================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                              -------------------

                                    FORM 6-K

                            REPORT OF FOREIGN ISSUER
                        PURSUANT TO RULE 13a-16 or 15d-16

                                      UNDER

                       THE SECURITIES EXCHANGE ACT OF 1934

                          FOR THE MONTH OF MARCH, 2004


                       COMMISSION FILE NUMBER: 001-13425


                     RITCHIE BROS. AUCTIONEERS INCORPORATED


                                 6500 RIVER ROAD
                   RICHMOND, BRITISH COLUMBIA, CANADA V6X 4G5
                                 (604) 273-7564


Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.

                      Form 20-F [ ]           Form 40-F [X]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): ______

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a
Form 6-K if submitted solely to provide an attached annual report to security
holders.


Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101 (b)(7):_______

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a
Form 6-K if submitted to furnish a report or other document that the registrant
foreign private issuer must furnish and make public under the laws of the
jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.

Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

                            Yes [ ]          No [X]


If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82- ______

================================================================================



                                    SIGNATURE


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant, Ritchie Bros. Auctioneers Incorporated, has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date: March 19, 2004                      Ritchie Bros. Auctioneers Incorporated



                                          By:  /s/  Robert S. Armstrong
                                               --------------------------------
                                               Robert S. Armstrong
                                               Corporate Secretary


                               ANNUAL REPORT 2003

                                                            [RITCHIE BROS. LOGO]



CONTENTS


                                         
To Our Fellow Shareholders                   2
Growth Potential                             6
Creating Value for our Customers            11
  Our Relationships with Equipment Buyers   14
  Our Relationships with Equipment Sellers  18
Plans for the Future                        27
The Ritchie Bros. Auction Process           32
Financial Information                       33
Selected Financial and Operating Data       54
Supplemental Quarterly Data                 55
Shareholder Information                     56


In this annual report, all dollars amounts are stated in United States dollars
unless a different currency is indicated.



Ritchie Bros. Auctioneers conducts over 140 unreserved industrial auctions every
year and operates through over 90 locations around the world.

We sell a wide range of construction, transportation, mining, forestry,
petroleum, marine and agricultural equipment. All items in a Ritchie Bros.
Auction are sold to the highest bidder without minimum bids or reserve prices.



                            TWENTY-FIVE YEAR SUMMARY

                               GROSS AUCTION SALES

                            in billions of US dollars

                                  [BAR CHART]

                                     BUYERS

                                  in thousands

                                  [BAR CHART]

                                   CONSIGNORS

                                  in thousands

                                  [BAR CHART]



              WE VALUE OUR CUSTOMER RELATIONSHIPS ABOVE ALL ELSE.

                                    [PHOTO]



RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

TO OUR FELLOW SHAREHOLDERS

WHEN WE WROTE TO YOU LAST YEAR, WE SAID THAT THE SIGNIFICANT INVESTMENTS IN
PEOPLE, FACILITIES AND INFRASTRUCTURE MADE FROM 1998 THROUGH 2001 HAD GIVEN US
THE CAPACITY AND OPERATING LEVERAGE TO GROW OUR BUSINESS PROFITABLY FOR MANY
YEARS TO COME. WE NOTED THAT WE HAD GIVEN OURSELVES THE ABILITY TO HOLD LARGER
MORE COST-EFFECTIVE AUCTIONS AND THAT WE HAD SUFFICIENT CAPACITY IN PLACE TO
GROW OUR BUSINESS BY AS MUCH AS 50% FROM PRESENT LEVELS. WITH THIS PERIOD OF
SIGNIFICANT INFRASTRUCTURE EXPANSION BEHIND US, WE WERE ABLE TO FOCUS ON
PRODUCTIVITY AND CUSTOMER SERVICE IN 2003. WE FOLLOWED THROUGH ON THAT PLAN AND
MADE OUR 40TH YEAR OUR MOST SUCCESSFUL YET.

In 2003 we served more customers than ever before. Over 23,000 consignors(12%
higher than in 2002) chose unreserved Ritchie Bros. auctions when they decided
to sell their trucks and equipment; and more than 55,000 buyers (also 12% higher
than in 2002) bought trucks and equipment at our auctions. As a result, we were
able to set new records for gross auction sales, auction revenues and net
income. We took advantage of the foundation we had established and the momentum
that continues to build around our unreserved auctions.

The productivity of our salesforce improved dramatically. Gross auction sales
per sales representative increased from an average of $7.2 million in 2002 to
$8.3 million in 2003. We attribute this improvement primarily to the increased
maturity and experience of our sales force - the large number of Territory
Managers added to the team from 1998 through 2001 have evolved from rookies into
seasoned veterans. Going forward, we plan to increase the size of our sales
force while striving to keep productivity above the $8.0 million mark.

To continue growing our business, we need to work with people who haven't
traditionally turned to the auction channel to buy or sell equipment, especially
those who have relied on private sales (contractors selling directly to other
contractors), which remains one of the most popular ways of buying and selling
in our market. Our unreserved auctions may be the proverbial "better mouse-trap"
but they don't sell themselves. Our job is to build relationships with potential
customers and show them the benefits of participating in our global marketplace.
The fact that an ever-increasing number of buyers and sellers are choosing
Ritchie Bros. is proof that we are on the right track.

Continued growth will come from efforts on many fronts, including expansion into
new asset categories and geographies, further development of our Internet tools,
and additions to our international network of auction sites. But at the end of
the day, the success of these initiatives is dependent on our ability to develop
relationships with new customers. That's why in 2004


--------------------------------------------------------------------------------


 THE SUCCESS OF EACH AUCTION CONTRIBUTES TO THE SUCCESS OF THE NEXT -- A LARGE
    BIDDING AUDIENCE HELPS US TO ATTRACT MORE EQUIPMENT, WHICH ATTRACTS MORE
 BIDDERS, WHICH ATTRACTS MORE EQUIPMENT, AND SO ON. IT HAS BEEN THIS WAY FOR 40
 YEARS. THIS POSITIVE MOMENTUM IS FUELED BY OUR STEADFAST COMMITMENT TO HOLDING
    ONLY UNRESERVED AUCTIONS AND OUR COMPANY-WIDE FOCUS ON CUSTOMER SERVICE.

(2)



                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

we will be working on several customer service initiatives including completion
of the roll-out of a new customer relationship management system, increased
enrollment in our training program for new Territory managers, and customer
service training for all staff.

Ours has always been a relationship business and we value our customer
relationships above all else. Our past success is attributable to the strength
of these relationships and without doubt our future success will be based on the
same thing. This is why the entire Ritchie Bros. team is focused on providing
the best possible customer service. That team is comprised of 590 men and women
working in 22 countries around the world, but we act as one in the aggressive
pursuit of our common goal -- to offer our customers the best-run auctions in
the world.

We offer our thanks to our fellow employees for their dedication and commitment,
to our fellow shareholders for their support, and to our customers for choosing
Ritchie Bros. Auctioneers.

                                    [PHOTO]

/s/ Peter Blake            /s/ Dave Ritchie            /s/ Rob Mackay
-----------------------    ------------------------    -------------------------
Peter Blake                Dave Ritchie                Rob Mackay

SENIOR VICE PRESIDENT,     CHAIRMAN,                   EXECUTIVE VICE PRESIDENT
CHIEF FINANCIAL OFFICER    CHIEF EXECUTIVE OFFICER

/s/ Rob Whitsit          /s/ Roger Rummel              /s/ Randy Wall
---------------------   ---------------------------   ----------------------
Rob Whitsit             Roger Rummel                  Randy Wall

SENIOR VICE PRESIDENT   SENIOR VICE PRESIDENT         PRESIDENT,
SOUTHEAST DIVISION      SOUTHWEST& MEXICO DIVISIONS   CHIEF OPERATING OFFICER

THE RITCHIE BROS. AUCTIONEERS EXECUTIVE COMMITTEE

                                                                             (3)



                                    [PHOTO]




                                    [PHOTO]





RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

GROWTH POTENTIAL

WE OPERATE IN THE MASSIVE AND HIGHLY FRAGMENTED INDUSTRIAL EQUIPMENT MARKET. WE
SELL MORE USED TRUCKS AND EQUIPMENT THAN ANYBODY ELSE IN THE WORLD AND WE ARE
LARGER THAN OUR NEXT 40 AUCTION COMPETITORS COMBINED, BUT WE SERVE ONLY A SMALL
FRACTION OF THE TOTAL MARKET -- PROBABLY LESS THAN 2%. OUR GROWTH POTENTIAL IS
OBVIOUS.

We sell, through unreserved public auctions, a broad range of equipment,
including equipment used in the construction, transportation, mining, forestry,
petroleum, marine and agricultural industries. Our customers are primarily end
users of equipment, such as contractors, and they also include equipment
manufacturers, dealers, brokers and finance companies.

We are fortunate to have a dominant market position in a highly fragmented
market. We have been growing steadily for 40 years but we still have significant
growth potential.

THE OPPORTUNITY HAS PRESENTED ITSELF. There is estimated to be in the range of
$1 trillion worth of used equipment of the type we sell in circulation
worldwide, with approximately $100 billion of that equipment changing hands each
year. Private sales between equipment owners and sales involving equipment
dealers and brokers have traditionally accounted for most of the transactions in
this highly fragmented market. We estimate that all auctioneers combined
currently handle about 5% of the transactions. In our most mature markets, we
believe that auctioneers are selling as much as 25% of the used equipment; in
some markets Ritchie Bros. has 50% or more of the auction share. As the largest
participant in a large and fragmented market, we see strong growth opportunities
for many years, regardless of what is happening in the broader economy.
Throughout the Company's history we have been able to grow our

                                    [PHOTO]



Nick Nicholson             Guylain Turgeon          Rob Armstrong

VICE PRESIDENT             MANAGING DIRECTOR        VICE PRESIDENT
SOUTH CENTRAL DIVISION     EUROPEAN OPERATIONS      FINANCE & INTERNET SERVICES;
                                                    CORPORATE SECRETARY




                  Dale Finlan                 Clay Tippett

                  CHIEF INFORMATION OFFICER   VICE PRESIDENT
                                              MARKETING & CUSTOMER RELATIONS

(6)



                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

business during both good times and bad times, and we expect this to continue.

WE ARE EXPANDING OUR FOOTPRINT IN NON-TRADITIONAL MARKETS. In addition to
growth in our core truck and equipment markets, we have been increasing our
presence in other markets, especially agriculture. We will look at opportunities
to expand into markets where we can create value for our customers by bringing
some or all of the following competitive advantages to the table:

-        Our reputation

-        Our international network of auction sites

-        Our customer base

-        Our marketing systems

-        Our Internet tools

-        And most significantly, the ability of our unreserved auctions to
         deliver the best possible price

OUR INTERNET SERVICES ARE CREATING VALUE. One of the factors contributing to our
growth in recent years has been the leveling of the playing field in the used
equipment market. Thanks in part to the Internet, equipment owners are now much
better informed about market values and have easy access to information about
what's available for sale. While some market participants had an information
advantage in the past, the increasing transparency in today's market has changed
that significantly. In an environment where all players have equal access to
information, transactions migrate to the most efficient marketplace, which in
our industry is a Ritchie Bros. unreserved auction. Evidence that this
increasing transparency is favoring Ritchie Bros. is the fact that our average
bidder audiences have increased by approximately 20% since we began offering
buyers the opportunity to participate in our live auctions over the Internet.
The vast majority of our bidders still choose to attend our auctions in person
and physically inspect the equipment; but the rbauctionBid-Live service and
the depth of information available on the rbauction.com website have enabled
us to expand our bidding audiences, creating an environment where Internet
bidders and live bidders compete against each other on a level playing field -
this is the best of both worlds for bidders and consignors.

                                    [PHOTO]



Dean Siddle                 Sylvain Touchette           Mike Ritchie

VICE PRESIDENT              VICE PRESIDENT              VICE PRESIDENT
SENIOR VALUATION ANALYST    EASTERN CANADA DIVISION     WESTERN CANADA DIVISION





Vic Pospiech                        Mike Murray           Denis Prevost

VICE PRESIDENT                      VICE PRESIDENT        VICE PRESIDENT
ADMINISTRATION & HUMAN RESOURCES    NORTHWEST DIVISION    NATIONAL ACCOUNTS

                                                                             (7)



RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003


                       AVERAGE INDUSTRIAL AUCTION IN 2003
                       ----------------------------------

                    $11.0 MILLION IN GROSS AUCTION SALES

                            1,200 REGISTERED BIDDERS

                            1,100 LOTS

                              160 CONSIGNORS


                   UNRESERVED - WHY IS IT SO IMPORTANT TO US?
                   ------------------------------------------

     EACH AND EVERY RITCHIE BROS. AUCTION IS "UNRESERVED". AT RITCHIE BROS.
 "UNRESERVED" MEANS THAT THERE ARE NO MINIMUM PRICES - EVERYTHING SELLS TO THE
HIGHEST BIDDER ON SALE DAY. WE DO NOT ALLOW CONSIGNOR BUY-BACKS, BID-INS OR ANY
    OTHER TYPE OF ARTIFICIAL PRICE MANIPULATION. "UNRESERVED" IS A FOUNDING
PRINCIPLE OF OUR COMPANY AND ONE OF OUR MOST SIGNIFICANT COMPETITIVE ADVANTAGES.
 WE HAVE MAINTAINED OUR STEADFAST COMMITMENT TO THIS PROCESS FOR OVER 40 YEARS
 BECAUSE WE BELIEVE THAT OUR CUSTOMERS DESERVE TO BE TREATED WITH FAIRNESS AND
 INTEGRITY. IN OUR VIEW, THE ONLY AUCTION THAT LIVES UP TO THIS STANDARD IS AN
                              UNRESERVED AUCTION.

 BY STICKING TO OUR POLICY OF HOLDING ONLY UNRESERVED AUCTIONS, WE ARE ABLE TO
ATTRACT A LARGE AND DIVERSE BIDDER AUDIENCE -- AN AVERAGE OF 1,200 BIDDERS FROM
 ALL OVER THE WORLD PARTICIPATE IN EACH OF OUR INDUSTRIAL AUCTIONS. BY ALLOWING
THESE BIDDERS TO COMPETE IN AN OPEN AND FAIR AUCTION ENVIRONMENT, WE ARE ABLE TO
    TRANSCEND LOCAL MARKET CONDITIONS AND DELIVER THE BEST POSSIBLE PRICES.


                                [PHOTO]  [PHOTO]

(8)



                                    [PHOTO]



                                    [PHOTO]




                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

CREATING VALUE FOR OUR CUSTOMERS

AT THE END OF THE DAY, IT COMES DOWN TO PROVIDING THE HIGHEST POSSIBLE
LEVEL OF CUSTOMER SERVICE AND DEVELOPING STRONG CUSTOMER RELATIONSHIPS.

                            Our focus on people and
                         relationships will allow us to
                         continue growing our business.

We understand the importance of these relationships, and in 2003 we rededicated
ourselves to customer service and our goal of offering our customers the best
run auctions in the world. How do we do this?

OUR DEDICATED CUSTOMER SERVICE TEAM

At the end of 2003, we had 188 sales representatives calling on equipment owners
around the world. The members of our sales team, together with our Customer
Service Managers, are critical to our success - they represent the frontline in
our ongoing effort to develop strong relationships with our customers. Many of
our salespeople come to us with an equipment background, having worked for an
equipment or truck dealership, rental company or contractor. They apprentice
with an experienced member of our team before taking on their own territory. It
can take 24 months or longer for a new Territory Manager to reach the level of
productivity that we expect. More recently, we have also been focusing on hiring
younger people with post secondary degrees (who may not have an equipment
background but are bright, hard working and ambitious) and putting them through
our comprehensive training program for new Territory Managers. The first
graduates of this program are now working as Territory Managers in several
regions and many are already demonstrating the potential to become future
leaders of our company. Adding quality people to our team, giving them the right
tools and then helping them up the learning curve is a core part of our strategy
for delivering superior customer service.

OUR INTERNATIONAL NETWORK OF AUCTION SITES

We conduct recurring auctions at 29 locations around the world, giving us a
network of sites that is attractive to consignors of equipment with widely
dispersed fleets and to equipment manufacturers wanting access to multiple
regional markets. Many of our auction sites are equipped with environmentally
certified painting and refurbishing facilities, purpose-built auction theatres
and equipment display yards. This network of sites allows us to deliver to our
customers an unparalleled level of

                                                                 [PHOTO] [PHOTO]

                                                                            (11)



RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

                        WHAT DRIVES OUR SUPPLY OF EQUIPMENT?
                        ------------------------------------

WE CAN DO WELL IN GOOD TIMES AND IN BAD, AS LONG AS CIRCUMSTANCES ARE CHANGING.
   ANY ECONOMIC, POLITICAL OR OTHER FACTOR THAT LEADS TO A DESIRE OR NEED FOR
    PEOPLE TO BUY OR SELL EQUIPMENT CREATES WORK FOR RITCHIE BROS. ECONOMIC
        UNCERTAINTY TYPICALLY FUELS THE SUPPLY OF USED EQUIPMENT. SO DO
  FLEET REALIGNMENTS, FINANCIAL PRESSURE, MERGERS AND ACQUISITIONS, INVENTORY
REDUCTIONS, LEASE RETURNS, PROJECT COMPLETIONS AND EVEN RETIREMENTS. AS LONG AS
  A FEW OF THESE FACTORS ARE AT WORK SOMEWHERE IN THE WORLD, RITCHIE BROS. HAS
CUSTOMERS TO CALL ON. BECAUSE THE USED EQUIPMENT MARKET IS SO LARGE AND BECAUSE
 THERE ARE SO MANY DIFFERENT DRIVERS INFLUENCING OWNERS' DECISIONS TO SELL, OUR
               BUSINESS VOLUME IS NOT RELATED TO ECONOMIC CYCLES.

                                    [PHOTO]





                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

service. Our 22 permanent auction sites have, on average, over 50 acres of
developed land, and some have over 100 acres. We have ample room at most of our
locations to hold larger auctions and grow our business. In 2004, we will be
opening our newest permanent auction site on 90 acres in Sacramento, California.
This will replace our existing regional operation on leased land in Stockton.

OUR SUPPORTING SYSTEMS AND THE PEOPLE BEHIND THEM

Less visible but no less important is the supporting infrastructure that enables
us to deliver our services efficiently and effectively. To support the size and
breadth of our operations, we have developed sophisticated marketing and
information technology operations. We are continually refining the way we do
things and are always looking for better ways to help our customers. Our systems
today -- from marketing to salesite operations to Internet bidding -- enable us
to provide an unparalleled level of service to our customers. Our newest
technology tool is a sophisticated customer relationship management system that
we began rolling out to our sales force during the second half of 2003. The
information provided by this system should enable our Territory Managers to
deliver better service to existing customers and be more efficient in their
efforts to develop relationships with new customers.

As a Company, our challenge is to use these tools -- our people, our facilities
and our infrastructure -- to create value for our customers. The ever-increasing
numbers of buyers and consignors who choose Ritchie Bros. are the proof that we
are succeeding.

                                    [PHOTO]





                                    [PHOTO]

OUR RELATIONSHIPS WITH EQUIPMENT BUYERS
---------------------------------------

                            CUSTOMER RELATIONSHIPS-
                          We have over 400,000 active
                         customers in over 200 countries

There are many places a buyer can go to acquire equipment. An increasing number
of equipment buyers are coming to our auctions. Why?

UNRESERVED AUCTIONS CREATE A TRANSPARENT MARKET

We sell everything on an unreserved basis. As a result, bidders at our auctions
compete on an open and level playing field. There are no minimum prices and
sellers are not allowed to bid on their own equipment. While some auctioneers
openly permit sellers to bid on their own items, or will bid on the equipment
themselves to artificially support prices, we maintain a strict commitment to
our policy prohibiting consignors from bidding on their own equipment, either
directly or through agents. And Ritchie Bros. doesn't bid on any of the
equipment in our auctions.

Our commitment to selling everything on an unreserved basis is one of our most
significant competitive advantages when it comes to attracting bidders; and
large bidder audiences attract consignments, which in turn attract more bidders,
in a self-reinforcing cycle.

BUYERS PAY A FAIR MARKET PRICE

Because everything is sold on an unreserved basis, buyers at a Ritchie Bros.
auction always pay a fair market price. All bidders compete on an equal basis
irrespective of their negotiating skills or buying power; and they know that the
people they are bidding against are legitimate bidders like themselves. We don't
promise any bargains, but our buyers can always be confident that they are
paying fair market value.

(14)



                                    [PHOTO]

Not only does every item sell on sale day to the highest bidder, once the
auctioneer says "SOLD" the negotiations are over. The buyer simply pays Ritchie
Bros. and then takes possession of the equipment without any need to haggle over
payment or delivery terms.

CLEAR TITLE IS GUARANTEED TO OUR BUYERS

Buyers at a Ritchie Bros. auction do not need to be concerned about the
financial condition of the sellers. If we can't deliver clear title, the buyer
receives a full refund. Without such a guarantee, buyers run the risk of having
their equipment repossessed by the bank that financed the previous owner -
something buyers attending other auctions don't think about until it's too late.
We commit considerable resources to identifying and coordinating the release of
all liens before we sell the equipment.

CUSTOMERS CAN INSPECT, TEST AND COMPARE BEFORE BIDDING.

We recognize that used equipment needs to be inspected and compared to other
units before being purchased. On average, 80% of our buyers are end users of
equipment who intend to take the equipment to their jobsite and use it to earn
income - they are not willing to buy without inspecting. We organize our auction
yards so that customers can compare similar items and determine the condition
and value of the equipment before placing any bids. Marshalling the equipment at
our auction yards and allowing our customers to "kick the tires" are very
valuable features of a Ritchie Bros. auction.

WE MAKE IT EASY TO BUY

Our sale sites feature covered theater-style seating for the bidders -- during
the auction, the rolling stock is driven over an elevated ramp in front of the
bidders.

                                                                            (15)



RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

In addition to displaying the equipment to facilitate on-site inspections, we
arrange for transportation, finance and other service companies to be present at
our auction sites so customers can get competitive quotes before they bid.

Our dedicated and experienced sales and support team is a key factor in our
success, and they are always available if bidders need additional help or
information.

BUYERS DON'T WASTE THEIR TIME

During 2003, the average Ritchie Bros. industrial auction included over 1,100
lots from 160 different consignors, covering a diverse array of truck and
equipment categories and manufacturers. At our auctions, an equipment buyer can
inspect in one day what might have taken weeks if the equipment were being
offered for sale by a number of vendors in various locations. A buyer can
purchase multiple brands and models of equipment and attachments in one place,
on one day, with one invoice - rather than having to negotiate with multiple
vendors. And because many consignors take advantage of our painting and
refurbishing services, the equipment typically requires little, if any,
additional investment by its new owner before it can be put to work. This one
stop shopping approach addresses the needs of our customers, most of whom are
contractors who are willing to spend only a limited amount of time away from
their jobsites.

BIDDERS CAN BE IN TWO PLACES AT ONCE

Customers who are able to satisfy themselves as to the value of particular
pieces of equipment, but can't be at the auction site on sale day, can still
participate in one of two ways:

                          rbauctionBid-Live INTERFACE

                                    [PHOTO]

(16)



                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

RBAUCTIONBID-LIVE is our Internet bidding service. This service allows qualified
bidders to hear the auctioneer, follow the bid and ask numbers and see the item
being sold, live and in real-time over the Internet. Bidding is as simple as
clicking the bid button, which continuously updates to reflect the auctioneer's
current asking price. By the end of 2003, Internet bidders were representing
approximately 20% of the registered bidders at our auctions.

PROXY BIDS from qualified bidders can be submitted in advance of the auction via
our website, via fax, or by calling the sale site directly. Customers placing
proxy bids specify the maximum price they are willing to pay for the lots in
which they are interested. Proxy bids are introduced into the auction process
just as they would have been if the bidders were attending the auction in
person. The auctioneer ensures that proxy bidders never pay more than they would
have if they had been there to place their own bids on auction day.

[PHOTO]                                                                  [PHOTO]

                 SERVICES FOR EQUIPMENT OWNERS @ RBAUCTION.COM

                                    [PHOTO]

                                                                            (17)



                                    [PHOTO]

OUR RELATIONSHIPS WITH EQUIPMENT SELLERS
----------------------------------------

Equipment sellers come to Ritchie Bros. to achieve the highest possible return
on the sale of their equipment. How do we do that?

WE DELIVER A GLOBAL MARKETPLACE

We typically mail about 50,000 full-colour brochures for each of our auctions to
a strategic selection of customers from our proprietary database of over 400,000
potential bidders in over 200 countries. In addition, all of the equipment is
listed on our website and our auctions are advertised in trade journals and
industry publications, as well as promoted to the bidders attending other
Ritchie Bros. auctions. This marketing effort allows us to directly expose the
trucks and equipment being sold in our auctions to a large and geographically
diverse pool of buyers. Interested bidders can then participate in our auctions
either in person or by bidding on-line using the rbauctionBid-Live service,
ensuring that the largest possible bidding audience is participating in the
auction.

OUR AUCTIONS ARE ABLE TO TRANSCEND LOCAL MARKET CONDITIONS

Our auctions attract a large number of foreign and out-of-state/out-of-province
buyers. Transportation costs are frequently not an issue for these bidders
because, compared to the value of the equipment, such costs can be relatively
insignificant-particularly the costs of ocean freight. As a result, we are
able to deliver world market prices for our consignors' equipment regardless of
local market conditions. On average, over 50% of our gross auction sales go to
buyers from outside the region in which the auction is held.

WE HELP OUR CONSIGNORS GET THE MOST NET DOLLARS FOR THEIR EQUIPMENT

Although we charge higher commissions than some other auctioneers, the
comprehensive service we provide in order to enhance the resale value of the
equipment enables us to achieve higher returns for equipment sellers. Over
23,000 consignors chose Ritchie Bros.

(18)



                                    [PHOTO]

in 2003 because they understood that our unreserved auctions would put the most
net dollars in their pockets at the end of the day.

                            THE RITCHIE BROS. VALUE
                             PROPOSITION IS SIMPLE:
                         We get you the best net return
                         on the sale of your equipment.

On average, over 1,200 bidders participate in each of our industrial auctions.
Bidders participate aggressively, whether they are at the auction site or
bidding over the Internet, because they know our auctions are fair and open. The
introduction of Internet bidding has resulted in an average 20% increase in
registered bidders -- rather than negatively impact our live crowds, the
rbauctionBid-Live service has allowed us to add a significant number of new
bidders to each auction. Because we are using the Internet to enhance (rather
than replace) our live auctions, consignors get the best of both worlds.

On sale day, our experienced auctioneers and ringmen create an exciting
atmosphere and a rapid pace, selling up to 100 lots per hour. And with over 80%
of our buyers being end users, prices are often closer to retail than wholesale.
Our auctions provide the environment needed to generate the best prices.

In addition, our experience over 40 years and 2,400 auctions has taught us that
some pieces of equipment sell better in their "working clothes", while in other
cases an investment in new tires, some body work or a fresh coat of paint can
increase the value of a piece well beyond the cost of the work itself. A prudent
plan to make a machine "auction-ready" can generate returns well in excess of
the refurbishing costs; and when we see such an opportunity, we will recommend
it to our consignor.

                                                                            (19)



RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

WE OFFER AN INTERNATIONAL NETWORK OF AUCTION SITES

With regularly scheduled auctions at 29 auction sites around the world, and
numerous off-site sales, owners can sell their equipment when and where they
want. This gives us an unparalleled ability to help owners sell their equipment,
whether they have a single piece in their yard or a fleet spread out over
several states, provinces or countries.

The Ritchie Bros. value proposition is simple: we get you the best net return on
the sale of your equipment.

WE DO ALL THE WORK

We take the hassle out of selling equipment so our customers can concentrate on
their business. We help consignors sell their equipment quickly, efficiently and
with a minimum commitment of time, energy or costs. We can coordinate
transporting the equipment to the auction site and look after any cleaning,
refurbishing or painting required to get the equipment auction-ready. We store
the equipment in our secure yards prior to the sale and until the equipment is
removed by the new owner. We also handle questions from prospective bidders,
take care of the marketing and title searches, and set up the auction yard so
bidders can inspect, test and compare the equipment. Perhaps most importantly,
we help our consignors with all of their equipment-any make, model or
manufacturer, high-value or low-value, big or small, young or old. After the
auction, we handle the collections and we pay out the net proceeds. Our
consignors don't have to negotiate with multiple buyers.

OUR REFURBISHING FACILITIES ARE ENVIRONMENTALLY CERTIFIED

We have built environmentally certified refurbishing facilities at many of our
auction sites and can arrange for all necessary painting and refurbishing work
to be done right in our yards. Environmental compliance is important to Ritchie
Bros. and all of our refurbishing facilities are designed to recycle all waste
products generated. With environmental regulations tightening the world over,

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                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

equipment owners who want to paint their equipment before selling it are finding
that they have fewer and fewer alternatives. As a result, our refurbishing
facilities have become a valuable competitive advantage.

WE TAILOR OUR AUCTION CONTRACTS TO MEET THE NEEDS OF OUR CUSTOMERS

Our goal is to come up with the contract that best suits the needs of the
customer. Most of our consignments are done on a straight commission basis. In
these cases, we act as agent for the consignor and [ILLEGIBLE] a percentage of
the selling price. In other cases, when a consignor is selling a significant
fleet, we can offer to underwrite the sale by providing the owner with a
guarantee or by purchasing the equipment outright. Even though the equipments
till sells without any price protection or reserves at the auction, the owner is
assured a guaranteed minimum amount. In these cases, we factor in a higher
commission rate since we are effectively providing an insurance policy on the
resale value of the equipment.

RITCHIE BROS. IS A RELIABLE AND REPUTABLE BUSINESS PARTNER

Ritchie Bros. has an impressive balance sheet, has been conducting unreserved
industrial auctions for over 40 years and is a public company listed on both the
New York Stock Exchange and the Toronto Stock Exchange. Our customers know that
we have the financial strength to live up to our commitments - when they sign a
contract with Ritchie Bros. they know that their equipment will sell, that it
will sell for fair market value, and that they will be paid in full. They can
also be proud that they are doing business with a trusted and reputable business
partner that adheres to the highest standards of business ethics.

[PHOTO]                                                              [PHOTO]

                                 RISK MANAGEMENT
                                 ---------------

  STRAIGHT COMMISSION CONTRACTS POSE LITTLE RISK TO RITCHIE BROS. HOWEVER, IN
   CASES WHERE WE UNDERWRITE A CONTRACT, EITHER BY OFFERING A GUARANTEE OR AN
OUTRIGHT PURCHASE, WE ASSUME THE RISK OF THE SALE. THESE UNDERWRITTEN CONTRACTS
REPRESENTED ABOUT 25% OF OUR BUSINESS IN 2003, WHICH IS IN LINE WITH OUR TYPICAL
                                 BUSINESS MIX.

  WE MITIGATE OUR RISK WHEN ENTERING INTO UNDERWRITTEN CONTRACTS BY BUILDING A
RISK PREMIUM INTO OUR COMMISSION RATE AND BY FOLLOWING AN APPRAISAL PROCESS THAT
DRAWS ON OUR EXTENSIVE FIELD EXPERIENCE AND OUR PROPRIETARY APPRAISAL DATABASE.
 WE ALSO USE OUR KNOWLEDGE OF MAJOR EQUIPMENT DEALS AROUND THE WORLD TO FORM A
    VIEW OF THE PIPELINE OF EQUIPMENT COMING TO MARKET AND TO ANTICIPATE ANY
 POTENTIAL SUPPLY/DEMAND IMBALANCES. FURTHER MITIGATING THE RISK IS OUR LIMITED
 EXPOSURE TO CHANGES IN EQUIPMENT VALUES - THE TIME FROM SIGNING A CONTRACT TO
            THE DATE OF THE AUCTION IS TYPICALLY ONLY 30 TO 45 DAYS.

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RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

                         2003 CUSTOMER EXPERIENCE SURVEY
                         -------------------------------

IN JUNE 2003, WE HIRED AN INDEPENDENT RESEARCH COMPANY TO SURVEY 25,000 OF OUR
CUSTOMERS, RANDOMLY SELECTED FROM ACROSS NORTH AMERICA. HERE ARE SOME OF THE
MOST SIGNIFICANT RESULTS.

                     PERCENTAGE OF RESPONDENTS WHO WERE EITHER
                  "SATISFIED" OR "VERY SATISFIED" IN THESE AREAS



                                                                    Satisfied or Very Satisfied
                                                                    ---------------------------
                                                                 
Overall level of satisfaction with Ritchie Bros.                                89%

Level of satisfaction with our Auction Services and Facilities                  83%

Level of satisfaction with our website -- rbauction.com                         82%

Level of satisfaction with their RBA Territory Manager                          82%


                 PERCENTAGE OF RESPONDENTS WHO RATED US EITHER
         "BETTER" OR "MUCH BETTER" THAN OUR COMPETITORS IN THESE AREAS



                         Better or Much Better
                         --------------------
                      
Professionalism                   89%

Integrity                         83%

Trustworthiness                   82%

Dependability                     84%

Customer Service                  83%

Consistency of Service            85%

Innovation                        83%

Expertise                         85%


RESPONDENTS INDICATED THAT THEY ATTEND AN AVERAGE OF 3.6 RITCHIE BROS. AUCTIONS
PER YEAR. OVER 40% ATTEND 4 OR MORE PER YEAR. RESPONDENTS ALSO INDICATED THAT
THEY TRAVEL AN AVERAGE OF 250 MILES TO ATTEND OUR AUCTIONS. ALMOST 40% TRAVEL
MORE THAN 200 MILES.

71% OF RESPONDENTS PLAN TO MAINTAIN THEIR LEVEL OF BUSINESS WITH RITCHIE BROS.
OVER THE NEXT YEAR WHILE 25% PLAN TO INCREASE THE AMOUNT OF BUSINESS THEY DO
WITH US, CITING GROWTH, EXPANSION, AND FAVORABLE PAST AUCTION RESULTS AS
REASONS. ONLY 4% PLAN TO DO LESS BUSINESS. IN ADDITION, 91% RECOMMENDED RITCHIE
BROS. TO FRIENDS AND COLLEAGUES DURING THE PAST YEAR.

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                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

PLANS FOR THE FUTURE

OUR STRATEGY FOR 2004 IS ESSENTIALLY THE SAME STRATEGY WE HAVE BEEN FOLLOWING
SINCE OUR FIRST INDUSTRIAL AUCTION IN 1963. WE ARE STILL FOCUSED ON CUSTOMER
SERVICE, WE ARE STILL COMMITTED TO THE UNRESERVED AUCTION PROCESS AND WE ARE
STILL LOOKING TO GROW. WE PLAN TO STAY FOCUSED ON WHAT WE DO BEST-SELLING
INDUSTRIAL ASSETS AT UNRESERVED PUBLIC AUCTIONS AROUND THE WORLD.

The total number of registered bidders at our industrial auctions increased 16%
to 181,000 in 2003. One of the drivers behind the growth in registered bidders
was the roll-out of rbauctionBid-Live, our Internet bidding service. By the end
of the year, Internet bidders were representing approximately 20% of the
registered bidders at our auctions; instead of replacing live bidders, the
Internet brought new participants to our auctions, resulting in much larger
overall audiences. In addition, the popularity of the rbauction.com website has
continued to grow as an ever increasing number of equipment owners are turning
to rbauction.com for the information they need to manage their fleets. The
Internet has given us the opportunity to add a new dimension to our customer
relationships-a virtual dimension.

The growing number of consignors and bidders choosing Ritchie Bros. points to
the increasing popularity of our auctions. While we have an extensive customer
base, introducing our services to equipment owners who don't yet know us, and to
industries where we are only scratching the surface, remains a critical growth
strategy for Ritchie Bros. At the same time, we must remain flexible and
responsive to the needs of each customer. We understand that our customers
choose Ritchie Bros. not because we are the biggest, but because we provide the
best service.

WE INTEND TO CONCENTRATE ON THE FOLLOWING AREAS IN 2004:

EXPANDING INTO RELATED ASSET CATEGORIES

We will continue to look for growth outside our traditional markets where we can
see opportunities to create value for customers. In recent years, we have looked
to boost our sales of agricultural equipment and over-the-road trucks and
trailers. We have also been expanding our activities in the marine sector --
including industrial marine and pleasure craft, and have been selling an
increasing amount of industrial and agricultural real estate.

We are open to new opportunities, especially when we have a competitive
advantage by virtue of our reputation, our network of auction sites, our
customer base, and the ability of a Ritchie Bros. unreserved auction to generate
world market prices.

EXPANDING INTO NEW GEOGRAPHIC MARKETS

In 2003, we saw significant growth in our Canadian, European and Middle Eastern
operations. We didn't hold any auctions in Asia in 2003 due to the lack of
demand for equipment from local buyers, trade barriers in several countries and
depressed purchasing power throughout

                                                                 [PHOTO] [PHOTO]

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RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

the region. However, we were able to generate significant consignments from the
region by helping Asian consignors access stronger markets in other parts of the
world.

During 2003 we held our first ever auctions in Greece and South Africa and we
opened a sales office in Brazil. Over the next five years, we expect that our
most significant sales growth will come from the United States and Europe. But
by the end of this decade, we anticipate that our growth will be shifting to
markets such as China, India, Brazil and Eastern Europe. We are currently
working with customers in all of these markets but have yet to hold auctions
there. As we develop more and deeper relationships with local equipment owners
(primarily by working with buyers from these consumption-oriented regions), and
as these markets evolve, we expect to increase our level of activity, leading
eventually to local auctions.

Our operations in 2003 were impacted by the general weakening of the US dollar.
Approximately 30% of our revenues and 40% of our expenses are denominated in
currencies other than the US dollar (in our case, primarily the Canadian dollar
and the Euro). Because these amounts are translated into US dollars for
presentation in our financial statements, our overall revenues and expenses end
up being affected by currency swings. However, the revenue and expense amounts
roughly offset with the result that the bottom line impact of currency swings in
2003 was essentially neutral.

Although it is not having a discernable impact on our earnings, the relative
weakness of the United States dollar and the relative strength of the Euro and
the Canadian dollar are having an impact on the buying and selling patterns of
equipment owners. As expected, an increasing number of foreign buyers are
participating in our US auctions and we are noticing a reduced level of

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                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

participation by Americans in our non-US auctions. Anything that causes change
is good for Ritchie Bros. because it generates transactions. The dynamics of
changing currency valuations are complex, but for Ritchie Bros., change is
positive.

EXPANDING OUR INTERNATIONAL NETWORK OF AUCTION SITES

Since 1997 we have made significant investments in our network of auction
sites-- adding several new sites and upgrading several older ones. During 2003,
we opened new permanent auction sites in Orlando, Florida and Prince George,
British Columbia. We established new regional auction units in Valencia, Spain
and Melbourne, Australia

We now have 22 permanent auction sites (each with an average of over 50 acres of
developed land) and 7 regional auction units. A regional auction unit is an
auction site on leased land, typically with fairly modest facilities, whereas a
permanent auction site is on land owned by Ritchie Bros.

We plan to open our new permanent auction site in Sacramento, California in the
second half of 2004, which will replace our existing regional auction unit in
Stockton, California. We intend to continue to add permanent auction sites and
regional auction units to our network at the rate of one or two sites a year,
when suitable opportunities present themselves. Our focus for the next several
years will likely by in the United States and Europe, but we are always on the
lookout for attractive opportunities to increase our presence in new markets.

                        ORLANDO, FLORIDA - Grand opening
                     auction held on Feb 20-21, 2003 at the
                            new 99-acre auction site.

                                    [PHOTO]

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RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

BUILDING OUR CUSTOMER SERVICE TEAM

Our future growth depends on the quality of our customer relationships and our
ability to deliver superior customer service. As a result, it is critical that
we continue to recruit, train and develop the best people. In 2003 we placed a
significant focus on sales force productivity and due in part to initiatives
undertaken over the last several years, we have increased average gross auction
sales per sales representative from $6.9 million in 2001, to $7.2 million in
2002, and to $8.3 million in 2003. To support further increases in productivity,
we recently deployed a new customer relationship management system. This new
system, together with ongoing training and development initiatives, should help
us achieve our sales growth and productivity goals.

While our front line Territory Managers are the most visible members of our
customer service team, every Ritchie Bros. employee has contact with our
customers and plays an important role in our customer service efforts. In
recognition of this, we have customer relations specialists in both our training
department and our marketing department. In 2003 we conducted a customer survey
to find out how we are doing, and to discover ways that we can do things better.
The results were excellent but, as hoped, the survey did identify some areas for
improvement. We intend to use the results of this survey to continue to strive
for excellence in the way we serve our customers, and improve relationships in
every way we can.

We believe that our focus on people and relationships will allow us to continue
growing our business.

USING THE INTERNET

We will continue to use the Internet to enhance our auctions, not replace them.
We fully understand that buyers of used equipment like to kick tires and that
success in our market will continue to be based largely on personal
relationships, reputation and trust. However, it has been exciting to watch the
Internet become an increasingly valuable tool for our customers. We remain
committed to being technology leaders and to the extent that we can use the
Internet and other technologies to expand our services further, we will do so.

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                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

                       The popularity of our website and
                the value of our Internet services have added a
                          new virtual dimension to our
                            customer relationships.

Our most exciting Internet service, rbauctionBid-Live, allows customers to
follow the auction, hear the auctioneer, and place bids, all live and in
real-time over the Internet. By the end of the year, over 10,000 customers from
over 80 countries were using the service. Internet bidders were competing on as
many as 40% of the items being offered on- line and were buyer or runner-up
bidder on over 15%.

An increasing number of customers are having their first contact with Ritchie
Bros. on the rbauction.com website. Many spend hours on our website gathering
information about equipment for sale as well as recent selling prices. Our
customers have always been able to turn to their Territory Managers for
information and advice regarding fleet management. Now the rbauction.com website
has become an equally valuable tool, providing another dimension to the already
deep relationships between Ritchie Bros. and our customers.

OUR FUTURE LOOKS BRIGHT

Thanks to aggressive expansion in recent years, we are working from a very solid
base. We have the infrastructure and capacity to grow revenues faster than costs
and we plan to continue along that path. Working off this platform and seeking
out opportunities to enhance customer service and develop new markets, our plan
is to deliver long-term earnings growth and increased shareholder value.

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RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

                        THE RITCHIE BROS. AUCTION PROCESS
                        ---------------------------------

STEP 1

GETTING TO KNOW THE OWNER AND HIS EQUIPMENT

The auction process begins when an equipment owner meets with one of our
Territory Managers. We get to know the owner's needs and, if necessary, we
appraise his equipment. Photographs and particulars of the equipment are
reviewed by the people participating in the appraisal; a typical appraisal team
includes two people from the local area, two from head office and, if necessary,
additional people with specialized expertise. After their individual appraisals
are complete, members of the appraisal team compare results and conclude on a
final appraised value for the fleet.

STEP 2

DRAFTING THE AUCTION CONTRACT

We sitdown with the customer and workout the details of the auction contract.
Straight commission contracts are the most common. In some cases, we also offer
the consignor a guarantee of gross proceeds or an out right purchase contract.
in certain circumstances, we offer cash advances and other options. We draft a
contract tailored to the consignor's individual needs and requirements.

STEP 3

GETTING THE EQUIPMENT "AUCTION READY"

Once the equipment arrives at the auction site, we coordinate any cleaning,
refurbishing, repair work or painting that the consignor requires in order to
get the equipment ready for auction. When we see an opportunity to add value in
excess of the costs of refurbishing, we'll recommend doing the work.

STEP 4

MARKETING THE EQUIPMENT TO THE WORLD

Marketing is done through full-color auction brochures that are mailed to a
targeted selection of typically

STEP 5

SEARCHING THE EQUIPMENT FOR LIENS

To ensure that buyers can purchase with confidence, we guarantee them the clear
title of everything we sell or a full refund of their purchase price. Our search
department identifies and arranges for the release of all liens and encumbrances
so buyers are assured of acquiring good and marketable title to items purchased
at our auctions.

STEP 6

SETTING UP THE AUCTION YARD

The equipment is sorted and displayed in logical groupings so prospective buyers
can easily inspect, test and compare similar pieces. We have knowledgeable staff
on hand to answer bidders' questions. We also arrange for caterers, finance
company representatives, customs brokers, transportation companies and other
services to be present on the site.

STEP 7

AUCTION DAY

On auction day, our auctioneers, ringmen, yard staff, Internet services team and
customer relations staff conduct what we believe to be the best run auctions in
the world. We sell between 50 and 100 lots every hour. Our auctions are
efficient, exciting and completely unreserved.

STEP 8

TAKING CARE OF BUSINESS

After the auction is over, we collect the proceeds from the buyers, including
all relevant sales taxes(which we administer and remit to proper authorities)
coordinate the release of the equipment to its new owners, and disburse the
proceeds, along with detailed settlement statements, to the consignors.

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                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

FINANCIAL INFORMATION



                                                          PAGE
                                                       
MANAGEMENT'S DISCUSSION AND ANALYSIS                       33
INDEPENDENT AUDITORS' REPORT                               42
CONSOLIDATED FINANCIAL STATEMENTS
       Consolidated Statements of Operations               42
       Consolidated Balance Sheets                         43
       Consolidated Statements of Shareholders' Equity     43
       Consolidated Statements of Cash Flows               44
       Notes to Consolidated Financial Statements          45


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

OVERVIEW

The following discussion summarizes significant factors affecting the
consolidated operating results and financial condition of Ritchie Bros.
Auctioneers Incorporated ("Ritchie Bros.", the "Company", "we" or "us") for the
year ended December 31, 2003 compared to the year ended December 31, 2002. This
discussion should be read in conjunction with the consolidated financial
statements and notes there to included else where in this document, and with the
disclosures below regarding forward-looking statements and risk factors. The
date of this discussion is as of February 13, 2004. Additional information
relating to our company, including our Annual Information Form, is available by
accessing the SEDAR website at www.sedar.com. None of the information on the
SEDAR website is incorporated by reference in to this document by this or any
other reference.

We prepare our consolidated financial statements in accordance with generally
accepted accounting principles in Canada, or Canadian GAAP. There are no
material measurement differences between those financial statements and the
financial position and results of operations that would be reported under
generally accepted accounting principles in the United States, or U.S. GAAP.
Amounts discussed below are based on our consolidated financial statements
prepared in accordance with Canadian GAAP and are presented in United States
dollars. All dollar amounts discussed below are expressed in thousands of
dollars, except per share amounts.

Ritchie Bros. is the world's largest auctioneer of industrial equipment. Our
world headquarters are located in Richmond, British Columbia, Canada, and at
December 31, 2003, we operated from over 90 locations, including 29 auction
sites, in more than 20 countries around the world. We sell, through unreserved
public auctions, a broad range of equipment, including equipment used in the
construction, transportation, mining, forestry, petroleum, marine and
agricultural industries. In recent periods, an average of approximately 80% of
the buyers at our auctions have been end users of equipment (retail buyers),
such as contractors, with the remainder being primarily equipment dealers,
brokers and finance companies (wholesale buyers). Consignors to our auctions
represent a broad mix of equipment owners, the majority being end users of
equipment. Consignment volume at our auctions is affected by a number of
factors, including regular fleet upgrades and reconfigurations, financial
pressure, retirements, and inventory reductions, as well as by the timing of the
completion of major construction and other projects.

We operate in the auction segment of the global industrial equipment market
place. Our target market is the entire used equipment sector, which is large and
fragmented and continues to grow primarily as a result of the increasing,
cumulative world supply of used equipment. The auction segment of the used
industrial equipment market is also highly fragmented and has grown over the
last number of years; we believe that this growth will continue in the future.

We compete directly for potential purchasers of industrial equipment with other
auction companies. Our indirect competitors include equipment manufacturers,
distributors and dealers that sell new or used equipment, and equipment rental
companies. When sourcing equipment to sell at our auctions, we compete with
other auction companies, equipment dealers and brokers, and equipment owners
that have traditionally disposed of equipment through private sales.

We believe that we have several key strengths that will enable us to continue to
attract an increasing number of consignors and bidders to our auctions. Our
principal strengths are our reputation for conducting only unreserved auctions
and our highly publicized commitment to fair dealing. Other important strengths
include our size, the international scope of our operations, our extensive
network of auction sites, our Internet tools and our in-depth experience in the
market place.

Strict adherence to the unreserved auction process is one of our founding
principles and, we believe, one of our most significant competitive advantages.
"Unreserved" means that there are no minimum prices for anything sold at a
Ritchie Bros. auction - each item sells to the highest bidder on sale day,
regardless of the price. In addition, consignors (or their agents) are not
allowed to bid on or buy back their own equipment. We have maintained our
commitment to the unreserved auction process since our first industrial auction
in 1963.

Our worldwide marketing efforts and reputation for conducting fair auctions
enable us to attract a broad international base of customers to our auctions.
This provides a global market place that can transcend local market conditions.
Evidence of this is the fact that on average, over 50% of the equipment sold at
any particular auction leaves the region of the sale. We believe that our
ability to consistently draw significant numbers of local and international
bidders to our auctions provides a compelling value proposition to sellers of
used equipment and generates a greater volume of consigned equipment and higher
gross auction sales than our competitors. During the year ended December 31,
2003, approximately 181,000 bidders registered to bid at our auctions, compared
to approximately 156,000 in 2002. We received more than 23,000 consignments in
2003, compared to almost 21,000 in 2002. A consignment is typically comprised of
multiple lots.

One of our primary goals is to continue to grow our gross auction sales. Our
strategies for accomplishing this objective include, among others, continued
development of markets and regions in which we already operate and expansion in
to new and emerging markets and regions, particularly within Europe and North
America. We intend to continue to look for ways to capitalize on the competitive
advantages we have to offer, as outlined briefly above. Where there are
opportunities for us to bring some or all of these factors in to play and assist
an owner in realizing the best possible return on the sale of assets, we will
pursue that opportunity.

We are also using the Internet to enhance our business and to extend further the
geographic reach of our auctions and the multinational character of our bidding
audiences. In addition, we continue to develop our technical and physical
infrastructure, as well as our recruiting and training programs, in order to
improve the productivity of our employees and to enhance the service we provide
to our customers.

During the year ended December 31, 2003, we conducted 143 unreserved industrial
auctions at locations in North America, Europe, the Middle East, Australia and
Africa. Although our auctions vary in size, the average Ritchie Bros. industrial
auction in 2003 attracted over 1,200 bidders and featured approximately 1,100
lots consigned by about 160 consignors. The average gross auction sales at these
auctions was approximately $11.0 million. We also held 27 smaller unreserved
agricultural auctions in 2003. Approximately 57% of our auction revenues was
earned from operations in the United States(2002 - 63%), 19% was earned in
Canada (2002 - 13%) and the remaining 24% was earned from operations in
countries other than the United States and Canada (primarily Europe, the Middle
East and Australia) (2002 - 24%). We had 589 full-time employees at December 31,
2003, including 188 sales representatives.

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RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

We are a public company and our common shares are listed on the New York Stock
Exchange under the symbol "RBA". On January 27, 2004 our common shares also
became listed on the Toronto Stock Exchange under the symbol "RBA". At the date
of this management's discussion and analysis we had 16,994,022 common shares
without par value issued and outstanding and stock options out standing to
purchase a total of 541,527 common shares.

SOURCES OF REVENUE AND REVENUE RECOGNITION

A key indicator of our operating performance is gross auction sales,
representing the total proceeds from all items sold at our auctions during the
period. Gross auction sales is not a measure of revenue and is not presented in
our consolidated financial statements. However, we believe that gross auction
sales provides an important comparative measure of our relative operating
performance between periods. Auction revenues are reported as the top line of
our Statement of Operations and, as with certain other Statement of Operations
line items, is best understood by considering its relationship to gross auction
sales.

Auction revenues are comprised of auction commissions earned from consignors
through straight commission and guarantee contracts, net profits on the sale of
inventory items, incidental interest income, handling fees on the sale of
certain lots, and the Internet Purchase Fee and Proxy Purchase Fee. All revenue
is recognized when the auction sale is complete and we have determined that the
auction proceeds are collectible.

Straight commissions are our most common type of auction revenue and are
generated by us when we act as agent for consignors and earn a pre-negotiated,
fixed commission rate on the gross sales price of the consigned equipment at
auction. In recent periods, this type of sale has generally represented
approximately three-quarters of our gross auction sales volume on an annual
basis.

In certain other cases, we guarantee minimum sales proceeds to the consignor and
earn a commission based on the actual results of the auction, including a
negotiated percentage of any sales proceeds in excess of the guaranteed amount.
If the actual auction proceeds are less than the guaranteed amount, our
commission is reduced and, if proceeds are sufficiently lower, we can incur a
loss on the sale. We factor in a higher rate of commission on these sales to
compensate for the increased risk we assume. Our exposure from these guarantee
contracts fluctuates overtime, but guarantees are generally outstanding for less
than 45 days and the combined exposure at any time from all outstanding
guarantees is usually less than $30 million. Losses, if any, resulting from
guarantee contracts are recorded in the period in which the relevant auction is
held. In recent periods, guarantee contracts have generally represented in the
range of 20% of gross auction sales on an annual basis.

Auction revenues also include the net profit or loss on the sale of inventory in
cases where we acquire ownership of equipment for a short time prior to an
auction sale. When purchased, this equipment is assigned to a specific auction
sale and sold at that auction in the same manner as consigned equipment. During
the period that we retain ownership, the cost of the equipment is recorded as
inventory on our Balance Sheet. The net gain or loss on the sale is recorded as
auction revenue. In recent periods, sales of inventory have generally
represented in the range of 5% of gross auction sales on an annual basis.

The choice by consignors between straight commission, guarantee, or outright
purchase arrangements is dependent upon many factors, including the consignor's
risk tolerance and sale objectives. As a result, the mix of contracts in a
particular quarter or year is not necessarily indicative of future performance.
The composition of our auction revenues is dependent on the mix and nature of
contracts entered into with consignors in any particular period and fluctuates
from period to period. The variability in our auction revenue rate (auction
revenues as a percentage of gross auction sales) is presented below.

Changes in the relative proportion of straight commission contracts versus
underwritten business (guarantee and out right purchase contracts) are a
contributor to the variability in our auction revenue rate. However, the
largest contributor is the performance of our under written business. In a
period when our underwritten business performs better than expected, our auction
revenue rate typically exceeds the expected average rate. Conversely, if our
underwritten business performs below expectations, our auction revenue rate will
typically be below the expected average rate. See further discussion of our
auction revenue rate under "Results of Operations - Auction Revenues".

Since January 1, 2002, our auction revenues have included a handling fee,
payable by the buyer, typically equal to 10% of the selling price on all lots
sold for 2,500 or less in the currency of the auction. The impact of this fee on
auction revenues and our auction revenue rate in any given period will depend on
the quantity and value of lots sold during that period.

On January 1, 2003, we implemented fees to recover some of the costs involved in
running our proxy bidding service and the rbauctionBid-Live Internet bidding
service. The Proxy Purchase Fee and the Internet Purchase Fee affect only buyers
using these services. The fees are typically calculated as 2% of the selling
price to a maximum of 500 per lot in the currency of the auction.

Our gross auction sales and auction revenues are affected by the seasonal nature
of the auction business. Our gross auction sales and auction revenues tend to
increase during the second and fourth calendar quarters, during which time we
generally conduct more business than in the first and third calendar quarters.

Our gross auction sales and auction revenues are also affected on a period-to-
period basis by the timing of major auctions. In newer markets where we are
developing operations, the number and size of auctions and, as a result, the
level of gross auction sales and auction revenues, are likely to vary more
dramatically from period-to-period than in our established markets where the
number, size and frequency of our auctions are more consistent. In addition,
economies of scale are achieved as our operations in a region mature from
conducting intermittent auctions, establishing a regional auction unit, and
ultimately to developing a permanent auction site. Economies of scale are also
achieved when our auctions increase in size.

Because of these seasonal and period-to-period variations, we believe that our
gross auction sales and auction revenues are best compared on an annual, rather
than quarterly basis.

           ACTUAL QUARTERLY AUCTION REVENUE RATE VERSUS EXPECTED RATE

                                  [LINE GRAPH]

(34)



                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

RECENT DEVELOPMENTS

On January 15, 2004 we announced our intention to effect a two-for-one stock
split, subject to the approval of our shareholders at our Annual and Special
Meeting of Shareholders, scheduled to be held on April 16, 2004. All share and
per share information in this document does not give effect to the proposed
stock split.

DEVELOPMENTS IN 2003

Our primary goals for 2003 were to grow gross auction sales and net earnings,
improve sales force productivity, and increase our customer base. Our related
goals included an enhanced focus on customer service, continued expansion into
related markets and regions, and use of the Internet and other technology to
enhance our business. Our performance in relation to these goals is discussed
below.

During the first quarter of 2003 we conducted our first ever auction in Greece
and we opened a new regional auction unit in Sagunto, Spain. We also held the
grand opening auction at our new permanent auction site in Orlando, Florida.

During the second quarter of 2003 we opened a regional auction unit in
Australia, in the city of Melbourne. We also opened our new permanent auction
facility in Prince George, British Columbia, and acquired a parcel of land near
Sacramento, California, on which we are building a new permanent auction site.
The new facility in Sacramento will replace our current regional auction unit in
Stockton, California, and is expected to be completed by the second half of
2004.

During the third quarter of 2003 we declared our first ever cash dividend on our
common shares(see "Liquidity and Capital Resources"). We also held our
largest California-based auction to date, at our Perris auction facility.

We held our first ever auction in South Africa during the fourth quarter of
2003, further demonstrating our continued expansion into new regions.

Our sales force productivity, which is measured as gross auction sales per sales
representative improved from $7.2 million per sales representative in 2002 to
$8.3 million per sales representative in 2003. Our customer base continued to
grow as new relationships were formed with truck and equipment owners around the
world, and purchases by customers using our Internet bidding service increased
to $145 million compared to $76 million in 2002.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

In preparing our consolidated financial statements in conformity with Canadian
GAAP, we must make decisions that impact the reported amounts and related
disclosures. Such decisions include the selection of the appropriate accounting
principles to be applied and the assumptions on which to base accounting
estimates. In reaching such decisions, we apply judgments based on our
understanding and analysis of the relevant circumstances and historical
experience. On an ongoing basis, we evaluate these judgments and estimates,
including consideration of uncertainties relating to revenue recognition
criteria, recoverability of capital assets and goodwill, and the assessment of
possible contingent assets or liabilities that should be recognized or disclosed
in our consolidated financial statements. Actual amounts could differ
materially from those estimated by us at the time our consolidated financial
statements are prepared.

The following discussion of critical accounting policies and estimates is
intended to supplement the Significant accounting Policies presented As note 1
to our consolidated financial statements. Note 1 summarizes the accounting
policies and methods used in the preparation of our consolidated financial
statements. The policy and the estimate discussed below are included here
because they require more significant judgments and estimates in the preparation
and presentation of our consolidated financial statements than other policies
and estimates.

VALUATION OF GOODWILL

We assess the possible impairment of goodwill in accordance with standards
issued by the Canadian Institute of chartered Accountants in Canada (known as
the CICA) and the Financial Accounting Standards board in the United States. The
standards stipulate that reporting entities test the carrying value of goodwill
for impairment annually at the reporting unit level using a two-step impairment
test; if events or changes in circumstances indicate that the asset might be
impaired, the testis conducted more frequently.

In the first step of the impairment test, the net book value of each reporting
unit is compared with its fair value. We operate as a single reporting unit,
which is the consolidated public company. As a result, we are able to refer to
the stock market for a third party assessment of our company's fair value. As
long as the fair value of the reporting unit exceeds its net book value,
goodwill is considered not to be impaired and the subsequent step of the
impairment test is unnecessary. Changes in the market value of our common shares
may impact our assessment as to whether goodwill has been impaired. These
changes may result from changes in our business plans or other factors,
including those that are outside our control. We perform the goodwill test each
year as at September 30, or more frequently if events or changes in
circumstances indicate that goodwill might be impaired. We performed the test as
at September 30, 2003 and determined that no impairment had occurred.

ACCOUNTING FOR INCOME TAXES

We record income taxes relating to each of the jurisdictions in which we
operate. We estimate our actual current tax exposure and the temporary
differences resulting from differing treatment of items for tax and book
accounting purposes. These differences result in future income tax assets and
liabilities, which are included within our consolidated balance sheet. We must
then assess the likelihood that our future income tax assets will be recovered
from future taxable income. If recovery of these future tax assets is considered
unlikely, we must establish a valuation allowance. To the extent we either
establish or increase a valuation allowance in a period, we must include an
expense within the tax provision in the consolidated statement of operations.
Significant management judgment is required in determining our provision for
income taxes, our future tax assets and liabilities, and any valuation allowance
recorded against our net future tax assets. If actual results differ from these
estimates or we adjust these estimates in future periods, we may need to
establish a valuation allowance that could materially impact the presentation of
our financial position and results of operations.

NEW ACCOUNTING POLICIES

STOCK-BASED COMPENSATION

Prior to January 1, 2003, we recognized stock-based compensation expense using
the intrinsic value method of accounting at the date of grant of the underlying
stock option. Under the intrinsic value method, no compensation costs are
recognized in the financial statements for stock options granted to employees
and directors when they are issued at market value.

The CICA Accounting Standards board has amended CICA Handbook Section 3870 -
Stock-based Compensation and Other Stock-based Payments-- to require entities to
account for employee stock-based compensation using the fair value based method,
beginning January 1, 2004. Under the fair value based method of accounting,
compensation cost is measured using the Black-Scholes option pricing model at
the date of grant of the option and is expensed over the underlying
award's vesting period. The transitional provisions of amended section 3870
outline three possible methods of application for the new standards: the
prospective method, the retroactive method and the modified retroactive method.
Prospective application is only permitted if the fair value based method of
accounting is adopted in a company's fiscal year beginning before January 1,
2004.

In accordance with the permitted transitional options of amended section 3870,
we have prospectively applied the fair value based method of accounting to all
employee and director stock options granted on or after January 1, 2003. Under
the prospective method of adoption we selected, stock-based employee and
director compensation is recognized for all employee and director stock options
granted, modified or settled on or after January 1, 2003, using the fair value
based method. For the year ended December 31, 2003, our stock-based compensation
expense (net of future income tax impact of $0.2 million) relating to options
granted on or after January 1, 2003 was $0.9 million, or $0.05 per common share
basic and dilute. No stock-based compensation expense has been recognized for
any stock option grants in any years prior to January 1, 2003.

OVERALL PERFORMANCE

For the year ended December 31, 2003 we recorded auction revenues of $161.5
million and net earnings of $36.6 million, or $2.14 per diluted common share.
This performance compares to auction revenues of $133.6 million and net earnings
of $28.4 million, or $1.68 per diluted common share, in 2002. The improvement is
attributable to growth in our gross auction sales, combined with a higher than
expected auction revenue rate. We ended the year with working capital of $35.3
million, compared to $25.4 million at the end of 2002.

                                                                            (35)



RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

SELECTED ANNUAL INFORMATION

The following selected consolidated financial information as at December 31,
2003, 2002 and 2001 and for each of the years in the three-year period ended
December 31, 2003 has been derived from our audited consolidated financial
statements. This data should be read together with those financial statements
and the risk factors described below.

Our consolidated financial statements are prepared in United States dollars in
accordance with Canadian GAAP. These principles conform in all material respects
with U.S. GAAP, except as disclosed in note 12 of our consolidated financial
statements for the year ended December 31, 2003. All dollar amounts in the
following table and related notes are in thousands of United States dollars,
except per share data.



Year Ended December 31,                                2003              2002              2001
--------------------------------------------------------------------------------------------------
                                                                            
STATEMENT OF OPERATIONS DATA:
Auction revenues (1)                              $   161,542      $     133,552     $     116,991
Direct expenses                                       (22,099)           (19,684)          (18,861)
                                                  -----------      -------------     -------------
                                                      139,443            113,868            98,130

Operating expenses (2)(3)(4)                           86,750             74,841            68,208
Earnings before income taxes                           52,693             39,027            29,922
                                                  -----------      -------------     -------------
Income taxes (5)                                       16,099             10,656             9,868
Net earnings                                      $    36,594      $      28,371     $      20,054
                                                  -----------      -------------     -------------

Net earnings per share-basic                      $      2.17      $        1.69     $        1.20
Net earnings per share-dilute                            2.14               1.68              1.19

Cash dividends declared per share (6)             $      0.30      $           -     $           -

BALANCE SHEET DATA (PERIOD END):
Working capital (including cash)                  $    35,346      $      25,443     $      19,279
Capital assets                                        210,416            193,490           170,919
Total assets                                          413,008            329,136           275,543
Long-term liabilities                                  34,259             67,336            61,217


(1)  Auction revenues are comprised of commissions earned from consignors
     through straight commission and guarantee contracts, the net profit on the
     sale of inventory items, fees charged to buyers and incidental interest
     income.

(2)  Operating expenses include depreciation and amortization, general and
     administrative and other income and expenses.

(3)  Depreciation and amortization in 2001 includes goodwill amortization
     of $1,650. Goodwill amortization ceased effective January 1, 2002 in
     accordance with new accounting pronouncements in Canada and the United
     States. Excluding goodwill amortization, net earnings for 2001 would have
     been $21,061 ($1.26 per share basic and $1.25 per share diluted).

(4)  We adopted the fair value method of accounting for stock-based compensation
     in 2003, in accordance with amended accounting pronouncements in Canada and
     the United States. General and administrative expenses in 2003 include
     stock-based compensation charges of $1,047 ($880, or $0.05 per share basic
     and diluted, net of taxes).

(5)  Income taxes in 2001 include withholding taxes of $2,000 paid on
     intercompany dividends.

(6)  In addition to the cash dividend declared and paid in 2003, we declared a
     cash dividend of $0.15 per common share on January 30, 2004 relating to the
     quarter ended December 31, 2003, which is not included in this amount.

RESULTS OF OPERATIONS

We conduct operations on a global basis in a number of different currencies, but
our reporting currency is the United States dollar. In 2003 approximately 30% of
our revenues and approximately 40% of our operating costs were denominated in
currencies other than the United States dollar, which is consistent with the
relative proportions in recent periods. While the impact of currency
fluctuations on our net earnings was essentially neutral, the presentation of
our financial position and results of operations was impacted by fluctuations in
foreign exchange rates.

The main currencies other than the United States dollar in which our revenues
and operating costs are denominated are the Canadian dollar, the Euro, and the
Australian dollar. In the past, fluctuations in the value of these currencies
have not had a material impact on the presentation of our results of operations.
However, in recent periods there has been a significant increase in the value of
these currencies relative to the United States dollar. This fluctuation, which
we refer to as the currency fluctuation, has resulted in higher revenues and
operating costs, as discussed in more detail below.

AUCTION REVENUES



Years ended December 31,                              2003               2002          % Change
-----------------------------------------------------------------------------------------------
                                                                              
Auction revenues-United States (1)              $        92,273    $        84,348        9%
Auction revenues-Canada (1)                              30,752             17,650       74%
Auction revenues-Europe (1)                              21,262             15,678       36%
Auction revenues-Other (1)                               17,255             15,876        9%
                                                ---------------    ---------------       --
Total auction revenues                          $       161,542    $       133,552       21%
                                                ---------------    ---------------       --
Gross auction sales                             $     1,559,393    $     1,376,206       13%
Auction revenue rate                                      10.36%              9.70%


(1)  Information by geographic segment based on location of auction sale.

(36)



                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

The increase in auction revenues in 2003 was the result of higher gross auction
sales, combined with a higher average auction revenue rate on those sales and
the impact of the currency fluctuation. The increase in gross auction sales in
2003 is primarily a result of higher gross auction sales in Canada, Europe, the
Middle East and Australia compared to the year ended December 31, 2002. The
improvement in the auction revenue rate in 2003 can be attributed mainly to the
above-average performance of the Company's guarantee and inventory contracts.
This underwritten business represented 26% of our total gross auction sales in
2003 compared to 20% in 2002.

The new Proxy purchase Fee and Internet Purchase Fee described above (see
"Sources of Revenue and Revenue Recognition") together increased auction
revenues by approximately 0.13% of gross auction sales for the year ended
December 31, 2003. At the end of 2002 we estimated that these fees would
increase auction revenues by approximately 0.10% of gross auction sales.

Prior to 2002, our expected average auction revenue rate was approximately
8.80%. With the introduction of the handling fee in 2002 and the Proxy and
Internet Purchase Fees in 2003, our expected average auction revenue rate
increased to approximately 9.30%. We assess our auction revenue rate experience
on a regular basis to determine if revenue rate expectations are reasonable in
light of actual performance. Based on our assessment performed at the end of the
second quarter of 2003, we determined that we were achieving a sustainably
higher average auction revenue rate and we increased our expected average
auction revenue rate to approximately 9.50%.

At the end of 2003 we performed further analysis on our auction revenue rate,
looking closely at the various components of our revenues and the performance of
our underwritten business. We still believe that 9.50% is an appropriate
assumption to make when estimating our long-term expected average auction
revenue rate. However, we have exceeded this rate in each of the last two years
and while we are not certain that we will be able to sustain these levels in the
future, we are hopeful that we will be able to do so. As a result, we estimate
that our average auction revenue rate for 2004 will be in the range of 9.50% to
10.0%. Past experience has shown that our auction revenue rate is difficult to
estimate precisely, and therefore, the actual auction revenue rate in 2004 may
be below this range.

A small change in our auction revenue rate can have a material impact on our
auction revenues and therefore, our net earnings. For example, a 10 basis point
(0.1%) increase or decrease in the auction revenue rate would have impacted
auction revenues by approximately $1.6 million in 2003, of which approximately
$1.1 million would have flowed through to net earnings in our statement of
operations, all else being equal. This factor is important to consider when
evaluating our current and past performance, as well as when judging future
prospects.

DIRECT EXPENSES



Years ended December 31,           2003      2002     % Change
--------------------------------------------------------------
                                             
Direct expenses                  $22,099   $19,684      12.3%
Direct expenses as a percentage
   of gross auction sales           1.42%     1.43%


Direct expenses consist of costs incurred as a direct result of an auction sale
being held. Direct expenses include the costs of hiring personnel to assist in
conducting the auction, advertising specifically related to the auction, travel
costs for employees to attend and work at the auction site, security hired to
safeguard equipment at the auction site and rent expenses for temporary auction
sites. The increase in direct expenses in 2003 is consistent with the increase
in gross auction sales during the period.

Direct expenses as a percentage of gross auction sales fluctuate based on the
size and location of auctions held each period. As the size of auctions
increases, the direct expense rate generally decreases. Moreover, auctions held
at permanent auction sites tend to have lower direct expense rates than auctions
held at temporary locations due to the economies of scale and other efficiencies
typically achieved at permanent auction sites. We expect that direct expenses as
a percentage of gross auction sales will be in the range of 1.45% in 2004, which
is consistent with our experience in recent periods.

DEPRECIATION EXPENSE



Years ended December 31,         2003        2002     % Change
--------------------------------------------------------------
                                             
Depreciation expense          $11,773     $ 9,208      27.9%


Depreciation is calculated on either a straight line or a declining balance
basis on capital assets employed in our business, including buildings and site
improvements, automobiles, yard equipment, and computer hardware and software.
Depreciation expense grew primarily as a result of the depreciation of new
auction facilities constructed over the past few years and increasing charges
related to capitalized software development costs. In addition, the currency
fluctuation resulted in higher depreciation expense on assets denominated in
currencies other than the United States dollar.

We anticipate that depreciation expense will continue to increase in the future
as existing auction sites are improved and additional permanent auction sites
are acquired and developed, though we expect that the rate of increase will be
slower than in recent years because the acquisition and development of auction
sites has slowed, as discussed below under "Liquidity and Capital Resources".

GENERAL AND ADMINISTRATIVE EXPENSES



Years ended December 31,           2003        2002     % Change
----------------------------------------------------------------
                                               
General and
   administrative expenses       $71,265     $63,786      11.7%
G&A as a percentage
   of gross auction sales           4.57%       4.63%


General and administrative expenses("G&A") include items such as employee
expenses(salaries, wages, performance bonuses and benefits), non-auction related
travel, institutional advertising, insurance, general office, and information
technology expenses. The currency fluctuation is responsible for a portion of
the growth in G&A in 2003. The balance of the increase is attributable to
increased costs incurred in 2003 to support our growth initiatives, as well as
to costs associated with the operation of new permanent auction sites opened
during the current and prior years. In addition, the adoption in 2003 of the new
accounting policy relating to stock-based compensation increased our 2003 G&A by
$1.0 million compared to our 2002 expenses(see "New Accounting Policies").
Future levels of G&A will continue to be affected by the expansion of
infrastructure and workforce necessary to support our growth plans, as well as
other factors including fluctuations in foreign exchange rates.

INTEREST EXPENSE



Years ended December 31,         2003        2002     % Change
--------------------------------------------------------------
                                             
Interest expense               $ 4,772     $ 4,302      10.9%


Interest expense is comprised mainly of interest and bank charges paid on bank
term debt and operating credit lines. During 2003, we capitalized $0.2 million
of interest(2002 -- $1.5 million) related to properties under development, which
accounts for the increase in interest expense in 2003. The 2003 period also
reflects a reduction of $0.6 million relating to a provision for interest that
had been established in prior years in connection with a potential income tax
issue, which was resolved in the first quarter of 2003.

OTHER INCOME

Other income for the year ended December 31, 2003 was $1.1 million, a $1.4
million decrease from the prior year. The balance in 2002 included a $1.0
million gain on sale of redundant property. There was no such gain in 2003.

INCOME TAXES



Years ended December 31,        2003        2002     % Change
-------------------------------------------------------------
                                            
Income taxes                  $16, 099    $10,656      51.1%
Effective income tax rate         30.6%      27.3%


Income taxes have been computed based on rates of tax that apply in each of the
tax jurisdictions in which we earn our income. The effective tax rate for the
year ended December 31, 2003 is higher than the rate we experienced in 2002 as a
result of differences in earnings within the various tax jurisdictions in which
we earn our income. Income tax rates in future periods will fluctuate depending
upon the impact of unusual items and the level of earnings in the different tax
jurisdictions in which we earn our income.

                                                                            (37)



RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

NET EARNINGS



Years ended December 31,                              2003          2002          % Change
------------------------------------------------------------------------------------------
                                                                        
Net earnings                                       $  36,594     $   28,371         29.0%
Net earnings per share - basic                          2.17           1.69         28.4%
Net earnings per share - dilute                         2.14           1.68         27.4%


Net earnings increased in 2003 primarily as a result of increased gross auction
sales and an above average auction revenue rate, offset in part by increased
direct expenses, G&A(including the impact of our early adoption of the new
method of stock compensation accounting), depreciation and other expenses. The
currency fluctuation did not have a material net effect on earnings for the year
ended December 31, 2003.

SUMMARY OF QUARTERLY RESULTS

The following tables present our unaudited consolidated quarterly results of
operations for each of our last eight quarters. This data has been derived from
our unaudited consolidated financial statements which were prepared on the same
basis as the annual audited consolidated financial statements and, in our
opinion, include all normal recurring adjustments necessary for the fair
presentation of such information. These unaudited quarterly results should be
read in conjunction with our audited consolidated financial statements for the
year ended December 31, 2003. All dollar amounts in the following tables are
stated in thousands of United States dollars, except per share data



                                        Q4 2003   Q3 2003    Q2 2003     Q1 2003
---------------------------------------------------------------------------------
                                                            
Gross auction sales (1)                 $477,107   $277,832   $462,979   $341,475
---------------------------------------------------------------------------------
Auction revenues                        $ 47,719   $ 29,785   $ 47,657   $ 36,381
Net earnings (2)                          12,417      2,721     12,881      8,575

Net earnings per share  - basic         $   0.73   $   0.16   $   0.76   $   0.51
Net earnings per share  - diluted           0.72       0.16       0.76       0.51




Q4 2002                                 Q4 2002   Q3 2002    Q2 2002    Q1 2002
---------------------------------------------------------------------------------
                                                            
Gross auction sales (1)                 $460,871   $ 208,07   $414,056   $293,208
---------------------------------------------------------------------------------
Auction revenues                        $ 44,380   $ 20,991   $ 38,864   $ 29,317
Net earnings                              11,122      1,111     10,775      5,363

Net earnings per share - basic          $   0.66   $   0.07   $   0.64   $   0.32
Net earnings per share - diluted            0.65       0.07       0.64       0.32


(1)  Gross auction sales represents the total proceeds from all items sold
     at our auctions. Gross auction sales is not a measure of revenue and
     is not presented in our consolidated financial statements. See
     further discussion above under Sources of Revenue and Revenue Recognition.

(2)  We recorded stock-based compensation expense of $1,047 ($880 net of income
     taxes) during 2003 relating to the prospective adoption of the new stock-
     based compensation accounting policy. We have retroactively restated the
     2003 quarterly net earnings amounts to give effect to the change in
     accounting policy as if it had been adopted on January 1, 2003.

LIQUIDITY AND CAPITAL RESOURCES



December 31,                                           2003           2002         % Change
-------------------------------------------------------------------------------------------
                                                                          
Working capital                                     $   35,346     $   25,443        38.9%


Our cash position can fluctuate significantly from period to period, largely as
a result of differences between the timing, size and number of auctions, the
timing of the receipt of auction sale proceeds from buyers, and the timing of
the payment of net amounts due to consignors. We usually collect auction
proceeds from buyers within seven days of the auction and generally pay out
auction proceeds to consignors approximately 21 days following an auction. If
auctions are conducted near a period end, we may hold cash in respect of those
auctions that will not be paid to consignors until after the period end.
Accordingly, we believe a more meaningful measure of our liquidity is working
capital, including cash. In our opinion, our working capital balance at December
31, 2003 is adequate to meet our needs.

CONTRACTUAL OBLIGATIONS



Payments Due by Year              Total    In 2004   In 2005 and 2006    In 2007 and 2008   After 2008
------------------------------------------------------------------------------------------------------
                                                                             
Bank term loans                  $70,788   $43,438         $23,416            $ 1,005         $ 2,929
Operating leases                   4,913     1,388           2,317                966             242
Other liabilities                  3,338       963           2,375                  -               -
-----------------------------------------------------------------------------------------------------
Total contractual obligations    $79,039   $45,789         $28,108            $ 1,971         $ 3,171
=====================================================================================================


Our bank term loans due within one year include certain term loans that we
expect to renegotiate. Our current assets at December 31,2003 include funds
committed for debt repayment of $13,000 which will offset part of the loans to
be repaid in 2004. Our operating leases relate primarily to land on which we
operate regional auction units. These properties are located in the United
States, Australia, Singapore, Mexico, Canada and the United Arab Emirates.

(38)



                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003



December 31,                      2003        2002     % Change
---------------------------------------------------------------
                                             
Cash provided by(used in):
   Operations                 $ 77,450     $ 47,042     64.6%
   Investing                   (11,021)     (33,412)    67.0%
   Financing                   (13,411)      (2,854)  (369.9%)


Capital asset additions were $16.3 million for the year ended December 31, 2003
compared to $28.6 million in 2002. The expenditures in 2002 included the cost of
tangible assets acquired by virtue of the All Peace Auctions acquisition in
August 2002. Exchange rate changes relating to capital assets held in currencies
other than the United States dollar resulted in a further increase in capital
assets of $17.8 million (2002 - $3.9 million).

Our capital expenditures in 2003 relate primarily to the purchase of and
improvements to land in Sacramento, California, where we are building a new
permanent auction site, and to costs incurred in the construction of a
replacement auction facility in Prince Gorge, British Columbia that opened in
May 2003. During the year ended December 31, 2003 we sold a parcel of surplus
land in Texas with a book value of $3.0 million for net proceeds of
approximately $3.0 million.

We incurred lower site development and building costs in 2003 than in 2002 as a
result of the reduced pace of facilities expansion. In spite of the anticipated
slower rate of expansion in the future, we will continue to add additional
permanent auction sites in selected locations as opportunities arise; actual
expenditure levels in the future will depend on our ability to identify, acquire
and develop suitable auction sites. We expect that capital expenditures,
including maintenance capital expenditures, will be in the range of $15 million
to $20 million per year on average for the next few years.

Our Board of Directors declared three quarterly cash dividends of $0.15 per
common share each relating to the year ended December 31, 2003. Total dividend
payments in 2003 were $5.1 million, and the dividend declared subsequent to year
end relating to the quarter ended December 31, 2003 is payable on March 19, 2004
to shareholders of record on February 27, 2004.

We have established credit facilities with financial institutions in the United
States, Canada, Europe, and Australia. We had floating rate debt of $4.4 million
at December 31, 2003 (2002 - $3.9 million), with the remainder being fixed rate
debt. We are subject to interest rate risk on the floating rate debt, but an
increase in interest rates would not have a material impact on our financial
condition or results of operations because our floating rate debt balance is not
significant. We expect to renegotiate the majority of our fixed rate debt in
2004, once if becomes due. At December 31, 2003, we were in compliance with all
of the financial covenants applicable to our bank debt.



December 31,                                 2003         2002     % Change
---------------------------------------------------------------------------
                                                          
Bank term debt:
  Operations                             $      --    $   2,758      N/A

  Property acquisitions                     70,788       71,376     (0.8%)
                                         ---------    ---------
  Total                                  $  70,788    $  74,134
                                         =========    =========
Credit facilities-total:
  Operations                             $ 107,956    $  96,966
  Property acquisitions                     91,647      101,196

Credit facilities-available:
  Operations                               107,956       94,208
  Property acquisitions                     20,859       29,820


QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Although we cannot accurately anticipate the future effect of inflation on our
financial condition or results of operations, inflation historically has not had
a material impact on our operations.

We are exposed to currency fluctuations and exchange rate risk on all operations
conducted in currencies other than the United States dollar. We cannot
accurately predict the future effects of foreign currency fluctuations on our
financial condition or results of operations. For the year ended December 31,
2003, approximately 30% of our revenues were earned in currencies other than the
United States dollar and approximately 40% of our operating costs were
denominated in currencies other than the United States dollar. We do not hedge
against foreign currency rate fluctuations associated with our operations
denominated in currencies other than the United States dollar.

During the year ended December 31, 2003 we recorded an increase in our foreign
currency translation adjustment balance of $17.2 million, compared to $4.4
million in 2002. Our foreign currency translation adjustment arises from the
translation of our net assets denominated in currencies other than the United
States dollar into our reporting currency(the United States dollar). Increases
in this balance arise primarily from the strengthening of non-United States
currencies against the United States dollar.

TRANSACTIONS WITH RELATED PARTIES

During the year ended December 31, 2003, we entered into agreements with D.E.R.
Resorts Ltd., a corporation controlled by David E. Ritchie, our Chairman and
Chief executive Officer, pursuant to which D.E.R. Resorts Ltd. agreed to provide
meeting rooms, accommodations, meals and recreational activities at its
facilities on Stuart Island in British Columbia, Canada, for certain of our
customers. The agreements outline the maximum number of excursions to be
provided during a given year and the fees and costs per excursion. We paid
approximately $0.6 million to D.E.R. Resorts Ltd. under the terms of the
agreements during the year ended December 31, 2003, compared to $0.5 million in
2002. We believe that the terms of the agreements are at least as favourable to
us as terms we could have obtained from a third party. We have entered into
similar agreements with D.E.R. Resorts Ltd. in the past and intend to do so in
the future.

RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003 the Accounting Standards board in Canada issued Handbook Section
3063, Impairment of long-lived assets, establishing standards for the
recognition, measurement and disclosure of the impairment of long-lived assets.
The new Canadian standard is substantially the same as the existing standard in
the United States. The adoption of the new Canadian standard in 2003 did not
have a material impact on presentation of our financial condition or results of
operations.

In February 2003 the Accounting Standards Board in Canada issued Accounting
Guideline 14, Disclosure Of Guarantees, clarifying the financial statement
disclosures to be made by a guarantor about its obligations under guarantees.
The new Canadian guidance is substantially the same as the standard adopted in
the United States in 2002 (Financial Accounting Standards Board Interpretation
No. 45) and applied by us in our December 31, 2002 consolidated financial
statements. The disclosure required by this guidance is set out in note 11(b) to
our December 31, 2003 consolidated financial statements.

FORWARD-LOOKING STATEMENTS

This document, including this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contains forward-looking statements that
involve risks and uncertainties. These statements are based on current
expectations and estimates about our business, and include, among others,
statements relating to:

-        our future performance;

-        growth of our operations;

-        expansion of the markets and market segments(geographic and otherwise)
         in which we conduct auctions, including the international used
         industrial equipment market;

-        increases in the number of consignors and bidders participating in our
         auctions;

-        growth of auction industry markets and segments;

-        our competitive strengths;

-        the anticipated improvement, acquisition and development by us of
         auction sites;

-        increased sales force productivity;

-        our gross auction sales, auction revenues and auction revenue rates,
         including expected auction revenue rates and the sustainability of
         those rates, and the seasonality of gross auction sales and auction
         revenues;

-        our direct expense rates, depreciation expenses and potential increases
         in income taxes;

                                                                            (39)



RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

-        the effect on our general and administrative expenses of expanded
         infrastructure and workforce;

-        our future capital expenditures;

-        our Internet initiatives and the contribution to our operating results
         from Internet-based auction purchases;

-        amounts of our revenues and operating costs denominated in currencies
         other than the U.S. dollar and effect of any currency exchange
         fluctuations;

-        financing available to us; and

-        our proposed stock split.

In some cases, you can identify forward-looking statements by terms such as
"anticipate," "believe," "could," "continue," "estimate," "expect," "intent,"
"may," "might," "ongoing," "plan," "potential," "predict," "project," "should,"
"will," "would," or the negative of these terms, and similar expressions
intended to identify forward-looking statements. Our forward-looking statements
are not guarantees of future performance and involve risks, uncertainties and
assumptions that are difficult to predict. While we have not described all
potential risks related to our business and owning our common shares, the
important factors listed under "Risk Factors" are among those that may affect
our performance and could cause our actual financial and operational results to
differ significantly from our predictions. We do not intend to update publicly
any forward-looking statements, even if our predictions have been affected by
new information, future events or other developments. You should consider our
forward-looking statements in light of these and other relevant factors.

RISK FACTORS

Our business is subject to a number of risks and uncertainties, and our past
performance is no guarantee of future performance. Some of the more important
risks we face are outlined below and should be considered by holders of our
common shares. The risks and uncertainties described below are not the only
risks and uncertainties we face. Additional risks and uncertainties not
currently known to us or that we currently deem immaterial also may impair our
business operations. if any of the following risks actually occur, our business,
results of operations and financial condition would suffer.

OUR OPERATING RESULTS ARE SUBJECT TO QUARTERLY VARIATIONS.

Our revenues and operating results historically have fluctuated from quarter to
quarter. Among the factors that we expect will continue to cause these
fluctuations are:

-        the timing, frequency and size of auctions;

-        the seasonal nature of the auction business in general, with peak
         results typically in the second and fourth calendar quarters,
         primarily due to the seasonal nature of the construction and natural
         resources industries;

-        the performance of our underwritten business (guarantee and outright
         purchase contracts);

-        general economic conditions in our markets; and

-        the timing of acquisitions and development of auction sites and related
         costs.

Additionally, we generally incur substantial costs when entering new markets,
and the profitability of operations at a new location is uncertain due to
heightened variability in the number and size of auctions at these sites. These
and other factors may cause our future results to fall short of investor
expectations or to not compare favorably to past results.

WE MAY INCUR LOSSES RELATED TO OUR GUARANTEE AND OUTRIGHT PURCHASE CONTRACTS AND
ADVANCES TO CONSIGNORS.

We generally offer our services to consignors of used equipment on a straight
commission basis. In some cases we will, subject to our evaluation of the
equipment, either offer to:

-        guarantee the consignor a minimum level of sale proceeds, regardless of
         the ultimate results of the auction; or

-        purchase the equipment directly from the consignor for sale in a
         particular auction.

If auction proceeds are less than the guaranteed amount, our commission will be
reduced or, if sufficiently lower, we will incur a loss. If auction proceeds are
less than the purchase price we paid, we will incur a loss. Because all of our
auctions are unreserved, we cannot protect against these types of losses by
bidding on or acquiring any items at the auctions. In recent periods, guarantee
contracts and our direct purchases and sales of inventory have generally
represented approximately one-quarter of our annual gross auction sales.

Occasionally we advance to consignors a portion of the estimated auction
proceeds prior to the auction. We generally make these advances only after
taking possession of the equipment to be auctioned and upon receipt of a
security interest in the equipment to secure the obligation. If we were unable
to auction the equipment or if auction proceeds were less than amounts advanced,
we could incur a loss.

WE MAY INCUR LOSSES RELATED TO OUR GUARANTEES OF CLEAR TITLE ON THE EQUIPMENT
SOLD AT OUR AUCTIONS.

We guarantee that each item purchased at our auctions is free of liens and other
encumbrances up to the purchase price paid by the buyer. While we expend
considerable effort ensuring that all liens have been identified and, if
necessary, discharged prior to the auction sale, occasionally we have not
properly identified or discharged liens and have had to make payments to the
relevant lienholders or purchasers. If we are unable to recover sufficient funds
from the consignors to offset these payments, we will incur a loss; aggregate
losses from these payments could be material.

WE MAY BE UNABLE TO SUSTAIN AND MANAGE OUR GROWTH.

A principal component of our strategy is to continue our growth, primarily by
increasing earnings from operations in existing markets and by expanding into
new geographic markets and into auction market segments that we have not
historically emphasized. We may not be successful in growing our business or in
managing this growth. Our growth depends on our ability to accomplish a
number of things, including:

-        identifying and developing new markets and market segments;

-        identifying and acquiring, on favorable terms, suitable new auction
         sites and, possibly, businesses that are suitable acquisition
         candidates;

-        successfully integrating new sites and any acquired businesses with our
         existing operations;

-        achieving acceptance by potential consignors and industrial equipment
         buyers of the auction process generally;

-        establishing and maintaining favorable relationships with consignors
         and bidders in new markets and market segments, and maintaining these
         relationships in existing markets;

-        capitalizing on changes in the supply of and demand for industrial
         equipment, both on a local and global basis;

-        receiving required governmental authorizations for proposed development
         or expansion; and

-        successfully managing expansion and obtaining required financing.

Any growth we achieve may require additional employees and increase the scope of
both our operating and financial systems and the geographic area of our
operations. This will increase our operating complexity and the level of
responsibility of existing and new management personnel. We may be unable to
attract and retain qualified managers and employees, and our existing operating
and financial systems and controls may not be adequate to support any growth.
Our ability to improve our systems and controls may be limited by increased
costs, technological challenges, or lack of qualified employees. Our past
results and growth may not be indicative of our prospects or our ability to
penetrate new markets, many of which may have different competitive conditions
and demographic characteristics than our current markets.

OUR SUBSTANTIAL INTERNATIONAL OPERATIONS EXPOSE US TO FOREIGN EXCHANGE RATE
FLUCTUATIONS AND POLITICAL AND ECONOMIC INSTABILITY, WHICH COULD HARM OUR
OPERATING RESULTS.

We conduct business in North, South and Central America, Europe, Asia,
Australia, Africa and the Middle East and intend to expand our international
presence. Fluctuating currency exchange rates, acts of terrorism or war, and
changing social, economic and political conditions and regulations may adversely
affect our business in international markets and our related operating results.
Fluctuations in currency exchange rates between the different countries in which
we conduct auctions impact the purchasing power of buyers, the motivation of
consignors, equipment values and equipment flows between different countries.
These factors and other global economic conditions may impair our business and
harm our operating results.

(40)



                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

Although we report our financial results in United States dollars, a significant
portion of our auction revenues are generated at auctions held outside the
United States, mostly in currencies other than the United States dollar. Changes
in currency exchange rates against the United States dollar, particularly for
the Canadian dollar or the Euro, could affect the results presented in our
financial statements and cause our earnings to fluctuate.

COMPETITION IN OUR MARKETS MAY LEAD TO REDUCED REVENUES AND PROFITABILITY.

The international used industrial equipment market and the auction segment of
that market are highly fragmented. We compete directly for potential purchasers
of industrial equipment with other auction companies. Our indirect competitors
include equipment manufacturers, distributors and dealers that sell new or used
equipment, and equipment rental companies. When sourcing equipment to sell at
our auctions, we compete with other auction companies, equipment dealers and
brokers, and equipment owners that have traditionally disposed of equipment in
private sales.

Our direct competitors are primarily regional auction companies. Some of our
indirect competitors have significantly greater financial and marketing
resources and name recognition than we do. New competitors with greater
financial and other resources may enter the industrial equipment auction
market in the future. Additionally, existing or future competitors may succeed
in entering and establishing successful operations in new geographic markets
prior to our entry into those markets. They may also compete against us through
Internet-based services. If existing or future competitors seek to gain or
retain market share by reducing commission rates, we may also be required to
reduce commission rates, which may reduce our revenue and harm our operating
results and financial condition.

DECREASES IN THE SUPPLY OF, DEMAND FOR, OR MARKET VALUES OF INDUSTRIAL
EQUIPMENT, PRIMARILY USED INDUSTRIAL EQUIPMENT, WOULD HARM OUR BUSINESS.

Significant erosion in the supply of, demand for, or market values of used
equipment could reduce our auction revenues and impact our financial condition
and results of operations. Most of the factors that affect the supply of, and
demand for, used equipment are beyond our control, and market values for used
equipment fluctuate based on circumstances beyond our control. In addition,
price competition for new equipment as a direct impact on the supply of, demand
for, and market value of used equipment. Some industrial equipment manufacturers
are offering low or no down payment terms and low or no interest charges to
increase sales of new equipment, which also exerts downward pressure on new
equipment prices and in turn, impacts the market for used equipment.

WE DEPEND ON KEY PERSONNEL, THE LOSS OF ANY OF WHICH COULD HARM OUR BUSINESS.

Our future performance and development will depend to a significant extent on
the efforts and abilities of our executive officers. The loss of the services of
one or more of these individuals or other senior managers could harm our
business. We do not maintain key man insurance on the lives of any of our
employees. Our success will depend largely on our continuing ability to attract,
develop and retain skilled employees in all areas of our business.

OUR OPERATIONS ARE SUBJECT TO SUBSTANTIAL ENVIRONMENTAL AND OTHER REGULATIONS,
WHICH MAY SIGNIFICANTLY INCREASE OUR EXPENSES OR LIMIT OUR OPERATIONS AND
ABILITY TO EXPAND.

A variety of federal, provincial, state and local laws, rules and regulations
apply to our business. These relate to, among other things, the auction
business, imports and exports of equipment, worker safety, privacy of customer
information, and the use, storage, discharge and disposal of environmentally
sensitive materials. Failure to comply with applicable laws, rules and
regulations could result in substantial liability to us, suspension or cessation
of some or all of our operations, restrictions on our ability to expand at
present locations or into new locations, requirements for the acquisition of
additional equipment or other significant expenses or restrictions.

The development or expansion of auction sites depends upon receipt of required
licenses, permits and other governmental authorizations. Our inability to obtain
these required items could harm our business. Additionally, changes or
concessions required by regulatory authorities could result in significant
delays in, or prevent completion of, this development or expansion.

Under some laws regulating the use, storage, discharge and disposal of
environmentally sensitive materials, an owner or lessee of real estate may be
liable for the costs of removal or remediation of hazardous or toxic substances
located on or in, or emanating from, the real estate, and related costs of
investigation and property damage. These laws often impose liability without
regard to whether the owner or lessee knew of, or was responsible for, the
presence of the hazardous or toxic substances. Environmental contamination may
exist at our owned or leased auction sites from prior activities at these
locations or from neighboring properties. In addition, auction sites that we
acquire or lease in the future may be contaminated, and future use of or
conditions on any of our properties or sites could result in contamination. The
costs related to environmental contamination of any of the properties we own or
lease could harm our financial condition and results of operations.

There are restrictions in the United States and Europe that may affect the
ability of equipment owners to transport certain equipment between specified
jurisdictions. One example of these restrictions is environmental certification
requirements in the United States, which prevent non-certified equipment from
being entered into commerce in the United States. If these restrictions were to
materially inhibit the ability of customers to ship equipment to or from our
auction sites, they could reduce our gross auction sales and harm our business.

International bidders and consignors could be deterred from participating in our
auctions if governmental bodies impose additional export or import regulations
or additional duties, taxes or other charges on exports or imports. Reduced
participation by international bidders and consignors could reduce our gross
auction sales and harm our business, financial condition and results of
operations.

OUR INSURANCE MAY BE INSUFFICIENT TO COVER LOSSES THAT MAY OCCUR AS A RESULT OF
OUR OPERATIONS.

We maintain property and general liability insurance. This insurance may not
remain available to us at commercially reasonable rates, and the amount of our
coverage may not be adequate to cover any liability we incur. Our auctions
generally involve the operation of large equipment close to a large number of
people, and an accident could damage our facilities or injure auction attendees.
Any major accident could harm our reputation and business. In addition, if we
were held liable for amounts exceeding the limits of our insurance coverage or
for claims out side the scope of our coverage, the resulting costs could harm
our results of operations and financial condition.

OUR INTERNET-RELATED INITIATIVES MAY NOT IMPROVE OUR RESULTS AND ARE SUBJECT TO
TECHNOLOGICAL OBSOLESCENCE; IN ADDITION, WE MAY NOT BE ABLE TO COMPETE WITH OUR
COMPETITORS' TECHNOLOGIES.

We have invested significant resources in the development of our Internet
presence, including our rbauctionBid-Live Internet bidding service. In spite of
our investment, these new technologies may not result in any material
improvement in our financial condition or results of operations over the long
term and may require further investment. In addition, if we were unable to
provide services over the Internet at an acceptable level of performance or
reliability, our reputation could be damaged, which might result in us losing
customers. We may also not be able to continue to adapt our business to Internet
commerce, our internet technologies may become obsolete, and we may not be able
to compete effectively against Internet auction services offered by our
competitors.

OUR BUSINESS IS SUBJECT TO RISKS RELATING TO OUR ABILITY TO SAFEGUARD THE
SECURITY AND PRIVACY OF OUR CUSTOMERS' CONFIDENTIAL INFORMATION.

We maintain proprietary databases containing confidential information regarding
our customers and the results of our auctions, and we must safeguard the
security and privacy of this information. For example, our proprietary customer
database includes information relating to customers' auction attendance, trade
association memberships, buying habits and banking information. Despite our
efforts to protect this information, we face the risk of in advertent disclosure
of this sensitive information or an intentional breach of our security measures.

Security breaches could damage our reputation and expose us to a risk of loss or
litigation and possible liability. We may be required to make significant
expenditures to protect against security breaches or to alleviate problems
caused by any breaches. Our insurance policies may not be adequate to reimburse
us for losses caused by security breaches.

                                                                            (41)


RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

                INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS

We have audited the consolidated balance sheets of Ritchie Bros. Auctioneers
Incorporated (the "Company") as at December 31, 2003 and 2002 and the
consolidated statements of operations, shareholders' equity and cash flows for
each of the years in the three-year period ended December 31, 2003. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 2003
and 2002 and the results of its operations and its cash flows for each of the
years in the three-year period ended December 31, 2003 in accordance with
Canadian generally accepted accounting principles.

/s/ KPMG LLP
Chartered Accountants

Vancouver, Canada
February 13, 2004

                      CONSOLIDATED STATEMENTS OF OPERATIONS

  (Expressed in thousands of United States dollars, except share and per share
                                    amounts)



Years ended December 31,                             2003            2002           2001
--------------------------------------------------------------------------------------------
                                                                       
Auction revenue                                 $    161,542    $    133,552    $    116,991
Direct expenses                                      (22,099)        (19,684)        (18,861)
--------------------------------------------------------------------------------------------
                                                     139,443         113,868          98,130

Expenses:
  Depreciation and amortization                       11,773           9,208           9,076
  General and administrative                          71,265          63,786          56,517
--------------------------------------------------------------------------------------------
                                                      83,038          72,994          65,593
--------------------------------------------------------------------------------------------

Earnings from operations                              56,405          40,874          32,537
Other income (expenses):
  Interest                                            (4,772)         (4,302)         (4,024)
  Other                                                1,060           2,455           1,409
--------------------------------------------------------------------------------------------
                                                      (3,712)         (1,847)         (2,615)
--------------------------------------------------------------------------------------------

Earnings before income taxes                          52,693          39,027          29,922

Income taxes (note 10):
  Current                                             14,738           8,097           6,720
  Withholding taxes on intercompany dividend              --              --           2,000
  Future                                               1,361           2,559           1,148
--------------------------------------------------------------------------------------------
                                                      16,099          10,656           9,868
--------------------------------------------------------------------------------------------

Net earnings                                    $     36,594    $     28,371    $     20,054
============================================================================================

Net earnings per share (notes 1(l) and 8(e)):
Basic                                           $       2.17    $       1.69    $       1.20
Diluted                                                 2.14            1.68            1.19
============================================================================================
Weighted average number of shares outstanding     16,897,989      16,793,202      16,761,247
============================================================================================


See accompanying notes to consolidated financial statements.

Approved on behalf of the Board of Directors

/s/ G. EDWARD MOUL                               /s/  DAVID E. RITCHIE
G. EDWARD MOUL                                   DAVID E. RITCHIE
Director                                         Director

(42)



                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

                           CONSOLIDATED BALANCE SHEETS
               (Expressed in thousands of United States dollars)



December 31,                                     2003         2002
---------------------------------------------------------------------
                                                     
ASSETS
Current assets:
  Cash and cash equivalents                    $ 119,009   $  62,222
  Accounts receivable                             17,064      13,700
  Inventory                                        9,690       7,402
  Funds committed for debt repayment (note 7)     13,000          --
  Prepaid expenses and deposits                    2,553       2,060
  Income taxes recoverable                            --       2,485
--------------------------------------------------------------------
                                                 161,316      87,869

Capital assets (note 3)                          210,416     193,490
Funds committed for debt repayment (note 7)        5,107      13,000
Other assets                                         537         421
Goodwill (note 4)                                 35,632      34,356
--------------------------------------------------------------------
                                               $ 413,008   $ 329,136
====================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Auction proceeds payable                     $  44,186   $  17,360
  Accounts payable and accrued liabilities        35,150      33,544
  Income taxes payable                             3,196          --
  Short-term debt (note 5)                            --       2,758
  Current portion of bank term loans (note 7)     43,438       8,764
--------------------------------------------------------------------
                                                 125,970      62,426
Bank term loans (note 7)                          27,350      62,612
Other liabilities (note 6)                         2,375       2,758
Future income tax liability (note 10)              4,534       1,966
--------------------------------------------------------------------
                                                 160,229     129,762
Shareholders' equity:
  Share capital (note 8)                          72,794      69,499
  Additional paid-in capital                       6,075       4,646
  Retained earnings                              161,183     129,682
  Foreign currency translation adjustment         12,727      (4,453)
--------------------------------------------------------------------
                                                 252,779     199,374
--------------------------------------------------------------------
                                               $ 413,008   $ 329,136
====================================================================


Commitments and contingencies (note 11)
Subsequent events (note 8(b) and (c))

See accompanying notes to consolidated financial statements.

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                (Expressed in thousands of United States dollars)



                                                                                              Foreign
                                                              Additional                     currency         Total
                                                 Share         paid-in        Retained      translation    shareholders'
                                                capital        capital        earnings       adjustment        equity
------------------------------------------------------------------------------------------------------------------------
                                                                                            
Balance, December 31, 2000                     $  69,132      $   4,332      $  81,257       $  (5,957)      $ 148,764
  Net proceeds on stock options exercised              2             --             --              --               2
  Net earnings                                        --             --         20,054              --          20,054
  Foreign currency translation adjustment             --             --             --          (2,887)         (2,887)
----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2001                        69,134          4,332        101,311          (8,844)        165,933
  Net proceeds on stock options exercised            365             --             --              --             365
  Stock compensation tax adjustment                   --            314             --              --             314
  Net earnings                                        --             --         28,371              --          28,371
  Foreign currency translation adjustment             --             --             --           4,391           4,391
----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2002                        69,499          4,646        129,682          (4,453)        199,374
  Net proceeds on stock options exercised          3,295             --             --              --           3,295
  Stock compensation tax adjustment                   --            382             --              --             382
  Stock compensation expense                          --          1,047             --              --           1,047
  Net earnings                                        --             --         36,594              --          36,594
  Cash dividends paid                                 --             --         (5,093)             --          (5,093)
  Foreign currency translation adjustment             --             --             --          17,180          17,180
----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2003                     $  72,794      $   6,075      $ 161,183       $  12,727       $ 252,779
======================================================================================================================


See accompanying notes to consolidated financial statements.

                                                                            (43)



RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                (Expressed in thousands of United States dollars)



Years ended December 31,                                           2003         2002         2001
---------------------------------------------------------------------------------------------------
                                                                                 
Cash provided by (used in):

Operations:
  Net earnings                                                  $  36,594    $  28,371    $  20,054
  Items not involving the use of cash:
    Depreciation                                                   11,773        9,208        7,426
    Stock compensation expense                                      1,047           --           --
    Amortization of goodwill                                           --           --        1,650
    Future income taxes                                             1,361        2,559        1,148
    Net gain on disposition of capital assets                         (17)        (758)        (721)
  Changes in non-cash working capital:
    Accounts receivable                                            (3,364)      (1,325)      (1,810)
    Inventory                                                      (2,288)      (4,375)       6,148
    Prepaid expenses and deposits                                    (493)        (733)         (93)
    Income taxes payable                                            3,196           --           --
    Income taxes recoverable                                        2,485       (1,075)        (499)
    Auction proceeds payable                                       26,826        5,553      (11,749)
    Accounts payable and accrued liabilities                        1,606       10,270       (5,572)
    Other                                                          (1,276)        (653)         447
---------------------------------------------------------------------------------------------------
                                                                   77,450       47,042       16,429
---------------------------------------------------------------------------------------------------

Investing:
  Acquisition of business (note 6)                                     --       (8,743)          --
  Capital asset additions                                         (16,273)     (29,037)     (38,098)
  Proceeds on disposition of capital assets                         5,368        4,789        5,221
  Increase in other assets                                           (116)        (421)          --
---------------------------------------------------------------------------------------------------
                                                                  (11,021)     (33,412)     (32,877)
---------------------------------------------------------------------------------------------------

Financing:
  Issuance of share capital                                         3,295          365            2
  Increase in paid-up capital                                         382          314           --
  Dividends on common shares                                       (5,093)          --           --
  Issuance of bank term loans                                          --        5,000        8,139
  Repayment of bank term loans                                     (3,747)      (3,628)      (3,270)
  Increase (decrease) in other liabilities                           (383)       2,758           --
  Increase (decrease) in short-term debt                           (2,758)      (2,556)       3,257
  Increase in funds committed for debt repayment                   (5,107)      (5,107)      (4,643)
---------------------------------------------------------------------------------------------------
                                                                  (13,411)      (2,854)       3,485
---------------------------------------------------------------------------------------------------
Effect of foreign currency rates on cash and cash equivalents       3,769        1,913         (939)
---------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents                   56,787       12,689      (13,902)

Cash and cash equivalents, beginning of year                       62,222       49,533       63,435
---------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year                          $ 119,009    $  62,222    $  49,533
===================================================================================================

Supplementary information:
  Interest paid                                                 $   4,675    $   3,951    $   3,821
  Income taxes paid                                                 8,675        8,861        9,233

Non-cash investing and financing activities:
  Present value of future installments for
    acquisition of business                                            --        3,255           --
  Stock compensation tax adjustment                                   382          314           --
===================================================================================================


See accompanying notes to consolidated financial statements.

(44)



                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Tabular dollar amounts expressed in thousands of United States Dollars,
                            except per share amounts)
                  Years ended December 31, 2003, 2002 and 2001

1. SIGNIFICANT ACCOUNTING POLICIES:

     (a)  Basis of presentation:

          These consolidated financial statements present the financial
          position, results of operations and changes in shareholders' equity
          and cash flows of Ritchie Bros. Auctioneers Incorporated (the
          "Company"), a company incorporated in July 1997 under the Canada
          Business Corporations Act, and its subsidiaries. All significant
          intercompany balances and transactions have been eliminated.

          The consolidated financial statements of the Company have been
          prepared in accordance with generally accepted accounting principles
          in Canada which, except as disclosed in note 12, also comply, in all
          material respects, with generally accepted accounting principles in
          the United States.

     (b)  Cash and cash equivalents:

          Cash equivalents consist of highly liquid investments having an
          original term to maturity of three months or less when acquired.

     (c)  Inventory:

          Inventory is primarily represented by goods held for auction and has
          been valued at the lower of cost, determined by the specific
          identification method, and net realizable value.

     (d)  Capital assets:

          All capital assets are stated at cost and include capitalized interest
          on property under development. Depreciation is provided to charge the
          cost of the assets to operations over their estimated useful lives
          based on their usage as follows:

          
          
                  Asset                       Basis             Rate/term
          ----------------------------------------------------------------------
                                                          
          Buildings                     straight-line           30 years
          Improvements                  declining balance       10%
          Automotive equipment          declining balance       30%
          Yard equipment                declining balance       20 - 30%
          Office equipment              declining balance       20%
          Computer equipment            declining balance       30%
          Computer software             straight-line           3 years
          Leasehold improvements        straight-line           Terms of leases
          

          Long-lived assets are reviewed for impairment whenever events or
          changes in circumstances indicate that the carrying amount of the
          asset may not be recoverable. In such situations, long-lived assets
          are considered impaired when undiscounted estimated future cash flows
          resulting from the use of the asset and its eventual disposition are
          less than the asset's carrying amount.

     (e)  Goodwill:

          Goodwill represents non-identifiable intangible assets acquired on
          business combinations. Goodwill is not amortized and is tested for
          impairment annually, or more frequently if events or changes in
          circumstances indicate that the asset might be impaired. The
          impairment test compares the carrying amount of the goodwill against
          its implied fair value. To the extent that the carrying amount of
          goodwill exceeds its fair value, an impairment loss is charged
          against earnings.

     (f)  Revenue recognition:

          Auction revenues earned in the Company's capacity as agent for
          consignors of equipment are comprised mostly of auction commissions,
          but also include net profits on the sale of inventory, incidental
          interest income, internet and proxy purchase fees, and handling fees
          on the sale of certain lots. All revenue is recognized when the
          auction sale is complete and the Company has determined that the
          auction proceeds are collectible.

          Auction commissions represent the percentage earned by the Company on
          the gross proceeds from equipment sold at auction. The majority of
          auction commissions is earned as a fixed rate of the gross selling
          price. Other commissions are earned when the Company guarantees a
          certain level of proceeds to a consignor. This type of commission
          includes a percentage of the guaranteed gross proceeds plus a
          percentage of proceeds in excess of the guaranteed amount. If actual
          auction proceeds are less than the guaranteed amount, commission is
          reduced; if proceeds are sufficiently lower, the Company can incur a
          loss on the sale. The Company's exposure from these guarantee
          contracts fluctuates over time (see note 11(b)). Losses, if any,
          resulting from guarantee contracts are recorded in the period in which
          the relevant auction is held.

          Auction revenues also include net profit on the sale of inventory
          items. In some cases, incidental to its regular commission business,
          the Company temporarily acquires title to items for a short time prior
          to a particular auction sale. The auction revenue recorded is the net
          gain or loss on the sale of the items.

     (g)  Income taxes:

          Income taxes are accounted for using the asset and liability method
          where by future taxes are recognized for the tax consequences of
          temporary differences by applying substantively enacted or enacted
          statutory tax rates applicable to future years to differences between
          the financial statement carrying amounts and the tax bases of existing
          assets and liabilities. The effect on future taxes of a change in tax
          rates is recognized in earnings in the period in which the new tax
          rate is enacted. Future tax benefits, such as non-capital loss carry
          forwards, are recognized to the extent that realization of such
          benefits is considered more likely than not.

                                                                            (45)



RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Tabular dollar amounts expressed in thousands of United States dollars, except
                               per share amounts)

                  Years ended December 31, 2003, 2002 and 2001

1.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     (h)  Foreign currency translation:

          The Company's reporting currency is the United States dollar. The
          functional currency for each of the Company's operations is the
          currency of the country of residency or the United States dollar. Each
          of these operations is considered to be self-sustaining. Accordingly,
          the financial statements of operations of the Company that are not
          located in the United States have been translated into United States
          dollars using the exchange rate at the end of each reporting period
          for asset and liability amounts and the average exchange rate for each
          reporting period for amounts included in the determination of
          earnings. Any gains or losses from the translation of assets and
          liability amounts have been included in the foreign currency
          translation adjustment account which is included as a separate
          component of shareholders' equity. Monetary assets and liabilities
          recorded in foreign currencies are translated into the appropriate
          functional currency at the rate of exchange in effect at the balance
          sheet date. Foreign currency denominated transactions are translated
          into the appropriate functional currency at the exchange rate in
          effect on the date of the transaction. Any exchange gains and losses
          on these transactions are included in the determination of earnings.

     (i)  Use of estimates:

          The preparation of financial statements in conformity with generally
          accepted accounting principles requires the Company to make estimates
          and assumptions that affect the reported amounts of assets and
          liabilities and disclosure of contingent assets and liabilities at the
          date of the financial statements and the reported amounts of revenues
          and expenses during the reporting periods. Significant financial
          statement items requiring the use of estimates include the
          determination of useful lives for depreciation, the valuation of
          goodwill and capital assets, and the estimation of future income tax
          balances. Actual results could differ from such estimates and
          assumptions.

     (j)  Financial instruments:

          Carrying amounts of certain of the Company's financial instruments,
          including cash and cash equivalents, accounts receivable, income
          taxes recoverable, income taxes payable, auction proceeds payable,
          accounts payable and accrued liabilities and short-term debt,
          approximate their fair value due to their short maturities. Based on
          borrowing rates currently available to the Company for loans with
          similar terms, the carrying value of its bank term loans approximates
          fair value.

     (k)  Credit risk:

          The Company does not extend credit to purchasers of auctioned items.
          Equipment is not normally released to the purchasers until it is paid
          for in full.

     (l)  Net earnings per share:

          Net earnings per share has been calculated based on the weighted
          average number of common shares outstanding. Diluted net earnings
          per share has been calculated after giving effect to outstanding
          dilutive options calculated by the treasury stock method (note 8(e)).

     (m)  Stock-based compensation:

          The Company has a stock-based compensation plan, which is described in
          note 8(c) and (d). The Company recognizes compensation expense using
          the fair value method at the date of grant (note 2(a)). Under the fair
          value based method, compensation cost attributable to options granted
          to employees and directors is measured at the fair value at the grant
          date using the Black-Scholes option pricing model. Compensation
          expense is recognized over the vesting period of the underlying
          option. Any consideration paid by employees on exercise of stock
          options or purchase of stock is credited to share capital. If stock or
          stock options are repurchased from employees, the excess of the
          consideration paid over the carrying amount of the stock or stock
          option cancelled is charged to retained earnings. No compensation cost
          is recognized for options that employees forfeit if they fail to
          satisfy the service requirement for vesting.

     (n)  Comparative figures:

          Certain comparative figures have been reclassified to conform with the
          presentation adopted in the current year.

2.   CHANGE IN ACCOUNTING POLICY:

     (a)  Stock-based compensation:

          Prior to January 1, 2003, the Company recognized stock-based
          compensation expense using the intrinsic value method at the date of
          grant of the underlying option. Under the intrinsic value method, no
          compensation costs were recognized in the financial statements for
          stock options granted to employees and directors at market value.

          The Canadian Institute of Chartered Accountants ("CICA") Accounting
          Standards Board has amended CICA Handbook Section 3870 -- Stock-based
          Compensation and Other Stock-based Payments -- to require entities to
          account for employee stock options using the fair value based method,
          beginning January 1, 2004. Under the fair value based method,
          compensation cost is measured using the Black-Scholes option pricing
          model at the date of grant of the option and is expensed over the
          award's vesting period. In accordance with the transitional options
          permitted under amended Section 3870, the Company has prospectively
          applied the fair value based method to all employee and director stock
          options granted on or after January 1, 2003. Under the prospective
          method of adoption selected by the Company, stock-based employee and
          director compensation is recognized for all employee and director
          stock options granted, modified or settled on or after January 1,
          2003, using the fair value based method. For the year ended December
          31, 2003, the stock-based compensation expense (net of future income
          tax impact of $167,000) relating to options granted on or after
          January 1, 2003 was $880,000, or $0.05 per common share basic and
          diluted. No stock-based compensation expense has been recognized for
          any stock option grants in any years prior to January 1, 2003.

     (b)  Goodwill:

          Effective January 1, 2002, the Company adopted the new CICA Handbook
          Section 3062 regarding goodwill on a prospective basis. In accordance
          with Section 3062, the Company ceased goodwill amortization as of
          January 1, 2002. For the year ended December 31, 2001, $1,007,000 was
          recorded as amortization expense related to goodwill (net of tax).

(46)



                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Tabular dollar amounts expressed in thousands of United States Dollars, except
                               per share amounts)

                  Years ended December 31, 2003, 2002 and 2001

3. CAPITAL ASSETS:



                                                          Accumulated          Net book
2003                                     Cost            Depreciation           value
---------------------------------------------------------------------------------------
                                                                     
Buildings                              $112,133            $ 15,198            $ 96,935
Land and improvements                    94,253               3,453              90,800
Land and buildings under development      3,143                  --               3,143
Automotive equipment                     10,219               3,766               6,453
Yard equipment                            8,558               3,951               4,607
Office equipment                          5,716               3,245               2,471
Computer equipment                        4,076               2,032               2,044
Computer software                         8,751               5,531               3,220
Leasehold improvements                    1,430                 687                 743
---------------------------------------------------------------------------------------
                                       $248,279            $ 37,863            $210,416
=======================================================================================




                                                          Accumulated          Net book
2002                                     Cost            depreciation           value
---------------------------------------------------------------------------------------
                                                                      
Buildings                              $ 96,377            $ 10,234            $ 86,143
Land and improvements                    87,265               2,539              84,726
Land and buildings under development      5,001                  --               5,001
Automotive equipment                      8,954               3,444               5,510
Yard equipment                            6,644               2,902               3,742
Office equipment                          4,874               2,492               2,382
Computer equipment                        3,463               1,397               2,066
Computer software                         5,766               2,613               3,153
Leasehold improvements                    1,207                 440                 767
---------------------------------------------------------------------------------------
                                       $219,551            $ 26,061            $193,490
=======================================================================================


During the year, interest of $161,000 (2002 -- $1,458,000) was capitalized to
the cost of land and buildings under development.

4.   GOODWILL:

     
     
                                              2003                2002
     -------------------------------------------------------------------
                                                          
     Goodwill                               $ 40,169            $ 38,893
     Accumulated amortization                 (4,537)             (4,537)
     -------------------------------------------------------------------
                                            $ 35,632            $ 34,356
     ===================================================================
     

5.   SHORT-TERM DEBT:

     Short-term debt at December 31, 2002 consisted of draws on lines of credit
     with a weighted average interest rate of 5.12% per annum.

6.   ACQUISITION:

     On August 1, 2002, the Company acquired certain assets of All Peace
     Auctions(2001) Ltd., an industrial and agricultural equipment auctioneer,
     and All Peace Auctions Ltd., the owner of the property on which the
     majority of the auction business was conducted (collectively, "All Peace").
     All Peace is based in Grande Prairie, Alberta, Canada.

     The aggregate purchase price was $9,111,000 plus costs of approximately
     $79,000. The purchase price was settled through the payment of $5,409,000
     of cash and future annual installments totalling $3,781,000 with a present
     value of $3,255,000 at the date of acquisition. To reflect the fact that
     the future payments are due overtime, $526,000 was recorded as a discount
     to the long-term liability and is being amortized to interest expense over
     the four-year term of repayment. The future installments are unsecured and
     non-interest bearing. The total purchase price including expenses net of
     discount was $8,664,000, of which $2,809,000 was allocated to the fair
     value of capital assets acquired and $5,855,000 was allocated to goodwill.
     All Peace was acquired to expand the Company's presence in northern
     Alberta.

     Other liabilities are as follows:

     
     
                                              2003                2002
     -------------------------------------------------------------------
                                                          
     Present value of future payments       $  3,338            $  3,356
     Current portion                             963                 598
     -------------------------------------------------------------------
                                            $  2,375            $  2,758
     ===================================================================
     

                                                                            (47)



RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Tabular dollar amounts expressed in thousands of United States Dollars, except
                               per share amounts)

                  Years ended December 31, 2003, 2002 and 2001

7.   BANK TERM LOANS:

     
     
                                                                                             2003      2002
     --------------------------------------------------------------------------------------------------------
                                                                                                
     Term loans, unsecured, bearing interest at 1.95%, due in minimum annual
       installments of $5 million ($1.75 million towards principal, $3.25 million
       towards a sinking fund) plus interest, with the final payment occurring in 2004      $28,000   $29,750

     Term loans, denominated in Canadian dollars, unsecured, bearing interest between
       6.355% and 7.195%, due in monthly installments of interest only, with the full
       amount of the principal due in 2004                                                   11,568     9,509

     Term loans, unsecured, bearing interest between 2.60% and 7.91%, due in
       minimum annual installments of $500,000 plus interest, with final payment
       occurring in 2005                                                                      8,500     9,000

     Term loans, unsecured, bearing interest between 5.95% and 7.91%, due in minimum
       annual installments of $2.9 million ($1.0 million towards principal, $1.9 million
       towards a sinking fund), with the final payment occurring in 2005 and 2006            17,250    18,250

     Term loans, denominated in Australian dollars, secured by deeds of trust on specific
       property, bearing interest between the Australian prime rate and 6.5%, due in
       quarterly installments of AUD75,000, plus interest, with final payment occurring
       in 2008                                                                                1,111       999

     Term loan denominated in Euros, secured by deeds of trust on specific property,
       bearing interest at the Amsterdam Interbank Offered Rate plus 0.88%, due in
       quarterly installments of EUR56,723 including interest,
       with the final payment occurring in 2013                                               4,359     3,868
     --------------------------------------------------------------------------------------------------------
                                                                                             70,788    71,376
     Current portion                                                                         43,438     8,764
     --------------------------------------------------------------------------------------------------------
                                                                                             27,350    62,612
     ========================================================================================================
     Funds committed for debt payments                                                       18,107    13,000
     --------------------------------------------------------------------------------------------------------
                                                                                            $ 9,243   $49,612
     ========================================================================================================
     

     As at December 31, 2003, principal repayments including sinking fund
     requirements are as follows for the next five years:

     
                             
     2004                       $ 43,438
     2005                         14,190
     2006                          9,226
     2007                            512
     2008                            493
     Thereafter                    2,929
     -----------------------------------
                                $ 70,788
     ===================================
     

(48)


                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Tabular dollar amounts expressed in thousands of United States Dollars, except
                               per share amounts)

                  Years ended December 31, 2003, 2002 and 2001

8.   SHARE CAPITAL:

     (a)  Authorized:

          Unlimited number of common shares, without par value.
          Unlimited number of senior preferred shares, without par value,
          issuable in series.
          Unlimited number of junior preferred shares, without par value,
          issuable in series.

     (b)  Issued:

          No preferred shares have been issued. Common shares issued and
          outstanding are as follows:

          
                                                                                    
          Issued and outstanding, December 31, 2000                                    16,748,563
          Common shares issued during the year ended December 31, 2001:
               For cash, pursuant to stock options exercised                               18,667
          ---------------------------------------------------------------------------------------

          Issued and outstanding, December 31, 2001                                    16,767,230
          Common shares issued during the year ended December 31, 2002:
               For cash, pursuant to stock options exercised                               42,102
          ---------------------------------------------------------------------------------------
          Issued and outstanding, December 31, 2002                                    16,809,332
          Common shares issued during the year ended December 31, 2003
               For cash, pursuant to stock options exercised                              174,490
          ---------------------------------------------------------------------------------------
          Issued and outstanding, December 31, 2003                                    16,983,822
          =======================================================================================
          

          Subsequent to December 31, 2003, the Company's Board of Directors
          approved a two-for-one stock split for its common shares, subject to
          the approval of the Company's shareholders at the Annual Meeting of
          Shareholders scheduled for April 16, 2004. All share and per share
          information in the consolidated financial statements does not give
          effect to the proposed stock split.

     (c)  Stock option plan:

          The Company has a stock option plan that provides for the award of
          stock options to selected employees, directors and officers of the
          Company and to other persons approved by the Board of Directors. Stock
          options are granted at the fair market value of the Company's common
          shares at the grant date, with various vesting periods and a term not
          exceeding 10 years. At December 31, 2003, there were 808,117 (2002 --
          961,517) shares authorized and available for grants of option under
          the stock option plan. Stock option activity for 2001, 2002 and 2003
          is presented below:

          
          
                                                    Number of        Weighted average
                                               options outstanding    exercise price
          ===========================================================================
                                                               
          Outstanding, December 31, 2000             241,636             $   15.70

            Granted                                  157,750                 23.44
            Cancelled                                 (4,000)                24.60
            Exercised                                (18,667)                 0.10
          ---------------------------------------------------------------------------
          Outstanding, December 31, 2001             376,719                 19.62

            Granted                                   93,200                 26.10
            Exercised                                (42,102)                 8.68
          ---------------------------------------------------------------------------
          Outstanding, December 31, 2002             427,817                 22.11

            Granted                                  154,400                 31.05
            Cancelled                                 (1,000)                31.05
            Exercised                               (174,490)                18.89
          ---------------------------------------------------------------------------
          Outstanding, December 31, 2003             406,727             $   26.64
          ===========================================================================
          Exercisable, December 31, 2003             241,327             $   24.22
          ===========================================================================
          

          The options outstanding at December 31, 2003 expire on dates ranging
          to January 30, 2013.

          The following is a summary of stock options outstanding and
          exercisable at December 31, 2003:

          
          
                                                             Options outstanding                       Options exercisable
                                                             -------------------                       -----------------
                                                      Weighted average         Weighted average     Number      Weighted average
                                Number outstanding   remaining life (years)     exercise price    exercisable    exercise price
          ======================================================================================================================
                                                                                                 
          $0.10                     17,127                 0.58                    $    0.10         17,127         $ 0.10
          $23.35 -- $38.625        389,600                 7.57                        27.81        224,200          26.06
          ----------------------------------------------------------------------------------------------------------------------
                                   406,727                                                          241,327
          ======================================================================================================================
          

          Subsequent to December 31, 2003 the Company granted options to
          purchase a total of 145,000 of its common shares to certain
          employees and directors of the Company. The options have an exercise
          price of $52.92 and an expiry date of February 13, 2014.

                                                                            (49)



RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Tabular dollar amounts expressed in thousands of United States Dollars, except
                               per share amounts)

                  Years ended December 31, 2003, 2002 and 2001

8.   SHARE CAPITAL(CONTINUED):

     (d)  Stock-based compensation:

          Prior to January 1, 2003 the Company used the intrinsic value method
          to account for stock-based compensation awards. This method did not
          result in any compensation expense in 2002 or 2001. Had compensation
          expense for option grants made under the Company's stock option plan
          during the year ended December 31, 2002 been recorded in accordance
          with the fair value method at the applicable grant dates, the
          Company's net earnings for 2002 would have been reduced as indicated
          by the pro forma amounts below:

          
          
                                                                       Per share amount
                                                                       ----------------
          Year ended December 31, 2002    Earnings                   Basic         Diluted
          ================================================================================
                                                                         
          Net earnings:
            As reported                   $28,371                  $   1.69       $   1.68
            Pro forma                      27,644                      1.65           1.63
          ================================================================================
          

          During 2003, the Company recognized compensation cost of $1,047,000 in
          respect of options granted in 2003 under its stock option plan. This
          amount was calculated in accordance with the fair value method of
          accounting.

          For the purposes described above, the fair value of the stock option
          grants was estimated on the date of the grant using the Black-Scholes
          option pricing model with the following assumptions:

          
          
                                            2003          2002
          ======================================================
                                                  
          Risk free interest rate             3.1%          4.9%
          Dividend yield                        0%            0%
          Expected lives                  5 years       5 years
          Volatility                         18.3%         27.0%
          =====================================================
          

          The weighted average grant date fair value of options granted during
          the year ended December 31, 2003 was $7.34 per option (2002 -- $8.74).
          The fair value method requires that this amount be amortized over the
          relevant vesting periods of the underlying options.

     (e)  Net earnings per share:

          
          
                                                                            Per share
          Year ended December 31, 2003          Earnings      Shares         amount
          ===========================================================================
                                                                   
          Basic net earnings per share         $   36,594   16,897,989      $   2.17
          Effect of dilutive securities:
            Share options                              --      170,787         (0.03)
          --------------------------------------------------------------------------
          Diluted net earnings per share       $   36,594   17,068,776      $   2.14
          ==========================================================================
          

          
          
                                                                            Per share
          Year ended December 31, 2002          Earnings      Shares          amount
          ===========================================================================
                                                                   
          Basic net earnings per share         $   28,371   16,793,202      $   1.69
          Effect of dilutive securities:
            Share options                              --      122,222         (0.01)
          --------------------------------------------------------------------------
          Diluted net earnings per share       $   28,371   16,915,424      $   1.68
          ==========================================================================
          

          
          
                                                                            Per share
          Year ended December 31, 2001          Earnings      Shares          amount
          ===========================================================================
                                                                   
          Basic net earnings per share         $   20,054   16,761,247      $   1.20
          Effect of dilutive securities:
            Share options                              --      102,790         (0.01)
          --------------------------------------------------------------------------
          Diluted net earnings per share       $   20,054   16,864,037      $   1.19
          ==========================================================================
          

(50)



                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Tabular dollar amounts expressed in thousands of United States Dollars, except
                               per share amounts)

                  Years ended December 31, 2003, 2002 and 2001

9.   SEGMENTED INFORMATION:

     The Company's principal business activity is the sale of consignment and
     self-owned equipment at auctions. This business represents a single
     reportable segment.

     The Company determines its activities by geographic segment based on the
     location of its auctions. Summarized information by geographic segment is
     as follows:

     
     
                                           United States       Canada       Europe       Other       Combined
     ========================================================================================================
                                                                                      
     Year ended December 31, 2003:
       Auction revenues                     $ 92,273          $ 30,752     $ 21,262     $ 17,255     $161,542
       Capital assets and goodwill           136,624            72,277       24,086       13,061      246,048
     Year ended December 31, 2002:
       Auction revenues                       84,348            17,650       15,678       15,876      133,552
       Capital assets and goodwill           135,921            60,177       20,189       11,559      227,846
     Year ended December 31, 2001:
       Auction revenues                       76,283            18,461       11,230       11,017      116,991
       Capital assets and goodwill           124,340            43,032       17,267       14,746      199,385
     ========================================================================================================
     

10.  INCOME TAXES:

     Income tax expense differs from that determined by applying the United
     States statutory tax rates to the Company's results of operations as
     follows:

     
     
                                                                    2003           2002           2001
     ===================================================================================================
                                                                                       
     Statutory federal and state tax rate in the United States          40%            40%            40%
     ===================================================================================================

     Expected income tax expense                                  $ 21,077       $ 15,611       $ 11,969
     Differences:
       Earnings taxed in other countries                            (4,806)        (5,175)        (3,839)
       Withholding taxes on intercompany dividend                       --             --          2,000
       Other                                                          (172)           220           (262)
     ---------------------------------------------------------------------------------------------------
       Actual income tax expense                                  $ 16,099       $ 10,656       $  9,868
     ===================================================================================================
     

     Future income tax assets and liabilities are as follows:

     
     
                                                                                   2003           2002
     ===================================================================================================
                                                                                          
     Future income tax assets (liabilities):
       Capital assets                                                            $    513       $    397
       Stock-based compensation                                                       251            314
       Unused tax losses, expiring on December 31, 2004 to 2007                       902          1,085
       Other                                                                          393            105
     ---------------------------------------------------------------------------------------------------
       Total future income tax assets                                               2,059          1,901
       Valuation allowance                                                             --           (288)
     ---------------------------------------------------------------------------------------------------
       Net future income tax assets                                                 2,059          1,613
     ---------------------------------------------------------------------------------------------------

     Future income tax liabilities arising from
     temporary differences between the tax basis of net
     assets and their carrying value:
       Capital assets                                                              (1,328)        (2,064)
       Goodwill                                                                    (4,319)        (1,515)
       Other                                                                         (946)            --
     ---------------------------------------------------------------------------------------------------
       Total future income tax liabilities                                         (6,593)        (3,579)
     ---------------------------------------------------------------------------------------------------
                                                                                 $ (4,534)      $ (1,966)
     ===================================================================================================
     

                                                                            (51)


RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (Tabular dollar amounts expressed in thousands of United States Dollars,
                            except per share amounts)

                  Years ended December 31, 2003, 2002 and 2001

11.  COMMITMENTS AND CONTINGENCIES:

     (a)  Operating leases:

          The Company is party to certain operating leases. These operating
          leases relate to auction sites located in the United Arab Emirates,
          Mexico, the United States, Canada, Australia and Singapore. The future
          minimum lease payments as at December 31, 2003 are approximately as
          follows:

          
                                                                
          2004                                                     $  1,388
          2005                                                        1,278
          2006                                                        1,039
          2007                                                          483
          2008                                                          483
          Thereafter                                                    242
          

          Total rent expenses in respect of these leases for the year ended
          December 31, 2003 was $1,304,000 (2002 -- $1,069,000; 2001 --
          $689,000).

     (b)  Contingencies:

          Certain of the Company's operating leases for auction sites contain
          clauses that require the Company to return the auction site to the
          state and condition in which it was at the inception of the lease if
          the Company terminates the lease or does not renew it at the end of
          the lease term. The occurrence and amount of the potential liability,
          if any, for these site restoration costs is not determinable at the
          date of these financial statements.

          In certain situations the Company will guarantee a consignor a minimum
          level of proceeds in connection with the sale at auction of that
          consignor's equipment(note 1(f)). At December 31, 2003 the Company had
          outstanding guarantees under contract totaling $9,786,000 (2002 --
          nil) (undiscounted and before estimated proceeds from sale at auction)
          for equipment to be sold at various auctions to be held prior to July
          1, 2004. The Company has not recorded a liability with respect to
          these guarantees.

12.  UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES:

     The consolidated financial statements are prepared in accordance with
     generally accepted accounting principles("GAAP") in Canada which differ, in
     certain respects, from accounting practices generally accepted in the
     United States and from requirements promulgated by the Securities and
     Exchange Commission. However, for the years ended December 31, 2003, 2002
     and 2001, net earnings in accordance with Canadian GAAP equals net earnings
     in accordance with United States GAAP.

     US GAAP requires the preparation of a statement of comprehensive income.
     Comprehensive income is defined as the change in equity of a business
     enterprise during the period from transactions and other events and
     circumstances from non-owner sources. The statement of comprehensive income
     reconciles the reported net earnings to the comprehensive income amount as
     follows:

     
     
                                                                             2003         2002           2001
     ----------------------------------------------------------------------------------------------------------
                                                                                            
     Net earnings in accordance with Canadian and United States GAAP      $  36,594    $   28,371    $   20,054
     Other comprehensive income (loss):
       Foreign currency translation adjustment                               17,180         4,391        (2,887)
     ----------------------------------------------------------------------------------------------------------
     Comprehensive income in accordance with United States GAAP           $  53,774    $   32,762    $   17,167
     ==========================================================================================================
     

     Accumulated other comprehensive income (loss), which under United States
     GAAP is presented as a separate component of shareholders' equity, is
     comprised of the following:

     
     
                                                                2003            2002             2001
     --------------------------------------------------------------------------------------------------
                                                                                    
     Foreign currency translation adjustment:
     Balance, beginning of year                              $  (4,453)      $  (8,844)      $   (5,957)
     Current period change                                      17,180           4,391           (2,887)
     --------------------------------------------------------------------------------------------------
     Balance, end of year                                    $  12,727       $  (4,453)      $   (8,844)
     ==================================================================================================
     

(52)


                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

                                                                            (53)


RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

SELECTED FINANCIAL AND OPERATING DATA

(Tabular dollar amounts expressed in thousands of United States dollars, except
per share data)



Years ended December 31,                          2003            2002              2001            2000               1999
------------------------------------------------------------------------------------------------------------------------------
                                                                                                   
GROSS AUCTION SALES (UNAUDITED)              $  1,559,393     $  1,376,206     $  1,290,897     $ 1,232,974       $  1,170,529
------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS DATA:
  Auction revenues                           $    161,542     $    133,552     $    116,991     $   106,125       $    104,624
  Direct expenses                                 (22,099)         (19,684)         (18,861)        (17,936)           (17,469)
------------------------------------------------------------------------------------------------------------------------------
                                                  139,443          113,868           98,130          88,189             87,155

  Depreciation and amortization                    11,773            9,208(2)        (9,076)(2)      (7,761)(2)         (5,581)(2)
  General and administrative                       71,265(1)        63,786          (56,517)        (52,942)           (47,346)
------------------------------------------------------------------------------------------------------------------------------
  Earnings from operations                         56,405           40,874           32,537          27,486             34,228

  Interest expense                                 (4,772)          (4,302)          (4,024)         (3,378)            (1,705)
  Other income                                      1,060            2,455(3)         1,409           1,252              1,209
------------------------------------------------------------------------------------------------------------------------------
  Earnings before income taxes                     52,693           39,027           29,922          25,360             33,732
  Income taxes                                     16,099           10,656           (9,868)(4)      (8,155)           (11,452)
------------------------------------------------------------------------------------------------------------------------------
  Net earnings                               $     36,594     $     28,371     $     20,054     $    17,205       $     22,280
==============================================================================================================================
  Net earnings per share-diluted             $       2.14     $       1.68     $       1.19     $      1.02       $       1.32
==============================================================================================================================

BALANCE SHEET DATA (END OF YEAR):
  Working capital (including cash)           $     35,346     $     25,443     $     19,279     $    30,857       $     25,980
  Total assets                                    413,008          329,136          275,543         268,353            216,146
  Long-term debt                                   27,350           62,612           61,217          57,821             35,728
  Total shareholders' equity                      252,779          199,374          165,933         148,764            134,395

SELECTED OPERATING DATA (UNAUDITED):
  Auction revenues as percentage
   of gross auction sales                           10.36%            9.70%            9.06%           8.61%              8.94%
  Number of consignors                             23,480           20,919           19,196          18,177             16,185
  Number of bidders                               181,039          156,010          139,339         122,154            116,325
  Number of buyers                                 55,946           50,126           46,647          41,940             38,958
  Number of permanent
   auction sites (end of year)                         22               22               21              20                 17


(1)  General and administrative expenses in 2003 include stock-based
     compensation expense of $1.0 million ($0.9 million net of income taxes, or
     $0.05 per diluted share) relating to the prospective adoption of the
     stock-based compensation accounting policy. The Company adopted the fair
     value method of accounting effective January 1, 2003.

(2)  The Company stopped amortizing goodwill effective January 1, 2002 in
     accordance with new accounting pronouncements. The amortization expense in
     prior years was $1.7 million in 2001, $1.7 million in 2000, and $1.2
     million in 1999.

(3)  Other income in 2002 includes $1.0 million of non-recurring income.

(4)  2001 income tax expense includes a charge of $2.0 million for with holding
     taxes paid on an intercompany dividend.

(54)


                                  RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

SUPPLEMENTAL QUARTERLY DATA

(Unaudited; tabular dollar amounts expressed in thousands of United States
Dollars, except per share data)



                                        Gross          Auction          Net             Net Earnings Per Share        Closing
2003                                Auction Sales     Revenues       Earnings              Basic       Diluted      Stock Price
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
1st quarter                        $      341,475    $   36,381     $    8,575         $     0.51     $  0.51         $ 31.71
2nd quarter                               462,979        47,657         12,881               0.76        0.76           38.51
3rd quarter                               277,832        29,785          2,721               0.16        0.16           41.45
4th quarter                               477,107        47,719         12,417               0.73        0.72           53.10
-------------------------------------------------------------------------------------------------------------
                                   $    1,559,393    $  161,542     $   36,594(1)      $     2.17     $  2.14
=============================================================================================================




                                        Gross          Auction          Net             Net Earnings Per Share        Closing
2002                                Auction Sales     Revenues       Earnings              Basic       Diluted      Stock Price
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
1st quarter                        $      293,208    $   29,317     $    5,363         $     0.32     $  0.32         $ 27.15
2nd quarter(2)                            414,056        38,864         10,775               0.64        0.64           31.21
3rd quarter                               208,071        20,991          1,111               0.07        0.07           29.80
4th quarter                               460,871        44,380         11,122               0.66        0.65           32.35
-------------------------------------------------------------------------------------------------------------
                                   $    1,376,206    $  133,552     $   28,371(3)      $     1.69     $  1.68
=============================================================================================================




                                        Gross          Auction          Net             Net Earnings Per Share        Closing
2001                                Auction Sales     Revenues       Earnings              Basic       Diluted      Stock Price
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
1st quarter                        $      289,724    $   25,445     $    3,062         $     0.18     $  0.18         $ 23.50
2nd quarter                               373,990        35,025          6,351(4)            0.38(4)     0.38(4)        27.50
3rd quarter                               179,294        16,851           (955)             (0.06)      (0.06)          24.85
4th quarter                               447,889        39,670         11,596               0.69        0.69           24.88
-------------------------------------------------------------------------------------------------------------
                                   $    1,290,897    $  116,991     $   20,054(3)(4)   $     1.20(4)  $  1.19(4)
=============================================================================================================




                                        Gross          Auction          Net             Net Earnings Per Share        Closing
2000                                Auction Sales     Revenues       Earnings              Basic       Diluted      Stock Price
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
1st quarter                        $      289,928    $   26,769     $    3,609         $     0.22     $  0.21         $ 25.50
2nd quarter                               353,354        29,570          6,109               0.36        0.36           23.94
3rd quarter                               231,550        21,554          1,503               0.09        0.09           21.38
4th quarter                               358,142        28,232          5,984               0.36        0.36           20.75
-------------------------------------------------------------------------------------------------------------
                                   $    1,232,974    $  106,125     $   17,205(3)      $     1.03     $  1.02
=============================================================================================================




                                        Gross          Auction          Net             Net Earnings Per Share        Closing
1999                                Auction Sales     Revenues       Earnings              Basic       Diluted      Stock Price
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
1st quarter                        $      201,764    $   18,013     $    1,632         $     0.10     $  0.10         $ 33.69
2nd quarter                               387,288        35,589         10,471               0.63        0.62           38.13
3rd quarter                               219,024        20,699          2,146               0.13        0.13           38.00
4th quarter                               362,453        30,323          8,031               0.48        0.47           27.75
-------------------------------------------------------------------------------------------------------------
                                   $    1,170,529    $  104,624     $   22,280(3)      $     1.34     $  1.32
=============================================================================================================


(1)  The Company recorded stock-based compensation expense of $1.0 million ($0.9
     million net of income taxes) during 2003 relating to the prospective
     adoption of the new stock-based compensation accounting policy. The Company
     has retroactively restated the 2003 quarterly net earnings and earnings per
     share amounts to give effect to the change in accounting policy as if it
     had been adopted on January 1, 2003. The estimated quarterly net earnings
     amounts are reflected in the table presented above.

(2)  Net earnings for the second quarter of 2002 include non-recurring income
     of $0.8 million or $0.05 per share and net earnings for the third
     quarter of 1998 include non-recurring income of $1.2 million or $0.07 per
     share.

(3)  The Company stopped amortizing goodwill effective January 1, 2002 in
     accordance with new accounting pronouncements. The amortization expense in
     prior years was $1.7 million in 2001, $1.7 million in 2000 and $1.2 million
     in 1999.

(4)  Excluding the impact of $2.0 million in withholding taxes paid on an
     intercompany dividend in the second quarter of 2001, net earnings for the
     quarter would have been $8.4 million ($0.60 per share, basic or diluted)
     and net earnings for the full year would have been $22.1 million ($1.32 per
     basic share, $1.31 per diluted share).

                                                                            (55)


RITCHIE BROS. AUCTIONEERS / ANNUAL REPORT 2003

SHAREHOLDER INFORMATION

ADDRESS

RITCHIE BROS. AUCTIONEERS INCORPORATED
6500 River Road
Richmond, BC
Canada, V6X 4G5
Telephone:            604.273.7564
Canada (toll-free)    1.800.663.1739
USA(toll-free)        1.800.663.8457
Facsimile:            604.273.6873
Website:              www.rbauction.com

BOARD OF DIRECTORS

David E. Ritchie      Chairman & Chief Executive Officer

Peter J. Blake        Director, Senior VP & Chief Financial Officer

C. Russell Cmolik     Director

Charles E. Croft      Director

G. Edward Moul        Director

Mr. Moul serves as Lead Independent Director. Shareholders wishing to speak to
the Lead Independent Director should call 604.233.6153 or send an email to
leaddirector@rbauction.com.

MANAGEMENT ADVISORY COMMITTEE

David E. Ritchie*     Chief Executive Officer

Robert S. Armstrong   VP - Finance & Internet Services; Corporate Secretary

Peter J. Blake*       Senior VP & Chief Financial Officer

J. Dale Finlan        Chief Information Officer

Robert K. Mackay*     Executive VP

Michael J. Murray     VP - Northwest Division

David D. Nicholson    VP - South Central Division

Victor E. Pospiech    VP - Human Resources & Administration

C. Denis Prevost      VP - National Accounts

Michael G. Ritchie    VP - Western Canada Division

Roger W. Rummel*      Senior VP - Southwest & Mexico Divisions

J. Dean Siddle        VP - Senior Valuation Analyst

R. Clay Tippett       VP - Marketing & Customer Relations

Sylvain M. Touchette  VP - Eastern Canada Division

Guylain Turgeon       Managing Director - European Operations

Randall J. Wall*      President & Chief Operating Officer

Robert K. Whitsit*    Senior VP - Southeast Division

* Member of Executive Committee

CORPORATE GOVERNANCE

Corporate governance information is available on the Company's website at
www.rbauction.com.

INVESTOR RELATIONS

Securities analysts, portfolio managers, investors and representatives of
financial institutions seeking financial and operating information may contact:

  INVESTOR RELATIONS DEPARTMENT

  6500 River Road
  Richmond, BC
  Canada, V6X 4G5
  Telephone:                   604.273.7564
  Canada (toll-free)           1.800.663.1739
  USA(toll-free)               1.800.663.8457
  Facsimile:                   604.273.2405
  Email:                       ir@rbauction.com

Copies of the Company's filings with the U.S. Securities & Exchange Commission
and with Canadian securities commissions are available to shareholders and
other interested parties on request or can be accessed directly on the Internet
at rbauction.com.

ANNUAL GENERAL MEETING

The Annual General Meeting of the Company's shareholders will be held at 11am on
Friday April 16, 2004 at the Abercorn Inn, 9260 Bridgeport Road, Richmond,
BC V6X 1S1.

STOCK EXCHANGES

Ritchie Bros. Auctioneers Incorporated is listed on the New York Stock Exchange
and the Toronto Stock Exchange and on both exchanges, trades under the symbol
"RBA".

TRANSFER AGENT

Communications concerning transfer requirements, address
changes and lost certificates should be directed to:

  COMPUTERSHARE TRUST COMPANY OF CANADA

  Suite 600
  530 - 8th Avenue S.W.
  Calgary, Alberta
  Canada T2P 3S8
  Telephone:                   403.267.6850
  Canada and USA(toll-free):   1.800.332.0095
  Facsimile:                   403.267.6529
  Email:                       bonnie.steedman@computershare.com

Co-agent in the United States:
COMPUTERSHARE TRUST COMPANY OF NEW YORK
New York, NY

AUDITORS
KPMG LLP
Vancouver, Canada

(56)


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                              [RITCHIE BROS. LOGO]

                  6500 River Road, Richmond, BC, Canada V6X 4G5
                       Tel: 604.273.7564 Fax: 604.273.6873

                               www.rbauction.com