GR ENGINEERING SERVICES LIMITED — Investor Presentation 2014

Sep 3, 2014

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Investor Presentation FY14 Financial Results

September 2014

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Disclaimer
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This document has been prepared by GR Engineering Services Limited ACN 121 542 738 ( GR Engineering ) to provide an overview and update of GR Engineering’s activities and FY14 financial performance.

Any statements, opinions, projections or other material contained in this document do not constitute any commitments, representations or warranties by GR Engineering and associated entities or its directors, agents and employees. Except as required by law, and only to the extent so required, directors, agents and employees of GR Engineering shall in no way be liable to any person or body for any loss, claim, demand, damages, costs or expenses of whatsoever nature arising in any way out of, or in connection with, the information contained in the document.

This document includes certain statements, opinions, projections and other material, which reflect various assumptions. The assumptions may or may not prove to be correct. Recipients of the document must make their own independent investigations, consideration and evaluation of the opportunity to participate in any investment. By accepting this document the recipient agrees that if it proceeds further with its investigations, consideration or evaluation of the opportunity to participate in any investment it shall make and rely solely upon its own investigations and inquiries and will not in any way rely upon the document.

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About GR Engineering
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• Australian based process engineering design and construction contractor servicing the mining and minerals processing industry

• Specialising in EPC / EPCM contracting to provide project delivery with secure cost, time, plant performance and contract completion warranties and guarantees

• Australian offices in Perth and Brisbane. Offshore presence in West Africa, United Kingdom, PNG and Indonesia

• Primary expertise in gold, base metals and industrial mineral commodities

• GR Engineering operates in a niche market – limited EPC competitors, high barriers to entry

• Upstream Production Solutions – new addition to GR Engineering group providing operations, maintenance and well management services to Australian and South East Asian oil and gas industry

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Selected Clients

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FY14 Results Summary
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Revenue	Revenue $114.2 million (flat)
	EBITDA $17.2 million (56%)
	PBT $16.8 million (46%)
Earnings	NPAT $14.2 million ( 89%)
	EPS 9.4 cents ( 88%)
	Cash flow from operations $18.7 million ( 246%)
	Strong cash generation and profitability supports 4cps final dividend (full franked)
Dividend	Total dividend of 7cps for FY14 (payout ratio of 74.3% of NPAT)
	Since its listing in April 2011, GR Engineering has declared 24cps (over $36 million) in dividends
Balance Sheet	Cash $37.4 million1 Debt $0.5 million Net cash $36.9 million1(10%)

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1. Including cash held to secure contingent liabilities under the Company’s bonding facilities less borrowings.

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FY14 Results Analysis
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Revenue

EBITDA

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$120m
$80m
114.7 114.2
$40m
$0m
FY13 FY14
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$20m
56%
$15m
$10m
17.2
$5m 11.0
$0m
FY13 FY14
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PBT

NPAT

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$20m
46%
$15m
$10m
16.8
11.5
$5m
$0m
FY13 FY14
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$16m
89%
$12m
$8m
14.2
$4m 7.5
$0m
FY13 FY14
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Operational Performance
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• All projects completed on time and on budget

• Site works commenced on £75 million Hemerdon Tungsten & Tin Project in the United Kingdom with engineering now complete and all major equipment packages awarded

• Andy Well gold project and Whyalla brownfields upgrade completed and achieving successful operational outcomes

• Awarded $17 million EPC contract to undertake engineering design, procurement, construction and commissioning works on Moisture Reduction Project at Rio Tinto’s Greater Paraburdoo Operations

Syama Brownfields Expansion – Oxide Area

• Retain preferred contractor status for $55 million Keysbrook Mineral Sands project – GR Engineering continues to work closely with MZI prior to final investment decision and commencement under an EPC contract

• Operational efficiencies established to respond to lower levels of market activity

• One LTI recorded in May 2014, resulting in the Company’s LTI free record of almost four years ending. Further strengthened resolve to prioritise safety

• Study activity improved in 2H14 from earlier subdued levels

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Whyalla Brownfields Upgrade
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• In December 2013, GR Engineering agreed to acquire Production Solutions, a leading independent provider of specialist operations & maintenance and well management services to the oil and gas sector across Australia and South East Asia

• Asset acquisition by Upstream Production Solutions ( UPS ), a wholly owned subsidiary of GR Engineering for $5.75 million. Completion April 2014

• Early contract wins achieved, most recently with Origin for Australia Pacific LNG well site maintenance and associated services

Well Test Separator System

• Growth expected to be achieved in operations and maintenance (O&M) delivery stream

• The well management delivery stream expects to see continued growth in well site maintenance, servicing and the supply of well appraisal packaged equipment, particularly in the QLD CSG sector

• Strong HSE performance achieved to date with zero LTIs recorded

• Potential synergies to be realised with GR Engineering’s process engineering and design capabilities

Red Gully Operations

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Strategy & Outlook
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• Continuing to drive business efficiencies whilst maintaining renowned execution capability

• Remain alert to opportunities in the precious metals, base metals and iron ore sectors

• Contracted revenue of approximately $110 million in FY15 for GR Engineering

• Contracted revenue primarily from the Hemerdon Tungsten & Tin Project and Greater Paraburdoo Operations Moisture Reduction Project

• Further upside potential from additional revenue that may be received from the pending contract for the design and construction of the $55 million Keysbrook mineral sands processing facility (expected to commence in FY15)

• Additional group earnings to be received from Upstream Production Solutions – forecast revenues of $37 million, approximately 70% contracted in FY15

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Appendix: Corporate Summary
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Capital Structure
Shares on issue1	m	150.4
Share price_(GNG.ASX) (03/09/14)_	$	0.865
Market capitalisation	$m	130.1
Cash_(30 Jun 2014)2 _	$m	37.4
Debt_(30 Jun 2014)_	$m	0.5
Enterprise Value	$m	93.2

Directors & Management
Joe Ricciardo	Executive Chairman
Geoff Jones	Managing Director
Tony Patrizi	Executive Director
Barry Patterson	Non-Executive Director
Terry Strapp	Non-Executive Director
Peter Hood	Non-Executive Director
Joe Totaro	CFO & Company Secretary

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Share Price Performance
$0.90 5m
$0.80 4m
$0.70 3m
$0.60 2m
$0.50 1m
$0.40 0m
Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14
Volume GNG.ASX
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Shareholder Breakdown

28.7% 54.7% 16.6% Directors & Senior Management Institutions Other

1. The Company also has 2,315,000 Performance Rights and 1,669,337 Share Appreciation Rights on issue vesting on various dates with various vesting criteria.

2. Including cash held to secure contingent liabilities under the Company’s bonding facilities less borrowings

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Contact
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Geoff Jones

Managing Director

• +61 8 6272 6000

• geoff.jones@gres.com.au

Joe Totaro

CFO & Company Secretary

Australian Office Details

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179 Great Eastern Highway Belmont WA 6104

• PO Box 258 Belmont WA 6984

• +61 8 6272 6000

175 Melbourne Street South Brisbane QLD 4101

• +61 7 3838 8000

• +61 8 6272 6000

• joe.totaro@gres.com.au

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Level 2, 452 Flinders Street Melbourne VIC 3000

• +61 3 8623 9800

20 Container Street Tingalpa QLD 6173

• +61 7 3239 5800

Ground Level, 100 Havelock Street West Perth WA 6005

 +61 8 9482 0650

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