In the announcement dated 5 February 2019, GR Engineering Services Limited (ASX: GNG) announced that the company had secured an engineering, procurement and construction (EPC) contract with OZ Minerals. The contract has been assigned for the design and construction of the Northern Wellfield for the Carrapateena Water Supply Project, located ~160km north of Port Augusta, South Australia. The contract price has been fixed to approximately $16.3 million.
The contract will see the engineering group delivering the diverse scope of work including the detailed design, survey, supply, transportation, construction, testing and commissioning for the development of the trunk line. It will also include the transfer from the pumping station associated with four wells to enable water to be supplied to the Carrapateena mineral processing plant, currently under construction.
GR Engineering’s Managing Director, Mr Geoff Jones, stated “The award of this work demonstrates GR Engineering’s credentials in the supply of process infrastructure and performance of ancillary project works on a turnkey basis to support broader project delivery. Carrapateena is a globally significant copper-gold development project and its team is looking forward to working with OZ Minerals to make a meaningful contribution to its safe and successful delivery.”
As per the company’s information, work is scheduled to commence immediately with a completion to be achieved in the third quarter of the calendar year 2019. Further, it has been stated that the works to be delivered under a guaranteed maximum price (GMP) model.
On the financial front, the group reported record revenue of $283.6 million in Fiscal 2018 compared to $238.7 million in FY17. Underlying Earnings Before Interest, Tax Depreciation and Amortization (EBITDA) for the period was $24.1 million, up from the previous corresponding period’s EBITDA of $16.9 million. With respect to the bottom line, the company reported a net profit after tax of $11.64 million compared to $12.86 million NPAT in FY17.
Moreover, the company’s management explained that GNG’s FY18 financial performance was adversely impacted by the write off of bad debts totalling $7.0 million, including the bad debts incurred by its wholly owned subsidiary, Upstream Production Solutions with respect to work carried out on the Red Gully oil and gas production asset.
The company remains optimistic for Fiscal 2019 and Fiscal 2020 based on the winning of awards together with additional near-term opportunities. It has also committed to continuing delivering strong shareholder returns into FY19 and beyond.
GNG stock price dipped by 0.901% or $0.010 to settle at $1.100 on 5 February 2019. The stock is currently trading at a Price to Earnings multiple of 14.610 x with a market capitalization of $170.38 million.
Over the past 12 months to date, the stock has fallen by 22.38% including a negative price movement of 9.76% over the past three months.
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