GR ENGINEERING SERVICES LIMITED — Interim / Quarterly Report 2013

Feb 25, 2013

GR Engineering Services Limited Half Year Financial Report For the Half Year Ended 31 December 2012

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

DIRECTORS’ REPORT ............................................................................................................................ 3 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME.................................................................................................................... 5 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION .......................................... 6 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS ....................................................... 7 CONDENSED CONSOLIDATED 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) (“the consolidated entity”) for the half-year ended 31 December 2012.

DIRECTORS

The names of the consolidated entity‟s directors in office during the half 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 consolidated entity‟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 consolidated entity was $1,250,521. (2011: $6,725,316)

As advised in the consolidated entity‟s ASX announcement dated 19 November 2012, project delays and deferrals, combined with one off costs associated with a now resolved legal dispute, impacted the consolidated entity‟s operational performance during the six months ended 31 December 2012.

Operationally, all projects advanced satisfactorily and the consolidated entity was successful in maintaining its record of no lost time injuries.

The consolidated entity‟s strong performance in securing and executing study engagements continued during the six months ended 31 December 2012. Nine new study engagements were awarded relating to a range of gold and base metal projects in Australia, Africa, Europe and the South Pacific region.

Please refer to the consolidated entity‟s ASX announcement of 26 February 2013 for a comprehensive summary of the consolidated entity‟s recent operational performance.

DIVIDENDS

A fully franked interim dividend of 2 cents per share has been declared for the six months ended 31 December 2012. The record date for determining entitlements to the interim dividend is 8 March 2013 and the payment date for the interim dividend is 18 March 2013.

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: 26 February 2013

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT

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GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

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 Bad debt expense 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 parent Total comprehensive income attributable to : Owners of the parent Earnings per Share: Basic (cents per share) Diluted (cents per share)	Half-Year Ended 31 December 2012 Half-Year Ended 31 December 2011 $ $ 56,639,592 79,287,702 47,990,084 64,394,654
	8,649,508 14,893,048 709,809 1,055,818 187,270 105,367 35,644 26,351 936,250 916,212 4,938,510 4,174,931 881,933 - 434,467 304,054
	2,319,783 10,632,685 1,069,262 3,907,369
	1,250,521 6,725,316
	- -
	1,250,521 6,725,316
	1,250,521 6,725,316
	1,250,521 6,725,316
	Cents per share Cents per share
	0.83 4.48
	0.83 4.48

The accompanying notes form part of these Financial Statements.

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2012

Notes ASSETS Current Assets Cash and cash equivalents 4 Trade and other receivables Inventories Current tax asset Prepayments 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 Borrowings Provisions Unearned income 5 Income tax Total Current Liabilities Non-Current Liabilities Borrowings Provisions Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 6 Reserves Retained earnings TOTAL EQUITY	31 December 2012 30 June 2012 $ $ 27,064,985 33,861,242 20,852,096 25,378,835 648,345 578,464 142,856 - 217,336 231,305
	48,925,618 60,049,846
	1,831,897 1,832,680 2,441,508 2,191,887
	4,273,405 **4,024,567 **
	53,199,023 64,074,413
	7,584,844 10,258,673 317,547 246,701 3,865,358 3,872,639 2,761,660 6,101,140 - 694,564
	14,529,409 21,173,717
	377,596 232,335 605,974 478,500
	983,570 710,835
	15,512,979 21,884,552
	37,686,044 42,189,861
	28,501,548 28,501,548 536,496 290,834 8,648,000 13,397,479
	37,686,044 **42,189,861 **

The accompanying notes form part of these Financial Statements

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

Notes Cash flows from operating activities Receipts from customers Payments to suppliers and employees Income tax paid Interest received Net cash flows from operating activities Cash flows from investing activities Purchase of property, plant and equipment Net cash flows from/(used in) investing activities Cash flows from financing activities Payment of finance lease liabilities Proceeds from 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 2012 31 December 2011 $ $ 62,491,560 96,740,844 (56,688,370) (71,535,028) (1,905,899) (3,878,169) 709,809 1,055,818
	4,607,100 22,383,465
	(584,204) (179,471)
	(584,204) (179,471)
	(116,901) (379,210) 333,008 36,000 (6,000,000) (6,000,000)
	(5,783,893) (6,343,210)
	(1,760,997) 15,860,784 28,825,982 36,014,084
	27,064,985 51,874,868

The accompanying notes form part of these Financial Statements

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

Balance as at 30 June 2011 Profit for the period Other Comprehensive income for the period Total Comprehensive income for the period Dividends Share based payments Balance as at 31 December 2011 Balance as at 30 June 2012 Profit for the period Other Comprehensive income for the period Total Comprehensive income for the period Dividends Share based payments Balance as at 31 December 2012	Issued capital Reserves Retained Earnings Total $ $ $ $
	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
	28,501,548 290,834 13,397,479 42,189,861
	- - 1,250,521 1,250,521 - - - -
	- - 1,250,521 1,250,521
	- - (6,000,000) (6,000,000) - 245,662 - 245,662
	28,501,548 536,496 8,648,000 37,686,044

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 2012

1 CORPORATE INFORMATION

The financial report of GR Engineering Services Limited for the half year ended 31 December 2012 was authorised for issue in accordance with a resolution of the directors on 26 February 2013.

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 consolidated entity‟s annual financial report for the financial year ended 30 June 2012, 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 consolidated entity 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 2012.

• The following new and revised Standards and Interpretations that are relevant to the consolidated entity have been adopted in the current financial reporting period :  AASB 2011-9: Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income

The adoption of AASB 2011-9 has not resulted in any changes to the consolidated entity‟s accounting policies and has no effect on the amounts reported for the current or prior half-years. However, application of AASB 2011-9 has resulted in changes to the consolidated entity‟s presentation of, or disclosure in, its half year financial statements. AASB 2011-9 introduces new terminology for the statement of comprehensive income and income statement. Under the amendments to AASB 101, the statement of comprehensive income is renamed as a statement of profit or loss and other comprehensive income and the income statement is renamed as a statement of profit or loss. The amendments to AASB 101 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to AASB 101 require items of other comprehensive income to be grouped into two categories in the other comprehensive income section: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis – the amendments do not change the option to present items of other comprehensive income either before tax or net of tax. The amendments have been applied retrospectively, and hence the presentation of items of other comprehensive income has been modified to reflect the changes. Other than the above mentioned presentation changes, the application of the amendments to AASB 101 does not result in any impact on profit or loss, other comprehensive income and total comprehensive income.

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

• (d) Standards and Interpretations issued but not yet effective

Australian Accounting Standards and Interpretations have recently been issued or amended but are not yet effective and have not been adopted by the consolidated entity for the half year ending 31 December 2012. Management is in the process of assessing the impact of the adoption of these standards and interpretations on the consolidated entity.

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

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 2012 31 December 2011 $ $ 594 864 99,882 - - (3,411) 86,794 107,914
	187,270 105,367
	709,809 1,055,818 (35,644) (26,351) 434,467 304,054 17,939,130 18,437,332 144,120 63,727 1,345,439 1,330,429 245,662 129,366 19,674,351 19,960,854

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

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. Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the consolidated entity, 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 2012: Cash at bank and in hand Short-term deposits 5 UNEARNED REVENUE Unearned revenue on construction contracts 6 ISSUED CAPITAL Ordinary Shares Issued and fully paid Issue of ordinary shares At 30 June 2012 Issue of shares At 31 December 2012	31 December 2012 30 June 2012 $ $ 8,039,985 8,836,242 19,025,000 25,025,000
	27,064,985 33,861,242
	31 December 2012 30 June 2012 $ $ 8,039,985 8,836,242 19,025,000 25,025,000
	27,064,985 33,861,242
	31 December 2012 30 June 2012 $ $ 2,761,660 6,101,140
	2,761,660 6,101,140
	31 December 2012 30 June 2012 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 2012

7 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 2012 30 June 2012 $ $ 366,893 281,914 406,707 250,013 - -
	773,600 531,927 (78,457) (52,891)
	695,143 479,036
	1,416,418 1,727,652 2,644,308 2,872,652 - -
	4,060,726 4,600,304
	6,437,478 9,002,427

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 $15,000,000. 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 term deposits amounting to $5,035,260.

8 DIVIDENDS

During the half year, the consolidated entity made the following dividend payments :

Fully paid ordinary shares Dividend	31 December 2012 31 December 2011 Cents per share $ Cents per share $ 4.00 6,000,000 4.00 6,000,000
	4.00 6,000,000 4.00 6,000,000

A fully franked interim dividend of 2 cents per share has been declared for the six months ended 31 December 2012. The record date for determining entitlements to the interim dividend is 8 March 2013 and the payment date for the interim dividend is 18 March 2013.

9 SEGMENT INFORMATION

Operating segments have been identified on the basis of internal reports of the consolidated entity 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.

10 KEY MANAGEMENT PERSONNEL

Remuneration arrangements of key management personnel are disclosed in the annual financial report dated 30 June 2012. In addition, during the half-year 60,000 performance rights were issued to Peter Allen, Process Manager.

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2012

11 EVENTS AFTER THE REPORTING DATE

A fully franked interim dividend of 2 cents per share has been declared for the six months ended 31 December 2012. The record date for determining entitlements to the interim dividend is 8 March 2013 and the payment date for the interim dividend is 18 March 2013.

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 consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

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 consolidated entity.

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: 26 February 2013

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

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