IMDEX LIMITED - Interim / Quarterly Report 2012

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20 February 2012

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Company Announcements O f fice ASX Limited Exchange Centre 20 Bridge Street SYDNEY NSW 2001

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Dear Sir/Madam

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RESULTS ANNOUNCEMENT, APPENDIX 4D AND FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2011

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Please find attached a Co m pany Announcement regarding the Group’ s financial results and operating performanc e for the half year ended 31 December 2011.

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The Appendix 4D and H alf Yearly Financial Report for the half year ended 31 December 2011 follow this announcement.

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Yours faithfully Imdex Limited

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Paul Evans

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Company Secretary

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20 February 2012

IMDEX DELIVERS RECORD HALF-YEAR EARNINGS WITH POSITIVE OUTLOOK FOR FULL YEAR

Imdex Limited (ASX: IMD) is pleased to announce a record half year result for the six months to 31 December 2011 (1H12).

Key highlights:

Record revenue, up 44% to $138.5 million (1H11: $95.9 million)
Combined revenue (includes 50% of DHS JV revenue) up 46% to $139.9 million (1H11: $95.9 million)
Record Minerals division revenue, up 52% to $124.0 million (1H11: $81.6 million)
Record EBITA (includes equity accounted DHS JV result), up 81% to $38.3 million (1H11: $21.2 million)
Record NPAT, up 88% to $22.7 million (1H11: $12.1 million)
Strong increase in pre-tax operating cash flow, up 121% to $33.2 million (1H11: $15.0 million)
Conservative gearing at 23.7% which includes borrowings for the DHS JV’s acquisition of Vaughn Energy Services in January 2012
DHS JV’s acquisition of Vaughn Energy Services supports the strategy to increase oil & gas revenue to 30-40% of Group revenue over the next 3-4 years
Exciting pipeline of new and improved down hole instrumentation technology to drive future market share growth and maintain competitive advantage
Fully franked interim dividend up 86% to 3.25 cents per share (1H11: 1.75 cents).

Imdex’s Managing Director, Mr Bernie Ridgeway, commented, “The Directors are pleased with another set of excellent results, demonstrating Imdex’s market leading products and technology, and the strength of the Company’s business model.”

“Commodity prices and activity levels in both the minerals and oil and gas sectors are currently robust, and we remain optimistic about the balance of the 2012 financial year and continue to explore opportunities to grow the business.

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“Following the traditional end of calendar year seasonal slowdown activity levels have been quick to bounce back, providing a positive lead indicator for a strong second half of the 2012 financial year,” added Mr Ridgeway.

In keeping with the stated strategy of building a sustainable and growing dividend stream whilst balancing the capital needs of the business, the Directors declared a fully franked interim dividend of 3.25 cents per share to be paid on 23 March 2012. This represents an 86% growth in the interim dividend compared to 1H11.

The Group has two distinct business divisions, Minerals and Oil & Gas. The following summarises their financial and operational performance over 1H12.

Minerals division

Financial performance

Imdex’s Minerals division consists of AMC drilling fluids and chemicals, and Reflex down hole instrumentation. 1H12 divisional revenue increased 52% to $124.0 million (1H11: $81.6 million). This represented 89% of Imdex’s 1H12 combined revenue and reflected the continued strength in global drilling activity and increased mineral exploration expenditure. Metals Economics Group indicated in November, 2011 that it expected calendar year 2011 non-ferrous exploration expenditure to be up 58% on 2010 to a new all time high of US$18.2 billion due to commodity prices remaining relatively strong.

“Strong growth in all four major mining regions, Asia Pacific, the Americas, Africa and Europe, continued to contribute significantly to our results, reflecting the strength of Imdex’s underlying businesses and focused global strategy for its Minerals division,” said Mr Ridgeway.

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Key operating highlights

Record revenues across all of the major global mining regions
Continued growth in the Reflex rental fleet as a result of ongoing investment in product development and strong drilling activity
Realising benefits from the implementation of a regional reporting and operating structure, including offering combined solutions across drilling fluids and down hole instrumentation
Commercialisation of Imdex’s surface and underground Solids Removal Units
Finalisation and integration of the ADS acquisition
Acquisition of System Mud (Brazil) to further drive operational and geographic efficiencies and growth in South America, a key growth region for Imdex
Continued growth in Africa, the Americas and Europe, further diversifying the business geographically.

Oil & Gas division

Financial performance

The Oil & Gas division supplies AMC drilling fluids, production and completion chemicals, and down hole survey services through the DHS JV. 1H12 combined revenue for this division was $15.9 million (1H11: $14.4 million), representing 11% of Imdex’s 1H12 revenue. This result included $1.4m of revenue from the DHS JV.

Commenting on the Oil & Gas division, Mr Ridgeway said, “We continue to make progress in our strategy to expand our oil and gas business, and diversify the Imdex Group’s revenue streams. The transformational acquisition of Vaughn Energy Services by our DHS Services joint venture supports our strategy to generate approximately 30-40% of revenues from the oil and gas market within the next three to four years.”

Key operating highlights

Joint venture with DHS Services for Imdex’s range of down hole instrumentation and the subsequent acquisition by the DHS JV of Vaughn Energy Services as announced on 23 January 2012

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Integration of AMC Oil & Gas Germany (previously Mud Data), supplying drilling fluids and equipment to the oil & gas and geothermal industries in Europe
Continued investment in engineering and product development on existing and new instrumentation.

DHS Services JV’s acquisition of Vaughn Energy Services

The US$100 million acquisition of Vaughn Energy Services (Vaughn) positions the DHS JV as a third global competitor in the approximately US$400 million to US$500 million per annum oil & gas down hole survey market, and provides the joint venture with a significant presence in the substantial US onshore oil & gas market.

Texas-headquartered Vaughn is an oil & gas down hole survey provider with 125 employees, including 75 surveyors and wireline operators, across 13 locations in the US. In calendar year 2011, Vaughn generated revenue of US$39 million.

The key highlights of the acquisition include:

Transforms the DHS JV into a significant global competitor in the oil & gas down hole survey market
Enables a substantive and established entry into the US onshore oil & gas market, representing about a third of the global market
Diversifies the geographic footprint, range of technologies and customer base of the DHS JV, and introduces additional oil & gas technology to the Group
Supports Imdex’s strategy to generate approximately 30-40% of revenues from the oil & gas market within the next 3-4 years
Immediately earnings accretive for Imdex
Vaughn shareholders to retain 40% ownership of the DHS JV and remain with the business.

“The acquisition of Vaughn Energy Services by the DHS joint venture provides its customers with a full suite of technologies combined with a global footprint and superior service offering. The relationship gives Imdex access to technology, product advances and additional resources that can help us improve and expand our range of capabilities.

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“The combined business has excellent growth prospects in the US onshore oil & gas market, as well as the offshore and onshore international markets. It is expected to generate approximately US$70 million revenue in calendar year 2012,” said Mr Ridgeway.

Dividend

The Directors have declared a fully franked interim dividend of 3.25 cents per share with a record date of 9 March 2012 and a payment date of 23 March 2012. This represents an 86% increase on the FY11 interim dividend, and reflects the strength of Imdex’s underlying earnings and future opportunities, as well as the Board’s commitment to paying a sustainable and growing dividend stream while balancing the capital needs of the business as it continues to grow.

Outlook

With 2H12 under way, the outlook for Imdex remains positive. 1H12 saw another set of excellent results with strong growth in revenue, earnings and cash flow to record levels. Growth is expected to continue in 2H12 with the underlying fundamentals of Imdex’s key industry segments remaining positive.

Metals prices remain robust and importantly are still trading above their long-term averages. Drilling contractors continue to report strong demand from major, intermediate and junior mining/exploration companies, and rig utilisation rates are continuing to increase towards full utilisation.

“Whilst we are focussed on our core business in the mining and minerals exploration markets that are generating excellent results for the Group, there is considerable potential to deliver shareholder value through expanding our oil and gas interests with DHS Services including Vaughn, drilling fluids and production chemicals,” said Mr Ridgeway.

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Key priorities for 2H12

In 2H12, the Imdex Group will be focussed on:

introducing the solids removal technology in the Asia Pacific market ahead of its rollout to the other major mining markets of Africa, Canada, South America and Europe
release of new and improved down hole instrumentation
growth in the DHS JV and integration of Vaughn, to drive increased oil & gas revenues
continued investment for mining and oil & gas to maintain Imdex’s competitive advantage and grow market share.

For further information, please contact:

Bernie Ridgeway Paul Evans Managing Director Chief Financial Officer & Company Secretary T: +61-8 9445 4010 T: +61-8 9445 4010

E: [email protected]

Some of the information contained in this release contains “forward-looking statements” which may not directly or exclusively relate to historical facts. These forward-looking statements reflect Imdex’s current intentions, plans, estimates, forecasts, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which are outside the control of Imdex. Important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements include known and unknown risks, as well as uncertainties relating to assumptions made by Imdex. Actual results could therefore differ materially from forward-looking statements about Imdex’s current intentions, plans, estimates, forecasts, expectations, assumptions and beliefs about the future. Such statements are not representations or warranties that future matters will be achieved and therefore you are urged to view all forwardlooking statements contained herein with caution.

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Imdex Limited Summary Financial Highlights for the Half Year Ended 31 December 2011 (Results reviewed by auditors)

	Consolidated	Consolidated	Consolidated
	1H11 $’000	2H11 $’000	1H12 $’000

Revenue(incl interest income)	95,989 109,174 138,574
Operating Profit before Interest, Tax, Depreciation and Amortisation Depreciation	23,792 30,075 41,556 (2,637) (3,084) (3,274)
Earnings before Interest, Tax & Amortisation(EBITA)	21,155 26,991 38,282
EBITA margin Amortisation Net interest expense Income tax expense	22% 25% 28% (3,430) (3,348) (2,940) (1,296) (1,479) (711) (4,349) (5,242) (11,966)
Netprofit after tax for the halfyear	12,080 16,922 22,665
Basic earnings per share(cents)	6.17 ¢ 8.52 ¢ 11.14 ¢
Pre-tax Operating Cash Flows	15,038 29,001 33,166
Gearing (Net Debt / Net Debt + Equity)	18.4% 13.4% 11.5%
Net Assets	109,661 125,409 138,705
Net Tangible Assetsper Share(cents)	27.75 ¢ 34.83 ¢ 40.43 ¢

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AI assistant

IMDEX LIMITED Interim / Quarterly Report 2012

65119_rns_2012-02-19_6aa1e014-54dc-4f57-b6cd-f1c94f8faade.pdf

RESULTS ANNOUNCEMENT, APPENDIX 4D AND FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2011

20 February 2012

IMDEX DELIVERS RECORD HALF-YEAR EARNINGS WITH POSITIVE OUTLOOK FOR FULL YEAR

Key highlights:

Minerals division

Financial performance

Key operating highlights

Oil & Gas division

Financial performance

Key operating highlights

DHS Services JV’s acquisition of Vaughn Energy Services

Dividend

Outlook

Key priorities for 2H12

For further information, please contact:

E: [email protected]

Imdex Limited Summary Financial Highlights for the Half Year Ended 31 December 2011 (Results reviewed by auditors)

AI assistant

IMDEX LIMITED — Interim / Quarterly Report 2012

65119_rns_2012-02-19_6aa1e014-54dc-4f57-b6cd-f1c94f8faade.pdf

RESULTS ANNOUNCEMENT, APPENDIX 4D AND FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2011

20 February 2012

IMDEX DELIVERS RECORD HALF-YEAR EARNINGS WITH POSITIVE OUTLOOK FOR FULL YEAR

Key highlights:

Minerals division

Financial performance

Key operating highlights

Oil & Gas division

Financial performance

Key operating highlights

DHS Services JV’s acquisition of Vaughn Energy Services

Dividend

Outlook

Key priorities for 2H12

For further information, please contact:

E: [email protected]

Imdex Limited Summary Financial Highlights for the Half Year Ended 31 December 2011 (Results reviewed by auditors)

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IMDEX LIMITED Interim / Quarterly Report 2012