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

ASX APPENDIX 4D AND INTERIM FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2008.

Please find attached Imdex Limited’s Appendix 4D and Interim Financial Report for the Half Year Ended 31 December 2008.

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 WA 6872 Phone +61 8 9481 5777 Fax +61 8 9481 5377 E-mail imdex@imdexlimited.com

R:\Financial Reports\Half Year Reports\2008\Half-Year Report 311208.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 2008

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 2008 Previous Corresponding Reporting Period: 31 December 2007

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 2008.

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 2008

Imdex Limited Results for Announcement to the Market

% Change Notes up / (down) Revenue from ordinary activities * (i) 6% Profit from ordinary activities after tax attributable to members (i) (48%) Net profit for the period attributable to members (i) (48%) Interim dividend (cents per share) (ii) Final dividend (cents per share) (iii) Net tangible assets per ordinary security (cents)	Half Year Ended Half Year Ended 31 Dec 2008 31 Dec 2007 $ 000's $ 000's 81,356 76,789 Consolidated
	11,550 21,965
	11,550 21,965
	1.00 1.75
	2.25 1.50
	16.50 17.89

• • includes revenue in the comparative period from discontinued operations (refer financial report note 7)

(i) The announcement made to ASX on 16 February 2009 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 2008.

(ii) The FY09 interim, fully franked dividend will be paid on 24 March 2009 (FY08: 25 March 2008). The record date for determining the entitlement of the interim dividend will be 6 March 2009 (FY08: 7 March 2008). There are no dividend reinvestment plans in operation in the current or prior period.

(iii) The FY08 final, fully franked dividend was paid on 31 October 2008 (FY07: 2 November 2007). The record date for determining the entitlement of the final dividend was 17 October 2008 (FY07: 15 October 2007). There were no dividend reinvestment plans in operation.

IMDEX LIMITED

and its controlled entities

DIRECTORS’ REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2008

In accordance with a resolution of the Directors of Imdex Limited, the Directors submit the balance sheet as at 31 December 2008, 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
	Half Year Ended	Half Year Ended
	31 Dec 2008	31 Dec 2007
	$’000	$’000
Revenue - continuing operations	81,356	70,205
Revenue-discontinued operations	-	6,584
Total Revenue	81,356	76,789
Profit for the half year (including minority interests)	11,550	22,017
Basic earnings per share - continuing operations	6.12 ¢	6.34 ¢

The Consolidated Entity’s profit before tax was $17.9 million for the Half Year ended 31 December 2008. This was 6% higher than the $16.9 million in the prior comparable period and was achieved on total revenue of $81.4 million ($76.8 million during the prior comparable period).

Earnings from total operations was 6.12 cents per share.

Further details on the operations and overall results are contained in the Financial Report and the announcement made to the ASX on 16 February 2009 by the Chairman of Imdex Limited regarding the Group’s financial results and operating performance for the Half Year ended 31 December 2008.

Page 1 of 23

IMDEX LIMITED

and its controlled entities

DIRECTORS’ REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2008

Interim Dividend

The Directors have declared a fully franked interim dividend of 1.00 cent per ordinary share (prior period: 1.75 cents per ordinary share), to be paid on 24 March 2009 for which the record date will be 6 March 2009.

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, 13 February 2009

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Ian F Burston Chairman

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and its controlled entities

IMDEX LIMITED

AUDITOR’S INDEPENDENCE DECLARATION

Page 3 of 23

and its controlled entities

IMDEX LIMITED

AUDITOR’S REVIEW REPORT

Page 4 of 23

and its controlled entities

IMDEX LIMITED

AUDITOR’S REVIEW REPORT

Page 5 of 23

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, 13 February 2009

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Ian F Burston Chairman

Page 6 of 23

IMDEX LIMITED

and its controlled entities

CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE HALF YEAR ENDED 31 DECEMBER 2008

Notes Continuing operations Sale of goods and operating lease rental Interest income and other operating revenue Total revenue Other income 2 Raw materials and consumables used Employee benefit expense Depreciation expense 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 period 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)	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
	6.12 6.34 5.99 6.11 6.12 11.75 5.99 11.33

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

Page 7 of 23

IMDEX LIMITED

and its controlled entities

CONDENSED CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2008

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

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

Page 8 of 23

IMDEX LIMITED

and its controlled entities

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2008

		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 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		1,750	-	-	-	-	-	1,750
Issue of shares as part
consideration for the acquisition of
Southernland		1,387	-	-	-	-	-	1,387
Tax effect on prior period share
issue costs		(25)	-	-	-	-	-	(25)
Issue of shares under staff option
plan		397	-	-	(72)	-	-	325
Balance at 31 December 2007		57,791	6,700	(2,040)	1,741	36,260	86	100,538
Balance at 1 July 2008		58,183	6,700	(4,863)	2,573	43,050	-	105,643
Exchange differences on
translation of foreign operations
after taxation		-	-	5,817	-	-	-	5,817
Net income recognised directly in equity		-	-	5,817	-	-	-	5,817
Profit for the period		-	-	-	-	11,550	-	11,550
Total recognised income and
expense for the period		-	-	-	-	11,550	-	11,550
Dividend paid	3	-	-	-	-	(4,135)	-	(4,135)
Share based payments		-	-	-	878	-	-	878
Issue of shares as part
consideration for the acquisition of
Suay	4	278	-	-	-	-	-	278
Tax effect on prior period share
issue costs	4	(27)	-	-	-	-	-	(27)
Issue of shares under staff option
plan	4	126	-	-	(35)	-	-	91
Balance at 31 December 2008		58,560	6,700	954	3,416	50,465	-	120,095

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

Page 9 of 23

IMDEX LIMITED

and its controlled entities

CONDENSED CONSOLIDATED CASH FLOW STATEMENT FOR THE HALF YEAR ENDED 31 DECEMBER 2008

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 Surtron net of cash disposed 7 Payment for the acquisition of the shares of Poly-Drill 5(d)(iii) Payment for the acquisition of the shares of Suay 5(c)(ii), 5(b)(iii) Payment for the acquisition of the shares of Southernland 5(e)(iii) Payment for the acquisition of the shares of Imdex Technology (UK) 5(f) Payment for the acquisition of the shares of Wildcat 5(a)(ii) Deferred acquisition payments Amounts advanced to Sino Gas & Energy Ltd Net cash (used in)/provided by 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 Financing Activities Net (decrease) / increase in Cash and Cash Equivalents Held Cash and Cash Equivalents At The Beginning Of The Period 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 2008 31 Dec 2007 $’000 $’000 88,514 77,410 (75,078) (64,188) (1,512) (1,273) (5,301) (8,774)
	6,623 3,175
	96 201 (4,044) (4,114) - 14,778 - (899) (500) (232) - (1,446) (3,106) (5,088) (1,901) - - (28) - (86)
	(9,455) 3,086
	91 325 (4,135) (2,723) - (464) - (575) - 805 - 5,000 (3,061) (7,261)
	(7,105) (4,893)
	(9,937) 1,368
	13,276 15,271 1,430 (25)
	4,769 16,614

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

Page 10 of 23

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 2008 annual financial report for the financial year ended 30 June 2008, other than as detailed below.

Adoption of new and revised Accounting Standards

In the current period, 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 2008. The adoption of these new and revised Standards and Interpretations has not resulted in any changes in the Group’s accounting policies or disclosures and has had a nil impact on the Group’s balance sheet, income statement, statement of cash flows and statement of changes in equity.

Page 11 of 23

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

2. Other Income and Other Expenses

2. Other Income and Other Expenses
Other Income Foreign exchange gain ^ Other Expenses Auditors and accounting fees Commissions Communication Consultancy fees Electricity 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 2008 31 Dec 2007 $’000 $’000 4,408 95
	673 424 964 856 501 418 1,193 1,509 77 40 908 363 60 57 391 311 429 266 3,013 2,074 1,406 1,084 495 297 2,363 1,755 797 733
	13,270 10,187

^ - includes gain of $2.1 million on revaluation of US Dollar loan to Sino Gas and Energy Ltd

3. Dividends

3. Dividends
		Half Year	Ended	Half Year	Ended
		31 Dec	2008	31 Dec	2007
	Notes	Cents per	Total	Cents per	Total
		share	$’000	share	$’000
Recognised amounts
Fully paid ordinary shares - final dividend franked to 30%	(i)	2.25	4,135	1.50	2,723
Unrecognised amounts
Fully paid ordinary shares - interim dividend franked to 30%	(ii)	1.00	1,838	1.75	3,208

(i) The final, fully franked dividend was paid on 31 October 2008. The record date for determining the entitlement to the interim dividend was 17 October 2008. There were no dividend reinvestment plans in operation.

(ii) The FY09 interim, fully franked dividend was declared on 13 February 2009 with an entitlement date of 6 March 2009. The financial effect of the dividend has not been recognised in the financial statements at 31 December 2008.

Adjusted franking account balance Impact on franking account of dividends not recognised	31 Dec 2008 $’000 12,338 $’000 16,860 31 Dec 2007 Half Year Ended Half Year Ended
	(788) (1,176)

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and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

4. Contributed Capital

4. Contributed Capital
Notes Issued and Paid Up Capital - Fully paid ordinary shares (i) Mandatory convertible capital (ii)	31 Dec 2008 30 Jun 2008 $’000 $’000 58,560 58,183 6,700 6,700
	65,260 64,883

(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.

	31 Dec	2008	30	Jun	2008
	Number	$'000	Number		$'000
Ordinary shares
Balance at beginning of the period	183,490,932	58,183	182,930,932		57,791
Issue of shares as part consideration for the acquisition of the 25%
minority interest in Suay Energy Services LLP (Note 5(b))	168,530	278		-	-
Tax effect of share issue costs	-	(27)		-	(88)
Issue of shares under staff option plan	139,332	126	560,000		480
Closing balance at end of the period	183,798,794	58,560	183,490,932		58,183

Issuances of other equity securities

There were no issues of equity securities in the current period.

In the half year period ended 30 June 2008, 4,575,000 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 $2,200,575. None of these options have been exercised. Further details are shown in the table below.

The weighted average fair value of the share options granted during the half year is nil (half year ended 30 June 2008: $0.42). 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
	Half Year Ended 30 Jun 08
Inputs into the model	Tranche 7
Number of options issued	4,575,000
Grant date share price ($)	1.785
Exercise price ($)	3.00
Expected volatility	50%
Option life (years)	5.00
Risk-free interest rate	6.18%
Dividend yield	1.96%

Page 13 of 23

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

5. Acquisitions

(a) Acquisition of entity - Wildcat Chemicals Australia Pty Ltd

With effect from 1 September 2008, Imdex Limited, acquired 100% of the issued share capital of Wildcat Chemicals Australia Pty Ltd (Wildcat), a company incorporated in Australia and operating out of premises north of Brisbane. Wildcat manufacture production and completion chemicals for the oil and gas industry. The numbers presented below have been accounted for using the acquisition method of accounting.

Details of the assets, liabilities and goodwill: Notes 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 Direct costs relating to the acquisition (ii) Total purchase consideration comprises	Book value Fair value adjustments $’000 $’000 427 - 393 - 266 - (685) -	Fair value on acquisition $’000 427 393 266 (685)
	401 -	401 1,500
		1,901
		1,843 - 58
		1,901

Revenue Total expenses Profit after tax for the period Operating results of Wildcat included in the Consolidated Income Statement of Imdex Limited from acquisition on 1 September 2008 to 31 December 2008:	Results since acquisition $’000 1,122 (1,043)
	79

(i) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire Wildcat. 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 Wildcat. 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 2008 records the payment for the acquisition of Wildcat as $1.9 million being the total consideration including on-costs that was paid in cash in the current half year.

(iii) Had the acquisition of Wildcat been effected on 1 July 2008, the beginning of the current half year, the Wildcat financial results included in the Imdex consolidated results would have been revenue of approximately $1.7 million and profit of approximately $0.1 million. The results of Wildcat are included in the Drilling Fluids and Chemicals 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 14 of 23

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

5. Acquisitions (Continued)

(b) Acquisition of 25% minority interest - Suay Energy

With effect from 30 June 2008 Imdex Limited acquired the remaining 25% of the issued share capital of Suay Energy Services LLP (Suay) from the minority shareholders. The original 75% of the issued share capital of Suay was purchased with effect from 1 July 2007, refer note 5(c) below. The numbers presented below have been accounted for using the acquisition method of accounting.

Details of the assets, liabilities and goodwill: Notes Cash and cash equivalents Trade and other receivables Inventory Property, plant and equipment Trade and other payables Fair value of net identifiable assets acquired 25% thereof Goodwill on acquisition (i) Total purchase consideration Consideration in cash and cash equivalents Issue of ordinary shares (ii) Direct costs relating to the acquisition (iii) Total purchase consideration comprises	Book value Fair value adjustments $’000 $’000 10 - 494 - 572 - 212 - (1,106) -	Fair value on acquisition $’000 10 494 572 212 (1,106)
	182 -	182
		46 761
		807
		500 278 29
		807

(i) Although Imdex Limited already controlled Suay, an additional goodwill amount became payable on the acquisition of the remaining 25% due to growth in the business and future prospects as well as a premium to obtain complete 100% control. 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 168,530 fully paid ordinary shares in Imdex Limited. These shares had a fair value of $1.65 per share, being the closing market price at 30 June 2008. These shares were issued on 1 July 2008 and are not subject to escrow. The issue of these shares is not required to be formally approved by shareholders as they fall below the 15% threshold level.

(iii) The Consolidated Cash Flow Statement for the half year ended 31 December 2008 records the payment for the acquisition of Suay as $0.5 million being the total consideration of $0.8 million above less $0.3 million settled in shares.

Page 15 of 23

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

5. Acquisitions (Continued)

(c) Acquisition of initial 75% of entity - Suay Energy Services

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.

Details of the assets, liabilities and goodwill: Book value Fair value adjustments Notes $’000 $’000 Trade and other receivables 123 - Inventory 317 - Property, plant and equipment 43 - Trade and other payables (420) - Fair value of net identifiable assets acquired (other than cash and cash equivalents) 63 - 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 Total purchase consideration comprises Operating results of Suay, before minority interests, included in the Consolidated Income Statement of Imdex Limited from acquisition on 1 July 2007 to 31 December 2007:	Book value Fair value adjustments $’000 $’000 123 - 317 - 43 - (420) -	Fair value on acquisition $’000 123 317 43 (420)
		63 505 (16)
		552
		473 79
		552
		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 $0.6 million above less $0.4 million paid in the prior period.

Page 16 of 23

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

5. Acquisitions (Continued)

(d) 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: Book value Fair value adjustments Notes $’000 $’000 Inventory 178 - Property, plant and equipment 150 - Trade and other payables (696) - Fair value of net identifiable assets acquired (368) - Goodwill on acquisition (i) Total purchase consideration Consideration in cash and cash equivalents Less: Cash and cash equivalents acquired Issue of ordinary shares (ii) Direct costs relating to the acquisition (iii) Revenue Total expenses Profit after tax for the period Total purchase consideration comprises Operating results of Poly-Drill included in the Consolidated Income Statement of Imdex Limited from acquisition on 1 July 2007 to 31 December 2007:	Book value Fair value adjustments $’000 $’000 178 - 150 - (696) -	Fair value on acquisition $’000 178 150 (696)
		(368) 3,369
		3,001
		1,849 (673) 1,750 75
		3,001
		Results since acquisition $’000 1,059 (880)
		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 period.

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and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

5. Acquisitions (Continued)

(e) 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: Book value Fair value adjustments Notes $’000 $’000 Trade and other receivables 538 - Inventory 273 - Property, plant and equipment 83 - Trade and other payables (474) - Fair value of net identifiable assets acquired 420 - Goodwill on acquisition (i) Total purchase consideration Consideration in cash and cash equivalents Less: Cash and cash equivalents acquired Issue of ordinary shares (ii) Direct costs relating to the acquisition (iii) Revenue Total expenses Profit after tax for the period Total purchase consideration comprises Operating results of Southernland included in the Consolidated Income Statement of Imdex Limited from 1 July 2007 to 31 December 2007:	Book value Fair value adjustments $’000 $’000 538 - 273 - 83 - (474) -	Fair value on acquisition $’000 538 273 83 (474)
		420 2,413
		2,833
		1,413 (87) 1,387 120
		2,833
		Results since acquisition $’000 1,272 (1,159)
		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 $1.92 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.

(f) Acquisition of entity - Imdex Technology UK Ltd (formerly Chardec Consultants Ltd)

On 31 July 2008 the second of three deferred acquisition payments, being GBP 1.1 million ($3.1 million), was paid. The first deferred acquisition payment of GBP 2.2 million ($5.1 million) was paid on 31 July 2007. The third and final payment of GBP 1 million is due on 31 July 2009.

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and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

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, oil & gas, mineral exploration, oil and gas and water well drilling industries; and

Down Hole Instrumentation: Manufacture and distribution, by way of rental and sale, of down hole survey tools, gyros, motors and cameras to the mining and oil & gas industries.

(a) Segment Revenues

	Half Year 31 Dec 08 Half Year 31 Dec 07 Half Year 31 Dec 08 Half Year 31 Dec 07 Half Year 31 Dec 08 Half Year 31 Dec 07 $'000 $'000 $'000 $'000 $'000 $'000 External revenue Inter-segment Other	Half Year 31 Dec 08 Half Year 31 Dec 07 $'000 $'000 Total
Drilling Fluids and Chemicals 50,506 42,302 - - - - Down Hole Instrumentation 29,768 26,837 - - - - Total of all segments 80,274 69,139 - - - - Eliminations Unallocated Total revenue - all operations (b) Segment Results Drilling Fluids and Chemicals Down Hole Instrumentation 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 period - all operations Total revenue - continuing operations Profit for the period - continuing operations Discontinued operation - Surtron (note 7)	50,506 42,302 - - - - 29,768 26,837 - - - -	50,506 42,302 29,768 26,837
	80,274 69,139 - - - -	80,274 69,139
		- - 1,082 1,066
		81,356 70,205
		- 6,584
		81,356 76,789
		7,925 7,639 8,952 10,521
		16,877 18,160 - - 1,025 (1,243)
		17,902 16,917 (6,352) (5,023)
		11,550 11,894
		- 10,123
		11,550 22,017
		- (52)
		11,550 21,965

^ - includes a gain of $2.1 million on the revaluation of loan to Sino Gas and Energy Ltd that is denominated in US Dollars

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and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

7. Discontinued Operations

Effective 31 October 2007, the Group disposed of 100% of its shares in Surtron Technologies Pty Ltd, Surtron Technologies UK Ltd and Surtron Technologies US Inc, collectively known as the Surtron business. The disposal was part of the Group's decision to focus its efforts on the core competencies of selling drilling fluids and selling and renting down hole instrumentation. The financial results of the Surtron business up to the date of disposal included in the Group results are summarised below.

Profit from discontinued operations Revenue Expenses Profit before income tax Income tax expense Profit after income tax of discontinued operations	Half Year Ended 31 Dec 2008 $’000 - -	Half Year Ended 31 Dec 2007 $’000 6,584 (5,376)
	- -	1,208 (207)
	-	1,001
Gain on sale of the entities before income tax Income tax expense Gain on sale of the entities after income tax	- -	11,950 (2,828)
	-	9,122
Profit from discontinued operations Cash flows from discontinued operations Net cash outflow from ordinary activities Net cash inflow from investing activities (including the proceeds from the sale of the entities) Net cash inflow from financing activities 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	-	10,123
	- - -	(1,737) 16,652 1,121
	-	16,036
		31 Oct 2007 $’000 1,874 4,381 306 221 6,528
		13,310
		(2,612) (2,590) (2,300) (686)
		(8,188)
		5,122

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and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

7. Discontinued Operations (continued)

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

The cash flow statement for the half year ended 31 December 2007 shows cash received from the sale of Surtron as $14.8 million, being cash received of $16.7 million less net cash balances sold of $1.9 million. The remaining $3.4 million purchase consideration was received in the six month period ending 30 June 2008.

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8. Contingent Liabilities and Contingent Assets

8. Contingent Liabilities and Contingent Assets
Contingent Liabilities	Half Year Ended Half Year Ended 31 Dec 2008 31 Dec 2007 $’000 $’000
Rental bond	- 100 - 100
Contingent Assets	- -

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and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

9. Borrowings

Notes Current borrowings Secured At amortised cost Overdraft Commerical bill (i) Bank loan (ii) Non-current borrowings Secured At amortised cost Commerical bill (i) Bank loan (ii)	31 Dec 2008 30 Jun 08 $’000 $’000 3,419 - 4,000 9,000 4,163 4,016
	11,582 13,016
	12,000 8,000 7,854 9,132
	19,854 17,132

(i) Commercial bills bear interest at a floating rate 6.08% per annum and are repayable in 21 instalments of $0.75 million each calendar quarter commencing on 31 March 2009 and ending with a final instalment of $0.25 million on 30 June 2014. An interest rate cap of 7% per annum is in place over $10 million of this debt until December 2009. The interest rate cap does not operate where the variable interest rate on bills is below 7%. The bills are secured by a Mortgage Debenture over all the assets and liabilities of Imdex Limited, Australian Mud Company Pty Ltd, Reflex Asia Pacific Pty Ltd, Imdex International Pty Ltd, Wildcat Chemicals Australia Pty Ltd, Flexit Australia Pty Ltd, Imdex Sweden AB, Flexit AB, Reflex Instruments AB, Imdex Technology UK Limited and Samchem Drilling Fluids and Chemicals (Pty) Ltd.

(ii) Comprises of a loan of SEK 63,875,000 and bears interest at the 7 day Stockholm Interbank Offered Rate ('STIBOR'), currently 2.1% plus a weighted average margin of 1.78% per annum. The loan is repayable in quarterly instalments of SEK 5,875,000 until September 2009 after which instalments drop to SEK 4,500,000 per quarter. From the December 2011 instalment onwards they drop further to SEK 1,750,000 per quarter with a final instalment of SEK 1,500,000 in June 2013. This loan is secured over the assets of the Reflex and Flexit companies that are domiciled in Sweden.

10. Other Liabilities

Notes Other Current Liabilities Unsecured At amortised cost Deferred acquisition payments - Imdex Technology UK Ltd (i) Deferred acquisition payments - Flexit AB (ii) Other Non Current Liabilities Unsecured At amortised cost Deferred acquisition payments - Imdex Technology UK Ltd (i)	31 Dec 2008 30 Jun 08 $’000 $’000 2,403 2,687 8,500 -
	10,903 2,687
	- 2,717

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and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

10. Other Liabilities (Continued)

(i) These amounts are deferred acquisition payments arising from the acquisition of Imdex Technology UK Ltd (formerly Chardec Technology Ltd) on 1 August 2006. Due dates are as follows: GBP 1.1 million due on 31 July 2008 (paid) and GBP 1.0 million due on 31 July 2009. These liabilities have been discounted to their present values using an interest rate of 8% per annum.

(ii) This amount is a deferred acquisition payment arising from the acquisition of Flexit AB on 1 May 2007. The acquisition agreement required the issue of 5 million fully paid Imdex Limited ordinary shares on 1 May 2009. In addition, should the Imdex Limited share price be below $2 per share at 1 May 2009, a cash payment would be made being the difference between $10 million and the market value of the 5 million shares at 1 May 2009. It is the conservative view of the Directors that the Imdex Limited share price at 1 May 2009 will be in the region of 30 cents per share, hence a liability for $8.5 million has been raised.

11. Subsequent Events

On 10 January 2009 a fire destroyed stock at Samchem Drilling Fluids and Chemicals (Pty) Ltd in Johannesburg, South Africa. An insurance claim is being prepared and no significant net loss is expected to arise as the stock was fully insured. No production facilities were damaged. Production was suspended for one day during the clean up process.

On 29 January 2009 it was announced that, in light of current market conditions, the Heads of Agreement to acquire Australian Drilling Specialities Pty Ltd (ADS) had been terminated. On 16 October 2008, Imdex had announced the intention to acquire 100% of the issued share capital of Perth based ADS for $12 million. The purchase was due to be effective on 1 January 2009 and was to be settled by way of a cash payment at settlement of $6 million and the issue of 5,454,545 fully paid Imdex Limited ordinary shares at $1.10 each.

Effective 13 February 2009 a Deed of Variation was signed that varied the terms of the Flexit deferred consideration of $8.5 million described in Note 10 (ii). The Variation provides for the issue of 10 million shares at an issue price of $1 in May 2009 and a potential cash ‘top up’ in May 2012. The cash ‘top up’ will be required in May 2012 should the share price at that time be less than $1 per share. It will be calculated as the difference between $1 and the share at that time price multiplied by 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.

Subsequent to the half year end the Directors declared a 1.00 cent per share fully franked dividend with an entitlement date of 6 March 2009 and a payment date of 24 March 2009. The effect of this dividend has not been reflected in this financial report.

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