While the 2008 market collapse may mark the demise of financial “engineering”, traditional engineering services will still be required during the downturn and eventual recovery.
Governments around the world are pledging billions of dollars in stimulus packages, with a significant proportion of this expenditure targeted at infrastructure projects that will require the design and project management skills of engineers.
Like many companies GRD has been required to adapt to the circumstances brought about by the international financial turmoil. We have realigned the Group through the diversification of our engineering activities, while maintaining our core technical expertise, and the decision to sell Global Renewables’ Eastern Creek Facility in Sydney allows us to focus on the commercially stronger Lancashire Waste PFI Project.
Despite the changed conditions that characterised the latter half of the year, our core business GRD Minproc delivered a strong financial result, with earningsup 32 per cent on last year and this was achieved against a backdrop of falling commodity prices and industry project delays.
Such a tumultuous year was also marked by GRD Minproc’s 30th anniversary. During those three decades the company has continued to operate through the good and bad times. It is as a result of this experience and the expertise built up over this time that we can say the company is truly engineered for strength.
Long renowned for its mineral processing flow sheet expertise, GRD Minproc continues to develop its project delivery credentials.
By the end of the year we were well advanced in our largest ever African assignment, the Tenke Fungurume Copper/Cobalt Project for Freeport McMoRan in the Democratic Republic of Congo - a massive exercise with in excess of 5,000 workers on site at the construction peak.
Africa remains a growth sector for the company despite the global downturn. The continent is highly prospective and continues to provide project and study opportunities for GRD Minproc. The GRD Board continues to benefit from last year’s appointment of experienced African resources industry figure Richard Linnell as a non-executive director. Richard has extensive knowledge of the mining, engineering and construction industries across the African region and is a long-time friend and associate of GRD Minproc.
GRD Minproc is also well positioned in South America, where approximately one third of the world’s mineral exploration expenditure is located. Our offices in Brazil and Chile, whilst experiencing their share of the commodity downturn, have an expanding client base and continue to contribute to the relationships we are developing with key companies such as Vale and BHP Billiton.
We have also taken significant steps in realising our strategic aim of developing strong working alliances with Chinese companies involved in engineering design and project development. These mutually beneficial project partnerships, such as our involvement in the Sino Iron Project, have ensured our expanded role in the development of the magnetite iron ore sector while allowing us to add value for our Chinese linked clients.
While there exists an underlying strength in the GRD business, our share price performance for the 12 months has been a concern and the Board and senior management are working hard to realise increased returns for our shareholders in a depressed market.
We also made the difficult but prudent decision not to proceed with a final dividend for 2008 because of the need to maintain financial flexibility given the prevailing uncertainties in both the financial and resources markets. We believe it is responsible capital management to concentrate upon the continued reduction of debt and our ongoing efforts to cut costs.
This strategy will help us achieve sustained Group profitability.
