PETER F. CLARK Chief Executive Officer - CPI Plastics Group Ltd.
CEO'S MESSAGE TO SHAREHOLDERS 2007
2007 saw a continuation of the trend established in the back half of 2006 wherein the slumping U.S. economy negatively impacted on the sales of CPI’s products. Most affected was our Eon® Outdoor Living Products group where sales declined 26% year over year as consumer spending on home improvement projects and discretionary items was drastically cut back. Accordingly, our wholesale and retail distribution partners rationalized inventories and adjusted order patterns and volumes to a short-term needs basis. CPI’s Window Fashions business also suffered a setback, down 21%, in the much tighter consumer spending environment. In the face of these U.S. market realities, and with no certainty as to a timeframe for recovery,CPI took a very proactive approach early in 2007 by scaling back manufacturing operations and reducing staff and other operating costs. At the same time, CPI continued to develop new products and new markets in order to set the groundwork for future growth. New product and program development has always been the hallmark of CPI and will continue to be so to ensure future profitable growth. During 2007, CPI rapidly expanded distribution for our Eon® Pro Fence product which was positively received by the trade and consumer alike. Year-end saw the consummation of a new in-store stocking and special order program for Eon® Decking with a major home center customer in the U.S. As well, we participated in the rollout of an in-store deck merchandising kiosk with another major U.S. home center chain. Combined, these programs will provide Eon® Decking with unprecedented availability and visibility in the U.S. home improvement retail environment. In Q4 2007, CPI introduced our new Eon® Adirondack Outdoor Furniture collection. Combining the attributes of Eon® technology along with casual outdoor styling, the Eon® Adirondack collection has been enthusiastically adopted by a major Canadian retailer, a significant number of U.S. independent furniture retailers and a variety of dot.com retailers in Canada and the U.S. In addition, we have a good number of new products in the development pipeline for launch later in 2008. The current market dynamics – stubbornly high resin prices, the strong Canadian dollar and the weak U.S. economy continue to pose significant challenges for CPI. Our strategy of prudent investment spending, operations pared to reflect current volume realities and our risk management programs will provide CPI with the bridge over these troubled economic waters and help secure future growth. Peter F. Clark Chief Executive Officer March 2007

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