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2007 was a year of mixed fortunes for Tenon ®. While we were able to advance all of our strategic initiatives according to plan and report solid earnings in a particularly difficult macro-environment, unfortunately Tenon ® ’s share price was adversely impacted by a dramatic change in fortunes for the US housing market. The 2007 year saw a sharp decline in building activity in the US, a softening of remodelling spend for millwork products, and a strong appreciation in the New Zealand dollar – each of which had negative implications for earnings in the period. Despite this difficult environment, Tenon ® continued to execute its strategy to grow through selected acquisitions, to develop a platform to extract synergies across the entire Group, to eliminate costs throughout our supply chain, and to expand the breadth of our specialty product offerings. Highlights included:

• Stable year-on-year EBITDA of $20 million. This result, which was identical to that recorded in the previous financial year but which was achieved in a much more challenging market environment, was in line with market expectations
• A 6.5% increase in operating revenue for the business from $370 million in the prior year to $394 million
• The complete exit from the under-performing 50% investment in American Wood Mouldings (AWM)
• The purchase of 100% of Ornamental Mouldings (“OMI”) – a manufacturer and distributor of decorative mouldings
• The expansion of the market for our innovative and proprietary Armour Wood ® and LIFESPAN ® primed and treated outdoor finishing products
• The establishment of the One-Company platform to better leverage Tenon ® ’s scale in the US market and to extract synergies across the Group’s operations
• The successful refinancing of Tenon ®, which resulted in the establishment of a $100 million, five-year facility to support the Company’s current and future operational and strategic needs
• After balance date the step-up from 51% to 75.5% in our ownership of Southwest Moulding (“Southwest”), a manufacturer and distributor to the Pro-Dealer segment in the large Texas market, for approximately $7.8 million.