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ANNUAL REPORT 2012

Imdex Limited (Imdex) ABN 78 008 947 813

Australian Securities Exchange (ASX) Listing Date 24 September 1987

ASX Code

IMD

8 Pitino Court Osborne Park Western Australia 6017

Directors

Mr Ross Kelly (Chairperson) Mr Bernie Ridgeway (Managing Director) Mr Kevin Dundo (Non-Executive Director) Mr Magnus Lemmel (Non-Executive Director) Ms Betsy Donaghey (Non-Executive Director)

Company Secretary Mr Paul Evans

2012 Annual General Meeting

Imdex’s AGM will be held at The Celtic Club, 48 Ord Street West Perth, Western Australia commencing at 11am on Thursday 18 October 2012.

For further information please contact Paul Evans on 08 9445 4010 or visit the investor section of our website at www.imdexlimited.com

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||||
|---|---|---|
|Imdex Group at a Glance|3|
|Company Profi le|3|
|Key Data as at 30 June 2012|3|
|Company Structure|3|
|Comprehensive Product Range|4|
|Global Business|8|
|FY12 Snapshot|10|
|Strategy for Increasing Shareholder Value|10|
|Growth Initiatives|10|
|Operational Highlights and Challenges|10|
|Market Review|11|
|Revenue Base|12|
|Geographic Diversifi cation|12|
|Financial Performance|13|
|Summary Financial Highlights|15|
|Board of Directors|16|
|Chairperson’s Report|19|
|Managing Director’s Report|23|
|Operational Overview|27|
|Global Team|27|
|Research and Development|28|
|Quality, Health, Safety and Environment|29|
|Risk Management|30|
|Focus for FY13|31|
|Strategy for Increasing Shareholder Value|31|
|Growth Initiatives|31|
|2012 Financial Report|33|
|Throughout this document, unless otherwise|Company History|120|

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Throughout this document, unless otherwise stated, all monetary amounts are recorded in Australian currency.

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Imdex 2012 Annual Report 1
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During FY12 the company increased its market share in all global regions; achieved record rental levels of its mining downhole instrumentation; successfully integrated three strategic acquisitions; executed a signifi cant joint venture in the oil and gas sector; and further enhanced its product range and leading technology.

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Imdex Group at a glance

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KEY DATA AS AT 30 JUNE 2012

Market capitalisation: $366 million

Shares on issue: 208 million

Share price at 30 June 2012: $1.76

Number of shareholders:

3,853

Number of employees: 543

Banking institutions:

HSBC and Westpac

Legal advisors:

QLegal

Auditors:

Deloitte Touche Tohmatsu

Share registry: Com utershare p

Company Profi le

Imdex is a global leader in the provision of innovative drilling fl uid products and advanced downhole instrumentation. The company provides leading solutions and superior customer service to exploration, development and production companies within the minerals and oil and gas sectors worldwide.

The company supports a diverse range of customers at all stages of the mining cycle, from junior explorers to major producers, across a wide range of commodities. In order to provide optimal service to these customers, Imdex has operational centres in key mining regions of the world, including: Asia-Pacifi c; Africa; Europe; and the Americas (for further details regarding global operations refer to pages 8 and 9).

Imdex’s substantial commitment to ongoing research and development has enabled the company to achieve market leader status in its fi elds of operation. The company is continuously refi ning its range of unrivalled fl uid products and instrumentation to ensure customers have the most effi cient operational technology available.

Imdex is a global leader in the provision of innovative drilling fl uid products and advanced downhole instrumentation.

COMPANY STRUCTURE

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IMDEX
LIMITED
OIL & GAS MINERALS
DIVISION DIVISION
DHS IMDEX IMDEX IMDEX IMDEX
ENERGY AMC REFLEX AMC TECH TECH TECH TECH
SERVICES GERMANY UK AUS USA
JOINT VENTURE
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Imdex 2012 Annual Report 3
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Imdex Group at a glance

The company supports a diverse range of customers at all stages of the mining cycle, from junior explorers to major producers, across a wide range of commodities.

Comprehensive Product Range

MINERALS	DIVISION
Brands	Product Range	Market
Ref ex	Ref ex ACT III: digital core orientation
	Ref ex HT ACT: digital core orientation
	Ref ex Ez-Shot: single-shot magnetic survey
	Ref ex Ez-Trac: multi-shot magnetic survey
	Ref ex HT Ez-Trac: multi-shot magnetic survey
	Ref ex Maxibor II: optical survey	Global mining / mineral
	Ref ex Gyro: gyroscopic survey	exploration market
	Ref ex HT Gyro: gyroscopic survey
	Customised downhole motors

AMC	Drilling f uids and chemicals
	Fluid containment and transfer equipment
	Solids Removal Units (SRU)

OIL & GAS DIVISION

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Brands Product Range Market
DHS Energy Target INS, including Drop
Services Flexi Shot Survey Tool
Gyrofl ex Survey Tool, including Drop Global onshore / offshore
oil & gas market
AMC Oil & Gas Drilling fl uids and chemicals
Fluid containment and transfer equipment
PRODUCTS USED BY STAGE
AMC SOLIDS REMOVAL UNITS
AMC FLUIDS
REFLEX CORE ORIENTATION
REFLEX GYRO DOWN HOLE SURVEY
REFLEX MAGNETIC DOWN HOLE SURVEY
REFLEX DIRECTIONAL EQUIPMENT
EXPLORATION DEVELOPMENT PRODUCTION
29% [] REVENUE 47% [] REVENUE 24% [] REVENUE
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refers to Minerals revenue

Imdex Group at a glance

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What are Drilling Fluids?

industry, are a key part of the drilling process for mining, oil and gas, water-well, horizontaldirectional-drilling and tunnelling applications.

unique properties and uses, however, their principal role is to clean, cool and lubricate the drill-bit, return chips of rocks known as cuttings to the surface, and keep the borehole stabilised and open.

During the drilling process a continuous circulation of drilling fl uid is used. Fluid is pumped down the drill-pipe, through the drill-bit and returned to the surface via the aperture between the drill-pipe and borehole. The fl uid then circulates through a shale shaker, mud tanks, or Imdex’s new solids removal units to remove the cuttings from the fl uid for reuse.

by forming a thin membrane on the interior surface known as a fi lter-cake. The pressure of the drilling fl uid at depth keeps the borehole from collapsing.

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What is Fluid Recycling Equipment?

is used to eliminate cuttings in the drilling mud fl ow cycle. These units provide economic and environmental advantages as they eliminate the need to dig mud pits, reduce water consumption and are simple to mobilise.

Fig 1. The drilling process generates chips of

rock known as cuttings

Fig 2. Fluid is pumped down the drill pipe lubricating the drill bit and returning cuttings to the surface

Fig 3. Fluids stabilize and keep the bore hole open

environmental footprint and require site rehabilitation

Fig 5. Solids Removal Units minimise environmental impact

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1
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3
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Imdex 2012 Annual Report 5
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SOLIDS REMOVAL UNIT6

Imdex Group at a glance

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What are downhole survey and core orientation instruments?

SURVEY INSTRUMENTATION

Downhole survey instruments provide geologists and drillers with comprehensive data, including azimuth and dip, which allows the exact trajectory of boreholes to be determined, even at thousands of metres below the surface.

Borehole deviations, where the actual path is different to the planned path, are common and costly. Geological variations, drilling parameters, including excessive or irregular thrust and hole design, are just some of the reasons why a borehole 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 signifi cant additional drilling costs and loss of opportunity if zones of economic mineralisation are missed.

By surveying the borehole throughout the drilling process, deviations can be corrected and the likelihood of intercepting desired targets is signifi cantly enhanced.

CORE ORIENTATION INSTRUMENTS

Core orientation instruments are used to determine the exact position of a core sample in the ground prior to extraction. This process allows geoscientists to accurately assess the sample to determine the structural geology, which often controls a mineralised ore system. By understanding the structural geology, wasted time and money caused by drilling in the wrong location or direction are avoided. Core orientation is also particularly important during mine planning and development to avoid potential problem areas such as faults or slip zones.

GYROSCOPIC SURVEY AND DIRECTIONAL STEERING INSTRUMENTS

Drilling is becoming increasingly complex and challenging due to diminishing accessible reserves, high exploration costs and environmental impact concerns. As a result, energy companies are drilling deeper, for smaller targets, re-entering existing wells, and drilling multiple wells from a single platform. In such an environment, advanced technology and accurate data are crucial to locate reserves effi ciently 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 gyroscopic survey and directional steering instruments specifi cally designed for challenging multiple well environments, in areas of high magnetic interference, to allow directional drillers to accurately control the path of the wells.

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Imdex 2012 Annual Report 7
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Potential lateral displacement error

Global Business

Imdex has developed a truly global business, with operations in all key mining and exploration regions worldwide. The company’s extensive presence allows it to provide optimal customer service and greater access to international mineral exploration and oil and gas markets. During FY12 an additional base was established in Brazil with the acquisition of System Mud Indústria e Comércio Ltda.

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Calgary, Canada Timmins, Canada
North America
Salt Lake City, USA
Torreon, Mexico
Lima, Peru
Belo Horizonte, Brazil
Santiago, Chile
South America
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North
America
8%
Africa
13%
46%
Asia Pacific
Europe 15%
18%
South America
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Distribution of employees by region

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Europe
Rastede, Germany
Aktau, Kazakstan
East Sussex, UK Riegel, Germany
Prahova, Romania
New Delhi, India
Asia Pacific
Accra, Ghana Singapore
Africa
Jakarta
Townsville, QLD
Kalgoorlie, WA Brisbane, QLD
Johannesburg,
South Africa Perth, WA Mudgee, NSW
Adelaide, SA
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Imdex 2012 Annual Report 9
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FY12 Snapshot

STRATEGY FOR INCREASING SHAREHOLDER VALUE

Growing Imdex’s global business
Expanding into new markets, particularly oil and gas
Maintaining product leadership through investment in research and development
Increasing rental based revenue

GROWTH INITIATIVES

Manufacturing and marketing Imdex’s Solids Removal Units to the Australian market
Refl ex Smart Barrel for commercialisation in FY13
Increasing geographical market share in underpenetrated regions such as Canada, Latin America, Africa, the United States of America and Europe
Utilising Imdex’s specialist technical expertise and product development laboratories to enhance existing and develop new drilling fl uid products and downhole instrumentation for the minerals and oil and gas markets
Further expansion of Imdex’s capabilities and presence in the global conventional and unconventional oil and gas and geothermal markets.

OPERATIONAL HIGHLIGHTS AND CHALLENGES

Highlights

Acquisition of Brazilian based System Mud Industria e Comercio Ltda (System Mud), effective 1 August 2011
Acquisition of USA based oil and gas downhole survey provider Vaughn Energy Services (Vaughn) by DHS Services (DHS), Imdex’s oil and gas services joint venture, effective 1 January 2012
Successful integration of Australian Drilling Specialities (ADS)
of AMC Oil & Gas Europe for revenue generation in FY13. This development includes investment in asset rental infrastructure, securing key personnel and ISO 9000 accreditation, which will enable the company to participate in additional contract tenders
Record mining downhole instrumentation rental fl eet results (a graph of these results can be found on page 20)
Continuous product development of Imdex’s existing range of downhole instrumentation
Ez-Gyro and Refl ex Smart Barrel; further details on this instrumentation can be found on page 28
Commercialisation of AMC’s solids removal technology; refer to page 28 for information regarding this unit
Marketing expansion in niche areas for production and completion chemicals
Continued investment in engineering and product development for oil and gas market.

Challenges

• Growing Imdex’s global business in a softening market where junior exploration companies found it diffi cult to raise new capital. From FY13 this challenge will be countered by:

The introduction of new products through AMC minerals and Refl ex
Growing Imdex’s oil and gas business.

FY12 snapshot

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IMDEX STRATEGY ON TRACK
PAST FY12 MEDIUM TERM
13%
Oil & Gas
100%
Minerals
87%
Asia Pacifi c 47%
100%
Other 53%
Sales
32%
100%
Rentals
68%
End market
Geographic reach
Rent/Sell mix
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Note: All numbers based on actual or anticipated combined revenue

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A STRATEGY THAT WORKS
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GOAL
ENTERPRISE
STRATEGY
IMPERATIVES
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Market Review

Continuing global economic uncertainty attributed to European sovereign debt levels and the Chinese and USA economies
Trading activities remained high in all operating regions (Asia-Pacifi c, Africa, Europe and the Americas)
Drilling rig utilisation rates remained high in all operating regions, with drilling contractors estimating an average utilisation rate of 70%–80% across the year
Mineral and oil and gas exploration expenditure in all regions increased.

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Imdex 2012 Annual Report 11
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FY12 snapshot

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FY12 Revenue Base

The company provides leading solutions and superior customer service to exploration, development and production companies within the minerals and oil and gas sectors worldwide.

SUSTAINABLE REVENUE BASE

(Minerals revenue)

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Others
16%
Production
24%
Iron
Gold
14% Development
49% 47%
Exploration
Copper 29%
21%
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Junior
19%
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By Commodity

By Stage

By Customer

STRENGTH THROUGH GEOGRAPHIC DIVERSIFICATION

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Americas
30%
Americas
49%
Africa
17%
Europe 6%
Africa
26%
Asia Pacifi c
47% Europe 8%
Asia Pacifi c
17%
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FY12 FY12 Combined YoY Growth Revenue ($73.6m or 36%) ($278.9m)

FY12 snapshot

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Financial Performance

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RECORD REVENUE
278.9
Combined Revenue
($m) 205.2
142.0 Minerals
137.0 134.3
103.8
Oil & Gas
FY07 FY08 FY09 FY10 FY11 FY12
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*Includes Imdex share of DHS Joint Venture revenue

FINANCIAL PERFORMANCE IN FY12

Revenue up 31% to $269.6 million (FY11: $205.2 million)
Combined revenue (excluding interest) up 36% to $278.9 million (FY11: $205.2 million)
Earnings before interest, tax and amortisation (EBITA) up 56% to $75.2 million (FY11: $48.1 million)
to $45.8 million (FY11: $29.0 million)
Net assets up 34% to $168.1 million (30 June 2011: $125.4 million)
paid, up 29% to $56.9 million (FY11: $44.0 million)
Low gearing levels with net debt/ capital of 22.3%

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RECORD EBITA
75.2
EBITA
($m) 48.1
38.8
24.5
22.3 20.7
FY07 FY08 FY09 FY10 FY11 FY12
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Final fully franked dividend up 45% to 4.00 cents per share (FY11: 2.75 cents per share fully franked)
Total FY12 dividend up 61% to 7.25 cents per share fully franked (FY11: 4.50 cents per share fully franked)

*Includes equity accounted DHS Joint Venture result

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Imdex 2012 Annual Report 13
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FY12 snapshot

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Summary Financial Highlights for the Year Ended 30 June 2012 (Audited Results)

(Audited Results)	(Audited Results)

	C	onsolidated
	2010 2011 2012 11-12 Var $’000 $’000 $’000 % 134,253 205,163 269,563 31%
		2011 $’000		2012 $’000

Revenue from continuingoperations(excludinginterest income)	134,253		205,163

Operating Proft before interest, tax, depreciation and amortisation
Depreciation
Earnings before interest, tax and amortisation (EBITA)
EBITA margin

~~Amortisation~~
Earnings before interest and tax(EBIT)

Net interest expense
Net proft before tax

~~Income tax expense~~

~~Netproft after tax(before non-operational items)~~

Non-operational items
Forex loss on loan to SEH Impairment of SEH investment Impairment of operations Tax effect of non-operational items
Net Proft for the year after tax

Basic (loss)/earnings per share

Net Cash before tax provided by operating activities

Cash on hand

Net assets

Total borrowings (Incl deferred acquisition payments)

Net tangible assets per share

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Imdex 2012 Annual Report 15
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Board of Directors

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Board of Directors

Imdex’s Board of Directors has extensive professional expertise, business experience and technical knowledge of the mineral exploration, mining and oil and gas industries. Members of the Board are well respected in these sectors and play an active role in the generation and management of the company’s strategic planning.

Further information relating to the Board of Directors, including details of meetings and remuneration can be found on pages 34 to 44.

Mr Ross Kelly AM BE (HONS) FAICD

Non-Executive Chairperson Age 74 years

Appointed to the Board 14 January 2004
Appointed as Chairperson 15 October 2009
Bachelor of Electrical Engineering with Honours
Fellow of the Australian Institute of Company Directors
Advisor to the Western Australian Government on water policy and reform
Consultant to a number of major Australian companies in the mining, offshore gas, oil refi ning, steel, construction and heavy process industries
Councillor of the Australian Institute of Company Directors and member of the Advisory Board of the Curtin University Graduate School of Business
Previously Chairperson and Non-Executive Director of Clough Limited, Sumich Group Limited, Orbital Corporation Limited, Beltreco Limited, Fraser Range Granite NL and Director of Aurora Gold Limited, PA Consulting Services Ltd and the Fremantle Football Club Ltd.

Mr Bernard Ridgeway B.Bus (ACCTG) ACA Managing Director Age 58 years

Appointed to the Board 23 May 2000
Member of the Institute of Chartered Accountants Australia and the Australian Institute of Company Directors
Non-Executive Director of Sino Gas and Energy Holdings Limited
Over 26 years experience with public and private companies as a business owner, Director and Manager.

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Board of Directors

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Mr Magnus Lemmel B.A. Non-Executive Director Age 73 years

Appointed to the Board 19 October 2006
Management consultant based in Brussels, Belgium, involved in small business development in Sweden. Former Chairman of Fiberform Vindic Holding AB, previously the largest Imdex shareholder, and member of the board of Norfram S.A., Luxemburg and Xinix AB
Previously Senior Vice-President of Ericsson Telecommunications, Chief Executive Offi cer of the Federation of Swedish Industries and Director General for Enterprise Policy of the European Commission.

Mr Kevin Dundo B.Com, LLB

Non-Executive Director Age 60 years

Appointed to the Board 14 January 2004
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 Certifi ed Practicing Accountants. Practising lawyer, specialising in commercial and corporate law and in particular, mergers and acquisitions, with experience in the mining services and fi nancial services industries
Director of Red 5 Limited and Synergy Plus Limited
Previously a Director of Intrepid Mines Limited.

Ms Betsy Donaghey, B.S. Civil Engineering, M.S. Operations Research Non-Executive Director Age 54 years

Appointed to the Board 28 October 2009
Bachelor of Civil Engineering A & M University, Texas, and Master in Operations Research University of Houston
Extensive experience within the energy sector, including 19 years with BHP Billiton and nine years with Woodside Energy
Non-Executive Director of St Barbara Limited.

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Imdex 2012 Annual Report 17
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Throughout FY12 Imdex’s
rental instrumentation
for the minerals market
reached new highs.
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Chairperson’s Report

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Chairperson’s Report

On behalf of the Board, I am delighted to present Imdex’s 2012 Annual Report; summarising a year of record performance and continued development.

RECORD PERFORMANCE

A total combined revenue of $278.9 million was achieved for the 12 months ending 30 June 2012 (FY12). This represents an increase of 36% from the previous fi nancial year and is a record result for the company. EBITA from continuing operations increased 56% to $75.2 million and was also a record achievement.

These exceptional results were largely driven by strong activity across all operating regions (AsiaPacifi c, Africa, Europe and the Americas); Imdex’s ability to increase geographical market share; strategic acquisitions; and continuing demand for the company’s advanced suite of products and superior technology.

INVESTING IN CONTINUED GROWTH

The Board has a policy of reinvesting in product development and the long-term growth of Imdex, while maintaining a steady and sustainable dividend stream for shareholders.

In accordance with this policy, an interim dividend of 3.25 cents and a fi nal dividend of 4.00 cents, both fully franked, were declared in FY12.

PROVEN STRATEGY

As highlighted in previous years, Imdex is committed to a clear and focused strategy for growth, which includes:

The company maintained this strategy throughout FY12 and made a number of noteworthy achievements including acquisitions; the development and commercialisation of new products; and record instrumentation rental revenue.

STRATEGIC ACQUISITIONS

During FY12 the company acquired Australian Drilling Specialities Pty Ltd; Brazilian based System Mud Indústria e Comércio Ltda (System Mud); and USA based oil and gas downhole survey provider Vaughn Energy Services (Vaughn) via DHS Services (DHS), a oil and gas services joint venture.

All of these strategic acquisitions facilitate further global growth and the ability to increase Imdex’s presence in under-penetrated markets. In addition, the DHS acquisition of Vaughn will signifi cantly enhance the company’s exposure in the oil and gas market.

DEVELOPMENT AND COMMERCIALISATION OF NEW PRODUCTS

Continued investment in the development of Imdex’s existing range of products has maintained the company’s reputation as a global provider of innovative drilling fl uids and leading downhole instrumentation. Imdex has also made signifi cant progress with the development of new downhole instrumentation technology and released its unique solids removal technology to the Australian market. Additional revenue is expected to be generated from both the new instrumentation and solids removal technology when they are introduced to the international market in FY13.

Growing its global business
Expanding into new markets, particularly oil and gas
Maintaining product leadership through investment in research and development
Increasing rental based revenue

RECORD RENTAL LEVELS

Throughout FY12 Imdex’s rental instrumentation for the minerals market reached new highs. These excellent results highlight the demand for this superior range of instrumentation and align with the company’s strategy of increasing its rental based income. In FY12, total revenue generated by rentals increased from 31% in FY11 to 32%.

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Imdex 2012 Annual Report 19
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Chairperson’s Report

I am proud to say that, notwithstanding the cyclical nature of the resources sector, Imdex’s commitment to the strategic development of the company has established a strong organisation with the ability to accomplish positive outcomes.

REFLEX RENTAL FLEET GROWTH TREND

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Jun Oct Feb Jun Oct Feb Jun
10 10 11 11 11 12 12
Number of instrument rentals has increased by 89% over the last 2 years
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LONG-TERM GOLD AND COPPER PRICES

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GOLD
COPPER
Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul
02 03 04 05 06 07 08 09 10 11 12
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This percentage is forecast to increase in FY13 with the commercialisation of the new instrumentation and solids removal technology mentioned above.

OPERATIONAL EFFICIENCIES

Further gains in market share resulted from Imdex’s decision to implement a regional structure. Imdex’s minerals division is now divided into four regions namely; Asia-Pacifi c, Africa, Europe and the Americas. This structure provides locally focussed customer service and signifi cantly enhances cross-selling opportunities.

LOOKING TO FY13

Despite global economic concerns, principally brought about by continuing European sovereign debt concerns, a slowing Chinese economy and an uneven USA recovery, the fundamentals that drive Imdex’s core markets remain positive.

Gold and copper prices, which have the greatest impact on Imdex’s revenue, are above long-term averages
Based on forecasts by Metals Economic Group, a respected worldwide minerals information consultancy, exploration expenditure for nonferrous metals is expected to be robust in the 2013 calendar year. This is primarily driven by drilling activities of major and intermediate resource companies
Demand in the oil and gas sector remains strong, buoyed by continuing global demand. This demand is likely to continue due to a defi ciency in signifi cant discoveries and diminishing accessible reserves. This is good news for Imdex, as exploration companies increasingly rely on fl uids and advanced technology to ensure optimum levels of effi ciency in their operations.

the company is in a strong position going into FY13 to grow the business and yield returns for shareholders. Gold and copper projects generate 70% of revenue; 80% of revenue is generated in the development phase of exploration from major and intermediate resource companies. The company now has the product range, expertise and global reach to further enhance revenue from the oil and gas sector.

Chairperson’s Report

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ESTIMATED GLOBAL EXPLORATION/DEVELOPMENT SPEND

(non-ferrous) (US$Bn)

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Source: Metals Economics Group (1993-2012); Mckinsey 2011 analysis (2013-2018). Reproduced with permission from Boart Longyear.

BALANCE SHEET STRENGTH

Imdex’s solid balance sheet enables the advancement of growth initiatives as and when they are identifi ed. This ability to respond quickly to opportunities as they arise has proven to be of signifi cant benefi t in the past and, together with signifi cant organic growth, underpins the excellent results reported in FY12.

SUSTAINABLE REPORTING AND CORPORATE GOVERNANCE

Each year the company strives to enhance its sustainability reporting in order to provide additional, relevant and transparent information for all stakeholders. Imdex’s adherence to best practice in corporate governance principles also ensures prudent oversight of management. Further information regarding these policies can be found on pages 53 to 57 and the Board Charter is available on the company website.

I would like to thank my fellow Board members for their expertise, guidance and willingness to make signifi cant contributions to Imdex. It has been a rewarding experience and I look forward to working with them again in the coming year.

I would also like to express my gratitude to our Managing Director, Bernie Ridgeway and Senior Executives Gary Weston, Derek Loughlin and Paul Evans for another year of dedication, leadership and excellent performance.

Finally, on behalf of the Board members, senior executives and employees, I would like to thank all of our valued customers and shareholders for their loyalty and ongoing support.

Ross Kelly AM BE (HONS) FAICD Chairperson

Imdex’s solid balance sheet enables the advancement of growth initiatives as and when they are identifi ed.

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Imdex 2012 Annual Report 21
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Imdex has experienced
extraordinary development,
particularly over the
past seven years.
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Managing Director’s Report

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Managing Director’s Report

I am pleased to report FY12 was a dynamic and rewarding year for Imdex, and one the Directors and I are very proud.

Such accomplishments, coupled with strong market activity in Asia-Pacifi c, Africa, Europe and the Americas, made positive contributions to Imdex’s earnings and laid solid foundations for further growth in FY13 and beyond. The extent of these accomplishments is refl ected the following FY12 results.

GROUP FINANCIAL PERFORMANCE

Record combined revenue (excluding interest), up 36% to $278.9 million (FY11: $205.2 million)
Record EBITA, up 56% to $75.2 million (FY11: $48.1 million)
million (FY11: $29.0 million)
Net assets up 34% to $168.1 million (30 June 2011: $125.4 million)
$56.9 million (FY11: $44.0 million)
Low gearing levels with net debt/capital of 22.3% (30 June 2011: 13.4%).

MINERALS DIVISION

The Minerals Division contributed 87% of the full year combined revenue and achieved a 36% increase to $241.7 million (FY11: $177.7 million). Operational EBITA increased 72% to $85.7 million (FY11: $49.9 million).

These excellent results were driven by consistently strong performance in all geographical regions and validate the regional operating structure implemented in 2010. This structure allows operational effi ciencies, better customer support and enhances product cross-selling opportunities. Importantly, the benefi ts generated by this regional restructure are expected to continue.

Highlights for the Minerals Division during FY12 include the following activities and achievements:

Successful integration of Australian Drilling Specialities (ADS)

The acquisition of this Western Australian based manufacturer of high quality drilling fl uids and chemicals was fi nalised on 1 July 2011. The acquisition was made to complement Imdex’s existing operations and deliver additional growth opportunities within the mining and oil and gas industries. Importantly, ADS owns intellectual property for the manufacture of PHPA (polymer) which allows Imdex to establish polymer plants in strategic locations to enhance products and services across the company’s global markets. The acquisition was immediately earnings accretive and has merged seamlessly into Imdex’s operations.

Acquisition of Brazilian based System Mud Indústria e Comércio Ltda (System Mud)

System Mud is a leading independent drilling fl uids and chemicals supplier to the minerals industry in Brazil. This acquisition, effective 1 August 2011, signifi cantly strengthens Imdex’s position in Latin America and also aligns with the strategic expansion of drilling fl uids and chemicals enterprises in under-penetrated regions.

The record rental revenue returns for FY12 confi rms a strong demand for Refl ex’s superior technology, which will be further enhanced with the release of new products in FY13 together with the active product development of the existing range of downhole instrumentation,

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Imdex 2012 Annual Report 23
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Managing Director’s Report

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including the ACT III RD, ACT HT, HT Gyro and HT Ez-Trac. As with all leading technology, product refi nement is a continuous and consultative process. Imdex has maintained its technological leadership by investing in product longevity, thus ensuring customers achieve the most effi cient and accurate results.

Development of new instrumentation including the Refl ex Ez-Gyro and Refl ex Smart Barrel

seeking gyro utilising new technology for mineral exploration. The Refl ex Smart Barrel is an advanced coring tool that allows operators to control deviation and steer the hole accurately while collecting a core sample. Both of these revolutionary instruments will signifi cantly enhance the effi cient operations demanded by customers. This instrumentation will be released to the market during FY13.

AMC’s solids removal technology Imdex’s Solids Removal Units (SRUs) are designed for solids removal and fl uid property management. This technology meets customer demands by reducing the site footprint, the impact on the environment and site set-up and remediation costs. In addition, these highly mobile units have demonstrated signifi cant reductions in water consumption and costly wear-and-tear of drilling components caused by abrasion. The SRU was released to the Australian market in late FY12 and is expected to generate signifi cant revenue once marketed globally in FY13. The company will capitalise on its fi rst mover advantage and the signifi cant interest in this innovative technology, predominately from major exploration companies.

OIL AND GAS DIVISION

Imdex’s Oil & Gas Division contributed 13% of the full year combined revenue and achieved a 35% increase to $37.2 million. Operational EBITA saw a loss, returning $6.2 million. This is largely attributable to AMC Oil & Gas (AMC O&G). The acquisition of various revenue generating assets, however, will see the performance of AMC O&G increase signifi cantly from FY13.

Considerable investment and effort was committed to the consolidation and development of AMC O&G Europe to position it for growth in FY13. This included securing key personnel, equipment and ISO 9000 accreditation, which will enable participation in additional contract tenders.

within the Oil & Gas Division during FY12 including expanded marketing efforts in niche production and completion chemicals markets and continued investment in engineering and product development.

The most noteworthy achievement, however, was the acquisition of USA based oil and gas downhole survey provider Vaughn Energy Services (Vaughn) by DHS Services (DHS). This acquisition positions DHS as a leading global competitor in the circa US$400-$500 million annual oil and gas downhole survey market and offers numerous benefi ts including:

the oil and gas downhole survey market
Facilitating entry into the USA onshore oil and gas market, which represents approximately one third of the global market
of DHS’s geographical footprint, range of technologies and customer base.

The acquisition of Vaughn was immediately earnings accretive and supports Imdex’s strategy of generating 30-40% of revenue from the oil and gas market within the next 3-4 years. DHS has excellent growth prospects in the USA onshore oil and gas market and the offshore and onshore international markets. This joint venture is expected to generate signifi cant revenue and profi ts in FY13.

CORPORATE SUPPORT

were made to employee engagement, development programmes, and workplace health and safety. Information relating to these achievements is detailed on pages 27 and 29.

Managing Director’s Report

The acquisition of Vaughn was immediately earnings accretive and supports Imdex’s strategy of generating 30-40% of revenue from the oil and gas market within the next 3-4 years.

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POSITIVE OUTLOOK FOR FY13

As outlined in the Chairperson’s report, despite a level of underlying macro-economic uncertainty, Imdex has a great deal to be optimistic about in the coming fi nancial year. Gold and copper prices remain above long-term averages, exploration expenditure is forecast to be robust in the 2013 calendar year and drilling rig utilisation rates remain solid.

Imdex will maintain a strategy of growing its global business, expanding into new markets, particularly oil and gas; maintaining product leadership through investment in research and development; increasing rental based revenue; and achieving operational effi ciencies. More specifi cally, the company will focus on the following key growth areas:

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commitment and ability to deliver superior technology and unrivalled customer service.

On behalf of the Board of Directors, I would like to thank our management team, employees and contractors for their hard work, dedication and achievements in what has been a very rewarding year. I would also like to thank Imdex’s shareholders and customers for their continued support.

Bernie Ridgeway Managing Director

Manufacturing and marketing the Solids Removal Unit via Imdex’s global distribution channels
Ez-Gyro and Refl ex Smart Barrel
Increasing geographical market share in underpenetrated regions such as Canada, Latin America, Africa, the United States and Europe
Utilising Imdex’s specialist technical expertise and product development laboratories to enhance existing, and develop new, drilling fl uid products and downhole instrumentation for the minerals and oil and gas markets
Expanding Imdex’s capabilities and presence in the global conventional and unconventional oil and gas and geothermal markets.

Imdex has experienced extraordinary development, particularly over the past seven years. The company has signifi cantly increased its geographical presence (62% of employees are now based outside of Australia); successfully gained market share in underpenetrated regions; expanded its presence and opportunities for growth in the oil and gas market; diversifi ed its customer base (with 80% of revenue now generated from major and intermediate resource companies); and developed a range of drilling fl uids, associated equipment, and downhole instrumentation supporting customer operations at every stage of the mining cycle. What remains unchanged is Imdex’s

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Imdex 2012 Annual Report 25
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Imdex’s substantial
commitment to
ongoing research and
development has
enabled the company to
achieve market leader
status in its fi elds
of operation.
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Operational Overview

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Operational Overview

GLOBAL TEAM

Imdex’s 543 Imdex employees throughout the world are lead by a strong management team with extensive technical expertise, product knowledge and experience in the mineral exploration, mining and oil and gas sectors.

The company strives to attract employees who share Imdex’s values for hard work, continual improvement, technical excellence and equity in the workplace. Imdex seeks to retain employees and protect its knowledge-base by increasing employee engagement and providing intrinsically valued reward systems. Throughout FY12 the company carried out the following initiatives to strengthen and support its global team:

Implemented a new global loyalty programme
Carried out an employee engagement survey (completed and evaluated every two years)
Implemented a Learning Management System to track and manage employee training and development
Developed an employee induction programme to provide all employees with a greater understanding of Imdex its products, markets, customers and values
Updated the performance management process, with local language versions prepared for Germany, Kazakhstan, Chile, Romania and South Africa
Translated the Code of Conduct into relevant local languages.

IMDEX’S SENIOR EXECUTIVES

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Mr. Paul Evans Chief Financial Offi cer and Company Secretary

Chartered Accountant
Fellow of the Institute of Chartered Accountants in Australia
Industry experience covering media, manufacturing, mining services and telecommunications industries.

Mr. Derek Loughlin Divisional General Manager, Minerals

25 years experience within the drilling industry
17 years with leading drilling company Boart Longyear in engineering, operations, sales and global exports, working in Ireland, Australia and Germany
Honours Degree in Mining Engineering from the Camborne School Of Mines, UK
Diploma of Executive Development at the International Institute for Management and Development in Lausanne.

Mr. Gary Weston

Divisional General Manager, Oil and Gas

41 years in the drilling industry, in both the oil and gas and minerals sectors
1987, co-founder of Imdex Limited
1988, co-founder of Australian Mud Company
39 years management experience
Strong international marketing experience
Pivotal role identifying and negotiating Imdex’s strategic acquisitions.

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Imdex 2012 Annual Report 27
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Operational Overview

its range of unrivalled fl uid products and instrumentation to ensure customers have the most effi cient operational technology available.

Research and Development

Imdex’s commitment and ability to invest in product research and development has enabled it to retain a reputation for innovative products and superior technology. Throughout FY12 the company continued to enhance a range of drilling fl uids, commercialised its solid removal technology and made signifi cant progress with the development of two new downhole instruments, the Refl ex Ez-Gyro and Refl ex Smart Barrel.

Imdex has well developed policies for the management of its technical knowledge and protects its intellectual property, both internally and externally.

SOLIDS REMOVAL UNIT

Imdex’s unique Solids Removal Unit was designed as an environmentally acceptable alternative to the traditional methods of mixing, processing and storage of drilling fl uids on site. Signifi cant interest has been shown in the unit, particularly by major operators in the drilling industry as they seek to reduce water consumption and improve waste management. Principal features and customer benefi ts of the unit include:

Reduced environmental impact of site
Reduced site set-up and remediation costs
Reduced water consumption
Improved waste management
Reduced wear and tear of drilling components caused by abrasive drilling fl uid
Easy mobilisation.

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Solids Removal Unit
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REFLEX EZ-GYRO

g gyro that utilises newly developed technolog y for mineral exploration. The instrument al lows operators to accurately survey underground ope rations, including surveys of internal reverse circulation o r diamond drilling rods and casings. The Refl ex Ez- Gyro has the ability to provide accurate data in a range of drilling applications, including data from horizontal holes. Survey data is transferred via infrared to a hand held Personal Digital Assistant (PDA), doing away with the need for post survey processing. Principal cus tomer benefi ts include:

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Enhanced accuracy of survey data
Enhanced speed
Elimination of conducting cables, surveying vehicles and specialist technicians on site.

REFLEX SMART BARREL

core sampling and enhances accuracy by allowing operators to control deviation and achieve accurate hole-steering with simultaneous core sample collection. The principal customer benefi ts include:

Enhanced accuracy
Reduced maintenance costs
Elimination of additional on-site technical operators
signifi cant time and cost savings.

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WORLD-CLASS GYRO TECHNOL OGY

Imdex maintains a policy of investing in ta rgeted research and development to offer superio r world- class technology to its customers. To achiev e this, a rigorous process of testing, customer feedba ck and ongoing development is required. Throughout FY12 the company continued to refi ne its gyro techn ology for the oil and gas sector, which will be markete d by Imdex’s DHS Services joint venture, the third lar gest survey company in the oil and gas industry.

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Operational Overview

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INDUSTRY RECOGNITION

recognised at the Australian Mining Prospect Awards, for its innovation, effi ciency and advancement of the Australian mining industry. Also at these Awards, Refl ex Global Products Manager, Kelvin Brown, received the Outstanding Contribution to Mining and Miner of the Year award for his role in the Chilean mine rescue.

Quality, Health, Safety and Environment

Imdex has a dedicated QHSE team that oversees the company’s commitment to continuous improvement and the safety and wellbeing of our employees and external stakeholders.

Imdex Technology, successfully maintained globally certifi cation to ISO9001:2007. The company’s facilities at Osborne Park and Kwinana, including AMC AsiaPacifi c, Refl ex Asia-Pacifi c and Imdex Technology, also maintained certifi cation to the internationally recognized Occupational Health and Safety standard OHSAS18001:2007.

Imdex also made the decision to transfer its various ISO certifi cations around the world to Société Générale de Surveillance (SGS). SGS is the largest certifi cation body in the world, with over 2000 offi ces. The benefi ts of utilising SGS include:

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in line with the WorkSafe benchmark for oil and gas globally: six lost time injuries occurred globally, with a total of 75 days lost.

Imdex maintains a philosophy of continual development of quality drilling fl uid products that are environmentally friendly, biodegradable and meet the demands of its customers. Accordingly, Imdex will implement Environment Standard ISO14001 in Australia and Germany during FY13. This standard will assist the company achieve the growing environmental requirements of the oil and gas industry.

Throughout FY12 Imdex also commercialised an environmental alternative to conventional mud-pits, the innovative Solids Removal Unit (further details can be found on page 28).

Imdex Group Lost Time Injury F requency Rate (LTIF R)

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Globalised group system reporting
Global audit reports with feedback through SGS’s Global Client manager and SGS’s Global Lead Auditor
Better global visibility for senior management
standardisation.

Imdex’s Lost Time Injury Frequency Rate (LTIFR) was below the strict Western Australian WorkSafe benchmark for services to the mining industry and

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Imdex 2012 Annual Report 29
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Operational Overview

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Risk Management

MANAGING RISKS TO DELIVER LONG-TERM SHAREHOLDER VALUE

delivering long-term value to Imdex’s shareholders. As part of the company’s annual strategic planning cycle, the Board reviews and considers the risk profi le for the entire organisation.

The principal aim of Imdex’s risk management governance structure and system of internal control is to create a culture of risk-informed decisionmaking to manage business risks, enhance the value of shareholder investments, and safeguard assets.

Imdex is committed to an effective risk management process that enables management to operate a risk-based approach in establishing internal control systems to effectively identify, mitigate and/or control signifi cant risks.

CORPORATE GOVERNANCE STRUCTURE

The Board has delegated the oversight of risk management to the Audit and Compliance Committee (ACC). The ACC monitors obligations in relation to:

Financial reporting
Internal control structure
Risk management systems
Internal and external audit functions.

The ACC is supported by the Group Risk and Compliance function, which regularly carries out risk reviews, location-based internal audits, and compliance monitoring.

RISK MANAGEMENT FRAMEWORK

A risk management framework is used to provide governance for the identifi cation, assessment and management of risks. Risks are rated using a methodology outlined in ISO 31000:2009 – Risk Management – Principles and guidelines. When a risk is assessed as material, it is reported to the senior management group on a monthly basis until it is satisfactorily mitigated.

All employees are responsible for being aware of potential business operations risks and the supporting risk management frame work established by the ACC. Employees are also requested to promptly communicate signifi cant issues to their line manager and in accordance with the risk management framework. Each business unit is responsible for incorporating risk management activities and controls into their daily operations and to monitor risks pertaining to the unit. The risk management framework incorporates the following factors:

Consideration of other ASX principles on Corporate Governance as they related to risk management
Consultation with the Board, senior management and the leadership group in identifying the business risk areas
Consideration of the Imdex Quality Assurance risk assessment system to ensure a common language is used across both operational and commercial environments
Assurance mapping of key risks across all areas of the organisation
Development of a Corporate Risk Register to record and manage risks by assigning an owner, designing mitigating treatments and then applying the treatment
required by an internal audit and/or business unit to reduce risk exposure.

Focus for FY13

STRATEGY FOR INCREASING SHAREHOLDER VALUE

Continue growth of Imdex’s global business
Expand into new markets, with a particular focus on the oil and gas sector
Maintain product leadership through investment in research and development
Increase rental based revenue

GROWTH INITIATIVES

Manufacture and market the Solids Removal Units via Imdex’s global distribution channels
Increase geographical market share in under-penetrated regions such as Canada, Latin America, Africa, the United States and Europe
Utilise Imdex’s specialist technical expertise and product development laboratories to enhance existing, and develop new, drilling fl uid products and downhole instrumentation for the minerals and oil and gas markets
Further expansion of Imdex’s capabilities and presence in the global conventional and unconventional oil and gas and geothermal markets.

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Imdex 2012 Annual Report 31
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FY12 Financial Report

FY 12	FY 12
f nancial report
Directors’ Report	34
Auditor’s Independence Declaration	49
Independent Auditor’s Report	50
Directors’ Declaration	52
Corporate Governance Statement	53
Consolidated Income Statement	58
Consolidated Statement of Comprehensive Income	59
Consolidated Statement of Financial Position	60
Consolidated Statement of Changes in Equity	61
Consolidated Statement of Cash Flows	62
Notes to the Financial Report	63
Additional Securities Exchange Information	118

Imdex 2012 Annual Report

FY12 Financial Rep ort

Directors’ Report for the Year Ended 30 June 2012

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 fi nancial year ended 30 June 2012.

In order to comply with the provisions of the Corporations Act 2001, the Directors’ report as follows:

(a) Directors

Name	Role	Age	Particulars
Mr R W Kelly AM	Non Executive Chairman	74	• Engineer • Director since 14 January 2004 • Appointed as Chairman on 15 October 2009 • Member of the Audit and Compliance Committee • Chairman of the Remuneration Committee until 14 December 2009 • 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
Mr B W Ridgeway	Managing Director	58	• Chartered Accountant • Director since 23 May 2000 • Over 25 years experience with public and private companies as owner, director and manager • Member of the Institute of Chartered Accountants in Australia and Australian Institute of Company Directors. • Director of Sino Gas and EnergyHoldings Ltd
Mr K A Dundo	Independent, Non Executive Director	60	• Lawyer • Chairman of the Audit and Compliance Committee • Member of the Remuneration Committee • Director since 14 January 2004 • Director of Red 5 Limited and Synergy Plus Limited • PreviouslyDirector of Intrepid Mines Ltd
Mr M Lemmel	Independent, Non Executive Director	73	• Management Consultant • Director since 19 October 2006 • Chairman of the Remuneration Committee from 14 December 2009 • Chairman of Fiberform Vindic AB • Previously Senior Vice President of Ericsson Telecommunications, Chief Executive Off cer of the Federation of Swedish Industries and Director General for Enterprise Policyof the European Commission
Ms E Donaghey	Independent, Non Executive Director	54	• Civil Engineer • Director since 28 October 2009 • Member of the Audit and Compliance Committee from 14 December 2009 • Member of the Remuneration Committee from 14 December 2009 • Director of St Barbara Limited • Previously held a range of commercial and senior management positions in Woodside Petroleum and BHP Petroleum

FY12 Financial Report

(b) Directorships of Other Listed Companies

Name	Company	Position	Period of Directorship
Mr B W Ridgeway	Sino Gas and Energy Holdings Limited	Non Executive Director	2007 – Current
Mr K A Dundo	Red 5 Limited SynergyPlus Limited	Non Executive Director Non Executive Director	2010 – Current 2006 – Current
Ms E Donaghey	St Barbara Limited	Non Executive Director	2011 – Current

(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 fi nancial roles in the media, manufacturing and telecommunications industries. Mr Evans is a Fellow 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 fi nancial year and the number of meetings attended by each Director (while they were a Director or committee member). During the fi nancial year, eight Board meetings, four Audit and Compliance Committee meetings and four Remuneration Committee meetings were held.

were held.
	Board of Directors		Audit and Compliance Committee		Remuneration Committee
	Held	Attended	Held	Attended	Held	Attended
R W Kelly	8	8	4	4	-	-
B W Ridgeway	8	8	-	-	-	-
K A Dundo	8	8	4	4	4	4
M Lemmel	8	7	-	-	4	3
E Donaghey	8	8	4	4	4	4

(e) Directors’ Shareholdings

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

Company:
Directors	Shares Held Directly	Shares Held Indirectly	Options Held Directly	Performance Rights Held Directly ^
R W Kelly	-	380,000	-	-
B W Ridgeway	-	2,214,630	-	349,897
K A Dundo	-	150,000	-	-
M Lemmel	730,921	-	-	-
E Donaghey	210,000	-	-	-

^ - Performance rights expire either on failure to maintain employment tenure or on failure to satisfy performance hurdles. Refer to note 34 for further details.

year are disclosed in note 33. Details of performance rights on issue at the end of the fi nancial year are disclosed in note 34.

Imdex 2012 Annual Report

FY12 Financial Rep ort

(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 and performance rights 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 benefi ts on retirement from the Company.

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 received a payment during the current or prior years as consideration for agreeing to hold the relevant position.

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 $433,350, including statutory superannuation. The Board determines the apportionment of directors’ fees between each Director.

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 33% of his base remuneration package. Each year the Remuneration Committee sets key performance indicators (KPIs) for the Managing Director to earn this short term incentive bonus. These KPIs typically include fi nancial, strategic and risk based measures. The Remuneration Committee set these performance hurdles as they are signifi cant profi t and cash fl ow drivers which are linked to Imdex’s increased growth and profi tability 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 or performance rights may be issued to the Managing Director as a long term performance incentive. The portion of the Managing Director’s compensation package that comprises options or performance rights is linked to the Company’s performance. The number of options or performance rights granted are determined with regard to current market trends. The issue of any such options or performance rights requires the approval of Shareholders in General Meeting.

The Managing Director is employed under a permanent contract that provides for a 12 month termination period. No additional benefi ts above those already entitled to will become payable on termination.

Executives and Staff

All Executives and staff of the Company are subject to a formal annual performance review. The remuneration of Executives comprises a fi xed 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 to attract and retain suitably qualifi ed and experienced staff. Performance incentives that are linked to Company performance are used to reward Executives for exceptional performance that benefi ts the Company and Shareholders.

Each year the Remuneration Committee sets the KPIs for each key management person. These KPIs typically include people, customer, system, fi nancial, strategic and risk based measures. The Remuneration Committee set these performance hurdles as they are signifi cant profi t and cash fl ow drivers which are linked to Imdex’s increased growth and profi tability 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.

From time to time options or performance rights may be issued to the Executives and staff as a long term performance incentive. The portion of remuneration package that comprises options or performance rights is linked to the Company’s performance. The number of options or performance rights granted are determined with regard to current market trends. The issue of any such options or performance rights requires the approval of Shareholders in General Meeting.

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. No additional benefi ts above those already entitled to will become payable on termination.

FY12 Financial Report

Director and Key Management Personnel details

The Directors of Imdex Limited during the year were:

(i) Mr R W Kelly (Non Executive Chairman)
(ii) Mr B W Ridgeway (Managing Director)
(iii) Mr K A Dundo (Non Executive Director)
(iv) Mr M Lemmel (Non Executive Director)
(v) Ms E Donaghey (Non Executive Director).

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

(i) Mr G E Weston (Project General Manager; General Manager: Oil & Gas Division)
(ii) Mr D J Loughlin (General Manager: Minerals and Mining Division)
(iii)

since the end of the fi nancial year.

Elements of Director and Key Management Personnel Remuneration

Remuneration packages contain the following key elements:

(i)
(ii)
(iii) Equity – share options granted under the Staff Option Scheme (note 33) or performance rights granted under the Performance Rights Plan (note 34) or any other equity related benefi ts granted as approved by Shareholders in General Meeting; and
(iv) Group.

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 fi ve years to June 2012:

	30 June 2012	30 June 2011	30 June 2010	30 June 2009	30 June 2008
Revenue – continuing and discontinued operations($000s)	269,652	205,334	135,625	138,992	150,493
Net prof t / (loss) before tax from continuingoperations($000s)	67,500	38,593	(21,071)	18,195	31,885
Net prof t / (loss) after tax from continuingoperations($000s)	45,777	29,002	(21,548)	12,067	21,081
Share price at start of year (cents)	215.0	73.0	64.5	165	150
Share price at end of year (cents)	176.0	215.0	73.0	64.5	165
Interim dividend (cents) – fully franked	3.25	1.75	-	1.00	1.75
Final dividend (cents) – fully franked	4.00 *	2.75	-	-	2.25
Basic earnings / (loss) per share (cents) – continuingoperations	22.34	14.69	(11.05)	6.37	11.22
Diluted earnings / (loss) per share (cents)– continuingoperations	21.85	14.25	(11.05)	6.23	10.79

- Declared post year end on 17 August 2012 hence the fi nancial effect of this dividend has not been recognised in the fi nancial statements at 30 June 2012.

Imdex 2012 Annual Report

FY12 Financial Rep ort

		Total	$ $ $ $ $ $ $ $ $ $ $ $ 110,000 13,689 2,000 73,080 - 36,443 - - 142,682 - - 1,077,894 - - - 12,150 - - - - - - - 147,150 - - - 8,100 - - - - - - - 98,100 - - - - - - - - - - - 90,000 - - - 8,100 - - - - - - - 98,100	110,000 13,689 2,000 101,430 - 36,443 - - 142,682 - - 1,511,244			Total	$ $ $ $ $ $ $ $ $ $ $ $ 62,100 - 230,000 65,889 - 28,043 - - 83,750 - - 909,782 143,500 - 500 47,835 - 17,030 - - 79,527 - - 675,892 92,000 - 500 42,750 - 16,036 - - 75,205 - - 608,991	297,600 - 231,000 156,474 - 61,109 - - 238,482 - - 2,194,665
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 Benef ts					Termination Benef ts
Other	long-term employee benef ts				Other	long-term employee benef ts
Post Employment	Other				Post Employment	Other
	Super- annuation					Super- annuation
ort-term employee benef ts	Other *				ort-term employee benef ts	Other *
	Non- monetary					Non- monetary
	Bonus					Bonus
Sh	Salary & fees		$ 700,000 135,000 90,000 90,000 90,000	1,105,000	Sh	Salary & fees		$ 440,000 387,500 382,500	1,210,000
	Executive Director B W Ridgeway, Managing Director Non Executive Directors R W Kelly, Chairman K A Dundo M Lemmel E Donaghey

FY12 Financial Report

		Total	$ $ $ - - 885,029 - - 119,900 - - 87,200 - - 80,000 - - 87,200	- - 1,259,329			Total	$ 808,796 604,249 36,666 661,703	- - 2,111,414
payment	Other					Other		$ - - - -
	Cash settled				payment	Cash settled		$ - - - -
Share-based	ettled ^	Options & Rights	$ 53,076 - - - -	53,076	Share-based	ettled ^	Options & Rights	$ 155,388 99,340 - 113,068	367,796
	Equity-s	Shares & Units	$ $ - - - - - - - - - -	- -		Equity-s	Shares & Units	$ - - - -	- -
Termination Benef ts					Termination Benef ts			$ - - - -
Other	long-term employee benef ts		$ 42,671 - - - -	42,671	Other	long-term employee benef ts		$ 40,991 11,422 - 11,101	63,514
ployment	Other		$ - - - - -	-	ployment	Other		$ - - - -	-
Post Em	Super- annuation		$ 64,293 9,900 7,200 - 7,200	88,593	Post Em	Super- annuation		$ 50,567 40,747 - 44,384	135,698
f ts	Other		$ - - - - -	-	f ts	Other		$ - - - -	-
loyee bene	Non- monetary		$ 10,626 - - - -	10,626	loyee bene	Non- monetary		$ - - - -	-
t-term emp	Bonus		$ 140,000 - - - -	140,000	t-term emp	Bonus		$ 178,500 113,150 - 149,650	441,300
Shor	Salary & fees		$ 574,363 110,000 80,000 80,000 80,000	924,363	Shor	Salary & fees		$ 383,350 339,590 36,666 343,500	1,103,106
	Executive Director B W Ridgeway, Managing Director Non Executive Directors R W Kelly, Chairman K A Dundo M Lemmel E Donaghey

Imdex 2012 Annual Report

FY12 Financial Rep ort

(i) annually. The service contract specifi es a twelve month notice period in the event that the contract is terminated. If the contract is terminated without notice, the notice period will become payable in cash. There are no termination benefi ts specifi ed 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.

additional $140,000 could have been earned by Mr Ridgeway had the remaining targets been met. In addition Mr Ridgeway received a loyalty bonus in accordance with the Imdex Loyalty Programme. The Imdex Loyalty Programme is an employer of choice initiative in which all Imdex staff participate. For 10 years of service Mr Ridgeway earned a cash bonus of $2,000. Mr Ridgeway earned a short term cash bonus of $140,000 in the prior year for exceeding budgeted EBITA levels by more than a set percentage and for achieving one of three product development milestones. An additional $40,000 could have been earned by Mr Ridgeway had the remaining two product development targets and one cash fl ow related target been met.

No options were granted to Mr Ridgeway in the current year or in the prior year.

The grant of 153,318 performance rights to Mr Ridgeway in the current year was approved by the shareholders at the Annual General Meeting on 20 October 2011. The Managing Director is subject to two hurdles each with equal weighting. The fi rst is that the Total Shareholder Return (TSR) of Imdex Limited must exceed the average TSR of the ASX300 over the 3 year measurement period. The second is that the Earnings Per Share of Imdex Limited must exceed the average EPS of the ASX300 over the 3 year measurement period. The performance hurdle in relation to these performance rights will be measured after the audit sign off of the FY14 fi nancial statements on or about August 2014. No value has therefore been received by Mr Ridgeway in the current year. Refer note 34 for further details.

The grant of 196,579 performance rights to Mr Ridgeway in the prior year was approved by the shareholders at the Annual General Meeting on 14 October 2010. The performance hurdle in relation to these performance rights will be measured after the audit sign off of the FY13 fi nancial statements on or about August 2013. No value was therefore received by Mr Ridgeway in the prior year. Refer note 34 for further details.

(ii) annually. The service contract stipulates a twelve month notice period in the event that the contract is terminated. There are no termination benefi ts specifi ed in this contract. Performance incentives may be agreed between Mr Weston and Imdex Limited from time to time. Additionally, Mr Weston is party to a deed with Imdex Limited, granting Mr Weston the right of fi rst refusal of Australian Mud Company Pty Ltd, a 100% held subsidiary of Imdex Limited, in the event that an offer is received by the directors of Imdex Limited to purchase 100% of the Imdex Limited shares on issue. This ‘right’ lapses automatically should Mr Weston no longer be employed by Imdex Limited.

$144,900 could have been earned by Mr Weston had the remaining targets been met. In addition Mr Weston received a loyalty bonus in accordance with the Imdex Loyalty Programme. The Imdex Loyalty Programme is an employer of choice initiative in which all Imdex staff participate. For 25 years of service Mr Weston earned a cash bonus of $230,000, being 50% of his current annual salary. In the prior year, Mr Weston earned a short term cash bonus of $178,500 on achievement of specifi ed profi tability hurdles. This was the maximum possible bonus that Mr Weston could have earned.

No options were granted to Mr Weston in the current or prior year.

Mr Weston was granted 48,611 performance rights in the current period under the Performance Rights Plan. It is expected that the hurdles applicable to 44,779 of these performance rights will be achieved in the current year. These 44,779 performance rights will be settled via the issue of 44,779 fully paid ordinary shares in Imdex Limited in equal one third tranches annually on or about August each year starting in August 2012 on condition that Mr Weston remains employed by Imdex Limited at that time. Refer note 34 for further details.

Mr Weston was granted 120,897 performance rights in the prior year under the Performance Rights Plan. These 120,897 performance rights will be settled via the issue of 120,897 fully paid ordinary shares in Imdex Limited in equal one third tranches annually on or about August each year starting in August 2011 on condition that Mr Weston remains employed by Imdex Limited at that time. Refer note 34 for further details.

(iii) annually. The service contract specifi es a six month notice period in the event that the contract is terminated. There are no termination benefi ts specifi ed in this contract. Additional performance incentives may be agreed between Mr Loughlin and Imdex Limited from time to time.

additional $28,700 could have been earned by Mr Loughlin had the remaining targets been met. The Imdex Loyalty Programme is an employer of choice initiative in which all Imdex staff participate. For 5 years of service Mr Loughlin earned a cash bonus of $500. In the prior year, Mr Loughlin earned a short term cash bonus of $113,150 on achievement of specifi ed profi tability hurdles. This was the maximum possible bonus that Mr Loughlin could have earned.

FY12 Financial Report

No options were granted to Mr Loughlin in the current or prior year.

Mr Loughlin was granted 42,245 performance rights in the current period under the Performance Rights Plan. It is expected that the hurdles applicable to 38,914 of these performance rights will be achieved in the current year. These 38,914 performance rights will be settled via the issue of 38,914 fully paid ordinary shares in Imdex Limited in equal one third tranches annually on or about August each year starting in August 2012 on condition that Mr Loughlin remains employed by Imdex Limited at that time. Refer note 34 for further details.

Mr Loughlin was granted 125,587 performance rights in the prior year under the Performance Rights Plan. These 125,587 performance rights will be settled via the issue of 125,587 fully paid ordinary shares in Imdex Limited in equal one third tranches annually on or about August each year starting in August 2011 on condition that Mr Loughlin remains employed by Imdex Limited at that time. Refer note 34 for further details.

(iv) annually. The service contract specifi es a six month notice period in the event that the contract is terminated. There are no termination benefi ts specifi ed in this contract. Additional performance incentives may be agreed between Mr Evans and Imdex Limited from time to time.

$76,000 could have been earned by Mr Evans had the remaining targets been met. In addition Mr Evans received a loyalty bonus in accordance with the Imdex Loyalty Programme. The Imdex Loyalty Programme is an employer of choice initiative in which all Imdex staff participate. For 5 years of service Mr Evans earned a cash bonus of $500. In the prior year, Mr Evans earned a short term cash bonus of $149,650 on achievement of specifi ed profi tability hurdles. This was the maximum possible bonus that Mr Evans could have earned.

No options were granted to Mr Evans in the current or prior year. Refer note 33 for further details.

Mr Evans was granted 42,245 performance rights in the current period under the Performance Rights Plan. It is expected that the hurdles applicable to 38,914 of these performance rights will be achieved in the current year. These 38,914 performance rights will be settled via the issue of 38,914 fully paid ordinary shares in Imdex Limited in equal one third tranches annually on or about August each year starting in August 2012 on condition that Mr Evans remains employed by Imdex Limited at that time. Refer note 34 for further details.

Mr Evans was granted 111,806 performance rights in the prior year under the Performance Rights Plan. These 111,806 performance rights will be settled via the issue of 111,806 fully paid ordinary shares in Imdex Limited in equal one third tranches annually on or about August each year starting in August 2011 on condition that Mr Evans remains employed by Imdex Limited at that time. Refer note 34 for further details.

Bonuses granted to Directors and Key Management Personnel

The table below sets out the bonuses earned by Directors and Key Management Personnel in the current year and includes a long service bonus. Bonuses are paid on the achievement of performance criteria specifi c 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 fi nancial 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 $	Bonus $
	Performance based bonus	Loyalty bonus	% of possible bonus earned	% of possible bonus forfeited	% of compensation for the year consisting of performance based bonuses
B W Ridgeway	110,000	2,000	44%	56%	10%
G E Weston	62,100	230,000	30%	70%	7%
D J Loughlin	143,500	500	83%	17%	21%
P A Evans	92,000	500	55%	45%	15%

Imdex Loyalty Programme

During the year Imdex Limited introduced a new global Loyalty Programme in recognition of employees with long standing years of service.

Employees with 5, 10, 15, 20 or 25 years employment with Imdex will be entitled to rewards for their years of service. Rewards range from a AUD$500 voucher for 5 years’ service through to a cash equivalent of 3 and 6 months’ salary for employees who remain with the business for 20 and 25 years respectively.

Imdex 2012 Annual Report

FY12 Financial Rep ort

Value of options issued to Directors and Key Management Personnel

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

	Options Granted	Options Exercised	Options Exercised	Options Exercised	Options Lapsed	Number of options vested in the current year (ii)	Options granted that have vested in current year	Value of options included in remuneration during the year (iii)	Percent- age of remunera- tion for the year that consisted of options
	Value at grant date	Value at exercise date (i)	Number of shares Issued	Value paid for shares issued upon exercise of options	Value at lapsing date
	$	$	Number	$	$	Number	%	$	%
B W Ridgeway	-	-	-	-	-	-	-	-	-
G E Weston	-	-	-	-	-	-	-	-	-
D J Loughlin	-	700,000 (Tranche 3)	500,000 (Tranche 3)	375,000 (Tranche 3)	-	-	-	-	-
P A Evans	-	309,000 (Tranche 4)	300,000 (Tranche 4)	300,000 (Tranche 4)	-	-	-	-	-

(i) No amounts remain unpaid on these options

(ii) Represents 1/3 of each underlying tranche which vests annually

(iii) 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 refl ect the value of options issued in prior periods that are being expensed in the current period to recognise progressive vesting conditions.

Share based payment arrangements in existence during the current year

2012 Issue Date Expiry Date Exercise Price $ Fair Value at Grant Date $ Staff Options Tranche 3 (i) 23-Feb-07 22-Feb-12 0.75 0.56 Tranche 4 (i) 23-Feb-07 22-Feb-12 1.00 0.48 Tranche 5 (i) 12-Jun-07 11-Jun-12 1.80 0.51 Tranche 6 (i) 18-Oct-07 17-Oct-12 1.80 0.81 Tranche 7 (i) 28-Mar-08 27-Mar-13 3.00 0.42 Former Chairman’s Options (Mr I F Burston) Tranche 1 (ii) 19-Oct-06 18-Oct-11 0.75 0.35	Number of Options Opening balance Issued current year Exercised current year Lapsed current year Closing balance 700,000 - (700,000) - - 2,263,167 - (2,248,167) (15,000) - 575,000 - (75,000) (500,000) - 200,000 - - - 200,000 4,279,991 - - (586,658) 3,693,333 500,000 - (500,000) - -
	8,518,158 - (3,523,167) (1,101,658) 3,893,333

All staff options are exercisable one year after the date of issue, in one-third lots each year thereafter.

==> picture [117 x 56] intentionally omitted <==

FY12 Financial Report

Share options held by Directors and Key Management Personnel

2012 Mr B W Ridgeway Mr R W Kelly Mr K A Dundo Mr M Lemmel Ms E Donaghey Mr G E Weston Mr D J Loughlin Mr P A Evans 2011 Mr B W Ridgeway Mr R W Kelly Mr K A Dundo Mr M Lemmel Ms E Donaghey Mr G E Weston Mr D J Loughlin Mr P J Mander ~ Mr P A Evans	Balance at 1 July 2011 Granted as compensation Exercised Inception / (cessation) as key management person Balance at 30 June 2012 Vested but not exercisable Vested and exercisable Options vested during year No. No. No. No. No. No. No. No. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 500,000 - - - 500,000 - 500,000 - 500,000 - (500,000) - - - - - 500,000 - (300,000) - 200,000 - 200,000 -
	1,500,000 - (800,000) - 700,000 - 700,000 -
	Balance at 1 July 2010 Granted as compensation Exercised Inception / (cessation) as key management person Balance at 30 June 2011 Vested but not exercisable Vested and exercisable Options vested during year No. No. No. No. No. No. No. No. 2,000,000 - (2,000,000) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1,500,000 - - - 500,000 - 500,000 166,668 500,000 - (1,000,000) - 500,000 - 500,000 - 150,000 - - (150,000) - - - - 500,000 - - - 500,000 - 500,000 66,667
	4,650,000 - (3,000,000) (150,000) 1,500,000 - 1,500,000 233,335

~ - Mr P J Mander ceased to be a Key Management Person on 1 July 2010 when changed internal reporting structures came into effect. Disclosures above relate only to the period when in offi ce.

No options were granted to key management personnel in the current or prior year.

A total of 800,000 options were exercised by key management personnel during the current year. The exercise price was 75c per share for the 500,000 exercised by Mr D Loughlin and $1.00 per share for the 300,000 exercised by Mr P Evans. No amounts remain unpaid on the options exercised.

Imdex 2012 Annual Report

FY12 Financial Rep ort

Value of performance rights granted to Directors and Key Management Personnel

Percentages range from 7.5% to 25%. Each performance right is to be satisfi ed by the issue of one fully paid Imdex Limited ordinary share for nil consideration should specifi ed profi tability targets be met. Shares issued in satisfaction of performance rights are done so in 1/3 lots on the anniversary date of the satisfaction of the specifi ed hurdles should employment tenure be ongoing. The following table discloses the value of performance rights granted and expired during the year:

	Granted	Granted	Satisf ed by the issue of shares	Satisf ed by the issue of shares	Expired (iii)	Value included in remuneration during the year	Percentage of remuneration for the year that consisted of performance rights
		Value at grant date		Value at issue date
	Number	$	Number	$	Number	$	%
B W Ridgeway (i)	153,318 (MD Tranche)	292,500	-	-	-	142,682	13%
G E Weston (ii)	48,611 (Tranche 9)	67,926	40,299 (Tranche 2)	82,613	-	83,750	9%
D J Loughlin (ii)	42,245 (Tranche 9)	59,030	41,862 (Tranche 2)	85,817	-	79,527	12%
P A Evans (ii)	42,245 (Tranche 9)	59,030	37,269 (Tranche 2)	76,401	-	75,205	12%

(i) Approved by the shareholders at the Annual General Meeting on 20 October 2011.

(ii) Granted per the Performance Rights Plan.

(iii) Where performance rights expire no value is received by the performance rights holder.

the Performance Rights Plan can be found at note 34.

Performance Rights in existence during the current year

2012 Grant Date Expiry Date Exercise Price $ Estimated Fair Value at Grant Date $ Tranche 1 19-Feb-10 Aug-14 - 0.685 Tranche 2 3-Dec-10 Aug-15 - 1.395 Tranche 3 28-Jan-11 Aug-15 - 1.990 Tranche 4 10-Jun-11 Aug-16 - 2.160 Tranche 9 14-Oct-10 Oct-15 - 1.140 MD Tranche 20-Oct-11 Oct-16 - 1.910 Tranche 7 5-Sep-11 Aug-16 - 2.100 Tranche 8 29-Aug-11 Aug-16 - 2.080 Tranche 9 7-Oct-11 Aug-16 - 1.790	Estimated Number of Performance Rights
	Opening balance Granted Satisf ed by the issue of shares Expired ^ Closing balance 253,669 - (126,835) (5,635) 121,199 2,072,372 - (677,001) (100,897) 1,294,474 200,000 - (66,667) (133,333) - 200,000 - (66,667) - 133,333 196,579 - - - 196,579 - 153,318 - - 153,318 - 615,000 - - 615,000 - 15,000 - - 15,000 - 835,090 - (21,743) 813,347

^ - Performance rights expire either on failure to maintain employment tenure or on failure to satisfy performance hurdles.

Refer to (h) Performance Rights in the Directors Report for vesting details.

==> picture [117 x 56] intentionally omitted <==

FY12 Financial Report

(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 op- tion	Issue date of option	Expiry date of option	Key terms of option	Number of shares under option
Imdex Limited	Staff Share Options (Tranche 7)	Ordinary	300 cents	28 Mar 2008	27 Mar 2013	(aa)	3,693,333
Imdex Limited	Staff Share Options (Tranche 6)	Ordinary	180 cents	18 Oct 2007	17 Oct 2012	(aa)	200,000

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

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.

(ii)

Issuing Entity	Class of op- tion	Class of shares	Exercise price of option	Issue date of option	Expiry date of option	Number of shares issued
Imdex Limited	Staff Share Options (Tranche 4)	Ordinary	100 cents	23 Feb 2007	22 Feb 2012	2,248,167
Imdex Limited	Staff Share Options (Tranche 3)	Ordinary	75 cents	23 Feb 2007	22 Feb 2012	700,000
Imdex Limited	Staff Share Options (Tranche 6)	Ordinary	180 cents	12 Jun 2007	11 Jun 2012	75,000
Imdex Limited	Former Chairman’s Options (Tranche 1)	Ordinary	75 cents	19 Oct 2006	18 Oct 2011	500,000

Imdex 2012 Annual Report

FY12 Financial Rep ort

(h) Performance Rights

(i) Performance rights on issue at the date of this report

Issuing Entity	Class	Class of shares	Exercise price	Issue date	Expiry date	Key terms	Number of shares under performance right
Imdex Limited	Performance Rights (Tranche 1)	Ordinary	Nil	19 Feb 2010	Aug 2014	(aa)	121,199
Imdex Limited	Performance Rights (Tranche 2)	Ordinary	Nil	3 Dec 2010	Aug 2015	(bb)	1,294,474
Imdex Limited	Performance Rights (Tranche 4)	Ordinary	Nil	10 Jun 2011	Aug 2016	(cc)	133,333
Imdex Limited	Performance Rights (Managing Directors’ Tranche 1)	Ordinary	Nil	14 Oct 2010	Oct 2015	(dd)	196,579
Imdex Limited	Performance Rights (Managing Directors’ Tranche 2)	Ordinary	Nil	20 Oct 2011	Oct 2016	(ee)	153,318
Imdex Limited	Performance Rights (Tranche 7)	Ordinary	Nil	5 Sept 2011	Aug 2016	(ff)	615,000
Imdex Limited	Performance Rights (Tranche 8)	Ordinary	Nil	29 Aug 2011	Aug 2016	(gg)	15,000
Imdex Limited	Performance Rights (Tranche 9)	Ordinary	Nil	7 Oct 2011	Aug 2016	(hh)	813,347

(aa) being the day after signature of the FY10 independent audit report. Subject to ongoing employment tenure.

being the day after signature of the FY11 independent audit report. Subject to ongoing employment tenure.

(cc) being the day after signature of the FY12 independent audit report. Subject to ongoing employment tenure.

of specifi ed performance hurdles and ongoing employment tenure.
of specifi ed performance hurdles and ongoing employment tenure.

(ff) allotted August 2015 with the anniversary date being the day after signature of the FY14 independent audit report. Subject to ongoing employment tenure.

(gg)

being the day after signature of the FY12 independent audit report. Subject to ongoing employment tenure.

(i) Principal Activities

drilling fl uids and chemicals and down hole instrumentation.

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FY12 Financial Report

(j) Review of Operations

sell technologically advanced down hole instrumentation to the mining and oil and gas industries globally.

2011 and effective 1 August 2011 entered the Brazilian fl uids market by purchasing an established manufacturer and distributor of fl uids, System Mud Indústria e Comércio Ltda, based in Brazil.

These acquisitions occurred against the global backdrop of strong commodity prices, high drill rig utilisation rates and increasing exploration spending which assisted existing Imdex Group businesses to expand organically.

after tax of $45.8 million (2011: $29.0 million).

(k) Dividends

In the current year a fully franked interim dividend of 3.25 cents per ordinary share was paid on 23 March 2012 to shareholders registered on 9 March 2012. Since 30 June 2012 the Directors have declared a fully franked fi nal dividend of 4.00 cents per ordinary share, the fi nancial effect of which has not been refl ected in this Financial Report.

In the prior year a fully franked interim dividend of 1.75 cents per ordinary share was paid on 25 March 2011 to shareholders registered on 11 March 2011, and a fully franked fi nal dividend of 2.75 cents per ordinary share was paid on 21 October 2011 to shareholders registered on 7 October 2011.

(l) Changes in State Of Affairs

(m) Subsequent Events

Subsequent to year end the Directors declared a 4.00 cent per share fully franked dividend with a record date of 12 October 2012 and a payment date of 26 October 2012. The effect of this dividend has not been refl ected in this fi nancial report.

(n) Future Developments

results of those operations is likely to result in unreasonable prejudice to the Group. Accordingly, this information has not been disclosed in this report.

(o) 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 effl uent discharge. This is controlled through an effl uent system. No known environmental breaches have occurred in relation to the Group’s operations.

(p) 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 auditor’s behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

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 and 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 2012 Annual Report

FY12 Financial Rep ort

(q) Auditor’s Independence Declaration

The auditor’s independence declaration is included in the Annual Report immediately prior to the Audit Report.

Secretary, and all Executive Offi cers of the Company and of any related body corporate against a liability incurred as such a Director, Secretary or Executive Offi cer 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.

or agreed to indemnify an offi cer or auditor of the Company or of any related body corporate against a liability incurred as such an offi cer or auditor.

(s) 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 fi nancial report are rounded off to the nearest thousand dollars unless otherwise indicated.

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

Mr Ross Kelly AM

Chairman

Perth, Western Australia, 17 August 2012

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FY12 Financial Report

Auditor’s Independence Declaration

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The Board of Directors Imdex Limited 8 Pitino Court Osborne Park WA 6017

Deloitte Touche Tohmatsu ABN 74 490 121 060

Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia DX 206 Tel: +61 (0) 8 9365 7000 Fax: +61 (0) 8 9365 7001 www.deloitte.com.au

17 August 2012

Dear Board Members

Imdex Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Imdex Limited.

year ended 30 June 2012, I declare that to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

(ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely

DELOITTE TOUCHE TOHMATSU

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Peter Rupp Partner Chartered Accountants

Imdex 2012 Annual Report

FY12 Financial Rep ort

Independent Auditor’s Report

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Deloitte Touche Tohmatsu ABN 74 490 121 060

Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia

Independent Auditor’s Report to the Members of Imdex Limited

DX 206 Tel: +61 (0) 8 9365 7000 Fax: +61 (0) 8 9365 7001 www.deloitte.com.au

Report on the Financial Report

of fi nancial position as at 30 June 2012, the income statement, the statement of comprehensive income, the statement of cash fl ows and the statement of changes in equity for the year ended on that date, notes comprising a summary of signifi cant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity, comprising the company and the entities it controlled at the year’s end or from time to time during the fi nancial year as set out on pages 52 and 58 to 117.

Directors’ Responsibility for the Financial Report

and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the fi nancial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements , that the consolidated fi nancial statements comply with International Financial Reporting Standards.

Auditor’s Responsibility

audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the fi nancial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the fi nancial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control, relevant to the company’s preparation of the fi nancial report that gives a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the fi nancial report.

audit opinion.

FY12 Financial Report

Auditor’s Independence Declaration

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 . We confi rm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of Imdex Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

Opinion

Corporations Act 2001 , including:

performance for the year ended on that date; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Report on the Remuneration Report

We have audited the Remuneration Report included in paragraph (f) of the directors’ report for the year ended 30 June 2012. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion the Remuneration Report of Imdex Limited for the year ended 30 June 2012, complies with section 300A of the Corporations Act 2001.

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DELOITTE TOUCHE TOHMATSU

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Peter Rupp Partner Chartered Accountants Perth, 17 August 2012

Imdex 2012 Annual Report

FY12 Financial Rep ort

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) 2001, including compliance with accounting standards and giving a true and fair view of the fi nancial position and performance of the Group;
(c) Standards issued by the International Accounting Standards Board, as stated in note 2 to the fi nancial statements; and
(d) 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 fi nancial 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) of the Corporations Act 2001.

Dated at Perth, 17 August 2012.

Mr Ross Kelly AM

Chairman

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FY12 Financial Report

Corporate Governance Statement

ASX Governance Principles and ASX Recommendations

The Australian Securities 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 2012. In addition, the Company has a Corporate Governance section on its website: www.imdexlimited.com (under the “Investors” 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 2012, and the main corporate governance practices in place are set out below.

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.

The performance of Senior Executives is measured against prescribed criteria as set by the Remuneration Committee. These criteria are set annually and individual performance is assessed annually.

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

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 fi ve or six.

details concerning the skills, experience, expertise and term of offi ce of each Director is set out in the Director’s Profi les in the fi rst 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 affectingIndependence
Mr R W Kelly, Non Executive Chairman	Independent	Nil
Mr B W Ridgeway, ManagingDirector	Not Independent	Managing Director
Mr K A Dundo, Non Executive Director	Independent	Nil
Mr M Lemmel, Non Executive Director	Independent	Nil
Ms E Donaghey, Non Executive Director	Independent	Nil

Imdex 2012 Annual Report

FY12 Financial Rep ort

(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
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.

(v) Process for evaluating the performance of the Board, its committees and individual Directors

Individual Director performance is also measured by way of monitoring meeting attendance and individual contributions made at these meetings.

Principle 3: Promote ethical and responsible decision-making

Diversity

The Company has adopted a diversity policy to guide the Company’s employees and Board in developing and achieving its diversity objectives. The Company values diversity among its workforce and seeks to employ, retain and develop employees for the long term, assisting in their development and the development of the culture and values of the Company. This is done by promoting the value of different perspectives, ideas and benefi ts brought by engaging employees from all available talent.

The Company seeks to develop a culture of diversity within the Company whereby a mix of skills and diverse backgrounds are employed by the Company at all levels. This is achieved by:

developing and maintaining a diverse and skilled workforce through transparent recruitment processes
promoting an inclusive workplace culture that values and utilises the contributions of all employees backgrounds, experiences and perspective through improved awareness of the benefi ts of workforce diversity
facilitating diversity in the workplace by developing programs that promote growth for all employees, so each employee may reach their full potential, and providing maximum benefi t for the Company
setting measurable objectives to encourage diversity within the Company.

The Board continues to work on objectives that will work towards achieving these goals. The objectives will be reviewed and analysed regularly to assist the Company to benefi t from a diverse workplace.

At 30 June 2012:

of eight senior executive positions, seven (87%) were held by males, and one (13%) was held by a female
of 543 full time employees, 420 (77%) were male and 123 (23%) were female.

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FY12 Financial Report

(i)

Financial Report presents a true and fair view, in all material respects, of the Company’s fi nancial condition and operational results and are in accordance with relevant accounting standards.

(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 fi nancial information prepared for use by the Board in determining policies for inclusion in Financial Statements.

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

Mr K A Dundo (Chairman)

Mr R W Kelly

Ms E Donaghey.

Report. The Company Secretary acts as secretary of this Committee.

and Compliance Committee meetings at the discretion of the Committee. Details of meetings held by the Audit and Compliance Committee during the year are 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 required to attend the Annual General Meeting of the Company and be available to answer questions from Shareholders.

(iv) Internal Audit

The Group has an 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.

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 Board’s 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.

Imdex 2012 Annual Report

FY12 Financial Rep ort

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:

the Annual Report is made available to all Shareholders. 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;
the period. The Half-Year Financial Report is prepared in accordance with the requirements of Accounting Standards and the Corporations Act 2001 and is lodged with the Australian Securities and Investments Commission and the Australian Securities Exchange. The Half-Year Financial Report is made available to all Shareholders;
regular reports released through the ASX and the media;
proposed major changes in the Group, which may impact on share ownership rights are submitted to a vote of Shareholders; and
the Board encourages full participation by Shareholders at the Annual General Meeting to ensure a high level of accountability and identifi cation 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].

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.

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. 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.

In addition to receiving Internal Audit Reports, the Audit and Compliance Committee also receives regular reports from the External Audit function.

(ii)

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 effi ciently and effectively in all material respects.

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FY12 Financial Report

Principle 8: Remunerate fairly and responsibly

(i) Company’s remuneration policies

Details on the remuneration of Directors and Executives as well as the Company’s remuneration policies are set out in the Remuneration Report that is contained in the Directors Report.

(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 M Lemmel (Chairman)

Mr K Dundo

Ms E Donaghey.

Report.

The Remuneration Committee operates under a written Charter that is published on the Company’s website.

(iii) Structure of 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 fi xed cash fees. Non Executive Directors are not provided with retirement benefi ts 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. From time to time additional benefi ts may be agreed with Directors with due regard to market conditions.

Imdex 2012 Annual Report

FY12 Financial Rep ort

Consolidated Income Statement for the Year Ended 30 June 2012

Consolidated Income Statement for the Year Ended 30 June 2012
Notes Revenue from sale of goods and operating lease rental Other revenue from operations Total revenue 4 Other income 4 Raw materials and consumables used 4 Employee benef t expense 4 Depreciation expense 4 Amortisation expense 4 Finance costs 4 Share of loss of associate 27 Other expenses 4 Prof t before tax Income tax expense 5 Prof t for the year Attributable to: Owners of the Company Non-controlling interests Earnings per share Basic earnings per share (cents) 20 Diluted earnings per share (cents) 20	Year Ended Year Ended 30 June 2012 30 June 2011 $’000 $’000 269,563 205,163 89 171
	269,652 205,334
	275 - (104,985) (84,514) (44,010) (33,241) (6,761) (5,721) (5,957) (6,778) (1,831) (2,946) (1,460) - (37,423) (33,541)
	67,500 38,593
	(21,723) (9,591)
	45,777 29,002
	45,777 29,002 - -
	45,777 29,002
	22.34 14.69 21.85 14.25

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

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FY12 Financial Report

Consolidated Statement of Comprehensive Income for the Year Ended 30 June 2012

Note Prof t for the year Other comprehensive income Fair value adjustment on investment in Sino Gas and Energy Holdings Ltd (SEH) 19 Exchange differences arising on the translation of foreign operations 19 Other comprehensive income for the year Income tax relating to components of other comprehensive income 5 Total comprehensive income for the year Total comprehensive income attributable to: Owners of the parent Non-controlling interests	Year Ended Year Ended 30 June 2012 30 June 2011 $’000 $’000 45,777 29,002 5,290 9,320 (6,831) (5,291)
	(1,541) 4,029 (1,018) (3,324)
	43,218 29,707
	43,218 29,707 - -

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

Imdex 2012 Annual Report

FY12 Financial Rep ort

Consolidated Statement of Financial Position as

at 30 June 2012

at 30 June 2012
Notes Current Assets Cash and Cash Equivalents 29 Trade and Other Receivables 7 Inventories 8 Other 10 Total Current Assets Non Current Assets Other Financial Assets 9 Property, Plant and Equipment 11 Investment in Associates 27 Deferred Tax Assets 5 Goodwill 12 Other Intangible Assets 13 Total Non Current Assets Total Assets Current Liabilities Trade and Other Payables 14 Borrowings 15 Current Tax Liabilities 5 Provisions 16 Other Current Liabilities 17 Total Current Liabilities Non Current Liabilities Borrowings 15 Provisions 16 Other Non Current Liabilities 17 Total Non Current Liabilities Total Liabilities Net Assets Equity Issued Capital 18 Shares Reserved for Performance Rights Plan 18 Foreign Currency Translation Reserve 19 Investment Revaulation Reserve 19 Employee Equity-Settled Benef ts Reserve 19 Manadatory Issuable Capital 19 Retained Earnings Total Equity	30 June 2012 30 June 2011 $’000 $’000 11,232 18,388 59,689 50,219 52,106 40,565 11,295 4,596
	134,322 113,768
	21,412 16,122 19,730 17,344 24,255 - 13,700 10,461 54,577 38,705 6,556 17,146
	140,230 99,778
	274,552 213,546
	33,349 32,879 12,880 28,945 9,547 14,138 2,896 2,191 - 2,628
	58,672 80,781
	46,549 6,074 1,265 1,069 - 213
	47,814 7,356
	106,486 88,137
	168,066 125,409
	86,069 70,059 (3,740) - (17,703) (11,441) 10,227 6,524 6,385 7,158 990 - 85,838 53,109
	168,066 125,409

The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

FY12 Financial Report

Consolidated Statement Of Changes in Equity for the Year Ended 30 June 2012

Notes Balance at 1 July 2010 Exchange differences on translation of foreign operations after taxation 19 Fair value adjustment on available for sale f nancial instrument net of taxation 19 Prof t for the year Total comprehensive income for the period Dividend paid 21 Share based payments - options 19 Share based payments - performance rights 19 Shares purchased on market to satisfy performance rights 19 Issue of shares under staff option plan 18,19 Balance at 30 June 2011 Exchange differences on translation of foreign operations after taxation 19 Fair value adjustment on available for sale f nancial instrument net of taxation 19 Prof t for the year Total comprehensive income for the period Issue of shares as part consideration for the acquisition of Australian Drilling Specialties 18,26(a) Issue of shares as part consideration for the acquisition of System Mud Industria e Comercio Ltda 18,26(b) Issue of shares as consideration for the acquisition of Mud Systems Pte Ltd 18,26(e) Deferred consideration - mandatory issuable capital 19,26(b) Dividend paid 21 Share based payments - performance rights 18,19 Shares purchased on market to satisfy performance rights 19 Issue of shares under staff option plan 18,19 Balance at 30 June 2012	Fully Paid Ordinary Shares Shares reserved for Performance Rights Plan Foreign Currency Translation Reserve Employee Equity- Settled Benef ts Reserve Investment Revaluation Reserve Mandatory Issuable Capital Retained Earnings Total Attributable to Equity Holders of the Entity $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 67,415 - (5,622) 5,107 - - 27,595 94,495 - - (5,819) - - - - (5,819) - - - - 6,524 - - 6,524 - - - - - - 29,002 29,002
	- - (5,819) - 6,524 - 29,002 29,707
	- - - - - - (3,488) (3,488) - - - 580 - - - 580 - - - 2,131 - - - 2,131 - - - (134) - - - (134) 2,644 - - (526) - - - 2,118
	70,059 - (11,441) 7,158 6,524 - 53,109 125,409 - - (6,262) - - - - (6,262) - - - - 3,703 - - 3,703 - - - - - - 45,777 45,777
	- - (6,262) - 3,703 - 45,777 43,218 6,000 - - - - - - 6,000 3,840 - - - - - - 3,840 1,200 - - - - - - 1,200 - - - - - 990 - 990 - - - - - - (12,327) (12,327) - (3,740) - 6,683 - - (721) 2,222 - - - (5,769) - - - (5,769) 4,970 - - (1,687) - - - 3,283
	86,069 (3,740) (17,703) 6,385 10,227 990 85,838 168,066

The Consolidated Statement of Changes in Equity should be read in

conjunction with the accompanying notes.

Imdex 2012 Annual Report

FY12 Financial Rep ort

Consolidated Statement Of Cash Flows for the Financial Year Ended 30 June 2012

the Financial Year Ended 30 June 2012
Notes Cash Flows From Operating Activities Receipts from customers Payments to suppliers and employees Interest and other costs of f nance paid Income tax paid Net cash provided by Operating Activities 29(c) Cash Flows From Investing Activities Interest received Payment for property, plant and equipment 11 Proceeds from sale of property, plant and equipment Payment for development costs capitalised 13 Payment for shares in Australian Drilling Specialties Pty Ltd net of cash acquired 26(a) Payment for shares in System Mud net of cash acquired 26(b) Payment for shares in Fluidstar Pty Ltd and Ecospin Pty Ltd net of cash acquired 26(c) Payment for shares in AMC Germany GmbH net of cash acquired 26(d) Investment in Associate 27 Net cash used in Investing Activities Cash Flows From Financing Activities Cash received on exercise of options Shares purchased on market to satisfy performance rights Dividend paid to owners of the Company 21 Hire purchase and lease payments Proceeds from borrowings Repayment of borrowings Net cash provided by Financing Activities Net (Decrease) / Increase in Cash and Cash Equivalents Held Cash and Cash Equivalents at the Beginning Of The Financial Year 29(a) Effects of exchange rate changes on the balance of cash and cash equivalents held in foreign currencies Cash and Cash Equivalents at the End Of The Financial Year 29(a)	Year Ended Year Ended 30 June 2012 30 June 2011 $’000 $’000 288,004 219,761 (229,320) (173,417) (1,745) (2,305) (29,883) (8,146)
	27,056 35,893
	89 171 (11,065) (11,402) 366 247 (1,254) (691) (7,077) - (2,726) - - (12,413) - (2,067) (21,415) -
	(43,082) (26,155)
	3,283 2,118 (5,769) (134) (12,327) (3,488) (930) (2,987) 67,112 14,250 (42,252) (8,001)
	9,117 1,758
	(6,909) 11,496
	18,388 9,007 (247) (2,115)
	11,232 18,388

The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

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FY12 Financial Report

Notes to the Financial Report

1 Ad option of New and Revised Accounting Standards

Adoption of new and revised Accounting Standards

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 their operations and effective for the current reporting period. The adoption of these amendments has not resulted in any changes to the Group’s accounting policies and has no affect on the amounts reported for the current or prior periods.

Accounting Standards and Interpretations issued but not yet effective

Accounting Standards and Interpretations, including those issued by the IASB/IFRIC where an Australian equivalent has not yet been made by the AASB, that have recently been issued or amended but are not yet effective that have not been adopted for the annual reporting period ended 30 June 2012, but would be relevant to its operations, are:

	Application date
Affected Standards	(reporting period	Application date for
and Interpretations	commences on or after)	Group
AASB 9 ‘Financial Instruments’, AASB 2009- 11 ‘Amendments to Australian
Accounting Standards arising from AASB 9’ and AASB 2010-7 ‘Amendments
to Australian Accounting Standards arising from AASB 9 (December 2010)’ *	1 January 2013	30 June 2014
AASB 10 ‘Consolidated Financial Statements’	1 January 2013
		30 June 2014
AASB 127 ‘Separate Financial Statements’ (2011)	1 January 2013
		30 June 2014
AASB 13 ‘Fair Value Measurement’ and AASB 2011-8 ‘Amendments to
Australian Accounting Standards arising from AASB 13’	1 January 2013	30 June 2014
AASB 119 ‘Employee Benef ts’ (2011) and AASB 2011-10 “Amendments to
Australian Accounting Standards arising from AASB 119 (2011)’	1 January 2013	30 June 2014
AASB 2010-8 ‘Amendments to Australian Accounting Standards –Deferred
tax: Recovery of Underlying Assets’	1 January 2012	30 June 2013
AASB 2011-4 Amendments to Australian Accounting Standards to Remove
Individual Key Management Personnel Disclosure Requirements	1 July 2013	30 June 2014
AASB 2011-9 ‘Amendments to Australian Accounting Standards-
Presentation of Items of Other Comprehensive Income’	1 July 2012	30 June 2013

The IASB have recently deferred the application date of the IFRS equivalent to this standard until 1 January 2015.

Imdex 2012 Annual Report

FY12 Financial Rep ort

2

Corporations Act 2001 and Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board.

(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 fi nancial 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 fi nancial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.

(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 consolidated statement of fi nancial position.

(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 fl ows are included in the consolidated statement of cash fl ows on a gross basis. The GST component of cash fl ows arising from investing and fi nancing activities which is recoverable from, or payable to, the taxation authority is classifi ed as operating cash fl ows.

(d) Goodwill

Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifi able assets acquired and the liabilities assumed.

consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognised immediately in profi t or loss as a bargain purchase gain.

Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefi t from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated fi rst to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

(e) Inventories

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 fi rst in fi rst out basis. Net realisable value represents the estimated selling price less all estimated costs of completion and costs necessary to make the sale.

FY12 Financial Report

(f) Property, plant and equipment

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 fi nance 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 or 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 profi t or loss.

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

Plant and equipment: 10% to 50% Equipment rented to third parties: 10% to 50% Equipment under fi nance lease: 10% to 50%

Capital works in progress in the course of construction for production or supply purposes, or for purposes not yet determined, are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group’s accounting policy. Depreciation of these assets, on the same basis as other property, plant and equipment assets, commences when the assets are ready for their intended use.

(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, Binomial Tree Method and Monte-Carlo Simulation as appropriate. 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.

The fair value determined at the grant date of the equity-settled share-based payments is expensed 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 profi t or loss over the remaining vesting period, with a corresponding adjustment to the employee equity-settled benefi ts reserve.

(h) Basis of consolidation

(its subsidiaries) (referred to as ‘the Group’ in these fi nancial statements). Control is achieved where the Company has the power to govern the fi nancial and operating policies of an entity so as to obtain benefi ts 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.

those used by other members of the Group.

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

(i) Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at 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. Acquisition-related costs are recognised in profi t or loss as incurred.

Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). All other subsequent changes in the fair value of contingent consideration classifi ed as an asset or liability are accounted for in accordance with relevant Standards. Changes in the fair value of contingent consideration classifi ed as equity are not recognised.

Imdex 2012 Annual Report

FY12 Financial Rep ort

Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profi t or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassifi ed to profi t or loss, where such treatment would be appropriate if that interest were disposed of.

recognised at their fair value at the acquisition date, except that:

accordance with AASB 112 Income Taxes and AASB 119 Employee Benefi ts respectively;

liabilities or equity instruments related to the replacement by the Group of an acquiree’s share based payme nt awards are measured in accordance with AASB 2 Share-based Payment; and

Discontinued Operations are measured in accordance with that Standard.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to refl ect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date – and is subject to a maximum of one year.

(j) Investments in associates

venture. Signifi cant infl uence is the power to participate in the fi nancial and operating policy decisions of the investee but is not control or joint control over those policies.

except when the investment is classifi ed as held for sale, in which case it is accounted for in accordance with AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’. Under the equity method, an investment in an associate is initially recognised in the consolidated statement of fi nancial position at cost and adjusted thereafter to recognise the Group’s share of the profi t or loss and other comprehensive income of the associate. When the Group’s share of losses of an associate exceeds the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

liabilities of the associate recognised at the date of acquisition is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifi able assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profi t or loss.

The requirements of AASB 139 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with AASB 136 ‘Impairment of Assets’ as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with AASB 136 to the extent that the recoverable amount of the investment subsequently increases.

the Group’s consolidated fi nancial statements only to the extent of interests in the associate that are not related to the Group.

(k) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

deducted from the borrowing costs eligible for capitalisation.

FY12 Financial Report

(l) Foreign currency

the entity operates (its functional currency). For the purpose of the consolidated fi nancial statements, the results and fi nancial position of each entity are expressed in Australian dollars, which is the functional currency of Imdex Limited, and the presentation currency for the consolidated fi nancial statements.

(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.

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 profi t or loss on disposal of the net investment.

On consolidation, the assets and liabilities of the Group’s foreign operations are translated into Australian dollars at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fl uctuated signifi cantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classifi ed as equity and transferred to the Group’s translation reserve. Such exchange differences are recognised in profi t 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.

through the use of an interest rate cap. Further details of derivative fi nancial instruments are disclosed in the fi nancial instruments note in the fi nancial 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 profi t or loss immediately. The Group has not designated any fi nancial instruments as being hedge accounted.

(i) Embedded derivatives

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 profi t or loss.

(n) Financial assets

whose terms require delivery of the fi nancial asset within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs except for those fi nancial assets classifi ed as ‘at fair value through the profi t or loss’ which are initially measured at fair value.

maturity’ investments, ‘available-for-sale’ fi nancial assets, and ‘loans and receivables’. The classifi cation depends on the nature and purpose of the fi nancial assets and is determined at the time of initial recognition.

(i) Effective interest method

the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the fi nancial asset, or, where appropriate, a shorter period.

profi t or loss’.

Imdex 2012 Annual Report

FY12 Financial Rep ort

(ii) Held-to-maturity investments

intent and ability to hold to maturity are classifi ed 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.

Has been acquired principally for the purpose of selling in the near future;

term profi t-taking; or

Is a derivative that is not designated and effective as a hedging instrument.

The net gain or loss recognised in profi t or loss incorporates any dividend or interest earned on the fi nancial asset.

(iii)

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 profi t 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 profi t 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 profi t or loss, and other changes are recognised in equity. Available-for-sale fi nancial assets include investments where shareholding is greater than 20% but signifi cant infl uence is not exerted over the invested company.

(iv) Loans and receivables

classifi ed 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.

(v)

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 fi nancial asset, the estimated future cash fl ows of the investment have been impacted. For fi nancial 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 fl ows, discounted at the original effective interest rate.

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 profi t 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 profi t 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.

(vi)

fi nancial 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 fi nancial asset, the Group continues to recognise the fi nancial asset and also recognises a collateralised borrowing for the proceeds received.

FY12 Financial Report

(o) Financial liabilities and equity instruments issued by the Group

(i) Debt and equity instruments

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

(iii)

The net gain or loss recognised through profi t or loss incorporates any interest paid on the fi nancial liability.

it has been incurred principally for the purpose of repurchasing in the near future; or
short-term profi t-taking; or
it is a derivative that is not designated and effective as a hedging instrument.
recognition if:
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 profi t or loss’.
(iv)

recognised on an effective yield basis.

the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the fi nancial liability, or, where appropriate, a shorter period.

(p) Intangible assets

(i) Intangible assets acquired in a business combination

defi nition of an intangible asset and their value can be measured reliably. Identifi able 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:

eful lives are as follows:
Intellectual property	10 years
Technology	5-7 years
Contracts	1-5 years (term of contract)
Customers	5-6 years
Trade Names and Patents	1-6 years

useful life assessment for the asset. Such assets are tested for impairment in accordance with the policy stated in note 2(t).

Imdex 2012 Annual Report

FY12 Financial Rep ort

(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
asset
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 between 3 and 5 years, commencing on commercialisation of the underlying projects.

(q) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

(i) Current tax

statement because of items of income or expense that are taxable or deductible in other periods and items that are never taxable or deductible. The Company and the Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

(ii) Deferred tax

and the corresponding tax bases used in the computation of taxable profi t. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profi ts will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profi t nor the accounting profi t.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Company and the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be suffi cient taxable profi ts against which to utilise the benefi ts of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that suffi cient taxable profi ts will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets refl ects the tax consequences that would follow from the manner in which the Company and the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company and the Group intends to settle its current tax assets and liabilities on a net basis.

(iii) Current and deferred tax for the period

recognised outside profi t or loss (whether in other comprehensive income or directly in equity), in which case the tax is also recognised outside profi t or loss, or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is included in the accounting for the business combination.

FY12 Financial Report

(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 fi nancial 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 fi nancial 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 tax-consolidated group in accordance with the arrangement. Further information about the tax funding arrangement is detailed in note 5 to the fi nancial 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.

(r) Leased assets

the lessee. All other leases are classifi ed 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

minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the consolidated statement of fi nancial position as a fi nance lease obligation.

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 benefi ts 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 benefi ts 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 benefi ts from the leased asset are consumed.

(s) Revenue

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

(i) Sale of 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
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.

Imdex 2012 Annual Report

FY12 Financial Rep ort

(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 fi nancial asset to that asset’s net carrying amount.

(t)

(i) Provisions

when it is probable that settlement will be required and they are capable of being measured reliably.

the remuneration rate expected to apply at the time of settlement.

value of the estimated future cash outfl ows to be made by the Group in respect of services provided by employees up to reporting date.

(ii)

(u) Impairment of other tangible and intangible assets (other than goodwill)

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 fl ows 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 identifi ed, 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 identifi ed.

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 fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset for which the estimates of future cash fl ows 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 (cashgenerating unit) is reduced to its recoverable amount. An impairment loss is recognised in profi t 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 profi t or loss immediately.

(v) 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 cashfl ows estimated to settle the present obligation, its carrying amount is the present value of those cashfl ows.

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.

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FY12 Financial Report

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

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 signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year:

Impairment of Goodwill and Intangibles

Determining whether goodwill and intangibles are impaired requires an estimation of the value in use of the cashgenerating units to which goodwill and intangibles are attributable. The value in use calculation requires the entity to estimate the future cash fl ows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. A forward looking estimation of this nature is inherently uncertain. Details of the key assumptions made are contained in note 12 (Goodwill) and note 13 (Intangibles). No impairment losses were booked in the current or prior year. A goodwill amount of $54.6 million and intangible assets of $6.5 million have been recognised on the face of the balance sheet.

Recognition of net deferred tax asset

A net deferred tax asset of $13.7 million has been recognised on the face of the balance sheet. The largest component of this asset is the future tax benefi t of depreciation of unrealised profi ts in self manufactured inventory and property, plant and equipment items. This tax benefi t will be realised progressively over the next 3-5 years as these assets are depreciated or sold. This net asset has been raised as it is considered more likely than not that it will be realised. In making this assessment of likelihood a forward looking estimation of cash fl ows and the likelihood of business success needs to be made up to 5 years into the future. A forward looking estimation of this nature over 5 years is inherently uncertain. Details of deferred tax balances are contained in note 5.

Fair value of options and performance rights

Options and performance rights as detailed in notes 33 and 34 are inherently complex to value due to their nature and relationship to the share market and its uncertainties. The Imdex Group therefore engaged valuation professionals to perform a valuation. The models used by the valuation professionals, although they are industry standard models, are subject to limitations and uncertainties.

Imdex 2012 Annual Report

FY12 Financial Rep ort

4

4 Prof t from Operations
(a) Revenue from operations Revenue Revenue from the sale of goods Operating rental income Interest income - bank deposits	2012 2011 $’000 $’000 182,416 142,254 87,147 62,909 89 171
	269,652 205,334

(b)

Loss on disposal of property, plant and equipment	(27)	(32)
Financial liabilities at amortised cost
Interest expense	(1,831)	(2,946)
Prof t before income tax has been arrived at after charging the following items of income and expense:
Depreciation and amortisation of Non Current Assets
Depreciation of Property, Plant and Equipment (note 11)	6,761	5,721
Amortisation of Intangible Assets (note 13)	5,957	6,778
	12,718	12,499
Finance costs
Interest on hire purchase liabilities	102	343
Interest on deferred acquisition consideration (reversed in current year)	(101)	101
Interest on commercial bills/bank loans	1,489	2,251
Interest on overdraft	110	16
Other interest	231	235
	1,831	2,946
Other income
Foreign exchange gain	275	-
Other expenses
Commissions	3,452	2,552
Consultancy fees	3,723	2,104
Legal and professional expenses (i)	4,292	4,573
Foreign exchange loss	-	3,334
Rent and premises costs	4,192	3,402
Travel and accommodation	4,828	4,121
Freight	2,764	2,631
Motor vehicle costs	1,987	1,645
Other expenses	12,185	9,179
	37,423	33,541

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

FY12 Financial Report

Employee benef ts expense Post-employment benef ts: Def ned contribution superannuation costs Share based payments: Equity-settled share based payments - share options (note 19) Equity-settled share based payments - performance rights (note 19) Other employee benef ts Raw materials and consumables used Movement in provision for doubtful debts Operating lease rental (minimum lease payments) 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 Under/over provision per prior year Total tax expense	2012 2011 $’000 $’000 2,157 1,716 - 580 2,222 2,131 39,631 28,814
	44,010 33,241
	104,985 84,514
	142 t (325)
	4,429 3,448
	2012 2011 $’000 $’000 17,229 21,911 2,312 (9,861) 2,182 (2,459) 21,723 9,591

income tax in the fi nancial statements as follows:

Prof t from operations Income tax expense calculated at 30% Non-deductible share based payments Deductible net contribution to share trust Non-deductible share of loss of Associate Other non-deductible and non-assessable items Tax rate differential arising from foreign entities Under/over provision of prior year income tax	67,500 38,593 20,250 11,578 667 773 (1,337) - 438 - 122 (86) (599) (215) 2,182 (2,459) 21,723 9,591

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

Imdex 2012 Annual Report

FY12 Financial Rep ort

(b) Income tax recognised directly in equity

(b) Income tax recognised directly in equity
The following current and deferred amounts were charged directly to equity during the year: Deferred tax: SEH fair value uplift taken directly to reserve 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 Carry forward tax losses in subsidiary companies Accruals Foreign currency translation reserves Deferred tax liabilities comprise: Intangible assets Available-for-sale non-current assets Share based payments Net deferred tax balances 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	2012 2011 $’000 $’000 (1,587) (2,796) 569 (528)
	(1,018) (3,324)
	9,547 14,138
	1,013 569 2,312 3,133 12,062 7,989 791 1,700 1,070 2,860 1,924 1,355
	19,172 17,606
	(1,967) (5,660) (3,072) (1,485) (433) -
	(5,472) (7,145)
	13,700 10,461
	3,478 1,723

==> picture [117 x 56] intentionally omitted <==

FY12 Financial Report

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 whollyowned 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 profi t or loss of the entity and the current tax rate. Such amounts are refl ected 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

6 Remuneration of Auditors
Deloitte Touche Tohmatsu (Australia) Audit or review of the f nancial report Taxation services - mainly compliance work, transfer pricing and global restructuring advice Other non-audit services: Other consulting services Deloitte Touche Tohmatsu (overseas aff liates) Audit or review of the f nancial report Taxation services - mainly compliance work, transfer pricing and global restructuring advice Other non-audit services: Other consulting services Other auditors Audit or review of the f nancial report Other non-audit services: Accounting assistance and taxation advice	2012 2011 $ $ 313,110 271,085 490,828 184,060 - 13,690
	803,938 468,835
	74,732 65,111 31,031 13,733 69,539 17,070
	175,302 95,914
	25,718 69,075 - 93,105
	25,718 162,180

	1,004,958 726,929

Imdex 2012 Annual Report

FY12 Financial Rep ort

7 Trade and Other Receivables

Notes Current Trade receivables (i) Allowance for doubtful debts (ii) Other receivables	2012 2011 $’000 $’000 59,509 49,887 (1,463) (1,321)
	58,046 48,566 1,643 1,653
	59,689 50,219

(i) The average credit period on sales of goods is around 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 specifi c knowledge of 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	3,475 1,929 8,686 6,144 2,895 2,048
	15,056 10,121

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 Balance at the beginning of the year Amounts written off during the year Decrease/increase in allowance recognised in prof t or loss Balance at the end of the year 8 Inventories Current Raw materials – at cost Work in progress – at cost Finished goods – at cost	1,321 1,646 - - 142 (325)
	1,463 1,321
	2012 2011 $’000 $’000 6,984 9,493 1,581 499 43,541 30,573
	52,106 40,565

A provision for diminution of stock of $717,000 existed at 30 June 2012 (2011: $163,000).

FY12 Financial Report

9 Other Financial Assets

		2012	2011
	Notes	$’000	$’000
Non-Current
Available for sale f nancial asset at fair value
Investment in Sino Gas and Energy Holdings Ltd	(i)	21,412	16,122

i) Comprises 251,908,446 fully paid ordinary shares in Sino Gas and Energy Holdings Ltd (SEH) held at fair value (2011: 251,908,446 shares). This amounts to 22.48% of the issued share capital of SEH (2011: 25.96%). The shareholding percentage dropped in the current year due to additional shares being issued by SEH to third parties.

the current or prior periods due to its limited Board representation and minimal involvement in strategic planning and day to day management. The shareholding in excess of 20% is a consequence of partially sub-underwriting SEH’s recent capital raising in June 2010. The partial sub-underwriting was undertaken to facilitate the Company’s exit from the SEH convertible note that had been issued by SEH to Imdex Limited in a prior year. As the Company’s intention remains to realise the value of the investment through sale, this investment has been classifi ed, as an available-for-sale non-current asset and carried at fair value.

Investment in Sino Gas and Energy Holdings Ltd

Investment in Sino Gas and Energy Holdings Ltd
Balance at beginning of f nancial year Fair value adjustment taken directly to equity (pre-tax) Balance at end of f nancial year	2012 2011 Shares $000 Shares $000 251,908,446 16,122 251,908,446 6,802 - 5,290 - 9,320
	251,908,446 21,412 251,908,446 16,122

During the current year the carrying value of this investment was written up to its market value of $0.085 per share or $21.4 million in total at 30 June 2012.

During the prior year the carrying value of this investment was written up to its market value of $0.064 per share or $16.1 million in total at 30 June 2011.

10 Other Assets

10 Other Assets
Current Prepayments	2012 2011 $’000 $’000 11,295 4,596
	11,295 4,596

Imdex 2012 Annual Report

FY12 Financial Rep ort

11 Property, Plant and Equipment

Gross Carrying Value Balance at 30 June 2010 Additions Acquisitions through business combinations Disposals Net foreign currency exchange differences Transfer Balance at 30 June 2011 Additions Acquisitions through business combinations Disposals Net foreign currency exchange differences Transfer Balance at 30 June 2012 Accumulated Depreciation Balance at 30 June 2010 Disposals Acquisitions through business combinations Depreciation expense Net foreign currency exchange differences Transfer Balance at 30 June 2011 Disposals Depreciation expense Net foreign currency exchange differences Balance at 30 June 2012 Net Book Value As at 30 June 2011 As at 30 June 2012	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 10,806 7,014 3,229 805 21,854 5,303 5,346 - 753 11,402 1,536 - - - 1,536 (581) (834) (590) (526) (2,531) (387) (4,712) - (14) (5,113) 143 389 - (107) 425
	16,820 7,203 2,639 911 27,573 5,501 3,716 - 1,848 11,065 1,028 - - - 1,028 (2,267) (689) - - (2,956) (791) (3,224) - (39) (4,054) (2,410) 2,410 - - -
	17,881 9,416 2,639 2,720 32,656
	4,339 3,628 283 - 8,250 (1,418) (834) - - (2,252) 22 - - - 22 2,347 3,258 116 - 5,721 (162) (1,775) - - (1,937) (208) (11) 644 - 425
	4,920 4,266 1,043 - 10,229 (1,878) (685) - - (2,563) 2,459 3,634 668 - 6,761 (264) (1,237) - - (1,501)
	5,237 5,978 1,711 - 12,926
	11,900 2,937 1,596 911 17,344
	12,644 3,438 928 2,720 19,730

	2012	2011
	$’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	2,459	2,347
Plant and equipment rented to third parties	3,634	3,258
Equipment under hire purchase	668	116
	6,761	5,721

FY12 Financial Report

12 Goodwill

12 Goodwill
Notes Gross Carrying Amount Balance at beginning of the f nancial year Recognised on acquisition of Australian Drilling Specialties Pty Ltd (ADS) (i) Recognised on acquisition of System Mud Indústria e Comércio Ltda (System Mud) (ii) Reclassif ed to Investment in Associate 27 Recognised on acquisition of Fluidstar Pty Ltd and Ecospin Pty Ltd (iii) Recognised on acquisition of AMC Germany GmbH (formerly Mud-Data GmbH) (iv) Effect of foreign exchange movements Balance at end of the f nancial year Accumulated Impairment Losses Balance at beginning of the f nancial year Impairment losses for the year Balance at end of the f nancial year Net Book Value At the beginning of the f nancial year At the end of the f nancial year Goodwill is allocated to cash-generating units as follows: AMC Germany (iv) ADS / Fluidstar / Ecospin (i) System Mud (ii) Ref ex / Imdex Technology UK (v) Flexit / Imdex Technology Germany (v)	2012 2011 $’000 $’000 61,203 53,204 10,513 - 6,808 - (1,416) - - 7,848 152 145 (185) 6
	77,075 61,203
	(22,498) (22,498) - -
	(22,498) (22,498)
	38,705 30,706
	54,577 38,705
	297 145 18,360 7,848 6,808 - 29,112 19,953 - 10,759
	54,577 38,705

(i) Goodwill arose during the period on the acquisition of Australian Drilling Specialties Pty Ltd (ADS) by Imdex Limited - (Refer note 26(a)). The goodwill of ADS forms part of the AMC CGU since it is a vertical integration with AMC and has been assessed for impairment as part of the AMC CGU.

(ii) Goodwill arose in the current year on the acquisition of System Mud Indústria e Comércio Ltda (System Mud) by Imdex Limited - (Refer note 26(b)). System Mud is considered to be a separate cash generating unit since it operates independently from other Imdex operations in a separate geographical area being the Latin America region concentrating on the supply of drilling fl uids and chemical supplies.

(iii) Goodwill arose in the prior year on the acquisition of Fluidstar Pty Ltd (Fluidstar) and Ecospin Pty Ltd (Ecospin) by Imdex Limited - (Refer note 26(c)). Effective 1 January 2011, the businesses of Fluidstar and Ecospin were transferred into Australian Mud Company Pty Ltd (AMC), an existing legal entity and separate cash generating unit. This transfer occurred to gain synergies since these businesses are similar in nature and have similar customers and end markets. The goodwill of Fluidstar and Ecospin has therefore been absorbed into the AMC CGU and has been assessed for impairment as part of the AMC CGU.

Imdex 2012 Annual Report

FY12 Financial Rep ort

(iv) Goodwill arose in the prior year on the acquisition of AMC Germany GmbH (formerly Mud-Data GmbH) (AMC Germany) by Imdex Limited – (Refer to Note 26(d)). AMC Germany is considered to be a separate cash generating unit since it operates independently from other Imdex operations in a separate geographical area being the greater European region and in a separate market, being the oil and gas and geothermal markets. A true up of AMC Germany goodwill of $0.2m occurred in the current period.
(v) the ITS goodwill (Gyrosmart) is now being marketed as the Refl ex Gyro for mining.

date, with no write down required.

The key assumptions used in the value in use calculations for those CGU’s tested were as follows:

CGU	Forecasted revenue growth	Discount Rate	Forecasted net margins	Expected exchange rate f uctuations
AMC (including Fluidstar, Eco- spin, ADS and Mud Systems)	Revenue growth has been forecast in line with the expected rate of growth in the mining and mineral exploration markets in Australia as driven by strong commodity prices and ongoing strong demand from Chinese and other emergingmarkets.	17.32%	Net margins have been forecasted using current period actuals as a base on which operational improvements and economies of scale are expected to be gained, particularly from the introduction of a regionalised reporting structure and improved/ expanded product offerings.	Exchange rate f uctuation expectations have been built into the forecasted numbers based on FY13 forecasted exchange rates published by major local and international lending institutions. Discounted cash f ow outcomes using these rates are not materially different from having used current spot rates.
AMC Germany (formerly Mud Data)	Revenue has been forecast using contracted and committed revenues as a base on which a moderate growth projection has been based. Growth projections have been estimated using European market performance and client feedback as aguide.	13.04%
Ref ex/Imdex Technology	Revenue growth has been forecast in line with the expected rate of growth in the mining and mineral exploration markets in Australia and the broader Asia Pacif c Region as driven by strong commodity prices and ongoing strong demand from Chinese and other emergingmarkets.	16.70%
System Mud	Revenue growth has been forecast in line with the expected rate of growth in the mining and mineral exploration markets of South and Latin America as well as growth expected to arise from the global alliances and recent managerial changes.	17.97%
Flexit/Imdex Technology Germany	Income from the services based associate will be accounted for at the net margin level. Net margins have been forecast by the associated company’s management taking into account local market conditions and expected strategic growth plans.	9.38%	Returns from the joint venture are based on the expected rate of cash f ows as projected by joint venture management. These are a function of activity levels and market share expected in the Middle Eastern and North American oil and gas surveymarkets.

==> picture [117 x 56] intentionally omitted <==

FY12 Financial Report

13 Other Intangible Assets

13 Other Intangible Assets	ts	ts
Patents Intellectual Property Technology Based Contract Based Customer Based Development Costs Trade Name TOTAL Notes $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Gross Carrying Value Balance at 30 June 2010 761 1,505 14,080 1,315 10,931 7,401 3,893 39,886 Capitalised during the year - - - 3,914 - 691 - 4,605 Impact of exchange rate changes - - - - 14 - 2 16 Balance at 30 June 2011 761 1,505 14,080 5,229 10,945 8,092 3,895 44,507 Capitalised during the year - - - 943 - 1,254 - 2,197 Reclassif ed to Investment in Associate 27(i) - (904) - - - (1,980) - (2,884) Amounts derecognised 26(d)(i) - - - (3,914) - - - (3,914) Impact of exchange rate changes - - - - (52) - (8) (60) Balance at 30 June 2012 761 601 14,080 2,258 10,893 7,366 3,887 39,846 Accumulated Amortisation and Impairment Balance at 30 June 2010 482 376 8,159 1,223 6,678 1,117 2,582 20,617 Amortisation expense 152 150 2,230 346 1,962 1,245 693 6,778 Impact of exchange rate changes - - - - (29) - (5) (34) Balance at 30 June 2011 634 526 10,389 1,569 8,611 2,362 3,270 27,361 Amortisation expense / (write back) 127 75 2,102 (254) 1,901 1,403 603 5,957 Impact of exchange rate changes - - - - (24) - (4) (28) Balance at 30 June 2012 761 601 12,491 1,315 10,488 3,765 3,869 33,290 Net Book Value As at 30 June 2011 127 979 3,691 3,660 2,334 5,730 625 17,146 As at 30 June 2012 - - 1,589 943 405 3,601 18 6,556 14 Trade and Other Payables 2012 2011 Notes $’000 $’000 Trade payables (i) 17,384 22,926 Accruals and other payables 15,965 9,953 33,349 32,879	Patents Intellectual Property Technology Based Contract Based Customer Based Development Costs Trade Name TOTAL $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 761 1,505 14,080 1,315 10,931 7,401 3,893 39,886 - - - 3,914 - 691 - 4,605 - - - - 14 - 2 16
	761 1,505 - - - (904) - - - -	14,080 5,229 10,945 8,092 3,895 44,507 - 943 - 1,254 - 2,197 - - - (1,980) - (2,884) - (3,914) - - - (3,914) - - (52) - (8) (60)
	761 601	14,080 2,258 10,893 7,366 3,887 39,846
	482 376 152 150 - -	8,159 1,223 6,678 1,117 2,582 20,617 2,230 346 1,962 1,245 693 6,778 - - (29) - (5) (34)
	634 526 127 75 - -	10,389 1,569 8,611 2,362 3,270 27,361 2,102 (254) 1,901 1,403 603 5,957 - - (24) - (4) (28)
	761 601	12,491 1,315 10,488 3,765 3,869 33,290
	127 979	3,691 3,660 2,334 5,730 625 17,146
	- -	1,589 943 405 3,601 18 6,556
		2012 2011 $’000 $’000 17,384 22,926 15,965 9,953 33,349 32,879

(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 fi nancial risk management policies in place to ensure that all payables are paid within the credit timeframe.

Imdex 2012 Annual Report

FY12 Financial Rep ort

15 Borrowings

15 Borrowings
Notes Current borrowings Secured At amortised cost Club Facility - AUD Tranche (i) Club Facility - USD Tranche (i) Club Facility - CAD Tranche (i) Commercial bill (ii) Bank loan - Sweden (iii) Bank loan - Canada (iv) Hire purchase liabilities (v),24 Non-current borrowings Secured At amortised cost Club Facility - AUD Tranche (i) Club Facility - USD Tranche (i) Club Facility - CAD Tranche (i) Commercial bills (ii) Hire purchase liabilities (v),24	2012 2011 $’000 $’000 5,580 - 4,961 - 1,943 - - 20,350 - 971 - 6,904 396 720
	12,880 28,945
	22,595 - 17,406 - 6,478 - - 5,500 70 574
	46,549 6,074

(ii) On 7 October 2011 a clubbed banking facility involving Westpac Banking Corporation and HSBC was put in place. This facility replaced commercial bills and Canadian bank loans in place at that date. The facility allowed the Imdex Group access to a total facility of $50 million split equally between the two club participants. Westpac Banking Corporation provided AUD denominated borrowings in Australia while HSBC provided CAD and USD denominated borrowings in Chile, South Africa, Canada and Australia. On 19 January 2012 this facility was extended from $50 million to $75 million. The banking facility limit decreases with each repayment and at 30 June 2012 the total facility available was $64.96 million (including an unused $6 million facility) – (Refer note 29(d)).
equal monthly installments of $0.5 million to 31 October 2014 on which date the balance is payable.
the borrowing country). These borrowings are repayable in equal monthly installments of USD 0.4 million to 31 October 2014 on which date the balance is payable.
in equal monthly installments of CAD 0.2 million to 31 October 2014 on which date the balance is payable.

(iii) The club facility is secured by the assets of entities in Australia, Canada, South Africa and Chile.

(iv) $3.1 million were repayable on demand and bills totaling $14.3 million were due on 30 June 2011. The balance of bills were repayable in 13 installments of $0.75 million each due at the end of each calendar quarter and ending with a fi nal installment of $0.25 million on 30 June 2014. An interest rate cap of 7% per annum was in place over $10 million of this debt until December 2010. The interest rate cap did not operate where the variable interest rate on bills is below 7%. These commercial bills were repaid in full in October 2011 when the clubbed banking facility per note (i) above came into operation.

FY12 Financial Report

(v) These commercial bills were previously secured by a Mortgage Debenture over all the assets and liabilities of Imdex Limited, Australian Mud Company Pty Ltd, Refl ex Instruments Asia Pacifi c Pty Ltd, Imdex International Pty Ltd, Wildcat Chemicals Australia Pty Ltd, Flexit Australia Pty Ltd, Imdex Sweden AB, Imdex Technology Sweden AB (formerly Flexit AB), Refl ex Instruments AB, Fluidstar Pty Ltd, Ecospin Pty Ltd, AMC North America Ltd (formerly Poly-Drill Drilling Systems Ltd), Drillhole Surveying Instruments (Pty) Ltd and Samchem Drilling Fluids and Chemicals (Pty) Ltd.
(vi) Comprised of a loan of SEK 3.3 million which was fully repaid on 30 June 2012. This loan was secured over the assets of the Refl ex and Flexit companies that are domiciled in Sweden.
(vii) The prior period balance comprised a loan of CAD 8.8 million at the Canadian Prime Interest Rate (3.0% at 30 June 2011) plus a margin of 1.5%. This loan was repayable in 3 quarterly installments of CAD 0.4 million each, 47 monthly installments of CAD 0.06 million due on the fi rst day of each month and 58 monthly installments of CAD 0.08 million also due on the fi rst day of each month. In the prior period the loan was disclosed as a current liability since the bank retained the option to have these loans repaid on demand. These borrowings were repaid in full in October 2011 when the clubbed banking facility per note (i) above came into operation.
(viii) 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 the hire purchase pledged as security. The weighted average interest rate applicable to these liabilities is 9.67% (2011: 9.53%).

16 Provisions

16 Provisions
		2012	2011
	Notes	$’000	$’000
Current provisions
Employee entitlements	(i)	2,896	2,191
Non-current provisions
Employee entitlements		1,265	1,069
(i) The majority of these entitlements are expected to be taken during the coming year.
17 Other Liabilities
		2012	2011
	Notes	$’000	$’000
Other Current Liabilities
Unsecured
At amortised cost
Deferred acquisition payments	26(d)(i)	-	2,628
		-	2,628
Other Non Current Liabilities
Unsecured
At amortised cost
Deferred acquisition payments	26(d)(i)	-	213
		-	213

Imdex 2012 Annual Report

FY12 Financial Rep ort

18 Issued Capital and Shares reserved for Performance Rights Plan

Notes Issued and Paid Up Capital - Fully paid ordinary shares (i) Notes (i) Issued and Paid Up Capital - Fully paid ordinary shares Balance at beginning of the f nancial year Issue of shares as part consideration for the acquisition of Australian Drilling Specialties Pty Ltd Issue of shares as part consideration for the acquisition of System Mud Industria e Comercio Ltda Issue of shares as part consideration for the acquisition of Mud Systems Pte Ltd Issue of shares under staff option plan (ii) Closing balance at end of the f nancial year	2012 2011 $’000 $’000 86,069 70,059 2012 2011 Number $’000 Number $’000 199,699,165 70,059 195,047,128 67,415 3,206,770 6,000 - - 1,306,324 3,840 - - 500,000 1,200 - - 3,523,167 4,970 4,652,037 2,644
	208,235,426 86,069 199,699,165 70,059

Notes
Issued and Paid Up Capital - Fully paid ordinary shares
(i)
Notes
(i)
Issued and Paid Up Capital - Fully paid
ordinary shares
Balance at beginning of the f nancial year
Issue of shares as part consideration for the acquisition of
Australian Drilling Specialties Pty Ltd
Issue of shares as part consideration for the acquisition of
System Mud Industria e Comercio Ltda
Issue of shares as part consideration for the acquisition of
Mud Systems Pte Ltd
Issue of shares under staff option plan
(ii)
Closing balance at end of the f nancial year

2012
2011
$’000
$’000
86,069
70,059
2012
2011
Number
$’000
Number
$’000
199,699,165
70,059
195,047,128
67,415
3,206,770
6,000
-
-
1,306,324
3,840
-
-
500,000
1,200
-
-
3,523,167
4,970
4,652,037
2,644

208,235,426
86,069
199,699,165
70,059

Fully paid ordinary shares carry one vote per share and the right to dividends.

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.

(ii) Share options granted under the staff option plan

No options were granted under the staff option plan in the current or prior year.

In accordance with the provisions of the staff option plan, as at 30 June 2012, executives, directors and staff have options over 3,893,333 ordinary shares (all of which had vested), in aggregate. These options expire over a range of dates up to March 2013. As at 30 June 2011, executives, directors and staff had options over 8,518,158 ordinary shares (all of which had vested), in aggregate. These options expire over a range of dates up to March 2013. 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.

(iii) Shares issued in satisfaction of Performance Rights

No shares were issued in the current or prior years in satisfaction of performance rights. Performance rights obligations were settled by the purchase of existing shares on market. More information on the performance rights plan can be found in note 34.

Notes Shares reserved for Performance Rights Plan Balance at beginning of the f nancial year Movement 19 Balance at the end of the f nancial year	2012 2011 $’000 $’000 - - (3,740) -
	(3,740) -

Through a corporate trustee, the Company holds certain shares in Trust for employees

under the Performance Rights Plan (PRP or Plan). Refer to note 34 for further information.

FY12 Financial Report

19 Reserves

19 Reserves
Notes Foreign Currency Translation Reserve Balance at beginning of the f nancial year Translation of foreign operations Tax thereon Balance at the end of the f nancial year	2012 2011 $’000 $’000 (11,441) (5,622) (6,831) (5,291) 569 (528)
	(17,703) (11,441)

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.

Investment Revaluation Reserve

Investment Revaluation Reserve
Balance at beginning of the f nancial year Arising on revalution of SEH shares to market value 9 Tax thereon Balance at the end of the f nancial year	6,524 - 5,290 9,320 (1,587) (2,796)
	10,227 6,524

The investment revaluation reserve records increases in the market value of the SEH investment net of deferred taxation. Refer note 9 for details of the SEH investment.

Employee Equity-Settled Benef ts Reserve
Balance at beginning of the f nancial year Options expensed 4 Performance rights expensed 4 Shares purchased on market to satisfy performance rights Options exercised during the f nancial year Amounts transferred to shares reserved for performance rights plan 18 Amounts transferred to retained earnings Balance at the end of the f nancial year	7,158 5,107 - 580 2,222 2,131 (5,769) (134) (1,687) (526) 3,740 - 721 -
	6,385 7,158

Amounts are transferred out of the reserve and into issued capital when options are exercised. Further information regarding the Staff Option Plan is contained in note 33. Further information regarding the Performance Rights Plan is contained in note 34.

Mandatory Issuable Capital

Mandatory issuable capital 26(b) 990 -

Mandatory issuable capital relates to the future issue of 330,000 fully paid ordinary shares as consideration for the acquisition of System Mud.

Imdex 2012 Annual Report

FY12 Financial Rep ort

20 Earnings Per Share

20 Earnings Per Share
Basic earnings per share 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 Weighted average number of ordinary shares for the purposes of basic earnings per share (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 Weighted average number of ordinary shares for the purposes of diluted earnings per share (ii) (ii) 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 earnings per share Shares deemed to be issued for no consideration in respect of employee and Director options Shares deemed to be issued for no consideration in respect of performance rights (assuming not purchased on market) Weighted average number of ordinary shares used in the calculation of diluted earnings per share (iii) 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 5 Employees share options tranche 6 Employees share options tranche 7	2012 2011 Cents per share Cents per share 22.34 14.69
	21.85 14.25
	2012 2011 $’000 $’000 45,777 29,002
	Shares Shares 204,879,162 197,472,481
	2012 2011 $’000 $’000 45,777 29,002
	Shares Shares 209,553,673 203,462,391
	Shares Shares 204,879,162 197,472,481 1,310,518 3,663,869 3,363,993 2,326,041
	209,553,673 203,462,391
	Shares Shares - 575,000 - 200,000 3,693,333 4,279,991
	3,693,333 5,054,991

FY12 Financial Report

21 Dividends

	2012	2012	2011	2011
	Cents per	Total	Cents per	Total
	share	$’000	share	$’000
Recognised amounts
Fully paid ordinary shares - interim dividend franked to 30%	3.25	6,705	1.75	3,488
Unrecognised amounts
Fully paid ordinary shares - f nal dividend franked to 30%	4.00	8,329	2.75	5,492

(i) The interim, fully franked dividend was paid on 23 March 2012. The record date for determining the entitlement to the interim dividend was 9 March 2012. There are no dividend reinvestment plans in operation.

(ii) 26 October 2012. The fi nancial effect of this dividend has not been recognised in the fi nancial statements at 30 June 2012.

payment of $5,622,000 relating to the fi nal fully franked dividend was made on 21 October 2011.

Adjusted franking account balance Impact on franking account of dividends not recognised Income tax consequences of unrecognised dividends	2012 2011 $’000 $’000 51,607 32,487
	(3,570) (2,354)
	- -

22 Commitments for Expenditure

(a) Capital expenditure commitments

At 30 June 2012 the Group had capital expenditure commitments amounting to $3,690,000. These commitments relate to the purchase of Solids Removal Units (SRU’s) and related equipment .

At 30 June 2011 the Group had capital expenditure commitments amounting to $162,000. These commitments were for sundry capital equipment items for Australian Mud Company Pty Ltd in the Asia Pacifi c region.

(b) Lease commitment

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

23 Contingent Liabilities and Contingent Assets

There are no contingent liabilities or contingent assets at balance date (2011: nil).

Imdex 2012 Annual Report

FY12 Financial Rep ort

24 Leases

(a) Hire Purchases

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.

Hire purchase commitments Hire purchase commitments are payable as follows. Due: Within one year Between one and f ve years Later than f ve years Minimum lease payments Less: future f nance charges Hire purchase liabilities provided for in the Financial Report Current – Note 15 Non current – Note 15	Minimum future lease payments 2012 2011 $’000 $’000 417 793 83 545 - - 500 1,338 (34) (44) 466 1,294	Present value of minimum future lease payments 2012 2011 $’000 $’000 396 699 70 523 - -
		466 1,222
		- -
		466 1,222
		396 699
		70 523
		466 1,222

(b) Operating 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.

Non-cancellable operating lease payments Within one year Between one and f ve years Later than f ve years	2012 2011 $’000 $’000 2,685 2,734 3,465 4,624 - 275
	6,150 7,633

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FY12 Financial Report

25 Subsidiaries

25 Subsidiaries
			Ownership	Interest
		Country of	2012	2011
	Notes	Incorporation	%	%
Parent Entity
Imdex Limited	(i), (ii), (iii)	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)	Australia	100	100
Imdex Sweden AB		Sweden	100	100
Ref ex Instruments Asia Pacif c Pty Ltd	(ii), (iii)	Australia	100	100
Ref ex Instrument AB		Sweden	100	100
Ref ex Instrument North America		Canada	100	100
Ref ex Instrument South America Ltda		Chile	100	100
Ref ex Instruments Europe Ltd		United Kingdom	100	100
Drillhole Surveying Instruments (Pty) Ltd		South Africa	100	100
Imdex Technology Sweden AB		Sweden	100	100
Flexit Australia Pty Ltd	(ii)	Australia	100	100
Suay Energy Services LLP		Kazakhstan	100	100
AMC North America Ltd		Canada	100	100
Imdex South America S.A.		Chile	100	100
AMC Chile S.A.		Chile	100	100
Wildcat Chemicals Australia Pty Ltd	(ii)	Australia	100	100
Imdex Technology Australia Pty Ltd	(ii), (iii)	Australia	100	100
AMC Ref ex Argentina S.A.		Argentina	100	100
AMC Ref ex Peru S.A.C.		Peru	100	100
Imdex Technology Germany GmbH		Germany	100	100
AMC Ref ex Do Brasil Serviços Para Mineração Ltda		Brazil	100	100
AMC Drilling Fluids Pvt Limited		India	100	100
Fluidstar Pty Ltd	(ii), 26(c)	Australia	100	100
Ecospin Pty Ltd	(ii), 26(c)	Australia	100	100
Imdex Nominees Pty Ltd	(ii)	Australia	100	100
AMC Germany GmbH (formerly Mud-Data GmbH)	26(d)	Germany	100	100
AMC Oil & Gas Rom SRL (formerly Mud-Data-Rom SRL)	26(d)	Romania	100	100
Australian Drilling Specialties Pty Ltd	(ii), 26(a)	Australia	100	-
Imdex USA Inc	(iv)	United States of America	100	-
Imdex Technologies USA LLC	(v)	United States of America	100	-
AMC USA LLC	(v)	United States of America	100	-
Ref ex USA LLC	(v)	United States of America	100	-
Mud Systems Pte Ltd	26(e)	Singapore	100	-
System Mud Indústria e Comércio Ltda	26(b)	Brazil	100	-
Imdex Global Coöperatie U.A	(vi)	Netherlands	100	-
Imdex Global B.V.	(vi)	Netherlands	100	-

Imdex 2012 Annual Report

FY12 Financial Rep ort

(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 Australian tax consolidated group.
(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 fi nancial report. Australian Mud Company Pty Ltd became a party to the deed on 29 June 2006, Imdex International Pty Ltd on 20 October 2006, Refl ex Instruments Asia Pacifi c Pty Ltd on 14 September 2007 and Imdex Technology Australia Pty Ltd on 28 April 2011.
(iv) This entity was incorporated on 26 July 2011.
(v) These entities were incorporated on 11 August 2011.

(vi) These entities were incorporated on 22 June 2012.

The consolidated income statement of income of the entities which are party to the deed of cross guarantee are:

Income Statement Revenue from sale of goods and operating lease rental Other revenue from operations Total revenue Other income Raw materials and consumables used Employee benef t expenses Depreciation and amortisation expense Finance costs Auditors and accounting fees Commissions Consultancy fees Legal and professional expenses Rent and premises costs Travel and accommodation Motor vehicle costs Management fee overprovision from prior periods Foreign exchange loss Other expenses Prof t before income tax expense Income tax expense Prof t for the year Other comprehensive income Fair value adjustment on investment in SEH Income tax relating to components of other comprehensive income Total comprehensive income for the year	2012 2011 $’000 $’000 168,256 155,969 1,693 1,386
	169,949 157,355
	2,563 1,929 (62,126) (44,683) (25,505) (22,084) (13,991) (8,564) (1,045) (2,435) (938) (443) (2,006) (1,522) (1,323) (822) (3,745) (3,186) (1,607) (1,360) (2,384) (1,913) (924) (811) - (5,753) (2,135) (3,022) (10,698) (10,572)
	44,085 52,114 (14,214) (15,811)
	29,871 36,303
	5,290 9,320 (1,587) (2,796) 3,703 6,524

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FY12 Financial Report

Balance Sheet Current Assets Cash and Cash Equivalents Trade and Other Receivables Inventories Other Total Current Assets Non Current Assets Other Financial Assets Property, Plant and Equipment Other Intangible Assets Total Non Current Assets Total Assets Current Liabilities Trade and Other Payables Borrowings Current Tax Payables Provisions Other Current Liabilities Total Current Liabilities Non Current Liabilities Borrowings Provisions Deferred Tax Liabilities Other Non Current Liabilities Total Non Current Liabilities Total Liabilities Net Assets Equity Contributed Capital Shares reserved for Performance Rights Plan Employee Equity-Settled Benef ts Reserve Investment Revaulation Reserve Retained Earnings Total Equity Retained Earnings at the beginning of the f nancial year Net Prof t Dividends paid Amounts transferred from employee equity-settled benef ts reserve Opening retained earnings of entities joining the closed group Retained Earnings at the end of the f nancial year	2012 2011 $’000 $’000 3,286 10,647 73,294 79,409 30,268 28,491 3,292 120
	110,140 118,667
	166,842 118,166 16,929 20,622 1,324 4,186
	185,095 142,974
	295,235 261,641
	19,795 25,612 9,514 21,070 4,020 12,633 2,042 1,769 - 2,628
	35,371 63,712
	35,346 6,074 1,265 1,069 5,629 4,972 - 213
	42,240 12,328
	77,611 76,040
	217,624 185,601
	86,069 70,059 (3,740) - 6,385 7,158 10,227 6,524 118,683 101,860
	217,624 185,601
	101,860 56,803 29,871 36,303 (12,327) (3,488) (721) - - 12,242
	118,683 101,860

Imdex 2012 Annual Report

FY12 Financial Rep ort

26 Acquisition of Businesses

(a) Acquisition of entity - Australian Drilling Specialties Pty Ltd

With effect from 1 July 2011, Imdex Limited acquired 100% of the issued share capital of Australian Drilling Specialties Pty Ltd (ADS), incorporated in Australia and operating out of premises located in Western Australia. ADS is a drilling fl uids and chemical manufacturer that owns the formulations and intellectual property for the products it manufactures. The numbers presented below are provisional and 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 Trade and other receivables 2,408 Inventory 352 Property, plant and equipment 778 Trade and other payables (901) Provisions (73) Fair value of net identif able assets acquired 2,564 Goodwill on acquisition (i) Total purchase consideration Total purchase consideration comprises Consideration in cash and cash equivalents (ii) Overdraft acquired (ii) Issue of ordinary shares 18 Operating results of ADS included in the Consolidated Income Statement of Imdex Limited from acquisition to 30 June 2012: Revenue Total expenses Prof t after tax for the period	Book value Fair value adjustments $’000 $’000 2,408 352 778 (901) (73)	Fair value on acquisition $’000 - 2,408 - 352 - 778 - (901) - (73)
		- 2,564 10,513
		13,077
		6,000 1,077 6,000
		13,077
		Results since acquisition $’000 11,382 (9,052)
		2,330

(i) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire ADS. In addition, the consideration paid for the combination effectively included amounts in relation to the benefi t of expected synergies, revenue growth, future market development and the assembled workforce of ADS. These benefi ts are not recognised separately from goodwill as the future economic benefi ts 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 2012 records the payment for the acquisition of ADS as $7.1 million being the cash purchase consideration of $6.0 million shown above plus $1.1 million overdraft acquired.

==> picture [117 x 56] intentionally omitted <==

FY12 Financial Report

(b) Acquisition of entity - System Mud Indústria e Comércio Ltda

Imdex Limited acquired 100% of the issued share capital of System Mud Indústria e Comércio Ltda (System Mud), a manufacturer and seller of drilling muds to the mining and mineral exploration market in Brazil. The acquisition was completed on 18 April 2012. The numbers presented below are provisional and 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 387 Other debtors 1,068 Property, plant and equipment 250 Trade and other payables (957) Fair value of net identif able assets acquired 748 Goodwill on acquisition (i) Total purchase consideration Total purchase consideration comprises Consideration in cash and cash equivalents (ii) Less cash and cash equivalents acquired (ii) Issue of Ordinary Shares (iii),18 Deferred consideration - Mandatory Convertible Capital (iv) Operating results of System Mud included in the Consolidated Income Statement of Imdex Limited from acquisition to 30 June 2012: Revenue Total expenses Prof t after tax for the period	Book value Fair value adjustments $’000 $’000 387 1,068 250 (957)	Fair value on acquisition $’000 - 387 - 1,068 - 250 - (957)
		- 748 6,808
		7,556
		3,350 (624) 3,840 990
		7,556
		Results since acquisition $’000 5,413 (4,481)
		932

(i) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire System Mud. In addition, the consideration paid for the combination effectively included amounts in relation to the benefi t of expected synergies, revenue growth, future market development and the assembled workforce of System Mud. These benefi ts are not recognised separately from goodwill as the future economic benefi ts 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 2012 records the acquisition of System Mud as a net cash outfl ow of $2.7 million being the cash consideration of $3.3 million paid net of the $0.6 million of cash acquired.

(iii) (iii) Comprises 1,306,324 fully paid Imdex limited ordinary shares issued on settlement to the four vendors in equal proportions. These shares were issued at the weighted average price of a fully paid Imdex Limited ordinary share for the fi ve days leading up to settlement on 18 April 2012, being $2.94 per share.
(iv) Comprises 330,000 fully paid ordinary shares in Imdex Limited to be issued on the two year anniversary of completion (18 April 2014). The future issue of these shares is at a guaranteed price of $3.50 per share. That is, if the share price on the two year anniversary date is below $3.50 there is a cash top up of the difference. However, in the event that the share price reaches $3.50 at any time within that two year period, the potential cash top up falls away. Management’s view at 30 June 12 is that the Imdex Limited share price will have exceeded $3.50 by 18 April 2014, consequently no cash liability has been booked.

Imdex 2012 Annual Report

FY12 Financial Rep ort

(c) Acquisition of entity - Fluidstar Pty Ltd and Ecospin Pty Ltd

With effect from 1 September 2010, Imdex Limited, acquired 100% of the issued share capital of Fluidstar Pty Ltd (Fluidstar) and Ecospin Pty Ltd (Ecospin). Both companies are incorporated in Australia and operate out of premises located in Brisbane. Fluidstar manufactures and distributes drilling fl uids throughout the Asia Pacifi c region with a strong presence in the Queensland market. Ecospin develops and sell solids control solutions for the drilling industry. Both companies focus predominately on the mineral drilling industry. The numbers presented below are provisional and 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 Trade and other receivables 3,357 Inventory 2,970 Property, plant and equipment 434 Trade and other payables (2,381) Fair value of net identif able assets acquired 4,380 Goodwill on acquisition (i) Total purchase consideration Total purchase consideration comprises Consideration in cash and cash equivalents Less: Cash and cash equivalents acquired (ii) Operating results of Fluidstar and Ecospin included in the Consolidated Income Statement of Imdex Limited from acquisition to 31 December 2010: Revenue Total expenses Prof t after tax for the period	Book value Fair value adjustments $’000 $’000 3,357 2,970 434 (2,381)	Fair value on acquisition $’000 - 3,357 - 2,970 - 434 - (2,381)
		- 4,380 7,848
		12,228
		12,395 (167)
		12,228
		Results since acquisition $’000 6,279 (5,503)
		776

(i) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire Fluidstar and Ecospin. In addition, the consideration paid for the combination effectively included amounts in relation to the benefi t of expected synergies, revenue growth, future market development and the assembled workforce of Fluidstar and Ecospin. These benefi ts are not recognised separately from goodwill as the future economic benefi ts 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 2011 records the payment for the acquisition of Fluidstar and Ecospin as $12.4 million being the total purchase consideration of $12.4 million shown above plus $0.2 million of on-costs expensed during the period and less $0.2 million of cash acquired.

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FY12 Financial Report

(d) Acquisition of entity - AMC Germany GmbH

With effect from 1 March 2011, Imdex Limited, acquired 100% of the issued share capital of Mud-Data GmbH, a company incorporated in Germany and operating out of premises in Rastede. This entity was subsequently renamed AMC Germany GmbH (AMC Germany). AMC Germany own 100% of the issued share capital of Mud-Data-Rom SRL, an entity incorporated in Romania. AMC Germany manufactures and distributes drilling fl uids and solids control equipment for the oil and gas and geothermal industries in Europe. The numbers presented below are provisional and 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 Trade and other receivables 985 Inventory 231 Property, plant and equipment 1,080 Intangibles (i) - Trade and other payables (1,078) Deferred tax (i) - Fair value of net identif able assets acquired 1,218 Goodwill on acquisition (ii) Total purchase consideration Total purchase consideration comprises Consideration in cash and cash equivalents Less: Cash and cash equivalents acquired (iii) Operating results of AMC Germany included in the Consolidated Income Statement of Imdex Limited from acquisition to 30 June 2011: Revenue Total expenses Loss after tax for the period	Book value Fair value adjustments $’000 $’000 985 231 1,080 - (1,078) -	Fair value on acquisition $’000 - 985 - 231 - 1,080 - - - (1,078) - -
		- 1,218 297
		1,515
		1,601 (86)
		1,515
		Results since acquisition $’000 1,143 (1,593)
		(450)

(i) The provisional accounting for this acquisition shown at 30 June 2011 included intangibles assets of $3.9 million and related deferred tax of $1.2 million, being the fair value of a key geothermal contract. Since 30 June 2011 the purchase agreement was renegotiated with deferred consideration hurdles relating to this contract being removed and the value of this contract being reassessed. As a consequence the intangible asset, deferred tax and deferred consideration have all been derecognised in the current period. In addition the fair value of net assets acquired was adjusted by $0.2 million causing an equivalent change to the value of goodwill recognised.
(ii) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire AMC Germany. In addition, the consideration paid for the combination effectively included amounts in relation to the benefi t of expected synergies, revenue growth, future market development and the assembled workforce of AMC Germany. These benefi ts are not recognised separately from goodwill as the future economic benefi ts 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 2011 records the payment for the acquisition of AMC Germany as $2.1 million being the cash consideration above of $1.6 million above plus $0.6 million of on-costs expensed in the current year and less $0.1 million of cash acquired .

(e) Acquisition of entity - Mud Systems Pte Ltd (Mud Systems)

With effect from 1 January 2012, Imdex Limited acquired 100% of the issued share capital of Mud Systems Pte Ltd, a Singapore based company that is involved in the supply, manufacture and rental of equipment, predominately in the oil and gas industry. The purchase consideration for the acquisition was 500,000 fully paid ordinary shares of Imdex Limited issued to the vendor on 8 May 2012 at a fair value of $2.40 per share. The key reason for the purchase of Mud Systems was to access the exclusive supply agreement and ongoing relationship with the manufacturer of the centrifuges used in Solids Removal Units (SRU’s). The excess of fair value of consideration paid over fair value of net assets ($0.9 million) has been allocated in full to intangible assets.

Imdex 2012 Annual Report

FY12 Financial Rep ort

27 Investment in Associates

On 1 July 2011, Imdex Limited acquired 50% of the issued share capital of DHS Services (DHS) in exchange for granting an exclusive global licence over its oil and gas surveying instruments and technology. DHS is registered in the British Virgin Islands and operates an oil and gas services business based in Dubai using the technology licensed to it by Imdex Limited. Imdex Limited accounted for its investment in DHS as an associate as it was deemed to have a signifi cant infl uence over but not control of DHS since it held 50% of the issued capital but only 2 out of 5 board positions.

Effective 1 January 2012, DHS shares were rolled over into a newly created entity, DHS Energy Services (DHSES). On 23 January 2012 Imdex Limited announced that, effective 1 January 2012, DHSES purchased the business of Vaughn Energy Services (VES), a US based oil and gas services provider, for US$100 million. To fund the purchase DHSES increased its share capital. On 19 January 2012 Imdex Limited raised additional debt of $25 million from its banking club facility and applied approximately USD$22.5 million of this debt to purchase additional shares in DHSES. Following this transaction Imdex Limited’s shareholding in DHSES decreased from 50% to 30%. The numbers presented below in relation to the acquisition of VES are provisional and have been accounted for using the acquisition method of accounting.

Financial information in respect of the Associate is set out below:

Note Total Assets Total Liabilities Net Assets Share of Net Assets of Associate Total Revenue Total Prof t for the Period Share of loss of Associate Goodwill transferred to Associate (i) Intangible assets transferred to Associate (i) Investment in Associate (ii)	2012 $’000 139,961 (20,125)
	119,836
	35,951

	28,901

	2,216
	(1,460) 1,416 2,884 21,415
	24,255

(i) Goodwill and intangible assets transferred to the associate total $4.3 million and comprise the Technology Licence Agreement granted to DHS - (Refer to notes 12 and 13).

(ii) Comprises a loan of USD $22.5 million advanced to the associate during the year that was subsequently capitalised.

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FY12 Financial Report

28 Segment Information

Reportable Segments

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.

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

(i) Minerals Division: This segment comprises the manufacture, sale and rental of down hole instrumentation and manufacture and sale of drilling fl uids and chemicals to the mining and mineral exploration industry globally; and
(ii) Oil & Gas Division: This segment comprises the manufacture, sale and rental of down hole instrumentation and manufacture and sale of drilling fl uids and chemicals to the oil and gas and geothermal industries globally;

(a) Segment Revenues

(a) Segment Revenues
Minerals Oil and Gas Total of all segments Unallocated Total revenue (b) Segment Results Minerals Oil and Gas (i) Total of all segments Eliminations Central administration costs (ii) Prof t before income tax expense Income tax expense Prof t attributable to ordinary equity holders of Imdex Limited	2012 2011 $’000 $’000 241,655 177,683 27,908 27,480
	269,563 205,163
	89 171
	269,652 205,334
	81,234 45,916 (7,674) (1,687)
	73,560 44,229 - - (6,060) (5,636)
	67,500 38,593 (21,723) (9,591)
	45,777 29,002

(i) Includes the share of loss of Associate
(ii) offi ce costs attributable to operations are allocated to reportable segments in proportion to the revenues earned from those segments.

(c) Segment Assets and Liabilities

(c) Segment Assets and Liabilities
Minerals Oil and Gas Total of all segments Unallocated (i) Consolidated	Assets Liabilities 2012 2011 2012 2011 $’000 $’000 $’000 $’000 201,185 171,119 20,610 33,461 51,955 26,305 26,447 16,816
	253,140 197,424 47,057 50,277 21,412 16,122 59,429 37,860
	274,552 213,546 106,486 88,137

(i) Unallocated assets comprise the investment in Sino Gas & Energy Holdings Ltd. Unallocated liabilties comprise commerical bills, bank loans, hire pruchase liabilities and deferred acquisition payments.

Imdex 2012 Annual Report

FY12 Financial Rep ort

(d) Other segment information

	Minerals	Minerals	Oil & Gas	Oil & Gas	Unallocated	Unallocated	Total
	2012	2011	2012	2011	2012	2011	2012	2011
	$’000	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Depreciation	5,562	4,132	800	1,345	399	244	6,761	5,721
Amortisation	4,510	4,006	1,447	2,772	-	-	5,957	6,778
Acquisition of segment
assets	6,652	7,650	3,750	3,009	663	743	11,065	11,402
Signif cant non cash
expenses other than
depreciation and
amortisation	1,778	2,169	444	542	(101)	101	2,121	2,812

Geographical Segments

The Group operates in the following geographical segments:

(i)
(ii) Europe: Manufacture and sale/rental of products to the mining and mineral exploration and oil and gas industries
(iii) Africa: Manufacture and sale/rental of products to the mining and mineral exploration and oil and gas industries
(iv) Americas: Manufacture and sale/rental of products to the mining and mineral exploration and oil and gas industries

Asia Pacif c Europe Africa Americas Total	Revenue from external customers Segment assets (non-current) Acquisition of segment assets 2012 2011 2012 2011 2012 2011 $’000 $’000 $’000 $’000 $’000 $’000 131,486 118,723 106,661 72,852 4,097 4,891 16,104 10,457 9,606 15,417 4,199 2,466 47,971 28,659 2,738 3,523 858 1,712 74,091 47,495 21,225 7,986 1,911 2,333
	269,652 205,334 140,230 99,778 11,065 11,402

(e) Information about major customers

The Group has a broad range of customers across its global operations with no single customer making up more than 10% of revenue.

==> picture [117 x 56] intentionally omitted <==

100

FY12 Financial Report

29 Notes to the Statement of Cash Flows

(a) Reconciliation of cash and cash equivalents

For the purposes of the Statement of Cash Flows, 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 Statement of Cash Flows is reconciled to the related items in the balance sheet as follows:

Cash and cash equivalents Bank overdraft	2012 2011 $’000 $’000 11,232 18,388 - -
	11,232 18,388

$11,231,992 (2011: $18,388,328)

(b)

During the year the Group provided non cash consideration to acquire the issued share capital for certain acquisitions and transferred intellectual property to an associate. These transactions are disclosed in note 26 and note 27 respectively.

(c)

Prof t 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
Impairment losses
Interest received disclosed as investing activities
Share options and performance rights expensed
Loss on sale of non-current assets
Share of loss of Associate
Interest on hire purchase liabilities
Other
Changes in assets and liabilities during the f nancial year
Increase in assets:
Current receivables
Current inventories
Other current assets
Increase / (decrease) in liabilities:
Current payables
Provision for employee entitlements
Current and deferred tax liability
Net Cash Provided by Operating Activities

45,777
29,002
6,761
5,721
5,957
6,778
(101)
101
-
737
(89)
(171)
2,222
2,711
27
32
1,460
-
102
343
(74)
-
(8,016)
(5,380)
(10,802)
(8,764)
(6,699)
(1,100)
(2,222)
3,408
828
833
(8,075)
1,642

27,056
35,893

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(d) Financing facilities

Total facilities available Club Facility - AUD Tranche Club Facility - USD Tranche Club Facility - CAD Tranche Bank loan - Sweden Bank loan - Canada Commercial bills Equipment f nance facility Multi option facility (including bank overdraft) Facilities utilised at balance sheet date Club Facility - AUD Tranche Club Facility - USD Tranche Club Facility - CAD Tranche Bank loan - Sweden Bank loan - Canada Commercial bills Equipment f nance facility Multi option facility (including bank overdraft) Facilities not utilised at balance sheet date Club Facility - AUD Tranche Club Facility - USD Tranche Club Facility - CAD Tranche Bank loan - Sweden Bank loan - Canada Commercial bills Equipment f nance facility Multi option facility (including bank overdraft)	2012 2011 $’000 $’000 34,175 - 22,367 - 8,421 - - 971 - 7,631 - 25,850 466 4,015 - 2,220
	65,429 40,687
	28,175 - 22,367 - 8,421 - - 971 - 6,904 - 25,850 466 1,294 - -
	59,429 35,019
	6,000 - - - - - - - - 727 - - - 2,793 - 2,220
	6,000 5,668

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FY12 Financial Report

30 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 15, 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 regularly. The treasury function present regular updates 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 specifi c optimum gearing target other than to maintain a competitive weighted average cost of capital.

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

Debt (i) Cash and bank balances Net debt Equity (ii) Net debt divided by debt plus equity	2012 2011 $ 000 $ 000 59,429 37,786 (11,232) (18,388)
	48,197 19,472
	168,066 125,409
	22.3% 13.4%

(i) Debt includes commercial bills, bank loans, deferred acquisition liabilities and hire purchase liabilities .

(ii) Equity includes all capital and reserves of the Group that are managed as capital.

(b)

and the basis on which income and expenses are recognised, in respect of each class of fi nancial asset, fi nancial liability and equity instrument are disclosed in note 2 to the fi nancial statements.

(c)

(c) Categories of f nancial instruments
	2012	2011
	$ 000	$ 000
Financial Assets
Cash and cash equivalents	11,232	18,388
Loans and receivables	59,689	50,219
Available-for-sale f nancial assets	21,412	16,122
Financial Liabilities
Bank overdraft	-	-
Amortised loans and payables	92,778	70,739

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(d) Financial risk management objectives

monitors and manages the fi nancial 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 fl ow interest rate risk.

to hedge remaining risk exposures where the benefi t of the hedge outweighs the cost. The use of fi nancial 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 fi nancial derivatives and non-derivative fi nancial instruments, and the investment of excess liquidity. The Group does not enter into or trade fi nancial instruments, including derivative fi nancial instruments for speculative purposes. There are no derivative instruments in operation at year end.

(e) Market risk

interest rates (note (g) below). The Group monitors its exposure to these risks on a regular basis and enters into derivative fi nancial instruments to manage these risks where appropriate. There are no derivative fi nancial instruments in operation at year end. 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

arise. Exchange rate exposures are managed with the use of natural hedges where possible and with the use of fi nancial instruments where benefi t outweighs cost within approved policy parameters. During the current and prior year no fi nancial instruments were used to manage foreign exchange risk.

The carrying amount in Australian dollars of the Group’s monetary assets and liabilities denominated in currencies other than Australian dollars at the reporting date are as per the table below. Non Australian dollar liabilities include trade creditors, accruals and borrowings recorded in Australian as well as non-Australian entities. Non Australian dollar assets include cash on hand and debtors recorded in Australian as well as non-Australian entities. Any fl uctuation in exchange rates relative to the Australian dollar will cause the below assets and liabilities to change in value.


	2012	2011	2012	2011
	$ 000	$ 000	$ 000	$ 000
United States Dollars	29,911	3,548	25,151	20,212
South African Rand	3,571	3,098	2,783	5,294
Canadian Dollars	10,211	8,604	5,916	7,375
Swedish Kroner	-	971	162	205
British Pound	2,815	2,497	1,311	100
Euro	2,002	7,229	6,771	2,260
Chilean Pesos	6,115	4,546	4,414	3,978
Other	1,601	3,487	9,593	5,722

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FY12 Financial Report

Foreign currency sensitivity

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

The following table details the Group’s sensitivity to a 10% (2011: 10%) increase and decrease in the Australian Dollar against the relevant foreign currencies. The sensitivity rate of 10% (2011: 10%) is the rate used when performing regular reporting on foreign currency risk internally. Foreign exchange risk is reported regularly to key management personnel and the Board. The estimated movement of 10% (2011: 10%) 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 10% (2011: 10%) 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 profi t 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 profi t and other equity, and the balances below would carry the opposite sign.

	United States Dollar Impact	United States Dollar Impact		South African Rand Impact	South African Rand Impact
	2012	2011		2012	2011
	$ 000	$ 000		$ 000	$ 000
(Loss) or prof t	476	(1,666)	(i)	79	(220)	(i)
Other equity	-	-	(ii)	-	-	(ii)
	European Dollar Impact			Canadian Dollar Impact
	2012	2011		2012	2011
	$ 000	$ 000		$ 000	$ 000
(Loss) or prof t	(477)	497	(i)	430	123	(i)
Other equity	-	-	(ii)	-	-	(ii)

(i) 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

rate risk is managed within defi ned treasury policy guidelines. This is achieved by the Group by maintaining an appropriate mix between fi xed and fl oating 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.

management section of this note.

Interest rate sensitivity

The sensitivity data presented in the below paragraph is 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 fi nancial 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 qualifi ed fi nancial professionals.

Group sensitivity

would decrease by $0.6 million (2011: $0.3 million). There would be a nil impact on equity other than via profi t. A 100 basis point decrease in interest rates, holding all other variables constant would yield an increase in the Group’s net profi t of $0.6 million (2011: $0.3 million). This is mainly attributable to the Group’s exposure to interest rates on its variable rate borrowings.

105

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FY12 Financial Rep ort

(h) Credit risk management

Group has adopted a policy of only dealing with creditworthy counterparties and obtaining suffi cient collateral where appropriate, as a means of mitigating the risk of fi nancial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are monitored on a weekly basis 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 fi nancial condition of accounts receivable.

characteristics. The credit risk on liquid funds and derivative fi nancial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

maximum exposure to credit risk without taking account of the value of collateral obtained. At 30 June 2012 no such collateral had been obtained. (30 June 2011 : 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 fi nancial models. The treasury function reports regularly 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 fl ows and matching the maturity profi les of fi nancial 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.

Liquidity and interest risk tables

The tables have been drawn up based on the undiscounted cash fl ows of fi nancial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash fl ows. The adjustment column represents the possible future cash fl ows attributable to the instrument included in the maturity analysis which are not included in the carrying amount of the fi nancial liability on the consolidated statement of fi nancial position.

Weighted average effective interest rate % 2012 Non-interest bearing - Finance lease liability 9.67% Variable interest rate instruments 5.13% 2011 Non-interest bearing - Finance lease liability 9.53% Variable interest rate instruments 6.80%	0-3 months 3 months to 1 year 1-5 years 5+ years $’000 $’000 $’000 $’000 25,012 8,337 - - 127 290 83 - 3,118 9,353 46,492 - 28,257 17,980 46,575 - 24,659 10,840 221 - 205 615 602 - 25,727 3,637 6,347 - 50,591 15,092 7,170 -

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106

FY12 Financial Report

tables have been drawn up based on the undiscounted cash fl ows of fi nancial assets including interest that will be earned on those assets except where the Company/Group anticipates that the cash fl ow will occur in a different period. The adjustment column represents the possible future cash fl ows attributable to the instrument included in the maturity analysis which are not included in the carrying amount of the fi nancial asset on the consolidated statement of fi nancial position.

Weighted average effective interest rate % 2012 Non-interest bearing - Variable interest rate instruments 0.25% 2011 Non-interest bearing - Variable interest rate instruments 0.25%	0-3 months 3 months to 1 year 1-5 years 5+ years Adjustment Total $’000 $’000 $’000 $’000 $’000 $’000 59,689 - 21,412 - - 81,101 11,232 - - - - 11,232
	70,921 - 21,412 - - 92,333
	50,219 - 16,122 - - 66,341 18,388 - - - - 18,388
	68,607 - 16,122 - - 84,729

(j)

generally accepted pricing models based on discounted cash fl ow analysis using pricing models based on observable current market transactions

statements approximates their fair values.

grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

	Level 1	Level 2		Level 3		Total
	$ 000	$ 000		$ 000		$ 000
Available-for-sale f nancial assets
2012
Shares in Sino Gas & Energy Holdings Limited	21,412		-		-	21,412
2011
Shares in Sino Gas & Energy Holdings Limited	16,122		-		-	16,122

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FY12 Financial Rep ort

31 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

2012
Mr B W Ridgeway
Mr R W Kelly
Mr K A Dundo
Mr M Lemmel
Ms E Donaghey
Mr G E Weston
Mr D J Loughlin
Mr P A Evans

Balance at
1 July 2011
Granted as
compensation
Received on
exercise of
options
Net other
change #
Balance at
30 June 2012
Balance held
nominally
No.
No.
No.
No.
No.
No.
2,435,000
-
-
(220,370)
2,214,630
-
380,000
-
-
-
380,000
-
300,000
-
-
(150,000)
150,000
-
903,921
-
-
(173,000)
730,921
-
185,000
-
-
25,000
210,000
-
1,000,000
40,299
-
-
1,040,299
-
-
41,862
500,000
(288,500)
253,362
-
45,000
37,269
300,000
-
382,269
-

5,248,921
119,430
800,000
(806,870)
5,361,481
-

2011 Mr B W Ridgeway Mr R W Kelly Mr K A Dundo Mr M Lemmel Ms E Donaghey Mr G E Weston Mr D J Loughlin Mr P A Evans	Balance at 1 July 2010 Granted as compensation Received on exercise of options Net other change # Balance at 30 June 2011 Balance held nominally No. No. No. No. No. No. 3,500,000 - 2,000,000 (3,065,000) 2,435,000 - 380,000 - - - 380,000 - 300,000 - - - 300,000 - 903,921 - - - 903,921 - 110,000 - - 75,000 185,000 - 350,000 - 1,000,000 (350,000) 1,000,000 - - - - - - - 45,000 - - - 45,000 -
	5,588,921 - 3,000,000 (3,340,000) 5,248,921 -

- represent on market transactions

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FY12 Financial Report

(iv) Share options issued by Imdex Limited

2012 Mr B W Ridgeway Mr R W Kelly Mr K A Dundo Mr M Lemmel Ms E Donaghey Mr G E Weston Mr D J Loughlin Mr P A Evans 2011 Mr B W Ridgeway Mr R W Kelly Mr K A Dundo Mr M Lemmel Ms E Donaghey Mr G E Weston Mr D J Loughlin Mr P J Mander ~ Mr P A Evans	Balance at 1 July 2011 Granted as compensation Exercised Inception / (cessation) as key management person Balance at 30 June 2012 Vested but not exercisable Vested and exercisable Options vested during year No. No. No. No. No. No. No. No. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 500,000 - - - 500,000 - 500,000 - 500,000 - (500,000) - - - - - 500,000 - (300,000) - 200,000 - 200,000 -
	1,500,000 - (800,000) - 700,000 - 700,000 -
	Balance at 1 July 2010 Granted as compensation Exercised Inception / (cessation) as key management person Balance at 30 June 2011 Vested but not exercisable Vested and exercisable Options vested during year No. No. No. No. No. No. No. No. 2,000,000 - (2,000,000) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1,500,000 - - - 500,000 - 500,000 166,668 500,000 - (1,000,000) - 500,000 - 500,000 - 150,000 - - (150,000) - - - - 500,000 - - - 500,000 - 500,000 66,667
	4,650,000 - (3,000,000) (150,000) 1,500,000 - 1,500,000 233,335

~ - Mr P J Mander ceased to be a Key Management Person on 1 July 2010 when changed internal reporting

No options were granted to key management personel in the current or prior year.

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FY12 Financial Rep ort

(v) Performance rights granted by Imdex Limited

2012 Mr B W Ridgeway Mr R W Kelly Mr K A Dundo Mr M Lemmel Ms E Donaghey Mr G E Weston Mr D J Loughlin Mr P A Evans	Balance at 1 July 2011 Granted as compensation Satisf ed by the issue of shares Expired Closing balance at 30 June 2012 No. No. No. No. No. 196,579 153,318 - - 349,897 - - - - - - - - - - - - - - - - - - - - 120,897 48,611 (40,299) (3,832) 125,377 125,587 42,245 (41,862) (3,331) 122,639 111,806 42,245 (37,269) (3,331) 113,451
	554,869 286,419 (119,430) (10,494) 711,364

2011 Mr B W Ridgeway Mr R W Kelly Mr K A Dundo Mr M Lemmel Ms E Donaghey Mr G E Weston Mr D J Loughlin Mr P A Evans	Balance at 1 July 2010 Granted as compensation Satisf ed by the issue of shares Expired Closing balance at 30 June 2011 No. No. No. No. No. - 196,579 - - 196,579 - - - - - - - - - - - - - - - - - - - - - 120,897 - - 120,897 - 125,587 - - 125,587 - 111,806 - - 111,806
	- 554,869 - - 554,869

Performance rights expired where performance hurdles were not met. No value was received where performance rights expired.

More information on the Performance Rights Plan can be found in note 34.

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

(a) and conditions. Total legal costs arising from QLegal were $549,874 (2011: $378,638).

(b) Transactions with Directors

Note Prof t 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: Legal services expense vi(a) Total assets and liabilities arising from transactions, other than compensation, with Directors or their related entities: Current Liabilities vi(a)	2012 2011 $ $ 549,874 378,638
	39,826 26,957

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FY12 Financial Report

(c) Parent entity

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

32 Key Management Personnel Compensation

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 benef ts Post-employment benef ts Other long-term benef ts Termination benef ts Share-based payments	2012 2011 $ $ 2,969,289 2,619,395 257,904 224,291 97,552 106,185 - - 381,164 420,872
	3,705,909 3,370,743

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 6-12 months. Options expire when the option holder ceases to be employed by the Group.

(b) Share Based Payment Arrangements

Former Chairman’s Options

Options were issued to the former Chairman as a reward for past performance and as an incentive for the future. The options carry no rights to dividends and no voting rights. These options were all exercised on 8 July 2011.

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. These options were all exercised on 19 October 2010.

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FY12 Financial Rep ort

periods:
2012 Issue Date Expiry Date Exercise Price $ Fair Value at Grant Date $ Staff Options Tranche 3 (i) 23-Feb-07 22-Feb-12 0.75 0.56 Tranche 4 (i) 23-Feb-07 22-Feb-12 1.00 0.48 Tranche 5 (i) 12-Jun-07 11-Jun-12 1.80 0.51 Tranche 6 (i) 18-Oct-07 17-Oct-12 1.80 0.81 Tranche 7 (i) 28-Mar-08 27-Mar-13 3.00 0.42 Former Chairman’s Options (Mr I F Burston) Tranche 1 (ii) 19-Oct-06 18-Oct-11 0.75 0.35 2011 Issue Date Expiry Date Exercise Price $ Fair Value at Grant Date $ Staff Options Tranche 2 (i) 1-Feb-06 31-Jan-11 0.35 0.02 Tranche 3 (i) 23-Feb-07 22-Feb-12 0.75 0.56 Tranche 4 (i) 23-Feb-07 22-Feb-12 1.00 0.48 Tranche 5 (i) 12-Jun-07 11-Jun-12 1.80 0.51 Tranche 6 (i) 18-Oct-07 17-Oct-12 1.80 0.81 Tranche 7 (i) 28-Mar-08 27-Mar-13 3.00 0.42 Former Chairman’s Options Tranche 1 (ii) 19-Oct-06 18-Oct-11 0.75 0.35 Managing Directors’ Options Tranche 1 (iii) 15-Sep-05 14-Sep-10 0.30 0.01	Number of Options Opening balance Issued current year Exercised current year Lapsed current year Closing balance 700,000 - (700,000) - - 2,263,167 - (2,248,167) (15,000) - 575,000 - (75,000) (500,000) - 200,000 - - - 200,000 4,279,991 - - (586,658) 3,693,333 500,000 - (500,000) - -
	8,518,158 - (3,523,167) (1,101,658) 3,893,333
	Number of Options Opening balance Issued current year Exercised current year Lapsed current year Closing balance 1,579,536 - (1,552,870) (26,666) - 700,000 - - - 700,000 3,014,001 - (599,167) (151,667) 2,263,167 575,000 - - - 575,000 200,000 - - - 200,000 4,368,327 - - (88,336) 4,279,991 1,000,000 - (500,000) - 500,000 2,000,000 -(2,000,000) - -
	13,436,864 - (4,652,037) (266,669) 8,518,158

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

(ii) Expire on their expiry date 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 date.

(d)

No share options were issued in the current or prior year.

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FY12 Financial Report

(e)

2012

Option Series
Staff Options Tranche 3
Staff Options Tranche 4
Staff Options Tranche 5
Former Chairman’s
Options
2011
Option Series
Staff Options Tranche 2
Staff Options Tranche 4
Former Chairman’s
Options
Managing Directors’
Options

Number Exercised
Exercise Date
Weighted Average
Share Price at
Exercise Date ($)
Amount Paid ($)
Amount Unpaid ($)
700,000
Various
2.18
525,000
-
2,248,167
Various
2.14
2,218,168
-
75,000
16-Apr-12
2.93
135,000
-
500,000
08-Jul-11
2.46
375,000
-
3,523,167
Number Exercised
Exercise Date
Weighted Average
Share Price at
Exercise Date ($)
Amount Paid ($)
Amount Unpaid ($)
599,167
Various
1.94
543,503
-
1,552,870
Various
1.88
599,167
-
500,000
08-Feb-11
2.05
375,000
-
2,000,000
25-Oct-10
1.26
600,000
-
4,652,037

(f)

weighted average remaining contractual life of 262 days (2011: 442 days)

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

year

Balance at beginning of the f nancial year Granted during the f nancial year Exercised during the f nancial year Expired/ forfeited during the f nancial year Balance at end of the f nancial year Exercisable at end of the f nancial year	2012 Number of Options Weighted Average Exercise Price ($) 8,518,158 2.04 - - (3,523,167) 0.94 (1,101,658) 2.43 3,893,333 2.94 3,893,333	2011 Number of Options Weighted Average Exercise Price ($) 13,436,864 1.48 - - (4,652,037) 0.46 (266,669) 1.60 8,518,158 2.04 8,518,158

113

Imdex 2012 Annual Report

FY12 Financial Rep ort

34 Performance Rights Plan

(a) Performance Rights Plan

At the Imdex Limited Annual General Meeting on 15 October 2009 the shareholders approved the formation of a Performance Rights Plan (PRP or Plan). The Plan allows for the issue of performance rights to employees from time to time. The quantum of performance rights granted to employees is at the discretion of the Directors and is generally based on seniority and level of contribution to the strategic goals of Imdex Limited. A performance right is the right to receive one fully paid Imdex Limited ordinary share for nil consideration should set hurdles be achieved and tenure of employment be maintained. The hurdles are set by the Directors when performance rights are issued and are generally linked to the achievement of fi nancial or other strategic goals of Imdex Limited. If hurdles are achieved generally shares will be issued evenly over the 3 year period assuming continuity of employment.

(b) Performance rights granted in the current year

Staff Performance Rights

1,465,090 performance rights were granted to employees during the current year in 3 tranches (Tranches 7, 8 and 9 in the table below):

Tranche 7 – 615,000 performance rights were issued to Key Management Personnel with 1/4 to be allotted in August 2014 with the remaining 3/4 to be allotted in August 2015. These performance rights are subject to ongoing employment tenure only. The fair value of a performance right at grant date was $2.10. The expected total cost of the estimated 615,000 fully paid ordinary shares to be issued in Imdex Limited will therefore be $1.3 million. This value will be expensed over the vesting period from September 2011 to August 2015, with $0.2 million expensed in the current year.
Tranche 8 – 15,000 performance rights were issued to an employee and all will be allotted in August 2013 subject to ongoing employment tenure only. The fair value of a performance right at grant date was $2.08. The expected total cost of the estimated 15,000 fully paid ordinary shares to be issued in Imdex Limited will therefore be $0.03 million and has been fully expensed in the current year.
Tranche 9 – 835,090 performance rights were issued to employees and are to be allotted in equal 1/3 lots annually beginning in August 2012. These performance rights are subject to profi tability related hurdles as well as ongoing employment tenure. 21,743 of these performance rights expired due to performance hurdles not being met. The fair value of a performance right at grant date was $1.79. The expected total cost of the estimated 813,347 fully paid ordinary shares to be issued in Imdex Limited will therefore be $1.5 million. This value will be expensed over the vesting period from October 2011 to August 2014, with $0.9 million expensed in the current year.

Since their granting no performance rights have expired by virtue of staff leaving the employment of the Imdex Group. One fully paid Imdex Limited ordinary shares will be issued in satisfaction of each performance right should specifi ed targets be met.

targets and hence the number of fully paid Imdex Limited ordinary shares that are likely to be issued. An adjustment will be made in the next fi nancial year should the actual number of shares issued be different from those estimated. It is estimated that out of the 1,465,090 performance rights, 1,443,347 will meet the required performance hurdles and will result in 1,443,347 fully paid Imdex Limited ordinary shares being issued over three years should employment tenure be retained.

Managing Director’s Performance Rights

153,318 performance rights were granted to the Managing Director on 20 October 2011 following approval by the shareholders at the Annual General Meeting. One fully paid Imdex Limited ordinary shares will be issued in satisfaction of each performance right should the specifi ed earnings per share and total shareholder return targets be met over the 3 year measurement period from FY12 to FY14. The Managing Director is subject to two hurdles each with equal weighting. The fi rst is that the Total Shareholder Return (TSR) of Imdex Limited must exceed the average TSR of the ASX300 over the 3 year measurement period. The second is that the Earnings Per Share of Imdex Limited must exceed the average EPS of the ASX300 over the 3 year measurement period.

Measurement against targets will only be possible once the FY14 independent audit report is signed in August 2014.

specifi ed targets and hence the number of fully paid Imdex Limited ordinary shares that are likely to be issued. Due to the hurdle being market related, adjustment will not be made in future periods should the actual number of shares issued be different from those estimated. It is estimated that out of the 153,318 performance rights issued, all will meet the required performance hurdles and will result in 153,318 fully paid Imdex Limited ordinary shares being issued on or about August 2014 should employment tenure be retained.

The fair value of a performance right at grant date was $1.91 per right. The expected total cost of the estimated 153,318 fully paid ordinary shares to be issued in Imdex Limited will therefore be $0.3 million. This value will be expensed over the vesting period from October 2011 to August 2014, with $0.1 million expensed in the current year.

114

FY12 Financial Report

(c) Performance rights Granted in the prior year

Staff Performance Rights

2,630,029 performance rights were granted to employees during the prior year in 3 tranches (Tranches 2, 3 and 4 in the table below). Since their granting, 810,335 of these performance rights have met the required performance hurdles and fully paid Imdex Limited ordinary shares have been issued to staff, while 391,887 of these performance rights have expired by virtue of staff leaving the employment of the Imdex Group. Shares issued in satisfaction of performance rights occur annually in 1/3 lots, with the fi rst 1/3 lot being issued after the FY11 independent audit report was signed in August 11.

The weighted average fair value of performance rights outstanding at the end of the prior year was $1.50 per right. The expected total cost of the estimated 2,472,372 fully paid ordinary shares to be issued in Imdex Limited will therefore be $3.7 million. This value will be expensed over the remaining vesting period from July 2010 to August 2013, with $2.0 million expensed in the prior year.

Managing Director’s Performance Rights

196,579 performance rights were granted to the Managing Director during the prior period following approval by the shareholders at the Annual General Meeting. Due to the hurdle being market related, adjustment will not be made in future periods should the actual number of shares issued be different from those estimated. It is estimated that out of the 196,579 performance rights issued, all will meet the required performance hurdles and will result in 196,579 fully paid Imdex Limited ordinary shares being issued on or about August 2013 should employment tenure be retained.

The fair value of a performance right at grant date was $1.14 per right. The expected total cost of the estimated 196,579 fully paid ordinary shares to be issued in Imdex Limited will therefore be $0.2 million. This value will be expensed over the vesting period from October 2010 to August 2013, with $0.1 million expensed in the prior year.

(d) Summary of performance rights outstanding

Performance Rights Plan

2012
Grant Date
Expiry Date Exercise Price
$ Estimated
Fair Value at
Grant Date
$ Tranche 1
19-Feb-10
Aug-14
-
0.685
Tranche 2
3-Dec-10
Aug-15
-
1.395
Tranche 3
28-Jan-11
Aug-15
-
1.990
Tranche 4
10-Jun-11
Aug-16
-
2.160
MD Tranche
14-Oct-10
Oct-15
-
1.140
MD Tranche
20-Oct-11
Oct-16
-
1.910
Tranche 7
5-Sep-11
Aug-16
-
2.100
Tranche 8
29-Aug-11
Aug-16
-
2.080
Tranche 9
7-Oct-11
Aug-16
-
1.790
2011
Grant Date
Expiry Date Exercise Price
$ Estimated
Fair Value at
Grant Date
$ Tranche 1
19-Feb-10
Aug-14
-
0.685
Tranche 2
3-Dec-10
Aug-15
-
1.395
Tranche 3
28-Jan-11
Aug-15
-
1.990
Tranche 4
10-Jun-11
Aug-16
-
2.160
MD Tranche
14-Oct-10
Nov-15
-
1.140

Estimated Number of Performance Rights
Opening
balance
Granted
Satisf ed by
the issue of
shares
Expired ^
Closing
balance
253,669
-
(126,835)
(5,635)
121,199
2,072,372
-
(677,001)
(100,897)
1,294,474
200,000
-
(66,667)
(133,333)
-
200,000
-
(66,667)
-
133,333
196,579
-
-
-
196,579
-
153,318
-
-
153,318
-
615,000
-
-
615,000
-
15,000
-
-
15,000
-
835,090
-
(21,743)
813,347

Estimated Number of Performance Rights
Opening
balance
Granted
Satisf ed by
the issue of
shares
Expired ^
Closing
balance
458,779
-
(138,391)
(66,719)
253,669
-
2,230,029
-
(157,657)
2,072,372
-
200,000
-
-
200,000
-
200,000
-
-
200,000
-
196,579
-
-
196,579

^ - Performance rights expire either on failure to maintain employment tenure or on failure to satisfy performance hurdles.

115

Imdex 2012 Annual Report

FY12 Financial Rep ort

35 Parent Entity Information

same as those applied in the consolidated fi nancial statements. Refer to note 2 for a summary of the signifi cant accounting policies relating to the Group.

Financial Position Assets Current Assets Non Current Assets Total Assets Liabilities Current Liabilities Non Current Liabilities Total Liabilities Net Assets Equity Issued Capital Shares reserved for Performance Rights Plan Investment Revaulation Reserve Employee Equity-Settled Benef ts Reserve Accumulated Losses Total Equity Financial Performance Loss for the year Other comprehensive income, net of income tax Total comprehensive income Accumulated Losses at the beginning of the f nancial year Loss for the year Amounts transferred from employee equity-settled benef ts reserve Dividend received / (paid) Accumulated Losses at the end of the f nancial year	30 June 2012 30 June 2011 $’000 $’000 2,744 1,813 162,571 106,546
	165,315 108,359
	64,455 37,933 23,860 9,296
	88,315 47,229
	77,000 61,130
	86,069 70,059 (3,740) - 295 188 6,385 7,158 (12,009) (16,275)
	77,000 61,130
	Year Ended Year Ended 30 June 2012 30 June 2011 $’000 $’000 (12,686) (14,946) 107 188
	(12,579) (14,758)
	(16,275) 2,159 (12,686) (14,946) (721) - 17,673 (3,488)
	(12,009) (16,275)

==> picture [117 x 56] intentionally omitted <==

116

FY12 Financial Report

Guarantees entered into by the parent entity in relation to the debts of its subsidiaries

	30	June 2012	30 June 2011
		$’000	$’000
Guarantee provided under the deed of cross guarantee		77,611	76,040

The parent entity has no contingent liabilities or contingent assets at balance date (2011: nil).

The parent entity has no commitments for the acquisition of property, plant and equipment at balance date (2011: nil).

36 Subsequent Events

Subsequent to year end the Directors de clared a 4.00 cent per share fully franked dividend with a record date of 12 October 2012 and a payment date of 26 October 2012. The effect of this dividend has not been refl ected in this fi nancial report.

117

Imdex 2012 Annual Report

FY12 Financial Rep ort

Additional Securities Exchange Information as at 29 August 2012

(a) Distribution of Shareholders

(a) Distribution of Shareholders
	Number of Fully	Number of	Number of Option
	Paid Ordinary	Performance	Holders
	Shareholders	Rights Holders
1 – 1,000	475	35	-
1,001 – 5,000	1,475	98	9
5,001 – 10,000	897	29	23
10,001 – 100,000	1,199	56	67
100,001 – and over	123	7	8
	4,169	225	107
Holding less than a marketable parcel	133	-	-

(b) Substantial Shareholders

(b)
Substantial Shareholders

Ordinary Shareholders
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
(c)
Twenty Largest Holders of Quoted Equity Securities
Ordinary Shareholders
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
National Nominees Limited
JP Morgan Nominees Australia Limited (Cash Income Account)
Citicorp Nominees Pty Limited
Citicorp Nominees Pty Limited (Colonial First State Inv Account)
BNP Paribas Nominees Pty Ltd (Master Cust DRP)
Telic Alcatel (Australia) Pty Ltd (Middendorp Directors SuperFund Account)
Mr John Andrew Knox + Ms Janice Ann Knox (The JA Family Account)
AMP Life Limited
Buttonwood Nominees Pty Ltd
RBC Investor Services Australia Nominees Pty Ltd (Pi Pooled Account)
Imdex Nominees Pty Ltd (Imdex Equity Plans Account)
Mr Petrus Middendorp
Bond Street Custodians Ltd (Celeste Concentrated Fund)
Keeble Nominees Pty Ltd (Ridgeway Super Fund Account)
Aust Executor Trustees Ltd (Charitable Foundation)
Passio Pty Ltd (G Weston & Assoc SuperFund Account)
Methuen Holdings Pty Ltd (PB Family Account)
Wear Services Pty Ltd

Fully Paid
Number
Percentage
36,769,302
17.66%
29,468,514
14.15%
Fully Paid
Number
Percentage
36,769,302
17.66%
29,468,514
14.15%
20,217,787
9.71%
14,508,763
6.97%
6,110,662
2.93%
4,645,671
2.23%
3,219,154
1.55%
3,028,152
1.45%
2,928,627
1.41%
2,732,212
1.31%
1,984,012
0.95%
1,591,884
0.76%
1,510,927
0.73%
1,495,372
0.72%
1,402,869
0.67%
1,226,737
0.59%
1,056,067
0.51%
1,025,000
0.49%
1,000,000
0.48%
987,893
0.47%

136,909,605
65.75%

118

FY12 Financial Report

(d) Director and Company Secretary Shareholdings

Name

Mr R W Kelly Mr B W Ridgeway Mr K A Dundo Mr M Lemmel Ms E Donaghey Mr P A Evans

Number of	Number of	Number of
Shares	Options	Performance
		Rights
380,000	-	-
2,214,630	-	349,897
150,000	-	-
730,921	-	-
210,000	-	-
382,269	200,000	116,782
4,067,820	200,000	466,679

(e) Company Secretary

Mr Paul Anthony Evans

(f)

8 Pitino Court Osborne Park Western Australia 6018 Phone: (08) 9445 4010

(g) Share Registry

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

119

Imdex 2012 Annual Report

==> picture [596 x 67] intentionally omitted <==

Company History

17 December 1980 Australian company Pilbara Gold NL incorporated 21 July 1985 Pilbara Gold NL changed name to Imdex Limited 24 September 1987 Imdex Limited listed on the ASX 1988 Formation of Australian Mud Company

1997 Acquisition of Surtron Technologies Pty Ltd and Ace Drilling Supplies

2001 Joint venture formed with Imdex and Rashid Trading Establishment (RTE) in Saudi Arabia

1 July 2005 Sale of Imdex Minerals
1 August 2005 Acquisition of African based company Samchem

1 August 2006 United Kingdom based company Chardec

1 May 2007 Acquisition of Swedish based company Flexit 1 July 2007 Ace merged with Refl ex. Imdex fi nalised the sale of its interest in Imdex Arabia to RTE. Acquisition of Canadian based Poly-Drill and a 75% interest in Kazakhstan based Suay Energy Services

31 October 2007 Sale of Surtron Technologies
1 November 2007 Acquisition of Chilean based company Southernland 1 January 2008 Acquisition of German based company System Entwicklungs 1 July 2008 Acquisition of the remaining 25% of Kazakhstan based Suay Energy Services
1 September 2008 Acquisition of Australian based company Wildcat Chemicals Australia

1 July 2010 New regional structure implemented and business reporting streamlined into Minerals and Oil & Gas Divisions

1 September 2010 Acquisition of Australian based companies Fluidstar and Ecospin 1 March 2011 Acquisition of German based company Mud-Data

1 July 2011 Formation of DHS Services joint venture

1 July 2011 Acquisition of Australian based company Australian Drilling Specialties Pty Ltd

1 August 2011 Acquisition of Brazilian based company System Mud Indústria e Comércio Ltda

1 January 2012 Acquisition of Vaughn Energy Services by Imdex’s DHS Services joint venture

==> picture [117 x 56] intentionally omitted <==

120

==> picture [596 x 842] intentionally omitted <==

==> picture [596 x 233] intentionally omitted <==

Providing innovative drilling fluids and advanced downhole instrumentation worldwide.

Imdex is an ASX listed company, which provides quality drilling fluids and leading down hole instrumentation to the mining, oil and gas, water well, and civil engineering industries worldwide.

The company has a presence in all significant mining and exploration regions, and has a global profile and resources to position it for extended future growth.

Imdex Limited ABN 78 008 947 813

Head office

8 Pitino Court, Osborne Park, Western Australia 6017

T: +61 8 9445 4010 F: +61 8 9445 4042 E: [email protected]

AI assistant

IMDEX LIMITED — Annual Report 2012

65119_rns_2012-09-16_580a0b18-9448-4c5f-a6df-d062b3b96bf9.pdf

Contents

Imdex Group at a glance

Deloitte Touche Tohmatsu

Company Profi le

Comprehensive Product Range

OIL & GAS DIVISION

What are Drilling Fluids?

What is Fluid Recycling Equipment?

What are downhole survey and core orientation instruments?

SURVEY INSTRUMENTATION

CORE ORIENTATION INSTRUMENTS

GYROSCOPIC SURVEY AND DIRECTIONAL STEERING INSTRUMENTS

Global Business

FY12 Snapshot

FY12 Snapshot

STRATEGY FOR INCREASING SHAREHOLDER VALUE

GROWTH INITIATIVES

OPERATIONAL HIGHLIGHTS AND CHALLENGES

Highlights

Challenges

Market Review

FY12 snapshot

FY12 Revenue Base

SUSTAINABLE REVENUE BASE

STRENGTH THROUGH GEOGRAPHIC DIVERSIFICATION

FY12 snapshot

Financial Performance

FINANCIAL PERFORMANCE IN FY12

Summary Financial Highlights for the Year Ended 30 June 2012 (Audited Results)

Board of Directors

Board of Directors

Mr Ross Kelly AM BE (HONS) FAICD

Mr Kevin Dundo B.Com, LLB

Chairperson’s Report

Chairperson’s Report

RECORD PERFORMANCE

INVESTING IN CONTINUED GROWTH

PROVEN STRATEGY

STRATEGIC ACQUISITIONS

DEVELOPMENT AND COMMERCIALISATION OF NEW PRODUCTS

RECORD RENTAL LEVELS

Chairperson’s Report

REFLEX RENTAL FLEET GROWTH TREND

LONG-TERM GOLD AND COPPER PRICES

OPERATIONAL EFFICIENCIES

LOOKING TO FY13

ESTIMATED GLOBAL EXPLORATION/DEVELOPMENT SPEND

BALANCE SHEET STRENGTH

SUSTAINABLE REPORTING AND CORPORATE GOVERNANCE

Managing Director’s Report

Managing Director’s Report

GROUP FINANCIAL PERFORMANCE

MINERALS DIVISION

Managing Director’s Report

OIL AND GAS DIVISION

CORPORATE SUPPORT

POSITIVE OUTLOOK FOR FY13

Operational Overview

Operational Overview

GLOBAL TEAM

IMDEX’S SENIOR EXECUTIVES

Mr. Paul Evans Chief Financial Offi cer and Company Secretary

Mr. Derek Loughlin Divisional General Manager, Minerals

Mr. Gary Weston

Divisional General Manager, Oil and Gas

Research and Development

SOLIDS REMOVAL UNIT

REFLEX EZ-GYRO

REFLEX SMART BARREL

WORLD-CLASS GYRO TECHNOL OGY

INDUSTRY RECOGNITION

Quality, Health, Safety and Environment

Imdex Group Lost Time Injury F requency Rate (LTIF R)

Risk Management

MANAGING RISKS TO DELIVER LONG-TERM SHAREHOLDER VALUE

CORPORATE GOVERNANCE STRUCTURE

RISK MANAGEMENT FRAMEWORK

IMDEX LIMITED Annual Report 2012