SDI LIMITED — AGM Information 2007

Nov 25, 2007

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SDI Limited Chairman’s Address AGM 26 November 2007

The financial year 2007 has produced a disappointing after tax profit of $4.1m, which in my opinion does not reflect the potential of the Company. Sales grew by 7.5% to $48.6 million but substantially below our targeted 10-15% per annum . Both sales and profit were affected by the unfavourable currency environment, the slower than expected rollout of the Riva product, and the strategy of re-evaluating promotional campaigns to smooth out sales peaks.

I am pleased to say that the news is not all grim. In fact, from an operational standpoint, it has been an excellent year with a revamping of our workflows through utilisation of our newest factories purchased in 2005 and a greater degree of automation of our work processes. These moves have enabled better inventory management and together with other working capital initiatives, we have been able to increase cash by $1.9m while also reducing our debt by $2.6m.

The Company is fully aware that its future is dependent on substantially improving our sales and in this regard, we are significantly investing in human resources in both sales and marketing to help drive those sales. Senior appointments have been made in Europe, North America and Australia. It needs to be emphatically stated however that the financial rewards from these appointments will not flow through to the Company immediately and it may be 18-24 months before we see the real benefits. We believe though that we had no alternative but to put our investment into future growth now to ensure that our sales will achieve our future expectations of 10 to 15% growth.

SDI spends a considerable sum each year on Research and Development and sometimes we receive criticism for not bringing out enough new products each year to warrant this expenditure. I think it is important to stress that we launch one or two new products each year and that continual expenditure in R & D is critical to the future growth of SDI to ensure that we stay competitive in the global market.

In summary, 2007 was very much a year of fine-tuning business processes and investing in future growth. The Company is still targeting 10-15% year-on-year sales growth but it may take a little longer to get there. We recently advised the market that anticipated profit for the 2008 year is likely to remain flat due to the

aforementioned expenditure on sales and marketing however your Board is confident that this is the correct approach.

In conclusion, I would like to thank my fellow Directors for their commitment to SDI and to their ongoing support of the Company’s management team. I want to thank Jeffery and his tireless management team for their work in improving our efficiency and consequently our cash flows, and of course I want to thank all SDI’s staff for their positive approach and embrace of change. I believe that, while we may have stalled in the last 3 years, the Company and its stakeholders can look forward positively to the future.

Thank you for your attention.