GR ENGINEERING SERVICES LIMITED — Interim / Quarterly Report 2016

Feb 22, 2016

GR Engineering Services Limited Half Year Financial Report For the Half Year Ended 31 December 2015

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT

TABLE OF CONTENTS

DIRECTORS’ REPORT	3
AUDITORS’ INDEPENDENCE DECLARATION	5
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME	6
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION	7
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS	8
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	9
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	10
DIRECTORS’ DECLARATION	16
INDEPENDENT AUDITOR’S REVIEW REPORT	17

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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 2015 (HY16).

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.

Joe Ricciardo (Non-Executive Chairman) Geoff Jones (Managing Director) Tony Patrizi (Executive Director) Barry Patterson (Non-Executive Director) Peter Hood (Non-Executive Director) Terrence Strapp (Non-Executive Director)

COMPANY SECRETARY

Giuseppe (Joe) Totaro

PRINCIPAL ACTIVITIES

During the financial period the consolidated entity’s activities have been the provision of process engineering design and construction services to the mining and mineral processing industry and the provision of operations, maintenance and well management services to the oil and gas sector.

REVIEW OF RESULTS AND OPERATIONS

The operating profit after tax of the consolidated entity was $8,746,233 (HY15: $6,462,643). The EBITDA of the consolidated entity was $10,843,360 (HY15: $9,853,329).

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

HY16 saw heightened design and construction activity on predominantly Australian based projects. The largest of these projects is the engineering, procurement and construction works on the processing plant, paste fill plant and associated non-process infrastructure for Independence Group NL’s Nova Nickel Project. As at 31 December 2015, this project was over 30% complete and was progressing on time and on budget.

Work was completed on the construction of the MZI Resources Limited’s Mineral Sands Project. This project, which involved the construction of a wet concentrator plant located at the Keysbrook mine site and the expansion of an existing mineral separation plant located in Picton also progressed on time and on budget with practical completion being achieved in December 2015.

In July 2015 the consolidated entity entered into an engineering, procurement and construction (EPC) contract with Western Areas Limited in relation to its Forrestania Mill Recovery Enhancement Project. Engineering and design work on this project commenced immediately and is scheduled for completion in February 2016. Related construction work on this project has been deferred.

In August 2015 GR Engineering commenced early works on Doray Minerals Limited’s Deflector Project located near Gullewa Western Australia. Also executed under an EPC contract model, this project involves the design, construction and commissioning of 480ktpa gold-copper mineral processing facility and associated infrastructure. As at 31 December 2015 this project was approximately 74% completed and was progressing on time and on budget.

During HY16 GR Engineering continued to build on its international reputation by successfully executing design and construction engagements in a range of commodities and countries.

In the UK, operational control of the Hemerdon tungsten/tin plant was handed over to Wolf Minerals Limited in September 2015 and commissioning of the plant has commenced. As at 31 December, construction of the Hemerdon plant was complete save for work on peripheral and punch list items. With a value of GBP 75 million, this is the largest project executed by the consolidated entity to date and was delivered under an EPC contracting model.

In Indonesia, work continued on the Wetar Copper Project for PT Batutua Tembaga Raya pursuant to a contract awarded in November 2014 and in Greece, work commenced in September 2015 on Phase 2 of Hellas Gold SA’s Olympias Project. This project involves the design and construction of a 385ktpa gold, lead and zinc concentrator. Both the Wetar Copper Project and the Olympias Project are executed under engineering, procurement and construction management (EPCM) contracting arrangements.

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GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT

DIRECTORS’ REPORT

During the half year under review, the consolidated entity completed 13 studies and as 31 December 2015 was engaged on a further 18.

HY16 saw the consolidated entity’s wholly owned subsidiary, Upstream Production Solutions Pty Ltd (Upstream PS) continue to safely and successfully deliver operations and maintenance services to the oil and gas industry. Despite a marked decline in the price of oil and gas during HY16, Upstream PS was successful in maintaining levels of revenue and profitability consistent with budgeted performance.

Please refer to the consolidated entity’s ASX announcement of 23 February 2016 for a comprehensive summary of the consolidated entity’s recent operational performance.

DIVIDENDS

A fully franked dividend of 5.0 cents per share has been declared for the six months ended 31 December 2015. The ex dividend date for the interim dividend is 21 March 2016, the record date for determining entitlements to the interim dividend is 23 March 2016 and the payment date for the interim dividend is 30 March 2016.

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS

The auditor’s independence declaration to the directors is included on page 5 of the Half Year Financial Report.

EVENTS AFTER THE REPORTING DATE

For events occurring after the reporting date, refer to note 14 in the notes to the financial statements.

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

On behalf of the Directors

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______ Geoff Jones Managing Director Date: 23 February 2016

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GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT

AUDITORS’ INDEPENDENCE DECLARATION

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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 2015

Notes Revenue Rendering of services Cost of Sales Gross profit Other Income 3(a) Finance costs 3(b) Occupancy expenses Administrative expenses Depreciation and amortisation 3(c) Profit before income tax Income tax expense 13 Net profit for the period Other comprehensive income Items that may be reclassified subsequently to profit or loss : Fair value gain on available for sale financial assets Exchange differences on translating foreign operations Total other comprehensive income, net of income tax 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 Half-Year Ended 31 December 2015 31 December 2014 $ $ 127,216,127 98,156,609 111,542,821 80,720,685
	15,673,306 17,435,924 1,971,949 430,247 33,504 29,074 1,250,873 1,156,761 4,906,792 6,326,139 912,063 2,057,788
	10,542,023 8,296,409 1,795,790 1,833,766
	8,746,233 6,462,643
	33,197 291,595 (1,120,495) 936,939
	(1,087,298) 1,228,534
	7,658,935 7,691,177
	8,746,233 6,462,643
	7,658,935 7,691,177
	Cents per share Cents per share
	5.76 4.30
	5.71 4.19

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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 2015

Notes ASSETS Current Assets Cash and cash equivalents 4 Trade and other receivables Inventories Other Current tax asset Total Current Assets Non-Current Assets Deferred tax asset Property, plant and equipment Financial assets 10 Intangible assets Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Borrowings Provisions Unearned revenue 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 30 June 2015 2015 $ $ 44,111,966 64,582,994 49,553,960 26,038,936 3,036,414 2,821,512 787,276 652,458 1,965,086 -
	99,454,702 94,095,900
	3,389,905 2,256,138 3,846,370 3,514,591 2,482,496 2,347,202 294,161 552,656
	10,012,932 8,670,587
	109,467,634 102,766,487
	43,552,182 35,392,357 830,357 397,912 10,341,401 7,962,338 2,719,130 5,416,190 - 2,055,333
	57,443,070 51,224,130
	696,607 706,432 2,209,185 2,111,213
	2,905,792 2,817,645
	60,348,862 54,041,775
	49,118,772 48,724,712
	29,998,351 28,918,256 657,304 2,552,945 18,463,117 17,253,511
	49,118,772 48,724,712

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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 2015

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 Return from (investment in) term deposits for project security Payment for acquisition of financial assets Net cash flows from/(used in) investing activities Cash flows from financing activities Payment of finance lease liabilities 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 Effects of exchange rate changes of balances of cash held in foreign currencies Cash and cash equivalents at end of period 4	31 December 31 December 2015 2014 $ $ 108,654,555 114,454,182 (113,861,087) (93,026,104) (6,687,436) (2,139,713) 644,230 500,868
	(11,249,738) 19,789,233
	(559,207) (1,087,787) - 691,602 (114,637) (124,969)
	(673,844) (521,154)
	(3,518) 340,528 (7,536,627) (6,016,318)
	(7,540,145) (5,675,790)
	(19,463,727) 13,592,289 64,582,994 32,193,955 (1,007,301) 925,240
	44,111,966 46,711,484

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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 2015

Balance as at 30 June 2014 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 2014 Balance as at 30 June 2015 Profit for the period Other Comprehensive income (loss) for the period Total Comprehensive income (loss) for the period Dividends Issue of shares Share based payments Balance as at 31 December 2015	Issued capital Share Option Reserve Performance Rights Reserve Share Appreciation Rights Reserve Foreign Currency Translation Reserve Investment Revaluation Reserve Retained Earnings Total $ $ $ $ $ $ $ $
	28,785,355 545,500 590,246 82,291 (404,255) (142,852) 17,100,536 46,556,821
	- - - - - - 6,462,643 6,462,643 - - - - 936,939 291,595 - 1,228,534
	- - - - 936,939 291,595 6,462,643 7,691,177
	- - - - - - (6,016,318) (6,016,318) - 21,665 180,220 65,830 - - - 267,715
	28,785,355 567,165 770,466 148,121 532,684 148,743 17,546,861 48,499,395
	28,918,256 584,497 984,762 79,978 699,712 203,996 17,253,511 48,724,712
	- - - - - - 8,746,233 8,746,233 - - - - (1,120,495) 33,197 - (1,087,298)
	- - - - (1,120,495) 33,197 8,746,233 7,658,935
	- - - - - - (7,536,627) (7,536,627) 1,080,095 - (1,080,095) - - - - - - - 247,020 24,732 - - - 271,752
	29,998,351 584,497 151,687 104,710 (420,783) 237,193 18,463,117 49,118,772

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The accompanying notes form part of these Financial Statements

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2015

1 CORPORATE INFORMATION

The financial report of GR Engineering Services Limited for the half year ended 31 December 2015 was authorised for issue in accordance with a resolution of the directors on 22 February 2016.

GR Engineering Services Limited is a limited company incorporated and domiciled in Australia. The registered office of GR Engineering Services Limited is located at 179 Great Eastern Highway, 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 2015, 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 half-year 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) Standards and Interpretations adopted in the current year

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 2015.

The following new and revised Standards and Interpretations have been adopted in the current financial reporting period that are relevant to the consolidated entity are:

• [2015-3][‘Amendments][to][Australian][Accounting][Standards][arising][from][the][Withdrawal][of][AASB][1031]

• [AASB]

• Materiality’

• AASB 2015-4 ‘Amendments to Australian Accounting Standards – Financial Reporting Requirements for Australia Groups with a Foreign Parent’

The adoption of these Standards and Interpretations does not have any impact on the disclosures or the amounts recognised in the consolidated entity’s condensed consolidated financial statements.

(d) Standards and Interpretations in issue not yet adopted

Australian Accounting Standards and Interpretations that 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 2015. Management are in the process of assessing the impact of the adoption of these Standards and Interpretations on the consolidated entity.

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GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2015

3 REVENUES AND EXPENSES

(a) Other income Bank interest received Government rebates and subsidies Profit (loss) on sale of fixed assets Sundry revenue (b) Finance costs Interest charges on finance leases (c) Depreciation and amortisation Depreciation of fixed assets (d) Employee benefits expense Wages and Salaries Workers’ compensation costs Superannuation costs Share based payments 4 Cash at bank and in hand Short term deposits Amortisation of customer contracts CASH AND CASH EQUIVALENTS	31 December 2015 31 December 2014 $ $ 644,230 500,868 31,308 128 - 13,713 1,296,411 (84,462)
	1,971,949 430,247
	33,504 29,074 653,568 510,284 258,495 1,547,504
	912,063 2,057,788
	29,748,295 20,849,675 177,112 123,675 2,294,987 1,665,314 271,752 267,715
	32,492,146 22,906,379
	31 December 30 June 2015 2015 $ $ 24,611,966 40,610,353 19,500,000 23,972,641
	44,111,966 64,582,994

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 2015:

Cash at bank and in hand Short-term deposits	31 December 30 June 2015 2015 $ $ 24,611,966 40,610,353 19,500,000 23,972,641
	44,111,966 64,582,994

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GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2015

5 UNEARNED REVENUE 6 ISSUED CAPITAL Ordinary Shares Issued and fully paid Issue of ordinary shares At 30 June 2015 At 31 December 2015 7 Finance leases Not longer than 1 year Longer than 5 years Minimum lease payments Less: future finance charges Present value of minimum lease payments Not longer than 1 year Longer than 5 years Total lease payments Bank guarantees Bank guarantees issued Longer than 1 year and not longer than 5 years Unearned revenue on construction contracts Fully paid ordinary shares carry one vote per share and carry a right to dividends. COMMITMENTS AND CONTINGENCIES Issue of shares from exercise of performance rights Non-cancellable operating lease commitments Longer than 1 year and not longer than 5 years	31 December 30 June 2015 2015 $ $ 2,719,130 5,416,190
	2,719,130 5,416,190
	31 December 30 June 2015 2015 No of shares No of shares
	152,426,086 150,732,531
	No of shares $ 150,732,531 28,918,256 1,693,555 1,080,095
	152,426,086 29,998,351
	31 December 30 June 2015 2015 $ $ 874,488 435,514 725,930 737,675 - -
	1,600,418 1,173,189 (73,453) (68,846)
	1,526,965 1,104,343
	1,786,227 1,913,651 1,510,570 2,222,302 - -
	3,296,797 4,135,953
	35,118,580 29,737,896

The consolidated entity has a bank guarantee facility with the National Australia Bank to provide bank guarantees to support project performance in favour of certain clients of the consolidated entity. The facility has an approved limit of $40,000,000. The facility is secured by a fixed and floating charge over all the assets of the consolidated entity.

The amount of bank guarantees issued under this facility at 31 December 2015 is $34,181,265 (30 June 2015: $28,800,581). The consolidated entity has a bank guarantee facility with National Australia Bank to provide guarantees for the security of rental properties to the value of $937,315 (30 June 2015: $937,315). The amount of bank guarantees issued under this facility at 31 December 2015 is $937,315 (30 June 2015: $937,315).

Bond facility

The consolidated entity has a $30 million insurance bond facility with Assetinsure Pty Ltd. This facility is utilised to provide retention, maintenance and off site materials bonds in connection with certain projects. The amount of insurance bonds issued under this facility at 31 December 2015 is $11,398,926 (30 June 2015: $14,912,256).

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GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2015

8 DIVIDENDS

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

Fully paid ordinary shares Dividend	Cents per share $ Cents per share $ 5.00 7,536,627 4.00 6,016,318 31 December 2015 31 December 2014
	5.00 7,536,627 4.00 6,016,318

A fully franked dividend of 5.0 cents per share has been declared for the six months ended 31 December 2015. The ex dividend date for the interim dividend is 21 March 2016, the record date for determining entitlements to the interim dividend is 23 March 2016 and the payment date for the interim dividend is 30 March 2016.

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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 Managing Director. 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.

The Managing Director has chosen to classify the operations of the consolidated entity by reference to presence in an industry. The segments identified on this basis are "mineral processing" and "oil and gas".

Segment revenues and results

The following table shows the revenue and results of the consolidated entity summarised under these segments.

Mineral processing Oil and gas Total revenue Segment profit before tax Mineral processing Oil and gas Total profit before tax	31 December 31 December 2015 2014 $ $ 110,026,171 82,709,964 17,189,956 15,446,645
	127,216,127 98,156,609
	31 December 31 December 2015 2014 $ $ 9,542,487 8,928,156 999,536 (631,747)
	10,542,023 8,296,409

The above profit for the 6 months to 31 December 2015 (2014: loss) for the oil and gas segment includes amortisation expense of $258,495 (2014: $1,547,504).

Segment assets

Segment assets
Mineral processing Oil and gas Total assets	31 December 31 December 2015 2014 $ $ 93,612,514 81,254,042 15,855,120 13,268,944
	109,467,634 94,522,986

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GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2015

10 FINANCIAL ASSETS

Available for sale financial assets held at fair value

Shares in listed entities	31 December 30 June 2015 2015 $ $ 2,482,496 2,347,202

Shares held in the listed entities are measured at fair value at the end of the reporting period.

11 FINANCIAL INSTRUMENTS

Fair value of financial instruments

The fair values of financial assets and liabilities, together with their carrying amounts in the statement of financial position for the consolidated entity are as follows :

Assets Cash at bank Cash on deposit Trade receivables Available for sale securities Liabilities Trade payables Lease liability	Carrying amount Fair value Carrying amount Fair value $ $ $ $ 24,611,966 24,611,966 40,610,353 40,610,353 19,500,000 19,500,000 23,972,641 23,972,641 49,553,960 49,553,960 26,038,936 26,038,936 2,482,496 2,482,496 2,347,202 2,347,202 31 December 2015 30 June 2015
	96,148,422 96,148,422 92,969,132 92,969,132
	43,552,182 43,552,182 35,392,357 35,392,357 1,526,964 1,526,964 1,104,344 1,104,344
	45,079,146 45,079,146 36,496,701 36,496,701

Fair value of financial instruments

The group holds available for sale equity securities of $2,482,496 (30 June 2015: $2,347,202) which are classified as fair value hierarchy level 1, in which fair values are based on quoted prices in active markets. There has been no transfers of fair value hierarchy levels during the period.

During the period, net losses of $33,197 (31 December 2014: net gain of $291,595) have been included in other comprehensive income and are reported in the investment revaluation reserve.

During the period, $364,638 of additional available for sale securities were acquired (2014: nil).

12 KEY MANAGEMENT PERSONNEL

Remuneration arrangements of key management personnel are disclosed in the annual financial report dated 30 June 2015.

On 8 October 2015, the Board approved the adoption of the GR Engineering Services Limited 2015 Equity Incentive Plan providing, inter alia, for the provision of short and long term equity based incentives to eligible employees.

13 INCOME TAX

Income tax expense for the half year ended 31 December 2015 includes a research and development tax incentive refund of $1,454,606 (2014: $746,263) as an amendment to a research and development tax incentive return for the year ended 30 June 2014.

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GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2015

14 EVENTS AFTER THE REPORTING DATE

A fully franked dividend of 5.0 cents per share has been declared for the six months ended 31 December 2015. The ex dividend date for the interim dividend is 21 March 2016, the record date for determining entitlements to the interim dividend is 23 March 2016 and the payment date for the interim dividend is 30 March 2016.

On 8th January 2016 the consolidated entity acquired 12,500,000 fully paid ordinary shares in Carbine Resources Limited (ASX: CRB) at a price of $0.06 per share.

In February 2016, the consolidated entity disposed of 2,722,641 ordinary shares held in Doray Minerals Limited (ASX: DRM).

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.

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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

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Name: Geoff Jones Managing Director Date: 23 February 2016

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Deloitte Touche Tohmatsu ABN 74 490 121 060

Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia

Independent Auditor’s Review Report to the Members of GR Engineering Services Limited

Tel: +61 8 9365 7000 Fax: +61 8 9365 7001 www.deloitte.com.au

We have reviewed the accompanying half-year financial report of GR Engineering Services Limited, which comprises the condensed consolidated statement of financial position as at 31 December 2015, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of cash flows and the condensed consolidated statement of changes in equity for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the end of the half-year or from time to time during the half-year as set out on pages 6 to 16.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2015 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of GR Engineering Services Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Auditor’s Independence Declaration

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of GR Engineering Services Limited, would be in the same terms if given to the directors as at the time of this auditor’s review report.

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Touche Tohmatsu Limited

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Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of GR Engineering Services Limited is not in accordance with the Corporations Act 2001 , including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2015 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

DELOITTE TOUCHE TOHMATSU

Neil Smith Partner Chartered Accountants Perth, 23 February 2016

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