Mr. Westshore Terminals Income Fund Management's Discussion & Analysis of Financial Condition and Results of Operations General Results of Operations and Distributions Structure ofthe Fund Liquidity & Capital Resources Westshore Terminals Income Fund (the “Fund”) derives most of its cash inflows from its investment in Westshore Terminals Ltd. (“Westshore”) by way of interest on the $470 million unsecured subordinated notes (“Notes”) and dividends or return of capital on the common shares of Westshore. On February 28, 2003, the Fund acquired a 9.1% interest in the Fording Canadian Coal Trust (the “Fording Trust”) at a cost of $150 million. Quarterly distributions from the Fording Trust are also anticipated and when received will be paid (net of debt service) to unitholders of the Fund. In 2002, the earnings and distributable cash of the Fund were entirely dependent, and will in future remain substantially dependent, on the results of Westshore. Westshore’s results are determined largely by the volume of coal shipped by its coal mine customers for sale in the export market, the rate per tonne charged by Westshore and Westshore’s costs. A comparison of results of the Fund for the twelve months ended December 31, 2002 as compared to 2001 is as follows: As shown above, cash distributions declared to Unitholders for 2002 were $43,354,000 ($0.616 per unit) compared to $49,441,000 ($0.702 per unit) for 2001. Distributions were made quarterly during 2002, with the final distribution declared on December 17, 2002 and paid on January 15, 2003. The distributions from the Fund in 2002 to Unitholders for income tax purposes were comprised of interest income of $43,335,000 ($0.61572 per unit) and return of capital of $19,000 ($0.0003 per unit). The following chart illustrates the primary structural and contractual relationship among the Unitholders, the Fund, Westshore, Westar Group Ltd. (“Westar”), and the investment in the Fording Trust. During 2002, the Fund’s operating cash inflows were based solely on the interest income on the Notes. The interest on the Notes is at a variable rate and fluctuates in proportion to Westshore’s EBITDA. Commencing March, 2003, cash inflows to the Fund are increased by the distributions received from the Fund’s investment in the Fording Trust, net of the interest cost on funds borrowed to finance the investment. The Fund is obliged to distribute cash inflows to Unitholders, less administrative costs of the Fund and amounts required for the operation of the Fund and any amounts which may be paid in connection with any cash redemption of units. Because the Fund’s investments in Westshore and the Fording Trust are of a passive nature, it is not anticipated that the Fund will require significant capital resources to maintain its investment in Westshore or the Fording Trust on an ongoing basis. Unitholders Trust Units As , Westshore Trust Unit ministration . rust Units [ agreement ~| Terminals Income (9.1%) Fund Fording W Westshore . es ow Shares Nas Canadian Coal . (100%) (100%) Trust | Management | Westshore Agreement Terminals Ltd. Distributable Cash (lu Thousands of Dollars exccept per unit amounts) 2002 2001 Interest income 43,865 50,164 Administration costs 511 723 Distributable cash 43,354 49,441 Per unit 0.616 0.702