IMDEX LIMITED

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ABN 78 008 947 813

2008 Annual General Meeting

Meeting Documents Notice of Annual General Meeting & Explanatory Memorandum Proxy Form for Annual General Meeting Corporate Representative Certificate for Annual General Meeting

To be held on Thursday, 16 October 2008 at the Celtic Club, 48 Ord Street, West Perth, Western Australia commencing at 11.00am WST

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Providing Drilling Fluids and Leading Down Hole Instrumentation to the World

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Annual Report

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Imdex Group at a Glance	1
FY08 Highlights	3
Comparative Financial Performance	4
Board of Directors	6
Chairman’s Report	9
Managing Director’s Report	10
Imdex’s Operations	14
Supporting Operations for Future Growth	26
Financial Report 2008	33

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Imdex Group at a Glance

Imdex is a Western Australian based S&P/ASX 300 listed company, which provides drilling fluids and leading down hole instrumentation to the mining, oil and gas, water well, and civil engineering industries worldwide. The Group has a presence in all significant mining and exploration regions, and now has the global profile and resources to position it for extended future growth.

Key Dataas at 30 June 2008	Key Dataas at 30 June 2008	Key Dataas at 30 June 2008	Key Dataas at 30 June 2008
Market Capitalisation	Shares on Issue	Shareholders	Employees
$304.6 million	183,490,932	3,690	285

Group Structure

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DIVISIONS
TRADING COMPANIES
RESEARCH & DEVELOPMENT
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SAMCHEM
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DRILLING FLUIDS &
CHEMICALS DIVISION
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Imdex 2008 Annual Report | 1

The 2008 financial year marks the fifth consecutive year of revenue and profit growth for the Imdex Group.

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FY08 Operational Highlights

The 2008 financial year saw many positive operational achievements for the Imdex Group, including strategic acquisitions, sales and distribution alliances, and growth in new geographical regions and markets.

July 2007, acquired Poly-Drill Drilling Systems (Poly-Drill).
July 2007, acquired a 75% interest in Suay Energy Services LLP (Suay).
August 2007, supply agreement – Boart Longyear.
September 2007, distribution agreement with Sandvik Mining and Construction.
October 2007, divestment of non-core business Surtron Technologies for $20 million cash.
November 2007, acquired Southernland S.A. (Southernland).
January 2008, acquired System Entwicklungs GmbH (SEG).
March 2008, supply agreement - Major Drilling.
March 2008, supply agreement - Swick.
March 2008, Imdex was included in the S&P/ASX 300 for the first time.
April 2008, supply agreement - Layne Christensen.
June 2008, acquired remaining 25% of Suay Energy Services LLP (Suay).
FY08, further penetration into the global oil & gas market.
FY08, growth across all geographical regions.
FY08, continued strengthening of the management team.
FY08, production capacity expansion at Samchem commenced.
FY08, increased production capacity at Imdex Technology (UK) Limited (formerly Chardec) in the United Kingdom and Southernland in Chile.
FY08, consolidated position as a leading provider of drilling fluids and down hole instrumentation to the resources industry globally.

Market Highlights

Continuing demand for commodities, largely driven by China and India.
Continuing demand for energy, the interest in this sector was reported to be at a 30 year high.
Increased mining and exploration activity in a number of African countries.
High levels of exploration expenditure in Latin America.

Financial Highlights

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UP
62%
UP
25%
Operating EBITA (normal
Revenue operations)
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UP
137%
UP
60%
UP
45%
UP
18%
Net Profit Operating Earnings Fully Franked
after Tax Cash Flow Per Share FY08 Dividend
(before tax) 11.22 cents Per Share 4.0 cents
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Imdex 2008 Annual Report | 3

2008 Comparative Financial Performance

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2008 2007
$’000 $’000
Operating Revenue from continuing operations 142,009 103,849
Operating Revenue from discontinuing operations 6,584 14,591
Total Operating Revenue (excluding interest income) * 148,593 118,440
Change in percentage - Total Operating Revenue 25%
Operating Profit before Interest, Tax, Depreciation & Amortisation * 43,804 29,075
Depreciation * (3,733) (4,368)
Earnings before Interest, Tax & Amortisation (EBITA) * 40,071 24,707
EBITA margin * 27% 21%
Change in percentage - EBITA 62%
Amortisation * (6,055) (3,430)
Earnings before Interest & Tax (EBIT) * 34,016 21,277
Change in percentage 60%
Net interest expense * (923) (1,986)
Net profit before tax * 33,093 19,291
Income tax expense * (11,011) (6,558)
Net Profit after Tax * 22,082 12,733
Change in percentage 73%
Non-operational items
RTE/Imdex Joint Venture Recovery - 1,121
Profit on sale of Surtron business 12,139 -
Tax effect of non-operational items (2,219) (336)
Net Profit for the Year after Tax 32,002 13,518
Change in percentage 137%
EBITA of continuing operations (excluding non-operational items) 38,802 22,260
Change in percentage 74%
Basic earnings per share from continuing operations (cents) 11.22 ¢ 7.72 ¢
Change in percentage 45%
Net Cash provided by Operating Activities before Tax 25,619 21,651
Change in percentage 18%
Cash on hand 13,276 15,271
Change in percentage -13%
Net Assets 105,643 76,614
Change in percentage 38%
Total Borrowings 35,552 40,437
Change in percentage -12%
Net Tangible Assets per Share 14.02 ¢ 7.69 ¢
Change in percentage 82%
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* - denotes items that include both continuing and discontinued operations

4 | Imdex 2008 Annual Report

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Normalised Earnings and Dividends per share Normalised Revenue by Division ($m)
160
140
12.0 c
120
10.0 c
100
8.0 c
80
6.0 c
60
4.0 c 40
2.0 c 20
FY04
0
FY05 FY06 FY07 FY08 FY04 FY05 FY06 FY07 FY08
-2.0 c
-4.0 c
Final Dividend Interim Dividend Fluids and Chemicals Down Hole Instrumentation
Earnings per Share Minerals Processing
Return on Equity (EBITA/Equity) Normalised EBITA ($m)
45
50%
40
35
40%
30
30% 25
20
20%
15
10
10%
FY04 5
0% 0
FY04 FY05 FY06 FY07 FY08 -5
-10% FY04 FY05 FY06 FY07 FY08
-10
-20%
Normalised numbers include profit from discontinued operations and exclude non-operational items.
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Imdex 2008 Annual Report | 5

Imdex’s Board of Directors

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Mr. Ian Burston AM – Non Executive Chairman. Age: 73 years

Appointed to the Board 22 November 2000.
Previously Managing Director of Hamersley Iron, Chief Executive Officer for Kalgoorlie Consolidated Gold Mines, Managing Director and Chief Executive Officer of Aurora Gold, and Managing Director of Portman Limited.
Diploma in Aeronautical Engineering and a Bachelor of Engineering (Mechanical).
Fellow of the Institution of Engineers Australia, Australasian Institute of Mining and Metallurgy, and the Australian Institute of Company Directors.
Extensive experience leading publicly listed and private companies.

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Mr. Bernard Ridgeway B.Bus (ACCTG) ACA – Managing Director. Age: 54 years
Appointed to the Board 23 May 2000.
23 years experience with public and private companies as owner, director and manager.
Qualified Chartered Accountant.
Member of the Institute of Chartered Accountants Australia, and the Australian Institute of Company Directors.
Mr. Ridgeway has a hands on and participative management style with extensive experience and expertise in finance, administration, marketing and business development.
Mr. Ross Kelly BE (HONS) FAICD – Non Executive Director. Age: 70 years
Appointed to the Board 14 January 2004.

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Previously Chairman and Non Executive Director of Clough Limited, Sumich Group Limited, Orbital Corporation Limited, Beltreco Limited, and Director of Aurora Gold Limited, PA Consulting Services Ltd and the Fremantle Football Club.
Qualified Engineer and specialist consultant to the Western Australian Government and major Australian companies within the mining and heavy process industries.
Comprehensive professional and international experience in the offshore gas, oil refining and steel industries.
Previously a Councillor of the Australian Institute of Company Directors and Member of the Advisory Board for the Curtin Graduate School of Business.

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Mr. Kevin Dundo B.Com, LLB – Non Executive Director. Age: 55 years

Appointed to the Board 14 January 2004.
Practicing Lawyer specialising in commercial and corporate law, and in particular mergers and acquisitions, with experience in the mining services, and financial services industries.
Director of Intrepid Mines Ltd and Computercorp Limited.
Previously Director of St Barbara Mines Limited and Defiance Mining Corporation (listed on the Toronto Stock Exchange).
Bachelor of Commerce and Bachelor of Laws.
Member of the Law Society of Western Australia, Law Council of Western Australia, Australian Institute of Company Directors, and a Fellow of the Australian Society of Certified Practicing Accountants.

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Mr. Magnus Lemmel B.A. – Non Executive Director. Age: 68 years

Appointed to the Board 19 October 2006.
Management Consultant based in Brussels, Belgium.
I nvolved in small business development in Sweden and Chairman of the Technical Advisory Committee for Reflex and Imdex Technology (UK) Limited (formerly Chardec).
Previously Senior Vice President of Ericsson Telecommunications, Chief Executive Officer of the Federation of Swedish Industries, Director General for Enterprise Policy of the European Commission and President of Småföretagsinvest AB (the previous owners of Reflex).

6 | Imdex 2008 Annual Report

Imdex 2008 Annual Report | 7

FY08 was a year of strong growth with positive contributions from all business units.

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Mr. Ian Burston

Chairman’s Report

To our shareholders,

On behalf of the Board it is my pleasure to present the Imdex Group 2008 Annual Report. FY08 was a year of strong growth with positive contributions from existing business units, buoyant market conditions, and new acquisitions offering scope to leverage Imdex’s scale and global presence.

I am pleased to report that in FY08, Imdex achieved the highest revenue and profit figures in its history. The Imdex Group achieved a 25% increase in revenue to $148.6 million (excluding interest income), and a 137% increase in total net profit to $32 million. This delivered earnings per share of 11.22 cents. These strong results reflect the Imdex Group’s unwavering commitment to the priorities set down by the Board at the 2007 AGM, including an ambitious growth agenda set against the backdrop of a major acceleration across the globe in exploration and resource activity.

The acquisitions undertaken in the current year have been an integral part of our strategy to ensure a broad global presence for our businesses. Acquisitions made in the current financial year were:

Suay Energy Services (Suay) in Kazakhstan;
Poly-Drill Drilling Systems (Poly-Drill); in Canada;
Southernland S.A. (Southernland) in Chile; and
System Entwicklungs (SEG) in Germany.

Suay, Poly-Drill and Southernland are all drilling fluid companies and represent our entry into markets in the Caspian Sea region, Canada and Latin America. SEG is primarily aimed at the down hole instrumentation business in the oil and gas industry and offers world class technology.

The Imdex Group’s greatest achievement in FY08 has been the successful growth of our existing businesses in parallel with the seamless integration of new acquisitions. The Imdex Group has now firmly consolidated its position as the world’s leading provider of down hole

instrumentation to the resources industry with an increasing market share of the oil and gas sector.

The Board’s emphasis on acquiring businesses that complement existing operations and are earnings accretive, will create long term value for shareholders. Increased size and global reach has already started to deliver scale and efficiency benefits which position the Imdex Group for strong earnings growth in 2009 and beyond.

Another important dimension of Imdex’s medium term strategy has been streamlining the business into two distinct divisions which focus on the specific end markets of resources and energy. This strategy led to the divestment of the services oriented Surtron business from 31 October 2007.

The Group now has a clear focus on the resource and energy markets through its Fluids and Chemicals Division, providing fluids essential for drilling, and its Down Hole Instrumentation Division, providing drill hole survey and measurement tools.

Our presence in the oil and gas market began to grow during FY08 and will expand in FY09 with the introduction of specific products dedicated to meeting demands in this market.

In the medium term the Down Hole Instrumentation Division will continue to move away from a sales based model towards a rentals based model. This is underpinned by the Imdex Group’s control of manufacture and ownership of IP allowing maximisation of our competitive advantage. Building a rental instrumentation fleet will ensure a sustainable and more profitable business in the future.

The Fluids and Chemicals Division, by its nature, is easily scalable and Imdex is investing in expanded production facilities globally to meet the demands of supporting global supply alliances and growing the Company’s markets in other major exploration regions.

The main strategic objective of growing Imdex into a global company supporting drilling clients in the resources and oil and gas industries is being successfully implemented. There remains much to do in order to fully capitalise on the opportunities ahead and to continue to deliver sustainable and increasing dividend streams to our valued shareholders.

The Imdex Group became a constituent member of the S&P/ASX 300 in March 2008. This will project the company onto the investment radar of large scale institutions and fund managers who now have greater awareness of the Imdex Group’s exposure to and strong position in the global resources and energy industries.

The Imdex Group subscribes to best practice in corporate governance principles with the main objective being a functional Board that brings corporate insight and commercial acumen to its deliberations. The Board continues to enhance its corporate governance policies and procedures to ensure it maintains high standards.

I express my thanks and pay tribute to Imdex’s Managing Director Bernie Ridgeway and my other fellow Board members, Imdex’s General Manager Gary Weston and all Imdex employees for what was a very busy and successful year.

I would also like to acknowledge and thank our valued shareholders, for your ongoing support. Despite investing substantial resources to expand our existing businesses and acquire new ones, the Board is pleased to announce the declaration of a 2.25 cent per share final dividend payable on 31 October 2008.

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I F Burston Chairman

Imdex 2008 Annual Report | 9

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Mr. Bernie Ridgeway

Managing Director’s Report

The growth strategy that the Imdex Group put in place at the beginning of FY07 has paid off in FY08. The Group has successfully acquired four complementary businesses and consolidated its position as the world’s leading provider of down hole instrumentation to the resources industry with operations in all significant mining and exploration regions in the world.

The Imdex Group has established a strong market position in supplying products to the mineral and mining industries, has access to resources on a global scale, and is securely positioned for a period of sustained and extended growth in the years ahead.

With mining and exploration drilling expenditure (non ferrous) forecast to exceed US$13.1 billion in 2008 (up 25% on US$10.5 billion in 2007), the Imdex Group is set to unlock significant growth potential. FY09 will see the Imdex Group capture scale and efficiency benefits from its expanded business network.

The 2008 financial year marks the Group’s fifth consecutive year of revenue and profit growth. In addition to breaking financial records the Imdex Group has also made significant operational achievements.

Key Financial Highlights

Revenue (excluding interest revenue of $1.9 million) up 25% to $148.6 million (FY07 - $118.4 million);
EBITA up 62% to $40.1 million (FY07 - $24.7 million);
Earnings per share from continuing operations up 45% to 11.22 cents per share (FY07 - 7.72 cents per share); and
Final dividend up 50% to 2.25 cents fully franked, bringing the full year distribution for FY08 to 4 cents (up 60% on FY07).

Key Operational Highlights

Strong performance across both divisions:
Drilling Fluids & Chemicals (DFC) revenue up 37% to $85.7 million (FY07 - $62.4 million); and
Down Hole Instrumentation (DHI) revenue up 12% to $62.9 million (FY07 - $56.1 million);
Acquired four complementary businesses and strengthened our operating presence in major mining and exploration regions - Canada, Latin America, Africa and Asia Pacific;
Consolidated our position as a world leading provider of Drilling Fluids & Chemicals and Down Hole Instrumentation to the resources industry;
Divested the Surtron business for cash proceeds of $20 million;
Grown our pool of blue-chip customers signing strategic alliance agreements for the distribution and supply of drilling fluids and down hole instrumentation; and
Positioned for growth in the oil and gas market.

The Imdex Group’s continued success depends on its ability to attract and retain experienced and dedicated employees with a record of achievement across a diverse range of technical and business disciplines.

In FY08 the Imdex Group recruited a number of additional senior managers to assist in implementing our key strategic goals and maximise value for shareholders. The Board is grateful for the exceptional contribution of its 285 management and staff in achieving this year’s result and in creating and sustaining a framework for continued future growth.

Global Expansion

Part of Imdex’s strategy has been to acquire bolt-on businesses that can benefit from the Group’s leading market position and be integrated into existing operations.

The DHI Division’s acquisition of the German technology company System Entwicklungs (SEG) has delivered world class down hole instrumentation and a platform for the Imdex Group to launch its technology into the oil and gas market.

The three acquisitions made during the year in the DFC Division were aimed at building a global presence and ensuring that the Group has a local fluids manufacturing capability in major mining and mineral exploration regions of the world.

With the acquisitions of Suay Energy Services in Kazakhstan, Poly-Drill Drilling Systems in Canada and Southernland in Chile during FY08, the Imdex Group is now a truly global company. I am pleased to report that integration is proceeding successfully and management continues to focus on ensuring that synergy and scale benefits that have already started to generate value are maximized.

Rationalisation

In October 2007, the non core business of Surtron was divested for $20 million, and more recently the Imdex Group’s Drilling Products & Services Division was renamed the Down Hole Instrumentation Division.

In FY08 the Imdex Group streamlined the business into two distinct divisions concentrating on high growth end markets; the resources and energy industries. The two divisions focus on the Group’s key strengths, Drilling Fluids and Chemicals and Down Hole Instrumentation.

10 | Imdex 2008 Annual Report

The growth strategy that the Imdex Group put in place at the beginning of FY07 has paid off in FY08.

Imdex 2008 Annual Report | 11

In 2009, Imdex will expand its market share in the onshore oil and gas business in Australia, PNG, East Africa and the Caspian Sea Region.

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(continued) Managing Director’s Report

Drilling Fluids and Chemicals

The DFC Division recorded a revenue increase of 37% to $85.7 million (FY07 $62.4 million), and an EBITA increase of 34% to $14 million (FY07 $10.4 million). All companies in this Division, including those recently acquired, contributed positively to the Divisional result.

During the year divisional management focused its efforts on expanding existing businesses and the integration of the newly acquired entities.

Key achievements include:

The continued strong growth by the Australian Mud Company (AMC) and Samchem, with both companies producing record performances in FY08;
Increased production capacity commenced at Samchem in Johannesburg with the installation of a polymer manufacturing plant. This plant is expected to be completed in 1H09 and will ensure Samchem can control both quality and quantity of polymer supply and decrease costs;
The relocation in May 2008 of Southernland employees and operations to new premises in Santiago. An upgraded and expanded manufacturing and storage capability, to be completed in 1H09, will meet increased demand and reduce costs in Latin America. A similar relocation and upgrade process is intended for Poly-Drill in Canada in FY09; and
The introduction of a common accounting and reporting system which will continue in FY09.

Our priorities for the Drilling Fluids and Chemicals Division over the coming financial year are as follows:

Complete the various plant relocations, installations and upgrades;
Focus on driving operational efficiencies;
Continue to support global distribution and supply alliances; and
Continue to expand the business, particularly in Africa, the Caspian Sea region and the Americas.

Down Hole Instrumentation

The DHI Division recorded a revenue increase of 12% to $62.9 million (FY07 $56.1 million) and an EBITA increase of 61% to $28.3 million (FY07 $17.6 million). All companies in this Division, including SEG, contributed positively to the Divisional result.

During the year Divisional management focused on launching new and improved technology and increasing market share in the mineral exploration and mining industries as well as positioning the business to penetrate the oil and gas market.

The Imdex Group has strengthened its DHI customer loyalty by exceeding its competition with superior technology and faster, more efficient service.

Customer feedback has also shown a preference for renting as opposed to purchasing DHI equipment. The Imdex Group continues to transition toward this rental model which delivers a more sustainable and profitable business in the longer term. The Imdex Group continues to invest significant resources into research and development to maintain its reputation as the world leader in DHI product technology for the mineral exploration and mining industries.

Key achievements:

Divestment of non-core business Surtron;
Continued success of the core orientation tool and down hole survey instrumentation yielding record revenue and earnings for Reflex;
Strong earnings by Flexit and the repositioning of the company to focus primarily on the oil and gas industry;
Continued development of the MEMS gyro technology;
Greater cost efficiencies by streamlining Imdex Technology and Reflex operations;
Introduction of a common accounting and reporting system which will continue in FY09; and
Further expansion of the down hole instrumentation range for oil and gas applications with the acquisition of SEG.

Positive Outlook

The outlook for FY09 is for strong organic growth in all of Imdex’s businesses. The Imdex Group anticipates continued favourable economic conditions for resources and energy and has invested heavily in the businesses and structures that will support revenue and earnings growth in the years ahead.

Priorities for the coming financial year are to:

Further penetrate the oil and gas market with both drilling fluids and down hole instrumentation;
Maintain profit margins;
Build intellectual property and invest in R&D to maintain the Group’s reputation as the world leader in DHI technology in the resources sector;
Maintain strong customer loyalty through superior technology and faster, more efficient service;
Continue to build scale across all
Imdex Group businesses and service global supply partners;
Continue to attract and retain experienced staff and managers by establishing an engaging work environment, competitive remuneration and career opportunities; and
Acquire additional drilling fluids and down hole instrumentation businesses that complement the overall Imdex Group strategy.

Imdex’s acquisition strategy and integration performance has been well received by the investment market and we remain committed to pursuing growth opportunities that are value accretive for shareholders.

I would like to take this opportunity to thank my Imdex colleagues and consultants for their hard work and dedication during the year. I am very excited about the future and look forward with great anticipation and enthusiasm as Imdex continues to carve out a significant global presence in the supply of drilling fluids and down hole instrumentation in the resources and oil and gas markets.

The Imdex Group model has been constructed for long term sustainable growth. Over FY09 and beyond, we will work hard to deliver that for our shareholders.

Bernie Ridgeway

Managing Director

Imdex 2008 Annual Report | 13

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14 | Imdex 2008 Annual Report
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Imdex 2008 Annual Report | 15

Imdex’s Core Business

Imdex’s core business is to manufacture and provide drilling fluids and leading down hole instrumentation to the resources and energy industries, both of which are significant growth markets. The Company has streamlined its business into two clearly defined and distinct operational divisions; the Drilling Fluids and Chemicals Division, and the Down Hole Instrumentation Division.

Drilling Fluids and Chemicals Division

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Australian Mud Company

Head Office: Perth, Western Australia

The Australian Mud Company (AMC) was incorporated in January 1988 for the purpose of supplying drilling fluids to the mineral and water well industries throughout Australia. Since then AMC has diversified its product range to cater for the oil and gas, mineral, water well, horizontal directional drilling, and tunnelling industries worldwide.

Samchem

Head Office: Johannesburg, South Africa

Samchem manufactures and supplies a full range of drilling fluids, lubricants and environmental chemicals. The company has been the largest supplier of drilling fluids to the mining industry in Africa for over 20 years, and now supplies 18 countries within the continent. Samchem also exports drilling fluids to Australia, Chile and Europe.

Poly-Drill Drilling Systems

Head Office: Calgary, Canada

Poly-Drill manufactures and supplies polymer drilling fluid and solids control systems. These fluid systems enable drilling without the use of numerous conventional drilling products, such as fluid loss control agents and gels. Polymer drilling fluids are utilised throughout North America and have established new standards in drilling fluids technology. The acquisition of Poly-Drill strengthens Imdex’s position as an advanced drilling fluids provider.

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Southernland

Head Office: Santiago, Chile

Southernland manufactures and supplies a range of drilling fluids to the Latin American market including Chile, Peru, Bolivia, Argentina and Mexico. The acquisition of Southernland complements Imdex’s Drilling Fluids Division and facilitates expansion as a significant drilling fluids supplier to the mining, oil and gas and water well industries in the region.

Suay Energy Services

Head Office: Aktau, Kazakhstan

Suay provides drilling fluids and serves as an excellent platform for Imdex into the highly prospective oil and gas markets in Kazakhstan, Russia, Turkmenistan, Kurdistan, Azerbaijan and Uzbekistan. The Caspian Sea region is one of the fastest growing oil and gas regions in the world.

What are Drilling Fluids?

Drilling fluids, or mud, as it is known in the industry, are a key part of the drilling process for mining, oil and gas, and civil applications. There is a broad range of drilling fluids, all with unique properties and uses; however they are principally used to clean, cool and

lubricate the drill bit, return chips of rock known as cuttings to the surface, and keep the borehole stabilised and open. During the drilling process, a continuous circulation of drilling fluid is used where fluid is pumped down the drill pipe, through the drill bit,

and up the space between the drill pipe and borehole which brings the cuttings to the surface. The fluid then circulates through a shale shaker or mud tanks to remove the cuttings from the fluid for reuse.

16 | Imdex 2008 Annual Report

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Down Hole Instrumentation Division

Reflex Instruments

Head Office: Perth, Western Australia

Reflex is a leading supplier of down hole digital survey and core orientation instruments for the mining and resources industries. The company has service and support facilities in Asia Pacific, Africa, Europe and the Americas.

Flexit

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Head Office (Minerals): Vallentuna, Sweden Head Office (Oil & Gas): Perth, Western Australia Flexit is renowned as a market leader in technologically advanced down hole survey instruments, and in particular, its micro-electro mechanical systems (MEMS) gyro technology. A new division of Flexit was established in Australia in February 2008. Flexit Australia will focus on marketing Imdex’s range of instrumentation for the oil and gas industry.

System Entwicklungs GmbH (SEG)

Head Office: Riegel, Germany

SEG has strong research and development capabilities, and specialises in down hole instrumentation for the oil and gas industry. Of particular note is the company’s development of the Target inertial navigation system.

Imdex Technology (UK) Limited

Head Office: Lewes East Sussex, United Kingdom Imdex Technology, formerly Chardec Consultants, is dedicated to manufacture and research and development for Imdex’s Down Hole Instrumentation Division.

What are Down Hole Instruments?

Survey Instrumentation

Down hole survey instruments give geologists and drillers comprehensive data including azimuth and dip, which allows them to determine the exact trajectory of bore holes, even at thousands of metres below the surface.

Bore hole deviations, where the actual path is different to the planned path, are common. Geological variations, drilling parameters, including excessive or irregular thrust and hole design, are just some of the reasons a bore hole may deviate. A 2 degree deviation at the surface can lead to a 35 metre lateral displacement at a hole depth of 1000 metres, resulting in significant additional drilling costs and loss of opportunity if zones of economic mineralisation are missed.

By surveying the bore hole throughout the drilling process, deviations can be corrected and the likelihood of intercepting desired targets is significantly enhanced.

Core Orientation

Core orientation instruments are used to determine the exact position of a core sample in the ground prior to extraction. Geologists are then able to accurately assess the sample to determine the structural geology, which often controls the mineralised ore body.

By understanding the structural geology, time and money are not wasted drilling in the wrong location. Core orientation is also particularly important during mine planning to avoid potential problem areas such as faults or slip zones.

Gyroscopes & Directional Steering

Drilling is becoming increasing complex and challenging due to diminishing accessible reserves, high explorations costs and environmental impact concerns. As a result, energy companies are drilling deeper and for smaller targets, re-entering existing wells, and drilling multiple wells from a single platform or wellbore.

In such an environment, technology and accurate data is crucial to locate reserves efficiently, and to avoid collision with existing wells which can be catastrophic and cost millions of dollars to remediate. Imdex has developed a range of advanced instruments specifically designed for challenging multiple well environments in areas of high magnetic interference, and allow directional drillers to accurately control the path of the wells.

Imdex 2008 Annual Report | 17

Imdex’s Global Reach

Imdex has established operations in all key mining and exploration regions of the world, including the four major mineral exploration and mining regions, Canada, Latin America, Africa and Asia Pacific.

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Americas
Calgary (Canada)
Timmins (Canada)
Santiago
(Chile)
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Europe
Vallentuna (Sweden)
East Sussex
(UK)
Riegel (Germany)
Aktau (Kazakhstan)
Asia Pacific
Brisbane
Johannesburg (South Africa)
Perth Kalgoorlie
Africa
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Imdex 2008 Annual Report | 19

The successful integration of Imdex’s acquisitions can be largely attributed to Imdex’s experienced management team.

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Imdex 2008 Annual Report | 21

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22 | Imdex 2008 Annual Report

Imdex 2008 Annual Report | 23

Imdex has established global supply agreements for drilling fluids and down hole instrumentation with three of the world’s largest drilling contractors.

24 | Imdex 2008 Annual Report

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Marketing & Sales

The development of quality products, technologically advanced down hole survey instrumentation, and customer service is central to Imdex’s marketing and sales strategy. The Company exceeds its competition by offering superior technology, and faster, more efficient service. As an innovator in the market, Imdex also gains market leverage through its intellectual property ownership.

Advanced and Leading Technology

Imdex’s gyroscopic inertial navigation systems are the most modern available, and offer features not previously available to the market. Imdex is also proud to have designed and patented the leading digital core orientation instrument on the market, the Reflex ACT. The instrument’s advanced technology replaces existing mechanical devices. It is more accurate and reliable, and does not interrupt the drilling process allowing more metres to be drilled while obtaining higher quality planning data.

Expansion into Prospective Markets

Imdex’s research and development capabilities and leading product range facilitates further expansion into new markets such as the oil and gas market.

Strong Brands

Imdex has strong brands within its portfolio, particularly the Australian Mud Company, and Samchem and Reflex. The Australian Mud Company is the largest drilling fluid supplier to the Australian onshore market, and Samchem has been the largest supplier of drilling fluid to the African mining industry for 20 years. Reflex is the leading supplier of down hole instrumentation for the mining industry globally, and the brand has become a generic trademark for such instrumentation throughout Canada.

To continue to strengthen Imdex’s brands, the Company engaged a Group Marketing and Communications Manager in August 2007, whose principal role is to oversee continual improvement of the Company’s marketing

and communication to support Imdex’s internal and external branding, and sales activities globally.

Global Supply Agreements

Imdex has established global supply agreements for drilling fluids and down hole instrumentation with three of the world’s largest drilling contractors servicing mining and exploration, Boart Longyear, Major Drilling and Layne Christensen. These companies represent 35% to 40% of global exploration drilling rigs. Imdex aims to strengthen its relationship with its customers by providing drilling fluids, down hole instrumentation, and a high level of service in all areas of operation globally. Imdex also supplies to a broad range of medium to smaller sized customers throughout the world.

Customer Service, Distribution & Logistics

Imdex strives to build customer loyalty by offering superior products and a high level of customer service. Although Imdex has a low labour component, the Company is able to support its customers by having strategically placed businesses in all of the major mining and exploration regions of the world, highly mobile and capable teams, and a network of strong global distribution channels.

Imdex also engages dedicated logistics and distribution managers to ensure that customers receive orders efficiently and within an agreed time frame.

In September 2007, Imdex executed a significant distribution agreement with Sandvik Mining and Construction, a division of the Sandvik Group (Sandvik). Sandvik is a worldleader in the provision of equipment and

solutions for mineral exploration, underground and surface mining, and specific areas of the construction industry such as tunnelling and quarrying. The alliance agreement with Sandvik complements Imdex’s network of global distribution outlets for both Divisions.

Imdex 2008 Annual Report | 25

26 | Imdex 2008 Annual Report

Imdex 2008 Annual Report | 27

Quality, Health, Safety & the Environment

During the 2008 financial year, Imdex’s Quality and HS&E department continued to work towards achieving International Standard for Quality Management (ISO9001) across the Imdex Group in accordance with the Company’s Quality and Continual Improvement Policy.

Key Achievements for FY08

Imdex Technology (UK) and Flexit Australia received Quality System certification to ISO9001.
Imdex Limited, the Australian Mud Company, Reflex Asia Pacific and Samchem successfully maintained certification to ISO9001.
Implementation commenced for ISO9001 certification for Flexit Sweden.
Samchem commenced accreditation to ISO17025 for its Drilling Fluids Laboratory.
Regional Quality Alert representatives were appointed in Africa, Australia, Sweden and the United Kingdom to enable greater efficiency within Imdex’s Quality Assurance Department.

Key Statistics

Work-Safe Loss Time Incident Frequency Rate Benchmark (number of lost time injuries/ diseases for each one million hours worked).

Worksafe Benchmark = 12.4 / LTIFR
Imdex Group Result = 2.34
Work-Safe Loss Time Incident Rate Benchmark (number of lost time injuries/ diseases for each one hundred workers)
Worksafe Benchmark = 2.8 / LTIR
Imdex Group Result = 0.46

Lost Time Injury Frequency Rates (LTIFR) FY08

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16
14
12 WorkSafe Benchmark
10 (Services to Mining)
8
Average
6
4 Imdex’s LTIFR
2
0
JUL AUG SEP OCT NOV DEC JAN FEB MA APR MAY JUN
Month
Imdex measure world-wide performance against the stringent Western Australian WORKSAFE LTIFR Industry Benchmark
(Services to Mining). This Benchmark is reported on a monthly basis, using a 12 month rolling snapshot.
man hours)
LTIFR (Incidents per million
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Managing Risk

In February 2008 Imdex engaged a Group Manager for Risk and Compliance. This manager works closely with the Audit Committee and management to identify threats to the achievement of the Imdex’s objectives and assesses the appropriateness of management’s response to these risks.

Key areas of focus include:

Reviewing the reliability and integrity of financial and operating information and the means used to identify, measure, classify and report such information;
Examining and evaluating the adequacy and effectiveness of internal control mechanisms, appraising information technology systems and related risk areas and assessing the quality of performance in carrying out assigned responsibilities;
Assisting the Audit Committee to fulfil its roles and objectives;
Reviewing effectiveness of functions against stated objectives and strategies;
Reviewing the systems established by management to ensure compliance with those policies, plans, procedures, laws and regulations which could have a significant impact on operations and reports;
Reviewing processes in place to identify, assess and manage risk within the organisation;
Reviewing operations or programs to ascertain whether results are consistent with established objectives and goals, and whether the operations or programs are being carried out as planned; and
Coordination of activities with external auditors.

28 | Imdex 2008 Annual Report

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Utilising Technology

Throughout the 2008 financial year, Imdex implemented a number of systems to enhance efficiency, accuracy and communication to support the needs of Imdex’s expanding Group. The Company also engaged a Group ICT Manager to oversee Imdex’s current and future requirements.

Prophix

In February 2008, Imdex implemented a consolidation, budgeting and forecasting application known as Prophix. Prophix complements Imdex’s existing reporting system by taking financial data from business units in their local currencies, and generating standard financial reports in Australian dollars. Prophix can also store budget and forecast information, and generate a range of additional financial reports. The principal benefits of the Prophix system include:

Greater reporting efficiency;
Enhanced global customer sales and margin reporting;
Additional forecasting and sub-group reports.

Critical IT Systems and Remote Access

In April 2008, all of Imdex’s critical IT systems were moved to a new data centre which significantly enhances the security and reliability of Imdex’s IT communication systems. A new remote access system was also implemented, which enables access to centralised data, email and reporting systems from anywhere in the world.

Imdex Group Intranet

In March 2008, Imdex commenced development of a new global intranet. The principal objectives of the new system are to:

Enhance efficiency, accuracy and quality by having a central repository of information

which is accessible by all, monitored and kept up to date by departmental or business unit custodians;

Improve internal communication regarding company news and procedures, product developments and events throughout Imdex;
Encourage knowledge sharing between the companies within Imdex;
Provide a valuable induction tool for new employees joining Imdex; and
Provide greater access to market and industry information for all employees.

Attracting and Retaining Experienced Employees and Managers

The principal focus for the Human Resources team in the 2009 financial year will be attracting and retaining experienced employees and managers by offering competitive remuneration, career opportunities and establishing an engaging work environment.

In August 2007, Imdex employed a dedicated Group Human Resources Manager. This Manager oversees Imdex’s human resources policies and procedures to ensure that they are adequate for the Group’s future needs and are consistent across the expanding global operations.

Key achievements for FY08 include:

Establishment of benchmarks for salary reviews within Australia;
Revision of the remuneration policy and short term incentive program for the Imdex Group; and
The successful engagement of a number of key managers who have brought significant technical knowledge, industry and management experience to the Group.

Imdex 2008 Annual Report | 29

Continual research and development of innovative products remains a priority, enabling Imdex to maintain industry leadership.

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Continual Research & Development

The Imdex Group continues to invest significant resources in research and development to maintain and enhance its position as the world leader in down hole instrumentation technology for the resources industry.

Oil and Gas Innovations

In FY08, Imdex’s research and development team built two new down hole survey instruments for oil and gas applications: a multipurpose magnetic survey instrument capable of single or multi-shot surveys and a MEMS based Gyro survey instrument. These new instruments have been developed to withstand the higher pressures and temperatures encountered in oil and gas applications and offer advanced features not currently available to the market. Prototypes are being evaluated in the United States and the Middle East and extensive field testing is being carried out. Together Flexit and SEG enable Imdex to offer a suite of advanced down hole instrumentation, including the Target INS, to the oil and gas industry worldwide. The Down Hole Instrumentation Division, is increasing its presence in the lucrative global oil and gas industry by providing world class technology to independent service providers in this sector.

Continual Improvement

The research and development team is also finalising designs for two new generation instruments for Reflex. These instruments have been designed to keep the brand at the forefront of down hole instrumentation for the mining and mineral exploration industries and to satisfy the demands of customers for robust and highly accurate survey instruments.

Developing Our Environmental Products

During the 2008 financial year, Imdex continued to develop its range of environmental drilling fluid products and packaging. Regular consultation with customers highlighted the need to reduce the use of plastic packaging which can accumulate at drilling sites and cause environmental and logistical waste removal concerns. To address these concerns, Imdex has introduced biodegradable and recyclable cardboard

packaging alternatives for both liquid and powder based drilling fluids and will continue to expand the range in the future.

Dust Suppressants

Imdex’s Drilling Fluid Division has also developed a range of dust suppressant products for the mining industry. Benefits include:

The quantity of water normally used in suppressing dust, is substantially reduced.
A cleaner working environment;
Improves vehicle and tyre life; and
Health risks associated with excessive dust inhalation are reduced.

During the 2008 financial year, Imdex continued to enhance its manufacturing capabilities for both the Drilling Fluids and Chemicals Division and the Down Hole Instrumentation Division, allowing the Company to have greater control over its production, quality and supply.

The acquisition of Poly-Drill in Canada, and Southernland in Chile significantly enhanced

Imdex’s capabilities to manufacture drilling fluids in two of the world’s most significant mining and mineral exploration regions. Plans to expand and complement these manufacturing facilities at both Poly-Drill and Southernland are scheduled for FY09.

Construction of a polymer (PHPA) plant also commenced at Samchem in Johannesburg during the year. PHPA is an important

drilling fluid which will enable Samchem to manufacture a higher quality product in house, rather than rely on third parties for supply.

The acquisition of SEG in Riegel Germany complements Flexit and Imdex Technology, and contributes to Imdex’s range of products for the Down Hole Instrumentation Division.

Imdex 2008 Annual Report | 31

The Imdex model has been constructed for long term sustainable growth.

32 | Imdex 2008 Annual ReportImdex 2008 Annual Report | 32

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Financial Report 2008

Directors’ Report	34	Balance Sheet	56
Auditors’ Independence Declaration	46	Statement of Changes in Equity	57
Independent Audit Report	47	Cash Flow Statement	59
Directors’ Declaration	49	Notes to the Financial Report	60
Corporate Governance Statement	50	Additional Stock Exchange Information	119
Income Statement	55

Imdex 2008 Annual Report | 33

IMDEX LIMITED	IMDEX LIMITED	IMDEX LIMITED
and its controlled entities
DIRECTORS’REPORT FOR THE YEAR ENDED 30					JUNE 2008
The Directors of Imdex Limited (“Imdex” or “the Company”) present their					report together with the annual Financial Report of	the
Company and its Subsidiaries (“the Group”) for the financial year ended 30 June 2008.
In order to comply with the provisions of the Corporations Act 2001, the Directors’ report as follows:
(a) Directors
The names and particulars of the Directors of the Company during or since the end of the financial year are:
	Name	Role	Age		Particulars
	Mr I F Burston	Independent, Non Executive Chairman	73		Mechanical Engineer
					Member of the Audit and Compliance & Remuneration
					Committees
					Director since November 2000
	Mr B W Ridgeway	Managing Director	54		Chartered Accountant
					Director since May 2000
	Mr R W Kelly	Independent, Non Executive Director	70		Engineer
					Member of the Audit and Compliance Committee
					Chairman of the Remuneration Committee
					Director since 14 January 2004
	Mr K A Dundo	Independent, Non Executive Director	55		Lawyer
					Chairman of the Audit and Compliance Committee
					Member of the Remuneration Committee
					Director since 14 January 2004
	Mr M Lemmel	Independent, Non Executive Director	69		Management Consultant
					Director since 19 October 2006
	Additional information	on the Director’s experience and qualificati	ns is cont	a	ined in the preface to the financial statements.

Additional information on the Director’s experience and qualifications is contained in the preface to the financial statements.

(b) Directorships of other listed companies

Directorships of other listed companies held by the Directors in the 3 years immediately before the end of the financial year are as follows:

follows:
Name	Company	Position	Period of Directorship
Mr I F Burston	NRW Holdings Ltd Kansai Mining Corporation Mincor Resources NL Cape Lambert Iron Ore Ltd Aztec Resources Ltd Aviva Corporation Ltd	Non Executive Chairman Non Executive Director Non Executive Director Non Executive Chairman Chairman and Chief Executive Officer Non Executive Director	2007 – Current 2006 – Current 2003 – Current 2006 – 2008 2004 – 2006 2003 – 2006
Mr R W Kelly	Clough Limited	Non Executive Director	1996 – 2008
Mr K A Dundo	Computercorp Limited Intrepid Mines Ltd	Non Executive Director Non Executive Director	2006 – Current 2002 – Current

Imdex 2008 Annual Report | 34

and its controlled entities

DIRECTORS ’ REPORT FOR THE YEAR ENDED 30 JUNE 2008

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(c) Company Secretary

Mr P A Evans

Mr Evans, a Chartered Accountant, joined Imdex Limited on 17 October 2006. After leaving professional practice he worked in a range of commercial and financial roles in the media, manufacturing and telecommunications industries. Mr Evans is a Member of the Institute of Chartered Accountants in Australia.

(d) Directors’ Meetings

The following table sets out the number of Directors’ meetings (including meetings of committees of Directors) held during the financial year and the number of meetings attended by each Director (while they were a Director or committee member). During the financial year, six Board meetings, three Audit and Compliance Committee and three Remuneration Committee meetings were held.

	Board of	Directors	Audit and Compliance Committee	Audit and Compliance Committee	Remuneration Committee	Remuneration Committee
	Held	Attended	Held	Attended	Held	Attended
I F Burston	6	6	3	3	3	3
B W Ridgeway	6	6	-	-	-	-
R W Kelly	6	6	3	3	3	3
K A Dundo	6	6	3	3	3	3
M Lemmel	6	3	-	-	-	-

(e) Directors’ Shareholdings

At the date of this report the Directors held the following interests in shares and options in shares of the Company:

Directors	Shares Held Directly	Shares Held Indirectly	Options Held Directly
I F Burston	-	343,786	1,000,000
B W Ridgeway	-	3,500,000	2,000,000
R W Kelly	33,711	256,289	-
K A Dundo	-	300,000	-
M Lemmel	200,000	247,347	-

At the date of this report, the options on issue by the Company are disclosed at (g) below and in Note 33.

Imdex 2008 Annual Report | 35

IMDEX LIMITED

and its controlled entities

DIRECTORS ’ REPORT FOR THE YEAR ENDED 30 JUNE 2008

(f) Remuneration Report

Remuneration policy for Directors and Executives

Non Executive Directors

The Board seeks the approval of Shareholders in relation to the aggregate of Non Executive Directors’ remuneration and any options that may be granted to Directors. The remuneration for Non Executive Directors is reviewed from time to time, with due regard to current market rates. The cash remuneration of Non Executive Directors is not linked to the Company’s performance in order to preserve independence. Other than statutory superannuation, no Non Executive Director is entitled to any additional benefits on retirement from the Company.

Managing Director

The Managing Director’s remuneration is determined by the Remuneration Committee with due regard to current market rates.

The Managing Director has a short term incentive bonus amounting to 22% of his cash compensation package. Each year the Remuneration Committee sets the key performance indicators (KPIs) for the Managing Director. These KPIs include financial, strategy and risk measures. The Remuneration Committee set these performance hurdles as they are significant profit and cash flow drivers which are linked to Imdex’s increased growth and profitability and hence shareholder value. Performance is measured relative to budget and forecast results as these are the most accurate measures available against which to assess the achievement of set hurdles. The balance of his cash compensation package for the current year is not linked to the Group’s performance.

From time to time options may be issued to the Managing Director as an additional performance incentive. The portion of the Managing Director’s compensation package that comprises options is linked to the Company’s performance. The performance conditions for granting options are determined with regard to current market trends. The issue of any such options requires the approval of Shareholders in General Meeting. No such options were granted to the Managing Director in the current year.

The Managing Director is employed under a permanent contract that provides for a 12 month termination period.

Executives and Staff

All Executives and staff of the Company are subject to a formal annual performance review. The remuneration of Executives comprises a fixed monetary total, which is not linked to the performance of the Company, although bonuses related to the performance of the Company may be agreed between that Executive and the Company from time to time. The base component of Executive salaries is benchmarked against current market trends and is not linked to Company performance as it serves as a base salary only which is required to attract and retain suitably qualified and experienced staff. Performance incentives that are linked to Company performance are used to reward Executives for exceptional performance that benefits the Company and Shareholders. Refer table on page 5 for further details. Each year the Remuneration Committee sets the KPIs for each key management person. These KPIs include people, customer, system, financial, strategy and risk measures. The Remuneration Committee set these performance hurdles as they are significant profit and cash flow drivers which are linked to Imdex’s increased growth and profitability and hence shareholder value. Performance is measured relative to budget and forecast results as these are the most accurate measures available against which to assess the achievement of set hurdles. No bonus is awarded where hurdles are not met.

All Executives are employed under permanent contracts, none of which provide for any termination payments. Mr G E Weston’s contract provides a 12 month notice period and Mr D J Loughlin’s and Mr P A Evans’ contracts provide a 6 month notice period.

Incentives

The remuneration policy for the Managing Director is linked to the Company’s performance as an additional incentive to build shareholder value. The remuneration of Non Executive Directors is not linked to the Company’s performance in order to preserve their independence. The increase in net profits of the Company and dividends paid which drives an increase in shareholder value over the last five years is indicative of the success of this policy.

Management of the Company believes that in order to retain quality Non Executive Directors on the Board, some incentive to maintain their future involvement, commitment and loyalty to the Company, is required on certain occasions, over and above nominal Directors' fees.

No Director or Senior Manager received a payment during the current or prior years as consideration for agreeing to hold the relevant position.

Imdex 2008 Annual Report | 36

IMDEX LIMITED

and its controlled entities

DIRECTORS ’ REPORT FOR THE YEAR ENDED 30 JUNE 2008

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Director and Senior Management details

The Directors of Imdex Limited during the year were:

(i) Mr I F Burston (Non Executive Chairman);

(ii) Mr B W Ridgeway (Managing Director);
(iii) Mr R W Kelly (Non Executive Director);
(iv) Mr K A Dundo (Non Executive Director); and

(v) Mr M Lemmel (Non Executive Director).

The term ‘Senior Management’ is used in this remuneration report to refer to the following persons:

(i) Mr G E Weston (Group General Manager);

(ii) Mr D J Loughlin (General Manager: Down Hole Instrumentation Division); and (iii) Mr P A Evans (Company Secretary and Chief Financial Officer).

Elements of Director and Senior Management Remuneration

Remuneration packages contain the following key elements:

(i) Short-term benefits – salary/fees, bonuses and non monetary benefits including motor vehicles and health benefits;

(ii) Post-employment benefits – including superannuation and prescribed retirement benefits;

(iii) Equity – share options granted under the Staff Option Scheme (Note 33) or any other options granted as approved by Shareholders in General Meeting; and

(iv) Other benefits.

Earnings and Movements in Shareholder Wealth

The table below sets out summary information about the Consolidated Entity’s earnings and movements in shareholder wealth for the five years to June 2008:

five years to June 2008:
	30 June 2008	30 June 2007	30 June 2006	30 June 2005	30 June 2004^
Revenue – continuing and discontinued operations ($000s)	150,493	119,340	66,792	40,051	39,831
Net profit before tax from continuing operations ($000s)	31,885	18,115	11,864	5,005	(3,776)
Net profit after tax from continuing operations ($000s)	21,081	11,950	7,984	3,282	(3,689)
Share price at start of year (cents)	150	61	22	11.5	9.5
Share price at end of year (cents)	165	150	61	22	11.5
Interim dividend (cents) – fully franked	1.75	1.00	1.00	-	-
Final dividend (cents) – fully franked	2.25	1.50	1.00	-	-
Basic earnings per share (cents) – continuing operations	11.22	7.72	6.07	3.66	(3.07)
Diluted earnings per share (cents) – continuingoperations	10.79	7.09	5.95	3.66	(3.07)

^ - Imdex Limited adopted the Australian equivalents to International Financial Reporting Standards with effect from 1 July 2004, which resulted in various changes to its accounting policies from that date. The results for the year ended 30 June 2004 are reported in accordance with Imdex Limited’s previous accounting policies as permitted under Australian accounting standards as applicable at that time.

Elements of remuneration related to performance

(i) Managing Director: Of the cash remuneration package of the Managing Director, 22% is linked to the performance of the Company by way of short term cash incentives. In addition options have been the long term method by which Imdex has sought to reward key executives in a manner linked to the performance of the Company. Any such options to the Managing Director, or any Director, require the approval by Shareholders in General Meeting.

(ii) Non Executive Directors: The remuneration of Non Executive Directors is not linked to the performance of the Company. The maximum total remuneration payable to Non Executive Directors was approved by Shareholders at the 2006 Annual General Meeting and is currently $500,000. In the current year remuneration to Non Executive Directors totalled $416,750, including statutory superannuation. The Board determines the apportionment of directors’ fees between each Director.

(iii) Senior Management: The remuneration of specified Senior Managers generally comprises a fixed monetary total that is not linked to the performance of the Company. Bonuses dependant on individual performance criteria are set annually by the Remuneration Committee for Senior Managers. In addition, subject to a qualifying period, Executives may be issued options in the Staff Option Plan at the discretion of the Board. These options are linked to the performance of the Company. The percentage of the value of remuneration that consisted of options for each Senior Manager is set out below.

Imdex 2008 Annual Report | 37

	Shares & Units Options & Rights $ $ $ $ $ $ $ $ $ $ $ $ $ Executive Director B W Ridgeway, Managing Director 419,786 60,000 - - 37,781 - 39,790 - - 5,152 - - 562,509 Non Executive Directors I F Burston, Chairman 81,750 - - - - - - - - 176,000 - - 257,750 R W Kelly 50,000 - - - 4,500 - - - - - - - 54,500 K A Dundo 50,000 - - - 4,500 - - - - - - - 54,500 M Lemmel 50,000 - - - - - - - - - - - 50,000 651,536 60,000 - - 46,781 - 39,790 - - 181,152 - - 979,259 employee benefits Other Total Salary & fees Bonus Non- monetary Other Super- annuation Other Equity-settled Cash settled Details of remuneration of Senior Management are set out below:	Shares & Units Options & Rights $ $ $ $ $ $ $ $ $ $ $ $ $ Executive Director B W Ridgeway, Managing Director 419,786 60,000 - - 37,781 - 39,790 - - 5,152 - - 562,509 Non Executive Directors I F Burston, Chairman 81,750 - - - - - - - - 176,000 - - 257,750 R W Kelly 50,000 - - - 4,500 - - - - - - - 54,500 K A Dundo 50,000 - - - 4,500 - - - - - - - 54,500 M Lemmel 50,000 - - - - - - - - - - - 50,000 651,536 60,000 - - 46,781 - 39,790 - - 181,152 - - 979,259 employee benefits Other Total Salary & fees Bonus Non- monetary Other Super- annuation Other Equity-settled Cash settled Details of remuneration of Senior Management are set out below:
	Total			Total
Share-based payment	Other		Share-based payment	Other
	Cash settled			Cash settled
	Equity-settled	Options & Rights		Equity-settled	Options & Rights
		Shares & Units			Shares & Units
Termination Benefits			Termination Benefits
Other long- term	employee benefits		Other long- term	employee benefits
Post Employment	Other		Post Employment	Other
	Super- annuation			Super- annuation
Short-term employee benefits	Other		Short-term employee benefits	Other
	Non- monetary			Non- monetary
	Bonus			Bonus
	Salary & fees			Salary & fees

Imdex 2008 Annual Report | 38

$ $ $ $ $ $ $ $ $ $ $ $ $ Group Executives G E Weston, Group General Manager 224,846 25,000 38,092 - 21,046 - 14,765 - - 16,216 - - 339,965 D J Loughlin, General Manager: Down Hole Instrumentation Division 140,673 17,500 31,321 - 12,661 - - - - 56,935 - - 259,090 P A Evans, Chief Financial Officer / Company Secretary ^ 153,076 20,000 - - 13,777 - - - - 29,394 - - 216,247 S J Lyons, Company Secretary ^ 44,265 - 1,522 - 3,600 - - - - 2,099 - - 51,486 D L Kinley, Group Financial Controller ^ 39,375 - 8,523 - 3,544 - - - - 1,488 - - 52,930 C S Munyard, Manager: Surtron 17,500 -6,134 - 1,575 - - - - 1,116 - - 26,325 619,735 62,500 85,592 - 56,203 - 14,765 - - 107,248 - - 946,043	Executive Director B W Ridgeway, Managing Director Non Executive Directors I F Burston, Chairman H H Al-Merry R W Kelly K A Dundo I R Freeman M Lemmel Details of remuneration of Senior Management ar	Executive Director B W Ridgeway, Managing Director Non Executive Directors I F Burston, Chairman H H Al-Merry R W Kelly K A Dundo I R Freeman M Lemmel Details of remuneration of Senior Management ar	Executive Director B W Ridgeway, Managing Director Non Executive Directors I F Burston, Chairman H H Al-Merry R W Kelly K A Dundo I R Freeman M Lemmel Details of remuneration of Senior Management ar	Executive Director B W Ridgeway, Managing Director Non Executive Directors I F Burston, Chairman H H Al-Merry R W Kelly K A Dundo I R Freeman M Lemmel Details of remuneration of Senior Management ar	Executive Director B W Ridgeway, Managing Director Non Executive Directors I F Burston, Chairman H H Al-Merry R W Kelly K A Dundo I R Freeman M Lemmel Details of remuneration of Senior Management ar	Executive Director B W Ridgeway, Managing Director Non Executive Directors I F Burston, Chairman H H Al-Merry R W Kelly K A Dundo I R Freeman M Lemmel Details of remuneration of Senior Management ar	IMDEX LIMITED and its controlled entities DIRECTORS’REPORT FOR THE YEAR ENDED 30 JUNE 2008 Year ended 30 June 2007 Details of Directors’ remuneration are set out below. Further information is also set out in Note 32: Shares & Units Options & Rights Short-term employee benefits Post Employment Other long- term employee benefits Termination Benefits Share-based payment Total Salary & fees Bonus Non- monetary Other Super- annuation Other Equity-settled Cash settled Other	IMDEX LIMITED and its controlled entities DIRECTORS’REPORT FOR THE YEAR ENDED 30 JUNE 2008 Year ended 30 June 2007 Details of Directors’ remuneration are set out below. Further information is also set out in Note 32: Shares & Units Options & Rights Short-term employee benefits Post Employment Other long- term employee benefits Termination Benefits Share-based payment Total Salary & fees Bonus Non- monetary Other Super- annuation Other Equity-settled Cash settled Other	IMDEX LIMITED and its controlled entities DIRECTORS’REPORT FOR THE YEAR ENDED 30 JUNE 2008 Year ended 30 June 2007 Details of Directors’ remuneration are set out below. Further information is also set out in Note 32: Shares & Units Options & Rights Short-term employee benefits Post Employment Other long- term employee benefits Termination Benefits Share-based payment Total Salary & fees Bonus Non- monetary Other Super- annuation Other Equity-settled Cash settled Other
$ $ $ $ $ $ $ $ $ $ $ $ $ 224,846 25,000 38,092 - 21,046 - 14,765 - - 16,216 - - 339,965 140,673 17,500 31,321 - 12,661 - - - - 56,935 - - 259,090 153,076 20,000 - - 13,777 - - - - 29,394 - - 216,247 44,265 - 1,522 - 3,600 - - - - 2,099 - - 51,486 39,375 - 8,523 - 3,544 - - - - 1,488 - - 52,930 17,500 -6,134 - 1,575 - - - - 1,116 - - 26,325	Salary & fees		Short-term employee benefits	e set out below:	563,889 75,000 48,725 - 36,865 - 20,020 -	$ $ $ $ $ $ $ $ 309,615 75,000 48,725 - 27,865 - 20,020 - 81,720 - - - - - - - - - - - - - - - 50,000 - - - 4,500 - - - 50,000 - - - 4,500 - - - 37,500 - - - - - - - 35,054 - - - - - - -	Salary & fees		Short-term employee benefits
	Bonus						Bonus
	Non- monetary						Non- monetary
	Other						Other
	Super- annuation		Post Employment				Super- annuation		Post Employment
	Other						Other
	Other long- term employee benefits						Other long- term employee benefits
	Termination Benefits						Termination Benefits
	Shares & Units	Equity-settled	Share-base		- 135,503	$ $ - 12,880 - 122,623 - - - - - - - - - -	Shares & Units	Equity-settled	Share-based payment
	Options & Rights						Options & Rights
	Cash settled		d payment		- -	$ $ - - - - - - - - - - - - - -	Cash settled
	Other						Other
	Total				880,002	$ 494,105 204,343 - 54,500 54,500 37,500 35,054	Total

Imdex 2008 Annual Report | 39

IMDEX LIMITED

and its controlled entities

DIRECTORS ’ REPORT FOR THE YEAR ENDED 30 JUNE 2008

(i) Mr B W Ridgeway is a party to a service contract with Imdex Limited, which sets out a fixed compensation package reviewable annually. The service contract specifies a twelve month notice period in the event that the contract is terminated. There are no termination benefits specified in this contract. Additional performance incentives may be agreed between Mr Ridgeway and Imdex Limited from time to time. The Managing Director’s compensation is reviewed and determined annually by the Remuneration Committee.

During the current year Mr B W Ridgeway earned a cash bonus of $60,000, representing 60% of the possible bonus payable for the year. This bonus was paid on the satisfaction of performance criteria linked to Group operational progress and profitability. During the prior year a cash bonus of $75,000 was earned, representing 75% of the possible bonus payable for that year. This bonus was paid on the satisfaction of criteria linked to prior year audited EBITA.

No options were granted to Mr Ridgeway in the current year or in the prior year. The options expense shown in the tables above are the value of options granted in past years that has been spread over the two year vesting period. Refer Note 33 for further details.

(ii) Mr G E Weston is party to a service contract with Imdex Limited, which sets out a fixed compensation package, reviewable annually. The service contract stipulates a twelve month notice period in the event that the contract is terminated. There are no termination benefits specified in this contract. Performance incentives may be agreed between Mr Weston and Imdex from time to time. Additionally, Mr Weston is party to a deed with Imdex Limited, in respect of which Mr Weston has a right of first refusal in the event that Imdex receives an offer to purchase 100% of the shares of Imdex Limited. This ‘right’ lapses automatically should Mr Weston no longer be employed by Imdex.

During the current year Mr Weston earned a cash bonus of $60,000. This represents 100% of the possible bonus available for the current year and was earned on the satisfaction of operational and EBITA related hurdles. During the prior year Mr Weston was entitled to a cash bonus of $70,000 which was linked to the satisfaction of EBITA hurdles. A bonus of $25,000 was approved by the Remuneration Committee based on performance.

In the current year Mr Weston was granted 500,000 options under Staff Option Scheme Tranche 7 along with other staff of the Group. The percentage of the value of current year compensation that consisted of options was 4%. Mr Weston was not granted any options in the prior year. The options expense shown in the tables above includes a portion of the value of options granted in past years that has been spread over the three vesting period. Refer Note 33 for further details.

(iii) Mr D J Loughlin is a party to a service contract with Imdex Limited, which sets out a fixed compensation package reviewable annually. The service contract specifies a six month notice period in the event that the contract is terminated. There are no termination benefits specified in this contract. Additional performance incentives may be agreed between Mr Loughlin and Imdex Limited from time to time.

Mr Loughlin earned a bonus of $47,250 in the current year. This represents 100% of the possible bonus available for the current year and was earned on the satisfaction of operational and EBITA related hurdles. During the prior year a cash bonus of $17,500 was earned, representing 100% of the possible bonus payable for that year. This bonus was paid on the satisfaction of criteria linked to prior year audited EBITA.

No options were granted to Mr Loughlin in the current year. In the prior year, Mr Loughlin was granted 500,000 options, under Staff Option Scheme Tranche 3, along with other staff of the Group (Refer Note 33). The percentage of the value of prior year compensation that consisted of options was 22%. The options expense shown in the tables above includes a portion of the value of options granted in past years that has been spread over the three vesting period. Refer Note 33 for further details.

(iv) Mr P A Evans is a party to a service contract with Imdex Limited, which sets out a fixed compensation package reviewable annually. The service contract specifies a six month notice period in the event that the contract is terminated. There are no termination benefits specified in this contract. Additional performance incentives may be agreed between Mr Evans and Imdex Limited from time to time.

During the current year Mr Evans earned a bonus of cash $50,000, representing 100% of the possible bonus payable for the year. This bonus was paid on the satisfaction of specific EBITA, people and systems based criteria. During the prior year Mr Evans earned a cash bonus of $20,000, representing 67% of the possible bonus payable for that year. This bonus was paid on the satisfaction of criteria linked to current year audited EBITA.

In the current year, Mr Evans was granted 200,000 options, under Staff Option Scheme Tranche 7, along with other staff of the Group. The percentage of the value of compensation that consisted of options was 19%. In the prior year, Mr Evans was granted 300,000 options, under Staff Option Scheme Tranche 4, along with other staff of the Group. The percentage of the value of prior year compensation that consisted of options was 14%. The options expense shown in the table above includes a portion of the value of options granted in past years that has been spread over the three vesting period. Refer Note 33 for further details.

(v) In the prior year Mr S J Lyons was party to a service contract with Imdex Limited, which set out a fixed compensation package, reviewable annually. The service contract specified a two month notice period in the event that the contract was terminated. There were no termination benefits specified in this contract. Additional performance incentives were agreed between Mr Lyons and the Company from time to time. Mr Lyons resigned on 17 October 2006. No options were granted to Mr Lyons in the prior year. The options expense shown is the value attributable to options granted in past years that have been spread over the vesting period. Refer Note 33 for further details.

Imdex 2008 Annual Report | 40

and its controlled entities

IMDEX LIMITED

DIRECTORS ’ REPORT FOR THE YEAR ENDED 30 JUNE 2008

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(vi) In the prior year Mr D L Kinley was a party to a service contract with Imdex Limited, which set out a fixed compensation package, reviewable annually. The service contract specified a one month notice period in the event that the contract was terminated. There were no termination benefits specified in this contract. Additional performance incentives were agreed between Mr Kinley and the Company from time to time. Mr D L Kinley ceased to be a key management member on 17 October 2006 following the appointment of Mr P A Evans as Company Secretary and Chief Financial Officer on that date. No options were granted to Mr Kinley in the prior year. The options expense shown is the value attributable to options granted in past years that have been spread over the vesting period. Refer Note 33 for further details.

(vii) In the prior year Mr C S Munyard was a party to a service contract with Surtron Technologies Pty Ltd, which set out a fixed compensation package reviewable annually. The service contract specifies a one month notice period in the event that the contract was terminated. There were no termination benefits specified in this contract. Additional performance incentives were agreed between Mr Munyard and Surtron Technologies Pty Ltd from time to time. Mr C S Munyard ceased to be a key management member on 1 September 2006 following the appointment of Mr D J Loughlin as General Manager: Down Hole Instrumentation on that date. No options were granted to Mr Munyard in the prior year. The options expense shown is the value attributable to options granted in past years that have been spread over the vesting period. Refer Note 33 for further details.

Bonuses granted to Directors and Senior Managers

The table below sets out the bonuses earned by Directors and Senior Managers in the current year. Bonuses are paid on the achievement of performance criteria specific to the individual. Where performance hurdles are not met, no bonus is paid. The performance criteria used are chosen by the Remuneration Committee annually and are linked to the financial performance of the company and hence shareholder value. Performance criteria typically revolve around areas of risk management, people development, systems improvement and EBITA performance. Performance criteria are reviewed by the Remuneration Committee against budgeted outcomes before granting bonuses.

	Bonus	% of possible bonus earned	% of possible bonus forfeited	% of compensation for the year consisting of performance based bonuses
	$	%	%	%
B W Ridgeway	60,000	60%	40%	11%
G E Weston	60,000	100%	0%	13%
D J Loughlin	47,250	100%	0%	11%
P A Evans	50,000	100%	0%	12%

Value of options issued to Directors and Senior Managers

The following table discloses the value of options granted, exercised or lapsed during the year:

	Options Granted	Options Exercised (i)	Options Lapsed	Total value of options granted, exercised and lapsed	Number of options vested in the current year	Value of options included in remunerati on during the year(ii)	Percentage of remuneration for the year that consisted of options
	Value at grant date	Value at exercise date	Value at lapsing date
	$	$	$	$	Number	$	%
I F Burston	-	-	-	-	-	176,000	68%
B W Ridgeway	-	-	-	-	2,000,000	5,152	1%
G E Weston	209,667	810,000	-	1,019,667	1,000,000	20,206	4%
D J Loughlin	-	-	-	-	166,667	139,750	31%
P A Evans	83,667	-	-	83,667	100,000	78,217	19%

(i) On 26 October 2008 Mr G Weston exercised 500,000 options. The options exercised were issued as part of Staff Options Tranche 1 and are exercisable at $0.20 each. These options had a fair value of $1.62 each at the date of exercise. No amounts were paid by Mr G Weston when these options were granted. These options carry no performance criteria and are subject to a service period only. For more details on options held by Senior Managers refer to Note 29.

(ii) The total value of options included in remuneration for the year is calculated in accordance with Accounting Standard AASB 2 “Share Based Payments”. These non-cash numbers include a portion of the value of options issued in prior periods that are being expensed in the current period to recognise the progressive vesting of these options.

Imdex 2008 Annual Report | 41

IMDEX LIMITED

and its controlled entities

DIRECTORS ’ REPORT FOR THE YEAR ENDED 30 JUNE 2008

Share options granted to Directors and Senior Managers

During or since the end of the financial year an aggregate of 700,000 options were granted to the following executives of the Group. None of these options had vested at 30 June 2008. No options were issued to Directors in the current year. Options are issued for no consideration and none were forfeited. There is no policy in place limiting the risk of exposure to the securities in respect of the recipient of options.

of options.
Name	Number of options granted	Applicable tranche	Fair value at date of issue	Grant Date	Expiry Date	Terms	Issuing entity	Number of ordinary shares under option
G E Weston	500,000	Staff Share Options $3.00	$0.42	28 Mar 08	27 Mar 13	Exercisable in 1/3 lots on the anniversary date of issue	Imdex Limited	500,000
P A Evans	200,000	Staff Share Options $3.00	$0.42	28 Mar 08	27 Mar 13	Exercisable in 1/3 lots on the anniversary date of issue	Imdex Limited	200,000

(g) Share options

(i) Share options on issue at the date of this report

Details of unissued shares or interests under option are:

Issuing Entity	Class of option	Class of shares	Exercise price of option	Issue date of option	Expiry date of option	Key terms of option	Number of shares under option
Imdex Limited	Staff Share Options	Ordinary	300 cents	28 Mar 2008	27 Mar 2013	(aa)	4,815,000
Imdex Limited	Staff Share Options	Ordinary	180 cents	18 Oct 2007	17 Oct 2012	(aa)	500,000
Imdex Limited	Staff Share Options	Ordinary	180 cents	12 Jun 2007	11 Jun 2012	(aa)	625,000
Imdex Limited	Staff Share Options	Ordinary	100 cents	23 Feb 2007	22 Feb 2012	(aa)	3,513,667
Imdex Limited	Staff Share Options	Ordinary	75 cents	23 Feb 2007	22 Feb 2012	(aa)	700,000
Imdex Limited	Staff Share Options	Ordinary	35 cents	1 Feb 2006	31 Jan 2011	(aa)	1,792,872
Imdex Limited	Staff Share Options	Ordinary	20 cents	1 Aug 2004	31 Jul 2009	(aa)	1,168,333
Imdex Limited	Managing Director Options	Ordinary	30 cents	15 Sep 2005	14 Sep 2010	(bb)	2,000,000
Imdex Limited	Chairman’s Options	Ordinary	75 cents	19 Oct 2006	18 Oct 2011	(bb)	1,000,000

(aa) exercisable one year after the date of issue, in one-third lots each year thereafter.

(bb) exercisable at any point from 2 years after date of issue until expiry.

The holders of these options do not have the right, by virtue of the option, to participate in any share issue or interest issue of the Company or of any other body corporate or registered scheme.

Imdex 2008 Annual Report | 42

and its controlled entities

IMDEX LIMITED

DIRECTORS ’ REPORT FOR THE YEAR ENDED 30 JUNE 2008

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(ii) Share options exercised during or since the end of the financial year

Issuing Entity	Class of option	Class of shares	Exercise price of option	Issue date of option	Expiry date of option	Number of shares issued
Imdex Limited	Staff Share Options	Ordinary	20 cents	1 Aug 2004	31 Jul 2009	922,168
Imdex Limited	Staff Share Options	Ordinary	35 cents	1 Feb 2006	31 Jan 2011	326,998
Imdex Limited	Staff Share Options	Ordinary	100 cents	23 Feb 2007	22 Feb 2012	436,333

No options were exercised by Directors in the current year.

(h) Principal Activities

The Group’s principal continuing activities during the course of the financial year were manufacturing and sale of a range of drilling products.

(i) Review of Operations

A review of the operations for the financial year together with future prospects is contained in the Chairman’s Report, the Managing Director’s Review and the Financial Report.

(j) Dividends

A fully franked interim dividend of 1.75 cents per ordinary share was paid on 25 March 2008 to shareholders registered on 7 March 2008. A fully franked final dividend of 1.5 cents per ordinary share was paid on 2 November 2007 to shareholders registered on 15 October 2007. In the prior year a fully franked interim dividend of 1 cent per ordinary share was paid on 26 March 2007 to shareholders registered on 13 March 2007. Since 30 June 2008 the Directors have declared a fully franked final dividend of 2.25 cents per ordinary share, the financial effect of which has not been reflected in the Financial Report.

(k) Changes in State Of Affairs

During the financial year the Group acquired three drilling fluids businesses and one down hole instrumentation business. The drilling fluids businesses acquired were Suay Energy Services LLP, Poly-Drill Drilling Systems Ltd and Southernland SA. The down hole instrumentation business acquired was System Entwicklungs GmbH. In addition the Surtron Technologies business was disposed of. More details of these acquisitions and disposal are contained in notes 26 and 28 respectively.

Other than the above, there were no significant changes in the state of affairs of the Group.

Imdex 2008 Annual Report | 43

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IMDEX LIMITED

and its controlled entities

DIRECTORS ’ REPORT FOR THE YEAR ENDED 30 JUNE 2008

(l) Subsequent Events

On 1 July 2008, $500,000 cash was paid and 168,530 fully paid Imdex Limited ordinary shares were issued to acquire the remaining 25% of the issued share capital of Suay Energy Services LLP. Refer note 26(d).

On 31 July 2008 Imdex Limited paid the next deferred settlement instalment of GBP 1,090,000 (A$2,271,000) due to the vendors of Imdex Technology UK Limited (formerly Chardec Technology Limited).

Subsequent to year end the Directors declared a 2.25 cent per share fully franked dividend with an entitlement date of 17 October 2008 and a payment date of 31 October 2008. The effect of this dividend has not been reflected in this financial report.

(m) Future Developments

Disclosure of information regarding likely developments in the operations of the Group in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the Group. Accordingly, this information has not been disclosed in this report.

(n) Environmental Regulations

The only entity in the Group that is subject to environmental regulations is Samchem Drilling Fluids and Chemicals (Pty) Ltd. They are required to comply with the South African National Water Act, Act No 36 of 1998 which requires the management of effluent discharge. This is controlled through an effluent pit system using an oil separator. No known environmental breaches have occurred in relation to the Group’s operations.

(o) Non-audit services

Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in Note 6 to the Financial Report.

The Directors are satisfied that the provision of non-audit services, during the year, by the auditor (or by another person or firm on the auditor’s behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

The Directors are of the opinion that the services as disclosed in Note 6 to the financial statements do not compromise the external auditor’s independence, based on advice received from the Audit and Compliance Committee, for the following reasons:

All non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor, and
None of the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.

Imdex 2008 Annual Report | 44

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IMDEX LIMITED

and its controlled entities

DIRECTORS ’ REPORT FOR THE YEAR ENDED 30 JUNE 2008

(p) Auditor’s Independence Declaration

The auditor’s independence declaration is included on page 13 of the Annual Report.

(q) Indemnification of Officers and Auditors

During the financial year, the Company paid a premium in respect of a contract insuring the Directors of the Company, the Company Secretary, and all Executive Officers of the Company and of any related body corporate against a liability incurred as such a Director, Secretary or Executive Officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor.

(r) Rounding Off of Amounts

The Company is a Company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the Directors’ report and the financial report are rounded off to the nearest thousand dollars.

Signed in accordance with a resolution of the Directors made pursuant to S.298(2) of the Corporations Act 2001.

On behalf of the Directors

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----- Start of picture text -----

Mr I F Burston
Chairman
----- End of picture text -----

Mr Ian Burston

Chairman

PERTH, Western Australia, 15 August 2008.

Imdex 2008 Annual Report | 45

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Imdex 2008 Annual Report | 46

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Imdex 2008 Annual Report | 47

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Imdex 2008 Annual Report | 48

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IMDEX LIMITED

and its controlled entities

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;
(b) in the Directors’ opinion, the attached financial statements and notes thereto are in accordance 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 Company and the Group; and
(c) the Directors have been given the declarations required by s.295A of the Corporations Act 2001.

At the date of this declaration, the Company is within the class of companies affected by ASIC Class Order 98/1418. The nature of the deed of cross guarantee is such that each company which is party to the deed guarantees to each creditor payment in full of any debt in accordance with the deed of cross guarantee.

In the Directors’ opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC Class Order applies, as detailed in note 25 to the financial statements will, as a group, be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee.

Signed in accordance with a resolution of the Directors made pursuant to s.295(5) for the Corporations Act 2001.

Dated at Perth, 15 August 2008.

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Ian F Burston Chairman

Imdex 2008 Annual Report | 49

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IMDEX LIMITED

and its controlled entities

CORPORATE GOVERNANCE STATEMENT

(a) ASX Governance Principles and ASX Recommendations

The Australian Stock Exchange Corporate Governance Council sets out best practice recommendations, including corporate governance practices and suggested disclosures. ASX Listing Rule 4.10.3 requires companies to disclose the extent to which they have complied with the ASX recommendations and to give reasons for not following them.

Unless otherwise indicated the best practice recommendations of the ASX Corporate Governance Council, including corporate governance practices and suggested disclosures, have been adopted by the Company for the full year ended 30 June 2008. In addition, the Company has a Corporate Governance section on its website: www.imdexlimited.com (under the “Investor” heading) which includes the relevant documentation suggested by the ASX Recommendations.

The extent to which Imdex has complied with the ASX Recommendations during the year ended 30 June 2008, and the main corporate governance practices in place are set out below.

(b) Principle 1: Lay solid foundation for management and oversight

The Board has implemented a Board Charter that formalises the functions and responsibilities of the Board. The Charter is published on the Company’s website.

(c) Principle 2: Structure the Board to add value

Imdex’s Board structure is consistent with the ASX Recommendations on Principle 2, with the exception that it does not have a separate nomination committee for the reasons detailed below.

(i) Board Structure

The Board consists of a Non Executive Chairman, three Non Executive Directors and one Executive Director. Of the five Board members, four are considered independent.

In accordance with the Company’s Constitution the minimum number of Directors is three. There is no maximum number, although it would be expected that the optimal number of Directors would be five or six.

The names of the Directors of the Company in office at the date of this Statement are set out in the Directors’ Report and further details concerning the skills, experience, expertise and term of office of each Director is set out in the Director’s Profiles in the first section of the Annual Report.

(ii) Board Independence

Directors are expected to bring independent judgement to the decision making of the Board. To facilitate this, each Director has the right to seek independent legal advice at the Group’s expense with the prior approval of the Chairman, which may not be unreasonably withheld.

In assessing Director independence, materiality has been determined from both a quantitative and qualitative perspective. An amount of over 5% of turnover is considered material. Similarly, a transaction of any amount, or a relationship, is deemed material if knowledge of it impacts, or may impact, the Shareholders’ understanding of the Director’s performance. The Board has conducted a review of each Director’s independence and reports as follows:

Director	Assessment	Existence of any matters contained in ASX Recommendation 2.1 affecting Independence
Mr I F Burston, Non Executive Chairman	Independent	Nil
Mr B W Ridgeway, Managing Director	Not Independent	Managing Director
Mr R W Kelly, Non Executive Director	Independent	Nil
Mr K A Dundo, Non Executive Director	Independent	Nil
Mr M Lemmel, Non Executive Director	Independent	Nil

Imdex 2008 Annual Report | 50

IMDEX LIMITED

and its controlled entities

CORPORATE GOVERNANCE STATEMENT

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(iii) Board Nomination

The Board does not have a separate nomination committee and, given the Company’s size, does not intend to form such a committee. However, the composition of the Board is determined using the following principles:

The Board should comprise a majority of independent, Non Executive Directors with a broad range of experience, skills and expertise;
The Chairman of the Board should be an independent, Non Executive Director; and
The roles of the Chairman and the Managing Director should not be exercised by the same individual.

(iv) Procedure for the selection and appointment of new Directors to the Board

The Company has published on its website, procedures for the selection and appointment of new Directors to the Board. The Company also has terms and conditions which govern the appointment of Non Executive Directors. These are subject to the Company’s Constitution and the Corporations Act 2001, and cover: appointment, retirement, Corporate Governance, remuneration, Board meetings, and Board Committees.

The Board does not impose on Directors an arbitrary time limit on their tenure. Under the Company’s Constitution and the ASX Listing Rules however, each Director must retire by rotation within a three year period following their appointment. In such cases, the Director’s nomination for re-election should be based on performance and the needs of the Company.

(d) Principle 3: Promote ethical and responsible decision-making

(i) Code of Conduct

The Company has developed a Code of Conduct that applies to all employees, officers and Directors of the Company. The Code addresses matters relevant to the Company’s legal and other obligations to its Shareholders and covers: the way in which we must discharge our duties; compliance with laws; conflicts of interest; confidentiality; insider trading; the use of the Company’s resources and the environment, health and safety.

The Code is published on the Company’s website.

(ii) Share Trading Policy

The Board has developed a Share Trading Policy that restricts Directors and Senior Management to trading in the Company’s shares during the one month periods following the annual and half yearly results announcements and the Annual General Meeting.

At all other times the Chairman must be approached, prior to trading, to determine whether trading at that particular time is appropriate.

The Policy also reminds other staff of the laws applying to insider trading and stipulates that employees must not engage in short term trading of Imdex’s shares.

Each of the Directors has signed an agreement requiring them to provide immediate notification to the Company of any changes in securities held, or controlled, by the Director. The Company makes an immediate notification to the ASX providing details of any changes in a Director’s shareholding.

The Policy is published on the Company’s website.

(e) Principle 4: Safeguard integrity in financial reporting

(i) Statement by the Managing Director and Chief Financial Officer

The Managing Director and the Chief Financial Officer have signed a declaration to the Board attesting to the fact that the 2008 Annual Financial Report presents a true and fair view, in all material respects, of the Company’s financial condition and operational results and are in accordance with relevant accounting standards.

Imdex 2008 Annual Report | 51

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IMDEX LIMITED

and its controlled entities

CORPORATE GOVERNANCE STATEMENT

(ii) The Audit and Compliance Committee

The Audit and Compliance Committee consists of three independent Non Executive Directors and operates under a formal charter approved by the Board. The Charter is published on the Company’s website.

The Committee is chaired by an independent Chairperson who is not the Chairman of the Board of Directors.

The role of the Committee is to advise on the establishment and maintenance of a framework of internal control, risk management protocols, appropriate ethical standards for the management of the Company and to approve the annual internal audit plan. It also gives the Board assurance regarding the quality and reliability of financial information prepared for use by the Board in determining policies for inclusion in Financial Statements.

The members of the Audit Committee during the year and at the date of this Statement were:

Mr K A Dundo (Chairman); Mr I F Burston; and, Mr R W Kelly.

The experience and qualifications of each committee member is set out in the Directors’ Profiles in the first section of the Annual Report. The Company Secretary acts as secretary of this Committee.

The Group Risk Manager, external auditors, the Managing Director and the Chief Financial Officer are invited to Audit Committee meetings at the discretion of the Committee. The Audit Committee met three times during the year as set out in the Directors’ Report.

(iii) External Auditors

The Board reviews the performance, skills, cost and other matters when assessing the appointment of external auditors. This review is generally undertaken at the completion of the preparation of the Annual Financial Report and involves discussions with the auditors and the Group's senior management. Information concerning the selection and appointment of external auditors is published on the Company’s website.

The external auditors are invited to attend the Annual General Meeting of the Company and be available to answer questions from Shareholders.

(iv) Internal Audit

The Group has an independent internal audit function that reports directly to the Audit and Compliance Committee. The conduct and independence of the internal audit function are governed by the Internal Audit Charter which is approved by the Audit and Compliance Committee. The annual work plan of the internal audit function is approved annually by the Audit and Compliance Committee.

(f) Principle 5: Make timely and balanced disclosure

(i) Continuous disclosure policies and procedures

The Company has developed procedures to ensure that it complies with the disclosure requirements of the ASX Listing Rules. The procedures are published on the Company’s website.

The procedures set out who is responsible for determining whether information is of a type or nature that requires disclosure, the Boards role in reviewing the information disclosed to ASX and the procedures for ensuring that the information is released to ASX.

All information disclosed to the ASX is published on the Company’s website as soon as practicable.

(g) Principle 6: Respect the rights of Shareholders

Shareholders Communications Strategy: The Board aims to ensure that Shareholders are informed of all major developments affecting the Group 's state of affairs. Information is communicated to Shareholders through:

(i) the Annual Report distributed to all Shareholders (unless a Shareholder has specifically requested not to receive the Report). The Board ensures that the Annual Report includes relevant information about the operations of the Group during the year, changes in the state of affairs of the Group and details of future developments, in addition to the other disclosures required by the Corporations Act 2001;

(ii) the Half-Yearly Report which contains summarised financial information and a review of the operations of the Group during the period. Half-Year Financial Report prepared in accordance with the requirements of Accounting Standards and the Corporations Act 2001 are lodged with the Australian Securities & Investments Commission and the Australian Stock Exchange. The Half-Year Financial Report is sent to any Shareholder who requests them;

(iii) regular reports released through the ASX and the media;

(iv) proposed major changes in the Group, which may impact on share ownership rights are submitted to a vote of Shareholders; and

Imdex 2008 Annual Report | 52

IMDEX LIMITED

and its controlled entities

CORPORATE GOVERNANCE STATEMENT

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(v) the Board encourages full participation by Shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the Group's strategy and goals. Important issues are presented to the Shareholders as single resolutions. The Shareholders are responsible for voting on the re-appointment of Non Executive Directors.

Further information concerning the Company and the full text of the various announcements and reports referred to above are available on the Company’s website: www.imdexlimited.com. Further information can also be obtained by emailing the Company at: [email protected] and Shareholders may register on the Company’s website to receive automatic notification of ASX announcements.

The auditor is also invited to the Company’s Annual General Meetings and is available to answer Shareholders questions concerning the conduct of the audit.

The Company’s Shareholder Communications Strategy is published on the Company’s website.

(h) Principle 7: Recognise and manage risk

(i) Risk oversight and management policies

The Board has sought to minimise the business' risks by focusing on the Company's core business, making changes as outlined in the Chairman’s Report and the Managing Director’s Report. The Board is responsible for ensuring that the Company’s risk management systems are adequate and operating effectively.

The Company has an independent internal audit function that operates under a Charter approved by the Audit and Compliance Committee. One of the tasks of the internal audit function is to review and evaluate the Company’s and Group’s risk management and internal control processes on a continuous basis.

The risk management policy is published on the Company’s website.

(ii) Statement by the Managing Director and Chief Financial Officer

The Managing Director and the Chief Financial Officer have signed a declaration to the Board attesting to the fact that the integrity of Financial Reports are founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board, and that the system is operating efficiently and effectively in all material respects.

(i) Principle 8: Encourage enhanced performance

(i) Performance evaluation of the Board, its Committees, individual Directors and key executives

There is an informal process in place to enable the Chairman to discuss and evaluate with each Director their contribution to the Board and to enable that Director to comment on all facets of the operation of the Board. A formal performance evaluation of the Board was not conducted during the year.

Given the Company’s size, the Board considers that this process is adequate and does not envisage forming a Nomination Committee to perform this function or to formalise the performance evaluation process.

All other Executives, and all staff of the Company, are subject to formal annual reviews of their performance as set out in the Directors’ Report.

The description of the process for performance evaluation is published on the Company’s website.

(j) Principle 9: Remunerate fairly and responsibly

(i) Company’s remuneration policies

Details on the remuneration of Directors and Executives are set out in Note 32. The Company’s remuneration policies are set out in the Remuneration Report contained in the Directors Report.

Imdex 2008 Annual Report | 53

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IMDEX LIMITED

and its controlled entities

CORPORATE GOVERNANCE STATEMENT

(ii) Remuneration Committee

The Remuneration Committee consists of three Non Executive Directors and assists the Board in determining executive remuneration policy, determining the remuneration of Executive Directors and reviewing and approving the remuneration of senior management.

The members of the Committee during the year and at the date of this Statement were:

Mr R W Kelly (Chairman); Mr I F Burston; and, Mr K A Dundo.

The experience and qualifications of each committee member is set out in the Directors’ Profiles in the first section of the Annual Report.

The Remuneration Committee Charter is published on the Company’s website.

(iii) Non Executive Director’s remuneration

The terms and conditions governing the remuneration of Non Executive Director’s are set out in their appointment letter.

All Non Executive Directors are remunerated by way of fixed cash fees. Non Executive Directors are not provided with retirement benefits other than statutory superannuation. The maximum total remuneration payable to Non Executive Directors was approved by Shareholders at the 2006 Annual General Meeting and is currently $500,000.

(k) Principle 10: Recognise the legitimate interests of stakeholders

(i) Code of Conduct

As set out in Principle 3 above, the Company has developed and published to its website a Code of Conduct.

Imdex 2008 Annual Report | 54

IMDEX LIMITED and its controlled entities INCOME STATEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE Notes Continuing operations Revenue from sale of goods, rendering of services and operating lease rental Other revenue from operations Total revenue 4 Other income 4 Raw materials and consumables used 4 Employee benefit expense 4 Depreciation expense 4 Amortisation expense 4 Finance costs 4 Other expenses 4 Profit before tax Income tax expense 5 Profit from continuing operations Profit from discontinued operations 28 Profit for the year Attributable to: Equity holders of the parent Minority interest Earnings per share Continuing operations: Basic earnings per share (cents) 20 Diluted earnings per share (cents) 20 Basic earnings per share (cents) 20 Diluted earnings per share (cents) 20 Continuing and discontinued operations:	2008 Year Ended Year Ended Year Ended Year Ended 30 June 2008 30 June 2007 30 June 2008 30 June 2007 $’000 $’000 $’000 $’000 142,009 103,849 - 22,503 1,900 900 3,338 2,849 Consolidated Company
	143,909 104,749 3,338 25,352
	369 1,597 27,474 8,084 (59,589) (51,403) - (7,202) (22,996) (10,950) (5,720) (3,646) (3,266) (3,207) (198) (2,269) (6,055) (3,430) - - (2,762) (2,736) (1,575) (1,543) (17,725) (16,505) (4,474) (5,691)
	31,885 18,115 18,845 13,085
	(10,804) (6,165) (2,520) (3,219)
	21,081 11,950 16,325 9,866
	10,921 1,568 - -
	32,002 13,518 16,325 9,866
	31,966 13,518 16,325 9,866 36 - - -
	11.22 7.72 10.79 7.09 17.04 8.74 16.38 8.00

The Income Statement should be read in conjunction with the accompanying notes.

Imdex 2008 Annual Report | 55

IMDEX LIMITED
and its controlled entities
BALANCE SHEET
AS AT 30 JUNE 2008
		Consolidated		Company
		30 June 2008 30 June 2007		30 June 2008 30	June 2007
	Notes	$’000	$’000	$’000	$’000
Current Assets
Cash and Cash Equivalents	30	13,276	15,271	869	962
Trade and Other Receivables	7	32,079	27,806	2,401	10,213
Inventories	8	21,716	13,839	-	2,085
Other Financial Assets	9	13,237	11,556	13,237	11,556
Other	10	1,200	224	20	49
		81,508	68,696	16,527	24,865
Non Current Assets Classified as Held for Sale	11	4,500	4,500	4,500	4,500
Total Current Assets		86,008	73,196	21,027	29,365
Non Current Assets
Other Financial Assets	9	-	-	71,022	43,959
Property, Plant and Equipment	12	7,140	13,207	522	4,886
Goodwill	13	52,626	35,033	-	-
Other Intangible Assets	14	27,289	27,746	-	429
Other	10	-	664	-	664
Total Non Current Assets		87,055	76,650	71,544	49,938
Total Assets		173,063	149,846	92,571	79,303
Current Liabilities
Trade and Other Payables	15	16,522	16,741	1,811	5,570
Borrowings	16	15,703	11,881	9,000	2,685
Current Tax Payables	5	8,792	8,913	2,643	5,450
Provisions	17	972	1,212	245	265
Total Current Liabilities		41,989	38,747	13,699	13,970
Non Current Liabilities
Borrowings	16	19,849	28,556	8,000	10,064
Deferred Tax Liabilities	5	5,024	5,481	273	796
Provisions	17	558	448	128	116
Total Non Current Liabilities		25,431	34,485	8,401	10,976
Total Liabilities		67,420	73,232	22,100	24,946
Net Assets		105,643	76,614	70,471	54,357
Equity
Contributed Capital	18	64,883	60,982	64,883	60,982
Foreign Currency Translation Reserve	19	(4,863)	(2,137)	-	-
Employee Equity-Settled Benefits Reserve	19	2,573	751	2,573	751
Retained Profits/(Accumulated Losses)		43,050	17,018	3,015	(7,376)
Total Equity		105,643	76,614	70,471	54,357

IMDEX LIMITED and its controlled entities

BALANCE SHEET AS AT 30 JUNE 2008

The Balance Sheet should be read in conjunction with the accompanying notes.

Imdex 2008 Annual Report | 56

IMDEX LIMITED
and its controlled entities
STATEMENT OF CHANGES
FOR THE FINANCIAL YEAR
CONSOLIDATED
Notes
Balance at 1 July 2006
Exchange differences on
translation of foreign operations
after taxation
19
Net income recognised directly in
equity
Profit for the period
Total recognised income and
expense for the period
Dividend paid
Share based payments
19
Issue of equity securities for
working capital
18
Issue of equity securities on
conversion of debt
18
Issue of equity securities on
purchase of entity
18
Share issue costs (net of tax)
18
Issue of shares under staff option
plan
18
Deferred consideration - mandatory
convertible capital
18
Balance at 30 June 2007
Exchange differences on
translation of foreign operations
after taxation
19
Net income recognised directly in
equity
Profit for the period
Total recognised income and
expense for the period
Dividend paid
Share based payments
19
Issue of shares as part
consideration for the acquisition of
Poly-Drill
18
Issue of shares as part
consideration for the acquisition of
Southernland
18
Tax effect of prior period share
issue costs
18
Issue of shares under staff option
plan
18
Balance at 30 June 2008

IN EQUITY
ENDED 30 JUNE 2008
$'000
$'000
$'000
$'000
$'000
$'000
26,490
-
(494)
105
6,552
32,653
-
-
(1,643)
-
-
(1,643)
-
-
(1,643)
-
-
(1,643)
-
-
-
-
13,518
13,518
-
-
-
-
13,518
13,518
-
-
-
-
(3,052)
(3,052)
-
-
-
728
-
728
16,500
-
-
-
-
16,500
10,400
-
-
-
-
10,400
200
-
-
-
-
200
(510)
-
-
-
-
(510)
1,202
-
-
(82)
-
1,120
-
6,700
-
-
-
6,700
54,282
6,700
(2,137)
751
17,018
76,614
-
-
(2,726)
-
-
(2,726)
-
-
(2,726)
-
-
(2,726)
-
-
-
-
31,966
31,966
-
-
-
-
31,966
31,966
-
-
-
-
(5,934)
(5,934)
-
-
-
2,025
-
2,025
1,750
-
-
-
-
1,750
1,387
-
-
-
-
1,387
(113)
-
-
-
-
(113)
877
-
-
(203)
-
674
58,183
6,700
(4,863)
2,573
43,050
105,643
Fully Paid
Ordinary
Shares
Mandatory
Convertible
Capital
Total
Attributable to
Equity
Holders of the
Entity
Foreign
Currency
Translation
Reserve
Employee
Equity-
Settled
Benefits
Reserve
Retained
Earnings

The Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Imdex 2008 Annual Report | 57

IMDEX LIMITED
and its controlled entities
STATEMENT OF CHANGES		IN EQUITY
FOR THE FINANCIAL YEAR		ENDED	30 JUNE	2008
		Fully Paid	Mandatory	Foreign	Employee	Retained	Total
		Ordinary	Convertible	Currency	Equity-	Earnings /	Attributable to
		Shares	Capital	Translation	Settled	(Accumulated	Equity
				Reserve	Benefits	Losses)	Holders of the
					Reserve		Entity
COMPANY	Notes	$'000	$'000	$'000	$'000	$'000	$'000
Balance at 1 July 2006		26,490	-	-	105	(14,190)	12,405
Profit for the period		-	-	-	-	9,866	9,866
Total recognised income and
expense for the period		-	-	-	-	9,866	9,866
Dividend paid		-	-	-	-	(3,052)	(3,052)
Share based payments	19	-	-	-	728	-	728
Issue of equity securities for
working capital	18	16,500	-	-	-	-	16,500
Issue of equity securities on
conversion of debt	18	10,400	-	-	-	-	10,400
Issue of equity securities on
purchase of entity	18	200	-	-	-	-	200
Share issue costs (net of tax)	18	(510)	-	-	(82)	-	(592)
Issue of shares under staff option
plan	18	1,202	-	-	-	-	1,202
Deferred consideration - mandatory
convertible capital	18	-	6,700	-	-	-	6,700
Balance at 30 June 2007		54,282	6,700	-	751	(7,376)	54,357
Profit for the period		-	-	-	-	16,325	16,325
Total recognised income and
expense for the period		-	-	-	-	16,325	16,325
Dividend paid		-	-	-	-	(5,934)	(5,934)
Share based payments	19	-	-	-	2,025	-	2,025
Issue of shares as part
consideration for the acquisition of
Poly-Drill	18	1,750	-	-	-	-	1,750
Issue of shares as part
consideration for the acquisition of
Southernland	18	1,387	-	-	-	-	1,387
Tax effect of prior period share
issue costs	18	(113)	-	-	-	-	(113)
Issue of shares under staff option
plan	18	877	-	-	(203)	-	674
Balance at 30 June 2008		58,183	6,700	-	2,573	3,015	70,471

IMDEX LIMITED

and its controlled entities

STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2008

The Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Imdex 2008 Annual Report | 58

IMDEX LIMITED
and its controlled entities
CASH FLOW STATEMENT
FOR THE FINANCIAL YEAR ENDED 30	JUNE 2008
		Consolidated Consolidated		Company Company
		Year Ended Year Ended	Year Ended Year Ended	Year Ended Year Ended	Year Ended Year Ended
		30 June 2008 30 June 2008	30 June 2007 30 June 2007	30 June 2008 30 June 2008	30 June 2007 30 June 2007
	Notes Notes	$’000 $’000	$’000 $’000	$’000 $’000	$’000 $’000
Cash Flows From Operating Activities
Receipts from customers		154,253 154,253	128,311 128,311	- -	18,124 18,124
Payments to suppliers and employees		(126,292) (126,292)	(105,170) (105,170)	(7,565) (7,565)	(12,583) (12,583
Intercompany management fees received		- -	- -	4,665 4,665	1,363 1,363
Intercompany dividend received		- -	- -	3,378 3,378	3,000 3,000
Interest and other costs of finance paid		(2,342) (2,342)	(1,490) (1,490)	(1,562) (1,562)	(1,022) (1,022
Income tax paid		(15,362) (15,362)	(5,392) (5,392)	(8,907) (8,907)	(3,241) (3,24
Net cash provided by / (used in) Operating Activities	30(c) 30(c)	10,257 10,257	16,259 16,259	(9,991) (9,991)	5,641 5,64
Cash Flows From Investing Activities
Interest and bill discounts received		451 451	267 267	212 212	217 217
Payment for property, plant and equipment		(4,803) (4,803)	(5,733) (5,733)	(42) (42)	(3,358) (3,358
Proceeds from sale of property, plant and equipment		1,138 1,138	710 710	- -	2,886 2,886
Proceeds from Rashid Trading Establishment		- -	1,121 1,121	- -	1,121 1,12
Payment for development costs capitalised	14 14	- -	(429) (429)	- -	(429) (429
Payment for shares of Flexit net of cash acquired	26(f) 26(f)	- -	(10,274) (10,274)	- -	-
Payment for shares of Reflex net of cash acquired	26(g) 26(g)	- -	(15,194) (15,194)	- -	-
Payment for shares of Imdex Technology net of cash acquired	26(h) 26(h)	(5,088) (5,088)	(6,352) (6,352)	- -	-
Payment for shares of Poly-Drill net of cash acquired	26(b) 26(b)	(899) (899)	(352) (352)	(1,571) (1,571)	(352) (352
Payment for shares of Suay net of cash acquired	26(c), (d) 26(c), (d)	(246) (246)	(306) (306)	(246) (246)	(306) (306
Payment for shares of Southernland net of cash acquired	26(e) 26(e)	(1,446) (1,446)	- -	(1,533) (1,533)	-
Payment for shares of SEG net of cash acquired	26(a) 26(a)	(13,853) (13,853)	- -	- -	-
Proceeds on the sale of Surtron net of cash disposed	28 28	18,000 18,000	- -	19,873 19,873	-
Payment for the acquisition of patent		- -	(328) (328)	- -	(328) (328
Amounts advanced to Sino Gas & Energy Ltd		- -	(11,307) (11,307)	- -	(11,307) (11,307
Amounts repaid by Sino Gas & Energy Ltd		- -	200 200	- -	200 200
Net cash provided by / (used in) Investing Activities		(6,746) (6,746)	(47,977) (47,977)	16,693 16,693	(11,656) (11,656
Cash Flows From Financing Activities
Advances from / (to) Controlled Entities		- -	- -	(5,443) (5,443)	(20,444) (20,444
Proceeds from issue of equity securities	18 18	- -	16,500 16,500	- -	16,500 16,500
Payment for share issue costs	18 18	- -	(729) (729)	- -	(729) (729
Cash received on exercise of options		674 674	1,120 1,120	674 674	1,120 1,120
Dividend paid to equity holders of the parent	21 21	(5,934) (5,934)	(3,052) (3,052)	(5,934) (5,934)	(3,052) (3,052
Hire purchase and lease payments		(888) (888)	(1,801) (1,801)	(89) (89)	(721) (72
Payment for interest rate cap		(239) (239)	- -	(239) (239)	-
Payment of convertible note interest		(464) (464)	- -	(464) (464)	-
Proceeds from borrowings		12,000 12,000	33,890 33,890	12,000 12,000	18,000 18,000
Repayment of borrowings		(9,983) (9,983)	(5,700) (5,700)	(7,300) (7,300)	(5,700) (5,700
Net cash provided by / (used in) Financing Activities		(4,834) (4,834)	40,228 40,228	(6,795) (6,795)	4,974 4,974
Net Increase / (Decrease) in Cash and Cash Equivalents
Held		(1,323) (1,323)	8,510 8,510	(93) (93)	(1,041) (1,04
Cash and Cash Equivalents At The Beginning Of The Financial
Year	30(a) 30(a)	15,271 15,271	6,421 6,421	962 962	2,003 2,003
Effects of exchange rate changes on the balance of cash and
cash equivalents held in foreign currencies		(672) (672)	340 340	- -	-
Cash and Cash Equivalents At The End Of The Financial
Year	30(a) 30(a)	13,276 13,276	15,271 15,271	869 869	962 962

The Cash Flow Statement should be read in conjunction with the accompanying notes.

Imdex 2008 Annual Report | 59

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IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

1 Adoption of New and Revised Accounting Standards

In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period. The adoption of these new and revised Standards and Interpretations has resulted in a change to the Company’s and the Group’s disclosures in the following areas:

AASB 7 ‘Financial Instruments: Disclosures’ and consequential amendments to other accounting standards resulting from its issue;
AASB 2005-10 ‘Amendments to Australian Accounting Standards’; and
Interpretation 10 ‘Interim Financial Reporting and Impairment’

Changes in disclosures around financial instruments and the objectives, policies and processes for managing capital

The Australian Accounting Standards Board first released AASB 7 ‘Amendments to Australian Accounting Standards’ in August 2005. AASB 7 was represented in October 2007 to take into account amendments made to this standard by other standards since its original issue in August 2005. Changes made to this standard expand the disclosures required in relation to the Company’s and the Group’s financial instruments and the objectives, policies and processes for managing capital.

The Australian Accounting Standards Board released AASB 2005-10 ‘Amendments to Australian Accounting Standards’ in September 2005. These amendments arise from the release in August 2005 of AASB 7 ‘Financial Instruments: Disclosures’.

The changes introduced by AASB 7 and AASB 2005-10 are applied by the Company and the Group with effect from the beginning of the comparative reporting period presented in this financial report (i.e. with effect from 1 July 2006). The application of this represented standard only affects disclosures made and has no impact on the financial results presented in these financial statements.

Interim Financial Reporting and Impairment

The Australian Accounting Standards Board released Interpretation 10 ‘Interim Financial Reporting and Impairment’ in September 2006. This interpretation clarifies the period end accounting treatment of impairment losses that were recognised in interim periods.

Interpretation 10 is applicable to annual reporting periods beginning on or after 1 November 2006. The adoption of this Interpretation has had no impact on these financial statements.

Imdex 2008 Annual Report | 60

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

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1 Adoption of New and Revised Accounting Standards

Standards and Interpretations in issue but not yet effective

At the date of authorisation of the financial report, the following Standards and Interpretations were in issue but not yet effective:

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----- Start of picture text -----

Standard / Interpretation Effective Date
----- End of picture text -----

	Standard / Interpretation	Effective Date

	AASB 101 ‘Presentation of Financial Statements’ (revised September 2007)	Effective for annual reporting periods beginning on or after 1 January 2009
	AASB 8 ‘Operating Segments’ and consequential amendments to other accounting standards resulting from its issue	Effective for annual reporting periods beginning on or after 1 January 2009
	AASB 123 ‘Borrowing Costs’ revised	Effective for annual reporting periods beginning on or after 1 January 2009
	Interpretation 12 ‘Service Concession Arrangements’	Effective for annual reporting periods beginning on or after 1 January 2008
	Interpretation 13 ‘Customer Loyalty Programmes’	Effective for annual reporting periods beginning on or after 1 July 2008
	Interpretation 14 ‘Limit on a defined benefit asset, Minimum Funding Requirements and their Interaction’	Effective for annual reporting periods beginning on or after 1 January 2008
	AASB 2008-1 ‘Amendments to Australian Accounting Standard – Share-based Payments: Vesting Conditions and Cancellations’	Effective for annual reporting periods beginning on or after 1 January 2009
	AASB 2008-2 ‘Amendments to Australian Accounting Standards – Puttable Financial Instruments and Obligations arising on Liquidation’	Effective for annual reporting periods beginning on or after 1 January 2009
	AASB 2008-3 ‘Amendments to Australian Accounting Standards arising from AASB 3 and AASB 127’	Effective for annual reporting periods beginning on or after 1 July 2009
	IFRS 3 ‘Business Combinations’	Effective for annual reporting periods beginning on or after 1 July 2009
	IAS 27 ‘Separate and Consolidated Financial Statements’	Effective for annual reporting periods beginning on or after 1 July 2009

The application of AASB 8, AASB 123, IFRS 3, IAS 27, AASB 101, AASB 2008-1 and AASB 2008-3 are not expected to have a material effect on any of the amounts recognised in the financial statements, but may change the disclosures presently made in relation to the Company’s and the Group’s assets, liabilities and segments. The circumstances addressed by Interpretations 12, 13, 14 and AASB 2008-2 do not have application to the business of the Company or Group. These Standards and Interpretations will be first applied in the financial report of the Group that relates to the annual reporting period beginning after the effective date of each pronouncement.

The initial application of the expected issue of an Australian equivalent accounting standard to the following standard is not expected to have a material impact on the financial report of the Group and the Company:

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----- Start of picture text -----

Expected Standard / Interpretation Effective Date
----- End of picture text -----

Expected Standard / Interpretation	Effective Date
Improvements to IFRS’s (2008)	Effective for annual reporting periods beginning on or after 1 January 2009
Amendments to IFRS 1 ‘First-time Adoption of International Financial Reporting Standards’ and IAS 27 ‘Consolidated and Separate Financial Statements – Cost of Investment in a subsidiary, Jointly Controlled Entity or Associate’	Effective for annual reporting periods beginning on or after 1 January 2009
IFRIC 15 ‘Agreements for the Construction of Real Estate’	Effective for annual reporting periods beginning on or after 1 January 2009
IFRIC 16 ‘Hedges of a Net Investment in a Foreign Operation’	Effective for annual reporting periods beginning on or after 1 October 2008

Imdex 2008 Annual Report | 61

and its controlled entities

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IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

2 Summary of Significant Accounting Policies

The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001 and Accounting Standards and Interpretations and complies with other requirements of the law. Accounting Standards include Australian equivalents to International Financial Reporting Standards (‘A-IFRS’). Compliance with the A-IFRS ensures that the consolidated financial statements and notes of the Company and the Group comply with International Financial Reporting Standards (‘IFRS’).

The financial report includes the separate financial statements of the Company and the consolidated financial statements of the Group.

The financial statements were authorised for issue by the directors on 15 August 2008.

(a) Basis of preparation

The Financial Report has been prepared on the basis of historical cost except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

The Company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.

The following significant accounting policies have been adopted in the preparation and presentation of the Financial Report:

(b) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, cash in banks and investments in money market instruments, net of outstanding bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.

(c) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:

(i) where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or

(ii) for receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.

(d) Goodwill

Goodwill acquired in a business combination is initially measured at its cost, being the excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. Goodwill is subsequently measured at its cost less any impairment losses.

For the purpose of impairment testing goodwill is allocated to each of the Group’s cash-generating units (CGU’s), or groups of CGU’s, expected to benefit from the synergies of the business combination. CGU’s (or groups of CGU’s) to which goodwill has been allocated are tested for impairment annually, or more frequently if events or changes in circumstances indicate that goodwill might be impaired.

If the recoverable amount of the CGU (or group of CGU’s) is less than the carrying amount of the CGU (or groups of CGU’s), the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU (or groups of CGU’s) and then to the other assets of the CGU (or groups of CGU’s) pro-rata on the basis of the carrying amount of each asset in the CGU (or groups of CGU’s). An impairment loss recognised for goodwill is recognised immediately in profit or loss and is not reversed in a subsequent period

On disposal of an operation within a CGU, the attributable amount of goodwill is included in the determination of the profit or loss on disposal of the operation.

Imdex 2008 Annual Report | 62

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

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2 Summary of Significant Accounting Policies (continued)

(e) Inventories

Inventories are valued at the lower of cost and net realisable value. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to inventory on hand by the method most appropriate to each particular class of inventory, with the majority being valued on a first in first out basis. Net realisable value represents the estimated selling price less all estimated costs of completion and costs necessary to make the sale.

(f) Property, plant and equipment

Plant and equipment, leasehold improvements and equipment under finance lease are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition.

Depreciation is calculated on a straight line basis in order to write off the net cost of each asset over its expected useful life to its estimated residual value. Leasehold improvements and assets held under finance lease are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight line method. The estimated useful lives, residual values and depreciation method is reviewed at the end of each annual reporting period, with the effect of any changes recognised on a prospective basis.

The gain or loss arising on disposal of retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

The annual depreciation rates used for each class of assets are as follows:

Plant and equipment:	10% to 40%
Equipment rented to third parties:	10% to 40%
Equipment under finance lease:	13% to 22.5%

(g) Share-based payments

Equity-settled share-based payments with employees and others providing similar services are measured at the fair value of the equity instrument at the grant date. Fair value is measured by the use of the Black-Scholes Model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. Further details on how the fair value of equity-settled share-based transactions has been determined can be found in note 33.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest.

At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss over the remaining vesting period, with a corresponding adjustment to the employee equity-settled benefits reserve.

(h) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) (referred to as ‘the Group’ in these financial statements). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Imdex 2008 Annual Report | 63

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

2 Summary of Significant Accounting Policies (continued)

(i)

Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of the business combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under AASB 3 ‘Business Combinations’ are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

(j) Borrowing costs

Borrowing costs are expensed as incurred.

(k) Foreign currency

The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in Australian dollars, which is the functional currency of the Group, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognised in profit or loss in the period in which they arise except for exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned or likely to occur, which form part of the net investment in a foreign operation, and which are recognised in the foreign currency translation reserve and recognised in profit or loss on disposal of the net investment.

On consolidation, the assets and liabilities of the Group’s foreign operations (including comparatives) are translated into Australian dollars at exchange rates prevailing on the balance sheet date. Income and expense items (including comparatives) are translated at the average exchanges rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group’s translation reserve. Such exchange differences are recognised in profit or loss in the period in which the foreign operation is disposed.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity on or after the date of transition to A-IFRS are treated as assets and liabilities of the foreign entity and translated at exchange rates prevailing at the reporting date. Goodwill arising on acquisitions before the date of transition to A-IFRS is treated as an Australian dollar denominated asset.

(l) Derivative financial instruments

The Group enters into derivative financial instruments to manage its exposure to interest rate risk. This risk is primarily managed through the use of an interest rate cap. Further details of derivative financial instruments are disclosed in note 31 to the financial statements.

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in the profit or loss immediately. The Group has not designated any financial instruments as being hedge accounted.

(i) Embedded derivatives

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of host contracts and the host contracts are not measured at fair value with changes in fair value recognised in profit or loss.

Imdex 2008 Annual Report | 64

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

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2 Summary of Significant Accounting Policies (continued)

(m) Financial assets

Investments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs except for those financial assets classified as ‘at fair value through the profit or loss’ which are initially measured at fair value. Subsequent to initial recognition, investments in subsidiaries are measured at cost.

Other financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’, ‘held-tomaturity’ investments, ‘available-for-sale’ financial assets, and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

(i) Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period.

Income is recognised on an effective interest rate basis for debt instruments other than those financial assets ‘at fair value through profit or loss’.

(ii) Held-to-maturity investments

Bills of exchange and debentures with fixed or determinable payments and fixed maturity dates where the Group has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortised cost using the effective interest method less impairment, with revenue recognised on an effective yield basis.

(iii) Financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss where the financial asset:

Has been acquired principally for the purpose of selling in the near future;
Is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or
Is a derivative that is not designated and effective as a hedging instrument.

Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset.

(iv) Available-for-sale financial assets

Available-for-sale assets are stated at fair value. Gains and losses arising from changes in fair value are recognised directly in the investments revaluation reserve with the exception of impairment losses, interest calculated using the effective interest rate method and foreign exchange gains and losses on monetary assets which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the investments revaluation reserve is included in profit or loss for the period.

The fair value of available-for-sale monetary assets held in a foreign currency is determined in that foreign currency and translated at the spot rate at reporting date. The change in fair value attributable to translation differences that results from a change in amortised cost of the asset is recognised in profit or loss, and other changes are recognised in equity.

(v) Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest rate method less impairment. Interest is recognised by applying the effective interest rate.

(vi) Impairment of financial assets

Financial assets other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying value of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying value is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of available-for-sale instruments, any subsequent increase in fair value after an impairment loss is recognised directly in equity.

Imdex 2008 Annual Report | 65

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

2 Summary of Significant Accounting Policies (continued)

(m) Financial assets (continued)

(vi) Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risk and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

(n) Financial instruments issued by the Company

(i) Debt and equity instruments

Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual arrangement. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs. (ii) Financial liabilities

Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or other financial liabilities.

(iii) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised through profit or loss incorporates any interest paid on the financial liability.

A financial liability is held for trading if:

it has been incurred principally for the purpose of repurchasing in the near future; or
it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or
it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading is designated as ‘at fair value through profit or loss’ upon initial recognition if:
such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally or on that basis; or
it forms part of a contract containing one or more embedded derivatives, and AASB139 ‘Financial Instruments: Recognition and Measurement’ permits the entire combined contract (asset or liability) to be designated as ‘at fair value through profit or loss’.

(iv) Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Imdex 2008 Annual Report | 66

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

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2 Summary of Significant Accounting Policies (continued)

(o) Intangible assets

(i) Intangible assets acquired in a business combination

All intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their value can be measured reliably. Identifiable intangible assets comprise intellectual property, technology, contracts, customers, development costs and trade marks. These are recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight line basis over their estimated useful lives. The estimated useful life and amortisation method is reviewed at the end of each annual reporting period.

Estimated useful lives are as follows:

ul lives are as follows:
Intellectual property	indefinite
Technology	5-10 years
Contracts	5 years
Customers	5-6 years
Trade Marks and Brand Names	5-6 years

Intellectual property recognised by the Company has an indefinite useful life and is not amortised. Each period, the useful life of this asset is reviewed to determine whether events and circumstances continue to support an indefinite useful life assessment for the asset. Such assets are tested for impairment in accordance with the policy stated in note 2(t).

(ii) Research and development costs

Expenditure on research activities is recognised as an expense in the period in which it is incurred. Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period as incurred. An intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following are demonstrated:

the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its development.

Capitalised development costs are stated at cost less accumulated amortisation and impairment, and are amortised on a straight-line basis over their useful life of 5 years, commencing on commercialisation of the underlying projects.

(p) Taxation

(i) Current tax

Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).

Imdex 2008 Annual Report | 67

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

2 Summary of Significant Accounting Policies (continued)

(p) Taxation (continued)

(ii) Deferred tax

Deferred tax is accounted for using the balance sheet liability method. Temporary differences are differences between the tax base of an asset or liability and its carrying amount in the balance sheet. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) that affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, branches, associates and joint ventures except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with these investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company/Group intends to settle its current tax assets and liabilities on a net basis.

(iii) Current and deferred tax for the period

Current and deferred tax is recognised as an expense or income in the income statement, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess.

(iv) Tax consolidation

The Company and all its wholly-owned Australian resident entities are part of a tax-consolidated group under Australian taxation law. Imdex Limited is the head entity in the tax-consolidated group. Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences in the members of the tax-consolidated group are recognised in the separate financial statements of the members of the tax-consolidated group using the ‘separate taxpayer within group’ approach by reference to the carrying amounts in the separate financial statements of each entity and the tax values applying under tax consolidation. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and relevant tax credits of the members of the tax-consolidated group are recognised by the Company (as head entity in the tax-consolidated group). Due to the existence of a tax funding arrangement between the entities in the tax-consolidated group, amounts are recognised as payable to or receivable by the Company and each member of the group in relation to the tax contribution amounts paid or payable between the parent entity and the other members of the taxconsolidated group in accordance with the arrangement. Further information about the tax funding arrangement is detailed in note 5 to the financial statements. Where the tax contribution amount recognised by each member of the tax-consolidated group for a particular period is different to the aggregate of the current tax liability or asset and any deferred tax asset arising from unused tax losses and tax credit in respect of that period, the difference is recognised as a contribution from (or distribution to) equity participants.

Imdex 2008 Annual Report | 68

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

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2 Summary of Significant Accounting Policies (continued)

(q) Leased assets

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

(i) Group as Lessor

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease.

(ii) Group as Lessee

Assets held under finance leases are initially recognised at their fair value or, if lower, at amounts equal to the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on borrowing costs.

Finance leased assets are amortised on a straight line basis over the estimated useful life of the asset.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(iii) Lease incentives

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefits of incentives are recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(r) Revenue

Revenue is measured at the fair value of the consideration received or receivable.

(i) Sale of goods

Revenue from the sale of goods is recognised when all the following conditions are satisfied:

the Group has transferred to the buyer the significant risks and rewards of ownerships of the goods;
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction will flow to the entity; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
(ii) Rendering of services

Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract.

(iii) Royalties

Royalty revenue is recognised on an accrual basis in accordance with the substance of the relevant agreement.

(iv) Dividend and interest revenue

Dividend revenue from investments is recognised when the shareholders right to receive payment has been established. Interest revenue is accrued on a time basis, by reference to the principle outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

(v) Operating lease income

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.

Imdex 2008 Annual Report | 69

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

2 Summary of Significant Accounting Policies (continued)

(s) Employee benefits

(i) Provisions

Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured reliably.

Provisions made in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Provisions made in respect of employee benefits which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date.

(ii) Defined contribution plans

Contributions to defined contribution superannuation plans are expensed when incurred.

(t) Impairment of other tangible and intangible assets

At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cashgenerating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately.

(u) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive), as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cashflows estimated to settle the present obligation, its carrying amount is the present value of those cashflows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be measured reliably.

(v) Non-current assets held for sale

Non-current assets (and disposal groups) classified as held for sale are measured, with certain exceptions, at the lower of carrying amount and fair value less costs to sell.

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual or customary for such a sale and the sale is highly probable. The sale of the asset (or disposal group) must be expected to be completed within one year from the date of classification, except in the circumstances where sale is delayed by events or circumstances outside the Group’s control and the Group remains committed to a sale.

Imdex 2008 Annual Report | 70

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

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3 Critical Accounting Judgements and Key Sources of Estimation Uncertainty

In the application of the Group’s accounting policies, which are described in note 2, management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgements. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the entity’s accounting policies

Management have not made any significant critical judgements in the process of applying the Group’s accounting policies.

Key sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

Value of Shares

Note 11 describes the investment held in Sino Gas & Energy Ltd (SGE). Australian Accounting Standards require this investment to be held at the lower of carrying value and fair value less costs to sell. In making the assessment of which value is the lower, the Directors have had to make estimates of the fair value of this investment and the expected costs to sell. The Directors have estimated this investment to have a fair value in excess of its carrying value of $4,500,000 at 30 June 2008. (2007: $4,500,000)

The fair value of this listed investment has been determined using the Directors' best estimate. The Directors have estimated the fair market value by having regard to share placements previously made by SGE, the results of exploration activity to date, discussions with potential investors and having regard to the fact that SGE is an unlisted entity and the shares held in SGE can not be readily traded on any share market.

Value of Intangibles

Notes 14 and 26 describe intangibles that have arisen on business combinations during the current year. The Directors have engaged independent valuation professionals to identify and value such intangibles. The valuers have used industry accepted valuation techniques such as the relief-from-royalty, multi-period excess earnings and replacement cost methodologies as appropriate to value these assets. Data inputs into these models are derived largely from internal management budgets. Should actual financial results differ from managements budgeted expectations, this would have a consequent effect on the value of intangibles.

Value of Goodwill

Notes 13 and 26 describe the goodwill that has arisen on business combinations in the current year. Goodwill acquired in a business combination is initially measured at its cost, being the excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. Goodwill is subsequently measured at its cost less any impairment losses.

Any change in the value of the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised would have had a consequent impact on the carrying value of goodwill at the time of initial recognition. Goodwill is impairment tested annually.

Impairment of Goodwill and Intangibles

Determining whether goodwill and intangibles are impaired requires an estimation of the value in use of the cash-generating units to which goodwill and intangibles are attributable. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. No impairment losses have been booked in the current or prior years. Refer notes 13 and 14.

Imdex 2008 Annual Report | 71

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
4 Profit from Operations
	Consolidated		Company
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
(a) Revenue from operations
Revenue from continuing and discontinued operations consisted of
the following items:
Revenue from continuing operations
Revenue from the sale of goods	118,109	82,244	-	10,002
Revenue from the rendering of services	-	2,059	-	-
Operating rental income	23,900	19,546	-	12,501
Interest income - bank deposits	451	267	211	217
Interest income - other loans and receivables	1,449	633	3,127	2,632
	143,909	104,749	3,338	25,352
Revenue from discontinuing operations
Revenue from the rendering of services	6,584	14,591	-	-

	150,493	119,340	3,338	25,352
(b) Profit before income tax
Other than as disclosed on the face of the income statement, profit
before income tax has been arrived at after crediting / (charging) the
following gains and losses from continuing and discontinued
operations:
(Loss) / gain on disposal of property, plant and equipment (i)	91	76	-	2,200
Foreign exchange (loss)	(407)	(372)	(266)	(953)
	(316)	(296)	(266)	1,247
(i) In the prior year the Company sold some items of plant and
equipment to a subsidiary company. This profit is eliminated on
consolidation.
Gains attributable to:
Continuing operations	91	76	-	2,200
Discontinued operations	-	-	-	-
	91	76	-	2,200
Losses attributable to:
Continuing operations	(407)	(364)	(266)	(953)
Discontinued operations	-	(8)	-	-
	(407)	(372)	(266)	(953)
	(316)	(296)	(266)	1,247
Loans and receivables (including cash and cash equivalents)
Interest revenue	1,900	900	3,338	2,849
Exchange gain/(loss)	(305)	(185)	(266)	(185)
	1,595	715	3,072	2,664
Financial liabilities at amortised cost
Interest expense	2,822	2,868	1,575	1,532
Exchange gain/(loss)	(102)	(187)	-	(768)
	2,720	2,681	1,575	764
	4,315	3,396	4,647	3,428

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

4 Profit from Operations

Imdex 2008 Annual Report | 72

IMDEX LIMITED and its controlled entities NOTES TO THE FINANCIAL REPORT 4 Profit from Operations (continued) Profit before income tax has been arrived at after charging the following items of income and expense. The line items below combine amounts attributable to both continuing and discontinued operations: Other income Gain on disposal of property, plant and equipment Gain on disposal of subsidiary Management fees from Subsidiaries Dividends from Subsidiaries Amounts received from Rashid Trading Establishment (i) Other revenue (i) Prior year income of $1,121,000 comprises $812,000 in full recovery of a loan considered to have been impaired at 30 June 2006 and $309,000 for the sale of the Company's remaining 20% interest in Imdex Arabia previously carried in the Company's books at nil. No further amounts remain outstanding from Rashid Trading Establishment. Depreciation and amortisation of Non Current Assets Depreciation of property, plant and equipment (note 12) Amortisation of intangible assets (note 14) Depreciation and amortisation attributable to Continuing operations Discontinued operations Finance costs Interest on hire purchase liabilities Interest on convertible note Interest on deferred acquisition consideration Interest on commercial bills Interest on bank loan Interest on overdraft Other interest Finance costs - attributable to Continuing operations Discontinued operations Other expenses Commissions Consultancy fees Legal and professional expenses (i) Foreign exchange loss Rent and premises costs Repairs and maintenance Travel and accommodation Motor vehicle costs Other expenses	2008 2007 2008 2007 $’000 $’000 $’000 $’000 91 76 - 2,200 - - 17,245 - - - 6,671 1,363 - - 3,379 3,000 - 1,121 - 1,121 278 400 179 400 Consolidated Company
	369 1,597 27,474 8,084
	3,733 4,368 198 2,269 6,055 3,430 - -
	9,788 7,798 198 2,269
	9,321 6,637 198 2,269 467 1,161 - -
	9,788 7,798 198 2,269
	66 225 3 57 - 464 - 464 404 707 - - 1,487 923 1,487 923 744 350 - - - 18 - 11 121 199 85 88
	2,822 2,886 1,575 1,543
	2,762 2,736 1,575 1,543 60 150 - -
	2,822 2,886 1,575 1,543
	1,425 1,650 - 49 2,026 1,834 305 338 1,742 618 990 447 407 372 266 953 2,244 1,489 172 473 214 1,511 5 982 3,450 2,186 514 437 1,374 1,167 100 198 5,5579,304 2,122 1,814
	18,439 20,131 4,474 5,691

(i) Includes legal, audit, accounting, share registry and corporate secretarial fees.

Imdex 2008 Annual Report | 73

and its controlled entities

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
4 Profit from Operations (continued)
	Consolidated		Company
	2008	2007	2008	2007
	$’000	$’000	$’000	$’000
Employee benefits expense
Post-employment benefits:
Defined contribution superannuation costs	807	426	204	74
Share based payments:
Equity-settled share based payments	2,025	728	2,025	728
Other employee benefits	20,768	14,938	3,491	2,844
	23,600	16,092	5,720	3,646
Employee benefits expense attributable to
Continuing operations	22,996	10,950	5,720	3,646
Discontinued operations	604	5,142	-	-
	23,600	16,092	5,720	3,646
Cost of sales	63,119	53,618	-	7,202
Cost of sales attributable to
Continuing operations	59,589	51,403	-	7,202
Discontinued operations	3,530	2,215	-	-
	63,119	53,618	-	7,202
Movement in provision for doubtful debts	198	173	(71)	(43)
Movement attributable to
Continuing operations	198	173	(71)	(43)
Discontinued operations	-	-	-	-
	198	173	(71)	(43)
Operating lease rental expense (minimum lease payments)	2,386	1,682	178	478
Operating lease rental expense attributable to
Continuing operations	2,203	1,571	178	478
Discontinued operations	183	111	-	-
	2,386	1,682	178	478

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

4 Profit from Operations (continued)

5 Income Taxes

(a) Income tax recognised in the income statement Tax expense comprises: Current tax expense Deferred tax expense relating to the origination and reversal of temporary differences (Over)/under provision per prior year Total tax expense Attributable to: Continuing operations Discontinued operations	2008 2007 2008 2007 $’000 $’000 $’000 $’000 15,483 9,924 2,736 3,297 (1,690) (2,727) 150 57 (563) (303) (366) (135) Consolidated Company
	13,230 6,894 2,520 3,219
	10,804 6,165 2,520 3,219 2,426 729 - -
	13,230 6,894 2,520 3,219

Imdex 2008 Annual Report | 74

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
5 Income Taxes (continued)
	Consolidated		Company
	2008	2007	2008		2007
	$’000	$’000	$’000		$’000
The prima facie income tax expense on pre-tax accounting profit
from operations reconciles to the income tax expense in the
financial statements as follows:
Profit from continuing operations	31,885	18,115	18,845		13,085
Profit from discontinued operations	13,347	2,297		-	-
Profit from operations	45,232	20,412	18,845		13,085
Income tax expense calculated at 30%	13,570	6,124	5,654		3,926
Tax benefit of losses not previously brought to account	-	(23)		-	-
Intercompany dividends received	-	-	(1,014)		(900)
Non-deductible share based payments	986	218		986	218
Additional provincial tax arising in a foreign jurisdiction	230	142		-	-
Non-deductible interest on deferred payments	121	212		-	-
Other non-deductible expenses	480	232		214	10
Tax rate differential arising from foreign entities	(171)	38		-	-
Capital losses utilised	(844)	-		(844)	-
Non-assessable income from sale of foreign subsidiary	(579)	-	(2,110)		-
Adjustments in respect of prior year deferred tax balances	-	254		-	100
(Over) / under provision of prior year income tax	(563)	(303)		(366)	(135)
	13,230	6,894	2,520		3,219

The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under Australian law. There has been no change in the corporate tax rate when compared with the previous reporting period.

(b) Income tax recognised directly in equity The following current and deferred amounts were charged directly to equity during the period: Current tax: Share issue expenses Deferred tax: Translation of foreign operations (c) Current tax assets and liabilities Current tax payable (d) Deferred tax balances Deferred tax assets comprise: Provisions Inventory Property, plant and equipment Accruals Foreign currency translation reserves Share issue expenses Deferred tax liabilities comprise: Property, plant and equipment Intangible assets Non-current assets classified as held for sale Net deferred tax balances Deferred tax: Share issue expenses deductible over five years	2008 2007 2008 2007 $’000 $’000 $’000 $’000 - (53) - (53) (54) (165) (54) (165) 473 (71) 473 - Consolidated Company
	419 (289) 419 (218)
	8,792 8,913 2,643 5,450
	108 304 - 86 - 125 - - 2,571 1,871 - - 400 518 110 175 755 282 727 - 150 204 150 203
	3,984 3,304 987 464
	(4) (4) - - (7,744) (7,521) - - (1,260) (1,260) (1,260) (1,260)
	(9,008) (8,785) (1,260) (1,260)
	(5,024) (5,481) (273) (796)

Unrecognised deferred tax assets:

The following have not been brought to account as assets:

Temporary differences relating to the translation of investments in subsidiary undertakings

950 427 - -

Imdex 2008 Annual Report | 75

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IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

5 Income Taxes (continued)

Tax Consolidation

Relevance of tax consolidation to the Group

Legislation to allow groups, comprising a parent entity and its Australian resident wholly-owned entities, to elect to consolidate and be treated as a single entity for income tax purposes was substantively enacted on 21 October 2002. The Company and its wholly-owned Australian resident entities are eligible to consolidate for tax purposes under this legislation and have elected to be taxed as a single entity from 1 July 2003. The head entity in the tax consolidated group for the purposes of the tax consolidation system is Imdex Limited.

Nature of tax funding arrangements and tax sharing agreements

Entities within the tax-consolidated group have entered into a tax funding and a tax-sharing agreement with the head entity. Under the terms of this agreement, Imdex Limited and each of the entities in the tax consolidated group has agreed to pay a tax equivalent payment to or from the head entity, based on the net accounting profit or loss of the entity and the current tax rate. Such amounts are reflected in amounts receivable from or payable to other entities in the tax consolidated group.

The tax sharing agreement entered into between members of the tax consolidated group provides for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations or if an entity should leave the tax consolidated group. The effect of the tax sharing agreement is that each member's liability for tax payable by the tax consolidated group is limited to the amount payable by the head entity under the tax funding arrangement.

The amount of contribution or distribution relating to tax consolidation in the current and prior year amounted to nil.

6 Remuneration of Auditors

Deloitte Touche Tohmatsu (Australia) Audit or review of the financial report Taxation services - mainly compliance work, transfer pricing and global restructuring advice Other non-audit services: Other consulting services Other non-audit services: A-IFRS assistance Deloitte Touche Tohmatsu (overseas affiliates) Audit or review of the financial report Taxation services - mainly compliance work, transfer pricing and global restructuring advice Other non-audit services: Other consulting services Other non-audit services: A-IFRS assistance Other auditors Audit or review of the financial report Other non-audit services: Accounting assistance and taxation advice	2008 2007 2008 2007 $ $ $ $ 164,443 175,715 164,443 175,715 287,356 251,549 287,356 251,549 34,650 - 34,650 - - - - - Consolidated Company
	486,449 427,264 486,449 427,264
	88,674 - - - 3,391 - - - 79,461 - - - - - - -
	171,526 - - -
	178,438 356,471 - - 112,315 78,814 - -
	290,753 435,285 - -

	948,728 862,549 486,449 427,264

Imdex 2008 Annual Report | 76

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

==> picture [69 x 71] intentionally omitted <==

7 Trade and Other Receivables

Notes Current Trade receivables (i) Allowance for doubtful debts (ii) Other receivables	2008 2007 2008 2007 $’000 $’000 $’000 $’000 31,669 27,966 2,006 10,173 (677) (479) - (71) Consolidated Company
	30,992 27,487 2,006 10,102 1,087 319 395 111
	32,079 27,806 2,401 10,213

(i) The average credit period on sales of goods is 60 days. Trade receivables are interest free. An allowance has been made for estimated irrecoverable amounts from the sale of goods and services, determined by reference to past default experience and specific knowledge of individual debtors circumstances.

individual debtors circumstances.
Ageing of past due but not impaired debtors 0 - 30 days past due 31 - 60 days past due 61 + days past due	3,006 2,798 128 27 2,636 1,561 - - 879 1,082 1,138 37
	6,521 5,441 1,266 64

The above analysis shows debtors that are past due at the end of the reporting date where no provision has been raised as the Group believes that the amounts are still considered recoverable. The Group does not hold any collateral over these balances.

(ii) Movement in the allowance for doubtful debts

(ii) Movement in the allowance for doubtful debts
Balance at the beginning of the year Amounts written off during the year Increase/(decrease) in allowance recognised in profit or loss Balance at the end of the year	479 306 71 114 - - - - 198 173 (71) (43)
	677 479 - 71

All impaired debtors are in excess of 90 days overdue.

In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.

8 Inventories

Current Raw materials - at cost Work in progress - at cost Finished goods - at cost	2008 2007 2008 2007 $’000 $’000 $’000 $’000 3,383 1,251 - - 797 51 - - 17,536 12,537 - 2,085 Consolidated Company
	21,716 13,839 - 2,085

Imdex 2008 Annual Report | 77

and its controlled entities

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL	REPORT
9 Other Financial Assets
		Consolidated		Consolidated		Company	Company
		2008		2008 2 07		2007 2 08	2008 2 07	2007
	Notes	Notes $’000	$’000 $’ 0			$’000 $’ 0	$’000 $’ 0	$’000
Current
Derivatives at fair value
Interest rate cap	(i)	(i) 229		229	-	- 229	229	-	-
Loans carried at amortised cost
Loan to Sino Gas & Energy Limited	(ii)	(ii) 13,008		13,008 11,556		11,556 3,008	13,008 11,556	11,556
		13,237		13,237 11,556		11,556 3,237	13,237 11,556	11,556
Non-current
Loans carried at amortised cost
Loans to Subsidiaries	(iii)	(iii)	-	-	-	- 60,382	60,382 41,258	41,258
Investments carried at cost
Investments in Subsidiaries			-	-	-	- 10,640	10,640 2,7 1	2,701
			-	-	-	- 71,022	71,022 43,959	43,959
(i) Effective 1 January 2008 Imdex Limited entered		into an interest	rate cap. This instrument			allows the interest paid on $10,000,000 of
debt to be capped at 7% per annum for	a period of 3 years. Refer note 31 for further disclosures around this and other financial
nstruments.
(ii) During the prior year the Group advanced A$5 million and US$5			million to SGE as		a short	term facility pending the finalisation of their
capital raising initiatives. Interest of $1.4 million was recognised in the profit and loss in the current year and $0.6 million in the prior
year. The funds advanced are secured by	a fixed and floating char		e over all the assets held by SGE. The loan bears interest at 13.5%

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

9 Other Financial Assets

(i) Effective 1 January 2008 Imdex Limited entered into an interest rate cap. This instrument allows the interest paid on $10,000,000 of debt to be capped at 7% per annum for a period of 3 years. Refer note 31 for further disclosures around this and other financial instruments.

(ii) During the prior year the Group advanced A$5 million and US$5 million to SGE as a short term facility pending the finalisation of their capital raising initiatives. Interest of $1.4 million was recognised in the profit and loss in the current year and $0.6 million in the prior year. The funds advanced are secured by a fixed and floating charge over all the assets held by SGE. The loan bears interest at 13.5% per annum and is repayable on the IPO of SGE. The loan carries the option for Imdex Limited to convert the loan balance into equity in SGE at market price.

As a result of the above and Imdex’s holding of 13.6% (2007: 13.6%), the Company has determined that it has significant influence. However, as the Company’s intention is to realise the value of the investment through sale and it meets the requirements of AASB 5: ‘Non-Current Assets Held for Sale and Discontinued Operations’ the investment is not within the scope of AASB 128: ‘Investments in Associates’. Accordingly, the investment has been classified as a non-current asset held for sale. Refer to Note 11.

(iii) Loans to Subsidiaries are repayable on demand. These loans carry no interest other than the loan to Samchem Drilling Fluids and Chemicals (Pty) Ltd and Imdex Sweden AB. The loan to Samchem carries interest at the South African prime overdraft rate (currently 15.5%) plus a 2% margin. The loan to Imdex Sweden carries interest at the Stockholm Interbank Offered Rate (currently 4.44%) plus a weighted average margin of 0.75%.

10 Other Assets

Current Prepayments Non-current Deferred acquisition costs Notes (i)	Notes 2008 2007 2008 2007 $’000 $’000 $’000 $’000 1,200 224 20 49 1,200 224 20 49 (i) - 664 - 664 - 664 - 664 Consolidated Company 2008 2007 2008 2007 $’000 $’000 $’000 $’000 1,200 224 20 49 1,200 224 20 49 - 664 - 664 - 664 - 664 Consolidated Company

(i) Comprises legal, consulting and other direct costs associated with acquisitions in progress at the period end. These costs were included in the relevant cost of investment on settlement.

Imdex 2008 Annual Report | 78

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

==> picture [69 x 71] intentionally omitted <==

11 Non-Current Assets Classified as Held for Sale

Notes Shares held for sale (i)	2008 2007 2008 2007 $’000 $’000 $’000 $’000 4,500 4,500 4,500 4,500 Consolidated Company

(i) The investment in SGE has been classified as a non-current asset held for sale as its carrying amount will be recovered principally through a sale transaction.

12 Property, Plant and Equipment

Consolidated Gross Carrying Value Balance at 30 June 2006 Additions Acquisitions through business combinations Disposals Net foreign currency exchange differences Balance at 30 June 2007 Additions Acquisitions through business combinations Disposals Disposal through sale of subsidiary Net foreign currency exchange differences Transfer Balance at 30 June 2008 Accumulated Depreciation Balance at 30 June 2006 Disposals Acquisitions through business combinations Depreciation expense Net foreign currency exchange differences Balance at 30 June 2007 Disposals Disposal through sale of subsidiary Acquisitions through business combinations Depreciation expense Net foreign currency exchange differences Transfer Balance at 30 June 2008 Net Book Value As at 30 June 2007 As at 30 June 2008	Plant and Equipment at cost Equipment Rented to Third Parties at cost Equipment under Hire Purchase at cost Capital Works in Progress at cost TOTAL $’000 $’000 $’000 $’000 $’000 10,485 5,640 1,937 164 18,226 3,341 3,057 37 387 6,822 654 2,726 77 - 3,457 (368) (1,634) (107) - (2,109) (109) (394) (4) (3) (510)
	14,003 9,395 1,940 548 25,886 3,420 1,281 - 517 5,218 561 - - - 561 (242) (2,143) (43) (4) (2,432) (10,739) - (1,584) (436) (12,759) (420) (201) (11) (36) (668) 425 (78) (282) (65) -
	7,008 8,254 20 524 15,806
	5,059 2,125 1,075 - 8,259 (298) (1,130) (47) - (1,475) 278 1,399 8 - 1,685 1,484 2,691 193 - 4,368 (28) (129) (1) -(158)
	6,495 4,956 1,228 - 12,679 (96) (1,283) (6) - (1,385) (5,149) - (1,085) - (6,234) 250 - - - 250 1,397 2,241 95 - 3,733 (134) (239) (4) - (377) 218 (4) (214) - -
	2,981 5,671 14 - 8,666
	7,508 4,439 712 548 13,207
	4,027 2,583 6 524 7,140

Imdex 2008 Annual Report | 79

and its controlled entities

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL	REPORT
12 Property, Plant and	Equipment (continued)
Company	Plant and	Equipment	Equipment under	Capital Works in	TOTAL
	Equipment at	Rented to Third	Hire Purchase at	Progress at cost
	cost	Parties at cost	cost
	$’000	$’000	$’000	$’000	$’000
Gross Carrying Value
Balance at 30 June 2006	1,186	5,640	48	(2)	6,872
Additions	499	3,228	5	21	3,753
Disposals	(55)	(1,595)	-	-	(1,650)
Balance at 30 June 2007	1,630	7,273	53	19	8,975
Additions	42	-	-	-	42
Transfer to subsidiary	(381)	(7,273)	(53)	(19)	(7,726)
Balance at 30 June 2008	1,291	-	-	-	1,291
Accumulated Depreciation
Balance at 30 June 2006	638	2,125	21	-	2,784
Disposals	(44)	(925)	5	-	(964)
Depreciation expense	200	2,063	6	-	2,269
Balance at 30 June 2007	794	3,263	32	-	4,089
Transfer to subsidiary	(223)	(3,263)	(32)	-	(3,518)
Depreciation expense	198	-	-	-	198
Balance at 30 June 2008	769	-	-	-	769
Net Book Value
As at 30 June 2007	836	4,010	21	19	4,886
As at 30 June 2008	522	-	-	-	522
		Consolidated		Company
		2008	2007	2008	2007
		$’000	$’000	$’000	$’000
Aggregate depreciation allocated, whether recognised as an
expense or capitalised as part of the carrying amount of other
assets during the year:
Plant and equipment		1,397	1,484	198	2,063
Plant and equipment rented to third parties		2,241	2,691	-	200
Equipment under hire purchase		95	193	-	6
		3,733	4,368	198	2,269

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

12 Property, Plant and Equipment (continued)

Imdex 2008 Annual Report | 80

IMDEX LIMITED and its controlled entities NOTES TO THE FINANCIAL REPORT 13 Goodwill Notes Gross Carrying Amount Balance at beginning of the financial year Recognised on acquisition of Suay Energy Services LLP (i) Recognised on acquisition of Poly-Drill Drilling Systems Ltd (ii) Recognised on acquisition of Southernland S.A. (iii) Recognised on acquisition of System Entwicklungs GmbH (v) Recognised on acquisition of Reflex Holding AB (iv) Recognised on acquisition of Imdex Technology UK Ltd (iv) Recognised on acquisition of Flexit AB (v) Effect of foreign exchange movements Balance at end of the financial year Accumulated Impairment Losses Balance at beginning of the financial year Impairment losses for the year Balance at end of the financial year Net Book Value At the beginning of the financial year At the end of the financial year Goodwill is allocated to cash-generating units as follows: Australian Mud Company Samchem Suay Energy Services Poly-Drill Drilling Systems Southernland Reflex / Imdex Technology Flexit / SEG	2008 2007 2008 2007 $’000 $’000 $’000 $’000 35,033 1,906 - - 1,266 - - - 3,369 - - - 2,413 - - - 10,499 - - - - 14,623 - - - 8,319 - - - 11,107 - - 46 (922) - - Consolidated Company
	52,626 35,033 - -
	- - - - - - - -
	- - - -
	35,033 1,906 - -
	52,626 35,033 - -
	- - 1,324 1,699 1,266 - 3,369 - 2,413 - 22,613 22,406 21,641 10,928 52,626 35,033

(i) Goodwill arose during the year on the acquisition of 75% of the issued share capital of Suay Energy Services LLP (Suay) by Imdex Limited effective 1 July 2007 and the remaining 25% of the issued share capital effective 30 June 2008. Refer notes 26(c) and 26(d). Suay is considered to be a separate cash generating unit since it operates independently from other Imdex operations in a separate geographical area being Kazakhstan and the surrounding Caspian Sea region. The recoverable amount of this goodwill has been determined based on a value in use calculation which uses a 6 year discounted cash flow projection based on the 2009 budget. The projection assumes no additional growth in the business beyond 2009. A discount rate of 12%, being the Imdex Group weighted average cost of capital has been used. Management believe that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the carrying amount to exceed its recoverable amount.

(ii) Goodwill arose during the year on the acquisition of Poly-Drill Drilling Systems Ltd (Poly-Drill) by Imdex Limited effective 1 July 2007. Refer note 26(b). Poly-Drill is considered to be a separate cash generating unit since it manufactures and sells products independently from other Imdex operations in a separate geographical area being Canada. The recoverable amount of this goodwill has been determined based on a value in use calculation which uses a 6 year discounted cash flow projection based on the 2009 budget. The projection assumes modest growth in revenue and cost of 10% and 5% per annum respectively for the first 3 years of the projection. A discount rate of 12%, being the Imdex Group weighted average cost of capital has been used. Management believe that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the carrying amount to exceed its recoverable amount.

(iii) Goodwill arose during the year on the acquisition of Southernland S.A. (Southernland) by Imdex South America S.A., a newly incorporated wholly owned subsidiary of Imdex Limited effective 1 July 2007. Refer note 26(d). Southernland is considered to be a separate cash generating unit since it manufactures and sells products independently from other Imdex operations in a separate geographical area being Latin America. The recoverable amount of this goodwill has been determined based on a value in use calculation which uses a 6 year discounted cash flow projection based on the 2009 budget. The projection assumes modest growth in revenue and costs of 10% and 5% per annum respectively for the first 2 years of the projection. A discount rate of 12%, being the Imdex Group weighted average cost of capital has been used. Management believe that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the carrying amount to exceed its recoverable amount.

Imdex 2008 Annual Report | 81

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
13 Goodwill
(iv) Goodwill arose during the prior year on the acquisition of 100% of the issued share capital of Reflex Holding AB (Reflex) (refer note
26(g)), and Imdex Technology UK Limited (ITU) (formerly Chardec Technology Ltd) (refer note 26(h)). These two operations are
considered to be a single cash generating unit as they were purchased in close succession to create a single vertically integrated
operation in the Down Hole Instrumentation division. They operate in the same business segment and geographical area and have the
same operational management and a high level of operational and financial interdependency. The recoverable amount of this goodwill
has been determined based on a value in use calculation which uses a 6 year discounted cash flow projection based on the 2009
budget. The projection assumes no additional growth in the business beyond 2009. A discount rate of 12%, being the Imdex Group
weighted average cost of capital has been used. Management believe that any reasonably possible change in the key assumptions on
which recoverable amount is based would not cause the carrying amount to exceed its recoverable amount.
(v) Goodwill arose during the current year on the acquisition of 100% of the issued share capital of System Entwicklungs GmbH (SEG)
(refer note 26(a)) and Flexit AB (Flexit) (refer note 26(f)) in the prior year. These two operations are considered to be a single cash
generating unit as they were purchased in close succession to create a single vertically integrated operation in the Down Hole
Instrumentation division. They operate in the same business segment and geographical area and have the same operational
management and a high level of operational and financial interdependency. The recoverable amount of this goodwill has been
determined based on a value in use calculation which uses a 6 year discounted cash flow projection based on the 2009 budget. The
projection assumes no additional growth in the business beyond 2009. A discount rate of 12%, being the Imdex Group weighted
average cost of capital has been used. Management believe that any reasonably possible change in the key assumptions on which
recoverable amount is based would not cause the carrying amount to exceed its recoverable amount.
The key assumptions used in the value in use calculations for the various significant cash generating units are as follows:
Budgeted sales growth Budgeted net margins Exchange rate fluctuations
Samchem CGU Sales growth has been budgeted in line with the expected increase in activity in the local industries serviced by Samchem. Net margins have been budgeted using the prior year actuals as a base on which operational improvements and economies of scale are expected to begained.
Suay CGU Sales growth has been budgeted in line with the expected increase in activity in the local industries serviced by Suay. Net margins have been budgeted using the prior year actuals as a base on which operational improvements and economies of scale are expected to begained.
Poly-Drill CGU Sales growth has been budgeted in line with the expected increase in activity in the local industries serviced by Poly-Drill as well as growth expected to arise from the global alliances. Net margins have been budgeted using the prior year actuals as a base on which operational improvements and economies of scale are expected to be gained. Southernland CGU Sales growth has been budgeted in line with the expected increase in activity in the local industries serviced by Southernland as well as growth expected to arise from the global alliances. Net margins have been budgeted using the prior year actuals as a base on which operational improvements and economies of scale are expected to be gained. Exchange rate fluctuation expectations have been built into the budget numbers based on standard forecast advice received from major lending institutions.
Reflex / ITU CGU Sales growth has been budgeted based on the expected activity levels in the global down hole tool market plus an increment for the market share expected to be gained from the release of new tools. Net margins have been budgeted using the prior year actuals as a base. In addition an increase is expected to arise from the release of new tools and the business model trend away from sales towards rentals.
Sales growth has been Net margins have been
budgeted based on the budgeted using the prior year
expected activity levels in the actuals as a base. In addition an
global down hole tool market increase is expected to arise
Flexit / SEG CGU plus an increment for the market from the release of new tools,
share expected to be gained the accessing of new markets
from the release of new tools and the business model trend
and the targeting of the oil & gas away from sales towards
market. rentals.

Imdex 2008 Annual Report | 82

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
14 Other Intangible Assets
Consolidated	Patents	Intellectual	Technology	Contract	Customer	Development		Trade	TOTAL
		Property	Based	Based	Based	Costs		Name
	$’000	$’000	$’000	$’000	$’000	$’000		$’000	$’000
Gross Carrying Value
Balance at 30 June 2006	-	1,313	-	-	-		-	-	1,313
Additions through business
combinations	755	-	14,937	425	9,781		-	4,470	30,368
Capitalised during the year	-	-	-	-	-	429		-	429
Impact of exchange rate
changes	-	(143)	(234)	-	(483)		-	(202)	(1,062)
Balance at 30 June 2007	755	1,170	14,703	425	9,298	429		4,268	31,048
Additions through business
combinations	6	1,505	-	890	2,996		-	251	5,648
Capitalised during the year	-	-	-	-	-		-	-	-
Impact of exchange rate
changes	-	(258)	46	-	99		-	42	(71)
Balance at 30 June 2008	761	2,417	14,749	1,315	12,393	429		4,561	36,625
Accumulated Amortisation
and Impairment
Balance at 30 June 2006	-	-	-	-	-		-	-	-
Amortisation expense	25	-	1,501	78	1,491		-	335	3,430
Impact of exchange rate
changes	-	-	(41)	-	(71)		-	(16)	(128)
Impairment losses	-	-	-	-	-		-	-	-
Balance at 30 June 2007	25	-	1,460	78	1,420		-	319	3,302
Amortisation expense	152	75	2,382	530	1,883		86	947	6,055
Impact of exchange rate
changes	-	-	(10)	-	(2)		-	(9)	(21)
Impairment losses	-	-	-	-	-		-	-	-
Balance at 30 June 2008	177	75	3,832	608	3,301		86	1,257	9,336
Net Book Value
As at 30 June 2007	730	1,170	13,243	347	7,878	429		3,949	27,746
As at 30 June 2008	584	2,342	10,917	707	9,092	343		3,304	27,289
Company
Gross Carrying Value
Balance at 30 June 2006	-	-	-	-	-		-	-	-
Additions through business
combinations	-	-	-	-	-		-	-	-
Capitalised during the year	-	-	-	-	-	429		-	429
Impact of exchange rate
changes	-	-	-	-	-		-	-	-
Balance at 30 June 2007	-	-	-	-	-	429		-	429
Transferred to subsidiary entity
	-	-	-	-	-	(429)		-	(429)
Balance at 30 June 2008	-	-	-	-	-		-	-	-
Accumulated Amortisation
and Impairment
Balance at 30 June 2006	-	-	-	-	-		-	-	-
Amortisation expense	-	-	-	-	-		-	-	-
Impairment losses	-	-	-	-	-		-	-	-
Balance at 30 June 2007	-	-	-	-	-		-	-	-
Amortisation expense	-	-	-	-	-		-	-	-
Impairment losses	-	-	-	-	-		-	-	-
Balance at 30 June 2008	-	-	-	-	-		-	-	-
Net Book Value
As at 30 June 2007	-	-	-	-	-	429		-	429
As at 30 June 2008	-	-	-	-	-		-	-	-

Imdex 2008 Annual Report | 83

and its controlled entities

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
14 Other Intangible Assets (continued)
Intellectual Property
Intellectual Property arose on the acquisition by Samchem Drilling Fluids & Chemicals (Pty) Ltd, a wholly owned subsidiary of Imdex
Limited, of the business of SA Mud Services (Pty) Ltd and a range of clay and cement chemical additive inventory items effective 1
August 2005.
Intellectual Property has an indefinite life due to the uniqueness of the manufacturing processes and products, high cost barriers to entry
and the dominant market share held. Intellectual Property is therefore subjected to annual impairment testing.
The recoverable amount has been determined based on a value in use calculation which uses a 6 year	discounted cash flow		projection
based on the 2009 budget. The projection assumes no additional growth in the business beyond 2009. A discount		rate of 12% has been
used. Management believe that any reasonably possible change in the key assumptions on which recoverable amount is based would
not cause the carrying amount to exceed its recoverable amount.
15 Trade and Other Payables
Consolidated	Company
2008 2007	2008		2007
Notes $’000 $’000	$’000		$’000
Trade payables (i) 9,836 12,290		207	3,562
Accruals and other payables 5,252 4,451		826	2,008
Due to the vendors of System Entwicklungs GmbH 26(a) 656 -		-	-
Due to the vendors of Suay Energy Services LLC 26(d) 778 -		778	-
16,522 16,741	1,811		5,570
(i)Tradepayablesareinterestfreeforperiodsrangingfrom30to180daysThereafterinterestisc	argedat	commercial	ratesThe

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

14 Other Intangible Assets (continued)

Intellectual Property

Intellectual Property arose on the acquisition by Samchem Drilling Fluids & Chemicals (Pty) Ltd, a wholly owned subsidiary of Imdex Limited, of the business of SA Mud Services (Pty) Ltd and a range of clay and cement chemical additive inventory items effective 1 August 2005.

Intellectual Property has an indefinite life due to the uniqueness of the manufacturing processes and products, high cost barriers to entry and the dominant market share held. Intellectual Property is therefore subjected to annual impairment testing.

The recoverable amount has been determined based on a value in use calculation which uses a 6 year discounted cash flow projection based on the 2009 budget. The projection assumes no additional growth in the business beyond 2009. A discount rate of 12% has been used. Management believe that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the carrying amount to exceed its recoverable amount.

15 Trade and Other Payables

(i) Trade payables are interest free for periods ranging from 30 to 180 days. Thereafter interest is charged at commercial rates. The consolidated entity has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.

16 Borrowings

Notes Current borrowings Secured At amortised cost Commercial bill (i) Bank loan (ii) Hire purchase liabilities (iii) 24 Other (iv) Unsecured At amortised cost Deferred acquisition payments (v) 34 Non-current borrowings Secured At amortised cost Commercial bills (i) Bank loan (ii) Hire purchase liabilities (iii) 24 Other (iv) Unsecured At amortised cost Deferred acquisition payments (v) 34	2008 2007 2008 2007 $’000 $’000 $’000 $’000 9,000 2,300 9,000 2,300 4,016 2,430 - - - 1,443 - 385 - 335 - - 2,687 5,373 - - Consolidated Company
	15,703 11,881 9,000 2,685
	8,000 10,000 8,000 10,000 9,132 12,710 - - - 964 - 64 - 167 - - 2,717 4,715 - -
	19,849 28,556 8,000 10,064

Imdex 2008 Annual Report | 84

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

==> picture [69 x 71] intentionally omitted <==

16 Borrowings (continued)

(i) Commercial bills bear interest at 9.7% per annum. The Group has an interest rate cap in operation that caps the maximum interest payable on $10,000,000 of this debt at 7% per annum, thereby reducing the effective interest rate on this debt to 8.1%. Refer note 31(g) for further details. On 31 December 2008 a bill of $7,000,000 is repayable. The remaining bills are repayable in quarterly instalments of $500,000 each with the final payment due in June 2013. The bills are secured by a Mortgage Debenture over all the assets and liabilities of Imdex Limited, Australian Mud Company Pty Ltd, Reflex Asia Pacific Pty Ltd, Imdex International Pty Ltd, Imdex Technology UK Limited and Samchem Drilling Fluids and Chemicals (Pty) Ltd.

(ii) This comprises of a loan of SEK 75,625,000 raised in the prior year. This loan bears interest at the 7 day Stockholm Interbank Offered Rate ('STIBOR'), currently 4.4% plus a weighted average margin of 1.96% per annum. The loan is repayable in quarterly instalments of SEK 5,775,000 until December 2009 when the instalments drop to SEK 4,400,000 per quarter. From December 2011 they drop further to SEK 1,650,000 per quarter until the loan is fully repaid in June 2013. The interest rate applicable at 30 June 2008 was 6.36% per annum. This loan is secured over the assets of the Reflex and Flexit companies that are domiciled in Sweden.

(iii) Hire purchase liabilities are secured over the assets to which they relate, the carrying value of which exceeds the value of the hire purchase liability. The Group does not hold title to the equipment under hire purchase pledged as security. The weighted average interest rate applicable to these liabilities in the prior year was 7.6%.

(iv) Other current and non-current loans comprise sundry advances from third party lenders.

(v) Deferred acquisition payments are those portions of the purchase price of recent acquisitions that are due in future periods. The cash components of these deferred amounts have been discounted to their present values using an interest rate of 8% per annum. For further details refer to notes 26(g) and (h).

(vi) A convertible note with a face value of $10,400,000 was issued on 1 August 2006 and carried interest at the rate of 8% per annum payable in arrears. The note carried the right to convert into 20.8 million fully paid ordinary Imdex shares at any time up to 1 August 2008. Conversion would be automatically triggered upon the Imdex share price reaching $1 per share. This condition was satisfied on 15 February 2007. Refer note 18 for details of shares issued. These shares were held in voluntary escrow until 1 August 2008.

17 Provisions

17 Provisions
		Consolidated		Company
		2008	2007	2008	2007
	Notes	$’000	$’000	$’000	$’000
Current provisions
Employee entitlements	(i)	972	1,212	245		265
Non-current provisions
Employee entitlements		558	448	128		116

(i) The majority of these entitlements are expected to be taken during the coming year. (2007: same)

Imdex 2008 Annual Report | 85

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
18 Contributed Capital
		Consolidated		Company
		2008	2007	2008	2007
	Notes	$’000	$’000	$’000	$’000
Issued and Paid Up Capital - Fully paid ordinary shares	(i)	58,183	54,282	58,183	54,282
Mandatory convertible capital	(ii)	6,700	6,700	6,700	6,700
		64,883	60,982	64,883	60,982
(i) Fully paid ordinary shares carry one vote per share and the right to dividends.
(ii) Mandatory Convertible Capital relates to the future issue	of 5 million fully paid ordinary shares as consideration for the acquisition of Flexit
AB. Refer to Note 26(f)
			Consolidated and	Company
		2008		2007
	Notes	Number	$'000	Number	$'000
Ordinary shares
Balance at beginning of the financial year		179,949,003	54,282	139,466,037	26,490
Issue of shares as part consideration for the acquisition of
Poly-Drill	26(b)	1,212,751	1,750	-	-
Issue of shares as part consideration for the acquisition of
Southernland	26(e)	723,679	1,387	-	-
Issued on conversion of debt instrument	16(vi)	-	-	20,800,000	10,400
Issue of equity securities as part of working capital raising
		-	-	15,000,000	16,500
Issue of shares as part consideration for the acquisition of
patent		-	-	155,039	200
Tax effect of share issue costs / Share issue costs (net of
tax)		-	(113)	-	(510)
Issue of shares under staff option plan		1,605,499	877	4,527,927	1,202
Closing balance at end of the financial year		183,490,932	58,183	179,949,003	54,282

Changes to the Corporations Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998. Therefore, the Company does not have a limited amount of authorised capital and issued shares do not have a par value.

Share options granted under the staff option scheme

In accordance with the provisions of the staff option scheme, as at 30 June 2008, executives, directors and staff have options over 16,194,872 ordinary shares (5,019,872 of which had vested), in aggregate. These options expire over a range of dates up to March 2013. As at 30 June 2007, executives, directors and staff have options over 13,080,406 ordinary shares (1,423,739 of which had vested), in aggregate. These options expire over a range of dates up to June 2012. Share options granted under the employee share option plan carry no rights to dividends and no voting rights.

Details of the Staff Option Plan can be found in note 33.

Imdex 2008 Annual Report | 86

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

==> picture [69 x 71] intentionally omitted <==

19 Reserves Notes Foreign Currency Translation Reserve Balance at beginning of the financial year Translation of foreign operations after taxation Balance at the end of the financial year	2008 2007 2008 2007 $’000 $’000 $’000 $’000 (2,137) (494) - - (2,726) (1,643) - - Consolidated Company
	(4,863) (2,137) - -

Balance at beginning of the financial year (2,137) (494) - Translation of foreign operations after taxation (2,726) (1,643) - Balance at the end of the financial year (4,863) (2,137) -	Balance at beginning of the financial year (2,137) (494) - Translation of foreign operations after taxation (2,726) (1,643) - Balance at the end of the financial year (4,863) (2,137) -	Balance at beginning of the financial year (2,137) (494) - Translation of foreign operations after taxation (2,726) (1,643) - Balance at the end of the financial year (4,863) (2,137) -	Balance at beginning of the financial year (2,137) (494) - Translation of foreign operations after taxation (2,726) (1,643) - Balance at the end of the financial year (4,863) (2,137) -	Balance at beginning of the financial year (2,137) (494) - Translation of foreign operations after taxation (2,726) (1,643) - Balance at the end of the financial year (4,863) (2,137) -	- - -
Exchange differences relating to the translation from the functional currencies of the Group's foreign controlled entities into Australian					dollars
are brought to account by entries made directly to the foreign currency translation reserve.			This reserve is shown net of deferred tax.
Employee Equity-Settled Benefits Reserve
Balance at beginning of the financial year		751	105	751	105
Options issued	4	2,025	728	2,025	728
Options exercised during the financial year		(203)	(82)	(203)	(82)
Balance at the end of the financial year		2,573	751	2,573	751

The employee equity-settled benefits reserve arises on the grant of share options to Directors and employees. Amounts are transferred out of the reserve and into issued capital when the options are exercised. Further information regarding the Staff Option Plan is contained in note 33.

20 Earnings Per Share

Basic earnings per share From continuing operations From discontinued operations Total basic earnings per share Diluted earnings per share From continuing operations From discontinued operations Total diluted earnings per share (a) Basic earnings per share The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows: Earnings (i) Earnings from continuing operations (i) Weighted average number of ordinary shares for the purposes of basic earnings per share (i) Earnings used in the calculation of total basic earnings per share and basic earnings per share from continuing operations reconciles to net profit in the income statement as follows: Net profit Earnings used in the calculation of basic EPS Adjustments to exclude profit for the period from discontinued operations Earnings used in the calculation of basic EPS from continuing operations	2008 2007 Cents per share Cents per share 11.22 7.72 5.82 1.02 Consolidated
	17.04 8.74
	10.79 7.09 5.59 0.91
	16.38 8.00
	$'000s $'000s 31,966 13,518
	21,045 11,950
	Shares Shares 187,578,226 154,717,072
	$'000s $'000s 31,966 13,518
	31,966 13,518
	(10,921) (1,568)
	21,045 11,950

Imdex 2008 Annual Report | 87

==> picture [4 x 373] intentionally omitted <==

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

20 Earnings Per Share (continued)

(b) Diluted earnings per share

The earnings and weighted average number of ordinary shares used in the calculation of diluted earnings per share are as follows:

Earnings (ii)

Earnings from continuing operations (ii)

Weighted average number of ordinary shares for the purposes of diluted earnings per share (iii)

(ii) Earnings used in the calculation of total diluted earnings per share and diluted earnings per share from continuing operations reconciles to net profit in the income statement as follows:

Net profit

Adjustment to exclude the impact of interest expense on convertible note Earnings used in the calculation of diluted EPS Adjustments to exclude profit for the period from discontinued operations Earnings used in the calculation of diluted EPS from continuing operations

Consolidated 2008 2007 Cents per share Cents per share

$'000s	$'000s
31,966	13,836
21,045	12,268
Shares	Shares
195,112,068	172,920,311
$'000s	$'000s
31,966	13,518
-	318
31,966	13,836
(10,921)	(1,568)
21,045	12,268

(iii) The weighted average number of ordinary shares for the purposes of diluted earnings per share reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows:

Weighted average number of ordinary shares used in the calculation of basic EPS

Potential ordinary shares arising on the conversion of convertible note Shares deemed to be issued for no consideration in respect of employee and Director options

Weighted average number of ordinary shares used in the calculation of diluted EPS

(iv) The following potential ordinary shares are not dilutive and are therefore excluded from the weighted average number of ordinary shares for the purposes of diluted earnings per share:

Employees share options tranche 4 Employees share options tranche 5 Employees share options tranche 6 Employees share options tranche 7

Shares	Shares
187,578,226	154,717,072
-	11,340,274
7,533,842	6,862,965
195,112,068	172,920,311
Shares	Shares
-	4,425,000
625,000	675,000
500,000	-
4,815,000	-
5,940,000	5,100,000

Imdex 2008 Annual Report | 88

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

==> picture [69 x 71] intentionally omitted <==

21 Dividends

Notes Recognised amounts Fully paid ordinary shares - interim dividend franked to 30% (i) Fully paid ordinary shares - final dividend franked to 30% (ii) Unrecognised amounts Fully paid ordinary shares - final dividend franked to 30% (iii)	2008 2008 2007 2007 Cents per share Total $’000 Cents per share Total $’000 1.75 3,212 1.00 1,641 1.50 2,722 1.00 1,411
	3.25 5,934 2.00 3,052
	2.25 4,129 1.50 2,722

(i) The interim, fully franked dividend was paid on 25 March 2008 (2007: 26 March 2007). The record date for determining the entitlement to the interim dividend was 7 March 2008 (2007: 13 March 2007). There are no dividend reinvestment plans in operation.

(ii) The final, fully franked dividend was paid on 2 November 2007 (2007: 13 October 2006). The record date for determining the entitlement to the final dividend was 15 October 2007 (2007: 10 October 2006). There are no dividend reinvestment plans in operation.

(iii) The final, fully franked dividend was declared on 15 August 2008 with an entitlement date of 17 October 2008 and a payment date of 31 October 2008. The financial effect of this dividend has not been recognised in the financial statements at 30 June 2008.

Adjusted franking account balance Impact on franking account of dividends not recognised Income tax consequences of unrecognised dividends	2008 2007 $'000 $'000 13,521 7,062 Consolidated
	(1,770) (1,157)
	- -

22 Commitments for Expenditure

(a) Capital expenditure commitments

At 30 June 2008 the Group had a capital expenditure commitments amounting to $927,000. This commitment comprised $475,000 relating to the construction of a PHPA plant at Samchem and $452,000 representing gyro purchase commitments in SEG. The Company had no capital expenditure commitments.

At 30 June 2007 the Company and Group had no capital expenditure commitments.

(b) Lease commitments

Hire purchase liabilities and non-cancellable operating lease commitments are disclosed in note 24.

23 Contingent Liabilities and Contingent Assets

Contingent Liabilities Rental bond Contingent Assets	2008 2007 2008 2007 $’000 $’000 $’000 $’000 - 119 - 100 Consolidated Company
	- 119 - 100
	- - - -

Imdex 2008 Annual Report | 89

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
24 Leases
(a) Hire Purchases
Hire purchase arrangements
Hire purchase arrangements relate to plant and equipment with terms of up to 5 years.				The Group has options to purchase the equipment for
a nominal amount at the conclusion of the arrangements.
	Minimum future lease payments				Present	value of minimum future lease
						payments
	Consolidated		Company		Consolidated		Company
	2008	2007	2008	2007	2008	2007 2008		2007
	$’000	$’000	$’000	$’000	$’000	$’000 $’000		$’000
Hire purchase commitments
Hire purchase commitments are payable as
follows. Due:
Within one year	-	1,580	-	467	-	1,443	-	449
Between one and five years	-	760	-	-	-	728	-	-
Later than five years	-	248	-	-	-	236	-	-
Minimum lease payments	-	2,588	-	467	-	2,407	-	449
Less: future finance charges	-	(181)	-	(18)	-	-	-	-
	-	2,407	-	449	-	2,407	-	449
Hire purchase liabilities provided for in the Financial Report
Current – Note 16					-	1,443	-	385
Non current – Note 16					-	964	-	64
					-	2,407	-	449
(b) Operating Leases

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

24 Leases

Operating leasing arrangements

Operating leases relate to premises and equipment (including motor vehicles) used by the Group in its operations, generally with terms between 2 and 5 years. Some of the operating leases contain options to extend for further periods and an adjustment to bring the lease payments into line with market rates prevailing at that time. The leases do not contain an option to purchase the leased property.

Within one year Between one and five years Later than five years Non-cancellable operating lease payments	2008 2007 2008 2007 $’000 $’000 $’000 $’000 1,838 1,062 162 162 3,785 1,911 365 352 1,139 686 - - Consolidated Company
	6,762 3,659 527 514

Imdex 2008 Annual Report | 90

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
25 Subsidiaries
			Ownership	Interest
		Country of	2008	2007
	Notes	Incorporation	%	%
Parent Entity
Imdex Limited	(i), (ii)	Australia
Controlled Entities
Australian Mud Company Pty Ltd	(ii), (iii)	Australia	100	100
Samchem Drilling Fluids & Chemicals (Pty) Ltd		South Africa	100	100
Imdex International Pty Ltd	(ii), (iii), (iv)	Australia	100	100
Imdex Sweden AB	(v)	Sweden	100	100
Reflex Instruments Asia Pacific Pty Ltd	(ii), (iii), (vi)	Australia	100	100
Imdex Technology UK Ltd (formerly Chardec Technology Ltd)	26(h)	United Kingdom	100	100
Reflex Holding AB	26(g)	Sweden	100	100
Reflex Instrument AB	(vii), 26(g)	Sweden	-	100
Reflex Instrument North America	26(g)	Canada	100	100
Reflex Instrument South America Ltda	26(g)	Chile	100	100
Reflex Instruments Europe Ltd	(xii)	United Kingdom	100	-
Drill Hole Surveys (Pty) Ltd	26(g)	South Africa	100	100
Flexit AB	26(f)	Sweden	100	100
Flexit Navigation AB	(viii), 26(f)	Sweden	-	100
Flexit Australia Pty Ltd	(ii), (ix)	Australia	100	100
Nudge Geotechnical Instrumentation Inc	(x)	Canada	-	100
Suay Energy Services LLP	26(c) (d)	Kazakhstan	100	-
Poly-Drill Drilling Systems Ltd	26(b)	Canada	100	-
Imdex South America S.A.	26(e)	Chile	100	-
Southernland S.A.	26(e)	Chile	100	-
System Entwicklungs GmbH	26(a)	Germany	100	-
Surtron Technologies Pty Ltd	(ii), (iii), 28	Australia	-	100
Surtron Technologies UK Ltd	28	United Kingdom	-	100
Surtron Technologies US Inc	(xi), 28	United States of America	-	100

(i) Imdex Limited is the ultimate parent company and is the head entity within the tax consolidated group.

(ii) These companies are part of the tax consolidated group. Surtron Technologies Pty Ltd was part of the tax consolidated group until sold on 31 October 2007.

(iii) These wholly-owned subsidiaries have entered into a deed of cross guarantee with Imdex Limited pursuant to ASIC Class Order 98/1418 and are relieved from the requirement to prepare and lodge an audited financial report. Australian Mud Company Pty Ltd became a party to the deed on 29 June 2006, Imdex International Pty Ltd on 20 October 2006 and Reflex Instruments Asia Pacific Pty Ltd on 14 September 2007. Surtron Technologies Pty Ltd became a party to this deed on 29 June 2006 and ceased to be a party on 31 October 2007 when Imdex Limited sold 100% of its shares in this entity.

(iv) This entity was incorporated on 4 July 2006

(v) This entity was incorporated on 5 July 2006

(vi) This entity was incorporated on 26 March 2007

(vii) This entity was merged with Reflex Holding AB on 1 October 2007.

(viii) This entity was merged with Flexit AB on 29 April 2008.

(ix) This entity was incorporated on 11 May 2007

(x) 100% of the issued share capital of this entity was acquired on 1 May 2007. As this entity is non-trading and holds one asset being a patent, this purchase transaction was accounted for as an acquisition of an asset, not a business combination. This entity was amalgamated with Reflex Instrument North America on 1 January 2008.

(xi) This entity was incorporated on 16 November 2006

(xii) This entity was incorporated on 28 April 2008

Imdex 2008 Annual Report | 91

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
25 Subsidiaries (continued)
The consolidated income statement of entities which are party to the deed of cross guarantee are:
Income Statement	2008	2007
	$’000	$’000
Revenue from sale of goods, rendering of services and operating lease rental	91,161	66,909
Other revenue from operations	3,356	2,866
Total revenue	94,517	69,775
Other income	9,615	4,814
Raw materials and consumables used	(42,784)	(34,280)
Employee benefit expenses	(11,888)	(6,451)
Depreciation and amortisation expense	(3,243)	(2,372)
Finance costs	(1,998)	(2,252)
Commissions	(1,259)	(1,170)
Consultancy fees	(1,834)	(1,384)
Legal and professional expenses	(1,330)	(449)
Rent and premises costs	(1,242)	(1,017)
Repairs and maintenance	(37)	(554)
Travel and accommodation	(2,012)	(1,244)
Motor vehicle costs	(655)	(493)
Foreign exchange gain/(loss)	(1,018)	(950)
Other expenses	(10,283)	(3,440)
Profit before income tax expense	24,549	18,533
Income tax expense	(9,127)	(5,928)
Profit for the year from continuing operations	15,422	12,605
Profit for the year from discontinued operations	15,855	1,568
Profit for the year	31,277	14,173

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

25 Subsidiaries (continued)

Imdex 2008 Annual Report | 92

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

==> picture [69 x 71] intentionally omitted <==

25 Subsidiaries (continued)

The consolidated balance sheet of entities which are party to the deed of cross guarantee are:

Balance Sheet Current Assets Cash and Cash Equivalents Trade and Other Receivables Inventories Other Financial Assets Other Total Current Assets Non Current Assets Other Financial Assets Property, Plant and Equipment Other Intangible Assets Other Total Non Current Assets Total Assets Current Liabilities Trade and Other Payables Borrowings Current Tax Payables Provisions Total Current Liabilities Non Current Liabilities Borrowings Deferred Tax Liabilities Provisions Total Non Current Liabilities Total Liabilities Net Assets Equity Contributed Capital Employee Equity-Settled Benefits Reserve Retained Profits Total Equity Retained Profit at the beginning of the financial year Net Profit Dividend provided for or paid Retained Profit at the end of the financial year	2008 2007 $’000 $’000 7,341 7,171 31,946 24,861 14,214 11,085 51,243 60,871 30 56
	104,774 104,044
	40,752 8,492 7,216 11,768 1,543 429 - 664
	49,511 21,353
	154,285 125,397
	12,980 14,871 11,687 9,060 8,071 5,358 800 1,475
	33,538 30,764
	10,717 15,678 (130) 303 558 116
	11,145 16,097
	44,683 46,861
	109,602 78,536
	64,883 60,982 2,573 751 42,146 16,803
	109,602 78,536
	16,803 5,682 31,277 14,173 (5,934) (3,052)
	42,146 16,803

Imdex 2008 Annual Report | 93

and its controlled entities

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26 Acquisition of Businesses
(a) Acquisition of entity - System Entwicklungs GmbH
With effect from 1 January 2008, Imdex Limited, acquired 100% of the issued share capital of System			Entwicklungs GmbH (SEG), a			company
incorporated in Germany. SEG manufacture and sell technologically advanced down hole instrumentation for use in the drilling industry						from their
facility located in Riegel, Germany. The numbers presented below have been	accounted for using the acquisition method of accounting.
Details of the assets, liabilities and goodwill:		Book value		Fair value	Fair value on
				adjustments	acquisition
	Notes	$’000		$’000	$’000
Receivables			446		-	446
Inventory			838		-	838
Property, plant and equipment			35		-	35
Technology and customer based intangibles	(i)		-	5,642		5,642
Trade and other payables		(1,914)			-	(1,914)
Deferred tax	(i)		-	(1,693)		(1,693)
Fair value of net identifiable assets acquired (other than cash and cash		(595)		3,949		3,354
equivalents)
Goodwill on acquisition	(ii)					10,499
Total purchase consideration						13,853
Total purchase consideration comprises
Consideration in cash and cash equivalents						14,100
Less: Cash and cash equivalents acquired						(637)
Direct costs relating to the acquisition						390
	(iii)					13,853
					Results since
					acquisition
					$’000
Operating results of SEG included in the Consolidated Income Statement of Imdex Limited from acquisition on 1 January 2008
to 30 June 2008:
Revenue						2,418
Total expenses						(2,130)
Profit after tax for the period	(iv)					288

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

26 Acquisition of Businesses

(i) Intangible assets of $5.6 million comprise technical knowledge and other know-how as well as customer relationships in existence at the time of acquisition. Deferred tax of $1.7 million was raised on these balances. These intangibles have been valued by independent valuation professionals using the replacement cost and relief-from-royalty methods. Data inputs into the model were derived from internal management budgets. Intangible assets are being amortised over their estimated useful lives of between 1 and 10 years.

(ii) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire SEG. In addition, the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of SEG. These benefits are not recognised separately from goodwill as the future economic benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor were there any contingent liabilities assumed in the acquisition.

(iii) The Consolidated Cash Flow Statement for the year ended 30 June 2008 records the payment for the acquisition of SEG as $13.9 million being the total consideration of $14.1 million above plus direct costs of $0.4 million and less $0.6 million of cash and cash equivalents acquired. A dividend of $0.7 million representing profits up to the acquisition date is due to the vendors of SEG and was taken up at acquisition.

(iv) Had the acquisition of SEG been effected on 1 July 2007, the beginning of the financial year and assuming all units were sold and none rented, the SEG financial results included in the Imdex consolidated results would have been revenue of approximately $4.8 million and profit of approximately $0.6 million. The results of SEG are included in the Down Hole Instrumentation segment. The Board considers these 'pro-forma' numbers to represent an approximate measure of the performance of the combined group on an annualised basis and to provide a reference point for comparison in future periods.

Imdex 2008 Annual Report | 94

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

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26 Acquisition of Businesses (continued)

(b) Acquisition of entity - Poly-Drill Drilling Systems Limited

With effect from 1 July 2007, Imdex Limited, acquired 100% of the issued share capital of Poly-Drill Drilling Systems Limited (Poly-Drill), a company incorporated in Canada. Poly-Drill undertake the manufacture and sale of polymer based drilling fluids as well as various solids control activities from Calgary, Canada. The numbers presented below have been accounted for using the acquisition method of accounting.

Details of the assets, liabilities and goodwill: Book value Fair value adjustments Notes $’000 $’000 Inventory 178 - Property, plant and equipment 150 - Trade and other payables (696) - Fair value of net identifiable assets acquired (other than cash and cash equivalents) (368) - Goodwill on acquisition (i) Total purchase consideration Consideration in cash and cash equivalents Less: Cash and cash equivalents acquired Issue of ordinary shares (ii), 18 Direct costs relating to the acquisition (iii) Revenue Total expenses Profit after tax for the period Total purchase consideration comprises Operating results of Poly-Drill included in the Consolidated Income Statement of Imdex Limited from acquisition on 1 July 2007 to 30 June 2008:	Book value Fair value adjustments $’000 $’000 178 - 150 - (696) -	Fair value on acquisition $’000 178 150 (696)
		(368) 3,369
		3,001
		1,849 (673) 1,750 75
		3,001
		Results since acquisition $’000 2,727 (2,422)
		305

(i) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire Poly-Drill. In addition, the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of Poly-Drill. These benefits are not recognised separately from goodwill as the future economic benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor were there any contingent liabilities assumed in the acquisition.

(ii) Comprised the issue of 1,212,751 fully paid ordinary shares in Imdex Limited at $1.443 per share. The issue price of the shares was determined using the closing weighted average share price over the 5 business days prior to 1 July 2007. These shares will be held in voluntary escrow for a period of 12 months from 1 July 2007. The issue of shares was approved by shareholders at the Annual General Meeting on 19 October 2007.

(iii) The Consolidated Cash Flow Statement for the year ended 30 June 2008 records the payment for the acquisition of Poly-Drill as $0.9 million being the total consideration of $3.0 million above less $1.8 million settled in shares and $0.3 million paid in the prior year.

Imdex 2008 Annual Report | 95

and its controlled entities

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26 Acquisition of Businesses (continued)
(c) Acquisition of initial 75% of entity - Suay Energy Services LLP
With effect from 1 July 2007 Imdex Limited acquired 75% of the issued share capital of Suay Energy			Services LLP	(Suay), a company
incorporated in Kazakhstan. The purchase of Suay is complementary to the	existing drilling fluids and chemicals businesses				of Imdex.	Suay
provide drilling fluids and chemicals to the Kazakhstan oilfields in the Caspian Sea region. The numbers presented below have					been accounted
for using the acquisition method of accounting.
Details of the assets, liabilities and goodwill:		Book value	Fair value		Fair value on
			adjustments		acquisition
	Notes	$’000	$’000		$’000
Trade and other receivables		123		-		123
Inventory		317		-		317
Property, plant and equipment		43		-		43
Trade and other payables		(420)		-		(420)
Fair value of net identifiable assets acquired (other than cash and cash		63		-		63
equivalents)
Goodwill on acquisition	(i)					505
Less: Minority interests						(16)
Total purchase consideration						552
Total purchase consideration comprises
Consideration in cash and cash equivalents						473
Direct costs relating to the acquisition						79
	(ii)					552
					Results since
					acquisition
					$’000
Operating results of Suay included in the Consolidated Income Statement of Imdex Limited from acquisition on			1 July 2007 to
30 June 2008:
Revenue					2,108
Total expenses					(1,963)
Profit after tax for the period						145

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

26 Acquisition of Businesses (continued)

(i) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire a 75% interest in Suay. In addition, the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of Suay. These benefits are not recognised separately from goodwill as the future economic benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor were there any contingent liabilities assumed in the acquisition.

(ii) The Consolidated Cash Flow Statement for the year ended 30 June 2008 records the payment for the acquisition of Suay as $0.2 million being the total consideration of $0.6 million above less $0.4 million paid in the prior year.

Imdex 2008 Annual Report | 96

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

==> picture [69 x 71] intentionally omitted <==

26 Acquisition of Businesses (continued)

(d) Acquisition of minority interest - Suay Energy Services LLP

With effect from 30 June 2008 Imdex Limited acquired the remaining 25% of the issued share capital of Suay Energy Services LLP (Suay) from the minority shareholders. The original 75% of the issued share capital of Suay was purchased with effect from 1 July 2007, refer note 26(c). The numbers presented below have been accounted for using the acquisition method of accounting. These numbers are provisional only as the acquisition accounting is still in the process of being finalised.

acquisition accounting is still in the process of being finalised.
Details of the assets, liabilities and goodwill: Notes Cash and cash equivalents Trade and other receivables Inventory Property, plant and equipment Trade and other payables Fair value of net identifiable assets acquired 25% thereof Goodwill on acquisition (i) Total purchase consideration Consideration in cash and cash equivalents Issue of ordinary shares (ii) Direct costs relating to the acquisition (iii) Total purchase consideration comprises	Book value Fair value adjustments $’000 $’000 10 - 494 - 572 - 212 - (1,106) -	Fair value on acquisition $’000 10 494 572 212 (1,106)
	182 -	182
		46 761
		807
		500 278 29
		807

(i) Although Imdex Limited already controlled Suay, an additional goodwill amount became payable on the acquisition of the remaining 25% due to growth in the business and future prospects as well as a premium to obtain complete 100% control. These benefits are not recognised separately from goodwill as the future economic benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor were there any contingent liabilities assumed in the acquisition.

(ii) Comprised the issue of 168,530 fully paid ordinary shares in Imdex Limited. These shares had a fair value of $1.65 per share, being the closing market price at 30 June 2008. These shares were issued on 1 July 2008 and are not subject to escrow. The issue of these shares is not required to be formally approved by shareholders as they fall below the 15% threshold level.

(iii) The Consolidated Cash Flow Statement for the year ended 30 June 2008 records the payment for the acquisition of Suay as nil as the cash consideration was paid on 1 July 2008. The purchase consideration of $0.8 million is accrued at note 15.

Imdex 2008 Annual Report | 97

and its controlled entities

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26 Acquisition of Businesses (continued)
(e) Acquisition of entity - Southernland S.A.
On 1 November 2007 Imdex South America S.A., a newly incorporated wholly owned subsidiary of Imdex Limited, settled the purchase of 100%
of the issued share capital of Southernland S.A. (Southernland), a company incorporated in Chile. The acquisition was structured under a mandate
so as to entitle the Group to the profits from 1 July 2007 onwards. Southernland manufacture and supply drilling fluids and chemicals to the Latin
American market, complementing the existing fluids and chemicals businesses of Imdex and		providing	access to new geographic markets. The
numbers presented below have been accounted for using the acquisition method of accounting.
Details of the assets, liabilities and goodwill:		Book value		Fair value	Fair value on
				adjustments	acquisition
	Notes	$’000		$’000	$’000
Trade and other receivables			538	-	538
Inventory			273	-	273
Property, plant and equipment			83	-	83
Trade and other payables		(474)		-	(474)
Fair value of net identifiable assets acquired (other than cash and cash			420	-	420
equivalents)
Goodwill on acquisition	(i)				2,413
Total purchase consideration					2,833
Total purchase consideration comprises
Consideration in cash and cash equivalents					1,413
Less: Cash and cash equivalents acquired					(87)
Issue of ordinary shares	(ii), 18				1,387
Direct costs relating to the acquisition					120
	(iii)				2,833
					Results since
					acquisition
					$’000
Operating results of Southernland included in the Consolidated Income Statement of Imdex Limited from			1 July 2007 to 30
June 2008:
Revenue					3,062
Total expenses					(2,616)
Profit after tax for the period					446

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

26 Acquisition of Businesses (continued)

(i) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire Southernland. In addition, the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of Southernland. These benefits are not recognised separately from goodwill as the future economic benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor were there any contingent liabilities assumed in the acquisition.

(ii) Comprised the issue of 723,679 fully paid ordinary shares in Imdex Limited at $1.9163 per share. The issue price of the shares was determined using the closing weighted average share price over the 5 business days prior to 1 November 2007. These shares will be held in voluntary escrow for a period of 24 months from 1 November 2007. The issue of these shares is not required to be formally approved by shareholders as this issue falls below the 15% threshold level.

(iii) The Consolidated Cash Flow Statement for the year ended 30 June 2008 records the payment for the acquisition of Southernland as $1.4 million being the total consideration of $2.8 million above less $1.4 million paid in shares.

Imdex 2008 Annual Report | 98

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

==> picture [69 x 71] intentionally omitted <==

26 Acquisition of Businesses (continued)

(f) Acquisition of entity - Flexit AB

With effect from 1 May 2007, Imdex Sweden AB, wholly owned subsidiary of Imdex Limited, acquired 100% of the issued share capital of Flexit AB (Flexit), a company incorporated in Sweden. Flexit AB has one Swedish wholly owned subsidiary, Flexit Navigation AB. Flexit are leading developers and suppliers of borehole survey equipment to the exploration and mining industries globally. At the General Meeting of Shareholders held on 30 April 2007, the shareholders of Imdex Limited approved this acquisition and the associated issue of shares. The numbers presented below have been accounted for using the acquisition method of accounting.

Details of the assets, liabilities and goodwill are as follows: Notes Trade and other receivables Inventory Deferred tax assets / (liabilities) (i) Property, plant and equipment Technology based intangibles (i) Trade name based intangibles (i) Trade and other payables Long term liabilities Fair value of net identifiable assets acquired (other than cash and cash equivalents) Goodwill on acquisition (ii) Total purchase consideration Consideration in cash and cash equivalents Less cash and cash equivalents acquired Deferred consideration - Mandatory Convertible Capital (iv), 18 Direct costs relating to the acquisition (iii) Total purchase consideration comprises	Book value Fair value adjustments Fair value on acquisition $’000 $’000 $’000 896 - 896 557 - 557 - (2,124) (2,124) 207 - 207 - 4,672 4,672 - 2,916 2,916 (1,203) - (1,203) (54) - (54)	Book value Fair value adjustments Fair value on acquisition $’000 $’000 $’000 896 - 896 557 - 557 - (2,124) (2,124) 207 - 207 - 4,672 4,672 - 2,916 2,916 (1,203) - (1,203) (54) - (54)
	403 5,464	5,867 11,107
		16,974
		12,000 (1,842) 6,700 116
		16,974

Consideration in cash and cash equivalents Less cash and cash equivalents acquired Deferred consideration - Mandatory Convertible Capital (iv), 18 Direct costs relating to the acquisition (iii) Total purchase consideration comprises	12,000 (1,842) 6,700 116 16,974
Operating revenue Total expenses Loss for the period after tax (v) Operating results of the Flexit consolidated group included in the Consolidated Income Statement of Imdex Limited from acquisition on 1 May 2007 to 30 June 2007:	Results since acquisition $’000 1,275 (1,315)
	(40)

(i) Technology based intangible assets of $4.7 million comprise technical knowledge and other know-how in existence at the time of acquisition. Trade name based intangibles of $2.9 million represents the value of the Flexit and GyroSmart trade names at acquisition. Deferred tax of $2.1 million was raised on these balances. These intangibles have been valued by independent valuation professionals using the replacement cost and relief-from-royalty methods respectively. Data inputs into the model were derived from internal management budgets. Intangible assets are being amortised over their estimated useful lives of 5 years.

(ii) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire Flexit. In addition, the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of Flexit. These benefits are not recognised separately from goodwill as the future economic benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor were there any contingent liabilities assumed in the acquisition.

(iii) The Consolidated Cash Flow Statement for the year ended 30 June 2007 records the payment for the acquisition of Flexit as $10.3 million being the total consideration of $20.3 million above less $10.0 million of deferred consideration.

(iv) The balance of the purchase price is due on 1 May 2009. This will be settled by way of the issue of 5 million fully paid ordinary shares in Imdex Limited. Should the Imdex share price be below $2 per share at that time, an additional cash payment will be made to bring the total of cash paid and shares issued at that time to $10 million. At the General Meeting of Shareholders held on 30 April 2007 the shareholders approved the future issue of these shares to the vendors of Flexit. The deferred consideration has been recorded at $6,700,000 based on the Company's analysis of the fair value of the consideration at acquisition date.

(v) Had the acquisition of Flexit been effected on 1 July 2006, the beginning of the prior financial year, the Flexit financial results included in the Imdex consolidated results would have been revenue of approximately $9.2 million and profit of approximately $1.0 million. The results of Flexit are included in the Down Hole Instrumentation segment. The Board considers these 'pro-forma' numbers to represent an approximate measure of the performance of the combined group on an annualised basis and to provide a reference point for comparison in future periods.

Imdex 2008 Annual Report | 99

and its controlled entities

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
26 Acquisition of Businesses (continued)
(g) Acquisition of entity - Reflex Holding AB
With effect from 1 August 2006, Imdex Sweden AB, a wholly owned subsidiary of Imdex Limited, acquired 100% of the						issued	share capital of
Reflex Holding AB (Reflex), a company incorporated in Sweden. Reflex Holding AB is the		parent of a	group of companies operating in South
Africa, Europe, North and South America under the "Reflex Instrument" trading name. Reflex are leading				developers and suppliers of borehole
survey equipment globally. At the General Meeting of Shareholders held on 8 August 2006, the shareholders of Imdex						Limited approved this
acquisition and the associated issue of the convertible note. The numbers presented below have been accounted for using						the acquisition method
of accounting.
Details of the assets, liabilities and goodwill are as follows:		Book value			Fair value		Fair value on
					adjustments		acquisition
	Notes	$’000			$’000		$’000
Trade and other receivables		3,818				(14)	3,804
Inventory		1,511				-	1,511
Deferred tax assets / (liabilities)	(i)		405		(3,174)		(2,769)
Property, plant and equipment		1,566				-	1,566
Goodwill			670		(670)		-
Intangibles	(i)			-	11,335		11,335
Other non-current assets			22			(19)	3
Trade and other payables		(4,966)				487	(4,479)
Fair value of net identifiable assets acquired (other than cash and cash		3,026			7,945		10,971
equivalents)
Goodwill on acquisition	(ii)						14,623
Total purchase consideration							25,594
Total purchase consideration comprises
Consideration in cash and cash equivalents							2,884
Less cash and cash equivalents acquired							(111)
Convertible note raised	(iv)						10,400
Bank loan raised	16						9,955
Deferred vendor finance - due and paid on 31 January 2007							2,000
Direct costs relating to the acquisition							466
	(iii)						25,594
							Results since
							acquisition
							$’000
Operating results of the Reflex consolidated group included in the Consolidated Income Statement of Imdex				Limited from
acquisition on 1 August 2006 to 30 June 2007:
Operating revenue							18,492
Total expenses							(14,626)
Profit for the period after tax	(v)						3,866

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

26 Acquisition of Businesses (continued)

(i) Customer based intangible assets of $9.8 million comprise customer lists and relationships at the time of acquisition. Trade name based intangible assets of $1.5 million represent the value to the Group of the Reflex trading name in the markets in which they operate. Deferred tax of $3.2 million was raised on these balances. These intangibles have been valued by independent valuation professionals using the multi period excess earnings model. Data inputs into the model were derived from internal management budgets. These intangible assets are being amortised over their estimated useful lives of 6 years each.

(ii) Goodwill arose because the cost of the combination included a control premium paid to acquire Reflex. In addition, the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of Reflex. These benefits are not recognised separately from goodwill as the future economic benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor were there any contingent liabilities assumed in the acquisition.

(iii) The Consolidated Cash Flow Statement for the year ended 30 June 2007 records the payment for the acquisition of Reflex as $15.2 million being the total consideration of $25.6 million above less the $10.4 million convertible note.

(iv) At the General Meeting of Shareholders held on 8 August 2006 the shareholders approved the issue of a convertible note with a face value of $10.4 million. This convertible note converted into equity on 15 February 2007. Refer to notes 16 and 18.

(v) Had the acquisition of Reflex been effected on 1 July 2006, the beginning of the prior financial year, the Reflex financial results included in the Imdex consolidated results would have been revenue of approximately $20.3 million and profit of approximately $4.6 million. The results of Reflex are included in the Down Hole Instrumentation segment. The Board considers these 'pro-forma' numbers to represent an approximate measure of the performance of the combined group on an annualised basis and to provide a reference point for comparison in future periods.

Imdex 2008 Annual Report | 100

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

==> picture [69 x 71] intentionally omitted <==

26 Acquisition of Businesses (continued)

(h) Acquisition of entity - Imdex Technology UK Ltd (previously Chardec Consultants Ltd)

With effect from 1 August 2006, Imdex International Pty Ltd, a newly incorporated, wholly owned subsidiary of Imdex Limited acquired 100% of the issued share capital of Imdex Technology UK Ltd (Imdex Technology), a company incorporated in the United Kingdom. Imdex Technology is a leading developer and supplier of borehole survey equipment globally. At the General Meeting of Shareholders held on 8 August 2006, the shareholders of Imdex Limited approved this acquisition. The numbers presented below have been accounted for using the acquisition method of accounting.

accounting.
Details of the assets, liabilities and goodwill are as follows:		Book value		Fair value	Fair value on
				adjustments	acquisition
	Notes	$’000		$’000	$’000
Trade and other receivables		2,111		-	2,111
Inventory		273		-	273
Deferred tax assets / (liabilities)	(i)(ii)		3	(3,207)	(3,204)
Technology based intangibles	(i)		-	10,265	10,265
Contract based intangibles	(ii)		-	425	425
Trade and other payables		(2,456)		-	(2,456)
Fair value of net identifiable assets acquired (other than cash and cash		(69)		7,483	7,414
equivalents)
Goodwill on acquisition	(iii)				8,319
Total purchase consideration					15,733
Total purchase consideration comprises
Consideration in cash and cash equivalents					6,203
Less cash and cash equivalents acquired					(175)
Direct costs relating to the acquisition					324
Deferred vendor finance and earn out payments	(v)				9,381
	(vi)				15,733
					Results since
					acquisition
					$’000
Operating results of Imdex Technology included in the Consolidated Income	Statement from 1 August 2006		to	30 June 2007:
Operating revenue					6,685
Total expenses					(4,281)
Profit for the period after tax	(vi)				2,404

(i) Technology based intangible assets of $10.3 million comprise intellectual property and technical expertise contained within the business of Imdex Technology at the time of acquisition. Deferred tax of $3.1 million was raised on this balance. These intangibles have been valued by independent valuation professionals using the multi period excess earnings model. Data inputs into the model were derived from internal management budgets. Technology based intangible assets are being amortised over their estimated useful life of 7 years.

(ii) Contract based intangible assets of $0.4 million represent the value to the Group of the 5 year employment contract signed with the vendor and now employee of Imdex Technology. Deferred tax of $0.1 million was raised on this balance. This contract has been valued by independent valuation professionals using the multi period excess earnings model. Data inputs into the model were derived from internal management budgets. Contract based intangible assets are being amortised over the term of the contract which is 5 years.

(iii) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire Imdex Technology. In addition, the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of Imdex Technology. These benefits are not recognised separately from goodwill as the future economic benefits arising from them cannot be reliably measured. There were no acquisition provisions created, nor were there any contingent liabilities assumed in the acquisition.

(iv) The Consolidated Cash Flow Statement for the year ended 30 June 2007 records the payment for the acquisition of Imdex Technology as $6.4 million being the total consideration of $15.7 million above less deferred consideration of $9.4 million.

(v) Further purchase price instalments are due as follows: GBP 2.18 million on 31 July 2007 (paid); GBP 1.09 million on 31 July 2008 and GBP 1.045 million on 31 July 2009. In addition a revenue based earn-out may also become payable. The additional revenue based earn-out payments have been estimated by management as totalling GBP 0.4 million over the three years. All expected future payments have been discounted to their present values using a discount rate of 8% per annum.

(vi) Had the acquisition of Imdex Technology been effected on 1 July 2006, the beginning of the prior financial year, the Imdex Technology financial results included in the Imdex consolidated results would have been revenue of approximately $7.3 million and profit of approximately $2.8 million. The results of Imdex Technology are included in the Down Hole Instrumentation segment. The Board considers these 'pro-forma' numbers to represent an approximate measure of the performance of the combined group on an annualised basis and to provide a reference point

Imdex 2008 Annual Report | 101

==> picture [4 x 373] intentionally omitted <==

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

27 Segment Information

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise income earning assets and interest revenue, interest bearing loans, borrowings and expenses, and corporate assets and expenses. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period.

Business Segments

The Group comprises the following business segments which are based on the Group's internal management reporting system:

(i) Down Hole Instrumentation: This segment comprises the manufacture, sale and rental of down hole instrumentation. Until 31 October 2007 this division also provided down hole surveying, geophysical logging and directional drilling services through its Surtron business which was sold on this date; and

(ii) Drilling Fluids and Chemicals: This segment comprises the manufacture and supply of drilling fluids and chemicals to the mining, mineral exploration, oil and gas and water well drilling industries.

Geographical Segments

The Group operates in the following geographical segments which are based on the Group's internal management reporting system:

(i) Asia Pacific: Manufacture and sale of drilling fluids and chemicals; sale and rental of down hole instrumentation

(ii) Europe: Manufacture, sale and rental of down hole instrumentation

(iii) Africa: Manufacture and sale of drilling fluids and chemicals; sale and rental of down hole instrumentation

(iv) Americas: Manufacture and sale of drilling fluids and chemicals; sale and rental of down hole instrumentation

Primary reporting: Business Segments

(a) Segment Revenues

2008 2007 2008 2007 2008 2007 $'000 $'000 $'000 $'000 $'000 $'000 Drilling Fluids and Chemicals 85,711 62,337 - - - 16 Down Hole Instrumentation 56,298 41,512 - - - 36 Total of all segments 142,009 103,849 - - - 52 Unallocated Total revenue - all operations (b) Segment Results Continuing operations Drilling Fluids and Chemicals Down Hole Instrumentation Total of all segments Eliminations Unallocated Profit before tax Income tax expense Discontinued operations Drilling Fluids and Chemicals Down Hole Instrumentation Total of all segments Eliminations Unallocated Profit before tax Income tax expense Total revenue - continuing operations Profit for the year from continuing operations External revenue Inter-segment Other Profit for the year from discontinued operations Profit attributable to ordinary equity holders of Imdex Limited* Discontinued operation - Surtron (note 28)	2008 2007 2008 2007 2008 2007 $'000 $'000 $'000 $'000 $'000 $'000 85,711 62,337 - - - 16 56,298 41,512 - - - 36 External revenue Inter-segment Other	2008 2007 $'000 $'000 85,711 62,353 56,298 41,548 Total
	142,009 103,849 - - - 52	142,009 103,901
		1,900 848
		143,909 104,749
		6,584 14,591
		150,493 119,340
		13,981 11,570 21,221 11,858
		35,202 23,428 - - (3,317) (5,313)
		31,885 18,115 (10,804) (6,165)
		21,081 11,950
		- - 13,347 2,297
		13,347 2,297 - - - -
		13,347 2,297 (2,426) (729)
		10,921 1,568

		32,002 13,518

- Included in the prior period is a $1.1 million recovery from the RTE/Imdex Joint Venture

Imdex 2008 Annual Report | 102

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

==> picture [69 x 71] intentionally omitted <==

27 Segment Information (continued)

(c) Segment Assets and Liabilities

Drilling Fluids and Chemicals
Down Hole Instrumentation
Total of all segments
Unallocated
Consolidated

2008
2007
2008
2007
$'000
$'000
$'000
$'000
54,194
33,997
12,895
10,580
101,361
101,837
18,973
34,795
155,555
135,834
31,868
45,375
17,508
14,012
35,552
27,857
173,063
149,846
67,420
73,232
Assets
Liabilities
2008
2007
2008
2007
$'00
$'00
$'00
$'00
54,194
33,997
12,895
10,580
10 ,361
10 ,837
18,973
34,795
155,55
135,834
31,86
45,375
17,508
14,012
35,552
27,857
173,063
149,846
67,420
73,23
Assets
Liabilit es

(d) Other segment information

(d) Other segment information
	Drilling Fluids and Drilling Fluids and	Down Hole Down Hole	Unallocated Unallocated		Total Total
	Chemicals Chemicals	Instrumentation Instrumentation
	2008 2007 2008 2007	2008 2007 2008 2007	2008 2008	2007 2007	2008 2008	2007 2007
	$'000 $'000 $'00 $'00	$'000 $'000 $'00 $'00	$'000 $'00	$'000 $'00	$'000 $'00	$'000 $'00
Depreciation	229 258 229 258	3,306 3,947 3,306 3,947	198 198	163 163	3,733 3,733	4,368 4,368
Acquisition of segment assets	1,408 373 1,408 37	3,768 7,788 3,768 7,788	42 42	433 433	5,218 5,218	8,594 8,594
Significant non cash expenses other
than depreciation and amortisation	1,418 364 1,418 364	608 364 608 364	404 40	707 70	2,430 2,430	1,435 1,435

Secondary Reporting: Geographical Segments

Asia Pacific
Europe
Africa
Americas
Total

2008
2007
2008
2007
2008
2007
$'000
$'000
$'000
$'000
$'000
$'000
94,513
77,858
112,298
99,199
1,405
6,302
8,207
5,057
42,380
37,501
862
1,334
28,710
22,858
10,615
4,783
1,729
293
19,063
13,567
7,770
8,363
1,222
665
150,493
119,340
173,063
149,846
5,218
8,594
Revenue from external
customers
Segment assets
Acquisition of segmen
assets
2008
2007
2008
2007
2008
2007
$'00
$'00
$'00
$'00
$'00
$'00
94,513
77,85
112,298
99,199
1,405
6,302
8,207
5,057
42,380
37,501
862
1,334
28,710
22,85
10,615
4,783
1,729
293
19,063
13,567
7,770
8,36
1,22
665
150,493
119,340
173,063
149,846
5,218
8,594
Rev nue from external
customers
Segment assets
Acquisition of segment
assets

Imdex 2008 Annual Report | 103

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
28 Discontinued Operations
Effective 31 October 2007, the Group disposed of 100% of its shares in Surtron Technologies Pty Ltd,		Surtron Technologies UK Ltd and
Surtron Technologies US Inc, collectively known as the Surtron business. The disposal was part of the Group's decision to				focus its efforts on
the core competencies of selling drilling fluids and selling and renting down hole instrumentation. The financial results of the Surtron business
up to the date of disposal included in the Group results are summarised below.
		Consolidated
	4 months ended		12	months ended
	31 Oct 2007			30 Jun 2007
	$’000			$’000
Profit from discontinued operations
Revenue		6,584		14,591
Expenses		(5,376)		(12,294)
Profit before income tax		1,208		2,297
Income tax expense		(207)		(729)
Profit after income tax of discontinued operations		1,001		1,568
Gain on sale of the entities before income tax		12,139		-
Income tax expense		(2,219)		-
Gain on sale of the entities after income tax		9,920		-

Profit from discontinued operations		10,921		1,568
Cash flows from discontinued operations
Net cash (outflow)/inflow from ordinary activities		(1,737)		84
Net cash inflow from investing activities (including the proceeds from the sale of
the entities)		20,002		210
Net cash inflow from financing		1,121		-
		19,386		294
	Consolidated
	31 Oct 2007
The assets and liabilities of Surtron at the date of disposal were as follows:	$’000
Carrying amounts of assets and liabilities
Cash and cash equivalents		1,873
Trade and other debtors		4,382
Inventories		306
Deferred tax asset		221
Property, plant and equipment		6,528
Total assets		13,310
Intercompany balances		(2,612)
Trade and other creditors		(2,590)
Hire purchase liabilities		(2,300)
Employee entitlements		(686)
Total liabilities		(8,188)

Net assets		5,122
Details of the sale of the entities		Consolidated
	4 months ended		12	months ended
	31 Oct 2007			30 Jun 2007
	$’000			$’000
Consideration received:
Cash received		20,002		-
Carrying amount of net assets sold (net of intercompany balances)		(7,734)		-
Costs of disposal		(129)		-
Gain/(loss) on sale before income tax		12,139		-
Income tax expense		(2,219)		-
Gain/(loss) on sale after income tax		9,920		-

Imdex 2008 Annual Report | 104

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

==> picture [69 x 71] intentionally omitted <==

29 Related Party Disclosures

(a) Equity interests in related parties

Details of the percentage ownership of subsidiaries and the wholly owned Group is set out in Note 25. The wholly owned Group consists of Imdex Limited and its wholly owned subsidiaries.

(b) Transactions with key management personnel

(i) Key management personnel compensation

Details of key management personnel compensation is set out in Note 32.

(ii) Loans to key management personnel

No loans were made during the current or prior years to key management personnel or their related parties.

(iii) Key management personnel equity holdings

2008 Mr I F Burston Mr B W Ridgeway Mr R W Kelly Mr K A Dundo Mr M Lemmel Mr G E Weston Mr D J Loughlin Mr P A Evans 2007 Mr I F Burston Mr B W Ridgeway Mr H H Al-Merry Mr R W Kelly Mr K A Dundo Mr I R Freeman Mr M Lemmel * Mr G E Weston Mr D J Loughlin Mr S J Lyons Mr P A Evans Mr D L Kinley Mr C S Munyard	Balance at 1 July 2007 Granted as compensation Received on exercise of options Inception as key management person Net other change Balance at 30 June 2008 Balance held nominally No. No. No. No. No. No. No. 260,000 - - - 83,786 343,786 - 3,500,000 - - - - 3,500,000 - 265,000 - - - 25,000 290,000 - 300,000 - - - - 300,000 - 400,000 - - - 47,347 447,347 - - - 500,000 - (500,000) - - 10,000 - - - (10,000) - - 5,000 - - - 5,000 10,000 -
	4,740,000 - 500,000 - (348,867) 4,891,133 -
	Balance at 1 July 2006 Granted as compensation Received on exercise of options Cession as key management person Net other change Balance at 30 June 2007 Balance held nominally No. No. No. No. No. No. No. 200,000 - - - 60,000 260,000 - 5,000,000 - - - (1,500,000) 3,500,000 - 755,000 - - - (755,000) - - 265,000 - - - - 265,000 - 300,000 - - - - 300,000 - 16,059,002 - - - (16,059,002) - - - - - - 400,000 400,000 - - - 500,000 - (500,000) - - - - - - 10,000 10,000 - 50,000 - - (50,000) - - - - - - - 5,000 5,000 - 120,000 - - (120,000) - - - 25,000 - - (25,000) - - -
	22,774,002 - 500,000 (195,000) (18,339,002) 4,740,000 -

- Represent on market transactions after appointment as a director. Mr M Lemmel's shareholding at the date of becoming a director was nil.

Mr S J Lyons resigned on 17 October 2006, Mr D L Kinley ceased to be a key management person on 17 October 2006 and Mr C S Munyard ceased to be a key management person on 1 September 2006. Accordingly, the movement in equity holdings disclosed reflects only those movements which took place during the period that these persons were key management persons. The balance of securities held as at 30 June 2007 is nil as they are no longer key management personnel and therefore the net change shown in the table above is not as a result of the sale of any securities whilst being a key management person.

Imdex 2008 Annual Report | 105

and its controlled entities

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
29 Related Party Disclosures		(continued)
(iv) Share options issued by Imdex Limited
2008 Balance at 1	Granted as	Exercised		Cession as	key	Balance at	Vested but	Vested and	Options
July 2007	compensation			management		30 June	not	exercisable	vested
				person		2008	exercisable		during year
No.	No.	No.		No.		No.	No.	No.	No.
Mr I F Burston 1,000,000	-		-		-	1,000,000	-	-	-
Mr B W Ridgeway 2,000,000	-		-		-	2,000,000	-	2,000,000	2,000,000
Mr R W Kelly -	-		-		-	-	-	-	-
Mr K A Dundo -	-		-		-	-	-	-	-
Mr M Lemmel -	-		-		-	-	-	-	-
Mr G E Weston 2,500,000	500,000	(500,000)			-	2,500,000	-	1,666,667	1,000,000
Mr D J Loughlin 500,000	-		-		-	500,000	-	166,667	166,667
Mr P A Evans 300,000	200,000		-		-	500,000	-	100,000	100,000
6,300,000	700,000	(500,000)			-	6,500,000	-	3,933,334	3,266,667
Options granted to G E Weston	and P A Evans during the		financial year were made in accordance with the Staff Option Plan, as further
described in Note 33. Each share option converts into		1 ordinary share of Imdex			Limited. No amounts were paid, or are payable, by the recipient
on receipt of the option. The options issued to G E Weston and P A Evans are					exercisable in one		third lots at the	end of each of	the first three
years during their life.
A total of 500,000 options were exercised by key management personnel during the						year. The exercise price was 20c per share. No amounts
remain unpaid on the options exercised during the financial year at year end.
2007 Balance at 1	Granted as	Exercised		Cession as	key	Balance at	Vested but	Vested and	Options
July 2006	compensation			management		30 June	not	exercisable	vested
				person		2007	exercisable		during year

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

29 Related Party Disclosures (continued)

2007

Balance at 1
July 2006
Granted as
compensation
Exercised
Cession as key
management
person
Balance at
30 June
2007
Vested but
not
exercisable
Vested and
exercisable
Options
vested
during year

Mr I F Burston
Mr B W Ridgeway
Mr H H Al-Merry
Mr R W Kelly
Mr K A Dundo
Mr I R Freeman
Mr M Lemmel
Mr G E Weston
Mr D J Loughlin
Mr S J Lyons
Mr P A Evans
Mr D L Kinley
Mr C S Munyard

No.
No.
No.
No.
No.
No.
No.
No.
-
1,000,000
-
-
1,000,000
-
-
-
2,000,000
-
-
-
2,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,000,000
-
(500,000)
-
2,500,000
-
1,166,667
1,000,000
-
500,000
-
-
500,000
-
-
-
200,000
-
-
(200,000)
-
-
-
16,667
-
300,000
-
-
300,000
-
-
-
200,000
-
-
(200,000)
-
-
-
33,333
125,000
-
-
(125,000)
-
-
-
25,000

5,525,000
1,800,000
(500,000)
(525,000)
6,300,000
-
1,166,667
1,075,000

Mr S J Lyons resigned on 17 October 2006, Mr D L Kinley ceased to be a key management person on 17 October 2006 and Mr C S Munyard ceased to be a key management person on 1 September 2006. Accordingly, the movement in share options disclosed reflects only those movements which took place during the period that these persons were key management persons. The balance of options held as at 30 June 2007 is nil as they are no longer key management personnel and therefore the net change shown in the table above is not as a result of the any transaction whilst being a key management person.

Imdex 2008 Annual Report | 106

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

==> picture [69 x 71] intentionally omitted <==

29 Related Party Disclosures (continued)

(v) Other transactions with key management personnel (and their related parties) of Imdex Limited

(a) The premises on which the administration and factory buildings of Samchem Drilling Fluids & Chemicals (Pty) Ltd are located in Alrode, Alberton, South Africa are leased on normal commercial terms and conditions from PTS Investments (Pty) Ltd and Basalt Properties (Pty) Ltd, companies in which Mr I R Freeman has an interest. Mr I R Freeman was a non-executive director of Imdex Limited from the beginning of the prior financial year until his resignation on 10 April 2007. The total lease cost arising from this arrangement during the prior year until the date of his resignation on 10 April 2007 was $129,460.

(b) Mr K A Dundo is a Partner of the legal firm QLegal, that provided legal services to the Imdex Group on normal commercial terms and conditions. Total legal costs arising from QLegal were $216,202 (2007: $208,785)

Note
v(a)
v(b)
v(b)
Current Assets
Current Liabilities
v(a) v(b)
Profit from ordinary activities before income tax
includes the following items of income and expenses
relating to transactions, other than compensation, with
Directors or their related entities:
Total assets arising from transactions, other than
compensation, with Directors or their related entities:
Total assets and liabilities arising from transactions,
other than compensation, with Directors or their related
entities:
Goodwill and intercompany loans (parent: acquisition
costs)
Legal services expense
Operating lease rental expense

2008
2007
2008
2007
$
$
$
$
- 129,460
- -
134,314 31,281 134,314 31,281
Company
Consolidated

81,888 177,504 81,888 177,504

- - - -
3,573
- 3,573
-

(c) Transactions with other related parties

(i) Transactions within the wholly-owned Group

Details of dividend revenue received by the ultimate parent entity is disclosed in Note 4. Amounts receivable from entities in the whollyowned Group are disclosed in Note 9. During the financial year Imdex Limited provided management services amounting to $6,671,293 (2007: $1,363,000) to entities in the wholly-owned Group as disclosed in Note 4.

(d) Parent entity

The ultimate parent entity in the Group is Imdex Limited, a Company incorporated in Western Australia.

Imdex 2008 Annual Report | 107

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

30 Notes to the Cash Flow Statement

(a) Reconciliation of cash and cash equivalents

For the purposes of the Cash Flow Statement, cash and cash equivalents includes cash on hand and in banks and investment in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the year as shown in the Cash Flow Statement is reconciled to the related items in the balance sheet as follows:

Cash and cash equivalents Bank overdraft	2008 2007 2008 2007 $’000 $’000 $’000 $’000 13,276 15,271 869 962 - - - - Consolidated Company
	13,276 15,271 869 962

Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates. The fair value of cash and cash equivalents is $13,275,763 (2007: $15,271,482)

(b) Non cash financing and investing activities

During the year the Group acquired equipment under a finance lease of $0.7 million (2007: $1.1 million). This acquisition will be reflected in the prior period cash flow cash flow statement over the term of the finance lease via lease repayments.

(c) Reconciliation from the Profit for the Year to Net Cash Provided by Operating Activities

Profit for the year
Adjustments for non-cash and non-operational items
Depreciation of non-current assets
Amortisation of intangible assets
Non-cash interest on deferred payments
Interest earned on intercompany accounts
Interest received disclosed as investing activities
Share options expensed
Profit on sale of non-current assets
Interest on hire purchase liabilities
Fair value adjustment on interest rate cap
Proceeds from Rashid Trading Establishment shown as
investing activities
Profit on sale of Surtron before tax
Changes in assets and liabilities during the financial year
(Increase) / decrease in assets:
Current receivables
Current inventories
Other current assets
Increase / (decrease) in liabilities:
Current payables
Provision for employee entitlements
Increase / (decrease) in current tax liability
Increase in deferred tax balances
Net Cash Provided by / (used in) Operating Activities

2008
2007
2008
2007
$’000
$’000
$’000
$’000
32,002
13,518
16,325
9,866
3,733
4,368
198
2,269
6,055
3,430
-
-
404
707
-
-
-
-
(1,677)
(1,999)
(451)
(267)
(212)
(217)
2,025
728
2,025
728
(91)
(76)
-
(2,200)
66
225
3
57
10
-
10
-
-
(1,121)
-
(1,121)
(12,139)
-
(17,245)
-
(10,096)
(3,169)
(3,455)
(6,876)
(6,577)
(1,791)
-
(1,004)
(976)
(212)
23
(45)
(2,132)
(2,187)
258
2,577
556
604
143
152
(121)
4,584
(5,797)
3,477
(2,011)
(3,082)
(590)
(23)
Consolidated
Company

10,257
16,259
(9,991)
5,641

Imdex 2008 Annual Report | 108

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
30 Notes to the Cash Flow Statement (continued)
(d) Financing facilities
Total facilities available
Bank loan	13,148	15,484	-	-
Commercial bills	17,000	12,300	17,000	12,300
Equipment finance facility	76	2,591	76	633
Multi option facility (including bank overdraft)	2,020	2,522	2,020	2,020
	32,244	32,897	19,096	14,953
Facilities utilised at balance sheet date
Bank loan	13,148	15,140	-	-
Commercial bills	17,000	12,300	17,000	12,300
Equipment finance facility	-	2,407	-	449
Multi option facility (including bank overdraft)	-	-	-	-
	30,148	29,847	17,000	12,749
Facilities not utilised at balance sheet date
Bank loan	-	344	-	-
Commercial bills	-	-	-	-
Equipment finance facility	76	184	76	184
Multi option facility (including bank overdraft)	2,020	2,522	2,020	2,020
	2,096	3,050	2,096	2,204
31 Financial Instruments

(a) Capital Risk Management

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 16, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in notes 18 and 19. Management and the Board review the capital structure quarterly when the treasury function present an update to the Board. As a part of these reviews management considers the cost of capital and the risks associated with each class of capital. Based on the outcome of these reviews the Group will balance its overall capital structure through payment of dividends and issue of new shares as well as the issue of new debt or repayment of existing debt. The Board does not have a specific optimum gearing target other than to maintain a competitive weighted average cost of capital.

The Group’s overall capital management strategy remains unchanged from 2007.

(b) Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements.

(c) Categories of financial instruments

(c) Categories of financial instruments
	Consolidated		Company
	2008	2007	2008	2007
	$ 000s	$ 000s	$ 000s	$ 000s
Financial Assets
Cash and cash equivalents	13,276	15,271	869	962
Loans and receivables	45,087	39,362	75,791	63,027
At fair value through profit and loss	229	-	229	-
Financial Liabilities
Amortised cost	52,074	57,178	18,811	18,319

Imdex 2008 Annual Report | 109

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

31 Financial Instruments (continued)

(d) Financial risk management objectives

The Group’s treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk and fair value interest rate risk), credit risk, liquidity risk and cash flow interest rate risk.

The Group seeks to minimise the effects of these risks by using natural hedges where possible and derivative financial instruments to hedge remaining risk exposures where the benefit of the hedge outweighs the cost. The use of financial derivatives is governed by the Group’s treasury policies which are approved by the Board of Directors. These policies describe the Group’s policies with respect to foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. The Group does not enter into or trade financial instruments, including derivative financial instruments for speculative purposes. The only derivative instrument in operation at 30 June 2008 is an interest rate cap as described in note (g) below. The corporate treasury function reports quarterly to the Board of Directors.

(e) Market risk

The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates (note (f) below) and interest rates (note (g) below). The Group monitors its exposure to these risks on a quarterly basis and enters into derivative financial instruments to manage these risks where appropriate. The only derivative financial instrument currently being used is an interest rate cap. At a Group and at a company level market risk exposures are measured by sensitivity analyses and scenario modelling.

There has been no change to the Group’s exposure to market risks or the manner in which it manages and measures the risk.

(f) Foreign currency risk management

The Group undertakes certain transactions denominated in foreign currencies, hence exposures to foreign exchange rate fluctuations arise. Exchange rate exposures are managed with the use of natural hedges where possible and with the use of financial instruments where benefit outweighs cost within approved policy parameters. During the current and prior year no financial instruments were used to manage foreign exchange risk.

The carrying amount of the Group’s foreign currency denominated monetary assets and liabilities at the reporting date is as follows:

	Liabilities	Liabilities	Assets
	2008	2007	2008	2007
	$ 000s	$ 000s	$ 000s	$ 000s
United States Dollars	487	930	14,045		9,920
South African Rand	1,770	1,820	3,782		5,132
Canadian Dollars	44	714	4,222		3,197
Swedish Kroner	13,564	17,381	3,975		4,446
British pounds	4,953	13,700	401		2,416
Other - mostly Euros and Chilean Pesos	3,554	66	3,620		130

Foreign currency sensitivity

The Group is mainly exposed to United States Dollars, Swedish Kroner, Canadian Dollars and South African Rand.

The following table details the Group’s sensitivity to a 2% increase and decrease in the Australian Dollar against the relevant foreign currencies. The sensitivity rate of 2% is the rate used when performing the quarterly reporting on foreign currency risk internally. Foreign exchange risk is reported quarterly to key management personnel and the Board. The estimated movement of 2% represents management’s assessment of the possible change in foreign currency exchange rates which is based on regular forecasts received from major lending institutions. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjust their translation at the period end for a 2% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the Group where the denomination of the loan is in a currency other than the currency of the lender or the borrower. A positive number indicates an increase in profit or loss and other equity where the Australian Dollar strengthens against the respective currency. For a weakening of the Australian Dollar against the respective currency there would be an equal and opposite impact on the profit and other equity, and the balances below would carry the opposite sign.

Imdex 2008 Annual Report | 110

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

==> picture [69 x 71] intentionally omitted <==

31 Financial Instruments (continued)

==> picture [468 x 157] intentionally omitted <==

----- Start of picture text -----

(f) Foreign currency risk management (continued)
United States Dollar Impact South African Rand Impact
Consolidated Company Consolidated Company
2008 2007 2008 2007 2008 2007 2008 2007
$ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's
Profit or (loss) (271) (180) - - (i) (40) (66) - - (i)
Other equity - - - - (ii) - - - - (ii)
Swedish Kroner Impact Canadian Dollar Impact
Consolidated Company Consolidated Company
2008 2007 2008 2007 2008 2007 2008 2007
$ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's
Profit or (loss) 192 259 - - (i) (84) (50) - - (i)
Other equity - - - - (ii) - - - - (ii)
----- End of picture text -----

(i) Profit and loss impacts are mainly attributable to exposure on outstanding receivables and payables at year end denominated in the applicable foreign currency

(ii) Equity movements are attributable to the net investment in a foreign operation denominated in the applicable foreign currency

(g) Interest rate risk management

The Company and the Group are exposed to interest rate risk as entities in the Group borrow funds at floating interest rates. Interest rate risk is managed within defined policy guidelines. This is achieved by the Group by maintaining an appropriate mix between fixed and floating rate borrowings and by the use of an interest rate cap to limit the maximum exposure to interest rate rises on part of Group debt.

The Company and the Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.

Interest rate sensitivity

The sensitivity analyses below have been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the possible changes in interest rates based on consultation with appropriately qualified financial professionals.

Group sensitivity

At reporting date, if interest rates had been 100 basis points higher and all other variables were held constant, the Group’s net profit would decrease by $0.2 million (2007: 0.3 million). There would be a nil impact on equity. A 100 basis point decrease in interest rates, holding all other variables constant would yield an increase in the Group’s net profit of $0.3 million (2007: $0.3 million). This is mainly attributable to the Group’s exposure to interest rates on its variable rate borrowings. The profit increase / decrease effect is not symmetrical due to the presence of an interest rate cap which limits the Group’s maximum exposure to interest rates on $10 million of its debt.

The Group’s sensitivity to interest rates decreased during the current period due to the introduction of an interest rate cap to limit the maximum amount of interest rate impact on $10 million of its debt.

Imdex 2008 Annual Report | 111

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

31 Financial Instruments (continued)

(g) Interest rate risk management (continued)

Company sensitivity

At reporting date, if interest rates had been 100 basis points higher and all other variables were held constant, the Company’s net profit would decrease by $0.1 million (2007: $0.1 million). There would be a nil impact on equity. A 100 basis point decrease in interest rates, holding all other variables constant would yield an increase in the Company’s net profit of $0.2 million (2007: $0.1 million). This is mainly attributable to the Company’s exposure to interest rates on its variable rate borrowings. The profit increase / decrease effect is not symmetrical due to the presence of an interest rate cap which limits the Group’s maximum exposure to interest rates on $10 million of its debt.

The Company’s sensitivity to interest rates decreased during the current period due to the introduction of an interest rate cap to limit the maximum amount of interest rate impact on $10 million of its debt.

Interest rate cap

On 1 January 2008 the Company entered into an interest rate cap arrangement for a 3 year period. This interest rate cap, costing $0.2 million, enabled the Company to limit the maximum exposure to interest rate movements on $10 million of its debt to 7% per annum. At 30 June 2008 this interest rate cap had a fair value of $0.2 million. (Note 9) This fair value has been determined by seeking market valuations at 30 June 2008 for an interest rate cap with identical terms that terminates on 31 December 2011.

(h) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed regularly by management.

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable.

The Group does not have any significant credit risk exposure to any single counterparty or group of counterparties having similar characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Group’s maximum exposure to credit risk without taking account of the value of collateral obtained. At 30 June 2008 no such collateral had been obtained. (30 June 2007 : nil)

(i) Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the Board of Directors, who monitor short, medium and long term liquidity requirements through the use of financial models. The treasury function reports quarterly to key management personnel and the Board on matters affecting liquidity risk. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Included in note 30(d) is a listing of additional undrawn facilities that the Company/Group has at its disposal to further reduce liquidity risk.

Imdex 2008 Annual Report | 112

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

==> picture [69 x 71] intentionally omitted <==

31 Financial Instruments (continued)

(i) Liquidity risk management (continued)

Liquidity and interest risk tables

The following tables detail the Company’s and the Group’s remaining contractual maturity for its non–derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. The adjustment column represents the possible future cash flows attributable to the instrument included in the maturity analysis which are not included in the carrying amount of the financial liability on the balance sheet.

Consolidated

Weighted average effective interest rate % 2008 Non-interest bearing - Finance lease liability Variable interest rate instruments 8.20% 2007 Non-interest bearing - Finance lease liability 7.60% Variable interest rate instruments 6.26% Company Weighted average effective interest rate % 2008 Non-interest bearing - Finance lease liability - Variable interest rate instruments 9.70% 2007 Non-interest bearing - Finance lease liability 7.65% Variable interest rate instruments 8.54%	0-3 months 3 months to 1 year 1-5 years 5+ years Adjustment Total $’000 $’000 $’000 $’000 $’000 $’000 10,948 8,261 2,717 - - 21,926 - - - - - - 2,101 12,788 19,606 - (4,347) 30,148
	13,049 21,049 22,323 - (4,347) 52,074
	13,744 8,371 4,715 - - 26,830 395 1,185 760 248 (181) 2,407 1,359 5,437 23,086 3,240 (5,181) 27,941
	15,498 14,993 28,561 3,488 (5,362) 57,178
	0-3 months 3 months to 1 year 1-5 years 5+ years Adjustment Total $’000 $’000 $’000 $’000 $’000 $’000 906 905 - - - 1,811 - - - - - - 908 9,256 9,584 - (2,748) 17,000
	1,814 10,161 9,584 - (2,748) 18,811
	2,785 2,785 - - - 5,570 117 350 - - (18) 449 1,071 2,564 10,327 2,093 (3,755) 12,300
	3,973 5,699 10,327 2,093 (3,773) 18,319

Imdex 2008 Annual Report | 113

and its controlled entities

IMDEX LIMITED
and its controlled entities
NOTES TO THE FINANCIAL REPORT
31 Financial Instruments (continued)
(i) Liquidity risk management (continued)
The following tables detail the Company’s		and the Group’s remaining contractual maturity for its non–derivative financial assets. The
tables have been drawn up	based on the	undiscounted	cash flows		of financial assets including interest			that will be earned on those
assets except where the Company/Group anticipates			that the	cash flow will occur in a different period. The adjustment column
represents the possible future cash flows attributable to			the instrument included in the maturity analysis					which are not included in the
carrying amount of the financial asset on the balance sheet.
Consolidated
	Weighted	0-3 months	3 months		1-5 years	5+ years	Adjustment		Total
	average		to 1 year
	effective
	interest rate
	%	$’000	$’000		$’000	$’000	$’000		$’000
2008
Non-interest bearing	-	32,079		-	-	-		-	32,079
Variable interest rate
instruments	4.40%	13,276		-	-	-		-	13,276
Fixed interest rate
instruments	13.50%	-	13,008		-	-		-	13,008
		45,355	13,008		-	-		-	58,363
2007
Non-interest bearing	-	27,806		-	-	-		-	27,806
Variable interest rate
instruments	2.50%	15,271		-	-	-		-	15,271
Fixed interest rate
instruments	13.50%	-		-	13,116	-	(1,560)		11,556
		43,077		-	13,116	-	(1,560)		54,633
Company
	Weighted	0-3 months	3 months		1-5 years	5+ years	Adjustment		Total
	average		to 1 year
	effective
	interest rate
	%	$’000	$’000		$’000	$’000	$’000		$’000
2008
Non-interest bearing	-	2,401		-	-	60,382		-	62,783
Variable interest rate
instruments	4.40%	869		-	-	-		-	869
Fixed interest rate
instruments	13.50%	-	13,008		-	-		-	13,008
		3,270	13,008		-	60,382		-	76,660
2007
Non-interest bearing	-	10,213		-	-	41,258		-	51,471
Variable interest rate
instruments	4.40%	962		-	-	-		-	962
Fixed interest rate
instruments	13.50%	-		-	13,116	-	(1,560)		11,556
		11,175		-	13,116	41,258	(1,560)		63,989

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

31 Financial Instruments (continued)

(i) Liquidity risk management (continued)

The following tables detail the Company’s and the Group’s remaining contractual maturity for its non–derivative financial assets. The tables have been drawn up based on the undiscounted cash flows of financial assets including interest that will be earned on those assets except where the Company/Group anticipates that the cash flow will occur in a different period. The adjustment column represents the possible future cash flows attributable to the instrument included in the maturity analysis which are not included in the carrying amount of the financial asset on the balance sheet.

The following table details the Company’s and Group’s liquidity analysis for its derivative financial instrument. The table has been drawn up based on the undiscounted gross cash inflows / (outflows) since derivative financial instrument, being the interest rate cap, settles on a gross basis. Since the amounts payable and receivable are not fixed, the amount disclosed has been determined by reference to the projected interest rates as illustrated by the yield curves existing at the reporting date. There were no derivative financial instruments in the Company or Group in 2007.

0-3 months 3 months 1-5 years 5+ years to 1 year $’000 $’000 $’000 $’000 2008 Interest rate cap 20 60 200 -

Imdex 2008 Annual Report | 114

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

==> picture [69 x 71] intentionally omitted <==

31 Financial Instruments (continued)

(j) Fair value of financial instruments

The fair values of financial assets and financial liabilities are determined as follows:

the fair value of financial assets and financial liabilities (excluding derivative financial instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using pricing models based on observable current market transactions; and
the fair value of derivative financial instruments are calculated using quoted market prices

The financial statements include holdings in unlisted shares which are measured at cost due to them being held for disposal (note 11).

The Directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximates their fair values.

32 Key Management Personnel Compensation

The aggregate compensation of the key management personnel of the Group and the Company is set out below:

Short-term employee benefits Post-employment benefits Other long-term benefits Termination benefits Share-based payments	2008 2007 2008 2007 $ $ $ $ 1,656,713 1,455,441 1,301,545 1,150,003 112,836 93,068 88,225 72,022 116,291 34,785 39,790 20,020 - - - - 419,325 242,751 399,119 208,952 Consolidated Company
	2,305,165 1,826,045 1,828,679 1,450,997

33 Staff Option Scheme

(a) Share Based Payment Arrangements

Staff Option Plan

The Group has in place a Staff Option Scheme (Scheme) to reward employees (including Key Management Personnel) for their past services as well as to provide an incentive for future efforts. The terms and conditions of the Scheme are set out in the Scheme Rules with the Board of Directors responsible for the administration of the Scheme. The options carry no rights to dividends and no voting rights. The options expire on their expiry date. Each employee share option converts to one ordinary share of Imdex Limited on exercise. No amounts are paid or payable by the recipient on receipt of the option. Options may be exercised at any time from the date of vesting to the date of expiry. The number of options granted to staff is generally based on an assessment of the performance of that staff member as determined by the Board of Directors. Staff are normally only eligible to receive options when they have been with the Company in excess of 12 months. Options expire when the option holder ceases to be employed by the Group.

Chairman’s Options

During the prior year options were issued to the Chairman as a reward for past performance and as an incentive for the future. These options have been approved by members in General Meeting. The options carry no rights to dividends and no voting rights. The options expire on their expiry date or when ceasing to be a Director and may be exercised after 2 years at any time to their expiry date. As at 30 June 2008 none of these options had vested.

Managing Director’s Options

Options were issued to the Managing Director as a reward for past performance and as an incentive for the future. The options carry no rights to dividends and no voting rights. As at 30 June 2008 all of these options had vested.

Imdex 2008 Annual Report | 115

and its controlled entities

IMDEX LIMITED	IMDEX LIMITED
and its controlled entities
NOTES TO	THE FINANCIAL REPORT
33 Staff Option Scheme (continued)
(b) The following share based payment			arrangements were in existence during the current and comparative periods:
2008	Issue Date	Expiry	Exercise	Fair Value		Number of Options
		Date	Price	at Grant	Opening	Issued	Exercised	Lapsed	Closing
			$	Date	balance	current	current year	current year	balance
				$		year
Staff Options
Tranche 1 (i)	1-Aug-04	31-Jul-09	0.20	0.01	2,090,501	-	(912,168)	-	1,178,333
Tranche 2 (i)	1-Feb-06	31-Jan-11	0.35	0.02	2,189,905	-	(306,998)	(70,035)	1,812,872
Tranche 3 (i)	23-Feb-07	22-Feb-12	0.75	0.56	700,000	-	-	-	700,000
Tranche 4 (i)	23-Feb-07	22-Feb-12	1.00	0.48	4,425,000	-	(386,333)	(475,000)	3,563,667
Tranche 5 (i)	12-Jun-07	11-Jun-12	1.80	0.51	675,000	-	-	(50,000)	625,000
Tranche 6 (i)	18-Oct-07	17-Oct-12	1.80	0.81	-	500,000	-	-	500,000
Tranche 7 (i)	28-Mar-08	27-Mar-13	3.00	0.42	-	4,875,000	-	(60,000)	4,815,000
Chairman's Options
Tranche 1 (ii)	19-Oct-06	18-Oct-11	0.75	0.35	1,000,000	-	-	-	1,000,000
Managing Directors' Options
Tranche 1 (iii)	15-Sep-05	14-Sep-10	0.30	0.01	2,000,000	-	-	-	2,000,000
					13,080,406	5,375,000	(1,605,499)	(655,035)	16,194,872
2007	Issue Date	Expiry	Exercise	Fair Value		Number of Options
		Date	Price	at Grant	Opening	Issued	Exercised	Lapsed	Closing
			$	Date	balance	current	current year	current year	balance
				$		year
Staff Options
Tranche 1 (i)	1-Aug-04	31-Jul-09	0.20	0.01	3,048,333	-	(937,832)	(20,000)	2,090,501
Tranche 2 (i)	1-Feb-06	31-Jan-11	0.35	0.02	2,660,000	-	(428,428)	(41,667)	2,189,905
Tranche 3 (i)	23-Feb-07	22-Feb-12	0.75	0.56	-	700,000	-	-	700,000
Tranche 4 (i)	23-Feb-07	22-Feb-12	1.00	0.48	-	4,575,000	-	(150,000)	4,425,000
Tranche 5 (i)	12-Jun-07	11-Jun-12	1.80	0.51	-	675,000	-	-	675,000
Chairman's Options
Tranche 1 (ii)	19-Oct-06	18-Oct-11	0.75	0.35	-	1,000,000	-	-	1,000,000
Managing Directors' Options
Tranche 1 (iii)	15-Sep-05	14-Sep-10	0.30	0.01	2,000,000	-	-	-	2,000,000
Corporate Advisors Options
Tranche 1 (iv)	23-Dec-04	31-Jul-09	0.20	0.03	100,000	-	(100,000)	-	-
Tranche 2 (v)	23-Dec-04	31-Oct-07	0.20	0.02	2,000,000	-	(2,000,000)	-	-
Tranche 3 (iv)	23-Dec-04	31-Oct-07	0.35	0.01	1,000,000	-	(1,000,000)	-	-
					10,808,333	6,950,000	(4,466,260)	(211,667)	13,080,406

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

33 Staff Option Scheme (continued)

(i) Exercisable in one third lots in each year commencing one year after issue.

(ii) Expire on their expiry date or when ceasing to be a Director, and may be exercised after 2 years at any time to their expiry date.

(iii) Expire on their expiry date or 3 months after ceasing to be a Director, and may be exercised after 2 years at any time to their expiry

(iv) Exercisable at any time up to expiry.

(v) Exercisable at any time after Imdex shares trade at 30 cents for 5 consecutive trading days. This condition has been satisfied.

Imdex 2008 Annual Report | 116

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

==> picture [69 x 71] intentionally omitted <==

33 Staff Option Scheme (continued)

(c) Fair value of options granted during the financial year

The weighted average fair value of the share options granted during the financial year is $0.45 (2007: $0.47). Options were priced using a Black-Scholes option pricing model. Where relevant, the expected life used in the model has been adjusted based on management’s best estimate for the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions attached to the option), and behavioural considerations. Expected volatility is based on the historical share price volatility trends.

2008	Staff Options	Staff Options
	Tranche 6	Tranche 7
Inputs into the model
Grant date share price ($)	1.87	1.79
Exercise price ($)	1.80	3.00
Expected volatility	45%	50%
Option life (years)	5.00	5.00
Risk-free interest rate	6.47%	6.18%
Dividend yield	1.66%	1.96%
2007
	Chairman's Options	Staff Options	Staff Options	Staff Options
	Tranche 1	Tranche 3	Tranche 4	Tranche 5
Inputs into the model
Grant date share price ($)	0.80	1.08	1.08	1.40
Exercise price ($)	0.75	0.75	1.00	1.80
Expected volatility	50%	50%	50%	50%
Option life (years)	5.00	5.00	5.00	5.00
Risk-free interest rate	5.89%	6.00%	6.00%	6.38%
Dividend yield	2.30%	2.30%	2.30%	2.30%

(d) Exercised during the financial year

2008

Staff Options Tranche 1 Staff Options Tranche 2 Staff Options Tranche 3 Option Series	Number Exercised Exercise Date 912,168 Various 306,998 Various 386,333 Various 1,605,499 Weighted Average Share Price at Exercise Date 1.86 1.86 1.86

2007

Staff Options Tranche 1 Staff Options Tranche 2 Corp Advisor Tranche 1 Corp Advisor Tranche 2 Corp Advisor Tranche 3 Option Series	Number Exercised Exercise Date 937,832 Various 428,428 Various 100,000 24-Nov-06 2,000,000 Various 1,000,000 Various 4,466,260 Weighted Average Share Price at Exercise Date 0.77 0.78 0.74 0.97 0.97

(e) Balance at end of the financial year

The share options outstanding at the end of the financial year had a weighted average exercise price of $0.33 (2007: $0.25), and a weighted average remaining contractual life of 1582 days (2007: 1398 days)

Imdex 2008 Annual Report | 117

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

33 Staff Option Scheme (continued)

(f) Reconciliation of movements in share options during the year

The following reconciles the outstanding share options granted under the Staff Option Scheme at the beginning and end of the financial year

Balance at beginning of the financial year Granted during the financial year Forfeited during the financial year Exercised during the financial year Expired during the financial year Balance at end of the financial year Exercisable at end of the financial year	Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price 13,080,406 0.25 10,808,333 0.02 5,375,000 0.45 6,950,000 0.47 - - - - (1,605,499) 0.13 (4,466,260) 0.02 (655,035) 0.42 (211,667) 0.34 16,194,872 0.33 13,080,406 0.25 5,019,872 2,493,739 2007 2008

34 Subsequent Events

On 31 July 2008 Imdex Limited paid the next deferred settlement instalment of GBP 1,090,000 (A$2,271,000) due to the vendors of Imdex Technology UK Limited (formerly Chardec Technology Limited).

Imdex 2008 Annual Report | 118

IMDEX LIMITED

and its controlled entities

ADDITIONAL STOCK EXCHANGE INFORMATION AS AT 2 SEPTEMBER 2008

==> picture [69 x 71] intentionally omitted <==

(a) Distribution of Shareholders

a) Distribution of Shareholders
1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – and over Holding less than a marketable parcel	Number of Fully Paid Ordinary Shareholders Number of Option holders 353 - 1,258 7 797 41 1,148 213 126 18
	3,682 279
	54 -

(b) Substantial Shareholders

b) Substantial Shareholders
Ordinary Shareholders	Fully	Paid
	Number	Percentage
Fiberform Vindic Holding AB	20,800,000	11.32%
National Nominees Ltd	15,744,776	8.57%
HSBC Custody Nominees (Australia) Ltd	14,294,842	7.78%

(c) Twenty Largest Holders of Quoted Equity Securities

Ordinary Shareholders
Fiberform Vindic Holding AB
National Nominees Ltd
HSBC Custody Nominees (Australia) Ltd
Citicorp Nominees Pty Ltd
ANZ Nominees Ltd
J P Morgan Nominees Australia Ltd
RBC Dexia Investor Services Australia Nominees Pty
Ltd (PIIC Account)
UBS Nominees Pty Ltd
Telic Alcatel (Australia) Pty Ltd
RBC Dexia Investor Services Australia Nominees Pty
Ltd (PIPooled Account)
Queensland Investment Corporation
Wear Services Pty Ltd
Bond Street Custodians Ltd
RBC Dexia Investor Services Australia Nominees Pty
Ltd (BKCust Account)
Citicorp Nominees Pty Ltd
Mr Petrus Cornelius Nicolaas Middendorp
Primbee Investments Pty Ltd
Fortis Clearing Nominees Pty Ltd
Longo Pty Ltd
Mr B Conway and Mrs R Conway

Fully Paid
Number
Percentage
20,800,000
11.32%
15,744,776
8.57%
14,294,842
7.78%
11,119,760
6.05%
8,989,877
4.89%
6,153,846
3.35%
4,417,516
2.40%
3,806,337
2.07%
3,603,152
1.96%
3,078,118
1.68%
2,895,929
1.58%
2,725,547
1.48%
2,667,449
1.45%
2,631,648
1.43%
2,331,802
1.27%
1,882,500
1.02%
1,737,171
0.95%
1,668,534
0.91%
1,572,826
0.86%
1,100,000
0.60%

113,221,630
61.62%

Imdex 2008 Annual Report | 119

MDEX LIMITED
nd its controlled entities
DDITIONAL STOCK EXCHANGE INFORMATION
S AT 2 SEPTEMBER 2008
d) Director and Company Secretary Shareholdings
Name	Number of	Number of
	Shares	Options
Mr B W Ridgeway	3,500,000	2,000,000
Mr I F Burston	393,786	1,000,000
Mr R W Kelly	290,000	-
Mr K A Dundo	300,000	-
Mr M Lemmel	457,347	-
Mr P A Evans	10,000	500,000
	4,891,133	3,500,000
e) Company Secretary
r Paul Anthony Evans
) Registered Office

IMDEX LIMITED

and its controlled entities

ADDITIONAL STOCK EXCHANGE INFORMATION AS AT 2 SEPTEMBER 2008

(d) Director and Company Secretary Shareholdings

(e) Company Secretary

Mr Paul Anthony Evans

(f) Registered Office

Level 1, Canute House 15 Rheola Street West Perth Western Australia Phone: (08) 9481 5777

(g) Share Registry

Computershare Investory Services Level 2 45 St Georges Terrace Perth WA 6000 Phone: (08) 9323 2000

Imdex 2008 Annual Report | 120

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Contact Details

Imdex Limited Level 1, 15 Rheola Street West Perth 6005 Western Australia PO Box 1325 West Perth 6872 Western Australia Telephone: +61 8 9481 5777 Fax: +61 8 9481 6527 Email: [email protected]

www.imdexlimited.com

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ABN 78 008 947 813

2008 Annual General Meeting

Meeting Documents Notice of Annual General Meeting & Explanatory Memorandum Proxy Form for Annual General Meeting Corporate Representative Certificate for Annual General Meeting

To be held on Thursday, 16 October 2008 at the Celtic Club, 48 Ord Street, West Perth, Western Australia commencing at 11.00am WST

ABN 78 008 947 813

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NOTICE OF ANNUAL GENERAL MEETING

Notice is given that the 2008 Annual General Meeting of Shareholders of Imdex Limited will be held at The Celtic Club, 48 Ord Street, West Perth, Western Australia, on 16 October 2008 commencing at 11.00am WST

Agenda

Ordinary Business

1 To receive and consider the Annual Financial Report, together with the Directors’ and Auditor’s reports for the year ended 30 June 2008.
2 To consider and, if thought fit, pass the following Resolution as an Ordinary Resolution:

That, for all purposes, Mr Ian Burston, who retires from the office of Director by rotation, and being eligible, offers himself for re-election, is re-elected as a Director .

3 To consider and, if thought fit, pass the following resolution as an Ordinary Resolution:

That, for the purposes of Chapter 2E of the Corporations Act, ASX Listing Rule 10.11 and for all other purposes, the Company approves the grant of 2,000,000 Options to acquire ordinary fully paid shares in the Company to Mr B W Ridgeway, the Managing Director of the Company, on the terms set out in the accompanying Explanatory Memorandum.

Voting Exclusion: The Company will disregard any votes cast on Resolution 3 by Mr Ridgeway or any of his associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy form, or it is cast by the person chairing the Meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

4 To consider and, if thought fit, pass, with or without amendment, the following resolution as an Ordinary Resolution:

That, for the purposes of ASX Listing Rule 7.4 and for all other purposes, the Company ratifies the allotment and issue of 723,769 fully paid ordinary shares in the capital of the Company on the terms set out in the accompanying Explanatory Memorandum.

Voting Exclusion: The Company will disregard any votes cast on Resolution 4 by Christian Rolando Dockendorff Catalán, Christian Alexander Dockendorff Rioseco and Fernando Ivan Dockendorff Catalán or any person who participated in the issue and any associate of such person. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy form, or it is cast by the person chairing the Meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

5 To consider and, if thought fit, pass, with or without amendment, the following resolution as an Ordinary Resolution:

That, for the purposes of ASX Listing Rule 7.4 and for all other purposes, the Company ratifies the allotment and issue of 168,530 fully paid ordinary shares in the capital of the Company on the terms set out in the accompanying Explanatory Memorandum.

NOTICE OF ANNUAL GENERAL MEETING

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Voting Exclusion: The Company will disregard any votes cast on Resolution 5 by Elvira Zhubaniyazov or any person who participated in the issue and any associate of such person. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy form, or it is cast by the person chairing the Meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

6 To consider and, if thought fit, pass, with or without amendment, the following resolution as an Ordinary Resolution:

That, for the purposes of ASX Listing Rule 7.4 and for all other purposes, the Company ratifies the allotment and issue of 1,605,499 fully paid ordinary shares in the capital of the Company issued upon the exercise of Staff Options on the terms and conditions set out in the accompanying Explanatory Memorandum.

Voting Exclusion: The Company will disregard any votes cast on Resolution 6 by any person who participated in the issue and any associate of such person. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy form, or it is cast by the person chairing the Meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

7 To consider and, if thought fit, pass the following resolution as an Advisory Resolution:

That, for all purposes, the Directors’ and Executives’ Remuneration Report, included within the Directors’ Report, for the year ended 30 June 2008 be approved.

8 To consider any other business that may be brought before the Meeting in accordance with the Company’s Constitution.

Explanatory Memorandum

Shareholders are referred to the Explanatory Memorandum accompanying and forming part of this Notice of Annual General Meeting.

Snap Shot Time

Regulation 7.11.37 of the Corporations Regulations 2001 permits the Company to specify a time, not more than 48 hours before the meeting, at which a “snap shot” of Shareholders will be taken for the purposes of determining Shareholder entitlements to vote at the Meeting.

The Company’s Directors have determined that all Shares of the Company that are quoted on ASX at 5pm WST, 14 October 2008 shall, for the purposes of determining voting entitlements at the Annual General Meeting, be taken to be held by the persons registered as holding the Shares at that time.

Proxies

Please note that:

(a) a member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint a Proxy;
(b) a Proxy need not be a member of the Company; and
(c) a member of the Company entitled to cast two or more votes may appoint two proxies and may specify the proportion or number of votes each Proxy is appointed to exercise, but where the proportion or number is not specified, each Proxy may exercise half of the votes.

The enclosed Proxy Form for the Annual General Meeting provides further details on appointing Proxies and lodging the Proxy Form. Proxies must be returned by 11.00am WST on 14 October 2008.

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NOTICE OF ANNUAL GENERAL MEETING

Corporate Representative

If a representative of a Shareholder corporation is to attend the meeting the attached “Appointment of Corporate Representative” form should be completed and produced prior to admission.

Dated: 8 September 2008

By Order of the Board of Directors Imdex Limited

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Paul Evans Company Secretary

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EXPLANATORY MEMORANDUM

1 Purpose of this Document

This Explanatory Memorandum has been prepared to assist Shareholders with their consideration of the Resolutions in the accompanying Notice of Annual General Meeting.

2 Resolution 2 – Re-election of Director

In accordance with ASX Listing Rule 14.4 and Article 17.4 of the Constitution, at every Annual General Meeting, one third of the Directors for the time being must retire from office and are eligible for re-election. The Directors to retire are to be those who have been longest in office since their appointment or last reappointment or, if the Directors have been in office for an equal length of time and unless mutually agreed, by lot.

Mr Ian Burston, a Director of the Company since 22 November 2000, seeks re-election by reason of his retirement by rotation pursuant to Resolution 2 of the Notice of Meeting. A record of Mr Ian Burston’s attendances at Board meetings over the 12 month period to 30 June 2008 is set out in the 2008 Annual Report as are further details concerning his qualifications and experience.

The Directors recommend that Shareholders vote in favour of Resolution 2 to appoint Mr Ian Burston.

3 Resolution 3 – Issue of options to Mr B W Ridgeway

In accordance with ASX Listing Rule 10.11, and Chapter 2E of the Corporations Act, Resolution 3 of the Notice of Meeting deals with the consideration by Shareholders of the proposed issue to Mr Bernie Ridgeway, Imdex’s Managing Director, or his nominee of 2,000,000 five year Options to acquire ordinary shares in the Company, exercisable at $3.00 per Option, which are subject to the general terms and conditions set out below.

The purpose of the grant of the Options is to provide a performance incentive to Mr Ridgeway. The Options will be granted and issued no later than one month after this meeting if the resolution is passed, for no consideration.

If the Options are fully exercised by Mr Ridgeway $6 million will be received by the Company. This money will be used by the Company for general working capital purposes. The dilution effect if all Options are exercised by Mr Ridgeway would amount to approximately 1.1%, based on the Company’s current issued share capital. No material opportunity cost is considered to arise to the Company in respect of the proposed grant of Options to Mr Ridgeway.

Requirements of the Listing Rules

Listing Rule 10.11 provides that a listed entity must not issue equity securities to a related party without Shareholder approval. The proposed grant of Options to Mr Ridgeway requires approval by Shareholders under the Listing Rules.

If approval is given under Listing Rule 10.11, the Listing Rules specify that approval is not required under Listing Rule 7.1 (which limits the number of equity securities the Company may issue within a 12 month period to not more than 15% of the total number of ordinary securities on issue without the requirement for Shareholder approval).

Page 1

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EXPLANATORY MEMORANDUM

Requirement of the Corporations Act

Chapter 2E of the Corporations Act prohibits a public company from giving a “financial benefit” to a “related party” unless the giving of that benefit is approved by a resolution passed at a General Meeting of the Company.

Mr Ridgeway is a related party of the Company within the meaning of Chapter 2E of the Corporations Act and the Options to be granted to him to acquire fully paid ordinary shares in the Company will constitute a financial benefit for the purposes of Chapter 2E of the Corporations Act. The grant will, therefore, involve the giving of a financial benefit to a related party of the Company. Accordingly, the Company is required to seek Shareholder approval of the grant of the Options to Mr Ridgeway prior to making that grant.

Specific Disclosure of Information as Required by the Corporations Act and the Listing Rules

In accordance with Section 219 of the Corporations Act, and for the purposes of Listing Rule 10.11, the following information is provided:

a) The related party to whom this Resolution would permit financial benefits to be given is Mr Bernie Ridgeway;
b) The financial benefit to Mr Bernie Ridgeway consists of the grant to him of 2,000,000 Options exercisable at $3.00 per Option which are subject to the general terms and conditions set out below;
c) The Directors of the Company other than Mr Ridgeway recommend to Shareholders that this Resolution be passed as they believe it is in the Company’s best interests to provide Mr Ridgeway with performance incentives. Mr Ridgeway makes no recommendation;
d) None of the Directors of the Company other than Mr Ridgeway has a direct interest in the outcome of the Resolution. Mr Ridgeway has a direct interest in the outcome of the Resolution as he is the recipient of the Options;
e) ASIC requires that a dollar value be placed on the Options to be granted and has indicated the Black and Scholes Option valuation method is acceptable for calculating such value. The Black and Scholes Option Valuation method is designed to value listed securities that are freely tradeable. A range of values for the Options has been estimated using this valuation method. On this basis, the Options currently have a value of approximately 60 cents each. Therefore, the implied “value” being received by Mr Ridgeway is assessed at approximately $1.2 million. The key assumptions used in this calculation are:
risk free rate of 7.00% based on the Commonwealth Government securities rate with a maturity date approximating that of the expiration period of the options (source: Reserve Bank of Australia);
strike price of the Option of $3.00, being the exercise price on or before 5 years from the date of issue of the Options;
time to expiry of 5 years;
current share price of $1.85, based on the closing share price on 4 September 2008; and
share volatility of 50%, being the annualised standard deviation of returns.
f) The highest and lowest price on the ASX for the Company’s shares in the past 12 months was $2.69 on 13 December 2007 and $1.04 on 17 August 2007. The closing share price of the Company's shares on 4 September 2008, being the latest practicable date before the date of this Notice of Meeting was $1.85;
g) The dilution effect if the Options granted to Mr Ridgeway are exercised would amount to approximately 1.1% based on the Company’s current issued share capital;

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EXPLANATORY MEMORANDUM

h) Mr Ridgeway currently holds 3.5 million ordinary fully paid shares and 2 million options in Imdex Limited through Wear Services Pty Ltd and Keeble Nominees Pty Ltd, companies of which he is a director. As at the date of this Explanatory Memorandum and as set out in further detail in Imdex’s 2008 Annual Report that accompanies this Notice of Meeting, Mr Ridgeway’s total remuneration for the year ended 30 June 2008 was $562,509 and it is anticipated that Mr Ridgeway's salary for the current financial year will be substantially the same as for the previous financial year, however this will be the subject of review by the Company’s Remuneration Committee on, or about, 31 December 2008. Mr Ridgeway does not currently receive any other remuneration or emoluments from the Company;
i) The primary purpose of the grant of Options is to provide a performance incentive to Mr Ridgeway. Given these purposes, the Directors do not consider that there is any material opportunity cost or benefit foregone to the Company in granting the Options. The Board determined the number and value of the Options to be issued to Mr Ridgeway based on Mr Ridgeway's historical level of participation and assistance to the Company and also the Board's perception of Mr Ridgeway’s likely future involvement, commitment and loyalty to the Company; and
j) Other than the information set out in this Explanatory Memorandum, neither the Directors nor the Company are aware of any additional information that would be reasonably required by the Shareholders to enable them to make a decision in relation to whether the grant to Mr Ridgeway is in the Company’s interests.

General Terms and Conditions

a) The Options shall be exercisable by the option holder by notice in writing to the Company together with a payment of the exercise price of the Options, provided that Mr Ridgeway is employed by or on behalf of the Company at the time the Options are exercised or he may exercise the Options or part thereof within three calendar months of ceasing such employment;
b) An option holder may exercise one third of the Options granted to him at any time within the period beginning one year after the date of issue of the Options and ending five years of the date of issue of the Options. A further one third of the Options may be granted to him at any time within the period beginning two years after the date of issue of the Options and ending five years of the date of issue of the Options. The remaining one third of the Options may be granted to him at any time within the period beginning three years after the date of issue of the Options and ending five years of the date of issue of the Options;
c) Any notice of exercise of an Option received by the Company shall be deemed to be a notice of the exercise of the Option on the first business day after the date of receipt of the notice;
d) No Option will entitle the option holder to:
(i) distributions or bonus issues made by the Company to its Shareholders; or
(ii) the right to participate in any new offers of securities which may be made to the existing Shareholders of the Company without first exercising that option and the option holder has no rights to a change in the exercise price, or a change in the number of shares over which the Option may be exercised;
e) In the event of any re-organisation (including reconstruction, consolidation, subdivision, share buyback, reduction or return) of the issued capital of the Company, the rights of the Option holder shall be reorganised (as appropriate) in accordance with the Listing Rules of the ASX and (subject to the provisions with respect to rounding of entitlements) in all other respects the terms of the Options shall remain unchanged;
f) Shares issued pursuant to the exercise of the Options will be granted following the receipt of all relevant documentation and payments;
g) Any shares granted on exercise of Options will be credited as fully paid and will rank pari passu in all respects with other shares on issue as at the exercise date;

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EXPLANATORY MEMORANDUM

h) During Mr Ridgeway's employment with the Company or any of its subsidiaries, the holder may transfer the Options to an associate or related party of the holder;
i) In the event of the holder dying whilst an employee of the Company or any of its subsidiaries prior to the expiry of the Options, the right of the holder to exercise the Options shall vest in his executor and/or administrator and they shall have the same rights to exercise the Options as such deceased holder would have had during the option period but for his death;
j) The Options will not be quoted on the ASX; and
k) The Company will not make an application to the ASX for the quotation of shares issued on exercise of Options. The Company will not be under any obligation to ensure that such shares will be quoted.

Voting Restrictions

The Company will disregard any votes cast on this Resolution by Mr Ridgeway or his associates. However, the Company need not disregard a vote if:

a) It is cast by a person as proxy for a person who is entitled to vote in accordance with the directions on the proxy form; or
b) It is cast by the Chairperson of the meeting as proxy for a person who is entitled to vote as the proxy decides.

4 Resolution 4 – Ratification of the issue of 723,679 Shares

Resolution 4 seeks Shareholder ratification for the issue and allotment of 723,679 Shares issued to Christian Rolando Dockendorff Catalán, Christian Alexander Dockendorff Rioseco and Fernando Ivan Dockendorff Catalán (collectively the Vendors) as part consideration for the purchase of all of the shares of Southernland S.A. ( Southernland ).

4.1 Southernland S.A.

Southernland is, a South American based company which specialises in the manufacture and supply of drilling fluids for the Latin American market. The business of Southernland is complementary to the existing drilling fluids businesses of Imdex. The total consideration for the purchase of all of the shares of Southernland was $2,920,000, consisting of a cash payment of $1,533,000 (including on-costs) and the issue of 723,769 Shares at a deemed issue price of $1.92 per share.

4.2 ASX Listing Rule 7.4

ASX Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue or agree to issue during any 12 month period any equity securities, or other securities with rights to conversion to equity (such as an option), if the number of those securities exceeds 15% of the number of securities in the same class on issue at the commencement of that 12 month period.

ASX Listing Rule 7.4 sets out an exception to ASX Listing Rule 7.1. It provides that where a company in general meeting ratifies the previous issue of securities made pursuant to ASX Listing Rule 7.1 (and provided that the previous issue did not breach Listing Rule 7.1) those securities will be deemed to have been made with shareholder approval for the purpose of ASX Listing Rule 7.1.

Ratification by the shareholders of the Company is now sought pursuant to ASX Listing Rule 7.4 in order to reinstate the Company’s capacity to issue up to 15% of its issued capital, if required, in the next 12 months without shareholder approval.

Page 4

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EXPLANATORY MEMORANDUM

ASX Listing Rule 7.5 requires that the following information be provided to shareholders in relation to the Shares the subject of Resolution 4:

(a) the total number of Shares issued by the Company on 1 November 2007 was 723,679 Shares;
(b) the Shares are subject to voluntary escrow for 24 months from 1 November 2007;
(c) the Shares were issued at a deemed price of $1.92 per Share, being the closing weighted average share price of the Company's Shares on ASX on the five business days prior to 1 November 2007;
(d) the Shares were allotted to Christian Rolando Dockendorff Catalán, Christian Alexander Dockendorff Rioseco and Fernando Ivan Dockendorff Catalán (collectively the Vendors) as part consideration for the purchase by the Company of Southernland S.A.
(e) all of the Shares allotted and issued rank equally in all respects with the Company’s existing Shares on issue;
(f) no Shares were issued to any related party of the Company; and
(g) no monies were raised by the issue as the issue was in part consideration for the purchase by the Company of all of the shares in Southernland S.A..

The Directors recommend that Shareholders vote in favour of Resolution 4.

5 Resolution 5 – Ratification of the issue of 168,530 Shares

Resolution 5 seeks Shareholder ratification for the issue and allotment of 168,530 Shares issued to Elvira Zhubaniyazov as part consideration for the purchase of the remaining 25% of Shares in Suay Energy Services LLP ( Suay ).

5.1 Suay

Suay provides drilling fluids to customers in the Caspian Sea region. The total consideration for the purchase of the remaining 25% of the shares in Suay was $778,075 comprising a cash payment of $500,000 and the issue of 168,530 Shares at a deemed issue price of $1.65 per Share being the price of the Company’s shares at 30 June 2008.

5.2 ASX Listing Rule 7.4

Page 5

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EXPLANATORY MEMORANDUM

ASX Listing Rule 7.5 requires that the following information be provided to shareholders in relation to the Shares the subject of Resolution 5:

(h) the total number of Shares issued by the Company on 1 July 2008 was 168,530 Shares;
(i) the Shares were issued at a deemed price of $1.65 per Share, being the price of the Company's shares on the ASX on 30 June 2008;
(j) the Shares were allotted to Elvira Zhubaniyazov as part consideration for the purchase by the Company of 25% of Suay Energy Services LLP;
(k) the Shares allotted and issued rank equally in all respects with the Company’s existing Shares on issue;
(l) no Shares were issued to any related party of the Company; and
(m) no monies were raised by the issue as the issue was in part consideration for the purchase by the Company of 25% of the shares in Suay Energy Services LLP.

The Directors recommend that Shareholders vote in favour of Resolution 5.

6 Resolution 6 – Ratification of the issue of Staff Shares

Resolution 6 seeks Shareholder ratification for the issue and allotment of 1,605,499 Shares which were issued to employees and consultants of the Company ( Staff Shares ).

6.1 Staff Shares

1,605,499 Staff Shares were issued to various employees of the Company on the exercise of employee options previously granted by the Board in accordance with the Company's Staff Option Plan as incentives and rewards for staff loyalty and performance. The Company notes that the Staff Option Plan has since been superseded by an Employee Option Plan approved by Shareholders at a general meeting held on 30 April 2007.

The full details of all the Staff Shares issued are provided at Annexure A, however by way of summary: (a) 912,168 Shares were issued at a price of $0.20;
(b) 306,998 Shares were issued at a price of $0.35; and
(c) 386,333 Shares were issued at a price of $1.00.

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EXPLANATORY MEMORANDUM

6.2 ASX Listing Rule 7.4

Ratification by the shareholders of the Company is now sought pursuant to ASX Listing Rule 7.4 in order to reinstate the Company’s capacity to issue up to 15% of its issued capital, if required in the next 12 months without shareholder approval.

ASX Listing Rule 7.5 requires that the following information be provided to shareholders in relation to the Shares the subject of Resolution 6:

(a) The total number of Shares issued by the Company was 1,605,499 Shares;
(b) 912,168 Shares were issued at a price of $0.20 per Share, 306,998 Shares were issued at a price of $0.35 per Share and 386,333 Shares were issued at a price of $1.00 per Share. The Shares were issued on the dates detailed in the table in Annexure A, which dates are between 1 July 2007 and 30 June 2008;
(c) The Shares were allotted to employees of the Company by the exercise of Staff Options held by the employees, which Staff Options had been issued by way of incentive and reward for performance and loyalty pursuant to the Company's Staff Option Plan;
(d) The Shares allotted and issued rank equally in all respects with the Company’s existing Shares on issue;
(e) No Shares were issued to any related party of the Company; and
(f) $676,216 in total was raised by the issue, which was used as general working capital.

The Directors recommend that Shareholders vote in favour of Resolution 6.

7 Resolution 7 – Remuneration Report

Included in the Directors' Report contained within the 2008 Annual Report is a Remuneration Report that sets out the details of the remuneration of all Directors and the highest paid group executives. In addition, it describes the Board’s remuneration policy.

The Board submits the Remuneration Report to Shareholders for their consideration and adoption by way of a non-binding resolution as required by the Corporations Act.

The Directors recommend that Shareholders vote in favour of Resolution 7.

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EXPLANATORY MEMORANDUM

8 Glossary

In this Explanatory Memorandum, the following terms have the following meanings unless the context otherwise requires:

AGM	means the 2008 Annual General Meeting of the Company to be held at 11.00am
	on 16 October 2008.
ASIC	means the Australian Securities & Investments Commission.
ASX	means the Australian Securities Exchange operated by ASX Limited ABN 98 008
	624 691.
Board	means the Board of Directors.
Company	means Imdex Limited ABN 78 008 947 813.
Constitution	means the Constitution of the Company.
Corporations Act	means the Corporations Act 2001 (Cth).
Director	means a Director of the Company.
Share	means a fully paid ordinary share in the capital of the Company.
Shareholder	means a holder of a Share.
Staff Options	means the options issued to employees and/or consultants of the Company
	pursuant to the Staff Option Plan.
Staff Option Plan	means the previous option plan for employees and consultants of the Company.
Staff Shares	means the Shares issued on the exercise of the Staff Options.
Southernland	means Southernland S.A.
Suay	means Suay Energy Services LLP.
WST	means Australian Western Standard Time.

Page 8

ANNEXURE A – STAFF SHARES

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Date of exercise of options	Number of Staff Shares issued	Issue Price ($)
1/07/2007	8,333	$0.35
18/07/2007	8,334	$0.20
18/07/2007	25,000	$0.35
18/07/2007	50,000	$1.00
23/07/2007	25,000	$1.00
23/07/2007	10,000	$0.35
01/08/2007	10,000	$0.20
01/08/2007	5,000	$0.20
03/09/2007	20,000	$0.20
07/09/2007	25,000	$0.20
12/09/2007	16,667	$0.20
24/09/2007	33,500	$0.20
26/09/2007	22,000	$0.20
26/09/2007	16,667	$0.20
27/09/2007	25,000	$0.20
27/09/2007	8,333	$0.35
22/10/2007	50,000	$0.20
22/10/2007	25,000	$0.20
22/10/2007	5,000	$0.20
23/10/2007	250,000	$0.20
26/10/2007	16,667	$0.20
26/10/2007	250,000	$0.20
05/11/2007	16,666	$0.35
05/11/2007	30,000	$0.20
05/11/2007	3,333	$0.35
29/11/2007	8,333	$0.35
04/12/2007	25,000	$1.00
04/12/2007	15,000	$0.35
17/12/2007	16,666	$0.20
18/12/2007	10,000	$0.35
19/12/2007	25,000	$1.00
09/01/2008	10,000	$0.35
09/01/2008	25,000	$1.00

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ANNEXURE A – STAFF SHARES (continued)

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09/01/2008	20,000	$0.35
18/01/2008	16,667	$0.20
22/01/2008	20,000	$1.00
22/01/2008	6,667	$0.35
23/01/2008	25,000	$1.00
25/01/2008	16,666	$0.35
30/01/2008	20,000	$0.20
04/02/2008	25,000	$0.35
20/02/2008	8,333	$0.35
20/02/2008	25,000	$1.00
27/02/2008	33,000	$1.00
29/02/2008	16,667	$1.00
29/02/2009	16,667	$0.35
04/03/2008	25,000	$1.00
04/03/2008	5,000	$0.35
05/03/2008	34,000	$0.35
07/03/2008	10,000	$0.20
07/03/2008	26,667	$0.35
10/03/2008	10,000	$0.35
01/04/2008	10,000	$0.35
04/04/2008	8,333	$1.00
11/04/2008	5,000	$1.00
11/04/2008	3,000	$0.35
16/04/2008	30,000	$1.00
17/04/2008	8,333	$1.00
28/04/2008	5,000	$1.00
01/05/2008	15,000	$1.00
27/05/2008	4,000	$1.00
16/06/2008	16,000	$1.00
16/06/2008	10,000	$0.35
19/06/2008	40,000	$0.20
Total	1,605,499

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CORPORATE REPRESENTATIVE CERTIFICATE

Shareholder Details

This is to certify that by a resolution of the Directors of:

( Company)

(Insert name of shareholder company)

The Company has appointed:

( Authorised corporate representative)

(Insert name of corporate representative)

in accordance with the provisions of section 250D of the Corporations Act 2001, to act as the body corporate representative of that Company at the Annual General Meeting of Imdex Limited to be held on 16 October 2008 and at any adjournments of that meeting.

DATED

………………………………………………………………………………………………………………………………..2008

Please sign here

Executed by the Company

in accordance with its constituent documents

Signed by authorised representative Signed by authorised representative Name of authorised representative (print) Name of authorised representative (print) Position of authorised representative (print) Position of authorised representative (print)

Instructions for Completion

Insert name of appointor Company and the name or position of the appointee (eg “John Smith” or “each Director of the Company”).
Execute the Certificate following the procedure required by your Constitution or other constituent documents.
Print the name and position (eg Director) of each Company officer who signs this Certificate on behalf of the Company.
Insert the date of execution where indicated.
The certificate must be produced prior to admission to the Meeting. You may send or deliver the Certificate to Imdex Limited, Level 1, 15 Rheola Street, West Perth WA 6005 or fax to (08) 9481 6527.

Page 11

CORPORATE REPRESENTATIVE CERTIFICATE

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THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY

Page 12

ABN 78 008 947 813

Imdex Limited

Lodge your vote:

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By Mail:

Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia

Alternatively you can fax your form to +61 8 9323 2033

000001 000 IMD MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

For all enquiries call:

(within Australia) 1300 850 505 (outside Australia) +61 3 9415 4000

Proxy Form

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For your vote to be effective it must be received by 11.00am (WST) Tuesday 14 October 2008

How to Vote on Items of Business

All your securities will be voted in accordance with your directions.

Appointment of Proxy

Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.

Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.

Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.

A proxy need not be a securityholder of the Company.

Signing Instructions

Individual: Where the holding is in one name, the securityholder must sign.

Joint Holding: Where the holding is in more than one name, all of the securityholders should sign.

Power of Attorney: If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held.

Attending the Meeting

Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate ''Certificate of Appointment of Corporate Representative'' prior to admission. A form of the certificate may be obtained from Computershare or online at www.computershare.com.

Comments & Questions: If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form.

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View the annual report:

www.imdexlimited.com

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Turn over to complete the form

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PLEASE NOTE: For security reasons it is important that you keep your SRN/HIN confidential.

999999_SAMPLE_0_0_PROXY/000001/000001/i

MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

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----- Start of picture text -----

I9999999999
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Change of address. If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a I9999999999 broker (reference number commences with ' X ') should advise your broker of any changes. I 9999999999 I ND

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Proxy Form

to indicate your directions

Please mark

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Appoint a Proxy to Vote on Your Behalf

XX

I/We being a member/s of Imdex Limited hereby appoint

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the Chairman of the Meeting[OR]

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PLEASE NOTE: Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s).

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the Annual General Meeting of Imdex Limited to be held at the Celtic Club, 48 Ord Street, West Perth, Western Australia on Thursday, 16/10/2008 at 11.00am and at any adjournment of that meeting.

Important for Resolutions 3, 4, 5 and 6: If the Chairman of the Meeting is your proxy and you have not directed him/her how to vote on Resolutions 3 to 6 below, please mark the box in this section. If you do not mark this box and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on Resolutions 3 to 6 and your votes will not be counted in computing the required majority if a poll is called on these resolutions. The Chairman of the Meeting intends to vote undirected proxies in favour of Resolutions 3 to 6.

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I/We acknowledge that the Chairman of the Meeting may exercise my proxy even if he/she has an interest in the outcome of that Item and that votes cast by him/her, other than as proxy holder, would be disregarded because of that interest.

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PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.

Items of Business

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Resolution 2 Re-election of Mr Ian Burston as a Director Resolution 3 Issue of options to Mr B W Ridgeway Resolution 4 Ratification of issue of 723,679 Shares

Resolution 5 Ratification of issue of 168,530 Shares Resolution 6 Ratification of issue of Shares - Staff Options Resolution 7 Approval of Remuneration Report

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The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.

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Signature of Securityholder(s) [This section must be completed.]
Individual or Securityholder 1 Securityholder 2 Securityholder 3
Sole Director and Sole Company Secretary Director Director/Company Secretary
Contact
Contact Daytime
Name Telephone Date / /
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0 5 5 3 5 4 A

I MD

AI assistant

IMDEX LIMITED — Annual Report 2008

65119_rns_2008-09-16_0ba93e8b-74e6-4309-87b0-114f17711883.pdf

ABN 78 008 947 813

2008 Annual General Meeting

Contents

Imdex Group at a Glance

Group Structure

FY08 Operational Highlights

Market Highlights

Financial Highlights

2008 Comparative Financial Performance

Imdex’s Board of Directors

Chairman’s Report

To our shareholders,

Managing Director’s Report

Key Financial Highlights

Key Operational Highlights

Global Expansion

Rationalisation

(continued) Managing Director’s Report

Drilling Fluids and Chemicals

Key achievements include:

Down Hole Instrumentation

Key achievements:

Positive Outlook

Bernie Ridgeway

Imdex’s Core Business

Drilling Fluids and Chemicals Division

Australian Mud Company

Samchem

Poly-Drill Drilling Systems

Southernland

Suay Energy Services

What are Drilling Fluids?

Down Hole Instrumentation Division

Reflex Instruments

Flexit

System Entwicklungs GmbH (SEG)

Imdex Technology (UK) Limited

What are Down Hole Instruments?

Survey Instrumentation

Core Orientation

Gyroscopes & Directional Steering

Imdex’s Global Reach

Marketing & Sales

Advanced and Leading Technology

Expansion into Prospective Markets

Strong Brands

Global Supply Agreements

Customer Service, Distribution & Logistics

Quality, Health, Safety & the Environment

Key Achievements for FY08

Key Statistics

Lost Time Injury Frequency Rates (LTIFR) FY08

Managing Risk

Key areas of focus include:

Utilising Technology

Prophix

Critical IT Systems and Remote Access

Imdex Group Intranet

Attracting and Retaining Experienced Employees and Managers

Continual Research & Development

Oil and Gas Innovations

Continual Improvement

Developing Our Environmental Products

Dust Suppressants

Financial Report 2008

(b) Directorships of other listed companies

IMDEX LIMITED

DIRECTORS ’ REPORT FOR THE YEAR ENDED 30 JUNE 2008

(c) Company Secretary

(d) Directors’ Meetings

(e) Directors’ Shareholdings

IMDEX LIMITED

DIRECTORS ’ REPORT FOR THE YEAR ENDED 30 JUNE 2008

(f) Remuneration Report

Remuneration policy for Directors and Executives

Non Executive Directors

Managing Director

IMDEX LIMITED Annual Report 2008