Page 1
Page 2 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.
Page 2
Page 3ANGLEC PUBLIC OFFERING 2003
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
Page 3
Page 4 ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITED
(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
Email: [email protected]
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
Email: [email protected]
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.
Page 4
Page 5ANGLEC PUBLIC OFFERING 2003
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
Page 5
Page 6 ANGLEC PUBLIC OFFERING 2003
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
Page 6
Page 7ANGLEC PUBLIC OFFERING 2003
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
Page 7
Page 8 ANGLEC PUBLIC OFFERING 2003
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
Anguilla Electricity Company Limited
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
Page 8
Page 9ANGLEC PUBLIC OFFERING 2003
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$1.00.
ECCB
Eastern Caribbean Central Bank
ECSE
Eastern Caribbean Securities Exchange
ECCSD
Eastern Caribbean Central Securities Depository
ECSRC
Eastern Caribbean Securities Regulatory Commission
ESOP
Employee Stock Option Plan - Stock options are rights
to purchase a corporation’s capital stock. Various
conditions may be specified for the options, including
times, prices, and amounts. Options are frequently given
to corporate officers and/or staff as a form of incentive
compensation and may have assorted conditions, a typical
form being the granting of the right to the Corporate
Officers and/or staff to purchase shares (exercise the
option) during some specified time in the future at today’s
market price. The exercise price is set at the date of
grant.
Efficiency Ratio
The percentage calculated when the numerator is total
operating expenses and the denominator is total operating
net revenue during the financial period.
Firm Capacity
The maximum continuous power output that a station
or electrical supply system can be expected to sustain
without compromising the risk of failure.
GOA
Government of Anguilla.
Page 9
Page 10 ANGLEC PUBLIC OFFERING 2003
GDP
Gross Domestic Product
GWh
One thousand million watt hours
Gross Generation
The total energy generated.
I.R.S.A.
Interim Revised Statutes of Anguilla
IPO
Initial Public Offering
kW
Kilowatt or one thousand watts
kWh
Kilowatt-hour or one unit of electrical energy.
kV
Kilovolt or one thousand volts
kVA
Kilovolt-ampere
Licensed Intermediary
Bank of St. Lucia Limited.
MWh
One million watt hours
MICU
Ministry of Infrastructure, Communications and Utilities
Market Capitalisation
The market share price of ANGLEC at the date of this
Prospectus of EC$ 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.
Page 10
Page 11ANGLEC PUBLIC OFFERING 2003
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)
The percentage calculated when the numerator is net
income and the denominator is the weighted average total
shareholders’ equity during the financial period.
Return on Investment (ROI)
The percentage calculated when the numerator is net
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
Page 11
Page 12 ANGLEC PUBLIC OFFERING 2003
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
Page 12
Page 13ANGLEC PUBLIC OFFERING 2003
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
Page 13
Page 14 ANGLEC PUBLIC OFFERING 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.
Page 14
Page 15ANGLEC PUBLIC OFFERING 2003
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.
Page 15
Page 16 ANGLEC PUBLIC OFFERING 2003
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,
Page 16
Page 17ANGLEC PUBLIC OFFERING 2003
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.
Page 17
Page 18 ANGLEC PUBLIC OFFERING 2003
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
Page 18
Page 19ANGLEC PUBLIC OFFERING 2003
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.
Page 19
Page 20 ANGLEC PUBLIC OFFERING 2003
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
Page 20
Page 21ANGLEC PUBLIC OFFERING 2003
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.
Page 21
Page 22 ANGLEC PUBLIC OFFERING 2003
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
Email: [email protected]
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
Email: [email protected]
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
Email: [email protected]
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.
Page 22
Page 23ANGLEC PUBLIC OFFERING 2003
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;
Page 23
Page 24 ANGLEC PUBLIC OFFERING 2003
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
Page 24
Page 25ANGLEC PUBLIC OFFERING 2003
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
� 120/208 volts three phase 4 wire
� 240/415 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
Page 25
Page 26 ANGLEC PUBLIC OFFERING 2003
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.
Page 26
Page 27ANGLEC PUBLIC OFFERING 2003
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
Page 27
Page 28 ANGLEC PUBLIC OFFERING 2003
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
Page 28
Page 29ANGLEC PUBLIC OFFERING 2003
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%
Page 29
Page 30 ANGLEC PUBLIC OFFERING 2003
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.
Page 30
Page 31ANGLEC PUBLIC OFFERING 2003
� 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
Page 31
Page 32 ANGLEC PUBLIC OFFERING 2003
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
Page 32
Page 33ANGLEC PUBLIC OFFERING 2003
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
Page 33
Page 34 ANGLEC PUBLIC OFFERING 2003
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.
Page 34
Page 35ANGLEC PUBLIC OFFERING 2003
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.
Page 35
Page 36 ANGLEC PUBLIC OFFERING 2003
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
Page 36
Page 37ANGLEC PUBLIC OFFERING 2003
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.
Page 37
Page 38 ANGLEC PUBLIC OFFERING 2003
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
Page 38
Page 39ANGLEC PUBLIC OFFERING 2003
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
Page 39
Page 40 ANGLEC PUBLIC OFFERING 2003
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.
Page 40
Page 41ANGLEC PUBLIC OFFERING 2003
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.
Page 41
Page 42 ANGLEC PUBLIC OFFERING 2003
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.
Page 42
Page 43ANGLEC PUBLIC OFFERING 2003
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.
Page 43
Page 44 ANGLEC PUBLIC OFFERING 2003
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.
Page 44
Page 45ANGLEC PUBLIC OFFERING 2003
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$3,300,336.18. GOA is currently negotiating credit
terms with ANGLEC. ANGLEC’s normal customer
policy is payment within 30 days of the billing date. An
extra 2 days are allowed before disconnection.
With the exception of the above, related party
transactions and balances are at normal arms-length
Company terms.
MAJOR CONTRACTS AND SERVICE
ARRANGEMENTS
� Delta Petroleum for the provision of gas oil for
the power plants and gasoline for vehicular
usage;
� Cable & Wireless for the provision of a fibre optic
cable from the administrative building to Corito;
� Cable & Wireless for the leasing of ANGLEC’s
electricity poles to run telephone lines;
� DakSoft for the maintenance of the billing system;
� Building Leasehold Contract expired in March
2002 and renewal terms are currently being
established;
� Street Lighting Policy with GOA.
� New Line Extensions Policy
� Lease Arrangements of Crown Land;
Architect’s Design and Supervision Contract for New
Administrative Offices.
DIRECTORS’ CONTRACTS
There are no existing or proposed service contracts with
directors except for one director who is an employee at
the Company and is the staff representative on the Board
of Directors. He is a supervisor at the Company.
OTHER IMPORTANT RELATIONSHIPS
Member of the Carilec
Page 45
Page 46 ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITED
AUDITED FINANCIAL STATEMENTS
December 31, 2002, 2001 and 2000
Expressed in Eastern Caribbean Dollars (EC$)
Page 48
Page 49ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITEDINCOME STATEMENT AND STATEMENT OF RETAINED EARNINGS
Years ended December 31, 2002, December 31, 2001 and December 31, 2000
Expressed in Eastern Caribbean Dollars (EC$)
Notes 2002 2001 2000
Income Statement
GROSS OPERATING REVENUE 11 29,015,583 27,502,654 23,984,853
COST OF OPERATING REVENUE:
Generation - Fuel (10,643,394) (10,207,649) (10,567,983)
- Fuel Surcharge 11 - (48,098) (809,446)
- Other (4,744,897) (4,657,069) (4,923,535)
Transmission and Distribution (4,596,670) (4,536,695) (3,738,484)
(19,984,961) (19,449,511) (20,039,448)
GROSS OPERATING PROFIT 9,030,622 8,053,143 3,945,405
OPERATING EXPENSES:
Administration (3,488,332) (3,844,095) (2,710,906)
Consumer Service (371,879) (362,816) (439,919)
Employee Compensation 17 - - (1,100,000) - -
(3,860,211) (5,306,911) (3,150,825)
NET OPERATING PROFIT 5,170,411 2,746,232 794,580
Finance Cost (1,262,536) (1,649,190) (1,131,510)
Other Income 12 375,332 420,855 252,553
NET PROFIT FROM ORDINARY ACTIVITIES 4,283,207 1,517,897 (84,377)
EXTRAORDINARY INCOME 13 - - 1,508,109 1,118,969
NET PROFIT FOR THE YEAR 4,283,207 3,026,006 1,034,592
Statement of Retained Earnings
ACCUMULATED PROFIT AT BEGINNING OF YEAR 3,235,382 209,376 (825,216)
NET PROFIT FOR THE YEAR 4,283,207 3,026,006 1,034,592
7,518,589 3,235,382 209,376
DIVIDENDS (814,000) - -
RETAINED EARNINGS AT END OF YEAR 6,704,589 3,235,382 209,376
EARNINGS PER SHARE 0.37 0.26 0.09
The accompanying notes form an integral part of the financial statements.
Page 49
Page 50 ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITEDSTATEMENT OF CASH FLOWS
Years ended December 31, 2002, December 31, 2001 and December 31, 2000
Expressed in Eastern Caribbean Dollars (EC$)
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.
Page 50
Page 51ANGLEC PUBLIC OFFERING 2003
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.
Page 51
Page 52 ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITEDNOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
December 31, 2002, December 31, 2001 and December 31, 2000
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.
Page 52
Page 53ANGLEC PUBLIC OFFERING 2003
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
December 31, 2002, December 31, 2001 and December 31, 2000
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.
ANGUILLA ELECTRICITY COMPANY LIMITED
Page 53
Page 54 ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
December 31, 2002, December 31, 2001 and December 31, 2000
Expressed in Eastern Caribbean Dollars (EC$)
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$240,000)
Page 54
Page 55ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
December 31, 2002, December 31, 2001 and December 31, 2000
Expressed in Eastern Caribbean Dollars (EC$)
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)
Page 55
Page 56 ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
December 31, 2002, December 31, 2001 and December 31, 2000
Expressed in Eastern Caribbean Dollars (EC$)
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$2.50 each were transferredto SSB on June 3, 2003.
Page 56
Page 57ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
December 31, 2002, December 31, 2001 and December 31, 2000
Expressed in Eastern Caribbean Dollars (EC$)
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$245,743 is capitalised and shown under fixed assets (Note 3). This loan is secured by
a legal charge over the Company’s plant and equipment as well as the freehold property of the Company.
Page 57
Page 58 ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
December 31, 2002, December 31, 2001 and December 31, 2000
Expressed in Eastern Caribbean Dollars (EC$)
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$3.64.However thefuel surcharge was re-introduced February 2003.
Page 58
Page 59ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
December 31, 2002, December 31, 2001 and December 31, 2000
Expressed in Eastern Caribbean Dollars (EC$)
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$400,000 for the years 2002 and 2001.
• The Company entered into an agreement on March 28, 1991 with the GOA to take over the electricity supply
system of Anguilla.
The GOA has guaranteed the CDB (02 SFR-ANG), CDB (03 SFR-ANG), CCB & Lloyds Bank loans borrowed by the
Company (see note 9).
Page 59
Page 60 ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS(CONTINUED)
December 31, 2002, December 31, 2001 and December 31, 2000
Expressed in Eastern Caribbean Dollars (EC$)
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$200,000 being legal fees.
18. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
Financial assets of the Company include cash, term deposits, investments and accounts receivable. Financial
liabilities include accounts payable and accruals and claims payable.
(a) Credit Risk
Credit risk on receivables is concentrated in the Government of Anguilla, the largest consumer and also the
largest debtor. Credit risk is reflected in the provision for bad and doubtful receivables. (Refer to notes 5 and
15).
(b) Fair Value
The fair values of cash, accounts receivable, accounts payable and accruals and long-term loans are not materially
different from their carrying amounts.
Fair value estimates are made at a specific point in time, based on market conditions and information about the
financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant
judgement and, therefore, cannot be determined with precision. Changes in assumptions could significantly
affect estimates. All non-financial instruments such as prepaid expenses are excluded from fair value disclosure.
Thus the total fair value amounts cannot be aggregated to determine the underlying economic value of the
Company.
Page 60
Page 61ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITED
FORECASTED FINANCIAL STATEMENTS
December 31, 2003, 2004 and 2005
Expressed in Eastern Caribbean Dollars (EC$)
Page 61
Page 62 ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITED
FORECASTED BALANCE SHEET
As of December 31, 2003, 2004 and 2005
Expressed in thousands of Eastern Caribbean Dollars (EC$)
Note 2003 2004 2005
ASSETS
PROPERTY, PLANT & EQUIPMENT (NET) 31,349 33,999 39,602
CURRENT ASSETS
Inventories 4,426 5,346 5,815
Trade Receivables 7,300 7,869 8,342
Other Receivables 1,350 1,450 1,670
Cash and Cash Equivalent 1,356 1,216 973
14,432 15,881 16,800
Total Assets 45,781 49,880 56,402
EQUITY AND LIABILITIES
SHAREHOLDER’S EQUITY
Share Capital 14,536 14,536 14,536
Retained Earnings 9,885 13,709 17,911
24,421 28,245 32,447
LONG-TERM LIABILITIES
Interest-bearing Loans and Borrowings 12,986 15,200 17,509
Contribution in Aid of Construction 2,545 2,625 2,656
15,531 17,825 20,165
CURRENT LIABILITIES
Bank overdraft 2,100 - -
Current portion - Interest-bearing Loans and Borrowings 819 785 690
Accounts Payable 2,560 2,650 2,710
Customer Deposits 350 375 390
5,829 3,810 3,790
Total equity and liabilities 45,781 49,880 56,402
Accompanying notes form an integral part of the financial forecast.
Page 62
Page 63ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITED
FORECASTED INCOME STATEMENT AND STATEMENT OF RETAINED EARNINGS
For years ended December 31, 2003, 2004 and 2005
Expressed in thousands of Eastern Caribbean Dollars (EC$)
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
Accompanying notes form an integral part of the financial forecast.
Page 63
Page 64 ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITED
FORECAST STATEMENT OF CASH FLOWS
For years ended December 31, 2003, 2004 and 2005
Expressed in thousands of Eastern Caribbean Dollars (EC$)
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
Accompanying notes form an integral part of the financial forecast.
Page 64
Page 65ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITED
NOTES TO THE FORECASTED FINANCIAL STATEMENTS
For years ended December 31, 2003, 2004 and 2005
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.
Page 65
Page 66 ANGLEC PUBLIC OFFERING 2003
ANGUILLA ELECTRICITY COMPANY LIMITED
NOTES TO THE FORECASTED FINANCIAL STATEMENTS
For years ended December 31, 2003, 2004 and 2005
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.
Page 66
Page 67ANGLEC PUBLIC OFFERING 2003
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:
Page 67
Page 68 ANGLEC PUBLIC OFFERING 2003
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
Page 68
Page 69ANGLEC PUBLIC OFFERING 2003
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:
Anguilla Electricity Company Limited
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.
Bank of St. Lucia Ltd.
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:
Bank of St. Lucia Ltd.
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.
Page 69
Page 70 ANGLEC PUBLIC OFFERING 2003
Subscriptions may also be sent by mail or courier to
arrive by 3:00 pm on September 1, 2003 at the
following location:
Bank of St. Lucia Ltd.
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.
Page 70
Page 71ANGLEC PUBLIC OFFERING 2003
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
Page 71
Page 72 ANGLEC PUBLIC OFFERING 2003
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.
Page 73
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))
DE
TA
CH
AB
LE
DE
TA
CH
AB
LE
DE
TA
CH
AB
LE
DE
TA
CH
AB
LE
DE
TA
CH
AB
LE
DE
TA
CH
AB
LE
DE
TA
CH
AB
LE
Page 74
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