GR ENGINEERING SERVICES LIMITED — Interim / Quarterly Report 2017

Feb 26, 2017

GR Engineering Services Limited Half Year Financial Report For the Half Year Ended 31 December 2016

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	15
INDEPENDENT AUDITOR’S REVIEW REPORT	16

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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 2016 (HY17).

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.

Geoff Jones (Managing Director)

Phillip Lockyer (Non-Executive Chairman) Appointed 21 December 2016 Tony Patrizi (Executive Director) Barry Patterson (Non-Executive Director) Terrence Strapp (Non-Executive Director) Peter 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 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 $7,896,569 (HY16: $8,746,233). The EBITDA of the consolidated entity was $10,773,636 (HY16: $10,843,360).

During HY17 GR Engineering continued to build on its reputation by successfully executing design and construction engagements in a range of commodities and countries.

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

HY17 saw the successful delivery of Independence Group’s Nova Nickel Project with practical completion being achieved in November 2016. This project, with an overall value of circa $136 million was completed under an engineering, procurement and construction (EPC) contract model and was completed on time and on budget.

In Indonesia, the consolidated entity completed the Wetar Copper Project for PT Batutua Tembaga Raya pursuant to a contract awarded in November 2014 and in Greece, work continued on Phase 2 of Hellas Gold SA’s Olympias Project. Both the Wetar Copper Project and Olympias projects were executed under engineering, procurement and construction management (EPCM) contracting arrangements. In the United Kingdom, the consolidated entity continued to work collaboratively with Wolf Minerals (UK) Limited in fine tuning and enhancing the performance of the Hemerdon Tungsten and Tin Plant.

During HY17, the consolidated entity also continued to provide services to Ma’aden Barrick Copper Company Limited with engineering design, procurement and site construction support for the Jabal Sayid underground paste backfill plant located in Saudi Arabia. Work on this copper related project is scheduled to be completed in July 2017.

In July 2016, the consolidated entity announced the entry into a $36 million EPC contract with Auctus Resources Pty Ltd for the design and construction of completion works associated with the 500,000 tonne per annum Mungana zinc, lead, copper and gold concentrator facility located at Chillagoe, Northern Queensland. As at 31 December 2016, work on this project was progressing on time and on budget.

In September 2016 Eastern Goldfields Limited awarded GR Engineering the EPC contract for the refurbishment of the 1.2 million tonne per annum Davyhurst Gold Processing facility located approximately 140 km north-west of Kalgoorlie, Western Australia. As at the end of HY17 this project was also proceeding on time and on budget.

During the half year under review, the consolidated entity completed 16 studies and as at 31 December 2016 was engaged on a further 15. Study activity has related to a wide range of commodities including gold, copper, iron ore, nickel, tin and uranium. Of the 31 studies either completed during HY17 or underway as at 31 December 2016, 8 related to overseas projects, supporting the consolidated entity’s strategy for growth through international expansion.

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GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT

DIRECTORS’ REPORT

HY17 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 difficult trading conditions for the oil and gas industry generally, 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 27 February 2017 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 2016. The ex dividend date for the interim dividend is 13 March 2017, the record date for determining entitlements to the interim dividend is 14 March 2017 and the payment date for the interim dividend is 30 March 2017.

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: 24 February 2017

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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 2016

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 (loss) 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 2016 31 December 2015 $ $ 105,923,381 127,216,127 88,327,135 111,542,821
	17,596,247 15,673,306 772,595 1,971,949 28,574 33,504 1,193,815 1,250,873 5,876,865 4,906,792 724,290 912,063
	10,545,298 10,542,023 2,648,729 1,795,790
	7,896,569 8,746,233
	(685,641) 33,197 207,140 (1,120,495)
	(478,501) (1,087,298)
	7,418,068 7,658,935
	7,896,569 8,746,233
	7,418,068 7,658,935
	Cents per share Cents per share
	5.17 5.76
	5.12 5.71

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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 2016

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 2016 2016 $ $ 41,323,657 64,923,175 42,404,656 29,909,363 4,903,466 4,409,364 815,054 503,561 1,530,631 -
	90,977,464 99,745,463
	1,735,616 3,028,018 3,254,719 3,613,480 3,752,035 3,712,539 17,383 34,765
	8,759,753 10,388,802
	99,737,217 110,134,265
	33,954,209 28,356,507 870,969 401,450 9,621,466 10,891,708 634,578 15,034,068 - 643,876
	45,081,222 55,327,609
	344,827 522,418 2,462,283 2,290,471
	2,807,110 2,812,889
	47,888,332 58,140,498
	51,848,885 51,993,767
	30,225,436 30,225,436 (65,118) 332,768 21,688,567 21,435,563
	51,848,885 51,993,767

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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 2016

Notes Cash flows from operating activities Receipts from customers Payments to suppliers and employees Income tax paid Interest received Net cash flows used in operating activities Cash flows from investing activities Purchase of property, plant and equipment Proceeds from sale of assets Payment for acquisition of financial assets Net cash flows used in investing activities Cash flows from financing activities Payment of finance lease liabilities Dividends paid Net cash flows used in financing activities Net 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 2016 2015 $ $ 83,469,107 108,654,555 (96,078,651) (113,861,087) (3,236,987) (6,687,436) 524,526 644,230
	(15,322,005) (11,249,738)
	(346,168) (559,207) 455 - (396,666) (114,637)
	(742,379) (673,844)
	(221,264) (3,518) (7,643,565) (7,536,627)
	(7,864,829) (7,540,145)
	(23,929,213) (19,463,727) 64,923,175 64,582,994 329,695 (1,007,301)
	41,323,657 44,111,966

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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 2016

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 Balance as at 30 June 2016 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 2016	Issued capital Share Option Reserve Performance Rights Reserve Share Appreciation Rights Reserve Foreign Currency Translation Reserve Investment Revaluation Reserve Retained Earnings Total $ $ $ $ $ $ $ $
	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 49,118,773
	30,225,436 584,497 99,171 53,040 (1,270,503) 866,563 21,435,563 51,993,767
	- - - - - - 7,896,569 7,896,569 - - - - 207,140 (685,641) - (478,501)
	- - - - 207,140 (685,641) 7,896,569 7,418,068
	- - - - - - (7,643,565) (7,643,565) - - - - - - - - - - 41,683 38,932 - - - 80,615
	30,225,436 584,497 140,854 91,972 (1,063,363) 180,922 21,688,567 51,848,885

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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 2016

1 CORPORATE INFORMATION

The financial report of GR Engineering Services Limited for the half year ended 31 December 2016 was authorised for issue in accordance with a resolution of the directors on 24 February 2017.

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 2016, 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 2016.

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:

• AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations

• AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation

• AASB 2014-9 Amendments to Australian Accounting Standards – Equity Method in Separate Financial Statements

• AASB 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012-2014 Cycle

• AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101

• AASB 2015-5 Amendments to Australian Accounting Standards – Investment Entities: Applying the Consolidation Exception

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 2016. 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 2016

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 2016 31 December 2015 $ $ 524,526 644,230 33,750 31,308 2,433 - 211,886 1,296,411
	772,595 1,971,949
	28,574 33,504 706,908 653,568 17,382 258,495
	724,290 912,063
	39,705,054 29,748,295 305,619 177,112 3,196,073 2,294,987 80,614 271,752
	43,287,360 32,492,146
	31 December 30 June 2016 2016 $ $ 18,823,657 40,423,175 22,500,000 24,500,000
	41,323,657 64,923,175

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 2016:

Cash at bank and in hand Short-term deposits	31 December 30 June 2016 2016 $ $ 18,823,657 40,423,175 22,500,000 24,500,000
	41,323,657 64,923,175

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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 2016

5 UNEARNED REVENUE 6 ISSUED CAPITAL Ordinary Shares Issued and fully paid Issue of ordinary shares At 30 June 2016 At 31 December 2016 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 Non-cancellable operating lease commitments Unearned revenue on construction contracts Issue of shares from exercise of performance rights Fully paid ordinary shares carry one vote per share and carry a right to dividends. COMMITMENTS AND CONTINGENCIES Longer than 1 year and not longer than 5 years	31 December 30 June 2016 2016 $ $ 634,578 15,034,068
	634,578 15,034,068
	31 December 30 June 2016 2016 No of shares No of shares
	152,871,308 152,871,308
	No of shares $ 152,871,308 30,225,436 - -
	152,871,308 30,225,436
	31 December 30 June 2016 2016 $ $ 900,296 430,815 353,210 539,570 - -
	1,253,506 970,385 (37,710) (46,517)
	1,215,796 923,868
	1,852,223 1,738,202 922,972 1,257,555 - -
	2,775,195 2,995,757
	31,581,658 30,697,308

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 $85,000,000. 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 2016 is $30,675,968 (30 June 2016: $29,791,618). 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 $905,690 (30 June 2016: $905,690). The amount of bank guarantees issued under this facility at 31 December 2016 is $905,690 (30 June 2016: $905,690).

Bond facility

The consolidated entity has a $30 million insurance bond facility with Assetinsure Pty Ltd (30 June 2016: $30,000,000). 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 2016 is $9,897,650 (30 June 2016: $10,033,027).

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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 2016

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 7,643,565 5.00 7,536,627 31 December 2016 31 December 2015
	5.00 7,643,565 5.00 7,536,627

A fully franked dividend of 5.0 cents per share has been declared for the six months ended 31 December 2016. The ex dividend date for the interim dividend is 13 March 2017, the record date for determining entitlements to the interim dividend is 14 March 2017 and the payment date for the interim dividend is 30 March 2017.

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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.

Segment revenue

Mineral processing Oil and gas Total revenue Segment profit before tax Mineral processing Oil and gas Total profit before tax	31 December 31 December 2016 2015 $ $ 74,298,820 110,026,171 31,624,561 17,189,956
	105,923,381 127,216,127
	31 December 31 December 2016 2015 $ $ 7,155,442 9,542,487 3,389,856 999,536
	10,545,298 10,542,023

The above profit for the 6 months to 31 December 2016 for the oil and gas segment includes amortisation expense of $17,382 (2015: $258,495).

Segment assets Mineral processing Oil and gas Total assets	31 December 31 December 2016 2015 $ $ 75,667,625 93,612,514 24,069,592 15,855,120
	99,737,217 109,467,634

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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 2016

10 FINANCIAL ASSETS

Available for sale financial assets held at fair value

Shares in listed entities	31 December 30 June 2016 2016 $ $ 3,752,034 3,712,539

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 $ $ $ $ 18,823,657 18,823,657 40,423,175 40,423,175 22,500,000 22,500,000 24,500,000 24,500,000 42,404,656 42,404,656 29,909,363 29,909,363 3,752,034 3,752,034 3,712,539 3,712,539 31 December 2016 30 June 2016
	87,480,347 87,480,347 98,545,077 98,545,077
	33,954,209 33,954,209 28,356,507 28,356,507 1,215,796 1,215,796 923,868 923,868
	35,170,005 35,170,005 29,280,375 29,280,375

Fair value of financial instruments

The group holds available for sale equity securities of $3,752,034 (30 June 2016: $3,712,539) which are classified as fair value hierarchy level 1, in which fair values are based on quoted prices in active markets. There have been no transfers of fair value hierarchy levels during the period.

During the period, net losses of $685,641 (31 December 2015: net gain of $33,197) have been included in other comprehensive income and are reported in the investment revaluation reserve.

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KEY MANAGEMENT PERSONNEL

Remuneration arrangements of key management personnel are disclosed in the annual financial report dated 30 June 2016.

13 INCOME TAX

Income tax expense for the half year ended 31 December 2016 includes a research and development tax incentive refund of $241,837 (31 December 2015: $1,454,606) as an amendment to a research and development tax incentive return for the year ended 30 June 2016.

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 2016. The ex dividend date for the interim dividend is 13 March 2017, the record date for determining entitlements to the interim dividend is 14 March 2017 and the payment date for the interim dividend is 30 March 2017.

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: 24 February 2017

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Deloitte Touche Tohmatsu ABN 74 490 121 060

Tower 2 Brookfield Place 123 St Georges Terrace Perth WA 6000 Tel: +61 8 9365 7000 Fax: +61 8 9365 7001 www.deloitte.com.au

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

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 2016, the condensed consolidated statement of profit or loss and other 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 15.

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.

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Touche Tohmatsu Limited

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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.

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 2016 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

A T Richards Partner Chartered Accountants Perth, 24 February 2017

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