SDI LIMITED — AGM Information 2005

Nov 13, 2005

.A(C.N. Gos 075 581 , A.B.N. 27 008 075 581

Hascl Office 15.3 Burnsdon St Mayswater, P.O. Box 314 | fax: 461 3 8727 7222 Victoria, 3153 Australia – toll tree 1 800 337 003 Vww.sdc.com.au

1 pfg +61 3 8727 7111 | Info@sck.com.au

SDI Limited Chairman's address Annual General Meeting 14 November 2005

As was made clear in our very forthright Annual Report, which you should have all received, it has been a very difficult year for the Company having a major profit decline after 7 very strong and record years. The reasons for the setback have been widely canvassed and our response has been clearly articulated in the Annual Report, so I am not going to dwell on them again here. Suffice to say that if there are any outstanding questions that you have, I will give you an opportunity before this meeting closes, to ask them.

What I am happy to advise you of today is that most of the issues affecting last year's financial results have not recurred in the first four months of trading in the current financial year. Our first quarter sales were up 9% on last year and this trend is further reinforced by sales for the first four months of trading showing an 11% increase on last year. The first four months of sales has shown that our amalgam sales are back to our expectations representing 46% of our total sales. while total North American sales have increased by 32% and total European sales by 14% on last year. This has contributed to our margins returning to the traditional higher levels. We remain confident that our profit recovery is underway and that our current profit quidance of $5m to $6m will be achieved.

For the record, our actual result for the year ended 30 June, 2005 were sales of $45.9m, an increase of 8% on the prior year but more particularly, sales were up by 11% in the January to June half year compared to the corresponding prior period, and this was what gave us confidence for the trend outlook at the time of announcing our new year profit quidance.

As part of our response to last year's result, we have been working to extend our distribution networks further particularly in our higher margin trading countries. Our Managing Director, Jeffery Cheetham will enlarge on this when he addresses you, but suffice to say, we are very excited about some of the arrangements that we have been able to negotiate which, we believe, will help underpin future growth.

I am happy to report that our Japanese subsidiary is picking up some momentum and is our belief that we should achieve a 'break even' outcome this year.

Over the last 2 years, the Company has invested more than $8m in R & D and this will ensure a continued rollout of new products. It should be recognised that R & D investment is a fundamental part of our business expansion because unlike many other companies we do not have opportunities to make acquisitions locally.

SDI is also well on the way to fully installing the SAP Enterprise Resource Planning system across our entire business with the USA already running the system and Europe to come on-stream later this year. It will not be long before our global network will be operating on this world-class system all being monitored and maintained from our Bayswater headquarters.

Capital expenditure in automating our production lines will continue. This will help us to get closer to a just-in-time inventory system, therefore enabling quicker delivery times, improved stock turnover, and ultimately higher margins.

Your Board is confident that with our ongoing investment in production improvements, research and development, new and expanded markets and, of course, investing in our people, that SDI will reward its shareholders with continued growth. We are satisfied that our business is 'back on track'.

The Company has successfully adapted to the new International Accounting Standards (AIFRS) and, in fact, will report its half-year ended 31 December 2005 using those new standards.

In conclusion, I would like to take this opportunity of thanking my fellow directors for their work and deliberations throughout the year and our management team and staff for remaining focussed and working together to ensure that we move forward with optimism and confidence in restoring SDI's profitable growth into the future.

Thank you for your attention.

Mr. A.J. Bardsley Chairman SDI Limited.