IMDEX LIMITED — Interim / Quarterly Report 2009

Feb 15, 2009

Imdex Limited FY09 Half Year Results 16 February 2009

Bernie Ridgeway – Managing Director Paul Evans – Chief Financial Officer

Presentation overview

• Overview

• FY09 Half Year Results

• Operational review

• Outlook

• Mining & Mineral exploration

• Oil & Gas

• What this means for Imdex

Overview Bernie Ridgeway Managing Director

Overview – financial

• Revenue from continuing operations up 16% to $81.4m (1H08 - $70.2m)

• EBITA from continuing operations up 1% to $20.0m (1H08 - $19.8m)

� NPAT before non-operational items down 15% to $10.1m (1H08 - $11.9m)

• Cash flow from operations up 109% to $6.6m (1H08 - $3.2m)

• Low gearing at 22% (Jun 08 - 17%) with EBITA interest cover of 30x

• Focus on cost reductions & increased efficiencies

• Rolled bank facilities out to 2014

• Interim fully franked dividend of 1.00 cent (1H08 - 1.75 cents)

Overview – operational

Drilling Fluids & Chemicals (DFC) Division

• Acquisition of Wildcat Chemicals – manufactures oil & gas chemicals

• Commissioning of polymer plant at Samchem, South Africa

• Successful trials of solids control equipment for diamond drillers

• Down Hole Instrumentation (DHI) Division

• Segmentation of brands (Reflex – Mining, Flexit – Oil & Gas)

• Further development of oil & gas down hole instrumentation

• Successful trialling of new core orientation tool

• Further strengthening of management team, particularly oil & gas

• Decision to relocate mining DHI manufacturing to Australia

Growth in revenue and EBITA

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Normalised Revenue by Division Normalised EBITA
($m) ($m)
� 16%
90 25 � 1%
80.3
80 19.8 20.0
69.1 20
70
60
15
50 45.9
40 10.1
10
30
23.1
17.4
20
5
3.0
10
1.4
0
0
1H05 1H06 1H07 1H08 1H09
1H05 1H06 1H07 1H08 1H09
Fluids and Chemicals Instrumentation Minerals Processing
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Normalised revenue excludes other income and discontinued operations

Normalised EBITA excludes discontinued operations and non-operational items

Actively managing the market downturn

• Rolled bank facilities out to 2014

• Reviewing all internal procedures across control margins, inventory, debtors and expenses

• Deferred Dec 08 salary reviews until Jun 09

• Implemented redundancies of 13% of global work force without impacting growth plans

• Relocating UK based manufacturing to Australia to obtain efficiencies

• Continuing to invest in R&D

FY09 Half Year Results

Paul Evans Chief Financial Officer

Profit & loss

	Profit & loss
			Half Year Ended	Half Year Ended
			31 Dec 2008	31 Dec 2007
			$’000	$’000
	Revenue from continuing operations		81,356	70,205
	Revenue from discontinuingoperations		-	6,584
	Total Revenue incl Interest Income		81,356	76,789
		Change in percentage - Total Revenue	6%
	Operating Profit before Interest, Tax, Depreciation and Amortisation		21,830	21,222
	Depreciation		(1,808)	(1,433)
	Earnings before Interest, Tax & Amortisation(EBITA)		20,022	19,789
	EBITA margin		25%	26%
		Change in percentage - EBITA margin	(1%)
	Amortisation		(3,581)	(2,547)
	Net interest expense		(659)	(325)
	Income tax expense		(5,716)	(5,023)
	Operating Profit after Tax from continuing operations		10,066	11,894
		Change in percentage	(15%)
	Net trading result of Surtron after tax		-	1,001
	Non-operational items
	Foreign exchange gain on the revaluation	of SGE loan	2,120	-
	Profit on sale of Surtron business		-	11,950
	Tax effect thereon		(636)	(2,828)
	Net Profit after tax for the Half Year		11,550	22,017
		Change in percentage	(48%)

Strong balance sheet

		December 08	June 08	�Healthy liquidity &
		$000’s	$000’s	gearing ratios
	Cash (net of overdraft)	4,769	13,276
	Receivables	30,781	32,079	�Low capital intensity
	Inventory Investment in SGE	33,132 20,615	21,716 17,508	�Bank debt down $2.1m
	Property, plant & equipment	11,269	7,140	from Jun 08 to Dec 08
	Goodwill & intangible assets	89,776	79,915
	Other assets	1,526	1,429	�$8.5m Flexit liability
	Total Assets Payables Commercial bills Bank loan	191,868 25,529 16,000 12,017	173,063 25,314 17,000 13,148	extinguished – 10m shares; potential cash top up deferred to 2012
	Vendor finance – Flexit Vendor finance – Chardec	8,500 2,403	- 5,404	�SGE
	Provisions / Deferred tax Total Equity	7,324 120,095	6,554 105,643	�Investment $4.5m
				�Secured $16.1m
	Quick ratio (CA – Inventory)/CL 1.24 Current ratio CA/CL 1.91		1.53 2.05	receivable

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|||||
|---|---|---|---|
|Deferred|
|Low gearing|Composition of Debt|Payment (ITUK)|
|31 Dec 08|$2.4m (6%)|
|Dec 08|Jun 08|Comm Bills|
|Deferred|$10.0m (25%)|
|Net Cash ($000’s)|4,769|13,276|Payment|
|(Flexit)|
|Debt ($000’s)|38,920|35,552|$8.5m (22%)|
|Equity ($000’s)|120,095|105,643|
|Net Debt to Equity|22%|17%|
|Bank Loan|
|EBITA / Interest Cover|30 times|61 times|Comm Bills|
|$12m (31%)|
|$6.0m (16%)|
|Nil interest rate|
|�|
|Gearing drops to 18% post Flexit variation|Floating interest rate|
|Capped interest rate|
|�|

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• – –

• Total debt Dec 08 $38.9m (16 Feb 09 $30.4m)

• Cash flow from operations 1H09 $6.6m (1H08 $3.2m)

• Low interest rate exposures

• Interest cover : EBITA remains very high at 30x

Operational review Bernie Ridgeway Managing Director

Imdex’s business

Drilling Fluids & Chemicals

• •Consumable item

Key Markets

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Mining & Mineral Exploration
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•Keep drill holes open and lubricate moving parts while Sell removing cuttings to the surface

• •Environmental focus

• •Manufacture & supply

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Oil & Gas
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Down Hole Instrumentation
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• Core orientation

• Survey tools Rent/

• Magnetic and non-magnetic

• World class technology

• Rental model

• Manufacture & supply

Other markets

• Coal Bed Methane (CMB)

• Water well

• Horizontal directional drilling / Civil

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Global Reach
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Drilling Fluids & Chemicals (DFC)

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Revenue
($m)
� 19% �
60 3% acquisition + 16% organic = 19% growth
50.5
�
50
Strong organic growth to Nov 08
42.3
40 �
Decline in world markets since Nov 08
29.1
30
�
Continued to support global alliances
20 18.4
�
10.5 Polymer plant commissioned at Samchem,
10 Johannesburg
0
1H05 1H06 1H07 1H08 1H09 �
Wildcat (acquired 1 Sept 08), positive
DHI contribution
37%
�
DFC Australian Drilling Specialties (ADS)
63%
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• 3% acquisition + 16% organic = 19% growth

• Australian Drilling Specialties (ADS) acquisition terminated

1H09 Divisional Revenue Split

DFC growth initiatives 2H09 & beyond

• Continued focus on global alliances

• Manufacturing plant commissioned in Chile, Jan 09

� Expansion in under penetrated geographic markets

• Canada

• Latin America

• Further expansion in niche oil & gas markets & coal bed methane

• Successful trials of solids control units (rentals)

Down Hole Instrumentation (DHI)

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Revenue ($m)
35 � 11%
29.8
30
26.8 �
6% acquisition + 5% organic = 11% growth
25
�
Growth excludes Surtron
20
16.9
�
Instrument rentals peaked in Jul 08
15
�
10 Dec 08 low point with increases in Jan 09
4.8
�
5 3.3 Rental model proved resilient
0 �
Continued to support global alliances
1H05 1H06 1H07 1H08 1H09
DHI
37%
DFC
63%
1H09 Divisional Revenue Split
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DHI growth initiatives 2H09 & beyond

• Continued focus on global alliances

� Further expansion into oil & gas market globally – onshore & offshore

• Market new/improved instruments

• Continued development of oil & gas instruments

• Focus on rental model

• Market segmentation of brands:

• Reflex – mining & mineral exploration

• Flexit – oil & gas

• Internal restructure to move mining DHI manufacturing to Australia

Outlook Mining & Mineral exploration Bernie Ridgeway Managing Director

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Few discoveries support ongoing exploration
12 16
11
14
10
9 12
8
10
7
6 8
5
6
4
3 4
2
2
1
0 0
(US$ Bn)
Number of Discoveries
Worldwide Exploration Spend
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
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Source: Metals Economics Group & UBS

� 1 new world class discovery in 8 years

• Higher costs, deeper & more complicated ore bodies

• Longer to bring into production

• Supply issues unaddressed

• May lead to a cyclical misalignment in supply/demand

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Current downturn likely to be higher
tha
15 n previous peak 3
Worldwide Mineral Exploration Expenditure
12 2.5
Uranium Exploration
9 Nonferrous Exploration 2
Relative Copper Price
Relative Gold Price
6 1.5
3 1
0 0.5
89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Source: Metals Economics Group – review of exploration strategies 25 Nov 08
(US$Billion)
Relative Gold and Copper Prices (1989=1)
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• 2009 expenditure will be lower than 2008

• Likely to be higher than top of previous peak

• Principal drivers – gold, copper & uranium

Outlook Oil & Gas Bernie Ridgeway Managing Director

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Growth in global exploration spend
30 30%
Exploration spend as a %
25 of total E&P spend 25%
20 20%
15 15% Oil & Gas Exploration Spend
Top 25 IOC exploration spend Source: SEB Enskilda 2007
10 10%
(excluding national oil
companies)
5 5%
0 0%
�
Significant uplift in spend over past 4 years failed to arrest reserve decline
$Bn
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007E
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• 2007 worldwide exploration spend was ~ US $332 billion

• Currently, significant reductions in exploration spend due to global financial crisis

• Post this crisis, substantial increases in spend due to long term supply / demand imbalance

• “Easy” oil gone - complex exploration needs sophisticated DHI technology

• Imdex supplies this technology.

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Significant exploration spend required
ove
120 r the longer term
100 Newbuild Drilling Rigs
Oil Price
80
60
20 year
underinvestment
40
Source: Douglas
Westwood Global Oil
20
and Gas Briefing 28
Oct 08
0
1971 1975 1979 1983 1987 1991 1995 1999 2003 2007
�
Two decades of low oil prices resulted in underinvestment
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• Ageing drilling and production base

• Oil & gas industry needs to spend $10 trillion by 2030 (Onshore & offshore)

Outlook What this means for Imdex Bernie Ridgeway Managing Director

Robust business model & strategy

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Medium Term Objective
Past FY 08 (3-5 years)
� Greater penetration into
9%
Early Stage 1% oil & gas markets for both
27%
Minerals DFC & DHI
49% 50%
Late StageMinerals 64% � Minerals exploration:
majority of Imdex
Oil & Gas business derived from
Management’s best estimate Management’s best estimate late stage
� Move away from Services
Fluids 19% to reduce fixed costs,
39% capital investment and
50%
Downhole 58% high labour component
31%
Instrumentation
Services 3% � Margin benefit from
growing DHI
20% � Growing DHI rental
Sell business
Rent
80%
100%
¹ Based on actual or anticipated EBITA contribution
2 Based on actual or anticipated Revenue contribution
exposure¹
End-market
1
Profit
Divisional
2
mix
Rent / Sell
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Resilient business with long term growth opportunities

• Strategy is solid. Built around medium to long term objectives

• Rental model success

• Delivers sustainable income

• Rental fleet fully paid for

• Global business

• Alliances with world’s largest drilling companies – DFC & DHI

• Attractive end markets with supply / demand balance likely to recur

• Under penetrated markets

• Strong balance sheet with low gearing

• Experienced & industry respected management team

Growth opportunities

• Market penetration

• Oil & gas – DHI and DFC

• Coal bed methane

• Underexploited geographic markets – Canada, Caspian Sea & Latin America

• Product development

• Down hole instrumentation for oil & gas industry

• Solids control equipment for global diamond drilling industry

• Operational efficiencies – simplification of DHI manufacture & supply

Appendices

Statutory profit and loss statement

Continuing operations Sale of goods and operating lease rental Interest income and other operating revenue Total revenue Other income Raw materials and consumables used Employee benefit expense Depreciation expense Amortisation expense Finance costs Other expenses Profit before tax Income tax expense Profit from continuing operations Profit from discontinued operations Profit for the period Attributable to: Equity holders of the parent Minority interest

Half Year Ended Half Year Ended 31 Dec 2008 31 Dec 2007 $’000 $’000 80,274 69,139 1,082 1,066 81,356 70,205 4,408 95 (33,956) (28,449) (13,506) (9,436) (1,808) (1,433) (3,581) (2,547) (1,741) (1,331) (13,270) (10,187) 17,902 16,917 (6,352) (5,023) 11,550 11,894 - 10,123 11,550 22,017 11,550 21,965 - 52

Statutory Balance sheet 31	Dec 2008	30 Jun 2008
	$’000	$’000
Current Assets
Cash and Cash Equivalents	8,188	13,276
Trade and Other Receivables	30,781	32,079
Inventories	33,132	21,716
Other Financial Assets	16,115	13,237
Other	1,526	1,200
	89,742	81,508
Non-Current Assets classified as held for resale	4,500	4,500
Total Current Assets	94,242	86,008
Non Current Assets
Property, Plant and Equipment	11,269	7,140
Goodwill	64,893	52,626
Other Intangible Assets	24,883	27,289
Total Non Current Assets	101,045	87,055
Total Assets	195,287	173,063
Current Liabilities
Trade and Other Payables	16,163	16,522
Borrowings	11,582	13,016
Current Tax Payables	9,366	8,792
Provisions	1,218	972
Other Current Liabilities	10,903	2,687
Total Current Liabilities	49,232	41,989
Non Current Liabilities
Borrowings	19,854	17,132
Deferred Tax Liabilities	5,528	5,024
Provisions	578	558
Other Non Current Liabilities	-	2,717
Total Non Current Liabilities	25,960	25,431
Total Liabilities	75,192	67,420
Net Assets	120,095	105,643
Equity
Contributed Capital	65,260	64,883
Foreign Currency Translation Reserve	954	(4,863)
Employee Equity-Settled Benefits Reserve	3,416	2,573
Retained Profits	50,465	43,050
Total Equity	120,095	105,643
			30

Statutory cash flow statement Half Year Ended Half Year Ended	Statutory cash flow statement Half Year Ended Half Year Ended	Statutory cash flow statement Half Year Ended Half Year Ended
	31 Dec 2008	31 Dec 2007
	$’000	$’000
Cash Flows From Operating Activities
Receipts from customers	88,514	77,410
Payments to suppliers and employees	(75,078)	(64,188)
Interest and other costs of finance paid	(1,512)	(1,273)
Income tax paid	(5,301)	(8,774)
Net cash provided by Operating Activities	6,623	3,175
Cash Flows From Investing Activities
Interest and bill discounts received	96	201
Payment for property, plant and equipment	(4,044)	(4,114)
Proceeds from sale of Surtron net of cash disposed	-	14,778
Payment for the acquisition of the shares of Poly-Drill	-	(899)
Payment for the acquisition of the shares of Suay	(500)	(232)
Payment for the acquisition of the shares of Southernland	-	(1,446)
Payment for the acquisition of the shares of Imdex Technology (UK)	(3,106)	(5,088)
Payment for the acquisition of the shares of Wildcat	(1,901)	-
Deferred acquisition payments	-	(28)
Amounts advanced to Sino Gas & Energy Ltd	-	(86)
Net cash (used in)/provided by Investing Activities	(9,455)	3,086
Cash Flows From Financing Activities
Cash received on exercise of options	91	325
Dividend paid	(4,135)	(2,723)
Convertible note interest paid	-	(464)
Hire purchase and lease payments	-	(575)
Proceeds from hire purchase financing	-	805
Proceeds from borrowings	-	5,000
Repayment of borrowings	(3,061)	(7,261)
Net cash used in Financing Activities	(7,105)	(4,893)
Net (decrease) / increase in Cash and Cash Equivalents Held	(9,937)	1,368
Cash and Cash Equivalents At The Beginning Of The Period	13,276	15,271
Effects of exchange rate changes on the balance of cash and cash
equivalents held in foreign currencies	1,430	(25)
Cash and Cash Equivalents At The End Of The Period	4,769	16,614
			31

Disclaimer

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

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