the treatment of the
re-domiciliation as a continuation of the existing group; an
Assessing the adequacy of the disclosures as set out in
notes 2 and 11.
•
•
•
•
•
exchange for the issue of equity and warrants. Prior to
the recapitalisation certain debt holders were also
shareholders of the Company. Interpretation 19
‘Extinguishing Financial liabilities with equity
instruments’ (“Int 19”) does not apply to transactions
where the creditor is also a direct or indirect
shareholder and is acting in the capacity of shareholder.
In the accounting for the recapitalisation judgement is
required in determining whether such debt holders
who were also shareholders were acting in their
capacity as shareholders. Where such debt holders
were considered to be acting in their capacity as
shareholders no gain or loss was recognised in the
profit and loss account on the extinguishment of the
debt.
Further, on applying Int 19 when debt is extinguished
by debt holders who were not also shareholders in
exchange for equity instruments the gain arising is
determined by comparing the fair value of the equity
instruments issued, comprising equity shares and
warrant liabilities, to the carrying value of the debt.
Determining the fair value of equity instruments when
a quoted price in an active market is not considered to
reflect fair value is complex.
As disclosed in note 11 of the financial report the
recapitalisation resulted in a number of considerations
relevant to the tax treatment in the USA, Canada and
Australia.
Further, as disclosed in note 2 of the financial report on
5 October 2021, Boart Longyear Group Limited, a newly
incorporated Canadian resident entity, acquired all the
issued shares in Boart Longyear Limited from existing
Boart Longyear Limited shareholders and subsequently
listed on the ASX. The Company has accounted for the
re-domiciliation as a group reorganisation in the form
of the continuation of the existing group.
Due to the complexity of the debt recapitalisation and
re-domiciliation a significant level of judgement was
required to determine the appropriate accounting and
tax treatments applied in the preparation of the
financial report.
________________________________________________________________________________________
41
41
BOART LONGYEAR 2021 ANNUAL REPORT Our procedures performed in conjunction with internal tax
specialists, included but were not limited to:
• Obtaining an understanding of the process and key
controls that management have in place to determine the
taxation balances;
•
•
•
•
Evaluating the appropriateness of the Company’s tax
expense calculations and the rationale on which deferred
tax assets and liabilities were recognised;
Challenging and evaluating management’s assessment of
uncertain tax positions and conclusions on complex tax
arrangements through enquiries of the Company’s
Taxation department, and obtaining and considering the
Company’s correspondence with local tax authorities;
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; and
Assessing the adequacy of the disclosures in notes 11, 23,
and 30.
Taxation
The Company 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 11, 23 and 30.
As at 31 December 2021, the Company has recorded an
income tax expense of $4.3 million, current and non-
current tax receivables of $0.8 million and $0.9 million
and a net current tax payable of $1.5 million, deferred
tax assets of $10.1 million, and deferred tax liabilities of
$21.1 million.
In notes 11, 23 and 30, the Company has disclosed its
assessment of tax-related contingent liabilities and that
the Company is subject to certain tax audits that arise
in the normal course of its business.
As at 31 December 2021, the Company has recorded a
provision for tax contingencies of $46.3 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
Other Information
The directors are responsible for the other information. The other information comprises the Directors’ Report 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 for the year ended 31 December 2021, but does not include the financial report and our auditor’s
report thereon: 2021 Overview, the Chairman’s report, the CEO report, and the Supplementary Information which is
expected to be made available to us after that date.
Our opinion on the financial report does not cover the other information and we do not and will note express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information 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.
________________________________________________________________________________________
42
42
BOART LONGYEAR 2021 ANNUAL REPORT When we read the 2021 Overview, the Chairman’s report, the CEO report, and the Supplementary 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 Parent are responsible for the preparation of the financial report in accordance with Australian
Accounting Standards and for such internal control as directors determine is necessary to enable the preparation of the
financial report that is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Company 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 Company or to cease operations, or have no realistic alternative but to do
so.
The directors are responsible for overseeing the Company’s financial reporting process.
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
Company’s internal control.
•
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
Conclude on the appropriateness of management’s 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 Company’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 Company to cease to continue as a going concern.
________________________________________________________________________________________
43
43
BOART LONGYEAR 2021 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 Company to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the Company’s audit. We remain solely responsible for our audit opinion.
We communicate with 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 of the Parent 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 the directors’ report for the year ended 31 December 2021.
In our opinion, the Remuneration Report of Boart Longyear Group Ltd for the year ended 31 December 2021, has been
prepared in accordance with section 300A of the Corporation Act 2001.
Responsibilities
The directors of the Parent have voluntarily presented the Remuneration Report which has been prepared in accordance
with the requirements of section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on out audit conducted in accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
A T Richards
Partner
Chartered Accountants
Perth, 25 February 2022
________________________________________________________________________________________
44
44
BOART LONGYEAR 2021 ANNUAL REPORT DIRECTORS’ DECLARATION
The Directors declare that:
(a)
(b)
(c)
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;
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;
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 31 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.
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
________________________________________________________________________________________
45
45
BOART LONGYEAR 2021 ANNUAL REPORT Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the financial year ended 31 December 2021
Continuing operations
Revenue
Cost of goods sold
Gross margin
Other income
General and administrative expenses
Sales and marketing expenses
Other expenses
Operating profit (loss)
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 and diluted loss per share
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 (loss) gain arising on translation of foreign operations
Note
2021
US$'000
2020
US$'000
4
5
5
6
6
921,399
(747,550)
173,849
20,608
(125,023)
(20,643)
(13,114)
35,677
42
(88,828)
(53,109)
657,265
(559,753)
97,512
5,821
(69,847)
(17,049)
(17,116)
(679)
43
(92,877)
(93,513)
11
(4,280)
(5,253)
(57,389)
(98,766)
12
(68.7) cents
(2,245.2) cents 1
(57,389)
(98,766)
(4,612)
8,629
Items that will not be reclassified subsequently to profit or loss
Actuarial gain related to defined benefit plans
Loss on cash flow hedges recorded in equity
Income tax on income and expense recognised directly through equity
Other comprehensive gain for the year, net of tax
24
11
6,979
(1,548)
(151)
668
3,140
—
(861)
10,908
Total comprehensive loss for the year attributed
to equity holders of the parent
(56,721)
(87,858)
(1) On 23 September 2021, the Company completed a consolidation of issued capital on a basis that every 20 shares be consolidated into 1
share. The comparative information has been restated as a result of share consolidation as discussed in Notes 2 and 12.
See accompanying Notes to the Consolidated Financial Statements included on pages 51 to 106.
_______________________________________________________________________________________
46
46
BOART LONGYEAR 2021 ANNUAL REPORT
Consolidated Statement of Financial Position
As at 31 December 2021 BOART LONGYEAR GROUP LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2021
Note
2021
US$'000
2020
US$'000
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
Defined benefit pension asset
Total non-current assets
Total assets
Current liabilities
Trade and other payables 1
Provisions 1
Current tax payable 1
Loans and borrowings
Total current liabilities
Non-current liabilities
Loans and borrowings
Other financial liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets (liabilities)
Equity
Issued capital
Reserves
Other equity
Accumulated losses
Total equity
Non-controlling interest
Total equity
35
13
14
11
16
18
19
20
11
11
24
21
23
11
22
22
25, 26
11
23
25
25,579
137,900
207,962
824
15,641
387,906
161
388,067
168,635
104,916
30,959
10,139
912
3,832
1,117
320,510
708,577
137,996
21,600
1,506
10,752
171,854
178,694
20,900
21,115
45,532
266,241
438,095
270,482
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
96,507
21,693
1,946
10,235
130,381
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(50)
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(128,790)
(1,692,944)
(469,901)
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(469,396)
(1) Prior year amounts were updated to align with current year classifications.
See accompanying Notes to the Consolidated Financial Statements included on pages 51 to 106.
_______________________________________________________________________________________
47
47
BOART LONGYEAR 2021 ANNUAL REPORT
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S
BOART LONGYEAR 2021 ANNUAL REPORT
Consolidated Statement of Cash Flows
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the financial year ended December 2021
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
Gain on fair value of warrant liabilities
Shares issued
Shares issued to directors
Impairment of current and non-current assets
Non-cash foreign exchange loss
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
Note
2021
US$'000
2020
US$'000
(57,389)
(98,766)
6
7
6
7
6
4,280
88,828
48,551
(42)
(4,005)
(6,902)
(11,630)
—
—
424
8,246
(32,750)
(50,161)
(7,972)
44,359
2,802
26,639
(12,011)
42
(11,463)
3,207
5,253
92,877
40,964
(43)
(1,998)
12,545
—
285
332
8,825
1,550
5,291
(3,757)
59
(8,951)
3,097
57,563
(7,624)
43
(603)
49,379
See accompanying Notes to the Consolidated Financial Statements included on pages 51 to 106.
_______________________________________________________________________________________
49
49
BOART LONGYEAR 2021 ANNUAL REPORT
Consolidated Statement of Cash Flows
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the financial year ended December 2021
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Intangible costs paid
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from the issuance of shares 1
Payments for share purchases
Payments for debt issuance costs
Proceeds from borrowings
Repayment of borrowings
Net cash flows provided by (used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on the balance
of cash held in foreign currencies
Cash and cash equivalents at the end of the year
(1)
The Company was Recapitalized on 23 September 2021. See Note 2.
Note
2021
US$'000
2020
US$'000
(51,717)
5,712
(6,498)
(52,503)
1,578
(5)
(4,375)
263,311
(207,837)
52,672
3,376
23,513
(1,310)
25,579
(25,127)
5,214
(6,999)
(26,912)
—
—
(153)
62,521
(81,314)
(18,946)
3,521
20,240
(248)
23,513
35
See accompanying Notes to the Consolidated Financial Statements included on pages 51 to 106.
_______________________________________________________________________________________
50
50
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
1. GENERAL INFORMATION
Boart Longyear Group Ltd. (the “Parent”) is a public company listed on the Australian Securities Exchange Limited (“ASX”)
and is incorporated in Ontario, Canada. Boart Longyear Group Ltd. 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 Group Ltd. was inserted as the Parent entity during the year as part of the
Company's re-domiciliation to Canada. Refer to Note 2. Boart Longyear Limited continues to be the ultimate controlling
entity incorporated within Australia.
Boart Longyear Group Ltd.’s registered office and its principal place of business are as follows:
Registered office
2442 South Sheridan Way
Mississauga, Ontario
Canada L5J 2M7
Tel: +1 905 822 7922
Principal place of business
2455 South 3600 West
Salt Lake City, Utah 84119
United States of America
Tel: +1 (801) 972 6430
As Boart Longyear Group Ltd. is incorporated in Ontario, Canada, it is subject to certain Canadian securities laws, including
applicable take-over bid rules under which any offer to acquire outstanding voting or equity securities of a class made to
one or more persons, any of whom is in a Canadian jurisdiction where the securities subject to the bid, together with the
offeror's securities (and those held by joint actors), constitute in aggregate 20% or more of the outstanding securities of the
company at the time of the offer are required to extend the offer to all security holders who are in Canada. The takeover bid
rules require, among other things, the equal treatment of all shareholders by the mailing of a takeover bid circular to all
shareholders of the target company, minimum offer periods and prescribed disclosure requirements. There are certain
exemptions from the Canadian take-over bid rules, including if among other things, less than 10% of the issued and
outstanding shares are held by shareholders in Canada and the principal trading market for the shares is outside of
Canada.
There are no restrictions imposed on a third party’s acquisition of Boart Longyear Group Ltd.’s securities under the
company’s articles or by-laws.
The Company is not subject to Chapters 6, 6A, 6B and 6C of the Australian Corporations Act 2001 (Cth) dealing with the
acquisition of the Company's shares (including substantial holdings and takeovers).
Basis of Preparation
This financial report is a general-purpose financial report which:
– has been prepared in accordance with the requirements of Australian Accounting Standards and of the Australian
Corporations Act (Cth) 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 AASB. 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 Group Ltd.’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 25 February 2022;
– 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 Group Ltd. 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.
__________________________________________________________________________________________
51
51
BOART LONGYEAR 2021 ANNUAL REPORT Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
1. GENERAL INFORMATION (CONTINUED)
– does not early adopt Accounting Standards and Interpretations that have been issued or amended but are not yet
effective. Refer to Note 37 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.
Going Concern
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 and
Exit Term 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.
Impact of COVID-19
On 11 March 2020, the World Health Organization designated COVID-19 as a global pandemic. During the second quarter
of 2020, the Company's business was significantly impacted by the COVID-19 pandemic due government-imposed
measures to prevent or reduce its spread. As a result, beginning in March 2020, the Company implemented its business
continuity plan 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.
During 2021, the Company has seen improvements to the business and a return to pre-COVID-19 activity. While the
Company believes the worst of the impacts of COVID-19 on the business have been felt, there remains a level of
uncertainty.
Government Assistance
In response to the COVID-19 pandemic, many governments implemented legislation to help businesses experiencing
financial difficulty stemming from the pandemic. Although the Company did not receive any significant subsidies in 2021,
the Company was successful in securing a number of government relief packages in 2020 which 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 operating loss in 2020.
The Company also received payroll tax relief deferrals of $2.7 million for the year ended 31 December 2020 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 2020, the deferral of these payments
improved the Company’s cash flows provided by operations. The Company paid 50% of the deferred payroll taxes in 2021
and the remaining 50% of deferred payroll taxes will be paid in 2022.
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. In 2020, the Company early adopted COVID-19-Related Rent Concessions
(Amendment to AASB 16) that provided practical relief to lessees in accounting for rent concessions occurring as a direct
consequence of COVID-19, by introducing a practical expedient under AASB 16 Leases. 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 2022; 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 Consolidated Statement of Profit or Loss
for the year ended 31 December 2021.
__________________________________________________________________________________________
52
52
BOART LONGYEAR 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
1. GENERAL INFORMATION (CONTINUED)
Key Judgements and Estimates
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 2
Note 11
Note 20
Note 23
Note 28
Note 30
Recapitalisation and Re-Domiciliation
Income Taxes
Other Intangible Assets
Provisions
Commitments for Expenditures
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.
__________________________________________________________________________________________
53
53
BOART LONGYEAR 2021 ANNUAL REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2021
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
2. RECAPITALISATION AND RE-DOMICILIATION
Implementation of the Creditors' Schemes
On 23 September 2021, Boart Longyear completed a Recapitalisation that substantially reduced the Company's debt,
strengthened its balance sheet, lowered interest expense, and enhanced the liquidity of the Company to support operations
and future growth. The following summarises the steps taken to implement the creditors' schemes and Recapitalisation
transaction.
Share Consolidation
As part of the Recapitalisation transaction, the Company completed a share consolidation on the basis that every 20
shares be consolidated into 1 share. The share consolidation was applied to all issued capital comprising shares, warrants,
and options. The share consolidation occurred prior to the implementation of the Recapitalisation so that all securities
issued under the Recapitalisation were issued on a post-share consolidation basis.
The share consolidation had the following impact on issued capital at 23 September 2021:
Issued Capital Outstanding
Exercise Price
Pre-Consolidation Post Consolidation
Pre-Consolidation
Post Consolidation
Issued Capital
Share capital, ordinary shares
Ordinary warrants
Class A warrants
Class B warrants
Options
88,511,580
2,012,403
282,784
145,032
43,158
4,425,590
103,790
14,141
N/A
US $1.80
US $3.00
N/A
US $36.00
US $60.00
7,254
2,166
A $6.30
US $57.60 - $96.00
A $126.00
US $1,152.00 - $1,920.00
As a result of the share consolidation, the weighted average number of shares outstanding has been adjusted
proportionately as if the share consolidation had occurred at the start of the earliest period for which earnings per share
information is presented. Refer to Note 12.
Issue of New Shares and Warrants
According to the terms of the Recapitalisation, $829.7 million of debt and accrued interest costs were cancelled in
exchange for the issue of the Company's equity and warrants. The cancelled debt and associated interest was owed to the
holders of Term Loan A debt, Term Loan B debt, the Senior Secured Notes and the Senior Unsecured Notes. The
obligations of Boart Longyear under the Term Loan A debt, Term Loan B debt, Senior Secured Notes and Senior
Unsecured Notes has now been cancelled in exchange for the issue of:
•
•
290,613,743 ordinary shares in the Company; and
32,782,148 warrants to the Senior Unsecured Note holders.
The cancellation of this debt was accounted for as follows:
Term Loan A and Term Loan B: The holders of Term Loan A and Term Loan B were significant shareholders of the
Company and were considered to be acting in their capacity as significant shareholders at the time the debt was
extinguished; as a result, this transaction was outside the scope of AASB Interpretation 19 Extinguishing Financial
Liabilities with Equity Instruments ("AASB 19"). When the cancellation of debt is outside the scope of AASB 19, judgement
is required in determining the appropriate accounting treatment. The Company has developed an accounting policy to
measure the share capital issued to existing, significant shareholders as part of the Recapitalisation by reference to the
carrying amount of the debt extinguished. Therefore, the increase in equity for the shares issued was measured by
reference to the $364.2 million owed to the holders of Term Loan A and Term Loan B when the debt was cancelled and no
gain or loss was recognised on the transaction.
Senior Secured Notes: The Senior Secured Notes were held by various stakeholders, some of whom were significant
shareholders and some of whom were not. Of the $371.1 million outstanding on the Senior Secured Notes, a balance of
$204.2 million was due to significant shareholders of the Company while the remaining $166.9 million was due to non-
shareholders. The increase in equity for the shares issued to extinguish the Senior Secured Notes held by significant
shareholders was measured by reference to the carrying amount of the liability and no gain or loss was recognised on the
cancellation of debt as the shareholders were considered to be acting in their capacity as shareholders on this transaction.
Where shares were issued to extinguish the remaining $166.9 million in debt held by non-shareholders, the shares issued
were measured at their fair value on the date of issue and a $1.4 million restructuring gain was recorded as other income in
the Consolidated Statement of Profit or Loss and Other Comprehensive Income as the carrying value of the cancelled debt
was higher than the fair value of the shares issued.
__________________________________________________________________________________________
54
54
BOART LONGYEAR 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2021
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
2. RECAPITALISATION AND RE-DOMICILIATION (CONTINUED)
A share price of US$2.27 (or A$3.13) was used to fair value the shares issued to the non-shareholders which was lower
than the A$3.55 quoted share price on the date of the debt extinguishment. Due to the low trading volume of BLY shares,
the market was considered inactive at the time of the Recapitalisation. Further, the share price hadn't had time to reflect
fully the impact of the Recapitalisation on the Company.
The fair value of the equity issued to non-shareholders was estimated using an income approach and utilizing a discounted
cash flow forecast model. The following were the key model inputs used in determining the fair value:
• Assumed after-tax discount rate of 10.5%;
• Assumed terminal period EBITDA margin of 14%; and
• Assumed two year projection period based on the Board approved budget and long range plans followed by a long-term
terminal period due to the cyclical nature of the industry that market participants would consider when estimating
projected cash flows.
An enterprise valuation was derived using the income approach model and the Company's net debt was deducted from the
enterprise valuation to arrive at an overall equity value. A range of enterprise values was evaluated before concluding on an
enterprise value that was most representative of the fair value given all the facts and circumstances.
Senior Unsecured Notes: Similar to the Senior Secured Notes, the Senior Unsecured notes were held by both significant
shareholders and non-shareholders. In addition to receiving shares, the holders of the Senior Unsecured Notes also
received share purchase warrants. These warrants have an exercise price of A$2.79 and are exercisable through 23
September 2027. Holders of these warrants may elect a cashless exercise whereby the warrant holder is not required to
pay the Company the exercise price of the warrant and instead will be issued a net number of shares that is variable based
on the fair value of the Company's shares on the exercise date of the warrant. As a result, these warrants don't meet the
fixed-for-fixed criteria for classification as equity and have therefore been classified as a liability in the Consolidated
Statement of Financial Position. The warrants were valued using an option pricing model resulting in an initial liability being
recognised for the warrants of $31.1 million. Refer to Note 25 for the inputs used to determine the fair value of the warrants.
The fair value of the warrants was deducted from the $94.5 million due to holders of the Senior Unsecured Notes resulting
in a remaining $59.6 million outstanding debt due to significant shareholders and $3.8 million outstanding due to non-
shareholders. The shares issued to the significant shareholders in exchange for cancelling the remaining debt were
measured by reference to the $59.6 million due to these shareholders and no gain or loss was recognised on the
cancellation of this debt as it was determined the shareholders were acting in their capacity as shareholders.The shares
issued to non-shareholders were measured at their fair value on the date of issue resulting in a $2.3 million restructuring
gain recorded as other income in the Consolidated Statement of Profit or Loss and Other Comprehensive Income as the
carrying value of the cancelled debt was higher than the fair value of the shares issued.
The fair value of the shares issued to the non-shareholders of the Senior Unsecured Notes was determined using the same
aforementioned approach used to determine the fair value of the shares issued to the non-shareholders of the Senior
Secured notes.
Exit Financing
Immediately after issuing the new shares and warrants to cancel the debt and accrued interest owned under Term Loan A,
Term Loan B, the Senior Secured Notes and the Senior Secured Notes, the Company drew down on its five-year, $115.0
million term loan facility with HPS Investment Partners, LLC, Blue Torch Capital LP and other financial institutions to fully
repay:
• The incremental, short term credit facility of $50.0 million entered into on 10 July 2021, with Corre Partners
Management, First Pacific Advisors, Nut Tree Capital Management, and certain other financial institutions affiliated
therewith; and
• The existing backstop ABL/Term Loan creditor facility with Centerbridge and others.
Refer to Note 22 for the key terms and conditions of the new Exit Term Loan.
Creditor Share Purchase Plan
The Company issued 878,169 shares to participating shareholders under a Share Purchase Plan, raising $1.6 million in the
aggregate. Refer to Note 25.
Selective Buy-Back and Cancellation of Shares under Selective Buy-Back
The Company accepted offers received from eligible shareholders under a Selective Buy-Back and repurchased 2,562
shares. The shares purchased under the Selective Buy-Back were cancelled on 24 September 2021. Refer to Note 25.
Income Tax
The tax attributes of the Company were impacted by the Recapitalisation in Australia and the United States. These impacts
can be found in Note 11.
__________________________________________________________________________________________
55
55
BOART LONGYEAR 2021 ANNUAL REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2021
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
2. RECAPITALISATION AND RE-DOMICILIATION (CONTINUED)
Re-domiciliation
On 8 September 2021, the Company's shareholders approved a re-domiciliation of the Company to Canada. In
accordance with the terms of the re-domiciliation, on 5 October 2021, Boart Longyear Group Ltd., the new Canadian parent
entity, acquired all the issued shares in the existing parent entity, Boart Longyear Limited, from existing Boart Longyear
Limited shareholders on a one for one basis.
Apart from stating that a business combination has not occurred when a new entity is placed on top of an existing group by
issuing shares to the existing shareholder, there is no specific guidance in AASB 3 Business Combination on this topic. As
a result, the Company has developed an accounting policy to account for this transaction using the predecessor's carrying
amounts at the date of the transaction. Therefore, the consolidated financial statements of Boart Longyear Group Ltd. are
presented as a continuation of the existing group. Assets and liabilities are recognised at predecessor carrying values while
share capital, including shares, options, and warrants, are recognised at fair value. As the re-domiciliation has been
presented as a continuation of the Company, existing reserves from the predecessor parent entity have been brought
forward. The $1.6 billion difference between the share capital of Boart Longyear Group Ltd. and the reserves and net
assets acquired at predecessor book value has been credited to Other equity in the Consolidated Statement of Changes in
Equity.
In all, the Company incurred $41.4 million in costs, recognized as general and administrative expenses in the Consolidated
Statement of Profit or Loss and Other Comprehensive Income, during 31 December 2021 to fund the Recapitalisation
transaction and re-domiciliation activities. These costs were partially offset by the above mentioned $3.7 million
restructuring gains recorded as other income in the Consolidated Statement of Profit or Loss and Other Comprehensive
Income.
__________________________________________________________________________________________
56
56
BOART LONGYEAR 2021 ANNUAL REPORT Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
3. SEGMENT REPORTING
Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of
segment performance is based on the Company’s two general operating activities: Global Drilling Services and Global
Products. The Global Drilling Services segment provides a broad range of drilling services to companies in mining, energy
and other industries. The Global Products segment manufactures and sells drilling equipment and performance tooling to
customers in the drilling services and mining industries.
Information regarding these segments is presented below. The accounting policies of the reportable segments are the
same as the Company’s accounting policies. Segment profit shown below is consistent with the income reported to the
chief operating decision maker for the purposes of resource allocation and assessment of segment performance. Segment
profit represents earnings before interest and taxes.
Segment revenue and results
Segment Revenue
2021
US$'000
2020
US$'000
Segment Profit
2021
US$'000
2020
US$'000
Global Drilling Services
614,840
456,267
60,552
8,511
Global Products revenue
Products third party revenue
Products inter-segment revenue 1
Total Global Products
306,559
73,671
200,998
56,407
380,230
257,405
54,577
16,381
Less Global Product sales to Global Drilling Services
(73,671)
Total third party revenue
921,399
(56,407)
657,265
Total segment profit
Unallocated costs 2
Recapitalisation costs
Finance costs
Interest income
Loss before taxation
115,129
24,892
(41,791)
(37,661)
(88,828)
42
(53,109)
(25,571)
—
(92,877)
43
(93,513)
(1) Transactions between segments are carried out at arm's length and are eliminated on consolidation.
(2) Unallocated costs include corporate general and administrative costs as well as other expense items such as foreign exchange
gains or losses.
Other segment information
Global Drilling Services
Global Products
Total of all segments
Unallocated 1
Total
Depreciation and
amortisation of segment
assets
Additions to non-current
assets
2021
US$'000
2020
US$'000
2021
US$'000
2020
US$'000
34,995
10,400
45,395
3,156
48,551
30,593
6,585
37,178
3,786
40,964
48,248
20,987
69,235
1,455
70,690
26,016
10,944
36,960
2,120
39,080
(1) Unallocated additions to non-current assets relate to the acquisition of general corporate assets such as software and hardware.
__________________________________________________________________________________________
57
57
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
3. SEGMENT REPORTING (CONTINUED)
Geographic information
The Company’s two business segments operate in four principal geographic areas – North America, Asia Pacific, Latin
America and EMEA. The Company’s revenue from external customers and information about its segment assets by
geographical locations are detailed below:
North America
Asia Pacific
Latin America
EMEA
Total
Revenue from external
customers
2021
US$'000
2020
US$'000
417,961
216,022
104,747
182,669
921,399
291,489
170,548
66,865
128,363
657,265
Non-current assets 1
2020
2021
US$'000
US$'000
207,205
53,007
12,147
36,895
309,254
198,323
50,775
13,268
31,616
293,982
(1)
Non-current assets excluding deferred tax assets and post-employment assets.
__________________________________________________________________________________________
58
58
BOART LONGYEAR 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
4. REVENUE
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 generally happens at the point the products are delivered to the carrier for drilling rigs
and 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
2021
US$'000
2020
US$'000
614,840
306,559
921,399
456,267
200,998
657,265
There was one customer that contributed 13% of the Company’s revenue in 2021 and 12% in 2020.
__________________________________________________________________________________________
59
59
BOART LONGYEAR 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
5. OTHER INCOME / EXPENSE
The components of other income are as follows:
Gain on disposal of property, plant and equipment
Gain on disposal of scrap
Gain on warrants revaluation
Gain on recapitalization
Other
Total other income
The components of other expense are as follows:
Amortisation of intangible assets 1
Value-added tax
Loss on foreign currency exchange
Impairment of Latin America property, plant and equipment 2
Impairment of property, plant and equipment 2
Other
Total other expenses
2021
US$'000
2020
US$'000
4,005
151
11,630
3,726
1,096
20,608
1,998
570
—
—
3,253
5,821
2021
US$'000
2020
US$'000
1,609
—
10,330
—
—
1,175
13,114
1,818
280
4,087
6,807
1,492
2,632
17,116
(1) Total amortisation of intangible assets for the year is $5.5 million, as presented in Note 20. Amortisation expense of $3.9 million for
development assets was recorded within research and development expenses, while $1.6 million of amortisation was recorded
within other expenses. In the year ended 31 December 2020 amortisation totalled $3.4 million, while $1.6 million was recorded in
research and development, and $1.8 million was recorded within other expenses.
(2) No fixed asset impairments were recorded during the year ended 31 December 2021. Impairments of $8.3 million in the year ended
31 December 2020 were recorded in other expenses. See Note 18.
__________________________________________________________________________________________
60
60
BOART LONGYEAR 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
6.
INTEREST INCOME / FINANCE COSTS
Interest income is as follows:
Interest income:
Bank deposits
Finance costs are as follows:
Finance costs:
Interest on loans and bank overdrafts
Interest on retired bank loans
Debt modification1
Applicable premium
Amortisation of debt issuance costs
Interest on lease liabilities
Other
Total finance costs
(1) See Note 22.
2021
US$'000
2020
US$'000
42
43
2021
US$'000
2020
US$'000
5,747
43,488
9,528
23,558
604
3,015
2,888
88,828
62,496
—
11,786
13,745
1,148
3,191
511
92,877
__________________________________________________________________________________________
61
61
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
7. LOSS FOR THE YEAR
Loss for the year includes the following:
(a) Gains and losses
Loss for the year includes the following gains and (losses):
Gain on disposal of property, plant and equipment
Net foreign exchange losses
Fair value adjustment on warrant liabilities
Gain on recapitalization
Net change in expected credit loss
(b) Employee benefits expenses
Salaries and wages
Post-employment benefits:
Defined contribution plans
Defined benefit plans
Termination benefits
Other employee benefits1
2021
US$'000
2020
US$'000
4,005
1,998
(10,330)
(4,087)
(11,630)
3,726
—
—
(596)
(564)
2021
US$'000
2020
US$'000
(303,915)
(215,825)
(11,576)
(1,444)
(2,143)
(69,495)
(9,867)
(1,374)
(1,911)
(56,635)
(388,573)
(285,612)
(1) Other employee benefits include items such as medical benefits, workers’ compensation, other fringe benefits and state taxes.
(c) Other
Depreciation of non-current assets
Amortisation of non-current assets
Rental expense
2021
US$'000
2020
US$'000
(43,010)
(5,540)
(23,960)
(37,591)
(3,373)
(18,179)
__________________________________________________________________________________________
62
62
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
8. REMUNERATION OF AUDITORS
Company auditor's remuneration
Audit and review of the financial report:
Auditor of the parent entity
Related practices of the parent entity auditor
Non-audit services:
Tax Consultation
Tax Compliance
Tax Audit Support
2021
US$'000
2020
US$'000
912
793
1,705
349
228
497
1,074
783
710
1,493
44
199
196
439
Total remuneration to Company auditor
2,779
1,932
Boart Longyear Group Ltd.’s auditor is Deloitte Touche Tohmatsu. The Company has employed Deloitte Touche Tohmatsu
on assignments in addition to their audit duties where their expertise and experience with the Company are important.
These assignments principally have been related to tax advice and tax compliance services, the magnitude of which is
impacted by the global reach of the Company.
The Board and its Audit & Risk Committee are committed to ensuring the independence of the external auditor.
Accordingly, significant scrutiny is given to non-audit engagements of the external auditor. The Company has a formal pre-
approval policy which requires the pre-approval of non-audit services by the Chairman of the Audit Committee.
Additionally, the total annual fees for such non-audit services cannot exceed the auditor’s annual audit fees without the
approval of the Audit Committee. The Audit Committee believes that the combination of these two approaches results in
an effective procedure to pre-approve services performed by the external auditor.
9. KEY MANAGEMENT PERSONNEL COMPENSATION
The aggregate compensation made to key management personnel of the Company is set out below.
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Total key management personnel compensation
2021
US$'000
2020
US$'000
8,405
58
504
388
—
9,355
3,536
38
—
4
224
3,802
__________________________________________________________________________________________
63
63
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
10. EMPLOYEE LONG TERM INCENTIVE PAYMENTS
In 2020, BLY shareholders adopted a Long-Term Equity Incentive Plan ("LTIP”). The LTIP allows the Company’s
Remuneration Committee to grant incentive performance stock units to senior leaders, or others, as appropriate. The LTIP
awards are tied to performance measures established by the Remuneration Committee that management and senior
leaders have to achieve to receive their awards. The LTIP will terminate 10 years after the 30 July 2020 Effective Date.
No shares or performance stock units were awarded under the LTIP in 2021; however, the Remuneration Committee
approved and announced the 2021 LTIP Plan. The 2021 LTIP Plan is a two-year program that will be phased in over two
cycles. The details of the 2021 LTIP Plan are outlined below:
•
•
•
•
•
Duration of 2021 LTIP Plan: 1 January 2021- 31 December 2022. Target Bonus: 35% of Base Pay
◦ Duration of Cycle One: 1 January 2021 - 31 December 2022. Target Bonus: 17.5% of Base Pay
◦ Duration of Cycle Two: 1 January 2022 - 31 December 2022. Target Bonus: 17.5% of Base Pay
Date of Performance Criteria Being Set
◦ Cycle One: February 2021
◦ Cycle Two: Early 2022
Cycle One Performance Criteria: Achievement of Adjusted EBITDA of $98.0 million
Payment Type: Cash or shares at the discretion of the Remuneration Committee
Payment Curve: Cycle One of the 2021 LTIP Plan was awarded using a payment curve with the following thresholds
for minimum and over-achievement targets:
◦ Minimum Achievement of $73.0 million Adjusted EBITDA earns a 75% payout
◦ Maximum Achievement of $147.0 million Adjusted EBITDA earns a 150% payout
The Company began recognising the expense associated with Cycle One of the 2021 LTIP Plan over a one-year service
period from 1 January 2021 to 31 December 2021 at the time it was communicated to eligible employees and the Cycle
One performance metrics were known. The expense was measured using a 'most likely amount' approach based on the
Company's estimate of year-to-date Adjusted EBITDA.
Adjusted EBITDA for the year ended 31 December 2021 was $112.0 resulting in an over-achievement for Cycle One of
the 2021 LTIP Plan. As a result, the Company recognised an expense for the 2021 LTIP plan of $2.0 million calculated
using the salaries of the employees eligible for the plan and a percentage achievement of 114%. Cycle One of the 2021
LTIP Plan is scheduled to be paid to eligible employees in 2022 and has been accrued as an employee benefit at
31 December 2021.
11.
INCOME TAXES
The Company is subject to income taxes in Canada 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 amounts relate to items recognised directly in equity in which
case the income tax expense (benefit) is also recognised in equity.
__________________________________________________________________________________________
64
64
BOART LONGYEAR 2021 ANNUAL REPORT Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
11.
INCOME TAXES (CONTINUED)
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.
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 Parent Entity is taxed in Canada as a single entity. The Company includes tax consolidated groups for the entities
incorporated in Australia and also in 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 groups have entered into tax-funding arrangements with their respective
head entities. 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 Canada 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 Note 23.
__________________________________________________________________________________________
65
65
BOART LONGYEAR 2021 ANNUAL REPORT Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
11.
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
2021
US$'000
2020
US$'000
2,626
(3,430)
5,084
4,280
1,187
(49)
4,115
5,253
(b) Reconciliation of the prima facie income tax expense on pre-tax accounting profit to the income tax expense
in the financial statements:
Loss before taxation
Income tax benefit calculated at Canada rate of 26.5% (prior year 30.0%)
Impact of non-Canada tax rates
Net non-deductible/non-assessable items
Net unrecognised tax losses and tax credits for the current year 1
Recognition of deferred tax assets arising in prior years
Income tax impact of debt restructure
Other
Over provision from prior years
Income tax expense per the Consolidated Statement of Profit or Loss and Other
Comprehensive Income
(53,109)
(93,513)
(14,074)
(1,617)
20,250
13,855
(2,276)
(3,712)
(4,716)
7,710
(3,430)
(28,054)
2,390
24,415
9,511
(1,211)
—
(1,749)
5,302
(49)
4,280
5,253
(1) Due to the group being in a tax loss position in many jurisdictions during the current financial year, the Company has not recognised
a tax benefit for current period losses.
(c)
Income tax recognised directly in equity during the period:
The following current and deferred amounts were charged directly through equity during the year:
Deferred tax recognised in equity:
Actuarial movements on defined benefit plans
2021
US$'000
2020
US$'000
(151)
(861)
__________________________________________________________________________________________
66
66
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
11.
INCOME TAXES (CONTINUED)
(d) Tax assets and liabilities:
Tax assets:
Income tax receivable attributable to:
Parent
Other entities 1
Total tax assets
Current tax liabilities:
Income tax payable attributable to:
Parent
Other entities 2
Total current tax liabilities
2021
US$'000
2020
US$'000
—
1,736
1,736
—
1,506
1,506
—
2,066
2,066
—
1,946
1,946
(1) The income tax receivable for 2021 is $1.7 million (2020: $2.1 million) of which $0.8 million is classified as current tax receivable and
$0.9 million is classified as non-current tax receivable (2020: $0.5 and $1.6 million respectively).
(2) Prior year balances were updated to align with current year classifications.
(e) Deferred tax balances:
Deferred tax comprises:
Temporary differences
Unused tax losses and credits
Total deferred tax asset (liability)
(f) Provision for tax contingencies:
2021
US$'000
2020
US$'000
(19,011)
8,035
(10,976)
(17,426)
11,986
(5,440)
2021
US$'000
2020
US$'000
Provision for tax contingencies 1, 2
46,284
57,254
(1) See Note 23.
(2) Prior year balances were updated to align with current year classifications.
__________________________________________________________________________________________
67
67
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
11.
INCOME TAXES (CONTINUED)
Opening
balance
US$'000
Recognised
in income
US$'000
Foreign
exchange
difference
US$'000
Acquired/
disposed
US$'000
Recognised
in equity
US$'000
Closing
balance
US$'000
2021
Deferred tax assets (liabilities)
temporary differences
Property, plant and equipment
Provisions
Doubtful debts
Other intangible assets
Accrued liabilities
Pension
Inventories
Investments in subsidiaries
Unrealised foreign exchange
Other
Unused tax losses and credits:
Tax losses
1,378
778
176
(19,383)
325
(2,450)
1,826
—
(608)
532
(17,426)
(114)
(82)
(61)
(1,748)
(26)
(1,045)
773
—
720
450
(1,133)
11,986
(5,440)
(3,951)
(5,084)
(162)
(91)
(21)
—
(38)
287
(214)
—
—
(62)
(301)
—
(301)
—
—
—
—
—
—
—
—
—
—
—
—
—
Presented in the statement of financial position as follows:
Deferred tax asset
Deferred tax liability
—
—
—
—
—
(151)
—
—
—
—
(151)
1,102
605
94
(21,131)
261
(3,359)
2,385
—
112
920
(19,011)
—
(151)
8,035
(10,976)
10,139
(21,115)
(10,976)
Where deferred tax assets have been recognised, it is considered probable that the Company will generate sufficient future
taxable income to utilise the assets within the relevant tax jurisdictions.
__________________________________________________________________________________________
68
68
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
11.
INCOME TAXES (CONTINUED)
Opening
balance
US$'000
Recognised
in income
US$'000
Foreign
exchange
difference
US$'000
Acquired/
disposed
US$'000
Recognised
in equity
US$'000
Closing
balance
US$'000
2020
Deferred tax assets (liabilities)
temporary differences
Property, plant and equipment
Provisions
Doubtful debts
Other intangible assets
Accrued liabilities
Pension
Inventories
Investments in subsidiaries
Unrealised foreign exchange
Other
Unused tax losses and credits:
Tax losses
3,735
660
—
(17,378)
179
(1,546)
2,117
(240)
(1,163)
345
(13,291)
(2,043)
174
176
(2,005)
161
(173)
(113)
240
555
215
(2,813)
13,288
(3)
(1,302)
(4,115)
(314)
(56)
—
—
(15)
130
(178)
—
—
(28)
(461)
—
(461)
—
—
—
—
—
—
—
—
—
—
—
—
—
Presented in the statement of financial position as follows:
Deferred tax asset
Deferred tax liability
Unrecognised deferred tax assets
Tax benefit of unused losses 1, 4
Tax benefit of unused capital losses 2
Unused tax credits 3
Tax benefit of temporary differences
—
—
—
—
—
(861)
—
—
—
—
(861)
1,378
778
176
(19,383)
325
(2,450)
1,826
—
(608)
532
(17,426)
—
(861)
11,986
(5,440)
13,252
(18,692)
(5,440)
2021
US$'000
2020
US$'000
212,615
483,879
7,921
18,265
722,680
279,420
508,434
13,842
45,938
847,634
(1) $50.7 million of the tax benefit of unused losses expire within 3-20 years and $176.5 million related to tax losses that do not expire
(2020: $49.9 million and $229.5 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 $7.9 million will expire within 1-10 years.
(4) The estimated effect on unrecognised deferred tax assets as a result of the Recapitalisation was a reduction of $31.2 million ($16.5
million, United States, $14.7 million, Australia).
Recapitalisation
On 23 September 2021, the Company completed a Recapitalisation that substantially reduced the Company’s debt (See
Note 2). The United States and Australia were the two tax jurisdictions where tax impacts were identified. The Company
performed a valuation and determined the amount of Cancellation of Debt Income (“CODI”) in the United States and
Commercial Debt Forgiveness (“CDF”) in Australia. The Company will utilize unbenefited tax losses to offset the tax
impacts identified. The initial estimate of the reduction in unbooked tax losses has been reflected in the numbers
disclosed above.
__________________________________________________________________________________________
69
69
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
11.
INCOME TAXES (CONTINUED)
Canadian income tax audits
As previously disclosed by the Company, the Canada Revenue Agency (“CRA”) has reassessed the Company’s Canadian
affiliates for tax years 2010 through 2016. These tax years remain in various stages of audit or appeal with the CRA. Tax
years 2010-2014 are also proceeding under mutual agreement procedures, which are a negotiation between Canada and
other countries on the allocation of taxable profits between Canada and these countries. The unsettled tax, penalties and
interest for 2010-2014 could result in a maximum remaining reassessment of C$51.2 million, with a net cash payment
after prior payments and credits of C$33.8 million. The unsettled tax, penalties and interest for 2015-2016 could result in a
maximum remaining reassessment of C$13.3 million. The Company is vigorously disputing these reassessments. Due to
the uncertainty surrounding these audits, a provision for the estimated outcome has been recognised as a non-current
provision. Refer to Note 23.
12. LOSS PER SHARE
Basic and diluted loss per share 1
Basic and diluted loss per share
The loss and weighted average number of ordinary shares used in the calculation
of basic and diluted loss per share are as follows:
Loss used in the calculation of basic and diluted loss per share
Weighted average number of ordinary shares for the purposes of
basic and diluted loss per share 1
2021
US¢ per
share
2020
US¢ per
share
(68.7)
(2,245.2)
2021
US$'000
2020
US$'000
(57,389)
(98,766)
2021
Shares '000
2020
Shares '000
83,487
4,399
(1) On 23 September 2021, the Company completed a consolidation of issued capital on a basis that every 20 shares be consolidated
into 1 share. The comparative information has been restated as a result of share consolidation as discussed in Note 1.
__________________________________________________________________________________________
70
70
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
13. TRADE AND OTHER RECEIVABLES
Trade receivables are recorded at amortised cost. The Company reviews collectability of trade receivables on an ongoing
basis and provides allowances for credit losses when there is evidence that trade receivables may not be collectible.
These losses are recognised in the income statement within operating expenses. When a trade receivable is determined
to be uncollectible, it is written off against the allowance for doubtful accounts. Subsequent recoveries of amounts
previously written off are recorded in other income in profit or loss.
Trade receivables
Loss allowance
Goods and services tax receivable
Other receivables
The aging of trade receivables is detailed below:
Current
Past due 0 - 30 days
Past due 31 - 60 days
Past due 61 - 90 days
Past due 90 days
2021
US$'000
2020
US$'000
121,844
(822)
15,540
1,338
137,900
98,589
(1,519)
10,924
1,572
109,566
2021
US$'000
2020
US$'000
112,796
5,384
2,347
368
949
121,844
93,676
1,787
819
602
1,705
98,589
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 aging 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.
__________________________________________________________________________________________
71
71
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
14.
INVENTORIES
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.
Raw materials
Work in progress
Finished products
2021
US$'000
2020
US$'000
31,056
6,308
170,598
207,962
19,244
6,960
132,123
158,327
The allowance for excess or obsolete inventory was $20.4 million and $23.5 million as at 31 December 2021 and 2020,
respectively.
15. 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 22,
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, Blue Torch Capital and HPS Investments Partners, LLC accounted for $115.0
million of Term Loans outstanding. 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
72
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
15. FINANCIAL RISK MANAGEMENT (CONTINUED)
Financial risk management objectives
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 to reduce the risk of exposure from exchange rate
fluctuations during the years ended 31 December 2021 or 2020.
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
Liabilities
2021
US$'000
2020
US$'000
2021
US$'000
2020
US$'000
145,786
1,104
2,924
458,596
95,684
331
2,274
471,190
87,602
7,971
11,216
179,350
95,895
9,080
10,947
173,796
Australian Dollar
Canadian Dollar
Euro
US Dollar
Foreign currency sensitivity
The Company is mainly exposed to exchange rate fluctuations in the Australian Dollar (AUD), Canadian Dollar (CAD),
Euro (EUR) and United States Dollar (USD). The Company is also exposed to translation differences as the Company’s
presentation currency is different from the functional currencies of various subsidiaries. However, this represents a
translation risk rather than a financial risk and consequently is not included in the following sensitivity analysis.
The following tables reflect the Company’s sensitivity to a 10% change in the exchange rate of each of the currencies
listed above. This sensitivity analysis includes only outstanding monetary items denominated in currencies other than the
respective subsidiaries’ functional currencies and remeasures these at the respective year end to reflect a 10% decrease
in the indicated currency against the respective subsidiaries’ functional currencies. A positive number indicates an
increase in net profit and/or net assets.
Net profit
Net assets
Net profit
Net assets
10% decrease in AUD
10% decrease in CAD
2021
US$'000
2020
US$'000
2021
US$'000
2020
US$'000
(1,165)
(5,294)
1,701
18
613
613
792
792
10% decrease in EUR
10% decrease in USD
2021
US$'000
2020
US$'000
2021
US$'000
2020
US$'000
933
933
766
766
7,500
(25,386)
5,845
(27,036)
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
73
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
15. FINANCIAL RISK MANAGEMENT (CONTINUED)
Forward foreign exchange contracts
There were no open forward foreign currency contracts as at 31 December 2021 or 2020.
Interest rate risk management
The Company is exposed to interest rate risk as borrowed funds have floating interest rates. This risk is managed by the
use of interest rate swap contracts. The Company regularly analyses its interest rate exposure, by taking into
consideration forecast debt positions, refinancing, renewals of existing positions, alternative financing, hedging positions
and the mix of fixed and floating interest rates. Refer to Note 26 for additional information on the Company's hedging
strategy.
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 2021 or 2020.
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 future interest and principal cash flows; therefore, the balances may vary from the
Consolidated Statement of Financial Position.
31 December 2021
Non-interest bearing payables
Variable interest rate instruments
Fixed interest rate instruments
Leases
Equipment financing
31 December 2020
Non-interest bearing payables 1
Variable interest rate instruments
Fixed interest rate instruments
Leases
Equipment financing
Weighted
Average
Effective
Interest
Rate %
-
Less
than 1
month
1 to 3
months
3 months
to 1 year
1 - 5
years
5+ years
Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
7.2%
39.9%
7.5%
9.5%
—
92,518 45,478
1,855
14
114
230
—
8,348 194,279
155
9,501 23,732
1,603
93,703 47,691 18,552 219,769
928
7
174
76
642
61
-
3.7%
10.0%
8.7%
9.5%
—
67,391 29,116
143
—
642 23,407
— 28,825 947,132
9,128 21,632
23
2,549
137
67,747 29,419 39,252 994,720
71
—
216
69
657
— 137,996
— 205,410
237
—
2,602 36,123
2,551
2,602 382,317
—
— 96,507
— 24,263
— 975,957
5,622 36,621
3,412
5,622 1,136,760
—
(1) Prior year amounts were updated to align with current year classifications.
__________________________________________________________________________________________
74
74
BOART LONGYEAR 2021 ANNUAL REPORT Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
15. FINANCIAL RISK MANAGEMENT (CONTINUED)
Liquidity risk (continued)
The following tables reflect the expected maturities of non-derivative financial assets. These are based on the
undiscounted expected cash flows of the financial assets.
2021
Non-interest bearing receivables
Cash
2020
Non-interest bearing receivables
Cash
Less than 1
month
US$'000
1 to 3 months
US$'000
3 months to 1
year
US$'000
Total
US$'000
79,862
25,579
105,441
59,300
23,513
82,813
41,529
—
41,529
38,545
—
38,545
16,509
—
16,509
11,721
—
11,721
137,900
25,579
163,479
109,566
23,513
133,079
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.
16. 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 $0.2 million as held for sale as at 31 December 2021 (31 December 2020: $0.4 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
75
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
17.
IMPAIRMENT OF ASSETS
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.
Impairment by cash-generating units ("CGU")
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 2021 and 31 December 2020. The recoverable amount of the North America
Drilling Services CGU exceeded its carrying amount by approximately 54.7% and 17.6%, respectively, resulting in no
impairment to the North America Drilling Services CGU for the year ended 31 December 2021 and 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 for the year ended 31 December 2021 and 31 December 2020.
Consequently, no goodwill impairments were recorded for the year ended 31 December 2021 and 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 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 10.5% for North America Drilling
Service in 2021 and 25.0% for Geological Data Services CGU. The higher discount rate used for Geological Data
Services is necessitated due to the risk and uncertainty of cash flows in this developing business. 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 2.5% in North America and Geological Data Services, 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 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 and Geological Data Services exceeds its carrying value under all change scenarios and
each scenario would result in no further impairment of the CGU.
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.
During the year ended 31 December 2020, the Company identified the global economic impact of COVID-19 as a
potential indicator of impairment. As a result, 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.
__________________________________________________________________________________________
76
76
BOART LONGYEAR 2021 ANNUAL REPORT Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
18. PROPERTY, PLANT AND EQUIPMENT
The Company’s assets are held in various 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 years
5 - 10 years
5 - 12 years
1 - 5 years
5 - 10 years
3 - 5 years
1 - 7 years
Depreciation methods, useful lives and residual values are reassessed at each reporting date.
__________________________________________________________________________________________
77
77
BOART LONGYEAR 2021 ANNUAL REPORT Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
18. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Land and
buildings
Plant and
equipment
Right of use
assets
Construction
in progress
Total
US$'000
US$'000
US$'000
US$'000
US$'000
Gross carrying amount:
Balance at 1 January 2020
Additions
Disposal
Asset classification transfer
Transfer from construction in progress
Currency movements
Balance at 31 December 2020
Additions
Disposal
Asset classification transfer
Transfer from construction in progress
Transfer from intangible assets
Currency movements
Balance at 31 December 2021
Accumulated depreciation and impairment:
Balance at 1 January 2020
Depreciation
Impairment
Disposal
Asset classification transfer
Currency movements
Balance at 31 December 2020
Depreciation
Disposal
Asset classification transfer
Currency movements
Balance at 31 December 2021
50,597
—
(5,908)
1,135
336
1,261
47,421
—
(3,092)
1,198
1,013
—
(532)
46,008
(29,627)
(2,672)
(779)
5,735
(961)
(803)
(29,107)
(1,538)
2,883
(1,053)
258
(28,557)
642,321
1,207
(41,220)
1,843
32,941
14,706
651,798
4,382
(80,263)
646
40,893
—
(29,870)
587,586
(557,184)
(25,635)
(5,518)
37,775
(978)
(14,332)
(565,872)
(31,681)
78,970
(500)
23,265
(495,818)
46,232
7,118
(23)
(2,978)
—
1,521
51,870
11,744
(1,634)
(2,029)
—
—
(1,083)
58,868
(10,627)
(9,284)
(1,645)
60
1,939
(423)
(19,980)
(9,791)
1,633
1,553
523
(26,062)
23,325
23,734
(376)
—
(33,277)
2,437
15,843
48,077
—
185
(41,906)
30
4,381
26,610
—
—
(376)
376
—
—
—
—
—
—
—
—
762,475
32,059
(47,527)
—
—
19,925
766,932
64,203
(84,989)
—
—
30
(27,104)
719,072
(597,438)
(37,591)
(8,318)
43,946
—
(15,558)
(614,959)
(43,010)
83,486
—
24,046
(550,437)
Net book value at 31 December 2020
Net book value at 31 December 2021
18,314
17,451
85,926
91,768
31,890
32,806
15,843
26,610
151,973
168,635
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 saleability 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 has
determined that there were no impairment as at 31 December 2021. The Company recorded an impairment loss as at
31 December 2020 of $8.3 million on property, plant, and equipment.
__________________________________________________________________________________________
78
78
BOART LONGYEAR 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
19. GOODWILL
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.
Gross carrying amount:
Balance at 1 January 2020
Currency movements
Balance at 31 December 2020
Balance at 1 January 2021
Currency movements
Balance at 31 December 2021
US$'000
104,458
657
105,115
105,115
(199)
104,916
__________________________________________________________________________________________
79
79
BOART LONGYEAR 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
19. GOODWILL (CONTINUED)
Allocation of goodwill to cash-generating units
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
2021
US$'000
2020
US$'000
100,869
4,047
104,916
100,862
4,253
105,115
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.
20. 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. 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 their expected useful lives 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
80
BOART LONGYEAR 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
20. OTHER INTANGIBLE ASSETS (CONTINUED)
Trademarks
Patents
Customer
relationships
and other
Software
Develop-
ment
assets
Total
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
Gross carrying amount:
Balance at 1 January 2020
Additions
Disposals
Currency movements
Balance at 31 December 2020
Balance at 1 January 2021
Additions
Disposals
Transfer from/(to) PP&E
Currency movements
Balance at 31 December 2021
Accumulated amortisation and
impairment:
Balance at 1 January 2020
Amortisation for the period
Disposals
Impairment for the period
Currency movements
Balance at 31 December 2020
Balance at 1 January 2021
Amortisation for the period
Disposals
Transfer (from)/to PP&E
Impairment for the period
Currency movements
Balance at 31 December 2021
1,947
—
—
—
1,947
9,928
748
(143)
30
10,563
1,947
—
—
—
—
1,947
10,563
1,380
(5,300)
—
(12)
6,631
40,863
—
—
1,505
42,368
89,477
66
(323)
17
89,237
45,062
6,207
—
1,583
52,852
187,277
7,021
(466)
3,135
196,967
42,368
—
(21,346)
—
361
21,383
89,237
(236)
(177)
—
2
88,826
52,852
5,343
196,967
6,487
(23,180) (50,003)
(30)
(377)
153,044
(30)
(728)
34,257
—
—
—
—
—
—
—
—
—
—
—
—
—
(5,887)
(415)
—
(387)
—
(6,689)
(6,689)
(578)
5,300
(331)
(165)
(5)
(2,468)
(37,145) (88,628)
(384)
323
—
(17)
(39,666) (88,706)
(1,019)
—
—
(1,502)
(27,983) (159,643)
(3,373)
340
(507)
(2,218)
(30,340) (165,401)
(1,555)
17
(120)
(699)
(39,666) (88,706)
(12)
177
—
—
(2)
(19,700) (88,543)
(1,019)
21,346
—
—
(361)
(30,340) (165,401)
(5,540)
50,003
(331)
(424)
(392)
(11,374) (122,085)
(3,931)
23,180
—
(259)
(24)
Net book value at 31 December 2020
Net book value at 31 December 2021
1,947
1,947
3,874
4,163
2,702
1,683
531
283
22,512
22,883
31,566
30,959
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 2021 and 31 December 2020 on trademarks, patents and development assets of $0.4 million and
$0.5 million, respectively.
The Company recognised $10.9 million of research and development expenses in the consolidated statement of profit or
loss and other comprehensive income for the year ended 31 December 2021 (2020: $6.6 million).
__________________________________________________________________________________________
81
81
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
21. TRADE AND OTHER PAYABLES
Trade payables and other payables are carried at amortised cost. They represent unsecured liabilities for goods and
services provided to the Company prior to the end of the financial period that are unpaid and arise when the Company
becomes obligated to make future payments.
Current
Trade payables
Accrued payroll and benefits
Goods and services tax payable 1
Accrued interest
Accrued legal and environmental
Professional fees
Accrued drilling costs
Other sundry payables and accruals
2021
US$'000
2020
US$'000
86,393
32,694
5,166
239
1,538
3,747
3,210
5,009
137,996
59,412
21,387
5,938
245
637
3,100
2,502
3,286
96,507
(1) Prior year amounts were updated to align with current year classifications.
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
82
BOART LONGYEAR 2021 ANNUAL REPORT
6
1
7
1
0
8
,
7
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3
8
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
22. LOANS AND BORROWINGS (CONTINUED)
A summary of the maturity of the Company's borrowings is as follows:
Current borrowings
Non-current borrowings
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
2021
US$'000
2020
US$'000
10,752
178,694
189,446
10,752
9,190
7,193
44,361
122,416
193,912
(3,310)
(1,156)
189,446
10,235
868,331
878,566
10,235
848,112
7,142
5,213
8,699
879,401
—
(835)
878,566
The following table provides a reconciliation of debt cash flows from financing activities to borrowings:
Proceeds from borrowings
Capital lease additions
Total debt drawn
Repayment of borrowings
Debt exchanged for equity at book value
Debt exchanged for equity at fair value
Debt exchanged for warrants
Total debt payments
Revolver Bank Loans
2021
US$'000
2020
US$'000
263,311
13,389
276,700
(207,837)
(628,034)
(170,692)
(31,008)
(1,037,571)
62,521
9,374
71,895
(81,314)
—
—
—
(81,314)
The Company has an asset-based revolver bank loan with an available facility of $90.0 million and $75.0 million as of
31 December 2021 and 2020, respectively. Of this revolving bank loan $40.0 million was drawn as at 31 December 2021
($23.0 million at 31 December 2020).
ABL
Available facility
Drawn
Letters of credit
Availability block
Borrowing base adjustment
Minimum liquidity
Undrawn
2021
US$ Millions
2020
US$ Millions
90.0
40.0
8.2
—
15.0
5.6
21.2
90.0
75.0
23.0
5.8
10.0
10.0
8.3
17.9
75.0
__________________________________________________________________________________________
84
84
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
22. LOANS AND BORROWINGS (CONTINUED)
As at 31 December 2021, $8.2 million (31 December 2020: $5.8 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 Benchmark Replacement rate for LIBOR will bear interest at a floating rate equal to the LIBOR index (subject
to customary Alternative Reference Rate Committee ("ARRC") benchmark replacement language, which, in any event,
shall be an economically equivalent rate subject to the reasonable discretion of the lender).
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 2021, the
borrowing base was $75.0 million.
The facility contains a “Springing Dominion”/Minimum liquidity covenant that requires the Company to maintain on the last
day of any month a certain percent of the lesser of the “borrowing base” or “facility capacity” ($5.6 million at 31 December
2021) (see Note 35). If minimum availability at the end of each month is lower than this threshold, 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.
In May 2021, the facility was amended to release an “availability block” of $10.0 million allowing the Company to access
this additional liquidity. This amendment also temporarily reduced the “Springing Dominion” (refer above) from 15% of the
“borrowing base” to 7.5% through 30 September 2021 and 12.5% beginning 1 October 2021.
In December 2021, this facility was further amended to temporarily increase the available facility from $75 million to $90
million. This amendment also temporarily reduced the “Springing Dominion” from 12.5% (which has been effective from 1
October 2021) of the “borrowing base” to 7.5%. As at 31 December 2021 the minimum liquidity was $5.6 million being
7.5% of the borrowing base of $75 million. The increase in the facility size and the reduced “Springing Dominion” remain
in effect through 30 June 2022.
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).
The scheduled maturity date of the facility is 12 May 2025. As at 31 December 2021 the Company was in compliance with
all of its debt covenants
Exit Term Loan
In September 2021, the Company entered into a new Exit Term Loan in the amount of $115.0 million. The interest rate on
this facility is based on LIBOR, inclusive of a 1.0% floor, plus a variable margin ranging between 7.25% and 7.75%, for an
all in rate as of December 31, 2021 of 8.5% and an effective interest rate of 9.72%. The benchmark replacement rate for
LIBOR will bear interests at a floating rate equal to the LIBOR index (subject to customary ARRC benchmark replacement
language, which, in any event, shall be an economically equivalent rate subject to the reasonable discretion of the lender).
The exit term loan contains a maturity of 8 September 2026. It is secured by a first lien on the Working Capital Assets of
the Term Loan guarantors that are not ABL guarantors, a second lien on the Working Capital Assets of the Term Loan
issuer and the other Term Loan guarantors that are also ABL guarantors, and a second lien on substantially all of the Non-
Working Capital Assets of the Term Loan issuer and guarantors, including equipment, intellectual property, the capital
stock of subsidiaries and certain owned real property. As at 31 December 2021, the amount outstanding under this facility
was $115.0 million.
The Exit Term Loan contains a month end Minimum Liquidity covenant ($25.0 million) and a Fixed Charge Coverage ratio
of not less than 1.25 to 1.00 on the last day of each fiscal quarter. As at 31 December 2021, the Company was in
compliance with all of its debt covenants.
The Company’s Exit Term Loans and ABL require that obligors under the term loans must 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%
2021
178.6%
67.9%
2020
112.1%
67.0%
__________________________________________________________________________________________
85
85
BOART LONGYEAR 2021 ANNUAL REPORT Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
22. LOANS AND BORROWINGS (CONTINUED)
Backstop ABL
As part of the Company's Recapitalisation in September 2021 (see Note 2), this loan was repaid in full with cash. As of
31 December 2021, there was no balance owing on this facility. The term loan facility carried interest at a rate of 11% per
annum payable-in kind or 10% per annum payable in cash at the option of the borrower. As at 31 December 2020, the
amount outstanding under this facility was $45.0 million.
Senior Notes
Senior Unsecured Notes
As part of the Company's Recapitalisation in September 2021 (see Note 2), the Senior Unsecured Notes were
exchanged for equity. As of 31 December 2021 there was no balance owing on these notes. The Company had $88.9
million of senior unsecured notes outstanding as at 31 December 2020. These notes carried an interest rate of 1.5%, per
annum, which was payable-in-kind (i.e. non-cash settlement of interest whereas interest is capitalized to the debt
balance).
Senior Secured Notes
As part of the Company's Recapitalisation in September 2021 (see Note 2), the Senior Secured Notes were exchanged
for equity. As of 31 December 2021, there was no balance owing on these notes. The Company had $217.0 million of
senior secured notes outstanding as at 31 December 2020. 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
Consent was received in June 2020 to pay 30 June 2020 interest as payment-in-kind at 12% per annum and 31
December 2020 payment-in-kind per annum. Consent was received in June 2021 to pay 30 June 2021 interest as
payment-in-kind at 14.5% per annum.
On 8 June 2021 and 19 June 2020, the Company received consent from the holders of the Senior Secured Notes and the
ASX relief necessary to implement amendments to satisfy the interest payments due in respect of the notes on 30 June
2021 and due in respect of the notes on 30 June 2020 and 31 December 2020, respectively, by way of payment in-kind
rather than by payment of cash (payable-in-kind Notes). As a result of these amendments, the Company recorded a
modification loss of $9.5 million and $11.8 million within finance costs in the Consolidated Statement of Profit or Loss and
Other Comprehensive Income for the year ended 31 December 2021 and 2020, respectively. 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 Senior Secured Notes included 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 was expressed as a
percentage of the principal redeemed or repaid and included payable-in-kind Interest. The premium percentage increased
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 resulted in an effective interest rate on the Senior Secured Notes
of 14.4% per annum. The debt modification and applicable premium have been expensed to interest expense and are
presented as part of the finance costs in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.
The final settlement of the debt in September 2021 included a premium paid at 17.7%.
Term Loans
The Company had a term loan facility which was structured as Tranche A and Tranche B loans. As part of the
Recapitalisation in September 2021 (see Note 2), all amounts owing on these loans were exchanged for equity. As at 31
December 2020, the amounts outstanding on Tranche A and Tranche B were $132.5 million and $159.9 million,
respectively. The term loan tranches were payable to the term loan lender, Centerbridge Partners, L.P., a related party.
Interest on Term Loans A and B was 8% payable-in-kind and maturity was December 2022.
__________________________________________________________________________________________
86
86
BOART LONGYEAR 2021 ANNUAL REPORT Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
22. LOANS AND BORROWINGS (CONTINUED)
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
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., BL
Capital Management LLC, BLY US Holdings Inc., BLY IP Inc. and Longyear TM, Inc.
Australia: Boart Longyear Australia Pty Limited, Boart Longyear Limited, Boart Longyear Investments
Pty Limited, Boart Longyear Management Pty Limited, and Votraint No. 1609 Pty Limited
Canada: Boart Longyear Canada, Boart Longyear Manufacturing Canada Ltd. Longyear Canada,
ULC, Boart Longyear I LP, Boart Longyear Ventures Inc. and Boart Longyear Alberta Limited
Chile: Boart Longyear Chile Limitada
Exit Term
Loan
BLY US Holdings
Inc.
Netherlands: Boart Longyear Netherlands B.V., Boart Longyear International B.V. and Cooperatief
Longyear Holdings U.A.
Peru: Boart Longyear S.A.C.
Switzerland: Boart Longyear Suisse Sarl
United States: Boart Longyear Company, Boart Longyear Manufacturing and Distribution Inc., BL
Capital Management LLC, BLY IP Inc., Longyear TM, Inc., Longyear Global Holdings, Inc., and Boart
Longyear Incorporated
__________________________________________________________________________________________
87
87
BOART LONGYEAR 2021 ANNUAL REPORT Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
23. PROVISIONS
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 $5.3 million are comprised of both legal
and environmental costs, which were reclassified from Trade and Other Payables as at 31 December 2020. See Note 21.
The following table reflects the provision balances:
Current
Employee benefits
Restructuring and termination costs 1
Warranty 2
Provision for tax contingencies 4
Non-current
Employee benefits
Provision for legal contingencies
Pension and post-retirement benefits 3
Provision for tax contingencies 4
2021
US$'000
2020
US$'000
13,165
1,320
514
6,601
21,600
653
5,196
—
39,683
45,532
67,132
10,158
3,116
592
7,827
21,693
534
5,333
6,331
49,427
61,625
83,318
(1) The provision for restructuring and termination costs represent the present value of management’s best estimate of the costs directly
and necessarily caused by the restructuring that are not associated with the ongoing activities of the entity, including termination
benefits.
(2) The provision for warranty claims represents the present value of management’s best estimate of the future outflow of economic
benefits that will be required under the Company’s warranty program.
(3) Full actuarial valuations of the defined benefit pension and post-retirement benefit plans are performed annually by qualified
independent actuaries for the Company’s 31 December year end closing. The zero pension provision amount as at 31 December
2021 is the result of the current-year, net pension asset. See Note 24.
(4) Prior year amounts were updated to align with current year classifications.
__________________________________________________________________________________________
88
88
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
23. PROVISIONS (CONTINUED)
The following table reflects the provision rollforwards:
Warranty
US$'000
Restructuring
and
termination
US$'000
Tax 1
US$'000
Employee
benefits
US$'000
Balance at 1 January 2021
Change in provisions
Reductions arising from payments
Reductions resulting from remeasurement
Amounts reclassified from tax receivables
Amounts reclassified from accrued
liabilities
Foreign exchange
Balance at 31 December 2021
592
449
(541)
—
—
—
14
514
3,116
51
—
(1,589)
—
—
(258)
1,320
57,254
(8,224)
(1,603)
—
(2,209)
1,343
(277)
46,284
10,692
6,183
(3,000)
—
—
—
(57)
13,818
(1) Prior year amounts were updated to align with current year classifications.
24. PENSION AND POST-RETIREMENT BENEFITS
Defined contribution pension plans
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.
Pension costs represent actual contributions paid or payable by the Company to the various plans. As at 31 December
2021 and 2020, there were no significant outstanding or prepaid contributions. Company contributions to these plans were
$11.6 million and $9.9 million for the years ended 31 December 2021 and 2020, 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 or asset, 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 subject
to any asset ceiling for each plan.
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 10.9 years for 2021 and 11.0 years for 2020, and in Europe was 15.0
years for 2021 and 19.8 years for 2020. 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
89
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
24. PENSION AND POST-RETIREMENT BENEFITS (CONTINUED)
Full actuarial valuations of the defined benefit pension plans were performed as at various dates and updated to
31 December 2021 by qualified independent actuaries. The estimated market value of the assets of the funded pension
plans was $93.0 million and $173.3 million as at 31 December 2021, and 2020, 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 2021 and 2020 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 $2.7 million and $3.0 million during the years ended 31 December 2021 and
2020, respectively. Contributions in 2022 are expected to be $1.3 million.
The principal assumptions used to determine the actuarial present value of benefit obligations and pension costs are
detailed below (shown in weighted averages):
Discount rates
Expected Average Rate Increases:
Salaries
Pensions in payment
Healthcare costs (initial)
Healthcare costs (ultimate)
2021
2020
North
America
4.6%
Europe
1.0%
North
America
2.5%
Europe
1.0%
3.5%
-
5.0%
5.0%
3.0%
1.5%
-
-
3.5%
-
5.0%
5.0%
3.0%
1.5%
-
-
Amounts recognised in profit or loss in respect of these defined benefit plans are as follows:
2021
Post-
retirement
medical Plan
US$'000
—
11
—
11
Pension
plan
US$'000
957
207
269
1,433
Total
US$'000
957
218
269
Pension
plan
US$'000
1,014
351
—
1,444
1,365
2020
Post-
retirement
medical Plan
US$'000
—
9
—
9
Total
US$'000
1,014
360
—
1,374
Current service cost
Net interest expense
Loss on settlement
Total charge to profit and loss
account
For the financial years ended 31 December 2021 and 2020, charges of approximately $1.1 million and $1.1 million,
respectively, have been included in cost of goods sold and the remainder in general and administrative or sales and
marketing expenses.
__________________________________________________________________________________________
90
90
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
24. PENSION AND POST-RETIREMENT BENEFITS (CONTINUED)
Changes in the present value of the defined benefit obligations were as follows:
2021
Post-
retirement
medical Plan
US$'000
303
—
11
Pension
plan
US$'000
179,371
957
4,110
Total
US$'000
179,674
957
4,121
Pension
plan
US$'000
217,974
1,014
5,273
2020
Post-
retirement
medical Plan
US$'000
1,389
—
1,389
(624)
(6,805)
(9)
(6,814)
10,362
(76,195)
—
(76,195)
(48,109)
Total
US$'000
218,295
1,014
5,282
(624)
10,373
(48,109)
321
—
9
—
11
—
517
(11,722)
91,622
2
(64)
243
519
(11,786)
91,865
4,923
(11,442)
179,371
12
(50)
303
4,935
(11,492)
179,674
Opening defined benefit obligation
Current service cost
Interest cost
Actuarial (gains) losses arising
from demographic assumptions
Actuarial losses (gains) arising
from financial assumptions
Liabilities extinguished on
settlements
Exchange differences on
foreign plans
Benefits paid
Closing defined benefit obligation
Changes in the fair value of the plan assets were as follows:
2021
Post-
retirement
medical Plan
US$'000
Total
US$'000
173,343
4,069
Pension
plan
US$'000
207,946
5,038
1,551
13,275
(1,431)
(1,310)
892
2,808
4,887
2,916
—
—
—
—
—
64
2020
Post-
retirement
medical Plan
US$'000
Total
US$'000
207,946
5,038
13,275
(1,310)
4,887
2,966
—
—
—
—
—
50
—
(64)
—
(76,464)
(11,786)
92,982
(47,967)
(11,442)
173,343
—
(50)
—
(47,967)
(11,492)
173,343
Pension
plan
US$'000
173,343
4,069
1,551
(1,431)
892
2,744
(76,464)
(11,722)
92,982
Opening fair value plan of assets
Expected return on plan assets
Actuarial gains arising from
financial assumptions
Administrative expenses paid from
the trust
Exchange differences on
foreign plans
Contributions from the employer
Distribution of assets from
settled plan
Benefits paid
Closing fair value of plan assets
__________________________________________________________________________________________
91
91
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
24. PENSION AND POST-RETIREMENT BENEFITS (CONTINUED)
Assumed healthcare cost trend rates impact the amounts recognised in profit or loss. A one percentage point change in
assumed healthcare cost trend rates would have the following effects:
One percentage point increase
Effect on the aggregate of the service cost and interest cost
Effect on accumulated post-employment benefit obligation
One percentage point decrease
Effect on the aggregate of the service cost and interest cost
Effect on accumulated post-employment benefit obligation
2021
US$'000
2020
US$'000
—
2
—
(2)
—
3
—
(3)
__________________________________________________________________________________________
92
92
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
25.
ISSUED CAPITAL
Ordinary shares
Share capital
2021
2020
Shares '000
US$'000
Shares '000
US$'000
Ordinary shares, fully paid
295,920
668,364
88,511
1,463,802
Movements in ordinary shares
Balance at beginning of year
Share consolidation 1
Shares reduced due to selective buy-back
Shares issued due to warrants exercised
Shares issued
Re-domiciliation reserve adjustment
Shares issued to Directors
Balance at end of the year
88,511
(84,084)
(3)
4
291,492
—
—
295,920
1,463,802
—
(5)
—
796,604
(1,592,037)
—
668,364
87,656
—
—
—
—
—
855
88,511
1,463,185
—
—
—
332
—
285
1,463,802
Total shares outstanding
Balance at end of the year
295,920
295,920
668,364
668,364
88,511
88,511
1,463,802
1,463,802
Issued Warrants
Warrants issued but not exercised
Share consolidation 1
Warrant liabilities issued
Warrants exercised
Balance at end of the year
2021
2020
Warrants '000
US$'000
Warrants '000
US$'000
2,440
(2,315)
32,782
(25)
32,882
5,591
—
—
—
5,591
2,440
—
—
—
2,440
5,591
—
—
—
5,591
Total ordinary shares and warrants
673,955
1,469,393
(1) On 23 September 2021, the Company completed a consolidation of the Company’s issued capital on a basis that every 20 shares
be consolidated into 1 share.
Warrant Liabilities
The 32.8 million warrants issued to extinguish the Senior Unsecured Notes (Refer to Note 2) were valued on 23
September 2021 using the Black-Scholes option-pricing model using an underlying share price of A$3.13, expected
volatility of 56.21%, no expected dividends, an expected term of three years, and a risk-free rate of 0.64%. The underlying
share price at this date was determined using the income approach described in Note 2. This resulted in a grant date fair
value of $31.0 million.
Due to the liability classification of these warrants, they were re-measured at 31 December 2021 using an underlying
share price equal to the close price of the Company's share on the date of re-measurement of A$2.47, expected volatility
of 56.21%, no expected dividends, an expected term of 2.73 years, and a risk-free rate of 1.34%. This resulted in a
decrease in the warrant liability of $13.7 million and a corresponding gain recognised in other income in the Consolidated
Statement of Profit or Loss. This gain was partially offset by a $2.1 million loss the Company recognised when 24,980
warrants were exercised in October 2021. At 31 December 2021, the liability-classified warrants had a fair value of $19.4
million classified within Other financial liabilities in the Consolidated Statement of Financial Position.
Options
As at 31 December 2021, the Company had 2,166 vested and unexpired options. The options will expire on various dates
in years 2024 and 2026 and have an exercise price of $1,152 and $1,920 per option.
__________________________________________________________________________________________
93
93
BOART LONGYEAR 2021 ANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
26. FINANCIAL INSTRUMENTS
Derivative Financial Instruments
The Company may enter into derivative financial instruments to manage its exposure to interest rate risks. Derivative
instruments are recognised initially at fair value at the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit or less immediately
unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in
profit or less depends on the nature of the hedge relationship.
Derivative instruments are classified as either hedges of the fair value of recognised assets or liabilities or of firm
commitments ("fair value hedges"), hedges of highly probably forecasted transactions ("cash flow hedges") or non-hedge
derivatives. Derivatives designated as either a fair value or cash flow hedge that are expected to be highly effective in
achieving offsetting changes in the fair value or cash flows are assessed on an ongoing basis to determine that they
actually have been highly effective throughout the financial reporting periods for which they were designated. A derivative
with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as
a financial liability. Derivative assets and derivative liabilities are shown separately unless there is a legal right to offset
and intent to settle on a net basis.
Hedging Strategy
The Company may designate derivative instruments as hedging instruments in respect of interest rate risks in fair value
hedges or cash flow hedges. At the inception of the hedge relationship, the Company documents the relationship between
the hedging instrument and the hedged item, along with its risk management objective and its strategy for undertaking
various hedge transactions. Further, at the inception of the hedge and on an ongoing basis, the Company documents
whether the hedging instrument is highly effective in offsetting changes in fair value or cash flows of the hedged item
attributable to the hedged risk.
Fair Value Hedges
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the
consolidated statement of profit or loss, together with any changes in the fair value of the hedged asset or liability or firm
commitment that is attributable to the hedged risk. The Company did not have any qualifying fair value hedges in 2021 or
2020.
Cash Flow Hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in equity. The gain or loss relating to the ineffective portion is recognised in the consolidated statements of
profit and loss. Amounts accumulated in equity are transferred to the consolidated statements of profit and loss in the
period when the forecasted transaction impacts earnings. When the forecasted transaction that is hedged results in the
recognition of a non-financial asset or a non-financial liability, the gains and losses previously deferred in equity are
transferred from equity and included in the measurement of the initial carrying amount of the asset or liability.
When a derivative designated as a cash flow hedge expires or is sold and the forecasted transaction is still expected to
occur, any cumulative gain or loss relating to the derivative that is recorded in equity at that time remains in equity and is
recognised in the consolidated statements of profit and loss when the forecasted transaction occurs. When a forecasted
transaction is no longer expected to occur, the cumulative gain or loss that was recorded in equity is immediately
transferred to the Consolidated Statements of Profit or Loss.
The Company is exposed to variability in interest rate risk because the funds borrowed under the Exit Term Loan have a
floating interest rate. The Company's hedge strategy is to manage its exposure to interest rate risk in line with the
Company's risk strategy by using derivative contracts.
On 28 December 2021, the Company entered into an interest rate swap agreement with PNC Bank with a notional
principal amount of $86.3 million to pay an agreed upon fixed rate of interest of 1.905% in return for a floating rate of
interest that matches the benchmark USD LIBOR rate on the Exit Term Loan. This interest rate swap becomes effective
on 28 December 2022 and terminates on 8 September 2026. The initial payment on the interest rate swap will commence
on 8 January 2023 and thereafter will reset monthly on the eighth day of each month.
The Company has designated the interest rate swap as a cash flow hedge and will settle the difference between the fixed
and floating interest rate on a net basis. The hedge was fully effective through 2021 and is expected to remain highly
effective as the rates and maturity dates match.
At 31 December 2021, the interest rate swap had a fair value of $1.5 million classified within other financial liabilities in the
Consolidated Statement of Financial Position with the loss recognised in the cash flow hedge reserve in equity.
__________________________________________________________________________________________
94
94
BOART LONGYEAR 2021 ANNUAL REPORT Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
26. FINANCIAL INSTRUMENTS (CONTINUED)
Fair Value
The following table combines information about:
•
•
•
•
Classes of financial instruments based on their nature and characteristics
The carrying amounts of financial instruments
Fair values of financial instruments (except financial instruments when carrying amount approximates their fair
value)
Fair value hierarchy levels of financial liabilities for which fair value was disclosed
Fair value hierarchy levels 1 to 3 are based on the degree to which the fair value is observable:
•
•
•
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical
assets or liabilities;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data (unobservable inputs).
Balance at 31 December 2021
Warrant liabilities
Derivative financial liabilities
Total other financial liabilities
Level 1
US$'000
Level 2
US$'000
Level 3
US$'000
—
—
—
(19,352)
(1,548)
(20,900)
—
—
—
•
•
•
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.
Cash and cash equivalents, trade and other receivables, and trade and other payables are carried at amortised cost which
materially approximates the fair value.
Interest Rate Benchmark Reform
The Company is exposed to USD LIBOR interest rate benchmarks within its asset-based revolver loan, Exit Term Loan,
and interest rate swap agreement all of which are subject to interest rate benchmark reform. These financial instruments
include detailed fallback clauses clearly referencing the alternative benchmark rate and the trigger event on which the
clause is activated.
__________________________________________________________________________________________
95
95
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
27. DIVIDENDS
No dividends have been determined for 31 December 2021 or 31 December 2020. There are no franking credits
available for the years ended 31 December 2021 or 2020.
28. 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
29. LEASE COMMITMENTS
2021
US$'000
2020
US$'000
10,734
12,388
5,485
8,525
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 2021, the Company has right-of-use assets with a net book value of $32.8 million and corresponding
lease liabilities of $36.1 million compared to $31.9 million and $36.6 million as at 31 December 2020.
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 leases as at 31 December 2021 were $2.1 million
compared to $1.4 million as at 31 December 2020. Payments for short-term leases as at 31 December 2021 were $10.3
million compared to $7.6 million as at 31 December 2020. Payments for short-term leases includes short-term rentals of
survey equipment common to the industry.
Right-of-use-assets and depreciation by asset type are as follows:
Balance at 31 December 2020
Leased asset cost
Leased asset accumulated depreciation
Net book value at 31 December 2020
Balance at 31 December 2021
Leased asset cost
Leased asset accumulated depreciation
Net book value at 31 December 2021
2020 Depreciation expense
2021 Depreciation expense
Land and
buildings
US$'000
Plant and
equipment
US$'000
Total
US$'000
32,412
(10,198)
22,214
19,458
(9,782)
9,676
51,870
(19,980)
31,890
32,454
(13,654)
18,800
26,414
(12,408)
14,006
5,055
5,118
4,229
4,673
58,868
(26,062)
32,806
9,284
9,791
__________________________________________________________________________________________
96
96
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
30. CONTINGENT LIABILITIES
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 23.
Letters of credit
Standby letters of credit primarily issued in support of commitments or other obligations as at 31 December 2021 are as
follows:
Subsidiary
Australia
Australia
Australia
Chile
United States
United States
United States
Purpose
Secure a facility rental
Secure a facility rental
Secure a facility rental
Secure DS bonding program
Secure bonding program
Secure bonding program
Secure insurance program
Expiration date
August 2022
September 2022
October 2022
May 2022
January 2022
May 2022
August 2022
Amount
US$'000
285
461
60
3,057
769
1,901
1,670
8,203
Financial guarantee contract liabilities are measured initially at their fair values and subsequently at the higher of the
amount recognised as a provision or the amount initially recognised less cumulative amortisation in accordance with the
revenue recognition policies described in Note 4.
A summary of the maturity of issued letters of credit is as follows:
Less than 1 year
1 to 3 years
Guarantees
2021
US$'000
2020
US$'000
5,146
3,057
8,203
5,768
—
5,768
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 22.
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 11.
__________________________________________________________________________________________
97
97
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
30. CONTINGENT LIABILITIES (CONTINUED)
Other contingencies
Other contingent liabilities as at 31 December 2021 and 2020 consist of the following:
Contingent liabilities
Guarantees/counter-guarantees to outside parties
15,593
12,272
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 15.
2021
US$'000
2020
US$'000
Financial assets and other credit exposure
Performance guarantees provided, including letters of credit
Maximum credit risk
2020
2021
US$'000
US$'000
23,796
18,040
__________________________________________________________________________________________
98
98
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
31. DEED OF CROSS GUARANTEE
For the year ended 31 December 2021, Boart Longyear Group Ltd., 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 Group Ltd., they also represent the “extended closed group”.
On 5 October 2021, the Company completed a re-domiciliation whereby Boart Longyear Group Ltd., the new Canadian
Parent entity acquired all the issued shares from the existing parent entity, Boart Longyear Limited, on a one for one
basis. Refer to Note 2.
For the year ended 31 December 2020, prior to the abovementioned re-domiciliation and creation of the new Parent entity,
Boart Longyear Limited, Votraint No. 1609 Pty Ltd, Boart Longyear Investments Pty Ltd. and Boart Longyear Management
Pty Limited were parties to the deed of cross guarantee.
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 2021 and 31 December 2020 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
Interest income
Finance costs
Loss before taxation
Income tax benefit (expense)
Loss for the year from continuing operations
Loss for the year
2021
US$'000
2020
US$'000
28,100
(5,751)
37,946
(113,573)
(53,278)
1,551
(62,234)
(113,961)
(1,148)
(115,109)
(115,109)
—
(3,359)
41,984
(61,138)
(22,513)
296
(80,740)
(102,957)
659
(102,298)
(102,298)
Other comprehensive loss
Loss for the year attributable to equity holders of the parent
2021
US$'000
2020
US$'000
(115,109)
(102,298)
Dividends received from related parties
Other comprehensive loss for the year (net of tax)
—
—
—
—
Total comprehensive loss for the year
(115,109)
(102,298)
__________________________________________________________________________________________
99
99
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
31. DEED OF CROSS GUARANTEE (CONTINUED)
b) Consolidated statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Prepaid expenses and other assets
Total current assets
Non-current assets
Loan to related parties1
Investment in subsidiaries
Other assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Other current financial liabilities
Total current liabilities
Non-current liabilities
Loans from related parties
Loans and borrowings
Provisions
Other financial liabilities
Total non-current liabilities
Total liabilities
Net liabilities
Equity
Issued capital
Other equity
Accumulated losses 1
Total equity
2021
US$'000
2020
US$'000
474
658
301
1,433
173,841
543,730
65
717,636
719,069
628
1,498
2,529
4,655
145,701
38,846
213
19,354
204,114
208,769
510,300
395
2,936
137
3,468
78,785
493,815
69
572,669
576,137
2,963
516
1,082
4,561
214,008
512,613
213
—
726,834
731,395
(155,258)
2,436,761
2,055,390
(3,981,851)
510,300
3,219,853
491,631
(3,866,742)
(155,258)
(1) The comparative information has been restated as a result of a correction in the Senior Secured Notes in Boart Longyear
Management Pty Limited. This correction did not impact the Consolidated statement of comprehensive income. As of 31 December
2021, there was no balance owed on the Senior Secured Notes due to the Company's Recapitalisation in Sep 2021. See Note 2.
__________________________________________________________________________________________
100
100
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
32. PARENT ENTITY DISCLOSURES
On 5 October 2021, the Company completed a re-domiciliation whereby Boart Longyear Group Ltd., the new Canadian
Parent entity, acquired all the issued shares from the existing parent entity, Boart Longyear Limited, on a one for one
basis. Due to the re-domiciliation and creation of the new Parent entity in 2021, there is no prior year comparative
information. See Note 2.
Financial position
Assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial performance
Loss for the year
Total comprehensive loss
2021
US$'000
637,103
637,103
2
6,987
6,989
630,114
672,921
(35,817)
(6,990)
630,114
2021
US$'000
6,990
6,990
Guarantees entered into by the parent entity in relation to debts of its subsidiaries
Other guarantees are described in Note 30.
Contractual obligations
As at 31 December 2021 and 2020, Boart Longyear Group Ltd. did not have any contractual obligations.
__________________________________________________________________________________________
101
101
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
33. COMPANY SUBSIDIARIES
The Company’s percentage ownership of the principal subsidiaries are as follows:
Subsidiaries
BL Capital Management LLC 1
BL Group Holdings Inc.
BLI Zambia Ltd.
BLY Canada Inc.
BLY Cote d'Ivoire S.A.
BLY Drilling Services and Products Mexico, S.A. de C.V. 2
BLY EMEA UK Holdings Ltd.
BLY Gabon S.A.
BLY Ghana Limited
BLY Guinea S.A.1
BLY Holdings Tanzania Ltd. 3
BLY IP Inc.
BLY Madagascar S.A. 1
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 Pty Ltd
Boart Longyear B.V.
Boart Longyear Burkina Faso Sarl 2
Boart Longyear Canada
Boart Longyear Chile Limitada
Boart Longyear Company
Boart Longyear de Mexico, S.A. de C.V.
Boart Longyear Drilling Products (Wuxi) Co., Ltd.
Boart Longyear Drilling Services KZ LLP 1
Boart Longyear Eritrea Ltd.
Boart Longyear Finance Ltd.
Boart Longyear GmbH & Co., KG
Boart Longyear I LP
Boart Longyear Incorporated
Boart Longyear International B.V.
Boart Longyear Investments Pty Ltd
Boart Longyear Liberia Corporation
Boart Longyear Limitada
Boart Longyear Limited 4
Country of
incorporation
Business
31 Dec
2021
31 Dec
2020
USA
Holding Company
Cayman Island
Holding Company
Zambia
Canada
Ivory Coast
Mexico
Dormant
Holding Company
Drilling Services
Dormant
United Kingdom
Holding Company
Gabon
Ghana
Guinea
Tanzania
USA
Drilling Services
Drilling Services
Dormant
Holding Company
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
Netherlands
Dormant
Dormant
Holding Company
Drilling Services
Drilling Services
Drilling Products
Burkina Faso
Dormant
Canada
Chile
USA
Mexico
China
Drilling Products and Services
Drilling Products and Services
Drilling Products and Services
Drilling Services
Drilling Products and Services
Kazakhstan
Dormant
Eritrea
Canada
Germany
Canada
Canada
Netherlands
Australia
Liberia
Brazil
Australia
Drilling Services
Holding Company
Drilling Products and Services
Drilling Services
Holding Company
Holding Company
Holding Company
Dormant
Dormant
Holding Company
—
100
100
100
100
100
100
100
100
—
80
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
—
__________________________________________________________________________________________
102
102
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
33. COMPANY SUBSIDIARIES (CONTINUED)
Subsidiaries
Country of
incorporation
Business
31 Dec
2021
31 Dec
2020
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 1
Boart Longyear S.A.C.
Boart Longyear Saudi Arabia LLC 2
Boart Longyear Sole Co., Limited
Boart Longyear Suisse Sàrl
Boart Longyear Tanzania Limited
Boart Longyear Ventures Inc.
Boart Longyear Vermogensverwaltung GmbH
Boart Longyear Zambia Limited 2
Cooperatief Longyear Holdings UA
Geoserv Pesquisas Geologicas S.A.
Globaltech Corporation Pty Ltd
Inavel S.A.
Longyear Canada, ULC
Longyear DRC S.A.
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
USA
Canada
Netherlands
Poland
Kazakhstan
Peru
Drilling Products
Drilling Products
Holding Company
Drilling Products and Services
Dormant
Drilling Products and Services
Saudi Arabia
Dormant
Laos
Switzerland
Tanzania
Canada
Germany
Zambia
Drilling Services
Holding Company
Drilling Services
Holding Company
Holding Company
Dormant
Netherlands
Holding Company
Brazil
Australia
Uruguay
Canada
Dormant
Holding Company
Dormant
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
58
100
100
99
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
(1) This entity was merged or dissolved in 2021.
(2) This entity is currently in liquidation status.
(3) This entity was formed in 2021.
(4) Boart Longyear Limited was the former parent entity until it was acquired by the new Parent entity, Boart Longyear Group Ltd., in
2021. See Note 2.
__________________________________________________________________________________________
103
103
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
34. RELATED PARTY TRANSACTIONS
Transactions with key management personnel
a) Key management personnel compensation
Details of key management personnel compensation are disclosed in Note 9.
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:
Centerbridge
Term Loan A
Term Loan B
Backstop ABL
Senior Secured Notes
Ascribe
Backstop ABL
Senior Secured Notes
Unsecured Notes
35. CASH AND CASH EQUIVALENTS
Balances at
31 December 2021
US$'000
Interest expense
for the year ended
31 December 2021
US$'000
—
—
—
—
—
—
—
9,389
11,318
1,379
4,207
328
11,630
472
Included in the cash balance as at 31 December 2021 is $0.5 million of restricted cash and as at 31 December 2020 is
$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.
36. 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:
•
•
•
$76.2 million of non-cash interest expense
$829.7 million of debt exchanged for shares of equity and warrants
$31.0 million warrants issued to debt holders
__________________________________________________________________________________________
104
104
BOART LONGYEAR 2021 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
37. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS
Standards and Interpretations issued, but not yet effective
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
1 January 2022
31 December 2022
1 January 2022
31 December 2022
AASB 2017-5 Amendments to Australian
Accounting Standards - Effective Date of
Amendments to AASB 10 & AASB 128
and Editorial Corrections
1 January 2022
Editorial Corrections apply from
1 January 2018
31 December 2022
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 2021-2 Amendments to
Australian Accounting Standards -
Disclosure of Accounting Policies
and Definition of Accounting
Estimates
AASB 2021-5 Amendments to
Australian Accounting Standards -
Deferred Tax related to Assets and
Liabilities arising from a Single
Transaction
1 January 2023
31 December 2023
1 January 2022
31 December 2022
1 January 2023
31 December 2023
1 January 2023
31 December 2023
__________________________________________________________________________________________
105
105
BOART LONGYEAR 2021 ANNUAL REPORT Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2021 BOART LONGYEAR GROUP LTD.
For the financial year ended 31 December 2021
37. 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
Effective for annual reporting
periods beginning on or after
Applied in the financial year ended
AASB 2020-8 Amendments to Australian
Accounting Standards -
Interest Rate Benchmark Reform
AASB 2021-3 Amendments to Australian
Accounting Standards - COVID-19
Related Rent Concessions beyond 30
June 2021
38. SUBSEQUENT EVENTS
None.
1 January 2021
31 December 2021
1 April 2021
31 December 2021
__________________________________________________________________________________________
106
106
BOART LONGYEAR 2021 ANNUAL REPORT SUPPLEMENTARY INFORMATION
Additional information as of 22 March 2022
1. Substantial holders
To the best of the Company's knowledge, the substantial holders in the Company as at the date of
this Annual Report are:
Name of substantial holder
First Pacific Advisors, L.P. and related entities
Ascribe II Investments LLC and related entities
Corre Partners Management, LLC, and related entities
Nut Tree Capital Management, LP, and related entities
Centerbridge entities
Number of securities in
which the person and
their associates has a
relevant interest
Voting power of the
substantial holder
and their associates
158,265,847
158,265,847
158,265,847
158,265,847
134,503,475
53.48%
53.48%
53.48%
53.48%
45.45%
Note: Each of the members of the Ad Hoc Group (being First Pacific Advisors, L.P. and related
entities, Ascribe II Investments LLC and related entities, Corre Partners Management, LLC, and
related entities, and Nut Tree Capital Management, LP, and related entities) may be deemed to be an
associate of the each other in relation to the Company by virtue of section 12(2)(b) or 12(2)(c) of the
Corporations Act 2001 (Cth), on the basis of the director nomination agreements under which certain
of those persons will have a collective right to nominate a specified number of individuals to the board
of the Company. Accordingly, each member of the Ad Hoc Group is treated as having a relevant
interest in the Company's securities in which each other member of the Ad Hoc Group has a relevant
interest.
2. Number of securities on issue and security holders
(a) Quoted Securities
i) Common Shares (including CHESS Depositary Interests)
There are 295,920,414 common shares in the Company on issue. All of the issued common
shares in the Company are held by CHESS Depositary Nominees Pty Ltd (CDN) and there are
295,920,414 quoted CHESS Depositary Interests (CDI) on issue (each CDI represents a
beneficial ownership in one common share in the Company). The CDIs are quoted under the
ASX code “BLY” and are held by 3,352 individual holders. Each holder of common shares in
the Company is entitled to one vote on a show of hands or, on a poll, one vote for each common
share held. Each holder of CDIs is entitled to direct CDN as to how to vote in respect of the
underlying common shares in which the CDI holder as a beneficial interest.
ii) Warrants
There are 103,790 quoted warrants expiring on 1 September 2024 held by 5,502 individual
warrant holders, that are publicly traded on the ASX under the code “BLYO”. The quoted
warrants do not carry rights to vote.
(b) Unquoted Securities
i) Options
There are 2,166 unquoted share options on issue held by 13 individual option holders that are
not publicly traded on the ASX under the code “BLYAA”. The unquoted share options do not
carry rights to vote.
ii) Warrants Class A and B
There are 21,395 unquoted warrants expiring 1 September 2024 held by 18 individual warrant
holders that are not publicly traded on the ASX under the code “BLYAC”. The unquoted
warrants do not carry rights to vote.
iii) Warrants
There are 32,757,168 unquoted warrants expiring on 23 September 2027 held by 9 individual
warrant holders that are not publicly traded on the ASX under the code “BLYAD”. The unquoted
warrants do not carry rights to vote.
107
BOART LONGYEAR 2021 ANNUAL REPORT
SUPPLEMENTARY INFORMATION
Additional information as of 22 March 2022
3. Distribution of holders of quoted CHESS Depositary Interests
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
4. Distribution of holders of quoted Warrants
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
5. Distribution of holders of unquoted Options
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
Securities
201,023
336,429
129,252
956,574
%
0.07
0.11
0.04
0.33
294,297,136
295,920,414
99.45
100.00
No. of
holders
3,130
154
17
38
13
%
93.38
4.59
0.51
1.13
0.39
3,352
100.00
Securities
%
53,444
34,344
16,002
0
0
51.49
33.09
15.42
0.00
0.00
No. of
holders
5,482
18
2
0
0
%
99.63
0.33
0.04
0.00
0.00
103,790
100.00
5,502
100.00
Securities
%
377
1,789
0
0
0
17.41
82.59
0.00
0.00
0.00
No. of
holders
12
1
0
0
0
%
92.31
7.69
0.00
0.00
0.00
2,166
100.00
13
100.00
6. Distribution of holders of unquoted Warrants Class A and B
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
Securities
%
3,727
11,429
6,239
0
0
17.42
53.42
29.16
0.00
0.00
No. of
holders
13
4
1
0
0
%
72.22
22.22
5.56
0.00
0.00
21,395
100.00
18
100.00
108
BOART LONGYEAR 2021 ANNUAL REPORT
SUPPLEMENTARY INFORMATION
Additional information as of 22 March 2022
7. Distribution of holders of unquoted Warrants
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
Securities
0
0
0
310,124
32,447,044
32,757,168
%
0.00
0.00
0.00
0.95
99.05
100.00
No. of
holders
0
0
0
6
3
9
%
0.00
0.00
0.00
66.67
33.33
100.00
8. Unmarketable parcel of shares
The number of security investors holding less than a marketable parcel of 189 securities ($2.64 on 21
March 2022) is 2,845 and they hold 75,392 securities.
9. On-market buy back
There is no current on-market buy-back of Boart Longyear CHESS Depositary Interests.
10. 20 largest holders of quoted CHESS Depositary Interests
No. Holder
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
CCP II (CAYMAN) HOLDINGS A, L.P.
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CREDIT SC II HOLDINGS E (CAYMAN), L.P
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
CREDIT SC II HOLDINGS E (CAYMAN), L.P
CCP II DUTCH ACQUISITION - E2 B.V.
CCP CREDIT SC II DUTCH ACQUISITION - E B.V.
MR MOSES MARX
BOFA SECURITIES INC
CS THIRD NOMINEES PTY LIMITED
PACIFIC CUSTODIANS PTY LIMITED
SITI INVESTMENTS PTY LTD
MR ZHONG-WEI MIAO
MR CHRISTOPHER STUART KING
BNP PARIBAS NOMINEES PTY LTD
RIADIS HOLDINGS PTY LTD
CITICORP NOMINEES PTY LIMITED
MR ALLAN KEITH CLARKE
CHESS
Depositary
Interests
Percentage of
Issued Capital
Held
89,274,570
49,387,127
46,316,374
44,095,631
33,045,138
18,734,095
9,796,906
1,477,243
673,381
544,701
348,651
335,653
267,666
100,000
75,000
70,000
69,347
50,000
45,948
42,381
30.17
16.69
15.65
14.90
11.17
6.33
3.31
0.50
0.23
0.18
0.12
0.11
0.09
0.03
0.03
0.02
0.02
0.02
0.02
0.01
TOTAL FOR TOP 20
294,749,812
99.60%
109
BOART LONGYEAR 2021 ANNUAL REPORT
SUPPLEMENTARY INFORMATION
Additional information as of 22 March 2022
11. 20 largest holders of quoted Warrants
No. Holder
Quoted
Warants
Percent Held of
Quoted Warrants
VFG ASSET MANAGEMENT PTY LTD
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
MR THEOFANIS PERDIKIS & MRS DIMITRA PERDIKIS
CITICORP NOMINEES PTY LIMITED
PACIFIC CUSTODIANS PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
OUTCOME POSITIVE PTY LTD
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
1
2
3
4
5
6
7
8
9
10 MRS SURANJITA MULVEY
11
12 MR GAVIN ROSS JONES & MRS ELWYNN RONDELL JONES
13 MR TREVOR DURRANT
14 MISS CAMILLE KATHLEEN SCOTT
15
16
17
18
19 MR BAREND JACOBUS STOLTZ
20
PACIFIC CUSTODIANS PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
DR SIL LIN TAN
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
PACIFIC CUSTODIANS PTY LIMITED
DR PAUL FRANCIS MORTON
8,912
7,090
4,231
3,725
3,520
2,514
2,000
1,910
1,874
1,839
1,651
1,545
1,500
1,288
1,259
1,209
1,133
1,077
1,052
1,017
8.59
6.83
4.08
3.59
3.39
2.42
1.93
1.84
1.81
1.77
1.59
1.49
1.45
1.24
1.21
1.16
1.09
1.04
1.01
0.98
TOTAL
50,346
48.51
110
BOART LONGYEAR 2021 ANNUAL REPORT
CORPORATE INFORMATION
Global Headquarters
Shareholder Enquiries
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
2442 South Sheridan Way
Mississauga, Ontario L5J 2M7
Canada
Tel: +1 905 822 7922
Auditors
Deloitte Touche Tohmatsu
Company Secretary
Alex Nikolic
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
Listing
boart Longyear Group Ltd. 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
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