Lower Churchill Development Corporation Limited: 1998 annual report

This is the 20th annual report to the Board of Directors of the Lower Churchill Development Corp. Ltd. for the year ending Dec. 31, 1998. The Corp. remains ready to proceed with hydroelectric power developments at Gull Island and/or Muskrat Falls following definitive shareholder direction. The accounting policy followed by the Corp. is in accordance with generally accepted accounting principles in Canada. It follows the practice of capitalizing the cost related to studies in respect of the development of the Lower Churchill Basis, as well administrative and other costs. Pursuant to the provisions of the Principal Agreement, Newfoundland agreed to enter into an Option Agreement, dated Nov. 24, 1978, with the Corp. in respect of the Gull Island Power Corp. Ltd. assets and the hydroelectric development rights to the Lower Churchill River. The Class A shares issued in the Corp. as of Dec. 31, 1998 are listed. Under an agreement between Hydro and the Corp., Hydro provides certain administrative and engineering services to the Corp. as needed. No fees were paid to Hydro for 2 years. In connection with the Y2K problem, management developed and is implementing a plan designed to identify and address the expected effects of the Year 2000 issue on the company