GR ENGINEERING SERVICES LIMITED — Interim / Quarterly Report 2012

Feb 20, 2012

Appendix 4D

Preliminary Half Year Report to the Australian Securities Exchange

GR Engineering Services Limited ABN 12 121 542 738

For the Half Year Ended 31 December 2011 (corresponding period half year ended 31 December 2010)

RESULTS FOR ANNOUNCEMENT TO THE MARKET

	Half year ended 31 Dec 2011 $’000	Percentage increase / (decrease) from 31 Dec 2010
Revenue from ordinary activities	79,288	12.19%
Profit from ordinary activities after tax attributable to members	6,725	(36.74%)
Net profit for the period attributable to members	6,725	(36.74%)

INTERIM DIVIDENDS

	Half year ended 31 Dec 2011 (cents per share)	Half year ended 31 Dec 2010 (cents per share)1
Interim dividend (fully franked, to be paid on 13 March 2012)	4.00	12.50

Subsequent to reporting date, an interim dividend was resolved to be paid of 4 cents per share (fully franked), with a record date for determining entitlements to the interim dividend on 6 March 2012. The payment date of the interim dividend is 13 March 2012.

NET TANGIBLE ASSET BACKING

	Half year ended 31 Dec 2011 (cents per share)	Half year ended 31 Dec 2010 (cents per share)1
Net tangible asset backing per ordinary share	27.79	1.51

1. For comparative purposes, it has been assumed that 120 million fully paid ordinary shares were on issue as at 31 December 2010. This is based on share capital on issue following a share split in February 2011.

The Half Year Financial Report dated 20 February 2012 forms part of and should be read in conjunction with this Preliminary Half Year Report (Appendix 4D).

This report is based on accounts which have been reviewed. The review report is included in the Half Year Financial Report.

GR Engineering Services Limited Half Year Financial Report For the Half Year Ended 31 December 2011

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT TABLE OF CONTENTS

DIRECTORS’ REPORT ............................................................................................................................ 3 AUDITORS’ INDEPENDENCE DECLARATION ...................................................................................... 4 CONDENSED STATEMENT OF COMPREHENSIVE INCOME .............................................................. 5 CONDENSED STATEMENT OF FINANCIAL POSITION ........................................................................ 6 CONDENSED STATEMENT OF CASH FLOWS ..................................................................................... 7 CONDENSED STATEMENT OF CHANGES IN EQUITY ........................................................................ 8 NOTES TO THE FINANCIAL STATEMENTS .......................................................................................... 9 DIRECTORS’ DECLARATION ............................................................................................................... 15 INDEPENDENT AUDITOR’S REVIEW REPORT................................................................................... 16

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT DIRECTORS’ REPORT

Your directors present their report on GR Engineering Services Limited (ASX.GNG) (“Company”) for the half-year ended 31 December 2011.

DIRECTORS

The names of the Company’s directors in office during the year and until the date of this report follow. The Directors were in office for this entire period unless otherwise stated.

Barry Sydney Patterson (Non-Executive Chairman) Joseph Mario Paul Ricciardo(Managing Director) Tony Marco Patrizi (Executive Director) Terrence John Strapp (Non-Executive Director) Peter John Hood (Non-Executive Director)

COMPANY SECRETARY

Giuseppe (Joe) Totaro

PRINCIPAL ACTIVITIES

During the financial period the Company’s activities have been the provision of high quality process engineering design and construction services to the mining and mineral processing industry.

REVIEW OF RESULTS AND OPERATIONS

The operating profit after tax of the Company was $6,725,316. (2010: $10,630,057)

Strong revenue and cash flow reflected the Company’s excellent operational performance during the six months ended 31 December 2011.

All construction projects advanced on time and on budget while maintaining a nil lost time injury frequency rate.

The Company was awarded twelve studies in the period under review, primarily for gold and base metal projects in Australia, West Africa and Indonesia. These studies are for a range of clients, from junior explorers to global mining houses.

Please refer to the Company’s ASX announcement dated 21 February 2012 for a comprehensive summary of the Company’s recent operational performance.

DIVIDENDS

A fully franked interim dividend of 4 cents per share has been declared for the six months ended 31 December 2011. The record date for determining entitlements to the interim dividend is 6 March 2012 and the payment date for the interim dividend is 13 March 2012.

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS

The auditor’s independence declaration to the directors is included on page 4 of the Half-Year Financial Report.

Signed in accordance with a resolution of directors made pursuant to s.306(3) of the Corporations Act 2001.

On behalf of the Directors

Joe Ricciardo Managing Director

Date: 20 February 2012

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT AUDITORS’ INDEPENDENCE DECLARATION

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GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT CONDENSED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALY-YEAR ENDED 31 DECEMBER 2011

Notes Revenue Rendering of services Cost of Sales Gross profit Finance income 3(b) Other Income 3(a) Finance costs 3(b) Occupancy expenses Administrative expenses Depreciation 3(c) Profit before income tax Income tax expense Net profit for the period Other comprehensive income Total comprehensive income for the period Profit attributable to : Owners of the Company Total comprehensive income attributable to : Owners of the Company Earnings per Share: Basic (cents per share) Diluted (cents per share)	Half-Year Ended 31 December 2011 Half-Year Ended 31 December 2010 $ $ 79,287,702 70,673,078 64,394,654 50,961,699
	14,893,048 19,711,379 1,055,818 385,130 105,367 400,597 26,351 21,513 916,212 514,797 4,174,931 2,268,844 304,054 257,822
	10,632,685 17,434,130 3,907,369 6,804,073
	6,725,316 **10,630,057 **
	- -
	6,725,316 **10,630,057 **
	6,725,316 10,630,057
	6,725,316 10,630,057
	Cents per share Cents per share
	4.48 8.86
	4.48 8.86

The accompanying notes form part of these Financial Statements.

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT CONDENSED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2011

Notes ASSETS Current Assets Cash and cash equivalents 4 Trade and other receivables 5 Inventories Current tax asset Total Current Assets Non-Current Assets Deferred tax asset Property, plant and equipment Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables 6 Borrowings 10 Provisions 7 Unearned Income 8 Total Current Liabilities Non-Current Liabilities Borrowings 10 Provisions 7 Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 9 Reserves Retained earnings TOTAL EQUITY	31 December 2011 30 June 2011 $ $ 51,874,868 36,014,084 18,902,277 24,739,462 1,673,918 1,673,918 2,464,159 1,202,524
	74,915,222 63,629,988
	1,931,469 3,222,304 1,844,646 1,972,638
	3,776,115 5,194,942
	78,691,337 68,824,930
	14,593,004 14,760,281 307,917 526,904 3,816,669 6,486,824 17,632,990 5,586,776
	36,350,580 27,360,785
	277,360 401,581 374,521 228,370
	651,881 **629,951 **
	37,002,461 27,990,736
	41,688,876 **40,834,194 **
	28,501,548 28,501,548 179,988 50,622 13,007,340 12,282,024
	41,688,876 40,834,194

The accompanying notes form part of these Financial Statements

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT CONDENSED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

Notes Cash flows from operating activities Receipts from customers Payments to suppliers and employees Income tax paid Interest received Net cash flows from/(used in) operating activities Cash flows from investing activities Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Net cash flows from/(used in) investing activities Cash flows from financing activities Proceeds from issue of shares Payment of capital raising costs Payment of finance lease liabilities Proceeds from borrowings Repayments of borrowings Dividends paid Net cash flows from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 4	31 December 2011 31 December 2010 $ $ 96,740,844 84,279,425 (71,535,028) (55,015,974) (3,878,169) (6,181,090) 1,055,818 385,130
	22,383,465 23,467,491
	(179,471) (123,009) - -
	(179,471) (123,009)
	- - - - (379,210) (108,990) 36,000 - - - (6,000,000) (15,000,000)
	(6,343,210) (15,108,990)
	15,860,784 8,235,492 36,014,084 12,399,632
	51,874,868 20,635,124

The accompanying notes form part of these Financial Statements

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT CONDENSED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

Balance as at 30 June 2010 Profit for the period Other Comprehensive income for the period Total Comprehensive income for the period Dividends Issue of capital Capital raising costs Deferred tax asset (capital raising costs) Issue of options Balance as at 31 December 2010 Balance as at 30 June 2011 Profit for the period Other Comprehensive income for the period Total Comprehensive income for the period Dividends Issue of capital Capital raising costs Deferred tax asset (capital raising costs) Issue of options Balance as at 31 December 2011	Issued capital Reserves Retained Earnings Total $ $ $ $
	1,000 - 10,184,098 10,185,098
	- - 10,630,057 10,630,057 - - - -
	- - 10,630,057 10,630,057
	- - (19,000,000) (19,000,000) - - - - - - - - - - - - - - - -
	1,000 - 1,814,155 1,815,155
	28,501,548 50,622 12,282,024 40,834,194
	- - 6,725,316 6,725,316 - - - -
	- - 6,725,316 6,725,316
	- - (6,000,000) (6,000,000) - - - - - - - - - - - - - 129,366 - 129,366
	28,501,548 179,988 13,007,340 41,688,876

The accompanying notes form part of these Financial Statements

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

1 CORPORATE INFORMATION

The financial report of GR Engineering Services Limited for the half year ended 31 December 2011 was authorised for issue in accordance with a resolution of the directors on 20[th] February 2012.

GR Engineering Services Limited is a limited company incorporated and domiciled in Australia. The registered office of GR Engineering Services Limited is located at 71-73 Daly Street, Belmont, Western Australia.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation

The condensed financial statements have been prepared on the basis of historical cost, except for certain non-current assets and financial instruments that are measured at revalued amounts or fair values. Historical cost is generally based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

The accounting policies and methods of computation adoption in the preparation of the half-year financial report are consistent with those adopted and disclosed in the company’s annual financial report for the financial year ended 30 June 2011, except for the impact of the Standards and Interpretations described below. The accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

(b) Statement of Compliance

The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 ‘Interim Financial Reporting’. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 ‘Interim Financial Reporting’. The halfyear report does not include notes of the type normally included in an annual financial report and shall be read in conjunction with the most recent annual financial report.

(c) Adoption of new and revised Accounting Standards

The Company has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board that are relevant to their operations and are effective for the current financial reporting period, being the half year ended 31 December 2011.

Significant new and revised standards and interpretations effective for the current financial reporting period that are relevant to the Company are:

• AASB 124: Related Party Disclosures;

• AASB 2010-4: Further Amendments to Australian Accounting Standards arising from Annual Improvements Project;

• AASB 2010-5: Amendments to Australian Accounting Standards;

• AASB 2010-6: Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets.

The adoption of these standards has not had an impact on the Company.

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

(d) Standards and Interpretations issued but not yet effective

The following Australian Accounting Standards and Interpretations have recently been issued or amended but are not yet effective and have not been adopted by the Company in the half year ended 31 December 2011

Standard/Interpretation	Standard/Interpretation	Effective for annual	Expected to be initially
		reporting periods	applied in the financial
		beginning on or after	year ending
	AASB 9 Financial Instruments, AASB 2009-
	11 Amendments to Australian Accounting
	Standards arising from AASB 9 and AASB
	2010-7 Amendments to Australian
	Accounting Standards arising from AASB9
	(December 2010)	1 January 2013	30 June 2014
	AASB 2010-8 Amendments to Australian
	Accounting Standards – Deferred Tax:
	Recovery of Underlying Assets	1 January 2012	30 June 2013
	AASB 2011-4 Amendments to Australian
	Accounting Standards to Remove Individual
	Key Management Personnel Disclosure
	Requirements	1 July 2013	30 June 2014
	AASB 10 Consolidated Financial
	Statements	1 January 2013	30 June 2014
	AASB 11 Joint Arrangements	1 January 2013	30 June 2014
	AASB 12 Disclosure of Interests in Other
	Entities	1 January 2013	30 June 2014
	AASB 13 Fair Value Measurement, AASB
	2011-8 Amendments to Australian
	Accounting Standards arising from AASB
	13	1 January 2013	30 June 2014
	AASB 127 Separate Financial Statements	1 January 2013	30 June 2014
	AASB 128 Investments in Associates and
	Joint Ventures	1 January 2013	30 June 2014
	AASB 119 Employee Benefits, AASB 2011-
	10 Amendments to Australian Accounting
	Standards arising from AASB 119	1 January 2013	30 June 2014

The impact of these recently issued or amended standards and interpretations have not been determined as yet by the Company.

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

3 REVENUES AND EXPENSES

(a) Other income

(a) Other income
Government rebates and subsidies Profit on disposal of inventories Profit (loss) on sale of fixed assets Sundry revenue (b) Finance (costs) / income Bank interest received Interest charges on finance leases (c) Depreciation Depreciation (d) Employee benefits expense Wages and Salaries Workers’ compensation costs Superannuation costs Share based payments	31 December 2011 31 December 2010 $ $ 864 21,602 - 262,128 (3,411) - 107,914 116,867
	105,367 400,597
	1,055,818 385,130 (26,351) (21,513) 304,054 257,822 18,437,332 13,076,655 63,727 67,722 1,330,429 841,673 129,366 - 19,960,854 13,986,050

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

4 CASH AND CASH EQUIVALENTS

Cash at bank and in hand Short term deposits Cash at bank and in hand earns interest at floating rates based on daily bank rates.	31 December 2011 30 June 2011 $ $ 20,544,237 6,279,222 31,330,631 29,734,862
	51,874,868 36,014,084

Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Company, and earn interest at the respective short-term deposit rates.

Reconciliation of cash For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise the following at 31 December 2011: Cash at bank and in hand Short-term deposits TRADE AND OTHER RECEIVABLES (CURRENT) Trade receivables Provision for doubtful debts Other receivables Trade receivables are non-interest bearing and are generally on 30 day terms.	31 December 2011 31 December 2010 $ $ 20,544,237 18,863,428 31,330,631 1,771,696
	51,874,868 20,635,124
	31 December 2011 30 June 2011 $ $ 20,020,940 25,923,621 (1,525,000) (1,525,000) 406,337 340,841 18,902,277 24,739,462

5 TRADE AND OTHER RECEIVABLES (CURRENT)

6 TRADE AND OTHER PAYABLES (CURRENT)

Trade payables Other payables & accruals	31 December 2011 30 June 2011 $ $ 13,227,311 13,015,333 1,365,693 1,744,948
	14,593,004 14,760,281

Trade payables are non-interest bearing and are normally settled on 30 day terms. The net of GST payable and GST receivable is remitted to the appropriate tax body on a monthly basis.

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

7 PROVISIONS

7 PROVISIONS
Current liabilities Provision for annual leave Provision for warranty and defects liability Provision for project returns Non-current liabilities Provision for long service leave 8 UNEARNED REVENUE Unearned revenue on construction contracts 9 ISSUED CAPITAL Ordinary Shares Issued and fully paid Issue of ordinary shares At 30 June 2011 Issue of shares At 31 December 2011	31 December 2011 30 June 2011 $ $ 1,206,512 1,013,497 2,284,000 4,608,135 326,157 865,192 3,816,669 6,486,824 374,521 228,370 374,521 228,370 31 December 2011 30 June 2011 $ $ 17,632,990 5,586,777
	17,632,990 5,586,777
	31 December 2011 30 June 2011 No of shares No of shares
	150,000,000 150,000,000
	No of shares $ 150,000,000 28,501,548 - - 150,000,000 28,501,548

Fully paid ordinary shares carry one vote per share and carry a right to dividends.

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

10 COMMITMENTS AND CONTINGENCIES

Finance leases Not longer than 1 year Longer than 1 year and not longer than 5 years Longer than 5 years Minimum lease payments Less: future finance charges Present value of minimum lease payments Non-cancellable operating lease commitments Not longer than 1 year Longer than 1 year and not longer than 5 years Longer than 5 years Total lease payments Bank guarantees Bank guarantees issued	31 December 2011 30 June 2011 $ $ 351,154 591,456 302,192 443,762 - -
	653,346 1,035,218 68,069 106,733
	585,277 928,485
	1,697,944 1,409,799 3,412,108 3,016,766 - -
	5,110,052 4,426,565
	7,158,970 6,734,862

GR Engineering Services Limited has a bank guarantee facility with the National Australia Bank to provide bank guarantees to support project performance in favour of certain clients of GR Engineering Services Limited and rental property security. The facility has an approved limit of $7,330,631, with an expiry date of 30 November 2012. The facility is secured by a fixed and floating charge over all the assets of GR Engineering Services Limited and a term deposit letter of set-off over a $3,330,631 term deposit. The unused facility amount is $171,661.

Certain claims arising out of engineering and construction contracts have been made by or against the company in the ordinary course of business, some of which involve litigation or arbitration. The Directors do not consider the outcome of any of these claims will have a material adverse impact on the financial position of the company.

11 EVENTS AFTER THE REPORTING DATE

A fully franked interim dividend of 4 cents per share has been declared for the six months ended 31 December 2011. The record date for determining entitlements to the interim dividend is 6 March 2012 and the payment date for the interim dividend is 13 March 2012.

There has been no other matter or circumstance, other than that referred to in the financial statements or notes thereto, that has arisen since the end of the financial period, that has significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.

12 SEGMENT INFORMATION

Operating segments have been identified on the basis of internal reports of the Company that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance. The chief operating decision maker has been identified as the Board of Directors. On a regular basis, the board receives financial information on a company basis similar to the financial statements presented in the financial report, to manage and allocate their resources.

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT DIRECTORS’ DECLARATION

The directors declare that:

• (a) In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and

• (b) In the directors’ opinion, the attached financial statements and notes thereto are in compliance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the Company.

Signed in accordance with a resolution of the directors made pursuant to s.303(5) of the Corporations Act 2001.

On behalf of the Directors

Name: Joseph Mario Paul Ricciardo

Date: 20 February 2012

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT INDEPENDENT AUDITOR’S REVIEW REPORT

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GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT INDEPENDENT AUDITOR’S REVIEW REPORT

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