PLEASE NOTE: GWA Trading Update released – 20 October 2011

Prior to the release of this report GWA provided the market with a trading update.

The update outlined the tough trading conditions being faced by GWA at present given the continued softening in market conditions. Key points include:

- 1H12 sales expected to be 8 – 10% below the pcp on a like for like basis;

- Trading EBIT expected to be down 5-10% for continuing operations;

- Continued deterioration of NSW market vs expected improvement by management;

- Consumer shift back to lower value traditional electric and gas storage water heaters impacting on Dux business;

- Absence of government stimulus spending having greater impact that expected;

- Renovation market declining with other areas of discretionary spending;

Operating cashflows however remain strong and the previously stated dividend policy is expected to stand.

As mentioned in our report, soft building activity will impact negatively upon GWA’s business, however this is a cyclical consideration and (at this point) not a result of GWA’s business model.

An updated full year guidance by management will be provided with the 1H12 results in February.

Our valuation may be subject to change upon review of this update.

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