IMDEX LIMITED — Annual Report 2008

Aug 17, 2008

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Imdex Limited FY08 Full Year Results August 2008

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1

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• Highlights

• Financial Performance

• Review of Activities

• Strategy & Outlook

• Questions

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Continued Strong Growth

• Growth across all geographic regions – strong business model with a global footprint

• Supply and Distribution agreements with Sandvik, Boart Longyear, Major Drilling and Layne Christensen

• Increased exposure to the global oil & gas market – drilling fluids and down hole instrumentation

• Continued product technology leadership

• Divestment of Surtron business for $20m cash

• Earnings accretive acquisitions:

• Suay Energy Services in Kazakhstan

• Poly-Drill Drilling Systems in Canada

• Southernland in Chile

• System Entwicklungs in Germany

• Commencement of upgrades/additional plant and manufacturing facilities - Samchem (South Africa) and Southernland (Chile) - reduce costs and meet demand

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Reflex EZ Shot being prepared for use
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Five consecutive years of revenue and profit growth

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Normalised Revenue by Division Normalised EBITA
($m) ($m)
45
40.1
160 148.6
40
� 25%
140 35 � 62%
120 30
25
100
20
80
15
60 10
40 5
0
20
-5
0
-10
FY04 FY05 FY06 FY07 FY08
FY04 FY05 FY06 FY07 FY08
Fluids and Chemicals Down Hole Instrumentation Minerals Processing
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Normalised results include discontinued operations and exclude non-operational items

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• Highlights

• Financial Performance

• Review of Activities

• Strategy & Outlook

• Questions

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Financial Results Overview

				FY08		FY07
				$000’s		$000’s		Change
	Fluids and Chemicals Revenue			85,711		62,353		�37%
	Down Hole Instrumentation Revenue (incl Surtron)			62,882		56,139		�12%
	Normalised Revenue			148,593		118,492		�25%
	EBITA (incl Surtron trading, excl profit on disposal)			40,071		24,707		�62%
	EBIT (incl Surtron trading, excl profit on disposal)			34,016		21,277		�60%
	Profit on sale of Surtron (before tax)			12,139		-		-
	Net Profit after Tax			32,002		13,518		�137%
	Earnings per Share (continuing operations)			11.22c		7.72c		�45%
	Return on Equity			38%		32%		�19%
	Operating Cash Flow before Tax			25,619		21,651		�18%
											6

25% Revenue Growth

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Normalised Revenue Growth
($m)
160 � 5% 148.6
� 20%
140
118.5
120
100
80
60
40
20
0
FY07 Organic Acquisition FY08
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• 25% revenue growth – 20% organic growth and 5% acquisition growth

• Organic growth - all geographic areas (see next slide)

• Highest organic growth - AMC and Reflex

• The growth in AMC was driven by increased mining and mineral exploration activity - Asia Pacific and Africa

• Reflex’s growth driven by increased market penetration - Asia Pacific, Africa and Canada

Normalised results include discontinued operations and exclude non-operational items

Strong revenue growth across all geographies

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Europe
62%
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$8.2m
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Asia Pacific
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� 19%
$92.6m
Americas
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$19.1m
Africa
� 26%
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62% EBITA Growth

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Normalised EBITA Growth
($m)
45
� 5% 40.1
� 57%
40
35
30
24.7
25
20
15
10
5
0
FY07 Organic Acquisition FY08
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• 62% EBITA growth – 57% organic growth and 5% acquisition growth

• Growth in margins achieved by:

• Growing economies of scale

• Controlling back office costs, particularly in newly acquired operations

• Continued implementation of the Imdex business model in all overseas operations

Normalised results include discontinued operations and exclude non-operational items

EPS, DPS and ROE Growth

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Normalised Earnings & Dividends
Return on Equity
per Share 50% (normalised EBITA/Equity)
14.0 c
12.0 c 40%
10.0 c
30%
8.0 c
20%
6.0 c
4.0 c
10%
2.0 c
0%
0.0 c FY04 FY05 FY06 FY07 FY08
-10%
-2.0 c
-4.0 c
-20%
FY04 FY05 FY06 FY07 FY08
Interim Div Final Div Earnings per Share
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Imdex is delivering attractive Returns on Equity

Normalised results include discontinued operations and exclude non-operational items

Strong Balance Sheet

Goodwill & intangible assets Other assets Property, plant & equipment Investment in SGE Inventory Receivables Cash	June 08 $000’s	June 07 $000’s
	79,915 1,429 7,140 17,508 21,716 32,079 13,276	62,779 888 13,207 16,056 13,839 27,806 15,271
Total Assets	173,063	149,846
Provisions / Deferred tax liabilities Vendor finance – Chardec Other borrowings Hire purchase borrowings Bank loan Commercial bills Payables	6,554 5,404 - - 13,148 17,000 25,314	7,141 10,088 502 2,407 15,140 12,300 25,654
Total Equity	105,643	76,614

• Strong cash position

• Growth in assets due to acquisitions and organic business growth

• Goodwill/intangible assets due to acquisitions: includes IP and technology assets

• Recent acquisitions funded by operating cash flows and debt

� SGE:

• Investment $4.5m book value (15m shares at cash cost $300k);

• � Secured loan $13.0m (being repaid in cash from IPO - 1H09)

• Net debt of $22.3m at 30 June 08

• Vendor finance reduced to $3.1m on 31 July 08

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Low Gearing

Composition of Debt at 30 June 2008

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Deferred
Payments
$5.4m (15%)
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Bank Loan
$13.2m (37%)
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Comm Bills
$10.0m (28%)
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Comm Bills $7.0m (20%)

• floating interest rate - fixed interest rate

• nil interest rate

• Total debt as at 30 June 08 of $35.6m (30 June 07 - $40.4m)

• Gearing down to 25% (30 June 07 – 35%)

• Gearing reduced further to 24% on 31 July 08 with the repayment of $2.3 million deferred payment

• Commercial bills are AUD based with $10m capped at 7% p.a.

• Bank loan is SEK based and bears interest at ~7% per annum

• Deferred payments have no cash interest payments

• 43% of debt - fixed interest rates

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• Highlights

• Financial Performance

• Review of Activities

• Strategy & Outlook

• Questions

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Fluids and Chemicals Division Global Presence

Fluids and Chemicals Revenue

0 10 20 30 40 50 60 70 80 90

14 �Strong organic growth �A balanced global presence �Facilities being upgraded and expanded to reduce costs and meet demand: �Samchem (Africa) �Southernland (Latin America) �FY08 margins maintained �Growth experienced from global alliances �Strengthened management team to maintain/extend superior customer service FY04 FY05 FY06 FY07 FY08 ($m) 85.7 �37% 1 July 07 100% Canada Poly-Drill 1 Nov 07 100% Chile Southernland 30 June 08 25% Kazakhstan Suay 1 July 07 75% Kazakhstan Suay Company Country Date % Acquired

Down Hole Instrumentation Division Technology Leader

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Down Hole Instrumentation Revenue
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($m)
70
62.9
� 12%
60
50
40
30
20
10
0
FY04 FY05 FY06 FY07 FY08
•
Divestment of Surtron for $20m cash on 1 Nov 07
•
Acquisition of 100% of SEG (Germany) 1 Jan 08
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• Gaining entry into oil & gas market with industry specific down hole instrumentation

• Continuing to grow rental business

• Maintained technology leadership:

• Digital down hole survey instrumentation

• Electronic core orientation tool

• MEMS digital, solid state down hole gyro survey system

• Growth experienced from global alliances

• Strengthened management team to maintain/extend superior customer service

Down Hole Instrumentation Division SEG – Platform for Oil & Gas Market

• Successful integration of SEG

• Strong demand going forward

• Long term supply of gyros secured for Target INS system

• Production capacity is being expanded

• Focussed primarily on rentals

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3D representation of multiple drill holes in
close proximity
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• SEG technology has competitive edge e.g. continuous “on the fly” survey

• Ongoing development of additional technologies e.g. Drop Tool

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FY08 Scorecard

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Achieved
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Achieved Yes Yes Yes, ongoing Yes, ongoing Yes, ongoing Ongoing Ongoing Ongoing

• Integrate acquisitions

• Deliver organic growth

• Maintain superior customer service

• Maintain and extend global technology leadership

• Support global alliances

• Penetrate oil & gas market – DHI

• Become 5[th] global player in drilling fluids

• Dispose of SGE investment

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• Highlights

• Financial Performance

• Review of Activities

• Strategy & Outlook

• Questions

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Outlook for Mineral Exploration

• Record minerals exploration spend and increased production activity

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Estimated Exploration Spend Worldwide (Non Ferrous)
(US$b)
12
10
8
6
4
2
0
Data from the Corporate Exploration Strategies report of the Metals
Economics Group – March 2008
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
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• US$13.1b in 2008 - up 25% on US$10.5b in 2007

• Strong demand for drilling fluids and down hole instrumentation

• Production capacity constraints – longer for supply to meet demand

• Deeper and more complicated ore bodies

• Longer timeframes from discovery to production

• Rising exploration, development and production costs

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Outlook for Oil & Gas

• Strong investment into exploration and development of new reserves

Oil & Gas Exploration Spend

• Significant uplift in exploration spend over past 4 years

• Worldwide exploration spend in 2007 was ~US$332b (approx. 30 times that of minerals sector)

• Interest in new exploration in all parts of the industry – highest for 30 years

• Complex exploration places a premium on technologies that improve performance and reduce risk

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30,000 30%
Exploration spend as a
25,000 % of total E&P spend 25%
20,000 20%
15,000 15%
10,000 10%
Top 25 IOC exploration
5,000 spend (excluding national oil 5%
companies)
0 0%
Source: SEB Enskilda 2007
$m
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007E
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• Imdex is well positioned to benefit from this long-term opportunity through our developing technology portfolio and competitive drilling fluids

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Sustainable growth and profitability

• Continue to build strong customer relationships

• Continue to diversify down hole instrumentation into oil & gas industry

• Increase competitive advantage and points of differentiation

• Continue to invest in R & D – instruments easier to operate, more accurate information, multi functional leading to increased productivity for customers

• Expand manufacturing facilities in local jurisdictions – reduces freight/shipping costs

• Continue to implement rental model in down hole instrumentation

• Diligent cost control. Where applicable, pass costs on through price increases

• Business model means profit per employee and EBITA margins highest amongst peer companies

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Medium term strategy

Strong relationships, leading technology, sustainable growth and attractive end-markets

Medium Term Objective Past Present (3-5 years) � Greater penetration into Early Stage 1% 9% Oil & Gas markets for Minerals 27% both DFC & DHI 49% 50% Late Stage � Minerals exploration: Minerals 64% majority of Imdex Oil & Gas business derived from Management’s best estimate Management’s best estimate late stage � Move away from Services Fluids 19% to reduce fixed costs, 39% capital investment and 50% Downhole 58% high labour component 31% Instrumentation Services 3% � Margin benefit from growing DHI 20% � Growing DHI rental Sell business Rent 80% � Rental business returns 100% higher margins and is more sustainable ¹ Based on actual or anticipated EBITA contribution 2 Based on actual or anticipated Revenue contribution

• Move away from Services to reduce fixed costs, capital investment and high labour component

• Rental business returns higher margins and is more sustainable

Summary

� Attractive market fundamentals

• Continued growth in mining and mineral exploration spend

• Increased drilling in oil & gas with expenditure at 30 year highs

• Commodity prices expected to drive demand for the foreseeable future

• Balanced global exposure

• Imdex supplies three of the world’s largest drilling contractors servicing mining and exploration representing about 40% of the global market

� Focused divisions

• Fluids and chemicals – offers scale

• Down hole instrumentation – offers scale

• Further bolt-on acquisitions to be pursued for both divisions

� Strong business model

• Continued implementation of rental model

• Market leadership using owned IP and ongoing investment in R&D

• Low capital intensity

• Own manufacturing

• Comparatively low staff costs

Summary

• Strong growth in earnings

• FY08 was a record year for Group revenues and profit

• Fifth successive year of increased revenues and profits

• Profit margins and profit per employee highest amongst peers

� Outlook

• Strong track record in revenue and profit growth expected to continue in FY09

• The Board expects the current strong demand for Imdex products to persist and is forecasting revenue growth in FY09 of between 15-20% at similar margins to those achieved in FY08

Strong financial and capital position supports Imdex’s strategy of becoming a significant global company in “drilling fluids and down hole instrumentation”

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Oil and gas rig

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• Highlights

• Financial Performance

• Review of Activities

• Strategy & Outlook

• Questions

• Appendices

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Appendix – Industry Outlook Resources

Sandvik Mining & Construction

“2Q08 organic sales growth of 19%”

Atlas Copco Construction & Mining

“24% organic sales growth in 2Q08”

Boart Longyear

“20-25% revenue growth in FY08”

Major Drilling

“4Q08 revenue a new record up 31.8% on pcp”

Layne Christensen

• “1Q09 mineral exploration revenues up 37.7% on pcp”

Appendix – Industry Outlook Oil & Gas

Schlumberger

“2Q08 revenue up 7% on 1Q08 and 20% on pcp

“It appears that customers are responding vigorously to current commodity price levels”

“We therefore reiterate our “stronger for longer” view of the current cycle of exploration and production spending”

Halliburton

“2Q08 revenue was a record $4.5 billion, up 20% on pcp…driven by both increased international activity and strengthening demand in the United States”

Baker Hughes

“Revenue for 2Q08 was up 18% on pcp”

“Looking forward, we continue to see many opportunities…”

Newpark Resources

“2Q08 drilling fluids revenue of US$169.1m, up 29% on pcp”

Appendix - Mineral Exploration Spend

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Estimated Exploration Spend Worldwide (Non Ferrous)
(US$b)
14
12
10
8
6
4
2
0
Data from the Corporate Exploration Strategies report of the Metals
Economics Group – March 2008
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
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• In Latin America, 83% of expenditure is undertaken in Mexico, Peru, Chile, Brazil and Argentina

• In Africa, major exploration destinations include South Africa, DRC, Angola, Tanzania, Botswana and Ghana representing two thirds of Africa’s total spend

• Late stage exploration exceeds grassroots exploration for the third consecutive year

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Worldwide Exploration Budgets
by Region 2007 (%)
Pacific /
United Latin
SE Asia
States America
Australia 8% 4%
24%
12%
16% 19%
Africa 17%
Canada
Rest of
World
Worldwide Exploration Budgets
by Stage 2007 (%)
Minesite
Grass
20%
roots
39%
41%
Late
Stage
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• 1,980 companies’ budgets totalling US$11.4B. Source: MEG, Mar 2008

Disclaimer

This presentation has been prepared by Imdex Limited (“the Company”). It contains general background information about the Company’s activities current as at the date of the presentation. It is information given in summary form and does not purport to be complete. The distribution of this presentation in jurisdictions outside Australia may be restricted by law and you should observe any such restrictions.

This presentation is not (and nothing in it should be construed as) an offer, invitation, solicitation or recommendation with respect to the subscription for, purchase or sale of any security in any jurisdiction, and neither this document nor anything in it shall form the basis of any contract or commitment. The presentation is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice, when deciding if an investment is appropriate.

The Company has prepared this presentation based on information available to it, including information derived from publicly available sources that have not been independently verified. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, correctness or reliability of the information, opinions and conclusions expressed.

Any statements or assumptions in this presentation as to future matters may prove to be incorrect and differences may be material. To the maximum extent permitted by law, none of the Company, its directors, employees or agents, nor any other person accepts any liability, including, without limitation, any liability arising from fault or negligence on the part of any of them or any other person, for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it.

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