Alcan Alumi Annual Report 1971

.., . Alcan Annual Report 1976

10-K Report Edition fran~aise A copy of the Company's current On pourra se procurer le texte annual 10-K Report filed with fran~aisde ce rapport annuel en the United States Securities and s'adressant au secretariat de la Exchange Commission will be Compagnie, case postale 6090, available to shareholders after , Canada H3C 3H2. 1 April upon written request to the Secretary of the Company. Definition of terms In this report, all amounts are in Annual Meeting United States dollars and all The Annual Meeting of the share- quantities are in short tons of 2,000 holders of Alcan Aluminium Limited pounds, unless otherwise stated. will be held on Thursday 17 March 'Subsidiary' indicates a com- 1977, at 10 a.m. in the Chateau pany owned directly or indirectly Champlain Hotel, Montreal. more than 50 per cent whereas 'related company' indicates a com- Stock Exchanges pany owned 50 per cent or less. The common shares of Alcan Aluminium The term 'Alcan' refers to the Limited are listed on the Montreal, parent Alcan Aluminium Limited . Vancouver. New York, Midwest. itself, or to one or more subsidiaries Pacific, London, Paris, Brussels, Am- according to the context. sterdam, Frankfurt, Easel, Geneva, Lausanne and Zurich stock exchanges. Front cover: Versa- Preferred shares: Montrbal, Toronto tile aluminum is and Vancouver stock exchanges. rustDr00f. corrosion resistant and an Transfer Agents excellent conductor Common shares: National Trust Com- of heat and elec- pany, Limited, Montrbal, Toronto, tricity. It is light, yet Winnipeg, Regina, Calgary, Vancouver. certain alloys attain Mellon Bank, N.A., Pittsburgh. Citibank. very high strength. N.A., New York. Morgan Grenfell & Co. I Aluminum can also Limited, London. be highly reflective, asshown by our Preferred shares: National Trust cover photo of the interplay, on a coil, Company, Limited, Montrbal, Toronto, of reflected sky, grass and flowers. Calgary Vancouver.

Registrars Contents Common shares: The Royal Trust Com- Alcan in 1976 pany, Montrbal, Toronto, Winnipeg, Report to the Shareholders Regina. Calgary, Vancouver. Pittsburgh Operations Worldwide National Bank. Pittsburgh. Manufacturers North America and HanoverTrust Company, New York. Caribbean Region The Royal Trust Company of Canada. Europe, Near East, Africa ana London. Latin America Region Preferred shares: The Royal Trust Research and Development Company, Montrbal, Toronto, Calgary, M~ddleEast, Asia and Vancouver. South Pacific Region Financial Review Financial Statements Alcan Aluminium Limited lnflat~onAccounting 1 Place Ville Marie, Montreal, Canada Ten-Year Summary Mail: Box 6090, Montreal, Canada Principal Companies H3C 3H2 Directors. Officers, Committees Alcan .. .

Alcan Aluminium Limited is a Canadian company formed in 1928 and engaged, through its subsidiaries and its investments in related companies, in all phases of the aluminum business on an international scale. These operations, large and small, and ranging from the mining of the ore bauxite to the manufacture of aluminum end products, are conducted in some 35 countries, with about 75 per cent of the total assets located in Canada, the United States, the United Kingdom and Continental Europe. With the operations in other continents, they make Alcan one of the major enterprises in the aluminum industry. The Company is publicly owned. It has about 43,000 share- holders mainly in Canada, the United States and Europe, and 60,000 employees.

Highlights of 1976

Year ending 31 December 1976 1975 1974 Shipments of all aluminum products ('000 tons) 1,515 1,402 1,662 Shipments of fabricated products ('000 tons) 953 785 1,018 Sales of fabricated products (US. $ millions) $ 1,701 $ 1,370 $ 1,489

~p Sales and operating- revenues (US. $millions) 5 2.656 $ 2.302 $ 2.412 Net income (US. $ millions) 5 44 $ 35 $ 169 Income per common share (excl. extraord. gain) 5 1.14 $ 0.65 $ 4.1 1 Dividends per common share $ 0.40 $ 0.90 $ 1.20 Capital expenditures (US. $millions) $ 138 $ 208 $ 268 As at 31 December . - . -. .- . ~otalassets.. - (US. $ millions) S 3,090 S 3.012 S 2.979 - .- -. Long-term debt (US. $millions) $ 837 $ 971 $ 881 Common shareholders' equity (US. $millions) 5 1,268 $ 1,li0 $1,090 31.36 31.41 Book value per common share $ 31.34 $ $ - Number of common shares outstanding (millions) 40.45 35.38 34.71 Number of common shareholders 43,142 46,588 47,978 Shares held by residents of Canada (%) 52.5 42.0 45.4 Shares held by residents of U.S.A. (%) 33.6 43.1 44.1 Shares held by others (%) 13.9 14.9 10.5 Number of employees (thousands) 60 61 64 2

Report to the Shareholders

In the international aluminum in- was a marked change in the trend dustry, 1976 was a year of partial of earnings within the Group, as recovery from the severe economic described more fully in the body of recession which the industrialized this report. In the first half of the year world experienced in 1975. Demand the Aluminum Company of Canada for primary aluminum in the non- showed an improved earnings trend, communist countries increased by but consequent upon the strike suf- about 25 per cent over the preceding fered a severe loss in the second year, as fabricators and manufac- half. In contrast, Alcan's other oper- turers experienced a recovery in ations, taken as a whole, contributed their own product sales and stepped little to profitability during the first up their purchases of metal. Surplus half but, benefitting from improved inventories of aluminum (in all forms markets, showed strongly improved throughout the industry) appear to earnings in the second half. This im- have been reduced by about one provement included a welcome re- million tons from the record level of covery in Continental Europe and the two million tons at the start of 1976. United Kingdom, a much lower loss Basic aluminum prices in most by a related company in Japan and markets showed considerable im- continued strong earnings in Latin provement, permitting some relief America, especially in Brazil. Results 1976 with the Federation des Syndi- from the continuing upward pres- in Australia, India and Southeast cats du Secteur Aluminium (FSSA) sure of costs of materials and Asia were also encouraging. The in was based upon the me- services. alumina operations in Jamaica, diator's recommendation and has Due to the heavy financial im- however, continued to suffer losses. been submitted to the Anti-Inflation pact of a five and a half month . The financial structure of the Board for approval. strike at the Aluminum Company of Group has been strengthened by We are pleased to be able to Canada's main smelter operations the successful issue of five million report that the return to work has in Quebec, Alcan did not share fully new common shares in July. occurred in a constructive atmo- in the improvement in volume and The resulting increase in the equity sphere and that the facilities have profitability experienced by many base, combined with a reduction in been brought back into production aluminum producers. Consolidated debt, substantially increases Alcan's ahead of schedule. Shortly before net income of $44.0 million in 1976 ability to proceed with the modern- this settlement, however, a strike ($1.14 per share) showed only a ization and expansion programs was called by a different union at modest improvement over the re- which the Company wishes to , where 70,000 tons of cession year of 1975 when $35 mil- undertake. operating primary capacity and some lion was earned ($1.01 per share). Business activities in Canada fabricating facilities were idled for including an extraordinary gain of during the past year have been con- three months. The issues have $12.4 million ($0.36 per share). ducted in an atmosphere of uncer- recently been resolved and the em- By drawing down surplus inven- tainty brought about by increasing ployees are returning to work. tories built up in 1975 and increasing and changing Government regula- Looking ahead on the Canadian purchases of metal, consolidated tions, labour unrest and new political scene, Alcan has plans to start a sales of fabricated products recov- developments in Quebec. Alcan's staged smelter expansion and ered more than 20 per cent over operations in Canada have been rebuilding program in Quebec when 1975. However, with reduced pro- subject to controls on prices, profit conditions permit. We believe such duction of primary metal, sales of margins, dividends and employee a program would be desirable primary ingot declined. Sales of compensation. Profits and dividends from the Company's viewpoint and aluminum in all forms, primary ingot were well below permissible levels would contribute significantly to and fabricated products, rose 8 per but the controls on compensation economic development in Quebec. cent from 1,402,300 tons in 1975 contributed in part to the unsettled Before embarking on this program to 1,515,100 tons in 1976. labour conditions. The labour which would require heavy capital As the year progressed, there agreement reached in November commitments over an extended Alcan's structure encompasses Mr. Elton had made a notable con- operations in many countries. Some tribution to the development of units are largely self-contained Alcan's interests in his area of re- but the larger segment comprises sponsibility. Patrick J. J. Rich, a geographically diversified raw regional executive vice president, material sources supplying our was appointed to the Board in May. smelters in Canada and overseas Two executive vice presidents, which, in turn, provide primary metal N. Stewart Crerar and James W. to a large number of fabricating Cameron, have retired from active operations located in world markets. duty after long and valued service. Alcan being multinational in char- Mr. Cameron has agreed to remain a acter, it seems appropriate to men- member of the Board. Eric A. Trigg, tion the adoption by the OECD on a director and senior officer, has 21 June, of guidelines for multi- been appointed regional executive national enterprises. These guide- vice president, Middle East, Asia lines, which take into account and South Pacific, succeeding the problems which can arise be- Mr. Cameron. Paul H Lernan cause of the international structure Many of the Company's per- of such enterprises, establish stan- sonnel put forth extraordinary efforts period, Alcan expects to have full dards for their activities in the dif- under trying conditions during the discussions with the new Quebec ferent member countries. Alcan past year and deserve commenda- Government. We believe that, as a welcomes them as a positive state- tion. As we enter 1977 with most of result of such discussions and with a ment of what is good practice for our productive facilities back in renewed dedication on the part of all multinational companies, and as operation, we look forward to im- concerned to bring about improved part of a package of declarations proved operating efficiencies and industrial relations, Alcan will be establishing an acceptable frame- the opportunity to earn a far better able to achieve continuity and work of reciprocal rights and respon- financial return on the Company's success in its Quebec operations. sibilities between multinational assets. We enter 1977 expecting a enterprises and host governments. modest growth in demand for alumi- These guidelines are entirely num based upon current forecasts of consistent with Alcan's own long- an average growth of four to five standing philosophy, and the Com- Chairman of the Board per cent in GNP in the major coun- pany will comply with them not only tries. Building on a strong world- in OECD member countries but in wide base and on the recently com- all countries in which it has sub- missioned rolling mills in Canada, sidiary operations. In particular, the the United States, Germany and content of this report complies with Montreal President Brazil, we should be in a position the guidelines in regard to the dis- 2 February 1977 to benefit from the market opportu- closure of information. nities which lie ahead. In the primary aluminum sector reference has Directors and Management been made to our longer range plans In April, the Board of Directors for Canadian smelting. Outside suffered the loss, through death, of Canada incremental smelter expan- Dr. John J. Deutsch, an eminent sion opportunities exist in Britain, Canadian who had served since Australia and Brazil. The Brazilian 1973. In October, P. John Elton expansion was begun in 1976 and submitted his resignation as Alcan's an expansion in Australia is being area general manager for the United planned. Reference to our new Kingdom and Scandinavia to enter bauxite source in Brazil is made other business, and as a Director ef- elsewhere in this report. fective at the March annual meeting. From fop left, ciockwise: Bank of Canada building. Ottawa, uses aluminum extrusions to frame its 20.000 rn2 of curtain wall. Historically important old buildings, re- stored wth aluminum roofing and curtain wall. update the past for present use. Warm anodic-brown tones of aluminum wrndows. doom and vents enhance the sandy. hued exterlor of Place Desjardins Montreal. Aluminum sldlng comes in many shapes and colours. It is easy to install, econornlcal, long lasting and good looking. Review of Operations Alcan Worldwide

As in previous years, the 1976 from 391,000 tons in the recession operating and financial results of Fabricating and Sales year of 1975 and 562,000 tons in the Alcan Aluminium Limited arose buoyant year of 1974. Alcan's obli- from the activities of consolidated Markets for semi-fabricated products gations to repay 'borrowed' metal subsidiaries in 25 countries, carried showed a strong upturn in most in kind in 1977 and later are less out under widely varying circum- countries served by Alcan subsi- than 20,000 tons, provision for which stances, together with those of diaries, and consolidated sales of has been made by reduction of the related companies, in at least as these products rose by 21 per cent 1976 year end inventory. many countries, in which Alcan has from 785,400 tons in 1975 to 953,300 Within the Group, the normal an investment of 20-50 per cent. tons, still below the record level of conduct of the business involves The financial results of the related 1,018,000 tons in 1974. However, due many of the subsidiary and related companies are included in the con- in part to the low level of ingot sales, companies buying from and selling solidated statements on an equity the shipments of fabricated products to each other, mostly across na- accounting basis. were 63 per cent of total sales. tional borders. Prices charged in This review of operations pre- Shipments of primary ingot these transactions are intended to sents first a consolidated summary products dropped from 616,900 tons reflect realistic market values. by functions. A detailed analysis by in 1975 to 561,800 tons in 1976 due regions and areas follows, reflecting to the lower level of spot sales in the the group's corporate and manage- first half and to an inability to pro- ment structure. duce certain ingot products during Raw Materials the strikes at Canadian smelters in the second half. Grouped by prin- Alumina requirements for group cipal markets, consolidated sales smelters and for sale to related com- Smelting were, in thousands of short tons: panies were 18 per cent lower than in 1975. Company-owned alumina Due largely to strikes, Alcan's Cana- plants in Canada and Jamaica and 1972 1973 1974 1975 1976 dian smelter production declined Canada 195 235 248 215 232 a related company in Australia re- to 543,000 tons in 1976 from 838,000 U.S.A. 416 480 452 325 388 mained the principal sources of tons in 1975 and 963,000 tons in U.K. 210 265 287 220 230 supply. Supply from Australia was 1974. Smelting subsidiaries in the EEC (less U.K.) 172 208 207 164 220 Latin America 111 113 124 121 127 maintained at the previous year's United Kingdom, Australia, lndia and All Others 347 375 344 357 318 level, but strikes at the Canadian

Brazil increased their total output 1,451 1,676 1.662 1.402~ - 1,515 and Jamaican alumina plants from 295,000 tons in 1975 to 329,600 reduced availability from those tons last year, reaching full capa- The 8 per cent increase in total sources by 38 per cent compared city production in the second half, consolidated sales to 1,515,100 tons, to 1975. The shortfall was made up except in lndia. The combined an- despite the production losses, was by tolling of bauxite and purchases nual capacity of these subsidiaries achieved through a reduction of of alumina from third parties. is now 375,000 tons. 150,000 tons in group inventories in The alumina plants at Jonquiere, The related smelting companies 1976, and by some increased pur- Quebec continued to obtain bauxite in Japan, Norway, Spain and Sweden chases of primary ingot. from Guinea, Guyana, Sierra-Leone had all reduced their production in Alcan has long-term purchase and Surinam. Alumina for use at the 1975 and early 1976 for recessionary commitments for considerable quan- smelter in British Columbia reasons but their operating rates tities of primary aluminum. It may was obtained mainly from the Glad- werestepped up as 1976 progressed, also make additional purchases at stone plant of Queensland Alumina except in Japan where govern- certain periods to balance its own Limited in Australia, in which Alcan ment directions involved prolonged supplies with customer needs and is a participant. Only 2.5 per cent restraint. Their total production in it also purchases scrap aluminum of the production of the Jamaican 1976 was 800,500 tons against which is recycled in secondary ingot plants was directed to Canada last 885,000 tons the preceding year. or fabricated form. Because of the year but this is expected to move Only the Norwegian producer is a abnormal circumstances of 1976, closer to 7 or 8 per cent in 1977. The supplier to the Alcan system, pro- purchases of all types from all balance is supplied to other subsi- viding 177,000 tons in 1976. sources increased to 519,000 tons, diary and related companies. From fop left, clockwise: Precoated aluminum jacketing protects insulated lines, equipment. tanks, ducts and piping at oil refinery. Continued thorough testing of aluminum house wiring by government and other bodies in Canada and elsewhere, and the metal's proven performance in home wiring, are in- creasing its acceptance for this application. Rectangular pattern of curtain wall on

the entrances to Canada's waterwavs. The corrosion-resistant aluminum tower and panels have proved virtually maintenance-free m the heavily salt-laden air of the seacoasts. Tubular aluminum bus bar (two photos). capable of carrying the maximum amount of enerclv-. for minimum overall cost, also help create 'low-profile', ecologically more attractive utility switching stations. Computer-designed inductance coils of aluminum wire protect conductors by limiting the current which can flow in an electrical circuit under short-circuit conditions. Operations North America and Caribbean Region

Alcan's largest regional group of in start-up costs absorbed in the operations, accounting for 62 per second half of the year, which figure cent of consolidated fixed assets is expected to cover all the start-up and about 60 per cent of sales in costs of the potlines closed by normal years, comprises Aluminum strikes, including that at Shawinigan Company of Canada, Ltd and its which ended on 30 January 1977. subsidiaries. This subsidiary group Operations in Canada, the incurred a consolidated loss of United States and the Caribbean $17.2 million in 1976, compared with are carried out by four principal a profit of $0.5 million in 1975, the organizations within Aluminum Com- loss being due to the effects of the pany of Canada, Ltd, namely, Alcan prolonged strike and to other labour loss of sales, was $90 million before Smelters and Chemicals Ltd, Alcan disturbances. The estimated cost of tax. This included the fixed charges Canada Products Limited, Alcan the strikes in the Canadian smelters, of idle plant, extra costs of pur- Aluminum Corporation and Alcan apart from any profit lost through chased metal and some $30 million Jamaica Limited.

Canada

Alcan Smelters and Chemicals Ltd still at 80 per cent. tions (annual capacity 610,000 This company is responsible for The smelter strike at Jonquiere tons) was approximately 250,000 Canadian smelter operations with (A~idaWorks), Alma and Beau- tons, assuming pre-strike levels of total annual capacity of 985,000 tons harnois, occurring after the previous production would have remained in the provinces of Quebec and union contract expired on 31 May, unchanged during the strike period. British Columbia supported by their was the first at these locations in Labour disruptions also occur- own hydroelectric power supply, 19 years, and lasted for five and a red at Alcan's two other smelters in plus fluorspar mining in the province half months until 15 November. It Canada. In June, there was an illegal of Newfoundland. The alumina ca- brought serious and irrecoverable withdrawal of work by a separate pacity in Quebec, about 1,400,000 economic loss to the employees and union at Kitimat, British Columbia, tons per year, is sufficient to $upply the communities involved, and severe which lasted for 18 days. For this the Quebec smelters. This company financial loss to the company. The period the smelter was kept in oper- is also a major producer and seller issues involved, and the efforts to ation by staff members and other of inorganic chemicals. obtain an earlier settlement, were employees, and there was no loss When the year 1976 opened, described in a communication to of production. In September, the smelters in Canada were operating shareholders dated 5 November. operating rate at Kitimat was raised at a curtailed annual rate of about The eventual strike settlement to close to its rated capacity of 800,000 tons, just over 80 per cent was based on the report of a special 295,000 tons per annum. of capacity, as they had been for the mediator appointed by the Quebec On 3 November, a third union preceding eight months. Despite government. It provided for a 30- group called a strike, when it was these cutbacks, the corr~pany'ssur- month contract from the date of legally in a position to do so, at the plus inventories of primary aluminum signing and it involved increases in company's fourth Quebec smelter, at had climbed to high levels during wages averaging 8.7 per cent in the Shawinigan. This facility, which has the 1975 period of low shipments, first ten months, an additional 9.5 an annual capacity of 91,000 tons, and continued to rise in the early per cent in the second ten months, had remained in operation during weeks of 1976. With the resumed followed by a further four per cent the other disruptions. The Shawini- growth in demand, inventories in the final ten months. The contract gan strike, in which inter-union started to decline, but at the onset is subject to review by the Cana- rivalries were involved, ended on of strikes in three Quebec smelters dian Anti-Inflation Board. The loss 30 January 1977 with settlement on 3 June, the operating rate was of production at these three loca- terms substantially unchanged from Operations .North America and Caribbean Region

Canada (continued) The program would provide ous heat-treating line, greatly in- substantial benefits in better oper- creases the company's ability to those at the others smelters. The ating efficiencies, economic gains produce light-gauge sheet for a Shawinigan smelter is now returning for the region and higher environ- variety of markets. to its previous level of production, mental standards both inside and Other important developments about 70,000 tons per annum. outside the smelters. However, the included extension of capabilities The start-up of the three Quebec capital investment program would in continuous casting and rolling at smelters after the settlement of 15 be very large and its implementation, Jonquiere, Quebec. The company November proceeded in satisfactory in part or in full, would be governed has concentrated in recent years fashion and faster than anticipated, by the prospects for adequate finan- on the development of the continu- thanks to the cooperation of em- cial return and for reasonable as- ous casting and rolling process at ployees and the technical methods surances in the fields of industrial the smelter site, and significant employed. Operations were returned and governmental relations. progress has been made in both to pre-strike levels by year end, In the Saguenay district, 2,400 process design and product range. and authorization was given in acres of land have been purchased Expansion also continued in the January to re-start four potlines in for a new site on which to commence company's Building Products Divi- Arvida Works which had been idle the rebuilding program and in 1977 sion. Housing starts in Canada were since 1975. By the end of April 1977, it is expected that some $12 million at a good level during the year, which the operating rate in the Canadian will be spent on the necessary resulted in satisfactory demand for system is expected to be 940,000 engineering studies and planning. such aluminum building materials tons per annum, or 95 per cent of as windows, doors, siding and rain- capacity. Alcan Canada Products Limited water goods. Apart from returning its opera- This company is responsible for The Wire and Cable Division tions to optimum efficiency and operating 27 manufacturing plants announced its intention to construct striving to restore the industrial and 23 distribution centres across a new cable mill in the province of relations climate in 1977, the Smelter Canada, and is the largest supplier Quebec to enable it to meet anti- Division intends to continue its pro- of semi-fabricated and finished cipated cable requirements for the gram, interrupted last year, to im- aluminum products and of ingot to James Bay power project. This prove the environmental and work- the Canadian domestic market. division also continued its drive to ing conditions in its older smelters. Its sales in 1976 increased by improve and simplify connectability This involves a capital expenditure 8 per cent to 234,000 tons, including of aluminum wire and cable with of the order of $38 million in 1977. 7,500 tons of fabricated products equipment and service boxes, re- The company also proposes to sold in export markets. Profits from sulting in the development of the undertake a progressive rebuilding these activities increased in 1976 'Coppertail' connector which im- program for such smelters, but has over those of 1975. proves the reliability of electrical not yet made a start in the light of The year began strongly but connections and reduces the space recent financial and industrial con- demand slackened in the second half. needed in which to make them. ditions. The program would include While the company believes it re- Increasing emphasis on efficient the construction of new smelter tained market share, and maintained transport is leading to greater use capacity in the Saguenay region of supplies of metal to customers, its of aluminum as Canada's stock of Quebec, and upon its completion fabricating operations were ad- rail cars is increased and modern- other capacity would be closed versely affected as many operations ized. Early 1976 saw the delivery down progressively for rebuilding. designed to utilize molten metal from of 1,600 aluminum grain hopper If implemented in full, the building the smelter were forced by the cars of Alcan design, and the year and rebuilding program, which could smelter strike to switch to metal in end marked the delivery of 20 pro- also include fabricating facilities in ingot form, which increased costs. duction-model rotary-dump coal- the same area, would, over a long With the commissioning of a cars, prototypes of which were jointly period, effect an increase in smelting second high-speed cold-rolling mill, developed by Alcan and Procor capacity of some 300,000 tons, with rolling capacity at Kingston Works Limited. power to be available from the com- increased to 150,000 tons a year. pany's existing hydroelectric plants. This mill, together with its continu- United States

Alcan Aluminum Corporation is a the upsurge in the sheet market, it the strike at the Canadian smelters. wholly-owned United States com- provided the capacity for increasing The results of Alcan Building pany with an important market sales to both existing and new cus- Products were disappointing but the position in that country, operating tomers. A joint research and devel- division's sales of windows and fabricating plants and distribution opment project with the Kingston, agricultural building products were outlets in 24 states. , research centre enabled most satisfactory. In 1976, the U.S.A. continued to the company to become an approved Although the markets for build- be Alcan's largest national market, sheet supplier to the growing ing and construction products with sales representing 25 per cent automotive market. improved during 1976, their recovery of the group's total sales dollars Alcan's Metal Goods service lagged behind the overall economy and 26 per cent of its tonnage. The centres had another successful in general. This is Alcan's largest recovery from the 1974-75 reces- year, even though capital investment market for aluminum products in the sion was especially gratifying after by the industrial community was United States, and a program of the sharp drop in sales during the less than anticipated. Sales of elec- restructuring, improved productivity, recession of 1975. trical conductor products increased and new products places the build- Alcan Aluminum Corporation but Alcan's cable divisions were ing products division in a strong had a successful financial year, with hampered by rising costs and soft position to compete for the growth all of its operations contributing to prices. The Alcan Metal Powders' in residential construction materials its record earnings. The second business in 1976 was back to normal anticipated in 1977. This recovery, cold-rolling mill at Oswego, New levels after dropping in the 1975 plus the expected higher capital York, was brought on-stream by recession. Ingot sales in the United investments by industry, will help Alcan Sheet and Plate Division with States were strong in the first half the company's overall business minimal start-up problems and, with but were hurt in the second half bv this year.

Caribbean

Alcan Jamaica Limited is respon- of the strike on production costs, operations in Jamaica. sible for operating Alcan's bauxite and of the increased costs of wages Talks between the Government mining and alumina facilities in and fuel oil, the 1976 loss was held of Jamaica and Alcan regarding Jamaica. Reflecting lower customer to approximately the same level as such questions as ownership of land demand, and a strike at one of the that suffered in 1975. Cost-cutting and bauxite reserves, Government two alumina plants which resulted measures taken by the company - participation in the company's in a loss of production of 39,000 including a 20 per cent reduction in equity, and expansion of existing tons, total output was 841,000 tons the size of the work force - contrib- mining and processing facilities, of alumina in 1976. This tonnage uted to containing the 1976 loss. continued during the year and are represented 35 per cent of the The bauxite production levy still in progress. Group's total alumina requirements imposed by the Government of Other company operations in for its own use and sales commit- Jamaica since 1974 results in taxa- Jamaica and Trinidad continued to ments. At year end the alumina tion substantially higher than in perform satisfactorily. These include plants were operating at a rate of other bauxite-producing countries, bauxite trans-shipment and bulk 948,000 tons per annum. and is a continuing factor in the storage, aluminum fabricating, and In spite of the adverse impact unprofitability of bauxite and alumina trading. From fop ielt, clockwise: High strength, better appearance: from a single extrusion. a dependable, one-piece boat mast. A modular extruded shape which inter- locks with ttself provides two, three or four- sided shafts for attractive, rigid light poles. For refrigerated transportation, meat is hung by means of disposable. hygienic straps to slldlng aluminum hangers which combine lightness and strength at low temperatures. Attractive aluminum fencing is easy to install and ~racticallvmaintenance-free. Bright colours, plus the warm anodic tones of aluminum. make an inviting workplace. Lightweight and durable, aluminum con- tainers provide a speedy service which adapts well to customers' shipping patterns. Operations . Europe, Near East, Africa and Latin America Region

In the Europe, Near East, Africa and area, the Company owns and oper- Latin America Region, Alcan con- ates a major aluminum enterprise in ducts its operations and investments Brazil, with integrated operations through three area groups. from bauxite mining to aluminum end The United Kingdom, Scandi- products, has substantial but smaller navia and Ireland are in one group fabricating subsidiaries in four other with the British subsidiaries directed countries, and holds a minority in- by a holding company, Alcan Alumi- terest in Argentina's largest alumi- nium (U.K.) Limited. The area general num fabricator. Alcan is a partner manager is located in London. in a major new bauxite enterprise In continental Europe, Alcan in the Amazon region of Brazil. The Europe NV is the holding company Because of continuing national area general manager for Latin for fully-owned fabricating busi- differences in many sectors, in- America is located in Rio de Janeiro. nesses in Belgium, France, Ger- cluding labour andsocial legislation, On the African continent, Alcan's many, Italy and Switzerland, the fiscal regulations and economic fac- interests are concentrated in fab- largest facilities being in Germany. tors, the European units operate as ricating subsidiaries in Nigeria and It also holds a 25 per cent interest separate national entities. However, Ghana, minority participations in in the leading aluminum company in international coordination, rational- aluminum fabricating and silicon Spain. A trading company, Alcan ization and allocation of resources production enterprises in the Repub- S.A., Zurich, sells aluminum and between the national companies are lic of South Africa, and membership related products in the Near East carried out through the area general in a major bauxite-mining consortium and North Africa. The area general managers in London and Geneva. in the Republic of Guinea. manager is located in Geneva. In Latin America, the third major

United Kingdom, Scandinavia and Ireland

United Kingdom additional export business. During In April the company increased Alcan Aluminium (U.K.) Limited, the year, prices for all aluminum its interest to a majority holding in through its subsidiary Alcan (U.K.) products were substantially in- Luxfer Holdings Limited, a leading Limited, owns a modern smelter of creased because of higher raw company in the high-pressure gas 132,000-ton annual capacity in material and operating costs which cylinder business with plants in Northumberland and a coal-fired resulted in part from the devaluation Nottingham, England, and Riverside, power plant, both of which started of sterling. These conditions, to- California. operations in 1972. It also holds a gether with continuing good indus- During the year, the Lynemouth, 75 per cent interest in a wide range trial relations, led to much improved Northumberland smelter stepped up of fabricating facilities through Alcan consolidated results (after minority its output in response to a higher Booth lndustries Limited. Together, interests) for Alcan Aluminium (U.K.) level of primary ingot demand in the these operations constitute one of Limited, particularly in the second U.K. market. In the fourth quarter the two principal enterprises in the half. In sterling terms the U.K. the smelter reached full effective U.K. aluminum industry. returned to a position of profit for capacity, maintaining high operating In the U.K. in 1976, modest the year, and in dollar terms showed efficiencies and product quality. economic recovery, accompanied a loss of $3 million compared with a Alcan Booth lndustries Limited had by an end of customers' inventory loss of $14 million in 1975, but a much improved and profitable reductions, led to growth and im- was significantly profitable in the year. proved trading conditions in the fourth quarter. The prospect is New investment in U.K. plant domestic market, while a rising level for a further improvement in the and equipment was at a low level of world trade gave opportunities for profit position of this group. due to the difficult conditions which United Kingdom (continued) coating line at Holmestrand and a metal inventories declined and much plant for aluminum casting at of the continental smelting capacity existed in 1975 and during the early Hsyanger. Alcan has agreed to take which had been closed during the months of the year but the outlook its share of a capital increase by recession was restarted. Inventories is for higher expenditure in 1977. ASV, requiring an investment of at year end were reported to be still about $7 million early in 1977. large but these will be further Scandinavia reduced if the anticipated average The general recovery of the econo- Republic of lreland demand growth in 1977 and 1978 mies led to an increase in demand In the Republic of lreland, Unidare materializes. and eventually also to higher Limited, a diversified manufacturing Since Alcan is not directly en- metal prices for the related com- and aluminum fabricating company gaged in smelting in Continental panies in Scandinavia. Granges in which a 25.5 per cent interest Europe, the ingot supplies for its Essem AB of Sweden, in which is held, had a reasonable year fabricating plants are obtained Alcan's participation is 20.84 despite slow growth and high in- mainly from ASV in Norway. Sales per cent, increased its profitability flation in the Irish economy. During tonnage of fabricated products was over the preceding year. The com- the year, the company maintained higher by about 35 per cent in 1976. pany greatly strengthened its posi- its traditional export markets and This growth, together with some im- tion in the extrusion market by secured additional outlets in areas provement in prices and rationaliza- acquiring Skandinaviska Aluminium as diversified as Iceland, Fiji and tion of operations, cost-cutting mea- Profiler AB (SAPA), Scandinavia's Taiwan. sures and increased productivity, largest aluminum extruder. The proposal to construct an was reflected in substantially better After a difficult first half, alumina plant on the Shannon River financial results in all of the coun- Ardal og Sunndal Verk a.s. (Asv), estuary, which had been postponed tries where the Group operates, of Norway, in which Alcan holds a in late 1975 by Alcan and its two except Spain. Area net income after 25 per cent of the equity, returned partners (Ardal og Sunndal Verk as. tax improved to a profit of $24 million to profitable operations in the of Norway and Granges Essem AB as opposed to a loss of $1.6 million second half, though a loss was of Sweden), will be under review in in 1975. The 1976 net income bene- recorded in Alcan's accounts for 1977. fitted from some inventory profits. the year. With metal inventories In Spain, Empresa Nacional del back to normal levels and operations Continental Europe Aluminio, S.A. (Endasa), in which at full capacity, a further improve- With the significant recovery from Alcan holds a 25 per cent equity, is ment of the financial results is economic recession in Western strengthening its position as the expected for the coming year. 1976 Europe, the demand for primary principal integrated aluminum enter- was the first year of Asv's new aluminum in 1976 grew by an es- prise in that country. Endasa has a 10-year program of smelter mod- timated 25 per cent. The growth was 55 per cent interest in a large ernization. Major projects on which particularly strong in the second and smelter and alumina complex now work was started include a 32,000- third quarters but showed hesitancy under construction at San Ciprian ton potline at Ardal, a second coil- in the fourth. The industry's surplus in Spain. Alcan holds a contract to

Research and Development

In 1976, Alcan's ongoing fundamental and applied In partnership with L'Aluminium , the research programs were concerned with many construction of a pilot plant in Southern France to phases of the business, from processing of raw produce alumina from non-bauxitic materials such materials and improved technology in smelting, to as clays and shales was completed in September. development of special alloys and products, fabri- Experimental processing of various raw materials cating and joining techniques and methods of is now under way. In addition, Alcan participates surface finishing for aluminum. with other aluminum producers in the ongoing The Company employs some 900 scientists, evaluation by the US. Bureau of Mines of a number engineers, technicians and support staff in R & D of other processes for the extraction of alumina activities in its three research centres in Canada from non-bauxitic materials. and the U.K. and in development projects The expense incurred for research and dev- associated with its manufacturing facilities elopment activities amounted to $24.4 million in throughout the world. 1976. Continental Europe (continued) mina will be used by smelters in 1976 Alcan participated to the Spain, including those owned by extent of $1.7 million in a capital provide technology, basic engineer- Endasa, and 55 per cent of the baux- increase of Endasa in order to ing and start-up support for the ite requirements will be supplied maintain its interest in that company 880,000-ton-per-annum capacity by Alcan. A smelter to reach 198,000 at 25 per cent. alumina plant which is scheduled to tons of capacity early in 1980 is begin operations in 1979. The alu- also to be built at San Ciprian. In

Africa

In Nigeria, the fabricating subsid- holds a minority participation in cent equity participation, recorded iaries, Alcan Aluminium of Nigeria partnership with the Government of lower earnings in 1976. Silicon Limited and Flag Aluminium Prod- Guinea and five other aluminum Smelters (Pty) Limited, in which ucts Limited, maintained good producers, mined over six million Alcan owns a one-third interest, levels of profitability during the year tons of bauxite in 1976 and showed overcame production problems as the country's prosperity contin- a profit for the first time. The Com- experienced early in the year but ued to grow. pany purchased 1.4 million tons of incurred losses. It is now operating In Ghana, the semi-fabricating bauxite, mainly for use in its Quebec on an improved basis. The output and end-products operations con- alumina plants. was sold to the Group and to other tinued to show good results. In South Africa, Huletts Alu- export markets. In Guinea, Compagnie des minium Limited, a fabricating com- Bauxites de Guinee, in which Alcan pany in which Alcan has a 24 per

Latin America

Brazil's economy continued to grow program of $90 million, financed settled conditions. The company's in the face of severe import restric- from internal sources and from a final earnings were good in peso tions which, among other effects, $50 million eight-year floating-rate terms but only modest when ex- impeded growth in aluminum con- loan placed by 'Alcanbrasil' with a pressed in dollars. sumption. Aided by a full year's syndicate of international banks. Aluminio Alcan de Colombia, production from the smelter expan- Construction work on the $300 S.A. showed good profits as sion completed in 1975, however, million first stage of a bauxite devel- Colombia emerged from its 1975 the sales and earnings of Alcan opment on the Trombetas River in slump and received a substantial Aluminio do Brasil S.A. again grew Brazil's Amazon region was con- boost from high market prices for significantly to new record levels. tinued by Minera~SoRio do Norte coffee. Net income was $39 million, com- S.A. This is a consortium company. Alcan Aluminio del Uruguay pared with $32 million in 1975. sponsored by Companhia Vale do S.A. showed good profits as During 1976 the new sheet mill Rio Doce (CVRD) and Alcan, and provements in Uruguay's exports to at Pindamonhangaba, between SSo includes seven other corporate part- Europe and Latin America provided Paulo and Rio de Janeiro, neared ners from Brazil. Europe and North a needed lift to the economy. completion. When this facility be- America. Capacity of the first stage Alcan de Venezuela, S.A. con- gins operation shortly, it will give will be 3.35 million metric tons of tinued to show high rates of growth Latin America its first mill capable bauxite per annum, of which 1.2 and profitability, in spite of the of rolling the full range of today's mllion metric tons will go to the appearance of several new competi- strong, light-gauge, close-tolerance Company's alumina plants in Can- tors attracted by the country's sheet products. ada. Bauxite shipments are expected booming economy. Construction began on a 30.000- to start in 1979. Aided by Argentina's improving ton expansion of Alcan Aluminio do In Mexico. Alcan Aluriiinio, S.A. economic conditions, Alcan's re- Brasil's Saramenha smelter and of saw a very good year disrupted by a lated company Camea S.A. improved supporting alumina facilities on the sharp devaluation of the peso on its profitability over 1975 levels. same site. This represents a capital 1 September and by subsequent un- Operations Middle East, Asia and South Pacific Region

In Australia, Japan and lndia, where in Malaysia and Thailand, and has the aluminum industry is well de- I=' traded actively through the Pacific veloped, and elsewhere in the vast 4 - and Asian regions. continent of Asia where live hun- b 11 An area general manager for dreds of millions of potential users I Australia and New Zealand is located of aluminum, Alcan plays a signifi- in Sydney; for lndia, in Calcutta; and cant role. for Southeast Asia, in Hong Kong. In Japan, the second largest Within this larger regional market for aluminum after the US., grouping, Alcan also includes the Alcan has participated for almost Middle East where trading activities ------8 50 years and has a 50 per cent hold- have been conducted for many ing in one of the principal Japanese 40 years ago and holds a major years and where new business and aluminum groups. In Australia and position in both countries. Alcan was investment opportunities are under India, the company took part in a pioneer aluminum fabricator in continuing study. establishing the aluminum industry Indonesia, New Zealand, and later

lndia

Indian Aluminium Company, Limited, consolidation were lower. Total increase of eight per cent over the in which Alcan owns 55.27 per cent aluminum shipments for the year levels of the previous year, due to of the common shares with the were 104,000 tons, including 22,000 improved availability of power in the balance widely held by the Indian tons of ingot exports permitted by early parts of 1976. However, in the public and by institutions, operates the authorities to alleviate problems latter part of the year, the State- the largest integrated bauxite, of surplus inventories accumulated owned power supplies were again alumina, smelting and fabricating in 1975. Demand for electrical grade curtailed by the deficiency of enterprise in the sub-continent. metal increased with higher govern- monsoon rainfall and smelter opera- Due to higher sales volume and ment spending on power transmis- tions at year end were reduced to improved price realizations on semi- sion and distribution projects, and 62 per cent of their rated annual fabricated products, this company sales of fabricated products rose capacity of 129,000 tons. Power increased its net profits by 16 per with the general economic recovery. restrictions also affected the level cent in 1976, though, due to ex- The company's smelter pro- of fabricating operations and change adjustments, the earnings in duction reached 93,000 tons, an shipments.

Japan

Alcan's investments in Japan include fabricating operation. that, despite continuing heavy ingot a 50 per cent holding in one of the In 1976, the Japanese economy imports, excess industry stocks de- country's largest aluminum produc- recovered slowly but primary alumi- creased by more than 300,000 tons. ers, Nippon Light Metal Company, num demand rose by 30 per cent The market gradually supported Ltd (NKK), with the balance of the over 1975 to equal the previous better prices for ingot and fabricated equity widely held by institutional record level of 1973. The domestic products, and the financial results and public shareholders. This com- aluminum smelters, including NKK, of the company improved in the pany, with its subsidiaries, is an however, reduced production to course of the year. By the end of integrated alumina, smelting and about 60 per cent of capacity so 1976, NKK had approximately Japan (continued) in 1975. ing role in the rapid growth of the Prospects for 1977 in Japan foil and aluminum paste markets in reached a break even point. The appear to be a continuing moderate Japan. A new subsidiary, Toyo year's sales were about $850 million, increase in demand which should Aluminium Foil Products K.K., was but high energy costs and the low allow NKK to operate profitably. established to further the company's operating rate resulted in a loss Alcan's other 50 per cent owned moves in the field of consumer for the year, Alcan's share being related company, Toyo Aluminium products. The company was pro- $11.8 million against $17.7 million K.K. (Toyal), is continuing its lead- fitable in 1976.

Australia and New Zealand

In Australia, Alcan owns 70 per cent ture of windows and doors and and for export to Alcan's smelter (and Australian institutional inves- opened a replacement window in Kitimat, British Columbia, derives tors the balance) of Alcan Australia service for the renovation market. from Alcan's 21.39 per cent owner- Limited which, with its 50,000-ton It also introduced a new pleasure ship of the world's largest alumina smelter and several plants for fabri- boat, combining aluminum with fibre plant at Gladstone, in the state cated and consumer products, is glass, which was well received, of Queensland. a major member of the Australian and production facilities will be Alcan New Zealand Limited, industry. In spite of the country's expanded. the principal fabricator in that coun- lagging economy in 1976, this com- The year 1976 closed with Alcan try, increased its 1976 sales tonnage pany increased its consolidated Australia's metal sales in balance by 30 per cent, and profits were profits to $3.5 million. Starting early with full smelter production, and $1 million. notwithstanding the prob- in the year, the operating level further expansion of the smelter is lems of inflation, exchange rate of the smelter was raised to full being planned. The energy required fluctuations and industrial unrest in capacity from a reduced rate of 66 to support this expansion is already the general economy. The com- per cent. To broaden and strengthen under contract. The recent Austra- pany's associated window-making its marketing base, particularly in lian devaluation should strengthen enterprises had a profitable year. the building and residential fields, operations there. the company began the manufac- Alumina supply for the smelter,

Southeast Asia

In the fast-developing and populous plete a series of spot sales which sia Berhad. in which Alcan's equity nations of Southeast Asia, the had been arranged in 1975. has been reduced to 34.48 per Group's interests are in aluminum Two fabricating subsidiaries, cent, operated at a deficit due to ingot sales, bauxite production and Alcan Thai Company Limited, in government price controls on fabric- the development of pioneer fabri- Thailand and P.T. Alcan Indonesia, ated products, but these controls cating enterprises in several moved from loss to profit positions were later relaxed. countries. in 1976, the former with a net income Baux~teproduction by a mining Some 25,000 tons of ingot were of $400,000 earned mainly from subsidiary in Malaysia was at a delivered to the People's Republic export sales to the Middle East. level of 600,000 tons in 1976, mainly of China early in the year, to com- Aluminium Co~npanyof Malay- for sales to Japan and Taiwan. Financial Review

Sales revenues were $2,656 million Net lncome earnings in Latin America, surpas- ($2,302 million in 1975), due to an Net income of $44 million reflected sing the previous year's level, though 8 per cent increase in total ton- an improving quarterly earnings marginally lower in the first half nage, the significantly higher prices trend, in spite of heavy losses on than in 1975, and from improved realized, and the increased propor- Canadian operations in the second earnings from smelting and fabri- tion of semi-fabricated sales, which half. cating in Australia. lncome from increased to $1,701 million from This trend was due to a con- Continental Europe was lower in the $1,370 million in 1975. Ingot sales siderable improvement in the first quarter, but for the three revenues were $432 million, against earnings of most of the overseas remaining quarters showed a large $441 million in 1975, as ingot subsidiaries, and to reduced losses improvement after the loss in 1975. tonnage fell to 561,800 tons from in equity companies. Equity income Operations in the United 616,900 tons last year. in 1976 also benefitted from Alcan's Kingdom recorded significant losses Revenues from other products new equity investment in Hunter in the first two quarters of 1976, as such as alumina, chemicals and Douglas N.V. The changes in quar- had been the case for most of 1975 other metals, at $452 million, in- terly income reflect the recovery but, after a small loss in the third creased from the level of $419 mil- from recession in North America quarter, improved to substantial lion achieved in the previous year, which preceded the recovery in profitability in the last quarter. but gross profitability declined. some other countries, as shown by Another major element in the The cost of goods sold increased the breakdown of Alcan's net in- improvement in second half income to $2,155 million from $1,840 million come for 1976 and for 1975 between was a recovery in Nippon Light last year. Apart from reflecting consolidated income reported by Metal, in which Alcan's 50 per cent increased tonnage and continued Aluminum Company of Canada, Ltd interest resulted in an equity loss inflation, the year's costs were dis- (Alcan: Canada) and its subsidiaries, of $11.8 million for the year, com- torted by the impact of strikes, and the total income of all other pared with $17.7 million for 1975. Of including charges arising from elements in the Group. the 1976 loss, $9.6 million arose additional metal purchases. in the first half but, after a further Net Income Selling, Research and Admin- (in millions of US. dollars) loss in the third quarter, a marginal

~ ~ ~~~ppp---pp istrative expenses were $195 mil- 1976 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year profit was earned in the final period. lion, an increase of 7 per cent over Alcan: Canada 5.3 4.6 (17.9) (9.2) (17.2) The sale of lower cost inven- the previous year. Of the increase, All Others (0.8) 1.5 28.3 32.2 61.2 tories accumulated during the Alcan 4.5 6.1 10.4 230 440 ~~~~ $3 million was in respect of the con- ~ -~- ~ recession in 1975 benefitted 1976 solidation of new subsidiaries. -- net income. Inventory profits for 1975 1 Qtr 2 0tr 3 Qtr 4 Qtr Year Interest expense fell to $100 p~ 1976 are estimated at $40 million Alcan: Canada (0.5) (0.6) 5.1 (3.5) 0.5 million from $105 million in 1975, All Others 18.1 4.9 (0.2) (0.7) 22.1 before tax. reflecting repayment of debt follow- Extraordinary gain 12.4 12.4 ing the issue of Alcan shares in -- Foreign Exchange Alcan 176 4.3 4.9 8:2 KO mid-year. -- ~~~ If debt (not maturing within one For Aluminum Company of year) in currencies other than US. Tax Rate Canada, the first half of 1976, com- dollars had been valued at year- Alcan's effective tax rate for 1976 pared with 1975, was characterized end rates of exchange, reported was 39 per cent, the same as by improving earnings from Cana- net income would have increased in 1975. Alcan's taxes are affected dian smelting and fabricating opera- by $7.1 million in 1976 and by $40.1 by differing tax rates in the various tions, and by a return to substantial million in 1975. The principal un- countries in which it operates, by profitability in the United States. realized gains in 1976 were caused taxes on intercompany dividends In the second half of 1976, strikes by declines in the value of the U.K. and by the effect of investment or caused heavy losses in Canada and, pound and of the Australian dollar, similar allowances. Non-taxable for reasons given earlier, the Jamai- partially offset by appreciation of foreign exchange gains or losses can operations were unprofitable. the German mark. which arise on translation also affect In other Alcan operations, net the tax rate, as do any other non- income benefitted throughout the taxable items. year from a continued high level of Alcan Consolidated Metal Sources

Thousmds of Tons 2000 IIIII

Trends in Aluminum Prices

Alcan Aluminium Limited Price Range of Common Shares \ 1 New York Stock Exchange ~lcahNet ~ealizationon Sa and Ingot Products (&month. US. $

Sources of Sources of Consolidated Revenues Consolidated Gross Profit

US. I Millhona U.S. $ Millions I,,, 500 IIIIIIII

2(* Operating Rwenues and Financial Review

Financing ness and the sale of metal in inven- This amount includes allowances In April, Aluminum Company of tory allowed the repayment and for continued expenditure on the Canada, Ltd made its first debt issue termination of credits arranged in Trombetas bauxite project and in the Eurodollar market, raising 1975 to finance the excess inven- smelter expansion in Brazil, for ex- US50 million at 9Y2 per cent with tories which were accumulating at pansion in Australia and a start on a maturity of 12 years. In July, that time. smelter modernization in Quebec. in view of the improved prospects for the aluminum industry and of the Flow of Funds Common Dividends group's future requirements, Alcan Although aluminum inventories were Dividends amounted to $15 million sold five million new common shares, lower at December 1976 than a year or 40$ per common share, com- raising $127.5 million after issue earlier, working capital was little pared to 90d per share in 1975 and expenses. The new shares were changed on the year due to sub- $1.20 in 1974. The rate of lo$ per marketed by leading underwriters stantially higher receivables, share initiated in the first quarter in the United States, Canada and reflecting improved business, and was maintained during the year, as Europe. Of the proceeds, $67 to increased inventories of raw improved conbitions were offset by million was applied to increase materials, including higher stocks strike losses in the second half. On the share capital of Aluminum Com- of bauxite. Capital expenditures, 2 February, the Directors declared pany of Canada, Ltd and the balance at $138 million, were below the a quarterly dividend of 20 cents per was retained by the parent com- planned level, in part due to labour share, payable on 7 March 1977, pany for future requirements, includ- problems at the Quebec smelters which is well below the limits im- ing additions to existing investments which caused deferment of expen- posed by the Canadian Anti-Inflation in Norway and in Australia. The ditures. Board guidelines. issue permitted an equivalent reduc- For 1977, expenditures of ap- tion in group long-term indebted- proximately $300 million are planned.

Information by Geographic Areas

U.S. and Latin South Asia and Elimin- Total Year ending 31 December 1976 Canada Caribb. Europe America Pacific Africa ations Consolidated ------in millions of U.S. dollars Sales and operating revenues To subsidiary companies $ 66 To other companies 753 - Total 81 9

Net income - 1976 2 Net income - 1975, excluding extraordinary gain (11)

31 December 1976 Working capital $1 74 Fixed capital (net) 207 Investments and other assets 16 - Capital employed 397 Number of employees (thousands) 7

Sales to subsidiary companies are made at a fair market price recognizing volume, continuity of supply and other factors. Net income is total revenues less expenses directly related to the geographic area in accordance with generally accepted accounting principles. Capital employed represents the Company's book value of the net assets located in each area. Of the Canadian sales, $622 million were export sales, principally to the United States Consolidated Statement of lncome

Alcan Aluminium year ending 31 December 1976 in thousands of US. dollars Limited 1976 1975

- - Revenues Sales Operating revenues Other income (note 9)

Costs and expenses Cost of sales and operating expenses 2,154,669 1,839,580 Depreciation and depletion 115,621 110,740 Selling, research and administrative expenses 195,494 182,277 Interest on debt not maturing within one year 81,064 85,060 Other interest 19,131 19,954 Other expenses 8,379 5,612

lncome before income taxes and other items

lncome taxes (note 10) Current Deferred

lncome before other items Equity income and minority interests (note 11)

lncome before extraordinary gain Gain on sale of investment

Net income (note 1) $ 44,007 $ 35,000

in U.S. dollars lncome per common share (after preferred dividends) Before extraordinary gain $ 1.14 $ 0.65 Extraordinary gain - 0.36

$ 1.14 $ 1.01

Dividends per common share $ 0.40 $ 0.90 Consolidated Balance Sheet

Alcan Aluminium 31 December 1976 in thousands of US. dollars Limited 1976 1975 Current assets Assets Cash and time deposits $ 57,900 $ 59,225 Receivables 494,061 41 8,859 Aluminum 445,549 475,118 Raw materials and other supplies 371,148 357,490

Deferred charges Deferred receivables (note 5) Investments in companies owned 50% or less (note 2) Property, plant and equipment (note 3) Less: Accumulated depreciation and depletion

~ -~ ~ - -.-

-. - Total assets --

- - - Liabilities and Current liabilities Shareholders' Payables Equity Short-term borrowings (principally from banks) Incomeand other taxes Debt maturing within one year (note 4) -- --

Debt not maturing within one year (note 4) Deferred credits Deferred income taxes Minority interests (note 6) Shareholders' equity Preferred shares, par Can. $40 (note 7) Outstanding - 56,309 shares (1975 - 62,402) Common shares, without nominal or par value (note 7) Outstanding - 40,446,694 shares (1975 - 35,378,987) 426,905 291,480 Retained earnings (note 8) 840,611 81 8,171

- -~ -- ~p 1,269,604 1,111,965

~ p~~~ ~-- - - - Total liabilities and shareholders' equity $ 3,090,239 $ 3,011,781

~~~~ ~ - .. Approved by the Board: Nathanael V. Davis, Director John H. Hale, Director Consolidated Statement of Changes in Financial Position

Alcan Aluminium year ending 31 December 1976 in thousands of U.S. dollars Limited 1976 1975

Source of funds Income after taxes Depreciation and depletion Deferred income taxes Other

From operations 149,950 155,507 Common shares (net of financing expenses) 129,132 15,761 Preferred shares of a subsidiary company - 49,235 New debt 110,109 156,453 Disposals of plant and equipment 5,458 12.239 Sale of investments (including extraordinary gain in 1975) 744 18,654 Other (net) 11,322 21,866

Application of funds Plant and equipment Investments Debt repayments Dividends

Increase in working capital (note 16)

Working capital - beginning of year

Working capital - end of year $ 773,698 $ 765,777

Consolidated Statement of Retained Earnings

Alcan Aluminium Retained earnings - beginning of year Limited Net income

Underwriting commissions and expenses of issue of 5,000,000 common shares Dividends on preferred shares Dividends on common shares

Retained earnings - end of year (note 8) Notes to Financial Statements in millions of U.S. dollars

1. Summary of accounting policies Principles of consolidation The consolidated financial statements include the accounts of all companies more than 50% owned. In addition, under the equity accounting principle, consolidated net income includes Alcan's equity in the net income or losses of all companies 20-50% owned and the investments in these companies have been increased by Alcan's share of their undistributed net income since acquisition. When the cost of an investment differs from the book value of Alcan's equity therein at date of acquisition, the difference is amortized over the estimated useful life of the related fixed assets. Intercompany items and transactions between consolidated companies, including profits in inventories, are eliminated. Translation of accounts into United States dollars The consolidated financial statements are expressed in U.S. dollars since this is the principal currency of international trade in which Alcan's business is mainly involved. Accounts included in the consolidated statement of income, except depreciation and depletion, are translated at average rates of exchange prevailing during the year. Accounts included in the consolidated balance sheet are translated at rates of exchange at year end except that (a) inventories, investments, fixed assets and accumulated depreciation and depletion are at rates at dates of acquisition, (b) deferred income taxes are at rates at dates of origin, and (c) debts not maturing within one year and capital stock are at rates at dates of issue. Translation adjustments are included in income. The Financial Accounting Standards Board in the United States requires that companies reporting to investors in the United States adopt the practice of translating long-term debt at current rates of exchange. However, as Alcan's borrowings in currencies other than US. dollars have been invested for the most part in the country of the borrowing and will be repaid out of funds generated in the same currency, Alcan believes that it could be misleading and cause violent fluctuations in reported earnings to recognize immediately translation gains or losses which arise from changes in exchange rates. Accordingly, Alcan has not adopted the current rate method but has continued to follow its policy of translating such debt at historic rates, an accounting practice which is generally accepted in Canada. The following table compares reported net income with the net income that would have been reported using the FASB current rate method, and also shows the cumulative effect on retained earnings. 1976 1975 AS Current Rate AS Current Rate Reported Method Reported Method Consolidated net income First quarter (unaudited) $ 4.5 $ 5.2 5 17.6 5 16.8 Second quarter (unaudited) 6.1 13.1 4.3 17.7 Third quarter (unaudited) 10.4 2.9 4.9 34.9 Fourth quarter (unaudited) 23.0 29.9 8.2 5.7 - - - - 5 44.0 $ 51.1 $ 35.0 $ 75.1 Dollars per common share 1.14 1.33 1.01 2.16 Consolidated retained earnings Beginning of year 5 818.2 5 797.4 5 814.5 5 753.6 End of year 840.6 826.9 818.2 797.4 Deferred income taxes Income tax regulations in Canada and certain other countries permit the deduction from taxable income of certain items (principally depreciation) in amounts which do not coincide with those charged for financial reporting purposes. The effect of such timing differences on income taxes otherwise payable is recognized as deferred income taxes. Inventories Aluminum, raw materials and other supplies are stated at cost or net realizable value, whichever is the lower. The cost of inventories other than those in the United States is determined for the most part on the monthly average method. The cost of inventories in the United States, amounting to $116 million, is determined by the last-in-first-out method, which is permitted for income tax purposes. Had such inventories been valued on the monthly average method, the value would have been $57 million higher.

Other Property, plant and equipment includes the cost of renewals and betterments. Repairs and maintenance are charged against income as incurred. Depreciation is calculated on the straight-line method using rates based on the estimated useful lives of the respective assets. Depletion, not significant in amount, is calculated on the unit of production basis. lncome per common share is calculated by dividing net income less preferred dividends by the average number of shares outstanding during the relevant period. For 1976, quarterly averages were used because of the shares issued during the year (1st Quarter, 35,390,272; 2nd, 35,446,694; 3rd, 39,196,694; 4th, 40,446,694). For 1975, the average for the year was 34,712,069,

- - ~ 2. Investments in companies owned 50% or less 1976 1975 ~-- ~ At cost plus equity in undistributed net income since acquisition Companies 50% owned (cost $53 million) $ 61 $ 73 Companies 20% to 50% owned (cost $118 million) 142 137 At cost Companies less than 20% owned 4 5 $ 207 $ 215

The results of operations and the financial position of the 20-50% owned companies, located mainly in Australia, Germany, Guinea, Japan and Norway, are summarized below. Results of operations for the year 1976 1975 Revenues $2.943 $2.001 Costs and expenses 2.935 2.043 Income (loss) before income taxes 8 (42) Income taxes 3 (30) Net income (loss) $5 $ (12) 'Alcan's share of net income (loss) (4) (12) Dividends received by Alcan 3 4

Financial position at 31 December Working capital Property, plant and equipment (net) Other assets (net)

Less: Deferred taxes Debt not maturing within one year Net assets **Alcan's equity in net assets

'Where a company operates as a joint venture supply~ngmaterials to each participant, Alcan's share of the net income is applied to the cost of the materials so obtained. "If debt not maturing within one year of companies 20-50% owned was translated into U.S. dollars at year-end rates of exchange, Alcan's equity in net assets of such companies would be reduced bv $34 million. Notes to Financial Statements in millions of U.S. dollars

3. Property, plant and equipment 1976 1975

~ p~~- .- - Cost Acc. Dep. Net Net

-~~p - p~-~- Land, and water rights $ 65 $ 1. $ 64 $ 64 Mineral properties, rights and development 18 7 11 11 Raw material, power and other facilities 1,041 623 418 413 Smelting facilities 974 532 442 443 Fabricating facilities 899 433 466 454 - - ~ - - $2,997 $1,596 $1,401 K385 Expenditures in 1977 are expected to be approximately $300 million

- ~ - 4. Debt not maturing within one year 1975 Aluminum Company of Canada, Ltd 'Bank loans under $200 million revolving credit agreement, due 1980/1984 $ 120 g1/2 % Sinking fund debentures, due 1995 100 103/4% Sinking fund debentures, due 1994 (Can. $75 million) 77 93h% Sinking fund debentures, due 1991(Can. $57 million) 59 4l/2% Sinking fund debentures, due 1980 25 7%% Serial debentures, due 1977/1979 (Can. $30 million) 40 9%% Debentures, due 1988 5.10% Notes, due 1977/1992 77 Other debt, due 1977/2001 8 Alcan Aluminum Corporation (U.S.A.) glh% Notes, due 198011994 45 4%% Notes, due 197711984 31 Other debt, due 1977/1990 4 Alcan Aluminium (U.K.) Lirriited (consolidated) 'Loan, due 1979 (£15 million) 36 9% Loan stock, due 1981/1994 (£9 million) 24 101/2% Loan stock, due 1981/1994 (£8 million) 19 'Bank loans, due 1977/1983 (£14 million) 29 Other debt, due 1977/1994 (£8 million) 20 Alcan Europe N.V. (consolidated) 5l/z% Bonds, due 1987 (Sw. F. 100 million) 26 'Bank loans, due 197711992 31 Other debt, due 1977/1994 6 Alcan Trading Limited Bank loans 63 Alcan Jamaica Limited 'Bank loans, due 1978/1980 44 Indian Aluminium Company, Limited Debentures and bank loans, due 1977/1984 (principally rupees) 22 Other companies *Bank loans, due 1977/1986 57 Debentures and notes, due 1977/1988 -50 1,013 Less: Debt maturing within one year included in current liabilities (equivalent to $40 million and $41 respectively, at year-end rates of exchange) 42 -- $ 971 'Interest fluctuates with lender's prime commercial rate,

After allowing for prepayments, sinking fund and other reauirements over the next five years amount to $43 million in 1977, $75 in 1978, $100 in 1979, $77 in 1980 and $50 in 1981.

If translated into United States dollars at year-end rates of exchange, debt not maturing within one year at 31 December 1976 would decrease by $20 million and, if there were no further changes in exchange rates, this amount would be credited to income as the debt matures. 5. Deferred receivables Deferred receivables include $44 million due from the Government of Guyana over the period 1978 to 1991 in respect of the nationalization in 1971 of Alcan's bauxite and alumina assets in that country. This amount bears interest at 6% per annum.

- ~ - - 6. Minority interests in subsidiary companies 1976 1975 Preferred shares $ 84 $ 88 Common shares 46 45 Retained earnings 33 30 - -- $ 163 $ 163 -- ~--- - ~- 7. Alcan preferred and common shares The number of 4Y4% cumulative redeemable convertible preferred shares originally authorized and issued was l,5OO,OOOof which 1,404,289were exchanged for an equal number of common shares prior to the expiration of the conversion privilege in 1973 and 39,402 were subsequently purchased on the open market (1976: 6,093, 1975: 6,691).The outstanding preferred shares are subject to redemption in whole or in part at any time at the option of the Board of directors on thirty days' notice at Can. $43 per share. The number of common shares authorized is 60,000,000.In March 1976, 67,707 shares were issued for a 50% equity in Intercontinental Alloys Corporation in the U.S.A., and valued at $1.6 million, being the average market price of Alcan's shares during the month prior to the purchase. In July 1976, the Company issued 5,000,000common shares for a cash consideration of $133.8 million before underwriting commissions and issue expenses of $6.3 million. At 31 December 1976, 99,500common shares remained under option to employees, including 24,000to officers and directors of the Company. These options were granted in 1967 at Can. $33.0625 per share and expire in March 1977.

8. Retained earnings Consolidated retained earnings at 31 December 1976 include Can. $100 million which, pursuant to the provisions of certain debt issues of Aluminum Company of Canada, Ltd, is not distributable as dividends either in cash or in kind to Alcan, the holder of its common shares. Consolidated retained earnings at 31 December 1976 also include about $328 million, some part of which may be subject to certain taxes on distribution to the parent company. No provision has been made for such taxes because these earnings are reinvested in the business.

-- - ~ - - 1976 1975 9. Other income -- -~- Interest $ 9.8 $ 9.5 Gain on redemption of debt 3.0 - Other 1.9 1.6 - ~- $ 14.7 $ 11.1

~ - 10. Income taxes Income taxes provided in 1976 represent approximately 39% of consolidated pre-tax income, an effective rate lower than statutory rates in Canada. The reduction is attributable to different tax rates in other countries, to investment and other special allowances, and to non-taxable income and losses. Notes to Financial Statements in millions of US. dollars

11. Equity income and minority interests 1976 1975 Alcan's equity in net income (losses) of companies 20-50%owned $ (5.0) $(1m Minority shareholders' interest in net income of subsidiary companies (10.0) (6.6) $ -(15.0) $(19.7)

12. Commitments Alcan has entered into long-term cost-sharing joint ventures under which the Company is required to pay its share of operating costs of facilities and costs of servicing long-term debt. The fixed portion of the commitments under these and other arrangements amounts to $20 million in 1977, $20 in 1978, $19 in 1979, $24 in 1980, $21 in 1981 and lesser annual amounts up to 1992. Minimum rental commitments, including charter hire of ships, amount to $33 million in 1977, $20 in 1978, $12 in 1979, $11 in 1980, $8 in 1981 and lesser annual amounts thereafter. Total rental expense amounted to $59 million in 1976 ($59 in 1975). See also reference to capital expenditures in note 3 and debt repayments in note 4.

13. Pension plans The Company and its subsidiaries (with some exceptions) have established pension plans in the principal countries where they operate, for the greater part contributory and generally open to all employees. The total pension expense in 1976 was $34 million ($31 in 1975) which includes, as to certain of the plans, amortization of unfunded actuarial liabilities which the Company and its subsidiaries are funding. The unfunded actuarial liability for currently vested benefits amounted to $13 million. Based on the most recent actuarial reports, the total unfunded actuarial liability for all plans amounted to $95 million, which for the most part is being funded over a period of 15 years. During 1976 an increase in unfunded actuarial liability of $26 million arose from amendments made to a Canadian pension plan covering unionized employees.

14. Remuneration of directors and officers The Company has 15 directors and their remuneration as such, which was paid by the Company, amounted to $69,002 in 1976 ($59,556 in 1975). The Company has 13 officers, seven of whom are directors of the Company. The aggregate remuneration received by these officers and by past officers amounted to $1,609,073 in 1976 ($1,530,324 in 1975) of which $262,569 was paid by the Company, $94,876 by Alcan International (1975) Limited, a management subsidiary, and $1,251,628 by Aluminum Company of Canada, Ltd, the Company's principal operating subsidiary.

15. Quarterly financial data (unaudited) 1976 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter - - -. -- Revenues $ 604.8 $ 704.9 $ 650.8 $710.3 Costs and expenses 578.6 669.7 637.9 688.2 Income taxes 13.0 23.1 (2.2) 3.5 Equity income and minority interests 4.4 -(8.7) (6.0) -(4.7) - Net income $ 4.5 $ 6.1 $ 10.4 $ 23.0

in US. dollars Income per common share (after preferred dividends) 16. Changes in working capital Current assets Cash and time deposits Receivables Aluminum, raw materials and other suD~lies

Current liabilities Payables and short-term borrowinas- lncomn and other taxes Debt maturing within one year

Net increase

17. Information by geographic areas Financial information by geographic areas is contained in the summary on page 18.

18. Replacement cost data The unaudited information required to be disclosed by Accounting Series Release No. 190 issued by the United States Securities and Exchange Commission in March 1976 is contained in the section 'Inflation Accounting' commencing on page 28.

Auditors' Report

To the Shareholders of Alcan Aluminium Limited We have examined the consolidated balance sheets of Alcan Aluminium Limited as at 31 December 1976 and 1975 and the related consolidated statements of income, retained earnings, and changes in financial position for the years then ended. Our examinations were made in accordance with generally accepted auditing standards and accordingly included such tests of accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion these financial statements present fairly the consolidated financial position of the Company and its subsidiaries as at 31 December 1976 and 1975 and the results of their operations and the changes in their financial position for the years then ended, in accordance with generally accepted accounting principles in Canada, applied on a consistent basis.

PRICE WATERHOUSE & Co. MontrBal, Canada Chartered Accountants 2 February 1977 Inflation Accounting

International developments posed in the U.K., for periods starting estimates of cost per unit of capac- Inflation, although diminishing, on or after 1 July 1977. These state- ity, including appropriate techno- continues to trouble most parts of ments would supplement the con- logical improvements, and multiplied the world, but no wholly satisfactory ventional historical cost statements. by existing capacity to arrive at the method of accounting and reporting By July 1978 a formal standard is estimated total replacement cost. the effects of inflation on the finan- expected which would make CCA No attempt has been made to cial results of a business has yet mandatory for financial reporting re-engineer the entire productive been developed. However, in 1975, purposes. capacity. Nor do the estimates recognizing the need to provide its In the United States, the Secu- take into account the manifold shareholders and investors with rities and Exchange Commission problems of. relocation and consol- some appreciation of the impact of (SEC) announced in March 1976, idation of existing productive facili- past inflation on its business, Alcan in its Accounting Series Release ties, including availability of labour, published a supplementary set of No. 190, a requirement for the larger sources of raw materials and prox- financial statements for 1974, using listed companies to provide the imity to customers, all of which the current purchasing power estimated 'current replacement cost' would necessarily have to be con- method (CPP) of inflation account- of productive capacity and inven- sidered in depth before undertaking ing. This was being advocated at tories with depreciation expense actual replacement. These studies that time in several countries, and and cost of sales based on those might significantly alter the cost gave historical costs re-stated in amounts, effective for the year 1976. and manner of replacement. current dollars by use of a consumer Unlike the U.K. and Australian ver- Furthermore, replacement would price index. Subsequently, it became sions of CCA, which will call for also alter the current level of oper- apparent that in a number of coun- audited financial statements, the ating costs, due to the greater effi- tries this method was not considered SEC calls for supplementary infor- ciency in the use of labour and adequate to meet the problem, and mation which need not be audited. materials in new production facilities Alcan decided not to publish any of more modern design. However, supplementary statements last year. Replacement cost data these cost changes cannot be However, during 1976 the search In accordance with SEC require- quantified with any precision. Never- for an appropriate method of ments, Alcan's estimated replace- theless, Alcan believes that they accounting under inflationary con- ment cost data are shown on the would significantly offset the addi- ditions continued, and there have opposite page, but within the frame- tional depreciation on a replace- been significant developments in the work of a consolidated balance ment-cost basis. United Kingdom, Australia and the sheet and income statement. The Accumulated depreciation is United States. latter has only been taken to the estimated by the relationship of In the United Kingdom, the Gov- 'Income before income tax' stage expired lives to total lives of the ernment-appointed Sandilands since no appropriate method of existing facilities, applied to the Committee proposed in September accounting for tax under these cir- estimated replacement cost of the 1975 an inflation-accounting method cumstances has been agreed. productive capacity. At this point described as 'current cost account- no attempt has been made to ing' (CCA), and this was further Asset values and operating costs re-estimate the useful lives of the refined by the Morpeth Committee Alcan's major operating subsidiaries assets for the replacement-cost in December 1976. The recom- made detailed reviews of their depreciation calculations. mended effective date for the larger assets, and calculated the replace- The annual depreciation charge U.K. companies to adopt CCA is ment cost mainly by valuing specific based on replacement values is for periods commencing on or after assets or operating capacities. calculated on the straight-line 1 July 1978. Valuations of the other assets and method, using the historical-cost In Australia, a provisional stan- those of the remaining smaller sub- depreciation rates for existing dard issued in October 1976 by the sidiaries were based on appropriate facilities, applied to the average of accounting profession suggested indices. the estimated replacement cost of that companies adopt 'current cost Generally, replacement costs productive capacity as at the begin- accounting' (CCA), a procedure for the major alumina, power and ning and at the end of the year. carrying the same name but differing aluminum smelter facilities have somewhat from the method pro- been developed through engineering Inflation Accounting (continued) and sale. year-end exchange rates for pro- Amounts on the replacement ductive capacity and inventories, Replacement cost of sales is basis related to locations outside and at average rates during the year estimated by adjusting historical the United States have been com- for cost of sales and depreciation costs for the inflation occurring dur- piled initially in local currencies and expense. ing the period between production then translated into US. dollars at

-- Consolidated Balance Sheet --- -- 31 December 1976 Estimated Replacement Historical Cost Basis Cost Basis -. ~ - Current assets in millions of U.S. dollars Inventories Other

Property, plant and equipment (a) Less: Accumulated depreciation and depletion

Other assets (b)

Current liabilities Debt not maturing within one year Deferred income taxes and credits Minority interests Shareholders' equity Share capital Retained earnings Replacement reserve

(a) Land, water rights and mineral properties have not been revalued and are included in the estimated replacement cost at theil historical cost of $83 million. Accumulated amortization and depletion relating to these assets of $8 million also have not been revalued and are included in the replacement data without change. (b) Includes investments, in companies owned 50% or less, of $207 million which have not been revalued and are included in the estimated replacement cost at the same amount.

Consolidated Statement of Income

Year ending 31 December 1976 Estimated Replacement Historical Cost Basis Cost Basis in millions of US. dollars Revenues $2,671 $2,671 Costs and expenses Cost of sales and operating expenses Depreciation and depletion Other Income before income taxes Inflation Accounting

Conclusions 3. The current replacement value Also, it does not call for the restate- Some conclusions may be drawn. of Alcan's assets is far higher than ment of previous years' accounts in In particular: the historical cost in current dollars, current dollars. It, therefore, will not showing that the inflation in ma- permit a direct comparison of the I. The figures indicate that re- chinery and construction costs has replacement value accounts of one placement of existing production far exceeded the consumer price year with those of prior years. capacity would not be justified by index. In a capital-intensive industry the 1976 price structure, even after this leads to a very high current- Summary of Alcan's view allowing for the problems stated cost depreciation charge, and a Because of the lack of established above (such as the greater efficiency corresponding impact on current- standards, the considerable degree that replaced assets would provide) cost earnings. However, cash flow of continuing experimentation and and the fact that 1976 was a poor is not affected. the many subjective judgments year for earnings because of work required in the compilation of the stoppages. This illustrates a fact 4. Under the recommended guide- data, we consider that the figures that has been frequently stated. Of lines, credit is not taken in the provided cannot give more than a course, replacement might be justi- replacement-cost net income state- general impression of the values fied by the price structure which ment for gains experienced from involved, and that specific compari- would be in effect when any particu- having debt, or losses resulting sons with other reported data are lar replacement could be completed. from holding monetary assets, such unlikely to be valid. as cash and receivables, in times Furthermore it is our view that 2. Government treatment of capital- of inflation. However, this omission an attempt to present a valuation intensive business is not satisfac- seems questionable in a capital- of assets which might replace the tory where current-cost depreciation intensive industry where leverage existing assets is not sufficiently -although a measure of the cur- is of great importance to the capital factual for a satisfactory accounting rent usage of assets- is not allowed structure. As Alcan has debt and presentation. We would prefer to as a cost for income tax purposes, other net monetary liabilities of about see a method which revalues in and where in Canada and some one billion dollars, an average current dollars the assetswhich the other countries (although not the inflation rate of 10 per cent in the company actually owns. US. or the U.K.) inventory profits are countries where it operates would The whole problem of inflation taxed currently. Furthermore, in most give an annual gain of about $100 accounting is still far from resolved. countries exercising price controls, million, greatly improving the current However, it is likely that consider- the basis of costing is average cost picture. able progress will be made in 1977 costing and not current costing, and, when a method is finally even though the price controls may 5. The replacement-cost method agreed, it will mark the most signifi- thus be giving a negative real return. does not correct for the change in cant development in accounting value of currency during the year. practice in this century. A Ten-Year Summary (Adjusted to give effect to changes in accounting practices)

Operating Data (in thousandsof tons)

Aluminum shipments by consolidated subsidiaries Ingot and ingot products 563 614 742 655 626 592 663 644 617 562

Fabricated products -541 - 606 .-621 - 691 -772 - 859 1.013- 1,018- - 785 953 1.104 1.220 1,363 1.346 1,398 1.451 1.676 1,662 1.402 1,515 Fabricated products shipments by all subsidiary and related companies 701 800 862 937 1.033 1,177 1,376 1.417 1.128 1.365 Production of primary aluminum Canada 878 873 969 903 945 880 872 963 838 543 Subsidiary and related companies outside Canada 521 585 720 849 935 981 1,146 1,211 1,178 1,130

Consolidated lncome Statement ltems (in millions of US. dollars)

Revenues Salesof aluminum ingot and ingot products 249 271 Salesof aluminum fabricated products 514 560 Sales of ail other products 104 127 Operating revenues 52 49 Other income --8 15 927 1,022 Costs and expenses Costof salesand operating expenses 635 685 Depreciation and depletion 74 91 Interest charges 36 39 All other expenses (except income taxes) 82 79

Income taxes 44 59 65 54 38 20 35 85 27 37 Equity in net income of companies 20-50% owned 7 7 11 11 9 8 18 11 (13) (5) Minority interests 4 3 4 4 5 6 11 9 7 10 Extraordinary gains - - - 9 - - - 27 12 - Net income 59 73 65 81 60 61 83 169 35 44

Consolidated Balance Sheet ltems (in millions of US. dollars)

Working capital Property, plant and equipment (net) Investments in companies owned 50% or less Long-term debt Deferred income taxes Minority interests Shareholders' equity Tolal assets

Per Common Share (in US. dollars) lncome (after preferred dividends but before extraordinary gains) Extraordinary gains lncome (after preferred dividends) Dividends paid Book value

Other Statistics

Capital expenditures (net of government development grants- in millions of US. dollars) 180 139 147 152 155 115 117 268 208 138 Funds generated from operations (millions of U.S. dollars) 131 148 160 164 155 140 163 275 156 150 Return on average equity (as a percentage) 8.7 10.0 11.0 9.6 7.0 6.9 6.9 16.5 3.2 3.7 Number of common shareholders at year end (thousands) 67 73 72 76 70 64 50 48 47 43 Number of employees at year end (thousands) 63 61 62 67 61 62 62 64 61 60 Principal Subsidiary and Related Companies Fully owned unless otherwise indicated between parentheses

Operating Companies Germany Asia Alcan Aluminiumwerke GmbH India Alcan Aluminiumwerk Nurnberg GmbH Indian Aluminium Company. Limited (55.27) North America Alcan Folien GmbH Canada Aluminiumfolienwerk GmbH Indonesia Aluminum Company of Canada, Ltd Aluminium Norf GmbH (50) P.T. Alcan Indonesia (80) Alcan Canada Products Limited Cargo Van Fahrzeugwerk GmbH (50) Japan Alcan Smelters and Chemicals Ltd Ireland Nippon Light Metal Company, Ltd (50) Alcan-Price Extrusions Limited (50) Alcan Ireland Limited Tovo Aluminium K.K. (50) Alsco (1974) Inc. Unidare Limited (25.5) Malaysia Revalex Inc. (75) ltalv Aluminium ComDanv of Roberval and Malaysia Berhad i34.48) Saguenay Railway Company. The Alcan Alluminio ltaliano S.p.A. Alcan Angeletti & Ciucani Alluminio S.p.A. Johore Mining and Stevedoring Saguenay Shipping Limited Co. Ltd (87.5) Storall Limited Netherlands Thailand Supreme Aluminum lndustries Limited (27.02) Hunter Douglas N.V. (25) Alcan Thai Company Limited Vic Metal Corporation (20) Norway United States Ardal og Sunndal Verk a.s. (As") (25) South Pacific Alcan Aluminum Corporation Nordisk Aluminium as. (25)t Australia V. E. Anderson Mfg Co. (90.14) Spain Alcan Australia Limited (70) Fabral Corporation Empresa Nacional del Alcan Queensland Ptv Limited Intercontinental Alloys Corporation (50) Aluminio. S.A. (ENDASA) (25) 0-eenslana Alumma -lm ted (21 39, Luxfer USA Limited (50.01) Productos Aluminio de Consumo, S.A. (62.5) Q~lnlrcxEnterprtses Ply .male0 (65 59) Bermuda Sweden Wm Bre~t8 Company Pty Ltd (70) Alcan (Bermuda) Limited Granges Essem AB (20.84) New Zealand Switzerland Alcan New Zealand Limited (69.2) Caribbean Aluminiumwerke A,-G. Rorschach Alcan Alloys Limited (69.2) Jamaica United Kingdom Alcan Anodisers Limited (69.2) Alcan Jamaica Limited Alcan Booth lndustries Limited (75) Alcan Cory Metals Limited (34.6) Alcan Products of Jamaica Limited Alcan Booth Extrusions Limited (75) Aluminium Anodisers (N.Z.) Ltd (34.6) Sprostons (Jamaica) Limited Alcan Booth Sheet Limited (75) Aluminium Conductors Limited (35.3) Trinidad Alcan Building Materials Limited (75) Barker Aluminium Windows Ltd (69.2) Chaguaramas Terminals Limited Alcan Design Products Limited (56.25) Horizon Aluminium Products Ltd (34.6) Geddes Grant Sprostons Industries Alcan Ekco Limited (37.5) Rolls Holdings Ltd (29.1) Limited (49) Alcan Enfield Alloys Limited (50) Sprostons (Trinidad) Limited Alcan Foils Limited (75) Alcan Metal Centres Limited (75) Holdina and Financial Alcan Overhead Line Fittings Limited (75) A can ~l;m mum (L.K.) L maled. London Latin America Alcan Polyfoil Limited (75) Alcan A ~mlno da Amer ca Lalina. S.A.. Argentina Alcan (U.K.) Limited Rio de Janeiro Camea S.A. (35) Alcan Wire Limited (75) Alcan Europe N.V.. Amsterdam Brazil Amari Limited (7.5) Alcan Finances Overseas N.V.. Amsterdam Alcan Aluminio do Brasil S.A. Thomas Bennett Limited (56.2) Aluminio do Brasil Nordeste S.A. Bonallack Vehicles Limited (75) Minera~aoRio do Norte S.A. (21.5) Cargo Van Equipment Limited (50) International Sales Petrocoque S.A. (25.1) Freight Bonallack Limited (75) Alcan Canada Products Limited Colombia Freight Development Company Limited (75) (Trading Division), Toronto - Canada Aluminio Alcan de Colombia, S.A. (81) Ian Proctor Metal Masts Limited (18) Alcan Aluminio (America Latina) Limited. Mexico Johnson Bloy Aluminium Pigments Montreal - Latin America A can Asoa Llmrled. Hong dong - Hong Kong Alcan Aluminio. S.A. (60.9) Limited (27) . . Luxfer Limited (50.01) Japan nd a and otner areas of Asla Uruguay Minalex Limited (75) A can S A Zur ch - Conmenla Europe Alcan Aluminio del Urusuav. S.A. (89.9) E. C. Payter & Co. Limited (75) (excluding Germany and Scandinavia). Venezuela Saguenay Shipping (U.K.) Limited Nearand Middle East, North Africa, U.S.S.R. Alcan de Venezuela, S.A Serco-Ryan Limited (75) Alcan Metali GmbH. Frankfurt - Germanv Alcan (U.K.) ~imited,London - U.K., !relend, Europe Africa Scandinavia Alcan Sales (Division of Alcan Aluminum Belgium Ghana Corporation), Cleveland - USA. and Alcan Aluminium Raeren S.A. Ghana Aluminium Products Limited (601. . Caribbean Denmark Guinea Alcan Project Services Limited, Montreal Aluminord AS. (25)t Compagnie des Bauxites de Guinee (13.77) Engineering and feasibility studies France Nigeria related to the aluminum industrv Aluminium Alcan de France Alcan Aluminium of Nigeria Limited (72.87) Alcan Trading Limited. ~ontreal--worldwide; Alcan-Schwartz, Filage et Oxydation (51) Flag Aluminium Products Limited (65.22) magnesium and other metals S.A. des Bauxites et Alumines de Provence South Africa Societe lndustrielle de Transformation et de Huletts Aluminium Limited (24) Construction (SITRACO) (15) Silicon Smelters (Pty) Limited (33.33) tsubsidiary of Ardal og Sunndal Verk as. (Asv) Directors Officers

Erik Brofoss Nathanael V. Davis Audit Committee Oslo- Chairman of the Chairman of the Board and John H. Hale, Chairman Norwegian Regional Development Fund. Chief Executive Officer Erik Brofoss an agency of the Norwegian Government Paul H. Leman, O.C. The Rt. Hon. Viscount James W. Cameron President Harcourt, K.C.M.G.O.B.E. Montreal - Regional Executive Vice President until 31 January 1977 David M. Culver Personnel Committee Reg ona Exec~tue Vlce Pres dent, Nathanael V. Davis, Chairman David M. Culver Canaoa US A ana Car bbean Montreal-Regional Executivevice President JamesT. Hill, Jr Patrick J. J. Rich Paul H. Leman, O.C. Nathanael V. Davis Regional Executive Vice President, Louis Rasminsky, c.c.,c.6.E. Montreal -khairman of the Board and Europe, Near East, Africa and Hon. James Sinclair, PC. Chief Executive Officer Latin America William 0.Twaits, cc. P. John Elton John H. Hale London - Chairman of Executive Vice President. Finance Area General Managers Alcan Aluminium (U.K.) Limited Canada, Fabricating and Sales: Eric A. Trigg John H. Hale Harold Corrigan, Toronto Regional Executive Vice President. Canada. Smelting and Chemicals: Montreal - Executive Vice President Middle East, Asia and South Pacific Roger Phillips, Montreal The Rt. Hon. F. G. Barker Caribbean: J. J. Gagnon, Viscount Harcourt, K.c.M.G.,O.B.E. Vice President. Engineering and Techrlology Mandeville, Jamaica London - Chairman of Legal and United States: Eric F. West, Cleveland General Assurance Society Limited. Duncan C. Campbell Latin America: A. F. Black, Vice President. Public Affairs an insurance company Rio de Janeiro James T. Hill, Jr H. Stewart Ladd United Kingdom, Ireland and New York - Director of various companies Vice President, Personnel Scandinavia: D. A. Pinn, London Continental Europe: Paul H. Leman, O.C. A. A. Bruneau lhor Suchoversky, Geneva Secretary Montreal - President Far East: David H. Clarke, Hong Kong Louis Rasminsky, c.c., C.B.E. T. F. D. Simmons India: D. A. Corbett-Thompson, Calcutta Ottawa-Chairman of the Treasurer South Pacific: J. B. Clarkson, Sydney International Development Research Centre, an agency of the Canadian Government Patrick J. J. Rich Montreal-Regional Executive Vice President Hon. James Sinclair, P.C. Vancouver - Chairman of Lafarge Canada Ltd, manufacturers of cement and related products Eric A. Trigg Montreal- Regional Executive Vice President William 0.Twaits, C.C. Toronto - Director of various companies Eric F. West Cleveland - President of Alcan Aluminum Corporation Alcan Aluminium Limited 1 Plaoe Ville Marie, MontrBal, Canada Mail Box 6090, MontrBal, Canada H3C 3H2