IMDEX LIMITED — Interim / Quarterly Report 2015

Feb 15, 2015

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216 Balcatta Road Balcatta Western Australia 6021 PO Box 1262, Osborne Park Western Australia 6916

Tel: +61 (0) 8 9445 4010 Fax: +61 (0) 8 9445 4055 imdex@imdexlimited.com

www.imdexlimited.com ABN 78 008 947 813

16 February 2015

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 2014.

Please find attached Imdex Limited’s Appendix 4D and Interim Financial Report for the Half Year Ended 31 December 2014, inclusive of the Auditors Review Report and Independence declaration.

Yours faithfully Imdex Limited

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Paul Evans

Company Secretary

Providing innovative drilling fluids and advanced down hole instrumentation worldwide.

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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 2014

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 2014 Previous Corresponding Reporting Period: 31 December 2013

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 International Financial Reporting Standards (“IFRS”). 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 2014.

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 2014

Consolidated

			**Half Year Ended **	Half Year Ended
		% Change	31 Dec 2014	31 Dec 2013
	Notes	up / (down)	$ 000's	$ 000's
Revenue from ordinary activities	(i)	10%	101,502	92,152
Profit from ordinary activities after tax attributable to members	(i),(ii)	(37%)	9,677	15,333
Net profit for the period attributable to members	(i),(ii)	(37%)	9,677	15,333
Interim dividend (cents per share)			-	-
Final dividend (cents per share)			-	0.40
Net tangible assets per ordinary security (cents)			58.91	66.58

(i) The announcement made to ASX on 16 February 2015 provides an explanation of the Group's financial results and operating performance for the half year ended 31 December 2014.

(ii) The Group's profit for the half year ended 31 December 2014 includes a gain on disposal in Sino Gas and Energy Holdings Ltd (SEH) of $14.2m, net of transaction costs (31 December 2013: $20.1m) and an expense of $2.1m relating to the product containment incident (31 December 2013: nil).

IMDEX LIMITED and its controlled entities

DIRECTORS’ REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

The Directors of Imdex Limited submit herewith the financial report of Imdex Limited and its subsidiaries (the Group or Consolidated Entity) for the half year ended 31 December 2014. 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 2014	31	Dec 2013
	$’000		$’000
Total Revenue	101,502		92,152
Profit after tax for the halfyear	9,677		15,333
Basic earnings per share - continuing operations	4.51 ¢		7.29 ¢

The Consolidated Entity’s profit after tax was $9.7 million for the half year ended 31 December 2014 (31 December 2013: $15.3 million). The result was achieved on total revenue of $101.5 million (31 December 2013: $92.2 million).

During the reporting period the Consolidated Entity sold the remaining 91.9 million shares of its Sino Gas and Energy Holdings Ltd shareholdings at a share price of 18.5 cents per share to realise gross cash proceeds of $17.0 million at a book profit before tax of $14.2 million.

During the half year ended 31 December 2013 the Consolidated Entity sold 130 million shares of its Sino Gas and Energy Holdings Ltd shareholdings at a share price of 18.5 cents per share to realise gross cash proceeds of $23.6 million at a book profit before tax of $20.1 million.

Earnings per share from total operations was 4.51 cents per share (31 December 2013: 7.29 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 2015 regarding the Group’s financial results and operating performance for the half year ended 31 December 2014.

Page 1 of 22

and its controlled entities

IMDEX LIMITED

DIRECTORS’ REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Auditor’s 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, 13 February 2015

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Ross Kelly AM Chairman

Page 2 of 22

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Deloitte Touche Tohmatsu ABN 74 490 121 060

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

The Board of Directors Imdex Limited 216 Balcatta Road BALCATTA WA 6021

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

13 February 2015

Dear Directors

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 2014, 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

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DELOITTE TOUCHE TOHMATSU

AT Richards

Partner

Chartered Accountants

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

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Deloitte Touche Tohmatsu ABN 74 490 121 060

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

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

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

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 2014, and the condensed consolidated statement of profit or loss and other comprehensive income, the condensed consolidated statement of cash flows and the condensed consolidated statement of changes in equity for the halfyear 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 pages 6 to 22.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

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 a Financial Report 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 the consolidated entity’s financial position as at 31 December 2014 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

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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 2014 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 .

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DELOITTE TOUCHE TOHMATSU

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AT Richards Partner Chartered Accountants Perth, 13 February 2015

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, 13 February 2015

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Ross Kelly AM Chairman

Page 6 of 22

and its controlled entities

IMDEX LIMITED

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Notes Continuing operations Revenue from sale of goods and operating lease rental Other revenue from operations Total revenue Other income Gain on the disposal of shares in Sino Gas and Energy Holdings Ltd (SEH) 3 Raw materials and consumables used Employee benefit expense Depreciation expense Amortisation expense Finance costs Share of profit of associate 4 Other expenses 2 Profit before tax Income tax expense Profit for the period Other comprehensive income Items that may be reclassified subsequently to profit or loss Fair value adjustment on investment in SEH 3 Income tax relating to components of other comprehensive income 3 Cumulative profit reclassified to profit or loss on sale of SEH shares, net of tax 3 Exchange differences arising upon translation of Associate’s net assets 4 Exchange differences arising on the translation of foreign operations Other comprehensive income for the period, net of income tax Total comprehensive income for the period Profit attributable to owners of the parent Total comprehensive income attributable to owners of the parent Earnings per share Basic earings per share (cents) Diluted earnings per share (cents)	Half Year Ended Half Year Ended 31 Dec 2014 31 Dec 2013 $’000 $’000 101,441 92,116 61 36
	101,502 92,152
	36 29 14,234 20,139 (47,329) (42,244) (27,171) (26,282) (4,736) (4,112) (825) (732) (1,615) (1,489) 517 271 (20,984) (19,878)
	13,629 17,854 (3,952) (2,521)
	9,677 15,333
	2,298 21,981 (689) (6,594) (10,166) (14,378) 4,647 - 5,026 3,294
	1,116 4,303
	10,793 19,636
	9,677 15,333
	10,793 19,636
	4.51 7.29 4.38 7.22

The Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

Page 7 of 22

and its controlled entities

IMDEX LIMITED

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2014

Note s Curre nt Asse ts Cash and Cash Equivalents Trade and Other Receivables Inventories Current Tax Assets Other Financial Asset Available for Sale 3 Tota l Curre nt Asse ts Non Curre nt Asse ts Property, Plant and Equipm ent Deferred Tax Assets Goodwill Other Intangible Assets Other Receivables Investm ents in Associates 4 Tota l Non Curre nt Asse ts Tota l Asse ts Curre nt Lia bilitie s Trade and Other Payables Borrowings 5 Other Financial Liabilities Current Tax Liabilities Provisions 6 Tota l Curre nt Lia bilitie s Non Curre nt Lia bilitie s Borrowings 5 Provisions 6 Tota l Non Curre nt Lia bilitie s Tota l Lia bilitie s Ne t Asse ts Equity Issued Capital 7 Shares Reserved for Perform ance Rights Plan 7 Foreign Currency Translation Reserve Investm ent Revaluation Reserve 3 Em ployee Equity-Settled Benefits Reserve Retained Earnings Tota l Equity	31 De c 2014 30 Jun 2014 $’000 $’000 9,569 10,070 45,002 39,744 42,957 42,631 - 267 3,621 2,870
	101,149 95,582 - 14,705
	101,149 110,287
	59,201 47,180 19,392 15,832 60,669 60,377 2,762 1,884 957 957 31,434 26,270
	174,415 152,500
	275,564 262,787
	19,856 17,306 6,995 6,902 92 80 4,430 - 18,214 16,185
	49,587 40,473
	32,956 43,239 2,215 2,153
	35,171 45,392
	84,758 85,865
	190,806 176,922
	93,259 90,259 (76) - (2,089) (11,762) - 8,557 5,042 6,266 94,670 83,602
	190,806 176,922

The Condensed Consolidated Statem ent of Financial Position should b e read in conjunction with the accom panying notes.

Page 8 of 22

IMDEX LIMITED

and its controlled entities

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Note s Ba la nce a t 1 July 2013 E xchange differences on translation of foreign operations after taxation Fair value adjustm ent on investm ent in S E H Incom e tax relating to com ponents of other com prehensive incom e Cum ulative profit reclassified to profit or loss on sale of S E H shares, net of tax P rofit for the period Total com prehensive incom e for the period S hare based paym ents - perform ance rights Granting/settlem ent of perform ance rights S hares purchased on m arket to satisfy perform ance rights Dividend P aid 8 Ba la nce a t 31 De ce m be r 2013 Ba la nce a t 1 July 2014 E xchange differences on translation of foreign operations after taxation E xchange differences arising upon translation of A ssociate’s net assets 4 Fair value adjustm ent on investm ent in S E H 3 Incom e tax relating to com ponents of other com prehensive incom e 3 Cum ulative profit reclassified to profit or loss on sale of S E H shares, net of tax 3 P rofit for the period Total com prehensive incom e for the period Issue of shares as consideration for the acquisition of 2iC A ustralia P ty Ltd 7 S hare based paym ents - options S hare based paym ents - perform ance rights Granting/settlem ent of perform ance rights S hares purchased on m arket to satisfy perform ance rights Ba la nce a t 31 De ce m be r 2014	Fully P a id Ordina ry S ha re s S ha re s re se rve d for P e rform a nce Rights P la n Fore ign Curre ncy Tra nsla tion Re se rve Inve stm e nt Re va lua tion Re se rve Em ploye e Equity-S e ttle d Be ne fits Re se rve M a nda tory Issua ble Ca pita l Re ta ine d Ea rnings Tota l Attributa ble to Equity Holde rs of the Entity $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 89,269 (952) (11,167) 13,754 6,087 990 90,471 188,452 - - 3,294 - - - - 3,294 - - - 21,981 - - - 21,981 - - - (6,594) - - - (6,594) - - - (14,378) - - - (14,378) - - - - - - 15,333 15,333
	- - 3,294 1,009 - - 15,333 19,636
	- - - - 340 - - 340 - 1,352 - - (640) - (712) - - (464) - - - - - (464) - - - - - - (842) (842)
	89,269 (64) (7,873) 14,763 5,787 990 104,250 207,122
	90,259 - (11,762) 8,557 6,266 - 83,602 176,922 - - 5,026 - - - - 5,026 - - 4,647 - - - - 4,647 - - - 2,298 - - - 2,298 - - - (689) - - - (689) - - - (10,166) - - - (10,166) - - - - - - 9,677 9,677
	- - 9,673 (8,557) - - 9,677 10,793
	3,000 - - - - - - 3,000 - - - - 66 - - 66 - - - - 332 - - 332 - 231 - - (1,622) - 1,391 - - (307) - - - - - (307)
	93,259 (76) (2,089) - 5,042 - 94,670 190,806

The Condensed Consolidated S tatem ent of Changes in E quity should b e read in conjunction with the accom panying notes.

Page 9 of 22

IMDEX LIMITED

and its controlled entities

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 31 DECEMBER 2014

Notes Cash Flows From Operating Activities Receipts from customers Payments to suppliers and employees Interest and other costs of finance paid Income tax refunded Net cash provided by Operating Activities Cash Flows From Investing Activities Interest received Proceeds from the sale of SEH shares, net of costs 3 Payment for property, plant and equipment Overdraft acquired on acquisition of 2iC Australia Pty Ltd 9 Net cash provided by Investing Activities Cash Flows From Financing Activities Shares purchased on market to satisfy performance rights Hire purchase and lease payments Proceeds from borrowings Repayment of borrowings Dividend paid to owners of the Company 8 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 2014 31 Dec 2013 $’000 $’000 107,196 112,537 (101,434) (106,863) (1,615) (1,470) 223 2,243
	4,370 6,447
	61 36 17,003 23,649 (9,681) (5,535) (163) -
	7,220 18,150
	(307) (464) (90) (133) 4,000 - (16,268) (18,664) - (842)
	(12,665) (20,103)
	(1,075) 4,494
	10,070 9,979 574 404
	9,569 14,877

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

Page 10 of 22

IMDEX LIMITED and its controlled entities 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 half year condensed consolidated financial statements have been prepared using the same accounting policies as used in the annual financial statements for the year ended 30 June 2014, other than for the impact of the adoption of new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to the consolidated entity and effective for annual reporting periods beginning on or after 1 July 2014.

Adoption of new and revised Accounting Standards

There have been no new and revised standards that have had a significant impact on the measurement or disclosure requirements of the Group.

Critical Accounting Judgements and Key Sources of Estimation Uncertainty

In the application of the Group’s accounting policies, management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgements. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the entity’s accounting policies

Management has not made any significant critical judgements in the process of applying the Group’s accounting policies.

Key sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

Use of forecasts

The directors have considered a number of factors in regard to any forward looking estimates. Imdex’s results for the period ended 31 December 2014 reflected the subdued activity levels within the minerals industry due to the cyclical downturn however positive signs of improvement were evident. The recent subdued activity in the oil and gas industry due to the drop in oil prices has also been considered. The use of estimates is inherently uncertain and requires a significant level of judgement. Forward looking estimates have been used in the preparation of the financial report in respect of impairment of assets, recognition of deferred tax assets, the appropriate level of provisions and preparation of the financial report on a going concern basis. Management and the Directors have concluded that appropriate assessments have been made with respect to the use of forecasts in the preparation of the financial report.

Page 11 of 22

IMDEX LIMITED and its controlled entities NOTES TO THE FINANCIAL REPORT

1. Summary of Significant Accounting Policies (continued)

• Impairment of Goodwill and Intangibles

Determining whether goodwill and intangibles are impaired requires an estimation of the value in use of the cash-generating units to which goodwill and intangibles are attributable. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. A forward looking estimation of this nature is inherently uncertain. A goodwill amount of $60.7 million and intangible assets of $2.8 million have been recognised on the face of the consolidated statement of financial position.

• Recognition of net deferred tax asset

A net deferred tax asset of $19.4 million has been recognised on the face of the consolidated statement of financial position. The largest component of this asset is the future tax benefit of depreciation of unrealised profits in property, plant and equipment items. This tax benefit will be realised progressively over the next 3-5 years as these assets are depreciated or sold. This net asset has been raised as it is considered more likely than not that it will be realised. In making this assessment of likelihood a forward looking estimation of cash flows and the likelihood of business success needs to be made up to 5 years into the future. A forward looking estimation of this nature over 5 years is inherently uncertain.

Fair value of performance rights

Performance rights are inherently complex to value due to their nature and relationship to the share market and its uncertainties. The Imdex Group therefore engaged valuation professionals to perform a valuation. The models used by the valuation professionals, although they are industry standard models, are subject to limitations and uncertainties.

Provisions and contingent liabilities

The Group exercises judgement in measuring and recognising provisions and the exposures to contingent liabilities related to pending litigation or other outstanding claims subject to negotiated settlement, mediation, arbitration or government regulation. Judgement is necessary in assessing the likelihood that a pending claim will succeed, or a liability will arise and to quantify the possible range of the financial settlement. Because of the inherent uncertainty in this evaluation process, actual losses may be different from the originally estimated provision.

As announced to the market on 13 March 2014, Imdex’s subsidiary the Australian Mud Company Pty Ltd (AMC), undertook precautionary measures for the containment of an imported product used in some drilling operations within Queensland, Australia. The measures were taken following notification that certain batches were contaminated. Costs relating to the product containment incident are unlikely to be recoverable. As a result, management has made an estimate of the costs to remediate and has provided for these costs (refer to note 6).

Page 12 of 22

and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

2. Other Expenses

2. Other Expenses
		Half Year Ended	Half Year Ended
		31 Dec 2014	31 Dec 2013
	Notes	$’000	$’000
Other expenses for the period include:
Bad debts		431	1,807
Foreign exchange loss		259	654
Obsolete stock		295	548
Product containment	6	2,142	-

3. Financial Asset Available for Sale

Notes Current Financial Asset Available for Sale Investment in Sino Gas and Energy Holdings Ltd (SEH) (i)	31 Dec 2014 30 Jun 2014 $’000 $’000 - 14,705

(i) At 31 December 2014, Imdex had disposed of its entire shareholding in SEH. At 30 June 2014, Imdex held 91.9 million fully paid ordinary shares in SEH. This amounted to 6.01% of the issued share capital of SEH.

This asset was non-core and accordingly, this investment was classified as a Financial Asset Held for Sale and carried at fair value in prior periods.

During the current period Imdex sold the remaining 91.9 million shares of its SEH shareholdings at a share price of 18.5 cents per share to realise gross cash proceeds of $17.0 million at a book profit before tax of $14.2 million.

During the half year ended 31 December 2013, Imdex sold 130 million shares of its SEH shareholdings at a share price of 18.5 cents per share to realise gross cash proceeds of $23.6 million at a book profit before tax of $20.1 million.

SEH shares have previously been accounted for as a financial asset held for sale, with revaluation gains/losses recorded within other comprehensive income (net of tax). Historical revaluation gains up to the date of disposal of $10.2m (net of tax) have been reclassified at the date of disposal from Other Comprehensive Income to the Statement of profit or loss.

The above transaction has had the following impact on the Investment Revaluation Reserve:

Investment Revaluation Reserve Balance at beginning of the financial period Net gain arising on revalution of SEH shares to market value Income tax relating to gain arising on revalution of SEH shares to market value Cumulative profit reclassified to profit or loss on sale of SEH shares, net of tax Balance at the end of the financial period	31 Dec 2014 30 Jun 2014 $’000 $’000 8,557 13,754 2,298 17,107 (689) (5,132) (10,166) (17,172)
	- 8,557

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IMDEX LIMITED and its controlled entities NOTES TO THE FINANCIAL REPORT

4. Investment in Associate

VES International (VES) is registered in the British Virgin Islands and operates an oil and gas services business using the technology licensed to it by Imdex Limited. The shares of VES are not publicly listed on a stock exchange and hence published priced quotes are not available.

The investment is accounted for under the equity method and has a reporting date of 31 December 2014.

Total Revenue Total profit for the Period Total profit for the Period includes the following: Depreciation Amortisation Income Tax Expense Current Assets Non Current Assets Total Assets Current Liabilities Non Current Liabilities Total Liabilities Net Assets Share of Net Assets of Associate Opening cost of investment in Associate Share of profit of Associate Exchange differences arising upon translation of Associate’s net assets Closing cost of investment in Associate Financial information in respect of the Associate is set out below: The Investment in Associate comprises the following:	Half Year Ended 31 Dec 2014 Half Year Ended 31 Dec 2013 $’000 $’000 41,455 32,384
	1,228 437
	(4,411) (4,071) (4,482) (4,083) (4,490) (2,668) 31 Dec 2014 30 Jun 2014 $’000 $’000 30,024 23,321 112,712 96,968
	142,736 120,289 (4,437) (6,269) (15,259) (11,996)
	(19,696) (18,265) 123,040 102,024
	37,650 31,219
	26,270 25,555 517 715 4,647 -
	31,434 26,270

During the period VES paid no dividends.

Page 14 of 22

IMDEX LIMITED

and its controlled entities NOTES TO THE FINANCIAL REPORT

5. Borrowings

5. Borrowings
Notes Current borrowings Secured At amortised cost Club Facility - AUD Tranche (i.a) Club Facility - USD Tranche (i.b) Club Facility - CAD Tranche (i.c) Hire purchase liabilities (ii) Non-current borrowings Secured At amortised cost Club Facility - AUD Tranche (i.a) Club Facility - USD Tranche (i.b) Club Facility - CAD Tranche (i.c) Hire purchase liabilities (ii)	31 Dec 2014 30 Jun 2014 $’000 $’000 4,476 4,476 293 255 2,101 1,983 125 188
	6,995 6,902
	17,444 26,004 13,617 14,420 1,751 2,643 144 172
	32,956 43,239

On 7 October 2011 a clubbed banking facility involving Westpac Banking Corporation and HSBC was put in place. This facility replaced commercial bills and Canadian bank loans in place at that date. In December 2013, this facility was renewed for a further three years.

As at 31 December 2014:

• (i.a) AUD denominated borrowings includes an amortising facility that is repayable in equal monthly instalments of $373,000 to 31 December 2016 on which date the balance remaining is payable, and a revolving facility that is fully repayable on 31 December 2016. Both facilities bear interest at floating rates.

• (i.b) USD denominated borrowings includes an amortising facility that is repayable in equal monthly instalments of USD$20,000 to 31 December 2016 on which date the balance remaining is payable, and a revolving facility that is fully repayable on 31 December 2016. Both facilities bear interest at floating rates.

• (i.c) CAD denominated borrowings include an amortising facility that bears interest at a floating rate and is repayable in equal monthly instalments of CAD$167,000 to 31 December 2016 on which date the balance remaining is payable.

The club facility is secured by the assets of entities in Australia, Canada, Chile, South Africa and Europe.

At 31 December 2014, the Group had unused banking facilities totaling AUD$12.8 million, comprising AUD$11.7 million and ZAR10.3 million (AUD$1.1 million). The above unused facility includes an amount that has been quarantined in relation to the product containment incident – refer to note 6.

• (ii) 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 5.96% (30 June 2014: 5.98%).

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IMDEX LIMITED and its controlled entities NOTES TO THE FINANCIAL REPORT

6. Provisions

Notes Current provisions Employee entitlements (i) Other provisions (ii)	31 Dec 2014 30 Jun 2014 $’000 $’000 3,800 4,011 14,414 12,174
	18,214 16,185

(i) The provision for employee entitlements represents annual leave with the majority of these entitlements expected to be taken during the coming year.

(ii) Other provisions

Balance at 1 July 2014 Net movement Balance at 31 December 2014	Kazakhstan business closure provision (iii) $’000 2,434 363 2,797	Office closure provision (iv) $’000 1,240 (265) 975	Origin product containment provision (v) Total $’000 $’000 8,500 12,174 2,142 2,240 10,642 14,414

(iii) The Kazakhstan business closure provison relates to the estimated costs of the closure of the Kazakhstan business (Suay Energy Services LLP). The movement for the period relates to foreign exchange movements.

(iv) The office closure provison relates to the estimated costs of the closure of the Osborne Park premises.

(v) As announced to the market on 13 March 2014, Imdex’s subsidiary the Australian Mud Company Pty Ltd (AMC), undertook precautionary measures for the containment of an imported product used in some drilling operations within Queensland, Australia. The measures were taken following notification that certain batches were contaminated. Costs relating to the product containment incident are unlikely to be recoverable. During the period management has determined that a further $2.1m be provided for.

Non-current provisions Employee entitlements	31 Dec 2014 30 Jun 2014 $’000 $’000 2,215 2,153

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IMDEX LIMITED and its controlled entities NOTES TO THE FINANCIAL REPORT

7. Issued Capital and Shares reserved for Performance Rights Plan

Notes Issued and Paid Up Capital - Fully paid ordinary shares (i)	31 Dec 2014 30 Jun 2014 $’000 $’000 93,259 90,259
Notes Number $'000 Ordinary shares Balance at beginning of the period 212,110,368 90,259 Issue of shares as consideration for the acquisition of 2iC Australia Pty Ltd 9 4,092,768 3,000 Issue of shares as part consideration for the acquisition of System Mud Industria e Comercio Ltda - - 31 Dec 2014	Number $'000 210,473,188 89,269 - - 1,637,180 990 30 Jun 2014
Closingbalance at end of theperiod 216,203,136 93,259	212,110,368 90,259
(i) Fully paid ordinary shares carry one vote per share and the right to dividends.
(ii) Shares issued in satisfaction of Performance Rights
No shares were issued in the current or prior years in satisfaction of performance rights. Performance rights obligations were settled by the purchase of existing shares on market.
31 Dec 2014 30 Jun 2014 $’000 $’000 Shares reserved for Performance Rights Plan Balance at beginning of the period - (952) Net movement (76) 952 Balance at the end of the period (76) - At balance date, the Company, through a Trustee, holds 103,775 shares in Trust for employees under the Performance Rights Plan (30 June 2014: nil).	31 Dec 2014 30 Jun 2014 $’000 $’000 - (952) (76) 952
	(76) -

No shares were issued in the current or prior years in satisfaction of performance rights. Performance rights obligations were settled by the purchase of existing shares on market.

	31 Dec 2014 30 Jun 2014	31 Dec 2014 30 Jun 2014
	$’000	$’000
Shares reserved for Performance Rights Plan
Balance at beginning of the period	-	(952)
Net movement	(76)	952
Balance at the end of the period	(76)	-
At balance date, the Company, through a Trustee, holds 103,775 shares in Trust for employees under the Performance Rights Plan
(30 June 2014: nil).

Page 17 of 22

IMDEX LIMITED

and its controlled entities NOTES TO THE FINANCIAL REPORT

8. Dividends

8. Dividends
Notes Recognised amounts Fully paid ordinary shares - final dividend franked to 30% Unrecognised amounts Fully paid ordinary shares - interim dividend franked to 30%	Cents per share Total $’000 Cents per share Total $’000 - - 0.40 842 Half Year Ended Half Year Ended 31 Dec 2014 31 Dec 2013
	- - - -

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IMDEX LIMITED and its controlled entities NOTES TO THE FINANCIAL REPORT

9. Acquisitions

Acquisition of entity - 2iC Australia Pty Ltd

With effect from 1 September 2014, Imdex Limited acquired 100% of the issued share capital of 2iC Australia Pty Ltd (2iC), an Australian based developer and supplier of exploration, production and technical products. 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
			adjustments	acquisition
	Notes	$’000	$’000	$’000
Trade and other receivables		307	-	307
Inventories		457	(160)	297
Property, plant and equipment	(ii)	293	2,058	2,351
Intangibles	(iii)	-	1,517	1,517
Trade and other payables		(709)	(118)	(827)
Deferred tax	(ii,iii)	(33)	(989)	(1,022)
Provisions		(110)	-	(110)
Fair value of net identifiable assets acquired		205	2,308	2,513
Goodwill on acquisition	(i)			649
Total purchase consideration				3,162
Total purchase consideration comprises
Issue of ordinary shares	7			3,000
Overdraft acquired				162
				3,162
				4 months to
				31 Dec 2014
Operating results of 2iC included in the Consolidated Income Statement of Imdex Limited				$’000
for the following periods:
Revenue				418
Total expenses (including income tax)				(412)
Profit after tax for the period	(iv)			6

(i) Goodwill arose in the business combination because the cost of the combination included a control premium paid to acquire 2iC. 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 2iC. 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) Property, plant and equipment of $2.3 million comprises the fair value of the rental equipment. A discount of approximately 50% - 60% to list price was used to determine the fair value of the rental tools, as this discount recognises the risk to a third party to manage the realisation of value via rental or sale of the equipment. Deferred tax of $0.6 million was raised on this asset.

(iii) Intangible assets of $1.5 million comprise the fair value of the patents owned by 2iC. The Ezy Latch & Posi-Connect patents have been licensed out and have been valued at $0.2 million by using a discounted cash flow of the licence fee in place of 50,000 Euro per annum. The EM3 Patent has been valued at $1.3 million based on the excess earnings potential for Imdex in relation to the ACT IV tool. These intangible assets are being amortised over their expected useful lives of 6 years. Deferred tax of $0.5 million was raised on these assets.

(iv) Had the acquisition of 2iC been effected on 1 July 2014, the beginning of the current year, the 2iC financial results included in the Imdex consolidated results for the half year would have been revenue of approximately $0.6 million with breakeven result. The results of 2iC 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.

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IMDEX LIMITED and its controlled entities NOTES TO THE FINANCIAL REPORT

10. Segment Information

The Group comprises the following reportable segments which are based on the Group's internal management reporting system:

(i) Minerals Division: This segment comprises the manufacture, sale and rental of down hole instrumentation, the manufacture and sale of drilling fluids and chemicals and related equipment and the provision of innovative cloud-based data management solutions to the mining and mineral exploration industry globally; and

(ii) Oil & Gas Division: This segment comprises the manufacture, sale and rental of down hole instrumentation and manufacture and sale of drilling fluids and chemicals to the oil & gas and geothermal industries globally.

(a) Segment Revenues

Notes Minerals Oil & Gas Total of all segments Interest income (b) Segment Profit/(Loss) Minerals Oil & Gas (i) Total of all segments Central administration costs (ii) Gain on the disposal of shares in SEH 3 Profit before income tax expense Income tax expense Profit attributable to ordinary equity holders of Imdex Limited Total revenue	Half Year 31 Dec 14 Half Year 31 Dec 13 $'000 $'000 70,761 63,653 30,680 28,463 Total
	101,441 92,116 61 36
	101,502 92,152
	8,260 4,900 (4,155) (2,671)
	4,105 2,229 (4,710) (4,514) 14,234 20,139
	13,629 17,854 (3,952) (2,521)
	9,677 15,333

(i) Includes the share of profit of Associate of $0.5 million (31 December 2013: $0.3 million) and the net movement in the Origin product containment provision of $2.1million (31 December 2013: nil) as detailed in note 6.

(ii) Central administration costs comprise 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 profit represents the 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.

(c) Segment Assets Minerals Oil & Gas Total of all segments Consolidated (i) Unallocated assets in the prior period comprised of the investment in Sino Gas Unallocated (i)	31 Dec 14 30 Jun 14 $'000 $'000 190,848 176,001 84,716 72,081 Assets
	275,564 248,082 - 14,705
	275,564 262,787
	& Energy Holdings Ltd.

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and its controlled entities NOTES TO THE FINANCIAL REPORT

IMDEX LIMITED

11. Financial Instruments

The fair value of the Group’s financial assets and liabilities are determined on the following basis:

Financial Assets and Financial Liabilities that are measured at fair value on a recurring basis

Subsequent to initial recognition, at fair value financial instruments are grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

Levels are defined as follows:

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2 fair value measurements are those derived from inputs other than quoted prices included with Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

At 31 December 2014, the Group has an interest rate swap liability which is classified as level 2. There were no transfers between levels in the period.

Financial Instruments	Fair value as at	Fair value as at	Fair value hierarchy	Valuation technique and key inputs
	31/12/2014	30/06/2014
Interest rate swap liability	$92,000	$80,000	Level 2	Valued using discounted cash flow techniques based on forward interest rates from observable yield curves at the end of the reporting period, discounted at a rate that reflects the credit risk of the counterparties
Financial asset held for sale	Nil	Listed equity securities in Sino Gas and Energy Holdings Ltd (SEH) - $14,705,000	Level 1	Quoted bid prices in an active market

Financial Assets and Financial Liabilities that are measured at fair value on a non-recurring basis

At 31 December 2014, the carrying amount of financial assets and financial liabilities for the Group is considered to approximate their fair values.

Page 21 of 22

and its controlled entities

IMDEX LIMITED

NOTES TO THE FINANCIAL REPORT

12. Contingent Liabilities and Contingent Assets

The Group is party to legal proceedings and claims which arise in the normal course of business. Any liabilities may be mitigated by legal defences, insurance, and third party indemnities. Unless recognised as a provision (refer Note 6), management do not consider it to be probable that they will require settlement at the Group’s expense. Whilst the outcome of these claims are, by their nature, uncertain, the directors do not currently anticipate that the outcome of the proceedings either individually, or in aggregate, will have a material adverse effect upon the Group’s financial position.

A provision is recognised related to pending litigation or other outstanding claims where probable and estimable. Actual costs can differ from estimates for many reasons. For instance, settlement costs for claims and litigation can vary from estimates based on differing interpretations of laws, opinions on responsibility and assessments of the amount of damages. Our in-house legal counsel regularly assesses contingent liabilities and in certain circumstances, outside legal counsel is utilised.

As at 31 December 2014, the main contingent liability relates to potential costs associated with the product containment incident which have been provided for based on management’s estimate of the costs to remediate (as detailed in note 6). In making this assessment a forward looking estimate has been made of future cash flows and the likely outcome of remediation negotiations. Because of the inherent uncertainty in this evaluation process, actual losses may be different from the originally estimated provision.

13. Subsequent Events

There are no matters or circumstances that have arisen since the end of the half-year which will significantly affect, or may significantly affect the state of affairs or operations of the reporting entity in future financial periods.

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