WATERCO LIMITED — AGM Information 2008

Oct 30, 2008

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WATERCO LIMITED A.B.N. 62 002 070 733

P O Box 230 Rydalmere BC NSW 1701 Australia Tel: (+ 61 2) 9898 8600 Fax: (+ 61 2) 9898 1877 www.waterco.com

Chairman’s Address to the Annual General Meeting 31 October 2008

Ladies and Gentlemen

You would have read the report on the 07/08 operations included in the Annual Report. At this meeting, instead of repeating these details, I would like to review the factors that influence the outlook for the new financial year 08/09.

We have just completed four months of trading in the new financial year and, with this, I would attempt to provide you with a view of our expectation for the full year.

Sales in Australia and New Zealand, year to date, are marginally ahead of the previous corresponding period. While this might have given us reason to be optimistic in a normal year, the uncertainties caused by the current global financial turmoil makes it hard for us to expect a significant improvement over the rest of the financial year. The last company-owned Swimart store in New Zealand has been sold, allowing the company to focus on its franchisor role and opening new stores.

In the Northern Hemisphere, in Canada, USA and Europe, our expectations are positive, with forward orders in Canada way ahead of the previous corresponding period. Again, with the uncertainties that we face today, it would be prudent for us not to foreshadow an improved financial year, compared to the previous, on this basis.

At Waterco Far East, production is now back to normal, after the fire in August last year, with the production level exceeding previous year’s. Insurance claims have now been fully resolved, largely to our satisfaction.

Before the global financial turmoil of the last one month, we had positive expectations for the remainder of the financial year. Of the events of the last month, the most significant impact on our business results from the reduction in value of the Australian Dollar against the US Dollar. This reduction of the Australian Dollar would mean that the cost of our imports would rise and will create pressure on our trading margins in Australia and Europe. In line with the market in which we operate, we will be considering price increases of our goods to offset our increased cost. We will also be seeking to renegotiate prices of raw materials, which our suppliers might have quoted us, when commodity prices were considerably higher than they are at present.

We have previously indicated that we would achieve a Profit Before Tax (and before Unrealized Foreign Exchange Differences on Intercompany Loans) of $4m for 08/09. At last report date, we have had to provide for exchange differences on foreign-currency denominated accounts payable due to the reduction in value of the Australian Dollar against the US Dollar. Assuming that the value of the Australian Dollar remains at the current level for the following months, we expect to see a reduction in our original forecast Profit Before Tax (and before Unrealized Foreign Exchange Differences on Intercompany Loans) to $3.2m.

I would like to thank Shareholders for their continuing support, and my fellow Directors, the Management and Employees for the efforts they have put in during the year.