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Annual Report 2003

The Performance of the ANSA McAL Group
The year 2003 proved to be a satisfying year for the ANSA McAL Group and is a significant step towards achieving the objectives we set out in our Vision 2006 in 2002. Our profit attributable to ordinary shareholders grew by 19% to reach $243,182M (2002: $203,824M). As a result, our EPS of $1.4, the highest we have ever achieved, is 16% above the $1.24 we announced in 2002.
Our Vision 2006
In 2002 we set ourselves new targets. In particular, we addressed the challenge of reinventing and growing our existing businesses so that as a consolidated Group we would be able to double our operating profits within a five-year time frame. The targets and our new vision have been boldly called: “Vision 2006.”I consider that the results we have achieved in 2003 represent a significant step towards making this vision a reality. It is clear to me that the Board and our dedicated management teams consider that the targets contained in Vision 2006 are well within our compass and I remain confident that these targets will be met on time as promised .In my Chairman’s statement last year I spoke of the significant sums that we were spending on improving our capital assets in readiness for the Free Trade Area of the Americas (FTAA). I am pleased to report that all capital expenditure projects have been completed on time and on budget. Projects that have been completed include a new furnace at Carib Glassworks, the commissioning of the world’s largest concrete block-making plant at Bestcrete and a new, state-of-the-art match line at Trinidad Match. In addition, new plants and equipment have been success-fully installed at both ANSA McAL Chemicals and ANSA Polymer. These capital projects will allow our companies to realise additional cost efficiencies, which, in turn will allow us to compete in world markets. Barring any major fluctuations in the exchange rate or commodity prices, it will place us in an excellent strategic position to exploit the opportunities that are presented by the FTAA.

Significant events in the year
A significant number of milestones and events occurred in the Group in 2003. I take this opportunity to highlight some of these. We have successfully rolled out a new incentive programme for middle and senior managers with the Group. This programme is designed to reward those who both add significant economic value to the Group and make best use of the capital provided to them. I am convinced that the successful results we achieved in 2003 can, at least in part, be attributed to the renewed focus on efficiency that this new incentive plan rewards. The Tatil Group implemented its Customer Relations Management programme and had another successful year. AMCO, our marketing and distribution company, grew its business from existing lines and added a significant number of new product lines to the items it offers. ANSA McAL Chemicals successfully launched new products and in the new year will begin penetration of Latin markets with its range of quality, value-added products. Trinidad Publishing had a successful year with the new format Guardian, which proved to be extremely popular with both readers and advertisers alike, and our radio stations continue to dominate the local airwaves. At both Carib and Carib Glassworks, we continued the thrust of our capital investment programmes geared to providing us with the technologies that will enable us to exploit the opportunities provided by the FTAA. At Carib, we extended our refrigeration capacity, improved our water treatment facilities and commissioned a new CO2plant. These changes will improve the quality of our products. We also under-took a multi-million dollar upgrade of our bottling lines. I am pleased to report that the Carlsberg and Smirnoff Ice brands continue to perform well and have been successfully launched in several islands in the Caribbean. At Carib Glassworks, we introduced new Triple Gob Technology and replaced one of our older furnaces. This allows us to continue to pursue the light weighting initiatives that we started successfully in the previous year. Carib Glassworks continues to be a significant earner of foreign currencies for the Group and the country.

Our Auto companies in Trinidad enjoyed significant growth and the launch of the pioneering and highly innovative “In One” concept in Trinidad, combining the financing, insurance cost and servicing cost of a vehicle into one low convenient payment, has generated significant customer excitement and success for our companies. Our merchant bank, ANSA Finance and Merchant Bank, continues to grow at a very satisfying rate. The Bank achieved an EPS this year that is 43% higher than the corresponding figure for the previous year. With its acquisition of TATIL during 2004, we expect even greater results from our Financing Group.

Our overseas operations
The overseas operations of the ANSA McAL Group continued to perform in accordance with our budgeted expectations. In Barbados, Stokes and Bynoe, our distribution company, formed a new company, Breweries Distribution Limited, to handle the distribution of our beverage brands. McEnearney Quality Inc continued the strong recovery it made in 2002 with a 21% increase in turnover in a highly competitive new car market. Consolidated Finance increased its market share, and its net earnings, buoyed by the launch of innovative products and grew by 54%.In Guyana, the results of our trading company again proved to be successful, despite a difficult economic and political climate in that country. In 2003, we used the model of our Guyana operation in a new company set up in St Lucia geared to marketing our beverage products. I am pleased to report that the results of this company surpassed our expectations.

Dividend and return to shareholders
Your Board of Directors has recommended a total dividend of $0.65 per share. In 2003 our share price improved 44% to close at year-end at $23.06. This positive movement in our share price reflects the market’s confidence in the ANSA McAL brand and our ability to generate consistent and superlative returns. The economic outlook for Trinidad and Tobago The future for our twin island state remains very positive with all key economic indicators reflecting the confidence of both local and international investors. Investment continues to flow into the country at unprecedented rates providing our Group with opportunities to act as partners with large multi-national companies in large capital investment projects. With this confidence, the expected oil and gas tax revenues should provide the Government with the necessary impetus to both reduce the rates of corporation tax that we suffer on our Group’s profits as well as provide additional incentives for capital investment by local investors. Because of its significant investment in fixed and capital assets made over the last two years, the ANSA McAL Group is well positioned and committed to exploiting opportunities that several commentators expect to emerge in the medium term. One Caribbean Market – A Sea of Great Potential. The unification of Caribbean markets provides us with a sea of great potential for investment and growth. It was with this in mind that the Board decided to pursue the acquisition of A S Bryden & Sons in Barbados. The acquisition of Bryden’s Barbados is seen as strategic to our plans for future development of markets in the Caribbean and allows the ANSA McAL Group, through the distribution arms of Bryden’s Barbados, to extend the Group’s presence in the region. The Board recognizes that in order to achieve the objectives that we have set in Vision 2006, we have to strengthen and renew our export thrusts. The acquisition of A S Bryden & Sons (Barbados) Limited when coupled with our existing marketing avenues provides us with a substantial Caribbean reach to channel our goods into new markets at competitive prices. The successful acquisition of this group at a price of$7 Barbados dollars per share will provide the Group with significant and exceptional returns in the future. The synergies we will be able to achieve with our own distribution companies will allow us to be a dominant player in wholesale markets in Barbados. We will continue to look diligently for additional acquisitions that will provide the same potential returns to shareholders of the ANSA McAL Group.

The acquisition of TATIL by ANSA Finance and Merchant Bank
The ANSA McAL Group has for some time been considering the benefits that could be derived from consolidating all of our financial service companies into a single group. With this in mind, during the current year, ANSA Finance and Merchant Bank Limited will acquire a 100% shareholding in the TATIL Group from ANSA McAL Group. The consideration for this purchase will be satisfied by the issue of new shares in ANSA Finance and Merchant Bank to ANSA McAL Limited. The acquisition price to be paid is currently being independently quantified by professionals in London. We believe that this acquisition by ANSA Finance and Merchant Bank will provide the springboard for superlative growth in our financial services companies. First, the acquisition will improve the risk profile of the companies and, with a more substantial balance sheet, allow both to compete on level terms with any current or future market player. Second, the acquisition will unlock huge marketing opportunities for both existing and new products. New products or services that are in development include underwriting services, launch of mutual fund products, the provision of trustee and asset management services and bond issues tailored to meet the needs of the borrower.

Third, we consider that the acquisition will, through an integrated approach to the financial governance of the financial services group, result in a more efficient use of resources and, ultimately, operational savings.

The ANSA McAL Foundation
The ANSA McAL Foundation is an independent body from the ANSA McAL Group of Companies. The Foundation was formed to evaluate and fund projects and activities that are deemed to be of the highest importance to our nation. In previous years, the Group has made an annual contribution to the Foundation of 1% of its profits. As I reported last year, the Foundation has now reached the point where it can be considered self-financing and, accordingly, this year’s financial statements do not include any contribution.

The ANSA McAL Family
I take this opportunity to thank my fellow Directors, the Management Teams in the Group, our committed staff and our shareholders and customers for the loyalty and dedication so strongly evidenced through the results of the Group for the year. During the year, Mr Horace Bhopalsingh retired from the Board and as Chief Executive Officer of Carib. Mr Bhopalsingh has relocated to Canada and I would like to take this opportunity to thank him for his contribution and dedicated service to the Group over the years.

Mr Randolph de Silva, our former Company Secretary and one of the Group’s longest serving employees retired during the year. Mr G Leonard Lewis and Mrs Lucille Mair also retired from the Board during the year. I would like to thank them for their excellent contribution to the Group during their years of service. I am pleased to report that Ms Stephanie Daly has joined our Parent Board. I take this opportunity to welcome Ms Daly and I look forward to her contribution towards our objectives set out in our Vision 2006. In addition, we decided to strengthen our corporate base with the following appointments: Mr David B Sabga rose to the position of Deputy Chairman while Mr Gerry C Brooks was appointed Chief Operating Officer. Mr David G Inglefield joined the company as Group Marketing Director, having spent a number of years in the advertising and communications fields. I welcome these new directors to their new positions. I remain extremely confident that with the continued support of our trading partners, our suppliers, our dedicated management teams, our staff and our shareholders that the ANSA McAL Group will continue to produce excellent results.

A Norman Sabga
Chairman and Chief Executive

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