DATADOT TECHNOLOGY LIMITED — AGM Information 2008

Nov 25, 2008

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DATADOT TECHNOLOGY LIMITED

ANNUAL GENERAL MEETING

26 NOVEMBER 2008

ADDRESS BY

ALLAN FARRAR CHAIRMAN

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Ladies and Gentlemen,

I am pleased to report that in 2008 the Group realised its first annual net profit since its public listing in 2005. The net profit after tax of $1.305 million represents an improvement in the bottom line of $3.329 million. Although nearly half this result was due to an income tax benefit of $630,594 as a result of the recognition of carried forward tax losses in the USA of $886,488, the Group achieved significant improvement in sales and revenue growth and cost containment. Each of the Group subsidiary companies and DataTraceDNA Pty Limited, the DataDot TechnologyCSIRO joint venture company, improved its performance in 2008. Annual Group sales revenue rose 7 per cent, consolidated revenue rose 11 per cent, gross operating margin increased 3 percentage points, operating expenses declined 14 per cent and EBITDA improved by $2.58 million. The result is pleasing in view of the strong appreciation of the Australian dollar against both the South African Rand and US Dollar, which depressed the effective yield from both regional markets.

However, the Directors recognise that there is considerably more which can be done to improve the performance of the Company. I will address some of these initiatives later in this address.

Whilst the result for the 2008 year reflected a significant improvement on prior periods the Group is approaching the current year with caution due to the global economic downturn particularly with respect to the impact of the downturn on the motor vehicle industry, one upon which much reliance has been placed by the Group in previous years. Notwithstanding the depreciation of the Australian dollar versus other foreign currencies in more recent times which will have a significantly positive effect in financial year 2009, there remain numerous challenges ahead.

The impact of the downturn on the motor vehicle industry has, as you are all aware, been quite dramatic and whilst Group companies have been impacted, particularly in South Africa, action taken by management to redirect the focus of the sales and marketing effort into the Utilities and Equipment sectors of the market has been successful in compensating for some of the reduction in motor vehicle business.

Australasia

In Australasia total revenue rose by 21 per cent to $8.4 million and net profit after tax rose by 41 per cent to $2.31 million due to licence fees, higher product sales and reduced operating costs.

USA

In the USA the effect of cost reductions introduced in 2007 underpinned a modest operating profit of $15,403 generated by DataDot Technology USA Inc. New management and sales personnel have been appointed, overheads have been significantly reduced, and product sales in the second half of 2008 were 27 per cent higher than the first half. Further growth had been expected in sales to major vehicle dealer distributorships but this may well have stalled, at least temporarily. However, growth is expected in other markets in 2009 with Ian Allen to focus on the generation of revenue in the USA and Europe.

South Africa

In South Africa, the sales cycle over the year was the reverse of the USA, with results in the second half lower than the first half. Across the whole year, product sales revenue in the functional currency increased by 34 per cent, which reduced to 15 per cent after conversion into $AUD. Total revenue rose by 15.7 per cent to $3.546 million and net profit after tax by 56 per cent to $345,000. Although total new vehicle sales in this market have declined sharply in recent months, vehicle theft remains unacceptably high and there is potential for further market penetration of new vehicle brands.

I will speak to the issue of the South African business later in this address.

UK and Europe

The UK subsidiary increased product sales revenue in sterling by 69 per cent, which reduced to 60 per cent after conversion into $A, and while the bottom line improved by 30 per cent the company recorded a net operating loss of $299,415. Revenue generation and a drive toward a positive contribution from this market remains a high priority in 2009.

DataTraceDNA

The share of the loss from DataTraceDNA Pty Limited attributable to DataDot Technology Limited was $586,430, a reduction of $136,210, or 19 per cent. Management has recently taken steps to reduce DataTraceDNA Pty Limited expenditure by more than $500,000 annually. Even though it is taking longer than anticipated to bring revenue on stream from the sale of product, Directors are confident that the operational savings, combined with expected revenue growth in 2009, will significantly improve the trading position of this business in the next period.

Cost Control

During the 2008 financial year and in the months leading up to this Annual General Meeting the Group, the Directors have been undertaking an extensive review of its operating cost base. Items identified combined with new cost focused initiatives introduced over the last few months are expected to reduce operating overheads by in excess of $1.5 million per annum. Your Directors continue to search for other areas where efficiencies can be gained without jeopardising the outlook or opportunities of the Company.

One example is the decision taken by a number of senior executives to accept substantial pay reductions and a shift to a more commission orientated basis of remuneration by the sales team. These measures are expected to be fully documented and effective within weeks.

In addition, Ian Allen has agreed to move into an International sales and marketing role to focus all his attention on the delivery of sales and licensing revenue for the Group. In doing so, Ian has decided to step down as the CEO of the Group and pass the day to day management of the company to new COO Mr Ben Bootle who will commence with us in December.

Ian’s move to this new role will give rise to cost savings of approximately $150,000 per annum for the Group as he will be remunerated in future based on sales performance.

I would like to express my appreciation to those executives who have assisted the company during this transition period.

DataDot Robot

During the year commercial prove-out of the DataDot robot was successfully completed across four vehicle brands at the largest vehicle import centre in Australia operated by Prixcar, based in Melbourne. Although the AusIndustry Commercial Ready grant scheme was discontinued in the recent federal Government budget, and funding of this particular project was scheduled to conclude in June 2007, approval has been given to continue funding of the on-line robot development until the end of December 2008, not beyond December as reported in the Annual Report.

Corporate Governance

The Group’s policy of improving high governance standards was further strengthened with the formation of a Risk Management & Compliance Committee, comprising non-executive Directors, and two management teams, responsible for product development and sales and marketing, respectively. As a consequence, it is evident that standards in key operational areas have lifted.

Strategic Direction

With regard to strategic settings and as indicated in my earlier comments, Directors and management are taking action to reduce the concentration of the motor vehicle industry as principal revenue source for the Group’s core product, DataDotDNA. The aim is not to shrink the size of our vehicle business, but to grow the non-vehicle market at a faster rate by diversifying the application of DataDotDNA across a broader range of market segments. Several such channels - heavy industry, communication infrastructure and plant and equipment in particular – have sought our assistance in curbing the escalating rate and cost of product theft. In response we have developed DataDot Metallic , a microdot metallic marker which is applied using an aerosol container and which, being metal, can withstand the rough and tumble of heavy industry far better than the standard poly substrate DataDot. Given the response of the target markets, including plant and equipment operators and power transmitters, which are using DataDot Metallic to mark copper wire, Directors expect solid growth for this new product in 2009.

New Product

In our Annual Report it was stated that the Group is also about to launch DataDot i Find , a security solution combining the DataDot Tracker, DataDotDNA and potentially a theft warranty. Since issuing the Annual Report it has been decided to defer that product launch, due to the significant decline in the value of the Australian dollar and consequent impact upon imported product components. It remains our

view that DataDot i Find will have application across a wide range of markets when circumstances become more favourable to its launch.

New Zealand

After a protracted process, in March 2008, the New Zealand authorities announced that mandatory Whole-of-Vehicle-Marking (WOVM) for all newly imported passenger vehicles under 15 years old would commence in the period between from July 1 and September 1, 2008. This announcement completed the administrative implementation process that commenced in February 2005 when the New Zealand Government announced its mandatory WOVM policy. By the end of March, however, the New Zealand Motor Industry Association launched legal proceedings for an order to set aside the official WOVM Notice on technical legal grounds that relate to the issuance of Rules by Ministers and Notices by administrative officials. The Crown consented to the application for an injunction until the matter is heard and determined. We are advised that the trial is set down for 9 February 2009.

Directors are no less frustrated than shareholders by this latest development as it has prevented the emergence of a significant additional revenue stream from July 2009. The Board has taken advice on the merits of the application and on the course of action that will best serve the interests of shareholders, and has applied for and been granted leave to be joined in the proceedings as a co-respondent with the Government. This will allow the company access to the evidence and, subject to any directions of the court, allow the company to test the evidence and make its own submissions to the court. At this stage it is not possible to be any more precise regarding the detail of the case or the further time that will elapse before final judgment.

DataTraceDNA Developments

Our joint venture company, DataTraceDNA Pty Limited, continues to develop commercial applications for specific industries in the three market segments identified in 2007:

• High Security Solutions;

• Industry Solutions; and

• Bulk Material Solutions.

In each of these areas the company is in various stages of discussion or product testing with potential customers. In all cases the engagement timeframes are determined by the potential customers and without exception have proven to be more protracted than our earlier estimates due to extended product testing protocols. In High Security Solutions, agreement has been reached with Gopsons, the largest security printer in India, to make DataTraceDNA their exclusive forensic tracer. Directors expect that applications will extend to include labels and tax stamps requiring a security feature. In Industry Solutions, the Company has recently launched a new textile product, Verifi TT, with AgResearch of New Zealand, and expects to announce shortly a supply contract with a North American injection moulding company that will use DataTraceDNA in polymer products. In Bulk

Materials our joint research work with Orica is continuing, a quality control application for concrete mixing will soon be available to that market and paint manufacturers are subjecting DataTraceDNA to extended durability tests. Owing to the longer than anticipated process of bringing these applications to market and generating revenue, Directors and management have reduced the company’s annual overhead by $500,000.

Outlook and Working Capital

As has been reiterated in this and many other forums the great uncertainty created by the global economic downturn, particularly within the motor vehicle industry upon which we have a strong dependence, has impacted the Group’s business.

Both Directors and management are monitoring trading performance very carefully and will continue to assess the capital requirements of the business Should further capital be required in the future it is our preference that any such capital will be to fund growth and expansion of the business in addition to our existing prospective opportunities.

South Africa

The Board has been in dialogue for some time with the two South African shareholders in DataDot Technology South Africa, who hold 57.5% of the equity, regarding the possible purchase of their interests in the company given the earlier positive financial prospects for that operation. This dialogue culminated earlier this year in a share buyback arrangement whereby DataDot Technology South Africa would buy back the holdings of the South African shareholders. These arrangements were subject to finance. Given the turmoil in the international capital markets, the financier withdrew, resulting in the buyback not being completed.

The relationship with the South African shareholders quickly deteriorated given their disappointment in the deal not closing and the subsequent significant deterioration in trading performance and they are now contesting the payment of accrued but not paid royalties, repayment of intercompany loans, Board voting rights and other matters relating to the shareholders agreement regulating the relationship between shareholders in DataDot Technology South Africa. They have also suggested that they can require specific performance on purported share disposals to DataDot Technology Limited. The Board has taken legal advice both in Australia and South Africa on these matters and believes that it has strong grounds to defend and/or resolve these matters favourably for DataDot Technology Limited.

However, these matters are not certain. Your Board continues to negotiate resolution of these matters with all options on the table including the possibility of selling its equity interest in DataDot Technology South Africa but retaining the royalty stream given the break down in the relationship with the South African partners resulting from recent events. It is also possible that litigation may ensue. You will be kept apprised of developments in this matter.

Staff and Directors

In conclusion and on behalf of the Board, I would like to express my gratitude to the management team and all employees for their effort and commitment. In particular, I want to acknowledge Ian Allen and John Richards.

Ian has been the Group’s CEO since 2000 and has led the Group with enormous passion and enthusiasm. He is now moving into an international role in which his sales and marketing skills can be used to best effect to help grow the Datadot suite of products in global markets, particularly in the United States and Europe.

I take this opportunity to thank Ian for his considerable and continuing efforts on behalf of the Group.

John, our Commercial Director, who has been with the company since its inception and who retires today as a Director of the company that he helped to found with Ian Allen and Brent McLaws a decade ago. John, many thanks for your years of pioneering effort in building this company from scratch. We wish you a happy and healthy retirement.

I would also like to express my thanks to my fellow Directors for their tireless efforts and considerable contribution during the past year and to thank our shareholders for their continuing support and to wish you all a safe happy and healthy festive season.