2014 - anglec · to ec$ 4.06 million in 2014, an ec$ 1.65 million or 29% decrease in revenue. še...

The Anguilla Electricity Company LimitedAnnual Report and Accounts 2014

Championing Sustainable Development

2 | ANGUILLA ELECTRICITY COMPANY LIMITED


ANGLEC: Supporting Sports and Culture; Hurricane Gonzalo Recovery Function

Table of ContentsSelected Financial Information

Board of Directors

Divisional Managers

Chairman’s Statement

Directors’ Report

Operational Review

Hurricane Gonzalo

Developing, Celebrating and Retaining our Human Resources

Creating a Culture of Learning

Celebrating a Culture of Recognition

Instilling a Culture of Accountability

Advanced Metering Infrastructure (AMI)

Tech Savvy

Community Involvement

Current and Future Outlook

Operating Highlights

2014 Expenditure

Independent Auditor’s Report

Statement of Financial Position

Statement of Comprehensive Income

Statement of Changes in Shareholders’ Equity

Statement of Cash Flows

Notes to the Financial Statements

Corporate Information

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ANNUAL REPORT AND ACCOUNTS 2014 | 3


OPER ATING COSTSTotal operating cost for the year 2014 is being reported at EC$ 67.15 million as compared with EC$ 70.27 million in 2013, a decrease of 4%. Total fuel cost is being recorded at EC$ 49.54 million as compared with EC$ 52.15 million in 2013, a decrease of some EC$ 2.61 million or 5%. Additionally, Generation cost decreased by EC$ 1.63 million or 15% over the same period, from EC$ 10.87 million in 2013 to EC$ 9.24 million in 2014. Total fuel and Generation cost as a function of total Revenue equaled 73% in 2014 as compared with 78% in 2013.

FUEL COSTFuel cost is, as has been historically the case, the major single cost incurred by the company, accounting for 64% of the total cost. However there was a substantial drop in fuel prices particularly in the latter part of the year. �e price for an average imperial gallon (IG) of diesel declined 37% during the year. Due to this drop in fuel cost, we were able to reduce the fuel surcharge from EC$ 0.45 per kWh to EC$ 0.35 per kWh on 31st

October, 2014 with a further reduction scheduled for early 2015.

TR ANSMISSION AND DISTRIBUTIONTotal Transmission and Distribution cost are being recorded at EC$ 8.37 million in 2014 as compared with EC$ 7.25 million in 2013, an increase of EC$ 1.12 million or 15% primarily due to Hurricane Gonzalo related activities.

GENER ATIONExcluding fuel costs, Generation costs in 2014 are reported at EC$ 9.24 million or 11% of revenues as compared to EC$ 10.87 million or 13% of revenues in 2013. �is decrease in Generation costs is primarily due to a signi�cant reduction in repairs and maintenance.

OTHER INCOMEOther income dropped from EC$ 5.74 million in 2013 to EC$ 4.06 million in 2014, an EC$ 1.65 million or 29% decrease in revenue. �e reduction in customer revenue is due to a drop in the late fees earned from late payments of EC$ 443 thousand and EC$ 1 million in proceeds from a 2013 insurance claim.

FINANCE COSTFinance cost decreased between 2013 and 2014 by EC$ 170 thousand. �is decrease was due to lower average structured debt between the two years.

NET INCOMENet income increased from EC$ 5.07 million in 2013 to EC$ 6.34 million in 2014, an increase of EC$ 1.27 million, or 25%. �e net income represents 8% of sales in 2014, as compared with 6% in 2013. �e major

drivers of this increased income are lower fuel cost and lower repairs and maintenance cost in the Generation department.

CAPITAL EXPENDITURESElectricity is a very capital intensive undertaking and by that we mean expensive. In order to continue to have a relatively stable energy supply it is incumbent on the company to continually invest in equipment and to embark on a robust capital works and capital maintenance program. Anglec has spent EC$ 1.34 million in capital assets during 2014 as compared with EC$ 1.48 million in 2013.�e breakdown in capital expenditure by category is as follows (in millions): Building EC $ 0.06 Plant and Machinery 0.83 Furniture, Fittings and Equipment 0.35 Vehicles 0.08 Work-in-Progress 0.02 Total EC $ 1.34

DEBT TO EQUIT Y R ATIO

CURRENT R ATIO


Selected Financial Information


RETURN ON ASSETS R ATIO

RETURN ON EQUIT Y R ATIO

Selected Financial Information (continued)



(in 000’s) 2014 2013 2012 2011 2010

Income Statement InformationGross Operating Revenue $80,631 $80,830 $82,236 $81,833 $69,233Cost of Operations (67,153) (70,265) (72,375) (69,836) (57,940)Gross Operating Pro�t $13,478 $10,565 $9,861 $11,997 $11,293

Operating Expenses (10,342) (10,205) (10,946) (7,466) (7,091)Other income 4,063 5,737 4,325 4,018 3,591Net Operating Pro�t $7,199 $6,097 $3,240 $8,549 $7,793

Finance Cost, net (854) (1,023) (1,155) (1,336) (1,813)

Net Pro�t $6,345 $5,074 $2,085 $7,213 $5,980

Balance Sheet InformationNon-current Assets $68,325 $73,251 $77,737 $81,200 $78,957 Current Assets 43,434 41,575 33,993 32,333 31,028Total Assets $111,759 $114,826 $111,730 $113,533 $109,985

Long-term Liabilities $9,095 $20,364 $24,225 $26,960 $29,570Current Liabilities 14,355 11,985 11,089 10,797 10,550Total Liabilities 23,450 32,349 35,314 37,757 40,120

Shareholders’ Equity $88,309 $82,447 $76,416 75,776 69,865

Total Liabilities & Shareholders’ Equity $111,759 $114,826 $111,730 $113,533 $109,985

Dividends Declared $815 $815 $- $1,164 $1,164

Statistical Information (000’s)Units Sold - kWh 78,074 77,406 78,887 83,674 87,214Energy Losses - kWh 8,670 8,658 7,987 8,756 9,423Net Generation (Units Sent Out) - kWh 86,744 86,064 86,874 92,430 96,637Station Usage - kWh 2,760 2,498 2,601 2,728 1,932Gross Generation - kWh 89,503 88,562 89,475 95,158 98,569Fuel Used - Imperial Gallons 4,827 4,675 4,771 5,045 5,216

Selected Financial Information (continued)



Board of Directors



Mr. J. Artnell RichardsonChairman

Mrs. Kathleen RogersVice-Chairman

Mr. James RichardsonMember

Mr. Victor NickeoMember

Mr. Desmond RichardsonMember

Mrs. Hertha RichardsonMember

Mr. Colonel HarriganMember

Mr. Bernard SmithMember

Mr. Courtney MortonMember

Divisional Managers

Mr. Ivor IbleTransmission and Distribution Superintendent

Mr. Damien LloydGeneration Superintendent

Ms. Maureen Woodley Accountant

Mr. Sylvan BrooksSystems Control Engineer

Mr. Elvin RichardsonInformation Technology Manager



Mr. Hadley HaynesChief Financial O£cer

Ms. Jeri RichardsonCorporate Secretary

Mr. Steve HodgeNetwork Operations Manager

Ms. Erimel FranklinHuman Resources Manager

Mr. David GumbsChief Executive O£cer

Chairman’s Statement

During the year 2014, the Board focused on power development planning with the objective of providing an integrated, reliable and a¤ordable supply of electricity with a lower carbon footprint. We are cautiously aware that decisions made during this critical period of energy integration would have a lasting e¤ect on the company and our customers therefore we want to satisfy ourselves that our decisions would result in the sustainable development of the company. �e energy landscape in Anguilla is changing and ANGLEC is championing the development of sustainable electricity production and supply by phasing in alternative and renewable energy generation options in a way that would maintain the integrity of the supply at a reasonable cost to our customers. Whilst solar may be the energy of choice, we must keep in mind that it will only reduce and not eliminate our carbon emissions, since it is intermittent during the day time and unusable at night. �erefore it can only be used, as of now, to help lower the cost of operations through fuel avoidance. To this end, we have moved ahead with plans to have a 1 MW Solar Farm installed as soon as possible.Alternative energy, such as that provided under the waste-to-energy agreement with Global Green Energy, would not only supply ANGLEC with additional base load capacity, but would reduce Anguilla’s carbon footprint. I had hoped that by now we would have received the bene�ts of our agreement, but Murphy’s Law is in e¤ect.

“The energy landscape is changing and ANGLEC is championing the development of sustainable electricity production...”





Fuel prices started moving downward since the last Annual General Meeting. As a result of the decrease, our customers enjoyed a reduction in the fuel surcharge from EC$ 0.45/kWh to EC$ 0.35/kWh, a much welcomed relief.

�ere is still much work to be done in preparation for alternative and renewable energy. Key factors are the development and implementation of a Grid Code and Grid Upgrade, which would come at a cost. We look forward to working with the Government and all regulatory bodies to ensure that the relevant legislative changes and tari¤ restructuring move ahead together for a smooth renewable energy integration process. �e Board of Directors is grateful to the shareholders and stakeholders for their con�dence in Anglec thus far.Without our highly skilled sta¤, we would not be able to continue to meet the demands of our customers therefore the Board of Directors wishes to put on record its sincere thanks to the members of sta¤ for their commitment to the success of the Company.

J. Artnell Richardson



Principle Activities�e principle activities of the company are the generation, transmission and distribution of electricity.

The Board�e Directors who served the company since the 11th Annual General Meeting held on 16th October 2014 are:Mr. J. Artnell RichardsonMrs. Kathleen RogersMr. James RichardsonMr. Bernard SmithMr. Desmond RichardsonMrs. Hertha RichardsonMr. Courtney MortonMr. Victor NickeoMr. Colonel HarriganIn accordance with Clause 4 of By-Law No.3 of the company, Mrs. Kathleen Rogers, Mrs. Hertha Richardson and Mr. Courtney Morton will retire by rotation and have decided not to seek re-election to the Board.

Board and Committee Meetings�e Board has a set ordinary meeting once per month to conduct the business of the company. �e sub-committees of the Board are the Audit and Finance Committee,

the Human Resources Committee and the Technical Committee. �e committees of the Board meet at least once per quarter. Directors attended additional Special Meetings of the Board as required. During the year 2014 the Board met sixteen (16) times. Six (6) Ordinary Meetings and ten (10) Special Meetings were held.�e Board carried out its responsibilities in accordance with the Companies Act and the By-Laws of the company and was guided by the Board Governance Policy. �e Board concluded that it acted in the best interest of the company during the year 2014.

Summary of Financial PerformanceFor the �scal year 2014, the company sold 78,073,761 KWh of electricity which brought in revenue totaling EC$ 80,631,517 as compared to 77,406,750 KWh, generating revenue of EC$ 80,830,584 for the �scal year 2013. Net income for the year totaled EC$ 6,345,268 compared to EC$ 5,073,859 for the �scal year 2013.

Dividends�e Board’s recommendation on the payment of a dividend is based on the performance of the company during the �scal year and the future

obligations of the company. A dividend of EC$ 0.07 per ordinary share for the 2014 �nancial year has been declared by the Board of Directors at its meeting on 31st August, 2015. �e Board will make a recommendation to the shareholders to pay dividends accordingly.

Proposed Re-appointment of AuditorsThe incumbent PriceWaterCoopers (PwC) who being eligible, have signified their willingness to continue in office, offer themselves for re-appointment. The Board recommends that PwC be re-appointed.

Shareholders’ TransactionsDuring the period January to December 2014, nineteen (19) shareholder transactions were processed.

Cautionary StatementDiscussions in the Annual Report relating to the company’s expectations, objectives and outlook, inter alia, may constitute forward looking statements. �e actual position of the company may be di¤erent from expressions made or implied, depending on factors such as economic conditions a¤ecting demand and supply, government regulations and taxation and acts of God which may signi�cantly a¤ect the operations of the company and for which the company has no control.

By order of the Board of Directors

Jeri RichardsonCorporate Secretary

Directors’ Report for the year ended December 31, 2014



OPERATIONAL REVIEW

ANGLEC continued to provide a high-reliable level of service in 2014. In our Generation department, none of our major units experienced a major breakdown. As a result, there was su£cient generation to meet all peak demand periods, namely the Easter, Carnival and Christmas seasons. �is was mainly due to the continuation of proactive, preventative and planned maintenance of the generation framework. �is included the major overall of two units in 2014. In 2015 the Company plans to repair its largest fuel tank and has scheduled an overhaul for one of the Company’s major generating units. In Transmission and Distribution (T&D), a major contributor to the improved service levels was the implementation of a robust approach to vegetation management combined with other maintenance work. �e company experienced a signi�cant, 50% drop in the number of outages due to this program.In light of this success, ANGLEC is bolstering its vegetation management with the addition of a tree cutting truck and chipper equipment which is expected to arrive on island early 2015.

HURRICANE GONZALO2014 culminated with the passing of hurricane Gonzalo on October 13, 2014 which caused signi�cant damage to the island and ANGLEC’s infrastructure.

On October 14th Anguilla awoke to images of devastation caused by hurricane Gonzalo. Within hours of the all clear, ANGLEC teams were deployed and

began the methodological process of restoring power throughout the island. �e power station and substation were virtually unscathed. �e T&D infrastructure on the eastern and western parts of the island su¤ered the most damage. Overall, a total of �fty-one poles and eighteen transformers had to be replaced.

Although most of the restoration was carried out by ANGLEC’s crews, a volunteer team from the United States Virgin Islands’ Water and Power Authority (WAPA) organized through the Caribbean Electric Utility Service Organization (CARILEC), assisted in the e¤orts. With a high level of teamwork, the restoration was carried out within seven days for 98% of our customers. Within 10 days, the system was virtually 100% restored. Given the level of e¤ort exuded and the many sacri�ces made by the teams, the Company arranged a thank you and celebratory ceremony. �e ceremony was attended by honored guests such as Her Excellency the Governor, the Honorable Chief Minister, numerous other ministers and members of the ANGLEC Board of Directors who expressed their gratitude for restoring the island safely and quickly along with praise for the hard working teams.

DEVELOPING, CELEBRATING AND RETAINING OUR HUMAN RESOURCES �e success of our company is intrinsically linked to our human resources. 2014 brought some exciting changes for our employees. One of our main objectives

Stacking the building blocks to achieve sustainable development



continues to be ensuring we have the right people at the right time in the right positions. Our human resources activities continued to focus on recruitment, retention, compensation and performance management. Some of the key initiatives for the past year focused on training and development, the celebration of our employees and instilling a culture of accountability. We also looked at reinforcing critical sections within the organization to ensure they were appropriately resourced to improve performance and service to its customers. In Transmission and Distribution, we recruited an Assistant Linesman and a Digger Derrick Operator. We also created two new positions, Foreman and Linesman Trainee. �ese new roles will be tasked with rolling out the Advance Metering Infrastructure (AMI) initiative in 2015.

CREATING A CULTURE OF LEARNINGTraining and developing of ANGLEC’s workforce is critical. We engaged a comprehensive and robust training and needs analysis which identi�ed our training needs and solutions to be implemented. Starting in 2015, we intend to roll out a robust 3 year training plan. In 2015, we will continue to focus on technical, administrative and �nancial training with the aid of partners like the Anguilla Community College, Carilec, and American Management Association.

CELEBRATING A CULTURE OF RECOGNITION

One of the most in©uential management gurus, �omas J. Peters said “Celebrate what you want to see more of.” In 2014, we celebrated our employees through emphasizing formal and informal recognition programs for sta¤. We were excited with the implementation of our Employee Recognition Programme. Some of the main tenants of the programme included the celebration of service, recognition of sections that went above and beyond, National Ambassadors, high performers, and those who exuded high levels of customer service and attendance. Because of our celebration of their e¤orts, sta¤ members felt more appreciated thereby contributing to a more engaged workforce.

INSTILLING A CULTURE OF ACCOUNTABILITY In order for ANGLEC to achieve its vision “To be the model energy provider of the Caribbean” a paradigm shift has to occur in our attitudes and actions. We continue to introduce new policies and procedures and made signi�cant strides to enforce existing policies and procedures. Our employee handbook was revised. Our supervisors and sta¤ were sensitized to our culture of accountability at various sta¤ meetings. We held an Employee Development Workshop with all our sta¤ members to sensitize sta¤ about job expectations, motivation and personal development.We will continue to build on this foundation. In 2015 and 2016 we will focus on performance management systems, job enrichment programmes and succession planning.

ADVANCED METERING INFRASTRUCTURE (AMI)Due to the unique requirements for radio frequencies in Anguilla, ANGLEC had to special order meters that meet Anguilla’s technical speci�cations. During the year, seven hundred meters were ordered for our pilot project. �e implementation of the pilot project is planned for early 2015.

TECH SAVVYAny modern company without a sturdy information technology (IT) backbone would �nd itself ©oundering. In 2014 our team ensured that ANGLEC remained attune to recent technological advances and ensured its



IT systems were enhanced as needed. To that end, the department explored purchasing volume licenses from Microsoft in order to keep current with frequent updates and security �xes. It is anticipated that this Company-wide rollout will occur in early 2015. In addition to the system upgrades, there were several security enhancements and redundancy improvements made throughout the year. �e Company’s communication pipelines were upgraded to �ber optic lines at both Corito and �e Valley o£ces. Our systems were redesigned to allow for improved accountabilities for sensitive systems and various other areas within the company.

To enhance e£ciencies and internal customer service e¤orts, ANGLEC launched a robust helpdesk system (Spiceworks). �is system allows the IT, facilities and safety functions to track and monitor requests and the timeliness of the responses. In addition, the system allows data to be logged, which allows the IT department to analyze, categorize and develop a database for frequently-ask-questions and related solutions, which will further improve e£ciency and response times.

COMMUNITY INVOLVEMENTDuring 2014, ANGLEC served over 30 community partners and organizations and fostered support for various youth, geriatrics, culture, sports, and education programs within Anguilla. In 2014, ANGLEC was awarded for excellence in Public Service (Friend of the Youth Award) by the Department of Youth Culture. We continue to demonstrate our passion and commitment to the development of youth in Anguilla. In 2014, we were the sole sponsor of several main initiatives including the National Primary School Awards which celebrates students’ academic excellence, National Primary Netball Tournament which promotes sports and teamwork skills and the Anguilla Horizons’ Scholarship program which provides 30 scholarships to primary schools students who are in need of �nancial assistance.

We also strengthened our community ties when we donated over EC$16,000 to the Anguilla Cancer Society for the sponsorship of Prostate Cancer Month. �rough our sponsorship, we hope that awareness of prostate cancer is increased and our males get tested. �e Company demonstrated its commitment to the growth of the country’s culture by sponsoring one of the largest cultural shows, the Anguilla Calypso Monarch Competition and the calypso tents.

Our community service initiatives bene�t the people and the organizations in our local community and we look forward to continuing this tradition of community service. We have seen much growth in the community due to our corporate sponsorships and we are proud to play our role.

CURRENT AND FUTURE OUTLOOK�ere is a strong push throughout the world for utilities to incorporate climate friendly and lower cost production technologies. Despite the intensi�ed push to alternate technologies, setting energy objectives for small island systems such as Anguilla’s remains challenging. Just as in other small island states, ANGLEC is challenged with �nding the right mix of energy sources. After many years of diligently building a reliable, high quality and e£cient system for energy generation and transmission and distribution, ANGLEC plans to incorporate new energy generating technologies that will lower costs and expand the possibilities for our customers. Deploying the right mix of new energy technologies will help lessen dependence on fossil fuel imports and limit the impact of potentially higher fuel prices at future dates. From all analyses, it is apparent that although intermittent renewable energy technologies such as wind and solar may not necessarily reduce energy prices, it would contribute signi�cantly to energy diversi�cation and improved sustainability for

the region. Over the past 5 years, ANGLEC has explored numerous energy producing alternatives. After careful analysis of



the various options, it was found that there are signi�cant factors including cost and technical challenges associated with the implementation of some technologies. As a result, it was determined that deploying alternative energy generation sources such as wind, solar, wave, waste-to-energy, natural gas and other renewable energy sources must be approached carefully.Given Anguilla’s small economy, population, geographic size, grid and generation capacity, it is imperative that the matter is approached carefully. It is in this light that ANGLEC has set out to better understand the challenges and identify potential solutions. To achieve energy sustainability in Anguilla, ANGLEC intends to:

1. Adapt available and proven technologies. i.e. Build and commission ANGLEC’s 1MW solar farm already in process and support the permitting process for the

agreed and approved waste-to-energy initiative to provide baseload capacity.

2. Carry out a grid study to assess Anguilla’s current energy baseline and grid capabilities. �e grid study will help us determine ability and levels of integration possible for distributed and large scale renewable energy integration and seek to carry-out the necessary upgrades as needed.

3. Evaluate Anguilla’s future energy needs and determine which renewable energy and energy e£cient technologies the market can support now and in the future.

4. Explore and execute the right �nancing models to ensure the best available technologies can be adapted and resources (natural and human) be utilized.

ANGLEC continues to explore new possibilities in energy generation. Given the ©uid state of the industry and the need for a stable, reliable and cost competitive generation sources, careful consideration is being given to this process.

Operating Highlights

GROSS REVENUE (FROM 2009 T0 2014)

NET INCOME (FROM 2009 TO 2014)

Gross revenues decreased from EC$ 80.83 million in 2013 to EC$ 80.63 million in 2014, or by EC$ 200 thousand. �is decrease in gross revenues is due to a decrease in the fuel surcharge rate for 2014 over 2013 of EC$ 751 thousnd, whilst reporting an increase on energy sales of EC$ 552 thousand.

Net income for 2014 is being reported at EC$ 6.34 million as compared with EC$ 5.07 million, an increase year on year of EC$ 1.27 million or 25% on 2013. �e increase is due to reduced cost of operations which dropped by EC$ 3.1 million from the operating cost in 2013. �e majority of this is due to a reduction in the fuel surcharge year on year.

UNITS SOLD (FROM 2009 TO 2014)

EARNINGS PER SHARE (FROM 2009 TO 2014)

Units sold increased from 77.41 million kWh in 2013 to 78.07 million kWh in 2014, an increase of 668 thousand kWh over the two years under review. We note increases month to month in January, June to August, and in December between 2013/2014. All other months reported similar kWh sales except for March, April and November, 2014 which reported reductions of over 330 thousand kWh each month/year on year.

Earnings per share increased from EC$ 0.44 in 2013 to EC$ 0.55 in 2014, a 25% increase, due to lower repairs and maintenance and lower fuel surcharge costs discussed under Net Income.



PEAK DEMAND (FROM 2009 TO 2014)

FUEL CONSUMED (FROM 2009 TO 2014)

Peak demand as usual occurred during the month of December; it increased from 14.0 MW in 2013 to 14.42 MW, being the height of the tourist season and the Christmas period.

Fuel consumption increased from 4.68 million to 4.83 million imperial gallons in 2014. �is represents a 152 thousand imperial gallons di¤erence over the period 2013/2014 an increase of 3% over that period representing increased generation output.

UNITS GENERATED (FROM 2009 TO 2014)

FUEL EFFICIENCY (FROM 2009 TO 2014)

Units generated increased from 88.6 million kWh to 89.5 million kWh in 2014, a 941 thousand kWh or 1% increase over 2013/2014.

Fuel e£ciency declined from 18.94 kWh per IG to 18.54 kWh per IG in 2014 due ot the overhaul of two major setsduring the year and the related down-time.

Operating Highlights (continued)



2014 Expenditure(PER KWH SOLD)

(10.9 cents)

(1.6 cents)

(63.5 cents)

(3.4 cents)

(4.2 cents)

(1.1 cents)

(0.6 cents)

(7.9 cents)(0.6 cents)

(1.0 cents) (0.8 cents)

Salaries and WagesOther Staff CostsFuelPlant & Network MaintenanceOther Generating CostsSystem Expansion and ImprovementsOther Capital ProjectsDebt RepaymentFinancial Costs (net)Dividends PaidOther Operating Costs (net)

KWH Sold 78,073,761 kWhElectricity Sales Earned $80,631,517 Earnings Cents per kWh 103.3 cents

Out©ow Cash Out©ow

Cents per kWh Salaries and Wages $8,545,362 (10.9 cents)Other Sta¤ Costs $1,260,840 (1.6 cents)Fuel $ 49,544,629 (63.5 cents)Plant & Network Maintenance (net) $ 2,627,192 (3.4 cents)Other Generating Costs $ 3,264,220 (4.2 cents)System Expansion and Improvements $ 853,218 (1.1 cents)Other Capital Projects $ 491,263 (0.6 cents)Debt Repayment $ 6,156,393 (7.9 cents)Financial Costs (net) $ 473,821 (0.6 cents)Dividends Paid $814,531 (1.0 cents)Other Operating Costs (net) $ 600,502 (0.7 cents)Total Cash Out©ow $74,631,971 (95.5 cents)



Financial Statements31 December 2014

(Expressed in Eastern Caribbean Dollars)


PricewaterhouseCoopers St. Maarten, Emmaplein Building, P.O. Box 195, Philipsburg, St. MaartenT: +(1-721) 542 2379, F: +(1-721) 542 4788, www.pwc.com/dutch-caribbean



Independent Auditor’s Report

To the Shareholders and Board of Directors ofAnguilla Electricity Company Limited�e ValleyAnguilla

Reference number: PP/CR/67.104.0/42052

Report on the �nancial statementsWe have audited the accompanying �nancial statements 2014 of Anguilla Electricity CompanyLimited, Anguilla, which comprise the statement of �nancial position as at 31 December 2014, thestatement of comprehensive income, the statement of changes in shareholders’ equity and thestatement of cash ©ows for the year then ended, and a summary of signi�cant accounting policies andother explanatory information.

Management’s responsibilityManagement is responsible for the preparation and fair presentation of these �nancial statements inaccordance with International Financial Reporting Standards, and for such internal control asmanagement determines is necessary to enable the preparation of �nancial statements that are freefrom material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on these �nancial statements based on our audit. Weconducted our audit in accordance with International Standards on Auditing. �is requires that wecomply with ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether the �nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the �nancial statements. �e procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the �nancial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the entity’spreparation and fair presentation of the �nancial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on thee¤ectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, aswell as evaluating the overall presentation of the �nancial statements.

We believe that the audit evidence we have obtained is su£cient and appropriate to provide a basis forour audit opinion.



Opinion with respect to the �nancial statementsIn our opinion, the �nancial statements give a true and fair view of the �nancial position ofAnguilla Electricity Company Limited as at 31 December 2014, and of its �nancial performance andcash ©ows for the year then ended in accordance with International Financial Reporting Standards.

St. Maarten, 18 September 2015PricewaterhouseCoopers St. Maarten

Cees Rokx

ANGUILLA ELECTRICITY COMPANY LIMITEDStatement of Financial PositionAs at 31 December 2014

Expressed in Eastern Caribbean Dollars (EC$)

Notes 2014 2013ASSETS Non-current AssetsProperty, plant and equipment – net 6 65,769,531 70,221,261Investment in certi�cates of deposit maturing beyond one year 7 2,033,953 2,827,635Net pension asset 23 509,656 190,392Other assets 11,492 11,492

68,324,632 73,250,780Current AssetsInvestment in certi�cates of deposit maturing within one year 7 5,898,499 6,211,312Inventories – net 8 6,013,238 7,018,492Trade and other receivables – net 9 17,469,557 19,568,541Prepayments and other current assets 10 452,305 220,113Cash and cash equivalents 11 13,600,545 8,556,684

43,434,144 41,575,142111,758,776 114,825,922

STOCKHOLDERS’ EQUITY AND LIABILITIESShareholders’ EquityShare capital 12 14,536,147 14,536,147Retained earnings 73,773,253 67,940,569

88,309,400 82,476,716Long-term LiabilitiesBorrowings – net of current portion 13 5,455,195 16,627,372Contributions in aid of construction 14 3,639,338 3,736,496

9,094,533 20,363,868Current LiabilitiesBorrowings - current portion 13 9,123,043 4,107,259Customer deposits 1,370,334 1,426,356Trade and other payables 15 3,861,466 6,451,723

14,354,843 11,985,338111,758,776 114,825,922

These financial statements were approved on behalf of the Board of Directors on 18 September 2015 by the following:

_______________________________ _________________________________ Mr. Artnell Richardson, Chairman Mrs. Kathleen Rogers, Vice Chairman

�e notes on pages 26 to 54 are integral part of the �nancial statements.

_________________________________



ANGUILLA ELECTRICITY COMPANY LIMITEDStatement of Comprehensive Income

For the Year Ended 31 December 2014


Notes 2014 2013REVENUES

Energy sales 16 46,550,564 45,999,015Fuel surcharge recovered 16 34,080,953 34,831,569

80,631,517 80,830,584

COST OF OPERATIONSGeneration expensesFuel 17,569,647 17,018,219Fuel surcharge 16 31,974,982 35,129,407Total fuel cost 49,544,629 52,147,626Other expenses 17 9,239,917 10,867,088Transmission and distribution expenses 18 8,368,931 7,250,489

67,153,477 70,265,203

GROSS OPERATING INCOME 13,478,040 10,565,381Other income 19 4,063,299 5,736,702GROSS INCOME 17,541,339 16,302,083OPERATING EXPENSES Administrative expenses 20 9,430,147 9,244,300Customer services 21 912,035 960,976

INCOME FROM OPERATIONS 7,199,157 6,096,807Finance cost (853,889) (1,022,948)

NET INCOME 6,345,268 5,073,859Other comprehensive incomeActuarial gain 301,947 986,862

TOTAL COMPREHENSIVE INCOME 6,647,215 6,060,721

Additional disclosures:Earnings per share 0.55 0.44Dividends per share 0.07 0.07




ANGUILLA ELECTRICITY COMPANY LIMITEDStatement of Changes in Shareholders’ EquityFor the Year Ended 31 December 2014


Note Share CapitalRetained Earnings Total

Balance as at 31 December 2012 14,536,147 61,879,848 76,415,995Net income for the year - 5,073,859 5,073,859Other comprehensive income – actuarial gain - 986,862 986,862Dividends paid - - -Balance as at 31 December 2013 14,536,147 67,940,569 82,476,716Net income for the year - 6,345,268 6,345,268Other comprehensive income – actuarial gain - 301,947 301,947Dividends paid 26 - (814,531) (814,531)Balance as at 31 December 2014 14,536,147 73,773,253 88,309,400




ANGUILLA ELECTRICITY COMPANY LIMITEDStatement of Cash Flows

For the Year Ended 31 December 2014


Notes 2014 2013

CASH FLOWS FROM OPERATING ACTIVITIESNet income 6,345,268 5,073,859Adjustments for:Depreciation 6 5,796,211 5,739,138Interest expense 896,355 1,022,948Impairment losses 20 1,627,357 1,811,176Interest income 19 (422,535) (380,719)Gain on sale of property, plant and equipment 19 (38,810) (4,200)Provision for (reversal of ) slow moving/obsolete inventories 8

(97,158) 12,663Operating income before working capital changes 14,106,688 13,274,865(Increase)/decrease in assets:Inventories 8 1,102,412 (1,386,680)Trade and other receivables 9 471,627 (1,793,853)Prepayments and other current assets 10 (232,192) (4,779)Net pension asset (17,317) 62,434Increase/(decrease) in liabilities:Customer deposits (56,021) 26,286Trade and other payables 15 (2,590,257) 797,600Net cash provided by operating activities 12,784,940 10,970,273CASH FLOWS FROM INVESTING ACTIVITIESAcquisitions of property, plant and equipment 6 (1,344,481) (1,477,926)Proceeds from disposal of property, plant, equipment 38,810 19,460Decrease/ (increase) in investment in certi�cates of deposit 8 1,106,495 (961,453)Interest received 422,534 323,274Net cash provided by / (used in) investing activities 223,358 (2,096,645)CASH FLOWS FROM FINANCING ACTIVITIESRepayment of borrowings 13 (6,156,393) (4,022,276)Interest paid (896,355) (1,035,744)Dividends paid 26 (814,531) -Proceeds from borrowings 13 - 1,281,653Revenues from contributions in aid of construction 14 (541,529) (536,393)Increase in contributions in aid of construction 14 444,371 235,397Net cash used in �nancing activities (7,964,437) (4,077,363)NET INCREASE IN CASH AND CASH EQUIVALENTS 5,043,861 4,796,265CASH AND CASH EQUIVALENTS AT BEGINNING OF

YEAR11 8,556,684 3,760,419

CASH AND CASH EQUIVALENTS AT END OF YEAR 11 13,600,545 8,556,684




ANGUILLA ELECTRICITY COMPANY LIMITEDNotes to the Financial Statements31 December 2014


1. Reporting entity

�e Anguilla Electricity Company Limited (the Company) was incorporated in Anguilla on 11 January 1991 under the Companies Act, I.R.S.A c1 and is governed by the Electricity Act, 1991, as amended, and operates in �e Valley, Anguilla. �e Company has an exclusive public supplier’s license to generate, transmit and distribute electricity on the island of Anguilla for a period of �fty years from 1 April 1991.

�e Company’s registered o£ce address is at Hannah-Waiver House, �e Valley, Anguilla, B.W.I.

2. Basis of preparation

(a) Statement of compliance�e �nancial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS).

�e �nancial statements were authorized for issue by the Board of Directors on 18 September, 2015

(b) Basis of measurement�e �nancial statements of the Company have been prepared on the historical cost basis.

(c) Functional and presentation currency�ese �nancial statements are presented in Eastern Caribbean Dollars (EC Dollars), which is the Company’s functional and presentation currency. Except as otherwise indicated, �nancial information presented in EC Dollars has been rounded to the nearest dollar.

(d) Use of estimates and judgments�e preparation of the �nancial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that a¤ect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may di¤er from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revision a¤ects only that period or in the period of the revision and future periods if the revision a¤ects both current and future periods.

In particular, information about signi�cant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most signi�cant e¤ect on the amount recognized in the �nancial statements is included in the following notes: Note 3 (b) Valuation of �nancial instruments Note 3 (d) Impairment of assets Note 3 (g) Estimation of unbilled sales and fuel charges Note 3 (h) Measurement of de�ned bene�t obligation Note 5 Determination of fair values



ANGUILLA ELECTRICITY COMPANY LIMITEDNotes to the Financial Statements

31 December 2014

Expressed in Eastern Caribbean Dollars (EC$

3. Summary of signi�cant accounting policies

�e accounting policies set out below have been applied consistently by the Company to all periods presented in these �nancial statements, unless otherwise stated.

(a) Property, plant and equipment

i. Recognition and measurementItems of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any.

Cost includes expenditures that are directly attributable to the acquisition of the asset. �e cost of self-constructed assets includes the cost of materials and direct labor, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.

When parts of an item of property, plant and equipment have di¤erent useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognized net in pro�t or loss.

ii. Subsequent costs�e cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic bene�ts embodied within the part will ©ow to the Company and its cost can be measured reliably. �e costs of the day-to-day servicing of property, plant and equipment are recognized in pro�t or loss as incurred.

iii. DepreciationDepreciation is recognized in pro�t or loss on a straight line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated.

�e estimated useful lives for the current and comparative periods are as follows:

Buildings 40 yearsPlant and machinery 10-20 yearsFurniture, �ttings and equipment 5 yearsMotor vehicles 35 years

Depreciation methods, useful lives and residual values are reassessed at each reporting date.





3. Summary of signi�cant accounting policies (continued)

(b) Financial instruments

i. Non-derivative �nancial instrumentsNon-derivative �nancial instruments comprise investment in certi�cates of deposit, trade and other receivables, cash and cash equivalents, borrowings, customer deposits and trade and other payables.

Non-derivative �nancial instruments are recognized initially at fair value plus, for instruments not at fair value through pro�t or loss, any directly attributable transaction costs. Subsequent to initial recognition, non-derivative �nancial instruments are measured as described below:

Investment in certi�cates of depositHeld-to-maturity investments are non-derivative assets with �xed or determinable payments and �xed maturity that the Company has the positive intent and ability to hold-to-maturity, and which are not designated at fair value through pro�t or loss or available-for-sale.

Held-to-maturity investments are carried at amortized cost using the e¤ective interest method. Any sale or reclassi�cation of a signi�cant amount of held-to-maturity investments not close to their maturity would result in the reclassi�cation of all held-to-maturity investments as available-for-sale, and prevent the Company from classifying securities as held-to-maturity for the current and the following two �nancial years.

Trade and other receivablesTrade and other receivables are initially measured at fair value plus incremental direct transaction costs, and subsequently measured at their amortized cost less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivable. �e amount of provision is the di¤erence between the asset’s carrying amount and the present value of estimated future cash ©ows, discounted at the e¤ective interest rate. �e amount of provision is recognized in pro�t or loss. Trade receivables, being short-term, are not discounted.

Cash and cash equivalentsCash and cash equivalents comprise cash on hand, cash in banks and other highly liquid �nancial assets with maturities of less than three months that are purposed to meet short-term cash commitments and are not subject to signi�cant risk of change in value.

BorrowingsBorrowings are recognized initially at fair value, net of any transaction costs incurred. Subsequent to initial recognition, borrowings are stated at amortized cost.

Trade and other payablesTrade and other payables are stated at their cost, which is the fair value of the consideration to be paid in the future for goods and services received whether or not billed to the Company.




31 December 2014



(b) Financial instruments (continued)

OtherOther non-derivative �nancial instruments are measured at cost less any impairment losses.

Regular purchases and sales of �nancial assets are recognized on the trade-date, the date on which the Company commits to purchase or sell the asset.

(c) InventoriesInventories are stated at the lower of cost and net realizable value. Cost is determined on a weighted average basis. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and selling expenses. Allowance is made for obsolete and slow moving items.

(d) Impairment

i. Financial assetsA �nancial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A �nancial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative e¤ect on the estimated future cash ©ows of that asset.

An impairment loss in respect of a �nancial asset measured at amortized cost is calculated as the di¤erence between its carrying amount, and the present value of the estimated future cash ©ows discounted at the original e¤ective interest rate. Individually signi�cant �nancial assets are tested for impairment on an individual basis. �e remaining �nancial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognized in pro�t or loss. An impairment is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For �nancial assets measured at amortized cost, the reversal is recognized in pro�t or loss.

ii. Non-�nancial assets�e carrying value of the Company’s non-�nancial assets, other than inventories, are reviewed at each reporting 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. Impairment losses are recognized in pro�t or loss.

�e recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash ©ows are discounted to their present value using a pre-tax discount rate that re©ects current market assessments of the time value of money and the risks speci�c to the asset. �e fair value less costs to sell is the amount obtainable from the sale of the asset in an arm’s length transaction.






For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash in©ows from continuing use that are largely independent of the cash in©ows of other assets or groups of assets (“the cash-generating unit”).

An impairment loss is recognized whenever the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in pro�t or loss. Impairment loss recognized in prior periods is assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(e) Contributions in aid of constructionContributions in aid of construction are amounts received from customers towards the cost of providing services. �ese amounts are amortized over the estimated service lives of the related assets over the same period. Contributions received in respect of un�nished construction are amortized once the assets are placed in service.

(f ) Share capital

Ordinary sharesOrdinary shares are classi�ed as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognized as a deduction from equity.

Treasury sharesWhen share capital recognized as equity is repurchased by the Company, the amount of the consideration paid, including directly attributable cost, is recognized as a deduction from equity. Repurchased shares are classi�ed as treasury shares and presented as a deduction from total shareholders’ equity. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or de�cit on the transaction is transferred to/from retained earnings.

(g) Revenuei. Sale of energy

Revenue from the sale of electricity is recognized in pro�t or loss 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.

In addition to the normal tari¤ rates charged for energy sales, a fuel surcharge is calculated which is based on the di¤erence between the cost of fuel used to generate energy sales in the current month and the average fuel price for the preceding 3 months. �e surcharge is recovered by applying the month’s surcharge rate to units billed in the following month for material changes in the surcharge rate.




31 December 2014



ii. Interest incomeInterest income is recognized on a time-proportion basis using the e¤ective interest method.

(h) Employee bene�ts

i. De�ned contribution planA de�ned contribution plan is a post-employment bene�t plan under which an entity pays �xed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to de�ned contribution pension plans are recognized as an employee bene�t expense in pro�t or loss when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available. �is plan is for all non-management employees and all management employees hired after 2005.

ii. De�ned bene�t planA de�ned bene�t plan is a post-employment bene�t plan other than a de�ned contribution plan. �e Company operates a de�ned bene�t pension for senior management hired before 2005. �e plan is a multi-employer scheme with �ve contributing employers. �e other participating companies are Montserrat Electricity Services Ltd., St. Lucia Mortgage Finance Company Ltd., St. Lucia Electricity Services Limited and St. Vincent Electricity Services Ltd.

Multi-employer schemes pool the assets contributed by the various enterprises that are not under common control, and use the assets to provide bene�ts to employees of more than one enterprise on the basis that contributed and bene�t levels are determined without regard to the identity of the enterprise that employs the employees concerned.

�e Company’s net obligation in respect of its de�ned bene�t plan is calculated by estimating the amount of future bene�t that employees have earned in return for their service in the current and prior periods; that bene�t is discounted to determine its present value, and any unrecognized past service costs and the fair value of any plan assets are deducted. �e calculation is performed by a quali�ed actuary using the projected unit credit method.

When the bene�ts of a plan are improved, the portion of the increased bene�t relating to past service by employees is recognized in pro�t or loss on a straightline basis over the average period until the bene�ts become vested. To the extent that the bene�ts vest immediately, the expense is recognized immediately in pro�t or loss.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.

When the calculation results in a bene�t to the Company, the recognized asset is limited to the net total of past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan.






(i) Finance costAll interest and other costs incurred in connection with borrowings are expensed as incurred as part of �nance costs. Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of the cost of the asset.

(j) Late chargesA 2% late fee is charged on all customer trade receivable balances not paid by the 27th day after billing. �e Company recognizes income from late charges when billed and is reported as other income (see Note 19) and trade receivables.

(k) Earnings per shareEarnings per share have been calculated by dividing the net pro�t for the year by the weighted average number of issued ordinary shares.

(l) DividendsDividends are recognized as a liability in the period in which they are sanctioned by the shareholders. Dividends per share have been calculated by dividing the dividend declared by the weighted average number of issued ordinary shares.

(m) Foreign currency transactionsTransactions in foreign currencies are translated to EC Dollars at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated to EC Dollars at the exchange rate prevailing at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign exchange di¤erences arising on conversion and translation are recognized in pro�t or loss. Nonmonetary assets and liabilities denominated in foreign currencies that are stated at historical cost are translated to EC Dollars at the exchange rate at the date of the acquisition.

(n) ProvisionsA provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an out©ow of economic bene�ts will be required to settle the obligation. Provisions are determined by discounting the expected future cash ©ows at a pre-tax rate that re©ects current market assessments of the time value of money and the risks speci�c to the liability. When it is not probable that an out©ow of economic bene�ts will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability unless the probability of out©ow of economic bene�ts is remote.

(o) Events after the reporting datePost year-end events that provide additional information about the Company’s position at the end of the reporting date (adjusting events) are re©ected in the �nancial statements when material. Post year-end events that are not adjusting events are disclosed in the notes to the �nancial statements when material.




31 December 2014



(p) New standards, interpretations and amendments adopted in 2014�e accounting policies applied in these �nancial statements are consistent with those of the previous �nancial year except for the adoption of the following new standards and interpretations e¤ective as of 1 January 2014.

Amendment to IAS 32, ‘Financial instruments: Presentation’ on o¤setting �nancial assets and �nancial liabilities. �is amendment clari�es that the right of set-o¤ must not be contingent on a future event. It must also be legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. �e amendment also considers settlement mechanisms. �e amendment did not have a signi�cant e¤ect on the Company’s �nancial statements.

IFRIC 21, ‘Levies’, sets out the accounting for an obligation to pay a levy if that liability is within the scope of IAS 37 ‘Provisions’. �e interpretation addresses what the obligating event is that gives rise to pay a levy and when a liability should be recognized. �is interpretation did not have a signi�cant impact on the Company’s �nancial statements since the Company’s accounting for the levies is consistent with the guidance provided by IFRIC 21.

Other standards, amendments and interpretations which are e¤ective for the �nancial year beginning on 1 January 2014 are not material to the Company.

(q) New standards, amendments and interpretations not yet adopted A number of new standards and amendments to standards and interpretations are e¤ective for annual

periods beginning after 1 January 2014, and have not been applied in preparing these �nancial statements. None of these is expected to have a signi�cant e¤ect on the �nancial statements of the Company, except the following set out below:

IFRS 9, ‘Financial instruments’, addresses the classi�cation, measurement and recognition of �nancial assets and �nancial liabilities. �e complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classi�cation and measurement of �nancial instruments. IFRS 9 retains but simpli�es the mixed measurement model and establishes three primary measurement categories for �nancial assets: amortized cost, fair value through ‘Other comprehensive income (OCI)’ and fair value through pro�t and loss. �e basis of classi�cation depends on the entity’s business model and the contractual cash ©ow characteristics of the �nancial asset. Investments in equity instruments are required to be measured at fair value through pro�t or loss with the irrevocable option at inception to present changes in fair value in OCI not recycling. �ere is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. For �nancial liabilities there were no changes to classi�cation and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through pro�t or loss. IFRS 9 relaxes the requirements for hedge e¤ectiveness by replacing the bright line hedge e¤ectiveness tests.






It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is di¤erent to that currently prepared under IAS 39. �e standard is e¤ective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted. �e Company is yet to assess IFRS 9’s full impact.

�ere are no other IFRSs or IFRIC interpretations that are not yet e¤ective that would be expected to have a material impact on the Company.

4. Financial risk management

Overview�e Company has exposure to the following risks from its use of �nancial instruments: credit risk liquidity risk market risk

�is note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s management of capital. Further quantitative disclosures are included throughout these �nancial statements.

�e Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework.

�e Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to re©ect changes in market conditions and the Company’s activities. �e Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

�e Board of Directors oversees how management monitors compliance with the Company’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

Credit riskCredit risk is the risk of �nancial loss to the Company if a customer or counterparty to a �nancial instrument fails to meet its contractual obligations, and arises principally from the Company’s investment in certi�cates of deposit and trade and other receivables.

Investment in certi�cates of deposit�e Company limits its exposure to credit risk by only investing in �xed deposits with local banks. Management does not expect the related counterparty to fail to meet its obligations.




31 December 2014


4. Financial risk management (continued)

Trade and other receivables�e Company’s exposure to credit risk is in©uenced mainly by the individual characteristics of each customer. �e demographics of the Company’s customer base, including the default risk of the industry and country in which its customers operate, has less in©uence on credit risk. �e Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. �e main components of this allowance are collective losses based on number of days in receivable.

Liquidity riskLiquidity risk is the risk that the Company will not be able to meet its �nancial obligations as they fall due. �e Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have su£cient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

Typically, the Company ensures that it has su£cient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of �nancial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. In addition, the Company maintains a line of credit with a limit of EC$3.2 million with the National Bank of Anguilla Limited with an interest rate of 9.20% per annum.

Market riskCurrency risk�e Company’s exposure to currency risk is minimal as the exchange rate of the Eastern Caribbean dollar (EC$) to the United States dollar (US$) has been formally �xed at EC$2.70 = US$1.00.

Interest rate riskDi¤erences in contractual repricing or maturity dates and changes in interest rates may expose the Company to interest rate risk. �e Company’s exposure and the interest rates on its �nancial liabilities are disclosed in Note 26 to the �nancial statements.

Capital management�e Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market con�dence and to sustain future development of the business. �e Board of Directors monitors both the demographic spread of shareholders, as well as the return on capital.

�e impact of the level of capital on shareholders’ return is also recognized and the Company recognizes the need to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security a¤orded by a sound capital position.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or sell assets to reduce debt.





4. Financial risk management (continued)

�e Company monitors capital on the basis of the following ratios:

2014 2013Total debt 23,449,376 32,349,206Stockholders’ equity 88,309,400 82,476,716Debt-to-equity ratio (total debt / total equity) 27% 39%

Total debt 23,449,376 32,349,206Total assets 111,758,776 114,825,922Debt ratio (total debt / total assets) 21% 28%

Stockholders’ equity 88,309,400 82,476,716Total assets 111,758,776 114,825,922Equity ratio (total shareholders’ equity / total assets) 79% 72%

�e improvements in all performance ratios are due to repayment of debts, lower operating expenses especially fuel and generation cost.

5. Determination of fair valuesA number of the Company’s accounting policies and disclosures require the determination of fair value for both �nancial and non�nancial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods:

(a) Held-to-maturity investment in certi�cates of deposit�e fair value of held-to-maturity investment in certi�cates of deposit is estimated as the present value of future cash ©ows, discounted at the market rate of interest at the reporting date.

(b) Trade and other receivables �e fair value of trade and other receivables is estimated as the present value of future cash ©ows, discounted at the market rate of interest at the reporting date.

(c) Cash and cash equivalents �e fair value of cash and cash equivalents approximates carrying value due to its short term nature.

(d) Non-derivative �nancial liabilitiesFair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash ©ows, discounted at the market rate of interest at the reporting date.

When applicable, further information about the assumptions made in determining fair values is disclosed in the notes speci�c to that asset or liability.




31 December 2014


6. Property, plant and equipment

Land Buildings Plant and machinery

Furniture, �ttings and equipment

Motor vehicles

Capital work in progress Total

Cost 31 December 2012 914,738 14,083,125 105,310,191 3,327,166 3,802,631 4,802,498 132,240,349 Additions/(transfers) - 476,009 4,488,810 121,925 266,368 (3,875,186) 1,477,926 Disposals - - - (121,510) - (121,510) 31 December 2013 914,738 14,559,134 109,799,001 3,449,091 3,947,489 927,312 133,596,765 Additions/(transfers) - 59,133 833,258 351,593 80,537 19,960 1,344,481 Disposals - - - - (279,933) (279,933)

31 December 2014 914,738 14,618,267 110,632,259 3,800,684 3,748,093 947,272 134,661,313Accumulated depreciation 31 December 2012 - 4,003,889 47,947,507 2,515,760 3,275,460 - 57,742,616 Depreciation - 368,979 4,961,180 209,923 199,056 - 5,739,138 Disposals - - - - (106,250) - (106,250) 31 December 2013 - 4,372,868 52,908,687 2,725,683 3,368,266 - 63,375,504 Depreciation - 364,055 5,023,119 206,959 202,078 - 5,796,211 Disposals - - - - (279,933) - (279,933)

31 December 2014 - 4,736,923 57,931,806 2,932,642 3,290,411 - 68,891,782 Net book values

31 December 2014 914,738 9,881,344 52,700,453 868,042 457,682

947,272 65,769,531

31 December 2013

914,738 10,186,266 56,890,314 723,408

579,223

927,312 70,221,261

�e Company is exposed to insurance risk on its transmission and distribution assets. �ese assets were not covered by external insurance. To manage this risk, the Company has established a “Self-insurance fund” (see Notes 7 and 29) and will continue to set aside funds on an annual basis to increase the funds and mitigate the risk of damage from catastrophic events. At present, the fund balance may not be adequate to cover for possible catastrophic occurrence. To further mitigate the risk, the Company continues to upgrade the transmission and distribution system to withstand higher categories of wind velocities.

7. Investment in certi�cates of deposit

�e Company’s investment in securities comprises of certi�cate of deposits with the Caribbean Commercial Bank Anguilla, Ltd and National Bank of Anguilla, Ltd maturing within one year and beyond one year. Interest earned on the investments range from 1.625 % to 5.0% (2013: 3% to 5%) per annum. �e EC$ deposits held with Caribbean Commercial Bank Anguilla Limited are restricted for the self-insurance of the Company’s transmission and distribution system.





7. Investment in certi�cates of deposit (continued)

2014 2013Caribbean Commercial Bank

Anguilla LtdNote Within one

yearBeyond one

yearWithin one

yearBeyond one

yearNational Bank of Anguilla Limited

29 2,030,516 2,033,953 3,756,235 1,490,895

3,867,983 - 2,455,077 1,336,7405,898,499 2,033,953 6,211,312 2,827,635

8. Inventories

2014 2013Generation parts and fuel 3,140,147 3,977,975Transmission and distributions parts 2,987,473 3,242,582Administration supplies 181,013 190,488

6,308,633 7,411,045Less: Allowance for slow-moving and obsolete inventories (295,395) (392,553)

6,013,238 7,018,492

�e movements of provision for slow-moving and obsolete inventories are as follows:

2014 2013Balance at beginning of year 392,553 379,890Additional/(reversal of ) provision during the year (97,158) 12,663Balance at end of year 295,395 392,553

9. Trade and other receivables

Notes 2014 2013Trade receivables 26 13,150,741 24,623,341Customer receivable under deferred payment plan 8,415,985 161,184Accrued interest receivable 180,457 274,668Insurance claim receivable - 966,187Others 149,494 152,424

21,896,677 26,177,805Less: Allowance for doubtful accounts 26 (4,427,120) (6,609,264)

17,469,557 19,568,541




31 December 2014


9. Trade and other receivables (continued)

�e Company has a signi�cant trade receivables balance that is required to be subjected to speci�c and/or collective impairment testing whenever there is objective evidence of impairment (see Note 26). �e Company also o¤ers deferred payment plans to customers with �nancial di£culties in settling their outstanding obligations. �e plan is o¤ered to customers interest free or with a low penalty rate and normally last for a maximum of twelve months.

As at year-end, the Government of Anguilla owes the Company an amount of EC$ 9,054,731 most of which was over 120 days in arrears. During the year, the Company provided credit loss amounting to EC$1,584,309, less other adjustments of EC$ 3,766,453, bringing the allowance for doubtful accounts from EC$6,609,264 in 2013 to EC$4,427,120 as at year-end. On 24 June 2014, the Executive Council of Anguilla approved the settlement agreement with the Company relating to the outstanding balance.

10. Prepayments and other current assets

2014 2013Advance deposits 276,429 52,293Prepaid insurance 144,805 165,859Other 31,071 1,961

452,305 220,113

11. Cash and cash equivalents

Note 2014 2013Cash in banks 13,598,695 8,554,834Cash on hand 1,850 1,850

13,600,545 8,556,684

Total cash and cash equivalent in the statement of cash ©ows 26 13,600,545 8,556,684

12. Share capital

Note 2014 2013Authorized: 30,000,000 30,000,000Issued and fully paid:

17,036,147 ordinary shares at XCD $1.00 per share 17,036,147 17,036,147Less: Treasury shares

5,400,000 ordinary shares at no par value (5,400,000) (5,400,000)11,636,147 11,636,147

Add: Discount on treasury stock 2,900,000 2,900,00026 14,536,147 14,536,147





12. Share capital (continued) 2014 2013¯e current percentage of ownership is:Government of Anguilla 40% 40%Anguilla Social Security Board 16% 16%National Bank of Anguilla Limited 12% 12%Caribbean Commercial Bank (Anguilla) Limited 11% 11%General Public 21% 21%

100% 100%

On 1 September 2003, the Government of Anguilla sold 6,600,000 ordinary shares of the Company in an Initial Public O¤ering at EC$2.50 per share.

�e members of the Anguilla Social Security Board are appointed by the Government of Anguilla.

All classes of shares have been converted to one class of ordinary shares e¤ective 3 June 2003. All shares are voting shares and carry equal rights. To date, the shares of the Company are not listed on any stock exchange.

13. Borrowings

Notes 2014 2013Caribbean Development Bank 13.1 6,820,152 8,184,196Scotia bank Anguilla Limited - Facility B 13.2 6,923,277 9,124,485Scotia bank Anguilla Limited - Facility A 13.3 834,809 2,659,699Caribbean Development Bank 13.4 - 766,251

14,578,238 20,734,631Less: Current portion (9,123,043) (4,107,259)

5,455,195 16,627,372

13.1 �is loan (03/OR-ANL) was made to the Company by Caribbean Development Bank in 2005 to �nance the purchase of two generators. �e total amount disbursed was US$6,089,000 (EC$16,368,450). �is loan is payable in forty eight (48) equal and consecutive quarterly installments of US$126,855 (EC$341,012) with a variable interest rate currently at 3.95% (2013: 3.95%) per annum commencing in January 2008. �is loan will mature in October 2019. �is loan is secured by a pari passu legal charge along with Scotia bank Anguilla Limited over the Company’s property, plant and equipment as well as the freehold property of the Company. �is loan is also guaranteed by the Government of Anguilla. As at 31 December 2014, the current and non-current portion of this loan is EC$1,364,957 and EC$5,455,195 (2013: EC$1,364,044 and EC$6,820,152), respectively.




31 December 2014


13. Borrowings (continued)

13.2 �is loan was made to the Company by Scotia bank Anguilla Limited on 22 July 2010 to re�nance the borrowings from National Bank of Anguilla, Ltd. and Caribbean Commercial Bank (Anguilla) Limited and to �nance the power station �re �ghting project. �e loan was approved for an amount up to US$3,394,273. �e total amount disbursed was US$3,394,273 (EC$9,124,485). �is loan is repayable in lump sum amount due in August 2015. Interest is payable each month at a rate of 1 month LIBOR plus 3.0% commencing in August 2011. �is loan is secured by a legal charge over all assets of the Company including its property, plant and equipment. As at 31 December 2014, the total outstanding balance of this loan is considered as current (during 2013 the total outstanding balance of this borrowing was considered non-current).

13.3 �is loan was made to the Company by Scotia bank Anguilla Limited on 22 July 2010 to re�nance the borrowings from National Bank of Anguilla, Ltd. and Caribbean Commercial Bank (Anguilla) Limited and to �nance the power station �re �ghting project. �e loan was approved for an amount up to US$3,394,273 (EC$9,124,485). �e total amount disbursed was US$2,108,809 (EC$5,668,900) as at 22 July 2010. On 15 April 2011 and 31 January 2013, the Company made draw-downs amounting to US$330,000 (EC$887,106) and US$393,230 (EC$1,057,081), respectively. �is loan is repayable in equal monthly installment of US$56,571 (EC$152,074), plus interest at a rate of 1 month LIBOR plus 3.0% per annum commencing in August 2011. �is loan will mature in August 2015. �is loan is secured by a legal charge over all assets of the Company including its property, plant and equipment. As at 31 December 2014, the current and non-current portion of this loan was EC$834,809 and nil (2013: EC$1,976,164 and EC$682,735), respectively.

13.4 �is loan (02/OR-ANL) was made to the Company by Caribbean Development Bank in 2000 to �nance the purchase of two generators. �e total amount disbursed was US$3,720,000 (EC$10,000,104). �is loan was repayable in forty eight (48) equal and consecutive quarterly installments of US$77,500 (EC$208,336) with an interest rate of 3.95% per annum commencing in October 2002. �e loan matured in July 2014 and was secured by a pari passu legal charge along with Scotiabank Anguilla Limited over the Company’s property, plant and equipment as well as the freehold property of the Company. �e loan was also guaranteed by the Government of Anguilla. As at 31 December 2014, the current and non-current portion of this loan was nil (2013: EC$766,251 and nil), respectively.

Total interest expense incurred on the aforementioned borrowings included in “Finance cost” in pro�t or loss follows:

2014 2013 Scotia bank Anguilla Limited - Facility B 531,946 531,507 Caribbean Development Bank (03/OR-ANL) 295,358 338,061 Scotia bank Anguilla Limited - Facility A 58,354 111,340 Caribbean Development Bank (02/OR-ANL) 10,697 41,704

896,355 1,022,612





14. Contributions in aid of construction

Note 2014 2013 Balance at beginning of year 3,736,496 4,037,492 Contributions during the year 444,371 235,397 Amount charged to pro�t or loss 19 (541,529) (536,393) Balance at end of the year 3,639,338 3,736,496

15. Trade and other payables

Note 2014 2013Trade payables 2,432,840 4,282,492Accrued expenses 721,174 552,166Environmental levy payable 27 400,943 1,218,458Other payables 225,606 296,801Accrued interest payable 80,903 101,806

3,861,466 6,451,723

16. Energy sales

2014 2013Amounts billed during the year 46,705,367 46,053,484Less: Unbilled revenue at beginning of the year (2,713,637) (2,768,106)

43,991,730 43,285,378Add: Unbilled revenue at end of the year 2,558,834 2,713,637

46,550,564 45,999,015

Based on the Electricity Regulations, tari¤s shall be subject to a surcharge of EC$0.01 per unit for every EC$0.10 per gallon increase in the price of fuel oil over EC$3.64 per gallon. �e surcharge was �xed at EC$0.45 per kwh since 15 May 2011 when it increased from EC$0.34 kwh. On 1 November 2014 the surcharge was reduced again to EC$ 0.34 and was further reduced to EC$0.23 on 15 January 2015.

�e Company incurred total fuel surcharge expenses of EC$31,974,982 (2013: EC$ 35,129,407) of which it recovered EC$34,080,953 (2013:EC$ 34,831,569).




31 December 2014


17. Generation other expenses

Notes 2014 2013Depreciation 6 3,185,402 3,121,788Sta¤ costs 22 2,790,295 2,574,010Repairs and maintenance 1,917,758 3,473,368Insurance 860,881 941,086Supplies and other expenses 485,581 756,836

9,239,917 10,867,088

18. Transmission and distribution

Notes 2014 2013Sta¤ costs 22 3,701,944 3,449,143Depreciation 6 2,039,795 2,038,448Repairs and maintenance 1,136,620 1,111,927Hurricane expenses 857,677 -Supplies and other expenses 395,498 415,141Insurance 237,397 235,830

8,368,931 7,250,489

19. Other income

Notes 2014 2013Late charges 2,451,789 3,224,585Revenue from contributions in aid of construction 14 541,529 536,393Interest income 422,535 380,719Connection upgrades and other services 298,074 273,519Reconnection fees 240,200 278,050Relocation and rental of poles 70,362 77,604Gain on sale of motor vehicles 38,810 -Proceeds from insurance claim - 965,832

4,063,299 5,736,702





20. Administrative expenses

Notes 2014 2013Sta¤ costs 22 2,866,640 3,093,864O£ce expenses 2,604,784 1,872,917Impairment losses 26 1,627,357 1,817,276Consultancy and professional fees 1,015,875 1,245,462Depreciation 6 571,014 578,902General 516,017 399,865Insurance 228,460 236,014

9,430,147 9,244,300

21. Consumer services

Notes 2014 2013Sta¤ costs 22 447,323 459,478Temporary and contract services 192,771 180,722Vehicle repairs and maintenance 172,170 182,952Other 99,771 137,824

912,035 960,976

22. Sta° costs

Notes 2014 2013Salaries, wages and other bene�ts 8,545,362 8,275,670Social security 318,223 320,931Training 302,504 205,492Pension expenses de�ned contribution plan 23 287,175 292,107Interim stabilization levy 236,664 226,496Pension expenses de�ned bene�t plan 23 116,274 255,799

9,806,202 9,576,495




31 December 2014


23. Pension expenses

�e Company has two pension plans for its employees:

a. De�ned contribution Plan�e Company uses a de�ned contribution plan for its non-management employees and all management employees hired after 2005. �is plan is handled and administered by Zurich International. Total contributions made by the Company amounted to EC$269,273 and EC$292,107 in 2014 and 2013, respectively (see Note 22).

b. De�ned bene�t planFor senior management hired before 2005, the Company has a de�ned bene�t plan and contributes to the multiemployer plan named CDC Caribbean Pension Scheme which is administered by Sagicor Life Inc. �is plan is closed to new participants.

�e amounts recognized in the statement of �nancial position are as follows:

Notes 2014 2013Present value of obligations 3,242,509 3,214,735Fair value of plan assets (3,752,165) (3,405,127)Net pension asset (509,656) (190,392)

�e movements in the present value of obligation for the de�ned bene�t plan are shown below:

2014 2013Present value of obligation at beginning of year 3,214,735 3,706,160Interest cost 232,594 272,062Current service cost 125,490 197,384Bene�ts Paid (34,893) (33,877)Actuarial gain on obligation (295,417) (926,994)Present value of obligation at end of year 3,242,509 3,214,735

�e movements in the fair value of plan assets for the de�ned bene�t plan are shown below:

2014 2013Fair value of plan assets at beginning of year 3,405,127 2,972,124Expected return on plan assets 241,811 214,118Contributions 133,590 192,894Bene�ts paid (34,893) (33,877)Actuarial gain/ (loss) on plan assets 6,530 59,868Fair value of plan assets at end of year 3,752,165 3,405,127





23. Pension expenses (continued)

�e plan assets as at the reporting date consist of the following:

2014 2013Equities 30% 37%Other 70% 63%

Pension expense recognized in pro�t or loss is shown below:

2014 2013Current service cost 125,491 197,384Interest cost 232,594 272,062Expected return on plan assets (241,811) (213,647)Pension expenses de�ned bene�t plan 116,274 255,799

�e principal actuarial assumptions used were as follows:

2014 2013Discount rate 7.50% 7.00%Expected return on plan assets 7.50% 7.00%Salary increase rates 6.50% 2.00%

�e historical information of the amounts as at reporting date is as follows:

2014 2013Present value of obligation 3,242,509 3,214,735Fair value of plan assets (3,752,165) (3,405,127)De�cit/(surplus) (509,656) (190,392)Experience adjustments arising from plan liabilities 295,417 926,994Experience adjustments arising from plan assets 6,530 59,869

�e actuarial (gain) loss recognized in the other comprehensive income is as follows:

2014 2013Gain from experience (295,417) (926,994)Expected return on plan assets 241,811 213,648Actual return on plan assets (248,341) (273,516)Gain from experience (301,947) (986,862)

�e Company expects to pay EC$134,175 plus the increase in salary for these employees which is of yet been determined (2013: EC$129,857) in contributions to the de�ned bene�t plan in 2015.




31 December 2014


24. Earnings per share

�e calculations of basic earnings per share as at 31 December 2014 and 2013 were based on the net income for the year and the total number of capital shares issued and outstanding as at reporting date calculated as follows:

2014 2013Net income for the year 6,345,268 5,073,859Total number of shares issued at end of year 11,636,147 11,636,147Earnings per share 0.55 0.44

25. Dividends

Dividends of EC$0.07 per share were declared by the Board of Directors on 31 August 2015 but not yet sanctioned by the shareholders. �e Board of Directors recommended and the shareholders’ sanctioned to pay a dividend of $0.07 per share for the year ended 31 December 2013.

2014 2013Retained earnings 73,773,253 67,940,569Appropriated for dividends declared to be sanctioned by

shareholders - (814,530)Retained earnings un-appropriated 73,773,253 67,126,039

26. Financial instruments

Exposure to credit risk�e carrying amount of �nancial assets represents the maximum credit exposure. �e maximum exposure to credit risk at the reporting date is as follows:

Notes 2014 2013Investment in certi�cates of deposits 7 7,932,452 9,038,947Trade and other receivables – net 9 17,469,557 19,568,541Cash and cash equivalents 11 13,600,545 8,556,684

39,002,554 37,164,172





26. Financial instruments (continued)

�e maximum exposure to credit risk for trade receivables at the reporting date by type of customer is presented below:

Note 2014 2013Government 9,054,731 13,494,888Hospitality 5,585,956 4,687,975Residential 3,309,359 3,719,382Commercial 3,516,538 2,655,537Other 430,093 65,559

9 21,896,677 24,623,341

�e credit quality of �nancial assets that are neither past due nor impaired are as follows:

Note 2014 2013Unimpaired trade receivablesGroup 1 - Customers with no defaults 8,881,327 7,197,365

Group 2 - Customers with some defaults, but full recovery 472,007 2,434,025Group 3 - Customers with some defaults, partial recovery

1,247,703 2,802,247

Total unimpaired trade receivables 9 10,601,037 12,433,637

Notes 2014 2013Cash, cash equivalents and investmentsCash and cash equivalents 11 13,600,545 8,556,684Investments 7 7,932,452 9,038,947

21,532,997 17,595,631

Cash and cash equivalents comprise cash on hand and cash in banks and carry little or no �nancial risk. �e Company’s investments are comprised of certi�cate of deposits with the Caribbean Commercial Bank Anguilla, Ltd and National Bank of Anguilla, Ltd. As there are no available independent ratings for these �nancial assets, the Company was unable to determine the credit quality of these �nancial assetsOn 12 August 2013, the Eastern Caribbean Central Bank (ECCB) assumed exclusive control of the Caribbean Commercial Bank (Anguilla) Ltd (CCB) and the National Bank of Anguilla (NBA) and placed both institutions into conservatorship under the powers given to it by the Banking Act. �e announcement from the Eastern Caribbean Central Bank (ECCB) indicated that the intention was to stabilize and restructure both �nancial institutions and return them to a state of normalcy, as well as to protect depositors and creditors. �is was also done to ensure stability of the banking system in the entire Eastern Caribbean Currency Union. �ey have made no further declarations.Impairment losses�e Company has a signi�cant trade receivables balance that is required to be subjected to speci�c and/or collective impairment testing whenever there is objective evidence of impairment.




31 December 2014



�e Company recognized provision for doubtful accounts as follows:(i) Inactive accounts - 100% provisions (2013: 100%)(ii) Government accounts - 2% to 100% provisions (2013: 2% to 50%)(iii) Accounts with payment agreements – 5% to 100% provisions (2013: 10% to 100%)(iv) General accounts – 10% to 30% provisions (2013: 5% to 40%)

Based on the aging report as of December 31, 2014, the past due trade receivables were provided for as follows:

2014 2013Gross Impairment Gross Impairment

Current 10,216,722 86,663 10,886,705 61,752Past due 30-60 714,267 131,176 1,492,465 64,022Past due 60-90 181,429 65,310 986,026 116,102Over 90 10,784,259 4,143,971 11,258,146 6,367,388Total 21,896,677 4,427,120 26,177,805 6,609,264

�e movements in the allowance for impairment in respect of trade receivables during the year are as follows:

Note 2014 2013Balance at beginning of year 6,609,264 4,798,088Additional credit losses 1,627,357 1,811,176Write-o¤ (3,809,501) -Balance at end of year 9 4,427,120 6,609,264






Liquidity risk

�e following are the contractual maturities of �nancial liabilities including estimated interest payments:

Carrying amount

Contractual cash ©ows Under 1 year 12 years 25 years

More than 5 years

31 December 2014Borrowings 14,578,238 15,950,900 9,431,942 4,893,371 1,625,587 -Customer deposits 1,370,334 1,370,334 1,370,334 - - -Trade and other payables 3,861,466 3,861,466 3,861,466 - - -

19,810,038 21,182,700 14,663,742 4,893,371 1,625,587 -

31 December 2013Borrowings 20,734,631 22,795,575 5,068,069 11,763,987 4,567,832 1,395,687Customer deposits 1,426,356 1,426,356 1,426,356 - - -Trade and other payables 6,451,723 6,451,723 6,451,723 - - -

28,612,710 30,673,654 12,946,148 11,763,987 4,567,832 1,395,687

Interest rate risk

2014 2013Interest rate Carrying

amountInterest rate Carrying amount

Investment securities 1.625% - 5.00% 7,932,452 3.25% - 5.00% 9,038,947Borrowings 3.20% - 5.75% 14,578,238 3.20% - 5.75% 20,734,631

Cash �ow and fair value interest rate riskCash ©ow interest rate risk arises from borrowings with variable interest rate. �e Company has borrowings carrying interest rates based on LIBOR. �e cash ©ow interest rate risk sensitivity is shown below in case there is a 10% increase/decrease in interest rate.




31 December 2014



2014 2013At average rate for the

year

+10%increase

-10%Decrease

At average rate for the

year

+10%Increase

-10%decrease

Scotia bank - Facility B 514,110 515,988 478,436 524,447 526,265 488,504Scotia bank - Facility A 52,787 53,032 47,768 110,852 111,526 98,046

566,897 569,020

526,204 635,299

637,791

586,550 Price riskPrice risk is the possibility that equity prices will ©uctuate a¤ecting the fair value of equity investments. �e Company is not exposed to price risk as it does not have equity investments as at the reporting date.

Fair values�e table below sets out fair values of the Company’s �nancial assets and liabilities as at the reporting date.

2014 2013Carrying amount Fair values Carrying amount Fair values

Investment securities 7,932,452 7,799,971 9,038,947 9,038,947Trade and other receivables 17,469,557 17,469,557 19,568,541 19,568,541Cash and cash equivalents 13,600,545 13,600,545 8,556,684 8,556,684

39,002,554 38,870,073 37,164,172 37,164,172

Borrowings 14,578,238 14,595,580 20,734,631 20,995,350Customer deposits 1,370,334 1,370,334 1,426,356 1,426,356Trade and other payables 3,861,466 3,861,466 6,451,723 6,451,723

19,810,038 19,827,380 28,612,710 28,873,429

27. Related party transactions

Identi�cation of related partyA party is related to the Company if:

(i) Directly or indirectly the party:Controls, is controlled by, or is under common control with the Company;Has an interest in the Company that gives it signi�cant in©uence over the Company; orHas joint control over the Company.

(ii) �e party is a member of the key management personnel of the Company

(iii) �e party is a close member of the family of any individual referred to in (i) or (ii)





27. Related party transactions (continued)

(iv) �e party is a post-employment bene�t plan for the bene�t of employees of the Company or any entity that is a related party of the Company.

Related party transactions and balances�e Company has entered into a number of transactions with related parties in the normal course of business as at 31 December 2014 and 2013. �ese transactions were conducted at market rates, or commercial terms and conditions.

2014 2013Directors’ fees and related activities 433,730 406,967Pension expense de�ned bene�t plan 116,274 255,799Pension expense de�ned contribution plan 91,567 96,235Bene�ts to executive o£cers 1,764,400 2,504,281

2,405,971 3,263,282

2014 2013Receivable from key management personnel - 15,600Accrued vacation payable to key management personnel 24,925 23,610Revenues from the Government of Anguilla 8,958,147 9,432,306Amount paid to the Government of Anguilla for the

environmental levy 5,896,570 4,304,395Credit loss on government accounts 1,248,400 1,154,583

�e Company has entered into the following related party transactions:

a. �e Government of Anguilla imposed an environmental levy of 7% of revenues, excluding Government’s usage, on the Company e¤ective 15 April 2010. �e amount payable to the Government of Anguilla as of 31 December 2014 amounted to EC$400,943 (2013: EC$ 1,218,458).

b. Gross trade receivables from the Government of Anguilla are EC$9,054,731 (2012: EC$11,622,257).

c. License fees paid to the Government of Anguilla is EC$300,000 for 2014 (2013: EC$300,000).

d. Amounts paid to the Government of Anguilla for import duties and other fees and services is EC$7,981,404 (2013: EC$3,956,642).

e. Interim stabilization levy paid to the Government of Anguilla is EC$468,553 (2013: EC$370,857) of which EC$64,288 was outstanding at year end (2013: EC$44,586).

f. Dividends paid to the Government of Anguilla in 2014 - EC$ 325,812 (2013: nil).

g. �e Government of Anguilla has guaranteed the loans borrowed by the Company from Caribbean Development Bank (03/ORANL) (see Note 13).




31 December 2014


27. Related party transactions (continued)

h. �e Company pays social security contributions for its employees to Anguilla Social Security Board in compliance with the Anguilla Social Security Act. Total contributions incurred during the year amounted to EC$ 629,723 (2013: EC$578,954) of which EC$57,917 (2013:EC$57,447) was outstanding at 31 December 2014.

i. �e Company has an overdraft facility with a limit of EC$3.2 million with the National Bank of Anguilla Limited with an interest rate of 9.2% per annum, which is currently not in use.

28. Commitments

On 1 May 2013, the Company entered into a gas oil supply contract with Delta Petroleum Limited commencing on that day until 30 April 2016.

On 29 August 2013 the Company has entered into an agreement with Global Green Energy Ltd (GGE) based in St. Maarten, to produce 4MW of electricity from waste for a term of twenty (20) years.

29. Self-insurance fund

�e Company experienced di£culty in obtaining adequate and reasonably priced commercial insurance coverage primarily on the Transmission and Distribution assets in prior years. In line with this, the Board of Directors had therefore given approval in 2006 for the establishment of a Self-insurance fund to provide coverage for its assets in the event of natural disasters or similar catastrophic events. �e relevant enabling legislative process was completed during 2006 and the Company set aside an amount of EC$685,714 in the same year. Consequently, the Company ceased commercial insurance cover of its Transmission and Distribution assets and will place an appropriate amount into the Fund on an annual basis.

�e changes in the self-insurance fund balance are as follows:

Note 2014 2013Balance at beginning of year 5,247,130 4,476,787Additional provisions for the year 1,018,548 770,343Withdrawals for the year (2,201,208) -Balance at end of year 7 4,064,470 5,247,130

This self-insurance fund is placed in a fixed deposit with a local bank (see Note 7).

30. Alternative energy resources

In an effort to diversify its energy generation portfolio, the Company has entered into an agreement with Global Green Energy Ltd (GGE) based in St. Maarten, to produce 4MW of electricity from waste for a term of twenty (20) years. Under this agreement, the Company has agreed to purchase 100% of energy produced by GGE and capped at 4MW on a take-or-pay model at a negotiated rate per kWh. In addition to the minimum standards for quality and consistent electricity production, the Company requires GGE to adhere to certain environmental standards. The Company anticipates reducing cost of generation mostly through reduction in diesel fuel consumption and avoiding certain capital investments. As of the report date, GGE has received approval from the Anguilla Executive Council and is working with the various Government departments to enable the plant construction and production. The Company anticipates receiving production from this plant in early 2016.





30. Alternative energy resources (continued)

�e Company is currently �nalizing its selection of the �nalist bidders to develop a turn-key 1MW solar photovoltaic (PV) plant. �is plant will be located in the vicinity of the Company’s Corito diesel powered plant. �e decision to invest in solar PV is driven by the signi�cant decline in costs in recent years.

As a result, solar PV technology has become cost competitive with traditional production means. Although the return on investment is challenged due to the recent decline in diesel prices, the Company believes this is the ideal opportunity to pivot and develop alternative modes of production to improve energy security and reduce the country’s dependence on fossil fuel.

31. Operating lease rent

On 6 November, 2009, the Company renewed its lease with the lessee for another two years with an option to renew for another year. Monthly rent is EC$8,500 commencing November 2009. �e lease contract had not been renewed since. However, the Company is paying based on the old terms of the contract. Total rent expense in 2014 included in “Operating expenses Administrative expenses “ in pro�t or loss is EC$102,000 (2013: EC$102,000). �e lease agreement does not provide for any escalation of rent during the lease term. On 23 December 2013, the Company entered into a two year lease agreement for additional o£ce space. Monthly rent of EC$7,661 commenced December 2013. Total rent expense related to this lease in 2014 and included in “Operating expenses Administrative expenses “ in pro�t or loss is EC$91,932 (2013-EC$2,718).

�e future minimum lease expense is as follows:

2014 2013Not later than one year 193,936 193,936Later than one year and not later than �ve years - 193,936

193,936 387,872

32. Contingencies

Several employees were terminated in line with the Fair Labour Standards Act, R.S.A F15 7(1)(d) on 26 January 2011, 07 October 2013 and 10 January 2014. In response to the termination, the employees have taken the matter to Labour with the intent to establish a Tribunal concerning their dismissal. No hearing has been convened and no decision has been made to date on any of the terminations.

�e estate of a contractor fatally injured while providing services at the Corito Power Station site �led a claim on 10 January 2013 against the Company in the Eastern Caribbean Supreme Court pursuant to the Causes of Action (Survival) Act, R.S.A.e.C25 for damages for injury and loss due to the accident. �e Company has not accepted responsibility for the accident and has �led a defense pursuant to the Causes of Action (Survival) Act, R.S.A.e.C25 and the Fatal Accidents Act FR.S.A.s.020. No provision has been made in these �nancial statements for any claim asserted or un-asserted.

It was brought to the Company’s attention during the 2014 �nancial year that the Water Corporation of Anguilla, a statutory body of the Government of Anguilla, was illegally obtaining electricity from ANGLEC for a period of about three (3) years. �e Company’s investigation con�rmed the illegal connection. �e matter was also brought to the attention of the Board of Directors of both ANGLEC and the Water Corporation as well as the Royal Anguilla Police Force. �e Company has estimated the revenue loss of this situation to be approximately EC$ 3,510,657. �e Company has not recognized this amount, pending negotiation and determination of the recoverable amount.



Corporate InformationRegistered O²ceMain O£ce, the Valley

Anguilla

Mailing Address

P.O. Box 400, the Valley

Anguilla

Tel: (264) 497-5200

Fax: (264) 497-5440

Website: www.anglec.com

Email: [email protected]

AuditorsPricewaterhouseCoopers

St. Maarten, Emmaplein Building,

P.O. Box 195, Philipsburg, St. Maarten

T: +(1-721) 542 2379,

F: +(1-721) 542 4788,

www.pwc.com/dutch-caribbean

Attorneys-at-lawCaribbean Juris Chambers

Hannah-Waiver House

�e Valley, Anguilla

Mailing Address

P.O. Box 328

�e Valley

Anguilla



Attorneys-at-lawKelsick Wilkin & Ferdinand

Fred Kelsick Building

Independence Square South

Mailing Address

P.O. Box 174

Basseterre

St. Kitts

Federation of St. Kitts & Nevis

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2014 - anglec · to ec$ 4.06 million in 2014, an ec$ 1.65 million or 29% decrease in revenue. še...

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