IMDEX LIMITED — Interim / Quarterly Report 2008

Feb 17, 2008

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15 February 2008

Australian Stock Exchange Limited Company Announcements Office Exchange Centre 20 Bridge Street SYDNEY NSW 2001

BY ELECTRONIC LODGEMENT

Dear Sirs

ASX APPENDIX 4D AND INTERIM FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2007.

Please find attached Imdex Limited’s Appendix 4D and Interim Financial Report for the Half Year Ended 31 December 2007.

Yours faithfully

Imdex Limited

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Paul Evans

Company Secretary

About Imdex :

Imdex is a Perth-based public company listed on the Australian Stock Exchange, whose core business is the supply of drilling products and services in Australia and internationally to the oil and gas, mining, water well, horizontal directional drilling and civil industries

For further information, please contact:

Bernie Ridgeway , Managing Director; Paul Evans , Chief Financial Officer and Company Secretary

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Imdex Limited ACN 008 947 813 ABN 78 008 947 813 Level 1 15 Rheola Street, West Perth Western Australia 6005 PO Box 1325 West Perth WA 6872 Phone +61 8 9481 5777 Fax +61 8 9481 5377 E-mail imdex@imdexlimited.com

R:\Financial Reports\Half Year Reports\2007\Half-Year Report 311207.doc

Quality

Endorsed

Company ISO 9002 LIC: QEC 2807 Standards Australia

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IMDEX LIMITED ABN 78 008 947 813

ASX Appendix 4D “Half Year” Report and Interim Directors’ Report & Financial Report

for the Half Year ended 31 December 2007

The ASX Appendix 4D “Half Year” Report is provided to ASX in accordance with Listing Rule 4.2A for announcement to the market.

Current Reporting Period: 31 December 2007 Previous Corresponding Reporting Period: 31 December 2006

The Financial Report had been subject to audit review and is not subject to dispute or qualification. The auditors review report is included herein.

The interim Financial Report has been prepared in accordance with Australian Equivalents to International Financial Reporting Standards (“AIFRS”).

The interim Financial Report does not include all the notes of the type normally included in an annual Financial Report and hence should be read in conjunction with the latest annual report of Imdex Limited, being for the financial year ended 30 June 2007.

In addition, reference should be made to any public announcements made by Imdex Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 (Cth).

IMDEX LIMITED and its controlled entities

APPENDIX 4D HALF YEAR REPORT 31 DECEMBER 2007

Imdex Limited Results for Announcement to the Market

% Change Notes up / (down) Revenue from ordinary activities * (i) 45% Profit/(loss) from ordinary activities after tax attributable to members (i) 267% Net profit/(loss) for the period attributable to members (i) 267% Interim dividend (cents) (ii) Final dividend (cents) (iii) Net tangible assets per ordinary security (cents)	Half Year Ended Half Year Ended 31 Dec 07 31 Dec 06 $ 000's $ 000's 76,789 53,141 Consolidated
	21,965 5,986
	21,965 5,986
	1.75 1.00
	1.50 1.00
	17.89 (6.80)

• • includes revenue from discontinued operations (refer financial report note 7)

(i) The announcement made to ASX on 15 February 2008 by the Chairman of Imdex Limited provides an explanation of the Group's financial results and operating performance for the Half Year ended 31 December 2007.

(ii) The interim, fully franked dividend will be paid on 25 March 2008 (2006: 26 March 2007). The record date for determining the entitlement of the interim dividend will be 7 March 2008 (2006: 12 March 2007). There are no dividend reinvestment plans in operation in the current or prior period.

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

IMDEX LIMITED

and its controlled entities

DIRECTORS’ REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2007

In accordance with a resolution of the Directors of Imdex Limited, the Directors submit the balance sheet as at 31 December 2007, the statement of changes in equity, the income statement and the cash flow statement of Imdex Limited and its controlled entities (together “the Consolidated Entity”) for the Half Year ended on that date (“the period”) and report as follows:

Directors

The Directors of the Company during or since the end of the Half Year are:

Name	Period of Directorship
Mr Ian Burston, Non Executive Chairman	Appointed 22 November 2000
Mr Bernie Ridgeway, Managing Director	Appointed 23 May 2000
Mr Magnus Lemmel, Non Executive Director	Appointed 19 October 2006
Mr Ross Kelly, Non Executive Director	Appointed 14 January 2004
Mr Kevin Dundo, Non Executive Director	Appointed 14 January 2004

Review of Operations

Review of Operations
	Consolidated
	Half Year Ended	Half	Year Ended
	31 Dec 2007	31	Dec 2006
	$’000		$’000
Revenue - continuing operations	70,205		46,547
Revenue-discontinued operations	6,584		6,594
Total Revenue	76,789		53,141
Profit for the half year (including minority interests)	22,017		5,986
Basic earningsper share - continuingoperations(cents)	6.34¢		3.65¢

The Consolidated Entity’s net profit after tax during the Half Year ended 31 December 2007 was $22.0 million. This was 267% higher than the $6.0 million outcome during the comparable period of 2006 and was achieved on total operating revenue including discontinued operations of $76.8 million ($53.1 million total revenue during the comparable period of 2006), a 45% increase.

Earnings from total operations increased from 3.65 cents per share to 6.34 cents per share over the same period, a rise of 74%.

Imdex has achieved strong revenue and profit growth in the period ended 31 December 2007. It continues to generate strong operating cash flow on a monthly basis.

Further details on the operations and overall results are contained in the Financial Report and the announcement made to the ASX on 15 February 2008 by the Chairman of Imdex Limited regarding the Group’s financial results and operating performance for the Half Year ended 31 December 2007.

Page 1 of 21

IMDEX LIMITED

and its controlled entities

DIRECTORS’ REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2007

Interim Dividend

The Directors have declared a fully franked interim dividend of 1.75 cents per ordinary share (31 Dec 2006: 1.0 cent), to be paid on 25 March 2008 for which the record date will be 7 March 2008.

Auditors’ Independence Declaration

Section 307C of the Corporations Act 2001 requires the auditor, Deloitte Touche Tohmatsu, to provide the Directors of Imdex Limited with an Independence Declaration in relation to the review of the Half Year Financial Report. The Independence Declaration is on page 3.

Rounding of Amounts

The Company is of a kind referred to in Class Order 98/100 issued by the Australian Investments and Exchange Commission dated 10 July 1998 and in accordance with that Class Order, amounts in the Financial Report and the Directors’ Report have been rounded off to the nearest thousand dollars, unless otherwise stated.

Signed in accordance with a resolution of the Directors pursuant to s.306(3) of the Corporations Act 2001.

Dated at Perth, 15 February 2008

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Ian F Burston Chairman

Page 2 of 21

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

The Board of Directors Imdex Limited 15 Rheola Street West Perth WA 6005

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

15 February 2008

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.

As lead audit partner for the review of the financial statements of Imdex Limited for the financial half-year ended 31 December 2007, 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 review; and

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

Yours sincerely

DELOITTE TOUCHE TOHMATSU

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Peter Rupp Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation.

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

Independent Auditor’s Review Report to the members of Imdex Limited

We have reviewed the accompanying half-year financial report of Imdex Limited, which comprises the balance sheet as at 31 December 2007, and the income statement, cash flow statement, statement of changes in equity for the half-year ended on that date, selected explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the end of the half-year or from time to time during the half-year as set out on pages 7 to 21.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2007 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Imdex Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Liability limited by a scheme approved under Professional Standards Legislation.

Auditor’s Independence Declaration

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Imdex Limited is not in accordance with the Corporations Act 2001 , including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2007 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

DELOITTE TOUCHE TOHMATSU

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Peter Rupp Partner Chartered Accountants Perth, 15 February 2008

IMDEX LIMITED and its controlled entities

DIRECTORS’ DECLARATION

The Directors declare that:

• (a) in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and

• (b) in the Directors’ opinion, the attached Financial Report and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the Consolidated Entity.

Signed in accordance with a resolution of the Directors made pursuant to s. 303(5) for the Corporations Act 2001.

Dated at Perth, 15 February 2008

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Ian F Burston Chairman

Page 6 of 21

IMDEX LIMITED

and its controlled entities

CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE HALF YEAR ENDED 31 DECEMBER 2007

Notes Continuing operations Sale of goods, rendering of services and operating lease rental Interest income and other operating revenue Total revenue Other income Raw materials and consumables used Employee benefit expense Depreciation and amortisation expense Finance costs Other expenses 2 Profit before tax Income tax expense Profit from continuing operations Profit from discontinued operations 7 Profit for the half year Attributable to: Equity holders of the parent Minority interest Earnings per share - continuing operations: Basic earnings per share (cents) Diluted earnings per share (cents) Earnings per share - continuing and discontinued operations: Basic earnings per share (cents) Diluted earnings per share (cents) Dividends per ordinary share: Interim dividend paid (cents) 3 Final dividend declared (cents) 3	Half Year Ended Half Year Ended 31 Dec 2007 31 Dec 2006 $’000 $’000 69,139 45,930 1,066 617 Consolidated
	70,205 46,547
	- 195 (28,449) (23,359) (9,436) (5,002) (3,980) (2,544) (1,331) (1,304) (10,092) (7,021)
	16,917 7,512
	(5,023) (2,388)
	11,894 5,124
	10,123 862
	22,017 5,986
	21,965 5,986 52 -
	6.34 3.65 6.11 3.29 11.75 4.26 11.33 3.81 1.75 1.00 1.50 1.00

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

Page 7 of 21

IMDEX LIMITED

and its controlled entities

CONDENSED CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2007

Notes Current Assets Cash and Cash Equivalents Trade and Other Receivables Inventories Other Financial Assets Other Non-Current Assets classified as held for resale Total Current Assets Non Current Assets Property, Plant and Equipment Goodwill Other Intangible Assets Other Total Non Current Assets Total Assets Current Liabilities Trade and Other Payables Borrowings Current Tax Payables Provisions Total Current Liabilities Non Current Liabilities Borrowings Deferred Tax Liabilities Provisions Total Non Current Liabilities Total Liabilities Net Assets Equity Contributed Capital 4 Foreign Currency Translation Reserve Employee Equity-Settled Benefits Reserve Retained Profits Parent Entity Interest Minority Interest Total Equity	31 Dec 2007 30 Jun 2007 $’000 $’000 16,614 15,271 32,381 27,806 17,158 13,839 12,246 11,556 937 224 Consolidated
	79,336 68,696 4,500 4,500
	83,836 73,196
	8,481 13,207 42,068 35,033 25,741 27,746 28 664
	76,318 76,650
	160,154 149,846
	12,684 16,741 9,038 11,881 8,225 8,913 711 1,212
	30,658 38,747
	22,764 28,556 5,808 5,481 386 448
	28,958 34,485
	59,616 73,232
	100,538 76,614
	64,491 60,982 (2,040) (2,137) 1,741 751 36,260 17,018
	100,452 76,614 86 -
	100,538 76,614

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

Page 8 of 21

IMDEX LIMITED

and its controlled entities

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2007

		Share	Mandatory	Foreign	Employee	Retained	Minority	Total
		Capital	Convertible	Currency	Equity-	Earnings	Interest	Attributable
			Capital	Translation	Settled			to Equity
				Reserve	Benefits			Holders of
					Reserve			the Parent
	Notes	$'000	$'000	$'000	$'000	$'000	$'000	$'000
Balance at 1 July 2006		26,490	-	(494)	105	6,552	-	32,653
Exchange differences on
translation of foreign operations
after taxation		-	-	(398)	-	-	-	(398)
Net income recognised directly in equity		-	-	(398)	-	-	-	(398)
Profit for the period		-	-	-	-	5,986	-	5,986
Total recognised income and
expense for the period		-	-	-	-	5,986	-	5,986
Dividend paid	3	-	-	-	-	(1,411)	-	(1,411)
Share based payments		-	-	-	48	-	-	48
Issue of shares under staff option
plan	4	652	-	-	(55)	-	-	597
Balance at 31 December 2006		27,142	-	(892)	98	11,127	-	37,475
Balance at 1 July 2007		54,282	6,700	(2,137)	751	17,018	-	76,614
Exchange differences on
translation of foreign operations
after taxation		-	-	97	-	-	-	97
Net income recognised directly in equity		-	-	97	-	-	-	97
Profit for the period		-	-	-	-	21,965	86	22,051
Total recognised income and
expense for the period		-	-	-	-	21,965	86	22,051
Dividend paid	3	-	-	-	-	(2,723)	-	(2,723)
Share based payments		-	-	-	1,062	-	-	1,062
Issue of shares as part
consideration for the acquisition of
Poly-Drill	4	1,750	-	-	-	-	-	1,750
Issue of shares as part
consideration for the acquisition of
Southernland	4	1,387	-	-	-	-	-	1,387
Tax effect on prior period share
issue costs		(25)	-	-	-	-	-	(25)
Issue of shares under staff option
plan	4	397	-	-	(72)	-	-	325
Balance at 31 December 2007		57,791	6,700	(2,040)	1,741	36,260	86	100,538

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

Page 9 of 21

IMDEX LIMITED

and its controlled entities

CONDENSED CONSOLIDATED CASH FLOW STATEMENT FOR THE HALF YEAR ENDED 31 DECEMBER 2007

Notes Cash Flows From Operating Activities Receipts from customers Payments to suppliers and employees Interest and other costs of finance paid Income tax paid Net cash provided by Operating Activities Cash Flows From Investing Activities Interest and bill discounts received Payment for property, plant and equipment Proceeds from sale of property, plant and equipment Proceeds from receivable - RTE/Imdex Joint Venture Proceeds from sale of Surtron net of cash disposed 7 Payment for the acquisition of the shares of Poly-Drill 5(a)(iii) Payment for the acquisition of the shares of Suay 5(b)(ii) Payment for the acquisition of the shares of Southernland 5(c)(iii) Payment for the acquisition of the shares of Reflex 5(d)(iii) Payment for the acquisition of the shares of Chardec 5(e)(iii) Deferred acquisition payments Amounts advanced to Sino Gas & Energy Ltd Net cash provided by/(used in) Investing Activities Cash Flows From Financing Activities Cash received on exercise of options Dividend paid 3 Convertible note interest paid Hire purchase and lease payments Proceeds from hire purchase financing Proceeds from borrowings Repayment of borrowings Net cash (used in)/provided by Financing Activities Net Increase in Cash and Cash Equivalents Held Cash and Cash Equivalents At The Beginning Of The Financial Year 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 Period	Half Year Ended Half Year Ended 31 Dec 2007 31 Dec 2006 $’000 $’000 77,410 61,386 (64,188) (52,526) (1,273) (564) (8,774) (864) Consolidated
	3,175 7,432
	201 90 (4,114) (1,821) - 57 - 138 14,778 - (899) - (232) - (1,446) - - (13,001) (5,088) (6,293) (28) - (86) (5,034)
	3,086 (25,864)
	325 597 (2,723) (1,411) (464) - (575) (891) 805 395 5,000 20,955 (7,261) (900)
	(4,893) 18,745
	1,368 313
	15,271 6,421 (25) 3
	16,614 6,737

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

Page 10 of 21

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

1. Summary of Significant Accounting Policies

Statement of Compliance

The half year report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 “Interim Financial Reporting”. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 “Interim Financial Reporting”. The half year financial report does not include notes of the type normally included in an annual financial report and should be read in conjunction with the most recent annual financial report.

Basis of Preparation

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

This financial report comprises the consolidated financial report of Imdex Limited (“Company”) and the entities it controlled at the end of, or during, the period (together, “the Consolidated Entity”).

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 half year financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

The accounting policies and methods of computation adopted in the preparation of the half year financial report are consistent with those adopted and disclosed in the Company’s 2007 annual financial report for the financial year ended 30 June 2007, other than as detailed below.

Adoption of new and revised Accounting Standards

In the current year, the Consolidated Entity has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”) that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2007. The adoption of these new and revised Standards and Interpretations has resulted in changes to the Group’s accounting policies in the following areas:

• Adoption of AASB 7 ‘Financial Instruments: Disclosures’ and consequential amendments to other accounting standards resulting from its issue. The adoption of this standard does not give rise to any adjustments in the financial report but requires additional disclosures surrounding financial instruments to be made in the 30 June 2008 annual financial report. There are no specific additional disclosures required for the 31 December 2007 half year financial report;

• Adoption of revised AASB 101 ‘Presentation of Financial Statements’ (revised October 2006). There are no specific additional disclosures required for the 31 December 2007 half year financial report, and

• Adoption of Interpretation 10 ‘Interim Financial Reporting and Impairment’ clarifying that an entity cannot reverse an impairment loss recognised in a previous interim period in relation to goodwill or an investment in an equity instrument or in a financial asset carried at cost. The adoption of this Interpretation does not give rise to any adjustment in the financial report at 31 December 2007.

Page 11 of 21

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

2. Other Expenses

Commissions Communication Consultancy fees Electricity Foreign exchange (gain)/loss Freight Hire of plant and equipment Insurance Legal and professional fees Other expenses Rent and premises costs Repairs and maintenance Travel and accommodation Vehicle expenses	Half Year Ended Half Year Ended 31 Dec 2007 31 Dec 2006 $’000 $’000 856 559 418 261 1,509 783 40 35 (95) 18 363 341 57 48 311 152 266 549 2,498 1,876 1,084 686 297 429 1,755 837 733 447 Consolidated
	10,092 7,021

3. Dividends

3. Dividends
		Half Year	Ended	Half Year	Ended
		31 Dec	2007	31 Dec	2006
	Notes	Cents per	Total	Cents per	Total
		share	$’000	share	$’000
Recognised amounts
Fully paid ordinary shares - final dividend franked to 30%	(i)	1.50	2,723	1.00	1,411
Unrecognised amounts
Fully paid ordinary shares - interim dividend franked to 30%	(ii)	1.75	3,201	1.00	1,629

(i) The final, fully franked dividend was paid on 2 November 2007. The record date for determining the entitlement to the interim dividend was 15 October 2007. There were no dividend reinvestment plans in operation.

(ii) The interim, fully franked dividend was declared on 15 February 2008 with an entitlement date of 7 March 2008. The financial effect of the dividend has not been recognised in the financial statements at 31 December 2007.

Adjusted franking account balance Impact on franking account of dividends not recognised	Half Year Ended Consolidated Half Year Ended 31 Dec 2007 $’000 5,906 $’000 12,338 31 Dec 2006
	(1,372) (698)

Page 12 of 21

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

4. Contributed Capital

4. Contributed Capital
	Consolidated
Notes Issued and Paid Up Capital - Fully paid ordinary shares (i) Mandatory convertible capital (ii)	31 Dec 2007 30 Jun 2007 $’000 $’000 57,791 54,282 6,700 6,700
	64,491 60,982

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

(ii) Mandatory Convertible Capital comprises 5 million fully paid ordinary shares that the company is committed to issue on 1 May 2009 as part consideration for the acquisition of Flexit AB, acquired effective 1 May 2007.

			Consolidated	Consolidated
	31	Dec	2007	30 Jun	2007
	Number		$'000	Number	$'000
Ordinary shares
Balance at beginning of the period	179,949,003		54,282	142,074,337	27,142
Issued on conversion of debt instrument		-	-	20,800,000	10,400
Issue of equity securities as part of working capital raising		-	-	15,000,000	16,500
Issue of shares as part consideration for the acquisition of patent		-	-	155,039	200
Issue of shares as part consideration for the acquisition of Polydrill
(Note 5(a))	1,212,751		1,750	-	-
Issue of shares as part consideration for the acquisition of
Southernland (Note 5(c))	723,679		1,387	-	-
Tax effect of share issue costs / Share issue costs (net of tax)		-	(25)	-	(510)
Issue of shares under staff option plan	1,045,499		397	1,919,627	550
Closing balance at end of the period	182,930,932		57,791	179,949,003	54,282

Issuances of other equity securities

In the current half year period, 500,000 options were issued to staff as a reward for past services and as an incentive for future performance. These options have a life of 5 years and are exercisable in 1/3 lots each year, commencing one year after the date of issue. The fair value of these options at the date of grant were $404,000. None of these options have been exercised.

In the six month period ended 30 June 2007 three tranches of options were issued to staff as a reward for past services and as an incentive for future performance. These options have a life of 5 years and are exercisable in 1/3 lots each year, commencing one year after the date of issue. The total fair value of these options at their grant dates was $2,937,475. By 31 December 2007 a total of 530,000 of these options had expired due to the resignation of staff members and 125,000 had been exercised at a weighted average market price of $1.841 per share.

The weighted average fair value of the share options granted during the half year is $0.808 (half year 2006: $0.352). Options were priced using a Black-Scholes option pricing model. Expected volatility is derived from the anticipated standard deviation over the expected life of the options and is based on the Company’s historical data from the Australian Graduate School of Management’s Risk Measurement Service. The risk free rate is the Commonwealth Government securities rate with a maturity date approximating that of the expiration period of the options as sourced from the Reserve Bank of Australia. The dividend yield is based on the expected future levels of dividends.

	Staff Options Issued	Staff Options Issued	Staff Options Issued	Staff Options Issued
	Half Year Ended 31 Dec 07	6 months ended 30 Jun 07
Inputs into the model Number of options issued Grant date share price ($) Exercise price ($) Expected volatility Option life (years) Risk-free interest rate Dividend yield	Tranche 6	Tranche 3	Tranche 4	Tranche 5
	500,000 4,575,000 700,000 675,000 1.865 1.08 1.08 1.40 1.80 1.00 0.75 1.80 45% 50% 50% 50% 5.00 5.00 5.00 5.00 6.47% 6.00% 6.00% 6.38% 1.66% 2.30% 2.30% 2.30%

Page 13 of 21

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

5. Acquisitions

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

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

Details of the assets, liabilities and goodwill: Notes Inventory Property, plant and equipment Trade and other payables Fair value of net identifiable assets acquired Goodwill on acquisition (i) Total purchase consideration Consideration in cash and cash equivalents Less: Cash and cash equivalents acquired Issue of ordinary shares (ii), 4 Direct costs relating to the acquisition (iii) Total purchase consideration comprises	Book value Fair value adjustments $’000 $’000 178 - 150 - (696) -	Fair value on acquisition $’000 178 150 (696)
	(368) -	(368) 3,369
		3,001
		1,849 (673) 1,750 75
		3,001

Operating results of Poly-Drill included in the Consolidated Income Statement of Imdex Limited from acquisition on 1 July 2007 to 31 December 2007:	Results since acquisition $’000
Revenue Total expenses	1,059 (880)
Profit after tax for the period	179

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

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

(iii) The Consolidated Cash Flow Statement for the half year ended 31 December 2007 records the payment for the acquisition of Poly-Drill as $0.9 million being the total consideration of $3.0 million above less $1.8 million settled in shares and $0.3 million paid in the prior year.

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Page 14 of 21

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

5. Acquisitions (Continued)

(b) Acquisition of entity - Suay Energy Services LLP

With effect from 1 July 2007 Imdex Limited acquired 75% of the issued share capital of Suay Energy Services LLP (Suay), a company incorporated in Kazakhstan. The purchase of Suay is complementary to the existing drilling fluids and chemicals businesses of Imdex. Suay provide drilling fluids and chemicals to the Kazakhstan oilfields in the Caspian Sea region. The numbers presented below have been accounted for using the acquisition method of accounting. These numbers are provisional only as the acquisition accounting is still in the process of being finalised.

Details of the assets, liabilities and goodwill: Book value Fair value adjustments Notes $’000 $’000 Trade and other receivables 118 - Inventory 301 - Property, plant and equipment 54 - Trade and other payables (336) - Fair value of net identifiable assets acquired 137 - Goodwill on acquisition (i) Less: Minority interests Total purchase consideration Consideration in cash and cash equivalents Direct costs relating to the acquisition (ii) Revenue Total expenses Profit after tax for the period Operating results of Suay included in the Consolidated Income Statement of Imdex Limited from acquisition on 1 July 2007 to 31 December 2007: Total purchase consideration comprises	Book value Fair value adjustments $’000 $’000 118 - 301 - 54 - (336) -	Fair value on acquisition $’000 118 301 54 (336)
		137 441 (34)
		544
		473 71
		544
		Results since acquisition $’000 1,224 (963)
		261

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

(ii) The Consolidated Cash Flow Statement for the half year ended 31 December 2007 records the payment for the acquisition of Suay as $0.2 million being the total consideration of $0.5 million above less $0.3 million paid in the prior year.

Page 15 of 21

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

5. Acquisitions (Continued)

(c) Acquisition of entity - Southernland S.A.

On 1 November 2007 Imdex South America S.A., a newly incorporated wholly owned subsidiary of Imdex Limited, settled the purchase of 100% of the issued share capital of Southernland S.A. (Southernland), a company incorporated in Chile. The acquisition was structured under a mandate so as to entitle the Group to the profits from 1 July 2007 onwards. Southernland manufacture and supply drilling fluids and chemicals to the Latin American market, complementing the existing fluids and chemcials businesses of Imdex and providing access to new geographic markets. The numbers presented below have been accounted for using the acquisition method of accounting.

Details of the assets, liabilities and goodwill: Notes	Book value Fair value adjustments $’000 $’000	Fair value on acquisition $’000
Trade and other receivables Inventory Property, plant and equipment Trade and other payables Fair value of net identifiable assets acquired Goodwill on acquisition (i) Total purchase consideration Consideration in cash and cash equivalents Less: Cash and cash equivalents acquired Issue of ordinary shares (ii), 4 Direct costs relating to the acquisition (iii) Total purchase consideration comprises	538 - 273 - 83 - (474) -	538 273 83 (474)
	420 -	420 2,413
		2,833
		1,413 (87) 1,387 120
		2,833
		Results since acquisition $’000
Revenue Total expenses Profit after tax for the period Operating results of Southernland included in the Consolidated Income Statement of Imdex Limited from 1 July 2007 to 31 December 2007:		1,272 (1,159)
		113

	Results since acquisition
	$’000
Operating results of Southernland included in the Consolidated Income Statement of Imdex Limited from 1
July 2007 to 31 December 2007:
Revenue	1,272
Total expenses	(1,159)
Profit after tax for the period	113

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

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

(iii) The Consolidated Cash Flow Statement for the half year ended 31 December 2007 records the payment for the acquisition of Southernland as $1.4 million being the total consideration of $2.8 million above less $1.4 million paid in shares.

Page 16 of 21

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

5. Acquisitions (Continued)

(d) Acquisition of entity - Reflex Holdings AB

With effect from 1 August 2006, Imdex Sweden AB, a newly incorporated, wholly owned subsidiary of Imdex Limited, acquired 100% of the issued share capital of Reflex Holding AB, a company incorporated in Sweden. Reflex are leading developers and suppliers of borehole survey equipment to the exploration, mining and construction industries globally. At the General Meeting of Shareholders held on 8 August 2006, the shareholders of Imdex Limited approved this acquisition and the associated issue of the convertible note. The numbers presented below have been accounted for using the acquisition method of accounting.

Details of the assets, liabilities and goodwill:		Book value	Fair value	Fair value on acquisition
			adjustments
	Notes	$’000	$’000	$’000
Trade and other receivables		3,840	(33)	3,807
Inventory		1,511	-	1,511
Deferred tax assets / (liabilities)	(i)	405	(3,174)	(2,769)
Property, plant and equipment		1,566	-	1,566
Goodwill		670	(670)	-
Identifiable intangibles	(i)	-	11,335	11,335
Trade and other payables		(4,966)	487	(4,479)
Fair value of net identifiable assets acquired		3,026	7,945	10,971
Goodwill on acquisition	(ii)			14,623
Total purchase consideration				25,594
Total purchase consideration comprises
Consideration in cash and cash equivalents				2,884
Less cash and cash equivalents acquired				(111)
Convertible note raised				10,400
Bank loan raised				9,955
Deferred vendor finance - due and paid on 31 Jan 2007				2,000
Direct costs relating to the acquisition				466
	(iii)			25,594
				Results since acquisition
				$’000
Operating results of the Reflex consolidated group included in the	Consolidated Income Statement of Imdex
Limited from acquisition on 1 August 2006 to 31 December 2006:
Revenue				6,870
Total expenses				(5,422)
Profit after tax for the period	(iv)			1,448

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

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

(iii) The Consolidated Cash Flow Statement for the half year ended 31 December 2006 records the payment for the acquisition of Reflex as $13.0 million being the total consideration of $25.6 million above less the $2.0 million deferrred consideration, $10.4 million convertible note and $0.2 million of costs paid in the prior period.

(iv) Had the acquisition of Reflex been effected on 1 July 2006, the beginning of the prior half year, the Reflex financial results included in the Imdex consolidated results would have been revenue of approximately $8.2 million and profit of approximately $1.7 million. The results of Reflex are included in the Drilling Products & Services segment. The Board considers these 'pro-forma' numbers to represent an approximate measure of the performance of the combined group on an annualised basis and to provide a reference point for comparison in future periods.

Page 17 of 21

IMDEX LIMITED

and its controlled entities NOTES TO THE FINANCIAL REPORT 5. Acquisitions (Continued)

(e) Acquisition of entity - Chardec Technology Ltd (previously Chardec Consultants Ltd)

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

Details of the assets, liabilities and goodwill:		Book value		Fair value	Fair value on acquisition
				adjustments
	Notes	$’000		$’000	$’000
Trade and other receivables		2,111		-	2,111
Inventory		273		-	273
Deferred tax assets / (liabilities)		3		(3,207)	(3,204)
Identifiable intangibles	(i)		-	10,690	10,690
Trade and other payables		(2,456)		-	(2,456)
Fair value of net identifiable assets acquired		(69)		7,483	7,414
Goodwill on acquisition	(ii)				8,319
Total purchase consideration					15,733
Total purchase consideration comprises
Consideration in cash and cash equivalents					6,203
Less cash and cash equivalents acquired					(175)
Direct costs relating to the acquisition					324
Deferred vendor finance	(iv)				9,381
	(iii)				15,733
					Results since acquisition
					$’000
Operating results of Chardec included in the Consolidated Income Statement		of Imdex Limited		from
acquisition on 1 August 2006 to 31 December 2006:
Revenue from the sale of goods					2,384
Total expenses					(1,356)
Profit after tax for the period	(v)				1,028

(i) Technology based assets of $10.3 million comprise intellectual property and technical expertise within the business at the time of acquisition. Contract based assets of $0.4 million represent the value of the 5 year employment contract signed with Richard Parfitt, the vendor and now employee of Chardec. Deferred tax of $3.2 million was raised on these balances. These intangibles have been valued by independent valuation professionals using the multi period excess earnings model. Data inputs into the model were derived from internal management budgets. Technology based intangible assets are being amortised over their estimated useful life of 7 years and contract based intangibles over the 5 year life of the contract.

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

(iii) The Consolidated Cash Flow Statement shows payment for this acquisition of $5.1 million being the first deferred payment per (iv) below. In the prior half year $6.3 million was paid being the total consideration of $15.7 million less deferred amounts of $9.4 million.

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

(v) Had the acquisition of Chardec been effected on 1 July 2006, the beginning of the prior half year, the Chardec financial results included in the Imdex consolidated results would have been revenue of approximately $2.9 million and profit of approximately $1.2 million. The results of Chardec are included in the Drilling Products & Services segment. The directors of the Group consider these 'pro-forma' numbers to represent an approximate measure of the performance of the combined group on an annualised basis and to provide a reference point for comparison in future periods.

Page 18 of 21

IMDEX LIMITED

and its controlled entities

NOTES TO THE FINANCIAL REPORT

6. Segment Information

Segment revenues and results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise interest-bearing loans, borrowings and expenses, and corporate assets and expenses.

The Consolidated Entity comprises the following main business segments, based on the Consolidated Entity's management reporting system:

Drilling fluids and chemicals: Manufacture and supply of drilling fluids and chemicals to the mining, mineral exploration, oil and gas and water well drilling industries; and

Drilling products and services: Down hole surveying, geophysical logging and directional drilling; down hole motors, cameras and drilling products (Surtron was previously a constituent entity of this business segment).

(a) Segment Revenues

	Half Year 31 Dec 07 Half Year 31 Dec 06 Half Year 31 Dec 07 Half Year 31 Dec 06 Half Year 31 Dec 07 Half Year 31 Dec 06 $'000 $'000 $'000 $'000 $'000 $'000 External revenue Inter-segment Other	Half Year 31 Dec 07 Half Year 31 Dec 06 $'000 $'000 Total
Drilling fluids and chemicals 42,302 29,073 - - - - Drilling products and services 26,837 16,857 - - - - Total of all segments 69,139 45,930 - - - - Eliminations Unallocated Total Revenue - all operations (b) Segment Results Drilling fluids and chemicals Drilling products and services Total of all segments Eliminations Unallocated Profit before income tax expense Income tax expense Profit attributable to minority interest Profit attributable to ordinary equity holders of Imdex Limited Discontinued operation - Surtron (note 7) Profit for the year - all operations Total revenue - continuing operations Profit for the year - continuing operations Discontinued operation - Surtron (note 7)	42,302 29,073 - - - - 26,837 16,857 - - - -	42,302 29,073 26,837 16,857
	69,139 45,930 - - - -	69,139 45,930
		- - 1,066 617
		70,205 46,547
		6,584 6,594
		76,789 53,141
		7,639 4,497 10,521 4,959
		18,160 9,456 - - (1,243) (1,944)
		16,917 7,512 (5,023) (2,388)
		11,894 5,124
		10,123 862
		22,017 5,986
		(52) -
		21,965 5,986

Page 19 of 21

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

7. Discontinued Operations

On 30 August 2007, Imdex Limited initiated an active program to dispose of the Surtron business division consisting of the following entities:

• Surtron Technologies Pty Ltd;

• Surtron Technologies UK Ltd; and

• Surtron Technologies US Inc.

The sale was part of the Consolidated Entity’s strategy to focus on its core business as a global provider of “drilling products and services”. As announced to the Australian Stock Exchange on 5 November 2007, Imdex Limited entered into a definitive agreement for the sale of Surtron with the sale being completed effective 1 November 2007. Financial information relating to the discontinued operation for the period to the date of disposal is set out below. Further information is set out in Note 6 – Segment Information. As the sale proceeds exceeded the book value of the related assets, no impairment losses were recognised.

Profit from discontinued operations Revenue Expenses Profit before income tax Income tax expense Profit after income tax of discontinued operations Gain on sale of the entities before income tax Income tax expense Gain on sale of the entities after income tax Profit from discontinued operations Cash flows from discontinued operations Net cash (outflow)/inflow from ordinary activities Net cash inflow/(outflow) from investing activities (including the proceeds from the sale of the entities) Net cash inflow/(outflow) from financing The assets and liabilities of Surtron at the date of disposal were as follows: Carrying amounts of assets and liabilities Cash and cash equivalents Trade and other debtors Inventories Deferred tax asset Property, plant and equipment Total assets Intercompany balances Trade and other creditors Hire purchase liabilities Employee entitlements Total liabilities Net assets	4 months ended Half Year Ended 31 Oct 2007 31 Dec 2006 $’000 $’000 6,584 6,594 (5,376) (5,481) Consolidated
	1,208 1,113 (207) (251)
	1,001 862
	11,950 - (2,828) -
	9,122 -
	10,123 862
	(1,737) 2,061 16,652 (657) 1,121 (570)
	16,036 834
	Consolidated 31 Oct 2007 $’000 1,873 4,382 306 221 6,528 13,310 (2,612) (2,590) (2,300) (686) (8,188) 5,122

Page 20 of 21

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

7. Discontinued Operations (continued)

7. Discontinued Operations (continued)
Consideration received: Cash received on settlement Cash to be received within 120 days of settlement Total disposal consideration	31 Oct 2007 31 Dec 2006 $’000 $’000 16,652 - 3,350 -
	20,002 -
Carrying amount of net assets sold (net of intercompany balances) Costs of disposal Gain/(loss) on sale before income tax Income tax expense Gain/(loss) on sale after income tax	(7,734) - (318) -
	11,950 -
	(2,828) -
	9,122 -

The cash flow statement shows cash received from the sale of Surtron as $14.8 million being cash received of $16.7 million net of cash balances sold of $1.9 million.

8. Contingent Liabilities and Contingent Assets

Notes Contingent Liabilities Rental bond (i)	Half Year Ended Half Year Ended 31 Dec 2007 31 Dec 2006 $’000 $’000 100 100 Consolidated
	100 100

(i) Comprise bank guarantees supporting the extension of credit or the performance of the Consolidated Entity in respect of its operations. The Directors are not aware of any circumstance or information which would lead them to believe that these liabilities will crystallise. Consequently no provisions have been made in the Financial Report in respect of these matters. No material losses are expected to arise in respect of these guarantees.

9. Subsequent Events

Effective 1 January 2008 Imdex Limited acquired 100% of the issued share capital of German based System Entwicklungs GmbH (SEG) for $13.8 million. These payments were funded by way of operating cash flow and a Westpac facility of $7 million. SEG is a developer, manufacturer and distributor of technologically advanced down hole tools, specialising in the oil and gas market. Additional disclosures with respect to this acquisition are impractical at this stage as the acquisition accounting is still being finalised.

Subsequent to the half year end the Directors declared a 1.75 cent per share fully franked dividend with an entitlement date of 7 March 2008 and a payment date of 25 March 2008. The effect of this dividend has not yet been reflected in this financial report.

On 15 February 2008 the Company announced the signing of a Protocol of Intentions to acquire the remaining 25% of the issued share capital of Suay Energy Services LLP no later than 30 June 2008. Imdex Limited will at that time hold 100% of the issued share capital of Suay Energy Services LLP. The purchase price comprises a $0.5 million cash payment and the issue of 200,000 fully paid ordinary shares in Imdex Limited at $2.50 per share. The cash and share consideration will be paid to the vendor no later than 30 June 2008.

Page 21 of 21