egco 01

The world is our home

A n n u a l R e p o r t 2 0 0 1

Electricity Generating Public Company Limited

A n n u a l R e p o r t 2 0 0 1

Electricity Generating Public Company Limited

The world is our home

Home...it does not only mean a place

to live. It is not just a cluster of bricks and

stones that shelters us from the vagaries

of seasons or physical danger. Home...it is

a beginning, a small but powerful thread

that binds many lives together. In a sense,

the world is a big home, with many members

from various background. Anything that

happens under the roof affects all the family

members, no matter where they are.

As a member of this family, EGCO is well

aware of our duty and obligation towards

our home. That is why we adhere to the good

governance standards in every operation.

We place primary concern as well as

support activities that benefit human

communities and environment. We have

always considered the interest of every party

involved before implementing any activities,

and will continue to do so in the future to ensure

that this world remains the safe and warm

home for every being.

The Best Practices Winner 2001on Corporate Governance,Major Public Company Category.

EGCO Business Philosophy Lasting business success derives from mutual support and cooperation, never from unscrupulously compet-

ing and taking advantage of each other. Lasting friendship is based on sincerity toward each other. The real value of business is to create worthy

product that renders its usefulness equitably to every sector of the society. Good operating results and profits are only the end product to be

justifiably allocated. When these are harmonized with upheld moral principles, business transaction and progress can be sustained.

2 General Information and Other Reference Persons 5 Message from the Chairman 8 Financial Overview

10 Review of 2001 Operation 15 Revenue Structure 18 Economic Report 2001 20 Current

Status of the Power Industry and Competition 22 Risk Factors 28 Group Structure and Shareholders

30 Organization Chart 31 Board of Directors and Subcommittes 37 Directors’ Remuneration

42 Board of Directors’ Report : Corporate Governance 45 Related Party Transactions with Persons who

may have Conflict of Interests with the Company 47 Management Discussion and Analysis 52 Social and

Environmental Care 53 Financial Statement

C o n t e n t s

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Company Business Registered Par Value Paid-up OwnershipShare Capital (Baht) Share Capital Interest (%)(Million Baht) (Million Baht)

Electricity Generating Public Company Limited (EGCO) Holding company 5,300 10 5,259.465 -Registration Number 333Head Office EGCO Tower, 222 Moo 5,

Vibhavadi Rangsit Road,Tungsonghong, Laksi,Bangkok 10210, ThailandTel. 66 0 2998-5999, 66 0 2955-0955Fax. 66 0 2955-0956-9

Website www.egco.com


Khanom Electricity Generating Company Limited (KEGCO) - Independent Power Producer (IPP) 4,850 10 4,850 99.99Office EGCO Tower - Electricity generating

Tel. 66 0 2998-5999, 66 0 2955-0955 - Net installed capacity 824 megawattsFax. 66 0 2955-0932

Site Office 112 Moo 8, Tongnean District, Amphur KhanomNakhon Sri Thammarat 80210, ThailandTel. 66 0 7552-9173, 66 0 7552-9179Fax. 66 0 7552-8358

Rayong Electricity Generating Company Limited (REGCO) - IPP 4,700 10 4,700 99.99Office EGCO Tower - Electricity generating

Tel. 66 0 2998-5999, 66 0 2955-0955 - Net installed capacity 1,232 megawattsFax. 66 0 2955-0931

Site Office 35 Rayong Highway No. 3191Huay Pong, Amphur Muang,Rayong 21150, ThailandTel. 66 0 3868-1012, 66 0 3868-1016,

66 0 3868-1020Fax. 66 0 3868-1784

TLP Cogeneration Company Limited (TLP COGEN) - Small Power Producer (SPP) 1,060 10 742 80Office EGCO Tower - Electricity generating

Tel. 66 0 2998-5999 - Net installed capacity 117 megawattsFax. 66 0 2955-0956-9

Thai LNG Power Corporation Limited (TLPC) To import and sell liquefied 750 10 450 100Office EGCO Tower natural gas (LNG) including to invest in

Tel. 66 0 2998-5999 the SPP companiesFax. 66 0 2955-0956-9

EGCO Engineering & Service Company Limited (ESCO) Power plant maintenance services 350 10 350 99.99Office EGCO Tower

Tel. 66 0 2998-5999, 66 0 2955-0955Fax. 66 0 2955-0933

Site Office 35 Rayong Highway No. 3191Huay Pong, Amphur Muang,Rayong 21150, ThailandTel. 66 0 3868-2611-4Fax. 66 0 3868-2823

General Information

SUBSIDIARIES

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JOINT VENTURES


Gulf Electric Public Company Limited (GEC) Holding company focusing on IPP and SPP 5,000 10 2,000 50Office 11th Floor, M. Thai Tower I,

All Seasons Place, 87 Wireless Road,Lumpini, Phathumwan, Bangkok 10330, ThailandTel. 66 0 2654-0155Fax. 66 0 2654-0156-7

EGCO Joint Ventures & Development Company Limited (EGCO JD) Investing in SPP and exploring and 800 10 696.72 50Office EGCO Tower energy business such as developing

Tel. 66 0 2998-5999, 66 0 2955-0955 energy resourceFax. 66 0 2955-0956-9

Conal Holding Corporation (Conal) Holding company focusing on electricity 729.32 3/ 91.17 3/ 729.32 3/ 40(EGCO Denmark is a company’s shareholder) generating company in the Philippines (800,000,000 (100 (800,000,000Office EGCO Tower PESO) PESO) PESO)

Tel. 66 0 2998-5999, 66 0 2955-0955Fax. 66 0 2955-0956-9

Oversea office Alsons Building, 2285 Pasong Toma Extension,Makati, City Metro Manila 1231, Philippines


Egcom Tara Company Limited (ET) Tap water business 345 10 345 70Office EGCO Tower

Tel. 66 0 2998-5999, 66 0 2955-0955Fax. 66 0 2955-0945

Site office- Plant 1 332 Moo 2, Pongsawai, Amphur Muang

Ratchaburi, Thailand- Plant 2 250 Moo 1, Pangpuay, Amphur Damnoen Saduak,

Ratchaburi, Thailand

EGCO Mining Company Limited (EM) Coal exploration and development 210 10 176 70Office EGCO Tower

Tel. 66 0 2998-5999, 66 0 2955-0955Fax. 66 0 2955-0956-9

EGCO International (BVI) Limited (EGCO BVI) Investing in the foreign electricity 2.00 1/ 39.952886 1/ 2.00 1/ 100Office EGCO Tower generating companies (50,000 USD) (1 USD) (50,000 USD)

Tel. 66 0 2998-5999, 66 0 2955-0955Fax. 66 0 2955-0956-9

Oversea office Romasco Place, Wickhams Cay 1, PO Box 3140,Road Town, Tortola, British Virgin Islands

Agro Energy Company Limited (AE) Trading/delivery service of natural scrap 2 10 0.50 99.99(ESCO is a company’s shareholder)Office EGCO Tower

Tel. 66 0 2998-5999, 66 0 2955-0955Fax. 66 0 2955-0956-9

EGCO Energy International (Denmark) Limited (EGCO Denmark) Holding company 0.67 2/ 500.34 2/ 0.67 2/ 100(EGCO BVI is a company’s shareholder) (133,000 DKK) (100 DKK) (133,000 DKK)Office EGCO Tower

Tel. 66 0 2998-5999, 66 0 2955-0955Fax. 66 0 2955-0956-9

Oversea office C/O Forum Administration A/SNorre Farimagsgade 3,Dk-1364 Copenhagen K, Denmark

EGCO Green Energy Company Limited Holding company focusing on SPP 171 10 87.26 74Office EGCO Tower utilizing agricultural waste as fuel

Tel. 66 0 2998-5999, 66 0 2955-0955Fax. 66 0 2955-0956-9

Roi-Et Green Energy Company Limited Electricity generating utilizing rice 180 10 90.01 94.77(EGCO Green Energy is a company’s shareholder) husk as fuelOffice EGCO Tower

Tel. 66 0 2998-5999, 66 0 2955-0955Fax. 66 0 2955-0956-9

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ASSOCIATES

OTHERS

Share and Debenture Registrar Thailand Securities Depository Company LimitedThe Stock Exchange of Thailand Building62 Ratchadaphisek Road, Klongtoey, Bangkok 10110, ThailandTel. 66 0 2359-1200-1 Fax. 66 0 2359-1259

Auditor Nangnoi CharoenthaveesubCertified Public Accountant (Thailand) No.3044PricewaterhouseCoopers ABAS Limited 15th Floor, Bangkok City Tower,179/74-80 South Sathorn Road, Bangkok 10120, ThailandTel. 66 0 2286-9999, 66 0 2344-1000 Fax. 66 0 2286-5050

Financial Advisors TISCO Securities Company LimitedTISCO Tower, 48/8 North Sathorn Road, Bangrak, Bangkok 10500, ThailandTel. 66 0 2633-6999 Fax. 66 0 2633-6500

National Securities Company Limited18th, 14th and 11th Floor, MBK Tower,444 Phayathai Road, Pathumwan, Bangkok 10330,Tel. 66 0 2217- 9595, 66 0 2217-6922 Fax. 66 0 2216-9261

Merrill Lynch Phatra Securities Company Limited6-11/F, Muang Thai-Phatra Office Tower 1252/6 Ratchadaphisek Road, Huaykwang, Bangkok 10320, ThailandTel. 66 0 2275-0888 Fax. 66 0 2693-2355

Thai Farmers Bank Public Company Limited1 Thai Farmers Lane, Ratburana Road, Bangkok 10140, ThailandTel. 66 0 2470-2200, 66 0 2470-2203 Fax. 66 0 2470-2224

Other Reference Persons


Amata-EGCO Power Company Limited (AEP) Co-generation SPP 1,350 10 1,350 14.85(EGCO JD is a company’s shareholder)Office EGCO Tower

Tel. 66 0 2998-5999, 66 0 2955-0955Fax. 66 0 2955-0956-9

Amata Power-ESCO Service Company Limited (AMESCO) Power plants operation and 2 10 2 50(ESCO is a company’s shareholder) maintenance servicesOffice EGCO Tower

Tel. 66 0 2998-5999, 66 0 2955-0955

Fax. 66 0 2955-0956-9


Eastern Water Resources Development and Water resources development and 1,050 10 1,000 20Management Public Company Limited (EASTW) management for supplying raw waterOffice 9/9 Vibhavadi Rangsit Road, to the customers

Talad Bangkhen, LaksiBangkok 10210, ThailandTel. 66 0 2940-9731-2, 66 0 2940-9974-6Fax. 66 0 2561-3793, 66 0 2940-7520

PMI International Company Limited To provide training and education in 2.5 10 0.30 10Office 254 Phayathai Road, Patumwan, support of saving energy

Bangkok, 10330, ThailandTel. 66 0 2218-8431-2Fax. 66 0 2218-8433

Notes : The Exchange rate as of Investment Date.1/ 1 USD = Baht 39.952886 (July 13, 21, 2000)2/ 1 DKK = Baht 5.00339 (July 20, 2000)3/ 1 PESO = Baht 0.91165 (August 25, 2000)

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5

The year 2001 marked the 9th year that EGCO has been in

operation. These past years have solidified the Company’s

knowledge and experience in the energy business, contributing to

its solid growth. Even during the financial crisis and the ensuing

economic downturn and sluggish investment climate, EGCO

continued to expand and maintain its leadership in the power sector,

thanks to the efficient management and their foresightedness.

These factors have reinforced mutual thrusts and confidence of

the investors and the public in the Company thereby ensuring its

continued success.

The EGCO Group of companies is committed to the principle

of good corporate governance. We believe that a majority of

business failures this country had experienced in the past were

due, by and large, to poor business management and weak

corporate governance. Only through greater transparency in

conducting its business and good corporate culture with strong

moral value can a company grow on a sustainable basis. By

maintaining strong oversight responsibility based on best practice

and good cooperation and commitment from the management

and staff, we were chosen as the winner of “The Best Practices

on Corporate Governance” in major public company category. This

reflects the acceptance and confidence that the various institutions

have in our management and business conduct. We will endeavor

to maintain and strengthen the high standards of good governance

as an integral part of our corporate culture.

In the past year, EGCO registered a net profit of Baht 2,939

million (or Baht 5.60/share), an increase of Baht 1,722 million or

141% over the year 2000. If foreign exchange losses of Baht 236

million were excluded, the net profit would have been Baht 3,175

million (or Baht 6.05/share), an increase of Baht 481 million or

18%. In making new investments, we continue to place strong

emphasis on projects with high returns and in line with the

Company’s business strategy to ensure our continued growth and

to enhance our shareholders’ value. The past and present

investments within and outside Thailand reflect these policies.

In terms of management and organization, EGCO has

adopted a system to assess our own performance through Key

Performance Indicators. The KPI provide a set of benchmarks

that would measure the Company’s performance at various levels

on a clear and objective basis. We believe that such system will

further enhance our overall operational efficiency.

While we have achieved a satisfactory degree of business

success with strong foundation, we recognize that our future

prospects depend on the continued support from the various

segments of the society. We therefore endeavor to return social

benefits where we can afford to the society on a regular basis. In

year 2001, we initiated a campaign to increase public awareness

to the importance of natural resources and the environment. The

advertising campaign on the theme “The world is our home” was

launched, aiming to promote friendly coexistence between man

and nature. Furthermore, EGCO has endeavored to ensure that

our power generations are of high standards and would not cause

any adverse effect to the surrounding communities and the

environment. In that regard, both REGCO and KEGCO have passed

the ISO 14001 certification for environment management and won

the EIA Award for outstanding environment management in the

workplace.

On behalf of the EGCO Board of Directors, I wish to thank

shareholders and all concerned parties for their thrusts and

confidence in the Company. Thanks also go to all the staff who

have dedicated their ability and hard work to help make EGCO

what we are today. We are all committed to make our Company a

more effective and efficient organization. And with the thrusts and

support that we have enjoyed from the various quarters, we will

embark upon our 10th Anniversary with an even brighter future.

Sommai Phasee

Chairman

Message from the Chairman

5

REGCO received the

ISO 14001 certificate

from Thailand Environmental

Institute (TEI).

KEGCO received the

ISO 14001 certificate from

RWTUV (Thailand) Limited.

KEGCO won the EIA Award

2001 - Implementing

the environmental

management system.

Biomass power plant project,

using rice husk as fuel, in Roi-Et

province. The project helps

reduce the amount of carbon

dioxide gas which contributes

to the Greenhouse effect.

EGCO realizes that now is the timefor us to join hands together and

make sure that the air will not be pollutedby our operation and remains fresh to render

good quality of life in the future.

RoofThe atmosphere is the roof of the world. It provides cover for every being in the house,

preventing us from the heat and toxic rays. Sadly, the relentless exploitation ofnatural resources has left the world with a myriad of problems.

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Financial Overview

Consolidated

2001 2000 1999

Financial Performance (Million Baht)

Electric energy sales 10,526 9,581 8,438

Service income 207 116 103

Other income 711 815 1,013

Cost of sales 3,916 3,312 2,687

Cost of service 117 150 89

Other expenses 937 1,030 905

Interest expenses 3,299 3,325 2,984

Net profit (loss) before Fx 3,175 2,695 2,889

Fx gain (loss) (236) (1,478) (241)

Net profit (loss) 2,939 1,217 2,648

Financial Position (Million Baht)

Total assets 52,965 55,112 49,897

Total liabilities 33,780 37,664 33,079

Shareholders’ equity 19,185 17,448 16,818

Authorized and paid up share capital 5,259 5,244 5,243

Per Share Data (Baht)

Net profit (loss) before Fx 6.04 5.14 5.51

Net profit (loss) 5.60 2.32 5.05

Book value 35.26 32.38 31.97

Dividend n.a. 2.00 2.00

Ratio Analysis

2001 2000 1999

Liquidity ratio (time) 2.80 2.85 6.97

Cashflows liquidity ratio (time) 1.01 0.96 1.29

Gross profit ratio (%) 62.42 64.30 67.50

Net profit ratio (%) 25.68 11.58 27.72

Return on equity ratio (%) 16.55 7.21 16.83

Return on assets ratio (%) 5.44 2.32 5.57

Debt to equity ratio (time) 1.76 2.16 1.97

8

99

12,000

11,000

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

Total Revenues

2001 2000 1999

12,000

11,000

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

02001 2000 1999

3,500

3,000

2,500

2,000

1,500

1,000

500

0

2001 2000 1999

11,444

10,512

8,2697,817

6,665

3,175

2,695

2,889

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

Total Assets

2001 2000 1999

52,96555,112

49,897

Net Profit Excluding CurrencyExchange Gains or Losses

Total Expenses Excluding CurrencyExchange Gains or Losses

9,554

Million Baht Million Baht


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Highlights of Operations– The net profit for the year 2001 was Baht 2,939 million or

Baht 5.60 per share which increased Baht 1,722 million or

141% from the previous year. The net profit for the year 2001

excluding foreign exchange loss of Baht 236 million was Baht

3,175 million or Baht 6.05 per share, increasing Baht 480

million or 18% from the net profit excluding foreign exchange

loss of previous year.

– EGCO was awarded The Best Practices Winner 2001 on

Corporate Governance, Major Public Company Category.

– EGCO invested in Thai LNG Power Corporation Limited and

TLP Cogeneration Company Limited to develop the

cogeneration power plant in Rayong province which has 117

megawatts.

– EGCO signed the Shareholder Agreement with the investment

group to establish the Nam Theun 2 Power Company Limited

to develop Nam Theun 2 Hydroelectric Project in Laos which

has total capacity 1,060 megawatts, 980 and 80 megawatts

of which will be sold to the Electricity Generating Authority of

Thailand (EGAT) and Electricite du Laos (EDL), respectively.

– Roi-Et Green Company Limited, a rice husk power plant

producer, signed Power Purchase Agreement (PPA) with EGAT

under SPP scheme with 8.8 megawatts for 21 years.

– EGCO implements Treasury Stock Program to manage

EGCO’s cash surplus and to reflect the real fundamental value

of EGCO. The amount reserve for the program is not exceeding

Baht 1,500 million or No. of treasury stock is not exceeding

42.86 million shares.

– EGCO and Unocal Bang Pakong Limited jointly invested in

Amata-EGCO Power (Bang Pakong) Limited through EGCO

Joint Ventures & Development Company Limited as a joint

venture company.

– KEGCO received the ISO 14001 certification for its

environmental management system from RWTUV (Thailand)

Limited.

– REGCO received the ISO 14001 certification from Thailand

Environment Institute (TEI).

– KEGCO received the ISO 9001:2000 from RWTUV (Thailand)

Limited.

– KEGCO was awarded the EIA Award 2001 for its best

qualification of environmental management system.

Business OperationEGCO is Thailand’s first independent power producer

that is the prototype of privatization in electricity generating

Review of 2001 Operation

11

effectively and efficiently. EGCO is structured as a holding

company and conduct business in compliance with maintaining

environmental balance for the betterment of society and everyone’s

benefit. The new business projects and the existing power plants

were developed and operated with the concern of safety standard.

Additionally, the implementation of Good Corporate Governance

Practice in business management enables EGCO to be a leading,

Thai owned and integrated electric power company with

comprehensive energy services in Thailand and in the ASEAN

region aiming at a favourable return on investment and maximizing

the stakeholders’ value.

Subsidiaries1. Rayong Electricity Generating Company Limited (REGCO)

was established on June 1, 1994 to acquire 1,232 megawatts

Rayong combined cycle power station from EGAT. The Rayong

power station comprised 4 units of combined-cycle power

plants generating and supplying the electric power to EGAT under

20-year Power Purchase Agreement (PPA).

In 2001 Thailand electricity demand was decreasing due

to the slow down of economic recovery but REGCO’s revenues

were slightly impacted because the electricity formula was

mainly based on the availability of the power plant not the electric

power supplied to EGAT. In 2001 the company’s net generation

sold to EGAT was 5,841.80 million kilowatt-hours, 25.55%

decreasing from the previous year. The electricity revenue was

Baht 4,899.90 million, 1.76 % decreasing from the previous year

due to lower capacity rate which had already been stated in the

PPA. Net profit was Baht 1,902.33 million, 19.53% increasing

from the previous year, in addition, the average Equivalent

Availability Factor (EAF) for 2001 was 90.58% which merited a

bonus payment from EGAT for the fifth consecutive year.

As the company was aware of its responsibility to society

and environment, the environmental management system has

been implemented to ensure the reliability and safety of the

nearby communities. The company was granted the ISO 14001

Certification from Thailand Environment Institute (TEI) in

December 2001.

The company’s goals for 2002 are still focusing on the

efficiency and reliability of the power plant together with safety

performance for employees and communities. The company will

maintain the quality management system (ISO 9002) and

environmental management system (ISO 14001) and put more

emphasis on financial and budgeting management in order to

fulfil all stakeholders’ satisfaction.

2. Khanom Electricity Generating Company Limited

(KEGCO) was founded on February 20, 1995 to acquire a power

station with 824 megawatts installed capacity from EGAT, the

largest power station in Southern Thailand, comprising of two

thermal power plants and one combined–cycle power plant.

In 2001, KEGCO generated 5,978.97 million kilowatt-hours

of power (net sale), representing a 7.12% increase compared to

last year. The revenue from operation was Baht 3,737.54 million,

representing a 4.02% decrease from 2000 due to the decrease

of electricity tariff. The company’s net profit of Baht 1,222.49

million compared with a net profit of Baht 655.44 million in 2000

amounted to the increase of Baht 567.05 million, a majority due

to the decrease of maintenance expenses and a less loss from

currency exchange rates. KEGCO consumed 60,802.01 million

cubic feet of natural gas, 0.24 million litres of fuel oil and 0.10

million litres of diesel oil throughout 2001.

As the company was strongly aware of its important role to

enhance the stability of electric power system, KEGCO’s production

comprised 80% of Southern’s electric power demand. Also being

a major part of Southern’s economic expansion, KEGCO had

occupied quality management standards including safety

management standards. The company placed prime concern on

the continuous development of human resources and technology.

Thus, in 2001, KEGCO developed the Quality Management System

in compliance with ISO 9001 Version 2000 and received the

certification from RWTUV (Thailand) Limited on October 12, 2001.

In addition to maintain the efficient production system, the company

had applied safety management including health standards and

was awarded “Occupational Health and Safety Awards” from the

Ministry of Labour and Social Welfare on May 10, 2001 for the

two consecutive year. Besides, realizing its responsibility to

communities and environment, the company planned to apply and

achieved the environmental management system standard. KEGCO

received Environmental Impact Assessment Award (EIA Award

2001) for the two consecutive year from the Ministry of Science,

Technology and Environment on September 17, 2001, passed

the audit of Environmental Management System Standard (ISO

14001) from RWTUV (Thailand) Limited in December 2000 and

received the certification on February 5, 2001.

3. EGCO Engineering & Service Company Limited (ESCO)

was established on September 8, 1995 to provide operation

services, maintenance services, engineering and construction for

power plants, petrochemical plants, oil refineries and other

industries including companies within the EGCO group itself.

The company concentrates on the quality for all kind of

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services provided. With high skilled staff modern tools and

effective management technique ESCO satisfied customers in

success of work through good performance resulting in the

increase in number of customers and revenue in maintenance

services, its core business, year by year. In 2001, the revenue

from power plant operation and maintenance services was Baht

186.558 million, representing a 24.73% increase compared to

2000 and net operating profit was Baht 44.866 million, 61.85%

increase from 2000.

Amata Power-ESCO Service Company Limited (AMESCO),

which was a joint venture company of ESCO, was established on

February 28, 1997, held by ESCO 50% and Amata Power Limited

50%. AMESCO provides operation and maintenance services for

Amata-EGCO power plant and Amata Power (Bang Pakong) power

plant. In 2001, the performance of company was outstanding as

the year before, the availability factor averaged in 12 months of

94.60% was achieved which is much higher than the target

specified in O&M contract.

4. EGCO International (BVI) Limited (EGCO BVI) was

established in the British Virgin Islands on April 12, 2000.

Presently, its issued and paid-up share capital is US Dollar 50,000

with the premium on share capital US Dollar 25.089 million. EGCO

holds a 100% share in EGCO BVI. The objective of setting up

EGCO BVI was to be a vehicle for the investment abroad and

to serve the tax optimization purpose. Hence, for the initial

investment in the Philippines, EGCO uses EGCO BVI as the

first-tier company to invest in the second-tier company which is

EGCO Energy International (Denmark) Limited Aps and uses

EGCO Denmark as a vehicle to invest directly in the Philippines.

5. EGCO Energy International (Denmark) Limited Aps (EGCO

Denmark) was set up on July 28, 2000 with the present registered

capital of DKK 133,000 and surplus of DKK 198.91 million. The

objective of setting up EGCO Denmark is to get the benefit from

the tax efficient structure for the acquisition of 40% equity interest

in Conal Holdings Corporation, from Alson Consolidated Resources,

Inc., a Philippine company and a shareholder of power plants with

total generating capacity of 250 megawatts. However, later in the

following year, there were changes in Danish tax legislation which

were brought into force in July 2001. These resulted in the

elimination of the existing tax efficiency structure. So the board of

directors has the resolutions to liquidate EGCO Denmark. The

cut-off date for the liquidation process was scheduled in December

2001 and the scheduled completion date was in May 2002.

6. Thai LNG Power Corporation Limited (TLPC) was founded

on September 28, 1995 with registered capital of Baht 750 million

to undertake Liquefied Natural Gas–LNG business. TLPC also seeks

an opportunity for expanding into the power generation businesses.

At that time, EGCO held 10% shares of TLPC.

In 1997, TLPC purchased a Small Power Producer (SPP)

project from Rayong Power Company Limited, which was

developing a power plant project in Rayong Industrial Park. TLPC

established TLP Cogeneration Company Limited to proceed the

developing of such power plant project.

On March 2, 2001, EGCO purchased all shares from the

existing shareholders with the objective to invest in SPP by joining

the other worldclass companies in Thailand and abroad.

7. TLP Cogeneration Company Limited (TLP COGEN) EGCO

purchased 60% of shares in TLP COGEN from TLPC on February

14, 2001 and afterward sold 20% of the shares to Electric Power

Development Company Limited of Japan (EPDC). At the present,

TLP COGEN’s shareholders consist of EGCO 40%, TLPC 40% and

EPDC 20%.

TLP COGEN had initial registered capital of Baht 500 million.

The registered capital was increased to Baht 1,060 million to invest

in Small Power Producer project at Rayong Industrial Park. TLP

COGEN is constructing a 117 megawatts with the capability to

supply 30 ton/hour steam to industrial users. TLP COGEN will

supply electricity of 60 megawatts to EGAT under a 21-year Power

Purchase Agreement. The remaining capacity and process steam

shall be sold to industrial users within and nearby Rayong Industrial

Park. The commercial operation date was expected on January

1, 2003. On March 14, 2001, TLP COGEN entered into Loan

Agreement with the financial Institutes; Krung Thai Bank Public

Company Limited, Industrial Finance Corporation of Thailand and

Military Bank Public Company Limited in the amount of Baht

1,456.93 million and US Dollar 29.4 million.

8. EGCO Green Energy Company Limited was established on

April 27, 2000 under the cooperation between EGCO and EPDC.

With an aim to invest in environmental friendly projects, EGCO

Green Energy invested in Roi-Et Green Company Limited to develop

a rice husk power plant project in Roi-Et province.

EGCO holds 74% of its shares and EPDC holds the rest with

the initial registered capital at Baht 100,000. On June 4, 2001

the company increased its capital up to Baht 171 million.

9. Roi-Et Green Company Limited was established on July 27,

2001 in response to the government’s policy to support and

promote utilization of renewable energy efficiently especially the

recycling of agricultural waste as fuel in electricity generating

process under Small Power Producer (SPP) scheme. The company

operates a rice husk power plant project with the capacity of

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9.9 megawatts. The project has a financial support from the

Industrial Finance Corporation of Thailand (IFCT) and receives

privilege from the Office of the Board of Investment (BOI).

Roi-Et Green is a successful cooperation between EGCO

Green Energy Company Limited, the joint venture company

between EGCO and EPDC, and Sommai Rice Mill Partnership.

EGCO Green Energy Company Limited holds 95% of its shares

while Sommai Rice Mill Partnership holds the rest. The capital

was initially registered at Baht 30,000 and increased up to Baht

180 million on August 23, 2001. The total project cost is Baht

600 million. The construction of the rice husk power plant is

scheduled to be completed in April 2003.

On October 22, 2001 the company signed Power

Purchase Agreement (PPA) with EGAT under SPP scheme with

8.8 megawatts for 21 years. The Commercial Operating Date

(COD) is scheduled on April 1, 2003.

10. Agro Energy Company Limited (AE) was established

on November 2, 1999, wholly owned by ESCO, to procure

agricultural waste for power plant e.g. rice husk for Roi-Et Green

power plant which is the plant in EGCO group.

11. Egcom Tara Company Limited (ET) was established on

April 23, 1999 with a registered capital of Baht 345 million. ET’s

shareholders consist of EGCO 70%, Eastern Water Resources

Development and Management Public Company Limited 15%,

Require Construction Company Limited 5%, Yanagawa Construction

Company Limited 5%, and Aqua Thai Company Limited 5%.

The company’s core mission is to generate water supply

according to Thai Industrial Standard (TIS) and supply it to the

Provincial Waterworks Authority of Thailand (PWA) for sale at Lak

Muang Water Station, Damnoen Saduak Water Station, and Samut

Songkhram Water Station. ET has entered into the agreement

with PWA for the production of water supply for a period of 30

years. ET has a capacity of 36,000 cubic meter/day. The total

lengths of water pipes from water treatment plants to PWA’s

Water Station are 31 kilometre.

In 2001, ET completed the construction of water treatment

plant, water pipes and water systems on February 9, 2001 and

began to sell water supply to PWA on February 15, 2001 at

Damnoen Saduak Water Station and Samut Songkhram Water

Station before the due date in the agreement, which was on April

7, 2001. Moreover, ET has obtained a privilege from the Office of

the Board of Investment (BOI) to have 8 years tax holiday period

for corporate income tax.

12. EGCO Mining Company Limited (EM) was established on

November 7, 1996 to undertake coal exploration and development

in South Kalimantan, Indonesia.

Regarding the Shareholder’s Extraordinary Meeting on

November 7, 2001 and November 27, 2001, the meetings had

decided to dissolve the company since EGCO, a major shareholder

of the company, set a new strategy to invest only in its core

business, power generation. The dissolution was processed to

the Department of Commercial Registration, Ministry of Commerce

on November 29, 2001. The company was delisted and in the

liquidation process.

Joint Ventures1. Gulf Electric Public Company Limited (GEC) was

established on November 12, 1998 with a registered capital of

Baht 5,000 million. GEC was a holding company, investing in 3

subsidiary companies.

1.1) Gulf Power Generation Company Limited (GPG) owned

and operated the Bor Nok coal fired power plant project (IPP)

with the installed capacity of 734 megawatts at Bor Nok district,

Prachuap Khiri Khan province.

1.2) Gulf Co-generation Company Limited (GCC) owned and

operated the Kaeng Khoi cogeneration power project (SPP) with

the installed capacity of 107 megawatts, and steam generating

capacity of 16 tons per hour at Kaeng Khoi district, Saraburi

province.

During the year 2001, the Kaeng Khoi cogeneration power

plant achieved a generation of 681.47 GWh, less than the

production during the year 2000 by 1.8%. Due to the Kaeng Khoi

cogeneration power plant performing a “Hot Gas Path Inspection”

(at 24,000 hours of machine operation) lasting 10 days, the

provision of electricity to EGAT was slightly reduced by 1.34%,

and the industrial customers similarly reduced their power

consumption by 6%. In all, 625.61 GWh were distributed to EGAT

and 55.87 GWh to the industrial customers. The total revenue

from this power distribution was equal to Baht 1,586 billion, higher

than during the year 2000 by 17.53%. GCC had earned revenue

from interest bearing deposits of Baht 3.2 million and other income

of Baht 2.85 million. GCC had operating expenses (not including

the effect from the exchange rate conversion) totaling Baht 1.37

billion, increasing by 6%. The outcome for GCC was that the gross

profit from operation was about Baht 431 million, increasing by

20%, or in other terms, a profit of Baht 0.31/kWh. The availability

of the power plant was 94.47%.

1.3) Gulf Siam City Generation Company Limited (GSC)

developed a 300 megawatts gas-fired power plant project for Siam

City Cement plants at Kaeng Khoi district, Saraburi province. The

14

project was in the engineering development phase.

The major shareholders of GEC consisted of EGCO and

Electric Power Development Company Limited (EPDC) which

equally held 50% of the shares.

2. EGCO Joint Ventures & Development Company Limited

(EGCO JD) was established on September 4, 1995 with registered

capital of Baht 800 milion and paid-up capital of Baht 696.72

million. EGCO is the major shareholders holding 99.99% of shares

in EGCO JD. Its objective was joint venture business with leading

companies both in Thailand and abroad focusing on the investment

in power station project and energy related business. Amata-EGCO

Power Limited (AEP), the first company that EGCO JD invested in,

was established on October 24, 1995 with registered capital of

Baht 1,500 million and paid-up capital of Baht 1,350 million. The

shareholders consisting of Amata Power Limited, the major

shareholder, which held 69.3% of shares, EGCO JD which held

29.7% of shares and small shareholder which, in total, held the

rest of 1% of shares. AEP owns a 165 megawatts cogeneration

power plant. This cogeneration power plant is considered to be a

Small Power Producer (SPP) and had the main objectives of

operating and delivering power and steam to the industrial users.

The remaining power of 90 megawatts was sold to EGAT through

PEA grid under 21 years long term Power Purchase Agreement

(PPA) starting from September 1999. Currently, this plant has

delivered power and steam to 45 customers located in Amata

Nakorn Industrial Estate with the plant availability higher than 99%.

Unocal Bang Pakong Limited (UBP), had invested 30 percent

of shares in Amata Power (Bang Pakong) Limited (APB) which

owned 112 megawatts cogeneration power plant, located next to

the cogeneration power plant owned by AEP. Due to their physical

locations, EGCO and UBP considered that if these two power plants

can be combined, it is possible to optimize the utilization of the

common facilities and O&M personnel as well as the effectiveness

and reliability in managing and services both in term of power and

steam supply to the customers located in the industrial estate.

Therefore, EGCO decided to join with UBP by using EGCO JD as a

joint venture vehicle in equal share percentage. The Joint venture

has been successfully accomplished on December 28, 2001. On

January 2, 2002, EGCO JD increased its registered capital to

116,843,386 shares. Resulting of the joint venture, EGCO JD

became one of the shareholders in APB in place of UBP. Since

EGCO JD has an expertise in power business while UBP has an

expertise in natural gas business, in addition to the mutual benefit

previously stated, the joint venture between the two companies

will result in the good business synergy and also advance

preparation for the highly competitive circumstances of the Power

Pool Market which is expected to be emerged in the near future.

APB has completed its construction on schedule and

successfully distributed 90 megawatts electricity to EGAT since

September 28, 2001 under the 21 years long-term Power

Purchase Agreement (PPA) of the Small Power Producer (SPP)

Program.

3. Conal Holdings Corporation (Conal) is the pioneer

Independent Power Producer (IPP) in Mindanao which is centrally

located in the Asia Pacific, comprising one-third of the Philippines’

total land area. Its head office is in Manila. The power generation

business is conducted through three subsidiaries, Northern

Mindanao Power Corporation (NMPC), Western Mindanao Power

Corporation (WMPC) and Southern Philippines Power Corporation

(SPPC). The operation and maintenance service is conducted by

Alto Power Management Corporation (APMC).

NMPC consists of two phases of diesel-fired power plants

of 60.9 and 42 megawatts, total combined capacity of 102.9

megawatts.

WMPC is a diesel-fired power plant with total capacity of

100 megawatts.

SPPC is also a diesel-fired power plant with total capacity

of 50 megawatts.

APMC provides operation and maintenance services

including plant management to the three mentioned power plants

and also other groups.

EGCO has invested in Conal through EGCO Denmark for

40%.

Other- PMI International Company Limited (PMI) was established

on November 1, 1996 with registered capital of Baht 2.5 million

to provide training and education in support of energy saving

management and developing management skills in the electric

power industry.

PMI was a joint venture among the Intellectual Property

Institute of Chulalongkorn University, Electric Power Research

Institute, Southern Electric International and EGCO, which held

10% of the shares.

The courses that were successfully organized during 2001

were Power Factor Correction in Harmonics Period, Is it fair to

include Fuel Adjustment Charge (Ft) into the electricity tariffs?,

Engineering Management, Engineering Managers Program and

Developing the detune filter for the power factor improvement

and harmonics resolution.

15

(Million Baht)

Product / Transaction % 2001 2000 1999

Service Shareholding Revenue % Revenue % Revenue %

Eletricity REGCO 99.99%

Capacity Charge 4,822.53 41.53% 4,883.96 46.29% 4,806.46 50.85%

Energy Charge 77.37 0.67% 103.60 0.98% 102.21 1.08%

KEGCO 99.99%

Capacity Charge 3,725.06 32.08% 3,882.66 36.80% 3,518.05 37.22%

Energy Charge 12.48 0.11% 11.38 0.11% 11.42 0.12%

GEC 50.00%

Energy Charge 792.71 6.83% 356.95 3.38% – –

Conal 40.00%

Energy Charge 1,003.93 8.65% 341.97 3.24% – –

Water ET 91.70 0.79% – – – –

Service ESCO /1 99.99% 174.28 1.50% 107.34 1.02% 103.34 1.09%

Conal 40.00% 32.32 0.28% – – – –

Interest EGCO /2 77.21 0.66% 180.24 1.71% 154.12 1.63%

income REGCO /3 99.99% 294.77 2.54% 331.71 3.14% 315.74 3.34%

KEGCO /4 99.99% 229.76 1.98% 250.12 2.37% 245.32 2.60%

ESCO, EGCO JD, EM, ET 11.51 0.10% 14.64 0.14% 3.27 0.03%

GEC, Conal 32.82 0.28% – – – –

Others EGCO /5 189.70 1.63% 46.39 0.44% 170.77 1.81%

REGCO 99.99% 12.38 0.11% 5.50 0.05% 14.13 0.15%

KEGCO 99.99% 3.87 0.03% 8.68 0.08% 2.08 0.02%

ESCO, EGCO JD, EM, ET 25.84 0.22% 25.51 0.24% 4.81 0.05%

GEC, Conal 1.80 0.02% – – – –

Total revenues (revenues item in consolidated) 11,612.02 100.00% 10,550.65 100.00% 9,451.73 100.00%

Notes/1 For year 2001, ESCO’s service income was Baht 174,278,068 (excluding related party transaction which was Baht 49,726,105

and Baht 1,189,000 of operating and maintenance service income from REGCO and KEGCO respectively and Baht 4,586,938

of ET Construction cost of water treatment plants./2 EGCO’s interest income in 2001 was Baht 77,215,662 (excluding related party transactions which was Baht 11,558,864 0f

KEGCO’s debenture)./3 REGCO’s interest income in 2001 was Baht 294,772,204 (excluding related party transactions which was Baht 3,607,747

and Baht 1,943,735 of EGCO’s and KEGCO’s debenture respectively) ./4 KEGCO’s interest income in 2001 was Baht 229,756,342 (excluding related party transactions which was Baht 19,392,179

0f EGCO’s debenture)./5 EGCO’s other income in 2001 was Baht 189,696,146 (excluding related party transactions which was Baht 5,053,985, Baht

4,125,467, Baht 2,010,789, Baht 10,080, Baht 825,985, Baht 1,564,193, Baht 295,700 and Baht 874,095 of office rental

and service income from REGCO, KEGCO, ESCO, EGCO JD, EM, ET, TLPC and TLP COGEN respectively .

Revenue Structure

15

Join hands with the Royal

Forest Department in

organizing the “Community

Forest Contest”

to win award from

Her Majesty the Queen.

Organizing the “Thai Forest

Conservation Youth Camp”

to raise awareness to conserve

watershed forests among

youngsters around the country.

Receive “Nature Resource

Conservation Award” from

the Royal Forest Department

for the company on-going

forest conservation support.

EGCO puts forest conservationas our priority. We have also been active in campaigns

to raise public awareness about this issue.We only hope that our land will be covered by rich

and lush forest again one day.

WallThe wall is an enclosure. It protects people from outside elements,

keeping us safe and warm. The forest as well. It insulates us from perils.It gives us food. Furthermore, it is a major component of our ecosystem.

18

Global Economy in 2001The global economy in 2001 was drastically slow down as

the US has suffered the economic crisis throughout 2001 as well

as the affect of terrorism on September 11. The Fed has decided

to implement the eased policy by reducing the Fed Funds Rate

11 times from previously at 7% to only 1.75%, but there was no

any significant sign of recovery. The industrial production index,

the industrial purchasing orders and the company’s earning

profits were still be worsen while the unemployment rate

was higher. Therefore, it was estimated that the US economic

expansion was only 1.1%. The economic expansion of EU after

introduction of Euro currency would slow the path to 1.6 - 1.7%

while in 2000 was 2.4%. For Japan, its economy was fallen

deeply into depression since 2001 due to the worsening economic

indicators, such as, declining industrial production index, and

increasing unemployment rate. It was shown that the economy

was worsen than expectation, even though the Japanese

government had been implemented the monetary policy to

stimulate the economy, the weakness of domestic economy

from NPLs of the financial institutions and inefficient business

operations would still be burdensome. Hence, the Japanese

economic expansion was depressed to - 0.9%.

Thai Economy in 2001The continuing slow down of global economy in 2001 has

significantly effected the Thai economic growth to decline to 1.4 -

1.5% lower than 2000, which was at 4.8%. This was because the

increasing demand of commodity and capital goods has shrunk

to approximately 6.5% of export value, which was regarded as

one important factor of the economic slow down in 2001 while

import was 1.3% depressive. Nevertheless, the trading balance

and excessive current account have also reduced upon compared

with the preceding years.

As a result of a decline in export sector, there was a

tremendous effect on Thai economy as private spending and

investment during the first 10 months were expanded only

3.3% and 3.9%, which reduced from the same period in the

preceding year where the expansion was 4.5% and 16.3%

respectively. Even the government has tried to stimulate the

demand by accelerating the spending both in the government and

state-enterprise sector by emphasizing on the fund mobilization

to the villagers, the expansion of government spending and

investment was still low as the government spending was slightly

increased by approximately 1.5% resulted from the slow down of

domestic demand. It was implied that the main driving factor of

Economic Report 2001

19

the economic expansion was the spending of private sector. As it

was revealed that the private investment trended to continuously

slow down since the beginning of the year because the remaining

excessive utilization capacity in the system was only 45% of total

capacity, but estimated to be expanded approximately 0 - 0.5%

throughout 2001. For the inflation rate in 2001, it was rather low

because of the lower price of crude oil and more inflexible Thai

currency in the second half of 2001resulting the average inflation

rate throughout 2001 to be around 1.6%.

For the financial policy in the mid year of 2001, the

Repurchase rate (RP) was increasingly adjusted from 1.5% to 2.0%

because the global interest rate was higher than the domestic

rate causing the continuous outflow of capital and lowering

international reserves. The foreign money market, however, has

adjusted to periodically reduce the interest rate to the level below

domestic rate. The liquidity in the domestic financial factor was

rather high, which encouraged the commercial banks to deduct

the saving and loan interest for another 0.25% on December 3,

followed by the announcement from the Bank of Thailand to

reduce the 14 day-RP rate to 2.25% in the last week of 2001.

The credit facility from the commercial banks was estimated

to depressed to 3.2%. The main reason was that the commercial

banks were reluctant to extend new loans due to NPLs and re-

entry NPLs although there were partially transferred to Thai Asset

Management Corporation (TAMC). In addition, the excessive

utilization capacity and export were also depressed.

Global Economic Trend in 2002

There are many signs of the US economic recovery in the

second half of 2002. However, it also depends upon the

effectiveness in stipulation of financial policy of the Fed. In addition,

the tax policy, increasing government spending, consumer and

investor confidences and reduction of inventories to the acceptable

level are the important factors to the US economic recovery in

2002. We expected the US economic growth at around 0.7%.

The EU and Japanese economy also depend on several factors,

such as, export value, number of tourists, consumer and investor

confidences. It is estimated that the economic expansion rate of

EU shall be 1.3-1.4% while Japan is still facing with the severe

problems of unemployment and extremely high public debt. The

private and public restructuring are, therefore, considered as

an important variance for the recovery and it is estimated that

Japanese economy shall be edged down to -1.3%.

Thai Economic Trend in 2002

The Bank of Thailand has estimated the Thai economy

in 2002 to grow at the rate of around 2-3%, which is slightly

higher than in 2001. The global economy and export are still

the main factors for Thai economic expansion in 2002. The

important external factors are crude oil price and global interest

rate, which are expected to remain low. Therefore, the important

factors for economic expansion in 2002 will come from internal

factors, which are government spending and the stimulus

measure to accelerate more effective spending of budget. For

the monetary policy, it is forecasted that the interest on loan is

still necessary to remain low in order to activate more private

consumption and investment. In the case of currency exchange

rate, Thai Baht is foreseeing as stable where in the beginning of

the year, Thai Baht trends to be more rigid due to higher domestic

interest rate than US interest rate and estimate to be weakened in

the second half. Should the US economic recovery becoming

distinctive, the inflation shall trend to be stable likewise in 2001.

From the Thai economic forecast, it is further analyzed that

the demand of new loan will also be compressed alongside with

the problem of NPLs, the commercial banks, therefore, shall be

aware in facilitating the new loans. However, the commercial banks

have already transferred some NPLs to TAMC causing the reduction

of bad loans in the banking system. In addition, the demand for

loans of private firms especially the SMEs trends to continuously

increase, this can be estimated that in 2002, the new loans to

commercial banks (including BIBF) shall be extended approximately

0.5-1% while the saving trends to increase approximately 4-4.5%.

Nevertheless, the government and commercial banks should

find out the way to extend new loans to SMEs in order to assure

the investors toward the economic circumstance including the

transformation of good fundamental factor of state-enterprises

and the attempt to reduce the political risk, thus it is possible that

the economy of Thailand shall be grown sustainable as well.

20

2001 was another year that peak demand growth and

energy generation continued to grow, in comparison to

the previous year, throughout the year for the second year

in a row. Since the crisis of 1997, the sector did not have a

twelve-consecutive month on month growth in both peak

demand and energy generation until the year 2000. Figure 1

shows the peak demand growth of 8.10% in April and Figure

2 shows the annual energy generation growth of 5.49%. Unlike

the year 2000, in comparison to the year 1999, where there

was a slight reduction in consumption of the Government and

Non Profit Organization Sector, Figure 3, the year 2001 in

comparison to the year 2000 showed healthy growth in all

sectors especially in the Large General Commercial/Industrial

Sector and the Residential Sector with the market shares of

39.50% and 22.85% respectively. The average selling price,

including Ft, also moved in line with CPI, Figure 4. The

government policy about competition via competitive market

Current Status of thePower Industry and Competition

or open access of the transmission/distribution system was

still not very clear. Nevertheless, to reduce risk to the

consumers and to keep competitive edge, EGCO still upheld

fuel diversification policy.

EGCO overseas investment in Laos via Nam Theun 2

project was making a satisfactory progress. The investment

in the Philippines via 40% holding in Conal through EGCO BVI

and EGCO Denmark was doing well despite some concerns

over peace-and-order and crimes situations. The long awaited

Electricity Industry Reform Act was voted by Congress in June

2001. The Implementing Rules and Regulations are expected

to be passed by the first half of 2002.

Due to changes in tax laws in Denmark, the holding of

Conal through EGCO Denmark was no longer tax-efficient, the

decision was made to dissolve EGCO Denmark to allow

EGCO BVI to hold Conal directly. The legal process to dissolve

EGCO Denmark was already started in December 2001.

Figure 1 : Peak Demand Comparison (1999-2001)

1999

MW

16,500

16,000

15,500

15,000

14,500

14,000

13,500

13,000

12,500

12,000Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2000 2001 Source : EGAT

21

Figure 4 : The Average Selling P rice of Electricity VS CPI

Figure 2 : Energy Generation Comparison (1999-2001)

GWh Market Share% GWh Market Share% GWh Market Share% % %

Residential 18,121.92 22.90 19,363.30 22.59 21,163.52 22.85 6.85 9.30

Small General Commercial/Industrial 8,093.32 10.23 8,670.83 10.11 9,261.16 10.00 7.14 6.81

Medium General Commercial/Industrial 16,471.07 20.81 17,659.54 20.60 18,306.47 19.76 7.22 3.66

Large General Commercial/Industrial 29,786.16 37.63 33,264.69 38.80 36,590.80 39.50 11.68 10.00

Government & Non-Profit Organization 3,213.58 4.06 3,134.57 3.66 3,454.66 3.37 (2.46) 10.21

Others 3,461.79 4.37 3,641.72 4.25 3,852.01 4.16 5.20 5.77

Total 79,147.84 85,734.66 92,628.61 8.32 8.04

1999 2000 20012000/1999

2001/2000

Figure 3 : Energy Sales by Categories of Consumers (1999-2001)

Source : PEA, MEA

1999

GW

h

9,500

9,000

8,500

8,000

7,500

7,000

6,500Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2000 2001 Source : EGAT

Consumer Price Index (CPI)

Baht

/Uni

t

E lectr ic ity Price

110

105

100

95

90

85

80

75

70

2.7

2.5

2.3

2.1

1.9

1.7

1.5

Jun 95 Dec 95 Jun 96 Dec 96 Jun 97 Dec 97 Jun 98 Dec 98 Jun 99 Dec 99 Jun 00 Dec 00

Source : - National Energy Policy Office (NEPO) - Bloomberg

22

The revenue of EGCO, a holding company, generates from

dividends from its subsidiaries, joint ventures and associated

companies, which operate their businesses by generating and

selling electricity and other energy business related. EGCO, sorts

its risk factors according to the ability of its cash flow management

into 2 types as follows:

(1) The risks from Investment in the companies, of

which EGCO has already received their dividends.

(2) The risks from Investment in the companies, of

which EGCO will receive their dividends in the future.

The risks of investment in type (1), from the companies, of

which EGCO has already received their dividends, consist of the

following:

Business Performance RisksREGCO and KEGCO have the long-term power purchase

agreements with EGAT, which is a good state enterprise with

strengthen financial status, for selling all of the generated

electricity to EGAT. Therefore, REGCO and KEGCO will not face

any circumstance of losing their customers. Moreover, the tariffs

are on the cost plus basis.

Conal holds the shares in 3 electricity generating companies:

NMPC, SPPC and WMPC, which sell all of the electricity to National

Power Corporation (NPC), which is Electricity Authority of the

Philippines. According to the long-term power purchase

agreements with NPC, the circumstance of losing the customers

will not occur and the tariffs have already covered fixed and

variable cost.

Operational Risks• Availability

In case of REGCO and KEGCO, there will be a risk of being

penalized if its availability falls below the defined dead band and

dependable contracted capacity respectively. Because of the good

maintenance plan in the year 2001, REGCO was able to maintain

average Equivalent Availability Factor at 90.58%, which is higher

than the target of 83-88%. As a result, REGCO has received the

bonus from EGAT for 5 consecutive year. Moreover, KEGCO was

also able to maintain power availability at 94.47%, which is higher

than the year 2001 agreeable target between EGAT and KEGCO

at 90.88%. As a result of KEGCO’s, the accumulating hours are

being calculated for the bonus from EGAT.

Risk Factors

NMPC, SPPC and WMPC will also be penalized if its

availability is below the contracted availability in each year. To

prevent this risk, NMPC contracts with Wartsila NSD Philippines,

Inc. (WNSD) for the plant maintenance. In accordance with the

contract, WNSD will guarantee the contracted availability and heat

rate of 2 NMPC’s power plants and will be responsible for the

penalty cost if occurred. In addition, SPPC and WMPC contract

with Alto Power Management Corporation (APMC), in which Conal

holds 60% stake, for the plant management, operation and

maintenance. APMC will guarantee the contracted availability and

heat rate of SPPC’s and WMPC’s power plants. APMC will be

responsible for the penalty cost if occurred.

• Heat Rate (rate of a unit of fuel conversion for power

production into heat)

The risks of maintaining heat rate of REGCO and KEGCO

will take place when heat rate of electricity generation is higher

than the agreeable level. REGCO and KEGCO will be accountable

for the extra cost of natural gas. In 2001, REGCO was able to

maintain heat rate at 7,363.63 BTU/kilowatt-hour, or 101.43%

of the target test heat rate, which was 7,259.57 BTU/kilowatt-

hour. The heat rate of REGCO has outperformed that specified

in PPA which is 103% of the target test heat rate. At the same

year, KEGCO’s heat rate of 8,752.23 BTU/kilowatt-hour was

lower than the agreeable target test heat rate, 9,122.60 BTU/

kilowatt-hour.

The risks of maintaining heat rate of NMPC, SPPC and

WMPC will also arise when heat rate of electricity generation is

higher than the agreeable level. In this regard, NMPC, SPPC and

WMPC will be responsible for the extra cost of fuel. However,

NPMC contracted with WNSD for its heat rate guarantee and

WNSD will be responsible for penalty cost if occurred. In addition,

SPPC and WMPC contracted with APMC for SPPC’s and WMPC’s

heat rate guarantee and APMC will be responsible for penalty

cost if occurred.

Risks of Legal, Regulation and Governmental PolicyChanges

Electricity Supply Industry (ESI) reform has been performing

continuously since 2000 by preparing the reforms of EGAT, the

Metropolitan Electricity Authority (MEA) and the Provincial

Electricity Authority (PEA). Additionally Thailand power pool, which

is approved by the cabinet on October 3, 2000, will be established

23

to encourage competition in ESI following the implementation

plans of ESI reform. However, due to obstacles of ESI reform in

foreign countries and deferring of considering draft energy industry

Act by the council of state, there may be possibility that the

scheduled commencement of liberalization of ESI in 2003 may be

postponed.

As the aforementioned, the impacts to REGCO, KEGCO and

other Independent Power Producers (IPP) having long-term power

purchasing agreement (PPA) with EGAT are:

1. Impact from establishment of Thailand power pool REGCO

and KEGCO, which sell their whole-generated capacity to EGAT,

will not have any impact when Thailand power pool is established.

The reason is Debt Management Company (A business unit of

EGAT after privatization), which will be established in the future,

will undertake the obligations of existing PPA within ESI structure

after privatization until contract will be expired.

2. Amendment of conditions in existing PPA from the

related party If EGAT would like to modify conditions in PPA, the

modification shall have to be accepted by all participated parties.

Therefore, it could states that both REGCO and KEGCO

will not have any impact from ESI reform and liberalization of

electricity market.

Political and Country RisksThe Philippines has an uncertainty in the political situation

and rather fragile economic condition as same as the other

countries in ASEAN. Statistically, the Philippines has higher

political and country risks than Thailand’s as measuring by

Credit Rating and Government Bond Yield. Moreover, NMPC,

SPPC and WMPC locate at Mindanao Island, which has the

instability of politic.

Financial Risks• Currency Exchange Fluctuations

REGCO and KEGCO are exposed to the risk by their US

Dollar - denominated loans from the foreign financial institutions

including the maintenance parts charges. However, KEGCO had

a swap contract of US Dollar100 million for an equivalent of

Baht 25.23 per US Dollar. After the managed float system, the

calculation of the capacity payment, determined in the Power

Purchase agreement, is adjusted to receive compensation of the

exchange rate effect from the debt burden denominated US Dollar

and expenses of major maintenance parts for the remain of the

contract. REGCO and KEGCO will receive higher electricity tariff if

the exchange rate is above 28 Baht per US Dollar, and lower tariff

if the exchange rate is below 28 Baht per US Dollar.

Moreover, both companies have maintained reserve

accounts to mitigate the currency risk by setting aside 2.52% of

their outstanding unhedged dollar - denominated loans every 6

months until this amount reaches 25% of the said loans, or US

Dollar 60 million for REGCO and US Dollar 43 million for KEGCO,

whichever is lower. At the present, REGCO has already had the

reserve accounts amounting to US Dollar 60 million and the reserve

account of KEGCO has already reached 25% of its outstanding of

unhedged dollar - denominated loan.

In the case of Conal, the net asset from investment in Conal

will relatively fluctuate with Baht-Peso’s currency exchange.

Furthermore, the dividend in Peso currency received from Conal

will expose to the risk of converting US Dollar before Baht’s

conversion. Nevertheless, in the debt portion of Conal’s foreign

currency-loan, the currency exchange fluctuation has already been

covered for the capital cost by the electricity tariff.

• Interest Rate Fluctuations

As of September 30, 1999, REGCO has refinanced domestic

long-term loan structure through the swap contract from floating

rate to be fixed rate. This structure has benefited REGCO for having

no interest rate risk. Loans for working capital of both REGCO and

KEGCO have not been withdrawn. According to its PPA with EGAT,

the risk of capital cost for fixed interest rate has already been

included into capacity payment.

In the case of Conal, it had already been applied an Interest

Rate Swap Contract to mitigate the interest rate fluctuation. As of

December 31, 2000, the outstanding amount on the interest rate

swap agreement was US Dollar 4.8 million.

• Inflation risks

The inflation risk of REGCO and KEGCO will rise from the

actual inflation and expense is become higher than the index used

for calculating the tariff according to the PPAs. In any case, the

proportion of operating costs and maintenance charges is

relatively low compared with the total expenses as calculated by

availability and energy payments; therefore, this inflation risk

would have less impact on REGCO’s and KEGCO’s operations.

Furthermore, EGCO still exposes to the risk in the investment

of type (2), in which EGCO will receive their dividends in the future.

The risks inherent in this investment type can be classified as

follows:

Business Performance RisksGCC, the subsidiary of GEC, will not face any circumstance

of losing its customers. Since GCC also generates electricity to

EGAT and its customers under the power purchase agreement.

Moreover, GCC’s tariff has already covered fixed and variable cost.

24

Operational RisksGCC will be deducted contracted availability capacity if its

availability capacity is unable to be maintained at the agreeable

target. Up to present, GCC is still able to maintain the contracted

availability capacity.

Risks of Legal, Regulation and Governmental PolicyChanges

For the case of GCC and TLP COGEN, which have the Power

Purchase Agreements with EGAT, they will not have any impact as

same as REGCO and KEGCO as well. However, there is no clear

trend for the impact of the other customers.

Political and Country RisksThe political risk in Lao PDR may occur under the socialist

government. Therefore, the project developed in Lao PDR may

have some obstacles in implementation. However, the risk may

not impact to the Nam Theun 2 Hydroelectric project since the

Government of Lao PDR is one of project’s developers holding

25% of total shares. Besides, the dividend received from the

project also creates several benefits to the Government of Lao

PDR, for example, job provision for local people, increase of

revenue from tax and royalty, and etc. Therefore, it may summarily

state that the project development of Nam Theun 2 will be

well supported from the Government of Lao PDR.

Financial RisksThe amended tariff of GCC can be compensated with the

impact on currency exchange fluctuation in case of the exchange

rate exceeding 27 Baht per US Dollar. As of December 31, 2001,

GCC has US Dollar 54.8 million outstanding debt in floating interest

rate at LIBOR reference, which may be a risk of interest rate

fluctuation. However, GCC has not yet applied any hedging

instrument to mitigate this risk.

The calculation of GCC’s availability payment and energy

payments will be varied relative to the structure of Provincial

Electricity Authority of Thailand’s electricity price. Thus,

availability payment and energy payment will reflect the actual

capital cost.

Customer RisksESCO provides operation and maintenance and other

services for the power plants in EGCO group and other companies.

As the new related-business company, ESCO has to increase

the customers’ confidence by developing the potential of its

employees and creating creditable performance. However, if

ESCO has not maintained sufficient quantity of good businesses

and customers, this will result in a negative impact to ESCO’s

return on investment. Thus, to mitigate the customer risk, ESCO

has attempted to cooperate with the well-known organizations

to provide operation and maintenance for the power plants

such as the cooperation between ESCO and EGAT in REGCO’s

power plant maintenance, and the cooperation between ESCO

and Alstom Power Ltd. for dispatching its personnel for the

commissioning work for the SAKRA Plant in Singapore and

Nong Kae Co-generation, etc.

TLP COGEN, which is presently on the construction stage,

is scheduled to commence its operation in January 2003 and

contracted with EGAT to generate and sell its 60 megawatts

capacity of the total capacity of 117 megawatts to EGAT. The

rest will sell to other customers. Therefore, TLP COGEN may

face the circumstance of customer risk.

Roi-Et Green Co., Ltd. was established for the purpose of

NEPO’s policy in developing power project utilizing agricultural

waste as fuel in order to reduce the fuel import and pollution from

the agricultural waste. It is also on construction stage. As Roi-Et

Green sells all of its generating capacity to EGAT, it will not face

of losing customer.

Risks from the Project’s DelayPresently, there is no conclusion whether the GPG’s

project will be able to implement. Although the expected

revenue stream from GEC would deviate from the projection

according to the GPG project’s delay, the effect on EGCO is not

considered as a serious issue since the return from only GCC

has met EGCO’s investment guidelines.

In case of the construction of TLP COGEN and Roi-Et Green,

the delay of projects may occur. However, the EPC contracts

were determined that the contractors will be penalized if the

construction is not in scheduled or the qualification does not

meet the agreeable target. This can compensate for some loss

occurred.

Risks from Non-core Business InvestmentAs EGCO has recognized the risk occurred by investing in

non-core business, in 2001, EGCO Mining has already filed for the

dissolution of itself and EGCO has the policy to sell off the shares

in Egcom Tara, its non-core business, to the highly proficient

companies.

Besides the risks from the 2 types of EGCO’s business, the

other important factor will be

Risks from Using Financial Instruments forTreasury Management

For EGCO’s treasury management, which includes the

raising fund for the investment by both equity and debt

instrument, EGCO mainly considers the stability and liquidity of

25

its business, and the optimal return in comparison with the

risks from using the financial instruments. Therefore, EGCO has

to study and analyze market situation, economics, monetary,

finance, and political policies, both in domestic and foreign,

including the changes in financial issues that will affect EGCO’s

business. Moreover, EGCO identifies types of risks such as market

risk, liquidity risk, interest rate risk and credit risk, etc., to establish

the treasury management guidelines as the EGCO’s group policy

to optimize their benefits. The treasury management identified

by investment types is as follows:

– Investment in Deposit Account, Negotiable Certificate

of Deposit (NCD) and Promissory Note (P/N) with Banks,

Finance companies and Finance & Securities Companies

with the qualifications of being guaranteed by the

Government, or having the Government as the major

shareholder, or being established by special law.

– Investment in Government Bond, State Enterprise Bond,

Treasury Bills and State Enterprise’s short-term Bill of

Exchanges guaranteed by the Government or the

Ministry of Finance.

– Investment in any Corporate Debenture with at least

A- credit rating and Corporate Debenture issued by EGCO

Group.

– Investment in local Bill of Exchanges issued by Bank

with at least A-credit rating, or Corporate and availed by

a bank or a Corporate with at least A-credit rating

– Investment in debt instrument funds with good fund

managers, good investment policies and low risks, and

sector funds which have the same investment and cash

management policies as EGCO. Moreover, investment

in quality ordinary shares which generate good return

at the price under the market position analyzed not

creating risk higher than the aforementioned type of

investments such as investment in ordinary shares in

the same sector as EGCO at the market situation that

EGCO implements Treasury Stock Program.

To diversify the risks, EGCO determines ratio for each

type of investment in its Treasury Management Guideline, to

maintain the deposit in each institution within 25%, to invest in

each Corporate Bond not exceeding 5% of the existing cash and

the totally invest must not exceeding 10% of the existing cash,

and etc.

In 2001, the return from EGCO’s treasury management

amounted to Baht 254 million.

Risk from Fund RaisingTo achieve fund raising for investment, both in equity and

debt portion, such as the equity fund raising for investment in

REGCO and KEGCO and the high investors’ interest in EGCO

amortizing debenture strongly confirms that ECGO has to be

able to invest in projects generating satisfying return. Therefore,

EGCO established its investment guideline. Project return

comparing with Weighted Average Cost of Capital (WACC), and

appropriate project risks are the base of investment decision

making. The WACC will reflect money market, on which

economic, finance, politic, and other direct and indirect related

factors have major effect. Moreover, EGCO has also be highly

conscious of the relative between the burden of EGCO’s debt

and return on investment in the future in order to prevent

Short Term to Medium Term Cash Flow Weakening Position.

This position will occur if the company has an inability to generate

its incomes from its new project investments in short to medium

term, which will results in risk of inability to create profit, pay

dividend and maintain credit standing. It may cause the risk

from not achievable for new fund raising and also the risk of

losing its Credit Standing.

Furthermore, EGCO and its group can minimize its cost

of debt by identifying type of risks, assessing and evaluating

cost of such risks with the efforts to mitigate them such as the

following:

– Currency Risk: If the business contract does not allow

the partial or wholly mitigation of currency risk,

hedging must be implemented in case the hedging cost

is lower than the return, e.g., KEGCO had a swap contract

of US Dollar 100 million for an equivalent of Baht 25.23

per US Dollar.

– Interest Rate Risk: In case the interest rate of secured

loan is floating while that of the business contract is

fixed, the interest rate swap to fixed rate shall be

applied to mitigate risk such as REGCO’s case.

Moreover, EGCO and its group always study and analyze

current market situation for preparation to minimize cost of fund

such as EGCO’s hedging implementation via Interest Rate Swap

to minimize the cost of 5-year amortized unsecured debenture

at 8% fixed coupon rate using the floating rate regime. For the

first hedging on October 21, 2001, the Thai Baht floating rate

was assigned at 6% p.a., which reduced the funding cost from

the first hedging by 2% p.a.

KEGCO received the

ISO 14001 certificate from

RWTUV (Thailand) Limited

in 2000.

As a proof of our emphasis

on energy conservation,

the EGCO Tower was given

the outstanding award in

energy conservation building

in Thailand and a second

prize in ASEAN.

REGCO received a bonus

from EGAT for exceeding

the Equivalent Availability

Factor (EAF) commitment under

its power purchase agreement.

EGCO realizes that as a power producer,our business is to make people happy and to make

their lives convenient. We maintain the quality of ourservice by ensuring that our systems of management,

business administration and production are efficient,capable of delivering the best output.

PillarThe pillar supports the house. It keeps the whole thing stable and allows every life

to live on in a secured way. The pillar can be compared to different kinds of energy,which propels all living things to move around and to progress.

2828

No.No.

HSBC (Singapore) Nominees PTE Ltd.HSBC (Singapore) Nominees PTE Ltd.

Thailand Securities Depository Co., Ltd. for DepositorsThailand Securities Depository Co., Ltd. for Depositors

The Bank of New York Nominees Ltd.The Bank of New York Nominees Ltd.

HSBC Bank Plc.HSBC Bank Plc.

Chase Nominees LimitedChase Nominees Limited

State Street Bank & Trust CompanyState Street Bank & Trust Company

1.1.

2.2.

3.3.

4.4.

5.5.

6.6.

7.7.

8.8.

9.9.

10.10. The Government Pension FundThe Government Pension Fund

25.4325.43

21.5121.51

5.665.66

3.263.26

2.312.31

2.142.14

2.122.12

1.791.79

1.731.73

1.171.17

Name of 10 Major ShareholdersName of 10 Major Shareholders

as of September 11, 2001(The date of the interim dividend payment of the 1st half of the year 2001 is on September 26, 2001

as of September 11, 2001(The date of the interim dividend payment of the 1st half of the year 2001 is on September 26, 2001

NameName Amountof Shares

Amountof Shares

%%

Electricity Generating Authority of ThailandElectricity Generating Authority of Thailand

CLP Power Projects (Thailand) LimitedCLP Power Projects (Thailand) Limited

THAI NVDR Co., Ltd.THAI NVDR Co., Ltd.

133,773,662133,773,662

113,138,806113,138,806

29,776,60129,776,601

17,171,90017,171,900

12,130,79012,130,790

11,275,80011,275,800

11,152,73511,152,735

9,409,740 9,409,740

9,109,5879,109,587

6,152,1006,152,100

PMI International Co., Ltd.

(PMI) 10.00%

Khanom Electricity Generating Co., Ltd.

(KEGCO) 99.99%

EGCO Mining Co., Ltd.*

(EM) 70.00%

EGCO Joint Ventures & Development Co., Ltd.

(EGCO JD) 50.00%

EGCO Green Energy Co., Ltd.

74.00%

Gulf Electric PCL.

(GEC) 50.00%

Egcom Tara Co., Ltd.

(ET) 70.00%

General Public 52.93%

EGCO Engineering & Service Co., Ltd.

(ESCO) 99.99%

CLP Power Projects (Thailand) Limited

20.75%

Rayong Electricity Generating Co., Ltd.

(REGCO) 99.99%

Electricity Generating Authority of Thailand

(EGAT) 25.43%

Electricity Generating PCL. (EGCO)Electricity Generating PCL. (EGCO) Thai LNG Power Corporation Ltd.

(TLPC) 100.00%

Crown Property Bureau (CPB Equity Co., Ltd.)

0.89%

EGCO International (BVI) Ltd.

(EGCO BVI) 100.00%

Eastern Water Resources Development

and Management PCL. (EASTW) 20.00%

Group Structure and Shareholders(as of December 31, 2001)

2929

Agro Energy Co., Ltd.

(AE) 99.99%

Gulf Co-generation Co., Ltd.

(GCC) 100.00%

Amata-EGCO Power Ltd.

(AEP) 29.70%

Roi-Et Green Co., Ltd.

94.77%

Gulf Siam City Generation Co., Ltd.

(GSC) 100.00%

Alto Power Management Corporation

(APMC) 60.00%

Alto Power Management Corporation

(APMC) 60.00%

APMC International Ltd.

100.00%

EGCO Energy International (Denmark)

Limited Aps (EGCO Denmark) 100.00%

Gulf Power Generation Co., Ltd.

(GPG) 60.00%

Alsing Power Holding Inc.

80.00%

Alsing Power Holding Inc.

80.00%

Southern Philippines Power Corporation

(SPPC) 55.00%

Amata Power - ESCO Service Co., Ltd.

(AMESCO) 50.00%

TLP Cogeneration Co., Ltd.

(TLP COGEN) 40.00%

Western Mindanao Power Corporation

(WMPC) 55.00%

Conal Holdings Corporation (Conal)

40.00%

Amata Power (Bang Pakong) Ltd.

(APB) 30.00%

Northern Mindanao Power Corporation

(NMPC) 50.78%

Northern Mindanao Power Corporation

(NMPC) 50.78%

Note : * On November 7, 2001, EM in its extraordinary Shareholder Meeting No. 2/2001

passed the resolution to dissolute EM, and on November 29, 2001

EM has already filed for the dissolution of the company, it is on the process of liquidation.

40.00%

30

Organization Chart

30

MIS Division

Energy BusinessDivision

Power Plant BusinessDivision

Engineering Business Division

SEVP-NewBusiness Ventures

Corporate AffairsDivision

Accounting & BudgetDivision

Project FinanceDivision

Finance Division

Legal Division

Public Relations Division

Corporate Strategic Planning Division

Corporate SecretaryDivision

Internal Audit Division

EVP-Finance

SEVP-Finance andAdministration

PresidentPresidentExecutive Committee

Audit Committee

Remuneration Committee

Nominating Committee

Board of Directors

31

Board of Directors

Education– M.Sc. (Economics), Thammasat University– M.Sc. (Economics Planning and Development), Vanderbilt University, USAWorking Experience– Director-General, the Fiscal Policy Office, Ministry of Finance– Inspector-General, Ministry of Finance– Member of the Board of Directors of Export-Import Bank of Thailand– Director, Bank of ThailandCurrent Position– Deputy Permanent Secretary, Ministry of Finance– Chairman, Bang Chak Petroleum PCL.– Director, Electricity Generating Authority of Thailand– Director, Financial Institutions Development Fund– Director, the Thai Military Bank PCL.

Mr. Aswin KongsiriAge 56

– Independent Director– Chairman, Audit Committee

– Nominating Committee Member– Remuneration Committee Member

Mr. Sommai PhaseeAge 58

– Chairman– Chairman, Remuneration Committee

– Chairman, Nominating Committee

Education– B.A. (Hons), Philosophy, Politics and Economics, Oxford University, England– Banff School of Advanced Management, Alberta, Canada– National Defence College, The National Defence Course for the Joint State-Private Sectors,

Class 6Working Experience– President, The Industrial Finance Corporation of Thailand– Chairman of Executive Board, Bangkok Bank of Commerce PCL.– Chairman, Bangkok Commercial Asset Management Co., Ltd.Current Position– Director & Executive Director, Siam Commercial Bank PCL.– Director & Executive Director, The Industrial Finance Corporation of Thailand

Mr. Boonshai JiwalaiAge 66

– Independent Director– Remuneration Committee Member

– Nominating Committee Member

Education– Training under Colombo Plan (Maintenance of Boiler and Steam Turbine)– Diploma, Psychological Operation Staff Course– Diploma, Mini MBA, Chulalongkorn University– Diploma, the Senior Executive Program, Sasin Graduate Institute of Business

Administration of Chulalongkorn University– B.Eng. (Mechanical Engineering), Chulalongkorn UniversityWorking Experience– President, Mining Business, Electricity Generating Authority of Thailand– Deputy Governor, Mining Business, Electricity Generating Authority of Thailand– Director, Mae Moh Mine, Electricity Generating Authority of Thailand– Division Chief of Turbine Maintenance, Electricity Generating Authority of Thailand– Power Plant Superintendent Region 3, Electricity Generating Authority of Thailand

Khunying NongkranChandhanayingyong

Age 68– Independent Director

– Audit Committee Member

Education– B.Sc.(Accounting), Chulalongkorn UniversityWorking Experience– Deputy Governor-Account & Finance, Electricity Generating Authority of Thailand– Advisor the Metro Machinery Co., Ltd.Current Position– Accountant and Executive Director-Administration, Sai Jai Thai Foundation

32

Education– L.L.B., Thammasat Unversity– Barrister-at-law, Thai Bar AssociationWorking Experience– Deputy Permanent Secretary for Justice– Permanent Secretary for JusticeCurrent Position– Permanent Secretary for Justice– Director, Electricity Generation Authority of Thailand

M.L. ChanaphunKridakorn

Age 58– Director

– Executive Committee Member

Mr. Somchai WongsawatAge 54

– Director

Education– Executive Education, Harvard Business School, Boston, USA– Master of Engineering (Water Resources Engineering), Asian Institute of Technology– B.Eng. (Irrigation Engineering), Kasetsart UniversityWorking Experience– Deputy Governor, Hydro Plant, Electricity Generating Authority of Thailand– Assistant Governor, Hydro Plant, Electricity Generating Authority of Thailand– Director, Corporate Planning Office, Electricity Generating Authority of ThailandCurrent Position– Deputy Governor, Policy and Planning, Electricity Generating Authority of Thailand

Ms. Angoon KamolyabutrAge 60

– Director

Education– Diploma Advanced Management Program : the International Senior Management Program

(AMP ; ISMP), Harvard Business School, USA– Diploma, the Senior Executive Program, Sasin Graduate Institute of Business Administration of

Chulalongkorn University– Diploma, the Financial Management Program Organized by Carl Duisberg Gessellshat E.V., Germany– B.Sc.(Accounting), Chulalongkorn UniversityWorking Experience– Assistant Governor-Accountant and Finance, Electricity Generating Authority of Thailand– Treasurer, Electricity Generating Authority of ThailandCurrent Position– Deputy Governor, Account and Finance, Electricity Generating Authority of Thailand– Director, Rayong Electricity Generating Co., Ltd.– Director, Khanom Electricity Generating Co., Ltd.– Director, EGCO Engineering & Service Co., Ltd.– Director, Thai LNG Power Corporation Ltd.

Mr. J.S. Dickson LeachAge 55

– Director

Education– MBA, Columbia University, USAWorking Experience– Held directorships/senior positions in a variety of industrial companies associated with

Sir Elly Kadoorie & Sons LimitedCurrent Position– Vice Chairman, CLP Holdings Limited, Hong Kong– Chairman, CLP Power International Limited, Hong Kong– Chairman, CLP Power China Limited, Hong Kong– Chairman, Tai Ping Carpets International Limited– Director, Carpets International Thailand Limited– Director, The Hongkong & Shanghai Hotels Limited

Education– M.Sc. (Mechanical Engineering) University of Alabama, USAWorking Experience– Managing Director, Electricity Generating PCL.– President, Mining Business, Electricity Generating Authority of Thailand– Assistant Governor, Mae Moh Power Plant, Electricity Generating Authority of ThailandCurrent Position– Director, P&W Consultant Co., Ltd.– Director, KAF Co., Ltd.– Managing Director, Aqua Plus Co., Ltd.– Independent Director and Member of Audit Committee, Public Warehouse Organization,

Ministry of Commerce

Mr. Worawit KhamkanistAge 62

– Independent Director– Audit Committee Member

33

Education– M.A. (1st Class Hons), Cambridge University, UKWorking Experience– Project Manager for CLP’s generating plant projects– General Manager for CLP’s generation business group and

later for CLP strategic development– Director of various CLP Group companiesCurrent Position– Operations Director, CLP Power International Limited, Hong Kong– Director, Rayong Electricity Generating Co., Ltd.– Director, Khanom Electricity Generating Co., Ltd.– Director, EGCO Engineering & Service Co., Ltd.

Mr. Thomas WattersAge 53

– Director– Executive Committee Member

Mr. Peter Albert LittlewoodAge 50

– Director

Education– Diploma in Electrical and Electronic Engineering, Napier University, Edinburgh ScotlandWorking Experience– Director for Business Development S.E. Asia and Country Director Thailand,

PowerGen InternationalCurrent Position– Business Development Director, CLP Power International– Director, Gulf Electric PCL.

Mr. Sitthiporn RatanopasAge 53

– Director and President– Chairman, Executive Committee

Education– Executive Education, Harvard Business School, Boston, USA– MM., SASIN Graduate Institute of Business Administration, Chulalongkorn University– B.Eng. (Electrical), Chulalongkorn UniversityWorking Experience– Deputy Governor-Policy Planning, Electricity Generating Authority of Thailand– Assistant Governor, Electricity Generating Authority of Thailand– Director, Demand Side Management Office, Electricity Generating Authority of ThailandCurrent Position– Chairman, Rayong Electricity Generating Co., Ltd.– Chairman, Khanom Electricity Generating Co., Ltd.– Chairman, EGCO Engineering & Service Co., Ltd.– Chairman, Thai LNG Power Corporation Ltd.– Director and Chairman of the Executive Board, Gulf Electric PCL.

Education– M.Sc. (Management Science & Engineering), Worcester Polytechnic Institute, USAWorking Experience– Energy Power Group, Irvine, USACurrent Position– Managing Director, CLP Power International Limited, Hong Kong

Mr. Kenneth W. ObergAge 53

– Director– Remuneration Committee Member

– Nominating Committee Member

34

Executive Committee

Name Position Starting Date

Mr. Sitthiporn Ratanopas Chairman January 23, 2000M.L. Chanaphun Kridakorn Committee member July 1, 2001Mr. Thomas Watters Committee member April 28, 2000* Appointed to be the chairman of the committee on July 1, 2000

Audit Committee


Mr. Aswin Kongsiri Chairman July 1, 2001Mr. Worawit Khamkanist Committee member July 1, 2001Khunying Nongkran Chandhanayingyong Committee member September 28, 1999



Mr. Sommai Phasee Chairman January 25, 1999Mr. Aswin Kongsiri Committee member July 1, 2001Mr. Boonshai Jiwalai Committee member July 1, 2001Mr. Kenneth W. Oberg Committee member January 25, 1999



Mr. Sommai Phasee Chairman January 25, 1999Mr. Aswin Kongsiri Committee member July 1, 2001Mr. Boonshai Jiwalai Committee member July 1, 2001Mr. Kenneth W. Oberg Committee member January 25, 1999

Subcommittee Member (as at December 31, 2001)

Executive Officers

1. Mr. Sitthiporn RatanopasPosition – Director and President

– Chairman, Executive Committee

2. Dr. Siwanan Na NakornPosition – Senior Executive Vice President-

New Business VenturesAge – 56Education – Ph.D. (Electrical Engineering),

Iowa State University, USAWorking Experience – Chief, Special Energy Division,

Thermal Power Engineering Department,Electricity Generating Authority of Thailand

Current Position – Director, Rayong Electricity Generating Co., Ltd.– Director, Khanom Electricity Generating Co., Ltd.– Director, EGCO Engineering and Service Co., Ltd.– Director and Managing Director,

Thai LNG Power Corp. Ltd.– Director, EGCO International (BVI) Ltd.

1 2

34

35

3. Mr. Machima Kunjara Na AyudhyaPosition – Senior Executive Vice President-Finance and

AdministrationAge – 53Education – M.A. (Economics), Pittsburg State University, USA

– B.A. (Economics), Thammasat UniversityWorking Experience – Director of Real Property Renting Management

Division, the Treasury Department, Ministry of FinanceCurrent Position – Director, Rayong Electricity Generating Co., Ltd.

– Director, Khanom Electricity Generating Co., Ltd.– Director and Executive Director, Krung Thai Bank PCL.– Director, the Stock Exchange of Thailand– Director, Listed Companies Association

4. Ms. Pikul SrisastraPosition – Executive Vice President- FinanceAge – 52Education – M.Sc. (Accounting), Chulalongkorn UniversityWorking Experience – Deputy Managing Director-Finance and

Administration, Rayong Electricity GeneratingCo., Ltd.

– Manager-Finance Division, Rayong ElectricityGenerating Co., Ltd.

– Assistant Chief-Bonds, Securities andLoan Division, Finance Department,Electricity Generating Authority of Thailand

Current Position – Deputy Managing Director-Finance andAdministration, Khanom Electricity Generating Co., Ltd.

– Director, EGCO Joint Ventures & Development Co., Ltd.– Director, Amata-EGCO Power Co., Ltd.

5. Dr. Sakul PochanartPosition – Senior Vice President-Power Plant Business DivisionAge – 44Education – D.Sc. (Civil Engineering), Sever Institute of

Technology, Washington University, USAWorking Experience – Chief, Civil Engineering Unit, Oil and

Gas-Fired Power Plant Engineering– Project, Stage 1, Electricity Generating Authority

of Thailand– Head, Special Structural Design Section,– Civil Engineering Department, Electricity Generating

Authority of ThailandCurrent Position – Director, EGCO Green Energy Co., Ltd.

– Director, Gulf Co-generation Co., Ltd.– Acting Manager-SPP Business Division, EGCO Joint

Ventures & Development Co., Ltd.

6. Mr.Voravit PotisukPosition – Senior Vice President -Engineering

Business DivisionAge – 44Education – B.A. (Electrical & Communication Engineering),

Chulalongkorn University– MBA., The University of The Thai Chamber of

CommerceWorking Experience – Vice President (Power Plant Project),

Sri U-Thong Co.,Ltd.– Chief, Electrical Project Division,

South Bangkok Combined CyclePower Plant Project Block 1,Electricity Generating Authority of Thailand

Current Position – Director, EGCO Green Energy Co., Ltd.– Director, TLP Cogeneration Co., Ltd.– Acting Manager-Engineering Business Division,

EGCO Joint Ventures & Development Co., Ltd.

7. Dr. Gumpanart BumroonggitPosition – Senior Vice President-Energy Business DivisionAge – 37Education – Ph.D. (Electrical Engineering), Southern Illinois

University at Carbondale, Illinois, USAWorking Experience – Manager-Project Development, Energy

Business Division, Electricity Generating PCL.

8. Mr. Kiatichai SiljitsongPosition – Senior Vice President-MIS DivisionAge – 50Education – M.Eng. (Energy Technology), Asian Institute of

TechnologyWork Experience – Chief, Special Energy Planning and Development

Division, Development and Planning Department,Electricity Generating Authority of Thailand

– Assistant Chief of Special Energy EngineeringDivision, Thermal Power EngineeringDepartment, Electricity Generating Authority ofThailand

9. Ms. Chantima RugpongPosition – Senior Vice President-Corporate Affairs DivisionAge – 42Education – MBA, The National Institute of Development

Administration– B.A. (English), Silapakorn University

Work Experience – Manager-Procurement and Service Section,Corporate Affairs Division,Electricity Generating PCL.

– Administrative Officer Level 8, acting asthe Manager of the Bidding Document Section,Lam Takhong Hydro Power PlantConstruction Project,Electricity Generating Authority of Thailand

10. Ms. Chutiporn PrayongPosition – Senior Vice President-Finance DivisionAge – 55Education – B.Sc. (Accounting), Thammasat UniversityWork Experience – Chief, Credits and Contracts Division,

Treasury Department,Electricity Generating Authority of Thailand

– Assistant Chief, Bond Securities and LoansDivision, Treasury Department,Electricity Generating Authority of Thailand

Current Position – Director, EGCO Green Energy Co., Ltd.– Director, TLP Cogeneration Co., Ltd.

35

34

36

11. Mr. Piya JetasanonPosition – Senior Vice President-Project Finance DivisionAge – 44Education – MBA, Ramkhamhaeng University

– B.A. (Economics), Thammasat UniversityWorking Experience – Manager-Finance Section, Khanom Electricity

Generating Co., Ltd.– Head of Financial Policy Section, Bonds,

Securities and Loans Division,Treasury Department,Electricity Generating Authority of Thailand

Current Postion – Manager-Finance Division, Khanom Electricity

Generating Co., Ltd.

12. Mr. Suvapan ChomchalermPosition – Senior Vice President-Accounting and Budget

DivisionAge – 40Education – M.Sc. (Accounting), Thammasart UniversityWorking Experience – Manager-Accounting and Budget Analysis

Section, Accounting and Budget Division,Electricity Generating PCL.

13. Ms. Vasana VongpromekPosition – Senior Vice President-Corporate Secretary

DivisionAge – 43Education – MBA, Kasetsart University

– B.A. (English) (Hons.), Chulalongkorn UniversityWorking Experience – Administrative Officer Level 7,

Development and Planning Department,Electricity Generating Authority of Thailand

14. Ms. Jutatip MahaveraPosition – Senior Vice President-Internal Audit DivisionAge – 49Education – Public and Private Management, University of

Texas at Austin, USA (Hubert H. HumphreyFellowship Program 1993-1994)

– M.Sc. (Accounting) Thammasat UniversityWorking Experience – Assistant chief, Audit Division 1,

Internal Audit Department,Electricity Generating Authority of Thailand

15. Mr. Arthaporn VatanasutiPosition – Senior Vice President-Legal DivisionAge – 50Education – MM., SASIN Graduate Institute of Business

Administration, Chulalongkorn University– LL.M., Temple University, USA– LL.B., Chulalongkorn University

Working Experience – Assistant chief, Legal Division,Legal Department,Electricity Generating Authority of Thailand

– Head, Foreign Contract Verification andAnalysis Section, Legal Division,Electricity Generating Authority of Thailand

16. Mr. Wuthichai SithipreedanantPosition – Senior Vice President-Public Relations DivisionAge – 39Education – M.A. (Public Administration),

Chulalongkorn University– B.A. (Communication Arts),

Chulalongkorn UniversityWorking Experience – Assistant Superintendent,

Public Relations Department,Electricity Generating Authority of Thailand

– Administrative Officer Level 7, Public RelationsDivision, Public Relations Department,Electricity Generating Authority of Thailand

1015

8

971611

141312

56

36

37

Directors’ Remuneration

1. Explicit Remuneration1.1 Total Remuneration of all Board Members

(unit : Baht)

Year 2001

Remuneration Members Total Remuneration

Bonus 16 1/ 6,157,730.00

Meeting Allowance 17 1/ 5,826,000.00

Total 11,983,730.00

1/ Four directors resigned in 2001 while three directors who resigned in 2000 were entitled to bonus remuneration in 2001.

1.2 Total Remuneration of the Executive Board and the Management

(unit : Baht)

Year 2001

Remuneration Executive Board (6 Persons) 1/ Management (5 Persons) 2/ Total Remuneration

Total Salary – 14,271,000.00 14,271,000.00

Bonus – 7,550,312.50 7,550,312.50

Meeting Allowance 3,237,677.00 – 3,237,677.00

Total 3,237,677.00 21,821,312.50 25,058,989.50

1/ In 2001, one director resigned while two directors retired by the expiry of their term.2/ Since two Senior Executive Vice Presidents were seconded to be the Managing Directors of REGCO and KEGCO and

were paid by those companies, EGCO accounted for the remuneration of only three executives.

1.3 Total Remuneration of REGCO Management

(unit : Baht)

Year 2001

Remuneration Board of Directors (11 Persons) Management (8 Persons) Total Remuneration

Total Salary – 12,488,787.10 12,488,787.10

Bonus 1,390,500.00 4,216,131.33 5,606,631.33

Meeting Allowance 1/ – – –

Total 1,390,500.00 16,704,918.43 18,095,418.43

1/ EGCO accounted for the meeting allowance of REGCO Board.

1.4 Total Remuneration of KEGCO Management

(unit : Baht)

Year 2001

Remuneration Board of Directors (11 Persons) Management (7 Persons) Total Remuneration

Total Salary – 12,331,859.55 12,331,859.55

Bonus 1,320,970.00 4,823,815.94 6,144,785.94

Meeting Allowance 1/ – – –

Total 1,320,970.00 17,155,675.49 18,476,645.49

1/ EGCO accounted for the meeting allowance of KEGCO Board.

38

2. Other RemunerationWarrant

The resolution of the board of Directors at the Meeting No.7/

1996 on July 26, 1996 considerably allocated the warrant of

100,000 units within the period of 5 years for the employees of

the company and its subsidiaries, which EGCO has more than

75% of voting rights. The warrants were allocated to the Executive

Management (President and Senior Executive Vice President of

the company and its subsidiaries) for the total of 1,000,000 units.

The other 9,000,000 units, is allocated to the division managers

and the rest of employees. The employees who have the right to

exercise the warrants shall meet the following qualifications:

A) As of August 31, 1996, any full time employees or

employees under probation of EGCO and its subsidiaries,

which EGCO has more than 75% of voting rights, shall

have the right to receive the warrants in the first year.

B) Employee who officially starts after July 31, 1996 will

have the right to receive allocation in the following year

or in first year of service if the process can be completed

in time. The warrants will be offered until the end of the

program or all the reserved shares are fully subscribed.

C) On April 17 of each year, the Employee who is in the

service less than 6 months is not eligible to receive any

warrant in that year, but they will receive the warrants in

the following year.

D) In case that any employee, who holds more than one

title in the company and/or its subsidiaries, will receive

the offered warrant in the amount based on the

represented title that earns the salary.

E) The methodology of the allocation depends on the year

in service, the position, and the salary.

F) On the allocation date, the person who has the right to

receive the warrants must be the company of the

company or its subsidiaries.

Moreover, the Board of Directors at the Meeting No. 3/

2001, held on April 30, 2001, passed the resolution to allocate

the fifth-year warrants under Employee Stock Ownership

Program (ESOP) to employees of EGCO and its subsidiaries.

The exercised date is scheduled on July 17, 2001 or on the first

anniversary from warrants’ issued date (June 17, 2002). Thus,

on July 17, 2001, employee who is in the service less than 6

months is not eligible to receive any warrants in the fifth year,

which is the last year of the program.

Since January 21, 1997, EGCO has issued warrants for 5

years to the employees of the company and its subsidiaries under

the Employee Stock Ownership Plan (ESOP), which was approved

by The office of the Securities and Exchange Commission (SEC).

The total issued warrants were 7,338,600 units which has been

allocated to the management of EGCO and its subsidiaries for

1,509,600 units, which accounted for 20.57% of the total issued

warrants.

In 2001, the company allocated 100,700 units of warrants

to the Executive Management. The details are as follows:

1. Mr. Sitthiporn Ratanopas 26,200 units

2. Dr. Siwanan Na Nakorn 22,100 units

3. Mr. Machima Kunjara Na Ayudhya 21,300 units

4. Mr. Anan Gee-em 16,400 units 1/

5. Mr. Sinchai Nerngjumnong 14,700 units 1/

1/ The allocated amounts are based on the position of Managing Director

of REGCO and KEGCO, respectively.

Since June 17, 2001, EGCO’s warrant holders exercised

their right to subscribe 878,400 ordinary shares in the fifth year.

Provident Fund

In 2001, the company and its subsidiaries paid the

provident fund to executive management as follows:

Year 2001

Company Members Provident fund

EGCO 3 943,552.50

REGCO 8 840,683.00

KEGCO 7 758,852.00

39

Management The amount of warrants 1/

Fourth Year Fifth Year Add

2000 2001 (Less)

Mr. Sommai Phasee – – –

Mr. Boonshai Jiwalai – – –

Khunying Nongkran – – –

Chandhanayingyong

Mr. Worawit Khamkanist 27,600 2/ – –

M.L. Chanaphun Kridakorn – – –

Ms. Angoon Kamolyabutr – – –

Mr. Aswin Kongsiri – – –

Mr. Somchai Wongsawat – – –

Mr. J.S. Dickson Leach – – –

Mr. Kenneth W. Oberg – – –

Mr. Peter Albert Littlewood – – –-

Mr. Thomas Watters – – –

Mr. Sitthiporn Ratanopas – 26,200 26,200

Dr. Siwanan Na Nakorn 23,300 22,100 (1,200)

Mr. Machima Kunjara Na Ayudhya 22,500 21,300 (1,200)

Mr. Anan Gee-em 19,000 16,400 (2,600)

Mr. Sinchai Nerngjumnong 15,500 14,700 (800)

The exercise of warrant holders

Fourth Year Fifth Year

2000 2001

1st 2nd 1st 2nd

May 17, 2000 April 16, 2001 July 17, 2001 June 17, 2002

– – – –

– – – –

– – – –

No exercise No exercise – –

– – – –

– – – –

– – – –

– – – –

– – – –

– – – –

– – – –

– – – –

– – 26,200 –

– 23,300 –

22,500 – –

– 19,000 16,400 –

– 15,500 14,700 –

The exercise of warrantson June 17,2002

The exercise of warrantson June 17,2002

Notes : 1/ EGCO issued warrants on ordinary shares for employees.

2/ To be alloted while being the President.

Other Remuneration of Management

Taking part in campaign to

raise awareness about the

importance of watershed

forest, which is crucial to

the survival of all living things.

It is also the origin of water

that nurtures agriculture,

the source of food for

people all over the world.

EGCO seriously monitors an

effect to the environment.

All the waste water from

our production is treated

by modern technology.

We have a regular check-up

to make sure that we meet

the safety standards in every

process of our operation.

EGCO is determined to generate the optimumbenefit for every party involved under

the good governance principles. Our sincerityis evident from the devotion we have shown

in the activities we have done so far.

FloorThe floor is a support, a foundation. It is comparable to water, which is a base of life.

Water not only nourishes all life forms but also helps create a balance.

42

1. PrincipleEGCO conducts the business under the oversight of the

Board of Directors with the full accountability to the shareholders

and other stakeholders, as well as its commitment towards the

environment, community and country to bring in the mutual benefits

for the whole. Such belief has transformed into practice, right

from the incorporation of the Company in 1992 and becomes the

unique way of life of EGCO Group.

The operation and the management of the Company always

conforms to the Articles of Association, the Securities and

Exchange Market Act, SET’s Code of Best Practices for Directors

of Listed Companies and the guidelines for Good Corporate

Governance. Part of the inherited governance of the Company is

to ensure the strict compliance with the Code of Conduct which is

issued and applied to the Management, Employees, as well as

Directors of the Company with the objectives of enhancing

efficiency, effectiveness, and of adding economic value to

optimize shareholders’ wealth. Such continuous practice and

improvement in line with the Good Corporate Governance resulted

in the Company’s being awarded the prestigious Best Practices

on Corporate Governance Award Contest for 2001, hosted by

the Institute of Internal Auditors-Thailand in collaboration with

the Stock Exchange of Thailand and Thai Institute of Directors

Association (IOD).

2. Shareholders: Right and EqualityThe Company recognizes and respects the shareholders’

rights. The shareholders can safeguard their investment in the

company via the election of the shareholders, voting and express-

ing opinions and comments on the Company’s major issues such

as the amendment of the articles of association, capital increase

and debenture issuance. Besides, the shareholders have the

fundamental rights to access and verify the information which are

disclosed on a reliable, timely and complete basis.

3. Information Disclosure and TransparencyThe Company assures that information disclosure,

transparency and business ethics are the factors to bolster the

company’s reputation as well as the beliefs of the shareholders.

The Company then conducts the business with transparency

and discloses the complete and timely information with the

Board of Directors’ ReportCorporate Governance

internal mechanism to ensure the reliability of the information.

4. Creating Added ValuesThe Company continues to develop the efficient manage-

ment process. As a result, the shareholders will gain the consis-

tent and sustainable return on investment. The Company strictly

adheres to the concept of good governance which is cascaded

down to the subsidiaries via the adoption of the internationally

accepted key performance indicators. Moreover, the Company

properly appropriates return to shareholders, the board of

directors, the management and the employees, which leads to

optimal shareholders’ wealth.

5. Board of DirectorsThe Board of Directors is composed of thirteen directors

i.e. four independent directors, eight outside directors and one

executive director, the President. The Board is well mixed in term

of age, skill, experience and expertise. In addition, the Board has

proved to have independent judgement with adequate time and

effort for the company governance. The list of the directors and

their meeting attendance is as shown in the table on page 43.

Board Remuneration

The remuneration of the board of directors is comparable

with the industry and adequate to attract and retain the high

capable directors at a given point in time. The shareholders’

meeting determines the directors’ remuneration and it is the

Company’s policy to disclose the remuneration paid to the

directors.

Board Meetings

In 2001, seven Board meetings were held. The meetings

were called every two months with the meeting scheduled

set in advance. Each meeting usually took 3-4 hours. The

meetings are generally held at the head office, and occasionally

upcountry. The secretary to the Board served the Board

members the written notice, the agenda and the related

documents prior to the meeting date as prescribed by law to

allow the directors enough time to review all matters before the

meeting. The written records of the meeting minutes, approved

by the Board and certified by the Chairman have been properly

kept and available for inspection by the directors and other

relevant parties.

43

Board Duties and Responsibilities

The Board is accountable for provision of important policy

framework and scrutiny and approval of the business plan, the

annual budget, project investment and termination, financial

decision, company structure, appointment of directors in

subsidiary and associated companies, appointment of senior

management, as well as setting a clear scope of authority and

accountability of Board Committees and President. The Board

also continuously monitored the Company’s operating perfor-

mance and results to ensure consistency with the approved

plans and targets.

Training and Instilling Knowledge

The Company encourages and supports the training and

education of the directors through IOD to enhance the pro-

fessionalism and efficiency of the directors in governing the

business. Besides, directors can exchange their experience and

update themselves on the governance information.

6. Board CommitteesThe Board committees comprising directors with appro-

priate knowledge and skills have been formed to help improve

the efficiency of the board. This was because the committees

members could investigate and discuss the issues in detail.

However, the entire board and every individual director still

holds collective responsibility and accountability for any matter

that arises.

The Board has appointed the following committees with

specific scope of responsibility to assist company oversight.

Audit Committee

The Audit Committee is composed of three independent

directors, each serving a three-year term with the authority

entrusted by the Board as described in the Audit Committee

Charter, which is reviewed annually to ensure the consistency

with the changing internal and external environment. In summary,

the Audit Committee’s mission is to review the accounting policy,

the financial reporting system and the information disclosure in

conformance with accounting standards. The Audit Committee

is also responsible for reviewing the internal control system to

ensure compliance with governing laws and company regulations,

nomination of the auditor, approval of the audit fee, and reviewing

the policy and approach in new project investment and risk

management.

Executive Committee

The Executive Committee consists of three members whose

term of service is three-year each. The Executive Committee

endorses recommendations to the Board or approves actions

within its delegated authority. The Committee meets regularly and

the meeting results are reported to the Board.

1 resigned as the Chairman on April 30, 2001 and as the director on June 22, 20012 appointed the Chairman on April 30, 2001 3 retired by rotation on April 30, 20014 resigned as director on may 19, 2001 5 retired by rotation on April 30, 2001

Board of Directors

Names Position Appointment Date Meeting Attendance

Mr. Viravat Chalayon 1 Chairman April 28, 2000 3/3

Mr. Sommai Phasee 2 Chairman May 12, 1992 7/7

Mr. Sirin Nimmanahaeminda 3 Independent Director May 12, 1992 2/2

Mr. Boonshai Jiwalai Independent Director October 31, 1996 7/7

Khunying Nongkran Chandhanayingyong Independent Director April 29, 1999 7/7

Mr. Worawit Khamkanist Independent Director April 29, 1997 7/7

Mr. Aswin Kongsiri Independent Director June 25, 2001 4/4

Mr. Chaiwat Wongwattanasan 4 Director May 12, 1992 3/3

Dr. Khien Vongsuriya 5 Director October 1, 1998 2/2

Mr. Somchai Wongsawat Director June 25, 2001 4/4

M.L. Chanaphun Kridakorn Director April 30, 2001 5/5

Ms. Angoon Kamolyabutr Director April 30, 2001 5/5

Mr. J.S. Dickson Leach Director July 24, 1998 5/7

Mr. Kenneth W. Oberg Director July 24, 1998 7/7

Mr. Peter Albert Littlewood Director February 22, 1999 7/7

Mr. Thomas Watters Director March 20, 2000 7/7

Mr. Sitthiporn Ratanopas Director March 20, 2000 7/7

44


The Remuneration Committee is composed of four

members with a three-year term of service. The Committee is

empowered to determine the compensation package for

directors, Group Committee members and EGCO group’s top

management as well as the meeting allowance, annual bonus,

guidelines for the top management’s annual compensation, and

other tangible and intangible fringe benefits.


The Nominating Committee comprising four directors with

a three-year term of service, has the authority to determine the

structure and the composition of the Board of Directors, to

nominate qualified persons to be EGCO’s and Group companies’

directors, to nominate the EGCO President, as well as to set the

succession plan criteria.

The Board of Directors is well aware of their responsibilities

on company governance for sustainable growth. This embraces

the adherence to the good governance concept, business ethics,

safeguard of shareholders’ wealth, risk mitigation, creation of

shareholders’ wealth to act in Good Corporate Governance to

oversee EGCO, towards sustainable growth by upholding high

ethical business standards of corporate governance as well as

recognition the shareholders’ rights, mitigating risk, creating added

values, conducting the company with transparency, information

disclosure and can investigate.

7. Internal ControlThe Board of Directors entrusted the Audit Committee

with the responsibility to review the effectiveness and efficiency

of the internal control systems established by the management to

mitigate risks, to safeguard the assets of EGCO and its subsidiary

from loss and/or mistreatment, and to ensure the correct and

reliable financial reporting.

The EGCO internal control system comprises of the

following elements:

Control Environment

EGCO group has implemented the Code of Conduct,

which applies to both directors and employees. The Code of

Conduct specifies recommended practices in conformance with

governing laws and regulations.

EGCO has improved its organization structure to support

growth with clear scope of responsibility especially on the

investment in new projects. EGCO’s regulations have also been

reviewed and updated periodically to cope with change and to

match the current situation.

Risk Assessment and Management

The Risk Management Committee has been established

to account for the continuous, internationally accepted and

systemmatic implementation of risk management in EGCO Group.

In this regard, risk management manual was formulated to offer

details of recommended practices.

In 2001, risk management workshops have been conducted

to educate all level of employees on how to identify and prioritize

risks of EGCO group. In addition, responsible persons are assigned

to account for risk mitigation and control process with continuous

monitoring procedure.

Control Activities

EGCO’s table of authority has been updated with

segregation of duties between authorization persons, transaction

recorders, and custodian as guidelines for all employees to

ensure that all business conducts met the obligation as required

by laws or governing body.

Information and Communication System

EGCO has consistently provided updated and timely

information to all level of management and the Board of directors.

The efficient communication systems has been provided to

ensure that all level of employees understand EGCO’s policies

and regulations. Responsible units were set up to provide

information to outside relevant parties such as investors and

governing body. EGCO focuses to make the best use of the

information management system to ensure the accurate, timely,

and safe access of information.

Monitoring and Evaluation

Monitoring systems has been set up to ensure the efficient

and effective performance to meet the short and long term

corporate objectives. Corporate performance appraisal has been

implemented to evaluate the overall performance of EGCO and

the subsidiaries.

The Internal Audit Division, which directly reports to the

Audit Committee, accounts for ensuring the conformance of the

operations with the related laws and regulations. The internal

auditing also assess the adequacy, efficiency and effectiveness

of internal control systems.

In auditing the financial statements, the chartered auditor

reviews the internal accounting control system to determine the

approach, timeframe and scope of work. In 2001, the auditor

did not find any significant area of concern with respect to the

internal accounting control system.

45

EGCO has the related party transactions with persons who may

have conflict of interests with the company as follows:

Power Purchase and Major MaintenanceEGCO’s affiliates, REGCO, KEGCO and GCC have related

party transaction with a person who may have conflict of interests,

i.e. EGAT, a major shareholder. The details are as follows:

Related party transactions between REGCO and EGAT

1. REGCO sells electricity to EGAT under the Power Purchase

Agreement (PPA) dated October 3, 1994. The agreement was

effective on December 7, 1994 for the period of 20 years, and

the first amendment to PPA dated January 30, 1998 was effective

on July, 1997.

2. REGCO signed the Major Maintenance Agreement

(MMA) with EGAT dated November 18, 1999 to extend for the

latter to provide major maintenance services, repair services,

administrative services, and additional services related to its

power plant for the period of 6 years starting from December 7,

2000.

Related party transactions between KEGCO and EGAT

1. KEGCO sells electricity to EGAT under PPA dated May

14, 1996. The agreement was effective on June 19, 1996 for the

period of 15 and 20 years, and the First Amendment to PPA dated

January 30, 1998 was effective on July 1997.

2. KEGCO has entered into the MMA dated May 14, 1996

with EGAT for the latter to provide major maintenance services,

repair services, administrative services, and additional services

related to its power plant. The agreement was effective on June

19, 1996 for a period of 6 years.

The related party transaction of REGCO and KEGCO with

EGAT is in accordance with the agreeable price as determined in

the PPA and MMA, which have been reviewed by National Energy

Policy Office and approved by the cabinet.

Related party transactions between GCC and EGAT

GCC has entered into PPA with EGAT in 1998. According to

the agreement, GCC must start to sell electricity to EGAT within

September 1998, with such sales quantity and electricity rate in

compliance with the agreement. The agreement is effective for a

period of 21 years, and GCC has pledged bank guarantees as

collateral for the cancellation in the amount of Baht 82 million.

This guarantee will be received on maturity.

The related party transaction of GCC with EGAT in

accordance with agreeable price as determined in the PPA,

which is for all Small Power Producers.

The Related PartyTransactions with

Persons who may haveConflict of Interests

with the Company

46

The Value of Related Party Transaction

Lists REGCO KEGCO GCC2001 2001 2001

Transactions

1. Sales of Electricity 4,900 3,738 725

2. Major Maintenance Expenses 221 88 -

Outstanding Balance

1. Trade Account Receivable 867 531 65

Unit : MB

LoanEGCO provides the loan to AEP, EGCO JD’s associate, as

approved by the Board of Director of EGCO. The details are

disclosed in the note to the consolidated and company financial

statement for the year ended December 31, 2001 that the loans

were under the normal commercial terms and conditions.

As at December 31, 2001, the outstanding amount is

32.49 Million Baht.

CommitmentsEGCO has commitments under the Sponsor Support

Agreements, which were made in respect of loans of its

subsidiaries and associates, and performance bonds of its

subsidiary on behalf of EGCO. The details are as follows:

1. EGCO has commitment under the Sponsor Support

Agreement, which was made in respect of AEP’s loan, in the

amount of 30% of total obligations for the following supports:

– Take-or-pay support under the Gas Sale Agreement

– Reserve account support

– Purchase of gas compressors

– Cash overrun support not exceeding US Dollar 23.77

million

In 2001, the commitment amount under the Sponsor

Support Agreements was approximately US Dollar 4.95 million

and it will gradually decrease for the period of 14 years starting

from February 10, 1997.


Agreement, which was made in respect of loan of Egcom Tara for

cost overrun and/or Cash deficiency. The total obligations will not

exceed Baht 51 million. EGGO, holds 70% stakes in Egcom Tara,

will be responsible for Baht 35.7 million.


Agreement, which was made in respect of loan of TLP COGEN,

for cost overrun and/or cash deficiency. The total obligations are

Baht 250 million. According to EGCO’s proportion in TLP COGEN,

EGGO will be responsible for Baht 200 million.


Agreement in respect of loan of Roi-Et Green. for cost overrun.

The total obligations are not exceeding Baht 60 million. As EGCO

holds 74% stakes in Roi-Et Green, EGCO will be responsible for

Baht 44.4 million.

5. EGCO has commitment for performance bonds of

ESCO on behalf of EGCO in the total amount of Baht 70 million.

The aforementioned transactions were approved by the

Board of Directors of EGCO and complied with EGCO’s

Investment Guideline, which determined that any Sponsor

Support or Contingent Liability of EGCO to its subsidiaries shall

not exceed 25% of EGCO’s equity in each subsidiary.

47

Management Discussion and Analysis

1. Report and Analysis of Operating ResultsEGCO was established on May 12, 1992 by EGAT in

accordance with the government’s policy on privatization to

allow private sector to participate in the business of generating

and trading electricity in order to decrease the government’s

financial burden.

EGCO is structured as a holding company for the purpose

of owning shares in the businesses which generate and trade

electricity and in other related energy businesses. The advantage

of the holding company is the ability to establish its subsidiaries

to finance new projects without liability to existing projects under

the good principle of Project Finance. EGCO also has the flexibility

to expand its businesses and administer its subsidiaries’ projects.

Main source of income is dividends received from the

company’s business group in form of shares of profits from

investments in its subsidiaries, joint ventures, and associates.

Currently, EGCO’ s main revenues still derive from its principal

subsidiaries, REGCO and KEGCO, which their operations are to

generate and sell electricity to EGAT under secured long-term

Power Purchase Agreement (PPA). Currently, the company has

also recognized revenues from its investments in other projects,

i.e. ESCO, Egcom Tara, GEC, Conal, AEP, and AMESCO.

1.1 Income Analysis

In 2001, the total revenues from EGCO, its subsidiaries

and joint ventures were Baht 11,612 million. Compared to 2000,

it increased by Baht 1,061 million or 10.06%. The details are as

follows;

1) Sales of electricity from the principal subsidiaries,

REGCO and KEGCO, amounted to Baht 8,638 million, representing

a slight decrease of Baht 244 million or 2.75%, as determined in

the capacity payment formula calculated on a “Cost Plus Basis”

under the PPA, and they were in line with the company’s projection.

Moreover, REGCO and KEGCO received bonuses from achieving

higher than targeted Equivalent Availability Factor (EAF) in case of

REGCO and having actual available hours, higher than Contracted

Available Hour (CAH), over 450 hours in 1 year or accumulated

hours, higher than CAH, over 700 hours in case of KEGCO. In

2001, those bonus amounts were Baht 108 million and Baht 7

million, respectively, which were included in the electricity revenues.

2) Shares of electricity sales from joint ventures, were

from GEC in the amount of Baht 793 million, increasing by Baht

436 million or 122.13%, and Conal in the amount of Baht 1,004

million, increasing by Baht 662 million or 193.57%. Main reason

is that EGCO recognized the revenues from GEC and Conal for the

whole year of 2001 while it recognized the revenues from GEC for

6-month period and from Conal for 4-month period in 2000.

3) Sales of water from a subsidiary, Egcom Tara, was

Baht 92 million, as determined in the formula under 30-year

agreement to generate and sell tap water to Provincial Waterworks

Authority (PWA). The revenue had been recorded since February

2001, and was in line with the company’s projection.

4) Service income totaled Baht 207 million, up Baht 91

million or 78.45% from the previous year, due to an increased

income from ESCO, which was contributed from the companies

outside the group, and increased share of service income from a

joint venture, Conal, which was recognized for the whole year.

5) Interest income was Baht 646 million, decreasing by

Baht 131 million or 16.86%, because of a decrease in deposits at

banks and financial institutions.

6) Other income of Baht 233 million rose by Baht 156

million or 202.6%, which resulted from;

– Dividend incomes totaling Baht 148 million were higher

than last year. They were from EASTW in the amount of

Baht 25 million, Krung Thai Selected Flexible Portfolio

Fund (KTSF) in the amount of Baht 110 million, and REGCO

Loan Fund in the amount of Baht 13 million.

– Gain on disposal of investments amounted to Baht

33 million.

– Gain on deemed on disposal of interest on dilution

of investment in a subsidiary-EGCO JD in the amount

of Baht 17 million was recognized from the issuance of

EGCO JD’s shares, which were sold to Unocal Bang Pakong

Limited (UBP) in order to dilute EGCO’s shareholding in

EGCO JD to 50%. However, EGCO first sold 27% of its

shares in EGCO JD to UBP, and recognized a loss of

Baht 10 million. Thus, EGCO recognized the net gain of

Baht 7 million from these transactions.

1.2 Expenses Analysis

Total expenses from EGCO, its subsidiaries, and joint

ventures in 2001 were in the amount of Baht 8,474 million, down

Baht 812 million or 8.74%, when compared to the year 2000,

due to the following reasons;

48

1) Unrealized foreign currency exchange loss of Baht

236 million was Baht 1,242 million dramatically lower than the

loss of Baht 1,478 million in 2000. (Currency exchange loss in

2001 was approximately Baht 0.92 per US Dollar whereas the

loss in 2000 was approximately Baht 5.73 per US Dollar).

The unrealized foreign currency exchange gain or loss is an

accounting number in accordance with Thai accounting standard.

It incurs from the difference of the translation of net debt

denominated in foreign currency to Thai Baht equivalent amount

using the foreign exchange rate at the end of this accounting

period (December 31, 2001) and the previous period (December

31, 2000).

However, the calculation of the capacity payment is adjusted

to receive compensation of the exchange rate effect from debt

burden denominated in US Dollar and expenses of major

maintenance parts. REGCO and KEGCO receive the compensation

monthly for each billing period. They receive higher capacity charge

if the exchange rate is above Baht 28 per US Dollar, and lower

capacity charge if the exchange rate is below Baht 28 per US

Dollar.

The compensation for the year ended December 31, 2001

amounted to Baht 1,152 million.

2) Cost of sales in a total of Baht 3,916 million, was Baht

604 million or 18.24% higher than last year, mainly as a result of

the full-year shares of cost of sales from the two joint ventures,

GEC and Conal, amounting to Baht 577 million and Baht 336 million,

respectively. Besides, cost of sales of Baht 47 million from a

subsidiary, Egcom Tara, was first recognized in 2001. However,

cost of sales from the principal subsidiaries, REGCO and KEGCO,

was down Baht 84 million, mainly owing to lower major maintenance

costs than last year, as projected in the budget.

3) Interest expenses amounted to Baht 3,299 million,

minimally decreasing by Baht 26 million or 0.78%. Even though

the interest expenses paid by EGCO and its principal subsidiaries

were less than the previous year, EGCO recognized the interest

expenses from GEC, Conal, and Egcom Tara for a full year, in the

amount of Baht 110 million, Baht 203 million, and Baht 26 million,

respectively.

EGCO’s interest expense incurred from the issuance of its

Baht 5,000 million debenture in 1999, repayable semi-annually

and bears interest rate of 8% per annum, and the interest is paid

semi-annually. Later, the company has entered into an interest

rate swap agreement to convert a fixed rate to a floating rate

based on six-month THBFIX plus a certain margin. The agreement

was effective since April 23, 2001. As a result, the interest expense

paid in October 2001 was reduced to 6% per annum, which the

company saved 2% per annum and paid less interest in 2001.

4) Administrative expense was Baht 895 million, down

Baht 115 million. In 2000, there were development expenses from

Nam Theun 2 Hydroelectric project in the amount of Baht 377

million and Yala project in the amount of Baht 9 million, which

were included in the administrative expenses, while there was no

development expense in this year. However, EGCO recognized

the administrative expenses from its joint ventures, GEC and Conal,

for a full year, totaling Baht 183 million, and its subsidiaries acquired

in 2001, i.e. TLPC and TLP COGEN, amounting to Baht 27 million.

1.3 Business Expansion Analysis

EGCO has a policy, which concerns the importance to

increase shareholder value and enhance sustainability to the

company and its shareholders, as a principle to set its business

strategy. The company’s strategy is to pursue business expansion

conservatively along with the preparation to maintain its quality

and credit standing at a favorable level. EGCO remains its policy

to invest in IPP or SPP, which are in operation and have already

generated revenues, as a first priority. Those projects must be in

Thailand or neighboring countries with cross-border sales to EGAT

under long-term PPA that would generate secured revenues and

return with low risk. The company still has plan to participate in

EGAT’s privatized assets including Re-powering project of EGAT’s

old generating units in the future.

According to unfavorable industry situation to expand

business in short term and the company’s aforementioned strategy,

EGCO has slowed down its investment and adjust its objective to

increase its committed equity capacity to 5,000 megawatts to

become a medium-sized power producer from within the year 2003

to 2005. They are several factors that cause these impacts. Firstly,

49

the demand for electricity was not as forecasted due to

unexpectedly low economic growth. Secondly, EGAT has revised

its plan to determine the new level of minimum reserve margin at

15%, lower than the previous level at 25%; thus, the opportunity

for new power plants is delayed. Thirdly, the government’s

conclusion has to be made on allowing Third Party Access (TPA)

before establishing of power pool system and the privatization

of electricity industry, including EGAT’s spin-off assets and Re-

powering projects.

As of December 2001, EGCO’s total committed equity

capacity was 2,785 megawatts, 92 megawatts of which was

additional capacity from last year. The result was not as planned

because of the unfavorable industry situation and the company’s

conservative approach to pursue its growth, as stated previously.

The additional megawatt was from the investments in SPP,

which sells electricity to EGAT under secured long-term PPA. There

are TLP COGEN power plant with 117 megawatts installed capacity,

of which 94 megawatts were attributable to EGCO, and Roi-Et

Green power plant with 9.9 megawatts installed capacity, of which

7 megawatts were attributable to EGCO. The commercial operation

dates of both projects will be in January 2003 and April 2003,

respectively. Moreover, the joint investment between EGCO and

UBP in EGCO JD, with an equal 50% of shareholding, diluted

EGCO’ s shareholding in AEP in half to 14.85% or 24 attributable

megawatts. However, EGCO received 15% of shareholding in a

new project, i.e. Amata Power (Bang Pakong) Limited, which has

been in operation and already generated revenues, so the company

had an addition of 17 attributable megawatts. The status of the

investment in EGCO JD changed from a wholly subsidiary to a

joint venture because it is a jointly controlled entity.

Furthermore, to increase the shareholder value, the company

has a policy to maintain its cash flow adequate for paying its

dividend not lower than Baht 2 per share without any impact on

the required capital for its existing projects. Moreover, the company

has implemented a share buyback program with the main purpose

to reflect the real value of the company in addition to managing

available cash with highest efficiency.

1.4 Operational Results and Conclusion

Net Profit for the year 2001 was Baht 2,939 million,

sharply increasing by Baht 1,722 million or 141.50% from last

year as a result of increased electricity sales, service income,

and water sales, which EGCO recognized from its subsidiaries

and joint ventures for a full year. Besides, in 2001, EGCO also

recognized shares of profits from its associates, AEP and AMESCO,

in the amount of Baht 35 million, up Baht 112 million, whereas it

recognized shares of loss in 2000 amounting to Baht 77 million,

owing to the foreign exchange loss. In 2001, Thai Baht was not

as weak as last year; therefore, the foreign exchange loss

decreased dramatically. Moreover, the decrease in the

administrative expenses and the interest expenses could cover

the increase in the cost of sales.

If excluding the effect of foreign exchange loss, the net

profit for the year 2001 was Baht 3,175 million, which was Baht

480 million higher than last year. Therefore, in 2001 EGCO

considerably operated better than the previous year.

The important financial ratios were as follows;

– Net profit (excluding the effect of foreign exchange)

margin was 27.35%.

– Return (excluding the effect of foreign exchange) on

shareholders’ equity (ROE) was 16.55%.

– Return (excluding the effect of foreign exchange) on total

asset (ROA) was 6.00%.

– Earning (excluding the effect of foreign exchange) per

share (EPS) was Baht 6.05 per share.

2. Report and Analysis of Financial Position2.1 Asset Analysis

As at December 31, 2001, total assets of EGCO, its

subsidiaries, and joint ventures amounted to Baht 52,965 million,

decreasing by Baht 2,147 million or 3.9%. The important details

are as follows;

1) Cash, short-term investments, and long-term

deposits at financial institutions totaling Baht 4,174 million,

were down Baht 1,049 million or 20.08%. They were mostly spent

on the acquisition and investment in projects, debt repayment,

dividend payment to the shareholders, and investment in

marketable securities.

2) Long-term investment in marketable securities and

others amounted to Baht 2,675 million, up Baht 171 million or

6.83%. Most were investments in EASTW in the amount of Baht

559 million and KTSF in the amount of Baht 1,300 million. The

increase in the year 2001 was mainly from an additional investment

of Baht 110 million in Nam Theun 2, an additional investment of

Baht 47 million in EASTW, and a new investment of Baht 50 million

in The Krung Thai Dividend Fixed Income Fund.

3) Short-term and long-term investment used as

collateral totaling of Baht 10,278 million, decresed by Baht

558 million or 5.15% as a result of decreased cash reserve for

debt repayment.

4) Investment in associate amounted to Baht 234 million,

down Baht 170 million or 42.08%. According to the joint venture

50

between EGCO and UBP in EGCO JD with equal shareholding of

50%, it diluted EGCO’s shareholding in AEP from 29.70% to

14.85%, and caused a decrease in the investment recorded by

the equity accounting method. In accordance to the accounting

standard, the transaction incurred on December 28, 2001, before

the end of accounting period, the change of investment must be

shown on the balance sheet as at December 31, 2001. However,

the recognition of revenue from EGCO JD for a few days was not

recorded on the profit and loss statement since it was not

significant to the company.

5) Property, plant, and equipment amounted to Baht

28,999 million, down Baht 1,110 million or 3.69%, mostly because

of depreciation for the year in the amount of Baht 2,101 million.

However, there were asset purchases of Baht 595 million, an

increase in assets of Baht 126 million from acquisition of TLPC

and TLP COGEN, and assets of Baht 435 million recognized from

EGCO JD after joint investment with UBP.

6) Goodwill was Baht 1,017 million, increasing by Baht 70

million or 7.39%, as a result of an increase of Baht 140 million

from TLPC although some were amortized over the life of the

projects.

7) Other assets in the amount of Baht 635 million, mostly

from deferred development cost and advanced payment of Baht

393 million from GEC’s subsidiary, which has not commenced its

operation and is awaiting for the approval from the government.

However, if the project is to be cancelled, such project development

costs will be reimbursed from EGAT as stated in the PPA.

8) Loans to related company was Baht 32.49 million to

AEP, which is an associate of EGCO JD.

2.2 Liabilities Analysis

As at December 31, 2001, the company’s total liabilities

were Baht 33,780 million, decreasing by Baht 3,884 million or

10.32% from 2000. The main reason was that long-term loans

and debentures decreased owing to the principal repayment by

subsidiaries, REGCO and KEGCO, and joint ventures, GEC and

Conal. Besides, Thai Baht was little weaker than last year, so it did

not have much impact on the translation of the debt denominated

in foreign currencies into Thai Baht equivalent.

Most of the liabilities were long-term loans, debentures, and

current portion of long-term loans and debentures in the amount

of Baht 32,670 million. The details are as follows;

– Long-term loans, including current portion totaled

Baht 21,444 million. They consisted of the loans

denominated in US Dollars in the amount of Baht 19,146

million, Philippines Peso in the amount of Baht 124 million,

Japanese Yen in the amount of Baht 24 million (drawdown),

and Thai Baht in the amount of Baht 2,150 million.

– Debentures including current portion amounted to

Baht 11,226 million.

As of December 31, 2001, the company had net of deposits

in US Dollars, which still exposed to currency risk, amounted to

US Dollar 219 million, derived from the net of the long-term loans

denominated in US Dollar and deposits and investments in US

Dollar.

Furthermore, as of December 31, 2001, EGCO had

commitment and contingent liabilities as follows;

Sponsor Support Agreement

– For AEP in the amount of US Dollar 4.95 million for Gas

Purchase Agreement with the Petroleum Authority of

Thailand, and etc.

– For Egcom Tara in the amount of Baht 35.7 million for

Loan Agreement with The Industrial Finance Corporation

of Thailand (IFCT).

– For TLP COGEN in the amount of Baht 200 million for

Loan Agreement with Krung Thai Bank, Thai Military Bank,

and IFCT

– For EGCO Green Energy and Roi-Et Green in the amount

of Baht 44.4 million for Loan Agreement with Krung Thai

Bank, Thai Military Bank, and IFCT.

Guarantor for subsidiary

– Guarantee against performance of ESCO in the amount

of Baht 70 million to its contracts.

As a credible, high-quality company, the company is

committed to administering its obligation in compliance with good

corporate governance. It has, accordingly, set up a reserve fund

of 25% of total obligations to its subsidiaries and associates; thus,

reducing the risk of default and providing extra return in the form

of interest income and increased financial stability.

As at December 31, 2001, the company had a reserve

fund amounting to 25% of its aforementioned total obligation.

51

2.3 Shareholder’s Equity Analysis

In 2001, Shareholder’s Equity (excluding minority interest)

amounted to Baht 18,544 million, which was Baht 1,565 million

higher than the previous year, due to profit for the year 2001 and

paid-up capital, which the company received from the employees

under the Employee Stock Ownership Plan (ESOP). The details of

the plan are as follows;

According to the resolutions of Shareholders’ Extraordinary

Meeting No. 1/1995 on August 22, 1995, EGCO was obliged to

issue 10 million shares with a par value of Baht 10 for the

employees of the company and its subsidiaries within 5 years.

In March and July 2001, the employees subscribed 671,000 and

878,400 shares, respectively.

As at December 31, 2001, EGCO’ s capital structure

consists of major items as follows;

Shareholders’ Equity

– Issued and paid-up capital amounted to Baht 5,259

million, and share premium value amounted to Baht

8,591 million.

– Retained earnings totaled Baht 4,611 million

– Other shareholders’ equity was Baht 83 million.

Liabilities

– Long term loans including current portion was Baht

21,444 million

– Debentures including current portion amounted to

Baht 11,226 million.

– Other current and non-current liabilities was Baht

1,110 million

From the above assets and liabilities, important financial

ratios are shown below. As at December 31, 2001,

– Debt to equity ratio was 1.76 times lower than 2.16 times

in 2000.

– Net debt to equity ratio was 0.87 times lower than 1.09

times in 2000.

– Book value per share was Baht 35.26 higher than Baht

32.38 in 2000.

3. Report and Analysis of Cash Flows PositionCash Flows Statement shows the change in cash flows from

operating activities, investing activities, and financing activities at

the end of accounting period, and it indicates the ending balance

of the cash and cash equivalents. As of December 31, 2001, the

ending balance of the cash and cash equivalent was Baht 3,641

million, down Baht 1,518 million from last year. The details of

source of funds and use of funds are as follows;

– Net cash receipt from operating activities of Baht

5,511 million, was up Baht 1,530 million or 38.43%, owing to

higher net profit for the year. After adjustment to reconcile the net

income to net cash, such as gains from disposal of marketable

securities, dividends received from other companies, and minority

interest, cash in 2001 was higher than the previous year. Moreover,

after adjustment with the change in working capital in 2001, cash

from operating activities was quite higher than the cash in the

year 2000.

– Net cash payment for investing activities was Baht

1,175 million, sharply decreasing by Baht 3,117 million. In 2001,

Baht 734 million was spent on the acquisition of subsidiaries, joint

ventures, and long-term investment, much less than the year 2000.

In 2000, EGCO acquired joint ventures for Baht 1,477 million,

invested in KTSF for Baht 1,300 million, and invested in Nam Theun

2 Project for Baht 370 million. Moreover, EGCO received higher

dividends from the investment in REGCO Loan Fund, EASTW, and

KTSF. Even though in 2001, EGCO invested in short-term investment

and in marketable securities more than last year, the cash spent

on investing activities was much less than the previous year.

– Net cash payment for financing activities was in

the amount of Baht 5,879 million, Baht 2,899 million much higher

than last year, mainly because there were higher debt repayments

totaling Baht 2,515 million. Dividend to shareholders was paid

from the 2000 operation at Baht 2 per share, and interim dividend

was paid from the half-year operation in 2001 at Baht 1 per share.

Thus, the dividend in 2001 was paid in a total of Baht 3 per share

while in 2000 only 2 Baht per share was paid out. However, there

were only Baht 104 million of cash received from long-term loans,

Baht 46 million of cash received from issuance of ordinary shares

from ESOP, and Baht 136 million of cash received from issuance

of ordinary shares from subsidiaries and joint ventures.

In conclusion, as at December 31, 2001, EGCO had higher

net cash from its operating activities, but it spent on investment

activities, debt repayment, and dividend payment to its

shareholders more than the amount it received; therefore, the

ending balance was lower than last year. In the end of 1999, EGCO

issued debenture in the amount of Baht 5,000 million for the

purpose of business expansion, but it did not go as planned due

to the economic recession. However, EGCO has an ability to

effectively manage its available cash and fund, which was prepared

for its investment plan, and maintain adequate funds for investment

in existing projects, and dividend payment at least 2 Baht per

share in 2002. Moreover, EGCO believes that the investments in

these projects will generate secured return in the future and

eventually add value to the company and its shareholders.

52

Social and Environmental Care

The existence of life on earth relies on several factors

according to its need, and most importantly, a healthy

environment is needed for providing a quality way of life. The

economic and social expansion contribute to the huge

consumption of natural resources which leads to natural

damages, such as water and air pollution. Due to the increase of

the world’s population, environmental management will be

important to every aspect of social development. EGCO realizes

that without preventive measures, conducting industrial

business may have an environmental effect. Therefore, the

company sets a clear policy and vision to do business with

environmental friendliness, causing no harm to society and

community. EGCO Group’s operating companies; REGCO and

KEGCO received environmental awards from recognized

institutions. Both of them passed ISO 14001 certification for

their environmental management system from the Thai

Environment Institute and RWTUV (Thailand) Limited

respectively. KEGCO also received EIA Award for the year 2001

for the best environmental management system in the

workplace, which demonstrated the firm determination of its

management’s policy in compliance with environmental

standards.

Moreover, the company develops biomass power plant

project utilizing rice husks as fuel in the electricity generating

process. The biomass power plant helps decrease the fuel import

and also minimize the rice husk dust usually annoying neighboring

communities. In addition, the combustion gas is less in quantity,

does not to cause air pollution and benefits the growth of trees

nearby.

With respect to supporting social and environmental

activities, EGCO, as a member of the Thai society, always

realizes that the company’s sustainable growth will be

combined with a healthy society and a pleasant environment,

having social contribution as a goal. Besides raising awareness

on watershed forest conservation, which is very crucial for every

life, the company launched the corporate advertising campaign

on the theme “The world is our home” to bring to people’s

minds the importance of nature, which creates a happy

co-existence. Moreover, EGCO cooperated with the Royal Forest

Department in organizing the Community Forest Contest

Program. The winners would be conferred Her Majesty Queen

Sirikit’s cup in order to encourage the communities for their

establishment of forest conservation body, as well as the

effective and long lasting use of forest.

Though EGCO’s activities are only a small social contribution,

but with a great intention, EGCO is very proud and determined

to continue further conservation programs together with

developing energy sources to be accepted by the public for the

benefit of all and the world, which is our home.

54

Statement of Directors’Responsibilities

The EGCO’s Board of Directors had the management prepare

financial statements to reveal the company’s financial position and

operating results of the year 2001 in accordance with the Public

Limited Companies Act B.E. 2535.

The Board of Directors is well aware of its duties and

responsibilities as the directors of a listed company in the Stock

Exchange of Thailand to ensure that the company’s financial

statements are accurate, complete, and transparent in accordance

with generally accepted accounting principles in Thailand, while

providing adequate information to safeguard the company’s assets

from unlawful conduct and abnormalities which is for the benefit

of shareholders and investors to have true and adequate

information.

To govern the company’s financial statements efficiently,

the Board of Directors had appointed an Audit Committee on August

31, 1998 to oversee the preparation of company’s financial

statements in accordance with generally accepted accounting

principles and apply appropriate accounting policies regularly. In

addition, the Audit Committee also played an important role in

ensuring that the financial statements were prepared in a justified

and prudent manner with adequate disclosure of important

information in the notes to the financial statements. Also, the Audit

Committee will ensure that the company has an effective risk

management system, good corporate governance, adequate

internal control systems and performs in compliance with relevant

laws and regulations.

The Board of Directors is of the opinion that EGCO’s financial

statements and consolidated financial statements of the year 2001,

reviewed by the Audit Committee in collaboration with the

Management and the External Auditor, PricewaterhouseCoopers

ABAS, were presented in a complete, true and fair manner in

compliance with the generally accepted accounting principles and

all governing rules and regulations, with appropriate and consistent

accounting policies and adequate information disclosure.

55

Audit Committee’s Report

The Audit Committee of EGCO was composed of three

independent directors. At the beginning of 2001, EGCO had

Mr. Sirin Nimmannahaeminda as Chairman of Audit Committee,

and Khunying Nongkran Chandhanayingyong and Mr. Boonshai

Jiwalai as Committee members.

During 2001, the members of EGCO’s Board of Directors

have been changed according to the expiration of the term of

some Directors. This resulted in the change of Audit Committee

members. Consequently, since July 1, 2001, the Audit Committee

has Mr. Aswin Kongsiri as Chairman, and Khunying Nongkran

Chandhanayingyong, and Mr. Worawit Khamkanist as Committee

members.

The Audit Committee has performed its duties in conformity

with the mission entrusted by the Board of Directors as prescribed

in the Audit Committee Charter. The Audit Committee Charter is

reviewed every year to ensure that the Committee’s responsibilities

are consistent with the “Audit Committee Best Practices” guidelines

as detailed by the Stock Exchange of Thailand. The review also

ensures compliance with the global best practices for audit

committees and that the practices are appropriate for EGCO’s

business.

In 2001 the Committee engaged in one site visit to the

Rayong Power Plant to observe the plant’s operation and

maintenance. In addition, the Committee held ten meetings in which

the management was invited to attend as deemed appropriate.

Issues of concern were addressed by management presentations

in order to facilitate better understanding between the Committee

and management. The Committee regularly submitted the meeting

minutes to the Board of Directors.

The major items completed from the meetings held during

the year 2001 are summarized as follows:

– Review of the financial statements with both the external

auditor and management before submission to the Stock

Exchange of Thailand and release to the public. This

procedure ensured that the financial information was

complete, correct and reliable, with adequate disclosure

to meet the accounting standards and requirements of

relevant laws and regulations. Certain accounting

procedures for the business were also reviewed.

– Consideration, recommendation for improvement and

subsequent approval of the year 2002 Internal Audit Plan

and acknowledgement of the External Audit Plan.

– Review of the Internal Audit Report to ensure that EGCO

is in compliance with Good Corporate Governance,

follows good risk management, maintains efficient

internal control systems and complies with all related

laws and regulations.

Upon consideration of the above issues, the Committee is

of the opinion that EGCO conducted its business in compliance

with Security and Stock Exchange laws, Stock Exchange of

Thailand regulations and related laws. The existing internal

control system and internal audit function can ensure that the

financial information is complete, correct and reliable with adequate

disclosure.

The Committee recommended a Quality Assurance Review

of the Internal Audit Division by an independent expert to ensure

that the internal audit activity is in conformity with the Standards

for the Professional Practice of Internal Auditing and is efficient

and practical for EGCO group’s business. This project will be

completed in the year 2002.

Concurrently, the Committee has also initiated the Audit

Committee Effectiveness Self-Assessment process, which will be

completed and reported to the Board of Directors in the year

2002 as well.

The Committee evaluated the performance of EGCO’s

auditor, PricewaterhouseCoopers (PwC) during the past year and

observed that PwC efficiently carried out their work with knowledge

and expertise. The Committee therefore proposed to the Board

of Directors that PwC be re-appointed by the shareholders as

EGCO’s auditor for 2002.

Aswin Kongsiri

Chairman, Audit Committee

56

Auditor’s Report

To the Shareholders of Electricity Generating Public

Company Limited

I have audited the accompanying consolidated and

company balance sheets as at 31 December 2001 and 2000,

and the related consolidated and company statements of income,

changes in shareholders’ equity, and cash flows for the years

then ended of Electricity Generating Public Company Limited and

its subsidiaries, and of Electricity Generating Public Company

Limited, respectively. These financial statements are the

responsibility of the Company’s management. My responsibility

is to express an opinion on these financial statements based on

my audits.

I conducted my audits in accordance with generally

accepted auditing standards. Those standards require that I

plan and perform the audits to obtain reasonable assurance

about 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. I believe that my audits provide a reasonable basis

for my opinion.

In my opinion, the consolidated and company financial state-

ments present fairly, in all material respects, the consolidated

and company financial position as at 31 December 2001 and

2000, and the consolidated and company results of operations,

and cash flows for the years then ended of Electricity Generating

Public Company Limited and its subsidiaries, and of Electricity

Generating Public Company Limited, respectively, in accordance

with generally accepted accounting principles.

Nangnoi Charoenthaveesub

Certified Public Accountant (Thailand) No. 3044

PricewaterhouseCoopers ABAS Limited

Bangkok

11 February 2002

57

Mr. Machima Kunjara Na Ayudhya(for) Director

Consolidated Company

Notes 2001 2000 2001 2000

Baht Baht Baht Baht

AssetsCurrent Assets

Cash on hand and at banks 6 1,864,618,035 2,123,695,065 1,410,053,826 1,517,554,046

Short-term investments

– Deposits at banks and financial institutions 7 2,212,854,225 3,035,736,237 1,320,792,218 2,103,533,931

– Marketable securities 8 72,628,198 12,766,575 138,587,758 84,108,855

Short-term investments used as collateral

– Deposits at banks and financial institutions 5,027,922,454 6,046,430,420 – –

– Marketable securities 9 691,770,401 426,774,098 – –

Trade accounts receivable, net 5, 10 1,818,316,652 1,704,299,095 – –

Dividend receivable from subsidiaries – – 356,664,060 855,980,627

Amounts due from related companies 32,494,512 121,962,006 987,740 9,698,776

Spare parts and supplies, net 11 2,650,765,908 2,369,998,085 – –

Other current assets

– Interest receivable 164,866,571 165,454,160 11,896,281 10,216,291

– Others 258,039,531 213,477,438 36,873,351 95,189,732

Total Current Assets 14,794,276,487 16,220,593,179 3,275,855,234 4,676,282,258

Non-Current Assets

Long-term investments

– Deposits at financial institutions 22,500,000 50,073,851 – –

– Marketable securities and others 12 2,674,596,468 2,504,284,296 2,671,596,468 2,504,284,296

Long-term investments used as collateral

– Deposits at financial institutions 2,599,990,828 2,633,033,921 – –

– Marketable securities 9 1,958,369,638 1,729,746,099 – –

Loans to a related company 5 32,490,000 32,490,000 32,490,000 25,200,000

Investments in subsidiaries,

joint ventures, and associates 13 232,730,521 403,967,019 15,586,641,119 13,932,148,402

Property, plant, and equipment, net 14 28,998,578,409 30,106,898,791 891,975,497 939,223,178

Goodwill, net 15 1,016,535,445 946,975,249 – –

Other assets 16 635,123,114 483,592,394 99,390,712 26,100,476

Total Non-Current Assets 38,170,914,423 38,891,061,620 19,282,093,796 17,426,956,352

Total Assets 52,965,190,910 55,111,654,799 22,557,949,030 22,103,238,610

Balance SheetsAs at 31 December 2001 and 2000

Electr icity Generating Publ ic Company Limited

The notes to the consolidated and company financial statements on page 64 to 88 are an integral part of these financial statements.

57

58


Notes 2001 2000 2001 2000

Baht Baht Baht Baht

Liabilities and Shareholders’ EquityCurrent Liabilities

Bank overdrafts and short-term loans 208,526,024 172,225,299 – –

Trade accounts payable 295,621,672 507,803,311 – –

Current portion of long-term loans and

debentures 17, 18 4,182,600,835 4,333,996,884 1,197,350,000 1,107,000,000

Amounts due to related companies 7,335,306 21,178,242 – 28,880

Other current liabilities

– Interest payable 224,082,872 229,246,590 60,550,000 78,630,107

– Value added tax payable 94,450,528 128,141,227 – –

– Dividend payable 13,095,362 10,048,010 11,224,602 9,468,831

– Ohters 258,208,909 279,193,734 49,010,995 36,586,923

Total Current Liabilities 5,283,921,508 5,681,833,297 1,318,135,597 1,231,714,741

Non-Current Liabilities

Long-term loans 17 18,813,057,348 20,596,847,306 – –

Debentures 18 9,674,592,701 11,384,068,917 2,695,650,000 3,893,000,000

Other liabilities 8,240,000 1,040,000 – –

Total Non-Current Liabilities 28,495,890,049 31,981,956,223 2,695,650,000 3,893,000,000

Total Liabilities 33,779,811,557 37,663,789,520 4,013,785,597 5,124,714,741

Shareholders’ Equity

Share capital 20

Authorised share capital 5,300,000,000 5,300,000,000 5,300,000,000 5,300,000,000

Issued and paid-up share capital 5,259,465,000 5,243,971,000 5,259,465,000 5,243,971,000

Premium on share capital 20 8,590,930,000 8,559,942,000 8,590,930,000 8,559,942,000

Retained earnings

Appropriated

– Legal reserve 21 442,832,100 295,878,172 442,832,100 295,878,172

Unappropriated 4,167,710,163 2,874,510,361 4,167,710,163 2,874,510,361

Unrelised gains on investments in marketable

securities - available-for-sale 115,851,509 118,627,107 115,851,509 118,627,107

Translation adjustments (32,625,339) (114,404,771) (32,625,339) (114,404,771)

Minority interest 19 641,215,920 469,341,410 – –

Total Shareholders’ Equity 19,185,379,353 17,447,865,279 18,544,163,433 16,978,523,869

Total Liabilities and Shareholders’ Equity 52,965,190,910 55,111,654,799 22,557,949,030 22,103,238,610


58

Balance Sheets (Continued)

As at 31 December 2001 and 2000


59


Notes 2001 2000 2001 2000

Baht Baht Baht Baht

Revenues

Sales 10,525,777,329 9,580,521,506 – –

Service income 206,597,552 116,303,749 – –

Other income

– Interest income 646,070,747 776,715,394 88,774,526 192,435,662

– Others 22 233,577,614 77,114,974 204,456,440 62,613,537

Total revenues 11,612,023,242 10,550,655,623 293,230,966 255,049,199

Expenses

Cost of sales 23 3,915,926,429 3,311,871,372 – –

Cost of services 117,220,936 150,011,164 – –

Administrative expenses 24 889,273,807 1,009,694,882 391,140,943 687,442,730

Interest expenses 3,299,278,296 3,324,970,236 297,496,515 399,725,998

Currency exchange losses 236,255,557 1,477,680,306 – –

Directors’ remuneration 27 15,584,270 11,293,500 12,872,800 7,224,000

Total expenses 8,473,539,295 9,285,521,460 701,510,258 1,094,392,728

Operating profit (loss) 3,138,483,947 1,265,134,163 (408,279,292) (839,343,529)

Share of profit (loss) of subsidiaries,

joint ventures and associates 35,094,800 (76,883,261) 3,347,357,870 2,056,084,428

Profit before tax 3,173,578,747 1,188,250,902 2,939,078,578 1,216,740,899

Income tax 31,042,046 9,822,506 – –

Profit befor minority interest 3,142,536,701 1,178,428,396 2,939,078,578 1,216,740,899

Profit (loss) attributable to minorities 203,458,123 (38,312,503) – –

Net profit (loss) for the year 2,939,078,578 1,216,740,899 2,939,078,578 1,216,740,899

Basic earnings per share 25

Profit before minority interst 5.99 2.25 5.60 2.32

Profit (loss) attributable to minorities 0.39 (0.07) – –

Net profit for the year 5.60 2.32 5.60 2.32

Diluted earnings per share 25

Profit before minority interest 5.94 2.23 5.55 2.30

Profit (loss) attributable to minorities 0.39 (0.07) – –

Net profit for the year 5.55 2.30 5.55 2.30


59

Statements of IncomeFor the years ended 31 December 2001 and 2000


60


Notes 2001 2000 2001 2000

Baht Baht Baht Baht

Share capital

Beginning balance 5,243,971,000 5,242,711,000 5,243,971,000 5,242,711,000

Increase during the year 15,494,000 1,260,000 15,494,000 1,260,000

Ending balance 5,259,465,000 5,243,971,000 5,259,465,000 5,243,971,000

Premium on share capital



Ending balance 8,590,930,000 8,559,942,000 8,590,930,000 8,559,942,000

Retained earnings

Appropriated retained earnings

– Legal reserve 21

Beginning balance 295,878,172 235,041,127 295,878,172 235,041,127


Ending balance 442,832,100 295,878,172 442,832,100 295,878,172

Unappropriated retained earnings


Dividends (1,498,924,848) (950,746,094) (1,498,924,848) (950,746,094)

Legal reserve (146,953,928) (60,837,045) (146,953,928) (60,837,045)

Appropriation for directors’ bonus – (16,688,545) – (16,688,545)

Net profit for the year 2,939,078,578 1,216,740,899 2,939,078,578 1,216,740,899

Ending balance 4,167,710,163 2,874,510,361 4,167,710,163 2,874,510,361

Unrealised gains on investments in

marketable securities - available-for-sale


Increase (decrease) during the year (2,775,598) 77,482,789 (2,775,598) 77,482,789

Ending balance 115,851,509 118,627,107 115,851,509 118,627,107


60

Statements of Changes in Shareholders’ EquityFor the years ended 31 December 2001 and 2000


61


2001 2000 2001 2000

Baht Baht Baht Baht

Translation adjustments

Beginning balance (114,404,771) – (114,404,771) –

Increase (decrease) during the year 81,779,432 (114,404,771) 81,779,432 (114,404,771)

Ending balance (32,625,339) (114,404,771) (32,625,339) (114,404,771)

Minority interest

– Subsidiaries

Beginning balance 49,798,742 56,470,331 – –

Acquisition 63,303,905 – – –

Additional paid-up share capital 97,033,788 – – –

Decrease during the year (2,546,142) (6,671,589) – –

Ending balance 207,590,293 49,798,742 – –

– Joint venture

Beginning balance 419,542,668 – -– –

Acquisition – 451,183,582 – –

Additional paid-up share capital 25,400,000 – – –

Dividends (217,321,306) – – –

Increase (decrease) during the year 206,004,265 (31,640,914) – –

Ending balance 433,625,627 419,542,668 – –

Total minority interest 641,215,920 469,341,410 – –

Total Sharesholders’ Equity 19,185,379,353 17,447,865,279 18,544,163,433 16,978,523,869


61

Statements of Changes in Shareholders’ Equity(Continued)

For the years ended 31 December 2001 and 2000


62


2001 2000 2001 2000

Baht Baht Baht Baht

Cash flows from operating activities

Net profit for the year 2,939,078,578 1,216,740,899 2,939,078,578 1,216,740,899

Adjustments to reconcile net profit to net cash

provided by operations :

– Depreciation and amortisation 2,179,253,999 1,885,207,090 62,724,988 62,774,160

– Unrealised currency exchange losses 238,163,789 1,472,415,302 – –

– Gains on disposal of marketable securities (2,567,224) (117,598) (2,567,223) (117,598)

– Gains on disposal of a subsidiary (22,266,016) – (6,879,806) –

– Gains on share dilution (16,947,636) – (16,947,636) –

– Losses (gains) on disposal of fixed assets 1,102,589 – (2,620,197) –

– Provision for obsolete and slow-moving stocks 40,502,279 55,277,956 – –

– Provision for doubtful accounts 1,849,555 – – –

– Reversed provision for doubtful accounts – (39,629,000) – –

– Dividends received from other companies (148,293,145) (45,610,882) (148,293,145) (45,610,882)

– Shares of (profit) loss of subsidiaries,

joint ventures and associates (35,094,800) 76,883,261 (3,347,357,870) (2,056,084,428)

– Minority interest 203,458,123 (38,312,503) – –

– Others 1,688,730 – – –

Cash flows before changes in operating assets and liabilities 5,379,928,821 4,582,854,525 (522,862,311) (822,297,849)

Changes in operating assets and liabilities :

(excluding the effects of acquisition and disposal)

– Short-term and long-term investments used as collateral 791,670,138 (293,845,798) – –

– Trade accounts receivable (59,085,960) 40,857,022 – –

– Amounts due from related companies 12,760,459 (1,310,913) 8,711,036 3,980,213

– Spare parts and supplies (283,645,560) (448,500,904) – –

– Other current assets 53,788,400 (31,785,998) 56,636,391 47,973,493

– Other assets (120,002,508) (24,532,167) (73,330,236) (6,168,648)

– Trade accounts payable (171,006,449) 173,243,812 – –

– Amounts due to related companies (9,926,580) (20,141,007) (28,880) 28,880

– Other current liabilities (73,161,611) 2,815,741 (5,656,036) (56,380,061)

– Other liabilities (10,429,875) 1,040,000 – –

Net cash receipts (payments) from operating activities 5,510,889,275 3,980,694,313 (536,530,036) (832,863,972)


62

Statements of Cash FlowsFor the years ended 31 December 2001 and 2000


63


2001 2000 2001 2000

Baht Baht Baht Baht

Cash flows from investing activities

Acquisition of subsidiaries and joint ventures, net of cash acquired (344,256,265) (1,476,972,783) (445,500,000) (2,102,467,339)

Disposal of a subsidiary 193,863,060 – 193,863,059 –

Investments in subsidiaries, joint ventures, associates and others – (156,975,000) (451,297,660) (247,049,000)

Purchase of short-term investments in financial institutions (390,153,502) – – –

Purchase of other long-term investments (250,015,543) (2,096,472,847) (204,375,365) (2,104,649,488)

Net purchase of property, plant and equipment (456,777,428) (588,562,517) (12,817,110) (3,941,460)

Purchase of investments in marketable securities (109,642,049) (7,949,987) (109,642,049) (7,949,987)

Disposal of investments in marketable securities 54,092,791 – 59,475,511 –

Loans to related companies (12,018,161) (22,233,276) (7,290,000) –

Dividends received from subsidiaries – – 3,033,265,649 2,334,627,211

Dividends received from associates and other companies 148,293,145 57,310,882 148,293,145 45,610,882

Others (8,621,432) – – –

Net cash receipts (payments) from investing activities (1,175,235,384) (4,291,855,528) 2,203,975,180 (2,085,819,181)

Cash flows from financing activities

Issue of ordianary shares 46,482,000 3,780,000 46,482,000 3,780,000

Issue of ordinary shares from minority of subsidiaries

and of a joint venture 136,461,340 8,000,000 – –

Repayment of short-term loans (23,784,642) (206,634) – –

Cash received from long-term loans 104,293,051 211,250,000 – –

Repayment of long-term loans and debentures (4,531,097,964) (2,015,779,665) (1,107,000,000) –

Payment of dividends (1,611,178,802) (1,106,397,567) (1,497,169,077) (998,958,835)

Net cash payments from financing activities (5,878,825,017) (2,899,353,866) (2,557,687,077) (995,178,835)

Net decrease in cash and cash equivalents (1,543,171,126) (3,210,515,081) (890,241,933) (3,913,861,988)

Cash and cash equivalents, beginning balance 5,159,431,302 8,343,517,061 3,621,087,977 7,534,949,965

Effects of exchange rate changes 24,470,509 26,429,322 – –

Cash and cash equivalents, ending balance 3,640,730,685 5,159,431,302 2,730,846,044 3,621,087,977

Cash and cash equivalents are made up as follows :

– Cash on hand and at banks 1,864,618,035 2,123,695,065 1,410,053,826 1,517,554,046

– Short-term investments - maturity within three months 1,776,112,650 3,035,736,237 1,320,792,218 2,103,533,931

3,640,730,685 5,159,431,302 2,730,846,044 3,621,087,977

– Short-term investments (cash equivalent) 1,776,112,650 3,035,736,237 1,320,792,218 2,103,533,931

– Short-term investments (non-cash equivalent) 436,741,575 – – –

Total short-term investments 2,212,854,225 3,035,736,237 1,320,792,218 2,103,533,931

Supplementary information for cash flows :

Interest paid 3,386,213,703 3,329,105,208 400,000,000 400,274,002

Tax paid 14,367,320 175,663 – –


63

Statements of Cash Flows (Continued)



64

1. General informationElectricity Generating Public Company Limited (“the Company”) is a public limited company and is incorporated and domiciled in Thailand. The

registered office of the Company is 15th Floor EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210The Company is listed on the Stock Exchange of Thailand.The principal business operations of the Company and its subsidiaries, associates, joint ventures (together the “Group”) is to generate electricity

for sale to government sectors both in Thailand and other country.The Group has operations in over two countries and employs over 755 people.

2. Significant accounting policiesThe principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out below:

Basis of preparationThe consolidated and company financial statements have been prepared in accordance with Thai Generally Accepted Accounting Principles under

the Accounting Act B.E. 2543, being those Thai Accounting Standards issued by the Institute of Certified Accountants and Auditors of Thailand and approvedunder law by the Board of Supervision of Auditing Practice appointed by the Minister of Commerce under the Auditor Act B.E. 2505, and the financialreporting requirements of the Securities and Exchange Commission.

The consolidated and company financial statements have been prepared under the historical cost method.

ConsolidationSubsidiary undertakings, which are those companies in which the Group, directly or indirectly, has an interest of more than one half of the voting

rights or otherwise has power to exercise control over the financial and operating policies, have been consolidated. Subsidiaries are consolidated fromthe date on which effective control is transferred to the Group and are no longer consolidated from the date of disposal. All intercompany transactions,balances and unrealised gains and losses on transactions between group companies have been eliminated. Where necessary, accounting policies forsubsidiaries have been changed to ensure consistency with the policies adopted by the Group. Separate disclosure is made for minority interest in theconsolidated balance sheets and consolidated statements of income.

A listing of the Group’s principal subsidiaries and the financial effects of the acquisitions and disposals of subsidiaries are set out in Note 13.

Investments in subsidiariesInvestments in subsidiary undertakings are accounted for in the non-consolidated financial statements by the equity method of accounting. These

are undertakings over which the Company has over 50% of the voting rights, and/or over which the Company exercises control.All intercompany transactions, balances and unrealised gains and losses on transactions between group companies have been eliminated.

Investments in joint venturesThe Group’s interest in jointly controlled entities are accounted for by proportionate consolidation. Under this method the Group includes its of the

joint ventures’ individual income and expenses, assets and liabilities in the relevant components of the consolidated financial statements.Interest in a jointly controlled entity is accounted for in the non-consolidated financial statements by the equity method of accounting.Further details about the joint ventures are shown in Note 32.

Investments in associatesInvestments in associated undertakings are accounted for in the consolidated and company financial statements by the equity method of accounting.

These are undertakings over which the Group has between 20% and 50% of the voting rights, and over which the Group exercises significant influence, butwhich it does not control.

A listing of the Group’s principal associates is set out in Note 13.

Dilution gains or lossesDilution gains or losses that arise when the subsidiaries increase their authorised share capital and the Group acquires some or all additional share

capital. As a result, the Group’s shareholding in such subsidiaries changes. The Group recognises the changing of investment in such subsidiaries to gain/(loss) on deemed disposal of interest on dilution of investments in subsidiaries in the statements of income.

Notes to the Consolidated and CompanyFinancial Statements



65

Investments (other than subsidiaries, joint ventures, and associates)Marketable debt securities and marketable equity securities which are classified as available-for-sale securities are carried at fair values. Fair value

of debt securities is calculated by reference to the risk-free yield curve adjusted by the appropriate risk premium. Fair value of marketable equity securitiesis calculated by reference to Stock Exchange quoted bid prices at the close of business on the balance sheet date. Increases/decreases in the carryingamount are credited/charged against unrealised gains/losses on investments in available-for-sale securities in shareholders’ equity.

Investments in debt securities which are classified as held-to-maturity securities are carried at amortised cost.Investments in non-marketable equity securities which are classified as general investments are carried at cost.A test for impairment is carried out when there is a factor indicating that such investment might be impaired. If the carrying value of the investment

is less than its recoverable amount, impairment loss is charged to the statements of income.When disposing part of the Group’s holding of a particular investment in debt or equity securities, the carrying amount of the disposed part is

determined from the weighted average carrying amount of the total holding of the investment. Gains or losses from such disposal are recognised inthe statements of income.

Related partiesEnterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common

control with, the Company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individualsowning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the enterprise, key managementpersonnel, including directors and officers of the Company and close members of the family of these individuals and companies associated with theseindividuals also constitute related parties.

In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form.

Cash and cash equivalentsCash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and cash equivalents

comprise cash on hand and deposits held at banks.Cash and cash equivalents represent cash and short-term highly liquid investments with maturities of three months or less.

Short-term investmentsShort-term investments represent time deposits, bills of exchange and promissory notes.

Trade accounts receivableTrade accounts receivable are carried at anticipated realisable value. An allowance is recorded for doubtful accounts receivable, which is equivalent

to the estimated collection losses that may be incurred. The estimated losses are based on historical collection experience combined with a review ofthe current status of the existing receivables at the balance sheet date.

Spare parts and suppliesSpare parts and supplies are stated at cost less provision for obsolete stock. Cost is calculated based on the moving average basis. The spare parts

are categorised as “specific spare parts”, which are used for specific plant equipment in power plants of subsidiaries and joint ventures, and “commonspare parts”, which are for general use.

The provision for specific spare parts of subsidiaries is calculated by dividing the balances of specific spare parts on hand at the year end bythe number of years remaining under the Power Purchase Agreement with the Electricity Generating Authority of Thailand. The provision for common spareparts is generally provided based on an aging analysis.

Property, plant and equipmentAll property, plants and equipment are initially recorded at cost. All plants and equipment are stated at historical cost less accumulated depreciation.Depreciation is calculated on the straight-line method to write off the cost of each asset, except for land as it is deemed to have an indefinite life,

to their residual values over their estimated useful lives as follows:

YearsPower Plants 15, 20 and 21Water Plants and transmission line 30Buildings and structures 10 and 20Transmission system 20 and 21Office equipment, furniture and computers 3, 5 and 10Operating and maintenance equipment 5Motor vehicles 5Leasehold improvement 2

The power plants located in other country are depreciated by the units of production method based on estimates volume according to salesagreements. Whenever actual production of the two plants falls below a specified level, depreciation charged to operations shall be the base depreciationamount. The base depreciation amount is computed based on the straight-line method over the estimated useful life of the power plants of 35 years. Theactual production has fallen below a specified level; therefore, those power plants have been depreciated based on the straight-line method.

66

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.Estimated recoverable amount is the higher of the anticipated discounted cash flows from the continuing use of the asset and the amount obtainable fromthe sale of the asset less any cost of disposal.

Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amounts and are taken into account indetermining operating profit.

Interest costs on borrowings to finance the construction of property, plant and equipment are capitalised, during the period of time that is requiredto complete and prepare the property for its intended use, as part of cost of the asset. All other borrowing costs are expensed. The borrowing costs include:

• Interest on long-term borrowings; and• Amortisation of ancillary costs incurred in connection with the arrangement of borrowingsThe capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to the

Group’s outstanding borrowing during the year. Where funds are borrowed specifically for the acquisition, construction or production of property, plant andequipment, the amount of borrowing costs eligible for capitalisation on that asset is determined as the actual borrowing costs incurred on that borrowingduring the period less any investment income on the temporary investment of those borrowings.

Expenditures for addition, renewal and betterment, which result in a substantial increase in an asset’s current replacement value, are capitalised.Repair and maintenance costs are recognised as an expense when incurred.

GoodwillGoodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired subsidiary

undertaking and joint ventures at the date of acquisition. Goodwill on acquisitions is reported in the consolidated balance sheet as goodwill and is amortisedusing the straight-line method over its estimated useful life which are between the periods of 3.5-20 years.

The carrying amount of goodwill is reviewed annually and written down for impairment where it is considered necessary.

Foreign currency translationForeign currency transactions are accounted for at the exchange rates prevailing at the date of the transactions. Gains and losses resulting from

the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognised in theconsolidated and company statements of income. Such balances are translated at year-end exchange rates. Liabilities which are covered by currency swapcontract are translated into Thai Baht at the contract rate.

Statements of income of foreign entity are translated into the Group’s reporting currency at average exchange rates for the year and the balancesheets are translated at the year end exchange rates ruling on balance sheet date. Exchange difference arising from the retranslation of the net investmentsin a foreign entity, is taken to “Translation adjustments” in shareholders’ equity. On disposal of the foreign entity, such translation difference is recognisedin the statements of income as part of the gain or loss on sale.

Financial instrumentsFinancial instruments carried on the balance sheets include cash and bank balances, investments, trade receivables, trade creditors and borrowings.

The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.The Group is also parties to financial instruments that reduce exposure to fluctuations in foreign currency exchange and interest rates. These

instruments, which comprise interest rate swap contracts and currency and interest rate swap contract, are not recognised in the financial statements oninception. The purpose of these financial instruments is to reduce risks.

Interest rate swap contracts protect the Group from movements in interest rates. Any differential to be paid or received on interest rate swapcontracts is recognised as a component of interest expense as incurred.

Currency and interest rate swap contract protects the Group from movements in exchange rates and interest rates. Any differential in interest rateto be paid or received is recognised as a component of interest expense as incurred.

Disclosures about financial instruments to which the Group is a party are provided in Note 30.

Revenue recognitionSales are recognised upon delivery of electricity and customer acceptance. Sales are shown net of sales taxes and discounts.Revenue from construction service is recognised on a percentage of completion method based on the ratio of actual cost incurred to the total

estimated cost of the relevant contract. Revenue from other service is recognised when the services have been rendered in accordance with the term of theagreements or invoices have been issued.

Interest income is recognised on accrual basis unless collectibility is in doubt.Dividend income is recognised when the shareholder’s right to receive payment is established.

Segment reportingThe segmental reporting has been prepared based on the Company’s method of internal reporting, which desegregates its business by geographical.

Major repair and maintenance expensesMajor repair and maintenance expenses relating to power plants, which are made to restore or maintain the future economic benefits, are expensed

when incurred. Spare parts are charged to repairs and maintenance expenses when they are issued from stocks.

ComparativesWhere necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.

67

3. Statements of cash flowsCash and cash equivalents consist of cash on hand and at banks and deposits at banks and financial institutions which maturities are within three

months.Change in deposits at banks and financial institutions used as collateral is included in cash flows from operating activities.

4. Segment informationFinancial information by geographical segments

For the year ended 31 December 2001Thailand Philippines Consolidated

Baht Baht Baht

Revenue from sales 9,521,852,137 1,003,925,192 10,525,777,329

Service income 174,278,068 32,319,484 206,597,552

Others 848,602,729 31,045,632 879,648,361

Total revenue 10,544,732,934 1,067,290,308 11,612,023,242

Cost of sales and services (3,697,417,050) (335,730,315) (4,033,147,365)Segment results 6,847,315,884 731,559,993 7,578,875,877

Selling and administrative expenses (812,691,487) (92,166,590) (904,858,077)

Operating profit 6,034,624,397 639,393,403 6,674,017,800

Currency exchange losses (236,255,557)

Interest expenses (3,299,278,296)

Shares of profit from associates 35,094,800

Profit before tax 3,173,578,747

Income tax (31,042,046)

Profit before minority interest 3,142,536,701

Minority interest 203,458,123

Net profit 2,939,078,578

Segment assets 50,143,249,455 2,821,941,455 52,965,190,910

For the year ended 31 December 2000Thailand Philippines Consolidated

Baht Baht Baht

Revenue from sales 9,238,547,620 341,973,886 9,580,521,506

Service income 107,338,343 8,965,406 116,303,749

Others 837,713,734 16,116,634 853,830,368

Total revenue 10,183,599,697 367,055,926 10,550,655,623

Cost of sales and services (3,362,061,546) (99,820,990) (3,461,882,536)

Segment results 6,821,538,151 267,234,936 7,088,773,087

Selling and administrative expenses (965,362,058) (55,626,324) (1,020,988,382)

Operating profit 5,856,176,093 211,608,612 6,067,784,705

Currency exchange losses (1,477,680,306)

Interest expenses (3,324,970,236)

Shares of loss from associates (76,883,261)

Profit before tax 1,188,250,902

Income tax (9,822,506)

Profit before minority interest 1,178,428,396

Minority interest (38,312,503)

Net profit 1,216,740,899

Segment assets 51,947,286,344 3,164,368,455 55,111,654,799

5. Related party transactionsThe Company is significantly influenced by the Electricity Generating Authority of Thailand (EGAT) and CLP Power Projects (Thailand) Limited who are

the major shareholders of the Company and hold 25.43% and 20.75%, repectively. The remaining Company’s shares are widely held.The information of the Company’s subsidiaries, joint ventures, and associates is stated in Note 13.

68

The following material transactions were carried out with related parties:(a) Sales of electricity


For the years ended 31 December 2001 2000 2001 2000

Million Baht Million Baht Million Baht Million Baht

Sales of electricity– Electricity Generating Authority of Thailand 9,362 9,206 – –

The two subsidiaries of the CompanyTwo subsidiaries of the Company, which are Rayong Electricity Generating Company Limited and Khanom Electricity Generating Company Limited,

have entered into the Power Purchase Agreements (PPAs) with EGAT. The agreements shall be effective for periods of 15 and 20 years. According to theresolutions of the Cabinet’s meetings dated 15 February 1994 and 23 January 1996, the electricity revenues from such agreements are calculated on a“Cost plus basis”. There is a limitation of sales of electricity to third parties as specified in the agreements. These agreements have been pledged ascollateral with the lenders under the Master Agreements.

Under the PPAs with EGAT, the subsidiaries are eligible to take into consideration and receive compensation exchange rate effects to adjust theformular for calculation of electricity power sold to EGAT in each month pertaining to “The First Amendment to Power Purchase Agreements” dated on 30January 1998 over the periods of the PPAs. Compensation for the years ended 31 December 2001 and 2000 amount to Baht 1,152 million and Baht 901million respectively.

Under the PPAs, EGAT has to bear the natural gas cost until the subsidiaries enter into a natural gas purchase agreement with PTT Public CompanyLimited (formerly the Petroleum Authority of Thailand). Therefore, the calculation of revenues from the portion of energy sales of electricity does not includea calculation of the natural gas cost.

A subsidiary of GulfA subsidiary of Gulf has entered into the Power Purchase Agreement with EGAT in 1998. According to the agreement, this subsidiary must start to

sell electricity to EGAT within September 1998, with such sales quantity and electricity rate in compliance with the agreement. The agreement is effectivefor a period of 21 years, and this subsidiary has pledged bank guarantees as collateral for the cancellation in the amount of Baht 82 million. This guaranteewill be received on maturity.

(b) Major maintenance expensesConsolidated Company



Major maintenance expenses– Electricity Generating Authority of Thailand 309 483 – –

Two subsidiaries of the Company, which are Rayong Electricity Generating Company Limited and Khanom Electricity Generating Company Limited,have entered into Major Maintenance Agreements with EGAT for the latter to provide major maintenance services, repair services, administrative servicesand additional services related to the subsidiaries’ power plants. The price for such services is calculated under the agreements, based on the “Cost plusbasis” and will be adjusted annually according to the Consumer Price Index. The agreements have been effective for a period of six years, commencing from14 May 1996 and 7 December 2000, and can be extended for an additional period of six years. These agreements have been pledged as collateral with thelenders under the Master Agreements.

(c) Outstanding balances arising from sales of electricityConsolidated Company

As at 31 December 2001 2000 2001 2000


Trade accounts receivable– Electricity Generating Authority of Thailand 1,464 1,498 – –

Outstanding trade accounts receivable as at 31 December can be analysed as follows:Up to 3 months 1,461 1,497 – –

3-6 months 1 – – –

6-12 months – – – –

Over 12 months 2 1 – –

1,464 1,498 – –

69

(d) Loan to related companiesConsolidated Company

As at 31 December 2001 2000 2001 2000


SubsidiaryEGCO Joint Ventures & Development Company Limited – – – 25

AssociateAmata-EGCO Power Limited 32 32 32 –

These loans were normally given on commercial terms and conditions. The repayments of principal and interest of the loan to Amata-EGCO PowerLimited are restricted until the fulfillment of cash reserves in accordance with the loan agreement with a financial institution.

(e) Investments in debentures issued by a subsidiary and the Company’s debentures held by the subsidiaries


As at 31 December 2001 2000 2001 2000


Investment in debentures– Khanom Electricity Generating Company Limited – – 66 71

The Company’s debentures held by– Rayong Electricity Generating Company Limited – – 39 50

– Khanom Electricity Generating Company Limited – – 357 250

(f) Interest income arising from investments in debentures issued by a subsidiary and interest expenses arising from theCompany’s debentures held by the subsidiaries




Interest income on investment in debenture of– Khanom Electricity Generating Company limited – – 12 12

Interest expenses on the Company’s debentures held by– Rayong Electricity Generating Company Limited – – 4 4

– Khanom Electricity Generating Company limited – – 19 20

6. Cash on hand and at banksCash on hand and at banks of the Group comprise cash and saving accounts. As at 31 December 2001 the interest rates bear at the rates of 0.25%

to 3% per annum.

7. Deposits at banks and financial institutionsDeposits at banks and financial institutions of the Group mainly comprise deposits at banks and promissory notes issued by local financial institutions.

As at 31 December 2001 the interest rates bear at the rates of 1% - 9% per annum.

8. Short-term investments

Marketable securitiesThe movements in marketable securities can be analysed as follows:


2001 2000 2001 2000

Baht Baht Baht Baht

Opening net book amount 12,766,575 95,477,840 84,108,855 171,630,680

Additions 109,642,049 12,798,727 109,642,049 12,798,727

Disposals (51,980,769) (660,000) (57,363,489) (5,470,560)

Transferred to long-term investments in marketable securities – (94,817,841) – (94,817,841)

Changes in value of investments 2,200,343 (32,151) 2,200,343 (32,151)

Closing net book amount 72,628,198 12,766,575 138,587,758 84,108,855

70

The details of short-term investments in marketable securities are as follows:Available-for-sale


2001 2000 2001 2000

Baht Baht Baht Baht

Debt securities– Khanom Electricity Generating Company Limited – – 65,959,560 71,342,280

– Advance Info Service Public Company Limited 20,000,000 – 20,000,000 –

– ING Thai Cash Mutual Fund 50,460,005 – 50,460,005 –

Equity securities– Ratchaburi Holdings Public Company Limited – 12,798,726 – 12,798,726

Changes in value of investments 2,168,193 (32,151) 2,168,193 (32,151)

72,628,198 12,766,575 138,587,758 84,108,855

9. Short-term and long-term investments used as collateralDeposits at banks and financial institutions used as collateral of the two subsidiaries, which are Rayong Electircity Generating Company Limited

(REGCO) and Khanom Electricity Generating Company Limited (KEGCO), are cash reserves to be maintained under the loan agreements referred to in Notes17 and 18, for the purpose of repayment of principal and interest due within one year and as a reserve to minimise the exchange risk. These cash reservesare provided from the proceeds from sales of electricity.

As at 31 December 2001 and 2000, the cash reserves, which are for the purpose of repayment of principal and interest due within one year,amounted to Baht 3,744 million and 3,921 million, respectively. The remaining balances of Baht 1,590 million and Baht 2,475 million as at 31 December2001 and 2000, mainly represent Holding accounts of both subsidiaries and Borrower’s accounts of KEGCO, which must be maintained in accordancewith the loan agreements.

The cash reserve for minimising exchange risk represents deposits in US Dollars. The two subsidiaries have to provide this reserve until suchaccount equals the lower of 25% of the aggregate outstanding unhedged US Dollar loans or an amount of US Dollars 103 million. As at 31 December 2001,the reserves fully complied with the requirements.

As at 31 December 2001, the deposits under these reserves bear interest at the rates of 1.46% - 5.42% per annum for the foreign currency depositsand 0.25% - 7.25% per annum for the Thai Baht deposits.

Short-term investments in marketable securities used as collateralThe details of short-term investments in marketable securities are as follows:

Consolidated

31 December 2001

Available- Held-to- Total

for-sale maturity

Baht Baht Baht

Debt securities– Foreign securities 597,601,629 – 597,601,629

– GE Capital Auto Lease Public Company Limited – 40,495,186 40,495,186

– Total Access communication Public Company Limited – 14,286,000 14,286,000

– PTT Exploration and Production Public Company Limited – 40,558,015 40,558,015

Changes in value of investments (1,170,429) – (1,170,429)

596,431,200 95,339,201 691,770,401

Consolidated

31 December 2000


for-sale maturity

Baht Baht Baht

Debt securities– Foreign securities 427,107,432 – 427,107,432

Changes in value of investments (333,334) – (333,334)

426,774,098 – 426,774,098

71

Long-term investments in marketable securities used as collateralThe details of long-term investments in marketable securities are as follows:

Consolidated

31 December 2001


for-sale maturity

Baht Baht Baht

Debt securities– Foreign securities 1,817,955,257 – 1,817,955,257



– PTT Exploration and Production Public Company Limited – 40,558,015 40,558,015

Less Current portion– GE Capital Auto Lease Public Company Limited – (40,495,186) (40,495,186)

– Total Access communication Public Company Limited – (14,286,000) (14,286,000)

– PTT Exploration and Production Public Company Limited – (40,558,015) (40,558,015)

Changes in value of investments 4,709,763 – 4,709,763

1,822,665,020 135,704,618 1,958,369,638

Consolidated

31 December 2001

Mature within (years)

1 2-5

Baht Baht

Held-to-maturity– GE Capital Auto Lease Public Company Limited 40,495,186 49,990,618

– Total Access communication Public Company Limited 14,286,000 85,714,000

– PTT Exploration and Production Public Company Limited 40,558,015 –

95,339,201 135,704,618

Consolidated

31 December 2000


for-sale maturity

Baht Baht Baht

Debt securities– Foreign securities 1,577,988,819 – 1,577,988,819



Changes in value of investment 1,751,542 – 1,751,542

1,579,740,361 150,005,738 1,729,746,099

The Group engaged an international Fund Manager to manage funds in US Dollar denominated Collateral Accounts. Most funds are invested in short-term and long-term marketable debt securities, under the investment guideline as stipulated in loan agreements with the Group’s lenders.

Gain or losses on revaluation of investments which are classified as available-for-sale are charged to shareholders’ equity and recognised as incomeor expenses in the statement of income when such investments are sold.

10. Trade accounts receivable, netConsolidated Company

2001 2000 2001 2000

Baht Baht Baht Baht

Trade account receivable 1,823,565,093 1,707,719,496 – –

Less Allowance for doubtful accounts (5,248,441) (3,420,401) – –

Trade account receivable, net 1,818,316,652 1,704,299,095 – –

72

Outstanding trade accounts as at 31 December can be analysed as following:Consolidated Company

2001 2000 2001 2000

Baht Baht Baht Baht

Up to 3 months 1,758,691,111 1,674,419,665 – –

3 - 6 months 25,638,887 298,143 – –

6 - 12 months 5,129,941 – – –

Over 12 months 34,105,154 33,001,688 – –

1,823,565,093 1,707,719,496 – –

Less Allowance for doubtful accounts (5,248,441) (3,420,401) – –

1,818,316,652 1,704,299,095 – –

11. Spare parts and supplies, netConsolidated Company

2001 2000 2001 2000

Baht Baht Baht Baht

Fuel 325,204,524 317,679,539 – –

Specific spare parts 2,160,424,202 2,166,030,262 – –

Common spare parts 138,250,907 37,849,977 – –

Spare parts in transit 199,493,056 – – –

2,823,372,689 2,521,559,778 – –

Less Allowance for obsolete stocks (172,606,781) (151,561,693) – –

Spare parts and supplies, net 2,650,765,908 2,369,998,085 – –

12. Long-term investmentsMarketable securities and others

The movements in long-term investments in marketable securities and others can be analysed as follows:Consolidated Company

2001 2000 2001 2000

Baht Baht Baht Baht

Opening net book amount 2,504,284,296 227,980,818 2,504,284,296 227,980,818

Transfer from (to) investments in equity securities (37,499,995) 94,817,840 (37,499,995) 94,817,840

Additions 282,154,890 2,128,973,813 279,154,890 2,128,973,813

Disposals (74,324,324) (24,902,923) (74,324,324) (24,902,923)

Changes in fair value of investments (18,399) 77,414,748 (18,399) 77,414,748

Closing net book amount 2,674,596,468 2,504,284,296 2,671,596,468 2,504,284,296

The details of long-term investments in marketable securities and others are as follows:31 December 2001


Available- Other Available- Other

for-sale investments for-sale investments

Baht Baht Baht Baht

Debt securities– REGCO Loan Fund (1) 140,540,540 – 140,540,540 –

– Primus Leasing Company Limited 20,000,000 – 20,000,000 –

– The Siam Pulp and Paper Public Company Limited 3,000,000 – – –

Equity securities– Eastern Water Resources Development and Management 559,346,693 – 559,346,693 –

Public Company Limited– The Krung Thai Selected Flexible Portfolio Fund 1,300,000,000 – 1,300,000,000 –

– The Krung Thai Dividend Fixed Income Fund 50,000,000 – 50,000,000 –

– Others – 2,300,000 – 2,300,000

Changes in value of investments 119,891,805 – 119,891,805 –

2,192,779,038 2,300,000 2,189,779,038 2,300,000

– Nam Theun 2 Project 479,517,430 479,517,430

2,674,596,468 2,671,596,468

73

31 December 2000


Available- Other Available- Other

for-sale investments for-sale investments

Baht Baht Baht Baht

Debt securities– REGCO Loan Fund (1) 164,864,865 – 164,864,865 –

Equity securities– Eastern Water Resources Development and Management 512,035,650 – 512,035,650 –

Public Company Limited– The Krung Thai Selected Flexible Portfolio Fund 1,300,000,000 – 1,300,000,000 –

– Thai LNG Power Company Limited – 37,499,995 – 37,499,995

– Others – 300,000 – 300,000

Changes in value of investments 119,910,203 – 119,910,203 –

2,096,810,718 37,799,995 2,096,810,718 37,799,995

– Nam Theun 2 Project 369,673,583 369,673,583

2,504,284,296 2,504,284,296

On 19 September 2001, the Company has entered into the Shareholder Agreement with the Electricity Authority of Lao, EDF International (EDFI) andItalian-Thai Development for establishment of the Nam Thuen 2 Power Company Limited to generate electricity.

13. Investments in subsidiaries, joint ventures and associates


2001 2000 2001 2000

Baht Baht Baht Baht

Investments in subsidiaries 440,243 470,845 13,353,744,675 12,180,124,777

Investments in joint ventures – – 2,232,896,444 1,752,023,625

Investments in associates 232,290,278 403,496,174 – –

Total investments 232,730,521 403,967,019 15,586,641,119 13,932,148,402

The movements in investments in subsidiaries, joint ventures, and associates can be analysed as follows:

2001


Baht Baht

Opening net book amount 403,967,019 13,932,148,402

Acquisitions (Note 13.2 (a)) - 445,500,000

Call for additional paid up share capital of subsidiaries and a joint venture - 451,297,660

Disposals (105,995,441) (186,983,253)

Dilution of investment in a subsidiary (Note 13.2 (c)) (100,335,857) 16,947,636

Shares of profit from investments in subsidiaries, joint ventures and associates 35,094,800 3,347,357,870

Dividends received from subsidiaries and joint ventures - (2,533,949,082)

Transfer of investments from other long-term investment - 37,499,995

Change in fair value of marketable securities of a subsidiary - (4,957,541)

Translation adjustments - 81,779,432

Closing net book amount 232,730,521 15,586,641,119

The Company holds ordinary shares in all its subsidiaries and there has been no change in these holdings except the acquisition of two subsidiaries(Note 13.2 (a)), the dissolution of a subsidiary (Notes 13.2 (b)) and the dilution of investment in a subsidiary (Note 13.2 (c)).

74

13.1 The principal subsidiaries, which are all incorporated in Thailand except EGCO International BVI which is incorporated in the British VirginIslands, are as follows:

Company as at 31 December 2001

Business Paid-up Portion of Cost Equity Dividend

share capital Investment (%) Method Method

Baht’000 (Including Baht’000 Baht’000 Baht’000

indirect holding)

Rayong Electricity Generating Co., Ltd. Electricity generating 4,700,000 99.99 4,700,000 6,148,141 1,542,627

Khanom Electricity Generating Co., Ltd. Electricity generating 4,850,000 99.99 4,850,000 5,631,523 991,322

EGCO Engineering & Service Power plant 350,000 99.99 350,000 320,676 –

Co., Ltd. and its subsidiary maintenance services and associate

– Subsidiary– Agro Energy Co., Ltd. Trading / delivery 99.99

services of natural scrap– Associate

– Amata Power-Esco Service Power plant operation 50.00Co., Ltd.

EGCO Mining Co., Ltd. Mining and other energy 176,000 70.00 124,800 841 –

Egcom Tara Co., Ltd. Tap water business 345,000 70.00 398,475 270,130 –

EGCO Green Energy Co., Ltd. Investing in biomass 87,259 74.00 64,572 63,754 –

and its subsidiary fueled electricgenerating plant

– Roi-Et Green Co., Ltd. Develop, design, 95.00

construct and testoperation of fueledelectric generatingplant from husk

EGCO International BVI Investing in power – 99.99 – 188,682 –

energy projectsThai LNG Power Corporation Investing in power 450,000 100.00 438,000 448,016 –

Limited and its subsidiary energy projects– TLP Cogeneration Co.,Ltd. Electricity generating 742,000 80.00 417,600 281,982 –

11,343,447 13,353,745 2,533,949

The investment in Agro Energy Company Limited was accounted for under the equity method but not consolidated in the consolidated financialstatements as at 31 December 2001 and 2000 because this subsidiary has not commenced its trading operation and its financial statements wereimmaterial to the Group.

Dividend receivable in the company financial statements represents interim dividend receivable from REGCO and EGCO International BVI in amountof Baht 278 and Baht 79 million, respectively.





indirect holding)

Rayong Electricity Generating Co., Ltd. Electricity generating 4,700,000 99.99 4,700,000 5,788,442 2,316,917

Khanom Electricity Generating Co., Ltd. Electricity generating 4,850,000 99.99 4,850,000 5,405,249 794,700

EGCO Engineering & Service Power plant 350,000 99.99 350,000 276,220 –

Co., Ltd. and its subsidiary maintenance servicesand associate– Subsidiary

– Agro Energy Co., Ltd. Trading / delivery 99.99

services of natural scrap– Associate

– Amata Power-Esco Service Power plant operation 50.00

Co., Ltd.EGCO Joint Ventures & Development Investing in power 447,720 99.99 447,720 435,978 –

Co., Ltd. and its associate energy projects– Amata-EGCO Power Limited Electricity generating 29.70

75





indirect holding)

EGCO Mining Co., Ltd. Mining and other energy 176,000 70.00 124,800 5,755 –

Egcom Tara Co., Ltd. Tap water business 345,000 70.00 398,475 268,407 –

EGCO Green Energy Co., Ltd. Investing in biomass 100 74.00 74 74 –

and its subsidiary fueled electricgenerating plant

– Roi-Et Green Co., Ltd. Develop, design, 95.00

construct and testoperation of fueledelectric generatingplant from husk

EGCO International BVI Investing in power – 99.99 – – –

energy projects10,871,069 12,180,125 3,111,617

13.2 Principal movements in investments in subsidiaries during the year ended 31 December 2001(a) Thai LNG Power Corporation Limited and its subsidiaryIn February 2001, the Company acquired 90% of the share capital of Thai LNG Power Company Limited, which is an investing company in electricity

projects and incorporated in Thailand, according to a Share Sale and Purchase Agreement dated 14 February 2001. As a result of this transaction, theCompany holds 100% of the share capital of both Thai LNG Power Company Limited and its wholly-owned subsidiary, TLP Cogeneration Company Limited.The consideration of Baht 445 million was settled in cash in February and March 2001. The consolidated net book value, amounting to Baht 305 million, asat 28 February 2001 was applied as the fair value of the net identifiable assets at the date of acquisition. The resulting goodwill of Baht 140 million will beamortised on a straight-line basis over the period of 20 years.

Details of acquisition of net consolidated assets of Thai LNG Power Company Limited in the consolidated financial statements and the resultinggoodwill are as follows:

Million Baht

Property, plant and equipment, net (Note 14) 126

Other assets less liabilities 179

Book value of net assets 305

Goodwill 140

Total purchase consideration 445

TLP Cogeneration Company Limited are currently constructing power plants.In March 2001, the Group sold 20% of investment in TLP Cogeneration Company Limited for Baht 77 million. Finally, the Group has its percentage

interest in such company only 80% of the share capital.TLP Cogeneration Company Limited called for additional paid up of Baht 2 per share from total shares of 50 million shares and issued 56 million

shares at par value of Baht 10 which were priced at Baht 2.50 in March 2001. The Group purchased new shares at the same proportion as originalinvestments.

In May 2001, Thai LNG Power Company Limited and TLP Cogeneration Company Limited called for additional paid up of Baht 1 per share fromtotal shares 75 million shares and Baht 3.50 per share from total shares 56 million shares, respectively. The Group purchased new shares at the sameproportion as original investments.

TLP Cogeneration Company Limited called for additional paid up of Baht 1 per share from the total shares 106 million shares in August 2001.The Group purchased new shares at the same proportion as original investments.

(b) EGCO Mining Company LimitedAt the Extraordinary Shareholders’ meeting dated 7 November and 27 November 2001, it was approved to dissolve EGCO Mining Company Limited,

a subsidiary of the Company. Such company has already registered for the dissolution with the Ministry of Commerce on 29 November 2001and is in theprocess of liquidation.

(c) EGCO Joint Ventures & Development Company LimitedAccording to the Share Purchase Agreement dated 27 November 2001 between the Company and Unocal Bang Pakong Limited (UBP), the Company

sold 21,578,306 ordinary shares in EGCO Joint Ventures & Development Company Limited (EGCO JD) at Baht 5.4014 each to UBP with loss amounting toBaht 10,429,613. As a result, the Company share holding in EGCO JD reduced from 99.99% to 73.02%.

On the same date, EGCO JD also entered into the Share Swap Agreement with UBP. Under the terms of the Share Swap Agreement, EGCO JD willswap the specific issuance of its shares of 36,843,386 shares at a price of Baht 6.758336 each or totaling to Baht 249 million with 30% of share holdingof Amata Power (Bang Pakong) Limited (APB) from UBP. Therefore, the Company’s shareholding in EGCO JD reduced from 73.02% to 50% and the status ofthe investment in EGCO JD changed from a wholly subsidiary to a joint venture. The Company recognised the reduction in its interest in EGCO JD as gainon deemed disposal of interest on dilution of investments (as mentioned in Note 22).

76

Under Share Swap Agreement on 27 December 2001, EGCO JD issued 36,843,386 new ordinary shares in exchange for APB shares from UBP.EGCO JD received 1,680,000 shares of APB in exchange for its new issued shares, at fair value of Baht 249 million. As a result, EGCO JD has 30%shareholding in APB.

The net assets of 30% interest in APB as at the exchange date approximate the fair value of the share swap transactions as follows:As at 28 December 2001

Consolidated APB


Property, plant and equipment, net (Note 14) 435 869

Other assets less liabilities 311 620

Fair value of share swap transactions 124 249

13.3 The principal joint ventures, which is incorporated in Thailand except Conal Holdings Corporation which is incorporated in the Philippines,are as follows:



share capital Investment Method Method

Baht’000 (%) Baht’000 Baht’000 Baht’000

EGCO Joint Ventures & Investing in power 696,720 50.00 348,360 358,898 –

Development Co., Ltd energy businessGulf Electric Public Co., Ltd. (Gulf) Electricity generating 2,000,000 50.00 1,175,000 1,084,307 –

Conal Holdings Corporation (Conal) Investing in power 729,320 40.00 1,002,467 789,691 188,682

energy business2,525,827 2,232,896 188,682





Gulf Electric Public Co., Ltd. (Gulf) Electricity generating 1,850,000 50.00 1,100,000 982,378 –

Conal Holdings Corporation (Conal) Investing in power 729,320 40.00 1,002,467 769,645 78,990

energy business2,102,467 1,752,023 78,990

Principal movements in investments in joint ventures during the year ended 31 December 2001

GulfIn March and September 2001, Gulf Electric Public Company Limited issued 10 million shares and 5 million shares, respectively, at par value of Baht

10 which were priced at Baht 10. The Company purchased new shares issued to be existing shareholders in the same proportion as its original investments.

13.4 The principal associates, which have been included in the consolidated financial statements, are as follows:

Consolidated as at 31 December 2001




Amata Power-Esco Power plant operation 2,000 50.00 1,000 2,948 –

Service Co., Ltd.Amata-EGCO Power Limited Electricity generating 1,350,000 14.85 200,475 229,342 –

201,475 232,290

Consolidated as at 31 December 2000




Amata Power-Esco Power plant operation 2,000 50.00 1,000 291 –

Service Co., Ltd.Amata-EGCO Power Limited Electricity generating 1,350,000 29.70 400,950 403,205 –

401,950 403,496

77

The investment in Amata Power-Esco Service Company Limited was accounted for under the equity method but not proportionate consolidation inthe consolidated financial statements as at 31 December 2001 and 2000 because its financial statements were immaterial to the Group.

14. Property, plant and equipment, net

Consolidated

Land Buildings Power Plants & Equipment Construction Total

and Land Substation, and Vehicles in progress

improvements Transmission

System and

Water Plants

Baht Baht Baht Baht Baht Baht

At 31 December 2000

Cost 1,876,410,244 3,293,207,113 33,155,511,747 294,973,926 392,924,653 39,013,027,683

Less Accumulated depreciation – (740,277,020) (8,020,920,415) (144,931,457) – (8,906,128,892)

Net book amount 1,876,410,244 2,552,930,093 25,134,591,332 150,042,469 392,924,653 30,106,898,791

Year ended 31 December 2001

Opening net book amount 1,876,410,244 2,552,930,093 25,134,591,332 150,042,469 392,924,653 30,106,898,791

Translation adjustments 37,541 282,536 10,110,811 (171,757) 123 10,259,254

Acquisitions (Notes 13.2 (a) and 13.2 (c)) 100,533,934 – 436,042,664 11,179,924 13,512,426 561,268,948

Additions 13,197,183 5,391,377 527,806,352 48,684,118 – 595,079,030

Disposals/Transfer – – (109,980,184) (12,350,942) (51,532,390) (173,863,516)

Depreciation charge (Note 24) – (169,571,970) (1,879,194,040) (52,298,088) – (2,101,064,098)

Closing net book amount 1,990,178,902 2,389,032,036 24,119,376,935 145,085,724 354,904,812 28,998,578,409

At 31 December 2001

Cost 1,990,178,902 3,305,027,130 34,709,280,698 362,747,655 354,904,812 40,722,139,197

Less Accumulated depreciation – (915,995,094) (10,589,903,763) (217,661,931) – (11,723,560,788)

Net book amount 1,990,178,902 2,389,032,036 24,119,376,935 145,085,724 354,904,812 28,998,578,409

Company

Land Buildings Equipment Total

and Land and Vehicles

improvements

Baht Baht Baht Baht

At 31 December 2000Cost 284,429,029 619,834,930 172,369,292 1,076,633,251

Less Accumulated depreciation – (54,184,991) (83,225,082) (137,410,073)

Net book amount 284,429,029 565,649,939 89,144,210 939,223,178

Year ended 31 December 2001Opening net book amount 284,429,029 565,649,939 89,144,210 939,223,178

Additions – – 16,733,942 16,733,942

Disposals/Transfer – – (1,296,635) (1,296,635)

Depreciation charge (Note 24) – (34,158,996) (28,525,992) (62,684,988)

Closing net book amount 284,429,029 531,490,943 76,055,525 891,975,497

At 31 December 2001Cost 284,429,029 619,834,930 181,006,222 1,085,270,181

Less Accumulated depreciation – (88,343,987) (104,950,697) (193,294,684)

Net book amount 284,429,029 531,490,943 76,055,525 891,975,497

Land, buildings and equipment of the five subsidiaries of the Company, which are specified in the Master Agreements and loan agreements, aremortgaged and pledged as collateral in accordance with the loan agreements (Notes 17 and 18).

Land, buildings and equipment of power plants of a joint venture of EGCO Joint Ventures & Development Company Limited mortgaged and pledgedas collateral in accordance with the loan agreements (Note 17).

78

Gulf has mortgaged parts of its land to secure bank overdraft facility and short-term loan obtained from a local bank. In addition, a subsidiary of Gulfhas mortgaged its land, power plant, machinery and equipment to secure the credit facilities granted by various financial institutions (Note 17).

The subsidiaries of Conal has mortgaged and pledged their property, plant and equipment as security for long-term loans (Note 17).Borrowing costs of Baht 332,403 (2000: Nil), arising on financing specifically entered into for the construction of a new factory, were capitalised

during the year and are included in “Additions”. A capitalisation rate of 3.25% (2000: Nil) was used representing the actual borrowing cost of the loan usedto finance the project.

15. GoodwillFor the year ended 31 December 2001 Consolidated

Baht

Opening book amount 981,123,794

Acquisition (Note 13.1 (a)) 140,203,163

Cumulative amortisation (113,225,454)

Translation adjustments 8,433,942

Closing book amount 1,016,535,445

16. Other assetsConsolidated Company

2001 2000 2001 2000

Baht Baht Baht Baht

Deposits 10,837,149 9,546,975 7,571,989 7,551,989

Refundable tax 91,555,390 50,266,500 91,555,390 16,245,154

Project development costs and advances 393,969,064 360,415,780 – –

Others 138,761,511 63,363,139 263,333 2,303,333

635,123,114 483,592,394 99,390,712 26,100,476

As at 31 December 2001, other assets in the consolidated financial statements include deferred development costs and project expenditures paidon behalf of a subsidiary of Gulf totalling Baht 393 million

The subsidiary has not commenced its operation and is awaiting for the consideration and approval from the government to proceed the project afterconclusion on the project’s environmental impacts. Under the sales/purchase agreement, if the project is to be cancelled such project development costswill be reimbursed from the Electricity Generating Authority of Thailand (EGAT).

17. Long-term loansThe long-term loans are as follows:


2001 2000 2001 2000

Baht Baht Baht Baht

Current portion of long-term loansUS Dollars 2,218,506,062 1,887,488,764 – –

Japanese Yen – – – –

Peso Philippines 15,533,953 15,904,434 – –

Thai Baht 396,687,500 339,500,000 – –

2,630,727,515 2,242,893,198 – –

Long-term loans, netUS Dollars 16,927,647,020 18,449,584,742 – –

Japanese Yen 23,602,593 – – –

Peso Philippines 107,787,422 126,262,564 – –

Thai Baht 1,754,020,313 2,021,000,000 – –

18,813,057,348 20,596,847,306 – –

Total long-term loans 21,443,784,863 22,839,740,504 – –

After taking accounts of interest rate swaps, the weight average effective interest rate exposure of the long-term loans of the Group wasapproximately 9%.

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Long-term loans of subsidiaries of the CompanyThe long-term loans of Rayong Electricity Generating Company Limited are the loans under the Master Agreement, Credit Agreement and

Institutional Loan Agreement, each dated 30 November 1994.The long-term loans of Khanom Electricity Generating Company Limited are the loans under the Master Agreement and Bank Credit Agreement, each

dated 3 June 1996.The long-term loans of Egcom Tara Company Limited and Roi-Et Green Company Limited are loans from a local financial institution.The long-term loan information of subsidiaries of the Company is summarised as follows :

Total facilities Outstanding balance Term of repayment Interest rate

as at 31 December 2001

(Million) (Million) (years) (% per annum)

Loans of Rayong Electricity GeneratingCompany LimitedUSD 93 35 10 LIBOR plus a certain marginUSD 48 18 10 LIBOR plus a certain marginUSD 141 134 15 Fixed rate at 8.85%Baht 3,550 1,846 12 MLR minus a certain margin

Loans of Khanom Electricity GeneratingCompany LimitedUSD 100 75 12 LIBOR plus a certain marginUSD 165 124 12 LIBOR plus a certain marginBaht 225 Not yet drawdown 15 MLR minus a certain margin

Loans of Egcom Tara Company LimitedBaht 300 280 7 MLR plus a certain margin

Loans of Roi-Et Green Company LimitedJPY 1,260 70 12 Fixed rate at 3.25%

Maturity of long-term loans of subsidiaries :Consolidated Company

2001 2000 2001 2000

Baht Baht Baht Baht

Within 1 year 2,147,266,544 1,717,179,908 – –

Later than 1 year and not later than 5 years 10,338,444,849 2,327,493,768 – –

Later than 5 years 5,364,428,616 15,107,634,920 – –

17,850,140,009 19,152,308,596 – –

Rayong Electricity Generating Company LimitedRayong Electricity Generating Company Limited has entered into an interest rate swap agreement to convert a floating interest rate based on LIBOR

plus a certain margin to fixed interest rates at 8.12% and 8.22% per annum for 2 tranches of loan amounting to US Dollars 93 million and US Dollars 48million, respectively. The agreement is effective from 30 November 1994 to 7 December 2004.

On 30 September 1999, the lenders of the Thai Baht loans have transferred the right to receive the loan repayment amounting to Baht 1,517 millionto the Mutual Fund, namely REGCO Loan Fund (1). On the same date the Mutual Fund has settled the loans of Baht 1,517 million due by the subsidiary.The loan bears interest at 8% per annum. The repayment schedule for principal and interest is semi-annually. In addition, such subsidiary has also enteredinto an interest rate swap agreement to convert the floating interest rate to a fixed rate of 8% per annum for the remaining Thai Baht loan of Baht 1,110million. The repayment schedules for principal and interest are semi-annually and monthly basis respectively.

Khanom Electricity Generating Company LimitedOn 9 May 1996, Khanom Electricity Generating Company Limited has entered into an interest rate swap agreement to convert a floating interest rate

based on LIBOR plus a certain margin to a fixed interest rate at 8.0275% per annum for the loan amounting to US Dollars 165 million. In addition, there isa currency and interest rate swap agreement to convert the loan amounting to US Dollars 100 million with a floating interest rate to Thai Baht currency ata fixed interest rate of 11% per annum. As a result, the balance of this loan as at 31 December 2001 amounting to US Dollars 75 million, equals to Baht1,892 million. These agreements are effective from 19 June 1996 to 14 June 2008.

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The Master Agreements of both subsidiaries have certain clauses which state that cash reserves are to be provided from the proceeds of sales ofelectricity for repayments of principal and interest due within one year, and other conditions as described in Note 9 to the financial statements. Also, areserve for minimising the exchange risk shall be provided as described in the same note.

In addition, the PPAs, the Asset Purchase Agreements, the Major Maintenance Agreements, insurance policies and other related agreements withthe lenders have been assigned as collateral in accordance with the conditions under the Master Agreements.

Long-term loans of joint venturesThe long-term loan information of joint ventures is summarised as follows:

Total facilities Outstanding balance Term of repayment Interest rate

as at 31 December 2001

(Million) (Million) (years) (% per annum)

EGCO Joint Ventures & Development(EGCO JD)USD 8 8 12 LIBOR plus a certain marginUSD 1 0.6 12 LIBOR plus a certain marginBaht 41 25 12 MLR plus a certain marginBaht 15 Not yet drawdown 12 MLR plus a certain marginBaht 24 Not yet drawdown 12 MLR plus a certain margin

GulfUSD 40 27 12 LIBOR plus a certain margin

ConalUSD 23 2 10 LIBOR plus a certain marginUSD 30 24 11.5 LIBOR plus a certain marginUSD 18 15 11.5 LIBOR plus a certain marginPHP 106 87 11.5 Fixed rate at 11%PHP 66 56 11.5 Fixed rate at 11%

Maturity of long-term loans of joint ventures:Consolidated Company

2001 2000 2001 2000

Baht Baht Baht Baht

Within 1 year 483,460,971 525,713,290 – –

Later than 1 year and not later than 5 years 1,602,031,274 99,449,190 – –

Later than 5 years 1,508,152,609 3,062,269,428 – –

3,593,644,854 3,687,431,908 – –

A subsidiary of Conal has entered into an interest rate swap agreement to convert a floating interest rate based on LIBOR plus a certain margin to afixed rate at 7.5% per annum. The agreement is effective up to 2002. As at 31 December 2001 the outstanding amount on such agreement amounted toUS Dollars 2 million.

Land, buildings, machinery and equipment of the subsidiaries of joint ventures were mortgaged and cash at banks and financial institutions werepledged as collateral.

18. DebenturesThe debentures are debentures in Thai Baht of the Company and its two subsidiaries as follows :


2001 2000 2001 2000

Baht Baht Baht Baht

Debentures 11,226,466,021 13,475,172,603 3,893,000,000 5,000,000,000

Less Current portion of debentures (1,551,873,320) (2,091,103,686) (1,197,350,000) (1,107,000,000)

9,674,592,701 11,384,068,917 2,695,650,000 3,893,000,000

After taking accounts of interest rate swap, the weighted average effective interest rate exposure of debentures of the Group and the Company wereapproximately 10% and 7%, respectively.

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The debenture information of the Company is summarised as follows :

Net outstanding balance Interest rate Term of Final repayment

as at 31 December 2001 repayment

(Baht Million) (% per annum) (Years) (Date)

Debentures 3,497 8 5 21 October 2004

Maturity of debenture of the Company :Consolidated Company

2001 2000 2001 2000

Baht Baht Baht Baht

Within 1 year – – 1,197,350,000 1,107,000,000

Later than 1 year and not later than 5 years – – 2,695,650,000 3,893,000,000

Later than 5 years – – – –

– – 3,893,000,000 5,000,000,000

The debentures of the Company are private placement, totalling 5,000,000 units of Baht 1,000 face value each, for a total of Baht 5,000 million.The debentures are repayable semi-annually commencing from 2001 to 2004. The debeutures bear fixed interest at the rate of 8% per annum and theinterest is paid semi-annually. The company is required to comply with the conditions set out in the agreement.

The Company has entered into an interest rate swap agreement to convert a fixed interest rate at the rate of 8% per annum to a floating interest ratebased on six-month THBFIX plus a certain margin. This agreement is effective from 23 April 2001 to 21 October 2004.

The debenture information of the two subsidiaries is summarised as follows :

Net outstanding balance Interest rate Term of Final repayment

as at 31 December 2001 repayment

(Baht Million) (% per annum) (Years) (Date)

Rayong Electricity GeneratingCompany LimitedDebentures No.1 1,250 11.25 5, 7, 10, 12 7 December 2006

Debentures No.2 520 11.25 1-12 7 December 2006

Khanom Electricity GeneratingCompany LimitedDebentures 5,959 11.5625 15 14 June 2011

Maturity of debentures of subsidiaries :Consolidated Company

2001 2000 2001 2000

Baht Baht Baht Baht

Within 1 year 1,551,873,320 2,091,103,686 – –

Later than 1 year and not later than 5 years 6,069,242,223 6,462,553,660 – –

Later than 5 years 3,605,350,478 4,921,515,257 – –

11,226,466,021 13,475,172,603 – –

Rayong Electricity Generating Company LimitedThe debentures of Rayong Electricity Generating Company Limited are under the Master Agreement and Debenture Holder Representative

Appointment Agreement No.1 and No.2, each dated 30 November 1994.The No.1 debentures of Rayong Electricity Generating Company Limited are divided into 4 parts, being repayable in 5 years, 7 years, 10 years, and

12 years in 2000, 2001, 2004 and 2006, respectively. The No.2 debentures are divided into 12 parts, being repayable in 1 to 12 years, in 1995 to 2006.The interest rate is payable semi-annually.

Khanom Electricity Generating Company LimitedThe debentures of Khanom Electricity Generating Company Limited are under the Master Agreement and the Statements of the Terms and Conditions

Regarding the Rights and Obligations of the Issuer and the Debentureholders, which were dated 3 June 1996 and 19 June 1996, respectively.These debentures are secured debentures with the holders’ names being registered, totalling 750,000 units of Baht 10,000 face value each, for a

total of Baht 7,500 million. The total debentures were offered to the public and are repayable within 15 years from the date of issuance on 14 June 1996,at six monthly intervals to 2011. The interest is payable semi-annually at the rate of 11.5625% per annum.

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Both subsidiaries are also required to maintain a reserve for repayments of principal and interest due within one year and to pledge the relevantagreements as collateral as mentioned in Note 17.

19. Minority interestConsolidated Company

2001 2000 2001 2000

Baht Baht Baht Baht

Beginning balance 469,341,410 56,470,331 – –

Acquisitions 63,303,905 451,183,582 – –

Additional paid-up share capital of subsidiaries and joint ventures 122,433,788 – – –

Shares of net profit (loss) of subsidiaries 203,458,123 (38,312,503) – –

Dividend paid of joint ventures (217,321,306) – – –

Ending balance 641,215,920 469,341,410 – –

20. Share capital and premium on share capital

Number of shares Ordinary shares Share premium Total

Baht Baht Baht

At 1 January 2000 524,271,100 5,242,711,000 8,557,422,000 13,800,133,000

Issue of shares 126,000 1,260,000 2,520,000 3,780,000

At 31 December 2000 524,397,100 5,243,971,000 8,559,942,000 13,803,913,000

Issue of shares 1,549,400 15,494,000 30,988,000 46,482,000

At 31 December 2001 525,946,500 5,259,465,000 8,590,930,000 13,850,395,000

The total authorised number of ordinary shares is 530,000,000 shares (2000: 530,000,000 shares) with a par value of Baht 10 per share (2000:Baht 10 per share). The amount of 525,946,500 shares are issued and fully paid up.

Under the resolution of the Shareholders’ Extraordinary Meeting no. 1/1995 on 22 August 1995, a 5-year allocation plan of 10 million warrants to theemployees of the Company and its subsidiaries under the Employee Stock Ownership Plan (ESOP) with a par value of Baht 10 per share was approved. OnMarch and July 2001, the Company received subscription of 671,000 and 878,400 additional shares at Baht 30 each, respectively. The Companyregistered the increased share capital with the Ministry of Commerce.

21. Legal reserveConsolidated Company

2001 2000 2001 2000

Baht Baht Baht Baht


Appropriation during the year 146,953,928 60,837,045 146,953,928 60,837,045

Ending balance 442,832,100 295,878,172 442,832,100 295,878,172

Under the Public Companies Act, the Company is required to set aside as statutory at least 5% of its net profit until the reserve is not less than 10%of the registered capital. The reserve is non-distributable.

22. Other incomeConsolidated Company

2001 2000 2001 2000

Baht Baht Baht Baht

Dividend income 148,293,145 45,610,882 148,293,145 45,610,882

Gains on disposal of investments 32,695,620 117,599 17,309,420 117,599

Gains on deemed on disposal of interest on dilution of investment in a subsidiary 16,947,636 – 16,947,636 –

Others 35,641,213 31,386,493 21,906,239 16,885,056

233,577,614 77,114,974 204,456,440 62,613,537

Gain on deemed on disposal of investments in a subsidiaryIn December 2001, EGCO Joint Venture and Development Company Limited increased its share capital by private placement. This affected to the

Group’s shareholding in this subsidiary decrease and is considered to be a deemed disposal of interest on dilution amounting to Baht 16 million.

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23. Cost of salesCost of sales comprises main expenses such as repair and maintenance expenses, depreciation expenses, and insurance expenses. Major repair

and maintenance expenses of power plants are recorded as expenses when they are incurred. The major repair and maintenance expenses for the yearsended 31 December 2001 and 2000 amounted to Baht 783 million and Baht 867 million, respectively.

24. Net profitThe following items have been charged in arriving at net profit :


2001 2000 2001 2000

Baht Baht Baht Baht

Depreciation on property, plant and equipment (Note 14) 2,101,064,098 1,875,513,531 62,684,988 62,734,160

Staff costs 590,735,463 540,648,081 130,568,694 115,907,862

Development cost of project – 385,106,093 – 385,106,093

25. Basic earnings per shareBasic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares in

issue during the year.Consolidated Company

2001 2000 2001 2000

Baht Baht Baht Baht

Net profit attributable to shareholders 2,939,078,578 1,216,740,899 2,939,078,578 1,216,740,899

Weighted average number of ordinary share in issue (share) 525,266,350 524,365,600 525,266,350 524,365,600

Basic earnings per share 5.60 2.32 5.60 2.32

For the diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potentialordinary shares. The Company has provided share warrants to the employees of the Group under the Employee Stock Ownership Plan (ESOP).

The outstanding share warrants are assumed to have been exercised to purchase ordinary shares for the purpose of computing the dilution. For suchcalculation, no adjustment is made to net profit.


2001 2000 2001 2000

Shares Shares Shares Shares

Weighted average number of ordinary shares in issue 525,266,350 524,365,600 525,266,350 524,365,600

Adjustments for share warrants 3,906,700 5,456,100 3,906,700 5,456,100

Weighted average number of ordinary shares diluted earnings per share 529,173,050 529,821,700 529,173,050 529,821,700

Diluted earnings per share (Baht) 5.55 2.30 5.55 2.30

26. DividendsAt the annual shareholders’ meeting dated 30 April 2001, it was approved to pay dividends for 525,068,100 shares of Baht 2 each, totalling Baht

1,050 million (2000 : Baht 1,048 million). These dividends were paid to the shareholders during the year.In addition, at the Board of Directors’ meeting dated 27 August 2001, it was approved to pay an interim dividend in respect of 2001 for 525,946,500

shares of Baht 1 per share, totalling Baht 526 million (2000 : Nil). These dividends were paid during the year. The Company has also reversed a long-outstanding dividend payable approximately Baht 77 million during the year.

27. Directors’ remunerationDirectors’ remuneration in the consolidated for the year ended 31 December 2001 amounted to Baht 15 million. (2000 : Baht 17 million) which

comprises of meeting fee and bonus. Such expense was approved from the Company’s annual shareholders’ meeting.

28. Provident fundThe Group has provident funds for those employees who apply to join. The contributions comprise the employee’s portion and the same amount from

the Group’s contribution. The funds are managed by authorised fund managers in accordance with the Provident Fund Act 1987.

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29. Promotional privilegesRayong Electricity Generating Company Limited, Khanom Electricity Generating Company Limited, TLP Cogeneration Company Limited , Egcom Tara

Company Limited and Roi-Et Green, which are the Company’s subsidiaries, have received promotional privileges from the Office of Board of Investmentunder promotion certificates issued on 15 June 1995, 6 November 1996, 7 June 1999, 6 December 2000 and 19 October 2001, respectively, in respectof electricity generating and tap water. Under these privileges, those subsidiaries have received exemption from certain taxes and duties as detailed in thecertificates including exemption from corporate income tax for a period of eight years from the date of commencement of earning revenue. As a promotedindustry, those subsidiaries are required to comply with the terms and conditions as specified in the promotion certificates.

The two subsidiaries of Gulf have been granted promotional privileges by the Office of Board of Investment for the generation and distribution ofelectricity. Under these privileges, the two subsidiaries have received exemption from corporate income tax for a period of eight years from the date ofcommencement of earning revenue from the promoted activities.

The three subsidiaries of Conal have received promotional privileges from the Office of Board of Investment under the Omnibus Investments Code of1987 in respect of electricity generating. Under these privileges the three subsidiaries have received exemption from corporate income tax for a period ofsix years from the date of commencement of earning revenue from the promoted activities.

30. Financial instrumentsThe principal financial risks faced by the Group are interest rate and exchange rate risks. The Group borrows at both fixed and floating rates of

interest and exchange to finance its operations.The objectives in using financial instruments are to reduce the uncertainty over future cash flows arising from movements in interest and exchange

rates, and to manage the liquidity of the cash resources. Interest rate exposures are managed through interest rate swaps and currency and interest rateswaps as mentioned in Note 17. In respect of currency exchange risk which mainly results from the US Dollar loans of the Group, it is minimised byadjustment of the exchange rate impact through the formula for the calculation of sales of electricity charged to EGAT and National Power Corporation(NPC).

Trading for speculative purpose is prohibited. All derivative transactions are subject to approval by the Group Management Committee beforeexecution. Decisions on the level of risk undertaken are confined to the Group Management Committee which has established limits by transaction type andby counterparty.

a) Financial assets and liabilitiesAs at 31 December, the Group has outstanding foreign currency assets and liabilities after taking accounts of currency swaps as follows:

2001


Currency Million Currency Million


AssetsUS Dollars 171 7,549 – –

Deutsche Mark 2 30 – –

7,579 –

LiabilitiesUS Dollars 509 23,265 – –

Japanese Yen 70 24 – –

23,289 –

2000


Currency Million Currency Million


AssetsUS Dollars 171 7,352 – –

Deutsche Mark 3 61 – –

7,413 –

LiabilitiesUS Dollars 503 20,348 – –

20,348 –

85

Foreign currency assets represent trade accounts receivable, US dollar deposits with foreign and local banks and financial institutions and invest-ments in US Dollars for the future payments of foreign currency liabilities. Foreign currency liabilities represent trade accounts payable, other payable andlong-term loans.

As at 31 December 2001, the Group has not entered into forward exchange contracts to cover the exchange risk to long-term loans in US Dollarswhich net of deposits in US Dollars amounted of US Dollars 219 million.

Objectives and significant terms and conditionsIn order to manage risks arising from fluctuations in interest rates and currency exchange rates, the Group uses of the following derivative financial

instruments:

Interest rate swapsContracts are entered into to manage exposures to fluctuations in interest rates on specific transactions. As at 31 December 2001, the fixed interest

rates for long-term loans in US Dollars and Baht amounted of US Dollars 177 million and Baht 780 million varied from 8% to 8.22% per annum (2000 : 8%to 8.22% per annum) and the floating rate for debenture of Baht 3,893 million was at the rate of a six-month THBFIX plus a certain margin (2000 : Nil).

Currency and interest rate swapContract is entered into to manage exposure to fluctuations in foreign currency exchange and interest rates on specific transactions. As at 31

December 2001, the long-term loans of US Dollars 75 million has the fixed exchange rate at Baht 25.23 per US Dollar 1 (2000: Baht 25.23 per US Dollar1) and the fixed interest rate at the rate of 11% per annum (2000: 11% per annum).

b) Credit riskThe Group has no significant concentrations of credit risk relating to its cash and investments. The Group places its cash and investments with high

quality institutions. The Group’s policy is designed to limit exposure with any one institution and to invest its excess cash in low risk investment accounts. TheGroup has not experienced any losses on such accounts.

c) Fair valueThe carrying amount of cash and cash equivalents, receivables and accounts payables approximates the fair value due to the short maturities of

these instruments. The value of long-term loans and debentures is estimated using discounted cash flows based on the Company’s incremental borrowingrates for similar types of loans and debentures.

The fair value of long-term loans and debentures of which the Group issued at the balance sheet date were:

31 December 2001


Carrying amount Fair value Carrying amount Fair value


Long-term loans 21,444 22,495 – –

Debentures 11,226 13,881 3,893 4,103

The fair values of interest rate swap and currency and interest rate swap contracts have been calculated by using rates quoted by the Group’sbankers to terminate the contracts at the balance sheet date except the contract that prohibited to early terminate. The fair value of such contractapproximates the original contract.

The fair values of the derivative financial instruments of the Group at the balance sheet date were:

31 December 2001



Favourable (Unfavourable) Interest rate swap contracts (594) 36

Favourable Currency and interest rate swap contracts 1,158 -

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31. Commitments and contingent liabilitiesCommitments and contingent liabilities of the Company

(a) As at 31 December 2001, the Company has commitments under the Sponsor Support Agreements, which were made in respect of loans ofassociates and performance bond of subsidiaries on behalf of the Company totalling Baht 755 million and Baht 70 million, respectively.

(b) As a credible, high-quality company, the Company is committed to administering its obligations in compliance with good corporate governance.It has, accordingly, set up a reserve fund of 25% of total obligations to its subsidiaries and associates, thus reducing the risk of default and providing extrareturn in the form of interest income and increased financial stability.

As at 31 December 2001, the reserve fund balance amounted to Baht 206 million. The Company is in the process of additional reserve in the amountof Baht 1 million.

Commitments and contingencies of joint ventures(c) A subsidiary of Gulf is obliged to provide capital amounting to Baht 150 million for the establishment of two compensation funds as insurance

against any adverse environment impact from the power plant throughout the project period. These funds will be managed by the Tripartite Committee, andthese funds will expire when such subsidiary ceases the power plant project.

In addition, such subsidiary is also obliged to provide capital amounting to Baht 2 million per fund per annum for the establishment of two compensationfunds for community development throughout the project period. These funds will be managed by Community Development Fund Committee.

Significant Power Purchase Agreements

Significant Power Purchase Agreements by the Company’s subsidiariesThe Power Purchase Agreements with the Electricity Generating Authority of Thailand (EGAT) of Rayong Electricity Company Limited and Khanom

Electricity Generating Company Limited are mentioned in Note 5.(d) TLP Cogeneration Company Limited has entered into the Power Purchase Agreement with the Electricity Generating Authority of Thailand

(EGAT) which is effective for a period of 21 years commencing from January 2003. Such company has to provide security of Baht 86 million in form of bankguarantee according to the Power Purchase Agreement with EGAT.

(e) Roi-Et Green Company Limited has entered into the Power Purchase Agreement with the Electricity Generating Authority of Thailand (EGAT)which is effective for a period of 21 year commencing from April 2003. Under the Power Purchase Agreement, such company has to provide security ofBaht 50 million in the form of performance loan on behalf of the Industrial Financial Corporation of Thailand (IFCT) against the regulations in the agreement.

Significant Power Purchase Agreements by the joint venturesThe subsidiaries of Gulf have the following significant agreements:(f) A subsidiary has entered into the sales/purchase agreement for electricity supply with the Electricity Generating Authority of Thailand (EGAT)

in quantity and charging rate as specified in the agreement. The agreement covers a period of 21 years commencing from September 1998, which was thetrading date. Under the agreement, such subsidiary has to provide security in the form of a bank guarantee of Baht 82 million as security against the earlycancellation of the agreement. The security is to be returned to the subsidiary upon termination of the agreement.

In addition, such subsidiary has also entered into Gas Purchase Agreement with PTT Public Company Limited (formerly the Petroleum Authority ofThailand) in quantity and gas price as specified in the agreement. The agreement is effective for a period of 21 years, which can be extended for a periodof four years under the conditions stipulated in the agreement.

(g) Another subsidiary has entered into the sales/purchase agreement for electricity supply with the Electricity Generating Authority of Thailand(EGAT) in 1997. Under the related agreement, the subsidiary has to provide security of Baht 184 million in the form of a bank guarantee against the earlycancellation of the agreement. The collateral is to be returned to such subsidiary upon expiry of the agreement.

However, as at 31 December 2001, the said subsidiary has not commenced its normal business operation and is waiting for consideration andapproval from the government to proceed the project.

The subsidiaries of Conal have the following significant agreements:(h) Under a Fast-Track Build, Operate and Transfer (BOT) project agreement with the National Power Corporation (NPC), a subsidiary has constructed,

installed and currently operates two bunker diesel power stations in Mindanao, Philippines. NPC supplies all fuel necessary to generate electricity, with allelectricity generated purchased by NPC at a price calculated based on the formula provided in the agreements. The power stations are being operated fora period of 10 years and 12 years commencing from 1994 to 2003 and 2005, respectively. Upon expiration of the specified periods, such subsidiary shalltransfer to NPC all its rights, title and interest in the power stations without compensation.

(i) Under a separate Energy Conversion Agreements (ECAs) with NPC, the other two subsidiaries have constructed a 100 and 50 megawattbunker diesel power plants under a Build-Own-Operate (BOO) scheme. NPC supplies all fuel necessary to generate electricity, with all electricity purchasedby NPC at a price calculated based on the formula provided in the agreements. The two subsidiaries shall, directly or indirectly, own the power plants andshall operate and manage the power plants for a period of 18 years upto 2015 and 2016. Upon expiration of the 18-year cooperation period, the ECAs maybe renewed upon the sole option of NPC.

These three subsidiaries are eligible to receive the compensation amounts from NPC, in the event of amendment, modification or repeal of anyPhilippines laws or any government regulations that will materially reduce, prejudice or otherwise adversely affect these subsidiaries’ interest in the projector the power plant/station, and/or these subsidiaries’ economic return on their investments.

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The joint venture of EGCO Joint Venture and Development Company Limited has the following significant agreements:(j) A joint venture of EGCO Joint Venture and Development Company Limited has entered into sales/purchase agreement for electricity supply

with the Electricity Generating Authority of Thailand (EGAT) in 1998. The agreement covers a period of 21 years commencing from September 2001, whichwas the trading date. Under the agreement, the joint venture has to provide security in the form of bank guarantee of Baht 24 million as security against theearly cancellation of the agreement. The security is to be returned to the subsidiary upon termination of the agreement.

In addition, the joint venture has also entered into Gas Purchase Agreement with PTT Public Company Limited (formerly the Petroleum Authority ofThailand) in quantity and gas price as specified in the agreement. The agreement was effective for a period of 21 years, which can be extended for a periodof four years under the conditions stipulated in the agreement.

Service and Capital Spare Parts Purchase Agreements

Service and Capital Spare Parts Purchase Agreements by the Company’s subsidiariesThe Major Maintenance Agreements with the Electricity Generating Authority of Thailand (EGAT) of Rayong Electricity Company Limited and Khanom

Electricity Generating Company Limited are mentioned in Note 5.The subsidiaries of the Company have the following significant agreements:(k) Two subsidiaries have entered into Long-term Part Agreements for Capital Spare Parts with a supplier. These agreements, totalling US Dollars

58 million, are effective for a period of six years up to 2006.(l) A subsidiary has entered into Power Plants and Substation and Transmission System Repair and Maintenance Service Contract with a related

company. The contract, totalling Baht 127 million, is effective for a period of six years commencing from 30 August 2000.(m) Two subsidiaries have entered into Spare Parts Repair Service Agreements with three suppliers, which one was previously a related company.

These agreements, totalling Baht 75 million, are effective for a period of 2-3 years up to 2004.(n) A subsidiary has entered into Operation and Maintenance Agreement with a related company. This agreement, totalling Baht 155 million, is

effective for a period of five years commencing from the completion of the power plant.

A subsidiary of Conal has the following significant agreement:(o) A subsidiary has entered into the Maintenance Agreement with a supplier. This agreement is effective over a period of 10 years and will expire

in 2003 for a yearly basic fee plus an additional amount calculated based on energy produced.

Capital commitments(p) Capital expenditure regarding power plants and equipment contracted for at the balance sheet date but not recognised in the consolidated

financial statements totalling of Baht 778 million, US Dollars 40 million and Japanese Yen 626 million.

32. Interests in joint venturesInvestment in EGCO Joint Ventures & Development Company Limited

EGCO Joint Ventures & Development Company Limited is joint venture between the Company and Unocal Bang Pakong Limited (UBP). The jointventure is under the Joint venture Agreement which the Group has a 50% interest in joint venture (as mentioned in Note 13.2 (c)).

Investment in Gulf Electric Public Company LimitedGulf Electric Public Company Limited is joint venture between the Company and Electric Power Development Company Limited (EPDC). The joint

venture is under the Joint venture Agreement which the Group has a 50% interest in joint venture.

Investment in Conal Holdings CorporationConal Holdings Corporation (Conal) is joint venture between the Company and Alson Consolidated Resource, Inc. The joint venture is under the Joint

venture Agreement which the Group has a 40% interest in joint venture.The following amounts represent the Group’s share of the assets, liabilities and revenues of the joint ventures and are included in the consolidated

financial statements ended 31 December:2001

EGCO Joint Ventures Gulf Electric Public Conal Holdings

& Development Company Limited Corporation

Company Limited

Million Baht Million Baht Million Baht

Balance sheetsCurrent assets 122 316 797Non-current assets 668 2,133 2,025Current liabilities (57) (418) (450)Non-current liabilities (374) (1,087) (1,649)Net assets 359 944 723

88

Profit and Loss For the year ended 31 December 2001

EGCO Joint Ventures Gulf Electric Public Conal Holdings

& Development Company Limited Corporation

Company Limited

Million Baht Million Baht Million Baht

Revenues – 796 1,607

Expenses – 764 698

Joint venture proportion – 50% 40%

2000

Gulf Electric Public Conal Holdings

Company Limited Corporation


Balance sheetsCurrent assets 295 767

Non-current assets 2,134 2,397

Current liabilities (427) (514)

Non-current liabilities (1,190) (1,971)

Net assets 812 679

For the six-month period ended For the four-month period ended

Profit and Loss 31 December 2000 31 December 2000


Revenues 362 367

Expenses 476 427

Joint venture proportion 50% 40%

33. PrivatisationThailand

The privatisation of Electricity Generating Authority of Thailand and the electricity supply industry reform are being implemented following planapproved by the Cabinet on 3 October 2000. In the plan, it is expected that processes will be completed in year 2003. Presently the draft Energy IndustryAct and State Investment Corporation Act are being considered by the Council of State; therefore, the effects of the law on the Group cannot be determined.

PhilippinesOn 8 June 2001, RA No. 9136, otherwise known as “Electric Power Industry Reform Act of 2001” (the Act), was signed into law, providing for the

privatisation of National Power Corporation (NPC) and the restructuring of the electric power industry. This law may have an impact on Conal’s operationsand the industry as a whole. The process of approval of the Implementing Rules and Regulation (IRR) is pending; therefore, the effects of the law on Conalcannot presently be determined.

However, according to Energy Conversion Agreement (ECAs) with NPC, Conal is eligible to receive the compensation amounts from NPC, in the eventof amendment, modification or repeal of any Philippines laws or any government regulations that will materially reduce, prejudice or otherwise adverselyaffect Conal’s interest in the project or the power plant/station, and/or Conal’s economic return on its investments.

Electricity Generating Public Company LimitedEGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210 Tel. 66 0 2998-5999, 66 0 2955-0955 Fax. 66 0 2955-0956-9 www.egco.com

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