A record year

This past year was a record year for Boart Longyear! We delivered 37% revenue growth and a solid 89% NPAT growth. All this adds up to a new high in our rich 120 year history. The Boart Longyear "brand" is stronger than ever. Mr Edmund J Longyear would be proud.

We have been very busy transforming the company since the 2008 GFC (Global Financial Crisis). While 2011 revenue and profitability may look very similar to the previous results of 2008, this is a much different company.

Boart Longyear did not waste the 2008-2009 crisis. Let me explain:

• Our capital structure has been made more recession resilient. The debt agreements in place prior to the IPO, have been completely replaced with long term high yield bonds and a new bank facility with extended maturities into 2021 and 2016, respectively.
• The company’s leverage is well below 1x EBITDA, reducing our exposure to any potential "tail risk".
• We have finished implementing a world class ERP system (Oracle®) everywhere: 21 modules, 40 countries, all businesses. It has replaced 12 old and disconnected internal IT systems. A new foundation for the digital century.
• We have launched well over 35 new products since 2007, for a current vitality index of 12%. 210 patents were applied for in 2011 alone.
• During 2011, 90 older rigs were replaced, and 112 safer, newer technology rigs were added. A revenue enhancing process that will continue.
• The safety metrics: TCIR and LTIR were 2.33 and 0.13, respectively. Our Severity Rate improved from 3.08 in 2010 to 1.9 in 2011.
• Our emerging market geographic expansion has been dramatic, now representing over 35% of our revenue. We continue to follow our key customers as they expand geographically.
• Re-investment back into the business has driven ROE from 8% in 2010 to 14% in 2011.

In summary, we have continued to invest in Boart Longyear’s people and technology. This has resulted in a much improved ROE. We will continue to invest for ongoing growth.

Finally, and perhaps most importantly, we have brought the company into the global digital age, with the recently launched "BLY App". In the future, any driller will be able to order a Boart Longyear product while standing at his rig, with his cell phone, anywhere in the world.

So, time was not lost. As promised, we have emerged from the recession a better company and have extended our competitive advantage and our global footprint. The net result of all this hard work is leverage to the shareholders.

Principally, that has meant leverage in our financial performance: revenue, EBITDA, NPAT and ROE. For example, our dividends have grown 167% in the past 18 months and our ROE has grown by 77% from the previous year. We plan to keep this momentum going and improve our performance again in 2012. Expected revenue and NPAT for 2012 should exceed our previous highs of 2011.

Finally, whether we are drilling in Afghanistan or selling product in Laos –"People Create All Value". As I mentioned last year, of the 20 top executives in Boart Longyear during September 2008 (start of the GFC), 17 are still here today. During difficult times, these leaders committed their most important asset to Boart Longyear: their careers.

This is the reason you reward good people in hard times: they are necessary to lead you to better opportunities. Leaders matter in these ongoing volatile times. The world is not going to get simpler or more predictable. Conversely, markets are getting faster, more variable and more global. Our team is tested and ready.

As always, I would like to thank our Board of Directors, our Chairman, David McLemore, and welcome our two newest Board members, Tanya Fratto and Barbara Jeremiah, to Boart Longyear.

In closing, thanks to all our shareholders for their ongoing support. The company is in great shape – ready to grow and continue performing.