Statement to the Shareholders

During the past years, and especially during 2007, the global outlook of the world economy has changed radically. The United States is no longer the sole determinant of the balance in supply and demand. Where 10 years ago a slowdown of the American economy would have immediately led to surpluses in raw materials and oil stocks, this is much less the case in the revised global economic context.

The new economic powers, the BRIC countries, absorb all oil, metal and plastic surpluses. Raw materials stocks are limited and appear to be insufficient to meet the current growth rhythm. It needs no mention that these shortages will create opportunities for new industries in the forthcoming decades, especially with regard to energy, sustainable construction, minimised energy consumption, mobility, and an optimized use of existing raw materials, alternative materials, etc. In these quickly changing and turbulent circumstances, the home and its neighbourhood will soon become the preferred place for relaxing, practicing Zen, resting and escaping from all the external pressures. In our efforts for a more efficient use of energy, and a reduction of CO² emissions, the existing, worldwide and often insufficiently insulated housing inventory will play an important role.

Within this macroeconomic framework, Deceuninck continues to implement its strategy that is directed towards innovation in new materials, while taking into account the new trends towards energy efficiency and increased living comfort.

At the same time, Deceuninck has gone through a metamorphosis at an operational level. Production capacity has been increased in the growth markets of Eastern Europe and Turkey, whilst at the same time cutting back in the mature markets of the West. The difficult restructuring of our operational activities in Germany forms the final stage of this exercise.

After the difficulties during 2006, 2007 has been the first year with improved results. Despite a difficult market climate, such as in the US, UK and Germany, and also despite the high costs of raw materials, transport and energy, Deceuninck has been successful in increasing margins. Sales during the past year amounted to 656.6 million euros, while the operational cash flow (EBITDA) rose by 12.3% to euros 60 million euros. The operational result after amortization of goodwill (EBITA) amounted to 18.3 million euros.
Deceuninck was able to compensate for the shrinking construction activity in the United States, the United Kingdom and Germany, with strong growth in Eastern Europe and Turkey, and through successful innovations in such mature markets as the Benelux and France.
Here we are referring to the success of Zendow, Twinson and our Deuctone colour strategy. These laid the basis for renewed growth dynamism in this mature market region.

Years of restructuring and revitalization measures have meant that enormous energy and extra effort was demanded from the personnel and the management throughout the world. Their entrepreneurial spirit, their support, loyalty, efforts and passion have assured that this operation could be carried out perfectly, and we herewith wish to express our thanks to them.

It speaks for itself that the results of 2007 are merely a first step in a positive direction, on the road to the objectives that are contained in our business plan for 2010. The foundations have been laid and now we can continue to work on the construction of a renewed Deceuninck, which has adapted itself to the new challenges that the new global economy has brought with it.