Some thoughts from my mining fleet asset management days … In a...

Some thoughts from my mining fleet asset management days …

In a perfect world the book value should accurately reflect the market value … which sees fleet managers constantly benchmarking asset prices usually from auction results as a indicator of true achievable sale value …

The downside if you greatly undervalue the asset is increased depreciable costs, hence increasing the operating cost model which leads to increased hire rates and potentially pricing yourself out of the market.

The reverse for overvaluing assets leads to an underestimation of true business costs / undercharging and large end of life write offs which shocks the bottom line.

The most difficult scenario is when you have an industry downturn, there’s surplus equipment for hire and no demand for sale which can quickly lead to large swings in business profitability … a perfect storm.

Boom is a little protected … operating in various segments and having an already established Australia wide footprint allowing rapid relocation to areas of higher demand.

Good asset management is critical to longterm viability … it appears Boom over time has improved the asset base and management there of considerably.

Best of luck.