EXCO TECHNOLOGIES LIMITED

1999 ANNUAL INFORMATION FORM

November 30, 1999

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THE COMPANY

Exco Technologies Limited ( A Exco @ or the A Company @ ) was formed by articles of amalgamation dated July 28, 1986 under the Business Corporations Act (Ontario) amalgamating Exco Holdings Inc. and two other holding companies with Extrusion Machine Co. Limited ( A Extrusion @ ) and Qualitool Inc. Extrusion was founded by H.H. Robbins, the father of the current President of the Company, and has carried on business since 1953 under the trade name Exco. Exco carries on business through nine operating entities at nine plants. Seven of these plants are located in the Toronto area, one is located in Toledo, Ohio and one is located in Chesterfield, = Michigan. The Company s registered and principal office is at 130 Spy Court, 2^nd Floor, Markham, Ontario, L3R 5H6.

Exco is a design, engineering and high precision machining house operating principally in the tooling segment of the metalworking industry. Its business is carried on through the seven divisions and two subsidiaries shown in the diagram below, serving three distinct but related sectors; extrusion tooling, mould making and plastic mould components. Each operation = constitutes an autonomous profit centre within the Company, but draws upon Exco s pool of expertise and technology. The Company currently has approximately 546 employees.

Exco Technologies Limited
(Ontario)
Exco (1) Exco Engineering (1) Canalloy (1) (4)
(Ontario) (Ontario) (Ontario)
Alu-Die (1)
(Ontario) Elex (1) Extec (1) Edco, Inc. (2)
(Ontario) (Ontario) (Ohio)
Castool (1)
(Ontario)
Exco Extrusion Dies,
Inc. (2) (3)
(Michigan)

1. Division of Exco Technologies Limited

2. Indirect wholly-owned subsidiary of Exco Technologies Limited

3. Formerly Nova Tool & Die, Inc.

4. Business was sold effective October 1, 1999

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SELECTED FINANCIAL INFORMATION

1995-1999

(in thousands except per share amounts)

The following table sets out certain selected financial information for the fiscal years ending September 30:

No significant changes in accounting policy have taken place over this five year period. In 1998, the Company paid a stock dividend whereby shareholders received one additional share for every two shares held. The earnings per share figures and average shares outstanding have been adjusted to reflect this stock dividend on a retroactive basis. Since 1987, the Company has had no preferred shares issued or outstanding, nor has it paid any cash dividends on its common shares.

In 1994, Exco acquired an extrusion tooling facility in Markham, Ontario for cash consideration of $700,000. In 1995, the Company acquired Edco, Inc. for $2.7 million, satisfied by the issuance of 425,602 (adjusted for stock dividend) Exco common shares and payment of $380,000. In the first quarter of fiscal 1997, Exco acquired Nova Tool & Die, Inc. for $1.5 million, satisfied by the issuance of 207,653 (adjusted for stock dividend) common shares of the Company. (See A Business of the Company-History @ ).

The following table sets out certain financial information for each of the eight fiscal quarters up to and including the fiscal year ended September 30, 1999:

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There were no extraordinary items during this period. Fluctuations in quarterly earnings are the result of the volume, nature and mix of product shipped during each quarterly period.

It is not Exco = s current policy to pay cash dividends, however, the Company continues to review this policy.

The Common Shares of Exco Technologies Limited are traded on The Toronto Stock Exchange under the symbol XTC.

THE INDUSTRY

The metalworking industry involves the forming or shaping of metals. Exco operates in three separate but related sectors of the tooling segment of the metalworking industry, namely: (i) extrusion tooling, which involves the design and manufacture of extrusion dies; (ii) mould making, which comprises the design and manufacture of moulds for aluminium and magnesium die castings; and (iii) plastic mould components, which consists of the supply of standard components to the plastic mould making sector (sold effective October 1, 1999). These three sectors are described in more detail as follows:

Extrusion Tooling

Structure

Aluminium extrusion dies are made of round discs of high nickel chrome alloy tool steel which are machined by a combination of turning, drilling, milling and electric discharge machining ( A EDM @ ) and subsequently heat treated to a hardened state. Typical extrusion dies range in diameter from eight inches to eighteen inches, in thickness from one to ten inches and in weight from 50 to 500 pounds.

Aluminium extrusion dies are used in the production of aluminium extrusions. In this process, a preheated aluminium billet is forced through an aperture in the end of a cylinder causing the metal to assume the shape of the extrusion die.

Each extrusion die must be individually designed. As in any design, a combination of science and art is employed. The design and manufacture of extrusion dies has become increasingly complex as extruders require thinner wall thickness and finer tolerances.

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The majority of extrusion dies are custom-designed, with the balance being standard or repeat shapes. Orders are received on a daily basis from the aluminium extruders, as their products are usually delivered on short notice. In turn, extrusion toolers must respond with the design and delivery of dies within two or three weeks of being ordered.

The extrusion tooling sector is comprised primarily of small, independently operated, private companies, although several captive companies (owned by large multinational extruders) participate in die production.

Manufacturing Methods

Prior to the 1970 = s, aluminium extrusion dies were conventionally designed utilizing rule-of-thumb standards and manual techniques. Such dies were manufactured by turning, drilling, milling, sawing and filing. More recently, the manufacturing process has changed with the advent of a more scientific design approach enhanced by computer-aided design/computer-aided manufacturing ( A CAD/CAM @ ). The method of manufacture of these dies has also changed dramatically with the introduction of computer numerical control ( A CNC @ ) machining centres and EDM, particularly wire EDM.

EDM is the controlled vaporizing or disintegration of the die steel utilizing electrical spark.Conventional EDM uses a precision machined spark generator to control the ultimate finished shape, whereas wire EDM uses a travelling wire whose path is CNC controlled. The advent of this technology has made it possible to produce more complex shapes and achieve finer tolerances. As a result, extrusion tooling is at the forefront of metalworking technology.

These developments, which involve significant capital costs and require highly trained staff, have made it increasingly difficult for new companies to enter and compete in the extrusion die manufacturing industry.

Customers and the Market

Extrusion tooling customers include most of the primary aluminium producers as well as several independent extruders who in turn supply aluminium extrusions to custom fabrication companies or to their own captive fabrication divisions. Aluminium extrusions are used in an increasing number of applications. The most significant application is as a building material, specifically for window framing and architectural facings of buildings. However, the complexity and configuration of possible extrusions is virtually infinite. Applications of complex extruded components are used in the computer, electronic, automotive and aerospace industries. Since the individual die cost is a relatively insignificant part of the final extrusion cost, there continues to be a strong demand for extrusion dies.

The Company estimates that the extrusion tooling market in North America is approximately $200 million annually. Exco believes that it is currently the dominant supplier in the Canadian extrusion tooling market and that it accounts for approximately 5% of sales in the United States market. Exco Extrusion Dies, Inc. (formerly Nova Tool & Die, Inc.), located in

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Michigan, was acquired to provide a base from which the Company can advance its penetration of the U.S. market. Sales to the United States are growing due to a focused marketing effort and the Company believes there is significant opportunity to expand its presence in this market.

The North American extrusion tool industry is comprised of a few mid-sized players and thirty to forty very small operations. These businesses are all privately owned. Exco believes that the North American market will undergo consolidation over the next few years in response to an increasing demand for quality, faster delivery and very competitive pricing which require a significant investment in technology. Exco continues to make the investment it believes is necessary = to remain a dominant supplier in this market. Given Exco s size and access to capital markets, Exco management believes that it is in a better position than its competitors to prosper under these changing conditions.

The market in Central and South America is also significant and should continue to grow as those countries develop their infrastructure and economies. In addition, Exco = s exports to the Far East are growing. Exports to the United States, Central and South America, and the Far = East collectively represent about 64% of sales of the Company s extrusion tooling business.

Mould Making

Structure

Moulds produced by Exco are used to produce aluminium shapes called aluminium die castings. The die castings are produced by forcing molten aluminium into the mould under extremely high pressure, with the resultant die casting precisely reflecting the detailed shape of the mould. Increasingly, die casters are also producing large magnesium products, which require the manufacture of specialized moulds for magnesium die casting.

The moulds are made of high nickel chrome alloy tool steel and are produced through a combination of machining techniques including turning, milling, boring, drilling, tapping and EDM. They are subsequently heat treated to a hardened state.

Moulds produced range in size from several cubic feet to several hundred cubic feet and from approximately one ton to 75 tons in weight. These moulds may be used to produce such products as automotive parts, consumer appliances and industrial products.

Participants in the mould making sector are diverse and generally small owneroperated businesses. Business is derived by quoting in response to customer invitation.

Manufacturing Methods

As the moulds required by customers have become larger and more complex, the methods of design and manufacture have also become more complex. The moulds are produced by a combination of milling, boring, drilling, turning, tapping, EDM and polishing. CNC machining and CAD/CAM have been extensively applied to these processes resulting in more precisely finished moulds with improved tolerances.

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CAD/CAM equipment and CNC machinery have brought the mould making industry to the leading edge of technology. The high capital costs, the requirement for special facilities and the need for a skilled workforce inherent in utilizing advanced technology and equipment are constraints for all companies in the business, particularly newly established companies.

Customers and the Market

The primary customers of the mould making sector are the major auto makers. As well as doing their own die casting, the auto makers purchase some of their requirements from independent custom die casters. Aluminium die cast moulds are also used in the production of nonautomotive products.

The main application of die casting in the automobile industry is in the manufacture of engine and transmission components such as transmission housings, engine blocks, water pumps, oil pumps and differential housings. With the trend to smaller and lighter cars, inspired initially by escalating energy costs, aluminium, particularly die cast aluminium, has become a frequent choice of designers. As a result, aluminium is being used to manufacture an increasing number of automobile components.

The complexity and intricacy of the moulds have increased as designers incorporate more features into the die cast components. Dies have become larger and heavier as multiple components have been redesigned into single complex castings. It is possible with this moulding process to control tolerances with a high degree of precision.

As quality requirements have increased, the die making and designing process has become increasingly complex and sophisticated. Production time for moulds ranges from 12 to 48 weeks.

The Company estimates that the transmission mould making market in North America is approximately $200 million annually.

While to date Exco has supplied moulds to the North American market only, Exco = s goal is to become a global supplier. In particular, Exco believes that the European market represents a significant opportunity for it currently. In fact, subsequent to its 1999 fiscal year end, the Company received its first order for an engine block mould to be supplied to Daimler-Chrysler in Stuttgart, = Germany. In pursuing this market, the Company s strategy is to design and manufacture the moulds in North America, primarily at its Newmarket, Ontario facility and as the business develops, provide local support for service and maintenance in Europe.

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Plastic Mould Components

Structure

This business was sold effective October 1, 1999. However, it did operate throughout the Company’s 1999 fiscal year.

The plastic mould components sector comprised the supply of speciality standard components such as pins, bushings and fasteners to the mould making sectors.

This division of the Company was the exclusive Canadian distributor of standard metric mould components for Hasco Normalien ( A Hasco @ ), the world = s largest manufacturer of standard metric mould components.

Customers and the Market

Customers included nearly all metalworking companies, from large auto makers to individual mould makers.

BUSINESS OF THE COMPANY

History

The Company commenced business in 1953 when Herbert Henry Robbins founded Extrusion Machine Co. Limited as a machine shop, and shortly thereafter became a custom manufacturer of aluminium extrusion dies for Canadian aluminium extruders. Over the years, the Company has evolved from a A family style @ machine shop into a sophisticated tooling company.

= During the 1960 s, divisions were established in England, France, Germany and Australia expressly for the production of aluminium extrusion dies for the developing extrusion industry in those areas. Following the death of H.H. Robbins in 1975, his son Brian Robbins was appointed President of the Company.

As a result of a strategic decision to develop a strong technological base (through the = acquisition of advanced technology and machinery) to maximize growth, the Company s foreign = = interests were sold during the late 1970 s and early 1980 s. The sale allowed the Company to focus its investment and management efforts in its Canadian operations. During the 1980 = s the Canadian operation expanded and the concept of profit centres and divisionalization was initiated. The = = Company s product base grew through the application of the Company s existing and acquired = technology to other related industries. The Company s activities expanded to include the design and manufacture of components for military hardware (aircraft, vehicular and marine) and civilian aircraft, intricate components for nuclear reactors, very large moulds for automotive aluminium die = casting and the distribution and processing of tool steels and mould makers supplies.

In 1986, the Company sold common shares to the public through an initial public offering. Subsequently, the Company continued to expand in its established market niches.

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The nature of Exco = s business has essentially remained unchanged over the past five years, aside from the withdrawal from a non-core tool steel distribution business and the closure of a small division in 1993 which supplied naval hardware to Unisys for the AEGIS defence program.

The growth of the Company resulted in the commissioning of a new plant in Newmarket, Ontario to house Exco Engineering. In 1997 and 1998, this facility was expanded by 75% (the last phase was completed in the first quarter of 1998). This plant, now 135,000 sq. ft., is more than three times the size of the facility it replaced. As well, it has greater crane capacity and is equipped with larger and more sophisticated machine tools. Included in the facility is an in-house aluminium foundry which is equipped with a large capacity die casting machine which is used to sample and verify new dies as they are built. This machine, which can run dies of various sizes, provides a further service to existing customers and enables the export of verified dies to customers.

Within the last five years, Exco has made three important acquisitions. In July 1994, Exco purchased an extrusion tooling facility located in Markham, Ontario from Alcan Aluminium Limited. This purchase provided the Company with additional capacity in the extrusion tooling sector and proprietary technology. The purchase price was $700,000 and was paid from Exco = s cash resources.

In the first quarter of fiscal 1995, the Company completed the purchase of Edco, Inc. ( A Edco @ ), located in Toledo, Ohio. Edco manufactures and repairs transmission case moulds, employs 55 skilled employees and is strategically located for servicing the market for these products. The purchase price was $2.7 million and was financed by the issuance of 425,602 (adjusted for stock dividend) Exco common shares to the vendor and cash of $380,000. In addition, Edco = s debt totalling $1.3 million was assumed.

In the first quarter of fiscal 1997, the Company purchased Nova Tool & Die, Inc. since renamed Exco Extrusion Dies, Inc. ( A Exco Michigan @ ). Exco Michigan manufactures extrusion tooling. In November, 1999, Exco Michigan relocated to a new 35,000 square foot facility. The Company believes that Exco Michigan will provide an important platform from which Exco can expand its extrusion tooling business in the United States. The purchase price was $1.5 million and was financed by a private placement of 207,653 (adjusted for stock dividend) common shares to the = vendor. As part of the purchase, Exco Michigan s operating lines and term debt totalling $1.4 million were assumed.

Organization

Each of Exco = s nine plants services a particular industry sector and is operated as = an autonomous profit centre. The Company s head office staff consists of five persons who have responsibility for the collection of financial data, budgetary controls, corporate philosophy and policy.

Exco = s policy is to maintain each of its divisions at a size not larger than approximately 100 employees.

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The profit centre basis enables the Company to reward individual managers and employees for results generated directly by their performance. The maintenance of small divisions enables the Company to respond quickly to customer requirements and encourages innovation. As well, the independence of each plant allows Exco to react quickly to new business opportunities. This organizational structure allows decision making and cost control to occur at the operational level.

Extrusion Tooling (Exco, Castool, Alu-Die and Exco Michigan)

Extrusion tooling is produced by the Exco division located in Markham, Ontario, the Alu-Die division recently relocated to a new 30,000 square foot facility in Newmarket, Ontario, = the Castool division located in Scarborough, Ontario and by the Company s subsidiary, Exco Michigan, located in Chesterfield, Michigan. These divisions have approximately 268 employees in total. They design and manufacture aluminium and copper extrusion dies and supply them to aluminium and copper extruders in North America, Central and South America, the Far East and Europe. Significant customers include Caradon Indalex, Bon L and Alcoa (Kawneer). The Exco division has been involved in designing and supplying extrusion dies for over 40 years. Sales from these divisions account for approximately 43% of the Company = s sales.

Mould Making (Exco Engineering, Extec, Elex and Edco)

Exco = s involvement in the mould making sector is primarily through the production of moulds used in producing aluminium shapes. Moulds are produced at the Company = s Exco Engineering division in Newmarket, Ontario, the Extec division in Markham, Ontario, the Elex division in Scarborough, Ontario and its Edco subsidiary, located in Toledo, Ohio. Sales from this sector represent approximately 53% of the Company = s sales.

The Exco Engineering division is located in a 135,000 square foot facility and employs approximately 144 persons. It has machines with travels up to 22 feet and lift capacities of up to 70 tons. Exco Engineering supplies some of the largest and most complex moulds produced in the world. It has developed and applied many new techniques to this industry. For example, EDM enables Exco to machine sections as large as 500 millimetres. With this ability, Exco is able to more accurately machine mould surfaces, thereby reducing cost and the need for specially produced spare parts. Moulds supplied by Exco Engineering are used primarily in the automotive industry to produce transmission case castings and, more recently, engine blocks.

Extec was created in late fiscal 1993 to build mid-sized aluminium die cast moulds. Like Exco Engineering, these moulds are used primarily in the automotive industry, however, the castings produced by these moulds are usually smaller, for products such as transfer cases and chain case covers. Extec uses the same technologies as those employed at Exco Engineering. The plant is located in a 25,000 square foot facility in Markham, Ontario and employs 42 people.

Elex occupies a 20,000 square foot facility and employs 27 persons. It provides EDM services primarily to Exco Engineering and Extec.

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Edco was acquired early in fiscal 1995. It is located in a recently expanded 48,000 square foot facility in Toledo, Ohio and employs 55 people. Edco builds and repairs die cast moulds primarily for the automotive industry.

Moulds produced by these divisions can be used for both aluminium and magnesium. The mould making market is growing with the wider application of aluminium and magnesium. The Company is achieving sales increases as a result of both growth in these markets and by targeting new customers and programs.

Plastic Mould Components (Canalloy)

Plastic mould components were supplied through the Canalloy division which was housed in a 7,100 square foot leased facility in Scarborough, Ontario. This division was sold, effective October 1, 1999, subsequent to the Company’s 1999 year end. The division supplied standard mould components supplied by Hasco. Canalloy was the sole Canadian sales agent for Hasco and also had an exclusive licence to manufacture these goods in Canada if necessary to meet order requirements. This division employed 6 persons. It had a sales force covering Ontario and Quebec. Its customer base of approximately 500 was comprised of mould makers to the plastics industry. This division accounted for approximately 4% of the Company = s sales.

Manufacturing Methods

Exco employs state-of-the-art equipment (such as CAD/CAM and CNC) and techniques to design and manufacture the various dies and moulds. Exco believes that its commitment to advanced technology has been a key factor to its success. Products are produced using a combination of turning, boring, milling, grinding, drilling and EDM. Most of the Company = s products are produced from high nickel chrome alloy tool steel, of which there is abundant supply. Purchased products such as fasteners and pins are supplied by either mill supply houses or Canalloy.

Engineering and Research

= Approximately 25% of Exco s workforce are design engineers and technicians who have, in addition to formal training, significant industry experience. Exco works closely with universities and suppliers of advanced technology equipment and offers incentives to its own employees for further training and education.

CAD/CAM systems have been installed and are employed on a daily basis as an engineering aid. Exco has established standard design concepts and an extensive data bank from which it draws new and enhanced designs. This allows Exco to respond rapidly and effectively to a customer = s order. Exco is an innovative designer of both extrusion dies and aluminium die cast moulds. In addition, Exco has applied its extensive engineering expertise to other related fields in the precision machining industry.

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Exco operates its own diecasting machine in its Newmarket plant to test customer products. In addition to verifying dies as they are built, the operating experience and data acquired during this testing process is used to resolve production problems for its customers.

Exco = s engineers often work closely with the Company = s customers during the initial = design of the die cast product. Exco s engineers are not only responsible for design but also are an integral part of the manufacturing processes. They have an ongoing input into manufacturing by means of advising and proposing modes of manufacture and equipment employed. Exco = s engineering capability is employed as a successful marketing tool.

Quality Assurance

Exco believes that quality assurance is the most important factor in performance in the tooling industry, and therefore places a heavy emphasis on it.

Exco = s strategy is to employ the latest technology in quality assurance with the assistance of CNC co-ordinate measuring equipment which has been interfaced with the = Company s in-house CAD/CAM capability. This interfacing permits a closed loop production cycle in which the components can be initially detailed, using data and specifications supplied by the customer, on the computer, utilizing CAD, and subsequently manufactured and inspected by CNC in conjunction with the CAM capability. Quality testing is co-ordinated with the same initial data base and is integrated throughout the manufacturing process.

Exco = s quality assurance procedures have been formally documented and approved by its customers. During 1995, the Exco division, one of the extrusion tooling operations, was ISO = 9002 certified. During 1996, the Exco Engineering division, the Company s largest mould making division, was ISO 9001 certified.

The Company carries product liability insurance and has not experienced any claims.

Sales and Marketing

The Company believes that its best marketing tools are its engineering capability and its broad reputation for quality and reliability. Marketing is handled on a divisional basis and, with the exception of Canalloy, the Company has no staff dedicated exclusively to sales. Corporate policy is for sales contact to be maintained through the divisional manager and each division = s engineering department. In the extrusion tooling division, the Company employs sales = agents in the Far East, Central and South America. As well, the Company s experience with its U.S. subsidiary, Edco, Inc., has demonstrated the marketing advantages of owning a U.S. based manufacturer.

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The distribution of Exco = s 1999 sales of $118,295,000 by industry sector is as

follows:

Total sales outside Canada, primarily to the United States, accounted for = = approximately 72% of the Company s sales with approximately 5% of the Company s sales being outside North America. Exco = s markets are well defined and sales are developed through target marketing. During fiscal 1999, four customers accounted for approximately 46% of the Company = s sales. One of those customers, Daimler-Chrysler, accounted for approximately 33% of total sales.

Human Resources

Exco currently has approximately 546 employees.

None of Exco = s employees are subject to a collective bargaining agreement and Exco believes employee relations are good. Exco provides rewards to its employees through a combination of financial benefits and personal recognition.

Exco encourages further education of its employees and is an active participant in apprenticeship programmes. In addition, the Company co-operates with and supports several local community colleges and the University of Waterloo.

The Company has a Deferred Profit Sharing Plan for most employees of the Company based on a distribution of 5% of pre-tax profits to participants according to years of = service and salary level. The full amount of an individual s award is used to acquire common shares of Exco, through purchases on The Toronto Stock Exchange, which are then held by a trustee. Exco also has an Employee Stock Purchase Plan. As a result, all present employees who have been with the Company for at least six months are shareholders.

Management believes that the personal and financial rewards offered to employees have resulted in a very stable and highly skilled work force which includes a significant majority who are engineers, toolmakers and machinists. In addition, it is the Company = s belief that small operating divisions lead to better employee relations as management is able to work individually with employees on a daily basis.

Competition

The industry sector in which the Company is involved is competitive. Exco has been obliged to invest and innovate in order to achieve and maintain its competitive edge. Exco = s

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strategy has been to employ the latest technology and to emphasize quality and service through small plant flexibility combined with a highly trained workforce.

Exco believes that its diversity and flexibility give it a distinct competitive advantage = during both strong and weak economies. The Company s diverse customer and product base, the flexibility of its machinery and customer requirements for the manufacture of replacement dies and moulds and the servicing of previously manufactured products provide the Company with a broad economic base which enables Exco to minimize the effects of cyclical downturns which some of its customers may experience.

Management of Exco is not aware of any single competitor which manufactures both extrusion tooling and die-cast moulds. In the extrusion tooling business, Exco is the largest producer in North America and competes against approximately 40 smaller privately-owned = operations. Exco s two major competitors in the mould making business are private, U.S. based companies. The Company has many competitors, most of which are smaller than Exco and owneroperated.

Facilities

The Company = s facilities are described below:

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MANAGEMENTS = DISCUSSION AND ANALYSIS OF OPERATING RESULTS AND FINANCIAL CONDITION

Year Ended September 30, 1999 compared to Year Ended September 30, 1998

Operating Results

Exco = s sales for fiscal 1999 of $118.3 million were consistent with 1998 sales of $118.0 million. The increase in extrusion tooling sales of approximately 15%, primarily in the North American market, was offset by a decrease in sales of 10% in the die-cast mould operations. Die-cast mould operations experienced lower revenue in 1999, a direct result of program delays, pending reorganization and the consolidation of its customer base. Exco believes that this reorganization is nearing completion and will allow for the continued growth of the Company’s business.

Exco’s mould standards business, which represents approximately 4% of sales, was sold subsequent to year end. This business was not strategic to Exco’s primary tooling operations.

Gross margin increased to 40% from 35% in fiscal 1998. Exco’s substantial investment in its facilities and technology over the past four years has resulted in improved operating efficiencies and reduced subcontract costs. Exco believes that further improvement is possible as capacity utilization increases.

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Selling, general and administrative costs increased by $2.8 million to 13.8% of sales from 11.5% of sales. Exco experienced higher selling costs in the year as it continued to focus on the development of its foreign markets.

During 1999, Exco disposed of excess machinery and equipment for net proceeds of $3.1 million resulting in a $1.1 million accounting gain. In 1998, the accounting gain on dispositions was $2.0 million. Significant dispositions, as experienced in 1998 and 1999, are not anticipated in 2000.

Depreciation expense increased by $1.8 million or 17% to $12.5 million, reflecting Exco’s extensive capital investment program over the past four years. Depreciation expense has increased at a compound rate of 30% per year since 1996. Exco has built significant available capacity into several of its facilities in anticipation of growth and expects to benefit from this investment over the next few years.

Depreciation expense is not expected to increase significantly in 2000 as capital spending has levelled out.

Interest on long-term debt and other interest fell by 43% to $615 thousand reflecting both a reduction of long-term debt and operating line usage. During 1999, Exco’s operating cash flow exceeded its capital expenditure requirements and, accordingly, Exco was able to eliminate its operating lines by year-end. Exco completed the year net debt-free with a cash balance of $2.8 million.

Financial Resources, Liquidity and Capital Resources

Cash flow from operations, before changes in non-cash working capital, was $24.2 million, an increase of $3 million (14%) over 1998. This improvement resulted from an increase in net income of $921 thousand and non-cash charges of $2.1 million. Cash invested in non-cash working capital declined by $5.6 million. This decrease was primarily a result of the timing of billing and collecting of customer advance payments.

Exco invested $11.8 million in its facilities during 1999 and received proceeds on disposition of fixed assets of $3.1 million for net cash invested of $8.7 million. Fixed asset purchases of $5.3 million for the extrusion tooling operations and $6.5 million for the die-cast mould operations enhance capacity and technology in these businesses. During 1999, Exco commenced construction of a new 35,000 square foot extrusion tooling facility in Michigan replacing a much smaller, leased plant. This new facility will be completed and occupied during the first quarter of fiscal 2000. The die-cast mould operations completed the installation of boring mills, specifically designed to handle the machining of moulds weighing up to 100 tonnes. These boring mills were necessary to accommodate the increased size of the transmission and engine block moulds.

In 2000, Exco will invest approximately $15 million in capital assets and will likely exceed the anticipated 2000 depreciation expense by $2.0 million or 15%. This

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expenditure includes the completion of the above mentioned extrusion tooling facility in Michigan. The die-cast mould operations will continue to upgrade and re-build existing equipment and CAD/CAM systems. In addition, specialized equipment for the rapid prototyping of new die-cast component designs will be installed. This equipment will enable Exco to demonstrate to its customers new design concepts while significantly reducing the time and cost associated with existing methods.

During 1999, the Company’s operating cash flow exceeded its capital expenditure requirements. As a result, Exco was net-debt free by year-end with total cash of $2.8 million and debt of $800 thousand as compared to total debt of $20.1 million in 1998. During 2000, Exco again expects to be cash flow positive after planned capital additions. However, Exco still has available operating lines of approximately $33 million if required.

Exco’s Canadian operations negotiate sales contracts with customers in both Canadian and U.S. dollars. In addition, Exco purchases material in Canadian and U.S. dollars. Exco reviews its net foreign currency exposure on a ongoing basis. Exco did not enter into forward foreign exchange contracts over the previous year as the Company did not believe that the value of the Canadian dollar relative to the U.S. dollar or the probable range within which the Canadian dollar would trade posed a financial risk to the Company. Exco will continue to evaluate its present strategy.

Year 2000

Exco has completed a review of its computer systems including the computer controls utilized in manufacturing equipment, CAD/CAM, production control, accounting systems and networks. Internal and external personnel conducted this review and reported to executive management who, in turn, reported to the Board of Directors.

For many years, Exco’s strategy has been to purchase the latest technology available and continue to maintain and upgrade it to the latest standard. As a result, Exco found, in most situations, that its systems were Year 2000 compliant. There were, however, certain upgrades that were required. Exco’s engineering, manufacturing and administrative systems are primarily well known, off the shelf packages with readily available patches.

Exco has not specifically identified the costs associated with the Year 2000 issue separate from the costs associated with ongoing system upgrades and replacement. The Company does not believe that Year 2000 costs, distinct from Exco’s ongoing upgrade program, are material.

Exco has been in contract with suppliers that are critical to its operations. They have advised us that they are ready for the Year 2000.

Exco believes that it has made an effort to ensure that its systems are ready for the Year 2000 and that the impact, if any, on its business has been minimized.

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However, it is difficult to determine all potential problems which could arise because of the complexity of the issue and, in particular, the implications of suppliers, customers and other third parties to Exco’s systems.

Outlook

Exco’s die-cast moulds are supplied to the automotive industry while its extrusion tools are supplied to a variety of industrial product markets with an emphasis on the construction and automotive industries.

The automotive industry has embraced aluminum because it is lighter than the equivalent iron or steel structure, it assists in fuel economy and it matches or exceeds crashworthiness standards. The construction industry endorses aluminum as a building material because it is light, strong, corrosion resistant, easily maintained and has attractive design options.

The market for Exco’s tool building capability continues to grow. Recognizing this, Exco has invested $84 million in its facilities over the past four years. This is a significant sum considering Exco’s size.

Exco is now very well positioned to benefit from the growing market. Exco continues to make technological advances and demonstrates this to its customers. This practice ensures Exco’s continued leadership in the industry.

Although Exco has less than 5% of the U.S. market for extrusion tooling, it is the largest and most advanced operation in North America with the resources to continue to grow its business. As well, the rapid consolidation of Exco’s customer base has created a customer who demands a more sophisticated and advanced supplier. This trend should assist Exco’s growth objectives.

Exco believes that the demand for more fuel efficient automobiles will result not only in an increase in aluminum die-cast components but will also lead to technological changes to existing aluminum components. Exco’s die-cast mould business thrives on change since redesigned transmissions and engine blocks require new moulds. These changes have a greater impact on Exco’s die-cast mould business than the level of North American vehicle sales.

These market and technology driven factors, coupled with Exco’s leadership in its product niche, should result in continued growth and prosperity.

Year Ended September 30, 1998 compared to Year Ended September 30, 1997

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Operating Results

Exco’s sales grew from $99.6 million to $118 million in 1998, an increase of 19%. All product areas achieved sales growth in 1998.

Extrusion tooling sales increased by 14%. Export sales in this area increased by 12% primarily from markets outside Canada and the United States such as Europe, South America and the Far East. Extrusion tooling sales outside Canada and the United States represent 20% of total extrusion tooling sales.

The die-cast mould operations experienced solid growth in 1998 with an increase in sales of 23%. This growth came primarily from moulds for Ford and General Motors programs, although Chrysler continued to represent a significant portion of Exco’s overall diecast mould business.

Mould standards sales grew modestly despite some softening of the plastic mould market it served.

Gross margin increased to 35% from 34% in 1997. Exco’s significant investment in its facilities and equipment from fiscal 1996 through to fiscal 1998 has been, at time, very disruptive to its operations, and, therefore, negatively affected gross margin. In 1998, most of these projects were completed and management anticipated some improvement in gross margin. With minimal disruption to facilities in fiscal 1999, improvement should continue. In addition, certain underperforming operations showed significant improvement in the latter part of fiscal 1998 and improvement is expected to continue through fiscal 1999.

Although selling, general and administrative expenses increased by $1.7 million, they decreased as a percentage of sales to 11.5% as compared to 11.9% in the previous year. An increase in travel, selling and profit sharing costs was experienced in 1998 and will continue as Exco grows, however, as a percentage of sales, a significant change is not expected.

During 1998, Exco disposed of machinery and equipment which was excess to its requirements for net proceeds of $2.9 million. This disposal resulted in an accounting gain of $2.0 million.

Depreciation expense increased by $2.9 million, or 38% to $10.7 million, reflecting Exco’s extensive capital program. The increase in Exco’s depreciation expense and the corresponding negative impact on the financial results has, to date, been disproportionate to the benefit derived from the improvement in Exco’s facilities. Management expects significant future benefits from its capital program. Further, this expense will increase only marginally in 1999 as capital spending returns to a more normal level.

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Interest on long-term debt declined in 1998, reflecting the reduction of long-term debt outstanding in 1998 compared to 1997.

Other interest represents interest paid on operating lines. It increased from approximately $300 thousand to $800 thousand in 1998. During 1998, Exco’s cash flow was not sufficient to fund both its capital program and the increase in its working capital requirements. As a result, Exco’s borrowing and therefore its interest costs increased in 1998 compared to 1997.

Financial Resources, Liquidity and Capital Resources

Cash flow from operations, before changes in non-cash working capital, was $21.2 million, an increase of $4.9 million or 30%. The increase in net income of $2.7 million and non-cash charges of $2.2 million account for the improvement. Cash invested in non-cash working capital increased by $6.4 million. This increase is primarily a result of the timing of billing and collection of customer advance payments and, in 1997, the shipment of product to a significant former customer on a C.O.D. basis. These payment terms had the affect of = lowering Exco s investment in accounts receivable in 1997 compared to 1998.

Exco invested $26.2 million, net of proceeds on disposition of fixed assets, during 1998. Investment in the die-cast mould operations of $16.4 million included expansion = of the Company s Newmarket, Ontario and Toledo, Ohio facilities, a new die-casting foundry in Newmarket for the testing of moulds and the purchase of some of the largest and most advanced machining equipment in the world.

Investment in the extrusion tooling operations totalled $9.8 million. This expenditure included the relocation of a division to a new, owned facility in Newmarket, Ontario and the purchase of advanced machining and CAD/CAM equipment.

In 1999, Exco will invest approximately $14 million, a substantial decrease from the previous three years. This expenditure includes construction of a new extrusion die facility in Detroit, Michigan, replacing an inadequate leased plant, adding magnesium capability to our Newmarket die-cast testing area and continued upgrading of equipment.

In 1998, the Company financed its capital expenditure program from cash flow and its operating lines. The terms of operating lines were amended to provide flexibility for this = purpose. Term debt, to finance a portion of Exco s capital expenditure requirements, was not considered necessary given the expectation of continued strong cash flow and the significant reduction in capital expenditures in 1999. Accordingly, Exco expects to reduce its borrowings in 1999. At September 30, 1998, Exco = s total debt to shareholders = equity was .26:1 and longterm debt to shareholders = equity was .03:1.

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Exco = s Canadian operations negotiate sales contracts with customers in both Canadian and U.S. dollars. In addition, Exco purchases material in Canadian and U.S. dollars and German deutschmarks. Exco reviews its net exposure to these currencies and enters into foreign exchange contracts in order to manage the financial risk associated with fluctuations in the relative value of the currencies. These foreign exchange contracts extend for up to two years from the balance sheet date. As a result of these contracts, the weakening of the Canadian = dollar through the Company s 1998 fiscal year did not have a significant impact on the operating results.

Year 2000

Exco is reliant on its computer systems for its operations and, accordingly, is conducting a thorough review of the programming code issues associated with its computer systems and the Year 2000.

This review encompasses computer controls of manufacturing equipment, CAD/CAM, production control, accounting systems and networks. Exco is also surveying its suppliers for compliance.

As a result of Exco = s strategy to purchase the latest technology available, its systems have, in most situations, met the requirements of Year 2000 compliance. However, certain system upgrades are still required and will be completed by July, 1999.

Exco has not specifically identified the costs associated with the Year 2000 issue separate from the costs associated with ongoing system upgrades and replacement. Exco does not believe that Year 2000 costs, per se, are material.

= Despite Exco s best efforts, it is difficult to determine the potential problems which could arise as a result of the Year 2000 issue, including implications of suppliers, customers and other third parties.

Outlook

Exco = s outlook is very favourable. Current market trends and Exco = s leading position should result in continued growth.

= In North America, Exco s extrusion tooling customers are consolidating through mergers resulting in fewer but larger customers. Management believes that these changes in the = marketplace are beneficial for Exco. Exco s advanced use of technology in its processes and its extensive manufacturing capacity can meet the needs of these customers better than many of its competitors. Although Exco believes that it is the largest supplier of extrusion tooling in North America, its market share is very small. These factors should result in continued growth for Exco in the North American market.

North American OEM = s continue to strive for fuel economy through weight reduction and greater engine efficiency. For Exco, this means that its customers require more

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die-cast moulds for aluminum and magnesium products. The trend toward aluminum engine blocks, replacing cast iron and the continuously variable transmission (CVT) are examples of these new products. Exco is well positioned to capture a significant portion of this business considering its extensive manufacturing capacity and advanced technology. In addition, Exco continues to strengthen its relationship with its customers. This has resulted in Exco increasing its overall market share.

= = These factors contribute to management s optimism for the future. Exco s dayto-day effort in developing its product is expected to lead to continued growth and prosperity for Exco.

DIRECTORS AND OFFICERS

As at September 30, 1999, the Directors and Officers of the Company were as

follows:

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1. Member of the Audit Committee

2. Member of the Compensation Committee

As at September 30, 1999, the directors and officers of the Company as a group beneficially owned, directly or indirectly, or exercised control or direction over, approximately 38% of the common shares of the Company.

RISK FACTORS

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The Company is subject to certain factors which may adversely affect the performance of its business.

Technological Changes

The Company carries on business in an industry in which rapid technological change may render obsolete the products designed and manufactured and the processes used by it. The Company maintains its competitive position in the market place by conducting research and development, using advanced production techniques and investing in the most technologically advanced machinery.

Dependence on Major Customers

During fiscal 1999, four customers accounted for approximately 46% of the = Company s sales. One of these customers, Chrysler Corporation, accounted for approximately 33% of total sales. Exco has, however, diversified its customer and product bases in recent years to reduce its dependence on any single customer.

Key Employees

The success of the Company is heavily dependent on the quality of certain of its key professional staff and its ability to attract and hold such employees. Failure to continue the = Company s past performance in this respect could have a significant negative impact upon the = Company s growth and profitability. In order to attract and retain key professional staff, the Company has sought to provide employees with challenging work and a variety of opportunities = for advancement through growth and expansion of the Company s business, and through participation in stock options, the deferred profit sharing plan and incentive bonuses.

Currency Exposure

Fluctuations and relative currency values, in particular, fluctuations in the value of the Canadian dollar against the U.S. dollar, may adversely affect the Company = s results of operations. Exco monitors its net exposure to movements in the relative value of the Canadian and U.S. dollar and employs hedging programs to minimize the risk associated with fluctuations.

ADDITIONAL INFORMATION

Additional information, including directors = and officers = remuneration and = indebtedness, and the principal holders of Exco s securities, options to purchase securities and interests of insiders in material transactions, as applicable, is contained in the most recent information circular of Exco prepared in connection with the annual meeting of shareholders held = on January 26, 2000. Additional financial information is provided in Exco s comparative = Financial Statements contained in the Company s 1999 Annual Report and in its quarterly reports for the periods ended December 31, 1998, March 31, 1999 and June 30, 1999.

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The Company will also provide to any person upon request to the Vice-President, Finance and Chief Financial Officer of the Company:

• (a when Exco = s securities are in the course of distribution pursuant to a short form prospectus or when a preliminary short form prospectus has been filed =

• in respect of a distribution of Exco s securities,

• =

• (i) one copy of the Company s Annual Information Form, together with one copy of any document, or the pertinent pages of any document, incorporated by reference in the Annual Information Form;

• (ii) one copy of the comparative financial statements of the Company for its most recently completed financial year together with the accompanying report of the auditors and one copy of any interim financial statements of the Company subsequent to the financial statements for its most recently completed financial year;

• =

• (iii) one copy of the Company s information circular in respect of its most recent annual meeting of shareholders that involved the election of directors or one copy of any annual filing prepared in lieu of that information circular, as appropriate, and

• (iv) one copy of any other documents that are incorporated by reference into the preliminary short form prospectus or the short form prospectus and are not required to be provided under (i) to (iii) above; or

• (b) at any other time, one copy of any other documents referred to in (a)(i), (ii) and (iii) above, provided the Company may require payment of a reasonable charge if the request is made by a person who is not a shareholder.