IMDEX LIMITED — Interim / Quarterly Report 2011

Feb 20, 2011

21 February 2011

ASX 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 2010.

Please find attached Imdex Limited’s Appendix 4D and Interim Financial Report for the Half Year Ended 31 December 2010, inclusive of the Auditors Review Report and Independence declaration.

Yours faithfully

Imdex Limited

Paul Evans

Company Secretary

Quality Endorsed Company ISO 9002 LIC: QEC 2807 Standards Australia

==> picture [164 x 82] intentionally omitted <==

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 2010

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 2010 Previous Corresponding Reporting Period: 31 December 2009

The Financial Report had been subject to 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 2010.

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 2010

Imdex Limited Results for Announcement to the Market

% Change Notes up / (down) Revenue from ordinary activities (i) 64% Profit from ordinary activites after tax before impairment adjustments 414% Impairment adjustments net of tax - Profit/(Loss) from ordinary activities after tax attributable to members (i) 149% Net profit/(loss) for the period attributable to members (i) 149% Interim dividend (cents per share) (ii) Final dividend (cents per share) Net tangible assets per ordinary security (cents)	Half Year Ended Half Year Ended 31 Dec 2010 31 Dec 2009 $ 000's $ 000's 95,989 58,704 Consolidated
	12,080 2,348 - (26,962)
	12,080 (24,614)
	12,080 (24,614)
	1.75 -
	- -
	27.75 19.15

(i) The announcement made to ASX on 21 February 2011 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 2010.

(ii) The FY11 interim, fully franked dividend was declared on 21 Febraury 2011 with an entitlement date of 11 March 2011 and a payment date of 25 March 2011. There are no dividend reinvestment plans in operation.

and its controlled entities

IMDEX LIMITED

DIRECTORS’ REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2010

The Directors of Imdex Limited submit herewith the financial report of Imdex Limited and its subsidiaries (the Group) for the half year ended 31 December 2010. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

Directors

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

Name

Period of Directorship

Mr Ross Kelly AM, Non Executive Chairman

Appointed as Non Executive Director on 14 January 2004 and appointed as Non Executive Chairman on 15 October 2009

Mr Bernie Ridgeway, Managing Director

Appointed 23 May 2000

Mr Magnus Lemmel, Non Executive Director

Appointed 19 October 2006

Mr Kevin Dundo, Non Executive Director

Appointed 14 January 2004

Ms Elizabeth Donaghey, Non Executive Director Appointed 28 October 2009

Review of Operations

	Consolidated	Consolidated
	Half Year Ended	Half	Year Ended
	31 Dec 2010	31	Dec 2009
	$’000		$’000
Total Revenue	95,989		58,704
Profit from ordinary activites after tax before impairment adjustments	12,080		2,348
Impairment adjustments net of tax	-		(26,962)
Profit / (loss) after tax for the half year	12,080		(24,614)
Basic earnings / (loss) per share - continuing operations	6.17 ¢		(12.63 ¢)

The Consolidated Entity’s profit after tax was $11.4 million for the Half Year ended 31 December 2010 (prior period: loss after tax of $24.6 million). The result was achieved on total revenue of $96.0 million (prior period: $58.7 million). The prior period result included once off impairment adjustments of $27.0 million.

Earnings per share from total operations was 6.17 cents per share (prior period: loss of 12.63 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 21 February 2011 by the Chairman of Imdex Limited regarding the Group’s financial results and operating performance for the half year ended 31 December 2010.

Page 1 of 21

and its controlled entities

IMDEX LIMITED

DIRECTORS’ REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2010

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 the next page.

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, 18 February 2011

==> picture [143 x 78] intentionally omitted <==

Ross Kelly AM Chairman

Page 2 of 21

==> picture [130 x 25] intentionally omitted <==

Deloitte Touche Tohmatsu A.B.N. 74 490 121 060

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

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

18 February 2011

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 half-year ended 31 December 2010, 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,

==> picture [152 x 25] intentionally omitted <==

DELOITTE TOUCHE TOHMATSU

==> picture [83 x 52] intentionally omitted <==

Peter Rupp Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

Deloitte Touche Tohmatsu ABN 74 490 121 060

==> picture [130 x 25] intentionally omitted <==

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

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

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

We have reviewed the accompanying half-year financial report of Imdex Limited, which comprises the condensed consolidated statement of financial position as at 31 December 2010, and the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of cash flows and the condensed consolidated 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 6 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 Interim and Other Financial Reports 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 Imdex Limited’s financial position as at 31 December 2010 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. Member of Deloitte Touche Tohmatsu Limited

==> picture [92 x 19] intentionally omitted <==

Auditor’s Independence Declaration

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

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 2010 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 .

==> picture [152 x 25] intentionally omitted <==

DELOITTE TOUCHE TOHMATSU

==> picture [83 x 52] intentionally omitted <==

Peter Rupp Partner Chartered Accountants Perth, 18 February 2011

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) of the Corporations Act 2001.

Dated at Perth, 18 February 2011

Ross Kelly AM Chairman

Page 6 of 21

IMDEX LIMITED

and its controlled entities

CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE HALF YEAR ENDED 31 DECEMBER 2010

Notes Continuing operations Sale of goods and operating lease rental Interest income Total revenue Other income 2 Raw materials and consumables used Employee benefit expense Depreciation expense Amortisation expense Finance costs Impairment charges 2 Other expenses 2 Profit / (loss) before tax Income tax (expense) / benefit Profit / (loss) for the period Attributable to: Owners of the parent Non-controlling interests Earnings / (loss) per share Basic earings / (loss) per share (cents) Diluted earnings / (loss) per share (cents)	Half Year Ended Half Year Ended 31 Dec 2010 31 Dec 2009 $’000 $’000 95,897 58,394 92 310
	95,989 58,704
	98 - (42,956) (25,035) (14,724) (11,342) (2,637) (1,935) (3,430) (3,089) (1,388) (1,130) - (28,433) (14,523) (13,295)
	16,429 (25,555) (4,349) 941
	12,080 (24,614)
	12,080 (24,614) - -
	6.17 (12.63) 5.99 (12.63)

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

Page 7 of 21

and its controlled entities

IMDEX LIMITED

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31 DECEMBER 2010

Profit / (loss) for the period Other comprehensive income Fair value gain on available-for-sale financial asset taken directly to equity Exchange differences arising on the translation of foreign operations Income tax relating to components of other comprehensive income Other comprehensive income for the period (net of tax) Total comprehensive income for the period Total comprehensive income attributable to: Owners of the parent Non-controlling interests	Half Year Ended Half Year Ended 31 Dec 2010 31 Dec 2009 $’000 $’000 12,080 (24,614) 9,824 - (4,954) (1,784) (2,947) -
	1,923 (1,784)
	14,003 (26,398)
	14,003 (26,398) - -

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

Page 8 of 21

IMDEX LIMITED

and its controlled entities

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2010

Notes Current Assets Cash and Cash Equivalents Trade and Other Receivables Inventories Other Total Current Assets Non Current Assets Property, Plant and Equipment Deferred Tax Asset Goodwill 3 Other Intangible Assets 4 Other Financial Asset Total Non Current Assets Total Assets Current Liabilities Trade and Other Payables Borrowings 10 Current Tax Payables Provisions Total Current Liabilities Non Current Liabilities Borrowings 10 Provisions Total Non Current Liabilities Total Liabilities Net Assets Equity Issued Capital 6 Foreign Currency Translation Reserve Investments Revaluation Reserve Employee Equity-Settled Benefits Reserve Retained Earnings Total Equity	31 Dec 2010 30 Jun 2010 $’000 $’000 15,898 9,007 39,834 41,210 36,475 28,600 4,191 3,496
	96,398 82,313
	15,074 13,604 9,953 10,703 37,721 30,706 17,144 19,269 16,626 6,802
	96,518 81,084
	192,916 163,397
	25,423 25,689 31,466 19,092 14,453 8,768 1,919 1,706
	73,261 55,255
	9,166 12,926 828 721
	9,994 13,647
	83,255 68,902
	109,661 94,495
	68,349 67,415 (10,576) (5,622) 6,877 - 5,336 5,107 39,675 27,595
	109,661 94,495

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

Page 9 of 21

IMDEX LIMITED

and its controlled entities

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2010

		Issued Capital	Foreign	Investments	Employee	Retained	Total
			Currency	Revaluation	Equity-Settled	Earnings	Attributable to
			Translation	Reserve	Benefits		Equity Holders
			Reserve		Reserve		of the Parent
	Notes	$'000	$'000	$'000	$'000	$'000	$'000
Balance at 1 July 2009		67,136	(4,105)	-	4,024	49,143	116,198
Other comprehensive income for the
period		-	(1,784)	-	-	-	(1,784)
Profit for the period		-	-	-	-	(24,614)	(24,614)
Total comprehensive income for the
period		-	(1,784)	-	-	(24,614)	(26,398)
Share based payments		-	-	-	476	-	476
Issue of shares under staff option
plan		274	-	-	(16)	-	258
Balance at 31 December 2009		67,410	(5,889)	-	4,484	24,529	90,534
Balance at 1 July 2010		67,415	(5,622)	-	5,107	27,595	94,495
Other comprehensive income for the
period		-	(4,954)	6,877	-	-	1,923
Profit for the period		-	-	-	-	12,080	12,080
Total comprehensive income for the
period		-	(4,954)	6,877	-	12,080	14,003
Share based payments		-	-	-	333	-	333
Issue of shares under staff option
plan	6	934	-	-	(104)	-	830
Balance at 31 December 2010		68,349	(10,576)	6,877	5,336	39,675	109,661

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

Page 10 of 21

IMDEX LIMITED

and its controlled entities

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 31 DECEMBER 2010

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 Payment for development costs capitalised Payment for the acquisition of the shares of Fluidstar and Ecospin 7(a) Payment for the acquisition of the shares of Imdex Technology (UK) 7(b) Net cash used in Investing Activities Cash Flows From Financing Activities Cash received on exercise of options Hire purchase debt raised Hire purchase and lease payments Proceeds from borrowings Repayment of borrowings Net cash provided by / (used in) Financing Activities Net decrease 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 2010 31 Dec 2009 $’000 $’000 107,536 60,904 (91,107) (50,763) (1,388) (875) (1,184) (4,679)
	13,857 4,587
	92 24 (3,673) (3,949) (232) (1,989) (12,398) - - (2,098)
	(16,211) (8,012)
	830 258 - 1,362 (725) (250) 14,250 6,846 (4,281) (6,642)
	10,074 1,574
	7,720 (1,851)
	9,007 11,975 (829) (439)
	15,898 9,685

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

Page 11 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 2010 annual financial report for the financial year ended 30 June 2010, other than as detailed below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

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 2010. The standards adopted are:

• AASB 3 : “Business Combinations”

• AASB 8 : “Operating Segments”

• AASB 2007-3 “Amendments to Australian Accounting Standards arising from AASB 8”

• AASB 101 : “Presentation of Financial Statements”

• AASB 2009-2 : “Amendments to Australian Accounting Standards – Improving Disclosures about Financial Instruments”

• AASB 127 : “Consolidated and Separate Financial Statements”

The adoption of these new and revised Standards and Interpretations has not resulted in any changes in the Group’s accounting policies and has had a nil impact on the reported numbers. Some disclosure changes have been made.

Page 12 of 21

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

2. Other Income and Other Expenses

2. Other Income and Other Expenses
Notes Other Income Profit on sale of fixed assets Other income Impairment Charges Impairment of Financial Asset (i) Impairment of Goodwill 3 Impairment of Intangible Asset 4 Other Expenses Auditors and accounting fees Commissions Communication Consultancy fees Electricity Freight Foreign exchange loss 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 2010 31 Dec 2009 $’000 $’000 28 - 70 -
	98 -
	- 4,902 - 22,498 - 1,033
	- 28,433
	330 489 1,080 790 706 464 1,135 1,738 147 94 1,172 677 2,512 1,513 110 176 422 405 1,793 641 889 2,519 1,453 1,450 285 212 2,154 1,475 335 652
	14,523 13,295

(i) Change in fair value of the investment in Sino Gas and Energy Holdings Ltd (ASX: SEH). This impairment loss is included in the “unallocated” section of the segment note 8. No impairment loss was booked in the current period since the market value of this investment appreciated.

Page 13 of 21

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

3. Goodwill

3. Goodwill
Notes Gross Carrying Amount Balance at beginning of the financial year Recognised on acquisition of Fluidstar and Ecospin (i) Effect of foreign exchange movements Balance at end of the period Accumulated Impairment Losses Balance at beginning of the financial year Impairment losses for the period (ii) Balance at end of the period Net Book Value At the beginning of the financial year At the end of the period Goodwill is allocated to cash-generating units as follows: Fluidstar / Ecospin Reflex / Imdex Technology UK Flexit / ITG	31 Dec 2010 30 Jun 2010 $’000 $’000 53,204 55,268 7,061 - (46) (2,064)
	60,219 53,204
	(22,498) - - (22,498)
	(22,498) (22,498)
	30,706 55,268
	37,721 30,706
	7,061 - 19,788 19,933 10,872 10,773
	37,721 30,706

(i) Goodwill arose during the current period on the acquisition of Fluidstar Pty Ltd (Fluidstar) and Ecospin Pty Ltd (Ecospin) by Imdex Limited effective 1 September 2010. (Refer note 7(a)). Fluidstar and Ecospin together are considered to be a single separate cash generating unit since they operate independently from other Imdex operations in a separate geographical area being the Queensland area.

(ii) During the comparative period impairment losses were booked to the following cash generating units:

Impairment losses per cash-generating unit Samchem Wildcat Suay Energy Services Poly-Drill Drilling Systems Southernland Flexit / ITG Impairment losses by segment Minerals Oil & Gas	31 Dec 2010 31 Dec 2009 $’000 $’000 - 1,499 - 1,501 - 1,266 - 3,369 - 2,363 - 12,500
	- 22,498
	$’000 $’000 - 7,231 - 15,267
	- 22,498

The recoverable amount of goodwill was determined based on a value in use calculation which used a 5 year discounted cash flow projection based on the 2010 forecast plus a terminal value. The future growth projections were risk adjusted and assume additional growth rates in cash generating units beyond 2010 that were consistent with the Board’s strategic plan. Future cash flows were discounted to present values using region specific, real, pre-tax discount rates per the table below.

Page 14 of 21

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

3. Goodwill (continued)

The key assumptions used in the value in use calculations for the various significant cash generating units were as follows:

CGU	Forecasted revenue growth	Discount Rate	Forecasted net margins	Expected exchange rate fluctuations
Wildcat	Revenue growth has been forecast in line with the expected activity levels of local oil & gas industries serviced by Wildcat and potential new on and offshore opportunities.	14.17%	Net margins have been forecasted using current period actuals as a base on which operational improvements and economies of scale are expected to be gained, particularly from the introduction of a regionalised reporting structure.	Exchange rate fluctuation expectations have been built into the forecasted numbers based on long term forecasted exchange rates published by major local and international lending institutions
Suay	Revenue growth has been forecast in line with the expected rate of growth of the oil & gas industry in Kazakhstan and the broader Caspian Sea region. This has been overlaid with risk adjusted additional revenues expected to be gained by the winning of new contracts and tenders.	26.23%
Southern- Land	Revenue growth has been forecast in line with the expected rate of growth of the mining and mineral exploration market in South and Latin America as well as growth expected to arise from the global alliances and recent managerial function changes.	11.07%
Flexit / ITG	This CGU will earn revenues from the rental and sale of HTGS and HTMS tools on a global scale. Revenue growth in this area is forecasted in light of current trends in oil & gas exploration trends. Income from the services based joint venture will be accounted for at the net margin level.	7.64%	Net margin growth from the HTGS and HTMS rental and sale business is expected to grow in line with increasing trends in global oil & gas exploration spending. Returns from the joint venture are based on the expected rate of cash flows as projected by joint venture management. These are a function of activity levels and market share expected in the Middle Eastern oil & gas surveymarket.

At 31 December 2010 no trigger was identified requiring a review of goodwill at the interim balance date. A full review will be performed at 30 June 2011 in accordance with accounting standards.

Page 15 of 21

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

4. Intangibles

4. Intangibles
Gross Carrying Value Balance at 30 June 2009 Capitalised during the year Impairment losses Impact of exchange rate changes Balance at 30 June 2010 Capitalised during the period Impact of exchange rate changes Balance at 31 December 2010 Accumulated Amortisation and Impairment Balance at 30 June 2009 Amortisation expense Impact of exchange rate changes Impairment losses Balance at 30 June 2010 Amortisation expense Impact of exchange rate changes Impairment losses Balance at 31 December 2010 Net Book Value As at 30 June 2010 As at 31 December 2010	Patents Intellectual Property Technology Based Contract Based Customer Based Development Costs Trade Name TOTAL $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 761 2,586 14,412 1,315 11,621 4,079 4,210 38,984 - - - - - 3,322 - 3,322 - (1,033) - - - - - (1,033) - (48) (332) - (690) - (317) (1,387)
	761 1,505 14,080 1,315 10,931 7,401 3,893 39,886 - - 1,081 - - 232 - 1,313 - - - - - - - -
	761 1,505 15,161 1,315 10,931 7,633 3,893 41,199
	329 226 6,074 1,138 5,092 172 2,038 15,069 153 150 2,289 85 2,009 945 732 6,363 - - (204) - (423) - (188) (815) - - - - - - - -
	482 376 8,159 1,223 6,678 1,117 2,582 20,617 76 75 1,294 43 979 617 346 3,430 - - - - 7 - 1 8 - - - - - - - -
	558 451 9,453 1,266 7,664 1,734 2,929 24,055
	279 1,129 5,921 92 4,253 6,284 1,311 19,269
	203 1,054 5,708 49 3,267 5,899 964 17,144

During the comparative period the full value of intellectual property associated with the clay brick manufacture process in Samchem Drilling Fluids and Chemicals (Pty) Ltd in South Africa amounting to $1.0 million was considered to be impaired. This line of business is non-core to the Imdex Group and sales and growth in this industry will not be actively pursued. This impairment loss is included in the Minerals segment in the segment note 8.

Page 16 of 21

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

5. Dividends

5. Dividends
		Half Year	Ended	Half Year	Ended
		31 Dec	2010	31 Dec	2009
	Notes	Cents per	Total	Cents per	Total
		share	$’000	share	$’000
Recognised amounts
Fully paid ordinary shares - final dividend franked to 30%		-	-	-		-
Unrecognised amounts
Fully paid ordinary shares - interim dividend franked to 30%	(i)	1.75	3,455	-		-

(i) The FY11 interim, fully franked dividend was declared on 21 February 2011 with an entitlement date of 11 March 2011. The financial effect of the dividend has not been recognised in the financial statements at 31 December 2010.

Adjusted franking account balance Impact on franking account of dividends not recognised	Half Year Ended Half Year Ended 31 Dec 2010 $’000 24,363 $’000 28,384 31 Dec 2009
	1,481 -

6. Issued Capital

6. Issued Capital
				31 Dec 2010	30 Jun 2010
			Notes	$’000	$’000
Issued and Paid Up Capital - Fully paid ordinary shares			(i)	68,349	67,415
		31 Dec	2010	30 Jun	2010
	Notes	Number	$'000	Number	$'000
Ordinary shares
Balance at beginning of the period		195,047,128	67,415	193,808,793	67,136
Issue of shares under Staff Option Plan	(i)	2,395,169	934	1,238,335	279
Closing balance at end of the period		197,442,297	68,349	195,047,128	67,415
(i) Fully paid ordinary share rights

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

Page 17 of 21

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

7. Acquisitions

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

With effect from 1 September 2010, Imdex Limited, acquired 100% of the issued share capital of Fluidstar Pty Ltd (Fluidstar) and Ecospin Pty Ltd (Ecospin). Both companies are incorporated in Australia and operate out of premises located in Brisbane. Fluidstar manufactures and distributes drilling fluids throughout the Asia Pacific region with a strong presence in the Queensland market. Ecospin develops and sell solids control solutions for the drilling industry. Both companies focus predominately on the mineral drilling industry. The provisional 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		3,357	-	3,357
Inventory		2,970	-	2,970
Property, plant and equipment		434	-	434
Intangibles	(i)	-	1,081	1,081
Trade and other payables		(5,949)	-	(5,949)
Deferred tax	(i)	-	(324)	(324)
Fair value of net identifiable assets acquired		812	757	1,569
Goodwill on acquisition	(ii)			7,061
Total purchase consideration				8,630
Total purchase consideration comprises
Consideration in cash and cash equivalents				8,797
Less: Cash and cash equivalents acquired				(167)
	(iii)			8,630
				Results since acquisition
				$’000
Operating results of Fluidstar / Ecospin included in the Consolidated Income Statement of Imdex
Limited from acquisition on 1 September 2010 to 31 December 2010:
Revenue				6,315
Total expenses				(5,203)
Profit after tax for the period	(iv)			1,112

(i) Intangible assets comprise the fair value of the mud separation technology contained within the Ecospin business. Deferred tax of $0.3 million was raised on this balance. This intangible asset will be amortised over its expected useful life of 2 years. Fair value was determined by reference to the arms length value paid for the technology.

(ii) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire Fluidstar and Ecospin. In addition, the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of Fluidstar and Ecospin. 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 2010 records the payment for the acquisition of Fluidstar and Ecospin as $12.4 million being the total purchase consideration of $8.6 million shown above plus an at acquisition dividend of $3.6 million funded by Imdex Limited plus $0.2 million of on-costs expensed during the period.

(iii) Had the acquisition of Fluidstar and Ecospin been effected on 1 July 2010, the beginning of the current half year, the Fluidstar and Ecospin financial results included in the Imdex consolidated results would have been revenue of approximately $9.5 million and profit after tax of approximately $1.7 million. The results of Fluidstar and Ecospin are included in the Minerals 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.

(v) In addition to the above purchase consideration, $0.2 million of direct costs were incurred. These costs comprised primarily legal costs and banking fees.

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

On 31 July 2009, the third and final deferred acquisition payment of GBP 1.0 million ($2.1 million) was paid. At 31 December 2009 there are no further amounts outstanding in relation to this acquisition.

Page 18 of 21

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

8. Segment Information

During the current period the Imdex Group changed the way businesses are managed and reported. As a consequence the Reportable Segments are now “Minerals” and “Oil & Gas”.

Information regarding these segments is presented below. Amounts reported for the comparative period have been restated to conform to the current period’s segment information.

(a) Segment Revenues

	Half Year 31 Dec 10 Half Year 31 Dec 09 Half Year 31 Dec 10 Half Year 31 Dec 09 Half Year 31 Dec 10 Half Year 31 Dec 09 $'000 $'000 $'000 $'000 $'000 $'000 External revenue Inter-segment Other	Half Year 31 Dec 10 Half Year 31 Dec 09 $'000 $'000 Total
Minerals 81,534 46,446 - - - - Oil & Gas 14,363 11,948 - - - - Total of all segments 95,897 58,394 - - - - Eliminations Interest income (b) Segment Profit / (Loss) Minerals Oil & Gas Total of all segments Eliminations Central administration costs Profit / (loss) before income tax expense Income tax (expense) / benefit Profit / (loss) attributable to ordinary equity holders of Imdex Limited Total revenue	81,534 46,446 - - - - 14,363 11,948 - - - -	81,534 46,446 14,363 11,948
	95,897 58,394 - - - -	95,897 58,394
		- - 92 310
		95,989 58,704
		19,694 (1,659) (600) (17,000)
		19,094 (18,659) - - (2,665) (6,896)
		16,429 (25,555) (4,349) 941
		12,080 (24,614)

Central administration costs comprise the SEH investment write down (prior year only), net financing costs for the Group and the corporate portion of head office costs. Head office costs attributable to operations are allocated to reportable segments in proportion to the revenues earned from those segments.

Segment (loss)/profit represents the (loss)/profit earned by each segment without allocation of central administration costs, directors salaries, net finance costs and income tax expense. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

Minerals Oil & Gas Total of all segments Consolidated Unallocated (SEH loan and investment)	31 Dec 10 30 Jun 10 $'000 $'000 155,360 136,794 20,930 19,801 Assets
	176,290 156,595 16,626 6,802
	192,916 163,397

Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments.

9. Contingent Liabilities and Contingent Assets

There are no contingent assets or liabilities at the current or prior balance dates.

Page 19 of 21

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

10. Borrowings

10. Borrowings
Notes Current borrowings Secured At amortised cost Commerical bill (i) Bank loan - Sweden (ii) Bank loan - Canada (iii) Hire purchase liabilities (iv) Non-current borrowings Secured At amortised cost Commerical bill (i) Bank loan - Sweden (ii) Hire purchase liabilities (iv)	31 Dec 2010 30 Jun 2010 $’000 $’000 20,350 11,000 957 969 8,633 5,673 1,526 1,450
	31,466 19,092
	7,000 8,500 479 1,938 1,687 2,488
	9,166 12,926

(i) Commercial bills bear interest at a weighted average floating rate currently 7.62% per annum. Bills totaling $3.1 million are repayable on demand and bills totaling $14.3 million are due on 30 June 2011. The balance of bills are repayable in 13 installments of $0.75 million each due at the end of each calendar quarter 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 $10,000,000 of this debt until December 2011. The interest rate cap does not operate where the variable interest rate on bills is below 7%.

Bills are in the process of being secured by a Mortgage Debenture over all the assets and liabilities of Imdex Limited, Australian Mud Company Pty Ltd, Reflex Instruments Asia Pacific Pty Ltd, Imdex International Pty Ltd, Wildcat Chemicals Australia Pty Ltd, Flexit Australia Pty Ltd, Imdex Sweden AB, Imdex Technology Sweden AB (formerly Flexit AB), Reflex Instruments AB, Fluidstar Pty Ltd, Ecospin Pty Ltd, AMC North America Ltd (formerly Poly-Drill Drilling Systems Ltd), Drillhole Surveying Instruments (Pty) Ltd and Samchem Drilling Fluids and Chemicals (Pty) Ltd.

(ii) Comprises of a loan of SEK 9.9 million and bears interest at the 7 day Stockholm Interbank Offered Rate ('STIBOR'), currently 1.48% plus a margin of 3.5% per annum. The loan is repayable in 6 quarterly instalments of SEK 1.65 million each with the next installment due on 31 March 2011. This loan is secured over the assets of the Reflex and Flexit companies that are domiciled in Sweden.

(iii) Comprises a loan of CAD 8.8 million at the Canadian Prime Interest Rate, currently 3.0% plus a margin of 1.5%. This loan is repayable in 3 quarterly installments of CAD 0.4 million each (next installment due 1 March 2011), 47 monthly installments of CAD 0.06 million due on the first day of each month and 58 monthly installments of CAD 0.08 million also due on the first day of each month. The loan is disclosed as a current liability since the bank retains the option to have these loans repaid on demand. No such demand has been made at the date of signing this report and the Directors do not expect such a demand to be made in the foreseeable future. This loan is secured by a Standby Letter of Credit issued by Westpac Banking Corporation in Australia for which a service fee of 2.25% per annum is charged.

(iv) Hire purchase liabilities are secured over the assets to which they relate, the carrying value of which exceeds the value of the hire purchase liability. The Group does not hold title to the equipment under the hire purchase pledged as security. The weighted average interest rate applicable to these liabilities is 9.24% (30 June 2010: 9.38%).

Page 20 of 21

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

11. Subsequent Events

As announced to the Australian Stock Exchange on 21 January 2011, the Imdex Group, through its wholly owned subsidiary Flexit Australia Pty Ltd, has executed a Letter of Intent to enter into a 50:50 joint venture with DHS Oil. This joint venture, DHSO Services, will provide a full service down hole survey offering to the oil & gas industry. Surveys will be performed using Flexit Target tools to provide highly accurate survey results. It is expected that the joint venture will become operational in 2H11.

As announced to the Australian Stock Exchange on 17 December 2010, the Imdex Group executed a Heads of Agreement to acquire 100% of Mud-Data GmbH and Mud-Data-Rom SRL, fluids companies based in Germany and Romania respectively. The due diligence process into this proposed acquisition is ongoing as at the date of this report.

Subsequent to the half year end the Directors declared a 1.75 cents per share fully franked interim dividend with an entitlement date of 11 March 2011 and a payment date of 25 March 2011. The effect of this dividend has not been reflected in this financial report.

Page 21 of 21