2007 was another outstanding year for Finning and our shareholders. On behalf of the Board of Directors, I wish to thank all Finning employees around the globe for their commitment and contribution to our long-standing success as we celebrate 75 years of delivering the best equipment and service to our customers.

The Finning Board of Directors believes that good corporate governance is fundamental to creating value for our shareholders. We make every effort to implement and maintain the best governance practices to support the Board in delivering effective performance on behalf of Finning shareholders.

The Board continuously evaluates and improves governance processes to ensure they drive appropriate conduct and reflect a corporate culture of integrity and respect for all stakeholders.

To that end, we published a revised Code of Conduct in 2007 outlining in detail the Finning values that guide our employees and Board members around the world in upholding high standards of ethical conduct in every aspect of day to day business.

The Finning Board of Directors is an experienced and balanced team of corporate leaders with diverse international backgrounds. Since our 2006 annual report was published, the composition of the Finning Board underwent further changes. Jim Dinning, Tim Howden and Jeff Mooney retired at the Annual General Meeting in May 2007 and Jim Carter was appointed to the Board in October 2007.

On behalf of the Board of Directors, I would like to thank Mr. Dinning, Mr. Howden and Mr. Mooney for their valuable contributions and I welcome Mr. Carter, who brings extensive senior executive experience and an in-depth knowledge of the energy business to the Finning Board. Previously, Mr. Carter played a prominent role in the growth of Syncrude, as well as the overall development of Alberta’s oil sands and the community of Fort McMurray. Also in 2007, as I mentioned in last year’s letter to shareholders, Kathleen O’Neill joined the Board of Directors.

In February 2008, we announced that I will be stepping down as Chairman of the Board and Doug Whitehead will be taking over that role. It has been a pleasure serving as Chairman of the Finning Board, and I’d like to thank my fellow Board members and the Finning executive team for the support they’ve provided me over the years. I look forward to my continued association with Finning.

Finning has a strong, committed and progressive Board, and we look forward to serving the Company to achieve continued success. For a more detailed discussion of our corporate governance policies and practices, I encourage you to review the Finning management proxy circular and visit the corporate governance section of our website at www.finning.com.

On behalf of your Board of Directors,

Conrad A. Pinette
Chairman Of The Board

The Board of Directors has overall responsibility for conduct of the business and affairs of the Corporation. The Board discharges this responsibility both directly and through delegating certain authority to committees of the Board and to senior management of the Corporation.

The direct responsibilities of the Board include:

(a) choosing the Corporation’s Chief Executive Officer, who is responsible for all of the Corporation’s day-to-day operations;
(b) reviewing and approving a strategic plan that takes into account an identification of business opportunities and business risks;
(c) overseeing and monitoring management’s systems for the operations of the Corporation;
(d) monitoring and assessing the Corporation’s performance in meeting both short and long-term goals established by the Board;
(e) directly reviewing and approving major transactions proposed by management;
(f) reviewing reports and recommendations from committees of the Board with respect to matters such as succession planning and preparation of financial statements and giving necessary directions to management;
(g) reviewing the content of significant communications with shareholders and the investing public, including this management proxy circular, annual reports, annual information forms and quarterly and annual financial statements; and
(h) approving the appointment and remuneration of all executive officers.

The Board of Directors is currently made up of 10 members. The Board has considered which of its members are “independent” for purposes of NI 58-101 and concluded that all directors, other than Douglas W.G. Whitehead (who is the President and Chief Executive Officer of the Corporation) are independent.

In addition, in order to ensure that the Board can function independently from management, the Corporation has separated the role of Chairman of the Board (currently Conrad A. Pinette) and Chief Executive Officer (currently Douglas W.G. Whitehead). The Board further ensures its independent function by convening an independent directors-only in camera session at every Board meeting.

Finally, each year the Board (with the assistance of the Corporate Governance Committee) formally reviews its own performance, the performance of each committee of the Board, the performance of the Chairman of the Board, the performance of each individual director (peer assessment) and the performance of the Chief Executive Officer.

As part of its oversight responsibilities, the Board has approved a number of written policies, job descriptions and mandates. These include: “Terms of Reference for the Board of Directors” (attached hereto as Schedule C); “Terms of Reference for the President and Chief Executive Officer”; “Terms of Reference for the Corporate Governance Committee”; “Terms of Reference for External Auditor”; a “Code of Conduct”; a “Code of Ethics for Senior Executives and Financial Officers”; a “Whistleblower Policy”; a “Policy on Share Trading and Use of Material Information”; a “Corporate Disclosure Policy”; and an “Employee Privacy Policy”. The full text of each of these policies can be found on the Corporation’s website at www.finning.com. In addition, any shareholder may request paper copies of any such policy by contacting the Corporate Secretary.

The Code of Conduct, the Code of Ethics for Senior Executives and Financial Officers and the Policy on Share Trading and Use of Material Information are signed by appropriate employees in order to confirm that such employees are aware of these policies and to acknowledge that they are bound by the terms thereof.

During 2007, the Board of Directors met on six occasions, including one special meeting devoted exclusively to the Corporation’s corporate strategy and direction. All of these meetings were in person. At every meeting, the Board discusses issues without the presence of management in camera, and in addition, the independent directors meet in camera at each meeting with neither management nor the non-independent director.

At the annual meeting, upon having reached the age of 70, it is contemplated that directors will retire. When a director reaches the age of 68, the Corporate Governance Committee will review the individual’s status on a year-to-year basis. The Corporate Governance Committee may only then propose the incumbent to be on the slate of directors to be presented at the next annual meeting of shareholders.