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ANGLEC PUBLIC OFFERING 2003

Prospectus

For an Initial Public Offering of Ordinary Shares in the

Anguilla Electricity Company Limited

Dated August 1, 2003

Offer For Sale of 6,000,000 Ordinary Shares held by the Government of Anguilla - the

principal shareholder - at EC$2.50 per Share.

Amount of Offer: EC$15,000,000

Additional Shares: Offer may be increased by 600,000 shares or 10% in the

event of over-subscription.

Minimum Subscription: 100 shares at EC$2.50 per share for a Minimum

Subscription of EC$250 per applicant.

Maximum Subscription: There is no maximum subscription.

Opening of the Offering: August 1, 2003

Close of the Offering: September 1, 2003

This Prospectus has been filed with the Eastern Caribbean Securities Regulatory Commission (“ECSRC”), Basseterre,

St. Kitts pursuant to Section 92(3) of the Securities Act, R.S.A c.S13, 2002 and with the Registrar of Companies of

Anguilla pursuant to Section 179 of the Companies Act, R. S. A. c.1., 2000 on August 1, 2003. The ECSRC and the

Registrar accept no responsibility for the content of this Prospectus, make no representations as to its accuracy or

completeness and expressly disclaim any liability whatsoever for any loss whatsoever arising from or reliance upon

the whole or any part of the contents of this Prospectus. If you are in doubt about the contents of this document or

need financial or investment advice you should consult a person licensed under the Securities Act or any other duly

qualified Corporate Advisor who specialises in advising on the acquisition of shares or other securities.


PUBLIC OFFER OF SHARES BY THE GOVERNMENT OF ANGUILLA IN THE

ANGUILLA ELECTRICITY COMPANY LIMITED

This is a Prospectus for the subscription of 6,000,000 ordinary shares being offered by the Government of Anguilla,

principal shareholder in the ANGUILLA ELECTRICITY COMPANY LIMITED (“ANGLEC”), an ordinary private

company incorporated in Anguilla on January 11, 1991 under the former Companies Ordinance, Chapter 335 and

continued on December 30, 1996 under the Companies Act, 1994 of Anguilla which became effective on January 1,

1995. This offer is made solely upon the terms and conditions contained in this Prospectus and no person has been

authorised to give any information or to make any representations with regard to ANGLEC other than through this

Prospectus. This Prospectus is issued for the purpose of giving information to the public about the Company. The

Directors, collectively and individually, accept full responsibility for the accuracy of the information given and

confirm, having made all reasonable inquiries, that to the best of their knowledge and belief there are no other facts,

the omission of which would make any statement in this Prospectus misleading.

The delivery of this Prospectus to a prospective investor at any time and the subsequent allocation of shares do not

imply that the information contained herein is correct at any time subsequent to the date of this Prospectus.

Prospective investors should not construe the contents of this Prospectus as legal or financial advice but should

instead consult their own professional advisors as to such contents and as to the legal, financial or other matters

relevant to the suitability of an investment in the shares of ANGLEC.

This Prospectus is intended for use only in Anguilla and is not to be construed as a public offering of any shares

herein referred to outside Anguilla.

The minimum total subscription required in order to proceed with the offering shall be two million, four hundred

thousand (2,400,000) shares.

ANGLEC’S MISSION STATEMENT:

“To meet the energy requirements of the people and businesses of Anguilla, safely, reliably and economically,

and operate to the highest technical, managerial and environmental standards.”

Camp Be Aware (Environment is FUNdamental)

visits Corito Power Station



(Company # 3618)

MAIN

P.O. Box 400

The Valley

Anguilla, B.W.I.

Phone: (264) 497-5200

Fax: (264) 497-5440

Email: [email protected]

CORPORATE OFFICE

The Valley

Anguilla, B.W.I.

Phone: (264) 497-5200

Fax: (264) 497-5440


REGISTERED OFFICEBenjamine Company Services Limited

P. O. Box 801

Hannah-Waiver House

The Valley, Anguilla, B.W. I.

Phone: (284) 497 3571

Fax: (264) 497 3177


SHARE REGISTRAR AND TRANSFER AGENT

Eastern Caribbean Central Securities Registry

P. O. Box 94

Bird Rock

Basseterre, St. Kitts

PRINCIPAL BROKER AND NEW ISSUE APPLICATIONS RECEIVING FIRM

Bank of St. Lucia Limited

C/O National Bank of Anguilla Limited

P. O. Box 44

The Valley

Anguilla, B.W.I.

The Principal Broker and New Issue Application Receiving Firms will begin receiving applications commencing at 8:00 am onAugust 1, 2003 and ending at 3:00 pm on the closing date of September 1, 2003. The New Issue Applications Receiving firms willreject any application received after 3:00 pm on the closing date. Please refer to the Section “Distribution, Subscription &Allocation Procedure” for the listing of the Other New Issue Application Receiving Firms. Applicants should note that only the NewIssue Applications Receiving Firms are authorised to receive applications for shares.


TABLE OF CONTENTS

ANGLEC’S MISSION STATEMENT ..................................................................................................... 3

COMPANY INFORMATION ................................................................................................................... 4

TABLE OF CONTENTS ........................................................................................................................... 5

DEFINITIONS AND ABBREVIATIONS ................................................................................................ 8

CURRENCY EQUIVALENT .................................................................................................................................. 8

MESSAGE FROM THE CHIEF MINISTER ....................................................................................... 12

LETTER FROM THE CHAIRMAN ..................................................................................................... 13

EXECUTIVE SUMMARY ...................................................................................................................... 14

SUMMARY OF THE OFFER ............................................................................................................................... 14

HISTORY AND NATURE OF THE BUSINESS .................................................................................................. 14

OWNERSHIP HISTORY ...................................................................................................................................... 15

USE OF PROCEEDS ............................................................................................................................................ 15

PLANNED CAPITAL EXPANSION .................................................................................................................... 16

SHARE CAPITAL STRUCTURE ......................................................................................................................... 16

OFFERING PRICE DETERMINATION .............................................................................................................. 17

SECONDARY MARKET FOR SHARES ............................................................................................................ 17

SELECTED FINANCIAL INFORMATION ........................................................................................................ 18

KEY INVESTMENT CONSIDERATIONS .......................................................................................... 19

DIRECTORS ............................................................................................................................................ 20

ADVISORS ............................................................................................................................................... 22

ROLES AND RESPONSIBILITIES OF ADVISORS .......................................................................................... 22

ROLE OF EASTERN CARIBBEAN SECURITIES EXCHANGE ..................................................................... 23

THE COMPANY ................................................................................................................................................. 23

HISTORY ................................................................................................................................................. 23

CURRENT FACILITIES ....................................................................................................................................... 24

GENERATION ................................................................................................................................................. 24

TRANSMISSION AND DISTRIBUTION (T&D) ............................................................................................... 24

CORPORATE STRATEGY .................................................................................................................................. 25

QUALITY AND EXPERIENCE OF MANAGEMENT AND SUPERVISORY STAFF ..................................... 25

SENIOR MANAGEMENT RENUMERATION .................................................................................................. 26

SERVICES AND PRODUCTS ............................................................................................................................. 27

USE OF PROCEEDS ............................................................................................................................... 27


MANAGEMENT DISCUSSION ............................................................................................................ 27

PRICE AND DIVIDEND HISTORY ...................................................................................................... 28

RECENT TRADES ............................................................................................................................................... 28

DIVIDEND POLICY ............................................................................................................................................ 28

FINANCIAL POSITION ......................................................................................................................... 28

FIXED ASSETS ........................................................................................................................................ 30

MANAGEMENT’S ECONOMIC OVERVIEW................................................................................... 30

INTERNATIONAL OVERVIEW........................................................................................................... 32

REGIONAL OVERVIEW ....................................................................................................................... 32

NATIONAL OVERVIEW ....................................................................................................................... 32

GLOBAL UTILITY RISK ASSESSMENT ........................................................................................... 35

ANGLEC INVESTMENT RISKS .......................................................................................................... 36

RISK MANAGEMENT ........................................................................................................................... 39

GENERAL INFORMATION .................................................................................................................. 41

APPROVAL OF SHARE OFFERING .................................................................................................................. 41

CORPORATE GOVERNANCE ........................................................................................................................... 42

ONGOING FINANCIAL REPORTING ............................................................................................................... 42

MATERIAL CHANGE REPORTING .................................................................................................................. 43

MATERIAL LITIGATION .................................................................................................................................... 43

INSURANCE COVERAGE .................................................................................................................................. 43

COMMISSIONS TO AGENTS ............................................................................................................................. 43

COMMISSIONS TO SUBSCRIBERS .................................................................................................................. 43

DISCOUNTS TO SUBSCRIBERS ....................................................................................................................... 43

CONSENT OF EXPERTS AND ADVISORS ...................................................................................................... 43

MATERIAL DISCLOSURES ................................................................................................................. 45

SUBSTANTIAL INTERESTS .............................................................................................................................. 45

RELATED PARTY SHAREHOLDINGS.............................................................................................................. 45

RELATED PARTY TRANSACTIONS ................................................................................................................ 45

MAJOR CONTRACTS AND SERVICE ARRANGEMENTS ............................................................................ 45

DIRECTORS’ CONTRACTS ............................................................................................................................... 45

OTHER IMPORTANT RELATIONSHIPS ........................................................................................................... 45

AUDITED FINANCIAL STATEMENTS .............................................................................................. 46


FORECASTED FINANCIAL STATEMENTS ..................................................................................... 61

DISTRIBUTION, SUBSCRIPTION & ALLOCATION PROCEDURES ......................................... 67

AVAILABILITY OF THE OFFERING ................................................................................................................ 67

MINIMUM SUBSCRIPTION ............................................................................................................................... 67

MAXIMUM OWNERSHIP ................................................................................................................................... 67

SUBSCRIPTION PROCEDURES ........................................................................................................................ 67

SUBSCRIPTION TERMS AND CONDITIONS .................................................................................................. 69

PAYMENT FOR SHARES ................................................................................................................................... 69

OFFER OF SHARES............................................................................................................................................. 70

JOINT OWNERSHIP ............................................................................................................................................ 70

OWNERSHIP BY MINORS OR IN CONJUNCTION WITH MINORS ............................................................. 70

ESCROW AND SUBSCRIPTION TRUST ACCOUNT ...................................................................................... 70

ALLOTMENT ................................................................................................................................................. 70

SETTLEMENT AND REGISTRATION OF OWNERSHIP PROCEDURES ..................................................... 71

MINIMUM TOTAL SUBSCRIPTION ................................................................................................................. 71

SHARE CERTIFICATES ...................................................................................................................................... 71

ESCROW AND SUBSCRIPTION TRUST ACCOUNT ...................................................................................... 71

SECONDARY MARKET FOR SHARES ............................................................................................................ 71

ALIEN LAND HOLDING REQUIREMENTS .................................................................................................... 71

ANTI-MONEY LAUNDERING PROVISIONS .................................................................................................. 72

DOCUMENTS AVAILABLE FOR INSPECTION .............................................................................................. 72

DIRECTORS’ CONSENT & SIGNATURES........................................................................................ 73

SUBSCRIPTION FORM ......................................................................................................................... 75

TERMS & CONDITIONS OF ANGLEC’S SHARE ISSUE:.............................................................. 76

ESCROW AND SUBSCRIPTION TRUST ACCOUNT ...................................................................... 76

TERMS, REPRESENTATIONS & WARRANTIES OF ISSUE SUBSCRIPTION .......................... 76


DEFINITIONS AND ABBREVIATIONS

Currency Equivalent

Dollars throughout this Prospectus refer to Eastern

Caribbean Dollars unless otherwise stated. The exchange

rate is as follows:

US$1.00 = EC$2.70

EC$1.00 = US$0.37

ANGLEC/The Company


Anguillian/Belonger/Anguillian National

Pursuant to Section 80 of the Constitution of Anguilla, a

person who:

a. is a British Dependent Territories Citizen –

i. who was born in Anguilla, whether before or after

the commencement of the British Nationality Act

1981; or if not so born

ii. who was adopted in Anguilla; or

iii. whose father or mother was born in Anguilla; or

iv. whose father or mother became a British Dependent

Territories Citizen by virtue of having been adopted

in Anguilla; or

v. who is domiciled in Anguilla and whose father or

mother by virtue of registration or naturalisation while

resident in Anguilla became a British Dependent

Territories Citizen at the commencement of the British

Nationality Act 1981 (or would have done so but for

his or her death) or so became such a citizen after

such commencement of said Act; or

vi. who by virtue of registration or naturalisation while

resident in Anguilla became such a citizen at or after

the commencement of the British Nationality Act

1981; or

b. is domiciled in Anguilla, has been ordinarily resident

in Anguilla for not less than fifteen years, and has

been granted belonger status by the Anguilla Belonger

Commission hereinafter referred to as “Commission”;

or

c. was born in Anguilla of a father or mother who was

born in Anguilla and who is regarded (or, if deceased,

would if alive be regarded) as belonging to Anguilla

by virtue of this subsection; or

d. was born outside Anguilla and has satisfied the

Commission that his father or mother was born in

Anguilla and is regarded (or, if deceased, would if

alive be regarded) as belonging to Anguilla by virtue

of this subsection; or

e. is the spouse of such a person as is referred to in any

of the preceding paragraphs of this subsection and

has been married to that person for not less than five

years; or

f. is the spouse of such as is referred to in paragraph

(a), (b), (c), or (d) of this subsection of the

Constitution, has been married to such a person for

not less than three years and has been granted

belonger status by the Commission.

Anguillian Companies/Corporate Entities

Any Anguillian Company, Limited Liability Company,

Partnership, Limited Partnership or any such hybrid

entities in which no more than 33% of its shares, interest

or partnership is owned or beneficially owned by Non-

Anguillians or Aliens.

Applicant

Any person, entity or group of related persons and/or

entities applying for shares in this share offering.

Articles and By-Laws

Articles and By-Laws of ANGLEC

BOSL

Bank of St. Lucia Limited

B.W.I.

British West Indies

CDC

Commonwealth Development Corporation


CDB

Caribbean Development Bank

Cap

Chapter

Capital/Asset Ratio

The amount calculated when the numerator is

shareholders’ equity and the denominator is total assets.

Cash Flow per Share

The amount calculated when the numerator is the volume

of cash generated by trading operations and the

denominator is the weighted average number of shares

in issue during the financial period.

Carilec

A Caribbean Association of Electrical Utilities whose

objective is to advance the capability of the Caribbean

utility industry, promote better understanding of the

industry and to support its contribution to the quality of

life of the Caribbean peoples.

Commission

The Anguilla Belonger Commission.

Debt Service Ratio

This ratio is an indicator of the Company’s ability to pay

both interest and the current principal instalments on its

outstanding debt and suggests the degree of safety for

creditors concerning currently due debt service

obligations.

Dividend Yield

The percentage calculated when the numerator is actual

or projected dividends per share in a financial period

and the denominator is the offer share price of ANGLEC.

Earnings Per Share (EPS)

The amount calculated when the numerator is net income

and the denominator is the weighted average number of

shares in issue during the financial period.

EC$

Eastern Caribbean Dollars. The exchange rate used in

this Prospectus is EC$2.6882 to US$1.00. The official

rate is pegged at EC$2.70 to US$1.00.

ECCB

Eastern Caribbean Central Bank

ECSE

Eastern Caribbean Securities Exchange

ECCSD

Eastern Caribbean Central Securities Depository

ECSRC

Eastern Caribbean Securities Regulatory Commission

ESOP

Employee Stock Option Plan - Stock options are rights

to purchase a corporation’s capital stock. Various

conditions may be specified for the options, including

times, prices, and amounts. Options are frequently given

to corporate officers and/or staff as a form of incentive

compensation and may have assorted conditions, a typical

form being the granting of the right to the Corporate

Officers and/or staff to purchase shares (exercise the

option) during some specified time in the future at today’s

market price. The exercise price is set at the date of

grant.

Efficiency Ratio

The percentage calculated when the numerator is total

operating expenses and the denominator is total operating

net revenue during the financial period.

Firm Capacity

The maximum continuous power output that a station

or electrical supply system can be expected to sustain

without compromising the risk of failure.

GOA

Government of Anguilla.


GDP

Gross Domestic Product

GWh

One thousand million watt hours

Gross Generation

The total energy generated.

I.R.S.A.

Interim Revised Statutes of Anguilla

IPO

Initial Public Offering

kW

Kilowatt or one thousand watts

kWh

Kilowatt-hour or one unit of electrical energy.

kV

Kilovolt or one thousand volts

kVA

Kilovolt-ampere

Licensed Intermediary

Bank of St. Lucia Limited.

MWh

One million watt hours

MICU

Ministry of Infrastructure, Communications and Utilities

Market Capitalisation

The market share price of ANGLEC at the date of this

Prospectus of EC$ 2.50 per share multiplied by the

number of shares in issue at the calculation date.

MW

Megawatt

MWh

Megawatt-hour

NBA

National Bank of Anguilla Limited

Name Plate Capacity

The amount of electrical output for which an apparatus

was designed and which is marked on the nameplate of

the electrical apparatus.

Net Generation

Total units sent out i.e. gross generation less units used

in the station.

No Par Value

Stock certificates typically bear some nominal “par or

stated or legal” value as assigned by the corporate board

of directors. However, the Companies Act, R.S.A..

c.1,2000, sub-section 28 (2) states that shares in a

company are to be without nominal or par value. As a

result, the Company’s shares are reported at no par value.

Non-Anguillian/Alien

Any persons or entities not falling under the definitions

of “Anguillian/Belonger/Anguillian National” and

“Anguillian Companies/Corporate Entities.”

OECS

The Organisation of Eastern Caribbean States

Offer/Offering/Issue

The Initial Public Offering of 6,000,000 Ordinary Shares

at EC$2.50 per share in Anguilla Electricity Company

Limited to the public with an offer period of August 1,

2003 through September 1, 2003.

Offer Period

August 1, 2003 through September 1, 2003

Ordinary Shares/Shares

Voting participating ordinary shares of no par value in

ANGLEC.


p. a.

per annum

Peak Demand

The largest amount of electrical energy consumed in any

half hour period during the operational year.

Price/Earnings Ratio (PE Ratio)

The ratio calculated when the numerator is the price per

share and the denominator is the earnings per share for a

financial period as if the current capital structure had

been in place since incorporation.

PUC

Public Utilities Commission

R.S.A.

Revised Statutes of Anguilla

R.R.A.

Revised Regulations of Anguilla

Related Party

A director, officer, or substantial shareholder of the

Company or any spouse, minor child (including step or

adopted child) of any such person or any company that

is controlled by any of these persons.

Resident

As used in this Prospectus the term “resident(s)” shall

include, in addition to those individuals who hold official

residency status in Anguilla, all those individuals who

have lived in Anguilla for at least six months of the

calendar years of 2001 and 2002, or who lived in Anguilla

for at least six months of the calendar years of 2001 or

2002, and for three months of the calendar year of 2003.

Return on Assets (ROA)

The percentage calculated when the numerator is net

income and the denominator is the weighted average total

assets during the financial period.

Return on Equity (ROE)


income and the denominator is the weighted average total

shareholders’ equity during the financial period.

Return on Investment (ROI)


income and the denominator is the average market

capitalisation of ANGLEC during the financial period.

SSB

Social Security Board of Anguilla

Subscriber

Any person, entity or group of related persons and/or

entities applying for shares in this share offering.

Substantial Shareholder

A person who:

a. exercises beneficial ownership of five percent or more

of the issued and outstanding share capital of the

Company; or

b. is entitled to exercise or control in the future any

options, rights, warrants or any other interest of the

Company which amounts to beneficial ownership of

five percent or more of the issued and outstanding

share capital of the Company; or

c. exercises direct or indirect control over the

management or affairs of the Company.

T & D

Transmission and Distribution


MESSAGE FROM THE CHIEF MINISTER

The Anguilla Electricity Company Limited (ANGLEC) was established by the Government of

Anguilla in April 1991 to take over the assets of the Government’s Electricity Department and

to provide the public supply of electricity under a Public Supplier’s License issued for that

purpose.

The Government’s main objectives included improving the quality and reliability of the electricity

supply, development of the professional and technical skills of employees, maintenance of

stable and affordable prices and achievement of financial viability. ANGLEC has successfully achieved these objectives

over the past twelve (12) years of its operations.

The Company is highly regarded by the public within the Anguillian Community and by its peers among the public

electricity supply companies within the Caribbean.

The sale to Anguillians at home and abroad and to residents of Anguilla of a significant percentage of the Government’s

shares held in ANGLEC is the last major objective still to be accomplished. The Initial Public Offering (IPO) for

which this Prospectus has been prepared addresses this objective. It will result in the public owning a majority of

the Company’s shares.

The proceeds from the IPO will be used primarily to assist the Government in financing its local counterpart

contribution to the largest ever public sector capital investment project to be undertaken in Anguilla, the Wallblake

Airport Expansion Project, the total estimated cost of which is EC$54,000,000 (US$20,000,000) to be implemented

by June 2004.

The Government is committed to creating and promoting opportunities for the people of Anguilla to own a stake in

essential and strategic industries in the country. In that regard, I am pleased that Government has been able to

provide this opportunity for the Anguillian community to purchase shares in ANGLEC and be a part of and help to

shape the future of the Company.

Honourable Osbourne Fleming

Chief Minister, Anguilla


LETTER FROM THE

CHAIRMAN

Anguilla Electricity Company

Limited (ANGLEC) came into

being on 1st April 1991 after being

a department of the Government

of Anguilla from its inception. At

that time, the Commonwealth

Development Corporation (CDC) bought 30% of the

shareholding in the Company and was given a management

contract to manage the affairs of the Company. This

arrangement however came to an end in 1998 when the

CDC shareholding was purchased by ANGLEC. The

Company therefore remained a private company operating

under the Companies Act of Anguilla but with the

Government of Anguilla as the sole shareholder.

Twelve years have elapsed since the birth of ANGLEC

and the Government now considers it opportune to divest

itself of some of its shareholding in order to finance, in

part, important development work which is integrally

linked to the expansion of the Wallblake airport. The

divestment of a portion of the Government’s shareholding

to Anguillians has been a long-term commitment that was

envisaged as far back as 1991.

It is important to review briefly the short history of

ANGLEC. In twelve years, the maximum demand for

electricity has climbed from 3.0 MW to 9.2 MW – an

increase of over 200%. This is an unusually rapid growth

rate when one considers that the Island was struck by

two very severe hurricanes during this period. Hurricanes

tend to retard growth in the electricity sector but the

resilience of the Anguillian people has always contributed

to a speedy return to a state of normality after disasters,

whether natural or economic. In 1991, the Power Station

had an installed nameplate capacity of 5.0 MW – today it

is 18.6 MW. Sales of electricity totalled 10.5 million kWh

whilst today it is 49.0 million kWh and growing steadily

each year.

Although between 1991 – 1998 the Company

accumulated approximately EC$5,000,000 in deficits, the

organisational transformation that took place in the post

1998 period has resulted in ANGLEC being a profitable

business entity.

The success of ANGLEC over the years would never have

been achieved if prudent decisions had not been taken by

the Board of Directors during the periods of change and

certainly would have been impossible if the staff did not

have the attributes of commitment, dedication and

determination.

The economic development of any country depends on

the strength of its infrastructure and Anguilla is no

exception. Without a strong, reliable electricity supply,

the economic growth of Anguilla will be held back.

ANGLEC is cognisant of its responsibility and therefore

ensures that development in the electricity sector is always

ahead of proposed developmental plans which increase

the demand for electricity.

The Government proposes to offer for sale 6,000,000

shares at a price of $2.50/share. With the curve of

profitability already well established it would appear that

one should be optimistic about the success of the Company

in the future.

The year 2002 has been one of our most successful in the

history of the Company and it is noteworthy that a

dividend was paid to the shareholder for the first time.

The Company is customer focussed and as such will

respond to the needs of our 6,000 customers as the need

arises. The employees are devoted and loyal and

management is determined to ensure that these traits are

maintained. Management is receptive to paradigm

changes and fully understands the need to keep pace with

the technological changes that are taking place in all

spheres of professional activity.

I trust that all Anguillians will give their fullest support to

this venture.

Everet Romney, M.B.E.

Chairman

Anguilla Electric Company Limited

August 1, 2003


EXECUTIVE SUMMARY

SUMMARY OF THE OFFER

A summary of the offering details is provided below in Table 1:

TABLE 1 – SUMMARY OF OFFERING DETAILS

Number of Shares Offered 6,000,000 Ordinary Shares at no par value

Amount of Offer EC$15,000,000

Additional Shares: Offer may be increased by 600,000 shares or 10% in the event of an

over-subscription.

Price per Share EC$2.50/US$0.93

Minimum Investment per Applicant EC$250.00/US$93 (100 shares)

Maximum Investment per Applicant No Maximum Investment per Applicant.

Percentage Offered 51.6%

Offer Opens 8:00 am on August 1, 2003

Offer Closes 3:00 pm on September 1, 2003

No right of pre-emption is attached, neither is there any restriction on the free transferability of these shares being

offered imposed. In addition, these shares have not been admitted to dealings on a licensed securities exchange.

The Board of ANGLEC is considering the possibility of listing the shares on the Eastern Caribbean Securities

Exchange. While there is no guarantee that a listing will be granted by ECSE, in the event that such a listing is

obtained it will further facilitate the secondary market for these shares. In the meantime, however, the shares will be

traded over the counter.

HISTORY AND NATURE OF THE BUSINESS

ANGLEC was established in 1991 when the Government’s Electricity Department was transformed to a private

Anguillian company under the Companies Ordinance, Cap 335. ANGLEC is the sole supplier and distributor of

electricity within the island of Anguilla. As such, it enjoys a monopoly position. Its generating plant is located in

Corito from which it distributes electricity to some 6,000 consumers. The operations of the Company are subject to

a licence of 50 years ending March 28, 2041. The Company is regulated by the Companies Act R.S.A.c1, 2000, The

Electricity Act R.S.A. E35, 2000, Revised ANGLEC Exemption Regulations R.R.A. E35-1, The Electricity (Rates

and Charges) Regulations R.R.A.E 35-2, 2000, The Electricity Supply Regulations R.R.A. E35-3, The Environmental

Levy Act 2003 and the recently enacted Public Utilities Commission Act, June 2003. The affairs of the Company

are run by a Board of Directors of eight (8) members elected by the shareholders. Decisions of the principal

shareholder (GOA) are made by resolution in the Executive Council of the Government of Anguilla.

While ANGLEC is a member of Carilec, an association of electrical utilities in the Caribbean, it is important to note

that it is not a subsidiary, affiliate or part of any corporate grouping.


EXECUTIVE SUMMARY

OWNERSHIP HISTORY

Section 10 (a) of the Articles of Continuance of the Company provided for five (5) classes of shares and the

minimum number that the Company was authorized to issue is as follows in Table 2:

TABLE 2: ANGLEC – CLASSES OF SHARES AUTHORIZED

Class A 5,400,000 Ordinary Shares of EC$1.00 each

Class B 5,400,000 Ordinary Shares of EC$1.00 eachClass C 7,200,000 Ordinary Shares of EC$1.00 eachClass D 6,236,152 Ordinary Shares of EC$1.00 eachUnclassified 5,763,848 Ordinary Shares of EC$1.00 each Total Authorized 30,000,000 Ordinary Shares of EC$1.00 each

No limit exists on the duration of the authorization to issue share capital.

Three classes of stock were initially issued as follows in Table 3:

TABLE 3: ANGLEC – CLASSES OF STOCK ISSUED

Class A 5,400,000 Ordinary Shares 30%Class B 5,400,000 Ordinary Shares 30%Class D 6,236,152 Ordinary Shares 40% Total Outstanding 17,036,152 Ordinary Shares 100%

Thirty percent (30%) of the stock outstanding (Class B) was owned by the Commonwealth Development Corporation

(CDC) - an agency of the United Kingdom Government. The remaining 70% was owned by the Government of

Anguilla; however, the voting power on the Board was 50/50. The agreement in 1991 was that CDC would own

30%, GOA 30% and the remaining 40% would be sold to the general public (Anguillian belongers). CDC agreed

that after a period of ten (10) years it would sell its interest to the general public of Anguilla. This did not happened

in that exact form; CDC withdrew as a shareholder from ANGLEC effective 1998 and sold its 30% interest back to

the Company, which is now being held as Treasury Stock.

At an Extra-ordinary General Meeting held on June 3, 2003, the Company’s Articles were amended to reflect one

class of Ordinary Shares to rank Pari Passu, thus removing the various stock categories as delineated above.

USE OF PROCEEDS

The net proceeds of the offering if fully subscribed are expected to amount to EC$14.22 million after the deduction

of EC$ 0.780 million which is the estimated total cost of the public offering.

The public offering involves the offer of 6,000,000 existing shares of ANGLEC held by the GOA. Hence, the net

proceeds will revert to the GOA and not ANGLEC. Likewise, all the expenses of the offering will be borne by the

GOA. The GOA intends to use the net proceeds for infrastructural project development, primarily the Wallblake

Airport Expansion Project. None of these funds will be available to ANGLEC for its capital expansion or any other

use.


PLANNED CAPTTAL EXPANSION

ANGLEC is planning on constructing an Administrative Building at a cost of US$2.5 million on Crown Land of

approximately 1.5 acres leased for a period of 99 years from GOA. ANGLEC has paid the agreed lump sum of

US$266,000 and will pay an annual peppercorn rent of EC$100 for a period of 99 years. The Building is expected

to be completed within two years. Likewise, the Company anticipates adding another 3.146 MW medium speed

generator in 2005/2006 at a total cost of US$3.5 million which includes the construction of a building to house the

generator, switch gear and installation. ANGLEC anticipates funding this capital expansion through internally

generated funds and borrowings.

SHARE CAPITAL STRUCTURE

The Anguilla Electricity Company Limited is an Anguillian private company. The Company’s share capital at the

time of the offer is comprised of 11,636,152 authorized, issued and fully paid up ordinary shares of no par value as

defined by the Companies Act R.S.A., c.1., 2000. An additional 5,400,000 shares are held in Treasury Stock. These

shares were purchased from CDC by the Company at a cost of EC$2,500,000 The Social Security Board (SSB)

purchased 400, 000 shares from GOA at EC$2.50 each. The selling price per share was determined by the Company

and GOA after reviewing accepted financial valuation methodologies. SSB is a statutory body created under the

Social Security Ordinance, 1980. The members of the Board of Directors are appointed by the Minister responsible

for the subject of Social Security. Table 4 shows the composition of shares currently offered and the market

capitalization of ANGLEC on the day of the close of the offering assuming full subscription.

TABLE 4: ANGLEC - SHARE DISTRIBUTION AND MARKET CAPITALISATION

Market Capitalization

Ordinary Shares Share Capital at EC$2.50

Issued and Fully Paid 17,036,152 EC$17,036,152.00 EC$42,590,380.00

Less: Treasury Stock (5,400,000) ( 5,400,000.00) ( 13,500,000.00)

11,636,152 EC$11,636,152.00 EC$29,090,380.00

Ownership Pre-Offer:

GOA 11,236,152 96.6% EC$11,236,152.00 EC$28,090,380.00

SSB 400,000 3.4% EC$ 400,000.00 EC$ 1,000,000.00

11,636,152 100.0% EC$11,636,152.00 EC$29,090,380.00

Ownership Post-Offer:

GOA 5,236,152 45.0% EC$ 5,236,152.00 EC$13,090,380.00

Public (incl. SSB) 6,400,000 55.0% EC$ 6,400.000.00 EC$16,000,000.00

11,636,152 100.0% EC$11,636,152.00 EC$29,090,380.00

ANGLEC currently has two (2) shareholders: GOA (96.6%) and SSB (3.4%). This Initial Public Offering (IPO) by

GOA is expected to significantly expand ANGLEC’s shareholder base.

The Company may decide at a later date to offer all or part of its Treasury Stock to the general public, private

investors or a combination of both. Reasons for this could include, but are not limited to: raising additional capital,


issuing shares to vendors in acquisition transactions, stock dividends and employee stock options plan (ESOP). No

such issue will be made without the prior approval of the shareholders in a special meeting and the approval of the

ECSRC.

OFFERING PRICE DETERMINATION

In determining the offering price of EC$2.50 (US$0.93), the Board of Directors of ANGLEC and GOA

considered many factors including but not limited to:

� The historical and projected performance of the Company;

� The intrinsic value of the Company;

� The risk profile of the Company;

� The monopoly position of the Company, the current licence and the regulatory environment;

� The experience and expertise available within the Company at the Board and management levels; and

� Comparative analysis of the trading multiples and dividend yields of utilities in the region.

SECONDARY MARKET FOR SHARES

ANGLEC’s shares are not traded on any established securities market; hence there is no established market for the

securities. It may therefore be difficult for the investor to sell shares held in ANGLEC or for him/her to obtain

reliable information about their value or the extent of the risks to which these shares are exposed. However, the

Company is considering the possibility of listing the shares on the Eastern Caribbean Securities Exchange to

facilitate better price discovery for these shares as the same will be traded on an organized securities exchange with

developed systems for recording and settlement of ownership. While there is no guarantee that a listing will be

granted by ECSE, in the event that such a listing is obtained, a secondary market for shares will be further facilitated.


SELECTED FINANCIAL INFORMATION

Table 5 below summarises selected actual and Forecasted summary financial information, statistics and key ratios:

TABLE 5: ANGLEC – SELECTED FINANCIAL INFORMATION

Year Ended December 31

(In 000’s)2000 2001 2002 2003 2004 2005

Actual Actual Actual Forecasted Forecasted Forecasted

INCOME STATEMENT INFORMATIONGross Operating Revenue $23,985 $27,502 $29,015 $32,113 $35,013 $37,114

Cost of Operating Revenue (20,039) (19,449) (19,985) (22,553) (24,068) (25,344)

Gross Operating Profit 3,945 8,053 9,030 9,560 10,945 11,770

Operating Expenses (3,151) (5,307) (3,860) (4,335) (4,740) (5,088)

Net Operating Profit 794 2,746 5,170 5,225 6,205 6,682

Financing Costs/Other Income (879) (1,228) (887) (880) (636) (735)

Extraordinary Income 1,119 1,508 0 0 0 0

Net Profit 1,034 3,026 4,283 4,345 5,569 5,947

BALANCE SHEET INFORMATIONProperty, Plant & Equipment $34,620 $33,484 $32,654 $31,349 $33,999 $39,602

Current Assets 11,766 10,523 13,330 14,432 15,881 16,800

Total Assets 46,386 44,007 45,984 45,781 49,880 56,402

Long-term Liabilities 19,391 17,211 15,802 15,531 17,825 20,165

Current Liabilities 12,249 9,025 8,942 5,829 3,810 3,790

Total Liabilities 31,641 26,236 24,744 21,360 21,635 23,955

Shareholders Equity 14,745 17,771 21,240 24,421 28,245 32,447

Total Liabilities & Shareholders Equity 46,386 44,007 45,984 45,781 49,880 56,402

Dividends Paid/Proposed 0 0 814 1,164 1,745 1,745

KEY RATIOSPrice per share $2.50 $2.50 $2.50 $2.50 $2.50 $2.50

Earnings per share $0.09 $0.26 $0.37 $0.37 $0.48 $0.51

Price earnings ratio 27.78 9.62 6.76 6.76 5.21 4.90

Dividend per share 0% 0% $0.07 $0.10 $0.15 $0.15

Dividend payout ratio 0% 0% 19% 27% 31% 29%

Dividend yield 0% 0% 2.8% 4.0% 6.0% 6.0%

Return on equity 7.3% 18.6% 22.0% 19.0% 21.1% 19.6%

Return on assets 2.6% 6.7% 9.5% 9.5% 11.6% 11.2%

Capital asset ratio 31.8% 40.4% 46.2% 53.4% 56.6% 57.5%

Debt service ratio 3.06 2.23 2.02 2.40 4.53 4.92

Cash flow per share $0.47 $0.21 $0.51 $0.51 $0.63 $0.71

Cash per share ($0.23) ($0.26) ($0.13) $0.04 $0.25 $0.23

STATISTICAL INFORMATION (‘000’S)Total Sales by Consumer - kWh :

Category – kWh

Domestic 12,895 13,178 14,107 15,103 16,010 16,970

Hospitality 12,298 14,087 16,160 17,301 17,130 19,853

Commercial 7,280 11,499 9,547 10,625 12,736 12,037

Government 5,425 6,746 6,856 7,000 7,200 7,400

Other 1,664 2,031 2,300 2,400 2,500 2,650

Total Sales – kWh 39,562 47,541 48,970 52,430 55,576 58,910

Energy Losses 4,976 4,847 5,199 5826 6,175 6,546

Net Generation (units sent out) 44,538 52,388 54,169 58,256 61,751 65,456

Station Usage 1,311 1,210 1,069 1,500 1,500 1,500

Gross Generation 45,849 53,598 55,238 59,756 63,251 66,956

Fuel Used – Imperial Gallons 2,764 2,949 3,163 3,415 3,721 3,939


KEY INVESTMENT CONSIDERATIONS

� ANGLEC’s historical financial position and performance has been strong with increasing profitability and assets of

EC$45,984 million as at December 31, 2002.

� ANGLEC has an Exclusive Public Supplier’s Licence and hence is the only Electricity Company licensed in Anguilla with

100% of the national market.

� ANGLEC has a clearly defined strategy and mission and is expanding locally.

� ANGLEC has respected professionals with proven local and international business experience serving as directors and in

senior management positions.

� ANGLEC has growing regional recognition.

� ANGLEC has an increasing number of employees attaining tertiary level education and employee turnover is low.

� ANGLEC has had a long and successful partnership with the Anguillian community.

� ANGLEC’s remuneration package for its employees is performance based.

� ANGLEC’s response time to emergency reports is one of the best in the region.

� ANGLEC is a customer focussed and customer oriented organisation.

� ANGLEC is committed to its Environment Management Plan to ensure it operates at the highest international standards.

� ANGLEC has a consistently high level of consciousness regarding Health and Safety matters.


DIRECTORS

ANGLEC has assembled a team of experienced

businessmen and professionals to direct and manage the

Company for the benefit of its shareholders. There are

currently eight (8) Directors whose backgrounds are

highlighted below:

Everet F. Romney, M.B.E. –

Chairman

Mr. Romney has been the chairman of

ANGLEC’s Board of Directors for two

and a half years. He is a self-employed

businessman and owns the Romcan

Supermarket and Romcan’s Car Rental.

Currently, he is a member of the Board of Directors of

the National Bank of Anguilla Limited. He was the

General Manager of Cable & Wireless – the Anguilla

Business Unit for 7 years. His past career experience

also involves service in the Royal Air Force in the United

Kingdom. Mr. Romney is a British Dependent Territories

citizen, born 15 June 1933. P.O. Box 345, Anguilla.

Gareth Hodge – Director

Mr. Hodge is a prominent contractor in

Anguilla and specializes in electrical,

plumbing and construction of swimming

pools. He has 15 years experience in

general management and broadcasting

services at the Beacon Radio. Prior to

this experience, he has been a successful teacher at the

primary school level. Currently, he participates in a

number of community activities and is an ordained pastor

of the Hilltop Baptist Church. He is involved in Hodge

Holding Group of Companies. Mr. Hodge is a British

Dependent Territories citizen, born 13 February, 1959.

P.O. Box 805, Anguilla.

Dr. Franklin Hughes, M.D., B.Sc., –

Director

Dr. Hughes is the longest serving

director of ANGLEC, serving for a third

term. He is a medical doctor and has

worked as a general practitioner in

Anguilla for the last 17 years. Dr.

Hughes has significant experience as a businessman and

entrepreneur. He manages Natcon Group of Companies

which comprise a leading hotel: The Paradise Cove

Resort Hotel and a construction, trucking and redi-mix

company: The National Trucking and Heavy Equipment

Company. Dr. Hughes is a British Dependent Territories

citizen, born 17 August, 1954, P.O. Box 135, Lower

South Hill, Anguilla.

Jerome Roberts – Director

Mr. Roberts has been appointed as a

member of ANGLEC’s Board of

Directors as staff representative. He is

a supervisor at ANGLEC and is

responsible for customer care and the

billing department. He has successfully

completed a number of courses sponsored at the

University of the West Indies. He is an active leader in

community activities and has served in the various

capacities including: Cub Scouts Leader and past

president of the Optimist Club, Anguilla. Mr. Roberts is

a British Dependent Territories citizen, born 12 July,

1969. P. O. Box 564, East End, Anguilla.

Harold Ruan - Director

Mr. Ruan is self-employed as a building

contractor and has 22 years of

experience in the construction sector.

He successfully completed two years of

training at the engineering department

of the Antigua State College. He is an

active member in the Anglican Community and the East

End Community serving in a cross-section of

organizations and clubs. Mr. Ruan is a British Dependent

Territories citizen, born 7 May, 1963, P.O. Box 736, East

End, Anguilla.

Kent Webster - Director

Mr. Webster has been a prominent

businessman in Anguilla for the past 25

years. He is a shareholder in the

National Bank of Anguilla and is the

owner and general manager of Hertz Car

Rental – Anguilla and an apartment

complex in Island Harbour. He also served as the


manager of a major wholesale operation and as

supervisor of a warehousing entity for the Government

of the U. S. Virgin Islands, both positions held in St.

Thomas, United States Virgin Islands. Mr. Webster is a

British Dependent Territories citizen, born 28 July, 1946,

P.O. Box 219, Island Harbour, Anguilla.

Roderick Webster, B.Scrip., M.A.

(Bible) - Director

Mr. Webster graduated with a Bachelor

of Scripture Ministries from the

International School of the Scriptures,

Louisiana, U.S.A. After graduating in

1991, he then pursued a Master of Arts

Degree in Bible at the Baptist Christian University and

was ordained a Minister of Religion in May 1998. He is

at present the Chairman of the Woodbine Pre-school

Board of Directors. He has been a practicing

businessman in Anguilla for the past twenty years. Mr.

Webster is a British Dependent Territories citizen, born

24 May, 1957. P.O. Box 331, Sandy Hill, Anguilla.

Arthwin V. Vanterpool, B.Phil.,

DAES - Director

Mr. Vanterpool is a newly elected

director of ANGLEC. He has been a

director of the National Bank of

Anguilla Limited from 1996 to 2002 and

has served as Chairman of the

Scholarship Committee and an alternate member of the

Executive Committee of NBA. He retired from a 37-

year teaching career, during which he served as

Headmaster for 21 years of the West End, East End,

Island Harbour and Valley Primary Schools. He also

served as the first Resident Representative for the ECCB

and as a Human Resource Officer for NBA. Mr.

Vanterpool is the Secretary to the Board of Governors

of the Albena Lake-Hodge Comprehensive School. He

holds a Bachelors Degree in Philosophy and a Diploma

in Advanced Educational Studies from the University of

Newcastle Upon Tyne. His community activities include

Leader of the 3rd Anguilla Scouts Troop, Former

Secretary to the East End Community Club and active

member of the St. Andrews Anglican Communion. Mr.

Vanterpool is a British Dependent Territories citizen, born

March 27, 1932. P.O. Box 41, Pondsite East End,

Anguilla.

Aggregate remuneration for directors during the year

ended December 31, 2002 was EC$213,473 and is

expected to remain at the same level for this year.

None of the Directors has any beneficial or non-beneficial

interest in the share capital of the Company.

One of the Directors who also fulfils the role of supervisor

at ANGLEC is the nephew of another member of the

Board of Directors.

Directors are elected for a two-year term of office by

the shareholders and may be removed earlier at a special

meeting of the shareholders. The present term of office

of the members of the Board will expire July 2004.


ADVISORS

AUDITORS

KPMG LLC, Chartered Accountants

Caribbean Commercial Centre

P.O. Box 136

The Valley

Anguilla, B.W.I.

Phone: (264) 497-5500

Fax: (264) 497-3755

COUNSEL & ATTORNEYS

Caribbean Juris Chambers

Hannah-Waver House

P.O. Box 328

The Valley

Anguilla, B.W.I.

Phone: (264) 497-3470

Fax: (264) 497-3177


CORPORATE ADVISORS TO THE OFFERING

KPMG Corporate Finance Ltd.

Caribbean Commercial Centre

P.O. Box 136

The Valley

Anguilla, B.W.I.

Phone: (264) 497-3400

Fax: (264) 497-3755


KPMG Corporate Finance Ltd.

Montague Sterling Centre

East Bay Street

P.O. Box N 123

Nassau, Bahamas

Phone: (242) 393-2007

Fax: (242) 393-1772


PRINCIPAL BROKER AND NEW ISSUE

APPLICATION RECEIVING FIRM

Bank of Saint Lucia Ltd.

(A subsidiary of the East Caribbean Financial

Holding Group of Companies)

C/o National Bank of Anguilla Limited

National Bank Building

P. O. Box 44

The Valley,

Anguilla, B.W.I.

Phone: (264) 497 2102

Fax: (264) 497 3310Email:

[email protected]

ROLES & RESPONSIBILITIES OF ADVISORS

KPMG Corporate Finance Ltd (“KPMG”) has been

engaged as Corporate Advisors to the Company and this

role includes assisting in the preparation of the Prospectus

for review and approval by the Board of Directors of

ANGLEC and ECSRC. KPMG will also act as a

facilitator of the transaction and coordinator of the

activities of the various other professionals involved

including the escrow agent, syndicate/placement agent,

public relations consultant, legal counsel and printing

company.

The Bank of St. Lucia Limited (BOSL) has been engaged

to fulfil the role of Principal Broker and New Issue

Application Receiving Firm. It will assume the role of

placing the securities offered by GOA to intended

investors, undertaking all the registration formalities with

ECSRC on behalf of ANGLEC/GOA, assisting in the

preparation and review of the Prospectus, marketing the

Prospectus and selling the shares. The BOSL will work

with a syndicate of licensed security firms in the OECS

region to successfully market the offering to Anguillian

Nationals, Belongers and Residents residing in Anguilla

and throughout the OECS. GOA has not contracted

with any other licensed intermediaries.


The National Bank of Anguilla (“NBA”) premises will

be used by BOSL for the collection of application forms

and money. NBA will provide hosting capacity for BOSL

and other New Issue Application Receiving Firms to

process the applications in Anguilla.

ROLE OF EASTERN CARIBBEAN

SECURITIES EXCHANGE

The Eastern Caribbean Securities Exchange (“ECSE”)

and its subsidiaries will serve as the platform for the

allotment, registration and settlement of shares acquired

by subscribers. Successful subscribers will receive a

notification statement from the Eastern Caribbean Central

Securities Registry (ECCSR) a subsidiary of ECSE. This

statement will serve as confirmation of proof of

ownership of ANGLEC shares purchased through this

offering. The ECCSR will serve as the registry for

ANGLEC and will maintain and service shareholder

records on behalf of the company with regard to this

offering. The Eastern Caribbean Central Securities

Depository (ECCSD), also a subsidiary of the ECSE,

will be responsible for the settlement of funds for this

offering.

THE COMPANY

HISTORY

In the 1970’s, a small temporary power station was

erected at the Government’s Ice Plant in The Valley

adjacent to St. Mary’s Anglican Church. This Plant

provided electricity only to The Valley area. In 1977/78

a 13.8kV distribution system was established to provide

electricity outside of The Valley. By the end of 1985,

electricity was available over the whole of Anguilla’s

populated areas. The expansion was initially funded by

aid grants from Britain until the electricity supply was

deemed sufficiently developed to sustain itself

commercially. With the aid from the British and funds

borrowed from the Caribbean Development Bank, the

power station was relocated to Corito and the first

medium speed generator (1 MW) was commissioned in

1985. Between 1987-1990 four additional 1MW

generators were added with additional funding from the

Caribbean Development Bank, the Social Security Board,

the Caribbean Commercial Bank (Anguilla) Ltd. and the

National Bank of Anguilla Ltd. The aggregate loans

from these financial institutions at that time represented

approximately 50% of the Government’s long-term debt.

In 1990, the maximum demand on the system was 3.6

MW thus unable to achieve firm capacity in the event of

one set being out of operation.

Throughout the second half of the 1980’s, the electricity

supply did not keep pace with demand, and hence the

quality of service remained poor. Demand continued to

grow at a rate between 15 and 25 percent per annum.

The need for strengthening the organisation, management

and operations of the public electricity supply became

apparent. In October 1985, the responsibility for meter

reading, billing and revenue collection was transferred

to the Treasury. Hence, the division between the supply

of electricity and the collection process meant that no

single body had full responsibility for the efficient

management and operation of the public electricity

supply. The Electricity Department did not have the

authority or the responsibility to manage and control its

own business. In 1991, the Government took steps to

incorporate the Electricity Department and a new

electricity company, The Anguilla Electricity Company

Limited (ANGLEC), was incorporated. The

Commonwealth Development Corporation (CDC), an

agency of the British Government purchased 30% of the

shares of ANGLEC. The Government retained 70% of

the total shares but categorised them as follows: 30%

voting and 40% non-voting in order to give CDC a

measure of control equal to Government. The 40% of

the non-voting stock were earmarked to be sold to the

Anguillian public at a later date, which to date has not

transpired. The rationale for incorporation in the early

1990’s was as follows:

1. Improvement of the scope for generating investment

capital;

2. Unified management of all aspects of the electricity

supply;

3. Creation of direct accountability on a commercial

basis;

4. Increased opportunities for managers and staff;


5. Greater flexibility in response to consumer demand;

6. More direct control by the people of Anguilla;

7. Implementation of commercial procedures and

practices;

8. Limiting the politics of electricity supply.

It was envisioned that within 3-10 years of the initial

incorporation that Government would divest most of its

shares to the public and that CDC would divest its shares

as well. In 1998, CDC divested its 5.4 million shares back

to ANGLEC for a total sum of EC$2.5 million which are

now held as Treasury Stock. The price paid by CDC in

1991 of EC$5.4 million for its 30% shareholding was

based on an independent valuation of the assets

transferred to the new company, which were deemed to

be the Government’s capital input.

The management of ANGLEC was contracted out to

CDC; however, the Board of Directors was drawn equally

from the Government and CDC using the voting stock

as the basis.

An EC$27 million dollar capital expansion of the Corito

power station was planned after the initial incorporation

but this event never took place. The expansion was

planned to be financed by the Caribbean Development

Bank, CDC and from the sale of shares issued to the

public.

Unfortunately, given the continued losses from the

inception of the Company through the year 1996,

shareholders were not able to receive a dividend from

the Company until the year 2002 when a dividend of EC$

0.814 million was declared and paid for the first time in

the history of the Company. The Company’s losses

through 1994 were further exacerbated by the onslaught

of Hurricane Luis in 1995 – a category 5 hurricane that

wreaked havoc with Anguilla’s infrastructure as well as

ANGLEC’s. Hurricane Marilyn some two weeks later

brushed Anguilla and exacerbated the impact of Hurricane

Luis. To stave off further losses, ANGLEC requested a

tariff increase, but was only allowed 5% increase after

an arbitration hearing. The Government denied the

requested increase because it felt that the cost structure

of the Company was inflated as a result of poor

management. Amidst debate on tariff structure, CDC in

1998 sold its 5.4 million shares back to ANGLEC and

the Government of Anguilla effectively became the sole

owner of ANGLEC. The Government has begun to

divest itself of the majority of the shares held in

ANGLEC.

Further, in November 1999, the Company experienced

a major setback from catastrophic damage by Hurricane

Lenny. Nonetheless, during the year 2000, the Company

purchased and commissioned two generators with the

capacity of 6.2 MW to meet the increasing demand.

CURRENT FACILITIES

GENERATION

The current generating capacity at ANGLEC is 18,840

kW and the derated capacity is 17,200 kW comprising

13,200 kW of medium-speed diesel and 4,000 kW of

high-speed diesel sets. In December 2000, two new

3.146 MW Wartsila generating medium-speed sets were

added to the generating system. As a result of the

addition of the two Wartsila sets, efficiencies have

increased overall with fuel efficiencies going from an

average of 16.2 kWh/gallon to an average of 17.4 kWh/

gallon.

The Company no longer uses the high-speed sets for

continuous base load operations but instead uses them

for emergency purposes or for peak load conditions. The

gross units generated in 2002 were 55,236,846 kWh.

The introduction of a modern Control Room, which was

commissioned at the same time as the two new Wartsila

sets, has contributed to improved overall operating

performance of the machines in the Power Station.

TRANSMISSION AND DISTRIBUTION (T&D)

The Transmission and Distribution System consists

essentially of four distribution feeders with a total length

of approximately 80 miles of overhead lines operating

at a voltage of 13.8 kilovolts (kV). A fifth feeder is at

present being constructed to cater for load developments


that are earmarked for the western section of the island.

The standard low voltages for utilisation by its

approximately 6,000 customers, is obtained via step

down pole mounted and pad mounted transformers,

which are installed throughout the island. The standard

low voltages are as follows:

� 120/240 volts single phase 3 wire

� 120/240 volts three phase 4 wire



CORPORATE STRATEGY

Dating back to the 1980’s and beyond, the Government

and the people of Anguilla felt that Anguillians should

play a major role in Anguilla’s development by becoming

more involved in the financial and monetary management

of their economy, including the area of electricity.

ANGLEC was chartered as the vehicle to fulfil this

objective, thereby revolutionising local investment

opportunities and entrepreneurship.

From the outset, ANGLEC committed itself to the

following critical success factors:

� Customer focus;

� Visionary leadership;

� Loyal and dedicated staff;

� Committed Board of Directors;

� Low cost generation and distribution of electricity

The technical aim of ANGLEC is to provide a

satisfactory, continuous, reliable supply of electricity to

all users of electricity at the lowest price compatible with

maintaining the highest standard of safety and service to

its customers while affording its owners an adequate

return on their investment in the Company.

Commitment to these critical success factors has allowed

the Company to achieve a leadership position in the

corporate sector in Anguilla.

QUALITY & EXPERIENCE OF MANAGEMENT

AND SUPERVISORY STAFF

The Company employs 67 people of whom 64 are

Anguillian nationals and belongers. Key members of the

management team are:

Neil McConnie, M.C.T., M.I.E.E.,

M.A.P.E., R. Eng. - General

Manager

Mr. McConnie has served as the

General Manager of ANGLEC for the

past four years during which time the

Company has consolidated its position

as a sustained profitable entity. Prior to ANGLEC, Mr.

McConnie worked over 30 years with the Trinidad and

Tobago Electricity Commission. Mr. McConnie is a

graduate of electrical engineering from the College of

Advanced Technology, Birmingham England. He is a

member of several professional societies including the

Institute of Electrical and Electronic Engineers of the

USA and is a Chartered Electrical Engineer in Trinidad

and Tobago.

Erville Hughes, MAAT, DMS,

MCMI – Financial Controller/

Secretary

Mr. Hughes has served as Company

Secretary/Financial Controller since

October, 1999. He has over 25 years

of accounting experience gained from

various large organisations in the United Kingdom. Mr.

Hughes obtained a Post Graduate Diploma in

Management from the Thames Valley University in the

United Kingdom in 1996 and is a member of the

Association of Accounting Technicians and the UK

Chartered Management Institute (formally the Institute

of Management).

Seymour Blackman, B.Sc. - Chief

Engineer

As Chief Engineer, Mr. Blackman has

responsibility for development and

implementation of policies and

procedures for the Company’s


transmission and distribution system and generating plant

and equipment. He is also responsible for monitoring

equipment and staff utilisation with a view to optimising

utilisation and productivity. Mr. Blackman graduated

from the University of the West Indies with a Bachelor’s

Degree in Mechanical Engineering in 1976.

Johanne Webster, B.Sc. – Corporate

Systems Officer

Ms. Webster joined ANGLEC in 1995

as Business/System Analyst responsible

for the operation and maintenance of the

Corporate Network Systems. Ms.

Webster has been instrumental in

computerising and upgrading systems in the personnel

and accounting departments and in the introduction of

hand-held computers for meter reading in the field. She

was appointed to Corporate System Officer in 2001.

Ms.Webster graduated from the University of the West

Indies in 1991 with a major in Mathematics.

Thomas Hodge, B.Sc. – Generation

Superintendent

Mr. Hodge joined ANGLEC in 1995

after completing his B.Sc. in Mechanical

Engineering from the University of the

West Indies. After receiving

postgraduate training at various

electricity utilities in the Caribbean, Mr. Hodge was

appointed Mechanical Engineer in the Generation

Department. He was an integral participant in the 2000

expansion of Corito Power Station. Mr. Hodge was

appointed Project Manager in 2000 to supervise the

second major expansion of the Power Station. In January

2001, Mr. Hodge was promoted to Generation

Superintendent and assumed additional responsibilities

for the operation and maintenance of electricity

generation at Corito.

Ivor Ible - Transmission &

Distribution Superintendent

Mr. Ible has been employed in the

electricity supply industry for over 24

years, 12 of these years have been with

the Company. Mr. Ible is responsible

for the maintenance of the transmission and distribution

system and optimal utilisation of human resources in that

department.

Sylvan Brooks, B.Sc. – Electrical

Engineer

Mr. Brooks is responsible for the design

and planning of extensions to the

distribution system, developing

strategic plans for future load

expectations, developing standards in

accordance with changes in technology and training of

technical personnel. Mr. Brooks was appointed Electrical

Engineer in 1998 after having completed extensive

training in the Caribbean region and subsequent to

receiving his BSc in Electrical Engineering from the

University of the West Indies in 1995.

Maureen Woodley, B.A. (Hons.) -

Accountant

Ms. Woodley has been employed at

ANGLEC since 1991 after obtaining

her Bachelor of Arts (Honors) degree

from the University of the Virgin

Islands. In 1994, Ms. Woodley was

appointed to the position of Accountant and was

instrumental in computerising and upgrading the

accounting function to improve efficiency in that

department.

SENIOR MANAGEMENT REMUNERATION

Aggregate remuneration for senior management during

the year ended December 31, 2002 was EC$525,217

and is expected to remain at the same level for this year.


SERVICES AND PRODUCTS

The Company’s primary service and product is the

generation of electricity from its plant in Corito and its

distribution to some 6,000 customers. Recently, the

Company has embarked upon providing technical support

to regional commercial entities in the repair and

restoration of generators. An assessment to combine

water and electricity in Anguilla and the likely

introduction of other non-electricity services and

products will be explored by the Company on an ongoing

basis.

USE OF PROCEEDS

The net proceeds of a fully subscribed offering are

expected to be EC$14.22 million after deducting EC$

0.780 million, which is the estimated total cost of the

public offering.

The offering comprises the sale of existing shares of

ANGLEC that are held by the Government of Anguilla,

the majority shareholder. Therefore, the net proceeds

will be paid to the Government of Anguilla. Nonetheless,

The Government plans to use the funds in the expansion

of the Wallblake Airport from a runway of 3,600 feet to

6,000 feet to meet the demands of the growing tourism

industry. A portion of the proceeds will be used to

relocate some 18 homes and businesses at an estimated

cost of EC$13.5 million. None of the funds generated

from the IPO will become available to ANGLEC for

capital expansion or for any of its infrastructural needs.

ANGLEC owns 5.4 million shares of treasury stock and

the Board of Directors has decided not to offer any

portion of that treasury stock as part of this offering.

MANAGEMENT DISCUSSION

This review focuses on the major elements of the balance

sheet, income statement and cash flows of the Company.

This section should be read in conjunction with the

financial information of the Company disclosed elsewhere

in this Prospectus. Following are some financial highlights

of ANGLEC for the year ended December 31, 2002.

� Gross operating revenue of EC$29,015,583 for the

year ended December 31, 2002 increased 5.5% over

the prior year and an average of 13.4% over the last

4 years. The increase over last year is attributed to

new consumers being added as well as the

improvement in reliability and efficiency as a result

of the installation of the two 3.1MW medium-speed

Wartsila generating sets.

� Earnings per share was EC$0.37 for the year ending

December 31, 2002 – an increase of 42.3% over the

prior year.

� Net profit of EC$4,283,207 for the year increased

41.5% over last year’s profit of EC$3,026,006. Last

year’s profit included extraordinary income of

EC$1,508,109 from the excess of insurance proceeds

over the net book value from the insurance claim

relating to Hurricane Lenny that struck the island on

November 19, 1999. This was mainly offset by an

expense of EC$1,100,000 charged to last year’s

profit and loss statement representing a claim

settlement from a long outstanding litigation with a

past employee.

� Total assets amounted to EC$45,984,123 at

December 31, 2002, an increase of 4.5% over last

year.

� Total shareholders’ equity at December 31, 2002 was

EC$21,240,736, an increase of 19.5% over last year.

This figure is made up of EC$14,536,147 of share

capital and EC$6,704,589 of retained earnings.

� Dividends of EC$0.814 million were paid for the first

time to the shareholders in 2002.

� Dividends per share was EC$ 0.07 for the year ending

31 December, 2002, representing a dividend yield of

2.8%.

It is notable that in the year ended December 31, 2002,

EPS increased to EC$ 0.37 from the prior year’s EC$

0.26, an increase of 42.3%. The year ended December


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Dec-98 Dec-99 Dec-00 Dec-01 Dec-02

EC

$'0

00s

Operating Revenue

Expenses (Net)

Net Profit

31, 2000 shows EPS falling to EC$ 0.09 from the prior

year’s EC$ 0.20. This fall is attributable to the effects of

Hurricane Lenny that struck the island in November

1999.

Chart 1 shows, the Company’s EPS has grown

significantly since 1998.

Chart 1: ANGLEC - EPS Analysis

Historical income, expense and net profit figures for the

years ended December 31, 1998 to December 31, 2002

are recorded in Chart 2 below.

Chart 2: ANGLEC - Historical Income, Expenses and Net Profit

Figures -1998 - 2002

PRICE AND DIVIDEND HISTORY

RECENT TRADES

There has been no official market for shares in

ANGLEC. Although there is no mechanism in place to

ensure that shares in ANGLEC transact at the prices

reported, the Company believes in the overall accuracy

of its historic price information and a summary of the

prices at which shares were bought and sold over the

past 12 months is given in Table 6 below.

Table 6: ANGLEC - Recent Trading Prices.

The Company and GOA have set the subscription price

in consideration of both the above unofficial market

value of the shares and accepted financial valuation

methodologies. The only shares traded since the

Company’s incorporation in 1991 were the buyback of

5.4 million shares of treasury stock from CDC in 1998

at a total price of EC$2,500,000 being a reduced price

in full and final settlement of a protracted dispute over

matters pertaining to the management agreement. In

June 2003, the Social Security Board acquired 400,000

shares purchased at EC$2.50 per share.

DIVIDEND POLICY

Table 7 details the history of ANGLEC’s cash dividends.

Table 7: ANGLEC - Cash Dividend History

-

0 . 0 5

0 . 1 0

0 . 1 5

0 . 2 0

0 . 2 5

0 . 3 0

0 . 3 5

0 . 4 0

1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2

E C $h

TRANSACTION

DATE

TRANSACTION

VOLUME

EC$ PRICE PER

SHARE

3 JUNE, 2003 400,000 SHARES 2.50

DATE

DECLARED

YEAR ENDED

DECEMBER 31

CASH

AMOUNT

CASH DIVIDEND

PER SHARE

DECEMBER

2002

2002 EC$814,000 EC$0.07


The Company proposes to pursue an annual cash

dividend payout ratio in the region of a 6% dividend

yield or EC$0.15 per share as shown in the projected

financial statements for the years 2004 and 2005, subject

to future capital and liquidity requirements of the

Company, adequate cash flow and provided that the

Company does not experience adverse or catastrophic

shocks such as hurricanes. However, the dividend

frequency and payout ratio are at the sole discretion of

the Company. It should also be noted that dividends can

only be declared after covenants with lending agencies

are satisfied. As per CDB’s loan covenant ANGLEC

may not pay dividends in any year in which it fails to

maintain a debt service ratio of at least 1.5 times. Any

retained profits will increase the book value of the shares.

The Company has not designated any outside paying

agent for the purpose of paying dividends should such

dividends be declared by the directors and sanctioned

by the shareholders.

Detailed audited financial statements for the three years

ended December 31, 2002, December 31, 2001 and

December 2000 can be found later in this Prospectus.

Other selected financial information dating back to

December 31, 2000 is shown in Table 5 under Summary

Financial Information as well as the Forecasted Financial

Statements for the three years ended December 31, 2005.

FINANCIAL POSITION

The Company’s assets have grown from EC$26.124

million in 1995 to EC$45.985 million in 2002 over the

last seven years and shareholders’ equity has grown from

EC$12.536 million at December 31, 1995 to EC$21.241

million at December 31, 2002. Chart 3 illustrates the

historical growth in the Company’s asset and equity base,

as well as the forecasted growth for the years 2003 -

2005.

-

10,000

20,000

30,000

40,000

50,000

60,000

EC

$'0

00s

1999 2000 2001 2002 2003 2004 2005

Total assets

Shareholders' equity

Chart 3: ANGLEC - Historical and Forecasted Growth in

Asset and Equity Base

Chart 4 shows the breakdown of sales by customer

category.

Chart 4: ANGLEC – Breakdown of Energy Sales by

Consumer Category as at Dec 31, 2002.

Hospit alit y

32%

Resident ial

28%

Ot her

16%

Government

14%

Commercial

10%


MANAGEMENT’S ECONOMIC

OVERVIEW

In real terms, the economic growth of Anguilla declined

by 3.2% in 2002 compared to 2001 which experienced

positive growth of 2.1% over the prior year. The

economic decline is attributed to the poor performance

in the Tourism and Construction Sectors. The decline

was offset by strong performance from the utilities

industry namely electricity, communications and water.

The Government Sector which represented 18% of the

Gross Domestic Product in 2002 experienced the slowest

growth of 2.6% in real terms or 6.5% nominally post

the 1995 era. GDP at factor cost and current prices

reached EC$240 million in 2002, a slight increase over

the EC$237 million in 2001. GDP per capita of

EC$20,094 or US$7,498 in 2002 has reached the level

of 1998. Inflation of 1.4% in 2002 had fallen from 2.9%

in 2001 and 6.5% in 2000.

The Tourism Sector remains the leading contributor to

the economy, contributing 28% in 2002 compared to

31% in 2001. In current prices, Hotels and Restaurants

produced EC$66.5 million of GDP. In 2002, overall

visitor arrivals to the island of 111,118 increased by 5.9%

over 2001 figure of 104,970. Despite the overall

increase, the stay over visitors declined 8.3% from 47,965

to 43,969. The remaining visitors of 67,149 arrived by

sea (yachts and ferries) and were largely day visitors.

Even though day visitors increased 11.9% over the prior

year, the impact of this increase did not outweigh the

impact of the decline in stay over visitors. Day visitors

spend substantially less than long stay visitors because

of the absence of the need for on-island accommodation.

Stay over visitors stay at hotels and villas.

Financial Services was the third largest contributor to

the economy after tourism and government. This sector

declined 7.5% in constant prices compared to 2001,

which grew 22% over the prior year. The Financial

Services Sector is dominated by four commercial banks

and some six insurance companies.

Similarly, the Construction Sector declined in 2002 since

no major new construction projects were started. In

2002, the sector contributed EC$24.74 million or 10%

of GDP compared to 17% in 2001. Construction in 2002

had fallen to the 1995 level. The Communication Sector,

on the other hand, contributed EC$23 million or 9.4%

of GDP in current terms.

The Wholesale and Retail Trade Sector, which comprises

mainly four (4) large supermarkets and car sales, declined

9.0% in 2002 compared to the prior year.

The fundamental characteristics of the Anguillian

economy and society include:

� A small, youthful, diverse and growing island

population 11,920 (estimated at end of 2002)

including a significant number of new arrivals;

� Gross Domestic Product (GDP) of EC$240 million

(per capita EC$20.094) in 2002;

� Openness and dependence on trade especially with

the USA;

FIXED ASSETS

The net book value of ANGLEC’s fixed assets at

December 31, 2002 is as follows (rounding differences

may occur):

Asset EC$000’s

Land and buildings 5,645

Plant and machinery 25,836

Furniture, fittings and equipment 720

Capital work-in-progress 267

Motor vehicles 187

Total 32,655

All of these assets are located in Anguilla. The land and

buildings are subject to a mortgage imposed by CDB

loan made to the Company in the year 2000 to finance

the purchase of two Wartsila generator sets. Also, NBA

has a debenture on the assets of the Company to cover

the overdraft facility.


� Dominance of the tourism industry as the main sector

driving the economy;

� An expanding group of local business owners,

managers and professionals;

� Relatively high cost of living and price levels together

with low inflation.

It is projected that the economy could grow at an average

rate of 6 - 8% per annum over the next 5 years if Anguilla

is spared the ravages of a major hurricane and the US

economy rebounds including the airline industry. The

moderate forecast is for growth of 3 – 4%.

This growth is expected to be driven in large measure by

significant expansion in tourism plant and by an increase

in the average hotel occupancy rate from 40% to 60%.

Physical infrastructure will undergo major expansion and

diversification. Projects commenced include: The

Wallblake Airport Runway Expansion to include facilities

for corporate and private jets, a Road Expansion

Programme, Royale Caribbean – a 100 room resort; the

Flag Luxury Project – a five Star hotel and golf course;

and a Tourism Project adjacent to Cap Juluca. Other

Projects expected to commence in the near term include:

Anguilla Tennis Academy; Port Relocation to Corito;

Tourism Projects in Lockrum and Gibbons Estates; an

Offshore Medical School and new separate administrative

offices for Government, ANGLEC and other private

sector entities. The expanding office space will also serve

to facilitate the Financial Services and E-Commerce

Sectors which are projected to have positive secondary

growth impacts.

Interest rate trends are stable and are helping to maintain

current net interest margins. Inflation is likely to remain

within the 3% to 4% range.

Unemployment is expected to decline from

approximately 7% to 4% or less over the next five years

and wages are expected to increase on an annual basis

between 3%-5%.

Long-range opportunities for educated young people in

the island are good. Professional and technical jobs are

expected to increase significantly over the next five years.

Sources:

National Account Statistics 2002


INTERNATIONAL OVERVIEW

Long before the California power crunch and Enron’s

collapse, the utilities industry was undergoing profound

transformations worldwide. Regulatory changes, com-

ing at different times and at different rates around the

globe, are changing the landscape constantly, creating

opportunities for new business while at the same time

impacting risks.

Newly freed from regulations that limited the businesses

utilities could enter in exchange for monopoly markets,

U.S. utilities have been plunged into turmoil. In Europe,

where deregulation has proceeded more slowly, utilities

as a rule have fared better, supported by vertically inte-

grated businesses that provide a natural hedge against

supply and trading risks. Because they have moved into

new markets since the beginning of deregulation, how-

ever, they often have struggled under the weight of un-

certain pricing trends – in the UK, for example, they

have been saddled with dramatically lower prices.

Demand for electricity is closely linked to the

performance of the economy – in boom times, demand

rises as a result of greater utilization. When economic

activity declines, as in 2001 and 2002, so does demand

for power. Table 8 shows the Drivers of Electricity by

Demand.

Table 8:- Drivers of Electricity by Demand.

REGIONAL OVERVIEW

Governments within and without the region are exploring

full or semi privatisation in industries such as electricity

that require large sums of money to make required capital

improvements. The Government of the British Virgin

Islands (BVI) is considering privatisation of the BVI

conditions. Many Caribbean Countries have signed on

to the Kyoto Protocol and as a result can access carbon

finance whereby concessions/credits are granted for

reducing emissions by utilizing wind energy. To date

wind energy has been introduced in Curacao, Barbados,

Jamaica and Guadeloupe with introduction being

contemplated in St. Lucia.

Electrical utilities in Aruba, Curacao, United States Virgin

Islands (USVI), Bonaire, Dutch St. Maarten and Antigua

have also embarked on diversification of operations by

combining water distribution with electricity generation

and distribution. The Antiguan Utility has further

combined telecommunications and Turks & Caicos has

combined Cable. Nevis is now in the process of

incorporating its electrical utility.

Household waste energy (bio-mass) has not taken off

due to the limited supply of solid waste and the fear of

toxins from imported waste.

NATIONAL OVERVIEW

THE REGULATORY ENVIRONMENT

ANGLEC is primarily owned and regulated by the

Government of Anguilla. It has been granted an exclusive

Public Supplier’s Licence for a period of 50 years

effective April 1, 1991 to generate, transmit, distribute

and sell electricity in the island of Anguilla under the

Electricity Act, enacted in 1991 and revised in 2000 and

became the Electricity Act, 2000 R.S.A., cE-35. The

Licence provides an option to renew for a period not

exceeding 50 years once the application is made to the

Governor not later than one year before the expiration

of the public supplier’s licence. The Licence states that

should Anguilla change its political status and become

MACROECONOMIC

DRIVERS

TOTAL POPULATION

REAL GDP

INDUSTRIAL PRODUCTION

HOUSING AND NEW PROJECT

STARTS

INDUSTRY DRIVERS HEATING DEGREE DAYS

COOLING DEGREE DAYS

ENERGY-INTENSITY OF

INDUSTRIAL ACTIVITIE S

ELECTRIC CONSUMPTION PER

HOUSEHOLD

RELATIVE PRICES OF FUELS

ENVIRONMENTAL REGULA TIONS

NON-UTILITY POWER

GENERATION


an independent nation during the term of the Licence

then said Licence shall remain in full effect.

A private supplier’s licence may be issued by the

Governor after consultation with ANGLEC to an

applicant to use any electrical plant for the purpose of

supplying his own premises with electricity.

ANGLEC is presently exempt from paying the majority

of taxes, exchange control regulations or other restriction

or control related to the remittance of funds locally or

overseas under The Electricity Exempt Regulations.

In June 2003, a Public Utilities Act was enacted to license

and regulate public utilities in Anguilla. The Act will

transfer certain regulatory powers to the Public Utilities

Commission including the review and approval of tariff

increases.

THE ELECTRICITY ACT

ANGLEC has been granted an exclusive Public

Supplier’s Licence for a period of 50 years effective April

1, 1991 to generate, transmit, distribute and sell electricity

in the island of Anguilla. The Licence provides an option

to renew for a period not exceeding 50 years once the

application is made to the Governor not later than one

year before the expiration of the public supplier’s licence.

The Licence provides that should Anguilla change its

political status and become an independent nation during

the term of the Licence then said Licence shall remain in

full effect.

Section 4 of the Public Supplier’s Licence issued to

ANGLEC by the Government of Anguilla on 28 March,

1991 states that in determining whether any or what

variation of the tariff of rates and charges should be made,

the Minister or the Arbitrator shall have regard to the

principle that the Licensee’s revenues must be at least

sufficient to enable the Licensee to 1) meet all expenses

reasonably incurred in the production of such revenues

2) repay its indebtedness 3) provide for the cost of

replacement of its capital assets 4) provide a reasonable

proportion of the capital costs of expanding its

undertaking to meet any demand for an increased service

to the public; and 5) provide an annual return on its

Ordinary Shareholders’ Equity at a rate which is not less

than the average twelve-month deposit rate paid by

commercial banks in Anguilla plus three per cent provided

that such return shall be at a rate not less than twelve

percent per annum.

A private supplier’s licence may be issued by the

Governor after consultation with ANGLEC to an

applicant to use any electrical plant for the purpose of

supplying his own premises with electricity. At the end

of 2002, private plants with a capacity of 7.95 MW were

installed in Anguilla mostly at hotels and large businesses,

however, under the Electricity Act, subsection 2 (1), no

person shall use or cause to be used any electrical plant

for the purposes of supplying any premises with

electricity except if the electrical plant is powered by

wind or photovoltaic generation and provides electricity

to his own premises, or when the private plant is used

when there is a temporary breakdown in the supply of

electricity under a public suppliers’ licence.

ANGLEC EXEMPTION REGULATIONS

In subsection 32 of the Electricity Act, ANGLEC may

be exempted, by regulation, from liability to pay any

taxation, duties, imposts, levies and rates, including but

not limited to income tax, withholding taxes, corporation

tax on profits, advance corporation tax, accumulation

tax, capital gains tax, capital transfer tax, gift tax,

inheritance tax, value added tax, custom duties, capital

duty, excise duties, import duties, development land tax,

stamp duty, stamp duty reserve tax and generally any

tax, duty, impost, levy or rate or other amount and any

interest, penalty or fine in connection therewith which

would otherwise be payable in respect of operations,

activities, investments and profits of the supplier arising

pursuant to the supplier holding a public supplier licence.

Similarly, ANGLEC may be exempted from any exchange

or other restriction or control in relation to the remittance

of funds by the supplier to others whether overseas or

otherwise.

The Government of Anguilla has imposed customs duty

of EC$.40 per imperial gallon on fuel imported by


ANGLEC during the year 2001 and an Environment

Levy of 5% of the total income derived monthly by

ANGLEC, a public supplier, from the supply of electricity

to consumers other than Government. The Public

Supplier shall pay the Environment Levy to the Treasury

within 30 calendar days of the end of each calendar

month. Section 32, of the Electricity Act, R.S.A, c35 as

amended states that the Governor may, by regulation,

impose an environmental levy based on a percentage of

the total income from electricity supplied by a public

supplier or on such other basis as he may determine. A

5% Environmental Levy will be implemented effective

September 1, 2003. A Tariff Adjustment has been applied

to offset the Environmental Levy imposed and is expected

to become effective September 1, 2003.

THE PUBLIC UTILITIES COMMISSION ACT,

2003

While the Electricity Act makes provision for a

Commissioner, the monitoring and effective regulation

of ANGLEC is presently performed by the Ministry of

Infrastructure, Communications and Utilities (MICU).

In June 2003, the Public Utilities Commission Act, 2003

was passed. The Public Utilities Act is designed to

regulate utilities in competitive markets. This Act

establishes a Public Utilities Commission (‘PUC’) that

would, among its other functions, license and regulate

public utilities in Anguilla. The PUC will in time subsume

the role of the Commissioner and be solely responsible

for the regulation of ANGLEC.

The PUC is structured as an independent body

comprising three (3) members appointed by the Governor

in Council. The members of the PUC would not be able

to hold public office while serving in the PUC.

Under the PUC Act, the Governor in Council determines

Government’s policy in relation to the various public

utilities and may provide the Commission with written

directions of general application on the basis of such

policy.

The PUC would also determine tariffs and the

present procedure for tariff increases will be

completely overhauled. Under this regime

applications to increase tariffs are to be made to

the PUC. The PUC would then determine whether

any such request is to be granted. The PUC Act

also provides for the review of tariffs every five

years. The criteria for determining changes to tariffs

is the principle that tariffs are to be just and

reasonable and must promote efficiency in the

supply and consumption of electricity.

The Commission is expected to be established by

December 2003. It is expected that the Electricity

Generation and Distribution sector will become

regulated by the PUC by June 2004.

LIBERALISATION

Government is in the process of establishing a

regulatory framework that promotes effective

competition in Anguilla. A new

Telecommunications Act was enacted in May 2003.

This Act allows new providers of

telecommunication services to enter the market,

thereby facilitating competition in the sector.

Internationally, countries seem to have adopted

liberalisation of their various economic sectors as a

centrepiece of their economic development. One

of the goals of liberalisation is to make pricing and

range of goods and services in local markets

competitive with international prices and standards

and thus making their countries more internationally

competitive. One of the benefits to citizens is greater

customer satisfaction both in respect of the range

of services offered and the competitive pricing of

such services. Furthermore, countries worldwide

have begun to permit both local and foreign

companies alike access to domestic markets.

With respect to the electricity sector, European

countries are contemplating liberalising their

electricity generation, transmission and distribution.


Those countries have large markets, a great number of

power plants, different generation technologies, a

European wide distribution system, access to capital and

subsidies (in the case of alternative energy). The

Anguillian market is constrained by market size, an

extremely limited applicable range of generating

technology and no regional electricity grid. It is therefore

difficult to predict the likely introduction of liberalisation

in the local electricity sector.

GLOBAL UTILITY RISK ASSESSMENT

Utility companies face a significant, and growing, number

of business risks. Deregulation, stronger environmental

restrictions and scrutiny, and now implied terrorist threats

have made the utility business an increasingly dangerous

area in which to operate and invest.

Economic Risk

Demand for electricity is intimately linked to the

economic well being of the community in which a utility

operates. Companies that serve mostly residential

markets are less subject to the vagaries of economic

cycles, since consumers will continue regardless to

refrigerate food, watch television, and surf the Internet.

Only a very sharp downturn in the economy will result

in a marked decrease in domestic consumption of

electricity, or high delinquency rates. The same is not

true of business customers, however, faced with falling

demand, they are more likely to adjust production and

cut back on personnel as they attempt to reduce operating

costs. These result in falling revenues for utilities.

Regulatory Risks

Utilities are one of the most heavily regulated industries,

and therefore face the constant threat of adverse

regulatory decisions. Deregulation has served to change,

but not reduce, the risks faced by utilities.

Environmental Risks

One area of strong regulatory oversight is in

environmental issues. Power generators are particularly

exposed to potential environmental problems. Fossil fuel

powered generators face restrictions regarding their

emissions.

Price Fluctuation Risks

Utilities are exposed to various types of price risk.

Changing natural gas prices pose a risk for power

generators.

Transmission and distribution companies are still highly

regulated and may find themselves caught in a vise be-

tween political and regulatory forces. Distributors face

significant financial exposure in the event of price vola-

tility unless they hedge that exposure. They are suscep-

tible to this risk because they may be subjected to pro-

tracted rate freezes without assurance of energy cost

recovery.

Deregulation – Re-regulation

Political realities around the globe will prohibit the total

deregulation of the utilities business for the foreseeable

future, leaving companies in a murky period of transition.

Problems attributed to deregulation, such as the 2001

electric power crisis in California, have the potential to

slow or even reverse the general trend toward

deregulation underway in the United States, Europe, and

parts of Asia. Some states that have moved forward

with deregulation are now reconsidering, while others

are finding that consumers have benefited from lower

costs.

Reliance on Debt Financing

Backed by the steadiness of their regulated revenue

streams, utility companies have historically been largely

debt financed. As a result, the utility industry has a

relatively high exposure to changing interest rates. Many

companies manage interest rate risks through swaps and

forward-rate agreements. Regulated utilities can usually

include the costs of these hedges in the calculation of

regulated rates.

Foreign Exchange Risks

The drive by many utility companies to diversify

geographically, particularly into emerging market

economies, has increased the risk of changing foreign

exchange rates. Prior to deregulation, few utility

companies maintained international operations.


purchasing shares offered by ANGLEC. Management

has detailed the risks below in order of importance of

the factors perceived to constitute the greatest threat

that the investment will be lost in whole or in part, or

will not provide an adequate return. These eventualities

can constrain cash flow thus hampering ANGLEC’s

capital expansion capabilities and payment of dividends,

reduce or eliminate profits and hence reduce the return

to investors.

Natural Disasters

The growth and stability of Anguilla’s economy is

significantly affected by hurricanes and other natural

disasters. A serious hurricane or other natural disaster

could have an adverse effect on the Company’s earnings.

Two major hurricanes ravaged the island in 1995 and

1999 and wreaked havoc on ANGLEC’s infrastructure.

While the Company was able to recover to pre-hurricane

level from insurance coverage and claims settlement from

Hurricane Lenny, no such future guarantee exists. No

actuarial assessment has been conducted to predict the

future eventuality of such disasters.

Consumer Group Concentration

ANGLEC’s largest consumer groups are the Hotels and

the Government sectors which constitute 32% and 15%

percent of sales, respectively. Any sudden decline in

revenue earnings capability in either of the two sectors

can adversely impact the revenue earning stream,

profitability and cash flow of ANGLEC. At least three

hotel closures have been experienced in the last four years

and this has adversely impacted ANGLEC’s revenue

growth.

Large Consumers’ Inability to Pay

Short or medium term cessation of payments of electricity

bills by either of the two large sectors above can impact

severely the cash flow sustainability of the Company.

Delayed payment or non-payment of the GOA’s current

outstanding receivable will also constrain cash flow and

reduce profits.

Adjustments in Exemptions

ANGLEC’s Exemption Regulations enabled under

section 32 of the Electricity Act, R.S.A. c. E35 exempts

Operating Risks

Operational risks for utilities result from the need to

maintain a constant source of supply, as well as ensuring

the safety of plant workers and nearby residents. Security

concerns at power plants have been vastly increased in

the wake of reports that terrorists involved in the

September 11 attacks on New York and Washington DC

displayed a troubling interest in power generation

facilities , particularly nuclear plants.

Weather

The weather poses an obvious risk for utilities, and is

one over which they have no control. The increased

incidence of hurricanes since 1995 remains a grave

concern to utility companies in the Caribbean hurricane

belt.

Plant Safety

Safety issues are of great concern for power generators

and distributors. Accidents that harm plant workers or

nearby residents can result in penalties and personal injury

lawsuits.

Strategic Risks

Utility deregulation has raised the issue of corporate

strategy. Freed of restrictions on investment outside their

operating areas, utilities have formed holding companies

to diversify into new businesses and markets. In many

instances, particularly for U.S. companies, owners of

regulated utilities have branched out into unregulated

businesses. Utility owners must decide what, if any, new

businesses to enter, where to enter them, and whether to

use partnerships, alliances or outright purchases to gain

exposure.

ANGLEC INVESTMENT RISKS

The contents of this Prospectus should not be construed

as investment or legal advice. Each prospective investor

is urged to seek independent investment and legal advice

concerning the consequences of investing in ANGLEC.

In addition to the aforementioned information set forth

in this Prospectus, the following risk factors should be

carefully reviewed by prospective investors before


ANGLEC for the duration of the validity of its public

supplier licence from liability to pay customs duties on

any goods imported into Anguilla on or behalf of

ANGLEC, taxes, levies or duties enumerated in Section

32 of the Electricity Act. Regulations may be altered

from time to time by the Governor. Customs duties on

fuel (EC$0.40 per imperial gallon) imported into Anguilla

have been imposed on ANGLEC by GOA, as well as a

licence fee of EC$200,000 per year effective as of year

2000, and a 5% Environmental Levy on electricity

revenues (net of revenues from Government’s

consumption) which will go into effect September 2003.

Net Profit and Cash Flow may be reduced by any amounts

not recovered from the imposition of a fuel surcharge to

customers or tariff increases as approved by the GOA or

the Public Utilities Commission when set up. Thus, the

return to the investor may be significantly affected.

Limiting ANGLEC’s cash flow can impact its capital

expansion capabilities.

Revision of Laws affecting ANGLEC

As noted in the above section “Adjustments in

Exemptions”, certain exemptions that were part of the

Public Suppliers Licence have been removed

subsequently by GOA. The Laws affecting ANGLEC

are likely to be updated to reflect adjustments of

exemptions as well as changes brought about by the PUC

Act, 2003 and any other future Acts or regulatory

changes likely to impact on the operations of the

Company. The Commission as appointed under the PUC

is expected to be established by year-end.

ANGLEC is reliant on key management personnel

The Company is dependent on certain key management

personnel whom it considers important to its future

success. The loss of such individuals or other members

of senior management and failure to replace them with

equally competent and effective successors could have

an adverse impact on the future performance of the

Company.

Public Utilities Commission (PUC) Impact

A new Public Utilities Commission Act was passed in

June, 2003 and as a result the regulation of public utilities

is being shifted from the Minister of Infrastructure (MICU)

The secondary market for shares is presently limited

Following the distribution of shares under this offering,

investors should be aware that they might not be able to

liquidate their holdings at the prices on an organized

securities market since the Company is not listed. The

Company is considering the possibility of listing the

shares on the Eastern Caribbean Securities Exchange.

While there is no guarantee that a listing will be granted

by ECSE, in the event that such a listing is obtained,

investors will be able to have a secondary market for

Currency exchange risk

ANGLEC’s operating results are reported in Eastern

Caribbean dollars. The Company is vulnerable to

currency exchange risk as a portion of the Company’s

revenues and expenses are generated or incurred in

foreign currencies. While the Eastern Caribbean dollar

has been fixed to the United States dollar for nearly 25

years, it does fluctuate against other currencies and there

is no guarantee that the Eastern Caribbean dollar will

remain fixed against the United States dollar. Exchange

risk primarily reflects the impact of fluctuating exchange

rates on the net difference between total foreign currency

revenues and foreign currency expenses. Currently, the

currency exchange risk of the Company is not considered

material and the Company has currency risk procedures

in place.

Liberalisation Policy Shift

Even though ANGLEC has a 50-year public supplier

licence ending March 31, 2041, there is no guarantee

to the PUC. The PUC has wide powers as summarized in

the section of the Prospectus captioned “Regulatory

Environment”. The impact of the introduction of the PUC

on the operational and financial performance of ANGLEC

cannot be ascertained at this point. Nonetheless, the Public

Utilities Act, 2003 specifies that an industry levy will be

imposed on each utility in a proportion to be prescribed

and such levy shall cover the expenditures of the

Commission. The Commission comprising three (3)

members is expected to be set up in September 2003 and

no expenditure budget for the Electricity Sector has been

adopted, hence, the materiality of the levy cannot be

ascertained at this point.


that the industry might not be liberalized similar to

Telecommunication and that private suppliers as well as

other public suppliers might not be licensed.

Interconnection using ANGLEC’s distribution

infrastructure might be effected and any associated

connection fees will be regulated by the PUC. Such an

eventuality might not place ANGLEC in a competitive

position vis-à-vis any licensed competitors. ANGLEC’s

Public Supplier Licence specifies a minimum Rate of

Return (ROR) on shareholders’ equity of 12 percent. In

the new Telecommunications Act that has liberalized the

telecommunications sector, there has been a shift away

from Rate of Return regulations to Price Cap regulations

or any other modern day regulation that the PUC deems

more appropriate. Liberalization terms, if and when,

may be determined through negotiations involving the

GOA, public utilities and other interested parties and

could result in a revision of the Licence. Again, these

eventualities may have a far reaching impact on

ANGLEC’s market share and may reduce or eliminate

projected profitability, thus significantly reducing return

to investors.

Potential Increased Cost of Borrowing

In the past, ANGLEC has procured soft loans from the

Caribbean Development Bank (CDB) by virtue of it being

a majority owned entity by government. With the

divestiture of shares to the general Anguillian Public,

the GOA will become a minority shareholder. As such,

loans with favourable market terms that were previously

available to the Company from institutions such as the

CDB may no longer be available at such favourable terms

going forward.

CDB has no objection to GOA’s sale of the shares being

offered.

The shares may not trade at or above the subscription

price

The Company through its Board of Directors and

Shareholders, determined the subscription price of

ANGLEC shares for this public issue taking into account

the factors listed under the heading “Offering Price

Determination”. The subscription price does not

necessarily bear a direct and strict relationship to the

book value of ANGLEC’s assets, past operations, cash

flows, earnings, financial condition or any other

established criteria for value and prospective investors

should not consider the offering price to be an indication

of its underlying net book value. ANGLEC cannot assure

that its shares will trade at prices in excess of the

subscription price at any time after the date of this

Prospectus.

This investment may not be appropriate for all investors

Investing in securities has inherent risks attached, as the

market value of investments may go up or down. Prior

to making an investment decision, prospective investors

should review the financial statements of the Company

and consider the investment in view of their personal

circumstances and objectives. If there are any doubts

about the shares offered herein, independent professional

advice should be sought.

Past performance is not a guarantee of ANGLEC’s

future performance

Actual financial results may differ substantially from the

historical results presented in this Prospectus. There

are no guarantees that the continued operations of the

Company will be profitable nor is past performance a

guarantee of future performance.

Forward-looking statements in this Prospectus are not

guarantees of ANGLEC’s future performance

This Prospectus contains or incorporates by reference

forward-looking statements. Forward-looking

statements typically can be identified by the use of

forward-looking words, such as “may,” “will,” “could,”

“projected,” “believe,” “anticipate,” “expect,”

“estimate,” “continue,” “potential,” “plan,” “intend,”

“forecast,” and the like. These statements appear in a

number of places in this Prospectus and the information

incorporated by reference including statements regarding

ANGLEC’s current intentions, plans, strategies, beliefs

and expectations.

Forward-looking statements do not guarantee future

performance and involve risks and uncertainties that

could cause actual results to differ materially from those

anticipated. The information contained in this


ANGLEC may not be able to realise the anticipated

benefits of future investment

ANGLEC intends to construct an office building in the

near future which involves numerous risks, including

diversion of ANGLEC’s management’s attention away

from operating activities and the costs associated with

delays or change-orders in the construction. ANGLEC

cannot assure that it will not encounter unanticipated

problems or liabilities relating to these commitments or

to any other assets or companies to which it may make

or have already made investments in, nor can it assure

that it will realise the anticipated benefits of any past or

future investments.

Competitive and market conditions

ANGLEC is vulnerable to changes in competitive and

market conditions. Changes in competitive, economic,

macroeconomic policy or market conditions locally,

regionally or internationally could significantly affect

ANGLEC’s operations and may reduce or eliminate

projected profits.

ANGLEC’s current dividend policy may change

The amount of any dividend declared will be determined

on an annual basis after reviewing the Company’s cash

flow, earnings, financial position, debt retirement

obligations and other factors including the need to

provide for the Company’s growth and resources to meet

future expansion and optimal cost of capital. Changes

in capital requirements or downturns in business may

cause a reduction in the payment ratio and/or frequency.

RISK MANAGEMENT

CURRENCY RISK

A large portion of the Company’s liabilities is in United

States Dollars. The Company therefore has aligned this

element of its currency risk with that of the United States

economy and currency. Further, the Company’s assets

are in Eastern Caribbean Dollars. The Eastern Caribbean

Dollar has been officially pegged to the United States

Dollar at a fixed rate of EC$2.70 to US$1.00 since 1975.

In light of the above facts, foreign currency risk is

considered minimal. Management will continue to

monitor the strength of both currencies and, should the

need arise, will take appropriate steps to protect against

adverse foreign exchange movements.

OPERATIONAL RISK

Demand projections may not be met if external factors

such as a downturn in the economy arising from

economic recessions or natural disasters occur. Similarly,

electricity consumption might be impacted by increases

in tariffs triggered by increases in fuel prices. As per the

Electricity Act, ANGLEC might increase the tariff by

EC$0.01 for every EC$0.10 that fuel prices increase over

EC$3.64 per imperial gallon and this increase may be

recognized as a fuel surcharge payable by the consumer.

In addition, an Environmental Levy of 5% on the

electricity revenues of ANGLEC ( less GOA’s

consumption) was enacted in April, 2003 and is being

implemented as of September 2003. ANGLEC has

applied to the Ministry to adjust the tariff to recover this

Environmental Levy from consumers. The increase in

tariff might negatively impact consumption.

Since 1995, Anguilla has experienced a high incidence

of hurricanes with at least two major hurricanes and

consumption was significantly impacted. An actuarial

assessment of future storms has not been determined.

Internally, the Company has taken steps to mitigate

operational risk, by establishing a wide range of

procedures and programmes. These include effective

internal control processes with adequate segregation of

duties, information technology systems to meet the

expanding needs of the Company, risk monitoring

systems, a strong human resource management policy

to ensure the Company is staffed by competent,

committed and professional individuals and ongoing

training programmes. The Company also has an effective

disaster recovery plan in place such that it can continue

operations in the event that the premises are partially or

completely destroyed.

The Company not only monitors all of these processes

and controls from within, but is also subject to an external

annual audit which reviews and comments and advises


on the adequacy of certain controls.

PROPERTY AND BUSINESS INTERRUPTION

INSURANCE

Management has reviewed the Company’s property and

business insurance coverage and is of the opinion that

the Company maintains adequate insurance coverage for

its business operations and any associated risks. The

coverage is with the National General Insurance

Corporation N.V. (NAGICO), Philipsburg, St. Maarten

and includes the following:

Type Sum Insured Deductible

(Each Loss)

Business EC$4,850,000 EC$50,000

Interruption

Building EC$43,220,000 Various

& Contents

Transmission EC$13,000,000* EC$100,000

& Distribution

* Coverage is based on a 50% Co-insurance with

Insured carrying EC$6,500,000.

LICENCE WITH GOA FOR 50 YEARS

On March 28, 1991, ANGLEC was granted a 50-year

exclusive Public Supplier’s Licence by the Government

of Anguilla which ends March 31, 2041 and this Licence

may be renewed for a period not exceeding fifty years.

The Licence stipulates that it shall stay intact even if

Anguilla changes its constitutional status and becomes

independent. It is important to note that in May 2003,

the Government of Anguilla enacted a new

Telecommunications Act, 2003 to liberalize the

telecommunication’s sector in accordance with Anguilla’s

new telecommunication’s policy. As a result the dominant

telecommunications provider surrendered its licence that

had a remaining duration of 15 years. In exchange for a

new 10 year licence which is being negotiated under the

new telecommunications liberalized environment. It is

difficult if not impossible to predict the path that

electricity might take over the remaining duration of

ANGLEC’s licence or whether ANGLEC will remain

the dominant provider of electricity.


GENERAL INFORMATION

APPROVAL OF SHARE OFFERING

At Special Meetings of the shareholders and of the Board

of Directors of the Anguilla Electricity Company Limited

held on 3 June, July 18 and July 25, 2003, it was resolved

that:

The Government of Anguilla shall be permitted to offer

for sale by Public Offering 6,000,000 shares the

Government of Anguilla owns in the Company in the

following prescribed manner, making an additional

600,000 shares available for sale in the event of an over-

subscription:

a. Limiting the sale to Anguillian Belongers residing

in Anguilla or abroad, those individuals who hold

official residency status in Anguilla, and all those

individuals who have lived in Anguilla for at least

six months of the calendar years of 2001 and

2002, or who lived in Anguilla for at least six

months of the calendar years of 2001 or 2002,

and for three months of the calendar year of 2003.

b. Corporate applicants being limited to companies

incorporated in Anguilla with the majority of its

shares being held by Anguillian Belongers

residing in Anguilla or Abroad, those individuals

who hold official residency status in Anguilla, and

all those individuals who have lived in Anguilla

for at least six months of the calendar years of

2001 and 2002, or who lived in Anguilla for at

least six months of the calendar years of 2001 or

2002, and for three months of the calendar year

of 2003.

c. Selling price of EC$2.50 per share be used;

d. The Allotment shall be undertaken in blocks of

100 shares (EC$250.00) with all applications for

lesser amounts being satisfied before any further

allotments are made.

e. There shall be no provision for the subsequent

sale of any under-subscribed portion of the Offer;

f. That if at least a minimum subscription of

EC$6,000,000.00 (being 2,400,000 shares) is

reached then the sale shall be complete.

g. That the share issue shall be open until 3:00 p.m.

on September 1, 2003 to allow maximum

participation by the public and no special rights,

pre-emptive or otherwise will be attached to these

shares;

h. That the collection, allotment, registration and

settlement of shares made available through this

offering would be undertaken using licensed

securities intermediaries and the primary market

infrastructure of the Eastern Caribbean Securities

Exchange (ECSE);

i. That the Eastern Caribbean Central Securities

Registry (ECCSR) would be responsible for

maintaining and servicing shareholder records on

behalf of the company;

j. That the Offering shall be registered with the

ECSRC; and

k. That the Company’s Legal Advisors and

Corporate Advisors shall review the requirements

and the processes involved with listing the

Company shares on the ECSE.


CORPORATE GOVERNANCE

Articles of Continuance

The Company is authorised by its Articles of Continuance

to engage in a wide range of business activities which

primarily includes, but is not limited to, the generation,

transmission and distribution of electricity in Anguilla.

By-laws

Following are extracts from the By-laws of the Company

as they relate to Directors:

(i) Pursuant to Paragraph 4.2, there shall be a

minimum of five (5) and a maximum of nine (9)

Directors;

(ii) Pursuant to Paragraph 4.3, Directors are

appointed by the Shareholders;

(iii) Pursuant to Paragraph 4.4, the Directors

appointment is for a term of 2 years

(iv) Pursuant to Paragraph 4.4.2, the shareholders of

the Company may, by ordinary resolution passed

at a special meeting of the shareholders, remove

any Directors from office and a vacancy created

by the removal of a Director may be filled at the

meeting of the shareholders at which the Director

is removed;

(v) Vacancies among the directors of the Company,

including a vacancy occurring pursuant to the

preceding paragraph, may be filled by a quorum

of the directors of the Company under Section

71 of the Companies Act.

(vi) Pursuant to Paragraph 5.1, the Directors may

from time to time:

a) Borrow money upon the credit of the

Company;

b) Issue, reissue, sell or pledge debentures of

the Company;

c) Subject to Section 52 of the Companies Act,

give a guarantee on behalf of the Company

to secure the performance of any lawful

obligation of any person; or

d) Mortgage, charge, pledge or otherwise create

a security or interest in all or any property of

the Company, owned or subsequently

acquired, to secure any obligation of the

Company.

(vii) Pursuant to Paragraph 7.1, the total remuneration

to be paid to the Directors for each financial year

shall be fixed by shareholders in a general

meeting. Such remuneration may be in addition

to the salary paid to any officer or employee of

the Company who is also a Director;

(viii) Pursuant to Paragraph 7.1, the Directors may

award special remuneration to any Director

undertaking any special services on the

Company’s behalf other than routine work

ordinarily required of a Director and approval of

the shareholders shall not be required.

For the year ended 31 December, 2002, aggregate

Directors compensation and expenses totalled

EC$213,473. For the current financial year, Directors’

compensation and expenses are expected to remain at

the same level. Per the By-laws, the remuneration of

the Directors is set by the Shareholders.

The Company’s By-laws do not provide for an age limit

by which Directors must retire.

ONGOING FINANCIAL REPORTING

The Company will, on an ongoing basis, report its affairs

as they evolve to the shareholders on a timely basis.


In particular, the Company has committed to: publish

annual audited financial statements in the official gazette

within one hundred and twenty (120) days of the fiscal

year end as mandated by the Companies Act 1994. In

addition, shareholders will be provided with management

discussion and analysis of the business, financial position

and performance of the Company as may be appropriate;

and

comply with the ongoing reporting and disclosure

requirements of the Eastern Caribbean Securities

Regulatory Commission (ECSRC) and the Eastern

Caribbean Securities Exchange (ECSE) to meet its

obligations as a Public Company.

The year-end of the Company is December 31.

MATERIAL CHANGE REPORTING

The Company will issue news releases promptly and

within seven days to its shareholders following a material

change in the business or affairs of the Company. A

“material change” is a matter which is likely to affect a

shareholder’s decision to sell or purchase shares or which

is likely to affect the price of the shares.

The Company’s Officers and Directors have undertaken

that they will not trade in any shares of the Company

while there is an undisclosed material change. By so

doing, ANGLEC intends that all trading in its shares is

conducted on a basis of equal access to information

regarding the Company.

MATERIAL LITIGATION

There are no material current, pending or threatened

claims, legal or arbitration proceedings against the

Company or any of its directors or properties that may

have a significant effect on the Company’s financial

position.

INSURANCE COVERAGE

The Company reviews its insurance coverage annually

and is of the opinion that it maintains adequate insurance

coverage for its business operations and associated

business risks.

COMMISSIONS TO AGENTS

The Company has entered into arrangements with the

Bank of St. Lucia Ltd. (BOSL) of Castries, St. Lucia, a

licensed intermediary to act as Principal Broker and New

Issue Application Receiving Firm, placement agents,

investment company, or underwriters in respect of this

issue. They will be paid a flat fee for the placement of

the shares of this offer. The BOSL will work with a

syndicate of other licensed intermediaries to successfully

place the shares being offered.

COMMISSIONS TO SUBSCRIBERS

No commission is payable or has been paid to anyone

for subscribing or agreeing to subscribe to this offer.

DISCOUNTS TO SUBSCRIBERS

No discount has been granted or arranged to anyone

subscribing or agreeing to subscribe to this offer.

CONSENT OF EXPERTS AND ADVISORS

KPMG LLC, Chartered Accountants, have given and

not withdrawn their written consent to the issue of this

Prospectus with the inclusion herein of their name and

reports on historical information in the manner and form

in which they are included. The auditors accept

responsibility for these audited reports, and have not

become aware, since the date of any report, of any matter

affecting the validity of these reports as at the date of

publication of this Prospectus. Neither the member nor

employees of KPMG have a financial interest in the

Company and do not intend to apply for shares in this

issue.


Caribbean Juris Chambers (“the legal counsel”) has been

retained as counsel and attorneys to the Company. The

legal counsel has issued to the Registrar and the Eastern

Caribbean Securities Regulatory Commission (ECSRC)

and not withdrawn (in accordance with section 168 of

the Companies Act R.S.A. c.1) a certificate confirming

that the Prospectus contains all particulars required by

section 181 (1) of the same Act and the Securities

(Prospectus) Regulations, 2002. The legal counsel does

not represent the investing shareholders in the Company

with regard to this Prospectus and the related Pubic

Offering and no independent counsel has been retained

to represent such shareholders. None of the partners,

associates and employees of the legal counsel has any

financial interest in the Company at the time of the offer.

KPMG Corporate Finance Ltd., an Anguillian company

and KPMG Corporate Finance Ltd., a Bahamian

company, (“the Corporate Advisors”) have been retained

as corporate advisors to the Company. The Corporate

Advisors do not represent the investing shareholders in

the Company with regard to this Prospectus and the

related Pubic Offering and no independent advisor has

been retained to represent such shareholders. The

Corporate Advisors have given and not withdrawn their

consent to the issue of this Prospectus with the inclusion

herein of their names as Corporate Advisors to the

offering in the form and context in which they are

included. Neither the Directors nor employees of the

Corporate Advisors have a financial interest in the

Company and do not intend to apply for shares in this

issue. The Corporate Advisors’ role in this offer is one

of advisory services to the Company only and they are

not providing placement, promotion, underwriting or

advocacy services. Finally, the price set for the offer has

been determined by the Company and not by the

Corporate Advisors.


MATERIAL DISCLOSURES

SUBSTANTIAL INTERESTS

Pursuant to the Companies Act, I.R.S.A. c.1. and the

Securities Act which require disclosure of shareholdings

in excess of 5% of the issued shares of ANGLEC, the

Government of Anguilla holds a 96.6% ownership

interest in ANGLEC. After the share offer, GOA will

have a 45% interest if the offer is fully subscribed.

RELATED PARTY SHAREHOLDINGS

As stated in the previous section, the GOA currently

owns 96.6% of the shares of ANGLEC. If the issue is

fully subscribed, then GOA’s ownership will fall to 45%

of ANGLEC’s issued and outstanding shares. With the

passage of the PUC Act, 2003 the Governor in Council

may give the Commission written directions of general

application concerning the policies of the GOA relating

to electricity and the Commission shall have regard to

such directions in carrying out its functions.

RELATED PARTY TRANSACTIONS

GOA is a substantial customer of ANGLEC and

consumes approximately 15% of the overall Kwh units

sold by the Company. The balance owed by GOA to

ANGLEC for electricity consumption as of July 22, 2003

was EC$2,287,692.00 of which EC$1,917,335.14 or

83.8% was more than 30 days past due and

EC$1,269,140.50 or 55.5% was more than 120 days past

due. On May 31, 2003 the figure owed by GOA to

ANGLEC for electricity consumption had reached

EC$3,300,336.18. GOA is currently negotiating credit

terms with ANGLEC. ANGLEC’s normal customer

policy is payment within 30 days of the billing date. An

extra 2 days are allowed before disconnection.

With the exception of the above, related party

transactions and balances are at normal arms-length

Company terms.

MAJOR CONTRACTS AND SERVICE

ARRANGEMENTS

� Delta Petroleum for the provision of gas oil for

the power plants and gasoline for vehicular

usage;

� Cable & Wireless for the provision of a fibre optic

cable from the administrative building to Corito;

� Cable & Wireless for the leasing of ANGLEC’s

electricity poles to run telephone lines;

� DakSoft for the maintenance of the billing system;

� Building Leasehold Contract expired in March

2002 and renewal terms are currently being

established;

� Street Lighting Policy with GOA.

� New Line Extensions Policy

� Lease Arrangements of Crown Land;

Architect’s Design and Supervision Contract for New

Administrative Offices.

DIRECTORS’ CONTRACTS

There are no existing or proposed service contracts with

directors except for one director who is an employee at

the Company and is the staff representative on the Board

of Directors. He is a supervisor at the Company.

OTHER IMPORTANT RELATIONSHIPS

Member of the Carilec



AUDITED FINANCIAL STATEMENTS

December 31, 2002, 2001 and 2000

Expressed in Eastern Caribbean Dollars (EC$)


ANGUILLA ELECTRICITY COMPANY LIMITEDINCOME STATEMENT AND STATEMENT OF RETAINED EARNINGS

Years ended December 31, 2002, December 31, 2001 and December 31, 2000


Notes 2002 2001 2000

Income Statement

GROSS OPERATING REVENUE 11 29,015,583 27,502,654 23,984,853

COST OF OPERATING REVENUE:

Generation - Fuel (10,643,394) (10,207,649) (10,567,983)

- Fuel Surcharge 11 - (48,098) (809,446)

- Other (4,744,897) (4,657,069) (4,923,535)

Transmission and Distribution (4,596,670) (4,536,695) (3,738,484)

(19,984,961) (19,449,511) (20,039,448)

GROSS OPERATING PROFIT 9,030,622 8,053,143 3,945,405

OPERATING EXPENSES:

Administration (3,488,332) (3,844,095) (2,710,906)

Consumer Service (371,879) (362,816) (439,919)

Employee Compensation 17 - - (1,100,000) - -

(3,860,211) (5,306,911) (3,150,825)

NET OPERATING PROFIT 5,170,411 2,746,232 794,580

Finance Cost (1,262,536) (1,649,190) (1,131,510)

Other Income 12 375,332 420,855 252,553

NET PROFIT FROM ORDINARY ACTIVITIES 4,283,207 1,517,897 (84,377)

EXTRAORDINARY INCOME 13 - - 1,508,109 1,118,969

NET PROFIT FOR THE YEAR 4,283,207 3,026,006 1,034,592

Statement of Retained Earnings

ACCUMULATED PROFIT AT BEGINNING OF YEAR 3,235,382 209,376 (825,216)

NET PROFIT FOR THE YEAR 4,283,207 3,026,006 1,034,592

7,518,589 3,235,382 209,376

DIVIDENDS (814,000) - -

RETAINED EARNINGS AT END OF YEAR 6,704,589 3,235,382 209,376

EARNINGS PER SHARE 0.37 0.26 0.09

The accompanying notes form an integral part of the financial statements.


ANGUILLA ELECTRICITY COMPANY LIMITEDSTATEMENT OF CASH FLOWS

Years ended December 31, 2002, December 31, 2001 and December 31, 2000


2002 2001 2000

CASH FLOWS FROM OPERATING ACTIVITIES

Net profit for the year 4,283,207 3,026,006 1,034,592

Items not involving cash:

Depreciation 3,507,677 3,292,445 2,627,168

Amortisation of customer contributions - (316,673) (200,554)

Provision for slow moving/Obsolete Inventory 134,709 152,365 271,193

Provision for bad and doubtful debts (8,348) 345,996 15,996

7,917,245 6,500,139 3,748,395

(Increase)/decrease in current assets:

Trade Receivable (1,140,438) (2,004,327) (1,504,890)

Other Receivable (311,392) (577,657) (65,524)

Inventories (56,105) (305,270) 70,387

Insurance Claim Receivable - 2,285,272 1,635,652

Increase/(decrease) in current liabilities:

Accounts Payable (306) (1,064,688) 1,956,039

Customer Deposits (100,822) (266,804) 197,866

Deferred Income - - (2,124,850) (541,357)

Net cash provided by operations 6,308,182 2,441,815 5,496,568

CASH FLOWS FROM INVESTING ACTIVITIES

Additions to fixed assets (2,677,862) (2,156,570) (16,221,682)

Capital work-in-progress - - - - (470,463)

Net cash used by investing activities (2,677,862) (2,156,570) (16,692,145)

CASH FLOWS FROM FINANCING ACTIVITIES

Long-term loans (net) (2,256,193) (1,374,051) 9,693,960Contributions in aid of construction 85,332 753,589 458,475

Dividends Paid (814,000)Net cash used by financing activities (2,984,861) (620,462) 10,152,435

NET(DECREASE)/INCREASE IN CASH RESOURCES 645,459 (335,217) (1,043,142)

CASH & CASH EQUIVALENT AT BEGINNING OF YEAR (3,026,190) (2,690,973) (1,647,830)

CASH & CASH EQUIVALENT AT END OF YEAR (2,380,731) (3,026,190) (2,690,972)

The accompanying notes form an integral part of the financial statements.


ANGUILLA ELECTRICITY COMPANY LIMITEDNOTES TO THE FINANCIAL STATEMENTS

December 31, 2002, December 31, 2001 and December 31, 2000

1. THE COMPANY

The Company was incorporated in Anguilla on January 11, 1991 under the Companies Act and is governed by the

Electricity Ordinance, as amended. The company is owned by the Government of Anguilla.

The company has an exclusive public supplier’s license to generate, transmit and distribute electricity on the island

of Anguilla for a period of fifty years from April 1, 1991.

The financial statements were authorised for issue by the Directors on July 28, 2003.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance:

The financial statements have been prepared in accordance with International Financial Reporting Standards

promulgated by the International Accounting Standards Board (“IASB”), and Interpretations issued by the

Standing Interpretations Committee of the IASB.

(b) Basis of preparation:

The financial statements are presented under the historical cost convention and are stated in East Caribbean

Dollars.

(c) Property, plant and equipment:

Owned assets

Items of property, plant and equipment are stated at cost less accumulated depreciation (refer below) and

impairment losses (refer to accounting policy “o”). The cost of self-constructed assets includes the cost of

materials, direct labour and an appropriate proportion of production overheads.

Leased assets

Leases in which the Company assumes substantially all the risks and rewards of ownership are classified as

finance leases. Plant and equipment acquired by way of a finance lease is stated at an amount equal to the lower

of its fair value and the present value of the minimum lease payments at inception of the lease, less accumulated

depreciation (refer below) and impairment losses (refer to accounting policy “o”).

Subsequent expenditure

Expenditure incurred to replace a component of an item of property, plant and equipment that is accounted for

separately, is capitalised with the carrying amount of the existing component being written off. Other subsequent

expenditure is capitalised only when it increases the future economic benefits embodied in the item of property,

plant and equipment. All other expenditure is recognised in the income statement as an expense as incurred.


ANGUILLA ELECTRICITY COMPANY LIMITEDNOTES TO THE FINANCIAL STATEMENTS(CONTINUED)


2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(d) Property, plant and equipment:

Depreciation

Depreciation is charged to the income statement on the straight-line basis over the estimated useful lives of

items of property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows:

Freehold buildings 40 years

Plant and machinery 10-20 years

Furniture, fittings and equipment 5 years

Motor vehicles 3-5 years

(e) Inventories:

Inventories are valued at the lower of cost and net realisable value. Cost is determined on a weighted average

basis.

(f) Trade and other receivables:

Trade and other receivables are stated at their cost less impairment losses (refer to accounting policy ‘o’).

(g) Cash and cash equivalent:

Cash and cash equivalent comprises cash balances and term deposits. For the purpose of the statement of cash

flows, cash and cash equivalent is presented net of bank overdraft.

(h) Repurchase of share capital:

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly

attributable costs, is recognised as a change in equity. Repurchased shares are presented as a deduction from

total equity.

(i) Interest-bearing borrowings:

Interest-bearing borrowings are recognised initially at cost, net of any transaction costs incurred. Subsequent to

initial recognition, interest-bearing borrowings are stated at amortised cost.

(j) Revenue:

Revenue from the sale of electricity is recognised in the income statement based on consumption recorded by

monthly meter readings, with due adjustment made for unread consumption at year end by apportioning the

consumption of the following month.


NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)


2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(k) Trade and other payables:

Trade and other payables are stated at their cost.

(l) Contributions in aid of construction:

Contributions in aid of construction are amounts received from certain customers towards the cost of providing

services. These amounts are amortised over the estimated service lives of the related assets at an amount equal

to the corresponding annual provision for depreciation. Contributions received in respect of unfinished

construction are amortised once the assets are placed in service.

(m) Finance Cost:

All interest and other costs incurred in connection with borrowings are expensed as incurred as part of finance

costs. The interest expense component of finance lease payments is recognised in the income statement using

the effective interest rate method.

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets

are capitalised as a part of the cost of the asset.

(n) Foreign currencies:

Transactions in foreign currencies are converted to EC Dollars, the functional and reporting currency, at the

foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign

currencies at the balance sheet date are translated to EC Dollars at the foreign exchange rate ruling at that date.

Foreign exchange differences arising from fluctuations in exchange rates are recognised in the income statement.

Non-monetary assets and liabilities denominated in foreign currencies, which are stated at historical cost, are

translated to EC Dollars at the foreign exchange rate ruling at the date of the transaction.

(o) Impairment:

The carrying amounts of the Company’s assets are reviewed at each balance sheet date to determine whether

there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.

An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount.

(p) Income tax:

No provision is made for income tax since Anguilla does not have any form of income tax.

(q) Comparative information:

Comparative information has been restated to conform to current year presentation where necessary.







3. PROPERTY, PLANT AND EQUIPMENT

Furniture, Capital

Land & Plant & Fittings & Motor Work in

Building Machinery Equipment Vehicles Progress Total

At Cost:

January 1, 2002 6,208,342 46,949,150 2,300,152 2,008,803 180,608 57,647,055

Additions/ (Disposals) 782,292 1,441,894 454,095 (5,409) 4,990 2,677,862

December 31, 2002 6,990,634 48,391,044 2,754,247 2,003,394 185,598 60,324,917

Depreciation:

January 1, 2002 1,176,280 19,530,279 1,795,367 1,660,807 - 24,162,733

Charge for the year 169,203 3,024,630 238,567 75,277 - - 3,507,677

December 31, 2002 1,345,483 22,554,909 2,033,934 1,736,084 - - 27,670,410

Net Book Values:

December 31, 2002 5,645,151 25,836,135 720,313 267,310 185,598 32,654,507

December 31, 2001 5,032,062 27,418,871 504,784 347,996 180,607 33,484,320

Land and Building include freehold land at a cost of EC$912,738. (2001: EC$240,000)






4. INVENTORIES

2002 2001 2000

Generation parts and fuel 2,554,331 2,493,608 2,035,819

Transmission and distribution parts 1,323,259 1,312,731 1,497,829

Administration supplies 110,984 126,129 93,550

3,988,574 3,932,468 3,627,198

Provision for slow-moving/obsolete items (558,267) (423,558) (271,193)

3,430,307 3,508,910 3,356,005

5. TRADE RECEIVABLES

2002 2001 2000

Trade receivables 7,503,298 6,362,860 4,358,533

Provision for bad & doubtful debts (754,071) (762,419) (416,423)

6,749,227 5,600,441 3,942,110

6. INSURANCE CLAIM RECEIVABLE

2002 2001 2000

Balance at the beginning of year - *2,285,272 3,920,924

Amounts claimed during the year - - 1,678,956

Amounts received during the year - - 2,285,272 (3,314,608)

- - - - 2,285,272

* This represents the balance of the Insurance Claim Receivable on property damage due to Hurricane Lenny.

7. CASH & CASH EQUIVALENT - NET

2002 2001 2000

Cash in hand and at bank 1,922,272 497,710 1,843,636

Bank overdraft (Debenture on assets, 9.2%, expires 30/09/04) (4,303,003) (3,523,900) (4,534,608)

Cash resources in the statement of cash flows (2,380,731) (3,026,190) (2,690,972)






8. SHARE CAPITAL

Authorised: 2002 2001 2000

5,400,000 “A” ordinary shares of EC$1 each 5,400,000 5,400,000 5,400,000

5,400,000 “B” ordinary shares of EC$1 each 5,400,000 5,400,000 5,400,000

7,200,000 “C” ordinary shares of EC$1 each 7,200,000 7,200,000 7,200,000

6,236,152 “D” ordinary shares of EC$1 each 6,236,152 6,236,152 6,236,152

5,763,848 unclassified ordinary shares of EC$1 each 5,763,848 5,763,848 5,763,848

30,000,000 30,000,000 30,000,000

“A”, “B” and “C” are voting shares and carry equal rights. “D” and the unclassified are non-voting shares.

Issued and fully paid: 2002 2001 2000

5,400,000 “A” ordinary shares of EC$1 each 5,400,000 5,400,000 5,400,000

5,400,000 “B” ordinary shares of EC$1 each 5,400,000 5,400,000 5,400,000

6,236,147 “D” ordinary shares of EC$1 each 6,236,147 6,236,147 6,236,147

17,036,147 17,036,147 17,036,147

Less: Treasury Stock

5,400,000 “B” ordinary shares (5,400,000) (5,400,000) (5,400,000)

Add:

Discount on treasury stock 2,900,000 2,900,000 2,900,000

14,536,147 14,536,147 14,536,147

During the year 1998, the Company repurchased 5,400,000 of class “B” ordinary shares at a consideration of EC$2,500,000.

The difference between the original issue price and the cost to acquire treasury stock is shown as Discount on treasury stock.

During the year 2002, the Government of Anguilla (GOA), the sole owner of the company, received EC$1 million to transfer

400,000 of class “A” shares to the Social Security Board (SSB). Accordingly 400,000 shares at EC$2.50 each were transferredto SSB on June 3, 2003.






9. INTEREST-BEARING LOANS AND BORROWING

2002 2001 2000

Caribbean Development Bank (See I below) 144,692 225,371 317,336

Caribbean Development Bank (See II below) 1,231,724 1,484,888 1,754,161

Caribbean Commercial Bank (Anguilla) Ltd (See III below) 3,514,018 3,848,850 4,159,041

Lloyds Bank (See IV below) 561,296 1,122,593 1,683,890

Caribbean Development Bank (See V below) 9,724,678 10,000,104 10,000,104

Caterpillar Financial Services Corporation (See VI below) - - 750,795 892,119

15,176,408 17,432,601 18,806,651

Less: Current Portions (1,829,836) (2,590,755) (1,348,053)

13,346,572 14,841,846 17,458,598

(I) This loan (02 SFR-ANG) was made to the Government of Anguilla on July 18, 1983. The total amount

disbursed was US$1,084,751 of which US$463,253 was transferred to the Anguilla Electricity Company

Limited on April 1, 1991. The loan is guaranteed by and repaid through the Government of Anguilla in equalquarterly instalments of approximately US$7,700, plus interest at the rate of 4% per annum. The final

payment is due in the year 2003.

(II) This loan (03 SFR-ANG) was made to the Government of Anguilla on February 18, 1986. The total amount

disbursed was US$1,435,709 which was transferred to the Anguilla Electricity Company Limited on April 1,

1991. The loan is guaranteed by the Government of Anguilla. This loan is repaid through the Government of

Anguilla in equal quarterly instalments of US$24,754, plus interest at the rate of 4% per annum. The final

payment is due on March 31, 2007.

(III) This loan was made to the Company by the Caribbean Commercial Bank (Anguilla) Ltd on May 7, 1998 to

refinance the Commonwealth Development Corporation loan. The loan is guaranteed by the Government of

Anguilla. The total amount disbursed was US$1,800,000. This loan is repaid in equal semi-annual instalmentsof US$116,550, including interest at the rate of 7.75% per annum. The final payment is due on May 7, 2010.

(IV) This loan was made to the Company by Lloyds Bank on September 7, 1998 to finance the purchase of a

2.5MW Mirrlees & Blackstone generator. The loan is guaranteed by the Government of Anguilla. The total

amount disbursed was US$1,044,001. This loan is repaid in equal semi-annual instalments of US$124,364including interest at the rate of 6.63% per annum. The final payment is due on December 15, 2003. Borrowing

cost of EC$58,382 was capitalised as part of the asset during set up and installation.

(V) This loan (02/OR-ANL) was made to the Company by the Caribbean Development Bank in the year 2000

to finance the purchase of two generators. The total amount disbursed was US$3,720,000. This loan is repaidin forty eight (48) equal and consecutive quarterly instalments of US$113,280 including interest at the rate of

5.5% per annum. This will be payable after two (2) years following the expiry of the first disbursement.

Borrowing cost of EC$245,743 is capitalised and shown under fixed assets (Note 3). This loan is secured by

a legal charge over the Company’s plant and equipment as well as the freehold property of the Company.






9. INTEREST-BEARING LOANS AND BORROWING (CONTINUED)

(VI) This loan was made to the Company by Caterpillar Financial Services Corporation to finance a generator.

The total amount disbursed was US$380,000. This loan is repaid in twelve (12) quarterly instalments. The

first eleven (11) shall each be paid in the sum of US$22,245, the first of which shall be due and payable April

1, 2000. The final instalment of US$232,245 was paid on December 27, 2002.

10. CONTRIBUTIONS IN AID OF CONSTRUCTION

2002 2001 2000

At beginning of the year 2,369,853 1,932,937 1,675,016

Contributions during the year 372,109 753,589 458,475

2,741,962 2,686,526 2,133,491

Amount amortised during the year (286,776) (316,673) (200,554)

At end of year 2,455,186 2,369,853 1,932,937

11. GROSS OPERATING REVENUE

2002 2001 2000

Amounts billed during the year 29,005,378 27,214,665 23,444,566

Less: unbilled revenue at beginning of the year (1,294,327) (1,054,436) (762,307)

27,711,051 26,160,229 22,682,259

Add: unbilled revenue at end of the year 1,304,532 1,294,327 1,054,436

29,015,583 27,454,556 23,736,695

Fuel surcharge* - - 48,098 248,158

29,015,583 27,502,654 23,984,853

* As per Electricity (rates & charges) Regulations, tariffs shall be subject to a surcharge of 1 cent per unit for every 10 cent

per gallon increase in the price of fuel oil over EC$3.64 per gallon. The company imposed thefuel surcharge from October2000 through May 2001 when fuel prices fell below EC$3.64.However thefuel surcharge was re-introduced February 2003.






12. OTHER INCOME

2002 2001 2000

Reconnection fees 104,966 93,000 66,300

Miscellaneous 270,366 327,855 186,253

375,332 420,855 252,553

13. EXTRAORDINARY INCOME

This represents the insurance claim received in excess of the net book value of assets relating to Hurricane Lenny that

struck Anguilla on November 19, 1999.

14. PERSONNEL EXPENSES

2002 2001 2000

Salaries & wages 3,373,371 3,350,241 3,063,088

Social security 148,831 145,797 140,262

Training 159,693 95,850 81,072

Other benefits 285,817 95,475 238,865

3,967,712 3,687,363 3,523,287

Average number of employees in the year 2002 was 67 (2001:70).

15. RELATED PARTY TRANSACTIONS AND BALANCES

2002 2001 2000

Directors’ Fees 213,473 213,200 157,200

Benefits to Executive Officers 525,217 505,457 505,457

738,690 718,657 662,657

The Company is fully owned by the Government of Anguilla (GOA) with which the Company has entered into the

following transactions/balances:

• Amounts payable to GOA EC$ Nil.

• Trade receivable from GOA EC$2,905,102(2001: EC$2,055,824).

• License fees paid to GOA is EC$400,000 for the years 2002 and 2001.

• The Company entered into an agreement on March 28, 1991 with the GOA to take over the electricity supply

system of Anguilla.

The GOA has guaranteed the CDB (02 SFR-ANG), CDB (03 SFR-ANG), CCB & Lloyds Bank loans borrowed by the

Company (see note 9).






16. COMMITMENTS

The directors have approved approximately EC$1,780,000 (2001: EC$68,107) for capital expenditure which

had not been spent at December 31, 2002.

17. EMPLOYEE COMPENSATION

In 2001, a former employee brought an action against the Company claiming EC$7,000,000 as general damages

for wrongful dismissal. On May 02, 2002, the case was withdrawn and settled at EC$900,000 being damages

and at EC$200,000 being legal fees.

18. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS

Financial assets of the Company include cash, term deposits, investments and accounts receivable. Financial

liabilities include accounts payable and accruals and claims payable.

(a) Credit Risk

Credit risk on receivables is concentrated in the Government of Anguilla, the largest consumer and also the

largest debtor. Credit risk is reflected in the provision for bad and doubtful receivables. (Refer to notes 5 and

15).

(b) Fair Value

The fair values of cash, accounts receivable, accounts payable and accruals and long-term loans are not materially

different from their carrying amounts.

Fair value estimates are made at a specific point in time, based on market conditions and information about the

financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant

judgement and, therefore, cannot be determined with precision. Changes in assumptions could significantly

affect estimates. All non-financial instruments such as prepaid expenses are excluded from fair value disclosure.

Thus the total fair value amounts cannot be aggregated to determine the underlying economic value of the

Company.



FORECASTED FINANCIAL STATEMENTS

December 31, 2003, 2004 and 2005




FORECASTED BALANCE SHEET

As of December 31, 2003, 2004 and 2005

Expressed in thousands of Eastern Caribbean Dollars (EC$)

Note 2003 2004 2005

ASSETS

PROPERTY, PLANT & EQUIPMENT (NET) 31,349 33,999 39,602

CURRENT ASSETS

Inventories 4,426 5,346 5,815

Trade Receivables 7,300 7,869 8,342

Other Receivables 1,350 1,450 1,670

Cash and Cash Equivalent 1,356 1,216 973

14,432 15,881 16,800

Total Assets 45,781 49,880 56,402

EQUITY AND LIABILITIES

SHAREHOLDER’S EQUITY

Share Capital 14,536 14,536 14,536

Retained Earnings 9,885 13,709 17,911

24,421 28,245 32,447

LONG-TERM LIABILITIES

Interest-bearing Loans and Borrowings 12,986 15,200 17,509

Contribution in Aid of Construction 2,545 2,625 2,656

15,531 17,825 20,165

CURRENT LIABILITIES

Bank overdraft 2,100 - -

Current portion - Interest-bearing Loans and Borrowings 819 785 690

Accounts Payable 2,560 2,650 2,710

Customer Deposits 350 375 390

5,829 3,810 3,790

Total equity and liabilities 45,781 49,880 56,402

Accompanying notes form an integral part of the financial forecast.



FORECASTED INCOME STATEMENT AND STATEMENT OF RETAINED EARNINGS

For years ended December 31, 2003, 2004 and 2005


Note 2003 2004 2005

Income Statement

GROSS OPERATING REVENUE 32,742 36,659 38,858

COST OF OPERATING REVENUE:

Environmental Levy (629) (1,646) (1,744)

Generation-Fuel (12,737) (13,886) (14,737)

-Fuel Surcharge

-Other (5,037) (5,132) (5,237)

Transmission and Distribution (4,779) (5,050) (5,370)

(23,182) (25,714) (27,088)

GROSS OPERATING PROFIT 9,560 10,945 11,770

OPERATING EXPENSES:

Administration (3,898) (4,281) (4,606)

Consumer Service (437) (459) (482)

NET OPERATING PROFIT 5,225 6,205 6,682

Finance Cost (1,265) (1,026) (1,130)

Other Income 385 390 395

NET PROFIT FROM ORDINARY ACTIVITIES 4,345 5,569 5,947

NET PROFIT FOR THE YEAR 4,345 5,569 5,947

Statement of Retained Earnings

RETAINED EARNINGS AT BEGINNING OF YEAR 6,704 9,885 13,709

NET PROFIT FOR THE YEAR 4,345 5,569 5,947

11,049 15,454 19,656

DIVIDENDS (1,164) (1,745) (1,745)

RETAINED EARNINGS AT END OF YEAR 9,885 13,709 17,911

EARNINGS PER SHARE .37 .48 .51




FORECAST STATEMENT OF CASH FLOWS



Note 2003 2004 2005

CASH FLOWS FROM OPERATING ACTIVITIES

Net Profit during the year 4,345 5,569 5,947

Items not involving cash:

Depreciation 3,400 3,539 3,807

Amortisation of customer contributions (290) (310) (380)

Provision for slow moving/Obsolete Inventory 45 126 64

Provision for bad and doubtful debts 242 180 70

7,742 9,104 9,508

(Increase)/decrease in current assets:

Trade Receivable (793) (749) (543)

Other Receivable (122) (100) (220)

Inventories (1,041) (1,046) (533)

Increase/(decrease) in current liabilities:

Customer Deposits 1 25 15

Accounts payable 100 90 60

Net cash provided by operations 5,887 7,324 8,287

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of Property, plant and equipments (2,094) (6,190) (9,410)

Dividends (1,164) (1,745) (1,745)

(3,258) (7,935) (11,155)

CASH FLOWS FROM FINANCING ACTIVITIES

Contributions in aid of construction 380 390 411

Loans (1,372) 2,181 2,214

(992) 2,571 2,625

NET (DECREASE)/INCREASE IN CASH RESOURCES 1,637 2,541 338

CASH & CASH EQUIVALENT AT BEGINNING OF YEAR (2,381) (744) 1,216

CASH & CASH EQUIVALENT AT END OF YEAR (744) 1,216 973




NOTES TO THE FORECASTED FINANCIAL STATEMENTS


1. Basis of Preparation

These financial Projections have been prepared by

management for inclusion in a Prospectus relating

to the offer to the public by the GOA of shares in

Anguilla Electricity Company Limited (“the

Company”). The financial projections may not be

appropriate for any other purpose. These

assumptions reflect the Company’s intensions for the

years covered and are based on management’s

judgment as to the most probable set of expected

future economic conditions. In view of uncertainties

inherent in predicting future conditions and actions,

actual results achieved during the projected period

may vary from the forecasted results and differences

may be material.

2. Significant Accounting Policies

The accounting policies prescribed in Note 2 of the

notes to the financial statements as at December 31,

2002 have been followed in the preparation of these

projections.

3. Key Assumptions in the Financial Projections

a. Regulatory Environment:

It is assumed that the existing regulatory

environment will continue unchanged without

introduction of any legislation that may

materially change the business of the company.

b. Socio-Economic Environment:

It is assumed that the Eastern Caribbean Dollar

remains pegged at 2.6882 to the United States

Dollar for the period of the forecast. Hurricane

damages, if any, are expected to be covered

through adequate insurance coverage. There

will be no significant changes to existing key

personnel in the Company.

c.Revenue:

The number of units has been forecasted

considering past experience and future

infrastructural projects as indicated by the

Planning Department of GOA. The major

projects envisioned in 2004 include Phase I of

the Golf Course Project with a projected

demand of 400 kW and the opening of a new

hotel with an anticipated demand of 200 kW.

Normal load growth is anticipated from the

ongoing construction of residences, villas,

offices and apartments throughout the forecast

periods. It is assumed that there will be a

change to the tariff (EC$.63) to reflect the

imposition of the 5% Environmental Levy.

d.Environment Levy:

The government will introduce a 5% levy on

the total electricity revenue of ANGLEC

(excluding revenue from the Government of

Anguilla) effective September 2003. No

change in the rate has been assumed for the

forecasted period.

Likewise, no changes in the government

consumption of electricity as a percentage of

the total consumption is assumed.

e.Line Losses:

Line losses are assumed at 12% of units sent

out.

f. Fuel Cost

It is assumed that one imperial gallon of diesel

will generate 17KWH. Cost per gallon is

assumed to be at EC$3.64. No further

adjustments are required as tariffs are subject

to a surcharge of 1 cent per unit for every 10

cent per gallon increase in the price of fuel oil

over EC$3.64 per gallon. Government duty

on fuel remains is assumed to remain

unchanged at EC$.40 per imperial gallon.



NOTES TO THE FORECASTED FINANCIAL STATEMENTS


g. Other Cost of Operating Revenue and Operating

Expenses

Other generation expenses, transmission and

distribution, administration and consumer service

expenses are based on the 2003 departmental level

operational budget. 5% general increment is assumed

for the remaining years.

h. Loans and Interest Expenses

It is assumed that loans repayments and interest will

be paid off according to existing repayment schedules.

An additional EC$9 million is expected to be

borrowed in 2004/2005 to fund ANGLEC’s capital

expansion.

i. Property Plant and Equipment

Additions to the property plant and equipment are

based on management’s best estimate considering

future expansions. Notable additions are expected

to be the construction of a new administrative building

amounting to US$2,5 million and purchase of another

medium speed generator for a total cost of US$3.5

million to meet increasing demand and consumption.


DISTRIBUTION, SUBSCRIPTION &

ALLOCATION PROCEDURES

AVAILABILITY OF THE OFFERING

The Offering targets primarily Anguillians/Belongers/

Anguillian Nationals, and Residents as defined under the

definitions and Abbreviations Section of this Prospectus.

For the Initial Public Offering, proof of nationality,

belonger and residence status will be required with the

submission of the application form. The application form

outlines the information required to provide proof of

nationality, belonger and residence status. Upon the

closure of the offering period on September 1, 2003 any

unsubscribed shares not bought by Anguillians/

Belongers/Anguillian Nationals and Residents will

become available to OECS Nationals - at a subsequent

date.

The shares described in this Prospectus are being offered

to Anguillians/Belongers/Anguillian Nationals residing

in Anguilla and abroad through the New Issue

Applications Receiving Firms that also operate as

licensed intermediaries on the ECSE. The shares are

not being offered in any other jurisdictions including the

United States of America, Canada or the United Kingdom

and hence this Prospectus will not be filed with any

securities regulatory authorities in any such jurisdictions.

The shares are not listed on any securities exchanges

including exchanges in such jurisdictions. Accordingly,

shares may not be directly or indirectly offered, sold or

delivered outside Anguilla and the OECS to any person

who, it is believed at the time of closing, intends to re-

offer, resell or deliver any shares without compliance

with resale requirements that may exist outside such

jurisdictions and the Company reserves the right to

require a written representation to such effect from any

subscriber. As a public company, ANGLEC will be

subject to the requirements of the Securities Act as well

as the rules and regulations of the ECSRC and the ECSE

including ongoing reporting and disclosure requirements.

MINIMUM SUBSCRIPTION

The minimum subscription amount is EC$250

(US$92.60) or 100 shares. Thereafter, shares may be

subscribed for in increments of 100. Subscriptions for

less than 100 shares will not be accepted.

MAXIMUM OWNERSHIP

No maximum subscription by any one applicant or related

group of applicants is specified.

SUBSCRIPTION PROCEDURES

The subscription period will begin at 8:00 am on August

1, 2003 and will close at 3:00 p.m. on September 1,

2003. The Prospectus will be distributed in Anguilla

and available in countries of the OECS through the New

Issue Application Receiving Firms as listed below. The

Prospectus can also be downloaded from the websites

of ECSE and GOA: www.ecseonline.com and

www.gov.ai, respectively. A detachable subscription

form is included in this Prospectus and subscribers for

shares should complete this form and forward it to one

of the New Issue Application Receiving Firms along with

payment as prescribed. For persons residing in Anguilla,

all subscription forms and payments shall be processed

but the Bank of St. Lucia Ltd., the Principal Broker and

New Issue Application Receiving Firm located at the

premises of the National Bank of Anguilla Ltd. Persons

who qualify to participate in the issue and do not reside

in Anguilla at the time of the Offering may contact any

of the New Issue Application Receiving Firms. A full

listing of these firms that are licensed and authorised to

participate in this placement is as follows:


ANGUILLA

Bank of St. Lucia Ltd.

National Bank of Anguilla PremisesThe Valley, AnguillaTel: 264 497 2101Fax: 264 497 3310Email: [email protected]

ANTIGUA

Antigua Barbuda Investment Bank Ltd.

P O Box W 1137Woods CentreFriars Hill RoadSt John’sTel: 268 480 2824Fax: 268 480 2765Email: [email protected]

Antigua Commercial Bank Ltd.

ACB Financial CentreP. O. Box 3089St John’sTel: 268 481 4200Fax: 268 481 4229E Mail: [email protected]

DOMINICA

National Mortgage Finance Company of

Dominica Ltd.

64 Hillsborough StreetRoseauTel: 767 448 4401/4405Fax: 767 448 3982Email: [email protected]

ST KITTS AND NEVIS

St Kitts Nevis Anguilla National Bank

P O Box 343Central StreetBasseterreTel: 869 465 2204Fax: 869 465 1050Email: [email protected]

Bank of Nevis Ltd.

P O Box 450CharlestownNevisTel: 869 469 5564Fax: 869 469 5798E mail: [email protected]

ST LUCIA

Bank of St Lucia Ltd.

P O Box 1862Bridge StreetCastriesTel: 758 456 6000Fax: 758 456 6190Email: bankofsaintlucia.candw.lc

ST VINCENT

National Commercial Bank (SVG) Ltd.

P O Box 880Cnr. Bedford and Grenville StreetsKingstownTel: 784 457 1844Fax: 784 456 2612Email: [email protected]

Before applying for shares in this issue, potential applicants are

encouraged to consider whether the shares are suitable for their

particular circumstances. If advice is needed, potential

applicants should consult any of the above-mentioned firms,

qualified licensed intermediaries or other qualified investment

advisors.

LIST OF LICENSED INTERMEDIARIES ACTING AS NEW ISSUE

APPLICATION RECEIVING FIRMS


SUBSCRIPTION TERMS AND CONDITIONS

A detachable subscription form for shares can be found

at the end of this Prospectus. Additional copies of the

Prospectus and subscription forms may be obtained from

any of the following locations:


Main Office

The Valley

Anguilla, W. I.

Caribbean Commercial Bank (Anguilla) Ltd.

The Valley

Anguilla, W.I.

The Eastern Caribbean Securities Exchange (ECSE)

Bird Rock

St. Kitts

Also available on website:www.ecseonline.com

National Bank of Anguilla Ltd.

The Valley

Anguilla, W.I.


Castries

St. Lucia

Also, from any on the list of New Issue Application

Receiving Firms provided above.

Only licensed individuals are authorised to participate in

the placement of this issue by accepting your

subscriptions and placing your bid for this issue.

Subscriptions are subject to the following terms and

conditions:

� The Company reserves the right to reject, in whole

or in part, any subscription. Consequently, the

payment may be returned in whole or in part,

respectively;

� Subscriptions may only be made by eligible investors

as described in this Prospectus;

� Subscription forms must be completed in every

respect and must be for a minimum of 100 shares

and in multiples of 100 thereafter;

� The number of shares applied for must be

accompanied by the required remittance when the

subscription is made.

Incomplete subscription forms will not be accepted.

PAYMENT FOR SHARES

Payment may be made in Eastern Caribbean Dollars or

in the equivalent amount of United States Dollars

(US$0.375 = EC$1). i.e. US$0.93 = EC$2.50.

Completed subscription forms must be accompanied by

payment in the form of:

� Bank Draft/Money Order

� Manager’s/Cashier’s Cheque or

� Postal Order

� Each should be crossed “Non-negotiable” and made

payable to ANGLEC Share Issue: Escrow and

Trust Account. All cheques are liable to be presented

for payment upon receipt. (CASH AND

PERSONAL CHEQUES WILL NOT BE

ACCEPTED)

Subscriptions may be hand delivered between 8:00 am

and 3:00 pm to:


At the National Bank of Anguilla Ltd.’s Premises

Main Office

The Valley

Anguilla, BW. I.

Attn: ANGLEC Share Subscription Processing

or within specified working hours to the premises of any

of the New Issue Application Receiving Firms mentioned

above and clearly noted: Attn: ANGLEC Share

Subscription Processing.


Subscriptions may also be sent by mail or courier to

arrive by 3:00 pm on September 1, 2003 at the

following location:


At the National Bank of Anguilla Limited Premises

P.O. Box 44

The Valley

Anguilla, BW.I.

Attn: ANGLEC Share Subscription Processing

Subscriptions arriving after 3:00 pm on September 1,

2003 will not be accepted by the above-mentioned firms.

OFFER OF SHARES

All bids (subscription forms accompanied by payments

as prescribed) shall be collected at the offices of the New

Issue Applications Receiving Firms. They shall be

checked for accuracy and the date and time received

will be stamped. The pricing methodology to be used

for selling the securities will be a fixed-price auction.

JOINT OWNERSHIP

Individuals applying for joint ownership for ANGLEC

shares are advised to indicate the name of the primary

holder who will be responsible for receiving corporate

communication and dividends with respect to the shares.

Before submitting an application, applicants are advised

to seek legal advice regarding the implications of joint

ownership.

OWNERSHIP BY MINORS OR IN

CONJUNCTION WITH MINORS

It should be noted that there are restrictions on

transferability of shares for individuals who include names

of minors individually or as joint owners or purchase

shares in trust for minors. Individuals desirous of

purchasing shares in conjunction with minors should seek

legal advice prior to submitting an application.

ESCROW & SUBSCRIPTION TRUST ACCOUNT

The Anguilla Electricity Company Limited will be holding

all subscription proceeds in a separate account named

ANGLEC Share Issue: Escrow and Subscription Trust

Account, (“Trust Account”) set up specifically for the

offering. The funds in the Trust Account will be held in

escrow and will not be transferred to GOA’s Account

until the close of the offering. This Trust Account will

be governed by the Terms and Conditions contained in

this Prospectus.

ALLOTMENT

Up to 100% of the new share issue has been allocated

for Anguillians/Belongers/Anguillian National and

Residents (as said term is defined in the Prospectus) as

well as Anguillian companies/corporate entities whose

majority shareholders are Anguillians/Belongers/

Anguillian Nationals, Belongers and Residents (hereafter

referred as “Anguillian Nationals/Residents”).

In the event of an over-subscription, the following shall

apply to ensure as wide an ownership as possible by

Anguillian Nationals/Residents. The Company shall allot

shares across all Anguillian National/Resident subscribers

of the new issue in rounds of 100 shares after the initial

purchase of 100 shares to each shareholder until all the

shares are allotted.

The above method is used to ensure an equitable

distribution to a wider cross-section of Anguillians. For

example Subscriber “A” applies for 100 shares while

Subscriber “B” applies for 400 shares of the new shares.

In the first round Subscriber “A’s” request will be fully

allotted. Subscriber “B” will be allotted 100 shares in

the first round. In the second round of the allotment of

100 shares, Subscriber “B” will be allotted another

amount up to 100 shares. In the third round of allotment,

Subscriber “B” will be allotted a further 100 shares. In

the course of the third round if all of the shares on offer

had been allotted then Subscriber B will have been

allotted only 300 of his 400 shares requested. As

demonstrated, this “Bottoms Up” approach gives

preference to filling smaller subscriptions first.


Subscriptions must be paid in full at the time of

submission of the completed subscription form.

ALLOTMENT AND NOTIFICATION

The allotment will take place no later than Monday,

September 8, 2003 at the ECSE offices in Basseterre,

St. Kitts or other suitable place. Notification to

subscribers will be made within ten (10) business days

of the allotment. Likewise, the return of monies to

subscribers arising from over subscription or any other

purpose whatsoever in accordance with this Prospectus

will be mailed within (10) business days of the allotment

date.

SETTLEMENT AND REGISTRATION OF

OWNERSHIP PROCEDURES

The ECSE and its subsidiaries, the Eastern Caribbean

Central Securities Depository (ECCSD) and the Eastern

Caribbean Central Securities Registry (ECCSR) shall be

responsible for processing, allotting, clearing, settling

and registering the securities issued. The ECCSR will

mail to prospective shareholders who are successful in

the offering, statement of proof of ownership of the

allotted shares. All unsuccessful bids shall be mailed

within 10 business days after the allotment along with a

full refund of all monies paid in, but without any interest

paid thereon.

MINIMUM TOTAL SUBSCRIPTION

If less than two million four hundred thousand

(2,400,000) of the shares offered are subscribed for, all

subscription monies will be remitted in full, without

interest, within ten (10) business days.

SHARE CERTIFICATES

No share certificates will be issued, but shareholders will

receive a statement confirming their shareholding from

the ECCSR. This is in keeping with the provision of the

new Securities Act and Uncertified Regulations of the

ECSRC as well as the dematerialised environment under

which the ECCSR operates. The ECCSR will serve as

the registrar and transfer agent for the Company and

will be responsible for maintaining and servicing

shareholders’ records.

ESCROW & SUBSCRIPTION TRUST ACCOUNT

BOSL will be holding all subscription proceeds in a

separate trust account “ANGLEC Share Issue: Escrow

and Subscription Trust Account” set up specifically for

the offering. The net proceeds will not be transferred to

GOA until the successful close of the offering. BOSL

has executed an Escrow and Trust Declaration dated

July 28, 2003 in this regard. The account will be

governed by the Terms and Conditions contained in this

Prospectus.

SECONDARY MARKET FOR SHARES

These shares have not been listed on any organised

securities exchange. Since there is no established market

for ANGLEC’s shares, it may be difficult for the investor

to sell the shares or for him to obtain reliable information

about the value of the shares or the extent of the risks to

which they are exposed. The Board of ANGLEC is

considering the possibility of listing the shares on the

Eastern Caribbean Securities Exchange. While there is

no guarantee that a listing will be granted by ECSE, in

the event that such a listing is obtained, investors will be

able to have a secondary market for their shares.

ALIEN LAND HOLDING REQUIREMENTS

The Alien Land Holding Regulation Act, 2000 R.S.A.

forbids an alien to hold land or any interest therein

without an Alien Land Holding Licence except as

otherwise provided. The term “alien” includes a company

under alien control. Section 6 of the Ordinance deems a

company to be under alien control inter alia if:

� Any of its directors is alien; or

� If more than one third of its issued shares are held by

aliens.

With respect to these issues, a non-belonger would not


be required to obtain an Alien Land Holding Licence

unless he intends to become a director of ANGLEC or

holds more than one third of ANGLEC’s issued shares.

ANTI-MONEY LAUNDERING PROVISIONS

The Anti-Money Laundering provisions of Anguilla will

be applied to the transactions of investors. All monies

or transfers over EC$10,000 or US$10,000 must be

accompanied by a source of funds statement that is

satisfactory to the depositing bank.

DOCUMENTS AVAILABLE FOR INSPECTION

The following documents are available for inspection at

the corporate offices of the Company during normal

business hours during the offering period:

1 Copies of the Articles of Continuance;

2 By-laws of ANGLEC;

3 The certificate of incorporation of ANGLEC;

4 ANGLEC’s audited financial statements for the years

ended December 31, 1998 to December 31, 2002;

5 Professional advisors’ consent letters;

6 Shareholders’ resolutions dated June 3, 2003, July

18, 2003, and July 25, 2003 approving various share

allocation terms and conditions related to this

offering;

7 Board Resolution dated July 25, 2003 approving and

granting consent to the Prospectus;

8 Copy of the Shareholder Register of ANGLEC as at

August 1, 2003;

9 Escrow and Trust Declaration dated July 28, 2003;

10 The Licensed Intermediary agreement dated July 28,

2003;

11 The Corporate Advisors Agreement dated March 31,

2003;

12 Public Utilities Act, 2003;

13 Public Utilities regulations, 2003 (if published);

14 Electricity Act and revised related regulations;

15 Telecommunications Act, 2003;

16 Major Contracts and Service Arrangements;

� Delta Petroleum for the provision of gas oil for the

power plants and gasoline for vehicular usage;

� Cable & Wireless for the provision of a fibre optic

cable from the administrative building to Corito;

� Cable & Wireless for the leasing of ANGLEC’s

electricity poles to run telephone lines;

� DakSoft for the maintenance of the billing system;

� Building Leasehold Contract expired in March 2002

and renewal terms are currently being established.

The Contract pertains to the lease of the

Administrative Building;

� Street Lighting Policy with GOA relating to charges

for street lighting

� New Line Extension Policy relating to new line

installations;

� Lease Arrangements of Crown Land for the

construction of New Administrative Offices;

� Architect’s Design and Supervision Contract for New

Administrative Offices.

ANGUILLA ELECTRICITY COMPANY LIMITED (Incorporated in Anguilla under the Companies Act, Chapter 335)

SUBSCRIPTION FORM

The public offering of 6,000,000 ordinary shares in Anguilla Electricity Company Limited by GOA will open on August 1, 2003 and will close on 3:00 p.m. on

September 1, 2003. All Bank Drafts/Manager’s Cheques, Money Order, Cashier’s Cheques, Postal Orders must be made payable to ANGLEC Share Issue: Escrow and Subscription Trust Account and crossed “Non-negotiable”. The aforementioned cheque or postal order must accompany each subscription form. Each will be

liable for payment upon receipt. CASH AND PERSONAL CHEQUES WILL NOT BE ACCEPTED.

Number of Shares Applied for Amount Due on Application

EC$ US$

*Applications may only be made for a minimum of 100 shares and in multiplies of 100 thereafter. I/We enclose the sum of EC$______________ being the full amount payable on application for the above-stated number of shares.

OR I/We enclose the sum of US$______________ being the full amount payable on application for the above-stated number of shares.

PLEASE COMPLETE THE FOLLOWING INFORMATION USING BLOCK LETTERS:

(1) Company Name (If applicable) or

Surname and Designation (Mr., Mrs., Miss or Title)

Christian Name(s) in full

Address in full (including P.O. Box Number) Date of Birth: ---------------------------------

Anguillian//Belonger/Anguillian National/Resident YES/NO

Citizenship/Occupation

Passport/National Identification Number

Email Address

(A corporation should complete this form under the hand of a Duly Authorized official who should state his capacity.)

The above individual will serve as the primary holder to receive corporate communication and dividends unless specified otherwise.

PLEASE REGISTER JOINT OWNER(S) AS FOLLOWS (TICK ONE): ( ) Joint Tenants with Rights of Survivorship ( ) Tenants in Common (Joint Tenants with rights of survivorship will be used if no indication is made)

JOINT APPLICANT(S) MUST SIGN BELOW:

(2) (3)

Surname/Designation: Surname/Designation:

Christian name(s) in full: Christian name(s) in full:

Address in full: Address in full:

Date of Birth: Date of Birth:

Anguillian//Belonger/Anguillian National/Resident

Citizenship/Occupation:

Anguillian//Belonger/Anguillian National/Resident

Citizenship/Occupation:

Passport/national Identification Number: Passport/national Identification Number:

Number of Share Beneficially Held: Number of Share Beneficially Held:

Email Address: Email Address:

Signature: Signature:

PLEASE NOTE THE FORM OF DIVIDEND PAYMENT PREFERRED:

Dividend cheque to be mailed to the above address described at (1) above. EC$ Cheque(s) deposited to my/our bank:

Please note that all dividends will be paid in EC$’s. Bank Name:

EC$ Account Number:

Bank Address:

(For deposit to Savings or Chequing Accounts only)

DECLARATION: The Subscriber, by signing this subscription form, acknowledges receipt of this Prospectus dated August 1, 2003 and makes the declarations as indicated in the subscription terms, representations & warranties which follow this subscription form. Further, the subscriber also acknowledges that he/she has read the Terms and Conditions of the ANGLEC Share Issue Subscription Escrow and Trust Account and agrees that by signing this subscription form he/she has agreed to those terms. The signature below is executed for and on behalf of all applicants on this Form.

SUBSCRIBER’s SIGNATURE: ___________________________________ DATE: ___________________________ (If a corporation, under seal and with title(s) of authorised signatory (ies))

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TERMS & CONDITIONS OF ANGLEC’S SHARE ISSUE:

ESCROW AND SUBSCRIPTION TRUST ACCOUNT

(i) The Subscriber shall be bound by these terms & conditions upon receipt by BOSL or any of the New Issue Application Receiving Firms of

the Subscription Form;

(ii) The Subscriber understands and acknowledges that in the event of an over-subscription of the share issue, BOSL reserves the right in its sole

discretion to return the application for allotment of shares along with the attached funds or to allot an amount less than the amount of shares

applied for;

(iii) In the event the Company becomes involved in litigation or a dispute by reason hereof, it is authorised to deposit with a Court of competent

jurisdiction any and all Escrow funds held by it pursuant hereto and, there upon, it shall stand fully relieved and discharged of any further

duties hereunder. The Company may utilise any or all of the Escrowed funds for such purposes and for court costs and attorneys’ fees, which

may be incurred by it as a consequence of the Company becoming a party to any legal proceedings pertaining to this Offer, the parties hereto

jointly and severally agree to indemnify and hold the Company harmless from all losses, costs, damages, expenses and attorneys’ fees other

than those suffered or incurred by the Company as a result of its own gross negligence or wilful misconduct;

(iv) This Escrow and Subscription Trust Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs,

successors and assigns;

(v) Neither Party to this Agreement shall transfer or assign any of its rights or obligations under this Agreement without the prior written

consent of the other Party;

(vi) This Escrow and Subscription Trust Agreement shall be governed by the Laws of Anguilla;

(vii) Should any part of any provisions contained in this Escrow and Subscription Trust Agreement be deemed unenforceable by a Court of

competent jurisdiction, then such part shall be deemed deleted or amended in order to render the remainder of any such provisions enforceable;

TERMS, REPRESENTATIONS & WARRANTIES OF ISSUE SUBSCRIPTION

THE SUBSCRIBER BY SIGNING THE REVERSE SIDE OF THIS SUBSCRIPTION FORM UNDERTAKES, REPRESENTS AND WARRANTS

TO THE COMPANY AS FOLLOWS:

(i) The information on the Subscription Form is full, true and complete;

(ii) The subscriber has the legal capacity and authority and is permitted by applicable law to execute and deliver this Subscription Form. In the

case of a joint subscription, at least one of the subscribers has the legal capacity and authority and is permitted by applicable law to execute

and deliver this Subscription Form;

(iii) I/we understand that the offer is only being made in the OECS Countries: Anguilla, Antigua and Barbuda, British Virgin Islands, Dominica,

Grenada, Montserrat, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines and is being conducted in compliance with the

applicable laws of Anguilla and that I/we represent that the shares are not being purchased directly or indirectly for the account of a resident

of any other jurisdiction and I/we submit exclusively to Anguillian law and the jurisdiction of Anguilla including any rights or remedies that

may be available therein;

(iv) The Subscriber understands that the subscriber’s capital contribution cannot be withdrawn from the Company except by way of transfer of

the shares in accordance with the terms outlined in the Prospectus;

(v) I/we acknowledge that this is an irrevocable offer to subscribe for shares which may be accepted or rejected, in part or in whole, by the

Company at its sole discretion;

(vi) If the Subscriber has not reached the age of majority, an authorised representative of such Subscriber will hold in trust the shares so

subscribed and accepted for the subscriber and that the authorised representative agrees and confirms that he/she has read the subscription

terms, representations and warranties and agrees to abide and be governed by the same;

(vii) I/we have read the Prospectus and the Escrow and Trust declaration and understand that the terms and conditions expressed therein are

incorporated into this Subscription Form.

(viii) I/we have read the Prospectus and the terms and conditions of the Escrow and Subscription Trust Account and understand the terms and

conditions expressed therein are incorporated into this Subscription Form

PLEASE SEND COMPLETED SUBSCRIPTION AND REMITTANCE TO ANY OF THE NEW ISSUE APPLICATION RECEIVING

FIRMS INCLUDED IN THIS PROSPECTUS.

Please note that Information required to provide proof of Nationality, Belonger or Resident Status which may include but are not limited to any of

the following as applicable:

� Passport � Birth Paper � Visa Stamps w/i Passport � Resident Book � Work Permit

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