IMDEX LIMITED — Interim / Quarterly Report 2009

Feb 15, 2009

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16 February 2009

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

BY ELECTRONIC LODGEMENT

Dear Sirs

RESULTS ANNOUNCEMENT, APPENDIX 4D AND FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2008

Please find attached a statement by the Chairman of Imdex Limited regarding the Group’s financial results and operating performance for the half year ended 31 December 2008.

The Appendix 4D and Financial Report for the half year ended 31 December 2008 follow this announcement.

Yours faithfully

Imdex Limited

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Paul Evans 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 Western Australia 6872 Phone +61 8 9481 5777 Fax +61 8 9481 6527 E-mail imdex@imdexlimited.com.au

Quality Endorsed Company ISO 9002 LIC: QEC 2807 Standards Australia

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16 February 2009

IMDEX FIRST HALF RESULTS

Imdex Limited (ASX:IMD), the Perth based global supplier of drilling fluids and leading down hole instrumentation, today announced its results for the half year ended 31 December 2008:

• Revenue from continuing operations (excluding interest revenue) up 16% to $80.3 million (1H08 – $69.1 million);

• EBITA from continuing operations up 1% to $20.0 million (1H08 – $19.8 million);

• Net profit after tax from continuing operations down 15% to $10.1 million (1H08 – $11.9 million);

• Cash flow from operations up 109% to $6.6 million (1H08 – $3.2 million);

• Gearing (net debt / net debt + equity) at 22% (30 June 2008 – 17%);

• Net assets up 19% to $120.1 million (30 June 2008 – $100.5 million); and

• Interim dividend declared of 1.0 cent per share fully franked (1H08 – 1.75 cents per share fully franked).

HIGHLIGHTS

Key highlights contributing to the overall financial result included:

• Commissioning of a PHPA manufacturing plant in Samchem, South Africa (PHPA is an acronym for Partial Hydrolytic Polyacrylamide, a drilling mud additive);

• The acquisition of Brisbane based Wildcat Chemicals Australia Pty Ltd (Wildcat) for $1.9 million, effective 1 September 2008;

• Streamlining of the manufacture and supply chain in the Down Hole Instrumentation (DHI) division to improve operational efficiencies and reduce costs;

• Repositioning of DHI brands

• Reflex – targeting mining and mineral exploration markets; and

• Flexit – targeting oil & gas markets.

Imdex’s Managing Director, Mr. Bernie Ridgeway, said the company was well positioned to manage the current downturn, with steady cash flows and a clear business plan in place.

“The first half result again reflected the success of the Group’s strategy of building a solid global business servicing the mining and oil and gas industries.

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“Our decision to pay an interim dividend of 1 cent per share is a prudent measure to manage balance sheet strength and maintain the company’s low gearing levels during this period of uncertainty.

“Whilst conditions are challenging, the underlying fundamentals of the markets Imdex operates in provide attractive medium to long term growth opportunities. Imdex has a number of growth initiatives in various stages of development that are expected to yield benefits in FY10 and beyond. These include expansion into under-penetrated mining markets and further expansion in oil and gas markets.

“Imdex is a strong and resilient business. It has global alliances with a number of the world’s largest drilling companies, and a track record of executing a consistent operational and financial strategy,” Mr Ridgeway said.

Drilling Fluids and Chemicals Division

The Drilling Fluids and Chemicals (DFC) Division manufactures and sells drilling fluids and chemicals to the mining, oil and gas, water well, civil and horizontal directional drilling industries globally. Fluids and chemicals are required in the drilling process primarily to cool and lubricate the drill bit, keep the hole open and to return cuttings to the surface.

The DFC Division experienced strong growth over the 1H09 principally due to organic expansion. Revenue increased 19% to $50.5 million (1H08 – $42.3 million) and operational EBITA increased 4% to $7.9 million (1H08 – $7.6 million).

During the last six months the DFC division experienced strong growth in Australia and the Asia Pacific region with good contributions from Africa, Latin America and Canada. The Caspian Sea region, which is primarily oil and gas focused, continued to expand and finished the half strongly.

Demand in the exploration and mining business peaked in October, softened in November and reduced in December 2008. Lower demand is likely to prevail in the second half of FY09.

The DFC Division has a number of initiatives in various stages of development in both mining and niche oil and gas markets.

Down Hole Instrumentation Division

The Down Hole Instrumentation (DHI) Division uses proprietary technology to manufacture and distribute a range of advanced down hole instrumentation used primarily in surveying drill holes and providing core orientation data. These instruments are rented to customers in preference to being sold.

Revenue for the DHI division (excluding trading result from Surtron in the prior period) increased 11% to $29.8 million (1H08 – $26.8 million), whilst EBITA (excluding trading result from Surtron in the prior period) decreased 4% to $12.5 million (1H08 – $13.1 million). The EBITA decline was a result of increased capital expenditure into the support structure for the oil & gas segment which is yet to realise the full benefit of revenue gains.

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The DHI division has also begun relocating much of the tool manufacturing activities to Perth, and this initiative is expected to generate cost savings and efficiencies.

Products within the DHI Division were repositioned into two distinct brands consisting of Reflex, which focuses on the mining and mineral exploration markets and Flexit, which has been positioned to capture the growing oil and gas market with a suite of down hole survey and steering instruments.

FLEXIT AGREEMENT

On 20 February, 2007, Imdex announced the acquisition of Flexit AB (Flexit) for $22 million with $12 million cash to be paid on 1 May 2007 and the balance of $10 million to be satisfied by the allotment of 5 million fully paid Imdex ordinary shares at an issue price of $2 per share on 1 May, 2009. If the Imdex share price is less than $2 per share on 1 May, 2009, Imdex is to issue the 5 million shares at the then trading price plus an amount of cash required to bring the market value of the shares and cash paid at that time to $10 million. At 31 December 2008 we estimated this to be a cash payment $8.5 million.

Effective 13 February, 2009, Imdex reached an agreement with the previous owners of Flexit to vary the $10 million deferred consideration due 1 May 2009 by the issue of 10 million Imdex shares on 9 May 2009 at an issue price of $1.00 and to defer the cash ‘top up’ mechanism to May 2012.

Pursuant to the new agreement the ‘top up” mechanism only applies if the share price is less than $1 per share at May 2012 causing an additional cash payment at that time calculated as the difference between the $1 per share and the current then share price multiplied by the 10 million shares. Should the share price at any time exceed $1 prior to May 2012, this mechanism lapses and the potential liability ceases to exist.

This is a very good outcome for Imdex and highlights the continuing support of the business by Flexit’s prior owners.

COMPANY OUTLOOK

In the second half of FY09 Imdex will continue to focus on controllable factors such as:

• maintaining high customer service levels;

• supporting global alliances; and

• continuing expansion of the business.

The current market volatility makes it difficult to provide a view on the outlook for FY09 earnings and no guidance is provided at this time.

Despite the expected challenging economic conditions, Imdex is positioned to take advantage of a number of expansion opportunities that will be pursued in 2H09 and beyond that will yield benefits from FY10, including:

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• further penetration into the oil and gas market with a range of industry specific drilling fluids and chemicals and down hole instruments;

• capitalising its position in new or underexploited geographic markets, particularly in Latin America, Canada and the Caspian Sea Region; and

• commercialising solids control technology for the diamond drilling industry globally.

In light of the current global market, the Directors have determined to pay a fully franked interim dividend of 1 cent per share. The Directors will take the opportunity to review operating conditions and cash requirements of the business at the full year as it relates to dividend payments.

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Ian Burston Chairman

For further information, please contact:

Bernie Ridgeway, Managing Director Ian Burston, Chairman Paul Evans, Chief Financial Officer and Company Secretary Ph: +61 8 9481 5777 Email: imdex@imdexlimited.com

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Imdex Limited

Summary Financial Highlights for the Half Year Ended 31 December 2008 (Results Reviewed by Auditors)

		Consolidated
		Half Year Ended Half	Year Ended
		31 Dec 2008 31	Dec 2007
		$’000	$’000
Revenue from continuing operations		81,356	70,205
Revenue from discontinuing operations		-	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%)
Basic earnings per share (cents) - continuing operations		6.12 ¢	6.34 ¢
	Change in percentage	(3%)
Net Cash provided by Operating Activities		6,623	3,175
	Change in percentage	109%
Gearing (Net Debt / Net Debt + Equity)		22%	17%
	Change in percentage	5%
Net Assets		120,095	100,538
	Change in percentage	19%
Net Tangible Assets per Share		16.50 ¢	17.89 ¢
	Change in percentage	(8%)

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