Imdex profit up 91 per cent after adjustments

Perth-based drilling products and services group Imdex Ltd has announced a 91 per cent profit increase to $8 million for the 2005-06 financial year, with the increase helped by two non-operational adjustments.

The company has written down its joint venture with the Dubai-based Rashid Trading Establishment to provide drilling fluids, chemicals and services to oil and gas industries operating in Saudi Arabia, costing the company $2.3 million, and reducing the carrying value of the venture to zero.

However, an uplift of $4.5 million in the value of the company's investment in Sino Gas & Energy Ltd boosted the company's profits.

After adjusting for the tax impact of these two items, the company posted a net profit from normal operations of $7 million, an increase of 114 per cent from the $3.3 million raised in normal operations over the previous year.

Imdex acquired three companies over the 2005-06 year for a total of $49 million in cash, shares and deferred payments. It bought South African drilling fluids supplier Samchem Ltd for cash and shares of $6.6 million last August, as well as Swedish survey equipment supplier Reflex Group for cash and notes totalling $25.4 million, and UK-based equipment manufacturer Chardec Consultants Ltd for $17 million in cash and deferred payments.

The company sold its mineral processing plant to Unimin Ltd on July 1 2005 for $6.3 million in cash. The company has also repaid all bank debt and maintains a strong cash position of $6.4 million at the end of the 2006 financial year.

Imdex directors expect continued growth driven by increased exploration drilling in Africa, Asia, Central and South America and China supported by strong ongoing demand for natural resources and energy commodities. The company aims to increase revenue by 45 per cent, with further improvement in EBIT margins.