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## Fellow Shareholders 

It is our pleasure to report the financial and operational progress of Caribbean Utilities Company, Ltd. (“CUC” or the “Company”) for the twelve month period ended December 31, 2011 (“Fiscal 2011”). 

## Financial Performance 

In spite of the relatively stagnant economic environment, and consecutive years without an increase in sales, CUC was able to improve its financial performance in 2011. 

Kilowatt-hour (“kWh”) sales for Fiscal 2011 were 554.0 million comparable to 553.8 million for the twelve months ended December 31, 2010 (“Fiscal 2010”). Warmer weather, particularly in the three months ended December 31, 2011, increased electricity consumption for that period and helped to offset reduction in customer demand due to increased fuel prices and a declining population. The average temperature for 2011 was 82.3 degrees Fahrenheit compared to 81.9 degrees Fahrenheit for 2010. 

Net earnings for Fiscal 2011 were $20.4 million, representing a 3% or $0.5 million increase from net earnings of $19.9 million for the twelve months ended December 31, 2010 (“Fiscal 2010”). This increase in earnings was due to lower financing charges and increased Other Income. 

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In July, CUC successfully closed on a $40 million private placement debt financing with terms between 15 and 20 years and very competitive coupon rates of 4.85% to 5.10%. We believe the competitive pricing was as a result of the Company’s strong balance sheet and credit rating. However, in September 2011 Standard & Poor’s lowered its rating of CUC’s debt to “A-” from “A” as a reflection of the continued weak economic environment in the Cayman Islands. 

After the adjustment for dividends on the Class B Preference Shares (“preference shares”) of the Company, earnings on Class A Ordinary Shares for Fiscal 2011 were $19.5 million, or $0.68 per Class A Ordinary Share, when compared to $18.9 million, or $0.67 per Class A Ordinary Share for Fiscal 2010. 

We are pleased that the Company was able to maintain an annualized dividend of $0.66 per Class A Ordinary Share. 

