GR ENGINEERING SERVICES LIMITED — Interim / Quarterly Report 2023

Feb 20, 2023

GR Engineering Services Limited Half Year Financial Report For the Half Year Ended 31 December 2022

GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT

TABLE OF CONTENTS

DIRECTORS’ REPORT	3
AUDITOR'S INDEPENDENCE DECLARATION	6
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME	7
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION	8
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS	9
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	10
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	11
DIRECTORS’ DECLARATION	17
INDEPENDENT AUDITOR’S REVIEW REPORT	18
APPENDIX 4D	20

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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) (GR Engineering or consolidated entity) for the half-year ended 31 December 2022 (HY23).

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.

Phillip Lockyer (Non-Executive Chairman) Tony Patrizi (Managing Director) Geoffrey Jones (Executive Director) (resigned 27 January 2023) Peter Hood (Non-Executive Director) Giuseppe (Joe) Totaro (Non-Executive Director)

COMPANY SECRETARY

Omesh Motiwalla

PRINCIPAL ACTIVITIES

During the financial period, the consolidated entity’s activities have been the provision of high quality process engineering, detailed engineering design, process control and automation design and construction services to the mining and mineral processing industry and the provision of operations, maintenance and advisory services to the oil and gas sector.

REVIEW OF RESULTS AND OPERATIONS

The EBITDA of the consolidated entity was $20.6 million (HY22: $24.3 million) on revenue of $331.9 million (HY22: $302.3 million).

During HY23, GR Engineering successfully achieved practical completion on several key projects, including the Thunderbox 6 Mtpa Expansion Project, Abra Base Metals Project and the Norseman Gold Project. In addition, GR Engineering continues to safely execute its ongoing contracted pipeline of work.

The HY23 EBITDA results were impacted by the following factors:

• GR Engineering did not achieve its forecast profitability targets on its Tasmanian projects due to higher labour costs, high turnover of site based personnel and the higher inflationary environment. These projects are now substantially complete.

• Upstream Production Solutions Pty Ltd's (Upstream PS) Northern Endeavour FPSO project was completed on 30 September 2022. In addition, during HY23, Upstream PS recognised one-off restructuring costs of $0.8 million.

GR Engineering continues to build its contracted and near term prospective pipeline of work across a diverse commodity base and also increase its revenue and earnings visibility for FY23 and future years. GR Engineering maintains its revenue guidance forecast of $500 million to $530 million. The EBITDA margin % is expected to return to historical levels in the second half of FY23.

Mineral Processing Design and Construction

New and ongoing projects

GR Engineering’s design and construction order book of current work includes:

• Thunderbird Mineral Sands Project - $179.5 million EPC Contract with Kimberley Mineral Sands Pty Ltd (KMS) in relation to the engineering, procurement and construction of the mineral processing plant and associated facilities for the Thunderbird Mineral Sands Project. In March 2022, GR Engineering commenced limited work under the contract ahead of a final investment decision being made by KMS. In October 2022, KMS finalised its funding and issued GR Engineering with a Full Notice to Proceed.

• West Musgrave Project - GR Engineering is assisting OZ Minerals Limited (OZ Minerals) with engineering and design works for the West Musgrave Project located in Western Australia, as well as supporting long lead procurement activities. Contract discussions are ongoing.

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GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT

DIRECTORS’ REPORT

• Bellevue Gold Project - $87.8 million EPC Contract with Golden Spur Resources Pty Ltd, a wholly owned subsidiary of Bellevue Gold Limited, for the engineering, procurement and construction works in relation to the 1.0 Mtpa gold processing plant and associated infrastructure for the Bellevue Gold Project.

• Cosmos Nickel Concentrator Facility Upgrade - $76.0 million EPC Contract with Australian Nickel Investments Pty Ltd, a wholly owned subsidiary of IGO Limited, for the engineering, procurement and construction work in relation to the upgrade of the existing nickel concentrator at the Cosmos Nickel Operations.

• Mt Ida Gold Project - $73.0 million EPC Contract with Aurenne Alt Resources Limited in relation to design and construction of the processing plant and associated infrastructure for the Mt Ida Gold Project located in Western Australia.

• Bluestone Mines Tasmania JV - multiple projects with a combined value of $31.7 million. GR Engineering was awarded an engineering, procurement and construction contract involving the design, supply, installation and commissioning of a new paste backfill plant and infrastructure at its Renison Tin Operations (Renison). In addition, a contract was also awarded that includes the design, supply and installation of new transformers and HV switchgear for Renison's existing main switchyard.

In addition to the above ongoing projects, GR Engineering maintains a solid pipeline of near term work opportunities across a broad range of commodities.

Studies and Consulting

GR Engineering has been engaged on a number of engineering and consultancy assignments on a range of domestic and international projects with scopes extending to engineering studies, process design, procurement support and site supervision services associated with new and existing operations.

During HY23, GR Engineering completed 29 project studies and as at 31 December 2022, GRES was engaged on 32 studies. This level of study activity continues to underpin a solid pipeline of design and construction opportunities into FY23 and beyond.

Process Controls - Mipac

Mipac is a leading provider of controls systems, operational technology and engineering services primarily in the mineral processing, energy and water industries. With an established proven track record of success, Mipac provides their clients with solutions that empower and engage workforces by providing automation and digitalisation that enables easy decision making and increased productivity, performance and safety.

During HY23, Mipac continued to deliver controls system, automation and digital solutions for key repeat clients such as First Quantum Minerals, OZ Minerals, Glencore Technology, Anglo American, Ok Tedi Mining and other large conglomerates. Mipac is forecasting a record revenue result for FY23 based on its year to date results and strong pipeline of work. The business continues to operate at a high utilisation.

- Oil, Gas, Energy and Water Services Upstream PS

GR Engineering’s operations and maintenance services business, Upstream PS, achieved revenue contributions primarily through the provision of operations and maintenance services to the coal seam gas (CSG), liquefied natural gas, carbon sequestration and onshore and offshore oil and gas sectors throughout Australia.

In Western Australia, Upstream PS remains a leading provider of operations and maintenance services to clients in the Perth Basin. During HY23, Upstream PS continued working with the Australian Government to maintain the Northern Endeavour FPSO in a non-producing state. This project was successfully completed on 30 September 2022. In the Northern Territory, Upstream PS continued to provide maintenance services on the Blacktip gas field production facilities (onshore and offshore).

In Queensland, Upstream PS managed and executed maintenance and operations support services on several thousand CSG wells. Upstream PS has expanded its service offering to Santos in the Surat Basin and Cooper Basin. Upstream PS continues to support onshore clients with respect to carbon sequestration services and were contracted to operate and maintain an industry leading green hydrogen production facility, with commissioning and operations commencing in the first quarter of 2023.

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GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT

DIRECTORS’ REPORT

Safety

The GR Engineering group’s Total Reportable Injury Frequency rate for HY23 was 9.36. The company pursues continuous improvement in its commitment to safety, with its primary objective being the achievement of a zero harm workplace environment on all jobs and at all locations. GR Engineering has completed the restructure of its processes and documentation to be aligned with the national harmonisation of the new Work Health and Safety legislation. During this process, the company has also undertaken both information and training sessions for responsible personnel within the business.

DIVIDENDS

During the half year period, a final dividend for financial year ended 30 June 2022 was paid. This was a fully franked dividend of 10.0 cents per share, paid on 20 September 2022.

A fully franked dividend of 9.0 cents per share has been declared for the 6 months ended 31 December 2022 (31 December 2021: 9.0 cents per share fully franked). The ex-dividend date for the interim dividend is 2 March 2023, the record date for determining entitlements to the interim dividend is 3 March 2023 and the payment date for the interim dividend is 23 March 2023.

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS

The auditor’s independence declaration to the directors is included on page 6 of the Half Year Financial Report.

EVENTS AFTER THE REPORTING DATE

None noted.

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

On behalf of the Directors

______ Tony Patrizi Managing Director Date: 21 February 2023

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GR ENGINEERING SERVICES LIMITED HALF-YEAR FINANCIAL REPORT

AUDITOR'S 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 2022

Notes Revenue 3(a) Cost of sales Gross profit Other income 3(b) Finance costs 3(c) Occupancy expenses Administrative expenses Impairment losses and gains (including reversals of impairment losses) on financial assets Depreciation and amortisation 3(d) Profit (loss) before income tax Income tax expense Net profit (loss) for the period Other comprehensive income Items that may be reclassified subsequently to profit or loss : Fair value gain (loss) on equity investments designated at fair value through other comprehensive income Exchange differences on translating foreign operations Total other comprehensive (loss)/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 2022 31 December 2021 $ $ 331,907,921 302,295,975 295,889,166 259,349,146
	36,018,755 42,946,829 4,377,407 462,153 191,185 192,771 347,093 337,928 18,977,376 16,285,449 (209,056) 2,414,284 3,003,417 2,637,972
	18,086,148 21,540,577 5,111,301 6,805,329
	12,974,847 14,735,249
	(607,904) 81,291 162,677 168,111
	(445,226) 249,402
	12,529,621 14,984,651
	12,974,847 14,735,249
	12,529,621 14,984,651
	Cents per share Cents per share
	8.03 9.56
	7.80 9.24

7

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 2022

Notes ASSETS Current Assets Cash and cash equivalents 4 Trade and other receivables 5 Inventories Other Current tax asset Total Current Assets Non-Current Assets Deferred tax asset Property, plant and equipment Financial assets 11 Intangible assets Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Borrowings Income tax Provisions Contract liabilities 6 Total Current Liabilities Non-Current Liabilities Borrowings Provisions Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 7 Reserves Retained earnings TOTAL EQUITY	31 December 30 June 2022 2022 $ $ 83,406,074 101,994,568 73,226,169 93,263,261 47,640 49,441 5,608,392 2,571,052 211,292 -
	162,499,567 197,878,322
	432,874 1,884,245 12,460,590 8,359,133 1,634,137 742,041 22,646,946 23,000,657
	37,174,547 33,986,076
	199,674,113 231,864,398
	83,201,635 97,505,989 4,825,659 1,576,630 - 4,252,240 16,087,310 16,713,929 29,132,558 44,563,914
	133,247,162 164,612,702
	5,638,721 2,682,047 1,786,418 2,409,025
	7,425,139 5,091,072
	140,672,301 169,703,774
	59,001,812 62,160,624
	40,025,411 39,890,962 1,944,225 2,055,609 17,032,176 20,214,053
	59,001,812 62,160,624

8

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 2022

Notes Cash flows from operating activities Receipts from customers Payments to suppliers and employees Income tax paid Interest received Net cash flows provided by / (used in) operating activities Cash flows from investing activities Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Payments for acquisition of financial assets Proceeds from sale of financial assets Net cash outflow on acquisition of business Net cash flows provided by investing activities Cash flows from financing activities Payment of lease liabilities Dividends paid Repayment of borrowings Net cash flows 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 2022 2021 $ $ 353,933,452 303,823,764 (355,153,730) (254,570,335) (8,064,519) (9,611,531) 673,727 26,284
	(8,611,070) 39,668,182
	(2,181,966) (2,046,621) 13,491 16,771 (1,500,000) - 10,657,982 343,573 - (1,049,495)
	6,989,507 (2,735,772)
	(999,505) (983,284) (16,156,725) (11,261,871) (185,949) (376,398)
	(17,342,179) (12,621,553)
	(18,963,742) 24,310,857 101,994,568 68,972,970 375,248 277,400
	83,406,074 93,561,227

9

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 2022

Balance as at 30 June 2021 Profit for the period Other Comprehensive income for the period Total Comprehensive income for the period Dividends paid Issue of shares Share based payments Balance as at 31 December 2021 Balance as at 30 June 2022 Profit for the period Other Comprehensive income for the period Total Comprehensive income for the period Dividends paid Issue of shares Share based payments Balance as at 31 December 2022	Issued capital Performance Rights Reserve Share Appreciation Rights Reserve Foreign Currency Translation Reserve Investment Revaluation Reserve Retained Earnings Total $ $ $ $ $ $ $
	39,141,677 694,322 177,338 (842,807) 1,297,527 11,171,571 51,639,628
	- - - - - 14,735,249 14,735,249 - - - 168,111 81,291 - 249,402
	- - - 168,111 81,291 14,735,249 14,984,651
	- - - - - (11,261,871) (11,261,871) 749,285 - (121,390) - - - 627,895 - 444,128 47,436 - - - 491,564
	39,890,962 1,138,450 103,384 (674,696) 1,378,818 14,644,949 56,481,866
	39,890,962 1,620,503 150,046 (386,552) 671,612 20,214,053 62,160,624
	- - - - - 12,974,847 12,974,847 - - - 162,677 (607,904) - (445,226)
	- - - 162,677 (607,904) 12,974,847 12,529,621
	- - - - - (16,156,725) (16,156,725) 134,449 (33,500) (100,949) - - - - - 517,389 (49,097) - - - 468,292
	40,025,411 2,104,392 - (223,875) 63,708 17,032,175 59,001,812

10

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 2022

1

CORPORATE INFORMATION

The financial report of GR Engineering Services Limited and its subsidiaries for the half year ended 31 December 2022 was authorised for issue in accordance with a resolution of the directors on 15 February 2023.

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 Daly Street, Ascot, Western Australia.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

The condensed consolidated 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 adopted 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 2022, 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 half year period

The accounting policies adopted in the preparation of the half-year financial report are consistent with those applied in the preparation of the consolidated entity’s annual financial report for the year ended 30 June 2022, except for new standards, amendments to standards and interpretations which became effective on 1 July 2022 as set out below.

In the current half year, the consolidated entity has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”) that are relevant to its operations and effective for an accounting period that begins on or after 1 July 2022, which include:

• AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018-2020 and Other Amendments

• AASB 2021-7 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections

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 issued but not yet adopted

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the consolidated entity for the reporting period ended 31 December 2022. 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 2022

3 REVENUES AND EXPENSES (a) Rendering of services (b) Other income Interest revenue Government rebates and subsidies Profit on sale of fixed assets Gain on equity instruments designated as at fair value through profit and loss Net foreign exchange gain/(loss) Sundry revenue (c) Finance costs Interest charges (d) Depreciation and amortisation Depreciation of fixed assets Depreciation of right of use assets Amortisation of intangible assets Employee benefits expense Wages and salaries Workers’ compensation costs Superannuation costs Share based payments Disaggregation of revenue & time of revenue recognition Rendering of services - mineral processing - over time Rendering of services - oil & gas - over time	31 December 2022 31 December 2021 $ $ 288,750,748 217,834,707 43,157,173 84,461,268
	331,907,921 302,295,975
	673,727 26,284 864 768 13,491 17,305 3,216,925 74,634 252,716 94,881 219,683 248,282
	4,377,407 462,153
	191,185 192,771
	1,299,514 1,121,330 1,137,552 846,055 566,351 670,588
	3,003,417 2,637,972
	74,880,330 62,091,930 1,019,678 690,087 6,169,902 5,292,802 468,292 491,563
	82,538,202 68,566,382

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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 2022

4 Cash at bank and in hand Short term deposits CASH AND CASH EQUIVALENTS	31 December 30 June 2022 2022 $ $ 83,406,074 101,994,568 - -
	83,406,074 101,994,568

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 2022:

Cash at bank and in hand 5 Trade receivables Term deposits held for security Other receivables 6 CONTRACT LIABILITIES TRADE AND OTHER RECEIVABLES Contract assets - oil and maintenance contracts Contract assets - mineral processing contracts Refer note 2(a) for GR Engineering’s policies in relation to contract assets. Contract liabilities - current liabilities	31 December 30 June 2022 2022 $ $ 83,406,074 101,994,568
	83,406,074 101,994,568
	31 December 30 June 2022 2022 $ $ 59,708,656 68,434,903 3,596,896 12,855,297 8,172,051 8,981,736
	11,768,947 21,837,033
	281,007 267,200 1,467,559 2,724,125
	73,226,169 93,263,261
	31 December 30 June 2022 2022 $ $ 29,132,558 44,563,914
	29,132,558 44,563,914

Refer note 2(a) for GR Engineering’s policies in relation to contract liabilities.

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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 2022

7 ISSUED CAPITAL

8

Ordinary Shares Issued and fully paid Issue of ordinary shares At 30 June 2022 At 31 December 2022 Bank guarantees Bank guarantees issued CONTINGENCIES Issue of shares from exercise of share appreciation rights Issue of shares from exercise of performance rights Fully paid ordinary shares carry one vote per share and carry a right to dividends.	31 December 30 June 2022 2022 No of shares No of shares
	161,567,252 161,231,951
	No of shares $ 161,231,951 39,890,962 285,301 100,949 50,000 33,500
	161,567,252 40,025,411
	31 December 30 June 2022 2022 $ $ 22,568,260 28,987,233

The consolidated entity's standby multi-option bank facility has a limit of $90,000,000. The facilities are secured by a fixed and floating charge over all the assets of the consolidated entity.

The consolidated entity provides bank guarantees under this facility to support project performance in favour of certain clients. The amount of these bank guarantees at 31 December 2022 is $21,974,639 (30 June 2022: $28,493,300). 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 $593,621 (30 June 2022: $493,933. The amount of bank guarantees issued under this facility at 31 December 2022 is $593,621 (30 June 2022: $493,933).

The consolidated entity has a $45 million insurance bond facility with Berkshire Hathaway Specialist Insurance Company and an additional $20 million insurance bond facility with Allianz Australia Insurance Limited. These facilities are utilised to provide retention and off site materials bonds in connection with certain projects. The amount of insurance bonds issued under the Berkshire Hathaway Specialist Insurance Company facility at 31 December 2022 is $30,599,607 (30 June 2022: $20,040,311). The amount of insurance bonds issued under the Allianz Australia Insurance Limited facility at 31 December 2022 is $8,567,573 (30 June 2022: $4,185,965).

GR Engineering Services Limited, the parent company, has provided guarantees and indemnities in relation to certain contracts entered into by its subsidiaries. Liability under these guarantees and indemnities is limited to the relevant subsidiaries' contracted limits of liability under the contracts.

9 DIVIDENDS

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

Fully paid ordinary shares Dividend	Cents per share $ Cents per share $ 10.00 16,156,725 7.00 11,261,871 31 December 2022 31 December 2021
	10.00 16,156,725 7.00 11,261,871

A fully franked dividend of 9.0 cents per share has been declared for the six months ended 31 December 2022. The ex dividend date for the interim dividend is 2 March 2023, the record date for determining entitlements to the interim dividend is 3 March 2023 and the payment date for the interim dividend is 23 March 2023.

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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 2022

10 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

11

Mineral processing Oil and gas Total revenue Segment profit before tax Mineral processing Oil and gas Total profit before tax Segment assets Mineral processing Oil and gas Corporate - financial assets Total assets FINANCIAL ASSETS Shares in listed entities Financial assets held at fair value through other comprehensive income	31 December 31 December 2022 2021 $ $ 288,750,748 217,834,707 43,157,173 84,461,268
	331,907,921 302,295,975
	31 December 31 December 2022 2021 $ $ 16,558,313 12,685,238 1,527,835 8,855,340
	18,086,148 21,540,577
	31 December 30 June 2022 2022 $ $ 177,603,375 191,227,956 20,436,601 39,894,401 1,634,137 742,041
	199,674,113 231,864,398
	31 December 30 June 2022 2022 $ $ 1,634,137 742,041

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

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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 2022

12 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 :

for the consolidated entity are as follows :
Assets Cash at bank Trade receivables Equity instruments Liabilities Trade payables	Carrying amount Fair value Carrying amount Fair value $ $ $ $ 83,406,074 83,406,074 101,994,568 101,994,568 73,226,169 73,226,169 93,263,261 93,263,261 1,634,137 1,634,137 742,041 742,041 31 December 2022 30 June 2022
	158,266,380 158,266,380 195,999,870 195,999,870
	83,201,635 83,201,635 97,505,989 97,505,989
	83,201,635 83,201,635 97,505,989 97,505,989

The consolidated entity holds equity securities of $1,634,137 (30 June 2022: $742,041) 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.

These investments in equity instruments are not held for trading. Instead, they are held for medium to long-term strategic purposes. Accordingly, the directors of the consolidated entity have elected to designate these investments in equity instruments as at fair value through other comprehensive income as they believe that recognising short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the consolidated entity’s strategy of holding these investments for long-term purposes and realising their performance potential in the long run.

13

KEY MANAGEMENT PERSONNEL

Remuneration arrangements of key management personnel are disclosed in the annual financial report dated 30 June 2022.

14 EVENTS AFTER THE REPORTING DATE

A fully franked dividend of 9.0 cents per share has been declared for the six months ended 31 December 2022. The ex dividend date for the interim dividend is 2 March 2023, the record date for determining entitlements to the interim dividend is 3 March 2023 and the payment date for the interim dividend is 23 March 2023.

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

______ Name: Tony Patrizi Managing Director Date: 21 February 2023

17

Deloitte Touche Tohmatsu ABN 74 490 121 060

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Tower 2 Brookfield Place 123 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

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Conclusion

We have reviewed the half-year financial report of GR Engineering Services Limited (the “Company”) and its subsidiaries (the “Group”) , which comprises the condensed consolidated statement of financial position as at 31 December 2022 , and 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 as set out on pages 7 to 17 .

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 the Group is not in accordance with the Corporations Act 2001, including:

• Giving a true and fair view of the Group’s financial position as at 31 December 2022 and of 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.

Basis for Conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity. Our responsibilities are further described in the Auditor’s Responsibilities for the Review of the Half-year Financial Report section of our report. We are independent of the Group in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s review report.

Directors’ Responsibilities 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 Responsibilities for the Review of the Half-year Financial Report

Our responsibility is to express a conclusion on the half-year financial report based on our review. ASRE 2410 requires us to conclude whether 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 Group’s financial position as at 31 December 2022 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.

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte organisation.

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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.

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Deloitte Touche Tohmatsu

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PG Janse Van Nieuwenhuizen Partner Chartered Accountants Perth, 21 February 2023

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 2022

(corresponding period half year ended 31 December 2021)

RESULTS FOR ANNOUNCEMENT TO THE MARKET

	Half year ended 31 Dec 2022 $’000	Percentage increase / (decrease) from 31 Dec 2021
Revenue from ordinary activities	331,908	9.80%
Profit from ordinary activities after tax attributable to members	12,975	(11.95%)
Net profit for the period attributable to members	12,975	(11.95%)

DIVIDENDS

	Half year ended 31 Dec 2022 (cents per share)	Half year ended 31 Dec 2021 (cents per share)
Final dividend	10.00 (fullyfranked)	7.00 (fullyfranked)

Subsequent to reporting date, a fully franked interim dividend was resolved to be paid of 9.0 cents per share, with an ex-dividend date of 2 March 2023 and a record date for determining entitlements to the interim dividend of 3 March 2023. The payment date of the interim dividend is 23 March 2023.

NET TANGIBLE ASSET BACKING

NET TANGIBLE ASSET BACKING
	Half year ended 31 Dec 2022 (cents per share)	Half year ended 31 Dec 2021 (cents per share)
Net tangible asset backing per ordinary share	22.23	19.77

The Half Year Financial Report dated 21 February 2023 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.