2021 Annual Report CONTENTS 01 2021 Highlights 02 Chairman’s Report 04 Business Overview 06 Managing Director’s Report 42 Consolidated Statement of Comprehensive Income 43 Consolidated Statement of Financial Position 44 Consolidated Statement of 14 Operating and Financial Review Cash Flows 20 Health, Safety, Environment & Quality 45 Consolidated Statement of Changes 22 Our People 24 Board of Directors and Key Management Team 26 Financial Report 27 Directors’ Report 41 Auditor’s Independence Declaration in Equity 46 Notes to the Consolidated Financial Statements 75 Directors’ Declaration 76 Independent Audit Report 80 ASX Additional Information 82 Company Directory AT BOOM, we deliver safe lifting solutions, with scale and precision, every time. Managing risk and complexity with confidence – that’s the promise we make to our customers. 2021 HIGHLIGHTS Revenue $m $182.7 $185.5 $173.3 EBITDA $m $29.0 $23.8 $36.3 2019* 2020 2021 2019* 2020 2021 Operating Cash Flow before Tax $m $25.0 $24.3 $25.9 Net Debt $m $36.6 $29.4 $19.6 2019* 2020 2021 2019 2020 2021 Dividends cents 1.5 0.5 0.0 2019 2020 2021 * Converted for comparison with current AASB16 standard Annual General Meeting Boom Logistics will hold its 2021 Annual General Meeting at 11.00am on Friday, 26 November 2021. Details will be provided in the Notice of Meeting. boomlogistics.com.au 1 Boom Logistics Annual Report 2021 CHAIRMAN’S REPORT The company has returned to profit and continued to diversify during FY21. The strategy is underpinned by capital expenditure to support ongoing growth and fleet renewal. We completed the year with an improved return on capital, a strong portfolio of work in progress and a sound balance sheet. Each division – crane services, projects and travel towers – performed well, generating solid returns for the year. It is pleasing to report a net profit of $1.2 million, the first net profit since 2012 and the Board has resolved to pay a final dividend for FY21, the third dividend since FY20. This was a sound improvement on the after-tax loss in FY20 which included impacts from COVID-related delays to projects and shutdown maintenance, a one-off $4.45 million franking deficit tax expense (which is being progressively repaid over FY21 and FY22) and a loss-making project. Over the year, successes included completion of a wind farm project at Moorabool South, commencement of works for Snowy 2.0, infrastructure work at Parramatta Light Rail and a solid performance from travel towers following restructure as a stand-alone business two years ago. We plan to develop business in sectors which are benefiting from strong markets, new technology rollout and federal government spending. Our confidence that this will maximise returns for the business and its shareholders was reflected in the decision to resolve to pay a final dividend of 1 cent per share, unfranked. This followed an interim dividend of 0.5 cents, unfranked, taking dividends for the year to 1.5 cents. Net debt continues to be managed in the range 20%-35% of total equity, and at 30 June 2021 was 26%. In December 2020, we commenced a new three-year finance facility on favourable terms. The company’s net debt at 30 June 2021 was $29.4 million, down from circa $50 million in 2016 and reflective of a concerted effort to retire older assets and debt to position the company for future growth. The company is now investing in assets to support growth and reduce its fleet age, after taking several years to consolidate its financial position. The capital recycling program supports investment in new crane and travel tower assets which service large projects and existing contracts, and net capital expenditure for the year was $14.7 million. This investment combines the advantages of a modern, more capable fleet with ongoing work – positioning Boom Logistics to the forefront of its industry. Our targeted capital investment and a strong pipeline of business in mining, telecommunications, infrastructure and energy markets provides a sound foundation for continued expansion of the business. The company is building a stronger, more modern platform, utilising the opportunities provided by work such as the Smelter Campaign Maintenance 2021 (SCM21) project at BHP Olympic Dam, further shutdown prospects in central Queensland and growth opportunities in north-west Western Australia. We continued to operate through the pandemic which brought project delays and restrictions on interstate travel and fly-in, fly-out labour workforce. The health and safety of our people remains our top priority while meeting the business expectations of our customers. Early action to improve processes and protect staff has enabled us to operate effectively despite COVID constraints and challenges presented. Across our business, mining maintenance and resources activity was healthy in Queensland, Western Australia and South Australia. However, our mining services 1.5c dividends to shareholders in FY21 2 Boom Logistics Annual Report 2021 continued growth, return on investment and profitability. We have a capable team, a sound balance sheet, and a strong pipeline of opportunities. I look forward to Boom’s continued progression over the years ahead. Maxwell J Findlay Chairman Net profit $1.2m business experienced weakness in New South Wales. Boom Logistics’ renewable energy strength is in the construction and maintenance of wind farms, which represents more than one-third of Australia’s renewable energy supply. Boom has accumulated significant industry expertise and a track record of successful projects in the sector. In FY21, this sector provided 23% of Boom Logistics’ revenue. Another key sector is the infrastructure market. Boom Logistics is providing cranes and travel towers supporting the development of projects such as Snowy 2.0 as the federal government invests to support Australia’s infrastructure-led recovery from the COVID-19 pandemic. We are also focused on the telecommunications sector, where mobile telecommunications infrastructure requires significant investment to achieve the deployment of 5G spectrum bands. These are all large, sustainable markets that provide scope for Boom Logistics to leverage its national service capability and benefit from capital recycling and investment in new cranes and travel towers. Our business is supported by the hard work and dedication of our people. On behalf of the board, I would like to thank Tony Spassopoulos and the executive team as they build a safe and strong culture across our business. The Board is undergoing significant change and rejuvenation. Since this time last year, Terry Francis and Jean-Pierre Buijtels have retired and we appointed Stephen Grove and Kieran Pryke as directors. Further board renewal is planned. I take this opportunity to announce my intention to retire from the Board at the AGM in 2021 and to thank Jack Hebiton for his many years of service to Boom as he also retires at the AGM and does not seek re-election. As we enter a new year, the company is positioned for future success. The Board maintains positive expectations for 3 3 BUSINESS OVERVIEW Delivering lifting solutions, with scale and precision. Travel towers dd Travel towers 4 Crane services Key Operations ● Mining maintenance services ● Engineered specialised lifts ● Shutdown, industrial and programmed maintenance services ● Major clients are in the mining sector Projects Key Operations ● Wind farm construction ● Bridge installations, rail and infrastructure construction ● Energy and high voltage powerline construction ● Wind farm maintenance programs Travel towers Key Operations ● Telecommunications – 5G and data network upgrades and connections ● Transmission ‘string-line’ installation works on wind farms ● Interconnector & power grid projects ● High voltage transmission line maintenance readi Key Operations ● Mining shutdown and maintenance labour ● Oil and Gas maintenance services ● Construction, heavy industry and windfarm specialised labour services Boom Logistics Annual Report 2021 Total revenue $173m Revenue $m $95.6 $94.4 $92.9 Achievements ● Contract renewals signed with Outlook ● BHP Olympic Dam Smelter Campaign Maintenance Anglo American, Australian Paper, Coronado Curragh, FQM Australia ● Major shutdowns completed for Boddington Gold, BMA, Bulga, MTW and Australian Paper (SCM21) project underway in 1H FY22 ● Solid book of maintenance work and growth from new customers in central Queensland and North West WA ● Pipeline of new business opportunities across the mining and industrial sectors 2019 2020 2021 dd Achievements ● Completion of Moorabool South Outlook ● Significant projects underway including Bango wind wind farm farm and Snowy 2.0 continuing in 1H FY22 Revenue $m $35.1 $38.0 $37.5 ● Securing a new wind farm construction project at Bango ● Commenced work at Snowy 2.0, Parramatta Light Rail, Martinus Rail and Armadale Road Bridge projects ● Strong pipeline of potential new business including renewable energy and infrastructure projects ● Ongoing wind farm maintenance work with opportunities to introduce new value-added services 2019 2020 2021 Achievements ● Installation of new 220kv Outlook ● Strong pipeline of high voltage line stringing and transmission line in the Pilbara interconnector work Revenue $m $24.9 $26.8 $25.3 ● Continued activity on wind farm, mining and maintenance work ● Telecommunications sector rectifications and upgrades ● Demand for telecommunications work remains consistent, albeit affected by pandemic-related constraints ● Continued renewable energy projects including maintenance and upgrades to the electricity grid 2019 2020 2021 Achievements ● Activities constrained by pandemic-related delays and lockdowns ● readi supported Boom’s customers at Olympic Dam, Boddington Gold and Esso Outlook ● readi continues to service mining maintenance and industrial shutdown customers Revenue $m $27.1 $26.3 ● readi is focussing on new customer opportunities in construction and infrastructure sectors as COVID- related constraints ease $17.6 2019 2020 2021 5 Boom Logistics Annual Report 2021 MANAGING DIRECTOR’S REPORT In early 2020, we introduced a national safety reset program to improve our work processes and establish a positive safety culture across the business. Lost Time Injury Frequency Rate (LTIFR) of Zero Total Recordable Injury Frequency Rate (TRIFR) 5.1 best safety performance in over a decade During FY21, we had zero lost time injuries and reported a total recordable injury frequency rate (TRIFR) of 5.1 per million hours worked, the lowest in more than a decade, and an improvement on 8.0 (36%) in the prior year. The leadership team, managers and supervisors increased their engagement with our people in the field, also ensuring the health and safety of our team during the pandemic. Regular communication with our employees on site has been an essential step toward integrating safe work processes in our operations. We built ‘safe workplace always’ into our thinking, empowering our people with authority to manage the job. This involved assessing risks and implementing safe processes across customer sites nationally. Safe act observations frequency rate (SAOFR) increased to 8,242, up from 6,450 in FY20, a 28% improvement on last year. Safe Act Observation Frequency Rate (SAOFR) Total Recordable Injury Frequency Rate (TRIFR) 8,242 8.6 8.0 6,450 3,888 5.1 2019 2020 2021 2019 2020 2021 6 The success of our safety transformation program has allowed us to proactively manage risk with confidence. Our positive safety record underpins our capability, supporting our bids to win new work. Boom provides lifting solutions for our customers, using small, medium-sized and large-scale cranes and travel towers. Our crews operate on a 24x7 basis providing engineering services, supervision and project management on mine, construction and infrastructure sites. We install and maintain wind farms across Australia, manage the connection of power transmission at height and support the 5G mobile roll-out. Our services require specialist experience, precision and technical skill. Our workforce of 445 permanent and 400 flexible employees provides services for some of Australia’s leading industrial businesses from 14 depots around Australia. Diversification to capture recurring revenue Our strategy to diversify services across multiple sectors has seen us focus on the mining and resources, renewable energy, infrastructure and telecommunications customers. These are strong, growing markets where Boom can provide sector expertise and high quality, differentiated services. We continue to diversify our business, targeting new recurring revenue streams and positioning the company to grow profitably in the future. Financial overview The company reported net profit of $1.2 milion for FY21, following a Boom Logistics Annual Report 2021 EBITDA $36.3m up 53% disappointing prior year (FY20: net loss $17.0 million). COVID-19 related delays to projects and shutdown maintenance continued as customers reduced non-essential work and delayed discretionary activity and costs. As a result, revenue was $173.3 million, down 6.6% from $185.5 million in the prior year. EBITDA, however, increased to $36.3 million, up 53% from $23.8 million in FY20, and the return to profit is a turning point for the company as EBIT improved to $4.5 million in FY21 (FY20: loss of $8.1 million). Balance sheet and cash flow During the first half of FY21 the company repaid debt. Following the purchase of new assets, gearing has returned to the range considered efficient for the company and at 30 June 2021 was 26%. Return on capital employed improved to 2.5% in FY21 (FY20: -1.4%), and further improvement is expected as newly purchased assets begin to generate returns. Cash flow from operating activities before tax was higher at $25.9 million, up $1.6 million on the prior year. The Boom values are an uncompromising foundation of our organisation, guiding our decisions, our behaviours and the way we do business to maximise returns for our shareholders. 7 CUSTOMERFOCUSEverything begins with the customerSAFETY ALWAYSContinue our journeytowards zero harmDEVELOPING OUR PEOPLECommittment toour futureRESPECTFor each other andall stakeholdersto do thingsLooking for new waysINNOVATIONto achieve our bestWorking togetherTEAM WORKBoom Logistics Annual Report 2021 Operating Cashflow before tax $25.9m up $1.6m MANAGING DIRECTOR’S REPORT (CONTINUED) Business overview The company implemented an organisational restructure under which the crane services and readi labour businesses report to the chief operating officer. Travel towers operates as a separate business unit, servicing the telecommunications and energy sectors. The projects division is focused on wind farms, construction and infrastructure work. Crane services Revenue decreased as supply chain management issues and COVID-related constraints disrupted activities. However, work remained solid and maintenance contract renewals were signed with the Anglo American, Australian Paper, Coronado Curragh and other organisations. Major shutdown activities were completed for Boddington Gold, Olympic Dam and in Central Queensland. A new contract to provide mining maintenance services for FQM Australia has extended our services into the nickel sector. While a new supply contract was signed at BHP’s Mt Arthur Coal, the Hunter Valley market remained challenging, with price competition affecting volume of work. The company was awarded a major shutdown, the Smelter Campaign Maintenance 2021 (SCM21) project for BHP Olympic Dam in May 2021. Mobilisation of services has commenced for this project, which is expected to generate circa $15 million additional revenue and at its peak will engage 150 Boom crew and 40 cranes. When the project completes at the end of 2021, our assets will be redeployed interstate on other activities. Projects The company completed a wind farm project at Moorabool South, Victoria and began another at Bango in the New South Wales Southern Tablelands region later in the year, compared to two projects running simultaneously in the prior year. Renewable energy is a key growth sector for Boom and has also benefited from a greater share of ongoing wind farm maintenance work across the east coast of Australia. We have built strong construction and maintenance expertise around wind farms. Our work requires crews skilled in construction and maintenance, capable of working at heights and managing the lifting, rigging and mechanical experience. Over twenty new wind farms are under construction or expected to commence in the next 2 years, and we are targeting this sector for growth. Work continues on the Snowy 2.0 project, where the company is supporting construction of a 27-kilometre tunnel linking major dams. Bridge installation, rail and infrastructure construction are all sectors where Boom plans to increase its participation. Projects included the Parramatta Light Rail, work for Martinus Rail in Queensland and the Armadale Road Bridge project in Western Australia. Work continues on Snowy 2.0 where the company is supporting construction of a new renewable energy project. 8 Boom Logistics Annual Report 2021 Travel towers Installation of the new 220kv transmission line in the Western Australia Pilbara region continues to progress, and the company has benefited from strong demand for high voltage string-line work. The group’s work in the telecommunications sector, where the company works with Tier 1 and 2 contractors for the large telecommunications organisations such as Ericsson and Nokia, was constrained by state government lockdowns. Demand, however, remains consistent, supported by the 5G and NBN rollout in metropolitan areas, plus rectifications and upgrade work to address ‘black spot’ mobile reception areas. Capital for growth A central component of our strategy is capital recycling, using a flexible asset rental model which allocates fleet resources and optimises performance for customers. During FY21, we invested $14.7 million in new crane and travel tower assets. The sale of under-used assets, including 35 older travel towers, raised $4.8 million. Our capital recycling program equips our fleet with new technology, improving efficiency, reducing maintenance costs and we invest in order to secure new and ongoing work. We successfully improved asset utilisation rates in FY21, crane utilisation increased to 81% and travel tower usage rose to 66%. Management systems The company continued to work closely with customers during the pandemic and followed government guidelines. We responded to border restrictions and state lockdowns being imposed at short notice, which required careful management of teams to ensure productivity and that customer schedules were met. Boom maintains cloud-based technologies which enable us to manage work and projects remotely. Upgrades to key platforms continue to improve efficiencies, cost management and workplace flexibility across the business. Total asset utilisation 77% up from 71% 9 Boom Logistics Annual Report 2021 MANAGING DIRECTOR’S REPORT (CONTINUED) The 22nd of December 2020 marked 20 years since the company was incorporated and became Boom as we know it today. Originally named ‘The Australian Crane Company’ over the first few years, the company acquired a range of businesses in the crane and access industry. Boom is now nationally recognised as an industry leader servicing a diverse customer base, and is a provider of choice for some of Australia’s largest blue-chip companies. We are proud of being known as a company that provides quality services and the leader of safety in our industry. We would like to acknowledge the contribution of all those people who have helped make Boom what it is today and are continuing to drive our success into the future. Our loyal and passionate employees are the key to Boom’s success. We are proud to have dedicated and skilled people who consistently deliver on customer service and safety. Outlook Our financial position is sound with major growth prospects and we are well positioned to take advantage of new business opportunities. The group continues to benefit from a proactive capital recycling program that aligns assets closely to customer requirements. We are focusing on achieving high rates of utilisation for our cranes and travel towers. New assets will support growth and enable recycling of older assets and reduction of maintenance costs. We expect revenue growth to resume in FY22, supported by major works such as SCM21 at BHP Olympic Dam, ongoing construction work at Snowy 2.0, Bango wind farm, and a major shutdown for BMA at Goonyella Riverside. We have a solid portfolio of work in the months ahead. The company has a strong pipeline for new business across mining maintenance, energy, infrastructure and telecommunications, with significant prospects across state markets. We are optimistic about further penetrating the renewable energy market. Australia has installed over 3,000 wind farm towers in the past decade, and will install a further 2,000 in the next three years. The federal and state governments are investing in major infrastructure projects over the next ten years. We are targeting this market for growth on the back of a successful track record over several years including current projects such as Snowy 2.0. The group anticipates some labour shortages and continued supply chain constraints; however, we have put in place programs to cover any potential ongoing COVID-19 impacts. I take this opportunity to thank the Board for their support over the past year and especially Max Findlay and Jack Hebiton, who have announced their retirement. I would like to acknowledge Jack for his vision to establish Boom 20 years ago and Max for his guidance and direction to return the company to profit. In closing, I would like to thank our people for their willingness to adapt to changed conditions and the achievements we have made to improve our safety and performance in the last year. Tony Spassopoulos Managing Director Work commencing on SCM21 project for BHP Olympic Dam, expected $15m additional revenue in FY22 10 Boom Logistics Annual Report 2021 Case Study PARRAMATTA LIGHT RAIL PROJECT Parramatta Light Rail is a twelve-kilometre rail line in western Sydney, New South Wales, which is currently under construction for transport NSW. Boom Logistics provided heavy lift services for the Parramatta Light Rail infrastructure project in New South Wales, installing large bridge girders and assisting construction of the showpiece bridge over James Ruse Drive. A lift about to commence using a 750-tonne capacity crane 11 Boom Logistics Annual Report 2021 OUR VALUE PROPOSITION As a large-scale lifting project specialist, we seek to deliver innovation for our customers, build shareholder value and ensure safety excellence. We continue to build our leading reputation in the market as a trusted lifting, construction and maintenance solutions partner for large scale infrastructure. Boom’s customer value proposition is based on total lifting solutions and specialised labour services. EQUIPMENT OPERATIONAL CAPABILITY ● A comprehensive and diverse fleet aligned to ● Highly experienced and trained workforce of customer requirements in mining and resources, wind, energy, utilities, infrastructure, industrial maintenance and telecommunications. ● Well maintained fleet with maintenance records and Key Performance Indicator reporting for customers. supervisors, crane operators, riggers and travel tower operators. ● Operational resources and infrastructure to support customers in our core markets. ● Planned and configured services involving operators, cranes, transport, travel towers and other assets to meet complex customer requirements. ENGINEERING EXPERTISE SAFETY & QUALITY SYSTEMS ● Pre-lift customer site survey and analysis. ● Cultural alignment with our customer base, with ● Detailed engineering lift studies to drive safety, an uncompromising safety focus. efficiency and cost effectiveness. ● Transition to new international safety standard ● Project planning and project management. ● Wind farm construction including lifting, mechanical and electrical installation and maintenance. ISO 45,001:2018 achieved. ● Confirmed certification to AS/NZS ISO 9001:2015. ● Investment to drive continuous improvement in our safety systems, processes and organisation. The Group’s distinctive and comprehensive value proposition provides a solid platform for future growth to maximise returns to shareholders. 12 Boom Logistics Annual Report 2021 Case Study HIGH VOLTAGE GRID AND INTERCONNECTOR PROJECTS Boom’s travel towers support power line connection and interconnector upgrade works Boom mobilises its large travel towers across Australia to support projects including the Qld-NSW interstate connectors and connection of renewable energy projects to the power grid. These projects enable the sharing of power generation across the national energy market. Safety and reliability are essential for Boom’s travel towers performing work at heights. Boom’s work includes supporting the replacement of power poles and transmission line insulators. Boom’s travel towers worked on wind farms and interconnector upgrades 13 Boom Logistics Annual Report 2021 OPERATING AND FINANCIAL REVIEW Overview The Group reported a net profit after tax of $1.2 million for the year ended 30 June 2021 (FY20: net loss after tax of $17.0 million). The return to profitability is an important step for the Group with the result for the year considered solid given the on-going disruption to operations caused by Covid-19. Mining maintenance shutdown work incurred delays and reductions in scope throughout the year, infrastructure project delays were prevalent with the on-going effects of state government lockdowns delaying or cancelling scheduled works. Delivering a net profit in this environment is confirmation that the Group’s strategy is effective and that results are moving in the right direction. The Group now has a flexible and lean cost base, a solid position in its key markets with strong pipelines and revenue opportunities, access to debt capital and an established and proven flexible rental model to enable the group to deliver improved returns on capital and grow profitably over the coming years. Income statement FY21 was an important year in the recent performance of the Group, recording a profit after tax of $1.2 million. With revenue impacted by the difficult environment, costs were well managed as the Group focused on quality revenue, supporting our customers and growing the opportunity for FY22. Revenue Operating Costs Earnings Before Interest, Tax, Depreciation and Amortisation Depreciation and Amortisation Earnings Before Interest and Tax Net Borrowing Costs Net Profit/ (Loss) Before Tax Net Profit/ (Loss) After Tax 30-Jun-21 $’m 30-Jun-20 $’m 173.3 (137.0) 36.3 (31.8) 4.5 (3.3) 1.2 1.2 185.5 (161.7) 23.8 (31.9) (8.1) (4.4) (12.5) (17.0) Change $’m (12.2) 24.7 12.5 0.1 12.6 1.1 13.7 18.2 Revenue Reported revenue was $173.3 million (FY20: $185.5 million). Revenue was 6.6% down on the prior year as the Group focused on quality revenue in key markets to generate improved margins. On-going Covid restrictions contributed to lower revenue with slower mining maintenance shutdown activity, reductions in project scope, delays in infrastructure projects and border restrictions and state government lockdowns impacting volumes. Earnings Despite the lower recorded revenue, the renewed focus on quality contracts and projects in key markets resulted in much improved earnings before interest expense, tax, depreciation and amortisation (EBITDA). EBITDA improved 53% to $36.3 million in the year (FY20: $23.8 million). Earnings before interest expense and tax (EBIT) improved significantly to $4.5 million (FY20: loss of $8.1 million). Importantly the improved EBIT and reduced borrowing costs translated into a profit after tax of $1.2 million (FY20: loss of $17.0 million). The return to profit is a turning point in the recent history of the Company. The Group has confidence in the outlook and that successful execution of the strategy will further increase profitability and generate improved returns on capital through: ● Diversifying revenue including both construction and recurring maintenance work on wind farms and pursuing the growing opportunity in energy projects associated with improvements and upgrades to the electricity grid; ● Capitalising on the infrastructure pipeline over the coming decade (albeit that Covid restrictions and customer supply chain issues continue to delay projects in the immediate term); ● Increasing recurring revenue in mining maintenance by growing market share in the Central Queensland market through our strong customer relationships in the region and 14 Boom Logistics Annual Report 2021 growing our revenue in Western Australia where the Group is currently under represented. Improved results from the execution of this strategy with a clear pipeline of opportunities has given confidence to invest in new capital equipment to grow our customer base, margins and return on capital. The Group will also continue to seek opportunities to diversify its earnings through aligned services that will complement the capital intensive nature of core operations. Taxation Income tax expense in the year was $nil as the Group utilised franking deficit tax paid to offset income tax payable. In the prior year a tax expense of $4.45 million was incurred which related to a historic franking deficit tax liability. This amount is being repaid in twenty-four monthly instalments under an interest free payment plan agreed with the ATO in August 2020. The first eleven payments under this plan were made in the year with repayments being available to offset against future taxable profits in addition to $103.7 million (gross) of tax losses that are also available to offset against future taxable profits. Cash flow Cash flow provided by operating activities before tax was $25.9 million (FY20: $24.3 million). This was a solid cash flow result and reflected payment of circa $1.6 million in FY21 that was deferred from FY20 with the agreement of suppliers as a result of the onset of Covid-19. Operating cash flow in the current year was further effected by the timing of projects revenue and expenses: ● Debtors increased from the Bango wind farm project that generated significant revenue in the last two months of the year as the project increased to full productivity (cash of $6.8 million from project invoices was received in July 2021). This project will continue through the first half of FY22; ● Boom announced on 6 May 2021 that it had been awarded a new contract at BHP Olympic Dam to support a major smelter shutdown project (SCM21 project) commencing in August 2021. Preparation for the major works have begun and mobilisation of people and equipment commenced in June 2021. Whilst the majority of costs incurred can be reimbursed under the contract the associated cash had not yet been received at year end; and ● Major mining maintenance shutdown works commenced in Central Queensland in June for which debtors remained unpaid at year end. These year end debtor balances will be realised in the normal course of business as the invoices become due for payment in FY22. Given the improving profitability of the Group and the strong outlook in key markets the Group applied operating cash largely to fund increased investment in new crane assets to support the SCM21 project. The project is an important maintenance task for BHP and Boom is pleased to partner with BHP on the project to support its on-going operations and deepen our relationship. The new cranes will be used on the project for 3 Year finance facility commenced in December 2020 the first half of FY22 and then transferred to other regions to support growth in key markets. The Group was also able to fund two half cent dividend payments during the year. The first payment, made in October 2020 was deferred from payment in April 2020 as a conservative measure during the initial stages of the pandemic. The second payment being the FY21 interim dividend paid in March 2021. In total dividend payments of $4.3 million were paid to shareholders during FY21. The Group has resolved to pay a final FY21 dividend of 1 cent per share. This dividend is expected to be paid on 5 November 2021 to shareholders on the register at 30 September 2021. Balance sheet Net assets at 30 June 2021 were $112.7 million down from $115.3 million at 30 June 2020. The movement reflects the profit generated in the period offset by $4.3 million of dividends paid to shareholders in the year. Return on capital employed was 2.5% compared with negative 1.4% in the prior year. The return has improved as the Group has maintained a tight cost base and focused on profitable revenue opportunities. Returns are forecast to further improve in FY22 as the capital investment in assets made towards the end of FY21 begin to generate a return. Assets will commence operation at the SCM21 project in the first half of FY22 and will then be reallocated across the fleet to support further growth in key markets in the second half of FY22. The increased net capital expenditure in FY21 of $14.7 million has increased the balance sheet gearing net debt (interest bearing borrowings plus finance lease liabilities less cash)/ total equity to 26% (30 June 2020: 17%). This is within the Board approved gearing range of 20%-35% and the Group maintains considerable undrawn debt facilities. Capital management Boom is committed to delivering efficient capital management outcomes that provide value to our shareholders, support our customers, bring innovation to our service offering and maintain the highest levels of safety performance. Our strategy of diversifying revenue streams and increasing our portion of recurring revenue in maintenance work is delivering improved results. In order to continue to improve results Boom is re-investing in its fleet of operating assets to meet the highest standards of customer service. Investment in the fleet is essential to maintain existing contracts and importantly to deliver growth in our key markets: 15 Boom Logistics Annual Report 2021 OPERATING AND FINANCIAL REVIEW (CONTINUED) ● Mining Maintenance – Boom continues to win market share with mining and resources customers in key geographies, being both major resource companies and other mining services suppliers. These customers often have specific requirements for assets deployed on contracts, being equipment age or particular safety systems. It is essential that Boom continues to invest in its fleet, upholding the highest standards of safety for our people and our customers. ● Energy Sector – The opportunities available in the energy sector is a significant growth market for Boom. Access to new equipment and additional capacity will allow Boom to grow revenue in the energy market as significant electricity grid upgrade projects are required over the coming years. ● Renewable Energy – Boom utilises its low capital rental model to access large cranes suitable for the wind farm construction and maintenance markets. The wind farm construction pipeline remains strong over the next three years with the maintenance market providing a growing opportunity as more turbines are commissioned. The Group is also expanding its service offering in the maintenance market through the addition of low capital services. ● Infrastructure – The Group’s low capital, asset rental model plays a central role in capturing growth in this market with rented assets supported by smaller assets and people sourced from Boom’s national depot footprint. The increase in capital expenditure during the year was targeted to deliver growth and improve returns on capital in Boom’s key markets. Capital was invested during the year in assets to support Olympic Dam’s FY22 program of works, and to deliver growth in Western Australia and Central Queensland where new revenue and contracts are being targeted. New large Bronto travel tower assets were ordered and deposits paid to increase capacity in the energy sector where Boom has identified a significant growth opportunity. These assets will be delivered through FY22 and will deliver immediate capacity and revenue upon their arrival. Significantly, in May 2021 Boom announced that it was successful in securing a new contract at BHP Olympic Dam to support a major smelter shutdown project that will commence around August 2021. Boom is pleased to be able to partner again with a major customer to deliver a significant project. Boom committed to a number of new assets to service this contract which will be required in addition to the fleet already stationed at Olympic Dam to service Boom’s long term maintenance contract. The investment in new equipment will help to deliver $15 million of new revenue in the first half of FY22. The equipment will then be available to support new revenue and growth in key markets in the second half of FY22. Debt Facilities The investment in the year was supported by the new finance arrangements that the Group entered into in December 2020. The new terms and conditions provide a secure committed facility with tenure to December 2023, significant debt capacity limits, no restrictive financial covenants and access to lower interest rates and facility costs. Balance Sheet Gearing To maintain the equipment fleet the Group considers that modest balance sheet leverage is appropriate. The Group’s Board approved gearing range is 20%-35% where gearing is defined as group interest bearing loans and borrowings plus finance lease liabilities divided by total equity. At 30 June 2021 the gearing ratio was 26% (30 June 2020: 17%). The increase to gearing was appropriate given the availability of long term committed debt facilities and the strong pipeline of opportunities in FY22, including the award of the major SCM21 shutdown contract. The Group will target gearing around the middle of the approved range although it may deviate from this in the short term having consideration to: ● Outlook for the Group’s key markets and wider economic circumstances; ● Customer requirements and opportunities to invest in new equipment for growth that will provide an appropriate return on capital invested; ● Acquisition opportunities that will complement and grow the Group’s core activities in key markets; ● On-going requirement to replace and maintain the core fleet. Current average age of fleet (including rented assets) is circa 10.7 years. The Group’s long term target is to maintain a fleet with an average age below 10 years; ● Proceeds realised from on-going capital recycling of older less productive equipment to reinvest in new assets with enhanced technology and safety systems, reduce fleet maintenance costs and increase overall fleet utilisation; ● Operating free cash flow1 generated by the Group in any period; and ● Surplus operating free cash will be available to be returned to shareholders. The Group expects to generate sufficient surplus operating free cash to maintain a consistent dividend to shareholders. 1 Operating free cash flow is defined as net cash provided by operating activities less net repayment of lease liabilities (included in cash flows from financing activities). 16 Boom Logistics Annual Report 2021 The Group may deviate from the guidelines above to capitalise on opportunities with superior returns on capital. Over the short and medium term this approach will ensure that Boom is well positioned to deliver sound risk adjusted returns to investors through a combination of dividends and capital appreciation, maintain a fleet of equipment to service our customers through market cycles and contribute to a safe working environment for our people and customers. FY21 Review of operations The Group had a solid year in an environment that continues to be impacted by Covid-19. Restrictions had an impact across the customer base with major impacts felt in the mining and infrastructure sectors with telecommunications work in the metro areas also impacted during periods of lockdown. Mining and Resources Revenue in mining and resources was down $5.0 million in the year. Revenue was down across the sector as customers reduced shutdown and project activity. This was particularly the case in Central Queensland and in Western Australia where site restrictions and labour shortages caused by border closures impacted work planned by customers. Despite the slowdown in project work regular maintenance work was solid with Boom building on its strong relationship with customers in the region. In Central Queensland Boom invested in targeted asset purchases acquiring a new category of crane to meet client demand and support our metallurgical coal customers. During the year the Group benefitted from extending and expanding our relationship with Anglo American in the region. The Group also secured a major project at Anglo’s Aquila mine site to partner with Fenner Dunlop in the construction of a new stacker conveyor with this project expected to complete in 1H FY22. The investment in new equipment also supported the Group’s ability to win a major shutdown project for BMA that commenced at the end of June 2021 and will be completed in the first quarter of FY22. After the successful completion of this project Boom is then targeting further on-going recurring revenue with this customer. The Group has also consolidated its depots in Mackay and Moranbah into a single location in Nebo, saving costs, streamlining operations and positioning the Group to target new customer sites and expand revenue. New assets were also acquired during the year to target the Western Australian region. The capital expenditure was used to support the new two year maintenance contract signed with FQM Australia (Nickel) in the year and to expand the revenue generated in the iron ore markets in the north west. This new revenue supporting customers in nickel and iron ore further diversifies the Group’s exposure to commodities and complements the long term maintenance contracts in the south west held with gold and aluminium customers. The contracts in the south west were particularly hard hit with major scope changes to shutdowns and consequentially revenue impacts as a result of Covid restrictions, border closures and labour shortages. Gearing Ratio (net debt/ equity) at 26% Work on contracts in the Hunter Valley region of NSW remained consistent during the year with these thermal coal customers operating a maintenance cycle that relies on smaller shutdowns. The thermal coal market in the Hunter Valley however remains challenging with margins tight as thermal coal customers seek to reduce costs. Revenue on our long term contract at Olympic Dam was consistent with increasing levels of activity on site in the second half of the year in preparation for works on the major shelter shutdown project. This is a significant project and will generate an additional $15 million of revenue in FY22 in addition to the Group’s on-going long term maintenance contract for the site. The award of the contract in May 2021 required Boom to commit to the acquisition of new mobile cranes to service the project. Boom’s fleet of cranes already on site will be required for the on-going maintenance work. Investment in the new fleet occurred in June 2021 with assets being mobilised to site for commencement in the first quarter of FY22. The new cranes will be utilised on the project and then released to growth markets to drive new revenue in 2H FY22. The Group maintained its strong performance in retaining key contracts during the year and winning significant new project work towards the end of the year at Olympic Dam and Central Queensland that will benefit the FY22 results. Wind, Energy and Utilities Revenue in Wind, Energy and Utilities segment was down $8.9m on the prior year. The decrease was largely due to lower revenue from wind farm construction projects. In the prior year the Group performed two fixed fee, full scope construction projections including scope for lifting in addition to mechanical and electrical completion. In the current year the focus was on pursuing quality revenue in the segment to reduce risk. In the first half of the current year the Group undertook a project for lifting services at Moorabool wind farm in Victoria. This project was successfully completed on a schedule of rates. In March the Group commenced a project at Bango wind farm to supply lifting services on a schedule of rates for GE Renewables. This project is progressing well and will be completed towards the end of the first half of FY22. The Group’s approach to wind farm construction projects in the year has been to undertake contracts with reduced scope (compared with FY20) and consequently lower revenue, but with risk minimised through the agreement of fee for service contracts. The pipeline of wind farm construction remains strong and will provide a profitable source of work over the medium term. In addition to the construction work Boom continued to grow its revenue in the wind farm maintenance sector. Boom completed 17 Boom Logistics Annual Report 2021 OPERATING AND FINANCIAL REVIEW (CONTINUED) significant maintenance work in the year that involved supplying large mobile assets and specialist crews to replace damaged blades, change gearboxes, and replace pitch bearings. The maintenance sector is a growing opportunity for the Group with an expanding range of services being offered to clients to complement the core services that utilise Boom’s skilled wind farm crews and large cranes and travel towers. The energy market is a growing opportunity and the Group has eight Bronto travel towers on order to be delivered through FY22 to enhance its capabilities to service this market. A number of projects are planned for FY22 and beyond as work to upgrade the electricity grid progresses nationally and new renewable energy projects are completed which require works to connect them into substations. In addition to the growing opportunity in wind farm maintenance there is strong pipeline of work in energy projects that typically utilise Boom’s fleet of large travel towers. During the year Boom worked with Powerlines Plus to install a 220kv transmission line in the Pilbara region. This has been a strong partnership and Boom is well placed to secure additional work in FY22 as well as similar major projects on the east coast. Infrastructure and Construction Revenue in the infrastructure and construction segment was up $5.0 million. During the year the Group has worked successfully at the Snowy 2.0 project assisting with the build and positioning of the major tunnel boring machine that is being used to construct 18 Boom Logistics Annual Report 2021 the 27 kilometres of tunnels that will link the Tantangara and Talbingo dams. Other major work in the year included work on the Parramatta Light Rail project, works in Queensland for Martinus Rail and bridge works on the Armadale Road project in WA. Project delays in this sector were frequent through the year as customers suffered from supply chain delays which deferred commitment to resources. Whilst this has been a frustration, Boom has a pipeline of opportunities growing into FY22 and beyond and is well placed to capitalise on the growing infrastructure segment as major new projects commence. Boom’s flexible rental model provides access to new equipment to deploy on infrastructure projects as these opportunities arise. Industrial Maintenance Revenue in the industrial maintenance segment was down $1.1m on the prior year. Revenue was impacted by a reduction of activity in the Group’s contracts in the Latrobe Valley in Victoria and in its offshore maintenance contract in the Bass Strait where Covid restrictions continued to limit the number of people permitted on site. 360+ Cranes and Travel Towers Telecommunications Revenue in the telecommunications and other segments was down $2.2m on the prior year. This segment was impacted by the continued state government Covid lockdowns. Due to the more transactional nature of the work in this segment jobs were frequently cancelled by customers as lockdowns occurred periodically through the year. As individual jobs in the telecommunications sector tend to be discrete work packages the customer has a larger ability to cancel or move the job at short notice. Activity in the sector remains high with the on-going 5G and NBN rollout work providing a solid outlook for FY22. 19 Boom Logistics Annual Report 2021 HEALTH, SAFETY, ENVIRONMENT AND QUALITY Our HSEQ Goals Boom’s three year HSEQ strategic plan was reviewed in FY21 and sets out the following goals for the company: ● To exceed client and other stakeholders’ HSEQ expectations by consistently providing benchmarked high quality and incident free services. ● To establish a positive and proactive safety culture with well-trained and competent people who demonstrate Boom’s values and exceptional safety leadership. ● To continue to develop and use excellent HSEQ processes and systems. ● To uphold best practice environmental standards. Highlights ● Boom reported a Lost Time Injury Frequency Rate (LTIFR) of ● 2) Boom’s systems of work are aligned with international zero at the end of FY21. best practice for managing safety ● Boom reported a Total Recordable Injury Frequency Rate (TRIFR) of 5.1 at the end of FY21, an improvement from 8.0 in FY20. ● Boom has continued a strong focus on Safety Leadership and increased the Safe Act Observation Frequency Rate (SAOFR) performance to 8,242 from 6,450 in the prior year. ● The company has successfully transitioned to the new international safety standard ISO 45001: 2018. The standard applies to depots for the crane and travel tower businesses and being certified shows that: ● 3) Boom is able to provide clear evidence that our systems of work are in use ● The company has continued Certification to AS/NZS ISO 9001:2015. ● Boom has developed a new Ground Conditions training video in conjunction with Driver Safety Australia, Elevating Work Platform Association of Australia (EWPA) and Crane Industry Council of Australia (CICA) for the set up and use of both travel towers and cranes that operate on outriggers. Boom seeks to be an industry leader in safe work practices. ● 1) Boom’s systems of work meet an internationally ● Compliance with environmental management recognised safety standard obligations continues. Safety Leadership Structure The company takes a four-tiered approach to safety leadership: Health, Safety, Environment & Quality (HSEQ) Committee The HSEQ Committee, a sub-committee of the Board, meets quarterly and considers all aspects of Boom’s safety environment. A summary of the committee’s responsibilities is set out in the Corporate Governance Statement. Safety Leadership Team (SLT) The Safety Leadership Team is chaired by Boom’s chief executive officer and includes the general managers from each business unit, senior management and the HSEQ leadership team. The SLT prioritises and monitors the safety environment and safety improvement activities. The SLT is supported by the Safety Management Team of safety professionals who operate nationally. 20 Boom Logistics Annual Report 2021 Personal Commitment All operational managers commit to a range of consultative and interactive activities which reinforce their personal commitment and our corporate commitment to Health and Safety. Training Boom’s operational training program contains a significant safety leadership element for frontline supervisory personnel and management which works to embed good workplace safety as an operational discipline. The training emphasises the importance of sustained and visible leadership through employee engagement and safety interactions. Key metrics are measured and recorded in the corporate HSEQ management database and included in the monthly HSEQ Report to the Board. Measurable activities include: Safe Act Observation Frequency Rate (SAOFR) improved 28% ● Improve systems / procedures in line with actions taken during the COVID-19 pandemic. ● A cultural improvement and leadership program consistent with Boom’s belief that excellent leadership improves all aspects of our business including HSEQ performance. ● A wellbeing program aimed at improving and maintaining the health of employees. ● Review of the life saving rules program and the Boom approach to risk management. ● Develop tools for the management of ground conditions risks. ● Safe Act Observations and Safety Interactions which are ● Seek opportunities to introduce digital transformation technology. ● Improved use of the hazard module in the myosh incident management software. ● Review overall approach to sustainability. Environment Boom continues to meet its legal and community obligations in environmental management. ● Boom’s environmental impact is managed through procedures mostly directed at waste management. Disposal of waste oil, batteries and tyres is undertaken by licensed disposal agents. ● Boom has procedures and equipment to manage runoff and spills. Onsite work is conducted in accordance with client procedures and regulations. ● Energy usage minimisation initiatives are in place. Quality The Company has continued Certification to AS/NZS ISO 9001:2015. an informal risk management and assurance activity which generates positive safety related discussions with employees in the field. ● HSEQ Internal Audits, which include consultation and discussion with employees. ● Involvement in consultative meetings (such as safety committees), delivering toolbox talks and pre-start meetings. Safety Boom’s safety performance continues to be a key operational focus, with emphasis on risk management, leadership and assurance. Our goal is to ensure employees, customers and the general public are free from harm when delivering lifting solutions in complex and diverse operating environments. The company’s ongoing emphasis on safety leadership, best practice safety systems and “Safety Always” culture builds confidence and trust with our customers and employees around the predictable, reliable and consistent delivery of high value lifting solutions. The focus of the three-year HSEQ Strategic Plans (2021-2023) is on leadership, safe operation of plant and equipment to ensure safety of our people and avoid damage to our plant and employee wellbeing. The “One BOOM” HSEQ Management System continues to be developed and enhanced. The HSEQ Strategic Plan actions include: ● System improvements in the areas of lifting operations, verification of competency, training, and contractor management. 21 Boom Logistics Annual Report 2021 OUR PEOPLE Boom continues to invest in our people to deliver efficiencies and develop leadership across the business. Our IT platform enables remote work and flexibility Boom’s total workforce exceeded 800 people during FY21. We have 445 permanent employees, 80% of whom directly provide services to customers – including operators, supervisors, safety professionals, engineers and sales personnel, while the remainder comprise management and functional support to the business. Our flexible workforce of over 400 employees enabled the company to support projects and maintenance shutdowns. A vital element of our company culture and drive for responsible growth is ensuring that Boom is a safe place to work. We recognise and reward performance, create opportunities for our staff to develop and provide support so they continue to thrive. Leadership program Boom recognises that people are critical to its success and continues to invest to deliver efficiencies and develop leadership capability across the organisation through internal and external training and development activities. Our workforce is well-trained so all employees work in a safe and professional manner to the standard and expectations of Boom and its customers. The company invests in the development of its business leaders to maximise their management potential. Training and development of operational staff ensures operating tickets are maintained, safety standards are upheld, customer site inductions are current and verification of competency is undertaken to meet the needs of our customers. Indigenous commitment We recognise the traditional rights of Indigenous peoples and acknowledge their right to maintain their cultures, identities, traditions and customs. Boom will continue to support communities and its customers in developing Indigenous programs in remote locations of Australia. Our National Indigenous Employment Framework provides a basis for localised strategies to generate work opportunities and support Indigenous communities. 22 Boom Logistics Annual Report 2021 OUR PEOPLE Training and development Boom has strengthened its commitment to training of employees through offering traineeships and apprenticeships within operational roles. Boom’s e-Learning Centre provides on-line induction and on-boarding through its life saving rules and compliance training. Our employee survey invites employees to provide candid feedback on their experience in the workplace. Gender equality Boom is dedicated to growing a rich culture, diverse workforce and a work environment in which every employee is treated fairly and respectfully and given the opportunity to contribute to business success. As part of our ongoing commitment, Boom reviewed it’s gender equality plan this year and continues to promote gender equality throughout the business. Total workforce exceeds 800 23 Boom Logistics Annual Report 2021 BOARD OF DIRECTORS AND KEY MANAGEMENT TEAM Maxwell John Findlay BEcon, FAICD (Independent, Non-executive Chairperson) (appointed 18 July 2016) Mr. Findlay was Managing Director and Chief Executive of industrial services company Programmed Group from 1990 until his retirement from executive life in 2008. Since retiring as an executive, Mr. Findlay has engaged in various non-executive roles in industrial services, engineering and government. He is currently Chairman of the Snowy Mountains Engineering Corporation and was previously Director of EVZ Limited and The Royal Children’s Hospital. During the past three years, Mr. Findlay has not held any other ASX listed public company Directorships. Mr. Findlay is Chairperson of the Boom Logistics Risk Committee. Tony Spassopoulos BBus (Management), MBA (Managing Director) (appointed 20 September 2018) Mr. Spassopoulos has over 30 years experience in the equipment hire, industrial services, and the pallet/container pooling industries. Prior to joining the Company, Mr. Spassopoulos was Director/ General Manager of CHEP Asia Pacific – Reusable Plastics Containers business and held other senior management positions during his 19 years in the Brambles Group. He joined the Company in 2008 and served as Director of Sales and Marketing and Chief Operating Officer prior to his appointment as Managing Director. During the past three years, Mr. Spassopoulos has not held any other ASX listed public company Directorships. Melanie Jayne Allibon MAICD (Independent, Non-executive Director) (appointed 19 June 2019) Ms. Allibon has an extensive background in human resources and operating risk, primarily in the manufacturing, FMCG, mining and industrial services sectors. Ms. Allibon has held Non-executive Director positions with the Australian Mines and Metals Association, and Melbourne Water Corporation. She is currently a member of World Vision’s Business Advisory Council, Chief Executive Women and the International Women’s Forum. During the past three years, Ms. Allibon has not held any other ASX listed public company Directorships. Ms. Allibon is Chairperson of the Boom Logistics Nomination & Remuneration Committee. Stephen Anthony Grove (Non-independent, Non-executive Director) (appointed 6 November 2020) Mr. Grove is Executive Chairman of the Grove Group of companies which, among other activities, manufactures and hires more than 2,300 portable and relocatable buildings and other assets to clients across Australia, primarily in the construction and educational classroom facilities sectors. He founded the group in 1997 and owns 100% through related entities. Mr. Grove brings considerable experience in the plant hire sector, together with general business, strategy and management expertise to the Board. Since the date of appointment, Mr. Grove has not held any other ASX listed public company Directorships. 24 Boom Logistics Annual Report 2021 Terence Alexander Hebiton (Independent, Non-executive Director) (appointed 22 December 2000) Mr. Hebiton commenced his commercial career in the rural sector. In 1989, he acquired various business interests associated with land and property rental developments. He is currently a Director of a number of private companies. He was a principal of Alpha Crane Hire, one of the founding entities of Boom Logistics. Mr. Hebiton was the CEO of Boom Logistics at its formation and ceased being an Executive Director in 2004. During the past three years, Mr. Hebiton has not held any other ASX listed public company Directorships. Mr. Hebiton is Chairperson of the Health, Safety, Environment & Quality Committee. Kieran Pryke BCom, FCPA (Independent, Non-executive Director) (appointed 8 February 2021) Mr. Pryke has over 25 years’ experience in the property industry. He has been Chief Financial Officer of General Property Trust, following nine years in Lendlease Corporation’s construction, development and investment management divisions, and of Australand Property Group and Grocon Group. Currently he is a non-executive director of Aventus Holdings Limited, where he chairs the audit, risk and compliance committee, and a director of GFM Investment Management Limited. He is also a director of Ozharvest Limited, the not-for-profit organisation which distributes surplus food to the needy. Since the date of appointment, Mr. Pryke has held ASX listed public company Directorships with Aventus Holdings Limited (current). Mr. Pryke is Chairperson of the Boom Logistics Audit Committee. Ben Pieyre Chief Operating Officer (appointed Chief Operating Officer on 4 January 2021) Ben joined Boom in September 2019. He has worked in the crane hire industry since 2006 commencing his career as a fleet controller before promotions into senior management. He has extensive operational experience specializing in Civil Construction, Industrial Services and Maintenance Sectors, as well as HR/IR and Engineering. Ben is currently the Vice president of the CICA board and Vice Chair for the WA committee. Ben holds an Advance Diploma in Leadership and Management and French qualifications in Business Management, Human Resources, Commerce and Marketing. Tim Rogers Chief Financial Officer, M.Phil (Criminology), MArts (Hons) (Economics & Law) (appointed July 2015) Prior to joining BOOM, Tim was the Group Chief Financial Officer for Crowe Horwath. An ASX listed Company with over 100 office locations, Crowe Horwath is the 5th largest accounting services group in Australasia. Prior to joining Crowe Horwath, Tim was a Director of Audit & Assurance at Deloitte Touche Tomatsu. Tim has a wealth of finance and strategy experience. Malcolm Ross Company Secretary, BBus, LLB, LLM, GradDipACG, FGIA (appointed Company Secretary 22 September 2014) Mr Ross joined the Company on 7 November 2011 as General Counsel and in addition to those responsibilities was appointed Company Secretary on 22 September 2014. Following admission as a solicitor in Victoria in 1997, he worked with Harwood Andrews and Hall & Wilcox Lawyers. In 2002, he joined InterContinental Hotels Group Plc (FTSE-listed) based in Singapore where his final position was Vice-President Legal and Associate General Counsel with responsibility for leading the legal function in Asia Australasia. 25 Boom Logistics Annual Report 2021 FINANCIAL REPORT 27 Directors’ Report 29 Remuneration Report 41 Lead Auditor’s Independence 50 2 Revenue from Contracts with Customers Section D: Other Disclosures 64 14 Leases 51 3 Other Income and Expenses 66 15 Subsidiaries Declaration 52 4 Income Tax 67 16 Deed of Cross Guarantee 42 Consolidated Statement of Comprehensive Income 43 Consolidated Statement of Financial Position 44 Consolidated Statement of Cash Flows 45 Consolidated Statement of Changes in Equity Notes to the Consolidated Financial Statements 46 About This Report 46 COVID-19 Impact on the Group Section A: Financial Performance 47 1 Segment Reporting 54 5 Earnings Per Share 69 17 Parent Entity 54 6 Dividends Section B: Operating Assets and Liabilities 55 7 Property, Plant and Equipment 56 8 Impairment Testing of Assets 57 9 Reconciliation of the Net Cash Flows from Operations with Net Profit After Tax 57 10 Other Provisions and Liabilities Section C: Funding Structures 58 11 Interest Bearing Loans and Borrowings 70 18 Key Management Personnel 70 19 Share-based Payments 73 20 Commitments 73 21 Contingencies 73 22 Auditor’s Remuneration 73 23 Subsequent Events 74 24 New Accounting Policies and Standards 75 Directors’ Declaration 76 Independent Auditor’s Report to Members of Boom Logistics Limited 60 12 Financial Risk Management 80 ASX Additional Information 64 13 Contributed Equity 26 Boom Logistics Annual Report 2021 DIRECTORS’ REPORT for the year ended 30 June 2021 Your Directors present their report on the consolidated entity (referred to hereafter as “the Group”) consisting of Boom Logistics Limited (“Boom Logistics” or “the Company”) and the entities it controlled for the financial year ended 30 June 2021. DIRECTORS The Directors of the Company at any time during or since the end of the financial year are: Maxwell John Findlay Qualifications and biographies (see previous page) Tony Spassopoulos Qualifications and biographies (see previous page) Melanie Jayne Allibon Qualifications and biographies (see previous page) Stephen Anthony Grove Qualifications and biographies (see previous page) Terence Alexander Hebiton Qualifications and biographies (see previous page) Kieran Pryke Qualifications and biographies (see previous page) Jean-Pierre Buijtels MSc (International Business) (Non-independent, Non-executive Director) (appointed 2 June 2017; resigned 27 November 2020) Mr. Buijtels is the portfolio manager of Gran Fondo Capital, a Dutch mutual fund. He is also involved in private equity investments at Strikwerda Investments. Since 2007 he has been investing in private equity and public equity at 3i, Gimv and Strikwerda Investments. He has been involved at board level at several companies, currently as observer at Constellation Software Netherlands Holding Coöperatief U.A (a subsidiary of Constellation Software Inc. and the indirect owner of Total Specific Solutions). During the past three years, Mr. Buijtels has not held any other ASX listed public company Directorships. Terrence Charles Francis DBus (hon. causa), BE (Civil), MBA, FIE Aust, FAICD, FFin (Independent, Non-executive Director) (appointed 13 January 2005; resigned 27 November 2020) Mr. Francis has over 20 years experience as a Non-executive Director of infrastructure development companies including Infrastructure Specialist Asset Management Limited, NBN Limited, Southern and Eastern Integrated Transport Authority, Emergency Services Telecommunications Authority. He also advises business and government on infrastructure development. Previously Mr. Francis was Executive Director of Deutsche Bank Australia, and Chief Executive Officer of Bank of America in Australia. During the past three years, Mr. Francis has not held any other ASX listed public company Directorships. Mr. Francis was Chairperson of the Boom Logistics Audit Committee. Company Secretary Malcolm Peter Ross Qualifications and biographies (see previous page) Directors’ Interests in the Shares and Options of the Company As at the date of this report, the interests of the Directors in the shares, rights and options of Boom Logistics Limited were: Name M.J. Findlay T. Spassopoulos M.J. Allibon S.A. Grove T.A. Hebiton K. Pryke Shares Rights Options 250,000 – – 1,500,000 2,994,889 14,166,667 100,000 23,942,297 547,995 150,000 – – – – – – – – 27 Boom Logistics Annual Report 2021 Directors Meetings The number of meetings of Directors (including meetings of committees of Directors) held during the year and the number of meetings attended by each Director was as follows: Board of Directors Audit Committee Nomination and Remuneration Committee Health, Safety, Environment & Quality Committee Risk Committee Name of Director Held Attended Held Attended Held Attended Held Attended Held Attended M.J. Findlay T. Spassopoulos M.J. Allibon S.A. Grovea T.A. Hebiton K. Prykea J-P. Buijtelsb T.C. Francisc 14 14 14 14 14 14 14 14 14 14 14 10 14 6 6 6 5 – – – 5 5 – 5 5 – – – 5 2 – 3 1 1 1 1 1 1 1 1 1 1 1 1 1 1 – – 4 4 4 4 4 4 4 4 4 4 4 3 4 2 – 1 2 2 2 2 2 2 2 2 2 2 2 2 2 1 – – a Attended 100% of meetings eligible to attend from date of appointment. b Attended 100% of meetings eligible to attend prior to resignation except for one Health, Safety, Environment & Quality Committee meeting. c Attended 100% of meetings eligible to attend prior to resignation. Corporate Structure Boom Logistics is a company limited by shares that is incorporated and domiciled in Australia. Boom Logistics Limited has prepared a consolidated financial report incorporating the entities that it controlled during the financial year, which are listed in note 15 to the financial statements. Indemnification and Insurance The Company has entered into Deeds of Access, Indemnity and Insurance with each of the Directors and the Company Secretary, under which the Company indemnifies, to the extent not precluded by law from doing so, those persons against any liability they incur in or arising out of discharging their duties. No indemnity has been granted to an auditor of the Group in their capacity as auditor. During the financial year, the Company has paid an insurance premium for the benefit of the Directors and officers of the Company in accordance with common commercial practice. The insurance policy prohibits disclosure of the liability insured and the amount of the premium. Nature of Operations and Principal Activities During the year, the principal activity of the Group was the provision of lifting solutions and specialised labour services. Operating and Financial Review A review of Group operations and results for the financial year ended 30 June 2021 is set out in the operating and financial review section of the Annual Report and in the accompanying financial statements. Corporate Governance The Group recognises the need for the highest standards of corporate behaviour and accountability. The Directors of Boom Logistics have accordingly followed the recommendations set by the ASX Corporate Governance Council. For further information on corporate governance policies adopted by Boom Logistics Limited, refer to our website: www.boomlogistics.com.au/ about-us/corporate-governance and annual reports. 28 DIRECTORS’ REPORTfor the year ended 30 June 2021Boom Logistics Annual Report 2021 Significant Changes in the State of Affairs There have been no significant changes in the state of affairs other than that reported in the Operating and Financial Review section disclosed above. Significant Events After the Balance Date Subsequent to 30 June 2021, the Board have resolved to pay an unfranked final dividend of 1.0 cents per share on 5 November 2021 to shareholders on the register at 30 September 2021. The estimated liability based on the number of ordinary shares at year end is $4.278 million. The dividend has not been provided for in the 30 June 2021 year end financial statements. Likely Developments and Expected Results The Directors expect performance to continue to improve as a result of key project wins and building new revenue and expanding services in key geographies and markets. Maintaining tight control of costs will ensure new revenue is delivered at improved margins and increase profit and return on capital. The economic conditions created by COVID-19 remain a challenge. There is consequently a degree of uncertainty surrounding the ongoing pandemic and its impact. The Directors are vigilant to this and are actively monitoring the situation. The Directors are cognisant of the requirement to continuously disclose material matters to the market. At this time, other than the matters addressed in this financial report there are no matters sufficiently advanced or at a level of certainty that would require disclosure. Environmental Regulation and Performance The Board confirms that the Group has adequate systems and processes in place to manage and comply with environmental regulations as they apply to the Group. This includes the National Greenhouse and Energy Reporting Act 2007 which requires the Group to report energy consumption and greenhouse gas emissions for the 12 months ended 30 June 2021 and future periods. There have been no significant known breaches of any environmental regulations to which the Group is subject. Remuneration Report – Audited The Directors of Boom Logistics Limited present the Remuneration Report for the Company and the Group for financial year ended 30 June 2021 (“FY21”). This report outlines the remuneration arrangements in place for non-executive directors (“NEDs”) and the Managing Director and Senior Executives (“Executive KMP”). Key management personnel (“KMP”) are those persons who, directly or indirectly, have authority and responsibility for planning, directing and controlling the major activities of the Company and Group. Principles of Remuneration Practices The Group’s remuneration practices are designed to maintain alignment with business strategy, shareholder interests and business performance whilst ensuring remuneration is appropriate. The Executive KMP remuneration framework and KMP remuneration is reviewed annually by the Board with the assistance of the Nomination & Remuneration Committee. In conducting the Executive KMP remuneration review, the following principles are applied: ● Monitoring against external competitiveness, as appropriate using independent market survey data comparing the Group’s remuneration levels against industry peers in terms of comparable job size and responsibility; ● Internal equity, ensuring Executive KMP remuneration across the Group is based upon a clear view of the scope of individual positions and the respective responsibilities; ● A meaningful “at risk” component with entitlement dependent on achieving Group and individual performance targets set by the Board of Directors and aligned to the Group’s strategy; and ● Reward for performance represents a balance of annual and longer term targets. Nomination and Remuneration Committee The Group is committed to ensuring remuneration is informed by market data and linked to the Group’s strategy and performance. In doing so, the Board of Directors rely on the advice provided by the Nomination and Remuneration Committee including their review and making recommendations: ● With regard to remuneration policies applicable to the Directors, Executive KMP and employees generally; ● In relation to the remuneration of Directors and Executive KMP; ● Of general remuneration principles, including incentive schemes, bonuses and share plans that reward individual and team performance; 29 Boom Logistics Annual Report 2021 ● With regard to termination policies and procedures for Directors and Executive KMP; ● In relation to the Group’s superannuation arrangements; and ● To the Board of Directors for the inclusion of the Remuneration Report in the Group’s annual report. The Nomination and Remuneration Committee comprises a majority of independent directors. From time to time, the Nomination and Remuneration Committee also draws upon advice and market survey data from external consultants in discharging its responsibilities. Period as a KMP All of FY21 From 4 January 2021 All of FY21 All of FY21 Health, Safety, Environment & Quality Member Member Member Chairperson Member Member Member Risk Chairperson Member Member Member Member Member Member Details of Key Management Personnel The tables below set out the KMP and their movements during FY21. Key Management Personnel (Executive) Name Title Tony Spassopoulos Chief Executive Officer & Managing Director Ben Pieyre Tim Rogersa Malcolm Ross Chief Operating Officer Chief Financial Officer General Counsel & Company Secretary a Tim Rogers will resign as Chief Financial Officer effective from 27 August 2021. Key Management Personnel (Non-executive Directors) Name Maxwell Findlay Melanie Allibon Stephen Grove Terence Hebiton Kieran Prykec Positionb Chairperson Non-executive Director Non-executive Director Non-executive Director Non-executive Director Jean-Pierre Buijtelsd Non-executive Director Nomination & Remuneration Audit Member Member – – Member Chairperson – Chairperson Member Member Member Member Member Terrence Francisd Non-executive Director Chairperson b All non-executive directors are independent, except for Stephen Grove and Jean-Pierre Buijtels who are not independent. c Kieran Pryke was appointed Chairperson of the Audit Committee on 8 February 2021. d Jean-Pierre Buijtels and Terrence Francis resigned from the Board and all Committees on 27 November 2020. 30 DIRECTORS’ REPORTfor the year ended 30 June 2021Boom Logistics Annual Report 2021 Remuneration Arrangements of Executive Key Management Personnel In the normal course of business, remuneration comprises fixed remuneration (fixed annual reward) and variable or “at risk” remuneration incentives. The Group’s remuneration structure for the Executive KMP comprises two main components: Fixed annual reward This element comprises base salary, any fringe benefits (e.g. motor vehicle allowance) and employer contributed superannuation. Executive KMP have scope to vary the components that make up their FAR and can tailor their salary package to suit individual requirements. Salary sacrifice rights plan a) Eligible executives will be permitted to salary sacrifice a portion of their pre-tax fixed annual remuneration to acquire equity in the form of rights to fully paid ordinary shares in the Company. Each right is a right to acquire one ordinary share in the Company. The exact number of rights to be granted is based on the amount of salary sacrificed and the 5 day volume weighted average price prior each month. Rights do not carry any dividend or voting rights. Rights will be granted twice a year following the announcement of the half-year and full-year results or in any event, within twelve months of the Annual General Meeting (“AGM”). Rights will have a twelve month exercise restriction commencing from the relevant grant dates. The rights to ordinary shares equivalent to the amount salary sacrificed in the period from the most recent grant date will be granted following the announcement of the full-year results. Variable remuneration The Group has a number of variable remuneration arrangements as follows: Short term incentive plan b) Eligible executives will have the opportunity to receive short term incentives subject to meeting performance hurdles over the financial year. 50% of the STIP outcome achieved for the financial year will be delivered in cash and 50% will be delivered in equity in the form of rights to ordinary shares in the Company. Each right is a right to acquire one ordinary share in the Company. The exact number of rights to be granted is based on 50% of the STIP outcome divided by the 5 day volume weighted average price after the release of full year results. Rights do not carry any dividend or voting rights. Rights will be granted following the announcement of the full-year results or in any event, within twelve months of the AGM. Rights will have a six month exercise restriction commencing from the grant date. The objectives of this plan are to: ● Focus Executive KMP on key annual business goals and reinforce the link between performance and reward; ● Allow scope to recognise exceptional performance through a sliding scale of reward; ● Encourage teamwork as well as individual performance in meeting annual goals; and ● Align reward with the Group’s values. Long term incentive plan c) Eligible executives will be granted options to acquire ordinary shares in the Company, subject to performance hurdles and some or all may vest at the end of the three year period if the performance hurdles are met. Each option is a right to acquire one ordinary share in the Company (or an equivalent cash amount) subject to payment of the exercise price. The exact number of options to be granted will be the LTIP award divided by the option valuation using a Binomial valuation methodology prior to grant date. The option exercise price is calculated based on the 5 day volume weighted average price prior to the grant date. Options do not carry any dividend or voting rights. Options will be granted within twelve months of the Annual General Meeting. Options are subject to performance hurdles based on three independent measures comprising absolute earnings per share (“EPS”), return on capital employed and key safety performance metrics, which are measured at the end of the three year performance period. The Board of Directors retains a discretion to adjust the performance hurdles as required to ensure plan participants are neither advantaged nor disadvantaged by matters outside management’s control that materially affect the performance hurdles (for example, by excluding one-off non-recurrent items or the impact of significant acquisitions or disposals). 31 Boom Logistics Annual Report 2021 The following table shows the potential annual remuneration packages for Executive KMP during the financial year. Name Title Tony Spassopoulos Chief Executive Officer & Managing Director Ben Pieyre Tim Rogers Chief Operating Officer Chief Financial Officer Malcolm Ross General Counsel & Company Secretary Fixed Variable FAR 600,000 350,000 339,433 283,467 STIP % of FAR LTIP % of FAR 40% 30% 30% 20% 50% 20% 20% 20% Consequences of Performance on Shareholder Wealth In considering the Group’s performance and benefits for shareholder wealth, the Nomination and Remuneration Committee have regard to the following indices in respect of the current and previous financial years. Net profit/(loss) attributable to members of Boom Logistics Limited Dividends paid Share price at financial year end Earnings per share Return on capital employed (Trading EBIT/ Capital Employed Remuneration Review The review of KMP and general staff remuneration is conducted annually through a formal process. KMP remuneration is reviewed by the Nomination and Remuneration Committee of the Board of Directors with input from the Chief Executive Officer (“CEO”). Market survey data combined with individual performance appraisals determine recommendations that go to the Board of Directors for approval. This process occurs in September of each year and remuneration adjustments take effect from October of that year. The Nomination and Remuneration Committee has direct responsibility for reviewing CEO performance against targets set by the Board of Directors and recommending to the Board of Directors appropriate adjustments to his remuneration package. Staff reviews are similarly conducted by the relevant Executives and General Managers, with overview from the CEO. 2021 $’000 2020 $'000 2019 $’000 2018 $’000 2017 $’000 $1,230 $4,278 $0.14 $0.00 ($16,959) ($5,330) ($1,547) ($22,630) $– $0.11 $– $0.15 ($0.04) ($0.01) $– $0.24 ($0.00) $– $0.09 ($0.05) 2.5% (1.4%) 1.5% 1.6% (3.7%) CEO & Managing Director Remuneration Mr. Spassopoulos has an employment contract that has no fixed term. Both the Company and Mr. Spassopoulos are entitled to terminate the employment contract on six month’s written notice, except in the case of serious misconduct or neglect of duty. Contractual arrangements relating to a redundancy event are set out below. Mr. Spassopoulos’ remuneration package as at 30 June 2021 comprised the following components: ● FAR of $600,000 per annum, inclusive of allowances and superannuation contributions in line with the Superannuation Guarantee legislation. Mr. Spassopoulos’ FAR is reviewed annually effective 1 October each year taking into account the Group’s performance, industry and economic conditions and personal performance. ● Mr. Spassopoulos has elected to salary sacrifice 20% of his FAR for rights to ordinary shares in the Company equating to an annual value of $120,000; ● STIP equivalent to 40% of his FAR upon achievement of performance conditions set by the Board of Directors on an annual basis. 50% of the STIP outcome achieved for 32 DIRECTORS’ REPORTfor the year ended 30 June 2021Boom Logistics Annual Report 2021 the financial year will be delivered in cash and 50% will be delivered in equity in the form of rights to ordinary shares in the Company. The cash payment of any bonus under the STIP will take place after the annual audit of the Group’s financial report which typically occurs in the first half of the following financial year. No STIP is awarded if performance conditions are not met; and ● LTIP equivalent to 50% of his FAR is allocated in options of the Company with a performance hurdle based on absolute EPS, return on capital employed and key safety performance metrics measured at the end of the three year performance period subject to shareholder approval at the Company’s Annual General Meeting. If his employment is terminated on the grounds of redundancy or where a diminution in responsibility occurs, Mr. Spassopoulos will be entitled to receive: ● The lesser of the maximum amount permitted by the Corporations Act and 12 months pay calculated in accordance with his FAR at the date of redundancy or diminution; ● Vested employee entitlements; ● STIP rights that have vested and if not exercised the exercise restrictions will be lifted. Where employment ceased prior to the STIP outcome being determined, the Board of Directors may at its discretion determine a pro-rated STIP based on the proportion of the performance period that has elapsed at the time of cessation. To the extent the relevant performance conditions are satisfied, the STIP award will be paid in cash and no rights will be allocated; ● LTIP options that have vested. Where employment ceased before the options vest, unvested options will continue “on-foot” and will be tested following the end of the original vesting date, and vesting to the extent that the relevant conditions have been satisfied (ignoring any service related conditions); ● In the event a termination payment is made, no payment in lieu of notice will be made. The Board of Directors also have a broader discretion to apply any other treatment that it deems appropriate in the circumstances. In the event that Mr. Spassopoulos was to be summarily dismissed, he would be paid for the period served prior to dismissal and any accrued leave entitlements. Mr. Spassopoulos would not be entitled to the payment of any bonus under the STIP or LTIP. Mr. Spassopoulos is subject to restrictive covenants upon cessation of his employment for a maximum period of one year. Other Executive KMP (standard contracts) All other Executive KMP have contracts with no fixed term. Either the Company or the Executive KMP may terminate the Executive KMP employment agreement by providing three months written notice or providing payment in lieu of the notice period (based upon the fixed component of the Executive KMP remuneration). If employment is terminated on the grounds of redundancy, in addition to the notice period, all other Executive KMP will be entitled to receive up to 6 months pay calculated in accordance with their FAR. On termination by notice of the Company or the Executive KMP, any STIP and LTIP that have vested will be awarded. Where employment ceased prior to the STIP outcome being determined or LTIP options vest, the treatment will be the same as that disclosed in the CEO & Managing Director Remuneration section above. The Company may terminate the contract at any time without notice if serious misconduct has occurred. Where termination with cause occurs, the Executive KMP is only entitled to that proportion of remuneration that is fixed, and only up to the date of termination. On termination with cause, any unvested STIP rights and LTIP shares or options will lapse. 33 Boom Logistics Annual Report 2021 % 3 . 9 1 7 5 5 , 1 2 2 5 1 0 4 , 7 7 6 , 1 2 0 0 5 , 0 1 – 0 0 5 , 2 1 0 0 5 , 2 1 0 0 5 , 0 1 l a t o T e e y o l p m E & l a u n n A e c n a m r o f r e p s t fi e n e B e c i v r e s g n o l P I T L y r a l a S d e c fi i r c a s - r e p u S l a t o T m r e T g n o L b s t n e m y a P d e s a b - e r a h S t n e m y o l p m E m r e T t r o h S d e t a l e r e s n e p x E d e v a e l s n o i t p o c s t h g i r P I T S s t h g i r n o i t a u n n a a r e h t O s u n o b h s a C y r a l a S h s a C t s o P . l w o e b t u o t e s e r a 1 2 0 2 e n u J 0 3 d e d n e r a e y e h t r o f n o i t a r e n u m e r P M K e v i t u c e x E o t g n i t a e r p u o r G e h t o t l t s o c e h t f o s l i a t e D P M K e v i t u c e x E f o n o i t a r e n u m e R l a t o T 34 % 4 4 1 . % 6 3 1 . 8 9 1 , 7 7 7 4 2 4 , 5 6 0 0 9 0 5 6 , ) 8 4 1 , 9 1 ( 4 7 7 , 6 3 4 0 4 8 3 , 0 0 5 , 7 3 0 0 0 5 2 , 0 0 0 0 2 1 , 0 0 0 0 2 1 , 0 0 0 , 5 2 0 0 0 5 2 , 2 9 4 , 2 2 7 2 8 , 7 2 0 0 5 , 7 3 0 0 0 5 2 , 8 0 5 , 2 3 4 , 7 1 8 8 0 4 i ) r o t c e r i D g n g a n a M d n a r e c ffi O e v i t u c e x E f e h C ( i l s o u o p o s s a p S y n o T s e v i t u c e x E 1 2 0 2 0 2 0 2 % 5 . 0 % 3 0 1 . % 3 . 0 1 % 2 . 5 – – 5 3 5 , 3 3 3 , 2 1 6 2 9 3 ) 8 1 2 , 9 ( 1 2 5 0 2 , ) 2 4 1 , 5 3 ( ) 5 0 3 5 ( , 5 1 0 , 6 1 3 3 3 1 , 8 7 2 2 8 6 ) 5 9 6 2 1 ( , 6 5 4 , 7 ) 0 6 4 5 ( , – 2 1 9 2 2 , 2 2 9 9 , 0 0 5 , 2 1 – – 3 4 9 , 3 3 0 7 2 3 3 , 6 0 3 , 8 4 6 , 1 3 0 9 , 0 6 5 4 6 , 1 2 3 , 1 ) 2 2 3 , 1 1 ( 5 6 7 , 0 3 9 3 6 , 7 2 0 0 5 , 0 6 4 3 8 , 7 5 3 4 9 , 3 5 1 0 7 2 3 5 1 , 0 0 0 , 5 2 0 0 0 5 2 , 0 0 0 , 5 2 9 3 9 4 2 , 0 0 5 , 7 8 9 3 9 4 7 , 7 3 7 , 8 2 6 2 2 1 , 3 0 0 , 8 1 3 0 5 9 1 , 2 3 7 , 1 6 2 9 5 9 5 , 3 1 9 , 6 3 1 1 9 2 2 , ) r e c ffi O g n i t a r e p O f e h C ( e r y e P n e B i i 5 6 8 , 9 4 1 e ) r e c ffi O l 2 0 3 , 3 7 2 1 4 0 , 1 6 2 i a i c n a n F f e h C ( i s r e g o R m T i 1 2 0 2 1 2 0 2 0 2 0 2 ) y r a t e r c e S y n a p m o C d n a l e s n u o C l a r e n e G ( s s o R m o c l a M l 1 2 9 9 , 0 0 5 , 2 1 3 1 4 , 7 9 2 3 8 , 7 5 5 7 8 , 9 3 2 3 0 0 2 3 2 , 1 2 0 2 0 2 0 2 1 6 8 , 1 0 9 0 5 5 , 5 9 0 , 1 1 2 0 2 0 2 0 2 s e v i t u c e x E : n o i t a r e n u m e R l a t o T n e e b s a h d o i r e p e h t o t g n i t a e r e s n e p x e e h t y l n O l . s e r u t c u r t s n o i t a r e n u m e r e h t r e d n u d e t n a r g d e t i i m L s c i t s i g o L m o o B n i s n o i t p o d n a s e r a h s , s t h g i r i f o n o i t a n b m o c a t n e s e r p e r s t n e m y a p d e s a b - e r a h S . 9 1 e t o n n i d e s o l c s i d y c i l o p g n i t n u o c c a e h t h t i w e c n a d r o c c a n i d e s i n g o c e r . t s u g u A 1 3 n a h t r e t a l t o n d n a s t l u s e r r a e y l l u f e h t f o t n e m e c n u o n n a e h t r e t f a d e t n a r g e b o t d e t c e p x e e r a P T S e h t I f o t r a p s a d e d r a w a s t h g R i . r a e y l a i c n a n fi e h t g n i r u d e m o c n i e v i s n e h e r p m o c f o t n e m e t a t s e h t n i d e s i n g o c e r s n o i s i v o r p e v a e l t e e h s e c n a a b n l i t n e m e v o m t e n e h t t n e s e r p e r s t n u o m a e v a e l e c i v r e s g n o l d n a e v a e l l a u n n a m r e t g n o L . s t n e m y a p e s a e l d e t a v o n d n a e c n a w o l l a e l c i h e v r o t o m s t n e s e r p e r r e h t O ’ s r e g o R . r M . t e m e b t o n l l i w n o i t i d n o c g n i t s e v r a e y 3 e h t s a d e t i e f r o f e r e w s r e g o R . r M o t d e u s s i s n o i t p o l l a , y l t n e u q e s n o C . 1 2 0 2 t s u g u A 7 2 m o r f e v i t c e ff e r e c ffi O l i i a i c n a n F f e h C s a n g i s e r l l i w s r e g o R m T i a b c d e . 1 2 0 2 e n u J 0 3 t a k c a b n e t t i r w o s l a s a w e c n a a b e v a e l l e c i v r e s g n o l DIRECTORS’ REPORTfor the year ended 30 June 2021Boom Logistics Annual Report 2021 Non-executive Director Fees Non-executive Director fees are determined by reference to external survey data, taking account of the Group’s relative size and business complexity. No additional payments are made for serving on Board Committees. In addition, non-executive Directors have no entitlement to STIP, no equity incentives are offered and no retirement benefits are payable. The maximum aggregate sum for non-executive Director remuneration of $400,000 was approved by shareholders at the 2004 Annual General Meeting. There has been no increase to the NED fee pool since 2004. Details of non-executive Directors’ remuneration for the year ended 30 June 2021 are as follows: Short Term Post Employment Share- based Payments Salary & fees Cash bonus Other Super- annuation All Long Term Annual & long service leaved Non-Executive Directors Maxwell Findlay 2021 2020 Melanie Allibon 2021 2020 Stephen Grove 2021 Terence Hebiton 2021 2020 Kieran Pryke 2021 Jean–Pierre Buitjelsa Terrence Francis 2021 2020 130,000 123,500 65,000 61,780 42,302 65,000 61,750 25,729 – 27,083 61,750 Total Remuneration: Non–Executive Directors 2021 2020 355,114 308,780 – – – – – – – – – – – – – – – – – – – – – – – – – – 12,350 11,733 6,175 5,869 4,019 6,175 5,866 2,444 – 3,088 5,866 34,251 29,334 – – – – – – – – – – – – – – – – – – – – – – – – – – Total 142,350 135,233 71,175 67,649 46,321 71,175 67,616 28,173 – 30,171 67,616 389,365 338,114 Total Remuneration: Non–Executive Directors and Executives – Group 2021 2020 1,450,664 1,210,641 97,413 57,832 61,732 59,592 121,751 245,208 60,903 2,037,671 104,273 238,743 (11,322) 1,659,759 a Jean-Pierre Buijtels was not paid a Director’s fee in both FY2020 and FY2021. Instead, the Company pays for his travel and accommodation costs whilst attending Board of Director and committee meetings in Australia up to a maximum of $65,000 per financial year. 35 Boom Logistics Annual Report 2021 Equity Instruments Held by KMP Summary of equity instruments held by KMP at reporting date are as follows: Name Max Findlay Tony Spassopoulos Melanie Allibon Stephen Grove Terence Hebiton Kieran Pryke Ben Pieyre Tim Rogers Malcolm Ross Shares 250,000 SSRP Rights – STIP Rights – LTIP Options – 1,500,000 2,275,260 719,629 14,166,667 100,000 23,942,297 547,995 150,000 – – – – – – – – – – – – – – – – 224,728 3,083,333 903,787 367,967 – – 354,903 2,677,188 Shareholdings of Directors and Executive KMP Ordinary shares in held in Boom Logistics Limited (number) 30 June 2021 Non-executive & Executive Directors Maxwell Findlay Tony Spassopoulos Melanie Allibon Stephen Grove(ii) Terence Hebiton Kieran Pryke Jean-Pierre Buijtels Terrence Francis Executives Ben Pieyre Tim Rogers Malcolm Ross Total Balance at start of year Net change other(i) Balance at end of year 250,000 1,500,000 100,000 – – – 250,000 1,500,000 100,000 22,442,297 1,500,000 23,942,297 547,995 – – 185,745 – 150,000 n/a n/a 547,995 150,000 n/a n/a – – – – – – – – – 25,026,037 1,650,000 26,490,292 (i) These amounts represent ordinary shares purchased or sold directly or indirectly by the directors and executives during the financial year. These transactions have no connection with their roles and responsibilities as employees of the Group. (ii) Includes shares held under a nominee or a related party. Balance at start of year represents shares held on date of director appointment. 36 DIRECTORS’ REPORTfor the year ended 30 June 2021Boom Logistics Annual Report 2021 SSRP Outcomes of the Executive KMP The following table shows the rights to ordinary shares granted to Executive KMP during the financial year under the salary sacrifice rights plan. Name Year Grant date Grant number Fair value per right at grant date Exercise date Expiry date Value of rights granted during the year Tony Spassopoulos Tim Rogers 2021 2020 2021 2020 24 Feb 21 440,649 $0.1362 24 Feb 22 24 Feb 31 26 Aug 20 24 Feb 21 26 Aug 20 612,784 124,642 173,333 $0.0979 26 Aug 21 26 Aug 30 $0.1362 24 Feb 22 24 Feb 31 $0.0979 26 Aug 21 26 Aug 30 $60,000 $60,000 $16,972 $16,972 SSRP rights are granted twice per annum during the trading window following the release of the half-year and full year results. Amounts are salary sacrificed monthly and are held until granting of rights during a trading window. Rights to ordinary shares (number) 30 June 2021 Salary Sacrifice Rights Balance at start of year Granted during year: Balance at end of year Number of rights not yet granted Grant date Tony Spassopoulos Tim Rogers Total 1,221,827 605,812 1,827,639 26 Aug 20 24 Feb 21 612,784 173,333 786,117 440,649 124,642 565,291 2,275,260 903,787 3,179,047 270,602 76,542 347,144 Number of rights not yet granted shows the potential rights to ordinary shares equivalent to the amount of salary sacrificed to 30 June 2021 since the most recent granting of rights under the salary sacrifice rights plan on 24 February 2021. Determining the STIP Outcomes of the Executive KMP For the FY2020 STIP, the following table shows the rights to ordinary shares granted to Executive KMP during the year. Name Year Grant date Tony Spassopoulos Ben Pieyre Tim Rogers Malcolm Ross 2020 2020 2020 2020 10 Sep 20 10 Sep 20 10 Sep 20 10 Sep 20 Grant number 249,698 224,728 228,838 99,095 Fair value per right at grant date $0.1001 $0.1001 $0.1001 $0.1001 Exercise date Expiry date 10 Mar 21 10 Sep 30 10 Mar 21 10 Sep 30 10 Mar 21 10 Sep 30 10 Mar 21 10 Sep 30 Value of rights granted during the year $25,000 $22,500 $22,912 $9,922 For the FY2021 STIP, the Nomination and Remuneration Committee conducted a review of the Executive KMP performance against their set targets which resulted in the following potential maximum STIP being awarded to the Executive KMP. The STIP will be settled 50% in cash and 50% in rights to ordinary shares in the Company, with the exception of Mr Rogers’ FY21 STIP that will be settled 100% in cash. The STIP will be paid after the announcement of the full year results and approval by the Board of Directors. 37 Boom Logistics Annual Report 2021 Name Title Tony Spassopoulos Ben Pieyre Tim Rogers Chief Executive Officer & Managing Director Chief Operating Officer Chief Financial Officer Malcolm Ross General Counsel & Company Secretary Maximum STIP $ Weightinga % Settled in Cash $ Settled in Rights $ Total Cost $ 240,000 31.3% 37,500 37,500 75,000 105,000 101,830 56,693 20.0% 36.2% 44.1% 10,500 36,913 12,500 10,500 – 12,500 21,000 36,913 25,000 a Weighting represents the percentage of total STIP entitlement awarded to Executive KMPs based on their financial, safety and individual performance targets. Rights to ordinary shares (number) 30 June 2021 STIP Rights Balance at start of year Granted during year: Exercised during year Balance at end of year Grant date Spassopoulos Ben Pieyre(i) Tim Rogers Tony Malcolm Ross Total 469,931 – 230,158 255,808 955,897 10 Sep 20 249,698 224,728 228,838 99,095 802,359 – – (91,029) – (91,029) 719,629 224,728 367,967 354,903 1,667,227 (i) STIP was granted during the year prior to appointment as a KMP. Appointed as Chief Operating Officer on 4 January 2021. Determining the LTIP Outcomes of the Executive KMP Set out below are options granted to the Executive KMP under the LTIP during the year including those granted in previous years that have not yet vested. Name Year Grant date Grant number Vesting date Fair value per option at grant date Exercise price Expiry date Value of options granted during the year Vesting bench- mark Tony Spassopoulos 2021 4 Dec 20 7,500,000 31 Aug 23 $0.0400 $0.159 30 Sep 23 Ben Pieyre 2021 4 Dec 20 1,750,000 31 Aug 23 $0.0400 $0.159 30 Sep 23 2020 29 Nov 19 6,666,667 31 Aug 22 $0.0450 $0.145 30 Sep 22 2020 29 Nov 19 1,333,333 31 Aug 22 $0.0450 $0.145 30 Sep 22 Tim Rogers 2021 4 Dec 20 1,697,165 31 Aug 23 $0.0400 $0.159 30 Sep 23 2020 29 Nov 19 1,508,591 31 Aug 22 $0.0450 $0.145 30 Sep 22 Malcolm Ross 2021 4 Dec 20 1,417,335 31 Aug 23 $0.0400 $0.159 30 Sep 23 2020 29 Nov 19 1,259,853 31 Aug 22 $0.0450 $0.145 30 Sep 22 (ii) $300,000 (ii) $300,000 (ii) $70,000 (ii) $60,000 (ii) (ii) (ii) (ii) $67,887 $67,887 $56,693 $56,693 (ii) The 2021 LTIP vesting benchmark consists of three independent vesting hurdles, each of which is measured at the end of the three year performance period being 30 June 2023. The three performance hurdles are Earnings per Share of $0.04 or more (50% of eligible options), Return on Capital Employed of 10% (25% of eligible options), Safety Performance: LTIFR < 1 and SAOFR > 6,500 (25% of eligible options) (2020 LTIP: Earnings per Share of $0.04 or more (50% of eligible options), Return on Capital Employed of 10% (25% of eligible options), Safety Performance: LTIFR < 1 and SAOFR > 4,500 (25% of eligible options)). The FY2019 options allocated to the Executive KMP did not vest as their vesting conditions were not met. In accordance with the LTIP rules, the FY2019 options were treated as lapsed at reporting date. 38 DIRECTORS’ REPORTfor the year ended 30 June 2021Boom Logistics Annual Report 2021 Options held in Boom Logistics Limited (number) 30 June 2021 Tony Spassopoulos Grant date 4 Dec 20 Balance at start of year Unvested Granted Lapsed Forfeited – 7,500,000 29 Nov 19 6,666,667 28 Nov 18 4,838,710 – – – – (4,838,710) 11,505,377 7,500,000 (4,838,710) Ben Pieyre(i) Tim Rogers 4 Dec 20 – 1,750,000 29 Nov 19 1,333,333 – 1,333,333 1,750,000 4 Dec 20 – 1,697,165 29 Nov 19 1,508,591 28 Nov 18 1,042,803 – – – – – – – – – (1,697,165) (1,508,591) – – – – – Balance at end of year Unvested 7,500,000 6,666,667 – 14,166,667 1,750,000 1,333,333 3,083,333 – – – – 2,551,394 1,697,165 (1,042,803) (3,205,756) (1,042,803) – Malcolm Ross 4 Dec 20 – 1,417,335 29 Nov 19 1,259,853 28 Nov 18 887,777 – – – – (887,777) 2,147,630 1,417,335 (887,777) – – – – 1,417,335 1,259,853 – 2,677,188 Total 17,537,734 12,364,500 (6,769,290) (3,205,756) 19,927,188 (i) LTIP options were granted prior to appointment as a KMP. Appointed as Chief Operating Officer on 4 January 2021. Share Trading Policy The Group Securities Trading Policy applies to all NEDs and Executive KMP. The policy prohibits KMP from dealing in the Company securities while in possession of material non-public information relevant to the Group. Lead Auditor’s Independence Declaration to the Directors The auditor’s independence declaration is set out on page 41 and forms part of the directors’ report for the financial year ended 30 June 2021. Non-audit Services The following non-audit services were provided by KPMG Australia, the Company’s auditor. The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor independence was not compromised. KPMG Australia received or are due to receive the following amounts for the provision of non-audit services: Other assurance services Taxation services Other services Total remuneration for non-audit services $0 $21,602 $2,484 $24,086 39 Boom Logistics Annual Report 2021 Proceedings on the Behalf of the Company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to 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 part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001. Rounding The amounts contained in this report and in the financial report are presented in Australian dollars and have been rounded to the nearest $1,000 (where rounding is applicable) under the option available under ASIC Corporations Instrument 2016/191. The Group is of a kind to which the Corporations Instrument applies. Signed in accordance with a resolution of the Directors. Maxwell Findlay Chairperson Melbourne, 26 August 2021 Tony Spassopoulos Managing Director 40 DIRECTORS’ REPORTfor the year ended 30 June 2021Boom Logistics Annual Report 2021 41 LEAD AUDITOR’S INDEPENDENCE DECLARATIONfor the year ended 30 June 2021Boom Logistics Annual Report 2021 Revenue Other income Salaries and employee benefits expense Equipment service and supplies expense Operating lease expense Other expenses Restructuring expense Depreciation and amortisation expense Depreciation expense – Right-of-use assets Impairment expense Profit / (loss) before financing expense and income tax Financing expense Financing expense – Lease liabilities Profit / (loss) before income tax Income tax expense Note 2 3(a) 2021 $’000 2020 $’000 173,255 185,535 714 533 (87,731) (98,013) 3(b) (37,890) (46,405) (436) 3(b) (11,536) – (16,189) (15,667) – 4,520 (2,055) (1,235) 1,230 – 7 14 11(e) 14 4(a) (1,033) (14,134) (718) (16,515) (15,392) (1,902) (8,044) (2,835) (1,633) (12,512) (4,447) Net profit / (loss) attributable to members of Boom Logistics Limited 1,230 (16,959) Other comprehensive income / (loss) Items that may be reclassified subsequently to profit or loss Cash flow hedges recognised in equity, net of tax Other comprehensive income / (loss) for the year, net of tax Total comprehensive income / (loss) for the year attributable to members of Boom Logistics Limited Basic earnings / (losses) per share (cents per share) Diluted earnings / (losses) per share (cents per share) 130 130 (86) (86) 1,360 (17,045) 0.3 0.3 (3.9) (3.9) 5 5 The accompanying notes form an integral part of the Consolidated Statement of Comprehensive Income. 42 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the year ended 30 June 2021Boom Logistics Annual Report 2021 CURRENT ASSETS Cash and cash equivalents Trade receivables, contract assets and other receivables Inventories, prepayments and other current assets Assets classified as held for sale Lease receivables TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment Right-of-use assets Lease receivables Deferred tax asset TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Interest bearing loans and borrowings Lease liabilities Employee provisions Other provisions and liabilities Derivative financial instruments Income tax payable TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest bearing loans and borrowings Lease liabilities Employee provisions Other provisions and liabilities Derivative financial instruments Income tax payable TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Retained losses Reserves TOTAL EQUITY Notes 2021 $’000 2020 $’000 2(b) 7 14 7 14 14 4(b) 11 14 4(c) 11 14 10 4(c) 2,347 42,915 2,639 – 437 2,131 34,552 3,486 3,136 1,176 48,338 44,481 122,654 25,619 – 11 148,284 196,622 15,570 23,609 15,733 9,122 5,762 93 2,224 72,113 361 8,483 497 2,248 – 185 11,774 83,887 112,735 124,196 22,788 437 67 147,488 191,969 11,952 4,309 11,592 8,461 7,526 184 4,447 48,471 14,166 11,531 395 2,083 49 – 28,224 76,695 115,274 13(a) 310,327 310,327 (200,608) (197,560) 3,016 112,735 2,507 115,274 The accompanying notes form an integral part of the Consolidated Statement of Financial Position. 43 CONSOLIDATED STATEMENT OF FINANCIAL POSITIONas at 30 June 2021Boom Logistics Annual Report 2021 Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest paid Interest paid – Lease liabilities Interest received Interest received – Lease receivables Income tax (paid) / received Net cash provided by operating activities Cash flows from investing activities Purchase of property, plant and equipment Proceeds from the sale of property, plant and equipment Net cash (used in) / provided by investing activities Cash flows from financing activities Payments for shares bought back Payment of dividends Proceeds from borrowings Repayment of borrowings Repayment of borrowings – Lease liabilities Receipts from finance leases as lessor Payment of transaction costs related to share buy-back and borrowings Net cash (used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period The accompanying notes form an integral part of the Consolidated Statement of Cash Flows. Note 2021 $’000 2020 $’000 14 14 9 6 14 184,349 205,898 (155,471) (177,385) (1,763) (1,235) 8 59 (2,692) (1,633) 7 110 (2,038) 4,450 23,909 28,755 (14,711) 4,820 (9,891) (2,190) 4,610 2,420 – (1,726) (4,278) 11,821 (5,964) (16,114) 1,176 (443) – – (15,923) (13,817) 978 (6) (13,802) (30,494) 216 2,131 2,347 681 1,450 2,131 44 CONSOLIDATED STATEMENT OF CASH FLOWSfor the year ended 30 June 2021Boom Logistics Annual Report 2021 Contributed Equity $’000 Retained Losses $’000 Retained Profits $’000 Notes Cash Flow Hedge Reserve $'000 Employee Equity Benefits Reserve $’000 Total Equity $’000 At 1 July 2019 Loss for the year Other comprehensive loss Total comprehensive loss Transactions with owners in their capacity as owners: Cost of share based payments 19(b) Share buy-back including transaction costs and net of tax (1,730) At 30 June 2020 Profit for the year Other comprehensive income Total comprehensive income Transactions with owners in their capacity as owners: Cost of share based payments 19(b) Dividends paid At 30 June 2021 312,057 (180,601) – – – – (16,959) – (16,959) – – 310,327 (197,560) – – – – – – – – – (4,278) – – – – – – – 1,230 – 1,230 – – (77) – (86) (86) – – 2,493 133,872 – – – (16,959) (86) (17,045) 177 177 – (1,730) (163) 2,670 115,274 – 130 130 – – – – – 1,230 130 1,360 379 – 379 (4,278) 310,327 (201,838) 1,230 (33) 3,049 112,735 The accompanying notes form an integral part of the Consolidated Statement of Changes in Equity. 45 CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the year ended 30 June 2021Boom Logistics Annual Report 2021 About This Report The financial report of Boom Logistics Limited and its subsidiaries (“the Group”) for the year ended 30 June 2021 was authorised for issue in accordance with a resolution of the Board of Directors on 26 August 2021. During FY21 the Group has continued to work with customers to ensure that all health requirements are met including restrictions on staff travel, maintaining cleaning processes for equipment, maintaining social distancing protocols and observing state government work from home orders for non- essential staff. Boom Logistics Limited is a company domiciled in Australia and limited by shares incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange. The Group is a for-profit entity and the nature of its operations and principal activities are described in note 1. The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial report complies with International Financial Reporting Standards (IFRSs) and interpretations adopted by the International Accounting Standards Board (IASB). The financial report has been prepared in accordance with the historical cost convention rounded to the nearest thousand dollars ($’000) in accordance with ASIC Corporations Instrument 2016/191 unless otherwise stated, except for derivative financial instruments which are measured at fair value. The financial report is presented in Australian dollars which is the Company’s functional currency. Boom’s Directors have included information in this report that they deem to be material and relevant to the understanding of the financial report. Disclosure may be considered material and relevant if the dollar amount is significant due to size or nature, or the information is important to understand the: ● Group’s current year results; ● impact of significant changes in Boom’s business; or ● aspects of the Group’s operations that are important to future performance. Disclosure of information that is not material may undermine the usefulness of the financial report by obscuring important information. COVID-19 Impact on the Group Since the onset of the COVID-19 global pandemic, which was declared by the World Health Organisation on 11 March 2020, the Group has been able to effectively manage its operations to minimise disruption to the business. The Group derives the majority of its revenue from the following sectors: mining and resources; infrastructure and construction; wind, energy and utilities; industrial maintenance; and telecommunications which are designated as essential services and have continued to operate throughout the year. Whilst the pandemic and on-going uncertainty has created challenges during the year the Group’s financial performance improved in the period. The solid financial results achieved reflected the impact of COVID on Group revenues in the following areas: ● Mining and resources – customers reduced shutdown and project activity as a result of site restrictions and labour shortages caused by border closures which reduced revenue. On-going maintenance activity on contracts continued through the year. ● Infrastructure and Construction – project delays in this sector were frequent throughout FY21 as customers suffered from supply chain delays which deferred commitment to resources. The Group was insulated from the worst impacts with major assets employed at the Snowy 2.0 project for the majority of the year. This project will also run through 1H FY22 and the Group’s pipeline of opportunities is growing for FY22. ● Wind, Energy and Utilities –the Group provided lifting services on two wind farm construction projects during the year which were not affected by the pandemic. Projects in wind farm maintenance and installation of power lines were also completed and only minimally effected with movement of the workforce restricted by border closures at various times during the year. ● Industrial Maintenance – social distancing protocols reduced revenue earned on the Group’s offshore maintenance contract as the number of people permitted on site was limited through the year. ● Telecommunications – this segment was impacted by state government lockdowns resulting in delay or cancellation to jobs. Accordingly, the Victorian depot suffered the greatest impact during the year. Due to the more transactional nature of this work individual jobs were cancelled at short notice. The pandemic has also had an impact on international freight. Shipping delays from Europe have delayed the arrival of new large travel tower assets that were ordered during the year to service growth opportunities in the energy sector. The assets have been delayed by around two months and are now expected to arrive in the second quarter of FY22. The increased uncertainty and general economic environment has prompted the Group to increase its general doubtful debt provision by an additional $0.4 million at year end. This is a prudent measure for perceived enhanced credit risk amongst the Group’s smaller customers. 46 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2021Boom Logistics Annual Report 2021 Whilst the pandemic has increased uncertainty it has not materially impacted the Group or its assessment of going concern. The Group has long term debt facilities committed to December 2023 with significant undrawn capacity. Further growth in cash flow and earnings are forecast for FY22 which is underpinned with major works contracted for 1H FY22; SCM21 project at Olympic Dam, major mining shutdown projects in Queensland for BMA and Fenner Dunlop, continued project work at Bango wind farm and at Snowy 2.0. The directors believe that it remains appropriate to prepare the accounts on a going concern basis. Section A: Financial Performance This section provides the information that is most relevant to understanding the financial performance of the Group during the financial year. 1. Segment Reporting Description of operating segments Management has determined the operating segments based on the reports reviewed by the Chief Operating Decision Maker (“CODM”) to make decisions about resource allocation and to assess performance. The CODM who is responsible for allocating resources and assessing performance of the operating segments is the Managing Director and CEO. The business is considered from a product perspective and has two reportable segments: ● “Lifting Solutions”, which consists of all lifting activities including the provision of cranes, travel towers, access equipment and all associated services; and ● “Labour Hire”, which includes the provision of skilled labour with a wide range of trades, such as, electricians, boiler makers, mechanics, plus the traditional crane and travel tower operators, riggers, truck drivers. The segment information provided to the CODM is measured in a manner consistent with that of the financial statements. All inter-segment sales are carried out at arm’s length prices. 47 Boom Logistics Annual Report 2021 Section A: Financial Performation (continued) 1. Segment information Segment Report (continued) Year ended 30 June 2021 Segment revenue Total external revenue Inter-segment revenue Total segment revenue Other income Total revenue and other income Segment result Operating result Net profit on disposal of property, plant and equipment Depreciation and amortisation Profit before net interest and tax Net interest Income tax Profit from continuing operations Segment assets and liabilities Segment assets Segment liabilities Additions to non-current assets Lifting Solutions $’000 Labour Services $'000 Other* $’000 Elimination $’000 Consolidated $’000 172,445 – 172,445 810 15,457 16,267 – – – 38,914 1,314 (4,566) 647 (31,178) 8,383 (3,190) – (53) 1,261 (5) – (625) (5,191) (28) – 173,255 (15,457) (15,457) – – – – – – 173,255 714 173,969 35,662 647 (31,856) 4,453 (3,223) – 1,230 196,833 77,937 14,711 416 864 – 1,033 5,086 – (1,660) 196,622 – – 83,887 14,711 * Other represents centralised costs including national office and shared services. 48 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2021Boom Logistics Annual Report 2021 Year ended 30 June 2020 Segment revenue Total external revenue Inter-segment revenue Total segment revenue Other income Total revenue and other income Segment result Operating result Net profit on disposal of property, plant and equipment Depreciation and amortisation Restructuring expense Impairment of right-of-use assets Impairment of assets classified as held for sale (Loss)/profit before net interest and tax Net interest Income tax expense Loss from continuing operations Segment assets and liabilities Segment assets Segment liabilities Additions to non-current assets Lifting Solutions $’000 Labour Services $'000 Other* $’000 Elimination $’000 Consolidated $’000 – 185,535 184,380 – 184,380 1,155 23,585 24,740 – – – 30,259 1,281 (5,590) 416 (30,999) (305) (75) (1,827) (2,531) (4,303) – (53) (2) – – – (855) (411) – – 1,226 (6,856) (7) (41) (23,585) (23,585) – – – – – – – – 187,737 71,389 1,390 2,157 1,003 90 3,715 4,303 67 (1,640) – – * Other represents centralised costs including national office and shared services. – 185,535 533 186,068 25,950 416 (31,907) (718) (75) (1,827) (8,161) (4,351) (4,447) (16,959) 191,969 76,695 1,547 49 Boom Logistics Annual Report 2021 Section A: Financial Performation (continued) 2. Revenue from Contracts with Customers (a) Disaggregation of revenue from contracts with customers Boom Logistics Limited is domiciled in Australia and all core revenue is derived from customers within Australia. The Group derives revenue from the transfer of services over time in the following industry segments: Industry segment Year ended 30 June 2021 Mining & resources Wind, energy, & utilities Infrastructure & construction Industrial maintenance Telecommunications Other Total revenue from contracts with customers Timing of revenue recognition Services transferred over time Year ended 30 June 2020 Mining & resources Wind, energy, & utilities Infrastructure & construction Industrial maintenance Telecommunications Other Note (i) Lifting Solutions $’000 Labour Services $'000 Consolidated $’000 81,480 39,403 23,105 17,984 9,894 579 172,445 – 26 106 331 – 347 810 81,480 39,429 23,211 18,315 9,894 926 173,255 172,445 810 173,255 86,466 48,368 17,928 18,732 11,817 1,069 38 17 309 656 – 135 86,504 48,385 18,237 19,388 11,817 1,204 Total revenue from contracts with customers 184,380 1,155 185,535 Timing of revenue recognition Services transferred over time 184,380 1,155 185,535 (i) Under AASB 15, the Group has assessed that the rendering of services under certain contracts contained embedded lease arrangements. As the lessor, these arrangements are accounted for as operating leases and totalled $1.184 million (2020: $1.184 million). (b) Contract balances Trade and other receivables Contract assets Total trade receivables, contract assets and other receivables Note (ii) 2021 $’000 35,595 7,320 42,915 2020 $'000 31,944 2,608 34,552 (ii) Contract assets relate to the Group’s right to consideration for work completed but not billed at the reporting date. The contract assets are transferred to trade receivables when the rights become unconditional. This usually occurs when the Group issues the invoices to the customers. 50 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2021Boom Logistics Annual Report 2021 Recognition and measurement Revenue from the hire of lifting/access equipment, labour and other services provided is recognised where the right to be compensated for the services can be reliably measured. This typically occurs when the job dockets or timecards are approved by the customers. If the services under a single arrangement are rendered in different reporting periods, then the consideration is allocated on a relative fair value basis. Revenue from the installation of wind towers is recognised by using either the equipment hire and labour rate models (schedule of rates) or the stage of completion of the contract, as specified in the contracts. The stage of completion is measured by reference to work completed on each stage of a wind tower unit calculated as a percentage of the total wind towers included under the contract. The total consideration in the services above is allocated based on their standalone selling prices. The stand-alone selling prices are determined based on the list prices at which the Group sells the services in separate transactions. The fair value and the stand-alone selling prices of both types of services are considered broadly similar. Key estimate and judgement Determining the stage of completion requires an estimate of the wind tower units completed to date as a percentage of the total wind tower units under the contract. Where variations and claims are made to the contract, assumptions are made regarding the probability that the customer will approve the variations and claims and the amount of revenue that will arise. Changes in these estimation methods could have a material impact on the financial statements. 3. Other Income and Expenses (a) Other income Profit on disposal of plant and equipment Profit / (loss) on disposal of plant and equipment – Right-of-use assets Interest income Interest income – Lease receivables Total other income (b) Expenses External equipment hire External labour hire Maintenance Fuel External transport Employee travel and housing Other reimbursable costs (on-charged to customers) Other equipment services and supplies Total equipment services and supplies expense Employee related Insurance and compliance IT and communications Occupancy Other overheads Total other expense 2021 $’000 2020 $'000 583 64 8 59 714 10,376 2,855 9,383 2,176 6,336 1,949 1,440 3,375 37,890 1,876 3,501 2,367 1,057 2,735 465 (49) 7 110 533 10,235 5,194 8,906 3,791 6,797 1,760 2,202 7,520 46,405 2,738 4,304 2,727 1,175 3,190 11,536 14,134 51 Boom Logistics Annual Report 2021 Section A: Financial Performation (continued) 4. Income tax (a) Income tax expense Current income tax Current income tax expense Adjustments in respect of current income tax of previous years Deferred income tax Relating to origination and reversal of temporary differences A reconciliation between tax expense and accounting profit / (loss) before income tax is as follows: Accounting profit/(loss) before tax from continuing operations At the Group's statutory income tax rate of 30% (2020: 30%) Expenditure not allowable for income tax purposes Current year losses for which no deferred tax asset is recognised Previously unrecognised tax credits now recouped to reduce current tax expense Other reimbursable costs (on-charged to customers) Other equipment services and supplies Income tax expense 4(c) Note 2021 $’000 2020 $'000 – – – – 1,230 369 52 – (421) – – – 4,449 – (2) 4,447 (12,512) (3,754) 53 1,565 – 2,136 4,447 4,447 (b) Deferred income tax Year ended 30 June 2021 – Employee leave provisions – Allowance for impairment on financial assets – Liability accruals – Restructuring provisions – Tax losses – Plant and equipment – Derivative financial instruments Net deferred tax asset / (liabilities) Year ended 30 June 2020 – Employee leave provisions – Allowance for impairment on financial assets – Liability accruals – Restructuring provisions – Tax losses 52 Opening Balance $’000 Recognised in Income Statement $'000 Recognised in Equity $’000 Closing Balance $'000 2,657 334 1,606 12 4,272 (8,884) 70 67 2,536 173 448 246 6,408 229 (49) (600) 5 (372) 787 – – 121 161 1,158 (234) (2,136) – – – – – – (56) (56) – – – – – 2,886 285 1,006 17 3,900 (8,097) 14 11 2,657 334 1,606 12 4,272 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2021Boom Logistics Annual Report 2021 – Plant and equipment – Derivative financial instruments Net deferred tax asset / (liabilities) Opening Balance $’000 (9,816) 33 28 Recognised in Income Statement $'000 Recognised in Equity $’000 932 – 2 – 37 37 Closing Balance $'000 (8,884) 70 67 Income tax payable (c) Income tax payable represents the remaining franking deficit tax that is being paid in twenty four interest free equal monthly instalments from August 2020 to July 2022. As at 30 June 2021, of the $2.038 million of income tax instalments paid to date, $0.857 million was utilised to offset the income tax payable arising from the financial year results. Tax losses (d) The Group has total tax losses of $31.165 million tax effected (2020: $31.101 million). $3.900 million of these losses have been recognised on balance sheet and $27.265 million has not been recognised as a deferred tax asset based on an assessment of the probability that sufficient taxable profit will be available to allow the tax losses to be utilised in the near future. The unused tax losses remain available indefinitely and are in addition to the franking deficit tax payments that can also be used to offset future tax payable. Recognition and measurement Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date. Deferred tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are recognised for all deductible / taxable temporary differences except where they arise from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of comprehensive income. Tax consolidation legislation Boom Logistics Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. The head entity, Boom Logistics Limited, and the controlled entities in the tax consolidated group have entered into tax funding and sharing agreements such that each entity in the tax consolidated group recognises the assets, liabilities, revenues and expenses in relation to its own transactions, events and balances only. Key estimate and judgement Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable profits will be available to utilise those temporary differences and losses, and the losses continue to be available having regard to their nature and timing of origination. Judgement is required to determine the amount of deferred tax assets that can be recognised based upon the likely timing and the level of future taxable profits. Utilisation of tax losses also depends on the ability of the Group to satisfy certain tests at the time the losses are recouped. 53 Boom Logistics Annual Report 2021 Section A: Financial Performation (continued) 5. Earnings Per Share Basic earnings per share amounts are calculated by dividing net profit or loss for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the net profit or loss for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. The following reflects the income and share data used in the calculation of basic and diluted earnings per share: Net profit/(loss) after tax Weighted average number of ordinary shares used in calculating basic earnings per share Effect of dilutive securities: – employee share awards Adjusted weighted average number of ordinary shares used in calculated diluted earnings per share Number of ordinary shares at financial year end Note 2021 $’000 2020 $'000 1,230 (16,959) No. of shares 427,774,207 431,555,802 (i) – – 427,774,207 431,555,802 427,774,207 427,774,207 (i) Dilutive securities are options granted to employees under the long term incentive plan and included in the calculation of diluted earnings per share assuming all vesting conditions are met. 6. Dividends The Company paid unfranked dividends of 0.5 cents per share on 2 October 2020 and 16 April 2021 totalling $4.278 million. Dividends proposed and not recognised as a liability The Board have resolved to pay an unfranked final dividend of 1.0 cents per share on 5 November 2021 to shareholders on the register at 30 September 2021. The estimated liability based on the number of ordinary shares at year end is $4.278 million. The dividend has not been provided for in the 30 June 2021 year end financial statements. 54 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2021Boom Logistics Annual Report 2021 Section B: Operating Assets and Liabilities This section provides information relating to the key operating assets used and liabilities incurred to support delivering the financial performance of the Group. 7. Property, Plant and Equipment Rental Equipment $’000 Motor Vehicles $'000 Note Machinery, Furniture, Fittings & Equipment $’000 Freehold Land & Buildings $’000 Total $’000 Year ended 30 June 2021 Opening carrying amount Additions Disposals Transfers Depreciation charge for the year Closing carrying amount At cost Accumulated depreciation Closing carrying amount Year ended 30 June 2020 Opening carrying amount Additions Disposals Transfers Depreciation charge for the year Closing carrying amount At cost Accumulated depreciation Closing carrying amount 2,648 955 1,562 124,196 (i) 119,031 14,695 (744) 715 (14,834) 118,863 294,871 (176,008) 118,863 7 (34) 1 (696) 1,926 19,113 (17,187) 1,926 145,000 4,078 1,100 (3,762) (8,455) (14,852) 119,031 282,670 (163,639) 119,031 32 (686) (34) (742) 2,648 20,103 (17,455) 2,648 9 (3) 1 (540) 422 6,203 (5,781) 422 1,319 415 (16) 38 (801) 955 6,263 (5,308) 955 – – – 14,711 (781) 717 (119) (16,189) 1,443 3,120 122,654 323,307 (1,677) (200,653) 1,443 122,654 1,682 152,079 – – – (120) 1,562 3,120 1,547 (4,464) (8,451) (16,515) 124,196 312,156 (1,558) (187,960) 1,562 124,196 (i) Additions during the year included $2.9 million of instalment payments for the manufacture of travel tower assets that are expected to arrive in the second quarter of FY2022. Property, plant and equipment with a carrying amount of $122.654 million (2020: $124.196 million) is pledged as securities for current and non-current interest bearing loans and borrowings as disclosed in note 11. Assets classified as held for sale There were no assets classified as held for sale at 30 June 2021. Recognition and measurement Property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Land is measured at cost less any accumulated impairment losses. 55 Boom Logistics Annual Report 2021 Property, Plant and Equipment (continued) Section B: Operating Assets and Liabilities (continued) 7. When a major overhaul is performed on an asset, the cost is recognised in the carrying amount of property, plant and equipment only if the major overhaul extends the expected useful life of the asset or if the continuing operation of the asset is conditional upon incurring the expenditure. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of property, plant and equipment as a replacement only if it is eligible for capitalisation. The cost of the day-to-day servicing or the replacement of consumable parts of property, plant and equipment is recognised in profit or loss as incurred. Management will increase the depreciation charge where useful lives are less than previously estimated lives or there is indication that residual values can not be achieved. Impairment Testing of Assets 8. Recognition and measurement The carrying amounts of the Group’s non-financial assets, other than deferred tax assets and inventories, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets (the “cash- generating unit”). The recoverable amount of an asset or cash-generating unit or a group of cash-generating units is the greater of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is recognised if the carrying amount of an asset, cash-generating unit or a group of cash-generating units exceeds its recoverable amount. Impairment losses are recognised in the statement of comprehensive income. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. Key estimate and judgement The carrying values of the CGU’s fixed assets were tested at 30 June 2021 by reference to management’s assessment of their fair value less costs of disposal. Fair value was determined after considering information from a variety of sources including a valuation of all cranes and travel tower assets obtained from an independent valuer dated 24 June 2021. The Group did not make any allowance for costs to sell as they were deemed immaterial given the Group’s in house expertise and track record of successful asset sales. The Group has classified the assessment as Level 2 in the fair value hierarchy (as per AASB 13) where “inputs other than quoted prices in active markets that are observable for the asset either directly or indirectly”. Depreciation is recognised in the statement of comprehensive income on a straight line basis over the estimated useful life of each part of an item of property, plant and equipment as follows: Buildings Mobile Cranes Travel Towers Access and Ancillary Equipment Vehicles Office and Workshop Equipment Leasehold Improvements Computer Equipment 20 Years 10 to 15 Years 10 to 20 Years 10 Years 5 to 10 Years 3 to 10 Years Lease term 3 to 5 Years Depreciation methods, useful lives and residual values are reviewed at each reporting date and at more regular intervals when there is an indicator of impairment or when deemed appropriate. Gains or losses on sale of property, plant and equipment are included in the statement of comprehensive income in the year the asset is disposed of. Key estimate and judgement The Group determines the estimated useful lives of assets and related depreciation charges for its property, plant and equipment based on the accounting policy stated above. These estimates are based on projected capital equipment lifecycles for periods up to twenty years based on useful life assumptions. Residual values are determined based on the value the Group would derive upon ultimate disposal of the individual piece of property, plant and equipment at the end of its useful life. The achievement of these residual values is dependent upon the second hand equipment market at any given point in the economic cycle. 56 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2021Boom Logistics Annual Report 2021 The independent valuation supported the carrying value of the CGU’s crane and travel tower assets as stated in the consolidated statement of financial position. The evaluation is consistent with the Group’s assessment of the economic environment, lengthening lead times for new equipment and second hand asset values. Consequently, no impairment adjustment to the carrying value of operating fleet was considered necessary at 30 June 2021. 9. Reconciliation of the Net Cash Flows from Operations with Net Profit / (Loss) After Tax Net profit / (loss) after tax Non cash items Depreciation and amortisation of non-current assets Impairment of non-current assets Borrowing costs – amortisation Net profit on disposal of non-current assets Share based payments Changes in assets and liabilities (Increase)/decease in trade receivables, contract assets and other receivables (Increase)/decrease in inventories, prepayments and other assets (Increase)/decrease in current and deferred tax balances Increase/(decrease) in trade and other payables Increase/(decrease) in provisions and other liabilities Net cash flow from operating activities Note 11(e) 3 19(b) 2021 $’000 2020 $'000 1,230 (16,959) 31,856 – 292 (647) 379 (8,363) (75) (1,982) 3,618 (2,399) 31,907 1,902 143 (416) 177 972 1,981 8,858 (1,208) 1,398 23,909 28,755 10. Other Provisions and Liabilities Other provisions and liabilities include accruals for PAYG, GST, wages, superannuation and payroll tax. The balance also includes provision for make good costs on leases of $1.145 million (2020: $2.824 million) which principally relates to shipment costs of returning leased equipment, including onshore transportation costs. 57 Boom Logistics Annual Report 2021 Section C: Funding Structures This section provides information relating to the Group’s funding structure and its exposure to financial risk, how they affect the Group’s financial position and performance and how the risks are managed. 11. Interest Bearing Loans and Borrowings Current Other loans Prepaid borrowing costs Total current interest bearing loans and borrowings Non current Other loans Secured bank loans Prepaid borrowing costs Total non-current interest bearing loans and borrowings Total interest bearing loans and borrowings Note 2021 $’000 2020 $'000 (i) 23,967 4,309 (358) – 23,609 4,309 (i) 361 – – 361 23,970 9,238 5,000 (72) 14,166 18,475 (i) Other loans includes an amortising loan with $4.618 million disclosed as current and $0.361 million disclosed as non-current. The loan expires in August 2022. Other current loans also includes the receivables finance facility that has a committed facility limit to December 2023. The drawings made under the committed facility limit are however revolving in nature and accordingly, the debt of $19.349 million outstanding under the facility at year end has been disclosed as a current liability. Amounts outstanding under the facility are not required to be repaid until December 2023 at the end of the facility term. Debt facility refinancing (a) The Group completed the refinance and consolidation of its syndicated bank and receivables finance facilities into a new agreement with a single financier. The new facilities were executed on 23 December 2020 for a term of 3 years and comprise of the following: ● Receivables finance facility with a credit limit of $56 million (subject to the availability of a percentage of eligible trade receivables). The facility incurs a fixed fee and floating interest on funds drawn; and ● Asset finance facility with a credit limit of $22 million. The facility incurs a fixed interest rate on funds drawn. The existing $35 million asset finance facility comprising finance and operating leases was left in place. Expiry dates of loans under this facility vary from July 2022 (extended from previous expiry of August 2021) to May 2024. Covenant position (b) The Group was in compliance with all financial and non-financial banking covenants throughout the reporting period and as at 30 June 2021. The new facilities that commenced in December 2020 are not subject to any financial covenants. Assets pledged as security (c) Fixed and floating charges are held over all of the Group’s assets, including cash at bank, trade receivables, contract assets and other receivables. 58 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2021Boom Logistics Annual Report 2021 Weighted average interest rate Year of maturity n/a n/a 7.95% December 2023 5.92% July 2022 Currency AUD AUD AUD (d) Terms and debt repayment schedule Syndicated debt Trade receivables loan Finance arrangement Prepaid borrowing costs Total interest bearing liabilities (e) Financing expense Interest expense Borrowing costs – amortisation (non-cash) Borrowing costs – other Total financing expense (f) Financing facilities available At reporting date, the following financing facilities had been negotiated and were available: Total facilities: – bank overdraft – bank loans and borrowings Facilities drawn at reporting date: – bank overdraft – bank loans and borrowings Facilities undrawn at reporting date: – bank overdraft – bank loans and borrowings Carrying Amount 2021 $’000 – 19,349 4,979 (358) 23,970 2021 $’000 1,178 292 585 2,055 – 113,000 113,000 – 31,759 31,759 – 67,907 67,907 2020 $'000 5,000 4,147 9,400 (72) 18,475 2020 $'000 1,862 143 830 2,835 1,000 75,000 76,000 – 21,740 21,740 1,000 44,792 45,792 Total facilities consist of $56 million receivables finance facility, $22 million chattel mortgage facility, and $35 million asset finance facility. Of the $56 million receivables finance facility, $19.3 million was drawn with a further $3.3 million utilised by bank guarantees. $33.4 million of the undrawn facility was available subject to the availability of eligible debtors which was $1.3 million at reporting date. The $22 million chattel mortgage facility was undrawn at reporting date. Of the $35 million asset finance facility, $12.4 million was drawn including $7.4 million of finance leases. A further $10.1 million was utilised by operating leases. $12.5 million was undrawn at reporting date. 59 Boom Logistics Annual Report 2021 Trade receivables and contract assets The Group applies the simplified approach to measuring expected credit losses (“ECL”) which uses a lifetime expected loss allowance for all trade receivables and contract assets. To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets. The Group established a provision matrix based on the historical credit loss experience and adjusted for forward looking factors specific to the debtors and the economic environment. The Group considers trade receivables and contract assets are at risk when contractual payments are 120 days past invoice date, subject to other internal or external information that indicate otherwise. Collectability is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance for impairment is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Section C: Funding Structures (continued) Interest Bearing Loans and Borrowings (continued) 11. Recognition and measurement All loans and borrowings are initially recognised at fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in the statement of comprehensive income when the liabilities are derecognised. The fair value of all borrowings approximates their carrying amount at reporting date as the impact of any market discounting is not significant. 12. Financial Risk Management The Board of Directors has overall responsibility for the oversight of the Company’s risk management framework including the identification and management of material business, financial and regulatory risks. Management reports regularly to the Risk Committee and the Board of Directors on relevant activities. Risk management guidelines have been further developed to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management guidelines are regularly reviewed to reflect changes in market conditions and the Group’s activities. The Group has exposure to the following risks from its use of financial instruments: ● Credit risk; ● Liquidity risk; and ● Market risk. Credit risk (a) Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade receivables, contract assets and other receivables, and derivative instruments. The Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Exposure at balance date is addressed in each applicable note. The Group’s policy is to trade with recognised, creditworthy third parties. It is the Group’s practice that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. 60 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2021Boom Logistics Annual Report 2021 At reporting date, the credit risk exposure on the Group’s trade receivables and contract assets using a provision matrix is as follows: Year ended 30 June 2021 0 – 30 days 31 – 60 days 61 – 90 days 91 – 120 days +120 days Year ended 30 June 2020 0 – 30 days 31 – 60 days 61 – 90 days 91 – 120 days +120 days Trade Receivables* $'000 Contract Assets* $’000 ECL Rate Total $’000 Loss Allowance $’000 0.20% 0.25% 0.75% 7.50% 20.00% 0.20% 0.25% 0.75% 7.50% 20.00% 22,323 7,320 29,643 6,663 4,960 1,840 470 – – – – 6,663 4,960 1,840 470 36,256 7,320 43,576 17,771 5,976 5,798 1,285 1,408 2,608 20,379 – – – – 5,976 5,798 1,285 1,408 32,238 2,608 34,846 56 15 34 125 85 315 37 14 40 88 256 435 * Trade receivables and contact assets are net of specific transactions totalling $0.234 million (2020: $0.539 million) that have been fully provided and excluded from above general provision calculation. The movement in the allowance for impairment in respect of trade receivables and contract assets during the financial year is as follows: Balance at 1 July Impairment loss recognised Amounts written-off and/or written back Balance at 30 June Note (i) 2021 $’000 1,114 378 (543) 949 2020 $'000 577 802 (265) 1,114 (i) The allowance for impairment of $0.949 million comprises a specific provision of $0.234 million (2020: $0.539 million), $0.315 million calculated from the provision matrix (2020: $0.435 million), and an additional allowance of $0.400 million in excess (2020: $0.140 million in excess) of the allowance calculated using the provision matrix above. The additional amount is to allow for a perceived temporary increase in the risk profile as a result of the uncertain economic environment at 30 June 2021. Recognition and measurement Trade receivables and contract assets are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for impairment. Trade receivables are generally due for settlement within 30 – 90 days. The amount of the impairment loss is recognised in the statement of comprehensive income within other expenses. When a trade receivable or contract asset for which an allowance for impairment had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of comprehensive income. 61 Boom Logistics Annual Report 2021 Financial Risk Management (continued) Liquidity risk Section C: Funding Structures (continued) 12. (b) Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its financial obligations as they fall due under both normal and stressed conditions without incurring unacceptable losses or damage to the Group’s reputation. In order to meet these requirements management estimates the cash flows of the Group on a weekly, monthly and three year rolling basis. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of operating leases, finance leases and trade receivables loan. At 30 June 2021, the Group’s balance sheet gearing ratio was 26% (interest bearing loans and borrowing plus finance lease liabilities less cash / total equity) (2020: 17%). Allowing for the additional operating lease liabilities recognised in accordance with AASB 16, the Group’s balance sheet gearing ratio was 41% (2020: 34%). The table below represents the undiscounted contractual settlement terms for financial liabilities based on the remaining period at the reporting date to the contractual maturity date. Carrying amount $’000 Contractual cash flows $’000 6 mths or less $'000 6-12 mths $’000 1-2 years $’000 2-5 years $’000 Year ended 30 June 2021 Trade and other payables Derivatives Income tax payable Other loans Lease liabilities Year ended 30 June 2020 Trade and other payables Derivatives Income tax payable Other loans Secured bank loans Lease liabilities 93 2,409 24,328 24,216 66,616 11,952 233 4,447 13,547 5,000 23,123 15,570 (15,570) (15,570) (93) (2,409) (26,914) (25,455) (73) (1,112) – (20) (1,112) (12,555) (12,555) (7,734) (7,734) (70,441) (37,044) (21,421) (11,952) (233) (4,447) (14,892) (5,383) (26,337) (11,952) (123) (4,447) (2,571) (121) (7,545) – (61) – (2,571) (121) (5,978) (8,731) 58,302 (63,244) (26,759) – – (185) (1,335) (5,752) (7,272) – (49) – (9,750) (5,141) (8,055) (22,995) – – – (469) (4,235) (4,704) – – – – – (4,759) (4,759) Recognition and measurement Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually payable within 60 days of recognition. 62 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2021Boom Logistics Annual Report 2021 Market risk (c) Market risk is the risk that changes in interest rates and foreign exchange rates will affect the Group’s income or the value of its holdings of financial instruments. Interest rate risk At the reporting date, the interest rate profiles of the Group’s interest bearing financial instruments were: Carrying amount 2021 $’000 2020 $'000 (12,410) (12,410) (17,593) (17,593) 2,347 (19,349) (17,002) 2,131 (4,147) (2,016) Recognition and measurement Derivatives designated as hedging instruments are classified as cash flow hedges. At the inception of each hedging transaction, the Group documents the relationship between the hedging instruments and hedged items, its risk management objectives and its strategy for undertaking the hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair value or cash flows of hedged items. The effective portion of changes in the fair value of the derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated in the cash flow hedge reserve in equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss. The Group does not speculate in the trading of derivative instruments. Derivatives are carried at fair value and categorised as level 2 in the fair value hierarchy under AASB 13 where “inputs other than quoted prices in active markets that are observable for the asset either directly or indirectly”. Fixed rate instruments Financial liabilities Variable rate instruments Financial assets – cash at bank and on hand Financial liabilities The Group’s main interest rate risk arises from short and long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. This risk is managed by taking into consideration the current and expected future debt profile, expectations regarding future interest rate movements, the mix between variable and fixed rate borrowings and the potential to hedge against negative outcomes by entering into interest rate swaps. Foreign exchange rate risk Foreign exchange risk arises when future commercial transactions and recognised liabilities are denominated in a currency that is not the entity’s functional currency. The Group has transactional currency exposures arising from operating lease of plant and equipment denominated in Euros. In order to protect against exchange rate movements, the Group has entered into forward exchange contracts to purchase Euros. These contracts are hedging highly probable forecasted transactions and are timed to mature when payments are scheduled to be made. The forward exchange contracts are considered to be fully effective cash flow hedges and any gain or loss on the contracts is taken directly to equity. The Group’s exposure to foreign exchange rate risk at reporting date, expressed in Australian dollars, was $0.596 million (2020: $0.499 million) and the forward exchange contracts had a fair value of $0.047 million payable (2020: $0.104 million payable) at 30 June 2021. Sensitivity Movements in the Australian dollar against the Euro would not result in a material difference to the balances stated in the consolidated statements of changes in equity and comprehensive income. 63 Boom Logistics Annual Report 2021 Section C: Funding Structures (continued) 13. Contributed Equity (a) Issued and paid up capital Beginning of the financial year Shares bought back on-market and cancelled Buy-back transaction costs Tax credits recognised directly in equity End of the financial year 2021 No. of shares $'000 2020 No. of shares $'000 427,774,207 310,327 439,193,800 312,057 – – – – – – (11,419,593) (1,726) – – (6) 2 427,774,207 310,327 427,774,207 310,327 All issued shares are fully paid. Fully paid ordinary shares carry one vote per share and carry the right to dividends. Capital management (b) For the purposes of capital management, capital includes issued capital and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Group’s capital management policy is to maximise shareholder value. The Group manages its capital structure and makes adjustments in light of changes in economic conditions and impacts on the Group’s budgets and forecasts. The Group monitors capital on the basis of the balance sheet gearing ratio. This ratio is calculated as net debt divided by total equity as disclosed in note 12(b). Section D: Other Disclosures This section provides additional financial information that is required by the Australian Accounting Standards and management considers relevant for shareholders. 14. Leases Group as a lessee The Group has commercial leases on certain plant and equipment, motor vehicles and property. These lease contracts have typically fixed terms of 1 to 5 years but may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The impact of leases on the financial statements for the period is as follows: Statement of Comprehensive Income Depreciation expense of right-of-use assets Interest expense on lease liabilities Interest income on sublease of right-of-use assets Gains or (losses) on termination of leases Rent expense – short-term leases and leases of low value assets Total amounts recognised in profit or loss Statement of Cash Flows Net cash flows from operating activities Net cash flows from financing activities 64 2021 $’000 2020 $'000 (15,667) (15,392) (1,235) (1,633) 59 64 (436) (17,215) 110 (49) (1,033) (17,997) 14,938 12,839 (14,938) (12,839) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2021Boom Logistics Annual Report 2021 Right-of-use Assets Rental Equipment $’000 Motor Vehicles $’000 Other Equipment $’000 Land & Buildings $’000 Lease Receivables $’000 Lease Liabilities $'000 Total $'000 Statement of Financial Position Year ended 30 June 2021 Opening carrying amount Additions Terminations 10,436 16,063 – 5,637 1,649 (39) Depreciation expense (8,484) (2,500) Impairment expense Receipts / payments – – – – Closed carrying amount 18,015 4,747 Year ended 30 June 2020 Opening carrying amount Additions Terminations 10,982 7,469 – 4,961 3,360 (24) Depreciation expense (8,015) (2,660) Impairment expense Receipts / payments – – – – Closed carrying amount 10,436 5,637 70 – (5) (53) – – 13 6,645 1,017 (187) 22,788 18,729 (231) (4,630) (15,667) – – – – 2,845 25,619 122 10,068 1,317 (4) 26,133 12,150 (28) (4,661) (15,392) (75) – (75) – 6,645 22,788 4 – (56) – – 70 1,613 – – – – (1,176) 437 654 1,937 – – – 23,123 17,503 (295) – – (16,114) 24,216 26,763 10,156 (24) – – (978) 1,613 (13,772) 23,123 Recognition and measurement Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use. The right-of-use asset is depreciated over the lease term on a straight-line basis. The lease payment is allocated between the lease liability and interest expense. The interest expense is charged to profit or loss over the lease term. Right-of-use assets are measured at cost comprising the following: ● the amount of the initial measurement of lease liability; ● any initial direct costs; and ● restoration costs. Lease liabilities are measured at the present value of lease payments to be made over the lease term discounted using the interest rate implicit in the lease. If that rate cannot be determined, the Group’s incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. The present value of lease payments include: ● fixed payments; ● variable lease payments that are based on an index or a rate; ● amounts expected to be payable under residual value guarantees; ● the exercise price of a purchase option if reasonably certain to exercise the option; and ● payments of penalties for terminating the lease. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option. Extension options are only included in the lease term if the lease is reasonably certain to be extended. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Group as a lessor The Group has several property, plant and equipment leases that were sub-let and classified as finance leases and recognised as Lease receivables. The sub-leases have terms of between 2 to 3 years. 65 Boom Logistics Annual Report 2021 Section D: Other Disclosures (continued) 14. The maturity analysis of lease receivables showing the undiscounted lease payments to be received after the reporting date is as follows: Leases (continued) – within one year – after one year but not more than five years Total undiscounted lease receivable – future finance income Net lease receivable 15. Subsidiaries AKN Pty Ltd Sherrin Hire Pty Ltd Shutdown Staffing Pty Ltd Boom Logistics (VIC) Pty Ltd Boom Logistics Projects Pty Ltd Boom Renewables Pty Ltd 2021 $’000 443 – 443 (6) 437 2020 $'000 1,234 443 1,677 (64) 1,613 Equity interest Country of incorporation 2021 % 2020 % Australia Australia Australia Australia Australia Australia 100 100 100 100 100 100 100 100 100 100 100 100 Boom Logistics Limited is the ultimate parent company. Recognition and measurement The consolidated financial statements comprise the financial statements of Boom Logistics Limited and its subsidiaries as at 30 June each year. Subsidiaries are entities controlled by the Group. Control exists when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. In the parent company financial statements, investments in subsidiaries are carried at cost less impairments. The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. 66 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2021Boom Logistics Annual Report 2021 16. Deed of Cross Guarantee Pursuant to ASIC Corporations Instrument 2016/785 (“Corporations Instrument”), the wholly owned subsidiaries listed below are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports and Directors’ report. It is a condition of the Corporations Instrument that Boom Logistics Limited and each of the subsidiaries enter into a Deed of Cross Guarantee. The effect of the Deed is that Boom Logistics Limited guarantees to each creditor payment in full of any debt in the event of winding up of any of the subsidiaries under certain provisions of the Corporations Act 2001. The subsidiaries have also given similar guarantees in the event that Boom Logistics Limited is wound up. The subsidiaries subject to the Deed are: ● Sherrin Hire Pty Ltd (party to the Deed on 6 December 2005); ● AKN Pty Ltd (party to the Deed on 3 November 2006 by virtue of a Deed of Assumption); ● Shutdown Staffing Pty Ltd (party to the Deed on 23 November 2007 by virtue of a Deed of Assumption); and together with Boom Logistics Limited, represent a “Closed Group” for the purposes of the Corporations Instrument. The consolidated statements of comprehensive income and financial position of the entities that are members of the “Closed Group” are as follows: Consolidated Statement of Comprehensive Income Revenue Other income Salaries and employee benefits expense Equipment service and supplies expense Operating lease expense Other expenses Restructuring expense Depreciation and amortisation expense Depreciation expense – Right-of-use assets Impairment expense Financing expense Financing expense – Lease liabilities Profit / (loss) before income tax Income tax benefit / (expense) Net profit / (loss) for the year Retained losses at the beginning of the year Dividends provided for or paid Retained losses at the end of the year Net profit / (loss) for the year Other comprehensive income / (loss) Cash flow hedges recognised in equity Other comprehensive income / (loss) for the year, net of tax Total comprehensive income / (loss) for the year Closed Group 2021 $’000 2020 $'000 163,790 176,038 406 295 (78,220) (91,135) (38,737) (44,364) (401) (11,527) – (15,507) (15,518) – (2,146) (1,226) 914 27 941 (1,007) (9,255) (709) (15,859) (15,235) (1,902) (2,835) (1,618) (7,586) (4,331) (11,917) (203,827) (191,910) (4,278) – (207,164) (203,827) 941 (11,917) 130 130 (86) (86) 1,071 (12,003) 67 Boom Logistics Annual Report 2021 Section D: Other Disclosures (continued) 16. Deed of Cross Guarantee (continued) Consolidated Statement of Financial Position Current assets Cash and cash equivalents Trade receivables, contract assets and other receivables Inventories, prepayments and other current assets Assets classified as held for sale Lease receivables Total current assets Non-current assets Investments Deferred tax asset Property, plant and equipment Right-of-use assets Lease receivables Total non-current assets Total assets Current liabilities Trade and other payables Interest bearing loans and borrowings Lease liabilities Employee provisions Other provisions and liabilities Derivative financial instruments Income tax payable Total current liabilities Non-current liabilities Payables Interest bearing loans and borrowings Lease liabilities Employee provisions Other provisions and liabilities Derivative financial instruments Income tax payable Total non-current liabilities Total liabilities Net assets 68 Closed Group 2021 $’000 2020 $'000 2,329 40,896 2,430 – 437 2,115 33,029 3,443 3,136 1,176 46,092 42,899 599 523 117,851 25,540 – 599 552 118,682 22,587 438 144,513 142,858 190,605 185,757 14,934 23,609 15,733 8,628 5,649 93 2,224 70,869 1,899 361 8,407 492 2,214 – 185 13,558 84,427 11,323 4,309 11,592 7,704 7,387 184 4,447 46,946 1,808 14,165 11,336 383 2,064 49 – 29,805 76,751 106,178 109,006 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2021Boom Logistics Annual Report 2021 Equity Contributed equity Retained losses Reserves Total equity 17. Parent Entity The individual financial statements for the parent entity show the following aggregate amounts: Statement of financial position Current assets Total assets Current liabilities Total liabilities Equity Contributed equity Reserves Retained losses Total equity Net (loss) / profit after tax for the year Dividends provided for or paid Total comprehensive (loss) / income for the year Closed Group 2021 $’000 2020 $'000 310,326 310,326 (207,164) (203,827) 3,016 2,507 106,178 109,006 2021 $’000 2020 $'000 43,842 43,138 234,581 231,990 72,611 48,606 116,475 108,204 310,327 310,327 3,016 2,507 (195,237) (189,048) 118,106 123,786 (1,911) (4,278) (1,781) 21,445 – 21,359 69 Boom Logistics Annual Report 2021 Section D: Other Disclosures (continued) 18. Key Management Personnel Summary of key management personnel compensation in the following categories is as follows: Short-term employee benefits Post employment benefits Other long term benefits Retirement benefits Share based payments Total compensation 2021 $ 2020 $ 1,609,809 1,328,065 121,751 60,903 – 104,273 (11,322) – 245,208 238,743 2,037,671 1,659,759 Refer to the Remuneration Report in the Directors’ Report for detailed compensation disclosure on key management personnel. Related party transactions During the year, the Group entered into hire contracts with Grove (Aust) Pty Ltd for the provision of mobile cranes services. Mr. Stephen Grove is Executive Chairman and owner of Grove (Aust) Pty Ltd. The services performed totalled $112,368 and is based on normal commercial terms and conditions. 19. Share-based Payments Three employee incentive schemes are in place to assist in attracting, retaining and motivating key employees as follows: ● Salary sacrifice rights plan; ● Short term incentive plan; and ● Long term incentive plan. Information with respect to the number of rights and options allocated under the employee incentive schemes are as follows: Salary Sacrifice Rights Plan Short Term Incentive Plan Long Term Incentive Plan Average fair value per right No. of rights Average fair value per right Average exercise price per option No. of rights No. of options $0.1434 1,827,639 $0.1827 2,302,798 $0.1522 26,214,991 $0.1139 1,351,408 – – – – – – $0.1001 $0.1353 1,141,493 (960,321) – – – – $0.1586 18,463,135 – – $0.1643 (9,760,588) $0.1522 (5,687,756) $0.1309 3,179,047 $0.1631 2,483,970 $0.1522 29,229,782 At start of period Granted during the period Exercised during the period Lapsed during the period Forfeited during the period At end of period Salary sacrifice rights plan Eligible executives will be permitted to salary sacrifice a portion of their pre-tax fixed annual remuneration to acquire equity in the form of rights to fully paid ordinary shares in the Company. Each right is a right to acquire one ordinary share in the Company. The exact number of rights to be granted is based on the amount of salary sacrificed and the 5 day volume weighted average price prior each month. Rights do not carry any dividend or voting rights. Rights will be granted twice a year following the announcement of the half-year and full-year results or in any event, within twelve 70 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2021Boom Logistics Annual Report 2021 months of the Annual General Meeting (“AGM”). Rights will have a twelve month exercise restriction commencing from the relevant grant dates. The rights to ordinary shares equivalent to the amount salary sacrificed in the period from the most recent grant date will be granted following the announcement of the full-year results. Short term incentive plan Eligible executives will have the opportunity to receive short term incentives subject to meeting performance hurdles over the financial year. 50% of the STIP outcome achieved for the financial year will be delivered in cash and 50% will be delivered in equity in the form of rights to ordinary shares in the Company. Each right is a right to acquire one ordinary share in the Company. The exact number of rights to be granted is based on 50% of the STIP outcome divided by the 5 day volume weighted average price after the release of full year results. Rights do not carry any dividend or voting rights. Rights will be granted following the announcement of the full-year results or in any event, within twelve months of the AGM. Rights will have a six month exercise restriction commencing from the grant date. Long term incentive plan Eligible executives will be granted options to acquire ordinary shares in the Company, subject to performance hurdles and some or all may vest at the end of the three year period if the performance hurdles are met. Each option is a right to acquire one ordinary share in the Company (or an equivalent cash amount) subject to payment of the exercise price. The exact number of options to be granted will be the LTIP award divided by the option valuation using a Binomial valuation methodology prior to grant date. The option exercise price is calculated based on the 5 day volume weighted average price prior to the grant date. Options do not carry any dividend or voting rights. Options will be granted within twelve months of the Annual General Meeting. Options are subject to performance hurdles based on three independent measures comprising absolute earnings per share (“EPS”), return on capital employed and key safety performance metrics, which are measured at the end of the three year performance period. The Board of Directors retains a discretion to adjust the performance hurdles as required to ensure plan participants are neither advantaged nor disadvantaged by matters outside management’s control that materially affect the performance hurdles (for example, by excluding one-off non-recurrent items or the impact of significant acquisitions or disposals). Options granted have the following details and assumptions: Grant date Vesting date Expiry date Share price at grant date Fair value at grant date Exercise price Expected life Expected price volatility of Boom’s shares Risk-free interest rate Expected dividend yield 2021 2020 2019 4 December 2020 29 November 2019 28 November 2018 31 August 2023 31 August 2022 31 August 2021 30 September 2023 30 September 2022 30 September 2021 $0.155 $0.040 $0.159 $0.145 $0.045 $0.145 $0.165 $0.062 $0.164 2.8 years 2.8 years 2.8 years 47% 0.12% 3.20% 47% 0.65% 0% 55% 2.07% 0% 71 Boom Logistics Annual Report 2021 Section D: Other Disclosures (continued) 19. Share-based Payments (continued) (a) Carrying values Salary Sacrifice Rights Plan Short Term Incentive Plan Long Term Incentive Plan Total employee equity benefits reserve 2021 $’000 907 856 1,286 3,049 Expenses arising from share-based payment transactions (b) Total expenses arising from share-based payment transactions recognised during the financial year are as follows: Rights issued under employee rights plans Options issued under employee option plan Note 9 2021 $’000 212 167 379 2020 $'000 753 798 1,119 2,670 2020 $'000 230 (53) 177 Legacy employee incentive schemes (c) Two existing legacy employee incentive schemes are still in place but have been discontinued with only the ordinary shares vested in previous financial years remaining in the share plans. These plans are expected to be wound up in the next 12 months. Employee share plan share holdings (d) Information with respect to the number of ordinary shares issued and allocated under the employee share plans is as follows: At start of period – issued for nil consideration (including unallocated shares in the employee share schemes allocated during the year) – sold / transferred during the year At end of period 2021 Number of shares 2020 Number of shares 1,480,089 1,969,131 960,321 544,317 (722,457) (1,033,359) 1,717,953 1,480,089 At 30 June 2021, the employee share plans also hold 6,693,777 ordinary shares (2020: 7,654,098) that are un-allocated to employees. Recognition and measurement The cost of these equity settled transactions with employees is measured by reference to the fair value at the date at which they are granted using an appropriate valuation model. In valuing equity settled transactions, the performance conditions are all non-market measures and as such, are not taken into account in determining the fair values of the options. The cost of equity settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period). No expense is recognised for awards that do not ultimately vest. 72 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2021Boom Logistics Annual Report 2021 20. Commitments (a) Capital expenditure contracted for at reporting date but not recognised in the financial statements are as follows: Capital commitments Property, plant and equipment – within one year The assets will be delivered progressively over the next 12 months. 2021 $’000 2020 $'000 12,304 – 21. Contingencies Contingent liabilities Performance guarantees totalling $0.736 million (2020: $0.736 million) have been provided in relation to wind farm construction projects which will expire by 1 May 2022. In addition, other bank guarantees totalling $2.532 million (2020: $3.529 million) have been provided to landlords and work cover authority. There are no other contingent liabilities identified at reporting date. 22. Auditor’s Remuneration During the year the following fees were paid or payable for services provided by KPMG Australia: Audit and review services – audit and review of financial statements Assurance services – other assurance services Other services – taxation services – other services Total other services Total remuneration of KPMG Australia 2021 $ 2020 $ 306,878 234,099 – 46,575 21,602 2,484 24,086 330,964 50,848 – 50,848 331,522 23. Subsequent Events Subsequent to 30 June 2021, the Board have resolved to pay an unfranked final dividend of 1.0 cents per share on 5 November 2021 to shareholders on the register at 30 September 2021. The estimated liability based on the number of ordinary shares at year end is $4.278 million. The dividend has not been provided for in the 30 June 2021 year end financial statements. 73 Boom Logistics Annual Report 2021 Section D: Other Disclosures (continued) 24. New Accounting Policies and Standards (a) The principal accounting policies adopted in the preparation of the financial report are consistent with those of the previous financial year, with no new accounting standards impacting the Group during the period. Changes in accounting policies New accounting standards and interpretations not yet adopted (b) There were no new standards, amendments to standards and interpretations not yet adopted that impacted the Group in the period of initial application. 74 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended 30 June 2021Boom Logistics Annual Report 2021 1. In the opinion of the Directors of Boom Logistics Limited (“the Company”): (a) the Consolidated Financial Statements and notes that are set out on pages 42 to 74, and the Remuneration Report in the Directors’ Report, set out on pages 29 to 39, are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2021 and of its performance for the financial year ended on that date; and (ii) complying with Accounting Standards, (including the Australian Accounting Interpretations) and Corporations Regulations 2001; and (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. The Directors draw attention to page 46 to the Consolidated Financial Statements which includes a statement of compliance with International Financial Reporting Standards. 3. There are reasonable grounds to believe that the Company and the group entities identified in note 15 will be able to meet any obligations 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 Instrument 2016/785. 4. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive officer and chief financial officer for the financial year ended 30 June 2021. Signed in accordance with a resolution of the Directors: Maxwell Findlay Chairperson Melbourne, 26 August 2021 Tony Spassopoulos Managing Director 75 DIRECTORS’ DECLARATIONfor the year ended 30 June 2021Boom Logistics Annual Report 2021 INDEPENDENT AUDITOR’S REPORT for the year ended 30 June 2021 76 INDEPENDENT AUDITOR’S REPORTfor the year ended 30 June 2021Boom Logistics Annual Report 2021 77 Boom Logistics Annual Report 2021 78 INDEPENDENT AUDITOR’S REPORTfor the year ended 30 June 2021Boom Logistics Annual Report 2021 79 Boom Logistics Annual Report 2021 ASX ADDITIONAL INFORMATION for the year ended 30 June 2021 Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 5 August 2021. Distribution of Equity Securities (a) The number of shareholders, by size of holding, in each class of share are: 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over The number of shareholders holding less than a marketable parcel of shares are: Substantial Holders (b) Substantial holders in the Company are set out below: Collins St Asset Management Castle Point Funds Management Rorema Beheer B.V. Greig & Harrison Pty Ltd Grove Investment Group Pty Ltd Ordinary shares Number of holders Number of shares 253 677 543 41,138 2,358,001 4,278,602 1,197 42,746,112 332 378,350,354 3,002 427,774,207 457 506,813 Listed ordinary shares Number of shares Percentage of ordinary shares 50,049,802 37,615,645 35,380,332 33,823,181 22,097,309 11.7% 8.8% 8.3% 7.9% 5.2% 80 ASX ADDITIONAL INFORMATIONfor the year ended 30 June 2021Boom Logistics Annual Report 2021 Twenty Largest Shareholders (c) The names of the twenty largest holders of quoted shares are: 1 2 3 4 5 6 7 8 9 10 11 12 13 SANDHURST TRUSTEES LTDNATIONAL NOMINEES LIMITED CITICORP NOMINEES PTY LIMITED GROVE INVESTMENT GROUP PTY LTD BNP PARIBAS NOMINEES PTY LTD BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD TAVERNERS NO 11 PTY LTD HORRIE PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED GRANTULLY INVESTMENTS PTY LIMITED HILLMORTON CUSTODIANS PTY LTD HORRIE PTY LTD J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 14 WALLBAY PTY LTD 15 16 17 18 19 BNP PARIBAS NOMS PTY LTD LUTON PTY LTD MORGAN STANLEY AUSTRALIA SECURITIES (NOMINEE) PTY LIMITED ALITOM PTY LTD IRAL PTY LTD 20 NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT> Top twenty shareholders Remainder Total Listed ordinary shares Number of shares Percentage of ordinary shares 51,557,123 40,171,557 36,293,324 23,942,297 12,588,420 11,411,550 8,926,364 7,000,000 5,505,357 5,501,243 5,143,000 5,000,000 4,829,864 4,740,000 3,989,469 3,987,005 3,663,345 3,163,466 3,125,806 2,867,282 12.1% 9.4% 8.5% 5.6% 2.9% 2.7% 2.1% 1.6% 1.3% 1.3% 1.2% 1.2% 1.1% 1.1% 0.9% 0.9% 0.9% 0.7% 0.7% 0.7% 243,406,472 184,367,735 56.9% 43.1% 427,774,207 100.0% Voting Rights (d) All ordinary shares (whether fully paid or not) carry one vote per share without restriction. Unquoted Securities (e) There are 5,663,017 rights granted under the Executive Remuneration Plan outstanding held by 16 holders. There are 29,229,782 options granted under the Executive Remuneration Plan outstanding held by 8 holders. 81 Boom Logistics Annual Report 2021 Share Registry Computershare Investor Services Pty Ltd 452 Johnston Street Abbotsford, Victoria, 3067 Investor Enquiries 1300 850 505 Annual General Meeting Boom Logistics will hold its 2021 Annual General Meeting at 11.00am on Friday, 26 November 2021. Details will be provided in the Notice of Meeting. Directors Maxwell J Findlay (Chairperson) Tony Spassopoulos Melanie Allibon Stephen Grove Kieran Pryke Terence A Hebiton Company Secretary Malcolm Ross Registered Office Suite B Level 1, 55 Southbank Boulevard Southbank VIC 3006 Telephone (03) 9207 2500 Fax (03) 9207 2400 Internet www.boomlogistics.com.au 82 CORPORATE DIRECTORYfor the year ended 30 June 2021Boom Logistics Annual Report 2021 Boom Logistics Limited (ASX: BOL) Suite B Level 1, 55 Southbank Boulevard Southbank VIC 3006 Telephone (03) 9207 2500 Fax (03) 9207 2400 www.boomlogistics.com.au