**SECURITIES
AND EXCHANGE COMMISSION**
 **Washington,
D.C. 20549**
  **FORM
40-F**
  (Check One)**o**
    
    Registration
      statement pursuant to Section 12 of the Securities Exchange Act of
      1934orþ
    
    Annual
      report pursuant to Section 13(a) or 15(d) of the Securities Exchange
      Act of 1934
  For
      Fiscal year ended:
    **December
      31, 2004**Commission
      File number:
    **No.
      1-14242**
 
 ****
 **ROYAL
GROUP TECHNOLOGIES LIMITED**
 (Exact
name of registrant as specified in its charter)
  **Canada**
 (Province
or other jurisdiction of incorporation or organization)
 
 **3084,
3087, 3089**
 (Primary
standard industrial classification code number, if applicable)
 
 **Not
Applicable**
 (I.R.S.
employer identification number, if applicable)
  **1
Royal Gate Boulevard**
 **Woodbridge,
Ontario**
 **L4L
8Z7**
 **(905)
264-0701**
 (Address
and telephone number of registrant’s principal executive office)
  **CT
Corporation System**
 **111
Eighth Avenue, 13** **th** **Floor**
 **New
York, New York 10011**
 **U.S.A**
 **(212)
894-8700**
 (Name,
address and telephone number of agent for service in the United
States)
  
   
  
  Securities
registered pursuant to Section 12(b) of the Act:
  Title
      of each class:
    Name
      of each exchange on
      which registered:**Subordinate
      Voting Shares**
    **New
      York Stock Exchange**
 
 Securities
registered or to be registered pursuant to Section 12(g) of the Act:
  **Not
Applicable**
  Securities
for which there is a reporting obligation pursuant to Section 15(d) of the
Act:
  **Not
Applicable**
  For
annual reports, indicate by check mark the information filed with this
form:
  þAnnual Information Form
    þAudited Annual Financial Statements
 
 Indicate
the number of outstanding shares of each of the issuer’s classes of capital or
common stock as of the close of the period covered by the annual
report:
  **Subordinate
      Voting Shares**
    **77,509,058**
 
 Indicate
by check mark whether the registrant by filing the information contained in this
form is also thereby furnishing the information to the Commission pursuant to
Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange Act”).
If “Yes” is marked, indicate the file number assigned to the registrant in
connection with such rule.
  Yes
      **o**
    Noþ
 
 Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13(d) or 15(d) of the Exchange Act during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports); and (2) has been subject to such filing requirements for the past 90
days.
  Yesþ
    No
      **o**







**ROYAL
GROUP TECHNOLOGIES LIMITED**









**FISCAL
2004**


**ANNUAL
INFORMATION FORM**









**May
13, 2005**

























**TABLE
OF CONTENTS**




CORPORATE
      STRUCTURE
    
    
    1GENERAL
      DEVELOPMENT OF THE BUSINESS
    
    
    5DESCRIPTION
      OF THE BUSINESS
    
    
    6LEGAL
      PROCEEDINGS
    
    
    16RISK
      FACTORS
    
    
    18CAPITAL
      STRUCTURE
    
    
    19MARKET
      FOR SECURITIES
    
    
    21DIRECTORS
      AND OFFICERS
    
    
    22AUDIT
      COMMITTEE
    
    
    24ADDITIONAL
      INFORMATION
    
    
    25
















*Unless
otherwise specified, this document presents information as at December 31,
2004.Unless the context otherwise requires, all references to "Royal”, “Royal
Group”, “the Company” and the "Group" include Royal Group Technologies Limited,
its subsidiaries and wholly and partially owned entities and unless otherwise
expressly indicated, all references to "$" or "dollars" are to Canadian dollars.
The financial information in this document is presented in accordance with
Canadian generally accepted accounting principles. Beginning in 2004, Royal
changed its fiscal year end from September 30* *th* *to December 31* *st* *.
As a result, Royal’s annual financial statements for fiscal 2004 and its Annual
Information Form for fiscal 2004 represent the fifteen month period from
September 30, 2003 through December 31, 2004.*






i





**ROYAL
GROUP TECHNOLOGIES LIMITED**




**Forward-Looking
Statements**




The
information in this document contains certain forward-looking statements with
respect to Royal Group Technologies Limited, its subsidiaries and affiliates.
These statements are often, but not always made through the use of words or
phrases such as "expect", "should continue", "continue", "believe",
"anticipate", "estimate", "contemplate", "target", "plan", "budget", "may",
"will", "schedule" and "intend" or similar formulations. By their nature, these
forward-looking statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by management, are inherently
subject to significant, known and unknown, business, economic, competitive and
other risks, uncertainties and other factors affecting Royal specifically or its
industry generally that could cause actual performance, achievements and
financial results to differ materially from those contemplated by the
forward-looking statements. These risks and uncertainties include the outcome of
the ongoing internal review and investigations by the Special Committee of the
Board of Directors; fluctuations in the level of renovation, remodeling and
construction activity; changes in product costs and pricing; an inability to
achieve or delays in achieving savings related to the cost reductions or
increases in revenues related to sales price increases; the sufficiency of our
restructuring activities, including the potential for higher actual costs to be
incurred in connection with restructuring activities compared to the estimated
costs of such actions; the ability to recruit and retain qualified employees;
the level of outstanding debt and our current debt ratings; the ability to meet
the financial covenants in our credit facilities; changes in product mix; the
growth rate of the markets into which Royal's products are sold; market
acceptance and demand for Royal's products; changes in availability or prices
for raw materials; pricing pressures resulting from competition; difficulty in
developing and introducing new products; failure to penetrate new markets
effectively; the effect on foreign operations of currency fluctuations, tariffs,
nationalization, exchange controls, limitations on foreign investment in local
business and other political, economic and regulatory risks; difficulty in
preserving proprietary technology; adverse resolution of any litigation,
investigations, administrative and regulatory matters, intellectual property
disputes, or similar matters; changes in securities or environmental laws, rules
and regulations; currency risk exposure and other risks described from time to
time in publicly filed disclosure documents and securities commission reports of
Royal Group Technologies Limited and its subsidiaries and affiliates. In view of
these uncertainties we caution readers not to place undue reliance on these
forward-looking statements. Statements made in this document are made as of May
13, 2005 and Royal disclaims any intention or obligation to update or revise any
statements made herein, whether as a result of new information, future events or
otherwise.




**CORPORATE
STRUCTURE**




**Royal
Group Technologies Limited******(“Royal” or the
“Company”)**** was
formed under the *Canada Business Corporations Act* on November 25, 1994
by the amalgamation of Steelwood Acquisition Inc. and Royal Plastics Group
Limited, each of which were incorporated under the *Canada Business
Corporations Act* on September 26, 1994. The name of the corporation was
changed to Royal Group Technologies Limited on February 14, 1997. Royal’s
registered and head office is located at 1 Royal Gate Boulevard, Woodbridge,
Ontario, L4L 8Z7. Corporate offices can be reached by:





Phone:
      (905) 264-0701
    Fax:
      (905) 264-0702
    Email:
      info@royalgrouptech.com


****


**Subsidiaries**




Royal’s
subsidiaries are divided into *Products
Segment Subsidiaries* and *Support
Segment Subsidiaries* .
Royal’s Products Segment produces and markets finished products to third party
customers while the Support Segment primarily supplies raw materials, machinery,
tooling, and logistical services to the Products Segment.




**(i)**
    **Products
      Segment Subsidiaries**













The
following is a list of Royal’s principal subsidiaries carrying on the business
of the *Products
Segment* as of December 31, 2004, including their jurisdiction of incorporation and the
percentage of their voting and non-voting securities owned by Royal or over
which Royal exercises control or direction:




**Subsidiary**
    **Jurisdiction**
      **of
      Incorporation**
    **Percent**
      **Ownership
      of**
      **Voting**
      **Securities**
    **Percent**
      **Ownership**
      **of
      Non-Voting**
      **Securities****HOME
      IMPROVEMENT PRODUCTS****Custom
      Profiles**Royal
      Group Technologies Inc.
      -
      Candor Plastics Co. Division
      -
      Crown Plastics Extrusions Co. Division
      -
      Dominion Plastics Co. Division
      -
      Dynast Plastics Co. Division
      -
      Imperial Plastics Co. Division
      -
      Majestic Plastics Co. Division
      -
      Pillar Plastics Co. Division
      -
      Regal Plastics Co. Division
      -
      Ultimate Plastics Co. Division
      -
      Royal Patio Doors Co. Division
      -
      Royal Dynamics Co. Division
      -
      Royal Foam Co. Division
    Ontario
    100%
    100%Custom
      Window Extrusions, Inc.
    Pennsylvania
    100%
    N/AKing
      Extrusions
    Washington
    100%
    100%Royal
      Group Technologies (Quebec) Inc.
      (formerly
      Royal Quebec Custom Limited)
      -
      Montreal PVC Division
      -
      Industrial Plastics Division
      -
      Thermoplast Division
    Quebec
    100%Liberty
      Plastics Limited
    Ontario
    50%
    N/ARoyal
      Deluxe Profiles Limited
    Ontario
    57.9%
    N/AVinyl
      Concepts Inc.
    Ontario
    50%
    N/ARoyal
      Sierra Extrusions, Inc.
    Nevada
    100%
    N/AMaine
      Ultimate Extrusions Limited
    Ontario
    50%
    N/ARoyal
      Mouldings Limited
    Nevada
    100%
    N/A**Exterior
      Cladding**Royal
      Group Technologies Inc.
      -
      Boncor Building Products Co. Division
      -
      Royalguard Vinyl Division
      -
      Roytec Vinyl Division
      -
      Royal Building Products Division
      -
      Residential Building Products Division
      -
      Royplast
    Ontario
    100%
    100%**CONSUMER
      PRODUCTS****Window
      Coverings**Royal
      Window Coverings Ltda.
    Brazil
    100%
    N/ARoyal
      Window Coverings (USA) L.P.
    Texas
    100%
    N/ANovo
      Europe B.V.
    Netherlands
    100%
    N/ARoyal
      Window Coverings Servicios, S.A. De C.V.
    Mexico
    100%
    N/ARoyal
      Window Coverings Mexico, S.A. De C.V.
    Mexico
    60%
    N/A










2










**Subsidiary**
    **Jurisdiction**
      **of
      Incorporation**
    **Percent**
      **Ownership
      of**
      **Voting**
      **Securities**
    **Percent**
      **Ownership**
      **of
      Non-Voting**
      **Securities****Houseware
      and Furniture**Royal
      Alliance Inc.
      -
      Gracious Living Industries Division
      -
      Royal Injection Division
    Ontario
    60%
    N/A**Outdoor
      Products**Royal
      Group Technologies Inc.
      -
      Royal Outdoor Products Co. Division
      -
      Prince Plastics Co. Division
    Ontario
    100%
    100%Royal
      Decor Limited
    Ontario
    70%
    N/ARoyal
      Crown Limited
    Indiana
    100%
    N/A**CONSTRUCTION
      PRODUCTS****Pipe**Plastic
      Trends, Inc.
    Michigan
    100%
    N/ARoyal
      Flex-Lox Pipe Limited
    Ontario
    100%
    100%Le-Ron
      Plastics Inc.
    Canada
    75%
    N/ARoyal
      Group Technologies Inc.
      -
      Royal Pipe Co. Division
      -
      Fabtech Co. Division
      -
      Royal Quickstop Fireprotection Systems Co.
      Division
    Ontario
    100%
    100%**Commercial
      Doors**Baron
      Metal Industries Inc.
    Ontario
    100%
    N/A**ROYAL
      BUILDING SYSTEMS AND FOREIGN OPERATIONS****North
      America**American
      Buildings Product Corporation
    Massachusetts
    80%
    N/ARoyal
      Concrete Encased Technologies Inc.
    Ontario
    75%
    N/ARoyal
      Group Technologies Inc.
      -
      Royal Building Technologies Division
      -
      Royal Telecom Structures Division
      -
      Royal Rainware Products
    Ontario
    100%
    100%





3










**Subsidiary**
    **Jurisdiction**
      **of
      Incorporation**
    **Percent**
      **Ownership****of**
      **Voting**
      **Securities**
    **Percent**
      **Ownership**
      **of
      Non-Voting**
      **Securities****Mexico**Royal
      Building Systems De Mexico, S.A. de C.V.
    Mexico
    100%
    N/AEdificacion
      Tecnica Internacional S.A. de C.V.
    Mexico
    100%
    N/AAdvanced
      Profiles, S.A. de C.V.
    Mexico
    100%
    N/A**South
      America**Royalco
      S.A.
    Colombia
    50%
    N/ARoyal
      Group Technologies del Sur S.A.
    Argentina
    88%
    N/ARoyal
      Do Brasil Technologies S.A.
    Brazil
    88%
    N/A**Poland**Royal
      Europa Sp.Zo.o.
    Poland
    80%
    N/ARoyal
      Hurt, Sp.Zo.o
    Poland
    80%
    N/A**Pacific**Royal
      Building Systems (Shanghai) Limited
    China
    85%
    N/AShanghai
      Royal Real Estate Limited
    China
    68%
    N/ARoyal
      Systems Hawaii, Inc.
    Hawaii
    100%
    N/ARoyal
      Building Systems (Philippines) Limited
    Philippines
    100%
    N/A




**(ii)**
    **Support
      Segment Subsidiaries**





The
following is a list of Royal’s principal subsidiaries carrying on the business
of the *Support
Segment* as of December 31, 2004, including their jurisdiction of incorporation and the
percentage of their voting and non-voting securities owned by Royal, or over
which Royal exercises control or direction:




**Subsidiary**
    **Jurisdiction**
      **of
      Incorporation**
    **Percent**
      **Ownership
      of**
      **Voting**
      **Securities**
    **Percent**
      **Ownership**
      **of****Non-Voting**
      **Securities****SUPPORT
      SEGMENT****Materials**Royal
      Polymers Limited
    Ontario
    100%
    N/AReagens
      Canada Ltd.
    Ontario
    100%
    100%Royal
      Group Technologies Inc.
      -
      Royal Plastics Co. Division
      -
      Royal Ecoproducts Co. Division
      -
      Royal Group Resources Co. Division
      -
      RoyalBond Co. Division
      -
      Royal Composites Co. Division
      -
      Royal Capital Stamping Co. Division
    Ontario
    100%
    100%









4














**Subsidiary**
    **Jurisdiction**
      **of
      Incorporation**
    **Percent**
      **Ownership
      of**
      **Voting**
      **Securities**
    **Percent**
      **Ownership**
      **of
      Non-Voting**
      **Securities****Machinery
      & Tooling**Amut
      S.p.A.
    Italy
    74%
    N/AAriostea
      S.p.A.
    Italy
    54%
    N/ARoyal
      Group Technologies Inc.
      -
      Royal Machine Manufacturing Co Division
      -
      Royal Tooling Co. Division
      -
      Royal R&D Centre Co.
    Ontario
    100%
    100%Vinyltech
      Inc.
    Ohio
    80%
    N/A**Services
      and Facilities**Roadex
      Transport Ltd.
    Ontario
    100%
    100%Roybridge
      Investments (USA) Limited
    Delaware
    100%
    N/ARoyal
      Martingrove-Steeles Properties Limited
    Ontario
    75%
    100%


****


**Organizational
Issues**





All
of Royal’s manufacturing activities are conducted through separate entities,
each of which operates as a separate profit centre. Activities are structured as
such to maximize the manufacturing efficiency and accountability of the
production processes while leaving administrative tasks to be performed largely
by the corporate office. Royal’s executive management centralizes certain
strategic planning, capital allocation, new business and certain new product
development and provides specialized services including raw material and
equipment purchasing, general corporate purchasing, as well as technological,
marketing, legal, risk management, financial, information systems and human
resource expertise.




**GENERAL
DEVELOPMENT OF THE BUSINESS**




**Glossary
of Technical Terms**




The
following compilation of definitions of technical terms used herein, has been
assembled to assist the reader to better understand Royal’s
business.




“Additives”
- ingredients including stabilizers and pigments, mixed with PVC to modify or
enhance the physical properties of an extruded profile and aid in the
manufacturing process.




“Compounding”
- mixing together of PVC resin and additives to produce a compound in either
powder or pellet form.




“Extrusion”
- the process of melting, sizing, shaping and cooling PVC or other plastic
materials.




5





“Injection”
- the process whereby a granulated plastic compound is heated and forced under
pressure into a mould in the shape of a finished product, such as a 90 degree
pipe fitting elbow.




“PVC”
- polyvinylchloride or vinyl - a versatile plastic used extensively in the
building products industry as well as automobile, packaging and toy industries.
PVC has many desirable properties including weatherability, low thermal
conductivity and high strength to weight ratio.




“VCM”
- Vinyl Chloride Monomer - which is the primary raw material used in the
production of PVC.




**The
Business**




Royal
began operations in 1970 as a small custom profile extruder, with sales of
approximately $270,000 in its first year of existence. Royal has evolved from
being a leading North American PVC building products extruder, to a vertically
integrated manufacturer of technologically advanced polymer-based home
improvement, consumer and construction products sold primarily in North America
and increasingly in international locations.




During
the past three years, Royal’s raw material costs, including PVC resin and Vinyl
Chloride Monomer, have increased significantly. Royal has been unable to offset
higher raw material costs with price increases, which has contributed to gross
profit margin erosion over the past three years, although the erosion has been
mitigated by productivity improvements and manufacturing plant
consolidations.




A
significant manufacturing plant expansion was completed in 2001, which included
a new 4 million square foot industrial complex in Woodbridge, Ontario.
Commensurate with this expansion program, capacity utilization levels fell,
putting further pressure on margins. In fiscal 2004, the company commenced a
plant consolidation program, vacating 338,000 square feet during the year.
During the later quarters of fiscal 2004, other manufacturing costs as a
percentage of sales began to decline, reflecting cost reductions associated with
plant consolidations. Royal is evaluating the feasibility of additional plant
consolidations.




As
raw material costs have risen and competition has become more intense in some
markets, the profitability of certain product lines has become unattractive.
Royal has initiated its withdrawal from production and supply of such product
lines. For example, some custom special order and related stock size retail
window covering programs were discontinued in 2003, with exit from certain
retail patio furniture programs initiated in 2004. At the same time, sales and
marketing efforts for more attractive product lines were increased, in pursuit
of a more favourable product mix.




Royal
is presently analyzing each of its business units’ profitability, growth
prospects and returns on invested capital, with the objective of identifying an
optimal strategic direction. The Board of Directors is currently engaged in the
process of selecting a permanent CEO to replace its interim designate.
Subsequent to hiring a new CEO, the company intends to focus on development and
implementation of a strategic plan. This plan may involve greater emphasis on
growth of certain businesses and harvesting or withdrawal from others. The
financial benefit of a more optimal strategic direction is not expected to be
realized until the later half of fiscal 2006.




**DESCRIPTION
OF THE BUSINESS**




**Organizational
Structure**




Royal
conducts its business under two operating segments: the *Products
Segment* and the *Support
Segment* .




The
businesses are located primarily in Canada and the United States with
international operations in Mexico, South America, Europe and Asia. Royal
typically enters into strategic joint venture arrangements with local partners
in respect of its international operations to gain access to local industry
expertise and share related business risks.




The
following chart identifies the organizational structure of Royal:














6
















**(1)**
    **Products
      Segment**





Royal’s
Products Segment is organized as follows:
















***Custom
Profiles***




Royal’s
Custom Profile products continue to represent the largest share of corporate
product mix, accounting for approximately 40% of total sales. The majority of
Royal’s Custom Profile sales involve extruded PVC window components supplied to
window manufacturers. Custom Profile sales consist of exterior and interior
millwork and decorative trim products, such as baseboard mouldings and entry
door brick mouldings which are sold primarily to manufacturers such as indoor
shutter producers, big-box retail sores, distributors and professional
installers.











7





***Exterior
Cladding***




Royal’s
Exterior Cladding products are the Group’s second largest product line,
representing approximately 16% of overall sales in fiscal 2004. Vinyl siding
represents the largest portion of overall Exterior Cladding sales. The remainder
of sales are primarily composed of aluminum soffit and fascia, as well as
roofing materials. The majority of Exterior Cladding sales are in the United
States where products are distributed through independent building product
suppliers. In Canada, Exterior Cladding sales are distributed through
company-owned building product distributors. Professional installers are the
principal customers of distributors of Exterior Cladding products in both Canada
and the United States.





***Home
Furnishings***




The
largest product line in Home Furnishings is window coverings, which are sold
primarily through dealers, contractors and retailers. The window coverings
product line includes extruded vertical blinds, horizontal blinds and shutters.
Home Furnishings also include sales of indoor storage systems that are injection
molded and assembled. These products are primarily distributed to homeowners
thorough retail stores.





***Outdoor
Products/RBS***




Royal’s
Outdoor Products includes outdoor storage buildings, fencing, decking, railing,
decorative columns and components of The Royal Building SystemTM which is a
polymer, component based building system, involving hollow polymer panels that
are used as a permanent framework for concrete. Outdoor storage buildings are
sold to homeowners through big-box home improvement stores. Fencing, decking and
railing is sold primarily though professional installers who act as
distributors. The Royal Building SystemTM is generally sold directly to
residential, commercial and industrial builders. In fiscal 2004, approximately
half of Outdoor Products sales were outdoor storage systems, with the other half
primarily being fence, deck and rail products. Royal’s outdoor storage product
offering has been enhanced in recent months, with a line of Tudor-styled sheds,
simulating the look of wood. The many variations of this upscale series of
storage shed, are expected to open up distribution opportunities with new and
existing retailer customers.





***Pipe/Fitting/Other
Construction***




Sales
of pipe and pipe fittings form the majority of this product area’s sales with
the remainder being steel commercial doors and door frames which are used in
commercial and industrial settings. In 2003, Royal expanded its line of
value-added doors to include stainless steel, acoustic and lead lined doors and
frames. Pipe and fittings include municipal sewer, water and vent pipe systems,
as well as household plumbing and electrical conduit systems. The majority of
sales occur in Canada where products are sold primarily through pipe
distributors to contractors.




**(2)**
    **Support
      Segment**





The
Support Segment comprises several activities, which are primarily supplied to
the Products Segment. These activities are designed to facilitate a low cost
structure, superior customer service and rapid product development.





The
activities of the Support Segment include:





(i)
    Materials
      manufacture involving production of PVC resin, chemical additives,
      compounding and recycling. In addition, a wide variety of post-industrial
      waste materials are recycled into usable raw materials utilizing RoyalEcoTM
      technology.(ii)
    Machinery/tooling
      development and manufacture involves extrusion equipment, tooling and
      computerized material handling systems.(iii)
    Services
      include distribution, Group property management, research and development,
      as well as certain centralizing of purchasing, finance, administration,
      sales and marketing functions.








8





**Royal
Building Systems and Foreign Operations**




In
2003, Royal implemented strategies to reposition Royal Building Systems and
Foreign Operations. The group sells components of The Royal Building SystemTM and
building products that are manufactured in foreign operations. Royal has focused
its foreign operations increasingly on developing markets for building products,
including PVC window profiles, siding and fencing, while continuing to offer The
Royal Building SystemTM as one product in the line up. Royal has focused its
development efforts on foreign operations in Mexico, China and Poland, as it is
believed these markets will offer the greatest near-term potential. In the
future, Royal will report sales for this product category within its other
building product categories reflecting the shift in its strategies toward
emphasis of development of foreign markets for all of Royal’s building products.




The
following summarizes Royal’s sales for fiscal 2004 and 2003 by segment and
product line:




**ROYAL
GROUP TECHNOLOGIES LIMITED**


**Sales
by Product Line**


**2003/2004**


(in
millions of Canadian dollars)




**15
      months**
      **ended
      Dec**
      **31/04**
    
    **12
      months**
      **ended
      Sept**
      **30/03**
    
    **%
      change**
      **2004
      vs.**
      **2003****1******
    
    **12
      months**
      **ended
      Dec**
      **31/04**
    
    **12
      months**
      **ended
      Dec**
      **31/03**
    
    **%
      change**
      **2004
      vs.**
      **2003****PRODUCTS
      SEGMENT**Custom
      Profiles
    
    $
    944
    
    $
    732
    
    
    29
    %
    $
    760
    
    $
    739
    
    
    3
    %Exterior
      Cladding
    
    
    410
    
    
    325
    
    
    26
    %
    
    335
    
    
    328
    
    
    2
    %Home
      Furnishings
    
    
    298
    
    
    285
    
    
    5
    %
    
    239
    
    
    269
    
    
    -11
    %Outdoor
      products/RBS
    
    
    275
    
    
    242
    
    
    14
    %
    
    239
    
    
    248
    
    
    -4
    %Pipe/Fittings/Other
      Construction
    
    
    365
    
    
    265
    
    
    38
    %
    
    306
    
    
    264
    
    
    16
    %Eliminations
    
    
    (48
    )
    
    (27
    )
    
    78
    %
    
    (40
    )
    
    (29
    )
    
    38
    %2,244
    
    
    1,822
    
    
    23
    %
    
    1,839
    
    
    1,819
    
    
    1
    %**SUPPORT
      SEGMENT**Materials
    
    
    589
    
    
    448
    
    
    31
    %
    
    474
    
    
    460
    
    
    3
    %Machinery
      & Tooling
    
    
    102
    
    
    61
    
    
    67
    %
    
    91
    
    
    59
    
    
    54
    %Services
    
    
    97
    
    
    91
    
    
    7
    %
    
    77
    
    
    90
    
    
    -14
    %Eliminations
    
    
    (697
    )
    
    (537
    )
    
    30
    %
    
    (560
    )
    
    (550
    )
    
    2
    %91
    
    
    63
    
    
    44
    %
    
    82
    
    
    59
    
    
    39
    %**NET
      SALES**
    
    
    **2,335**
    
    
    **1,885**
    
    
    **24**
    **%**
    
    **1,921**
    
    
    **1,878**
    
    
    **2**
    **%**







1
Figures represent a comparison of sales for the 15 months ended December 31,
2004 versus sales for the 12 months ended September 30, 2003.





9





**2004
NET SALES BY SEGMENT**


(in
millions of Canadian dollars)




**3
      months**
      **ended
      Dec**
      **31/03**
    
    **3
      months**
      **ended****Mar**
      **31/04**
    
    **3
      months**
      **ended
      June**
      **30/04**
    
    **3months**
      **ended
      Sept**
      **30/04**
    
    **3months**
      **ended
      Dec**
      **31/04****PRODUCTS
      SEGMENT**Custom
      Profiles
    
    $
    184
    
    $
    160
    
    $
    216
    
    $
    215
    
    $
    169Exterior
      Cladding
    
    
    75
    
    
    69
    
    
    99
    
    
    97
    
    
    70Home
      Furnishings
    
    
    59
    
    
    56
    
    
    61
    
    
    63
    
    
    59Outdoor
      products/RBS
    
    
    36
    
    
    52
    
    
    92
    
    
    57
    
    
    38Pipe/Fittings/Other
      Construction
    
    
    59
    
    
    61
    
    
    84
    
    
    91
    
    
    70Eliminations
    
    
    (8
    )
    
    (9
    )
    
    (14
    )
    
    (10
    )
    
    (7
    )**Total
      Products Segment**
    
    
    405
    
    
    389
    
    
    538
    
    
    513
    
    
    399**SUPPORT
      SEGMENT**Materials
    
    
    115
    
    
    106
    
    
    137
    
    
    134
    
    
    97Machinery
      & Tooling
    
    
    11
    
    
    32
    
    
    19
    
    
    14
    
    
    26Services
    
    
    20
    
    
    19
    
    
    21
    
    
    19
    
    
    18Eliminations
    
    
    (137
    )
    
    (125
    )
    
    (160
    )
    
    (155
    )
    
    (120
    )Total
      Support Segment
    
    
    9
    
    
    32
    
    
    17
    
    
    12
    
    
    21**CONSOLIDATED
      NET SALES**
    
    
    **414**
    
    
    **421**
    
    
    **555**
    
    
    **525**
    
    
    **420**


**2003
NET SALES BY SEGMENT**


(in
millions of Canadian dollars)




**3
      months**
      **ended
      Dec**
      **31/02**
    
    **3
      months**
      **ended
      Mar**
      **31/03**
    
    **3
      months**
      **ended
      June**
      **30/03**
    
    **3months**
      **ended
      Sept**
      **30/03****PRODUCTS
      SEGMENT**Custom
      Profiles
    
    $
    177
    
    $
    148
    
    $
    196
    
    $
    211Exterior
      Cladding
    
    
    72
    
    
    68
    
    
    89
    
    
    96Home
      Furnishings
    
    
    74
    
    
    66
    
    
    76
    
    
    69Outdoor
      products/RBS
    
    
    30
    
    
    55
    
    
    93
    
    
    64Pipe/Fittings/Other
      Construction
    
    
    61
    
    
    55
    
    
    70
    
    
    79Eliminations
    
    
    (6
    )
    
    (7
    )
    
    (5
    )
    
    (9
    )**Total
      Products Segment**
    
    
    408
    
    
    385
    
    
    519
    
    
    510





10





**3
      months**
      **ended
      Dec**
      **31/02**
    
    **3
      months**
      **ended
      Mar**
      **31/03**
    
    **3
      months**
      **ended
      June**
      **30/03**
    
    **3months**
      **ended
      Sept**
      **30/03****SUPPORT
      SEGMENT**Materials
    
    
    104
    
    
    105
    
    
    124
    
    
    115Machinery
      & Tooling
    
    
    12
    
    
    19
    
    
    13
    
    
    17Services
    
    
    21
    
    
    22
    
    
    22
    
    
    26Eliminations
    
    
    (124
    )
    
    (119
    )
    
    (153
    )
    
    (141
    )Total
      Support Segment
    
    
    13
    
    
    27
    
    
    6
    
    
    17**CONSOLIDATED
      NET SALES**
    
    
    **421**
    
    
    **412**
    
    
    **525**
    
    
    **527**


**Competition**




Royal
products face competition from alternative materials such as wood, fiberglass
and aluminum in the window and door profile market; fabric in the window
coverings market; brick, wood, stucco, fiber cement, concrete and aluminum in
the siding market; and copper, steel and concrete in the pipe market. Generally,
PVC building products have gained market share from conventional materials as a
result of their ease of installation, lower maintenance and durability. However,
in certain markets alternatives to PVC are beginning to emerge. Most notably,
fiber cement siding has acquired some of the market share of PVC siding and
fiberglass window frame components. The markets for PVC window frame components
and PVC siding continue to grow, but at a lesser rate than they did in their
growth phases late in the previous decade.




Royal
also faces competition from other manufacturers of vinyl products including
Quanex, Inc. (Mikon), Certain Teed Corp., Deceunick and VEKA Inc. in the window
profile market, Hunter Douglas, Spring Industries, Inc., NienMade and Levelor in
the window coverings market, Owens Corning and Alcoa Building Products for the
siding market and Ipex Inc., Rehau Inc. and JM Manufacturing Co. in the pipe
market. Some of these companies are larger than Royal in certain product
categories and regions and therefore may be capable of sustained price
competition in those lines and may be better positioned to respond to shifts in
the marketplace. Low cost foreign competitors are a threat to Royal’s cost
structure. Royal however, enjoys certain competitive advantages, including its
ability to offer enhanced customer services due to its high degree of vertical
integration and its high product quality as a result of its manufacturing and
technological capabilities, proprietary processes, tooling and machinery, and
research and development activities.




**Research
and Development**




During
fiscal 2004, Royal spent approximately $16 million on research and development
activities. Royal expects that substantially all of such expenditures should be
eligible for the Scientific Research and Experimental Development Program under
the Income Tax Act (Canada). Royal’s research and development activities are
focused on three areas, being new product development, raw material development
and manufacturing process development.




Material
development activities at Royal are primarily concentrated on refinement of PVC
compounds and additives for those compounds, driven by requirements to reduce
cost or improve performance. During fiscal 2004, construction of a plant to
produce acrylic PVC compound modifiers was completed and development trials
began. During 2005, production of acrylic modifiers are expected to be
scaled-up. Machinery and tooling development has concentrated on improving
throughput of extrusion lines. A number of higher speed lines were successfully
introduced in 2004, with more lines expected to be added in additional plants in
2005.




Royal
strives to develop leading edge building and home improvement products from
polymer materials that are more durable and require less maintenance than
conventional materials. Historically, product development activities have been







11





conducted
on a decentralized basis, although Royal recently initiated restructuring of its
development activities which are beginning to be conducted on a centralized
basis, resulting in more efficiency and cross product line
application.




In
the Custom Profile product area, Royal focused on commercialization of a series
of polymer window components in fiscal 2004, to complement its PVC window
profile offerings. These components include extruded cellular decorative trim,
thermally efficient insulated glass spacer bars, PVC window colourizing systems
and window coverings. While these component technologies have previously been
available, fiscal 2004 was the first year that they were packaged as an
integrated offering to existing window fabricator customers. A branding and
advertising program is being initiated in 2005 to further support the product
bundling initiative.




In
the Exterior Cladding product area, Royal focused on the development of upscale
PVC siding systems in fiscal 2004. As an example, Royal DuraPlankTM siding was
commercialized, offering home owners the look of wood and the feel of fiber
cement, while offering installers the ease of installation of PVC siding. Royal
DuraPlankTM is one of the thickest sidings on the market today, having a solid
foam backing to give it rigidity and thermal value. It is an Energy Star rated
product. In 2005, development continues to focus on upscale PVC siding
products.




During
fiscal 2004, product development in the Home Furnishings area was primarily
concentrated in two areas, being indoor shutter and garage organization system
development. Both systems have recently completed testing and are in the early
stages of commercialization. In 2005, development of innovative indoor storage
and organization systems will continue. In addition, Royal will strive to
maintain its reputation as a fashion leader in the hard window coverings market,
developing new styles of co-ordinating horizontal and vertical blinds.




In
the Outdoor Products/RBS product area, a number of new outdoor storage building
designs were successfully launched in fiscal 2004, which involved greater use of
colour to proliferate the product offering. In addition, a professionally
installed line of decking, under the trade name DecLockTM, was successfully
commercialized. DecLockTM offers a surface with no fasteners, as well as a deep,
rich, wood-like grain. In 2005, Royal intends to commercialize the Harmony
SelectTM line of fence, deck and rail, which marries the low maintenance of PVC
materials, with the strength of a cellular structure and the conventional appeal
of wood fiber. Final testing of Harmony Select TM products is being conducted as
this AIF is filed.




**Intellectual
Property**




Royal’s
intellectual property includes several leading-edge patents and an extensive
collection of strategic trade-marks.




Royal’s
patent portfolio covers diverse products and processes from window extrusions
and siding to window blinds. These patents allow Royal to protect its
intellectual property and maintain a competitive position in the marketplace.
Royal’s recent patent on a new type of deck plank, which simulates the look of
traditional wood, has allowed the Company to gain market share in the PVC
fencing, decking and railing industry.




Royal
also possesses a collection of trade-marks including its Royal Crown symbol,
which the Company utilizes in the marketing and development of its products.
Trademarks and intellectual property rights associated with Royal’s products are
considered to be important assets of Royal which are protected and defended
where appropriate.




**Human
Resources**




The
following table sets forth information on Royal’s employment data as at December
31, 2004.




**DIVISION**
    
    **EMPLOYEES**Products
      Segment
    
    
    8,484Support
      Segment
    
    
    928**Total**
    
    
    **9,412**










12





As
at December 31, 2004, there were 424 Royal employees covered by various
collective agreements.




**Environmental
Considerations**




The
geographic breadth of Royal’s facilities subject it to environmental laws,
regulations and guidelines in a number of jurisdictions including Canada, the
United States, Mexico, Italy, Poland, China, Columbia, Argentina and Brazil.
Such laws, regulations and guidelines relate to, among other things, the
discharge of contaminants into water and air and onto land, the storage and
handling of certain regulated materials used in the manufacturing process and
the disposal of wastes.




Royal’s
efforts to ensure environmental compliance include the review of its operations
on an ongoing basis utilizing in-house staff and on a selective basis, by
specialized environmental consultants. Environmental assessments are conducted
as part of Royal’s due diligence review prior to the completion of
acquisitions.




During
August 2003, Royal Polymers Limited, a subsidiary of the company engaged in
production of PVC resin located in Sarnia, Ontario, accidentally released a
small amount of Vinyl Chloride Monomer (VCM) into the St. Clair River. VCM is a
known carcinogen. The accidental release did not however, exceed governmental
safe water drinking standards.




The
widespread North American power failure at the time contributed to the release,
which has been under investigation by the Ontario Ministry of the Environment
(MOE). Royal Polymers has recently plead guilty to four charges laid by the MOE,
agreeing to pay the fines levied against it. A number of actions were taken by
Royal Polymers immediately following the release, to prevent similar future
incidents. Royal Polymers has been engaged in discussions with the MOE
pertaining to air emissions of VCM from its facility. The MOE and Royal Polymers
recently came to an agreement over actions to be taken by Royal Polymers to
reduce the level of VCM in the air at its fence line.




Based
on recent experience and current projections, environmental protection
requirements are not expected to have a material effect on the Company’s
earnings, capital expenditures, finances or competitive position in the current
or future years.




**Raw
Materials**





The
principal raw material used by Royal is PVC resin which is created through the
polymerization of VCM. PVC is 56% chlorine-based (derived from widely available
rock salt) and 44% hydrocarbon-based. PVC prices tend to be cyclical, influenced
by industry demand and supply factors as well as fluctuations in oil, gas and
ethylene prices. The market price for PVC rose in fiscal 2004 as a result of
increased demand and escalating energy costs, a trend that is likely to continue
into 2005.




**Seasonality**




Royal's
fiscal year end is December 31 st .
Given the seasonal nature of the building products industry, approximately 30%
of consolidated sales have been recorded in each of the second and third
quarters, while approximately 20% of its annual consolidated sales have been
recorded in each of the first and fourth quarters.




**Related
Party Transactions**




During
the fifteen months ended December 31, 2004, related party transactions with
companies related to the controlling shareholder totalled $870,000 (2003 -
$1,650,000). Related party transactions principally between a non-wholly owned
subsidiary and minority shareholders of this subsidiary totalled $12,107,000.




These
related party transactions were in the normal course of the Company's business
relating either to products typically manufactured by it and sold at prices and
terms consistent with those to third parties, the recovery of costs incurred in
respect of certain shared services and the purchase of other goods and services
such as rent for premises.












13





**Interest
of Insiders in Material Transactions**




A
Special Committee of the board of directors, comprised of James Sardo, Robert
Lamoureux and Ronald Slaght, each
of whom was, at the time such committee was established, independent of and
unrelated to Royal, its management and Mr. Vic De Zen, the company’s
controlling shareholder and former Chief Executive Officer, was formed in late
2003 as a result of Royal being advised that the Ontario Securities Commission
( *OSC* )
was conducting a regulatory investigation of Royal. Ralph Brehn and Irvine
Hollis, both of whom are independent and unrelated to Royal, joined the Special
Committee on October 21, 2004. Since establishment of the Special
Committee, Mr. Sardo and Mr. Lamoureux have been appointed as Interim
Chief Executive Officer and Interim Chief Financial Officer, respectively. The
Special Committee retained Goodmans LLP as its independent legal counsel and
Goodmans (on behalf of the Special Committee) retained Kroll Lindquist Avey
( *Kroll* ),
independent forensic auditors, to investigation transactions between Royal and
the Royal St. Kitts beach resort development (the *St.
Kitts Project* )
which is majority owned by Mr. De Zen.




Kroll
completed its initial investigation in April 2004. The findings were disclosed
in a Material Change Report dated May 6, 2004.




In
November 2004, the Special Committee asked Kroll to broaden its forensic work to
include investigations of, among other things, transactions
entered into by Royal with related parties. Kroll’s review of related-party
transactions focussed on three main areas: real estate transactions, corporate
acquisitions and divestitures, and other likely areas of overlap between private
and public interests.




Kroll
completed this second phase of its review in March 2005 the results of which
were disclosed in a Material Change Report dated April 1, 2005. The key
concerns raised by Kroll are summarized below.




•
    Kroll
      identified and brought to the attention of the Special Committee
      information regarding a related-party land transaction completed in 1998
      (the*Vaughan
      West Lands Transaction*),
      involving Vic De Zen, Douglas Dunsmuir (Royal’s Executive Vice
      President and General Counsel at the relevant time), and others, and which
      Ron Goegan (Royal’s Vice President, Corporate Finance at the relevant
      time) facilitated. The transaction concerned the purchase in Woodbridge,
      Ontario of approximately 185 acres of land by a numbered company owned by
      Mr. De Zen and certain other associates, including
      Mr. Dunsmuir, for $20.5 million. Immediately after the closing of
      that purchase, the property was sold to Royal for approximately $27
      million. The fact that the land purchase was a related-party transaction
      was not brought to the attention of the board of directors in 1998. The
      board also was not informed about the profit that the related parties
      realized on the purchase.•
    Royal
      received a warrant for 200,000 shares of another public company, Premdor
      Inc. (now known as Masonite International Corporation) (*Masonite*)
      as partial consideration for the sale of a Royal subsidiary to Premdor in
      early 2000. In early 2002, Royal exercised the warrant when Masonite’s
      shares were trading at approximately $21.75, which was $8.50 more than the
      exercise price (resulting in a gain of approximately $1.7 million). Royal
      exercise of the warrant was funded by five then senior executives of Royal
      (including Messrs. De Zen and Dunsmuir) and one other individual who
      was then an employee of Royal who deposited a total of $2.65 million which
      Royal paid to Masonite to exercise the warrant. The Masonite shares
      obtained were then distributed by Royal to the six individuals. It appears
      that the six individuals subsequently sold their shares netting proceeds
      of approximately $1.7 million. The warrant and the transfer of the
      Masonite shares to the individuals were not recorded in the accounting
      records of Royal. However, an amount approximating the gain made by the
      senior executives on the Masonite shares was included for each of them in
      the bonus amount shown as paid to such senior
  executives.





In
discussions with the Special Committee, Mr. De Zen maintained that following
completion of Kroll’s investigation and the determination of whether any prior
transactions were inappropriate, he would act as necessary with respect to such
transactions to ensure that appropriate arrangements are made with Royal that
are in the best interests of the shareholders.




There
have been ongoing discussions for some time between representatives of the board
of directors and Mr. De Zen with respect to the termination of Royal’s
existing two-tiered shareholder system. These discussions have included the
means by which Mr. De Zen will convert his Multiple Voting Shares to
single-voting shares. The Special Committee understands that such conversions
are often made at a premium ratio (i.e., each multiple voting share is
exchanged for more than one common share) and that a premium of approximately 5%
would be reasonable in these circumstances.







14







Conversion
Agreement




Following
delivery of Kroll’s report, discussions continued towards an overall resolution.
As a result of such discussions, pursuant to an agreement (the *Conversion
Agreement* )
dated March 23, 2005 between Vic De Zen, De Zen Holdings Limited, 3901602
Canada Inc., De Zen Investments Canada Limited, Fortunato Bordin and Domenic
D’Amico (collectively, the *De Zen
Group* )
and Royal, subject to shareholder approval of the Share Conversion:




•
    the
      De Zen Group represents and warrants that collectively they are the
      holders of all outstanding Multiple Voting Shares;•
    the
      full amount of the gain earned by all parties on the Vaughan West Lands
      Transaction ($6.5 million) plus interest (totalling $2.2 million) will be
      repaid to Royal by Mr. De Zen and, for the purposes thereof,
      Mr. De Zen will convert his Multiple Voting Shares to common
      shares on a one-for-one basis (i.e., without a premium) to satisfy
      this obligation, which amount is within the range that the Special
      Committee has determined is reasonable in the
    circumstances;•
    the
      Multiple Voting Shares will receive an increase in their adjusted cost
      base for tax purposes (at no cost to Royal or any shareholder), which will
      reduce Mr. De Zen’s gain for tax purposes if he disposes of his
      shares after conversion, the actual amount of such increase to be
      determined by KPMG LLP pursuant to the Conversion
    Agreement;•
    further
      to a previous agreement of Mr. De Zen to repay to Royal part of his
      bonus for fiscal 2002 out of future bonus entitlements
      Mr. De Zen will pay the approximately $1.13 million that he owes
      in respect of such agreement on or before the day that is 14 days after
      the Multiple Voting Shares are converted to Subordinate Voting
      Shares;•
    the
      De Zen Group will release Royal from all claims which they may have
      against Royal existing at the date of the Conversion Agreement (subject to
      certain exceptions relating to pre-existing litigation and a pre-existing
      indemnity given by Royal to its directors, including
      Mr. De Zen);•
    Messrs.
      De Zen, Bordin and D’Amico (each of whom are former executive
      officers or employees of Royal) covenant not to compete with Royal or
      solicit any employees of Royal, which covenants extend to
      December 18, 2006, which is three years from the date of
      Mr. De Zen’s resignation as Chief Executive
    Officer;•
    Messrs.
      De Zen, Bordin and D’Amico will not disclose any confidential
      information, including technology and trade secrets, proprietary to
      Royal;•
    Mr. De Zen
      will retire as a director of Royal effective at the time the Share
      Conversion is approved by the shareholders;•
    the
      De Zen Group will vote all Multiple Voting Shares and all Subordinate
      Voting Shares that they hold in favour of the Share
      Conversion;•
    the
      term of the options held by Mr. De Zen, which are exercisable
      for 1,360,000 Subordinate Voting Shares (common shares if the Share
      Conversion is approved) and which would have expired in accordance with
      the terms thereof three months after Mr. De Zen ceased to be an
      employee of Royal Group, will be extended and will expire on the earlier
      of December 18, 2006 and the original expiry date of such options
      none of which options are currently in-the-money;•
    the
      term of the options held by Mr. Bordin, which are exercisable for
      50,000 Subordinate Voting Shares (common shares if the Share Conversion is
      approved) and which would have expired in accordance with the terms
      thereof three months after Mr. Bordin ceased to be an employee of
      Royal Group, will be extended and will expire on the earlier of
      December 18, 2006 and the original expiry date of such options none
      of which options are currently in-the-money; and•
    Royal
      will release the De Zen Group and their affiliates from any potential
      claims that Royal may have and is currently aware of, including those
      claims related to the Vaughan West Lands
Transaction.





15





The
Share Conversion and the settlement with the controlling shareholder are both
subject to shareholder approval at the upcoming Annual and Special Meeting
expected to take place on May 25, 2005.If the shareholders approve the Share
Conversion, Royal will file Articles of Amendment in accordance with the special
resolution as soon as practicable after the meeting to :




•
    permit
      an increase in the stated capital of the Multiple Voting Shares tobe
      determined by the board of directors and set out in the Articles of
      Amendment but which, in any event, will not be more than 10 business days
      after the meeting; and•
    remove
      the Multiple Voting Shares and Subordinate Voting Shares, as well as the
      rights, privileges, restrictions and conditions attaching thereto,
      (ii) replace all references to “subordinate voting shares” with
      “common shares”, and (iii) to make such consequential amendments as
      may be necessary to provide for one class of voting common shares, at
      least one business day after the relevant amount is added to the stated
      capital amount for the Multiple Voting Shares and after the De Zen Group
      has converted all Multiple Voting Shares to Subordinate Voting Share not
      more than 10 business days after the
meeting.




**LEGAL
PROCEEDINGS**




**Investigations**




The
Company established a Special Committee in late December 2003 as a result of the
Company being advised that the OSC was conducting a regulatory investigation of
the Company. The Special Committee was asked by the board of directors to
conduct an independent inquiry into the principal subject matter of the
investigation - being the transactions between the Company and Royal St. Kitts
Beach Resort Limited (the “Resort”). The Resort ownership included the following
directors or former directors or executive officers or former executive officers
and their approximate percentage ownership: Vic De Zen, former Chairman,
President, Chief Executive Officer and the controlling shareholder (59.9%),
Douglas Dunsmuir, former President and Chief Executive Officer (5%), Ron Goegan,
former Chief Financial Officer (0.02%) and Angelo Bitondo, President Custom
Profiles, Outdoor Products and Royal Building Systems Divisions (0.01%). The
latter two individuals divested of their ownership in December 2004. In
addition, the following former non-executive employees of the Company and their
approximate percentage ownership in the Resort are as follows: Fortunato Bordin
(20%) and Domenic D'Amico (15%).




The
Special Committee consisted solely of three independent directors, at that time,
who retained independent legal counsel who in turn retained forensic accountants
to assist in the investigation. At the conclusion of the investigation based on
information available to them, the Special Committee recommended that no further
investigative actions be taken as of April 21, 2004.




On
October 15, 2004, the Company announced that the OSC provided the Company with a
copy of a Production Order on October 12, 2004 that was issued on October 5,
2004 by a Justice in Ontario addressed to the Company's lead bank. The Order,
which relates to the time period January 1, 1996 and July 30, 2004, requires
that certain documents be provided by such bank to the Royal Canadian Mounted
Police ("RCMP") in relation to four companies, Royal Building Systems, a
subsidiary of the Company, the Resort and two other affiliates of the Resort.




On
October 18, 2004, the Company received a letter from the RCMP advising that the
Company was a target of the RCMP's investigation.




On
October 21, 2004, the Company announced that it expanded the Special Committee
of its board of directors that was established in December 2003. The Special
Committee was expanded to comprise all five of the independent directors of the
Company at that time. The mandate of the Special Committee was also broadened to
include all aspects of the investigations and inquiries by securities regulatory
authorities and the RCMP and any similar or related investigations and inquiries
that may be commenced by these or other authorities, all news releases and other
communications with the public and to make a determination with respect to the
role within the Company of any individuals who are currently involved in the
regulatory or law enforcement investigations and/or proceedings.







16





On
October 28, 2004, the Company announced that on October 27, 2004, it was
provided with a copy of a second Production Order issued on October 25, 2004 by
a Justice in Ontario addressed to the Company's lead bank. The second Order,
which relates to the time period January 1, 1996 to October 25, 2004, requires
that certain documents be provided by the bank to the RCMP in relation to
certain individuals and a number of entities, including the Company.




Both
Orders include allegations of actions contrary to the Criminal Code and include
allegations of intent to defraud the shareholders and creditors of the Company
and deceive the shareholders and others by circulating or publishing in a
prospectus or statement or account which was known to be false and theft. The
Orders collectively named the controlling shareholder and non-executive chairman
of the Company, the chief executive officer and the chief financial officer at
that time, and certain non-executive president and employees of the Company at
that time and a former officer of the Company.




On
November 8, 2004, the Company announced that the Special Committee of
independent directors retained independent legal counsel and independent
forensic accountants to assist it in the broadened mandate.




On
November 29, 2004, the Company announced that the Special Committee terminated
for cause the president and chief executive officer and the chief financial
officer. In addition, the chairman of the board was dismissed. The board of
directors appointed an interim president and chief executive officer and an
interim chief financial officer, who were directors of the Company.




The
Company understands that the RCMP continues its previously announced
investigation. The OSC has also indicated that it is investigating the Company
with respect to disclosure records, financial affairs and trading in the shares
of the Company. In addition, the Special Committee has been communicating with
the Securities and Exchange Commission ("SEC") to keep the SEC advised of the
progress of the Special Committee's work. As part of these investigations, the
Company has received various requests for information and it has expressed its
willingness to cooperate with all regulators and law enforcement agencies in
their investigations. These investigations may produce results that have a
material impact on the Company and its previously reported financial results.




**Class
Action Lawsuits**




The
Company and certain of its former officers and directors have been named as
defendants in two class action shareholder lawsuits filed in the United States
District Court for the Southern District of New York. The first complaint, filed
on December 14, 2004 and thereafter, amended on January 4, 2005, purports to be
brought on behalf of all purchasers of the Company's common stock between
February 9, 2000 and October 13, 2004. The second complaint, filed on December
17, 2004, purports to be brought on behalf of all purchasers of the Company's
publicly-traded securities between February 11, 1999 and October 13, 2004. Both
actions purport to assert U.S. federal securities law violations, principally
alleging that the Company misrepresented its business performance and engaged in
various improprieties. The complaints each seek certification of the putative
class, unspecified damages, reasonable costs and attorneys' fees, and other
relief.




On
February 14, 2005, two putative class members separately moved for consolidation
of the two related actions, appointment as Lead Plaintiff, and approval of their
respective counsel as Lead Counsel. By order dated March 10, 2005, the court
consolidated the two cases within a single action and appointed lead plaintiffs
and their lead counsel. By order dated March 17, 2005, the court set a schedule
for the filing of a consolidated amended complaint and subsequent motions to
dismiss. The Company intends to defend itself vigorously in these actions.




**Criminal
Investigations By Department of Justice**




The
Company is the subject of a pending criminal investigation being conducted by
the Antitrust Division of the United States Department of Justice. The
investigation focuses on alleged price fixing in the window coverings industry.
The Company is co-operating with the Department of Justice and is attempting to
negotiate a resolution of the matter.




**Other
Claims**




Royal
is also involved in various claims, legal proceedings, investigations and
complaints arising out of the regular course of business. Royal is unable to
determine whether these claims, legal proceedings, investigations and complaints
will







17





individually
or collectively, have a material or adverse effect on the business, operations,
financial condition or liquidity of Royal.




**RISK
FACTORS**




Royal’s
business is subject to various risks, uncertainties and other factors that could
cause Royal’s results in fiscal 2005 and beyond to differ materially from past
results and from those expressed in forward-looking statements made by or on
behalf of Royal. The risks described below are not the only ones facing Royal.
Additional risks not currently known to Royal or that Royal currently deems
immaterial may also impact Royal. You should also refer to the other information
in this Annual Information Form and in Royal’s Management’s Discussion &
Analysis for fiscal 2004.




**Royal
operates in a very competitive business environment.**




Royal
faces substantial competition throughout its product categories and geographical
regions. Some of Royal’s competitors have financial and other resources that are
substantially greater than Royal’s, and may be able to make larger capital
expenditures that will give them a competitive advantage. Royal also competes
against foreign competitors with lower cost structures, particularly in its
consumer product lines, and these competitors may be able to compete more
effectively in an aggressive pricing environment. Such competition could result
in lower sales or downward price pressure on Royal’s products, which may
adversely affect its revenues, gross margins and cash flows.




**Adverse
changes in economic conditions generally or in the renovation, remodeling and
construction**  **markets
could reduce demand for Royal’s products.**




Royal’s
business is substantially related to the North American renovation, remodeling
and construction markets, both residential and industrial/commercial. As a
result, the demand for the products manufactured and distributed by Royal is
affected by the changes in the general state of the North American economy,
including the demand for renovation and remodeling, new housing starts and the
level of construction activity in general. Future economic downturns could
reduce demand for Royal’s products and could have a material adverse effect on
Royal’s business, operations and financial condition.




**Fluctuations
in raw material prices and raw material availability may adversely affect
Royal’s results.**




Royal
faces the risk that its access to some raw materials may be interrupted or that
it may not be able to purchase these raw materials at acceptable prices. Royal
uses large quantities of PVC resin and VCM in manufacturing its products. These
materials are subject to substantial price fluctuations resulting from shortages
in supply, industry demand and fluctuations in oil, gas and ethylene prices. The
market price of PVC increased in 2004, a trend that is expected to continue in
2005. Market conditions may not permit Royal to pass on increases in the prices
of these raw materials to its customers, or otherwise absorb such cost
increases. Significant increases in the prices of Royal’s raw materials, coupled
with an inability to pass such increases on to customers, would have a material
adverse effect on Royal’s business, operations and financial condition. In
addition, Royal has occasionally found certain raw materials to be in short
supply. A restriction in the availability of either PVC resin or VCM due to
market conditions, or issues particular to Royal, could have a material adverse
effect on Royal’s business, operations and financial condition.




**Class
action lawsuits and ongoing criminal and regulatory investigations may result in
significant fines, judgments or other material adverse consequences to
Royal.**




Royal
is subject to various ongoing regulatory and criminal investigations by the OSC,
the RCMP, and the United States Department of Justice, and has been named as a
defendant in A class action lawsuit filed in the United States District Court
for the Southern District of New York. For a detailed discussion of these
investigations and lawsuits, see “Legal Proceedings and Investigations” above.
These investigations and lawsuits may result in significant fines, judgments, or
other consequences that could have a material adverse effect on Royal’s
business, operations and financial condition.







18





**Royal
is exposed to foreign exchange risks that it cannot
control.**




Royal’s
costs and expenses are primarily in Canadian dollars. A significant portion of
Royal’s revenue, however, is incurred in U.S. dollars and other foreign
currencies. If the Canadian dollar gains value against these other currencies,
Royal’s results of operations and financial condition could be materially
adversely affected. Royal takes steps to mitigate risks associated with currency
fluctuations through matching of the currency of debt financing and the currency
of certain raw material purchases, sales or asset acquisitions. However, this is
not always economically practical and Royal may not be able to offset any or all
of its currency risks. While Royal has not entered into significant market
instruments with respect to foreign exchange hedging in the past, it may take
such actions in the future, although there can be no assurance that such hedging
strategies will be successful or that they will mitigate the risk of Royal’s
exposure to currency fluctuations.




**Royal’s
operations and products are subject to environmental, health and safety
regulations.**




Royal’s
operations and properties are subject to laws and regulations relating to
environmental protection, including laws and regulations governing the
investigation and clean-up of contaminated properties as well as water
discharges, waste management and workplace health and safety. Such laws and
regulations frequently change, are different in every jurisdiction, and can
impose substantial fines and sanctions for violations. Royal’s operations and
properties must comply with these laws, and must adapt to regulatory
requirements in all jurisdictions as these requirements change. Royal has
experienced, and continues to experience, both operating and capital costs to
comply with environmental laws and regulations, including costs relating to
fines incurred by Royal’s subsidiary, Royal Polymers Limited, in connection with
an accidental release of VCM in 2003. In addition, although Royal believes its
operations are currently substantially in compliance, new laws and regulations,
stricter enforcement of existing laws and regulations, the discovery of
previously unknown contamination, the potential imposition of new clean-up
requirements, and new claims for property damage or personal injury arising from
environmental matters could require Royal to incur costs or become the basis for
the new or increased liabilities that could have a material adverse effect on
its business, operations and financial condition.




**Royal
faces product liability risks and the risk of negative publicity if its products
fails.**




Royal’s
business is exposed to products liability risk and the risk of negative
publicity if its products fail. Although Royal maintains insurance for products
liability claims, the amount and scope of its insurance may not be adequate to
cover a products liability claim that is successfully asserted against it. In
addition, products liability insurance could become more expensive and difficult
to maintain and, in the future, may not be available on commercially reasonable
terms or at all. Royal cannot provide assurance that it has, or will continue to
have, adequate insurance coverage against possible products liability
claims. ****




**CAPITAL
STRUCTURE**




Royal’s
authorized share capital consists of an unlimited number of First and Second
Preferred Shares, an unlimited number of Multiple Voting Shares and an unlimited
number of Subordinate Voting Shares, of which 15,935,444 Multiple Voting Shares
and 77,509,058 Subordinate Voting Shares were outstanding as of April 19, 2005.
At the upcoming Annual and Special Meeting of shareholders expected to take
place on May 25, 2005, shareholders will vote on the proposed Share Conversion
as referred to in this AIF under the sub-heading “Conversion Agreement”. If
approved, Royal will file Articles of amendment resulting in changes to the
capital structure of Royal.




**(a)**
    **Unlimited
      Preference Shares**





Preference
shares are issuable in series, with the designation of rights, privileges,
restrictions and conditions to be determined by the Board of Directors prior to
the issue of the first shares of a series. None of these shares is issued or
outstanding.












19










**(b)**
    **Unlimited
      subordinate voting and multiple voting common shares:**


**


*(i)
Subordinate voting common shares*




Each
share is entitled to one vote per share at all meetings of shareholders and
shall participate equally as to dividends with each multiple voting share.




*(ii)
Multiple voting common shares*




Each
share is entitled to 20 votes per share at all meetings of shareholders and
shall participate equally as to dividends with each subordinate voting share.
Each share may be converted at any time into a fully paid subordinate voting
share on a one-for-one basis, at the shareholder's option.




In
the event that either the subordinate voting shares or the multiple voting
shares are subdivided or consolidated, the other class shall be similarly
changed to preserve the relative position of each class. Under certain
conditions, the sale or transfer of multiple voting shares shall cause such
shares to be changed to subordinate voting shares.




**Dividend
Policy**




Royal
retains its earnings to finance the growth and development of its business and
does not expect to pay dividends in the immediate future. The Board of Directors
will review this policy from time to time in the context of Royal's earnings,
financial position and other relevant factors.




**Ratings**




On
May 9, 2005 Standard and Poor’s Ratings Services (“S&P”) lowered its
long-term corporate credit and senior unsecured debt rating to “BB” from “BBB-”.
At the same time, S&P removed its ratings on Royal from Credit Watch where
the company was placed with negative implications on October 15, 2004. A ratings
category of BB signifies that financial security may be adequate, but capacity
to meet long-term obligations is vulnerable.




The
ratings reflect a transitioning management team and short-term problems such as
poor liquidity, weak internal controls and near-term refinancing requirements.
The ratings also reflect longer term issues such as weakening profitability and
a low return on capital. Although the moderate debt leverage, steady free cash
flow generation, and an underlying solid business profile have supported the
ratings, S&P now believes that the distractions caused by the criminal
investigations and governance problems have resulted in, and exposed both short
and long-term problems. Accordingly, the overall business and financial profile
do not currently support an investment-grade rating. The outlook is currently
negative. S&P believes that if Royal does not address its weak liquidity and
inefficient debt structure in the next eight months, the ratings could be
lowered further. S&P believes that profitability will be hampered by high
resin prices, a strong Canadian dollar, and the potentially negative effects of
rising interest rates on the housing and home renovation markets.




As
at December 31, 2004, the Dominion Bond Rating Services (“DBRS”) debt rating was
BBB (low) with a stable trend. In March 2005, DBRS changed its rating to BBB
(low) with a negative trend. A long-term debt rated BBB is of adequate credit
quality and considered acceptable but fairly susceptible to adverse changes in
financial and economic conditions. The ratings agencies have expressed concerns
regarding uncertainties surrounding Royal’s continuing investigations, as such,
it’s credit rating may be subject to further downgrades.




A
security rating is not a recommendation to buy, sell, or held securities and may
be subject to revision or withdrawal at any time by the rating agency.









20





**MARKET
FOR SECURITIES**




Royal's
Subordinate Voting Shares are currently listed on The Toronto Stock Exchange
(“TSX”) and on the New York Stock Exchange (“NYSE”) under the symbol “RYG.SV”.
Prior to October 15, 2004, Royal’s shares were listed under the symbol “RYG”.
The trading price and volume of Royal’s securities for 12 months ended December
31, 2004 on the TSX is summarised as follows:




**SYMBOL**
    **DATE**
    **OPEN**
    **HIGH**
    **LOW**
    **CLOSE**
    **VOLUME
      TRADED**RYG.SV
    2004/12
    $10
    $13.68
    $9.25
    $12.59
    7658326RYG.SV
    2004/11
    8.5
    10.49
    8.5
    10.11
    15740821RYG.SV
    2004/10*
    9.4
    10
    8.53
    8.78
    3857186RYG
    2004/10
    11
    11.74
    11
    11.28
    1481460RYG
    2004/09
    12
    12.35
    10.56
    11.1
    2683660RYG
    2004/08
    11.49
    12.55
    10.25
    12
    3887858RYG
    2004/07
    12.2
    12.4
    10.56
    10.95
    6889963RYG
    2004/06
    13.35
    13.64
    11.75
    12
    4604032RYG
    2004/05
    15.45
    16.29
    13
    13.33
    4382811RYG
    2004/04
    14.38
    16.45
    14.3
    15.32
    4101410RYG
    2004/03
    13.45
    14.93
    12.67
    14.38
    6615988RYG
    2004/02
    13.25
    17.4
    11.99
    13.45
    9724042RYG
    2004/01
    12.3
    14
    12.02
    13.3
    5765736





**
Trading information for the month of October is divided to reflect the change in
Royal’s trading symbol. Trading information under the symbol “RYG” represents
trades from October 1, 2004 to October 14, 2004. Trading information for October
15, 2004 to October 31, 2004 is identified under the symbol
“RYG.SV”.*




**Transfer
Agent**




Royal’s
transfer agent is Computershare Trust Company of Canada at its principal office
located at 100 University Avenue, 9 th Floor, Toronto, Ontario Canada, M5J 2Y1.









21







**DIRECTORS
AND OFFICERS**




The
following table identifies the directors of Royal, their committee memberships,
their occupations for the past five years and the percentage of each share
class, beneficially owned, directly or indirectly, or over which control or
direction is exercised, as of April 22, 2005. The directors were last elected on
February 25, 2004 and are elected on an annual basis.




Director
    First
      Became
      Director
    Committee
      Membership(1)
    Principal
      Occupation and
      other
      Public Issuer
      Directorships
      Held
    Shares
      owned or
      Over
      Which Control or
      Direction
      is Exercised(2) %Vic
      De Zen
      Vaughan,
      Ontario, Canada
    November
      25, 1994
    N/A
    Former
      Chairman and Chief Executive Officer of the Corporation
      
      Currently
      owns and operates a real estate development company
    100%
      MVS(3)
      0.01%
      SVSRalph
      Brehn
      Ste.
      Agathe Nord, Quebec, Canada
    May
      2, 1995
    AC,
      CC, NC, SC
    Former
      President of Hunter Douglas Canada Ltd. (Building Products
      Company)
    0.01%
      SVSIrvine
      Hollis
      Chatsworth,
      Ontario, Canada
    May
      2, 1995
    NC
      (Chair) CC,AC, SC
    Former
      President of Duracell Inc. (Consumer Products Company)
      
      Presently
      Management Consultant, I Hollis Management Consultants Inc. (Advises
      Start-up Businesses)
      
      Currently
      on advisory board at Mortile Industries and past President and Direct of
      Sudden Arrhythmia death (SADS) Canada
    0.01%
      SVSRobert
      E. Lamoureux
      Toronto,
      Ontario, Canada
    November
      18, 2003
    SC
    Lead
      Director and Interim Chief Financial Officer
      
      Former
      partner and National Leader of PricewaterhouseCoopers’ Corporate
      Governance Practice (Auditors)
      
      Currently
      a director of SR Telecom Inc., and the Institute of Corporate Directors,
      former chair of the Ontario Chapter and a member of its Communications and
      Membership committees
    None





22










Director
    First
      Became
      Director
    Committee
      Membership(1)
    Principal
      Occupation and
      other
      Public Issuer
      Directorships
      Held
    Shares
      owned or
      Over
      Which Control or
      Direction
      is Exercised(2) %James
      Sardo
      Mississauga,
      Ontario, Canada
    November
      18, 2003
    SC
      (Chair)
    Interim
      Chief Executive Officer
      
      Former
      President of Canadian operations of Moore Corporation Ltd. (Business Forms
      Company)
      
      Former
      President and Chief Executive Officer of SMK Speedy International
      (Automotive Repair Company)
      
      Presently
      Director of Hydrogenics Corporation (TSX, NASDAQ) (Hydrogen Fuel Cell and
      Test Equipment Company), Chairman Board of Trustees of Countryside Power
      Income Fund (Power Generation Company)
      
      Trustee/Director
      - UE Water Heater Income Fund (TSX) (Water Heater Rental Business),
      Trustee - CDI Income Fund (TSX) (Direct Marketer and Manufacturer of
      Custom Checks), Member of Institute of Corporate Directors
    0.01%
      SVSGwain
      Cornish
      Campbellville,
      Ontario, Canada
    November
      25, 1994
    N/A
    Senior
      Vice President
      
      Former
      Vice President of Sales and Director of BF Goodrich Chemical
      Company
    0.05%
      SVSRonald
      Slaght
      Toronto,
      Ontario, Canada
    November
      25, 1994
    CC
      (Chair), AC (Chair), NC, SC
    Partner,
      Lenczner Slaght Royce Smith Griffin (Barristers)
      
      Past
      President of The Advocates Society and Member of Civil Rules Committee,
      Fellow of American College of Trial Lawyers
      
      Former
      Head of the Trial Practice Program, University of Toronto, Faculty of
      Law
    0.04%
      SVS





Note1:
    “AC”
      refers to the Audit Committee;“CC”
      refers to the Human Resources and Compensation
  Committee;“SC”
      refers to the Special Committee; and“NC”
      refers to the Nomination and Corporate Governance
    Committee.Note2:
    “MVS”
      refers to Multiple Voting Shares and “SVS” refers to Subordinate Voting
      Shares.Note3:
    Mr.
      De Zen exercises control or direction over 100% of the Multiple Voting
      Shares of Royal Group and thereby exercises control over Royal
      Group.










23





**AUDIT
COMMITTEE**




***Charter***




The
Charter of Royal’s audit committee is set out on Schedule “A’ attached to this
AIF.




***Composition***




The
audit committee consists of three members, each of whom is independent and
financially literate. The members of the audit committee are Irvine Hollis,
Ronald Slaght and Ralph Brehn. Reference its made to the directors information
contained in this AIF for the experience of each member of the audit committee
that is relevant to the performance and responsibilities of an audit committee
member.




***Pre-Approval
Policies and Procedures***




The
audit committee has the authority to pre-approve all audit services and all
permitted non-audit services. The committee may delegate to one or more
designated members of the audit committee the authority to grant pre-approvals.
The decisions of any member to whom authority is delegated to pre-approve a
non-audit related fee must be presented to the committee at each of its
scheduled meetings. If the committee approves an audit service within the scope
of the engagement of the Company’s auditors, such audit service shall be deemed
to have been pre-approved. As part of the presentation of their audit planning
report to the audit committee, the auditors provide an estimate for the annual
audit related services, which is approved prior to the commencement of the
annual audit of the financial statements. The committee will be informed on an
on-going basis as to the non-audit services actually provided by the auditors as
part of the pre-approval process.




***External
Auditor Service Fees***




A
summary of the fees paid to Royal’s external auditors, KPMG LLP in fiscal 2004
and fiscal 2003 are as follows:




**Fiscal
      2004**
      **(15
      months)**
    
    **Fiscal
      2003**
      **(12
      months)**Audit
      Fees2
    
    $
    1,274,000
    
    $
    829,000Audit
      Related Fees3
    
    $
    29,000
    
    $
    93,000Tax
      Fees4
    
    $
    118,000
    
    $
    436,000All
      Other Fees5
    
    
    Nil
    
    $
    37,000







2 Audit
Fees - comprised of audit fees for the year and quarterly reviews





3
Audit Related Fees - comprised of fees for 401(k) plan audit and workers
compensation review





4
Tax Fees - comprised of fees for U.S. tax compliance services





5
All Other Fees - comprised of fees for transfer pricing study and assistance in
response to regulatory inquiries


24





**ADDITIONAL
INFORMATION**




Royal
will provide to any person or company, upon request to the Corporate
Secretary:




When
securities of Royal are in the course of distribution pursuant to a preliminary
short form prospectus or a short form prospectus,




•
    one
      copy of Royal's Annual Information Form, together with a copy of any
      document or pertinent pages of any document, incorporated by reference in
      the Annual Information Form,•
    one
      copy of the comparative financial statements and MD&A of Royal for its
      most recently completed financial year together with accompanying report
      of the auditor and one copy of the most recent interim financial
      statements of Royal subsequent to the financial statements for its most
      recently completed financial year,•
    one
      copy of Royal'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•
    one
      copy of any other document that is incorporated by reference into the
      preliminary short form prospectus or the short form prospectus and not
      required to be provided under (i) to (iii) above;
or





At
any other time, one copy of any document referred to in clauses (a) (i), (ii)
and (iii) above, provided that Royal may require payment of a reasonable charge
if the request is made by a person who is not a security holder of
Royal.




Additional
information including officers’ and directors’ remuneration and indebtedness,
principal holders of Royal’s securities, options to purchase securities, and
interests of insiders in material transactions, where applicable, is contained
in Royal's Management Proxy Circular, dated April 22, 2005 which is hereby
incorporated by reference. Additional financial information is provided in
Royal's consolidated financial statements for the 15 months ended December 31,
2004 which are hereby incorporated by reference.




Additional
information relating to Royal may be found on SEDAR at www.sedar.com and EDGAR
at www.sec.gov.






25


****


**SCHEDULE
“A”**




ROYAL
GROUP TECHNOLOGIES LIMITED






**MANDATE
FOR THE AUDIT COMMITTEE**


**OF
THE BOARD OF DIRECTORS**




This
Mandate supercedes any previous mandate and is effective as of February 2,
2005.




Version:
    February
      2, 2005 - Final




**1.**
    **PURPOSE**




The
      Audit Committee (“Committee”) is appointed by the Board of Directors
      (“Board”) of Royal Group Technologies Limited (the “Company”) for the
      purpose of overseeing the accounting and financial reporting process of
      the Company and audits of the financial statements of the Company and is
      responsible to assist the Board in its oversight responsibilities with
      respect to:




a)
    The
      reliability and integrity of the Company’s accounting principles and
      practices, financial statements and related disclosure and other financial
      reporting and disclosure practices followed by
  management;b)
    The
      Company’s compliance with related legal and regulatory
      requirements;c)
    The
      independence, qualifications, work and performance of the Company’s
      external auditors;d)
    The
      performance of the Company’s internal audit function;
  ande)
    The
      establishment by management of the Company’s system of disclosure controls
      and system of internal controls and performance
thereof.




The
Committee is directly responsible for overseeing the work of the external
auditor engaged for the purpose of issuing an auditor’s report or performing
other audit, review or attest services for the issuer, including the resolution
of disagreements between management and the external auditor regarding financial
reporting.




The
      Committee provides for an avenue of communication among the external
      auditors, internal audit, management and the Board.The
      Committee shall also produce such reports for inclusion in the Company’s
      public disclosure material required by the laws, regulations and stock
      exchange corporate governance requirements to which the Company is
      subject.**2.**
    **COMPOSITION
      AND PROCEDURES**The
      Committee shall be comprised of not fewer than three directors, each of
      whom shall have no material relationship with the Company and each member
      shall be otherwise unrelated and independent under the laws, regulations
      and listing requirements to which the Company is
  subject.Each
      Committee member shall be subject to annual re-confirmation and may be
      removed by the Board at any time. The Chair shall be appointed by the
      Board.





1












All
      members of the Committee shall be financially literate, as determined by
      the Board in its business judgement or become financially literate within
      a reasonable time after their appointment. At least one member of the
      Committee shall have accounting or related financial expertise, which
      entails the ability to analyze and interpret a full set of financial
      statements including the attached notes.The
      Committee shall have the authority to seek any information it reasonably
      requires from employees or external parties and meet with company
      officers, external auditors or outside counsel as reasonably necessary.The
      Committee shall have the authority to retain outside advisors, including
      counsel, as it determines necessary to carry out its duties. The Company
      shall provide appropriate funding, as determined by the Committee, in its
      capacity as a Committee of the Board, for payment of (i) compensation to
      any public accounting firm engaged for the purpose of rendering or issuing
      an audit report or related work or performing other audit, review or
      attest services for the Company, (ii) compensation to any advisor employed
      by the Committee as it determines necessary or appropriate in carrying out
      its duties, and (iii) ordinary administrative expenses of the Committee
      that are necessary or appropriate in carrying out its
    duties.**3.**
    **AUTHORITY
      AND RESPONSIBILITIES****A.**
    **Appointment
      of the Company’s External Auditor**The
      Committee shall recommend to the Board the external auditor to be
      nominated for appointment by the shareholders at each annual meeting who
      will be appointed for the purpose of issuing an auditor’s report or
      performing other audit, review or attest services for the Company. The
      Committee shall also be directly responsible for the approval of fees to
      be paid to the independent auditor for audit services and shall
      pre-approve the retention of the independent auditor for any permitted
      non-audit services. The Committee shall also be directly responsible for
      the oversight of the work of the independent auditor for the purpose of
      issuing an audit report or performing other audit, review or attest
      services for the Company, including the resolution of disagreements
      between management and the external auditors regarding financial
      reporting.The
      Committee shall obtain and review with the lead audit partner and a more
      senior representative of the independent auditor, annually or more
      frequently as the Committee considers appropriate, a report by the
      independent auditor describing: the independent auditor’s internal
      quality-control procedures; any material issues raised by the most recent
      internal quality-control review, or peer review, of the independent
      auditor, or by any inquiry, review or investigation by governmental,
      professional or other regulatory authorities, within the preceding five
      years, respecting independent audits carried out by the independent
      auditor, and any steps taken to deal with these issues; and (to assess the
      independent auditor’s independence) all relationships between the
      independent auditor and the Company. The Committee shall, in addition to
      assuring the regular rotation of the lead audit partner, consider whether
      there should be regular rotation of the audit firm.The
      Committee shall review the experience, qualifications and performance of
      the senior members of the independent auditor team.The
      Committee shall present its conclusions with respect to the independent
      auditor to the Board.**B.**
    **Specific
      Mandates**The
      Committee, to the extent it deems necessary or appropriate, shall carry
      out the following specific
responsibilities:





2












i)
    Financial
      Statement and Disclosure Matters•
    Review
      and discuss with management and the external auditor and report to the
      Board on all financial statements requiring Board approval, disclosures
      made in management’s discussion and analysis, the annual information form,
      the portions of the management proxy circular, for any annual or special
      meeting of the shareholders, containing significant information within the
      Committee’s mandate, and all financial statements included in prospectuses
      or other offering documents.•
    Review
      and discuss with management and the independent auditor each press release
      or material change report which contains significant financial information
      respecting the Company or contains estimates or information regarding the
      Company’s future financial performance or prospects, the use of
      “pro-forma” or adjusted non-GAAP information•
    Review
      and discuss with management financial information and earnings guidance
      provided to analysts and rating agencies - consisting of discussing the
      types of information to be disclosed and the types of presentations to be
      made. Should the Company decide to provide earnings guidance, the
      Committee shall approve this decision before any earnings guidance is
      provided. The Committee need not discuss in advance each instance in which
      the Company may provide earnings guidance or presentations to rating
      agencies.•
    Review
      with management and the independent auditor major issues regarding
      accounting and auditing principles and practices and financial statement
      presentations and disclosure as well as the adequacy of internal controls
      and procedures for financial reporting that could significantly affect the
      Company’s financial statements or special steps adopted in light of
      material deficiencies.•
    Review
      with management and the independent auditor, and satisfy itself as to the
      adequacy of the Company’s disclosure controls and procedures for the
      review of the Company’s public disclosure of financial information
      extracted or derived from the Company’s financial statements and
      periodically assess the adequacy of those procedures.•
    Review
      and discuss quarterly reports from the independent auditors
      on:(a)
      All critical accounting policies and practices to be
  used.(b)
      All alternative treatments within generally accepted accounting principles
      for policies and practices related to material items that have been
      discussed with management, including the ramifications of the use of such
      alternative disclosures and treatments and the treatment preferred by the
      independent auditor.(c)
      Other material written communications between the independent auditor and
      management, such as any management letter or schedule of unadjusted
      differences.•
    Review
      with management and the independent auditor the effect of regulatory and
      accounting initiatives as well as off-balance sheet structures on the
      Company’s financial statements.•
    Review
      analyses prepared by management and/or the independent auditor setting
      forth significant financial reporting issues and judgments made in
      connection with the preparation of the financial statements, including
      analysis of the effects of alternative GAAP methods on the financial
      statements.





3












•
    Discuss
      with management the Company’s principal risks and the steps management has
      taken to monitor and control such exposures, including the Company’s risk
      assessment and risk management policies.•
    Review
      with management, the independent auditor and, if necessary, legal counsel,
      any litigation, claim or contingency that could have a material effect
      upon the financial position of the Company, and the manner in which these
      matters have been disclosed in the financial
statements.•
    Discuss
      with the independent auditor the matters required to be discussed by
      applicable auditing and accounting standards relating to the conduct of
      the audit, including any difficulties encountered in the course of the
      audit work, any restrictions on the scope of activities or access to
      requested information, any significant disagreements with management and
      any other audit problems or difficulties and management’s
      response•
    Review
      with the chief executive officer and chief financial officer of the
      Company and the external auditors: (a) all significant deficiencies and
      material weaknesses in the design or operation of the Company’s “internal
      control over financial reporting”, which become known and are reasonably
      likely to adversely affect the Company’s ability to record, process,
      summarize and report financial information, and (b) any fraud, whether or
      not material, that involves management or other employees who have a
      significant role in the Company’s internal control over financial
      reporting.•
    Review
      other matters related to the conduct of the audit that are to be
      communicated to the Committee under generally accepted auditing
      standards.




ii)
    Oversight
      of the Company’s Relationship with the External
  Auditor




In
      addition to the items set out in section 3.A., the Committee
    shall:




•
    Meet
      with the independent auditor prior to the audit to discuss the planning
      and staffing of the audit.•
    Evaluate
      the qualifications, performance and independence of the external auditor,
      including considering whether the auditor’s quality controls are adequate
      and the provision of permitted non-audit services is compatible with
      maintaining the auditor’s independence, and should take into account the
      opinions of management and internal auditors. The Committee shall present
      its conclusions with respect to the independent auditor to the
      Board.•
    Ensure
      the rotation of partners on the audit engagement team as required by law
      and consider, if appropriate, rotating the independent auditing firm in
      order to assure continuing auditor independence.•
    Review
      with the independent auditor the adequacy and appropriateness of the
      accounting policies used in the preparation of the financial
      statements.•
    Meet
      separately with the independent auditor to review with them any problems
      or difficulties they may have encountered and specifically (a) any
      difficulties which were encountered in the course of the audit work,
      including any restrictions on the scope of activities or access to
      required information, and any disagreements with management and (b) any
      changes required in the planned scope of the audit. Report to the Board on
      the results of such meetings.•
    Resolve
      disagreements between management and the external auditor regarding
      financial reporting.





4












•
    Review
      the annual management letter from the independent auditor and management’s
      response and follow-up in respect of any identified weaknesses, inquire
      regularly of management and the independent auditor of any significant
      issues between them and how they have been resolved, and intervene in the
      resolution, if required.•
    Set
      clear policies for the Company’s hiring of employees or former employees
      of the independent auditor.•
    Discuss
      with the national office of the independent auditor issues on which they
      were consulted by the audit team and matters of audit quality and
      consistency.iii)
    Oversight
      of the Company’s Internal Audit and Internal Control
      Functions•
    Discuss
      with the Director of Internal Audit, the external auditor and management
      the internal audit department responsibilities, budget and staffing and
      any recommended changes in the planned scope of the internal
      audit.•
    Review
      the significant reports to management prepared by internal audit and
      recommendations issued by any external party relating to internal audit
      issues, together with management’s responses to such
    reports.•
    Monitor
      compliance with the Company’s policies and avoidance of conflicts of
      interest that may have a material impact on the financial
      statements.•
    Review
      the adequacy of the resources of the internal audit department to ensure
      the objectivity and independence of the function.•
    Review
      with management the appointment, replacement, and reassignment of the
      Director of Internal Audit.•
    Meet
      separately with the Director of Internal Audit to review any problems or
      difficulties encountered in the course of the audit work, including
      restrictions on the scope of activities or access to required information,
      and any disagreements with management and report to the Board on such
      meetings.•
    Ensure
      that management, the independent auditor and the internal audit department
      provides to the Audit Committee an update or report on the Company’s
      control environment as it pertains to the Company’s financial reporting
      process and controls.iv)
    Oversight
      in Respect of Legal and Regulatory Matters•
    Review
      with General Counsel the Company’s compliance policies, legal matters and
      any material reports or inquiries received from regulators or governmental
      agencies that could have a material effect upon the financial position of
      the Company and which are not subject to the oversight of another
      committee of the Board.v)
    Oversight
      in Respect of Certain Policies•
    Establish
      procedures for the receipt, retention and treatment of complaints received
      by the Company regarding accounting, internal accounting controls or
      auditing matters, and the confidential, anonymous submission by employees
      of concerns regarding questionable accounting or auditing matters. This
      shall commence in fiscal 2005.





5







vi)
    Oversight
      in Respect of Audit and Non-Audit Services•
    Have
      the authority to pre-approve all audit services and all permitted
      non-audit services, provided that the Committee need not approve in
      advance non-audit services where:(a)
      the aggregate amount of all such non-audit services that were not
      pre-approved constitute not more than 5% of the total amount of fees paid
      by the Company to the independent auditor during the fiscal year in which
      the non-audit services are provided;(b)
      such services were not recognized by the Company at the time of the
      engagement to be non-audit services; and(c)
      such services are promptly brought to the attention of the Committee and
      approved prior to the completion of the audit by the Committee or by one
      or more members of the Committee to whom authority to grant such approvals
      has been delegated by the Committee.•
    Approval
      by the Committee of a non-audit service to be performed by the independent
      auditor shall be disclosed as required in the Company reports filed with
      applicable regulatory agencies or organizations. The Committee may
      delegate to one or more designated members of the Committee the authority
      to grant pre-approvals required by this section. The decisions of any
      member to whom authority is delegated to pre-approve an activity shall be
      presented to the Committee at each of its scheduled meetings. If the
      Committee approves an audit service within the scope of the engagement of
      the independent auditor, such audit service shall be deemed to have been
      pre-approved for purposes of this section.




**C.**
    **Committee
      Member Evaluation**




•
    The
      Nominations and Corporate Governance Committee shall conduct an annual
      performance evaluation of the Committee and shall report to the Board the
      results of this evaluation. This shall commence in fiscal
      2005.




**D.**
    **Review
      of the Committee Mandate**




•
    The
      Committee shall review and reassess the adequacy of this Mandate at least
      annually, submit it to the Board for approval and ensure it is in
      compliance with applicable regulations. This shall commence in fiscal
      2005.




**E.**
    **Non-Exhaustive
      List**




•
    The
      foregoing list of duties is not exhaustive, and the Committee may, in
      addition, perform such other functions as may be necessary or appropriate
      for the performance of its oversight responsibilities. In discharging its
      oversight role, the Committee shall have full access to all of the
      Company’s books, records, facilities and
personnel.




**F.**
    **Oversight
      Function**




•
    While
      the Committee has the responsibilities and powers set forth in this
      Mandate, it is not the duty of the Committee to plan or conduct audits or
      to determine that the Company’s financial statements are complete and
      accurate or are in accordance with GAAP. These are the responsibilities of
      management and the independent auditor. The Committee, its Chair, and any
      of its members who have accounting or related financial management
      experience or expertise are members of the Board of the Company appointed
      to the Committee to provide broad oversight of the financial risk and
      control related activities of the Company, and are specifically not
      accountable nor responsible for





6












the
      day to day operation or performance of such activities. Therefore, each
      member of the Committee shall be entitled to rely, to the fullest extent
      permitted by law, on the integrity of those persons and organizations
      within and outside the Company from whom he or she receives information
      and the accuracy of the financial and other information provided to the
      Committee by such person or organization. A member or members having
      accounting or related financial management experience or expertise, or
      being designated as an “audit committee financial expert”, does not impose
      a higher degree of individual responsibility or obligation on such member.
      Rather, the role of any such members, like the role of all Committee
      members, is to oversee the accounting and financial reporting processes
      and not to certify or guarantee the accuracy or completeness of the
      internal or external audit of the Company’s financial information or
      public disclosure.




**4.**
    **COMMITTEE
      MEETINGS**The
      Committee shall meet at least four times a year, or more frequently as
      circumstances dictate. If the Chair is not present at any meeting of the
      Committee, one of the other members of the Committee present shall be
      chosen by the Committee to preside at the meeting.A
      majority of the total number of members of the Committee shall constitute
      a quorum at all Committee meetings. A majority of the members of the
      Committee shall be empowered to act on behalf of the Committee. Minutes
      shall be kept of each meeting of the Committee by the Secretary of the
      Corporation, or such other person as may be appointed by the Chair of the
      Committee.Each
      regularly scheduled meeting shall conclude with an executive session of
      the Committee excluding members of management. In addition, the Committee
      shall meet periodically with management, the general counsel, the director
      of internal audit and the independent auditors in separate executive
      sessions to discuss any matters that the Committee or each of these groups
      believe should be discussed privately. The findings of the Committee will
      be reported to the Board of Directors in a meeting subsequent to the
      meeting of the Committee.The
      Committee shall make regular reports to the Board regarding any issues
      that arise with respect to the quality and integrity of the Company’s
      financial statements, the Company’s compliance with legal or regulatory
      requirements, the performance and independence of the Company’s
      independent auditors or the performance of the internal audit
      function.






7




**UNDERTAKING
AND CONSENT TO SERVICE OF PROCESS**
 
 
 **A.**
    **Undertaking**Royal
      Group Technologies Limited (the “Registrant”) undertakes to make
      available, in person or by telephone, representatives to respond to
      inquiries made by the staff of the Securities and Exchange Commission (the
      “SEC”), and to furnish promptly, when requested to do so by the SEC staff,
      information relating to the securities in relation to which the obligation
      to file an annual report on Form 40-F arises or transactions in said
      securities.**B.**
    **Consent
      to Service of Process**The
      Registrant has previously filed with the SEC a written irrevocable consent
      and power of attorney on Form F-X in connection with the Subordinate
      Voting Shares.
  ****
 ****
 
 ****
 **DISCLOSURE
CONTROLS AND PROCEDURES**
  **A.**
    **Evaluation
      of Disclosure Controls and Procedures**The
      Registrant maintains disclosure controls and procedures and internal
      control over financial reporting designed to ensure that information
      required to be disclosed in the Registrant’s filings under the Securities
      Exchange Act of 1934, as amended (the “Exchange Act”) is recorded,
      processed, summarized and reported within the time period specified in the
      rules and forms of the SEC. The Registrant’s Interim President and Chief
      Executive Officer and Interim Chief Financial Officer, after having
      evaluated the effectiveness of the Registrant’s disclosure controls and
      procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as
      of the end of the period covered by this report have concluded that, as of
      such date, the Registrant’s disclosure controls and procedures were
      adequate and effective to ensure that material information relating to the
      Registrant and its consolidated subsidiaries would be made known to them
      by others within those entities. However, as recommended by the SEC in its
      adopting release, the Registrant will continue to periodically evaluate
      its disclosure controls and procedures and will make modifications from
      time to time as deemed necessary to ensure that information is recorded,
      processed, summarized and reported within the time periods specified in
      the SEC’s rules and forms.******B.**
    **Change
      in Internal Control Over Financial Reporting**There
      was no change in the Registrant’s internal control over financial
      reporting that occurred during the period covered by this report that has
      materially affected, or is reasonably likely to materially affect, its
      internal control over financial reporting.
 ****
 **AUDIT
COMMITTEE FINANCIAL EXPERT**
  The
      Registrant’s Board of Directors has determined that it does not currently
      have an audit committee financial expert (as such term is defined in the
      rules and regulations of the SEC) serving on its Audit Committee. The
      Registrant’s Audit Committee is currently chaired by Ronald Slaght. A
      Special and General Meeting of the shareholders of the Registrant will
      take place on May 25, 2005 at which time a new Board of Directors will be
      elected from which, it is expected, an audit committee financial expert
      will be selected to join the Audit
Committee.
 ****
 **CODE
OF ETHICS**
  The
      Registrant has adopted a Code of Business Conduct and Ethics****(included
      as Exhibit 6 to this report) that applies to all directors, officers and
      employees of the Registrant, including the Registrant’s principal
      executive officer, principal financial officer and principal accounting
      officer. The Registrant has also adopted an additional Code of Ethics
      (included in Exhibit 6 to this report) that applies only to principal
      executive and senior financial officers.****
 ****
 **PRINCIPAL
ACCOUNTANT FEES AND SERVICES**
 
 See
      page 24 of the Registrant’s Annual Information Form which is included in
      this Annual Report on Form 40-F.
 
  
  **AUDIT
COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES**
 
 See
      page 24 of the Registrant’s Annual Information Form which is included in
      this Annual Report on Form 40-F. None of the services described above
      under “Principal Accountant Fees and Services” under the captions
      “Audit-Related Fees”, “Tax Fees” and “All Other Fees” were approved by the
      Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of
      Regulation S-X.
 
 **OFF-BALANCE
SHEET ARRANGEMENTS**
 
 The
      Registrant’s off-balance sheet arrangements consist of commitment
      agreements with suppliers for the purchase of raw materials as discussed
      in Note 18 to the Audited Financial Statements for the year ended December
      31, 2004 which are included in this Annual Report on Form 40-F.
 
 **TABULAR
DISCLOSURE OF CONTRACTUAL OBLIGATIONS**
 
 **Contractual
      Obligations**
      **(CDN$
      in thousands as at December 31, 2004)**
    
    **Total**
    
    **2005**
    
    **In
      years**
      **2006-2007**
    
    **In
      years**
      **2008-2009**
    
    **After
      2009**Long
      Term Debt Obligations
    
    
    322,931
    
    
    18,464
    
    
    187,935
    
    
    -
    
    
    116,532Capital
      Lease Obligations
    
    
    2,746
    
    
    907
    
    
    1,203
    
    
    636
    
    
    -Operating
      Leases
    
    
    56,055
    
    
    16,478
    
    
    23,796
    
    
    12,406
    
    
    3,375Purchase
      Obligations
    
    
    1,777,859
    
    
    258,710
    
    
    507,166
    
    
    506,599
    
    
    505,384Other
      Long Term Obligations
    
    
    3,612
    
    
    2,519
    
    
    1,059
    
    
    20
    
    
    14Total
      Contractual Obligations
    
    
    2,163,203
    
    
    297,078
    
    
    721,159
    
    
    519,661
    
    
    625,305
 
   
  **SIGNATURES**
  Pursuant
to the requirements of the Exchange Act, the registrant certifies that it meets
all of the requirements for filing on Form 40-F and has duly caused this annual
report to be signed on its behalf by the undersigned, thereto duly
authorized.
  **ROYAL GROUP TECHNOLOGIES
      LIMITED**Date:
      May 13, 2005
    By:
    /s/
      James SardoName:
    James
      SardoTitle:
    Interim
      Chief Executive Officer
  
  **EXHIBIT
INDEX**
  **Exhibit
      No.**
    ****
    **Description**99.1
    
    Audited
      Consolidated Financial Statements for the Registrant as at and for the
      fifteen months ended December 31, 2004 and the year ended September 30,
      2003, together with the auditors’ report thereon99.2
    
    Management’s
      Discussion and Analysis from the 2004 Annual Report to
      Shareholders99.3
    
    Consent
      of KPMG LLP99.4
    
    Officers’
      Certifications Required by Rule 13a-14(a) or Rule
  15d-14(a)99.5
    
    Officers’
      Certifications Required by Rule 13a-14(b) or Rule 15d-14(b) and Section
      1350 of Chapter 63 of Title 18 of the United States
Code99.6
    
    Codes
      of Ethics99.7
    
    Notice
      and Management Proxy Circular dated as of April 22, 2005 other than
      the sections entitled “Report on Executive Compensation” and “Performance
      Graph” (incorporated by reference to Exhibit 99.2 of The Registrant’s Form
      6-K (Commission file No. 1-4242), excluding such sections, furnished to
      the Commission on May 13, 2005)