ANNUAL REPORT 2022
b
BOART LONGYEAR 2022 ANNUAL REPORT
BOART LONGYEAR 2018 ANNUAL REPORT
CONTENTS
2022 Overview
II
Chairman’s Report
IV
CEO’s Report
VI
ESG
VIII
Veracio
X
Drilling Services
XII
Global Products
XIV
Financial Report
1
Directors’ Report
3
Review of Operations
5
Remuneration Report
20
Board of Directors
33
Executive Management Team
38
Auditor’s Independence Declaration
42
Independent Auditor’s Report
43
Directors’ Declaration
48
Financial Statements
49
Supplementary Information
111
CORPORATE GOVERNANCE STATEMENT
Our Corporate Governance Statement may be found
at www.boartlongyear.com/corporate-governance
BOART LONGYEAR 2022 ANNUAL REPORT
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 a rich
heritage from 133 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.
Veracio (formerly Geological Data Services)
offers mining clients a range of solutions that
improve, automate, and digitally transform their
orebody sciences through a diverse product
portfolio that fuses science and technology with
digital accessibility.
*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.
Copyright © 2023 Boart Longyear. All rights reserved.
Cover photo by Anton Clarkson, Boart Longyear Australia
BOART LONGYEAR 2022 ANNUAL REPORT
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THREE DIVISIONS DRIVING LONG-TERM GROWTH
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 15 countries with more than 4,500
employees who operate approximately 650 rigs
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
• Products sold in 96 countries, has almost 1,100
employees and six manufacturing sites around
the globe
VERACIO
• Helps mining companies get more value from
their orebody data while mitigating the
environmental impact of their decisions
• Leverages artificial intelligence and advanced
analytics to accelerate real-time decision
making and significantly lower the cost of
mineral exploration
• More than 75 employees worldwide
BOART LONGYEAR 2022 ANNUAL REPORT
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2022 OVERVIEW
2022 OVERVIEW
Net Profit After Tax
$12m
Revenue
$1,039m
Adjusted EBITDA1
$124m
EBITDA $82m
Net Debt2
$134m
Number of Employees
5,894
Cash from Operations
$97m
Company
Safety
TCIR
3 1.45
Company
Safety
LTIR
4 0.11
Drilling Services
EBITDA
$125m
Drilling Services
Revenue
$724m
Products
Revenue*
$315m
Products
EBITDA*
$25m
2022 2021
2020
657
921
1,039
40
84
82
116
124
60
-99
-57
12
819
128
134
58
27
97
456
615
724
50
94
125
201
307
315
25
62
25
1. Adjusted EBITDA at 31 December has been restated from the prior year figure to make it comparable to the current year calculation.
2. Net debt does not include leasing facilities as reported under Australian Accounting Standards Board 16.
3. The Total Case Incident Rate (TCIR) is defined as the number of work-related injuries per 100 full-time workers during a one-year period based on 200,000 work hours.
4. The Lost Time Incident Rate (LTIR) is defined as the number of incidents that result in time away from work based on 200,000 work hours.
0.10
0.06
0.11
1.61
1.31
1.45
*Includes Veracio
US$ in millions
5,168
5,314
5,894
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BOART LONGYEAR 2022 ANNUAL REPORT
Surface Coring
28%
Performance Tooling
23%
Rotary/RC
19%
Underground Coring
17%
Drilling Equipment
6%
Production Drilling
3%
Other
4%
USA
28%
Asia Pacific
19%
Canada
19%
EMEA
19%
Latin America
15%
Development
(Near Mine/Brownfield)
55%
Production (In-Pit)
25%
Exploration (Greenfield)
17%
Non-Mining
3%
Gold
56%
Copper
29%
Non-Mining Water
5%
Other Metals
4%
Energy
3%
Other
1%
Nickel
1%
Iron Ore
1%
Company Revenue
(Products & Services)
Company Revenue
by Region
(Products & Services)
Drilling Services
Revenue by Stage
Drilling Services
Revenue by Commodity
Drilling Services
Revenue by Drilling Type
Products Revenue
by Category
Exploration Tooling
48%
Production Drilling
22%
Drilling Equipment
11%
Capital Spares
11%
E&I Tooling
8%
Surface Coring
40%
Rotary/RC
26%
Underground Coring
24%
Percussive
5%
Sonic
5%
CHAIRMAN’S
REPORT
Dear Shareholders,
It has been an honour serving as your board chair this
past year, particularly at a time when electrification is
driving long-term demand for metals and mining. Base
metals, such as copper and nickel, are fundamental to
electric vehicles and the many technologies that make
up the green economy. To meet the robust demand for
metals, our global customers turn to us for specialised
drilling programs to expand their mineral reserves.
Across the company’s rich history, Drilling Services and
Global Products have been the organisation’s operational
foundation. Over the last decade, we have been
developing a technology platform that is revolutionising
the way miners explore and operate producing mines.
The platform has created a new financial driver for Boart
Longyear, providing revenue diversification as well as an
avenue to better service the mining value chain like no
one else in the sector.
Veracio, Boart Longyear’s newly named technology unit,
offers a disruptive technology platform assisting miners to
make critical mineral-based decisions providing precise
and efficient orebody information for more effective
drilling programs. Championing an approach to orebody
science based on speed and sustainability, Veracio is
well-positioned to support the growing global need for
critical minerals.
“The board is proud
of the company’s
2022 achievements
and is confident our
growth strategy will
deliver success for
years to come.”
BOART LONGYEAR 2022 ANNUAL REPORT
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iv
Management delivered solid financial results for 2022.
Drilling Services had an impressive performance while
Global Products contended with increased operating
costs and supply chain challenges, which were an
outgrowth of COVID-related global trade disruptions
as well as the Russian – Ukrainian conflict.
During the year, the board continued working with
management to operationalise and strengthen Boart
Longyear’s environmental, social and governance
(ESG) strategy. While in a relatively early stage, we
are expanding the reach of ESG across the company,
delivering initial results and partnering with customers
to broaden our sustainability program.
In August 2022, we appointed Shannon McCrae as a
company director. She is a professional geoscientist,
an accomplished mining and exploration executive
and brings a wealth of experience within the
innovation and digital transformation space.
The board is proud of the company’s 2022
achievements and is confident our growth strategy will
deliver success for years to come.
Sincerely,
Rubin McDougal
Board Chair
“
Veracio, Boart Longyear’s newly named technology
unit, offers a disruptive technology platform assisting
miners to make critical mineral-based decisions
providing precise and efficient orebody information for
more effective drilling programs. ”
BOART LONGYEAR 2022 ANNUAL REPORT
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BOART LONGYEAR 2022 ANNUAL REPORT
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Dear Shareholders,
Boart Longyear had a strong 2022 benefitting from
past initiatives which strengthened our balance
sheet and improved our cost structure. We delivered
revenue in excess of $1 billion, which was a first
since 2013. We achieved our first net profit in ten
years while growing adjusted EBITDA by 7% to
almost $125 million.
Our results were supported by a healthy
macroeconomic environment driving long-term
demand for metals and mining. Electrification and
the green economy have fueled an ever-increasing
demand for metals, particularly copper and nickel. In
2022, Drilling Services generated 30% of its revenue
from copper and nickel-related drilling, further
indicating a strong future for metals.
From a safety perspective, 2022 was a successful
year, albeit marked by an increase in hand injuries
and rise in new employee safety incidents in the first
half, while the second half of the year realised strong
improvement in safety performance. We renewed
our focus on Critical Risk Management and EHS
fundamentals, including our eight Golden Rules of
Safety.
Drilling Services experienced robust customer
demand – particularly in Africa, Latin America and
Canada – leading to revenue and EBITDA gains
for the year. Global Products saw solid revenue
growth, driven by exploration and infrastructure
CEO’S
REPORT
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BOART LONGYEAR 2022 ANNUAL REPORT
vii
tooling, yet contended with higher operating costs
and unfavourable exchange rates which negatively
impacted EBITDA.
In February 2023, we marked a significant milestone
as a leader in orebody sciences with the unveiling
of Veracio, formerly Geological Data Services.
Veracio melds science and digital technologies
through sensing, automation and artificial intelligence
empowering miners to make better exploration and
operational decisions while improving environmental
stewardship.
We are delighted TruScan™ was named Mining
Innovation of the Year at the annual Mines and
Money industry event in London in early December.
TruScan™ is one element of Veracio’s impressive
portfolio and continues to be recognised for its
groundbreaking capabilities.
In 2022, we continued to focus on long-term growth by
investing $60 million of capital back into the business
– adding 31 rigs to our global Drilling Services’ fleet,
and focusing on Veracio-related R&D.
ESG continues to play an important role in our
operating model and is embedded within our rich
history of innovation. Our ESG-related initiatives led to
the following achievements during the year:
• Completed 63,000 training units in environment,
health and safety (EHS), ESG and compliance;
• Realised 11% women in our global workforce by
year end, highlighting progress toward our ’15
x 25’ goal of reaching 15% women in our global
workforce by the end of 2025;
• Finalised Scope 1 & 2 emissions baseline project
across global manufacturing facilities; and
• Received the ‘Safe Day Everyday Gold Award’ for
the third consecutive year in Canada.
We differentiate ourselves through our best-in-class
businesses offering distinct products and services
under one roof. I am enthusiastic about 2023 as
we execute our targeted operating plan focused on
strategically growing Drilling Services, selectively
expanding Global Products and revolutionising the
mining industry through Veracio’s breakthrough
technology.
Yours sincerely,
Jeff Olsen
President and CEO
vii
“
ESG continues to play an important role in
our operating model and is embedded within
our rich history of innovation.”
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BOART LONGYEAR 2022 ANNUAL REPORT
OUR ESG
STRATEGY
INFLUENCES
OUR GROWTH
Our drilling equipment and technology is ESG-friendly
making our customers’ activities more sustainable.
TECHNOLOGY + SAFETY
The technology in our drilling equipment
is made with a safety-first mindset
protecting people and assets better than
anything in our history
LESS WATER AND ENERGY USAGE
Our drilling equipment uses less water
and energy, which reduces related
greenhouse gas emissions
IMPROVED RECOVERY
Our drilling equipment leads to more
resource recovery
DIVERSITY + ACCESSIBILITY
Our technology is appealing to a new
generation of mining talent enabling a
gender-diverse workforce and greater
accessibility than ever before
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BOART LONGYEAR 2022 ANNUAL REPORT
ESG ACHIEVEMENTS FOR 2022
Beginning in 2021, Boart Longyear established a formal ESG program and in 2022 we appointed
a dedicated ESG manager to lead our sustainability efforts. While our formal program is relatively
new, the organisation’s history of innovation is based on ESG principles. The following highlights our
achievements for 2022.
11%
WOMEN
SAFE DAY
EVERYDAY
COMPLETED 63,000 TRAINING MODULES
Included EHS, ESG and compliance training
resulting in record employee participation and
certification.
ACHIEVED 11% WOMEN IN OUR GLOBAL WORKFORCE
We are committed to expanding diversity
in our workforce and progressing toward
our established goal of having women
represent 15% of our workforce by the
end of 2025.
FINALISED SCOPE 1 & 2 EMISSIONS BASELINE PROJECT
Focused on our six manufacturing
plants; also initiated a baseline project to
measure Scope 1 & 2 emissions within
Drilling Services.
RECEIVED ‘SAFE DAY EVERYDAY GOLD AWARD’
Recipient of Canadian mining industry safety
award for third consecutive year.
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BOART LONGYEAR 2022 ANNUAL REPORT
BIGGER VISION.
SMARTER DATA.
SMALLER FOOTPRINT.
JT Clark
CHIEF EXECUTIVE OFFICER
Mike Ravella
CHIEF INNOVATION OFFICER
By fusing science and technology,
Veracio will help miners leverage their
opportunities while mitigating the social
and environmental impact of their
decisions.
Unlocking the value and utility of scarce
resources.
• Sensing, automation and
AI technologies
• Accelerating exploration and
orebody confidence
• With high-definition data that
leads to better decisions
• Creating more economically
efficient operations
• While improving sustainability
and reducing waste
* TruCore is no longer offered in the US and Australia
*
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BOART LONGYEAR 2022 ANNUAL REPORT
In February 2023, Boart Longyear
announced its Geological Data
Services division would operate as
a separate entity called Veracio.
The new unit is ideally suited
to combine science and digital
technologies in a single, integrated
platform to help mining companies
get more value from their orebody
data, faster, while mitigating the
environmental impact of their
decisions. Veracio will be led by
newly appointed Chief Executive
Officer, JT (John) Clark, a
seasoned growth leader in mining
technology with a track record of
operational success.
Veracio’s technologies and
platform, the result of a decade
of testing and development in
sensing, automation, and artificial
intelligence (AI) technologies,
empowers miners to dig deeper
into data, accelerating exploration
and making better decisions that
result in economically efficient
operations and reduced waste.
Powered by an award-winning
integrated technology platform,
Veracio is well-positioned to
support the growing global
need for critical minerals by
championing an approach to
orebody science based on speed
and sustainability.
In addition to JT Clark, the Veracio
leadership team also includes
Mike Ravella, the founder and
innovative mind behind Boart
Longyear’s Geological Data
Services division, who assumes
the role of Chief Innovation Officer.
Jeff Olsen, Boart Longyear’s Chief
Executive Officer, is Veracio’s
Chairman, bringing with him a
wealth of mining and leadership
experience.
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BOART LONGYEAR 2022 ANNUAL REPORT
DRILLING
SERVICES
DRILLING SERVICES IS THE
PARTNER OF CHOICE FOR
LEADING MINING HOUSES
DUE TO INNOVATION CYCLE,
BREADTH OF OFFERING AND
GEOGRAPHIC DIVERSITY
SURFACE CORING
SONIC
Exploration drilling – both new mining and
existing mining resource development
• Deep Coring
• Versatile Fleet
• Closed Loop, Zero Discharge
Shallow grade sampling and environmental
core drilling
• Heap Leach Ore Recovery
• Grade Control Sampling
• Pre-Collaring
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BOART LONGYEAR 2022 ANNUAL REPORT
UNDERGROUND CORING
UNDERGROUND PRODUCTION
REVERSE CIRCULATION
ROTARY
Orebody delineation and underground
exploration
• Deep Hole Capability
• Dewatering/Piezometer
• Triple Tube
Percussive drilling primarily as part of drill
and blast mining activities
• Long Hole Drill and Blast
• Slot and Inverse Raises
• Cable Bolting
Economical, low-quality sampling
alternative to coring
• Piezometer
• Diverse Drilling Solutions
• Mineral Exploration/Pre-Collaring
Well drilling, primarily for dewatering/
creating access to ground water
• Well Service
• Dual Tube Flooded Reverse
• Environmental/Geothermal
BOART LONGYEAR 2022 ANNUAL REPORT
xiv
GLOBAL
PRODUCTS
INDUSTRY-LEADING
INNOVATION, SAFETY
AND EFFICIENCY
DRIFTMASTER™ TOP HAMMER
PRODUCTION TOOLING
TAPERED THREAD ROD
Achieves more drilling time and more underground
productivity with tapered thread profile by
increasing material cross-section at base and
minimising stress to achieve superior resistance
to wear.
Combined with carburising heat treatment, the
DriftMaster™ thread geometry is proven to outlast.
TOP HAMMER BITS
To further improve productivity, the tapered thread
profile provides superior rod-bit make-up and break
out characteristics.
Compatible with Retrac™, Straightrac™ button
bits (available from 43mm – 64mm), and
RazorBack™ back-reaming bits.
BOART LONGYEAR 2022 ANNUAL REPORT
xv
LF™ 160 DRILL RIG WITH
FREEDOM™ LOADER
LONGYEAR™
DIAMOND CORING BITS
Boart Longyear has combined proven technology
from its most popular surface coring drill rigs
to create the powerful LF™160. When paired
with the FREEDOM™ Loader, the LF™160
combination is ideal for contractors who want to
target sophisticated surface drilling exploration
contracts that stipulate some of the highest safety
standards, without compromising on productivity.
TOTALLY HANDS-FREE ROD HANDLING
The LF™160 and FREEDOM™ Loader
combination is one of the industry’s first 100%
hands-free rod handling solutions. No intervention
from the driller’s assistant is required to align
and cycle the rods or connect the hoist plugs
when operating the loader. All operations happen
behind the control panel at the touch of a finger.
PREMIUM PERFORMANCE DIAMOND
IMPREGNATED CORING BITS
Boart Longyear successfully created a ground-
breaking matrix that chemically bonds to
diamonds allowing for higher projection of
diamonds resulting in faster penetration and
longer life.
The product is available in formulations and
with waterway designs to perform in any
ground conditions.
LX™ MULTIPURPOSE DRILLS
LF™ SURFACE EXPLORATION DRILLS
LM™ UNDERGROUND AND MODULAR EXPLORATION DRILLS
LX6
DEPTH: 350 M +
LF90D
DEPTH: 930 M +
LF160
FREEDOM LOADER
DEPTH: 1600 M +
HANDS-FREE SEMI-AUTONYMOUS
ROD HANDLING
LMPQ
DEPTH: 1500 M
LM110
DEPTH: 1100 M +
LM90
DEPTH: 1000 M +
LM75
DEPTH: 700 M +
LM30SS
DEPTH: 410 M +
INDUSTRY-LEADING
DRILLING EQUIPMENT
BOART LONGYEAR 2022 ANNUAL REPORT
xvi
LS™ SONIC DRILLS
PRODUCTION DRILLS
STOPEMATE™
STOPEMASTER™
LS600
LS450
LS250
DEPTH: 37 M +
DEPTH: 80 M +
DEPTH: 61 M
(6” CASING)
DEPTH: 135 M +
(6” CASING)
DEPTH: 180 M +
(6” CASING)
LF230
DEPTH: 2300 M +
+
MDR700
DEPTH: 800 M +
BOART LONGYEAR 2022 ANNUAL REPORT
xvii
1
BOART LONGYEAR 2022 ANNUAL REPORT
FINANCIAL REPORT
BOART LONGYEAR GROUP LTD.
A.R.B.N. 652 848 103
ANNUAL FINANCIAL REPORT
YEAR ENDED 31 DECEMBER 2022
BOART LONGYEAR 2022 ANNUAL REPORT
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2
BOART LONGYEAR 2022 ANNUAL REPORT
BOART LONGYEAR 2022 ANNUAL REPORT
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CONTENTS
DIRECTORS’ REPORT
3
REVIEW OF OPERATIONS
5
REMUNERATION REPORT
20
BOARD OF DIRECTORS
33
EXECUTIVE MANAGEMENT TEAM
38
AUDITOR’S INDEPENDENCE DECLARATION
42
INDEPENDENT AUDITOR’S REPORT
43
DIRECTORS’ DECLARATION
48
CONSOLIDATED STATEMENT OF
PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
49
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
50
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
51
CONSOLIDATED STATEMENT OF CASH FLOWS
52
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
54
SUPPLEMENTARY INFORMATION
111
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BOART LONGYEAR 2022 ANNUAL REPORT
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 2022 (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 Boart Longyear (the “Directors”) in office during the financial year and as at the date of this report are set out
below.
Directors
Position
Rubin McDougal
Non-Executive Chairman
Tye Burt
Non-Executive Director
Lars Engström
Non-Executive Director
Shannon McCrae1
Non-Executive Director
Paul McDonnell
Non-Executive Director
Jeffrey Olsen
Executive Director
Thomas Schulz
Non-Executive Director
Conor Tochilin
Non-Executive Director
Bao Truong
Non-Executive Director
(1) Shannon McCrae was appointed to the Board effective 1 August 2022.
For a summary of experience and qualifications for each Director, see the Board of Directors section on page 33 of this Report.
COMPANY SECRETARIES
Nicholas Nash (appointed 15 April 2022)
Alex Nikolic (through 15 April 2022)
PRINCIPAL ACTIVITIES
Established in 1890, Boart Longyear is heading into its 133rd 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.
Veracio Ltd.("Veracio"), previously Geological Data Services, is included within our Global Products division and utilizes
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
insignia and brand
represent the gold standard in the global mineral drilling industry.
Boart Longyear is headquartered in Salt Lake City, Utah, USA, and is 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.
BOART LONGYEAR GROUP LTD. – ANNUAL REPORT 2022
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BOART LONGYEAR 2022 ANNUAL REPORT
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
On 2 February 2022, Boart Longyear announced the decision of Miguel Desdin, Chief Financial Officer, to leave the Company
to pursue new career opportunities. The Company also announced the appointment of Jenny Fuss as Chief Financial Officer
on this date. Mr. Desdin will continue his employment through 31 March 2023 to ensure a smooth transition of responsibilities.
SUBSEQUENT EVENTS
On 23 February 2023, it was announced that the Geological Data Services business will now operate as a separate entity
called Veracio. The annual financial report has been updated throughout to reflect this change in name.
DIVIDENDS
No dividends have been paid during the financial year.
5
BOART LONGYEAR 2022 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 the Veracio business.
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, the advanced
technology, engineering excellence and global manufacturing capabilities of Global Products, and the innovation and emerging
technologies of Veracio.
The Drilling Services division of Boart Longyear has a global reach with uncompromised standards for safety and performance
and rig and drilling discipline offerings that are specific to individual jurisdictions. Our regular exchange of knowledge and
experience throughout the division ensures the rapid dissemination and adoption of best practices, tailored to jurisdiction-
specific conditions. It is the global culture of continuous improvement in safety and performance which has made Boart
Longyear the drilling partner of choice for many of the world's major mining companies and junior explorers for over 130 years.
The Global Products division continues to serve multiple drilling applications around the world with its proven high quality
tooling, drill rigs and services to support mining and construction drilling ranging from exploration to blast hole to sonic. For
underground drilling applications, Boart Longyear’s DriftMaster™ drill rods and bits continue to set the benchmark for life and
durability. In addition to current rock tool products, we have recently expanded our surface tools with the HM60 to support
growth in this sector. We have also launched a line of down-the-hole tools to supplement our tooling line. In the exploration
market, Boart Longyear maintains its product leadership with the patented XQ™ coring rod which offers an unsurpassed life
and compatibility with automation. Our lighter weight W-Wall™ rods continue to grow in use, offering faster core retrieval and
increased rig depths. Longyear™ diamond bits are attracting additional drilling customers by generating higher productivity
and having a longer life due to their unique formulations that adapt to varying geological conditions. Finally, Roller Latch™ in-
hole tooling technology continues to drive improved safety and reliability for in-hole tools. In addition to consumables, Boart
Longyear offers a variety of drills covering exploration, sonic, and production drilling applications. The LF™160 rig continues to
grow in acceptance and now has other features that, when coupled with the FL™ 262 Freedom™ Loader, makes this the rig of
choice for many surface drilling applications. Boart Longyear has also added capability to its LS250 Sonic rig to provide
increased power with its same small footprint and introduced enhancements to its LX6 multipurpose rig as well. Our
engineering and product management teams continue to pursue new products and improve existing products to provide
additional value to our customers.
In the Veracio business, TruCore™ core orientation tools continue to expand geographically but are no longer available in
Australia or the United States, and the TruShot™ magnetic survey instrument 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 continue to develop
this technology. We are currently rolling out our TruGyroTM borehole survey technology. TruGyroTM offers significant
advantages over other technologies in the market and is rapidly gaining market adoption. These instruments are part of our
strategy to be the global technology leader in providing unified orebody knowledge to mining companies through our Veracio
business.
(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
6
BOART LONGYEAR 2022 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, Sustainability, Teamwork and Diversity 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 2022, the Company’s world class performance on key indicators includes a Total Case
Incident Rate (“TCIR”) of 1.45 recordable incidents and Lost-Time Injury Rate (“LTIR”) of 0.11 recordable incidents. Both TCIR
and LTIR rates are calculated based on 200,000 hours worked. During the year ending 31 December 2022, our employees
experienced 97 injuries that required some medical treatment or job restriction; seven of those injuries resulted in lost work
time. The 2022 focus has been on training new hires and leadership training for supervisors, critical control verifications and
empowering employees to utilize our Environmental, Health, Safety and Training fundamentals, most importantly our Golden
Rules.
1.3 Impact of Market Conditions
In 2022, global nonferrous exploration budgets grew 16% over 2021 to $13.0 billion, with gold and copper dominating
exploration spend. Commodity prices reached historic highs in the first half of 2022 before pulling back in the second and third
quarters, then beginning to recover in the fourth quarter. Boart Longyear remained mostly insulated from the impacts of this
pullback as our key customers remained bullish on long-term demand of key commodities, particularly gold and copper, which
account for the bulk of Boart Longyear’s drilling activity. The bullishness for copper in particular has been evident in recent
large-scale, copper-focused mergers and acquisitions by several of the largest major mining firms and the continuity of several
large copper exploration programs.
While the rapid growth of the electric vehicle ("EV") market is frequently referenced as a key driver for copper demand, it is
important to note that the EV market is just one component of a much larger global trend of increasing electrification that is
driving long-term demand for copper. During 2022, the demand for lithium, a key EV battery metal, continued to strengthen.
Analysts continue to voice the need for a significant and sustained increase in exploration spend in order to discover and
develop the supply of battery metals to meet the growing demands for EV.
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. Boart Longyear anticipates the end of China’s Zero-COVID policy late in 2022 will likely result in short-term
demand and supply chain disruptions impacting Drilling Services; however, it is expected to ultimately result in a boost to
demand and consequently an increase in drilling exploration activity.
6
7
BOART LONGYEAR 2022 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 earnings before interest, taxes, depreciation and amortization ("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 organization, particularly at the drill rig level;
•
Optimizing the commercial organization 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 both our well-established, quality products
and through newer products such as our LF™160 surface coring drill with its added features, including the option to add a six-
meter, rod-pulling capability. When coupled with the Freedom Loader, the LF™160 is growing in use around the world. Our
LongyearTM diamond bits, DriftMasterTM drill rods and bits for blast-hole applications, and new products in our rock tools
product line are all examples of Boart Longyear's new product development. The Global Products division also continues to
expand patented Roller Latch™ technology with the launch of our new Roller Latch™ Quick Pump-in™ Overshot that provides
heightened safety and improved productivity. These newer products complement the well-respected lines of existing products
that customers have come to rely on from Boart Longyear. Boart Longyear operates multiple production plants globally
supplying our customers with the products they need for their various drilling applications.
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 Veracio. 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 realize 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 capitalizing on longer-term growth opportunities through investment in technologies that
will broaden our customer offerings.
8
BOART LONGYEAR 2022 ANNUAL REPORT
2.
Financial and Operating Highlights
For the year ended 31 December
2022
2021
US$ Millions US$ Millions
(except
share data)
(except
share data)
$ Change
% Change
Key financial data
Revenue
1,038.9
921.4
117.5
12.8 %
Net profit (loss) after tax
11.9
(57.4)
69.3
120.7 %
Non-AASB EBITDA 1
81.8
84.2
(2.4)
(2.9) %
Non-AASB Adjusted EBITDA 1, 2
124.2
116.0
8.2
7.1 %
Operating profit
33.3
35.7
(2.4)
(6.7) %
Cash provided by operations
96.6
26.6
70.0
263.2 %
Net cash flows provided by operating activities
69.1
3.2
65.9
2,059.4 %
Capital expenditures (accrual)
61.5
59.0
2.5
4.2 %
Capital expenditures (cash)
59.9
58.2
1.7
2.9 %
Weighted average number of basic and diluted ordinary shares 3
295.9
83.5
212.4
254.4 %
Basic and diluted earnings (loss) per share
4.0 cents (68.7) cents 72.7 cents
105.8 %
Average rig utilization
49%
48%
1.0 %
Average fleet size
647
647
— %
(1)
EBITDA and Adjusted EBITDA are non-AASB financial measures that management uses to assess our operating performance. See the
section titled "Non-AASB Financial Measures" for information regarding our use of EBITDA and Adjusted EBITDA and a reconciliation of
net profit (loss) to EBTIDA and Adjusted EBITDA.
(2)
Adjusted EBITDA at 31 December 2021 has been restated from the prior year figure to make it comparable to the current year.
calculation.
(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.
3.
Discussion and Analysis of Operational Results and the Income Statement
3.1 Revenue
Revenue for the year ended 31 December 2022 of $1.0 billion increased by 12.8%, or $117.5 million, compared to revenue for
the prior year ended 31 December 2021 of $921.4 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.
The Company realized strong year-over year revenue growth as industry optimism increased exploration budgets for the year
ended 31 December 2022. While various global macroeconomic uncertainties brought constraints to the latter half of the year,
positivity around pandemic recovery and energy transition demands fueled investments in the first half of the year, aiding top
line revenue growth. Sales backlogs held steady throughout the year, offering room for a positive future outlook.
9
BOART LONGYEAR 2022 ANNUAL REPORT
3.2 Non-AASB Financial Measures
In addition to our results determined in accordance with Australian Accounting Standards ("AASB"), we believe the following
non-AASB financial measures are useful in evaluating our operating performance.
EBITDA and Adjusted EBITDA
We calculate EBITDA as net profit (loss) adjusted to exclude interest, income tax, depreciation, and amortization. We calculate
Adjusted EBITDA as EBITDA adjusted to exclude: major recapitalisation and restructuring initiatives; consulting fees for
strategic reviews that are nonrecurring in nature; losses (gains) on impairments and disposals of assets, net; mark to market
adjustments on financial instruments; other miscellaneous (income) expense, net; unrealized foreign exchange (gains) losses,
net; certain litigation expenses, consisting of legal settlement reserves and related fees for specific proceedings that arise
outside the ordinary course of our business; share based compensation; and reserves for other tax assets (e.g., value added
tax and goods and service tax) that would ordinarily be refundable in the normal course of business.
We use EBITDA and Adjusted EBITDA as measures of operating performance. We believe that these non-AASB financial
measures are useful to investors for period-to-period comparisons of our business and in understanding and evaluating our
operating results for the following reasons:
•
EBITDA and Adjusted EBITDA are widely used by investors to measure a company's operating performance without
regard to items such as interest income and finance costs, depreciation and amortization, provisions for income
taxes, and unrealized foreign exchange (gains) and losses that can vary substantially from company to company
depending upon their financing, capital structures, organizational structures, and the method by which assets were
acquired;
•
Our management uses EBITDA and Adjusted EBITDA in conjunction with financial measures prepared in accordance
with AASB for planning purposes, including the preparation of our annual operating budget, as a measure of our core
operating results and the effectiveness of our business strategy, in evaluating our financial performance, and in
establishing short-term incentive plan and long-term incentive plan performance benchmarks;
•
EBITDA and Adjusted EBITDA provide consistency and comparability with our past financial performance, facilitate
period-to-period comparisons for our core operating results, and also facilitate comparisons with other peer
companies, many of which use similar financial measures to supplement their results;
•
We completed a recapitalisation in 2021 which resulted in ongoing restructuring expenses, consulting fees, and
strategic reviews that would not have otherwise been incurred. Management has provided supplementary non-AASB
financial measures, which exclude recapitalisation, restructuring, and consulting related costs, to allow more accurate
comparisons of the financial results to historical operations. Management considers these types of costs and
adjustments to be unpredictable and dependent on a significant number of factors that are outside the Company's
control. Furthermore, we do not consider these costs and adjustments to be related to the organic continuing
operations of the business and are generally not relevant to assessing or estimating the long-term performance of the
business;
•
We believe it is useful to exclude non-cash share-based compensation because the amount of such expense in any
specific period may not directly correlate to the underlying performance of our business; and
•
We believe it is useful to exclude expenses related to non-cash impairments and gains on disposals, unrealized
foreign exchange (gains) and losses; certain litigation expenses, consisting of legal settlements and/or related fees
for specific proceedings; indirect tax reserves; and mark to market adjustments because of the variable and
unpredictable nature of these expenses which are not indicative of past or future operating performance. We believe
that past and future periods are more comparable if we exclude these expenses.
Our use of EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider these measures in
isolation or as substitutes for analysis of our financial results as reported under AASB. Some of these limitations are, or may in
the future be, as follows:
•
Although depreciation, amortization and impairment expenses are non-cash charges, the assets being depreciated,
amortized or impaired may have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash
capital expenditure requirements for such replacements or for new capital expenditure requirements;
•
EBITDA and Adjusted EBITDA do not reflect: (1) changes in, or cash requirements for, our working capital needs; (2)
interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which
reduces cash available to us; (3) tax payments that may represent a reduction in cash available to us; or (4) non-cash
share based compensation that may be replaced by cash compensation if these awards have no perceived value to
the recipients of such awards;
•
Adjusted EBITDA excludes unrealized foreign exchange (gains) and losses that may result in actual cash outflows or
inflows when foreign currency transactions are settled;
•
Adjusted EBITDA does not reflect certain litigation expenses, consisting of legal settlements and/or related fees for
specific proceedings;
•
Adjusted EBITDA does not reflect costs related to recapitalisation, strategic reviews, or deemed restructuring
activities;
•
Adjusted EBITDA does not include indirect tax reserve adjustments for indirect tax receivables in certain jurisdictions,
and the reserved receivables may never be collected; and
•
The expenses and other items that we exclude in our calculation of Adjusted EBITDA may differ from the expenses
and other items, if any, that other companies may exclude from Adjusted EBITDA when they report their operating
results and we may, in the future, exclude other significant, unusual, or non-recurring expenses or other items from
these financial measures.
10
BOART LONGYEAR 2022 ANNUAL REPORT
Because of these limitations, EBITDA and Adjusted EBITDA should be considered along with other operating and financial
reporting measures presented in accordance with AASB.
The following table presents a reconciliation of EBITDA and Adjusted EBITDA to net profit (loss) of the Company, the most
directly comparable financial measure prepared in accordance with AASB, for each of the periods indicated:
For the year ended 31 December
2022
2021
US$ Millions
US$ Millions
Profit (loss) for the period attributable to equity holders of the parent
11.9
(57.4)
Interest income and finance costs
20.0
88.8
Income tax expense
1.4
4.3
Depreciation and amortization expense
48.5
48.5
Non-AASB EBITDA
81.8
84.2
Restructuring charges and non-recurring consulting fees
14.9
1.0
Recapitalisation costs 1
—
37.7
Impairments and disposals of long lived assets
(2.0)
(3.5)
Fair value adjustment on financial instruments
(5.5)
(11.6)
Other miscellaneous income
(0.5)
(0.3)
Unrealized foreign exchange losses
13.8
8.3
Legal fees and settlement reserves
14.4
—
Share based compensation
3.6
—
Other tax reserves
2.9
—
Other non-recurring items
0.8
0.2
Total non-AASB adjustments
42.4
31.8
Non-AASB Adjusted EBITDA 2
124.2
116.0
(1)
Recapitalization costs are shown net of a $3.7 million restructuring gain recorded on the Recapitalization. See Note 2.
(2)
Adjusted EBITDA at 31 December 2021 has been restated from the prior year figure to make it comparable to the current year
calculation.
11
BOART LONGYEAR 2022 ANNUAL REPORT
4.
Discussion and Analysis of Cash Flow
For the year ended 31 December
2022
2021
US$ Millions
US$ Millions
$ Change
% Change
Cash provided by operations
96.6
26.6
70.0
263.2 %
Net cash flows provided by operating activities
69.1
3.2
65.9
2,059.4 %
Net cash flows used in investing activities
(54.2)
(52.5)
(1.7)
(3.2) %
Net cash flows (used in) provided by financing activities
(2.5)
52.7
(55.2)
(104.7) %
4.1 Cash Flow Provided by Operating Activities
Cash flow from operating activities for the year ended 31 December 2022 was $69.1 million, which is an increase of $65.9
million compared to 2021 of $3.2 million. The largest driver of this was overall business performance driven by top line volume
increases, price benefits, and operational improvements. Additionally, concerted efforts to collect on receivables in a more
timely manner contributed greatly to improved cash generation. An increase in trade and other payables also contributed to the
increase in cash flow from operating activities.
The Company invested $54.0 million in capital equipment to support existing operations during 2022, which is more than the
comparable prior period (2021: $51.7 million). Of the 2022 amount, approximately $14.0 million was spent on new rig
purchases, $29.9 million was spent on refurbishing current rigs and other support equipment, and $6.0 million was spent on
product development activities, including Veracio, engineering and patent maintenance. Capital expenditures in 2022 have
been partially offset by proceeds from the sale of property, plant and equipment of $5.6 million (2021: $5.7 million). The
Company continues to place significant emphasis around the capital allocation and approval process in order to meet demand.
The decrease in cash flows provided by financing activities is primarily due to borrowings related to the Company's
recapitalization in 2021 that weren't necessitated in the current year.
5.
Discussion of the Balance Sheet
The net assets of the Company increased by $10.5 million, to net assets of $280.9 million as at 31 December 2022, compared
to a net assets of $270.5 million as at 31 December 2021. The change in net assets resulted primarily from an increase in
inventory and investments in capital equipment offset by an increase in trade and other payables.
Total assets of $774.9 million were $66.3 million higher than 2021 of $708.6 million primarily as a result of the increase in
inventories, property, plant and equipment, and other assets comprised of long-term tax assets and financial assets.
Total liabilities increased by $55.8 million to $493.9 million compared to $438.1 million in 2021. This is primarily driven by an
increase in trade and other payables as well as an increase in loans and borrowings.
12
BOART LONGYEAR 2022 ANNUAL REPORT
Liquidity and Debt Facilities
The Company’s debt includes the following instruments:
Description
Principal
outstanding as
at 31 December
2022
US$ Millions
Original
issue
discount
Interest
rate
Scheduled
maturity
Security
ABL 1
$47.1
Nil
Variable 2
12 May 2025
First lien on substantially all Working Capital Assets of
the ABL borrower and guarantors. Second lien on
substantially all Non-Working Capital Assets of the
ABL borrower and guarantors.
Exit Term Loan
$114.7
$(3.3)
Variable 3
08 September
2026
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 $6.0 million were issued in addition to the $47.1 million borrowings that were outstanding.
(2)
Based on SOFR + margin (grid-based margin is currently 2.75%).
(3)
Based on SOFR + margin (grid-based margin is currently 7.5%).
6.
Review of Segment Operations
The following table shows our third-party revenue and revenue from inter-segment sales by our Global Drilling Services and
Global Products division. Segment profit represents earnings before interest and taxes.
Segment revenue
Segment profit
2022
2021
2022
2021
US$ Millions
US$ Millions
US$ Millions
US$ Millions
Global Drilling Services
723.8
614.8
87.9
60.6
Global Products revenue
Global Products third party revenue
315.1
306.6
Global Products inter-segment revenue1
82.8
73.7
Total Global Products
397.9
380.3
16.5
54.6
Less Global Product sales to Global Drilling Services
(82.8)
(73.7)
Total third party revenue
1,038.9
921.4
Total segment profit
104.4
115.2
Unallocated costs 2
(68.9)
(41.8)
Recapitalization costs
—
(37.7)
Global Drilling Services impairment costs
(2.2)
—
Products impairment costs
(0.1)
—
Finance costs
(20.0)
(88.8)
Interest income
0.1
—
Profit (loss) before taxation
13.3
(53.1)
(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.
13
BOART LONGYEAR 2022 ANNUAL REPORT
The following table shows our Global Drilling Services and Global Products inter-segment eliminations for revenue and
EBITDA.
For the year ended 31 December
2022
2021
US$ Millions
US$ Millions
Global Drilling Services
Revenue prior to intercompany eliminations 1
723.8
614.8
Less intercompany revenue
—
—
Total Global Drilling Services revenue
723.8
614.8
EBITDA prior to intercompany profit margin elimination
108.8
80.9
Plus intercompany profit margin 2
16.1
13.6
Total Global Drilling Services EBITDA 3
124.9
94.5
Global Products4
Revenue prior to intercompany eliminations 1
397.9
380.3
Less intercompany revenue 5
(82.8)
(73.7)
Total Global Products revenue
315.1
306.6
EBITDA prior to intercompany profit margin elimination 3
41.5
75.9
Less intercompany profit margin 2
(16.1)
(13.6)
Total Global Products EBITDA 3
25.4
62.3
Total Company
Total Global Drilling Services and Global Products EBITDA 3
150.3
156.8
Total Corporate EBITDA 3
(68.5)
(72.6)
Total Company EBITDA 3
81.8
84.2
(1)
Transactions between segments are carried out at arm’s length and are eliminated on consolidation.
(2)
Represents inter-segment profits for Drilling Products / Costs to Drilling Services which are eliminated upon consolidation.
(3)
EBITDA is a non-AASB financial measures that management uses to assess our operating performance. See the section titled "Non-
AASB Financial Measures" for information regarding our use of EBITDA and a reconciliation of net profit (loss) to EBITDA.
(4)
Global Products revenue and EBITDA includes Veracio.
(5)
Represents inter-segment sales to Drilling Services which are eliminated upon consolidation.
14
BOART LONGYEAR 2022 ANNUAL REPORT
6.1 Review of Segment Operations - Global Drilling Services
For the year ended 31 December
2022
2021
US$ Millions
US$ Millions
$ Change
% Change
Financial information
Third party revenue
723.8
614.8
109.0
17.7%
COGS
Materials/labor/overhead/other
574.3
499.8
74.5
14.9%
Depreciation and amortization
34.8
32.8
2.0
6.1%
Total COGS
609.1
532.6
76.5
14.4%
COGS as a % of Revenue
84.2 %
86.6 %
(2.4%)
(2.8%)
Segment profit $
87.9
60.6
27.3
45.0%
Segment profit %
12.1 %
9.9 %
2.2 %
22.2%
Business unit SG&A
9.7
9.2
0.5
5.4%
Allocated SG&A
14.7
13.8
0.9
6.5%
EBITDA
124.9
94.5
30.4
32.2%
Other Metrics
Average operating drill rigs
315
311
1.3%
Average fleet size
647
647
—%
Safety
The Global Drilling Services division’s TCIR for 2022 was 1.66 recordable incidents, compared to 1.51 recordable incidents for
the comparable period in 2021. The LTIR for 2022 was 0.11 recordable incidents compared to 0.08 recordable incidents for the
comparable period in 2021.Given the large number of new employees hired and trained in 2022, we feel satisfied with the
outcome of our safety statistics; although, we certainly recognize 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 2022 was $723.8 million, an increase of 17.7% from $614.8 million in 2021. The year-over-
year revenue increase was driven primarily by additional volumes in the United States, Argentina, and Chile. 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 2022 are up 8% compared to the year ended 31 December 2021. Unfavorable changes in foreign
exchange rates negatively impacted overall revenue by 4% due to the strong U.S. dollar during the year.
Approximately 88% of Global Drilling Services’ revenue for 2022 was derived from major mining companies. Our top ten
Global Drilling Services customers represented approximately 58% of the division’s revenue in 2022, with no single contract
contributing more than 10% of our consolidated revenue.
Profit
In 2022, Global Drilling Services achieved $87.9 million of profit compared to $60.6 million in 2021, an increase of 45.0%. The
increase in profit is primarily attributable to price increases that have more than offset rising energy costs and wage inflation as
well as volume increases that have leveraged existing fixed costs.
15
BOART LONGYEAR 2022 ANNUAL REPORT
6.2 Review of Segment Operations - Global Products
For the year ended 31 December
2022
2021
US$ Millions
US$ Millions
$ Change
% Change
Financial information
Third party revenue
315.1
306.6
8.5
2.8%
COGS
Materials/labor/overhead/other
242.2
208.8
33.4
16.0%
Inventory obsolescence
1.6
(0.2)
1.8
(900.0%)
Depreciation and amortization
6.5
6.4
0.1
1.6%
Total COGS
250.3
215.0
35.3
16.4%
COGS as a % of Revenue
79.4 %
70.1 %
9.3 %
13.3%
Segment profit $
16.5
54.6
(38.1)
(69.8%)
Segment profit %
5.2 %
17.8 %
(12.6%)
(70.8%)
Business unit SG&A
29.5
21.3
8.2
38.5%
Allocated SG&A
18.8
15.7
3.1
19.7%
EBITDA
25.4
62.3
(36.9)
(59.2%)
Other Metrics
Manufacturing plants
6
6
—
—
Average backlog
60.1
66.4
(6.3)
(9.5%)
Inventories 1
226.0
208.0
18.0
8.7%
(1) Represents total Company inventories including Global Drilling Services, Global Products and Veracio.
Safety
In 2022, the TCIR for the Global Products, including manufacturing and Veracio, was 0.65 recordable incidents per 200,000
hours worked compared to 0.35 recordable incidents in 2021. The LTIR was 0.11 recordable incidents, compared to 0.00
recordable incidents for 2021. 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 $315.1 million for the year ended 31 December 2022 is 2.8% higher than 2021 revenue of $306.6
million. Revenues generated from price increases across all product lines were favorable, offset by foreign exchange
headwinds and a revenue decline in our Veracio business.
Profit
Global Products profit for the year ended 31 December 2022 was $16.5 million, down $38.1 million compared to 2021. The
decrease in profit is primarily driven by professional fees associated with litigation involving our Veracio business, lower
manufacturing efficiency, cost inflation on raw materials, and unfavorable foreign exchange impact.
Backlog
At 31 December 2022, Global Products had a backlog of product orders valued at $57.5. This compares to $68.1 million at
31 December 2021. Average backlog during the 2022 was $60.1 million compared to $66.4 million during 2021. The decrease
in our backlog year over year, which we define as product orders we believe to be firm, was driven by a pull forward of orders
in 2021 for mining and exploration tooling consumables and capital equipment, driven by supply chain concerns. Orders
shipped within the same month the order is received does not count towards backlog. Also, there is no guarantee that orders in
our backlog will result in actual sales at the times or in the amounts ordered.
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BOART LONGYEAR 2022 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 2022,
Global Products had 448 issued patents, 403 registered trademarks, 143 pending patent applications and 37 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. New product
development efforts remain focused on product changes that continue to drive increased safety and productivity, so customers
see real added value regardless of the business environment. Our recent successes include the LF160 surface coring drill
paired with our Freedom Loader which has set a new benchmark in productivity and hands-free rod handling.
Under our Veracio business, TruCore™ core orientation tools continue to expand in some geographies but are no longer
available in Australia or the United States. The TruShot™ magnetic survey technology is available globally and growing. In
2021 we launched version one of 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 continue to develop in this space. We are
currently rolling out our TruGyroTM borehole survey technology. This technology offers significant advantages over any
technology in this space and is rapidly gaining 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 utilization 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 utilizing artificial intelligence and machine learning continue to be integrated into TruScanTM
ensuring it is well differentiated in the market.
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BOART LONGYEAR 2022 ANNUAL REPORT
7.
Outlook
7.1 Our 2023 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 2023 will be the continuous improvement of the Environmental, Health, and Safety Team
Leading Indicator KPIs which include: Critical Risk Management – Critical Control Verifications and Inspections, Boart
Longyear Integrated Training System (“BITS”) assigned training modules, In-Vehicle Monitoring System focused on Driver
Behavior Improvements, and Corrective Action closure metrics. A competency training program 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") program further demonstrating our commitment to
sustainability. We have a growing ESG program that is key to reinforcing our industry-leading position and building a
sustainable future for the Company and our stakeholders. During 2023, we will continue operationalizing our ESG program
enabling us to maximize 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.
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 prudently constrained capital budget. We will continue
to pursue disciplined investments in our business to drive returns and capitalize 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 Veracio business.
Improve cash generation in 2023, with the goal to continue to be cash positive, through careful management of
liquidity and costs. Ongoing improvement in cash generation in 2023 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 organization. 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 2023
and beyond.
7.2 Outlook and Future Developments
We are not providing an outlook for 2023 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 2022 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 industrialization and urbanization 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.
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BOART LONGYEAR 2022 ANNUAL REPORT
As a result, we retain confidence in our belief that natural resources companies will continue to produce throughout the cycle.
This will continue to drive the need to both replace and supplement ongoing depletion of reserves and resources, driving future
investment in exploration, development and capital spending. As the leading global drilling services provider to the mineral
industry, we continue to drive operational improvements and technological innovation across our global fleet of assets, which
we believe will continue to benefit the business through increased market opportunities.
We remain focused on our core mining markets and intend to continue to invest in growth opportunities in a selective and
disciplined manner. We will continue to invest to develop the next generation of rod-handling solutions across our range of
drilling rigs and expand the provision of subsurface resource information to our mining customers through our Veracio
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 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 and Commodity Price Risk. The Company’s operating results, financial condition and ability to achieve shareholder
returns are directly linked to underlying market demand for drilling services and drilling products. Demand for our drilling
services and products depends in significant part upon the level of mineral exploration, production and development activities
conducted by mining companies, particularly with respect to gold, copper and other base metals. In prior years we have
experienced significant declines in our financial performance as a result of the global contraction in exploration and
development spending in the commodities sector, and the subsequent impact on our mining customers. Mineral exploration,
production and development activities remain uncertain and could remain at current levels for an extended period of time or
decline even further, resulting in adverse effects on our operating results, liquidity and financial condition.
We seek to mitigate the risk associated with volatility and weak demand conditions in our core mining markets by selectively
pursuing opportunities in other markets, such as infrastructure and geotechnical applications for our Global Products business,
and new technology offerings through Veracio. 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 minimize 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 realize 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 organization
and rigorous monitoring processes around our key operational improvement programs 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 Veracio 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 2022, our net debt was $175.7 million (including capital
leases), with $210.5 million in gross debt and $34.8 million of cash on hand. The Company also has an additional $5.3 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 realization 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
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BOART LONGYEAR 2022 ANNUAL REPORT
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. In addition, imposition of new economic sanctions against Russia or other countries and the effects
of potential responsive countermeasures, or increased taxes, border adjustments or tariffs can make our operations more
costly. Our operations are subject to numerous laws, regulations and guidelines (including anti-bribery, tax, health and safety,
human rights and modern slavery, and environmental regulations) that could result in material liabilities or increases in our
operating costs or lead to the decline in the demand for our services or products. We therefore carefully monitor, and educate
our employees and business partners about, legal requirements and developments to make sure our operations remain aware
of applicable laws and regulations at all times. Further, we have implemented various internal and external resources and
controls to promptly detect and address any potential non-compliance.
Climate Related Risks. The potential impacts of climate change may affect the execution and performance of business
strategies as well as the Company’s ability to operate and provide goods and services globally. The Company is currently
evaluating the potential impacts of climate change on our strategies, customers and markets in which we operate. However, an
assessment of these impacts on global markets, regulatory policies, and technologies are not clear due to the wide range of
issues and potential outcomes.
Information and Technology Risk. The legal, regulatory and contractual environment surrounding information security,
privacy and fraud is constantly evolving and companies that collect and retain information are under increasing attack by
cyber-criminals around the world. We are dependent on information technology networks and systems, including the Internet,
to process, transmit and store electronic information and, in the normal course of our business, we collect and retain certain
information, including financial information and personally identifiable information, from and pertaining to our customers,
partners, vendors, and employees. The protection of data is important to us, and we have information security policies to
protect our information and information systems. However, the policies and security measures that we put in place could prove
to be inadequate and cannot guarantee security, and our information technology infrastructure may be vulnerable to criminal
cyber-attacks or data security incidents due to employee negligence, error, malfeasance, or other vulnerabilities. Cyber
security attacks are increasingly sophisticated, change frequently, and often go undetected until after an attack has been
launched. We may fail to identify these new and complex methods of attack or fail to invest sufficient resources in security
measures. We have and will continue to experience cyber-attacks, and we cannot be certain that advances in cyber-
capabilities or other developments will not compromise or breach the technology protecting our networks.
Public Health Risk. Our global operations expose us to risks associated with public health epidemics and pandemics.
COVID-19 has had an adverse impact on certain of our operations, supply chains and distribution systems. National and local
governments have implemented and may continue to implement safety precautions, including quarantines, border closures,
increased border controls, travel restrictions, shelter in place orders and shutdowns and other measures. These measures
may disrupt normal business operations and may have significant negative impacts on businesses and financial markets
worldwide. Our ability to continue to operate is highly dependent on our ability to maintain the health and safety of our
employees. The ability of our employees to work may be significantly impacted by the COVID-19 pandemic or future epidemics
and pandemics.
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.
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BOART LONGYEAR 2022 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 summarizes the arrangements in place for
the remuneration of directors, Key Management Personnel (“KMP” and outlined on page 24) and other employees of
Boart Longyear for the period from 1 January 2022 to 31 December 2022.
Senior Management Changes in 2022
The following changes to Boart Longyear's senior management occurred in 2022:
•
Giovanna Bee Moscoso was appointed Chief Legal Officer effective 28 February 2022;
•
Daniel Goldblatt was appointed Chief Human Resources Officer effective 1 September 2022 as Kari Plaster
stepped down from her responsibilities in April 2022;
•
Pat Nill and Mike Ravella ceased to be considered KMP as of 1 September 2022, however, total remuneration
received by both executives in 2022 has been included in this report for comparison purposes.
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 recognizes 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 organization, 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 organization’s strategic objectives, within its risk profile;
•
Promote positive outcomes across the geographies where we operate; and
•
Promote an ethical culture and behavior that are consistent with Company values and encourage responsible
corporate citizenship.
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BOART LONGYEAR 2022 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
appropriate for the
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.
•
Benchmark total
rewards against
relevant peer groups.
•
Remuneration
Committee regularly
performs executive
compensation
benchmarking utilizing
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 utilize
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 caliber Directors, executives and employees, motivate
them to maximize the Company’s long-term business and create value for shareholders, and support the Company’s
remuneration related objectives and framework.
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BOART LONGYEAR 2022 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 summarizes 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 2022 and 2021, the Remuneration Committee relied on the external review of Insight software as subject matter experts
as well as Ashurst, Alvarez and Marsel Consulting, Vinson & Elkins and key Centerbridge Partners in the creation of the
both the Long Term Incentive Plan and the Management 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 utilizes Willis Tower Watson, Culpepper, World at Work, Payfactors, Mercer, 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.
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BOART LONGYEAR 2022 ANNUAL REPORT
Short-Term Incentive Program (“STIP”): The STIP 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 STIP (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 STIP 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) return on capital employed; (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
STIP are paid in cash.
The STIP performance components for 2022 and their relative weighting are:
(1) Corporate Financial Target - Return on Capital Employed (“ROCE”) - 20% of the Company’s STIP opportunity is linked
to the Company’s ROCE performance. The ROCE 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. ROCE is defined as
Adjusted Earnings Before Taxes divided by the total of Total Assets less Current Liabilities.
(2) Corporate Financial Target – Adjusted EBITDA - 60% of the Company’s STIP opportunity is linked to the Company’s
Adjusted EBITDA performance. Refer to the Company's description and calculation of Adjusted EBITDA, a Non-AASB
Financial Measure, in Section 3.2 of the Review of Operations.
(3) Corporate Non-Financial Target - Safety - 20% of the Company’s STIP opportunity is dependent upon the Company’s
overall safety performance. The Board and management believe that a component of the STIP based on safety results
appropriately focuses Company employees on adopting safe work practices, continuously identifying ways to reduce or
eliminate hazards or unsafe behaviors 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 2022, the Board agreed on the recommendation of its Governance, Safety and Sustainability Committee to use TCIR,
LTIR, Critical Risk Incident Rate and a set of leading indicators as the measurements of safety performance for the STIP.
Individual Strategic Objectives - 100% of the Individual Strategic Objective STIP 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 utilized 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, 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. See note 10.
Although no shares or performance stock units were granted under the LTIP during 2021 or 2022, the Remuneration
Committee approved and announced Cycle One of the 2021 LTIP in 2021; Cycle Two of the 2021 LTIP and as well as the
2022 LTIP were approved and announced by the Remuneration Committee in 2022.
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BOART LONGYEAR 2022 ANNUAL REPORT
The potential target incentive under the LTIP is 17.5% of base pay for each of the 2021 LTIP cycles and 35% of base pay
for the 2022 LTIP. The achievement of these awards is tied to predetermined performance metrics for Adjusted EBITDA
and Cash Return on Investment ("CRI") where CRI is defined as Adjusted EBITDA divided by Gross Fixed Assets plus Net
Working Capital. The 2022 LTIP awards also include a time vesting 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 150% of that
component of the bonus. Bonuses awarded under the 2021 and 2022 LTIP are paid in cash or shares at the discretion of
the Remuneration Committee. Cycle One of the 2021 LTIP was paid in cash in March 2022.
Stock Awards: In 2022, shareholders approved the 2022 Management Incentive Plan ("2022 MIP") which allows the
Company to grant stock options and restricted stock awards to present and future officers, directors, employees,
consultants, and advisors. The 2022 MIP is intended to promote the long-term growth and profitability of the Company by
providing those individuals who are or will be involved in the growth of the Company with an opportunity to acquire an
ownership interest in the Company, thereby encouraging such individuals to contribute to and participate in the success of
the Company. A maximum number of 14,796,021 options and 5,000,000 restricted stock units may be issued pursuant to
the 2022 MIP. These awards are subject to both service and market vesting conditions.
Other benefits (monetary and non-monetary): These benefits are 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: directors and officers liability, 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 2022 were:
Directors
Position
Senior Executives
Position
Rubin McDougal
Non-Executive Chairman
Jeffrey Olsen
President and Chief Executive Officer
Tye Burt
Non-Executive Director
Denis Despres
Chief Operating Officer
Lars Engström
Non-Executive Director
Miguel Desdin 1
Chief Financial Officer
Shannon McCrae
Non-Executive Director (effective 1 Aug 2022)
Giovanna Bee Moscoso
Chief Legal Officer (effective 28 February 2022)
Paul McDonnell
Non-Executive Director
Daniel Goldblatt
Chief Human Resources Officer (effective 1 September 2022)
Jeffrey Olsen
Executive Director
Kari Plaster
Chief Human Resources Officer (ceased employment 1 April 2022)
Thomas Schulz
Non-Executive Director
Pat Nill
Vice President Global Products (KMP through 1 September 2022)
Conor Tochilin
Non-Executive Director
Mike Ravella
Vice President Veracio (KMP through 1 September 2022)
Bao Truong
Non-Executive Director
(1)
On 2 February 2022, Boart Longyear announced the decision of Miguel Desdin, Chief Financial Officer, to leave the Company to
pursue new career opportunities. Mr. Desdin will continue his employment through 31 March 2023 to ensure a smooth transition of
responsibilities.
25
BOART LONGYEAR 2022 ANNUAL REPORT
The table below summarizes 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 2022. This differs from the remuneration details prepared in accordance with statutory obligations and
accounting standards, which are reported on page 26 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 realized 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, "LTIP" represents cash paid in
respect of the executive's LTIP awards earned in prior years but paid in the current reporting year, “Other” represents
benefits such as US 401(k) retirement plan contributions, car allowances, relocation pay, severance pay, tax preparation
service reimbursements, accrued and unused vacation as of the date of ceased employment, sign-on bonuses and other
bonuses granted and paid in 2022.
Sr. Executive remuneration
US$
Base salary
compensation
STIP
LTIP
Other
Total
Jeffrey Olsen
720,225
1,296,945
135,252
37,939
2,190,361
Denis Despres
450,000
529,421
80,149
31,496
1,091,066
Miguel Desdin
420,000
468,195
80,149
29,648
997,992
Giovanna Bee Moscoso 1
296,154
—
—
76,791
372,945
Daniel Goldblatt 2
110,423
—
—
26,443
136,866
Kari Plaster 3
79,750
270,807
58,108
7,593
416,258
Pat Nill 4
284,000
202,617
51,721
29,963
568,301
Mike Ravella 4
275,000
192,423
50,093
31,029
548,545
(1)
Ms. Moscoso was hired on 28 February 2022; as such, her actual remuneration received reflects a partial year of earnings from her
date of hire. Ms. Moscoso was given a $100,000 sign-on bonus to be paid in two equal installments of $50,000. The first installment
was paid in 2022 and the second installment is scheduled to be paid on the first year anniversary of her hire date.
(2)
Mr. Goldblatt was hired on 1 September 2022; as such, his actual remuneration received reflects a partial year of earnings from his
date of hire. Mr. Goldblatt was given a $150,000 sign-on bonus to be paid in three equal installments of $50,000 at six months, 12
months and 18 months from his date of hire.
(3)
Ms. Plaster ceased employment with Boart Longyear as of 1 April 2022. She was given 100% of her STIP and LTIP earned in the
prior year.
(4)
Mr. Nill and Mr. Ravella were considered KMPs through 1 September 2022; however, remuneration for the full year has been
included for comparison purposes.
The relevant proportion of fixed to variable components for senior executive remuneration during 2022 is shown below.
The table illustrates the annualized remuneration mix for executive KMP, including annualized fixed salary and target STIP
and LTIP (assuming 100% of target bonus performance is achieved).
43%
49%
50%
54%
54%
57%
57%
57%
51%
50%
46%
46%
43%
43%
Fixed
At Risk STIP & LTIP Potential
Jeffrey
Olsen
Denis
Despres
Miguel
Desdin
Giovanna Bee
Moscoso
Daniel
Goldblatt
Patrick Nill
Mike Ravella
0%
20%
40%
60%
80%
100%
26
BOART LONGYEAR 2022 ANNUAL REPORT
3.1 EXECUTIVE REMUNERATION IN DETAIL
Details of each senior executive’s remuneration during the years ended 31 December 2022 and 2021 are set out in the
table below. The remuneration calculations reported in this table are based on the Accounting Standards principle of
“accrual accounting” and, consequently do not necessarily reflect the amount of compensation an executive actually
received in cash or shares in a particular year.
Cash-based compensation
Non-cash-
based
compensation
Short term benefits 1
Post-employment
benefits
Other long-term
benefits
Share-based
compensation 2
Compensation
STIP 3
Super-
annuation
benefits 5
Other 4
Other
LTIP 6
Termination
benefits
Options
Total
US$
US$
US$
US$
US$
US$
US$
US$
US$
Jeffrey Olsen
2022
720,225
503,581
29,239
8,700
—
130,889
—
1,652,832
3,045,466
2021
686,306
1,296,945
428,972
8,700
—
135,252
—
—
2,556,175
Denis Despres
2022
450,000
315,000
22,796
8,700
—
81,780
—
661,133
1,539,409
2021
412,500
529,421
173,143
8,700
—
80,149
—
—
1,203,913
Miguel Desdin
2022
420,000
207,480
20,948
8,700
—
76,328
—
495,850
1,229,306
2021
405,000
468,195
271,050
8,700
—
80,149
—
—
1,233,094
Giovanna Bee Moscoso 7
2022
296,154
133,000
69,118
7,673
—
12,760
—
75,764
594,469
Nora Pincus 8
2021
256,731
206,250
312,600
8,431
—
48,105
388,385
—
1,220,502
Daniel Goldblatt 9
2022
110,423
55,000
24,158
2,285
—
4,813
—
75,764
272,443
Kari Plaster 10
2022
79,750
—
7,593
2,393
—
—
—
—
89,735
2021
297,250
270,807
171,050
7,134
—
58,108
—
—
804,349
Pat Nill 11
2022
284,000
—
21,263
8,700
—
51,612
—
264,453
630,028
2021
271,062
202,617
62,078
7,229
—
51,721
—
—
594,707
Mike Ravella 11
2022
275,000
—
22,329
8,700
—
49,977
—
—
356,006
2021
262,692
192,423
52,476
8,700
—
50,093
—
—
566,384
(1)
There were no non-monetary benefits provided.
(2)
Non-cash based remuneration includes the fair value of equity compensation recognized over the respective vesting period (i.e. Options
awarded under the 2022 MIP). The fair value of equity instruments is determined as at the grant date and is recognized over the vesting
period. The amount included as remuneration is not related to or indicative of the benefit (if any) that senior executives may ultimately realize
should the equity instruments vest. The fair value of options at the date of their grant were valued using a Monte Carlo simulation model.
(3)
The 2022 amount represents cash STIP payments earned by the executive during the year ended 31 December 2022, which are expected to
be paid in 2023 and were approved by the Board in February 2023. The 2021 amount represents cash STIP payments earned by the
executive during the year ended 31 December 2021, which were paid in 2022.
(4)
Includes sign-on bonuses, automotive allowances, relocation and reimbursements of financial and tax preparation assistance and other
various given bonuses.
(5)
Includes 401(k) plan matching contributions made by the employing entity in the United States.
(6)
To be settled in cash or shares at the discretion of the Board.
(7)
Ms. Moscoso was hired on 28 February 2022; as such, her actual remuneration received reflects a partial year of earnings from her date of
hire. Ms. Moscoso was given a $100,000 sign-on bonus to be paid in two equal installments of $50,000. The first installment was paid in
2022 and the second installment is scheduled to be paid on the first year anniversary of her hire date.
(8)
Ms.Pincus ceased employment as General Counsel & Company Secretary as of 5 November 2021. Refer to prior year Remuneration Report.
(9)
Mr. Goldblatt was hired on 1 September 2022; as such, his actual remuneration received reflects a partial year of earnings from his date of
hire. Mr Goldblatt was given a $150,000 sign-on bonus to be paid in three equal installments of $50,000 at six months, 12, months and 18
months from his date of hire.
(10) Ms. Plaster ceased employment with Boart Longyear as of 1 April 2022. She was given 100% of her STIP and LTIP earned in 2021.
(11) Mr. Nill and Mr. Ravella were considered KMPs through 1 September 2022; however, remuneration for the full year has been disclosed for
comparison purposes. The 2022 STIP for Mr. Nill and Mr. Ravella has not been provided as they were no longer KMP when the earned STIP
for KMP was determined by the Remuneration Committee
27
BOART LONGYEAR 2022 ANNUAL REPORT
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 willful misconduct that requires a restatement of the
reported financial results, the Board may seek to recover the amount of the overpayment by a repayment or through a
reduction or cancellation of outstanding future bonus or awards. The Board can make determinations of overpayment at
any time through the third fiscal year following the year for which the inaccurate performance criteria were measured.
4. PERFORMANCE AND RISK ALIGNMENT
Below is a summary of the year-over-year operating performance which underpins the compensation program.
Net debt excludes the impact of recapitalisation transactions, letters of credit, CRA & IRS obligations, strategic asset
acquisitions and disposals, equity raise, and potential asset backed loans. Dividends per share are calculated as basic
EPS divided by closing share price.
Financial
year
Closing
share price
1 A$
Dividends
per share
US$
EPS 1
US$
Revenue
US$
Millions
Adj.
EBITDA 2
US$
Millions
CRI
ROE
Net debt
US$
Millions
2022
1.89
—
0.04
1,038.9
124.2
14.0%
4.3%
175.7
2021
2.47
—
(0.69)
921.4
116.0
12.6%
(57.7)%
163.9
2020
8.70
—
(22.45)
657.3
60.1
7.2%
(23.2)%
855.1
2019
32.60
—
(10.35)
745.0
87.3
10.2%
(16.1)%
781.5
2018
24.00
—
(9.93)
770.2
80.6
9.6%
(16.6)%
688.7
(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, amortization, 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 KMP, 2018 through 2022, is below:
2018
2019
2020
2021
2022
% of target STIP awarded
103%
72%
65%
174%
76%
STIP earned during the year ended 31 December 2022:
STIP earned in 2022
STIP earned
as % of
target 1
STIP earned
US$
Target STIP
US$
% of STIP
Forfeited
% of max STI
forfeited 2
Jeffrey Olsen
70%
503,581
720,225
30%
65%
Denis Despres
100%
315,000
315,000
0%
50%
Miguel Desdin
76%
207,480
273,000
24%
62%
Giovanna Bee Moscoso 3
91%
133,000
146,318
9%
55%
Daniel Goldblatt 3
100%
55,000
55,000
0%
50%
(1)
Calculated by multiplying the Individual Strategic Objective percentage achieved by the company-wide STIP performance payout of
76%.
(2)
The maximum potential award assuming superior performance against all STIP metrics is 200% of target STI.
(3)
Noted Executives were hired during the year ended 31 December 2022, as such, their target STIP amounts were pro-rated upon
hire date.
28
BOART LONGYEAR 2022 ANNUAL REPORT
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.
5. SERVICE CONTRACTS AND TERMINATION PROVISIONS
Name and position held
at the end of the
financial year
Duration of
contract
Notice period
by Company
Notice
period by
executive
Termination payments (where these are in
addition to statutory entitlements)
Chief Executive Officer
No fixed
term
None required
180 days
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
Chief Legal Officer
and General Counsel
No fixed
term
None required
90 days
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
Chief Financial Officer;
Chief Human
Resources Officer;
Chief Operating Officer;
Vice President Global
Products; Vice
President Geological
Data Services
No fixed
term
None required
90 days
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 favor. 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.
29
BOART LONGYEAR 2022 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
Cessation as
Balance
Balance
Granted as
change
Executive & Non-
Balance
held
Name
1 January 2022
remuneration
during year
Executive Director
31 December 2022
nominally
Rubin McDougal
8,292
—
—
—
8,292
—
Tye Burt
13,043
—
30,000
—
43,043
—
Lars Engström
—
—
—
—
—
—
Shannon McCrae 1
—
—
—
—
—
—
Paul McDonnell
—
—
—
—
—
—
Thomas Schulz
—
—
—
—
—
—
Conor Tochilin
—
—
—
—
—
—
Bao Truong
—
—
—
—
—
—
Jeffrey Olsen
13,572
—
—
—
13,572
—
Denis Despres
3,289
—
—
—
3,289
—
Miguel Desdin
3,265
—
—
—
3,265
—
Giovanna Bee Moscoso 2
—
—
—
—
—
—
Daniel Goldblatt 3
—
—
—
—
—
—
Kari Plaster 4
522
—
—
(522)
—
—
Pat Nill 5
1,319
—
—
(1,319)
—
—
Mike Ravella 5
11
—
—
(11)
—
—
(1)
Ms. McCrae appointed effective 1 August 2022.
(2)
Ms. Moscoso appointed effective 28 February 2022.
(3)
Mr. Goldblatt appointed effective 1 September 2022.
(4)
Ms. Plaster ceased employment 1 April 2022.
(5)
Mr. Nill and Mr. Ravella were considered KMP's through 1 September 2022.
5.2 OPTIONS
In September 2022, the Company granted options to certain employees pursuant to the 2022 MIP. These awards are
subject to both service and market vesting conditions and are only exercisable to the extent that they are fully vested. All
option awards are divided into three tranches and each tranche vests over a three-year period following the grant date.
Vesting of each tranche is dependent on the following market conditions:
Tranche one options vest on the first date the Company's 50-day volume-weighted average price ("VWAP") equals or
exceeds $2.88 per share.
Tranche two options vest on the first date the Company's 50-day VWAP equals or exceeds $4.32 per share.
Tranche three options vest on the first date the Company's 50-day VWAP equals or exceeds $5.76 per share.
Both the time vesting and market vesting conditions must be met for a tranche to vest. Any options that haven't fully
vested on the fifth anniversary of the grant date will expire. All vested option awards will expire on the tenth anniversary of
the grant date.
30
BOART LONGYEAR 2022 ANNUAL REPORT
These options were valued using a Monte Carlo simulation model. The following table summarizes the 2022 MIP options
granted to KMP during the year ended 31 December 2022:
Name
Grant
Date
Expiry
Date
Options
Granted
Options
Vested
Weighted
Average
Fair Value
of Options
Granted
Weighted
Average
Exercise
Price
Fair Value
of
Options
Granted
Unvested
Options
at End of
Period
Jeffrey Olsen
7 Sep 22
7 Sep 32
3,687,992
—
0.81
1.92
2,970,882
3,687,992
Denis Despres
7 Sep 22
7 Sep 32
1,475,197
—
0.81
1.92
1,188,353
1,475,197
Miguel Desdin
7 Sep 22
7 Sep 32
1,106,398
—
0.81
1.92
891,265
1,106,398
Giovanna Bee Moscoso
7 Sep 22
7 Sep 32
737,598
—
0.83
1.92
610,567
737,598
Daniel Goldblatt
7 Sep 22
7 Sep 32
737,598
—
0.83
1.92
610,567
737,598
Pat Nill 1
7 Sep 22
7 Sep 32
590,079
—
0.81
1.92
475,341
590,079
(1)
Mr. Nill was considered KMP through 1 September 2022.
The options listed below vested on 1 April 2017 and expire on 1 April 2024.
Name
Effective
grant
date
Vesting
date
Fair value
per option
at grant
date
US$
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 2022
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
utilized for Non-Executive Director fees, being approximately 50% of the fee pool limit.
No share rights were awarded as remuneration in 2022.
31
BOART LONGYEAR 2022 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$15,000 annually for committee chairs.
Where the Board Chairman sits on a committee, he or she does not receive any additional fee.
Other fees/
benefits
Non-Executive Directors are entitled to be reimbursed for all reasonable out-of-pocket expenses
incurred in carrying out their duties, including travel costs. The Chairman of the Board also is
entitled to reimbursement for office and secretarial support.
Non-Executive Directors may also, with the approval of the Board, be paid additional fees for extra
services or special exertions for the benefit of the Company.
Non-Executive Directors are not entitled to receive any performance-related remuneration, such as
short-term or long-term incentives.
Post-employment
benefits
Compulsory superannuation contributions for Australian-resident Non-Executive Directors are
included in the base fee and additional committee fees set out above.
Non-Executive Directors do not receive any retirement benefits other than statutory superannuation
contributions.
32
BOART LONGYEAR 2022 ANNUAL REPORT
6.2 REMUNERATION PAID TO NON-EXECUTIVE DIRECTORS
Details of Non-Executive Directors’ remuneration for the year ended 31 December 2022 and 2021 are set out in the table
below:
Non-Executive Directors
remuneration
US$
Fees (Including
committee fees)
Superannuation
contributions
Shares
Total
Kevin McArthur 1
2021 (up to 16 November 2021)
275,000
—
—
275,000
Rubin McDougal
2022
310,000
—
—
310,000
2021
197,507
—
—
197,507
Tye Burt
2022
175,000
—
—
175,000
2021
182,500
—
—
182,500
Lars Engström
2022
175,000
—
—
175,000
2021
30,417
—
—
30,417
Shannon McCrae 2
2022
66,667
—
—
66,667
Jason Ireland 3
2021
138,446
—
—
138,446
James Kern 4
2021
153,542
—
—
153,542
Paul McDonnell
2022
182,500
—
—
182,500
2021
30,417
—
—
30,417
Thomas Schulz
2022
175,000
—
—
175,000
2021
29,167
—
—
29,167
Robert Smith 5
2021
138,808
—
—
138,808
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)
Mr. McArthur retired 16 November 2021.
(2)
Ms. McCrae appointed effective 1 August 2022.
(3)
Mr. Ireland retired 16 November 2021.
(4)
Mr. Kern retired 16 November 2021.
(5)
Mr. Smith retired 16 November 2021.
33
BOART LONGYEAR 2022 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 1 March 2020 as Audit Committee Chair and was appointed Chair on 16
November 2021.
Mr. McDougal has senior executive experience across manufacturing, marketing and logistics industries in Asia, Europe and
the Americas. Mr. 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 23 August 2019 and serves as Chair of the Remuneration Committee and is a
member of the Audit and Risk Committee. His career includes more than 30 years of 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 16 November 2021 and serves as Chair of the Audit and Risk
Committee. Mr. Engström has more than 30 years of senior management experience at leading Swedish mining and industrial
companies. He is currently a Director on the Board 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.
Shannon McCrae
Ms. McCrae was appointed Director of the Company on 1 August 2022. Ms. McCrae is a professional geologist and executive
who brings over 25 years of experience in the resource industry. Her experience ranges from early-stage exploration to mine
sites across multiple commodities, driving economic discoveries and delivering innovation. She was Director of Exploration
and Growth for Barrick Gold, a global role operating as a member of the senior management team until 2019. Her experience
also includes senior roles with De Beers Canada. She has recently been involved within mining and exploration through her
company, Athena Geoscience, and as Vice President of Business Development with Novamera.
Ms. McCrae holds an Honors Bachelor of Science degree in Geology (BSc) from Western University and is a registered
Professional Geoscientist (P.Geo.) in Ontario.
Paul McDonnell
Mr. McDonnell was appointed Director of the Company’s Board on 17 November 2021 and serves as Chair of the Governance,
Safety and Sustainability Committee and is a member of the Remuneration 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.
34
BOART LONGYEAR 2022 ANNUAL REPORT
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.
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 as a Director of the Company on 16 November 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. Mr. Schulz currently serves as the Group Chief Executive Officer of BILFINGER SE. From
2013 to 2021, he served as Group Chief Executive Officer of FLSMIDTH. Since 2016 he is a Non-Executive Board Member of
HYDRO A/S. From 2001 to 2012, Mr. Schulz held several leadership positions at SANDVIK, including President - Construction,
Senior Vice President, Chairman of SJL SHAN BAO, SRP AB, Sandvik Extec, Sandvik Fintec, President - Construction
Segment, Senior Vice President / Chairman of SRP AB, Sandvik Extec, Sandvik Fintec. From 1998 to 2001, he was Business
Area Manager, Department Crushing, Screening, Grinding, Pyro at Swedish manufacturer SVEDALA INDUSTRI.
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 17 January 2020 and is a member of the Remuneration
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.
Bao Truong
Mr. Truong joined the Company’s Board on 16 November 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., 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
Alex Nikolic
Mr. Nikolic was appointed interim Company Secretary on 5 November 2021 and relinquished Company Secretary duties upon
Mr. Nash's appointment as Company Secretary as of 15 April 2022. 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 transactions. Frequently
assisting clients on debt and equity financings, both domestic and cross border, Mr. Nikolic'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.
35
BOART LONGYEAR 2022 ANNUAL REPORT
Nicholas Nash
Mr. Nash was appointed Company Secretary on 15 April 2022. Nicholas joined Boart Longyear in 2021 and has a legal
background in mergers and acquisitions, corporate transactional work, corporate governance, capital markets and securities,
and regulatory compliance. He holds a Juris Doctor degree from Vanderbilt University Law School and a Bachelor of Political
Science and a Bachelor of Business Management from the University of Utah.
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
Audit & Risk
Committee
Governance, Safety &
Sustainability
Committee
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Rubin McDougal
5
5
—
—
—
—
—
—
Tye Burt 1
5
5
5
5
2
2
—
—
Lars Engström 2
5
5
—
—
4
4
2
2
Shannon McCrae 3
3
3
—
—
—
—
—
—
Paul McDonnell
5
5
5
3
—
—
4
3
Thomas Schulz
5
5
—
—
4
4
4
3
Conor Tochilin
5
5
5
5
—
—
—
—
Bao Truong
5
5
—
—
4
4
—
—
Jeffrey Olsen
5
5
—
—
—
—
—
—
(1)
Mr. Burt was not a member of the Audit & Risk Committee for the August and November 2022 meetings.
(2)
Mr. Engström was not a member of the Governance, Safety & Sustainability Committee for the August and November 2022 meetings.
(3)
Ms. McCrae appointed effective 1 August 2022.
36
BOART LONGYEAR 2022 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
8,292
—
—
8,292
Tye Burt
43,043
—
—
43,043
Lars Engström
—
—
—
—
Shannon McCrae
—
—
—
—
Paul McDonnell
—
—
—
—
Thomas Schulz
—
—
—
—
Conor Tochilin
—
—
—
—
Bao Truong
—
—
—
—
Jeffrey Olsen
13,572
—
—
13,572
Denis Despres
3,289
—
—
3,289
Miguel Desdin
3,265
—
—
3,265
Giovanna Bee Moscoso
—
—
—
—
Daniel Goldblatt
—
—
—
—
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.
37
BOART LONGYEAR 2022 ANNUAL REPORT
GRANTS OF SHARES, RIGHTS OVER SHARES AND OPTIONS GRANTED TO DIRECTORS
At the Annual General Meeting of Shareholders held in May 2022, shareholders approved a Non-Executive Director share
purchase plan (the “2022 NED Share Plan”) and a Non-Executive Director Deferred Stock Unit Plan (the "2022 NED DSU
Plan") which allows current and future Non-Executive Directors to elect to receive up to 100% of their director fees in shares
and/or deferred stock units 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 and/or deferred stock units of the Company in lieu of cash pursuant to the 2022 NED
Share Plan or 2022 NED DSU 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 2022 NED Share Plan or 2022 NED DSU Plan, NED Shares and/or NED Deferred
Stock Units 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 the issue of shares issued in accordance with the 2022 NED Share Plan, 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.
Deferred stock units issued in accordance with the 2022 NED DSU Plan vest immediately at the time of grant to the Non-
Executive Director. Deferred stock units issued under the 2022 NED DSU Plan may only be settled after the Non-Executive
Director's death, retirement, or loss of his or her position as a Director.
The number of NED Shares and/or NED Deferred Stock Units to be allocated to Non-Executive Directors who elect to
participate in the 2022 NED Share Plan and/or 2022 NED DSU 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 2022 NED Share Plan and/or 2022
NED DSU 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 and/or deferred stock
units.
No securities were issued under the 2022 NED Share Plan or the 2022 NED DSU Plan during the year.
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.
38
BOART LONGYEAR 2022 ANNUAL REPORT
EXECUTIVE MANAGEMENT TEAM
Jeffrey Olsen
Jeffrey Olsen’s experience and qualifications are summarized on page 34.
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 has held various positions with progressive responsibility in the Company’s Drilling Services and
Products divisions, including 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 Drilling'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.
Daniel Goldblatt
Mr. Goldblatt joined Boart Longyear as Chief Human Resources Officer on 1 September 2022. His career includes significant
global human resources experience focused on organizational transformation, business partnering, and performance
management across diverse industries. From 2019 to 2022, Mr. Goldblatt was a senior executive with mattress manufacturer
Serta Simmons Bedding, most recently as Chief Operating Officer and previously as Chief Human Resources Officer. From
2006 to 2019, he was Senior Vice President, Human Resources, at Acuity Brand Lighting, the world’s largest manufacturer of
lighting fixtures. From 2001 to 2006, Mr. Goldblatt held a number of human resources positions at Hexion Speciality
Chemicals, including Vice President Human Resources Performance Products Division and Asia Pacific. He also held
additional senior human resources positions at Phase Two Strategies and Trucolor.
Mr. Goldblatt is a graduate of Brown University.
Giovanna Bee Moscoso
Mrs. Giovanna Bee Moscoso joined Boart Longyear as Chief Legal Officer on 28 February 2022, bringing an abundance of
legal and mining industry experience. Prior to joining the Company, Giovanna was a legal consultant to the mining industry
where she focused on permitting, compliance, due diligence, and land management. From 1994 to 2019, Giovanna held
progressive responsibilities at Barrick Gold, including Partner, Vice President, and Assistant General Counsel, in Peru, Chile,
Argentina, Salt Lake City and Toronto. Her scope of responsibilities encompassed managing legal, regulatory, permitting, and
contractual matters for various mines in the Americas. Mrs.Moscoso's roles have also included coordinating government and
public relations and developing social outreach and human rights programs with stakeholders, including indigenous
communities and private landowners.
Mrs. Moscoso was Chairwoman of the Board of Calipuy Resources Inc. through June 2022 and is currently the Independent
Director and Chair of the Governance, Social and Environmental Committee of the Board of Palladium One Mining Inc.
Mrs. Moscoso holds a Juris Doctor degree from the University of Lima and a Masters of Law – LLM from Duke University.
Pat Nill
Pat Nill was appointed to the Executive Committee in June 2021. Mr. Nill 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. Mr. Nill 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. Mr.
Ravella 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
_______________________________________________________________________________________
38
39
BOART LONGYEAR 2022 ANNUAL REPORT
Zone Manager, and E&I Northeast US Zone Manager. Prior to Boart Longyear, Mr. Ravella 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.
40
BOART LONGYEAR 2022 ANNUAL REPORT
AUDITOR
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is included on page 42 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.
41
BOART LONGYEAR 2022 ANNUAL REPORT
REMUNERATION
The Remuneration Report is included beginning at page 20 and forms part of this Directors’ Report.
Signed in accordance with a resolution of the Directors.
On behalf of the Directors
42
BOART LONGYEAR 2022 ANNUAL REPORT
Liability limited by a scheme approved under Professional Standards Legislation
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
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
DELOITTE TOUCHE TOHMATSU
D K Andrews
Partner
Chartered Accountants
The Directors
Boart Longyear Group Ltd
333 Bay Street
Suite 2400
Toronto Ontario M5H 2T6
CANADA
24 February 2023
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 2022, 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
43
BOART LONGYEAR 2022 ANNUAL REPORT
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report to the members of Boart
Longyear Group Ltd
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Boart Longyear Group Ltd (the Parent or Boart Longyear) and its controlled
entities (collectively the Company) which comprises the consolidated statement of financial position as at 31
December 2022, the consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended, and
notes to the financial statements, including a summary of significant accounting policies and the directors’
declaration.
In our opinion, the accompanying financial report gives a true and fair view, of the Company’s financial position as at
31 December 2022 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.
Liability limited by a scheme approved under Professional Standards Legislation
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
©2022 Deloitte Touche Tohmatsu
44
BOART LONGYEAR 2022 ANNUAL REPORT
Key Audit Matter
How the scope of our audit responded to the Key Audit
Matter
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 2022, the Company has recorded
an income tax expense of $1.4 million, current and
non-current tax receivables of $1.1 million and $1.3
million and a net current tax payable of $2.4 million,
deferred tax assets of $11.5 million, and deferred tax
liabilities of $22 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 2022, the Company has recorded
a provision for tax contingencies of $38.8 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
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.
45
BOART LONGYEAR 2022 ANNUAL REPORT
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 2022, but does not include the financial
report and our auditor’s report thereon: 2022 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.
When we read the 2022 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.
Other Information
46
BOART LONGYEAR 2022 ANNUAL REPORT
•
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.
•
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 2022.
In our opinion, the Remuneration Report of Boart Longyear Group Ltd for the year ended 31 December 2022, has
been prepared in accordance with section 300A of the Corporation Act 2001.
47
BOART LONGYEAR 2022 ANNUAL REPORT
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
D K Andrews
Partner
Chartered Accountants
Perth, 24 February 2023
Responsibilities
48
BOART LONGYEAR 2022 ANNUAL REPORT
DIRECTORS’ DECLARATION
The Directors declare that:
(a) in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable;
(b) in the Directors’ opinion, the attached financial statements are in compliance with International Financial Reporting
Standards, as stated in Note 1 to the financial statements;
(c)
in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations
Act 2001, including compliance with accounting standards, and giving a true and fair view of the financial position and
performance of the consolidated entity; and
(d) the Directors have been given the declarations required by section 295A of the Corporations Act 2001.
(e) there are reasonable grounds to believe that the Company and the group entities identified in Note 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
49
BOART LONGYEAR 2022 ANNUAL REPORT
2022
2021
Note
US$'000
US$'000
Continuing operations
Revenue
4
1,038,887
921,399
Cost of goods sold
(862,078)
(747,550)
Gross margin
176,809
173,849
Other income
5
12,259
20,608
General and administrative expenses
(109,201)
(125,023)
Sales and marketing expenses
(22,251)
(20,643)
Other expenses
5
(24,347)
(13,114)
Operating profit
33,269
35,677
Interest income
6
57
42
Finance costs
6
(20,036)
(88,828)
Profit (loss) before taxation
13,290
(53,109)
Income tax expense
11
(1,435)
(4,280)
Profit (loss) for the year attributable
to equity holders of the parent
11,855
(57,389)
Earning (loss) per share:
Basic and diluted earnings (loss) per share
12
4.0 cents
(68.7) cents 1
Other comprehensive income (loss)
Profit (loss) for the year attributable to equity holders of the parent
11,855
(57,389)
Items that may be reclassified subsequently to profit or loss
Exchange differences arising on translation of foreign operations
(10,942)
(4,612)
Items that will not be reclassified subsequently to profit or loss
Actuarial gain related to defined benefit plans, net of tax
24
4,904
6,828
Adjustments for restrictions on the defined benefit asset, net of tax
24
(4,816)
—
Gain (loss) on cash flow hedges recorded in equity, net of tax
5,859
(1,548)
Other comprehensive gain (loss) for the year, net of tax
(4,995)
668
Total comprehensive profit (loss) for the year attributed
to equity holders of the parent
6,860
(56,721)
(1)
On 23 September 2021, the Company completed a consolidation of issued capital on a basis that every 20 shares be consolidated into 1
share.
See accompanying Notes to the Consolidated Financial Statements included on pages 54 to 110.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the financial year ended December 2022
50
BOART LONGYEAR 2022 ANNUAL REPORT
2022
2021
Note
US$'000
US$'000
Current assets
Cash and cash equivalents
35
34,822
25,579
Trade and other receivables
13
139,657
137,900
Inventories
14
226,014
207,962
Current tax receivable
11
1,123
824
Prepaid expenses and other assets
15,443
15,641
417,059
387,906
Asset classified as held for sale
16
345
161
Total current assets
417,404
388,067
Non-current assets
Property, plant and equipment
18
187,859
168,635
Goodwill
19
103,758
104,916
Other intangible assets
20
33,833
30,959
Deferred tax assets
11
11,465
10,139
Non-current tax receivable
11
1,343
912
Other assets
19,193
3,832
Defined benefit pension asset
24
—
1,117
Total non-current assets
357,451
320,510
Total assets
774,855
708,577
Current liabilities
Trade and other payables
21
177,485
137,996
Provisions
23
19,334
21,600
Current tax payable
11
2,420
1,506
Loans and borrowings
22
20,187
10,752
Total current liabilities
219,426
171,854
Non-current liabilities
Loans and borrowings
22
190,326
178,694
Other financial liabilities
25, 26
13,575
20,900
Deferred tax liabilities
11
21,995
21,115
Provisions
23
48,597
45,532
Total non-current liabilities
274,493
266,241
Total liabilities
493,919
438,095
Net assets
280,936
270,482
Equity
Issued capital
25
673,955
673,955
Reserves
(123,772)
(123,720)
Other equity
1,463,247
1,463,247
Accumulated losses
(1,730,128)
(1,742,950)
Total equity
283,302
270,532
Non-controlling interest
(2,366)
(50)
Total equity
280,936
270,482
See accompanying Notes to the Consolidated Financial Statements included on pages 54 to 110.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
51
BOART LONGYEAR 2022 ANNUAL REPORT
Issued
capital
US$'000
Foreign
currency
translation
reserve
US$'000
Equity-settled
compensation
reserve
US$'000
Hedging
reserve
US$'000
Other 1
equity
US$'000
Accumulated
losses
US$'000
Total
attributable
to owners of
the parent
US$'000
Non-
controlling
interest
US$'000
Total
equity
US$'000
Balance at 1 January 2021
1,469,393
(120,176)
2,616
—
(128,790)
(1,692,944)
(469,901)
505
(469,396)
Loss for the period
—
—
—
—
—
(57,389)
(57,389)
—
(57,389)
Other comprehensive gain (loss)
for the period, net of tax
—
(4,612)
—
(1,548)
—
6,828
668
—
668
Total other comprehensive loss
—
(4,612)
—
(1,548)
—
(50,561)
(56,721)
—
(56,721)
Shares issued
796,604
—
—
—
—
—
796,604
—
796,604
Re-domiciliation reserve adjustment 2
(1,592,037)
—
—
—
1,592,037
—
—
—
—
Non-controlling interest
—
—
—
—
—
555
555
(555)
—
Share purchases
(5)
—
—
—
—
—
(5)
—
(5)
Balance at 31 December 2021
673,955
(124,788)
2,616
(1,548)
1,463,247
(1,742,950)
270,532
(50)
270,482
Balance at 1 January 2022
673,955
(124,788)
2,616
(1,548)
1,463,247
(1,742,950)
270,532
(50)
270,482
Profit for the period
—
—
—
—
—
11,855
11,855
—
11,855
Other comprehensive gain (loss)
for the period, net of tax
—
(10,942)
—
7,296
—
(1,349)
(4,995)
—
(4,995)
Total other comprehensive gain (loss)
—
(10,942)
—
7,296
—
10,506
6,860
—
6,860
Non-controlling interest
—
—
—
—
—
2,316
2,316
(2,316)
—
Share-based compensation
—
—
3,594
—
—
—
3,594
—
3,594
Balance at 31 December 2022
673,955
(135,730)
6,210
5,748
1,463,247
(1,730,128)
283,302
(2,366)
280,936
(1)
Other equity represents the Company’s reorganization reserve on creation of the Company in 2007, the expiration of unexercised equity-settled awards and the Company’s
reorganization reserve on the Recapitalisation and re-domicliation of the Company in 2021.
(2)
Refer to Note 2.
See accompanying Notes to the Consolidated Financial Statements included on pages 54 to 110.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the financial year ended 31 December 2022
52
BOART LONGYEAR 2022 ANNUAL REPORT
2022
2021
Note
US$'000
US$'000
Cash flows from operating activities
Profit (loss) for the year
11,855
(57,389)
Adjustments provided by operating activities:
Income tax expense recognized in profit
1,435
4,280
Finance costs recognized in profit
6
20,036
88,828
Depreciation and amortization
7
48,565
48,551
Interest income recognized in profit
6
(57)
(42)
Gain on sale or disposal of non-current assets
7
(4,846)
(4,005)
Other non-cash items
(10,165)
(6,902)
Gain on fair value of warrant liabilities
(5,777)
(11,630)
Impairment of current and non-current assets
2,866
424
Non-cash foreign exchange loss
13,808
8,246
Equity-settled share-based payments
3,594
—
Changes in net assets and liabilities, net of effects
from acquisition and disposal of business:
Increase in assets:
Trade and other receivables
(12,622)
(32,750)
Inventories
(17,798)
(50,161)
Other assets
(10,203)
(7,972)
Increase in liabilities:
Trade and other payables
47,512
44,359
Provisions
8,382
2,802
Cash provided by operations
96,585
26,639
Interest paid
(18,033)
(12,011)
Interest received
6
57
42
Income taxes paid
(9,498)
(11,463)
Net cash flows provided by operating activities
69,111
3,207
See accompanying Notes to the Consolidated Financial Statements included on pages 54 to 110.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the financial year ended 31 December 2022
53
BOART LONGYEAR 2022 ANNUAL REPORT
2022
2021
Note
US$'000
US$'000
Cash flows from investing activities
Purchase of property, plant and equipment
(54,037)
(51,717)
Proceeds from sale of property, plant and equipment
5,643
5,712
Intangible costs paid
(5,840)
(6,498)
Net cash flows used in investing activities
(54,234)
(52,503)
Cash flows from financing activities
Proceeds from the issuance of shares 1
—
1,578
Payments for share purchases
—
(5)
Payments for debt issuance costs
(1,134)
(4,375)
Proceeds from borrowings
142,932
263,311
Repayment of borrowings
(144,284)
(207,837)
Net cash flows (used in) provided by financing activities
(2,486)
52,672
Net increase in cash and cash equivalents
12,391
3,376
Cash and cash equivalents at the beginning of the year
25,579
23,513
Effects of exchange rate changes on the balance
of cash held in foreign currencies
(3,148)
(1,310)
Cash and cash equivalents at the end of the year
35
34,822
25,579
(1)
The Company was Recapitalized on 23 September 2021. See Note 2.
See accompanying Notes to the Consolidated Financial Statements included on pages 54 to 110.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the financial year ended 31 December 2022
54
BOART LONGYEAR 2022 ANNUAL REPORT
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
EMEA. Boart Longyear Group Ltd. was inserted as the Parent entity during 2021 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
Principal place of business
2442 South Sheridan Way
Mississauga, Ontario
Canada L5J 2M7
Tel: +1 905 822 7922
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 International Financial Reporting Standards ("IFRS"). The financial report includes
the consolidated financial statements of the Company. For purposes of preparing the consolidated financial statements,
the Company is a for-profit entity;
– is presented in United States dollars, which is Boart Longyear 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 authorized
for issue by the Directors on 24 February 2023;
– 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 unrealized income and expenses arising from inter-company
transactions, are eliminated.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
55
BOART LONGYEAR 2022 ANNUAL REPORT
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 36 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 realization 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 realization of assets and the
settlement of liabilities in the ordinary course of business. The Directors consider that current and expected liquidity from
operating cash flow, 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.
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
recognized 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
recognized in the financial statements, are found in the following notes:
Note 11
Income Taxes
Note 20
Other Intangible Assets
Note 23
Provisions
Note 30
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 unrealized 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 summarize the measurement basis used and are relevant to an
understanding of the financial statements are provided throughout the notes to the financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
56
BOART LONGYEAR 2022 ANNUAL REPORT
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 summarizes 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.
As a result of the share consolidation, the weighted average number of shares outstanding was adjusted proportionately as
if the share consolidation had occurred at the start of the earliest period for which earnings per share information was
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 was 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 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
recognized 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 recognized 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.
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 14.0%; 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
57
BOART LONGYEAR 2022 ANNUAL REPORT
2.
RECAPITALISATION AND RE-DOMICILIATION (CONTINUED)
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
recognized 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 recognized 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 Unsecured 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 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
58
BOART LONGYEAR 2022 ANNUAL REPORT
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 recognized at predecessor carrying values while
share capital, including shares, options, and warrants, are recognized 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 $3.7 million
restructuring gains recorded as other income in the Consolidated Statement of Profit or Loss and Other Comprehensive
Income.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
59
BOART LONGYEAR 2022 ANNUAL REPORT
3.
SEGMENT REPORTING
Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of
segment performance is based on the Company’s two general operating activities: Global Drilling Services and Global
Products. The Global Drilling Services segment provides a broad range of drilling services to companies in mining, energy
and other industries. The Global Products segment, which includes Veracio, manufactures and sells drilling equipment
and performance tooling to customers in the drilling services and mining industries.
Information regarding these segments is presented below. The accounting policies of the reportable segments are the
same as the Company’s accounting policies. Segment profit shown below is consistent with the income reported to the
chief operating decision maker for the purposes of resource allocation and assessment of segment performance.
Segment profit represents earnings before interest and taxes.
Segment revenue and results
Segment Revenue
Segment Profit
2022
2021
2022
2021
US$'000
US$'000
US$'000
US$'000
Global Drilling Services
723,803
614,840
87,947
60,552
Global Products revenue
Global Products third party revenue
315,084
306,559
Global Products inter-segment revenue 1
82,828
73,671
Total Global Products
397,912
380,230
16,548
54,577
Less Global Product sales to Global Drilling Services
(82,828)
(73,671)
Total third party revenue
1,038,887
921,399
Total segment profit
104,495
115,129
Unallocated costs 2
(68,850)
(41,791)
Recapitalisation costs
—
(37,661)
Global Drilling Services impairment costs
(2,225)
—
Global Products impairment costs
(151)
—
Finance costs
(20,036)
(88,828)
Interest income
57
42
Profit (loss) before taxation
13,290
(53,109)
(1)
Transactions between segments are carried out at arm's length and are eliminated on consolidation.
(2)
Unallocated costs include corporate general and administrative costs as well as other expense items such as foreign exchange
gains or losses.
Other segment information
Depreciation and amortization
of segment assets
Additions to non-current
assets
2022
2021
2022
2021
US$'000
US$'000
US$'000
US$'000
Global Drilling Services
37,937
34,995
63,642
48,248
Global Products
9,801
10,400
15,160
20,987
Total of all segments
47,738
45,395
78,802
69,235
Unallocated 1
827
3,156
3,427
1,455
Total
48,565
48,551
82,229
70,690
(1)
Unallocated additions to non-current assets relate to the acquisition of general corporate assets such as software and hardware.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
60
BOART LONGYEAR 2022 ANNUAL REPORT
3.
SEGMENT REPORTING (CONTINUED)
Geographic information
The Company’s two business segments operate in four principal geographic areas – North America, Asia Pacific, Latin
America and EMEA. The Company’s revenue from external customers and information about its segment assets by
geographical locations are detailed below:
Revenue from external
customers
Non-current assets 1
2022
2021
2022
2021
US$'000
US$'000
US$'000
US$'000
North America
490,582
417,961
221,381
207,205
Asia Pacific
200,933
216,022
54,202
53,007
Latin America
155,946
104,747
21,306
12,147
EMEA
191,426
182,669
49,097
36,895
Total
1,038,887
921,399
345,986
309,254
(1)
Non-current assets excluding deferred tax assets and post-employment assets.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
61
BOART LONGYEAR 2022 ANNUAL REPORT
4.
REVENUE
Boart Longyear operates two different business units throughout various geographical locations – Global Drilling Services
and Global Products, which includes our Veracio business.
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
mobilization, drilling, and demobilization 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 recognized 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 recognize revenue at the amount which it has the right to
invoice.
Customers are generally invoiced on a fortnightly basis and revenue is recognized 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 recognized 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 recognized 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:
2022
2021
US$'000
US$'000
Revenue from the rendering of services
723,803
614,840
Revenue from the sale of goods
315,084
306,559
1,038,887
921,399
There was one customer that contributed 13% of the Company’s revenue in 2022 and 2021.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
62
BOART LONGYEAR 2022 ANNUAL REPORT
5.
OTHER INCOME / EXPENSE
The components of other income are as follows:
2022
2021
US$'000
US$'000
Gain on disposal of property, plant and equipment
4,846
4,005
Gain on disposal of scrap
269
151
Gain on warrants revaluation
5,778
11,630
Gain on recapitalization
—
3,726
Other
1,366
1,096
Total other income
12,259
20,608
The components of other expense are as follows:
2022
2021
US$'000
US$'000
Amortization of intangible assets 1
1,019
1,609
Loss on foreign currency exchange
19,278
10,330
Impairment of property, plant and equipment 2
2,613
—
Other
1,437
1,175
Total other expenses
24,347
13,114
(1)
Total amortization of intangible assets for the year ended 31 December 2022 is $3.5 million, as presented in Note 20. In the year
ended 31 December 2022, amortization expense of $1.7 million for development assets was recorded within research and
development expenses, $0.8 million was recorded in general and administrative expenses, while $1.0 million of amortization was
recorded within other expenses. In the year ended 31 December 2021 amortization totaled $5.5 million, while $3.9 million was
recorded in research and development, and $1.6 million was recorded within other expenses.
(2)
Fixed asset impairments of $2.6 million were recorded during the year ended 31 December 2022 in other expenses and no fixed
asset impairments were recorded during the year ended 31 December 2021. See Note 18.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
63
BOART LONGYEAR 2022 ANNUAL REPORT
6.
INTEREST INCOME / FINANCE COSTS
Interest income is as follows:
2022
2021
US$'000
US$'000
Interest income:
Bank deposits
57
42
Finance costs are as follows:
2022
2021
US$'000
US$'000
Finance costs:
Interest on loans and bank overdrafts
15,590
5,747
Interest on retired bank loans
—
43,488
Debt modification 1
—
9,528
Applicable premium 2
—
23,558
Amortization of debt issuance costs
1,040
604
Interest on lease liabilities
3,406
3,015
Other
—
2,888
Total finance costs
20,036
88,828
(1)
The debt modification relates to amendments to the Company's Senior Secured Notes that were cancelled in September 2021 in
exchange for equity. See Note 2 in this annual report and Note 22 in the 2021 Annual Report.
(2)
The Company's Senior Secured Notes included a premium, payable at maturity of the notes. The Senior Secured Notes were
cancelled in September 2021 in exchange for equity. See Note 2 in this annual report and Note 22 in the 2021 Annual Report.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
64
BOART LONGYEAR 2022 ANNUAL REPORT
7.
GAIN (LOSS) FOR THE YEAR
Gain (loss) for each year includes the following:
(a) Gain and loss
Gain (loss) for each year includes the following:
2022
2021
US$'000
US$'000
Gain on disposal of property, plant and equipment
4,846
4,005
Net foreign exchange losses
(19,278)
(10,330)
Fair value adjustment on warrant liabilities
(5,777)
(11,630)
Gain on recapitalization
—
3,726
Net change in expected credit loss
(187)
(596)
(b) Employee benefits expenses
2022
2021
US$'000
US$'000
Salaries and wages
(323,434)
(303,915)
Post-employment benefits:
Defined contribution plans
(12,479)
(11,576)
Defined benefit plans
(793)
(1,444)
Long-term incentive plans:
Equity-settled share-based payments
(3,594)
—
Termination benefits
(2,486)
(2,143)
Other employee benefits 1
(79,476)
(69,495)
(1)
Other employee benefits include items such as medical benefits, workers’ compensation, other fringe benefits and state taxes.
(c) Other
2022
2021
US$'000
US$'000
Depreciation of non-current assets
(45,073)
(43,011)
Amortization of non-current assets
(3,492)
(5,540)
Rental expense
(26,679)
(23,960)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
65
BOART LONGYEAR 2022 ANNUAL REPORT
8.
REMUNERATION OF AUDITORS
2022
2021
US$'000
US$'000
Company auditor's remuneration
Audit and review of the financial report:
Audit of the parent entity
542
912
Related practices of the parent entity auditor
991
793
1,533
1,705
Non-audit services:
Tax consultation
280
349
Tax compliance
283
228
Tax audit support
647
497
1,210
1,074
Total remuneration to Company auditor
2,743
2,779
Boart Longyear Group Ltd.’s auditor is Deloitte Touche Tohmatsu. The Company has employed Deloitte Touche Tohmatsu
on assignments in addition to their audit duties where their expertise and experience with the Company are important.
These assignments principally have been related to tax advice and tax compliance services, the magnitude of which is
impacted by the global reach of the Company.
The Board and its Audit & Risk Committee are committed to ensuring the independence of the external auditor.
Accordingly, significant scrutiny is given to non-audit engagements of the external auditor. The Company has a formal pre-
approval policy which requires the pre-approval of non-audit services by the Chairman of the Audit Committee.
Additionally, the total annual fees for such non-audit services cannot exceed the auditor’s annual audit fees without the
approval of the Audit Committee. The Audit Committee believes that the combination of these two approaches results in
an effective procedure to pre-approve services performed by the external auditor.
9.
KEY MANAGEMENT PERSONNEL COMPENSATION
The aggregate compensation made to key management personnel of the Company is set out below.
2022
2021
US$'000
US$'000
Short-term employee benefits
5,150
8,405
Post-employment benefits
56
58
Other long-term benefits
408
504
Share based compensation
3,226
—
Termination benefits
—
388
Total key management personnel compensation
8,840
9,355
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
66
BOART LONGYEAR 2022 ANNUAL REPORT
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.
Although no shares or performance stock units were awarded under the LTIP during 2021 or 2022, the Remuneration
Committee approved and announced Cycle Two of the 2021 LTIP and the 2022 LTIP.
2021 LTIP
The 2021 LTIP is a two-year program that was phased in over two cycles. The details of the 2021 LTIP are outlined below:
•
Duration of 2021 LTIP: 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: February 2022
•
Performance Criteria: Achievement of Adjusted EBITDA of $98.0 million
◦
Cycle One: Achievement of 2021 Adjusted EBITDA of $98.0 million
◦
Cycle Two: Achievement of 2022 Adjusted EBITDA of $163.2 million (67% Achievement) and achievement
of 2022 Cash Return on Investment ("CRI") of 16.6% (33% Achievement) where CRI is defined as Adjusted
EBITDA divided by Gross Fixed Assets plus Net Working Capital
•
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
Cycle Two of the 2021 LTIP will be awarded using a payment curve with the following thresholds for minimum and
over achievement targets:
◦
Adjusted EBITDA:
–
Minimum Achievement of $122.4 million Adjusted EBITDA in 2022 earns a 75% payout
–
Maximum Achievement of $244.8 million Adjusted EBITDA in 2022 earns a 150% payout
◦
CRI:
–
Minimum Achievement of 12.5% CRI in 2022 earns a 75% payout
–
Maximum Achievement of 24.9% CRI in 2022 earns a 150% payout
The Company recognized the expense associated with Cycle One of the 2021 LTIP over a one-year service period from 1
January 2021 to 31 December 2021. At 31 December 2021, the Company had accrued $2.0 million for Cycle One of the
2021 LTIP using the salaries of the employees eligible for the plan and a percentage achievement of 114%. Participants of
Cycle One of the 2021 LTIP received their award in cash during the first quarter of 2022. Therefore, there is no accrual for
Cycle One of the 2021 LTIP at 31 December 2022.
Adjusted EBITDA and CRI for the year ended 31 December 2022 was $124.2 and 14.0%, respectively, resulting in an
under-achievement for Cycle Two of the 2021 LTIP Plan. As a result, the Company recognized an expense for Cycle Two
of the 2021 LTIP plan of $1.4 million calculated using the salaries of the employees eligible for the plan and a percentage
achievement of 79%. Cycle Two of the 2021 LTIP Plan is scheduled to be paid to eligible employees in 2023 and has
been accrued as an employee benefit at 31 December 2022.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
67
BOART LONGYEAR 2022 ANNUAL REPORT
10. EMPLOYEE LONG TERM INCENTIVE PAYMENTS (CONTINUED)
2022 LTIP
The 2022 LTIP has a duration of two years. The details of the 2022 LTIP are outlined below:
•
Duration of 2022 LTIP: 1 January 2022- 31 December 2023.
•
Target Bonus: 35% of Base Pay
•
Date of Performance Criteria Being Set: February 2022
•
Performance Criteria: Achievement of Adjusted EBITDA in 2023 of $232.9 million (50% Achievement), Achievement
of CRI in 2023 of 21.7% (25% Achievement), and time vesting (25% Achievement)
•
Payment Type: Cash or shares at the discretion of the Remuneration Committee
•
Payment Curve: The 2022 LTIP will be awarded using a payment curve with the following thresholds for minimum
and over-achievement targets::
◦
Adjusted EBITDA:
–
Minimum Achievement of $174.4 million Adjusted EBITDA in 2023 earns a 75% payout
–
Maximum Achievement of $349.9 million Adjusted EBITDA in 2023 earns a 150% payout
◦
CRI:
–
Minimum Achievement of 17.4% CRI in 2023 earns a 75% payout
–
Maximum Achievement of 32.6% CRI in 2023 earns a 150% payout
The expense for the 2022 LTIP is being recognized over the two-year service period from 1 January 2022 to 31 December
2023 using a "most likely amount" approach based on the Company's best estimate of Adjusted EBTIDA and Cash Return
on Investment at 31 December 2023.
As of 31 December 2022, the Company has only recognized an expense associated with the time vesting component of
the 2022 LTIP of $0.4 million calculated using the salaries of the employees eligible for the plan and a 12% forfeiture rate
as current forecast projections don't have the Company meeting the minimum achievement targets for the 2022 LTIP. The
2022 LTIP is scheduled to be distributed to eligible employees in March 2024 and has been accrued as a long-term
employee benefit at 31 December 2022.
Stock Awards: In 2022, shareholders approved the 2022 Management Incentive Plan ("2022 MIP") which allows the
Company to grant stock options and restricted stock awards to present and future officers, directors, employees,
consultants, and advisors. The 2022 MIP is intended to promote the long-term growth and profitability of the Company by
providing those individuals who are or will be involved in the growth of the Company with an opportunity to acquire an
ownership interest in the Company, thereby encouraging such individuals to contribute to and participate in the success of
the Company.
In September 2022, the Company granted options to certain employees pursuant to the 2022 MIP. These awards are
subject to both service and market vesting conditions and are only exercisable to the extent that they are fully vested. All
option awards are divided into three tranches and each tranche vests over a three-year period following the grant date.
Vesting of each tranche is dependent on the following market conditions:
Tranche one options vest on the first date the Company's 50-day volume-weighted average price ("VWAP") equals or
exceeds $2.88 per share.
Tranche two options vest on the first date the Company's 50-day VWAP equals or exceeds $4.32 per share.
Tranche three options vest on the first date the Company's 50-day VWAP equals or exceeds $5.76 per share.
Both the time vesting and market vesting conditions must be met for a tranche to vest. Any options that haven't fully
vested on the fifth anniversary of the grant date will expire. All vested option awards will expire on the tenth anniversary of
the grant date.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
68
BOART LONGYEAR 2022 ANNUAL REPORT
10. EMPLOYEE LONG TERM INCENTIVE PAYMENTS (CONTINUED)
These 2022 MIP options were valued using a Monte Carlo simulation model. A summary of 2022 MIP activity for the year
ended 31 December 2022 is provided below:
Shares
Subject to
Options
Outstanding
Weighted
Average
Grant Date
Fair Value
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Balance at 31 December 2021
—
Granted
10,178,860 $
0.81 $
1.92
Balance at 31 December 2022
10,178,860
Exercisable options at 31 December 2022
—
—
—
Vested and expected to vest at 31 December 2022
10,178,860
$
1.92
9.7
These options had no intrinsic value at 31 December 2022. Further, no option awards vested or were exercised for the
year ended 31 December 2022.
Total share based compensation expense for the year ended 31 December 2022 was $3.6 million and was recognized in
general and administrative expenses in the accompanying Consolidated Statement of Profit or Loss and Other
Comprehensive Income.
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 recognized 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 recognized 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 recognized on
the Statement of Financial Position. In such circumstances, some or all of the carrying amount of recognized 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 recognized in the Statement of Profit or
Loss and Other Comprehensive Income except to the extent that amounts relate to items recognized directly in equity in
which case the income tax expense (benefit) is also recognized in equity.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
69
BOART LONGYEAR 2022 ANNUAL REPORT
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 recognized in profit or loss.
Deferred tax is not recognized 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 recognized 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 realized.
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 and liabilities arising from temporary differences of the members of each
tax-consolidated group are recognized 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 recognized 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 recognized 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
70
BOART LONGYEAR 2022 ANNUAL REPORT
11. INCOME TAXES (CONTINUED)
(a) Income tax expense is comprised of:
2022
2021
US$'000
US$'000
Income tax expense:
Current tax expense
2,497
2,626
Adjustments recognized in the current year in relation to the current tax of prior years
(214)
(3,430)
Deferred tax expense
(848)
5,084
1,435
4,280
(b) Reconciliation of the prima facie income tax expense on pre-tax accounting profit to the income tax expense
in the financial statements:
Profit (loss) before taxation
13,290
(53,109)
Income tax expense (benefit) calculated at Canada rate of 26.5% (prior year 30.0%)
3,522
(14,074)
Impact of non-Canada tax rates
(1,457)
(1,617)
Net non-deductible/non-assessable items
(334)
17,247
Non-deductible intercompany management fees
3,257
3,003
Income tax impact of intragroup transfer of assets
4,578
—
Net unrecognized tax losses and tax credits for the current year 1
9,230
13,855
Recognition of deferred tax assets arising in prior years
(14,148)
(2,276)
Income tax impact of debt restructure
—
(3,712)
Other
(2,999)
(4,716)
1,649
7,710
Over provision from prior years
(214)
(3,430)
Income tax expense per the Consolidated Statement of Profit or Loss and Other
Comprehensive Income
1,435
4,280
(1)
Due to the group being in a tax loss position in many jurisdictions during the current financial year, the Company has not recognized
a tax benefit for current period losses.
(c) Income tax recognized directly in equity during the period:
The following current and deferred amounts were charged directly through equity during the year:
2022
2021
US$'000
US$'000
Deferred tax recognized in equity:
Actuarial movements on defined benefit plans
(111)
(151)
Adjustments for restrictions on the defined benefit asset
1,683
—
Interest rate swap
(1,437)
—
Total recognized in equity
135
(151)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
71
BOART LONGYEAR 2022 ANNUAL REPORT
11. INCOME TAXES (CONTINUED)
(d) Tax assets and liabilities:
2022
2021
Tax assets:
US$'000
US$'000
Income tax receivable attributable to:
Parent entity
—
—
Other entities 1
2,466
1,736
Total tax assets
2,466
1,736
Current tax liabilities:
Income tax payable attributable to:
Parent entity
—
—
Other entities 2
2,420
1,506
Total current tax liabilities
2,420
1,506
(1)
The income tax receivable for 2022 is $2.4 million (2021: $1.7 million) of which $1.1 million is classified as current tax receivable and
$1.3 million is classified as non-current tax receivable (2021: $0.8 and $0.9 million respectively).
(2)
Prior year balances were updated to align with current year classifications.
(e) Deferred tax balances:
2022
2021
Deferred tax comprises:
US$'000
US$'000
Temporary differences
(18,962)
(19,011)
Unused tax losses and credits
8,432
8,035
Total deferred tax asset (liability)
(10,530)
(10,976)
(f)
Provision for tax contingencies:
2022
2021
US$'000
US$'000
Provision for tax contingencies 1
38,817
46,284
(1)
See Note 23.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
72
BOART LONGYEAR 2022 ANNUAL REPORT
11. INCOME TAXES (CONTINUED)
Opening
balance
Recognized
in income
Foreign
exchange
difference
Acquired/
disposed
Recognized
in equity
Closing
balance
2022
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
Deferred tax assets (liabilities)
temporary differences
Property, plant and equipment
1,102
606
(59)
—
—
1,649
Provisions
605
613
(32)
—
—
1,186
Doubtful debts
94
(52)
(5)
—
—
37
Other intangible assets
(21,131)
(740)
—
—
—
(21,871)
Accrued liabilities
261
(142)
(14)
—
—
105
Pension
(3,359)
41
180
—
1,572
(1,566)
Interest rate swap
—
—
—
—
(1,437)
(1,437)
Inventories
2,385
140
(128)
—
—
2,397
Investments in subsidiaries
—
(578)
—
—
—
(578)
Unrealized foreign exchange
112
(250)
—
—
—
(138)
Other
920
383
(49)
—
—
1,254
(19,011)
21
(107)
—
135
(18,962)
Unused tax losses and credits:
Tax losses
8,035
827
(430)
—
—
8,432
(10,976)
848
(537)
—
135
(10,530)
Presented in the statement of financial position as follows:
Deferred tax asset
11,465
Deferred tax liability
(21,995)
(10,530)
Where deferred tax assets have been recognized, it is considered probable that the Company will generate sufficient
future taxable income to utilize the assets within the relevant tax jurisdictions.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
73
BOART LONGYEAR 2022 ANNUAL REPORT
11. INCOME TAXES (CONTINUED)
Opening
balance
Recognized
in income
Foreign
exchange
difference
Acquired/
disposed
Recognized
in equity
Closing
balance
2021
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
Deferred tax assets (liabilities)
temporary differences
Property, plant and equipment
1,378
(114)
(162)
—
—
1,102
Provisions
778
(82)
(91)
—
—
605
Doubtful debts
176
(61)
(21)
—
—
94
Other intangible assets
(19,383)
(1,748)
—
—
—
(21,131)
Accrued liabilities
325
(26)
(38)
—
—
261
Pension
(2,450)
(1,045)
287
—
(151)
(3,359)
Inventories
1,826
773
(214)
—
—
2,385
Unrealized foreign exchange
(608)
720
—
—
—
112
Other
532
450
(62)
—
—
920
(17,426)
(1,133)
(301)
—
(151)
(19,011)
Unused tax losses and credits:
Tax losses
11,986
(3,951)
—
—
—
8,035
(5,440)
(5,084)
(301)
—
(151)
(10,976)
Presented in the statement of financial position as follows:
Deferred tax asset
10,139
Deferred tax liability
(21,115)
(10,976)
2022
2021
Unrecognized deferred tax assets
US$'000
US$'000
Tax benefit of unused losses 1, 4
127,771
212,615
Tax benefit of unused capital losses 2
514,007
483,879
Unused tax credits 3
3,691
7,921
Tax benefit of temporary differences
15,544
18,265
661,013
722,680
(1)
$30.2 million of the tax benefit of unused losses expire within 3-20 years and $97.5 million related to tax losses that do not expire
(2021: $50.7 million and $176.5 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 $3.7 million will expire within 1-10 years.
(4)
The estimated effect on unrecognized 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 reduction in tax losses have been reflected in the numbers disclosed above.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
74
BOART LONGYEAR 2022 ANNUAL REPORT
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 could result in a maximum remaining reassessment of C$68.3 million, with a net cash payment after prior
payments and credits, of C$48.5 million. The Company is vigorously disputing these reassessments. Due to the
uncertainty surrounding these audits, a provision for the estimated outcome has been recognized.
12. EARNINGS (LOSS) PER SHARE
2022
2021
US¢ per
share
US¢ per
share
Basic and diluted earnings (loss) per share 1
4.0
(68.7)
The earnings (loss) and weighted average number of ordinary shares used in the
calculation of basic and diluted loss per share are as follows:
2022
2021
US$'000
US$'000
Earnings (loss) used in the calculation of basic and diluted earnings (loss) per share
11,855
(57,389)
2022
2021
Shares '000
Shares '000
Weighted average number of ordinary shares for the purposes of:
Basic earnings (loss) per share 1
295,920
83,487
Diluted earnings per share 1, 2
295,920
N/A
(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.
(2)
Outstanding warrants and options have been excluded from the diluted weighted average number of ordinary shares as they are
anti-dilutive as of 31 December 2022.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
75
BOART LONGYEAR 2022 ANNUAL REPORT
13. TRADE AND OTHER RECEIVABLES
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 below aging analysis. No interest is charged on trade receivables.
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 customer and an analysis of the customer’s current financial position, adjusted for factors that are
specific to the customer, general economic conditions of the industry in which the customer operates and an assessment
of both the current as well as the forecast direction of conditions at the reporting date.
The Company reviews collectability of trade receivables on an ongoing basis and writes off a trade receivable when there
is information that the customer is in severe financial difficulty and there is no realistic prospect of recovery.
2022
2021
US$'000
US$'000
Trade receivables
127,289
121,844
Loss allowance
(604)
(822)
Goods and services tax receivable
11,188
15,540
Other receivables
1,784
1,338
139,657
137,900
The aging of trade receivables is detailed below:
2022
2021
US$'000
US$'000
Current
120,161
112,796
Past due 0 - 30 days
4,035
5,384
Past due 31 - 60 days
1,043
2,347
Past due 61 - 90 days
841
368
Past due 90 days
1,209
949
127,289
121,844
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.
__________________________________________________________________________________________
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
76
BOART LONGYEAR 2022 ANNUAL REPORT
14. INVENTORIES
Inventories are measured at the lower of cost or net realizable 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 realizable 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 realizable value.
2022
2021
US$'000
US$'000
Raw materials
33,726
31,056
Work in progress
9,630
6,308
Finished products
182,658
170,598
226,014
207,962
The allowance for excess or obsolete inventory was $16.4 million and $20.4 million as at 31 December 2022 and 2021,
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
maximizing the return to stakeholders through the optimization 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 recognized, 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.
The carrying amount reflected above represents the Company’s maximum exposure to credit risk for trade and other
receivables.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
77
BOART LONGYEAR 2022 ANNUAL REPORT
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 analyze 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 utilize any derivative instruments to reduce the risk of exposure from exchange rate
fluctuations during the years ended 31 December 2022 or 2021.
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
2022
2021
2022
2021
US$'000
US$'000
US$'000
US$'000
Australian Dollar
157,588
145,786
87,565
87,602
Canadian Dollar
1,862
1,104
7,954
7,971
Euro
5,214
2,924
15,655
11,216
US Dollar
460,808
458,596
164,682
179,350
Foreign currency sensitivity
The Company is mainly exposed to exchange rate fluctuations in the Australian Dollar (AUD), Canadian Dollar (CAD),
Euro (EUR) and United States Dollar (USD). The Company is also exposed to translation differences as the Company’s
presentation currency is different from the functional currencies of various subsidiaries. However, this represents a
translation risk rather than a financial risk and consequently is not included in the following sensitivity analysis.
The following tables reflect the Company’s sensitivity to a 10% change in the exchange rate of each of the currencies
listed above. This sensitivity analysis includes only outstanding monetary items denominated in currencies other than the
respective subsidiaries’ functional currencies and remeasures these at the respective year end to reflect a 10% decrease
in the indicated currency against the respective subsidiaries’ functional currencies. A positive number indicates an
increase in net profit and/or net assets.
10% decrease in AUD
10% decrease in CAD
2022
2021
2022
2021
US$'000
US$'000
US$'000
US$'000
Net profit
(2,515)
(1,165)
548
613
Net assets
(6,366)
(5,294)
548
613
10% decrease in EUR
10% decrease in USD
2022
2021
2022
2021
US$'000
US$'000
US$'000
US$'000
Net profit
1,271
933
7,302
7,500
Net assets
1,271
933
(26,921)
(25,386)
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
78
BOART LONGYEAR 2022 ANNUAL REPORT
15. FINANCIAL RISK MANAGEMENT (CONTINUED)
Forward foreign exchange contracts
There were no open forward foreign currency contracts as at 31 December 2022 or 2021.
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 2022 or 2021.
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.
Weighted
Average
Effective
Interest
Rate %
Less than
1 month
1 to 3
months
3 months
to 1 year
1 to 5
years
Beyond 5
years
Total
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
31 December 2022
Non-interest bearing payables
—
108,827
71,979
—
—
—
180,806
Variable interest rate instruments
10.4%
1,406
2,812
12,656
203,605
—
220,479
Fixed interest rate instruments
10.4%
12
24
1,523
237
—
1,796
Leases
8.3%
23
93
12,503
26,478
2,473
41,570
Equipment financing
5.9%
359
421
1,973
3,673
—
6,426
110,627
75,329
28,655
233,993
2,473
451,077
31 December 2021
Non-interest bearing payables
—
92,518
45,478
—
—
—
137,996
Variable interest rate instruments
7.2%
928
1,855
8,348
194,279
—
205,410
Fixed interest rate instruments
39.9%
7
14
61
155
—
237
Leases
7.5%
174
114
9,501
23,732
2,602
36,123
Equipment financing
9.5%
76
230
642
1,603
—
2,551
93,703
47,691
18,552
219,769
2,602
382,317
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
79
BOART LONGYEAR 2022 ANNUAL REPORT
15. FINANCIAL RISK MANAGEMENT (CONTINUED)
Liquidity risk (continued)
The following tables reflect the expected maturities of non-derivative financial assets. These are based on the
undiscounted expected cash flows of the financial assets.
Less than 1
month
1 to 3 months
3 months to
1 year
Total
US$'000
US$'000
US$'000
US$'000
2022
Non-interest bearing receivables
82,509
44,831
12,317
139,657
Cash
34,822
—
—
34,822
117,331
44,831
12,317
174,479
2021
Non-interest bearing receivables
79,862
41,529
16,509
137,900
Cash
25,579
—
—
25,579
105,441
41,529
16,509
163,479
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 $0.3 million as held for sale as at 31 December 2022 (31 December 2021: $0.2 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 rationalize its assets and eliminate ongoing costs associated with maintaining
these assets.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
80
BOART LONGYEAR 2022 ANNUAL REPORT
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 Veracio CGU, the Company performed a goodwill impairment
test as at 31 December 2022.. The recoverable amount of the North America Drilling Services CGU exceeded its carrying
amount by over 100%, resulting in no impairment to the North America Drilling Services CGU for the year ended
31 December 2022. The recoverable amount for the Veracio CGU exceeded the carrying amount by over 100% resulting
in no impairment to the Veracio CGU for the year ended 31 December 2022. Consequently, no goodwill impairments were
recorded for the year ended 31 December 2022.
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 2022 and 19.5% for the Veracio CGU. The higher discount rate used for Veracio 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 3.5% used for
the North America Drilling Services and Veracio CGUs, respectively, does not exceed the long-term average growth rate
for the industry.
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 utilization 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. The
recoverable amount of the North America Drilling Services CGU and Veracio CGU exceeds its carrying value under all
change scenarios.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
81
BOART LONGYEAR 2022 ANNUAL REPORT
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 labor
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 capitalized 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 capitalized assets are capitalized 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 recognized in profit or loss as incurred.
Depreciation is recognized 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
20 - 40 years
Plant and machinery
5 - 10 years
Drilling rigs
5 - 12 years
Other drilling equipment
1 - 5 years
Office equipment
5 - 10 years
Computer equipment:
Hardware
3 - 5 years
Software
1 - 7 years
Depreciation methods, useful lives and residual values are reassessed at each reporting date.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
82
BOART LONGYEAR 2022 ANNUAL REPORT
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 2021
47,421
651,798
51,870
15,843
766,932
Additions
—
4,382
11,744
48,077
64,203
Disposal
(3,092)
(80,263)
(1,634)
—
(84,989)
Asset classification transfer
1,198
646
(2,029)
185
—
Transfer from construction in progress
1,013
40,893
—
(41,906)
—
Transfer from intangible assets
—
—
—
30
30
Currency movements
(532)
(29,870)
(1,083)
4,381
(27,104)
Balance at 31 December 2021
46,008
587,586
58,868
26,610
719,072
Additions
—
1,602
20,690
52,790
75,082
Disposal
(7,034)
(41,762)
(2,344)
—
(51,140)
Asset classification transfer
8
919
(927)
—
—
Transfer from construction in progress
756
56,368
—
(57,124)
—
Transfer to intangible assets
—
—
—
(69)
(69)
Currency movements
(2,052)
(30,063)
(2,246)
3,621
(30,740)
Balance at 31 December 2022
37,686
574,650
74,041
25,828
712,205
Accumulated depreciation and impairment:
Balance at 1 January 2021
(29,107)
(565,872)
(19,980)
—
(614,959)
Depreciation
(1,538)
(31,682)
(9,791)
—
(43,011)
Disposal
2,883
78,970
1,633
—
83,486
Asset classification transfer
(1,053)
(500)
1,553
—
—
Currency movements
258
23,266
523
—
24,047
Balance at 31 December 2021
(28,557)
(495,818)
(26,062)
—
(550,437)
Depreciation
(1,518)
(31,866)
(11,689)
—
(45,073)
Impairment
(1,152)
(1,461)
—
—
(2,613)
Disposal
7,021
40,781
2,345
—
50,147
Asset classification transfer
(2)
(730)
732
—
—
Currency movements
1,216
21,524
890
—
23,630
Balance at 31 December 2022
(22,992)
(467,570)
(33,784)
—
(524,346)
Net book value at 31 December 2021
17,451
91,768
32,806
26,610
168,635
Net book value at 31 December 2022
14,694
107,080
40,257
25,828
187,859
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 recorded
an impairment loss at 31 December 2022 of $2.6 million on property, plant, and equipment. The Company determined that
there were no impairments as at 31 December 2021.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
83
BOART LONGYEAR 2022 ANNUAL REPORT
19. GOODWILL
Goodwill resulting from business combinations is recognized 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 amortized 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 recognized 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 utilization 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 capitalization. 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.
US$'000
Gross carrying amount:
Balance at 1 January 2021
105,115
Currency movements
(199)
Balance at 31 December 2021
104,916
Balance at 1 January 2022
104,916
Currency movements
(1,158)
Balance at 31 December 2022
103,758
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
84
BOART LONGYEAR 2022 ANNUAL REPORT
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 allocated to cash-generating units that are significant individually or in aggregate is as follows:
Goodwill by cash-generating units
2022
2021
US$'000
US$'000
North America Drilling Services
99,982
100,869
Veracio
3,776
4,047
Total Goodwill
103,758
104,916
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 recognized by the Company that are considered to have indefinite useful lives are not
amortized. 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 recognized 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 amortization and accumulated
impairment losses.
Contractual customer relationships are amortized over their expected useful lives on a straight-line basis. Amortization
methods and useful lives are reassessed at each reporting date.
Patents
Patents are measured at cost less accumulated amortization and accumulated impairment losses. Amortization is charged
on a straight-line basis over estimated useful lives of 2 to 20 years. Amortization 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 recognized 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 capitalized 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. Capitalized costs include the cost of materials,
direct labor and overhead costs directly attributable to preparing the asset for its intended use. Other development costs
are expensed when incurred.
Capitalized development costs are measured at cost less accumulated amortization and accumulated impairment losses.
Amortization is recognized on a straight-line basis over the estimated useful lives, which on average is 15 years.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
85
BOART LONGYEAR 2022 ANNUAL REPORT
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 2021
1,947
10,563
42,368
89,237
52,852 196,967
Additions
—
1,380
—
(236)
5,343
6,487
Disposals
—
(5,300)
(21,346)
(177)
(23,180)
(50,003)
Transfer from (to) PP&E
—
—
—
—
(30)
(30)
Currency movements
—
(12)
361
2
(728)
(377)
Balance at 31 December 2021
1,947
6,631
21,383
88,826
34,257 153,044
Balance at 1 January 2022
1,947
6,631
21,383
88,826
34,257 153,044
Additions
—
596
—
2,436
4,115
7,147
Disposals
—
(61)
—
—
—
(61)
Transfer from (to) PP&E
—
—
—
—
69
69
Currency movements
—
(60)
(343)
(7)
(830)
(1,240)
Balance at 31 December 2022
1,947
7,106
21,040
91,255
37,611 158,959
Accumulated amortization and
impairment:
Balance at 1 January 2021
—
(6,689)
(39,666)
(88,706)
(30,340) (165,401)
Amortization for the period
—
(578)
(1,019)
(12)
(3,931)
(5,540)
Disposals
—
5,300
21,346
177
23,180
50,003
Transfer (from) to PP&E
—
(331)
—
—
—
(331)
Impairment for the period
—
(165)
—
—
(259)
(424)
Currency movements
—
(5)
(361)
(2)
(24)
(392)
Balance at 31 December 2021
—
(2,468)
(19,700)
(88,543)
(11,374) (122,085)
Balance at 1 January 2022
—
(2,468)
(19,700)
(88,543)
(11,374) (122,085)
Amortization for the period
—
(546)
(1,017)
(246)
(1,683)
(3,492)
Disposals
—
61
—
—
—
61
Impairment for the period
—
(131)
—
—
(123)
(254)
Currency movements
—
24
343
7
270
644
Balance at 31 December 2022
—
(3,060)
(20,374)
(88,782)
(12,910) (125,126)
Net book value at 31 December 2021
1,947
4,163
1,683
283
22,883
30,959
Net book value at 31 December 2022
1,947
4,046
666
2,473
24,701
33,833
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 2022 and 31 December 2021 on trademarks, patents and development assets of $0.3 million and
$0.4 million, respectively.
The Company recognized $11.2 million of research and development expenses in the consolidated statement of profit or
loss and other comprehensive income for the year ended 31 December 2022 (2021: $10.9 million).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
86
BOART LONGYEAR 2022 ANNUAL REPORT
21. TRADE AND OTHER PAYABLES
Trade payables and other payables are carried at amortized cost. They represent unsecured liabilities for goods and
services provided to the Company prior to the end of the financial period that are unpaid and arise when the Company
becomes obligated to make future payments.
2022
2021
US$'000
US$'000
Current
Trade payables
111,825
86,393
Accrued payroll and benefits
26,212
32,694
Goods and services tax payable
10,634
5,166
Accrued interest
1,202
239
Accrued legal and environmental
3,578
1,538
Professional fees
5,900
3,747
Accrued drilling costs
5,618
3,210
Other sundry payables and accruals
12,516
5,009
177,485
137,996
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 recognized 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 recognized 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 recognized 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
87
BOART LONGYEAR 2022 ANNUAL REPORT
22. LOANS AND BORROWINGS
All loans and borrowings are initially recognized at the fair value of the consideration received less directly attributable
transaction costs. Debt issuance costs are amortized using the effective interest rate method over the life of the
borrowing. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer
settlement of the liability for at least 12 months after the balance sheet date.
2022
2021
US$'000
US$'000
Unsecured - at amortized cost
Current
Bank loans
3,221
—
Secured - at amortized cost
Current
Bank Loans
1,488
81
Lease liabilities
12,725
9,722
Equipment finance
2,753
949
Non-current
Term loans
114,740
115,000
Bank loans
177
156
Revolver bank loans
47,125
40,001
Debt issuance costs
(1,825)
(1,156)
Original issue discount
(2,735)
(3,310)
Lease liabilities
29,171
26,401
Equipment finance
3,673
1,602
210,513
189,446
Disclosed in the financial statements as:
Current borrowings
20,187
10,752
Non-current borrowings
190,326
178,694
210,513
189,446
A summary of the maturity of the Company's borrowings is as follows:
Less than 1 year
20,187
10,752
Between 1 and 2 years
12,337
9,190
Between 2 and 3 years
56,176
7,193
Between 3 and 4 years
6,303
44,361
More than 4 years
120,070
122,416
215,073
193,912
Original issue discount
(2,735)
(3,310)
Debt issuance costs
(1,825)
(1,156)
210,513
189,446
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
88
BOART LONGYEAR 2022 ANNUAL REPORT
22. LOANS AND BORROWINGS (CONTINUED)
The following table provides a reconciliation of debt cash flows from financing activities to borrowings:
2022
2021
US$'000
US$'000
Proceeds from borrowings
142,932
263,311
Capital lease additions
22,426
13,389
Total debt drawn
165,358
276,700
Repayment of borrowings
(144,284)
(207,837)
Debt exchanged for equity at book value
—
(628,034)
Debt exchanged for equity at fair value
—
(170,692)
Debt exchanged for warrants
—
(31,008)
Total debt payments
(144,284)
(1,037,571)
Revolver Bank Loans
The Company has an asset-based revolver bank loan with an available facility of $90.0 million as of 31 December 2022
and 2021, respectively. Of this revolving bank loan $47.1 million was drawn as at 31 December 2022 ($40.0 million at
31 December 2021).
2022
2021
ABL
US$ Millions
US$ Millions
Available facility
90.0
90.0
Drawn
47.1
40.0
Letters of credit
6.0
8.2
Borrowing base adjustment
25.1
15.0
Minimum liquidity
6.5
5.6
Undrawn
5.3
21.2
90.0
90.0
As at 31 December 2022, $6.0 million (31 December 2021: $8.2 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 SOFR plus
2.75%).
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 2022, the
borrowing base was $65.0 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” ($6.5 million at 31 December
2022). 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.
At 31 December 2021, the facility had a temporary borrowing base of $90.0 million. In June 2022, this facility was
amended to permanently increase the available facility from $75.0 million to $90.0 million. This amendment also extended
the temporarily reduced “Springing Dominion” from 12.5% (which has been effective from 1 October 2021) to 7.5% of the
“borrowing base” through 30 September 2022. It then increased to 10% through 31 December 2022, and reverts back to
12.5% thereafter. The amendment also converted the interest rate pricing on future borrowings from LIBOR to SOFR.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
89
BOART LONGYEAR 2022 ANNUAL REPORT
22. LOANS AND BORROWINGS (CONTINUED)
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 2022, 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 SOFR, 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, 2022, of 12.3% and an effective interest rate of 13.9%. 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 2022, the amount outstanding under this facility was $114.7 million.
In June 2022, this facility was amended to convert the interest rate pricing on future borrowing from LIBOR to SOFR. The
amendment also implemented a Leverage Ratio covenant of 4.00 to 1.00. The numerator of the test is the sum of
outstanding advances under the ABL, capital leases and term loan outstanding minus up to $20.0 million in unrestricted
cash.
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 2022, the Company was in
compliance with all of its debt covenants.
The Company’s Exit Term Loan and ABL require that guarantor 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
Target Range
2022
2021
% of Consolidated EBITDA
Equal or more than 60%
97.6%
178.6%
% of Consolidated Tangible Assets
Equal or more than 60%
63.9%
67.9%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
90
BOART LONGYEAR 2022 ANNUAL REPORT
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
ABL
Boart Longyear
Management Pty
Limited
Australia: Boart Longyear Australia Pty Limited, Boart Longyear Pty 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, Boart Longyear Alberta Limited, Boart Longyear Incorporated, Boart Longyear I LP, Boart
Longyear Ventures Inc. and Boart Longyear Group Ltd
Chile: Boart Longyear Chile Limitada
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., BLY US
Holdings Inc., Longyear TM, Inc., Longyear Global Holdings, Inc. and Veracio Ltd.
Exit Term
Loan
BLY US Holdings
Inc.
Australia: Boart Longyear Australia Pty Limited, Boart Longyear Pty 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., Boart Longyear Incorporated, Boart
Longyear Alberta Limited and Boart Longyear Group Ltd.
Chile: Boart Longyear Chile Limitada
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.,
Longyear TM, Inc., Longyear Global Holdings, Inc. and Veracio Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
91
BOART LONGYEAR 2022 ANNUAL REPORT
23. PROVISIONS
A provision is recognized 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 recognized 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 subsidized goods and services,
are expensed based on the net marginal cost to the Company as the benefits are provided to the employees.
Provisions are recognized 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 recognized 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.
The following table reflects the provision balances:
2022
2021
US$'000
US$'000
Current
Employee benefits
13,369
13,165
Restructuring and termination costs 1
1,333
1,320
Warranty 2
591
514
Provision for tax contingencies
4,041
6,601
19,334
21,600
Non-current
Employee benefits
1,067
653
Provision for legal contingencies
10,517
5,196
Pension and post-retirement benefits 3
1,986
—
Provision for other tax
251
—
Provision for tax contingencies
34,776
39,683
48,597
45,532
67,931
67,132
(1)
The provision for restructuring and termination costs represent the present value of management’s best estimate of the costs directly
and necessarily caused by the restructuring that are not associated with the ongoing activities of the entity, including termination
benefits.
(2)
The provision for warranty claims represents the present value of management’s best estimate of the future outflow of economic
benefits that will be required under the Company’s warranty program.
(3)
Full actuarial valuations of the defined benefit pension and post-retirement benefit plans are performed annually by qualified
independent actuaries for the Company’s 31 December year end closing. The zero pension provision amount as at 31 December
2021 is the result of the net pension asset. See Note 24.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
92
BOART LONGYEAR 2022 ANNUAL REPORT
23. PROVISIONS (CONTINUED)
The following table reflects the provision rollforwards:
Warranty
Restructuring
and
termination
Tax
Employee
benefits
Legal
US$'000
US$'000
US$'000
US$'000
US$'000
Balance at 1 January 2021
592
3,116
57,254
10,692
5,333
Change in provisions
449
51
(8,224)
6,183
(137)
Reductions arising from payments
(541)
—
(1,603)
(3,000)
—
Reductions resulting from remeasurement
—
(1,589)
—
—
—
Amounts reclassified from tax receivables
—
—
(2,209)
—
—
Amounts reclassified from accrued liabilities
—
—
1,343
—
—
Foreign exchange
14
(258)
(277)
(58)
—
Balance at 31 December 2021
514
1,320
46,284
13,817
5,196
Balance at 1 January 2022
514
1,320
46,284
13,817
5,196
Change in provisions
721
704
(2,877)
7,603
5,321
Reductions arising from payments
—
(629)
(479)
(4,409)
—
Reductions resulting from remeasurement
(679)
(438)
—
—
—
Amounts reclassified from tax receivables
—
—
(596)
—
—
Amounts reclassified from accrued liabilities
—
—
(941)
—
—
Foreign exchange
35
376
(2,574)
(2,575)
—
Balance at 31 December 2022
591
1,333
38,817
14,436
10,517
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 recognized 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
2022 and 2021, there were no significant outstanding or prepaid contributions. Company contributions to these plans were
$12.5 million and $11.6 million for the years ended 31 December 2022 and 2021, 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
93
BOART LONGYEAR 2022 ANNUAL REPORT
24. PENSION AND POST-RETIREMENT BENEFITS (CONTINUED)
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 8.8 years for 2022 and 10.9 years for 2021, and in Europe was 8.9 years
for 2022 and 15.0 years for 2021. 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 recognized
directly in equity.
Full actuarial valuations of the defined benefit pension plans were performed as at various dates and updated to
31 December 2022 by qualified independent actuaries. The estimated market value of the assets of the funded pension
plans was $71.4 million and $93.0 million as at 31 December 2022, and 2021, 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% of the benefits that had accrued to participants after allowing for expected increases in future earnings and
pensions in 2022 and 2021 . 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
94
BOART LONGYEAR 2022 ANNUAL REPORT
24. PENSION AND POST-RETIREMENT BENEFITS (CONTINUED)
Company contributions to these plans were $0.9 million and $2.7 million during the years ended 31 December 2022 and
2021, respectively. Contributions in 2023 are expected to be $0.5 million.
The principal assumptions used to determine the actuarial present value of benefit obligations and pension costs are
detailed below (shown in weighted averages):
2022
2021
North
America
Europe
North
America
Europe
Discount rates
5.5%
3.8%
4.6%
1.0%
Expected Average Rate Increases:
Salaries
3.5%
3.0%
3.5%
3.0%
Pensions in payment
—
2.0%
—
1.5%
Healthcare costs (initial)
5.0%
—
5.0%
—
Healthcare costs (ultimate)
5.0%
—
5.0%
—
Amounts recognized in profit or loss in respect of these defined benefit plans are as follows:
2022
2021
Pension
plan
Post-
retirement
medical
plan
Total
Pension
plan
Post-
retirement
medical
plan
Total
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
Current service cost
760
—
760
957
—
957
Net interest expense
23
10
33
207
11
218
Loss on settlement
—
—
—
269
—
269
Total charge to profit and loss account
783
10
793
1,433
11
1,444
For the financial years ended 31 December 2022 and 2021, charges of approximately $0.7 million and $1.1 million,
respectively, have been included in cost of goods sold and the remainder in general and administrative or sales and
marketing expenses.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
95
BOART LONGYEAR 2022 ANNUAL REPORT
24. PENSION AND POST-RETIREMENT BENEFITS (CONTINUED)
Changes in the present value of the defined benefit obligations were as follows:
2022
2021
Pension
plan
Post-
retirement
medical
plan
Total
Pension
plan
Post-
retirement
medical
plan
Total
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
Opening defined benefit obligation
91,622
243
91,865
179,371
303
179,674
Current service cost
760
—
760
957
—
957
Interest cost
2,426
10
2,436
4,110
11
4,121
Actuarial losses arising
from demographic assumptions
982
—
982
1,389
—
1,389
Actuarial gains arising
from financial assumptions
(20,875)
—
(20,875)
(6,805)
(9)
(6,814)
Liabilities extinguished on
settlements
—
—
—
(76,195)
—
(76,195)
Exchange differences on
foreign plans
(1,826)
(18)
(1,844)
517
2
519
Benefits paid
(6,580)
(74)
(6,654)
(11,722)
(64)
(11,786)
Closing defined benefit obligation
66,509
161
66,670
91,622
243
91,865
Changes in the fair value of the plan assets were as follows:
2022
2021
Pension
plan
Post-
retirement
medical
plan
Total
Pension
plan
Post-
retirement
medical
plan
Total
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
Opening fair value plan of assets
92,982
—
92,982
173,343
—
173,343
Expected return on plan assets
2,565
—
2,565
4,069
—
4,069
Actuarial gains (losses) arising from
financial assumptions
(14,930)
—
(14,930)
1,551
—
1,551
Administrative expenses paid from
the trust
(1,311)
—
(1,311)
(1,431)
—
(1,431)
Exchange differences on
foreign plans
(2,239)
—
(2,239)
892
—
892
Contributions from the employer
894
74
968
2,744
64
2,808
Distribution of assets from
settled plan
—
—
—
(76,464)
—
(76,464)
Benefits paid
(6,580)
(74)
(6,654)
(11,722)
(64)
(11,786)
Closing fair value of plan assets
71,342
—
71,342
92,982
—
92,982
Net defined benefit plan assets
before asset ceiling
4,833
161
4,994
1,360
243
1,603
Assets not recognized due to asset
ceiling
(6,658)
—
(6,658)
—
—
—
Net defined benefit plan assets
(obligation) net of asset ceiling
(1,825)
161
(1,664)
1,360
243
1,603
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
96
BOART LONGYEAR 2022 ANNUAL REPORT
24. PENSION AND POST-RETIREMENT BENEFITS (CONTINUED)
Assumed healthcare cost trend rates impact the amounts recognized in profit or loss. A one percentage point change in
assumed healthcare cost trend rates would have the following effects:
2022
2021
US$'000
US$'000
One percentage point increase
Effect on the aggregate of the service cost and interest cost
—
—
Effect on accumulated post-employment benefit obligation
1
2
One percentage point decrease
Effect on the aggregate of the service cost and interest cost
—
—
Effect on accumulated post-employment benefit obligation
(1)
(2)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
97
BOART LONGYEAR 2022 ANNUAL REPORT
25. ISSUED CAPITAL
2022
2021
Shares '000
US$'000
Shares '000
US$'000
Ordinary shares
Share capital
Ordinary shares, fully paid
295,920
668,364
295,920
668,364
Movements in ordinary shares
Balance at beginning of year
295,920
668,364
88,511
1,463,802
Share consolidation 1
—
—
(84,084)
—
Shares issued
—
—
291,492
796,604
Re-domiciliation reserve adjustment
—
—
—
(1,592,037)
Shares reduced due to selective buy-back
—
—
(3)
(5)
Shares issued due to warrants exercised
—
—
4
—
Balance at end of the year
295,920
668,364
295,920
668,364
Total shares outstanding
295,920
668,364
295,920
668,364
Balance at end of the year
295,920
668,364
295,920
668,364
2022
2021
Warrants '000
US$'000
Warrants '000
US$'000
Issued Warrants
Warrants issued but not exercised
32,882
5,591
2,440
5,591
Share consolidation 1
—
—
(2,315)
—
Warrant liabilities issued
—
—
32,782
—
Warrants exercised
—
—
(25)
—
Balance at end of the year
32,882
5,591
32,882
5,591
Total ordinary shares and warrants
673,955
673,955
(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 2022 and 2021 using an
underlying share price equal to the close price of the Company's share on the date of re-measurement of A$1.89 (A$2.47
at 31 December 2021), expected volatility of 65.41% (56.21% at 31 December 2021), no expected dividends, an expected
term of 2.73 years (2.73 at 31 December 2021), and a risk-free rate of 3.51% (1.34% at 31 December 2021). This resulted
in a decrease in the warrant liability of $5.8 million ($13.7 million at 31 December 2021) and a corresponding gain
recognized in other income in the Consolidated Statement of Profit or Loss. At 31 December 2022 and 2021, the liability-
classified warrants had a fair value of $13.6 million and $19.4 million, respectively, and are classified within other financial
liabilities in the Consolidated Statement of Financial Position.
Options
As at 31 December 2022, 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.
During 2022, the Company granted 10,178,860 options under the provisions of the 2022 MIP. The option awards were
granted on 7 September 2022 with an exercise price of $1.92 (see Note 10).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
98
BOART LONGYEAR 2022 ANNUAL REPORT
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 recognized 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 recognized 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 recognized 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 recognized as a financial asset whereas a derivative with a negative fair value is recognized 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 2022 or
2021.
Cash Flow Hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognized in equity. The gain or loss relating to the ineffective portion is recognized 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
recognized 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 1-month term SOFR rate on the Exit Term Loan. This interest rate swap became
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.
At 31 December 2022, the interest rate swap had a fair value of $5.8 million classified within other financial assets in the
Consolidated Statement of Financial Position. The hedge was not fully effective through 31 December 2022 which
resulted in a gain of $0.1 million on the ineffective portion which was recognized in other income in the Statement of Profit
or Loss. A gain of $7.3 million (31 December 2021: $1.5 million loss) on the effective portion was recognized in the cash
flow hedge reserve in equity.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
99
BOART LONGYEAR 2022 ANNUAL REPORT
26. FINANCIAL INSTRUMENTS (CONTINUED)
Fair Value
The following table combines information about:
•
Classes of financial instruments based on their nature and characteristics
•
The carrying amounts of financial instruments
•
Fair values of financial instruments (except financial instruments when carrying amount approximates their fair
value)
•
Fair value hierarchy levels of financial liabilities for which fair value was disclosed
Fair value hierarchy levels 1 to 3 are based on the degree to which the fair value is observable:
•
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical
assets or liabilities;
•
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
and
•
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data (unobservable inputs).
Level 1
Level 2
Level 3
Balance at 31 December 2022
US$'000
US$'000
US$'000
Warrant liabilities
—
(13,575)
—
Derivative financial assets
—
5,846
—
Total other financial liabilities
—
(7,729)
—
Level 1
Level 2
Level 3
Balance at 31 December 2021
US$'000
US$'000
US$'000
Warrant liabilities
—
(19,352)
—
Derivative financial liabilities
—
(1,548)
—
Total other financial liabilities
—
(20,900)
—
•
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance
of the contractual arrangements.
•
The fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid
markets are determined with reference to quoted market prices.
•
The fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined in
accordance with generally accepted pricing models based on discounted cash flow analyses using prices from
observable current market transactions.
Cash and cash equivalents, trade and other receivables, and trade and other payables are carried at amortized cost which
materially approximates the fair value.
Interest Rate Benchmark Reform
The Company was exposed to USD LIBOR interest rate benchmarks within its asset-based revolver loan, Exit Term Loan,
and interest rate swap agreement all of which were subject to interest rate benchmark reform. These financial instruments
were amended in 2022 to convert the interest rate pricing on borrowings from LIBOR to SOFR.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
100
BOART LONGYEAR 2022 ANNUAL REPORT
27. DIVIDENDS
No dividends have been determined for 31 December 2022 or 31 December 2021. There are no franking credits
available for the years ended 31 December 2022 or 2021.
28. COMMITMENTS FOR EXPENDITURE
The Company has the following continuing operational and financial commitments in the normal course of business:
2022
2021
US$'000
US$'000
Capital commitments
Purchase commitments for capital expenditures
3,337
10,734
Lease commitment for short-term and low-value leases
15,497
12,388
29. LEASE COMMITMENTS
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 2022, the Company has right-of-use assets with a net book value of $40.3 million and corresponding
lease liabilities of $41.9 million compared to $32.8 million and $36.1 million as at 31 December 2021.
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 2022 were $1.7 million
compared to $4.0 million as at 31 December 2021. Payments for short-term leases as at 31 December 2022 were $25.0
million compared to $20.0 million as at 31 December 2021. Payments for short-term leases includes short-term rentals of
survey equipment common to the industry.
Right-of-use-assets and depreciation by asset type are as follows:
Land and
buildings
Plant and
equipment
Total
US$'000
US$'000
US$'000
Balance at 31 December 2021
Leased asset cost
32,454
26,414
58,868
Leased asset accumulated depreciation
(13,654)
(12,408)
(26,062)
Net book value at 31 December 2021
18,800
14,006
32,806
Balance at 31 December 2022
Leased asset cost
35,262
38,779
74,041
Leased asset accumulated depreciation
(17,553)
(16,231)
(33,784)
Net book value at 31 December 2022
17,709
22,548
40,257
2021 Depreciation expense
5,118
4,673
9,791
2022 Depreciation expense
5,123
6,566
11,689
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
101
BOART LONGYEAR 2022 ANNUAL REPORT
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 2022 are as
follows:
Subsidiary
Purpose
Expiration date
Amount
US$'000
Australia
Secure a facility rental
September 2023
439
Australia
Secure a facility rental
October 2023
57
Australia
Secure a facility rental
May 2025
14
Chile
Secure bonding program
May 2025
3,057
United States
Secure bonding program
May 2023
1,000
United States
Secure insurance program
August 2023
1,450
6,017
Financial guarantee contract liabilities are measured initially at their fair values and subsequently at the higher of the
amount recognized as a provision or the amount initially recognized less cumulative amortization in accordance with the
revenue recognition policies described in Note 4.
A summary of the maturity of issued letters of credit is as follows:
2022
2021
US$'000
US$'000
Less than 1 year
2,946
5,146
1 to 3 years
3,071
3,057
6,017
8,203
Guarantees
The subsidiaries of the Company provide guarantees within the normal course of business which includes payment
guarantees to cover import duties, taxes, performance and completion of contracts. In addition, the Parent and certain
subsidiaries are guarantors on the Company’s loans and borrowings. See Note 22.
Legal contingencies
The Company is subject to certain routine legal proceedings that arise in the normal course of its business. Management
believes that the ultimate amount of liability, if any, for any pending claims of any type (either alone or combined) will not
materially affect the Company’s operations, liquidity, or financial position taken as a whole. However, the ultimate outcome
of any litigation is uncertain, and unfavorable outcomes could have a material adverse impact.
Tax and customs audits
The Company is subject to certain tax and customs audits that arise in the normal course of its business. Management
believes that the ultimate amount of liability, if any, for any pending assessments (either alone or combined) would not
materially affect the Company’s operations, liquidity, or financial position taken as a whole. However, the ultimate outcome
of these audits is uncertain and unfavorable outcomes could have a material adverse impact. See additional disclosure in
Note 11.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
102
BOART LONGYEAR 2022 ANNUAL REPORT
30. CONTINGENT LIABILITIES (CONTINUED)
Other contingencies
Other contingent liabilities as at 31 December 2022 and 2021 consist of the following:
2022
2021
US$'000
US$'000
Contingent liabilities
Guarantees/counter-guarantees to outside parties
13,675
15,593
Except as detailed in the following table, the carrying amount of financial assets recorded in the financial statements, net
of any allowances for losses, represents the Company’s maximum exposure to credit risk without taking account of the
value of any collateral obtained. See Note 15.
Maximum credit risk
2022
2021
Financial assets and other credit exposure
US$'000
US$'000
Performance guarantees provided, including letters of credit
19,692
23,796
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
103
BOART LONGYEAR 2022 ANNUAL REPORT
31. DEED OF CROSS GUARANTEE
For the year ended 31 December 2022, Boart Longyear Group Ltd., Boart Longyear Limited, Votraint No. 1609 Pty Ltd,
Boart Longyear Investments Pty Ltd. and Boart Longyear Management Pty Limited are parties to a deed of cross
guarantee (‘the Deed’) under which each company guarantees the debts of the other. By entering into the Deed, the
wholly-owned entities have been relieved from the requirement to prepare a financial report under ASIC Corporations
(Wholly-owned Companies) Instrument 2016/785.
The above companies represent a “closed group” for the purpose of the Class Order, and as there are no other parties to
the Deed that are controlled by Boart Longyear Group Ltd., they also represent the “extended closed group”.
Set out below is a consolidated statement of financial performance, a consolidated statement of comprehensive income, a
consolidated statement of financial position and a summary of movements in consolidated retained earnings for the years
ended 31 December 2022 and 31 December 2021 of the closed group.
a)
Consolidated statement of comprehensive income
2022
2021
US$'000
US$'000
Other income
32,278
28,100
General and administrative expenses
(6,407)
(5,751)
Restructuring expenses and related impairments
—
37,946
Other expenses
(20,676)
(113,573)
Operating income (loss)
5,195
(53,278)
Interest income
3,408
1,551
Finance costs
(5,294)
(62,234)
Income (loss) before taxation
3,309
(113,961)
Income tax expense
(70)
(1,148)
Income (loss) for the year from continuing operations
3,239
(115,109)
Income (loss) for the year
3,239
(115,109)
2022
2021
Other comprehensive income (loss)
US$'000
US$'000
Income (loss) for the year attributable to equity holders of the parent
3,239
(115,109)
Exchange differences on translation of foreign operations 1
1,508
2,457
Other comprehensive income for the year (net of tax)
1,508
2,457
Total comprehensive income (loss) for the year
4,747
(112,652)
(1)
The comparative information has been restated to include the impact of exchange differences on translation of foreign operations in the
calculation of other comprehensive income.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
104
BOART LONGYEAR 2022 ANNUAL REPORT
31. DEED OF CROSS GUARANTEE (CONTINUED)
b)
Consolidated statement of financial position
2022
2021
US$'000
US$'000
Current assets
Cash and cash equivalents
439
474
Trade and other receivables
658
658
Prepaid expenses and other assets
233
301
Total current assets
1,330
1,433
Non-current assets
Loans to related parties
98,118
173,841
Investment in subsidiaries
613,585
543,730
Other assets
—
65
Total non-current assets
711,703
717,636
Total assets
713,033
719,069
Current liabilities
Trade and other payables
1,557
628
Provisions
5,628
1,498
Other current financial liabilities
—
2,529
Total current liabilities
7,185
4,655
Non-current liabilities
Loans from related parties
155,438
145,701
Loans and borrowings
45,300
38,846
Provisions
213
213
Other financial liabilities
13,585
19,354
Total non-current liabilities
214,536
204,114
Total liabilities
221,721
208,769
Net Assets
491,312
510,300
Equity
Issued capital
2,436,761
2,436,761
Other equity
2,033,163
2,055,390
Accumulated losses
(3,978,612)
(3,981,851)
Total equity
491,312
510,300
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
105
BOART LONGYEAR 2022 ANNUAL REPORT
32. PARENT ENTITY DISCLOSURES
Financial position
2022
2021
US$'000
US$'000
Assets
Current assets
232
—
Non-current assets
637,104
637,103
Total assets
637,336
637,103
Liabilities
Current liabilities
815
2
Non-current liabilities
13,503
6,987
Total liabilities
14,318
6,989
Net Assets
623,018
630,114
Equity
Issued capital
672,921
672,921
Reserves
(32,223)
(35,817)
Accumulated losses
(17,680)
(6,990)
Total equity
623,018
630,114
Financial performance
2022
2021
US$'000
US$'000
Loss for the year
10,691
6,990
Total comprehensive loss
10,691
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 2022 and 2021, Boart Longyear Group Ltd. did not have any contractual obligations.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
106
BOART LONGYEAR 2022 ANNUAL REPORT
33. COMPANY SUBSIDIARIES
The Company’s percentage ownership of the principal subsidiaries are as follows:
Subsidiaries
Country of
incorporation
Business
31 Dec
2022
31 Dec
2021
BL Group Holdings Inc.
Cayman Island
Holding Company
100
100
BLI Zambia Ltd.
Zambia
Dormant
100
100
BLY Canada Inc.
Canada
Holding Company
100
100
BLY Cote d'Ivoire S.A.
Ivory Coast
Drilling Services
100
100
BLY Drilling Services and Products Mexico, S.A. de C.V.2
Mexico
Dormant
100
100
BLY EMEA UK Holdings Ltd.
United Kingdom
Holding Company
100
100
BLY Gabon S.A.
Gabon
Drilling Services
100
100
BLY Ghana Limited
Ghana
Drilling Services
100
100
BLY Holdings Tanzania Ltd.
Tanzania
Holding Company
80
80
BLY IP Inc.1
USA
Holding Company
—
100
BLY Mali S.A.
Mali
Drilling Services
100
100
BLY Senegal S.A.
Senegal
Drilling Services
100
100
BLY Sierra Leone Ltd.
Sierra Leone
Drilling Services
100
100
BLY US Holdings Inc.
USA
Holding Company
100
100
Boart Longyear (Cambodia) Ltd.2
Cambodia
Dormant
100
100
Boart Longyear DRC S.A.U.
Dem. Rep. of Congo
Drilling Services
100
100
Boart Longyear (NZ) Limited
New Zealand
Dormant
100
100
Boart Longyear (Vic) No. 1 Pty Ltd
Australia
Dormant
100
100
Boart Longyear (Vic) No. 2 Pty Ltd
Australia
Dormant
100
100
Boart Longyear Alberta Limited
Canada
Holding Company
100
100
Boart Longyear Argentina S.A.
Argentina
Drilling Services
100
100
Boart Longyear Australia Pty Ltd
Australia
Drilling Services
100
100
Boart Longyear B.V.
Netherlands
Drilling Products
100
100
Boart Longyear Burkina Faso Sarl 2
Burkina Faso
Dormant
100
100
Boart Longyear Canada
Canada
Drilling Products and Services
100
100
Boart Longyear Chile Limitada
Chile
Drilling Products and Services
100
100
Boart Longyear Company
USA
Drilling Products and Services
100
100
Boart Longyear de Mexico, S.A. de C.V.
Mexico
Drilling Services
100
100
Boart Longyear Drilling Products (Wuxi) Co., Ltd.
China
Drilling Products and Services
100
100
Boart Longyear Eritrea Ltd.2
Eritrea
Drilling Services
100
100
Boart Longyear Finance Ltd.
Canada
Holding Company
100
100
Boart Longyear GmbH & Co., KG
Germany
Drilling Products and Services
100
100
Boart Longyear I LP
Canada
Drilling Services
100
100
Boart Longyear Incorporated
Canada
Holding Company
100
100
Boart Longyear International B.V.
Netherlands
Holding Company
100
100
Boart Longyear Investments Pty Ltd
Australia
Holding Company
100
100
Boart Longyear Liberia Corporation
Liberia
Dormant
100
100
Boart Longyear Limitada
Brasil
Dormant
100
100
Boart Longyear Pty Limited 4
Australia
Holding Company
100
100
Boart Longyear Limited
Ireland
Drilling Products
100
100
Boart Longyear Management Pty Ltd
Australia
Holding Company
100
100
Boart Longyear Manufacturing and Distribution Inc.
USA
Drilling Products
100
100
Boart Longyear Manufacturing Canada Ltd.
Canada
Drilling Products
100
100
Boart Longyear Netherlands BV
Netherlands
Holding Company
100
100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
107
BOART LONGYEAR 2022 ANNUAL REPORT
33. COMPANY SUBSIDIARIES (CONTINUED)
Subsidiaries
Country of
incorporation
Business
31 Dec
2022
31 Dec
2021
Boart Longyear Poland Spolka z.o.o.
Poland
Drilling Products and Services
100
100
Boart Longyear S.A.C.
Peru
Drilling Products and Services
100
100
Boart Longyear Saudi Arabia LLC 2
Saudi Arabia
Dormant
100
100
Boart Longyear Sole Co., Limited
Laos
Drilling Services
100
100
Boart Longyear Suisse Sàrl
Switzerland
Holding Company
100
100
Boart Longyear Tanzania Limited
Tanzania
Drilling Services
100
100
Boart Longyear Ventures Inc.
Canada
Holding Company
100
100
Boart Longyear Vermogensverwaltung GmbH
Germany
Holding Company
100
100
Boart Longyear Zambia Limited 2
Zambia
Dormant
100
100
Cooperatief Longyear Holdings UA
Netherlands
Holding Company
100
100
Geoserv Pesquisas Geologicas S.A.
Brasil
Dormant
100
100
Globaltech Corporation Pty Ltd
Australia
Holding Company
58
58
Inavel S.A.
Uruguay
Dormant
100
100
Longyear Canada, ULC
Canada
Drilling Products
100
100
Longyear DRC S.A.
Dem. Rep. of Congo
Holding Company
99
99
Longyear Global Holdings, Inc.
USA
Holding Company
100
100
Longyear South Africa (Pty) Ltd
South Africa
Drilling Products and Services
100
100
Longyear TM, Inc.
USA
Holding Company
100
100
P.T. Boart Longyear
Indonesia
Drilling Services
100
100
Patagonia Drill Mining Services S.A.
Argentina
Dormant
100
100
Votraint No. 1609 Pty Ltd
Australia
Drilling Services
100
100
Veracio Ltd.3
USA
Holding Company
100
—
Veracio Canada Ltd.3
Canada
Holding Company
100
—
Veracio Australia Pty Ltd.3
Australia
Holding Company
100
—
Veracio South Africa (Pty) Ltd.3
South Africa
Holding Company
100
—
(1)
This entity was merged or dissolved in 2022.
(2)
This entity is currently in liquidation status.
(3)
This entity was formed in 2022.
(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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
108
BOART LONGYEAR 2022 ANNUAL REPORT
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) Transactions with other related parties during the year were immaterial.
35. CASH AND CASH EQUIVALENTS
Included in the cash balance as at 31 December 2022 is $0.4 million of restricted cash and as at 31 December 2021 is
$0.5 million of restricted cash. The Company cannot access these cash balances until certain conditions are met. These
conditions pertain to restrictions to secure facility leases and pension payments.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
109
BOART LONGYEAR 2022 ANNUAL REPORT
36. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS
Standards and Interpretations issued, but not yet effective
At the date of authorization 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
1 January 2025
31 December 2025
AASB 2015-10 Amendments to Australian
Accounting Standards - Effective Date of
Amendments to AASB 10 & AASB 128
1 January 2025
31 December 2025
AASB 2017-5 Amendments to Australian
Accounting Standards - Effective Date of
Amendments to AASB 10 & AASB 128 and
Editorial Corrections
1 January 2025
31 December 2025
AASB 2020-1 Amendments to Australian
Accounting Standards -
Classification of Liabilities as Current or Non-
current
1 January 2023
31 December 2023
AASB 2021-2 Amendments to Australian
Accounting Standards -
Disclosure of Accounting Policies and Definition of
Accounting Estimates
1 January 2023
31 December 2023
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
AASB 2022-1 Amendments to Australian
Accounting Standards -
Initial Application of AASB 17 and AASB 9 -
Comparative Information
1 January 2023
31 December 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
110
BOART LONGYEAR 2022 ANNUAL REPORT
36. 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 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 2021-7 Amendments to Australian
Accounting Standards - Effective Date of
Amendments to AASB 10 & AASB 128 and
Editorial Corrections
1 January 2022
31 December 2022
AASB 2020-3 Amendments to Australian
Accounting Standards -
Annual Improvements 2018-2020
1 January 2022
31 December 2022
37. SUBSEQUENT EVENTS
On 23 February 2023, it was announced that the Geological Data Services business will now operate as a separate entity
called Veracio. The annual financial report has been updated throughout to reflect this change in name.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the financial year ended 31 December 2022
111
BOART LONGYEAR 2022 ANNUAL REPORT
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
Number of securities in which
the person and their associates
has a relevant interest
Voting power of the
substantial holder
and their associates
First Pacific Advisors, L.P. and related entities
158,265,847
53.48%
Ascribe II Investments LLC and related entities
158,265,847
53.48%
Corre Partners Management, LLC, and related entities
158,265,847
53.48%
Nut Tree Capital Management, LP, and related entities
158,265,847
53.48%
Centerbridge entities
134,503,475
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
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 3,172 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 103,788 quoted warrants expiring on 1 September 2024 held by 5,447 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”. These unquoted share options do not
carry rights to vote.
ii) Management Incentive Plan Options
There are 10,178,860 unquoted share options issued pursuant to the Company's Management
Incentive Plan on issue held by 13 individual options holders that are not publicly traded on the
ASX under the code "BLYAN". These unquoted share options do not carry rights to vote.
iii) 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.
iv) Warrants
There are 32,757,168 unquoted warrants expiring on 23 September 2027 held by 11 individual
warrant holders that are not publicly traded on the ASX under the code “BLYAD”. The unquoted
warrants do not carry rights to vote.
SUPPLEMENTARY INFORMATION
Additional information as of 17 March 2023
112
BOART LONGYEAR 2022 ANNUAL REPORT
3. Distribution of holders of quoted CHESS Depositary Interests
Range
Securities
%
No. of
holders
%
1 to 1,000
184,554
0.06
2,968
93.57
1,001 to 5,000
306,559
0.10
144
4.54
5,001 to 10,000
86,569
0.03
11
0.35
10,001 to 100,000
1,137,943
0.38
41
1.29
100,001 and over
294,204,789
99.42
8
0.25
Total
295,920,414
100.00
3,172
100.00
4. Distribution of holders of quoted Warrants
Range
Securities
%
No. of
holders
%
1 to 1,000
51,232
49.36
5,427
99.63
1,001 to 5,000
31,091
29.96
17
0.31
5,001 to 10,000
21,465
20.68
3
0.06
10,001 to 100,000
0
0.00
0
0.00
100,001 and over
0
0.00
0
0.00
Total
103,788
100.00
5,447
100.00
5. Distribution of holders of unquoted Options
Range
Securities
%
No. of
holders
%
1 to 1,000
377
17.41
12
92.31
1,001 to 5,000
1,789
82.59
1
7.69
5,001 to 10,000
0
0.00
0
0.00
10,001 to 100,000
0
0.00
0
0.00
100,001 and over
0
0.00
0
0.00
Total
2,166
100.00
13
100.00
6. Distribution of holders of unquoted Warrants Class A and B
Range
Securities
%
No. of
holders
%
1 to 1,000
3,727
17.42
13
72.22
1,001 to 5,000
11,429
53.42
4
22.22
5,001 to 10,000
6,239
29.16
1
5.56
10,001 to 100,000
0
0.00
0
0.00
100,001 and over
0
0.00
0
0.00
Total
21,395
100.00
18
100.00
SUPPLEMENTARY INFORMATION
Additional information as of 17 March 2023
113
BOART LONGYEAR 2022 ANNUAL REPORT
7. Distribution of holders of unquoted Warrants
Range
Securities
%
No. of
holders
%
1 to 1,000
0
0.00
0
0.00
1,001 to 5,000
0
0.00
0
0.00
5,001 to 10,000
0
0.00
0
0.00
10,001 to 100,000
394,368
1.20
7
63.64
100,001 and over
32,362,800
98.80
4
36.36
Total
32,757,168
100.00
11
100.00
8. Distribution of holders of unquoted Management Incentive Plan Options
Range
Securities
%
No. of
holders
%
1 to 1,000
0
0.00
0
0.00
1,001 to 5,000
0
0.00
0
0.00
5,001 to 10,000
0
0.00
0
0.00
10,001 to 100,000
0
0.00
0
0.00
100,001 and over
10,178,860
100.00
13
100.00
Total
10,178,860
100.00
13
100.00
9. Unmarketable parcel of shares
The number of security investors holding less than a marketable parcel of 238 securities ($2.10 on 17
March 2023) is 2,741 and they hold 76,384 securities.
10. On-market buy back
There is no current on-market buy-back of Boart Longyear CHESS Depositary Interests.
SUPPLEMENTARY INFORMATION
Additional information as of 17 March 2023
114
BOART LONGYEAR 2022 ANNUAL REPORT
11. 20 largest holders of quoted CHESS Depositary Interests
No.
Holder
CHESS
Depositary
Interests
Percentage of
Issued Capital
Held
1
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
178,390,221
60.28
2
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
49,385,560
16.69
3
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
46,250,752
15.63
4
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
18,735,666
6.33
5
MR MOSES MARX
544,701
0.18
6
BOFA SECURITIES INC
348,651
0.12
7
E-TECH CAPITAL PTY LTD
334,661
0.11
8
J.P. MORGAN SECURITIES LLC
214,577
0.07
9
SITI INVESTMENTS PTY LTD
100,000
0.03
10
RIADIS HOLDINGS PTY LTD
90,000
0.03
11
MR CHRISTOPHER STUART KING
89,000
0.03
12
CITICORP NOMINEES PTY LIMITED
88,978
0.03
13
MR ZHONGWEI MIAO
70,000
0.02
14
DR PAUL FRANCIS MORTON
55,589
0.02
15
MR ROBERT JAMES RUTTER
53,643
0.02
16
REAL PILLARS PTY LTD
46,841
0.02
17
MR ALLAN KEITH CLARKE
42,381
0.01
18
PHILIP & JANET TURNER PTY LTD
31,000
0.01
19
WILLYAMA ASSET MANAGEMENT PTY LTD
30,000
0.01
20
ASTRA SICAV SIF TRISIN
26,708
0.01
TOTAL FOR TOP 20
294,928,929
99.66%
12. 20 largest holders of quoted Warrants
No.
Holder
Quoted
Warrants
Percent Held of
Quoted Warrants
1
VFG ASSET MANAGEMENT PTY LTD
8,912
8.59
2
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
7,090
6.83
3
DR PAUL FRANCIS MORTON
5,463
5.26
4
MR THEOFANIS PERDIKIS & MRS DIMITRA PERDIKIS
4,231
4.08
5
PACIFIC CUSTODIANS PTY LTD
3,520
3.39
6
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
2,514
2.42
7
BNP PARIBAS NOMS PTY LTD
2,428
2.34
8
OUTCOME POSITIVE PTY LTD
2,000
1.93
9
BNP PARIBAS NOMINEES PTY LTD
1,894
1.82
10
MRS SURANJITA MULVEY
1,839
1.77
11
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
1,669
1.61
12
MR GAVIN ROSS JONES & MRS ELWYNN RONDELL JONES
1,545
1.49
13
MR TREVOR DURRANT
1,500
1.45
14
MISS CAMILLE KATHLEEN SCOTT
1,288
1.24
15
PACIFIC CUSTODIANS PTY LIMITED
1,259
1.21
16
DR SIL LIN TAN
1,133
1.09
17
STYX RIVER PTY LTD
1,125
1.08
18
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
1,077
1.04
19
MR BAREND JACOBUS STOLTZ
1,052
1.01
20
PACIFIC CUSTODIANS PTY LIMITED
1,017
0.98
TOTAL
52,556
50.64
SUPPLEMENTARY INFORMATION
Additional information as of 17 March 2023
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Global Headquarters
2455 South 3600 West
West Valley City, UT 84119
United States of America
Tel: +1 801 972 6430
Fax: +1 801 977 3374
Registered Office
2442 South Sheridan Way
Mississauga, Ontario L5J 2M7
Canada
Tel: +1 905 822 7922
Auditors
Deloitte Touche Tohmatsu
Company Secretary
Nicholas Nash
Alex Nikolic
Shareholder Enquiries
Boart Longyear Investor Relations
2455 South 3600 West
West Valley City, UT 84119
United States of America
Australia: +61 8 8375 8300
Others: +1 801 952 8343
Email: ir@boartlongyear.com
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
CORPORATE INFORMATION