egco 03

During the past decade, the achievement of good corporate governance

is a living proof of EGCO's success as a power generator

with social conscience. In the early part of its second decade,

EGCO is determined to walk on the firm path of prosperity and excellence

along with a concern for the environment. EGCO's business under

the practice of Corporate Governance will provide Thais with

better life quality while preserving valuable natural resources.

001A n n u a l R e p o r t 2 0 0 3

Electricity Generating Public Company Limited

002A n n u a l R e p o r t 2 0 0 3


GENERAL INFORMATION

Registered

Share Capital

(Million Baht)

5,300

Registered

Share Capital

(Million Baht)

4,700

5,000

250

2 1/

(50,000 USD)

750

1,060

Par Value

(Baht)

10

Par Value

(Baht)

10

10

10

39.952886 1/

(1 USD)

10

10

Paid-up

Share Capital

(Million Baht)

5,264.65

Paid-up

Share Capital

(Million Baht)

4,700

4,850

250

2 1/

(50,000 USD)

525

1,060

Ownership

Interest

(%)

-

Ownership

Interest

(%)

99.99

99.99

99.99

100

100

80

Business

Holding company focusing on

power business and other power

related businesses

Business

Independent Power Producer (IPP)

Electricity generating

and supply business


Electricity generating and supply

business

Engineering, operation and

maintenance services for power

plants and manufacturers


investment in electricity

generating companies in foreign

countries

Holding company focusing on SPP

Small Power Producer (SPP)

Electricity and steam generating

and supply business

Company

Electricity Generating Public Company Limited (EGCO)Registration Number 333Head Office EGCO Tower, 222 Moo 5,

Vibhavadi Rangsit Road, Tungsonghong, Laksi,Bangkok 10210, ThailandTel. 66 0 2998-5000, 66 0 2998-5999Fax 66 0 2955-0956-9

Website www.egco.com

SUBSIDIARIES

Company

Rayong Electricity Generating Company Limited (REGCO)Office EGCO Tower

Tel. 66 0 2998-5000, 66 0 2998-5999Fax 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

Khanom Electricity Generating Company Limited (KEGCO)Office EGCO Tower

Tel. 66 0 2998-5000, 66 0 2998-5999Fax 66 0 2955-0932

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

EGCO Engineering & Service Company Limited (ESCO) *Office EGCO Tower

Tel. 66 0 2998-5000, 66 0 2998-5999Fax 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

EGCO International (BVI) Limited (EGCO BVI)Office EGCO Tower

Tel. 66 0 2998-5000, 66 0 2998-5999Fax 66 0 2955-0956-9

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

Thai LNG Power Corporation Limited (TLPC)Office EGCO Tower

Tel. 66 0 2998-5000, 66 0 2998-5999Fax 66 0 2955-0956-9

TLP Cogeneration Company Limited (TLP COGEN)(TLPC is the company‘s 40% shareholder)Office EGCO Tower

Tel. 66 0 2998-5000, 66 0 2998-5999

Fax 66 0 2955-0956-9

003A n n u a l R e p o r t 2 0 0 3


Business


power business

SPP utilizing biomass as fuel

Trading / delivery service of fuel

from natural scrap

Piped water generating and supply

business

Business

Holding company focusing on IPP

and SPP

Holding company focusing on SPP

business and other energy related

businesses

SPP


and supply business

Small Power Producer (SPP)


and supply business

Registered

Share Capital

(Million Baht)

175

180

2

345

Registered

Share Capital

(Million Baht)

5,000

1,168.43

1,500

560

Par Value

(Baht)

10

10

10

10

Par Value

(Baht)

10

10

10

10

Paid-up

Share Capital

(Million Baht)

175

180

2

345

Paid-up

Share Capital

(Million Baht)

4,110

696.72

1,350

560

Ownership

Interest

(%)

74

70.13

99.99

70

Ownership

Interest

(%)

50

50

14.85

15

SUBSIDIARIES (continued)

Company

EGCO Green Energy Company LimitedOffice EGCO Tower

Tel. 66 0 2998-5000, 66 0 2998-5999

Fax 66 0 2955-0956-9

Roi-Et Green Energy Company Limited(EGCO Green Energy Company Limited is the company‘s 94.77% shareholder)Office EGCO Tower

Tel. 66 0 2998-5000, 66 0 2998-5999

Fax 66 0 2955-0956-9

Agro Energy Company Limited (AE)(ESCO is the company‘s 99.99% shareholder)Office EGCO Tower

Tel. 66 0 2998-5000, 66 0 2998-5999

Fax 66 0 2955-0956-9

Egcom Tara Company Limited (ET)Office EGCO Tower

Tel. 66 0 2998-5000, 66 0 2998-5999Fax 66 0 2955-0945

Site office- Plant 1 332 Moo 2, Pongsawai,

Amphur Muang, Ratchburi 70000, Thailand

- Plant 2 250 Moo 1, Pangpuay, Amphur Damneansaduak,Ratchburi 70130, Thailand

JOINT VENTURES

Company

Gulf Electric Public Company Limited (GEC)Office 11 th Fl., 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 and Development Company Limited (EGCO JD)Office EGCO Tower

Tel. 66 0 2998-5000, 66 0 2998-5999

Fax 66 0 2955-0956-9

Amata-EGCO Power Company Limited (AEP)(EGCO JD is the company‘s 29.70% shareholder)Office 33 Soi Lertnava,

Krungthepkreetha Rd, Huamark, Bangkapi, Bangkok 10240, ThailandTel. 66 0 2379-4333,

66 0 2379-4246,66 0 2710-3400, 66 0 2710-3000

Fax 66 0 2379-4245, 66 0 2379-4257

Amata Power (Bang Pakong) Limited (APB)(EGCO JD is the company‘s 30% shareholder)Office 33 Soi Lertnava,

Krungthepkreetha Rd, HuamarkBangkapi, Bangkok 10240, ThailandTel. 66 0 2379-4333, 66 0 2379-4246,

66 0 2710-3400, 66 0 2710-3000Fax 66 0 2379-4245, 66 0 2379-4257

Share and Debenture Registrar Thailand Securities Depository Company Limited

62 The Stock Exchange of Thailand Building,

Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand

Tel 66 0 2229-2800, 66 0 2654-5599 Fax. 66 0 2359-1259 Call Center 66 0 2229 2888

E-mail: [email protected] Website: http://www.tsd.co.th

Auditor 1. Mr. Prasarn Chuaphanich : Certified Public Accountant (Thailand) No. 3051

2. Mr. Suchart Luengsuraswat : Certified Public Accountant (Thailand) No. 2807

3. Mr. Prasit Yuengsrikul : Certified Public Accountant (Thailand) No. 4174

PricewaterhouseCoopers ABAS Llimited

15th Floor, Bangkok City Tower, 179/74-80 South Sathorn Road, Bangkok 10120, Thailand

Tel 66 0 2286-9999, 66 0 2344-1000 Fax. 66 0 2286-5050

Financial Advisor National Securities Company Limited

18th, 14th and 11th Floor, MBK Tower, 444 Phayathai Road, Pathumwan, Bangkok 10330, Thailand

Tel 66 0 2217- 9595, 66 0 2217-6922 Fax. 66 0 2216-9261

004A n n u a l R e p o r t 2 0 0 3


Note : The Exchange rate as of Investment Date

1/ 1 USD = Baht 39.952886 (July 13, 21, 2000)2/ 1 PESO = Baht 0.91165 (August 25, 2000)3/ 1 USD = Baht 42.26 (August 30, 2002)

* On March 5, 2003, ESCO decreased registered capital from 350 Million Baht to 250 Million Baht.** On December 3, 2002, PMI's Board of Directors in the extraordinary Meeting No.1/2002 passed the resolution to dissolute PMI and presently, it is on the process of the dissolute of the company

REFERENCE PERSONS

Business

Power plant operation and

maintenance services


power business in the Philippines


Business

Water resources development and

management for supplying raw

water to the customers

To provide training and education

in energy and energy conservation

Registered

Share Capital

(Million Baht)

2

729.32 2/

(800,000,000

PESO)

13,945.80 3/

(330,000,000

USD Million)

Registered

Share Capital

(Million Baht)

1,050

2.5

Par Value

(Baht)

10

91.17 2/

(100 PESO)

4,226 3/

(100 USD)

Par Value

(Baht)

10

10

Paid-up

Share Capital

(Million Baht)

2

729.32 2/

(800,000,000

PESO)

42.26 3/

(1,000,000

USD Million)

Paid-up

Share Capital

(Million Baht)

1,000

0.30

Ownership

Interest

(%)

50

40

25

Ownership

Interest

(%)

20

10

JOINT VENTURES (continued)

Company

Amata Power - ESCO Service Company Limited (AMESCO)(ESCO is a company shareholder 50%)Office EGCO Tower

Tel. 66 0 2998-5000, 66 0 2998-5999 Fax 66 0 2955-0956-9

Conal Holding Corporation (CONAL)Office EGCO Tower

Tel. 66 0 2998-5000, 66 0 2998-5999Fax 66 0 2955-0956-9

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

Nam Theun 2 Power Company Limited (NTPC)Office 26 Khun Boulom Road,

PO Box 5862, Vientiane, Lao PDR Tel. 856-21-217421 / 2Fax 856-21-217420

OTHERS

Company

Eastern Water Resources Development and Management Public Company Limited (EASTW)Office 9/9 Vibhavadi Rangsit Road,

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 Limited (PMI) **office 254 Phyathai Road, Patumwan,

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

005A n n u a l R e p o r t 2 0 0 3


MESSAGE FROM THE CHAIRMAN

Mr. Sitthiporn RatanopasChairman of the Board

The continual expansion of the Thai economy at a significant rate has led to a rapid increase in the demand for ener-

gy. The sharp rise in the demand for electricity, an infrastructure that supports the forces that drive the economy, clearly

reflects a strong growth of the economy. This trend has caused the authorities overseeing the energy sector to implement

new strategies and measures to cope with the situation. Their aims are to sufficiently and in a timely manner provide power

sources and capacity reserve to meet the higher demand caused by the rising economic trend.

The economic rising trend along with the resulting higher demand in electricity consumption provides the

Electricity Generating Public Company Limited (EGCO) with a promising growth opportunity. EGCO is committed to the

participation in private power generation projects and has restructured its organization to achieve more competitive

edge in the business. In terms of investment, EGCO has made progress in several projects. For Nam Thuen 2 Project in Lao

People's Democratic Republic, the Company signed a Power Purchase Agreement (PPA) with the Electricity Generating

Authority of Thailand (EGAT). It is expected to generate and sell the electricity capacity of 995 MW to EGAT in the second

half of 2009. The Khanom Power Plant 385 MW expansion project is in the stage of negotiating a long-term PPA with EGAT.

The final decision is expected to be concluded in the third quarter of this year. At the same time, Kaeng Khoi 2 (KK2) Project

with the capacity of 700 MW has been approved to change its fuel from coal to natural gas. The project will also relocate

from Prachuab Khirikan to Saraburi.

Regarding the operating performance in the fiscal year 2003, EGCO has achieved another outstanding year. The

company posted a total net profit of 5,994 million baht, or 11.41 baht per share, a dramatic increase of 103% or 3,035 million

baht from last year. Based on the performance in the first-half 2003, EGCO paid a dividend of baht 1.25 per share. While

the Company intends to pay regular dividends and invest under a long term plan, it is confident that it can maintain a dividend

per share payment at an amount that is not less than the previous year.

With respect to corporate reorganisation, two new business groups were added in 2003, namely, the Asset

Management and Planning Group and the Corporate Services group.

In addition to the outstanding business performance, EGCO is determined to follow the practice of Good Corporate

Governance. The Company has set a policy for all companies within EGCO group to have a Code of Conduct as a guide for

the boards as well as the employees. Consequently, it is no surprise that EGCO has gained trust from various business

communities and has received several awards of accomplishment such as the Board of the Year. EGCO is also selected by

the Thai Institute of Directors Association (IOD) as one of the fifty listed companies with good corporate governance. The

company is also lauded by the Securities Exchange of Thailand (SET) as one of the fifteen listed companies with 'Best

Practice on Corporate Governance' in compliance with 15 governing laws and regulations of fair disclosure. EGCO is also

ranked 40th of the total 132 large-sized energing market companies, ranked 4th in Thailand and ranked 1st as the Best

Corporate Governance Company in the utility category by the Euromoney magazine. The company also received the

Disclosure Award from the Stock Exchange of Thailand. These awards and achievements have encouraged EGCO to commit

itself to bring about progress and prosperity for the power generating business and the Thai society as a whole.

On behalf of the Board of the Electricity Generating Public Company Limited, I would like to express my deep gratitude

to all shareholders and supporters who have trust in our company, and importantly to all staff who are devoted to do their

jobs with perseverance and efficiency. EGCO has acheived extraordinary success, because of your contribution and trust.

The Company sincerely wishes to receive such good cooperation from all parties in the years to come.

NEW BUSINESS

VENTURE GROUP

ASSET MANAGEMENT

AND PLANNING

GROUP

CORPORATE SERVICES

GROUP

FINANCE GROUP

PRESIDENT’S

DIRECT REPORT

RE-STRUCTURE

Restructuring to achieve a progress with stability.

We firmly believe that a good foundation guarantees continual growth;

therefore, EGCO carefully takes a progressive step of restructuring

our organization to drive ourselves to success.

Our new structure can be broken down into five major groups:

008A n n u a l R e p o r t 2 0 0 3


FINANCIAL OVERVIEW

Consolidated 2003 2002 2001

Financial Performance (Million Baht)

Sales and service income 15,378 11,463 10,732

Other income and share of profit of

subsidiaries, associates and joint ventures 50 361 711

Cost of sales and cost of services 6,017 4,926 4,033

Other expenses 1,323 963 936

Impairment charge 170 342 -

Interest expenses 2,631 2,807 3,299

Profit attributable to minorities 303 236 203

Net Profit (loss) before Fx 5,287 2,784 3,175

Fx gain (loss) 707 174 (236)

Net Profit (loss) 5,994 2,958 2,939

Financial Position (Million Baht)

Total Assets 56,437 55,824 52,965

Total Liabilities 29,736 34,876 33,780

Shareholders' equity 26,701 20,948 19,185

Minority Interest 859 724 641

Authorized and paid up share capital 5,265 5,265 5,259

Per Share Data (Baht)

Net Profit (loss) before Fx 10.07 5.30 6.04

Net Profit (loss) 11.41 5.62 5.60

Book Value 49.21 38.51 35.26

Dividend n.a. 2.50 2.25

Ratio Analysis 2003 2002 2001

Liquidity ratio (Time) 2.19 2.21 2.80

Cashflows liquidity ratio (Time) 1.01 1.02 1.01

Gross profit ratio (%) 60.88 57.02 62.42

Return on equity ratio (%) 26.02 15.26 32.52

Return on assets ratio (%) 10.68 5.44 11.10

Debt to equity ratio (Time) 1.11 1.66 1.76

009A n n u a l R e p o r t 2 0 0 3


010A n n u a l R e p o r t 2 0 0 3


REVIEW OF 2003 OPERATION

BUSINESS OPERATION

EGCO's business operation focuses on an integrated electricity generating business that includes power related

services in Thailand and in the Asean region, with full commitment to environmental protection and social development

support. We intend to expand our market by developing or acquiring Independent Power Producers (IPP) that present

opportunities for economies of scale and are our traditional area of expertise.

For the 2003's operating results, EGCO reported the consolidated net profit of Baht 5,994 million, an increase

of Baht 3,035 million or 103% compared to 2002.

SUBSIDIARIES

1. Rayong Electricity Generating Company Limited (REGCO) was established on June 1, 1994 to acquire a 1,232

megawatt 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 the Electricity Generating Authority of

Thailand (EGAT) under a 20-year Power Purchase Agreement (PPA).

In 2003, the company's net generation sold to EGAT was 5,811.06 million kilowatt-hours (kWh), a decrease of

6.29% from the year 2002, with the consumption of 51,551.65 million cubic feet of natural gas, representing a 6.22%

decrease. The electricity revenue was 5,946.52 million Baht, higher than the previous year by 29.13%. Net profit was

3,357.86 million Baht, an increase from last year by 81.26%. In addition, the average Equivalent Availability Factor

(EAF) for 2003 was 91.64% which merited a bonus payment from EGAT for the seventh consecutive year.

As REGCO is conscious of its responsibility to human resources, in 2004 the company plans to implement TIS

18001, the Occupational Health and Safety Management System Standard, to reduce risks and accidents involving its

staff and other concerned people. The company continues to focus on efficiency and reliability of the power plant.

REGCO plans to retain ISO 9001 for quality production and ISO 14001 for environmental management, and will maintain

good corporate governance, implement full scheme risk management and best practice on power plant operation,

i.e. benchmarking, as well as put more emphasis on financial and budgeting management in order to meet all stake-

holders' satisfaction.

2. Khanom Electricity Generating Company Limited (KEGCO) was founded on February 20, 1995 to

acquire a power station with 824 megawatt installed capacity from EGAT, the largest power station in Southern

Thailand, comprising two thermal power plants and one combined-cycle power plant.

In 2003, KEGCO generated 6,133.39 million kWh of net electrical output, representing an increase of 10.94%

compared with the previous year. The electricity revenue was Baht 3,795.70 million, representing a decrease of

12.90% from 2002. This is mainly a result of KEGCO's tariff structure that rises and falls with the annual scheduled

maintenance expenses which were lower in 2003 compared to the previous year. KEGCO's 2003 net profit of Baht

1,454.82 million compared with Baht 1,645.11 million in 2002 (the restated financial statements) represented a

decrease of Baht 190.29 million. KEGCO consumed 61,473.43 million cubic feet of natural gas and 0.78 million litres

of diesel oil throughout its plant operation in 2003.

KEGCO is committed to quality and efficiency in electricity generation together with plant maintenance in

order to enhance the stability of the power system in southern Thailand. KEGCO's production represented 55% of

the South's demand for electricity supply. KEGCO has always applied international management standard and, at the

same time, has constantly developed its staff, particularly in the area of operation and maintenance technology.

KEGCO has maintained the Quality Management System, ISO9001:2000 since it attained the certification in 2001.

KEGCO has also encouraged other management systems, including Good Corporate Governance, Risk Management

and Best Practices, to raise its credibility and provide confidence among its stakeholders and all concerned parties

since 2002.

In parallel to its emphasis on achieving the highest efficiency in plant operation and maintenance, KEGCO has

focused on the application of recognized safety management and health standards. The success of this effort was

011A n n u a l R e p o r t 2 0 0 3


demonstrated by the "Occupational Health and Safety Awards" that KEGCO received from the Ministry of Labour and

Social Welfare for four consecutive years. KEGCO has applied the Occupational Health and Safety Management, TIS

18001, and announced the Occupational Health and Safety Policy as a major policy of the company's operations in

October 2003.

In addition, KEGCO fully realizes its responsibility to the community and environment and has consistently

applied the good practice of the Environmental Management System ISO14001, which led to it being awarded the

certificate since February 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 services provided. With highly skilled staff, modern

tools and effective management technique, ESCO has achieved customer's satisfaction through good performance

resulting in the increase in the number of customers and revenue in maintenance services, its core business, year by

year. The revenue from power plant operation and maintenance services in 2003 was Baht 355.18 million, a 31.91%

increase from the previous year. Net profit was Baht 59.97 million, a 6.65% decrease from 2002 due to the lack of

tax loss carried forward which existed in the previous year. The profit before tax in 2003 was Baht 85.88 million,

10.74% higher than the previous year. Dividend paid out to its shareholder, EGCO, was Baht 44.19 million.

3.1 Amata Power-ESCO Service Company Limited (AMESCO) was established on February 28, 1997, 50%

owned by ESCO and another 50% by Amata Power Company Limited. AMESCO provides operation and maintenance

services to Amata-EGCO Power (AEP) plant and Amata Power (Bang Pakong) (APB) plant.

In 2003 the performance of the company was outstanding, similar to the previous year. The 12-month average

availability factor for AEP plant and APB plant was at 95.37% and 95.20%, respectively, which were significantly

higher than the targets specified in the O&M Contract.

3.2 Agro Energy Company Limited (AE), wholly owned by ESCO, was established on November 2, 1999, to procure

fuel from agricultural waste, such as rice husk, for delivery to Roi-Et Green power plant which is a plant in EGCO

Group. Roi-Et Green plant has been in commercial operation since May 29, 2003.

The net operating loss of AE for the year was Baht 1.43 million due to the shortage of rice husk and AE having

to buy from various rice mills in Roi-Et and other provinces which resulted in higher overhead cost than expected.

4. EGCO International (BVI) Limited (EGCO BVI) was established in the British Virgin Islands on April 12,

2000 as a company wholly owned by EGCO to be a vehicle for investment abroad. Presently, its registered capital is

USD 50,000 with a share premium of USD 25.09 million.

For the 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. (EGCO Denmark). And EGCO Denmark itself

invested directly in 40% shares of Conal Holdings Corporation (Conal) in the Philippines.

Later, there was a change in the Danish tax law with effectiveness in July 2001 resulting in the elimination

of the tax efficiency structure. This led to the decision to liquidate EGCO Denmark in May 31, 2002. Consequently,

the investment in Conal was transferred to EGCO BVI.

5. 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 to

expand into the power generation business. Initially, EGCO held 10% share of TLPC.

In 1997, TLPC purchased a Small Power Producer (SPP) project in Rayong Industrial Park from Rayong

Power Company Limited and established TLP Cogeneration Company Limited (TLP Cogen) to develop the project.

Presently, EGCO owns a 100% share in TLPC after a buyout on March 2, 2001 with its objective to invest in

SPP projects.

012A n n u a l R e p o r t 2 0 0 3


6. TLP Cogeneration Company Limited (TLP Cogen) EGCO acquired a 60% share in TLP Cogen from TLPC

on February 14, 2001 when EGCO held a 10% share in TLPC. Later, EGCO purchased the remaining 90% of TLPC

shares from the original shareholders and sold a 20% share in TLP Cogen to Electric Power Development Company

Limited (EPDC or J-Power). Presently, EGCO held 80% of TLP Cogen by holding a 40% share directly and holding

the remaining 40% share through TLPC.

TLP Cogen was established to invest in SPP projects. TLP Cogen power plant, which is a combined-cycle plant

with an installed capacity of 117 megawatts and a steam generating capacity of 30 tons per hour, is located in Mabkha

Subdistrict, Nikom Pattana District, Rayong Province. TLP Cogen has been in commercial operation since January

28, 2003. Electricity is sold to industrial users in Rayong Industrial Park with the total signed contracts of 45.85

megawatts while electricity of 60 megawatts is sold to EGAT under a 21-year PPA.

Net electricity sale for the year was 594.14 million kWh, 402.02 kWh was distributed to EGAT and 192.12 kWh

to the industrial customers. The electricity revenue was Baht 1,334.88 million and net profit was Baht 266.97 million.

The availability of the power plant was 97.78%.

7. EGCO Green Energy Company Limited (EGCO Green) was established on June 27, 2000 under the

cooperation between EGCO and EPDC. With an aim to invest in environmental friendly projects, EGCO Green invested

in Roi-Et Green Company Limited (Roi-Et Green) to develop a rice husk power plant project in Roi-Et Province.

EGCO holds 74% of EGCO Green and EPDC holds the rest with the initial registered capital of Baht 100,000.

The company increased its capital to Baht 171 million and Baht 175 million on June 4, 2001 and March 28, 2003,

respectively.

8. Roi-Et Green Company Limited (Roi-Et Green) was established on July 27, 2000 under the cooperation

between EGCO Green, the joint venture company between EGCO, EPDC, and Sommai Rice Mill Partnership. EGCO

Green holds 95% of Roi-Et Green while Sommai Rice Mill Partnership holds the rest. The registered capital is Baht

180 million. The company's core mission is to operate a biomass power plant using rice husk as fuel, with 9.9 megawatt

installed capacity. The power plant is located at Nua Muang Subdistrict, Muang District of Roi-Et Province.

The company borrows from the Industrial Finance Corporation of Thailand (IFCT) and receives investment

promotion privileges from the Office of Board of Investment (BOI). To promote efficient utilization of renewable energy

especially the recycling of agricultural waste as fuel in electricity generating process, Global Environment Facility

(GEF) partly subsidizes the company's guarantee fee of the loan agreement. A PPA of 8.8 megawatts with EGAT was

signed under the SPP program for a 21-year period.

The company started commercial operation on May 29, 2003 and generated a total of 34.33 million kWh

throughout the year, with the consumption of 54,044.47 tons of rice husk. The electricity revenue was Baht 83.54

million.

Roi-Et Green Power Plant is supported by the Energy for Environment Foundation (E for E) as a pilot

biomass power plant with effective environmental management and was well accepted by the local community.

9. Egcom Tara Company Limited (ET) was established on April 23, 1999 with a registered capital of Baht

345 million. ET 's shareholders comprise EGCO and Eastern Water Resources Development and Management Public

Company Limited (EASTW) which hold 70% and 15% of shares, respectively, while Require Construction Company

Limited, Tyco Earth Tech (Thailand) Limited, and Mr. Jaturong Saduagkan holds 5% of shares each.

The company's core mission is to produce water supply according to the 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, which started on

April 7, 2001, with PWA for the production of water supply for a period of 30 years. ET has a capacity of 36,000 cubic

meters/day. The total length of water pipes from the water treatment plants to PWA's Water Station is 31 kilometers.

Moreover, ET has obtained a privilege from the Office of the Board of Investment (BOI) to have 8 years of corporate

income tax exemption.

013A n n u a l R e p o r t 2 0 0 3


Apart from being successful in generating and supplying tap water to meet the TIS standard, ET also managed

to minimise the rate of water loss in both production and transmission to 0.65%, a 0.10% decrease from the previous

year. In 2003, the third year of operation, ET was successful in achieving a net profit of Baht 65.76 million, a 43.76%

increase from the previous year. Production cost was 1.55% lower than the previous year. The company refinanced

its loan in May 2003 resulting in the reduction of the loan interest rate from the fixed rate of 8% to the fixed rate

of 5.50%.

The management in 2003 was successful in its endeavors to run the business with zero accident record both

among staff and third party. In addition, the company also launched the Code of Conduct as the guidelines to ensure

transparent business management that takes into account the interests of all stakeholders namely shareholders,

government agencies, and consumers.

In 2004, ET will pursue the same path of a continuous effort to enhance its efficiency in all areas by introducing

the quality system, ISO9001:2000, with the target to be certified by 2005. The company has a firm believe that the

adherence to quality will lead to an efficient water supply production with awareness to risks, safety, and environmental

concern.

JOINT VENTURES

1. Gulf Electric Public Company Limited (GEC) was established on November 12, 1998 with a registered

capital of Baht 5,000 million. GEC is a holding company with EGCO, EPDC, and Mit-Power(Thailand) Limited holding

50%, 49% and 1% of the shares, respectively. Its subsidiaries are as follows:

1.1 Gulf Cogeneration Company Limited (GCC) owns and operates the Kaeng Khoi cogeneration power plant.

The facility has an installed capacity of 110 megawatts and a steam generating capacity of 16 tons per hour, located

in Kaeng Khoi District, Saraburi Province.

Net electricity sales for the year were 627.21 kWh distributed to EGAT and 61.52 kWh to industrial customers,

totaling 688.74 kWh, a 0.75% decrease from the previous year. The total electricity was Baht 1,597.14 million, 1.06%

higher than the previous year. GCC earned Baht 3.38 million and 0.54 million from interest income and other income,

respectively. The operating expenses (excluding the effect of foreign exchange) was Baht 1,344.56 million and gross

profit from operation was about Baht 256.46 million, or in other terms, a profit of Baht 0.37/kWh. The availability of

the power plant was 95.53%.

1.2 Nong Khae Cogeneration Company Limited (NKCC) owns and operates the Nong Khae gas-fired cogeneration

power plant. The facility has a gross electrical capacity of 126 megawatts, and an average steam generating capacity

of 24 tons per hour. The power plant is located in Nong Khae District, Saraburi Province. Net electricity sales for the

year 2003 were 620.96 million kWh distributed to EGAT and 157.01 million kWh to the industrial customers, totaling

777.97 million kWh, a 0.6% decrease from the previous year. The total revenue was Baht 1,770.25 million, 100% higher

than the previous year. NKCC earned revenue from steam of Baht 46.94 million and interest income of Baht 12.97

million. The operating expenses (excluding the effect of foreign exchange) was Baht 1,671.89 million and gross profit

from operation was about Baht 158.28 million, or in other terms, a profit of Baht 0.20 per kWh. The availability of

the power plant was 95.18%.

1.3 Samutprakarn Cogeneration Company Limited (SCC) owns and operates the Samutprakarn gas-fired

cogeneration power plant. The facility has a net output capacity of 126 megawatts of power and 35 tons per hour of

steam. The power plant is located in Bangpoo Subdistrict, Samutprakarn Province. Net electricity sales for the year

were 819.46 kWh distributed to EGAT and 181.21 kWh to industrial customers, totaling 638.19 kWh, a 14.17% increase

from the previous year. The total electricity revenue was Baht 1,788.28 million and another Baht 42.22 million was

earned from steam sale. SCC earned Baht 11.41 million from interest income and other income. The operating expenses

(excluding the effect of foreign exchange) was Baht 1,701.17 million. The gross profit from operation was about Baht

140.73 million, or in other terms, a profit of Baht 0.17 per kWh. The availability of the power plant was 98.70%.

1.4 Gulf Power Generation Company Limited (GPG) owns the Bo Nok coal-fired power plant project, which is

an IPP project, having an installed capacity of 734 megawatts, located at Bo Nok District, Prachuab Kirikhan Province.

014A n n u a l R e p o r t 2 0 0 3


After certain reconsideration, GPG was relocated to Kaeng Khoi District, Saraburi Province together with a change

from coal-fired plant to the gas combined cycle generating plant.

1.5 Gulf Yala Green Company Limited (GYG or Gulf Yala Green) is developing the Yala power project, a para-

wood-fueled biomass power plant, with 23 megawatt installed capacity, in Lam Mai Subdistrict, Muang District, Yala

Province. GEC holds 95% of shares in GYG and another 5% is owned by Asia Plywood Company Limited. GYG had

a first draw down of debt on August 28, 2003 and, currently, had finished land filling and already started the

construction. This power plant has been selected to receive financial support from the government's Renewable SPP

Program.

1.6 Trang Biomass Company Limited (TBC or Trang Biomass) is developing the Trang power project, 20 megawatt

parawood and palm shell-fueled biomass power plant in Lam Phu Ra Subdistrict, Trang Province. Trang Biomass is

95% owned by GEC and another 5% is owned by the Woodwork Group of Companies. The power plant is also selected

to receive financial support from the government's Renewable SPP Program.

2. EGCO Joint Ventures & Development Company Limited (EGCO JD) was established on September 4,

1995 with a registered capital of Baht 800 million and paid-up capital of Baht 447.72 million. Initially, EGCO was the

major shareholder holding 99.99 % of shares in EGCO JD.

In 2000 EGCO entered into a joint venture with Unocal Bang Pakong Limited (UBP) by using EGCO JD as a

vehicle. The joint venture was finalized on December 28, 2001. On January 2, 2002, EGCO JD increased its registered

capital from 80,000,000 shares to 116,843,386 shares and the paid-up capital was also increased to Baht 696.72

million resulting in an equal ownership by both shareholders. Accordingly, EGCO JD became one of the shareholders

of two co-generation power plants operating under the SPP Program delivering power and steam to industrial users

in Amata Nakorn Industrial Park as follows:

2.1 Amata-EGCO Power Limited (AEP) was established on October 24, 1995 with a registered capital of Baht

1,500 million and paid-up capital of Baht 1,350 million. The shareholders comprise Amata Power Limited, the major

shareholder which holds 69.3% of shares, EGCO JD which holds 29.7% of shares and the other small shareholders

which, in total, hold the rest of 1% of shares. AEP owns and operates a 165 megawatt co-generation plant that runs

at its full capacity with a plant availability of 97%.

During the year 2003, AEP delivered power and steam to 44 industrial users with a total contracted capacity

of 77 megawatts. The remaining power of 90 megawatts is delivered to EGAT under a 21-year long-term PPA starting

from September 1998. In 2003 AEP's total electricity and steam sales were Baht 2,387.76 million, a 9.72% increase

from the previous year due to the increase in the electricity tariff. The company's operating expenses (not including

gain or loss on foreign exchange) was Baht 2,183.34 million, a 13.75 % increase from the previous year due to the

increase of natural gas cost and maintenance expenses. AEP net profit was Baht 211.55 million, a decrease by 19.24%

from the previous year.

2.2 Amata Power (Bang Pakong) Limited (APB) was established in May 1999. Its current registered capital is

Baht 560 million which was fully paid up. The existing shareholders comprise Amata Power Limited, the major share-

holder which holds 70% of shares and EGCO JD which holds 30% of shares. APB owns and operates a 112 megawatt

co-generation plant that runs at its full capacity with a plant availability of 99%.

During the year 2003 APB delivered power and steam to 22 industrial users with a total contracted capacity

of 37 megawatts. The remaining power of 90 megawatts is delivered to EGAT under a 21-year long-term PPA starting

from September 2001. In 2003 the total electricity and steam sales were Baht 1,848.76 million, a 13.45 % increase

from the previous year due to the increase in the electricity tariff. The company's operating expenses (excluding the

effect of foreign exchange) was Baht 1,462.81 million, a 11.04 % increase from the previous year due to the increase

of natural gas cost and maintenance expenses. AEP net profit was Baht 389.55 million, an increase by 21.97% from

the previous year.

3. Conal Holdings Corporation (Conal) is a pioneer IPP in Mindanao, the largest island comprising one-third

of the Philippines' total land area. Its head office is in Manila. The power generation business is conducted through

015A n n u a l R e p o r t 2 0 0 3


three subsidiaries and the operation and maintenance service is conducted by another subsidiary as follows :

3.1 Northern Mindanao Power Corporation (NMPC) is a diesel-fired power plant, which comprise Unit 1 and

Unit 2 of 60.9 and 42 megawatts, respectively, totaling 102.9 megawatt installed capacity. From July 2003, only 42

megawatts at Unit 2 was in operation as a result of Unit 1 reaching the end of the PPA term.

3.2 Western Mindanao Power Corporation (WMPC) is a diesel-fired power plant with a total capacity of 100

megawatts.

3.3 Southern Philippines Power Corporation (SPPC) is also a diesel-fired power plant with a total capacity of

50 megawatts.

3.4 Alto Power Management Corporation (APMC) provides operation and maintenance services including

plant management to the three above-mentioned power plants and also third party power plants.

EGCO invested in Conal for a 40% stake through EGCO Denmark. However, EGCO Denmark was later liquidated

resulting in the transfer of investment in Conal to EGCO BVI which was the parent company of EGCO Denmark.

4. Nam Theun 2 Power Company Limited (NTPC) was incorporated on August 28, 2002 with an initial

registered capital of USD 1 million. EGCO holds 25% of NTPC, while EDF International (a subsidiary of Electricité de

France), EDL (Electricité du Laos), and Italian-Thai Development Public Company Limited own 35%, 25%, and 15%,

respectively. The company was established to implement Nam Theun 2 Hydropower Project in Lao PDR.

NTPC signed a Concession Agreement with the Government of Lao PDR on October 3, 2002. The Government

grants NTPC the right to implement the Project for a period of 25 years. NTPC also signed PPAs with EGAT and EDL

on November 8, 2003. Under the PPAs, NTPC will supply 995 megawatts to EGAT and additional 75 megawatts to

EDL for 25 years after the occurrence of Commercial Operation Date. Currently, the company is under discussion

with lenders to obtain required funds for the Project. It is anticipated that NTPC will sign financing documents with

lenders in early 2005 and will begin its operation in late 2009.

OTHERS

1. PMI International Company Limited (PMI) was established on November 1, 1996 with registered capital

of Baht 2.50 million. EGCO owns 10% of its shares. PMI provided training and education in support of energy saving

management and developing management skills in the electric power industry.

PMI Executive Committee at its Extraordinary Meeting no. 01/2002 proposed the Chairman to liquidate the

company for effectiveness from January 1, 2003.

2. Eastern Water Resources Development and Management Public Company Limited (EASTW) was

established by a Cabinet resolution which assigned PWA to be the only agency responsible for supplying raw water

in the Eastern Seaboard of Thailand.

East Water's initial registered capital was Baht 10 million and was wholly owned by PWA. The company's service

areas covered initially 7 provinces, namely, Rayong, Chonburi, Chachoengsao, Prachinburi, Srakaew, Chantaburi and

Trad.

The company signed a 30-year contract for managing and operating major water transmission systems in

Eastern Seaboard with the Ministry of Finance. In 1996, the Cabinet authorized East Water to increase its capital to

Baht 1,700 million, with the initial registered capital of Baht 1,000 million, and to be converted to a public company

on November 18, 1996.

Currently, EGCO holds 20% of shares in East Water. The other shareholders comprise PWA 44%, Industrial

Estate Authority of Thailand (IEAT) 5%, and public investors 31%.

HUMAN RESOURCES

OUR PEOPLE

To become a successful enterprise with good corporate governance,

cooperation, unity and quality embedded in our staffs at all levels

are vital factors, in addition to good management and policies.

Recognizing this fact, EGCO is determined to efficiently manage

and develop our human resource in all aspects. Through various

training courses, we provide our staff with greater expertise

in their jobs and are able to retain them to work creatively for the

benefit of the company.

(Million Baht)

018A n n u a l R e p o r t 2 0 0 3


REVENUE STRUCTUREof EGCO and Subsidiaries the past three years

Product Transacting Entity % 2003 2003 2002 2002 2001 2001

Service Shareholding Revenue % Revenue % Revenue %

Electricity REGCO 99.99%

Capacity Charge 5,867.04 36.05% 4,521.65 37.27% 4,822.53 41.53%

Energy Charge 79.48 0.49% 83.41 0.69% 77.37 0.67%

KEGCO 99.99%

Capacity Charge 3,782.94 23.24% 4,345.75 35.82% 3,725.06 32.08%

Energy Charge 12.76 0.08% 12.29 0.10% 12.48 0.11%

GEC 50.00%

Energy Charge 2,622.41 16.11% 936.81 7.72% 792.71 6.83%

CONAL 40.00%

Energy Charge 892.34 5.48% 958.39 7.90% 1,003.93 8.65%

EGCO JD (APB) 50.00%

Energy Charge 277.31 1.70% 244.43 2.01% - -

TLPC (TLP Cogen) 80.00%

Energy Charge 1,334.88 8.20% - - - -

EGCO Green (Roi-Et Green) 70.13%

Energy Charge 83.54 0.51% - - - -

Water ET 70.00% 141.95 0.87% 122.59 1.01% 91.70 0.79%

Service ESCO /1 99.99% 283.31 1.74% 237.40 1.96% 174.28 1.50%

CONAL 40.00% - - - - 32.32 0.28%

Interest EGCO /2 40.76 0.25% 53.97 0.44% 77.21 0.66%

income REGCO /3 99.99% 84.36 0.52% 142.88 1.18% 294.77 2.54%

KEGCO /4 99.99% 125.02 0.77% 135.84 1.12% 229.76 1.98%

ESCO, EGCO JD, ET, TLPC,

TLP Cogen, EGCO Green,

Roi-Et Green 4.96 0.03% 8.64 0.07% 11.51 0.10%

GEC, CONAL 35.41 0.22% 22.92 0.19% 32.82 0.28%

Others EGCO /5 507.19 3.12% 231.55 1.91% 189.70 1.63%

REGCO 99.99% 18.90 0.12% 25.83 0.21% 12.38 0.11%

KEGCO 99.99% 1.42 0.01% 8.78 0.07% 3.87 0.03%

ESCO, EGCO JD, ET, TLP,

TLP Cogen, EGCO Green,

Roi-Et Green 11.83 0.07% 10.92 0.09% 25.84 0.22%

GEC, CONAL 68.35 0.42% 28.13 0.23% 1.80 0.02%

Total revenues(revenues item in consolidated) 1166,,227766..1177 110000%% 1122,,113322..1177 110000%% 1111,,661122..0044 110000%%

Notes /1 For year 2003, ESCO‘s service income was Baht 283,305,068.58 (excluding related party transactions which were the maintenance service

income of REGCO, TLP Cogen and Roi-Et Green amounted to Baht 28,601,463.00, Baht 39,597,735.62, and Baht 22,610,604.40 respectively and

revenues from selling spare parts to TLP Cogen amounted to Baht 199,914,833.85)/2 EGCO‘s interest income in 2003 was Baht 40,755,882.64 (excluding related party transaction which was Baht 10,248,843.00 of KEGCO‘s

debenture)/3 REGCO‘s interest income in 2003 was Baht 84,364,561.92 (excluding related party transactions which were Baht 1,603,196.50 and Baht

1,708,140.48 of EGCO‘s and KEGCO‘s debenture respectively)/4 KEGCO‘s interest income in 2003 was Baht 125,022,047.67 (excluding related party transaction which was Baht 13,693,271.05 of EGCO‘s

debenture)/5 EGCO‘s Other income in 2003 was Baht 507,194,116.50 (excluding related party transactions which were office rental and service income from

REGCO, KEGCO, ESCO, ET, TLPC, TLP Cogen, EGCO green and Roi-Et Green amounted to Baht 12,641,880.00, Baht 11,750,520.00, Baht

10,155,720.00, Baht 1,068,000.00, Baht 227,040.00, Baht 5,332,491.00, Baht 216,840.00 and Baht 11,163,526.68 respectively.

019A n n u a l R e p o r t 2 0 0 3


WORLD ECONOMY 2003

In 2003, the World economy continued to recover with the expected growth rate of 3.2%. The U.S. economy

has improved due to increased consumer confidence which in turn, has led to significant growth in private spending.

Manufacturing production grew at a slower pace while private investment started to expand. Correspondingly, the

U.S. government adopted several policies including expansionary monetary and fiscal policies to continually stimulate

the domestic economy. For instance, the Fed cut the Federal Funds Rate by 25 basis points from 1.25% to 1 percent

and has maintained the rate at this level, which is the lowest level in 42 years. As such, the U.S. economy was expected

to grow at 3.1%. The EU economy recovered at a slower level, led by rising private consumption and exports. The EU

economy was expected to expand at 0.7%. The Asian economy, led by the Japanese economy, has recovered noticeably,

thanks to the expansion of private and government spending. The unemployment rate in Japan also declined. As a

consequence, it was estimated that the Japanese economy's expansion rate would be 2.7%. The Chinese economy

recovered from the outbreak of Severe Acute Respiratory Syndrome (SARS) since the second quarter. The primary

supportive factors for growth were private consumption and investment as well as improved export. The Chinese

economy was expected to grow at 9.1%.

THAI ECONOMY IN 2003The Thai economy in the year 2003 expanded strongly with an expected GDP's growth of 6.7%. The favorable

growth was supported by strong domestic demand, especially the increase in private consumption and favorable

export growth. Private consumption improved in both durable and non-durable goods. Strong growth was seen in

automobiles' purchase and domestic residential demand. Such acceleration in private consumption was supported

by accomodative policies such as an expansionary monetary policy that included a low interest rate policy. The oil

price cap measure and other supportive government stimulus programs for low income citizens, such as the Village

Fund Program, and the reduction in housing transfer tax, were considered the driving forces behind the growth. All

of these policies along with a continued rise in farm income as well as an improved employment condition were the

major contributing factors to favorable growth in private consumption. The remarkable progress in private investment,

in particular equipment investment and property sector's investment, was stimulated by rising domestic residential

demand and several supportive government policies such as tax incentives for the property sector, low-income housing

projects, and measures to reduce underground economies. It was expected that private consumption and private

investment in 2003 would expand by 6.3% and 16.5%, compared to 4.9% and 13.2%, respectively, in the previous

year.

All production sectors continued to expand except for restaurant and hotel, in the light of the lingering impact

of the Severe Acute Respiratory Syndrome (SARS) outbreak. Manufacturing production both for domestic consumption

and export also continued to expand. Consequently, electricity consumption grew noticeably in line with the continual

expansion of economic growth. In 2003, the electricity consumption expanded by 6.63%, a slight decrease from

7.15% in 2002.

For international accounts, exports showed a good performance thanks to greater penetration into global

markets as a result of stronger economic growth of international trade partners that included the U.S., European and

Asian countries. As a consequence, continuing trade surplus and current account surplus was expected. Economic

stability was maintained, reflected by moderate inflation; improving fiscal position; declining external debt including

the repayment of the remaining USD 4.8 billion debt under the IMF package two years ahead of schedule; rising

international reserves; as well as credit rating upgrades by Fitch, Moody's and Standard & Poor.

With respect to the monetary condition, the Monetary Policy Commission of the Bank of Thailand announced

a cut in the key policy rate (Repurchase Rate: RP 14 days) by 50 basis points on June 27, 2003 to the level of 1.25%.

Liquidity in the financial system remained abundant. Meanwhile, commercial banks started to extend credits, resulting

in credit expansion particularly in consumer loans and housing loans.

020A n n u a l R e p o r t 2 0 0 3


WORLD ECONOMIC TREND IN 2004The world economy in the year 2004 will expand at a faster pace than that of the year 2003 with an expected

GDP growth of 4.1%, an increase from 3.2% in the year 2003. The U.S. economy is expected to expand by 4.6% in

2004. Such strong recovery will come from private consumption and investment, supported by investor and consumer

confidence; productivity improvement; and the lack of price pressure. The increase in labor productivity will also lead

to improved corporate performance. The depreciation of the U.S. dollar against other currencies has had a favorable

effect on export while the current account showed an improvement; these factors may contribute to the increase in

consumer and investor confidence as well as the improved investment climate. The EU economy will expand at 2%

in the year 2004, a notable improvement from 0.7% in the previous year. The factors contributing to this expected

growth are an increase in private consumption thanks to a strong export performance and government policies to

increase consumer and investor confidence. Improved employment conditions will further support the economic

recovery. The Asian economy (excluding the Japanese economy) in the year 2004 will continue to expand. Monetary

and fiscal policies in Asia will continue to be expansionary to sustain domestic demand. The world economic recovery

will continue to be favorable to Asian exports. The Japanese economy will expand at 2.5% since domestic demand

will grow at a slower pace resulting from expected deflation. The Japanese government will also intervene in the

foreign exchange market to ease the Japanese yen appreciation since yen appreciation will retard export and economic

growth. Another leading economy in Asia is China. The Chinese economy is expected to expand at 7.5-8%.

THAILAND ECONOMIC TREND IN 2004The Thai economy in the year 2004 is expected to expand at 7.0-8.0%. Domestic factors contributing to the

Thai economy's performance are domestic accommodative policies; extra government central fund and economic

stimulus programs, which should strengthen private investment and consumption. Private investment, which is

expected to expand at 19%, will play a more important role in stimulating the Thai economy, led by several

infrastructure and mass transit projects, low-income housing projects, and the government's scheme to allow assets in

the informal sector of the economy to be used as collateral for borrowing from financial institutions. The reduction

in excess capacity and rising foreign direct investment (FDI) will also lead to new investment expansion in the year

2004. Private consumption will remain strong and is expected to increase by 6%. Supportive factors are the low

interest rate climate, extra government budget to relieve the poverty problem, the extension of credit lines in the

Village Fund Program, improving wealth following the strong performance of the stock market, better employment

conditions, the recent upward trend of farm income, and the improvement of consumer confidence.

1 2

021A n n u a l R e p o r t 2 0 0 3


Electricity consumption is expected to grow by 7.13%, an increase from 6.36% the previous year, following the

strong growth in the economy.

The export sector is expected to continue to expand as a result of an increase in free-trade and bilateral trade

agreements and the growth prospect of the global economy.

Economic stability is expected to improve as a result of the government's emphasis on monitoring price

movement in all markets to prevent a speculative bubble in asset prices and stabilizing the exchange rate. The Bank

of Thailand also plans to review current credit card regulations to deal with the household debt problem. In addition,

the government plans to reduce external debt via early repayment and debt refinancing, which should help to build

confidence among investors and consumers.

In summary, the Thai economy in the year 2004 will continue to expand. This expansion will be driven mostly

by strong domestic demand as indicated by rising private consumption and investment as well as export growth.

Nevertheless, the major concerns that may affect the continuous improvement of the Thai economy are the impact

of the bird flu outbreak and the weakening of the U.S. dollar. Other concerns are performance of exports and declining

investor and consumer confidence.

Source: 1. Economic figures are from the National Economic Social and Development Board (NESDB)

2. Electricity consumption figures are from Energy Policy & Planning Office, Ministry of Energy

1. Rayong Power Plant, Rayong

2. Khanom Power Plant, Nakhon Sri Thammarat

3. TLP Cogeneration Power Plant (TLP COGEN), Rayong

4. Roi-Et Green Power Plant, Roi-Et

3 4

022A n n u a l R e p o r t 2 0 0 3


POWER INDUSTRY STATUS AND COMPETITION

Following the increase in economic growth in 2003, the peak power demand and electrical energy consumption

continued to grow in comparison to the year 2002 (Figure 1). In May 2003, the peak power demand of 18,121 MW was

8.63% higher than peak demand in 2002. The total electrical energy consumption for the year 2003 was 118,374

Gwh, which is a growth of 6.36%. Since the peak demand in 2003 was much higher than the forecast and it is expected

that the peak demand in 2004 will continue to grow with the same rate in accordance with the forecasted robust

economic growth, EGAT had revised Power Development Plan 2003. It is expected that the peak demand for Thailand

by 2010 will be as high as 28,700 MW (Figure 2).

As part of that required capacity, BLCP, the only coal-fired Independent Power Producer (IPP), is now under

construction. The project should achieve Commercial Operation Date (COD) in 2007. The other two proposed coal-fired

power projects, Hin Krut and Bo Nok, have switched fuel to natural gas. Hin Krut project has proposed to build its

power plant at the Ratchaburi Power Plant area, while the Bo Nok project has proposed to relocate to Saraburi and

is now under a Power Purchase Agreement (PPA) renegotiation with EGAT. It is anticipated that both power projects

will be able to supply power to the system as planned in revised PDP 2003. As for the Nam Theun 2 project, in which

EGCO has 25% interest, the project company signed PPAs with EGAT and EDL in November 2003. It is expected that

the project will achieve Financial Close and will commence construction in 2005. The Nam Theun 2 should be able

to deliver power to EGAT in 2010 in accordance with the revised PDP 2003.

Thailand's electricity supply industry (ESI) reform has been implemented consistently since 2000. On

September 9, 2003, the Cabinet had a resolution to restructure ESI to be the "Enhanced Single Buyer" (ESB) model

instead of the "Power Pool" model. According to the ESB model, EGAT will be the sole power purchaser sell electrical

power to Metropolitan Electricity Authority (MEA) and Provincial Electricity Authority (PEA). The three electric

authorities, EGAT, MEA and PEA will be privatized and listed on the Stock Exchange of Thailand (SET). There will be

account unbundling of EGAT's business units (generation and transmission) and PEA & MEA's business units (distribution

and retail) in order to create transparency and to provide for efficient operation. Furthermore, a regulatory body will

be set up under the Ministry of Energy to regulate the power sector, grant the right and license for investment, and

protect the right of customers & investors.

It is expected that the structure of the ESI and the establishment of a regulatory body will be completed in

2004 and EGAT will be privatized and listed on the SET by the 2nd quarter of 2004. Following EGAT's privatization,

MEA and PEA is expected to be privatized and listed on SET within 2004.

Source: EGAT & Energy Policy and Planning Office (EPPO)

20,000.00

18,000.00

16,000.00

14,000.00

12,000.00

Jan Feb Mar Apr May

MW

Insta

lled

Ca

pa

cit

y/P

ea

k D

em

an

d (

MW

)

Reserv

e M

arg

in (

%)

Jun Jul

Peak Demand

Aug Sep Oct Nov Dec

Installed Capacity

50,000

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

40

35

30

25

20

15

10

5

0

Reserve Margin

2000 2001 2002 2003

PEAK DEMAN 2002-2003

FORECAST INSTALLED CAPACITY, PEAK DEMAND & RESERVE MARGIN

Revised PDP 2003

023A n n u a l R e p o r t 2 0 0 3


BUSINESS AND

ENVIRONMENTAL

CONCERN

PHILOSOPHY

EGCO fully realizes the significance of a harmony between

prosperity and the environment. Prosperity can be introduced without

any harm to the society and the environment. Adhering to this principle,

EGCO’s concept of development strongly aims to build mutual bond

between people and the environment, which will eventually lead to

sustainable and lasting business.

026A n n u a l R e p o r t 2 0 0 3


RISK FACTORS

EGCO is a holding company with investment in generation and sale of electricity as major businesses. Risk

factors that will affect its operations are thus those stemming from its investments and core businesses activities

particularly from its significant subsidiaries, REGCO and KEGCO. These Independent Power Producers have signed

long-term power purchase agreements with EGAT. In 2003, 61.42% of EGCO's revenues were from REGCO and

KEGCO's revenues.

The power tariff calculation under the PPAs is on a cost plus basis and already takes into account all related

significant factors. That is, all cost items incurred shall be borne by EGAT. EGCO then will not be significantly affected

by changes of external factors.

The risk factors can be classified as follows:

RISK OF ELECTRICITY SUPPLY INDUSTRY REFORMThe latest progress of the electricity supply industry reform is that "The cabinet approved in principle of the

electricity supply industry reform and the guideline in setting up the electricity supply industry governance organization

of the Ministry of Energy as proposed by the Ministry of Energy in the cabinet meeting on December 9, 2003. The

cabinet assigned the Ministry of Energy, the Electricity Generating Authority of Thailand (EGAT), the Metropolitan

Electricity Authority (MEA), the Provincial Electricity Authority (PEA), and related departments to perform related

activities to concrete the electricity supply industry reform and the electricity supply industry governance organization". 1

"The reform model is Enhanced Single Buyer Model (ESB) which contains good points as follows : the security

of the power system, the efficiency, the governance structure, the competitiveness, the national champions, the

appropriate investment, and the reasonable electricity tariff". 2

Regarding the reform mentioned above, there is no impact on Power Purchase Agreements of EGCO group

that have already been effective because EGAT is still the offtaker under the agreements. With respect to investment

in new projects, EGCO has been following up on the guidelines from the regulatory body for use in planning and

assessing possible impact from restructuring.

RISK OF LOSING CUSTOMERSAs EGAT is the sole customer of REGCO and KEGCO under the long-term Power Purchase Agreements (PPAs),

there exists a risk of losing this important customer.

To provide customer's satisfaction and preserve their important customer, REGCO and KEGCO not only comply

with conditions in the PPAs, but their management also realizes the importance of a quality management system

and environmental management system to ensure that customer and stakeholders receive quality product.

Investments in Small Power Producers (SPPs) are secured under long-term PPAs with EGAT and industrial

customers in the industrial estate to mitigate the risk of losing customers. However, the risk of being penalized will

occur if their steam sales fail to meet the minimum offtake quantity; the SPP plants have come up with several

alternatives and reviewed with relevant authorities to find appropriate solutions.

AVAILABILITY RISKREGCO and KEGCO may have to bear a risk of being penalized if their availability falls below a certain contracted

availability target.

The measure taken to prevent the risk is that REGCO and KEGCO have set efficient maintenance plans as

evidenced in the good performance in 2003 when both companies were able to maintain the average availability at

1 Source : The Cabinet resolutions / www.thaigov.go.th2 Source : The Ministry of Energy / www.energy.go.th

027A n n u a l R e p o r t 2 0 0 3


levels higher than the targets. As such, REGCO received the bonus from EGAT for 7 consecutive years and KEGCO

had accumulated hours for calculation of bonus from EGAT.

HEAT RATE RISKREGCO and KEGCO's risks from heat rate maintenance will occur when the heat rate of power generation is higher

than the agreed level, leading to higher cost of fuel. In this regard, REGCO and KEGCO will be responsible for the

higher resulting fuel cost.

However, due to the internationally accepted plant design and construction as well as technology, machinery,

good maintenance plans, and managerial personnel experience in running the power plant, REGCO and KEGCO are

able to control heat rate within the acceptable level. The result of the annual testing of heat rate showed that REGCO

and KEGCO's power plant management has always been efficient.

The SPP plants, with technology and machinery of international standard, have very low risk from maintaining

the heat rate.

FINANCIAL RISKS

Foreign exchange rate fluctuations

REGCO and KEGCO have borrowed US Dollar-denominated loans while their revenues are in Baht. They are

thus exposed to foreign exchange rate risk that can severely impact their financial status.

After the introduction of the managed float system promulgated by the Thai Government on July 2, 1997.

EGAT has compensated for any loss incurred from such event by adjusting its capacity charge to cover the impact

of the foreign exchange rate of over Baht 28 per US Dollar on the foreign debt financing charge and the major maintenance

part charge in foreign currencies. Such adjustment can absorb most of the impacts of the foreign exchange rate

fluctuations.

KEGCO entered into a currency and interest rate swap agreement to convert a US Dollar loan with a floating

interest rate to Thai Baht loan at a fixed interest rate. Moreover, REGCO and KEGCO have maintained reserve

accounts in US Dollar at 25% of its unhedged loan outstanding to mitigate the foreign exchange rate risk. Thus, both

companies have minimal exposure to the foreign exchange rate risk.

EGAT has also adjusted the capacity payment for the SPPs covering the event of foreign exchange rate of over

Baht 27 per US Dollar so as to offset the impact of the currency exchange rate fluctuation. For the electricity charge

applicable to general customers, there is no direct adjustment to compensate for the currency exchange rate impact.

However, the electricity charge is generally based on the formula adopted by the PEA thereby part of the charge will

vary according to the cost of fuel and the foreign exchange rate, called fuel adjustment charge (Ft), which is changeable

and announced every four months. As such, the electricity charge to general customers will vary according to the

cost of fuel and the foreign exchange rate.

Interest rate fluctuation

REGCO and KEGCO earlier borrowed floating interest rate loans and were thus bearing risk of interest rate

fluctuation.

In order to mitigate such risk, REGCO and KEGCO have entered into interest rate swap agreements to convert

all floating interest rates to fixed interest rates.

028A n n u a l R e p o r t 2 0 0 3


Commitment and contingency liabilities

EGCO has commitments under the Sponsor Support Agreements, which were made in respect of loans of

subsidiaries, associate, and interests in joint venture, and bank guarantee of subsidiary.

As a way to mitigate commitment and contingency liabilities risk, EGCO has set up a reserve fund in the amount

of 25% of total obligations and regularly monitored the obligations status.

RISK OF THE INVESTMENT IN NAM THUEN 2 HYDROELECTRIC PROJECT, LAO PDRThe investment in the Nam Thuen 2 Hydroelectric Project (NT2) may involve financing risk, political risk, and

risk of partner's withdrawal from the project. These risks may lead to a delay or unsuccessful implementation of the

project.

At present, the NT2 has signed PPAs with EGAT and Electricité du Laos (EDL). The project loan agreement is

expected to be signed by early 2005.

In addition, NT2 is supported by the government of Laos as the project supports the development of the country

and has received good cooperation from the sponsors. At present, the World Bank is in the process of studying the

details of NT2 in order to provide support to the project and is satisfied with the work progress with respect to its

requirements on the Government of Laos and the project. There is a provision in the Shareholders Agreement to mitigate

impacts associated with a risk of partners' withdrawal.

EGCO has implemented NT2 project in a prudent manner by taking into consideration various risks to ensure

that the project progresses as planned.

RISK OF RETURN ON INVESTMENTEGCO's investment in electricity generating business demands a large amount of fund that might affect its

cashflow. The projects invested may require additional fund in operation in some occasions. In addition, substantial

time is required to develop projects.

EGCO's business operation may involve risks from not getting return on its investment as planned. To mitigate

these risks, EGCO has implemented the monitoring of the operations of its subsidiaries and invested projects, the

analysis of the operation's results, the comparison of the results to the targets and the reporting to the Management

and the Committee according to a schedule so that timely adjustments can be made when undesirable results occur.

029A n n u a l R e p o r t 2 0 0 3


EGCO is conscious that business success requires confidence, trust and support from the general public which

become a foundation for sustainable business growth.

With a clear vision of the future the Company has maintained its policy of continuous support to society and

the environment. Various actions to implement this policy have been taken, including emphasis on a high standard

in the production process at all our power plants to prevent any negative impact on the communities and the

environment leading to many international and domestic awards, such as the ISO 14001 and Environmental Impact

Assessment Award (EIA Award) from the Ministry of Natural Resources and Environment. EGCO Group Code of

Conduct for Employees includes responsibilities to the environment as well as people's safety and health. In addition

to the building of social conscience among our employees through various corporate activities, the Company has

been active in sponsoring and organizing an environmental conservation program to protect the watershed of Thailand

for six successive years targeting the young people who will become the future of the society.

EGCO places great importance on communities living near our facilities and has made it a policy for all companies

in our group to act as a good citizen by providing support for socially beneficial activities through cooperation with

other public and private entities.

The biomass power plant, Roi Et Green, has reached commercial operation. The project does not only help

cut fuel imports but also reduces the air pollution caused by dust from rice husk. It is a good example of the concept

of utilizing agricultural waste to generate electricity to serve future energy needs in Thailand. The success of the

power plant in being in harmony with the community and environment nearby is well known and has led to it being

a popular site for visits by the interested public.

EGCO believes that the source of business success lies not only in strong management and good corporate

governance but also in the conscience to build a balance in society and the environment. This approach to business

will help the Company achieve sustainable growth as well as generate well being for society in the long term.

SOCIAL AND ENVIRONMENTAL CARE

EGCO Youth Camp for forest Conservation.

Tree planting with the local community.

Eye glasses for the underprivileged.

030A n n u a l R e p o r t 2 0 0 3


GROUP STRUCTURE AND SHAREHOLDERS(As of December 31, 2003)

Rayong ElectricityGenerating Co., Ltd. (REGCO)

Conal Holding Corporation (Conal)

40.00%

EGCO International (BVI) Ltd. (EGCO BVI)

100.00%

TLP Congeneration Co., Ltd. (TLP COGEN)

40.00%

Thai LNG Power Corporation Ltd. (TLPC)

100.00% 40.00%

EGCO Engineering & Service Co., Ltd. (ESCO)

99.99%

Khanom Electricity Generating Co., Ltd. (KEGCO)

99.99%

Electricity Generating

Public Company Limited

(EGCO)

Electricity Generating Authority of Thailand (EGAT)

25.41%

CLP Power Projects (Thailand) Limited

22.42%

The general public

52.17%

Rayong Electricity Generating Co., Ltd. (REGCO)

99.99%

Name of 10 Major Shareholders

As of February 9, 2004

(The date of the Extra Ordinary General Meeting of Shareholders was on

February 23, 2004)

No. Name Amount %

of Shares

1. Electricity Generating Authority of Thailand 133,773,662 25.41

2. CLP Power Projects (Thailand) Limited 118,023,606 22.42

3. Thai NVDR Co., Ltd. 54,846,724 10.42

4. HSBC Bank Plc. - Clients General A/C 10,495,329 1.99

5. Bangkok Life Assurance Ltd. 6,665,700 1.27

6. Thailand Securities Depository Co., Ltd For Depositors 6,360,580 1.21

7. Littledown Nominees Ltd. 6,108,747 1.16

8. State Street Bank and Trust Company 5,667,876 1.08

9. Kim Eng Securities (Thailand) Plc. 5,653,800 1.07

10. The Government Pension Fund 5,266,800 1.00

The Major Shareholders who have material influences over the company‘s policy

setting, management and operation.

1. Electricity Generating Authority of Thailand

2. CLP Power Projects (Thailand) Limited which is held by CLP Power

International Limited 99.99%

031A n n u a l R e p o r t 2 0 0 3


Agro Energy Co., Ltd. (AE)

99.99%

Amata Power-ESCO

Service Co., Ltd. (AMESCO)

50.00%

Alsing Power Holding Inc.

80.00%

Alto Power Management

Corporation (APMC)

60.00%

Northern Mindanao Power

Corporation (NMPC)

50.78%

Roi-Et Green Co., Ltd. (Roi-Et Green)

94.77%

Southern Philippines

Power Corporation (SPPC)

55.00%

Amata-EGCO Power Ltd. (AEP)

29.70%

Amata Power

(Bang Pakong) Ltd. (APB)

30.00%

Gulf Co-generation Co., Ltd. (GCC)

100.00%

Gulf Yala Green Co., Ltd. (GYG)

95.00%

Gulf Power Generation

Co., Ltd. (GPG)

100.00%

Nong Khae Cogeneration

Co., Ltd. (NKCC)

100.00%

Samutprakarn Cogeneration

Co., Ltd. (SCC)

100.00%

APMC International Ltd.

100.00%

EGCO Green Energy Co., Ltd. (EGCO Green)

74.00%

Egcom Tara Co., Ltd. (ET)

70.00%

Eastern Water Resources Development

and Management PCL (EASTW)

20.00%

Nam Thuen 2 Power Co., Ltd. (NTPC)

25.00%

EGCO Joint Ventures & Development

Co., Ltd. (EGCO JD)

50.00%

Gulf Electric PCL (GEC)

50.00%

1/ GEC held by EGCO, Electric Power Development Co., Ltd. and Mitpower (Thailand) Co., Ltd. at 50%, 49% and 1%, respectively, purchased 26,000,000 shares of GPG or 40% stake from MEC Laguna Power B.V. at the amount of USD 13,000,000 and the transfer of GPG shares was completed on December 11, 2003. This resulted in GEC holding 100% stake in GPG.

Western Mindanao

Power Corporation (WMPC)

55.00%

Corporate PlanningDivision

Asset ManagementDivision

ORGANIZATION CHART

032A n n u a l R e p o r t 2 0 0 3


President

Legal Division

CorporateServices Group

MIS Division

Human ResourcesDivision

New BusinessVentures Group

Finance Group

Asset Managementand Planning Group

Procurement and Admin. Division

Business DevelopmentDivision

Project Finance Division

Engineering Division

Accounting & BudgetDivision

Finance Division

Remunerationand NominatingCommittee

ExecutiveCommittee

Group BusinessCommittee

Audit Committee

Board of Directors

Corporate andInvestor RelationsDivision

Internal AuditDivision

CorporateSecretary Division

BOARD OF DIRECTORS AND SUBCOMMITTEES(As of December 31, 2003)

Mr. SitthipornRatanopas

Age 55

Chairman

Chairman, Nominating and

Remuneration Committee

Education- Executive Education, Harvard Business School, Boston,USA

- MM., SASIN Graduate Institute of Business Administration, Chulalongkorn University

- B.Eng. (Electrical), Chulalongkorn University

Working Experience- President, Electricity Generating PCL.

- Deputy Governor Policy and Planning, Electricity Generating Authority of Thailand

- Assistant Governor, Electricity Generating Authority of Thailand

- Director, Demand Side Management Office, Electricity Generating Authority of Thailand

Current Position- Governor, Electricity Generating Authority of Thailand

- Director, Electricity Generating Authority of Thailand

Mr. SommaiPhasee

Age 59

Director

Chairman, Executive

Committee

Education- M.Sc. (Economics), Thammasat University

- M.Sc. (Economics Planning and Development), Vanderbilt University, USA

Working Experience- Director-General, the Fiscal Policy Office, Ministry of Finance

- Inspector-General, Ministry of Finance

- Director, Export-Import Bank of Thailand

- Director, Bank of Thailand


Current Position- Deputy Permanent Secretary, Ministry of Finance

- Chairman, Thai Maritime Navigation Co., Ltd.

- Chairman, The Thai Military Bank PCL.

- Chairman, Industrial Finance Corporation of Thailand

Education- BA ( Honours), 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 6- Directors Certification Program, Thai Institute of Directors (IOD)- Chairman 2000, Thai Institute of Directors (IOD)

Working Experience- Director & Executive Director, Siam Commercial Bank PCL.- 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- Adviser to the Executive Director, Siam Commercial Bank PCL.- Director & Executive Director, The Industrial Finance Corporation of Thailand

Mr. Aswin Kongsiri

Age 58

Independent Director

Chairman, Audit Committee

Nominating and


Member

Mr. Seri Chintanaseri

Age 62


Education- Barrister-at-law (LincoIn's Inn, England)

- Barrister-at-law (Thailand)

- LL.B. Thammasat University

Working Experience- President, The Stock Exchange of Thailand

- President, Bara Development Finance and Securities Co., Ltd.

- Vice President and Manager International Banking Development, Siam Commercial Bank

- Thai Representative, Banque National de Paris, Bangkok

- Advisor, Italthai Industries Co., Ltd.

- Bank of Thailand (The last position was Deputy Director, Legal Department)

Current Position- Chairman, Seri Manop & Doyle Ltd. (Tax and Legal Counsellors)

033A n n u a l R e p o r t 2 0 0 3


034A n n u a l R e p o r t 2 0 0 3


Dr. Chaipat Sahasakul

Age 49


Audit Committee Member

Education- Ph.D. in Economics, University of Rochester, USA

- M.A. in Econimics, Thammasat University

- B.A. in Economics, Thammasat University

Working Experience- Senior Executive Vice President, MFC Asset Management PCL.

- Senior Vice President and Spokesman, Stock Exchange of Thailand

- Executive Vice President, Morgan Grenfell Thai Co., Ltd., Bangkok, Thailand

Current Position- Secretary-General, Agricutural Futures Trading Commission

Mr. Worawit Khamkanist

Age 64


Nominating and


Member

Acting President

(During December 1-30, 2003)

Education- M.Sc. (Mechanical Engineering), University of Alabama, USA

- Directors Certification Program, Thai Institute of Directors (IOD)

Working Experience- Managing Director, Electricity Generating PCL.

- President, Mining Business, Electricity Generating Authority of Thailand

- Assistant Governor, Mae Moh Power Plant, Electricity Generating Authority of Thailand

Current Position- Director, KAF Co., Ltd.

- Managing Director, Aqua Plus Co., Ltd.

- Independent Director and Member of Audit Committee,

Public Warehouse Organization, Ministry of Commerce

Mr. Charu-Udom Ruangsuvan

Age 71


Audit Committee Member

Education- Diploma, National Defence College, 1984 (Class 27th)

- LL.B., Thammasat University

- B.E. (Mining), The University of Adelaide, Australia

Working Experience- President / Chief Executive Officer, Malaysia-Thailand Joint Authority

- Deputy Permanent Secretary, Ministry of Industry

- Inspector-General, Ministry of Industry

- Deputy Director-General, Department of Mineral Resource

Current Position- Advisor to the Ministry of Energy

- Advisor to the Ministry of Industry

- Advisor to the Ministry of Science and Technology

Mr. Somchai Wongsawat

Age 56

Director

Education- Master Program of Public and Private Management, MPPM

- Diploma, National Defence College, Regular Course, Class 38

- Barrister-at-law, Thai Bar Association

- L.L.B., Thammasat Unversity

Working Experience- Deputy Permanent Secretary for Justice

- Permanent Secretary for Justice

Current Position- Permanent Secretary for Justice

- Director, Electricity Generation Authority of Thailand

- Director, PTT Public Company Limited

- Director, Airports of Thailand Public Company Limited

035A n n u a l R e p o r t 2 0 0 3


Mr. Narong Sitasuwan

Age 55

Director

Executive Committee

Member

Education- MSc. (Mechanical and Aerospace Engineering), Illinois Institute of Technology

- B.E. (Mechanical), 2nd Class Honour, Chulalongkorn University

Working Experience- President-Maintenance Business, Electricity Generating Authority of Thailand

- Vice President-Maintenance Business, Electricity Generating Authority of Thailand

Current Position- Senior Deputy Governor-Generation Group, Electricity Generating Authority of Thailand

Ms. Pannee Sathavarodom

Age 55

Director

Education- M.A. (Econ) Thammasat University

- B.A. Second Honors (Econ) Thammasat University

Working Experience- Director, New Bangkok International Airport Co., Ltd.

- Acting Director-General, Public Debt Management Office

- Deputy Director-General, Fiscal Policy Office

- Senior Expert for Fiscal and Tax and Acting Director-General, Public Debt Management Office

Current Position- Director-General, Public Debt Management Office

- Director, Radanasin Asset Management Company Limited

- Director, Expressway and Rapid Transit Authority of Thailand


Mr. Richard McIndoe

Age 38

Director

Nominating and


Member

Education- MBA, Insead Business School (France)

- M.A. (Modern History), Cambridge University (U.K.)

Working Experience- Director, UBS Warburg, Hong Kong

- Vice President-Development and Finance, InterGen, China

- Managing Director, InterGen, China

- Managing Director, CLP Power International Ltd., Hong Kong

Current Position- Managing Director, CLP Power Asia Ltd., Hong Kong

- Director, Gulf Public Company Ltd.

Mr. Peter Albert Littlewood

Age 52

Director

Vice Chairman,

Executive Committee

Nominating

Education- MA (1st Class Honours) (Engineering), Cambridge University, UK- Advanced Management Program (AMP) Harvard University, USA

Working Experience- Operations Director, CLP Power International Ltd., Hong Kong- Project Manager for CLP's generating plant projects, CLP Power International, Hong Kong- General Manager for CLP's generation business group, CLP Power Hong Kong- CLP strategic development, CLP Holdings, Hong Kong- Director of various CLP Group companies

Current Position- Executive and Chief Operating Officer, CLP Power Asia, Hong Kong- Operations Director, CLP Power International Ltd., Hong Kong - Director, Rayong Electricity Generating Co., Ltd.- Director, Khanom Electricity Generating Co., Ltd.- Director, EGCO Engineering & Service Co., Ltd.

Mr. Andrew J. Pickering

Age 43

Director

Education- Queensland University LLB ( Honours), 1988

- Victoria University of Wellington, BA ( Honours)-Pure Mathematics, 1981

Working Experience- General Counsel & Project Development Director, CLP Power International Ltd.

- Regional General Counsel-Asia Pacific, Edison Mission Energy, Melbourne

- Vice President-Business Development, Edison Mission, Melbourne

- Partner-Banking & Finance Group, Blake Dawson Waldron, Melbourne

Current Position- Executive Director-Business Development, CLP Power Asia Ltd., Hong Kong

- Alternate Director, Nam Thuen 2 Power Co., Ltd., Laos

Mr. Michael Irl Nikkel

Age 39

Director

Education- Juris Doctor Degree-Law, University of Minnesota Law School - Bachelor of Arts Degree-Education, Southwestern Oklahoma State University

Working Experience- Chief Financial Officer and Vice President, AES China Generating Co., Ltd.- President and General Manager, Anhui Liyuan AES Power Co., Ltd. - Director, Yangcheng International Power Generating Company, Ltd.- Director, Jiaozuo AES Wan Fang Power Co., Ltd.- Chairman, Chongqing Nanchuan Aixi Power Company, Ltd. - Director, Wuhu Shaoda Electric Power Development Company Ltd.- Director, Chendu AES Kaihua Gas Turbine Power Co., Ltd.- Vice President, AES Orient, Inc.- Vice President, AES Korea, Inc.- Vice President, AES Taiwan, Inc.- Legal Counsel, The AES Corporation

Current Position- Executive Director, Business Development, CLP Power Asia Limited

Mr. Kraisi Karnasuta

Age 56

Director and President

Executive Committee

Member

(Vacating the office by resignationon November 30, 2003)

Education- Advanced Management Program (AMP) Harvard University, USA

- Diploma from the National Defense Academy

- Master of Engineering (Electrical), University of Washington, USA

- B. Eng. (Electrical), Chulalongkorn University

Working Experience- President-Maintenance Business Unit, Electricity Generating Authority of Thailand

- Assistant Governor-Transmission System Operation,

Electricity Generating Authority of Thailand

- Assistant Governor-Transmission System Maintenance,


- Director-Power System Control Division, Electricity Generating Authority of Thailand

Current Position- Deputy Governor-Policy and Planning, Electricity Generating Authority of Thailand

Mr. Chalermchai Ratnarak

Age 58

Director

Education- Master of Engineering (Water Science and Engineering) Asian Institute of Technology - B. Eng. (Civil Engineering), Chulalongkorn University- Certificate of Directors Certification Program, Thai Institute of Directors Association- Certificate of the Civil Service Executive Development Program 1, Office of Civil Service Commission

Working Experience- Senior Deputy Governor-Development Group, EGAT- Deputy Governor - Hydro Plant, EGAT- Assistant Governor - Power Purchase, EGAT- Director, Business Venture Division, EGAT

Current Position- Engineer, Level 14, Electricity Generating Authority of Thailand- Chairman, Rayong Electricity Generating Co., Ltd.- Chairman, Khanom Electricity Generating Co., Ltd.- Chairman, EGCO Engineering and Service Co., Ltd.- Director, Gulf Public Company Limited

036A n n u a l R e p o r t 2 0 0 3


037A n n u a l R e p o r t 2 0 0 3


Executive Committee

Name Position Starting Date

Mr. Sommai Phasee Chairman April 30, 2003

Mr. Peter Albert Littlewwod Vice Chairman April 30, 2003

Mr. Narong Sitasuwan Committee Member October 27, 2003

Mr. Kraisi Karnasuta 1 Committee Member October 1, 20021 resigned as Chairman of executive committee on December 1, 2003

Audit Committee


Mr. Aswin Kongsiri Chairman April 30, 2003

Mr. Charu-Udom Ruangsuwan Committee Member April 30, 2003

Mr. Chaipat Sahasakul Committee Member April 30, 2003

Nominating and Remuneration Committee


Mr. Sitthiporn Ratanopas Chairman April 30, 2003

Mr. Aswin Kongsiri Committee Member April 30, 2003

Mr. Worawit Khamkanist Committee Member April 30, 2003

Mr. Richard McIndoe Committee Member April 30, 2003

EXECUTIVE OFFICER

SUBCOMMITTEE MEMBER(As at December 31, 2003)

1. Mr. Kraisi KarnasutaDirector and President, Executive Committee Member(Vacating the office by resignation on November 30, 2003)Age 56

Education- Advanced Management Program (AMP)

Harvard University, USA- Diploma from the National Defense Academy- Master of Engineering (Electrical),

University of Washington, USA - B. Eng. (Electrical), Chulalongkorn University

Working Experience- President - Maintenance Business Unit,

Electricity Generating Authority of Thailand- Assistant Governor - Transmission System Operation,

Electricity Generating Authority of Thailand- Assistant Governor - Transmission System Maintenance,

Electricity Generating Authority of Thailand- Director, Power System Control Division,


Current Position- Deputy Governor- Policy and Planning,

Electricity Generating Authority of Thailand10 8 9

5 4 2 1 3 6 7

038A n n u a l R e p o r t 2 0 0 3


2. Mr. Worawit KhamkanistIndependent Director, Nominating and Remuneration Committee Member, Acting President(During December 1-30, 2003)Age 64

Education- M.Sc. (Mechanical Engineering), University of Alabama, USA - Directors Certification Program, Thai Institute of Directors (IOD)

Working Experience- Managing Director,

Electricity Generating Public Company Limited.- President, Mining Business,

Electricity Generating Authority of Thailand - Assistant Governor, Mae Moh Power Plant,


Current Position- Director, KAF Co., Ltd.- Managing Director, Aqua Plus Co., Ltd.- Independent Director and Member of Audit Committee,

Public Warehouse Organization, Ministry of Commerce

3. Mr. Kenneth W. ObergSenior Executive Vice President - New Business VenturesAge 55

Education- M.Sc. (Management Science & Engineering),

Worcester Polytechnic Institute, USA

Working Experience- Managing Director, CLP Power International Limited,

Hong Kong- Entergy Power Group, Irvine, USA

Current Position- Director, EGCO Joint Ventures Development Co., Ltd. - Director, Gulf Electric PCL.- Director, Num Theun 2 Power Company Limited

4. Mr. Sakda SreesangkomSenior Executive Vice President - Finance Age 42

Education- M.A. (Economics) Keio University, Tokyo, Japan - B.A. (Economics), Thammasat University

Working Experience- Vice President, Credit Suisse First Boston- Executive Director, SBC Warburg- Asian Development Bank Consultant to

Public Debt Management Office, Ministry of Finance - Senior Vice President, Glow Company Limited,

part of the Tractebel group

Current Position- Director, Rayong Electricity Generating Co., Ltd.- Director, Khanom Electricity Generating Co., Ltd.- Director, EGCO Engineering & Service Co., Ltd.- Director, EGCO International Ltd. (EGCO BVI) - Director, EGCO Joint Ventures Development Co., Ltd.- Director, Amata-EGCO Power Co., Ltd.- Director, Amata Power (Bangpakong) Co., Ltd.

5. Mr. Somyos PolachanSenior Executive Vice President -Asset Management and Planning and Managing Director, EGCO Engineering & Service Co., Ltd.Age 58

Education- Bachelor of Engineering (Honours),

Chulalongkorn University- High Certificate in Nuclear Engineering,

Chulalongkorn University- Advance Certificate in Electricity Utilities

Management, Austin, Texas, USA

Working Experience- Executive Director & Project Director,

Thai - Lao Power Co., Ltd.- Vice President - Corporate Affairs,

The Aromatics (Thailand) PCL.- Assistant Director of Corporate Planning Department,

Electricity Generating Authority of Thailand- Chief of Maintenance Training Division, Training Department,

Electricity Generating Authority of Thailand- Assistant Chief of Operation Division, Operation Department,

North Bangkok Thermal Power Plant, Electricity Generating Authority of Thailand

Current Position- Director, Rayong Electricity Generating Co., Ltd.- Director, Khanom Electricity Generating Co., Ltd.- Director, EGCO Engineering & Service Co., Ltd.- Chairman, Thai LNG Power Corporation Ltd.- Chairman, TLP Cogeneration Co., Ltd.- Chairman, EGCO Green Energy Co., Ltd.- Chairman, Roi-Et Green Co., Ltd. - Director, EGCO Joint Ventures & Development Co., Ltd.- Director, Amata - EGCO Power Co., Ltd.

6. Mr. Anan Gee-EmSenior Executive Vice President and Managing Director, Khanom Electricity Generating Co., Ltd.Age 60

Education- M.Sc. (Honours) (Management Engineering),

Adamson University, Philippines- B.Sc. (Electrical Engineering), Feati University, Philippines

Working Experience- Director and Managing Director,

Rayong Electricity Generating Co., Ltd.- Assistant Director, Southern Region Operation Department,

Electricity Generating Authority of Thailand- Engineer Level 11, Operation Department,


Current Position- Director, Khanom Electricity Generating Co., Ltd.

7. Mr. Sinchai NerngjumnongSenior Executive Vice President Managing Director, Rayong Electricity Generating Co., Ltd.Age 56

Education- B. Eng. (Mechanical), 2nd Class Honour,

Chulalongkorn University

Working Experience- Managing Director, Khanom Electricity Generating Co., Ltd.- Deputy Managing Director,

Rayong Electricity Generating Co., Ltd.- Operation Division Manager,

Rayong Electricity Generating Co., Ltd.- Assistant Director, Rayong Power Plant,

Electricity Generating Authority of Thailand- Assistant Director, Bang Pakong Power Plant

Operation Department - Combined Cycle, Electricity Generating Authority of Thailand

13 12 11 14 15

039A n n u a l R e p o r t 2 0 0 3


Current Position- Director and Managing Director,

Rayong Electricity Generating Co., Ltd.

8. Ms. Pikul SrisastraExecutive Vice President - FinanceAge 53

Eduction- B.Sc. (Accounting), Chulalongkorn University

Working Experience- Deputy Managing Director - Finance & Administration,

Khanom Electricity Generating Co., Ltd.- Deputy Managing Director - Finance & Administration,

Rayong Electricity Generating Co., Ltd.- Finance Division Manager,

Rayong Electricity Generating Co., Ltd.- Assistant Chief of Bonds, Securities and Loans

Division, Electricity Generating Authority of Thailand- Head of Financial Policy Section, Finance Division,


Current Position- Deputy Managing Director - Finance & Administration,

Rayong Electricity Generating Co., Ltd.- Director, Gulf Electric PCL.

9. Ms. Daranee SriwattanaExecutive Vice President - FinanceAge 54

Education- M. SC. (Accounting), Chulalongkorn University

Working Experience- Deputy Managing Director - Finance & Administration,

Rayong Electricity Generating Co., Ltd.- Manager - Accounting & Budget Division,

Electricity Generating Public Company Limited- Manager - Accounting & Budget Division,

Khanom Electricity Generating Co., Ltd.- Assistant Chief,

Accounting Division Accounting Department, Electricity Generating Authority of Thailand

Current Position- Deputy Managing Director - Finance & Administration,

Khanom Electricity Generating Co., Ltd.- Director, Thai LNG Power Corporation Ltd.- Director, TLP Cogeneration Co., Ltd.- Director, EGCO Green Energy Co., Ltd.

10. Ms. Vasana VongpromekExecutive Vice President - Corporate Services and Acting Senior Vice President - Corporate Secretary DivisionAge 45

Education- MBA, Kasetsart University- B.A. (Honours), Chulalongkorn University

Working Experience- Administrative Officer Level 7,

Development and Planning Department,Electricity Generating Authority of Thailand

11. Dr. Sakul PochanartSenior Vice President - Business development DivisionAge 45

Education- D.Sc. (Civil Engineering) Sever Institute of Technology,

Washington University, USA

Working Experience- Power Plant Business Division Manager, EGCO.- Director, Gulf Co generation Co.,Ltd.- Director, EGCO Green Co.,Ltd.- Director, Roi-Et Green Co.,Ltd.- Senior Business Development Officer,

Business Development Division, EGCO.- 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 Thailand- T&D Structural Designer, Lemco Engineers, St.Louis,

Missouri, USA

Current Position- Director, Gulf Yala Green Co., Ltd.- Director, Alsing Power Holding Inc- Director, Northern Mindanao Power Corporation

12. Mr. Voravit PotisukSenior Vice President - Engineering Business Division, Acting Managing Director, Egcom Tara Co., Ltd.Age 46

Education- MBA, The University of The Thai Chamber of Commerce - B.Eng. (Electrical & Communication)

Chulalongkorn University

Working Experience- Senior Vice President - Engineering Division,

EGCO Joint Ventures and Development Co., Ltd.- Vice President (Power Plant Project) Sri U-Thong Co., Ltd.- Chief, Electrical Project Division,

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

Current Position- Director, Trang Biomass Co., Ltd.- Director, Egcom Tara Co., Ltd.

13. Ms. Pannee BooncharoensombutSenior Vice President - Project Finance DivisionAge 44

Education- B.A. (Economics), Chulalongkorn University

Working Experience- Onshore Loan and Security Section Manager,

Finance Division, Rayong Electricity Generating Co., Ltd.

16 17 19 20 18 22 10 23 21

040A n n u a l R e p o r t 2 0 0 3


14. Mr. Piya JetasanonSenior Vice President - Finance DivisionAge 46

Education- MBA, Ramkhamhaeng University- B.A. (Economics), Thammasat University

Working Experience- Manager - Finance Division,

Khanom Electricity Generating Co., Ltd.- Manager- Treasury Management Section,

Electricity Generating PCL.- Head of Financial Policy Section, Bonds, Securities

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

15. Mr. Suvapan ChomchalermSenior Vice President - Accounting and Budget DivisionAge 42

Education- M.Sc. (Accounting), Thammasart University

Working Experience- Manager-Accounting and Budget Analysis Section,

Accounting and Budget Division, Electricity Generating PCL

16. Ms. Krisna PinkaewSenior Vice President - Asset Management DivisionAge 46

Education- M.Sc. (Accounting), Thammasat University

Working Experience- Manager - Accounting & Budget Division,

Rayong Electricity Generating Co., Ltd.- Senior Internal Auditor, Internal Audit Division,

17. Dr. Gumpanart BumroonggitSenior Vice President - Energy Business DivisionAge 39

Education- Ph.D. (Electrical Engineering), Southern Illinois

University at Carbondale, Illinois, USA

Working Experience- Senior Vice President - Energy Business Division,

Electricity Generating PCL.- Manager - Project Development ,

Energy Business Division, Electricity Generating PCL.

Current Position- Director, EGCO Green Energy Co., Ltd.

18. Mr. Kiatichai SiljitsongSenior Vice President - MIS Division Age 52

Education- M.Eng. (Energy Technology), Asian Institute of Technology

Working Experience- Chief, Special Energy Planning and Development

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

- Assistant Chief of Special Energy Engineering Division, Thermal Power Engineering Department, Electricity Generating Authority of Thailand

19. Mr. Prasarn SimsirivongSenior Vice President - Human Resource DivisionAge 40

Education- Master of Public Administration - Personnel Management,

National Institute of Development Adminstration- B.A. (Public Administration), Thammasat University

Working Experience- Human Resource System Executive, Mitr Phol Group- Head of HRM and SR. Consultant,

Thailand Productivity Institute

20. Ms. Chantima RugpongSenior Vice President - Procurement & Administration DivisionAge 44

Education- MBA, The National Institute of Development

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

Working Experience- Senior Vice President-Corporate Affairs Division,

Electricity Generating PCL. - Manager-Procurement and Service Section,

Corporate Affairs Division, Electricity Generating PCL. - Administrative Officer Level 8, acting as the

Manager of the Bidding Document Section, Lam Takhong Hydro Power Plant Construction Project, Electricity Generating Authority of Thailand

21. Ms. Jutatip MahaveraSenior Vice President - Internal Audit Division Age 51

Education- Public and Private Management, University of Texas

at Austin, USA (Hubert H. Humphrey Fellowship Program 1993-1994)

- M.Sc. (Accounting), Thammasat University

Working Experience- Assistant chief, Audit Division 1, Internal Audit Department,


Current Position- Director, Egcom Tara Co., Ltd.

22. Mr. Arthaporn VatanasutiSenior Vice President - Legal Division Age 52

Education- 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 and Analysis

Section, Legal Division, Electricity Generating Authority of Thailand

23. Mr. Wuthichai SithipreedanantSenior Vice President - Corporate and Investors Relations DivisionAge 41

Education- M.A. (Public Administration), Chulalongkorn University - B.A. (Communication Arts), Chulalongkorn University

Working Experience- Assistant Superintendent, Public Relations Department,

Electricity Generating Authority of Thailand - Administrative Officer Level 7, Public Relations

Division, Public Relations Department, Electricity Generating Authority of Thailand

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DIRECTORS' REMUNERATION

EXPLICIT REMUNERATION

(1) Total Remuneration of all Board Members

As of December 31, 2003, the Board of Directors is composed of fifteen directors.

(Unit : Baht)

Total Remuneration in 2003

No. Names Period of Appointment Meeting Meeting Period of Bonus /1 Total

Service Date Attendance Allowance Service Remuneration

in 2003 in 2002

1. Mr. Sitthiporn Ratanopas /2 /4 9 30 Apr. 03 6/6 376,250.00 9 - 376,250.00

2. Mr. Chalermchai Ratnarak /2 1 15 Dec. 03 1/1 27,000.00 - - 27,000.00

3. Mr. Michael Irl Nikkel /2 1 15 Dec. 03 1/1 27,000.00 - - 27,000.00

4. Mr. Peter Albert Littlewood 12 22 Feb. 99 8/11 431,933.33 12 745,980.00 1,177,913.33

5. Mr. Richard McIndoe 12 16 Dec. 02 10/11 449,666.67 3 50,570.00 500,236.67

6. Mr. Andrew J. Pikering 12 28 Oct. 02 9/11 431,666.67 3 189,660.00 621,326.67

7. Mrs. Pannee Satavarodom /2 9 30 Apr. 03 6/6 301,000.00 - - 301,000.00

8. Mr. Somchai Wongsawat 12 25 Jun. 01 6/11 419,666.67 12 720,690.00 1,140,356.67

9. Mr. Narong Sitasuwan /2 3 27 Oct. 03 2/2 85,000.00 - - 85,000.00

10. Mr. Worawit Khamkanist 12 29 Apr. 97 11/11 459,666.67 12 758,620.00 1,218,286.67

11. Mr. Chaipat Sahasakul 12 22 Apr. 02 11/11 459,666.67 9 568,970.00 1,028,636.67

12. Mr. Aswin Kongsiri 12 25 Jun. 01 10/11 451,666.67 12 758,620.00 1,210,286.67

13. Mr. Sommai Phasee /2 /3 12 12 May. 92 11/11 499,333.33 12 948,280.00 1,447,613.33

14. Mr. Charu-udom

Ruangsuwan /2 9 30 Apr. 03 6/6 301,000.00 - - 301,000.00

15. Mr. Seri Chintanaseri /2 9 30 Apr. 03 6/6 301,000.00 - - 301,000.00

16. Mr. James Seymour Dickson

Leach /3 10 24 Jul. 98 5/10 349,666.67 12 720,690.00 1,070,356.67

17. M.L. Chanaphun Kridakorn /3 9 30 Apr. 01 9/9 349,666.67 12 758,620.00 1,108,286.67

18. Mrs. Angoon Kamolyabutr /3 4 30 Apr. 01 5/5 158,666.67 12 745,980.00 904,646.67

19. Mr. Boonshai Jiwalai /3 4 31 Oct. 96 5/5 158,666.67 12 758,620.00 917,286.67

20. Mr. Kraisi Karnasuta /3 12 28 Oct. 02 10/10 11,000.00 3 - 11,000.00

21. Khunying Nongkran

Chandhanayingyong /4 - - - - 4 189,660.00 189,660.00

22. Mr. Kenneth W. Oberg /4 - - - - 12 745,980.00 745,980.00

23. Mr.Thomas Watter /4 - - - - 8 493,100.00 493,100.00

6,049,183.36 9,154,040.00 15,203,223.36

/1 2002 director bonus was paid in May in accordance with the resolution of the shareholders' AGM No. 1/2003 held on April 30, 2003./2 In 2003, eight directors were appointed.

- Mr. Sitthiporn Ratanopas, Mrs. Pannee Satavarodom, Mr. Charu-udom Ruangsuwan, Mr.Sommai Phasee and Mr. Seri Chintanaseri were appointed in the

Shareholders' Annual General Meeting No. 1/2003 on April 30, 2003.

- Mr. Narong Sitasuwan was appointed by the Board of Directors' in the meeting No. 10/2003 on October 27, 2003.

- Mr. Chalermchai Ratnarak and Mr. Michael Irl Nikkel were appointed by the Board of Directors' in the meeting No. 11/2003 on December 15, 2003./3 In 2003, five directors resigned and one director retired by rotation.

- Mr. Boonshai Jiwalai (Retired by rotation on April 30, 2003)

- Mrs. Angoon Kamolyabutr (Resigned as Director on April 30, 2003)

- Mr. Sommai Phasee (Resigned as Director on April 30, 2003)

- M.L. Chanaphun Kridakorn (Resigned as Director on October 1, 2003)

- Mr. James Seymour Dickson Leach (Resigned as Director on October 27, 2003)

- Mr. Kraisi Karnasuta (Resigned as Director on December 12, 2003)/4 In 2002, three directors resigned and one director retired by rotation.

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(2) Total Remuneration of the Executive Committee members and the Management

(Unit : Baht)

Year 2003

Remuneration Executive Management Total Remuneration

Committee members (6 Persons) /2

(4 Persons) /1

Total Salary - 22,652,502.76 22,652,502.76

Bonus /3 - 8,703,278.10 8,703,278.10

Meeting Allowance 2,973,333.00 - 2,973,333.00

Total 2,973,333.00 31,355,780.86 34,329,113.86

/1 In 2002, two Executive committee members resigned and two new members were appointed./2 Since two Senior Executive Vice Presidents were seconded to be the Managing Directors of REGCO and KEGCO and they were paid by those companies.

EGCO therefore accounted for the remuneration of only four executives./3 2002 bonus was paid in January 2003.

(3) Total Remuneration of REGCO and KEGCO Management

(Unit : Baht)

Year 2003

REGCO KEGCO

Remuneration Directors Management Total Directors Management /3 Total

(9 Persons) (7 Persons) Remuneration (9 Persons) (8 Persons) Remuneration

Total Salary - 11,165,849.50 11,165,849.50 - 12,166,005.81 12,166,005.81

Bonus 1/ - 4,326,498.37 4,326,498.37 - 4,989,575.66 4,989,575.66

Meeting

Allowance /2 - - - - - -

Total - 15,492,347.87 15,492,347.87 - 17,155,581.47 17,155,581.47

/1 2003 bonus was paid in January 2004./2 EGCO accounted for the meeting allowance of REGCO and KEGCO Board/3 In 2003, two managements were transferred from KEGCO to EGCO and one management was appointed.

OTHER REMUNERATION

Provident Fund

The contribution to the provident fund made by the company and its subsidiaries on behalf of the management are asfollows:

(Unit : Baht)

Year 2003

Company Members Provident fund

EGCO /1 4 947,011.50

REGCO 7 1,008,773.81

KEGCO 8 894,545.32

/1 In 2003, two SEVPs resigned while three SEVPs were appointed to join the Management team under the new corporate structure.

043A n n u a l R e p o r t 2 0 0 3


CORPORATE GOVERNANCE REPORT

The Electricity Generating Public Company Limited or EGCO, which operates the business under the oversight of theBoard of Directors, strongly intends to carry out the business to benefit all stakeholders.

With the awareness that the Company's reputation being established since the inception as the first power producerof Thailand, is the most valuable asset, the Board of Directors set the guiding principles for doing business with the adherenceto the good corporate governance concept as follows.

1. CORPORATE GOVERNANCE POLICYThe Board of Directors has established the following corporate governance policies based on the Company‘s vision,

mission and good corporate governance concept to reflect the company‘s responsibility as a good corporate citizen. - To account for shareholders and other stakeholders by protecting the company assets as well as the good reputation.- To establish clear responsibilities in accordance with the assigned mission with discipline and awareness of existing

and future risks. - To have clear and transparent decision making process and working procedures.- To treat the stakeholders equitably and avoid bias or situation that may raise any conflict of interest.- To foster the Company‘s growth for sustainable long-term value.- To constantly adopt the modern and appropriate practices for continuous competitiveness enhancement.- To be sensitive to community and environment concerns.The Company recognizes that to be a good corporate governance company, it should not only establish a full

framework of policies and systems but also cultivate a consistent culture and practices. Consequently, the Company embedsthe following fundamental business values into the Group‘s culture.

- We will conduct our business with honesty, integrity, and ethics.- We will carry out our business in compliance with all applicable business and commercial laws.- We will show respect and take into account the local traditions and cultures.- We will use natural resources in an efficient and environmentally responsible manner.- We will carry out our responsibilities in a professional manner and with team spirit.To successfully cultivate the above ideals, the Company has set up the Good Corporate Governance Committee to

promote the good corporate governance concept. This aims at ensuring that the employees obey and respect the spirit ofthe Code, which is the most important factor to make the good corporate governance system work.

2. SHAREHOLDERS : RIGHTS AND EQUITABLE TREATMENTWith respect to ensuring the shareholders' rights and equitable treatment, the Company has established the following

guidelines.- The Company enhances its transparency to ensure the shareholders that they will equitably and appropriately

receive their return on investment by having no cross shareholding structure in the Group. Although there are connected transactions from power purchase and maintenance service between the Electricity Generating Authority of Thailand, the shareholders, and the Company‘s subsidiary and associated companies, such transactions are in compliance with the terms and conditions either in the Power Purchase Agreement and the Major Maintenance Agreement, which have been endorsed by the National Energy Policy Committee and approved by the Cabinet, or the standard contracts being enforced to all small power producers. In addition, the Company has also established clear approval criteria which the authority to approve the connected transaction between the Group companies belongs to the Board of Directors.

- The Company makes clear the policy to prohibit the use of inside information including the imposed penalty in case of failure to observe the rules in the Director‘s Manual, Directors‘ Code of Conduct, and Employee‘s Code of Conduct.

- The Company has established the process to ensure that the shareholders‘ voting right will be respected by providing all necessary information to the shareholders and encouraging them to share their opinions in the shareholders‘ meeting.

- The Company respects the right of the shareholders to access all necessary information to evaluate how their investments are being managed. True and accurate information regarding the operating results and financial position and relating document is reported regularly to the shareholders in accordance with the requirements of the Stock Exchange of Thailand and the Office of the Securities and Exchange Commission. In addition, the Corporate Communications and Investor Relations Division are ready to clarify the shareholders' inquiries and disclose significant information on the Company‘s web site : www.egco.com

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3. STAKEHOLDERS' RIGHTSTo adhere to the good corporate governance concept, the Board of Directors is well aware that the Company should

take into account the business impacts to both the shareholders and other stakeholders. In this regard, the Company hasstipulated its accountabilities for each stakeholder in the Company‘s Code of Conduct as listed below:

Shareholders: The Company will strive to achieve growth based on its potential and core competency so that shareholders over the long term will benefit from the productive performance and good operating results of the Company.

Employee: The Company believes in the value of its human resources and will foster pride among all employees bypromoting the participative management with equal opportunity for career advancement. Employees are encouraged toenter the development program to bring out their highest working potentials to undertake tasks in competent manner andmaintain the Company‘s business leadership.

Customer: The Company will always commit to agreements and provide good quality and reliable services.Supplier and Contractor: The Company requires that all aspects of procurement of goods and services be conducted

in compliance with ethical standards. In addition, the Company aims at developing and securing sustainable relationshipwith suppliers and contractors with clear objectives on the basis of value for money, technical qualification, financial capability,and mutual trust.

Social and Environment: The Company intends to preserve the good environment by managing business with thegoal to alleviate the adverse effects on the environment. The Company also encourages the Group companies to complywith the governing environmental laws, regulations and policies. In addition, the Company encourages the employees tohave strong concern for the natural resources, forest, and wild animals by taking part in environment conservation activitiessuch as forestation, nature study, and appropriate technology use to reduce the extravagant consumption of the naturalresources, etc.

4. SHAREHOLDERS' MEETINGThe Company views the annual general meeting as a significant event. With respect to this, the Board of Directors

has established the policy for all directors and management to attend the shareholders‘ meeting and to clarify shareholders‘inquiries. For 2003, the annual general meeting was held on April 30, 2003. The notice of the meeting as well as the agendadocument were delivered to the shareholders not less than 14 days prior to the meeting date to allow shareholders appropriatetime to study the details of the agenda. The Company also advertised the notice in both Thai and English daily newspaperfor three consecutive days during April 21-23, 2003. In such meeting, the number of shareholders attending the meetingin person and by proxy exceeded one-third of the total issued shares as prescribed by law.

5. LEADERSHIP AND VISION The Board of Directors determines to continuously carry out the company‘s business in line with the committed

vision, mission, Code of Conducts, with regard to internal and external risks and good corporate governance principle. TheBoard of Directors works with the management in setting the directions, objectives, and goals in the corporate plan andannual business plan as well as providing recommendation regarding the rules and significant working procedures toensure that the Company‘s policies are always adhered to and the corporate goals are achieved. The Board also accountsfor monitoring the effectiveness of the strategies as well as implementing change when necessary.

The Board of Directors has conducted their duties with diligence and care in compliance with the governing laws andregulations to be a role model for the employee as well as to foster the public trust. With respect to this, the Board ofDirectors launched the Code of Conduct for EGCO Group Directors embracing the eight values: honesty, integrity, enterprise,excellence, accountability, justice, independence, and equality of shareholder opportunity.

Furthermore, the Board of Directors implements directors‘ appraisal every year to analyze the strengths and weaknessof the governance process for improvement purpose as well as goal setting for next year. In 2003, the Board of Directorsinitiated the individual appraisal apart from the collective performance appraisal. In addition, the Audit Committee alsoapplies the self-assessment to review whether their performances are in line with the international practice. The Board ofDirectors set the policy to apply this appraisal to every sub-committee in the next year as well.

To sustain the good corporate governance system, the Company encourages directors to attend the courses at theThai Institute of Directors to continuously develop their professionalism with the aim to enhancing the effectiveness of thegovernance system and to allow the directors to network with their peers to exchange and update information on corporategovernance.

045A n n u a l R e p o r t 2 0 0 3


6. CONFLICT OF INTERESTSEGCO has the policy to avoid the conflict of interest between the personal interest and the corporate interest as follows.- Directors and employees shall not be engaged as directors or advisors of other companies, organizations, and

associations that may conflict with the interest and the business of the company. Acknowledgment by the Board of Directors must be sought before taking such engagement.

- Directors, Management and employees shall not use inside information for the benefit of their own.- Transaction that may induce the conflict of interest shall be reported to the Board of Directors for consideration.

The details of such transaction such as transaction price, contractors, and rationale are to be disclosed in compliance with the requirements of the Office of the Securities and Exchange Commission and Stock Exchange of Thailand.

- Directors and Designated Management will report the change in their security holding to the regulatory body.

7. CODE OF CONDUCTWith the firm belief that reputation on business ethics is the valuable asset, every director and employee is equally

responsible to protect this reputation by respecting the spirit of the company‘s Code of Conduct.In 2003, the new ‘‘Code of Conduct‘‘, the updated version of the first issue dated July 11, 1999, was launched. Apart

from the description of the performance standards expected from all directors and employees, the Code also identifies theresponsible units to ensure the compliance, a key factor to make the system work. In addition, the Board of Directors alsolaunched the Code of Conduct for the Directors and set the policy that the Code of Conduct will be reviewed at least everytwo years.

8. BALANCE OF POWER BY NON-EXECUTIVE DIRECTORSCurrently, the Board comprises 15 directors. With the President as the only executive director, the other 14 are outside

directors who are not the Company‘s employees which accounts for 93% of the Board members. From these outside directors,6 are qualified as the independent directors which accounts for 40% of the total directors. The Nominating and Remuneration Committee accounts for the nomination of new director which includes both independent directors and shareholders‘ representative directors taking into account the expertise, experience, and skills as well as the devotion of time and effortto enhance the efficiency of the Board. The Chairman is also the outside director and is not the same person as the President.This structure indicates the Company's effort to create the appropriate balance for the Board in discharging their duties.

9. REMUNERATION FOR DIRECTORSThe Shareholders‘ meeting approves the directors‘ remuneration at a rate that well reflects their responsibilities.

The Company has a policy to disclose the remuneration of each director for transparency.In 2003, the Shareholders‘ Meeting resolved that the directors‘ remuneration comprised the monthly retainer fee

and meeting allowance to reflect the liabilities, time devotion and meeting attendance of each director. On the other hand,the bonus payment was tied with the company's achievement. Details were as follows.

1. Monthly retainer fee at Baht 30,000 and meeting allowance at Baht 10,000 each. In case of appointing the substituteddirectors/committee members, retainer fee would be paid to each person in proportion of the service time in the month.Members who did not attend the Meeting would not receive the allowance, which would also affect the bonus remuneration.Chairman of the Board received 25% additional remuneration for both the retainer fee and the meeting allowance.

2. Bonus would be allocated at 0.5% of the net profit after tax of the consolidated financial statement but notexceed Baht 11 million at the Board's discretion.

Remuneration for top executives is determined in consistent with the principles and policies of the Board of Directors and linked with the corporate and individual achievement. The Company periodically conducts the survey of the executiveremuneration to ensure that the rate is comparable to the peer companies and adequate to attract and motivate the qualified executives. The Nominating and Remuneration Committee accounts for considering and proposing the appropriate package to be approved by the Board of Directors.

10. BOARD MEETINGThe Board schedules the Meeting at least every two months. Extra Meeting can be called if there is any major

unplanned event that needs the Board's consideration. The Board can also authorize the Committees to scrutinize orapprove the management's activities within the delegated authority during the meeting interval.

To protect the company‘s interest, the Company plans the meeting dates and the agenda for the whole year in

046A n n u a l R e p o r t 2 0 0 3


advance. An agenda is prioritized in terms of significance i.e., Matter Arising, Matter for Consideration, Matter for Information to ensure that items that need the most careful deliberation are given adequate time. Directors can deliver their independencejudgment. The minutes of meeting are put in writing. The draft minutes are circulated to every director for review prior tothe adoption at the next meeting. Certified version of the minutes is securely filed and available for review by directors orconcerned parties.

Since the Company undertook the corporate restructure in year 2003, which was considered as a major event, thetotal number of the Board meetings last year was 11 which comprised 7 scheduled and 4 extra meetings. The Managementdelivered the notice, agenda, and meeting document to the directors for consideration well in advance. List of directorsand attendance record in 2003 is as listed below.

The Board of Directors

Name Position Appointment Date Attendance (No.)

Mr. Sitthiporn Ratanopas Chairman April 30, 2003 6/6

Mr. Sommai Phasee Independent Director May 12, 1992 11/11

Mr. Aswin Kongsiri Independent Director June 25, 2001 10/11

Mr. Worawit Khamkanist Independent Director April 29, 1997 11/11

Mr. Charu-udom Ruangsuwan Independent Director April 30, 2003 6/6

Mr. Seri Chintanaseri Independent Director April 30, 2003 6/6

Mr. Chaipat Sahasakul Independent Director April 22, 2002 11/11

Mr. Somchai Wongsawat Director June 25, 2002 6/11

Ms. Pannee Sathavarodom Director April 30, 2003 6/6

Mr. Narong Sitasawan Director October 27, 2003 2/2

Mr. Peter Albert Littlewood Director February 22, 1999 8/11

Mr. Richard McIndoe Director December 16, 2002 10/11

Mr. Andrew J. Pickering Director October 28, 2002 9/11

Mr. J.S. Dickson Leach 1 Director July 24, 1998 5/10

Mr. Michael Irl Nikkel Director December 15, 2003 1/1

Mr. Kraisi Karnasuta 2 Director and President October 28, 2002 10/10

Mr. Chalermchai Ratnarak Director and President December 15, 2003 1/1

1 Vacating the office by resignation on October 27, 20032 Vacating the office by resignation on December 12, 2003

11. SUBCOMMITTEESThe Board of Directors appoints the directors with knowledge and expertise to be the members of the sub-committees

to enhance the governance efficiency as follows. - Audit CommitteeThe Audit Committee comprises three independent directors with a 3-year term of service. The Audit Committee

undertakes its responsibilities as described in the Audit Committee Charter, which is reviewed annually to be in consistentwith the changing internal and external environment. In summary, the Audit Committee's mission covers the review of thefinancial statements, legal compliance, internal control and risk management policy review including auditor selection.

There were 8 meetings in 2003.- Executive CommitteeThe Executive Committee comprises four directors with a 3-year term of service. The Executive Committee governs

the company's business and endorses recommendations to the Board of Directors as well as approves actions within its delegated authority. The Committee meets regularly and the meeting results are reported to the Board.

There were 11 meetings in 2003. - Nominating and Remuneration CommitteeThe Nominating and Remuneration Committee comprises four directors with a 3-year term of service. The mission

is to determine the structure and the composition of the Board of Directors, to nominate qualified persons to be the directors

047A n n u a l R e p o r t 2 0 0 3


of EGCO and Group companies together with the members of the standing committees, to recommend the compensationpackage for directors, and committee members of EGCO and Group Companies which includes the meeting allowance, annualbonus, welfare and other financial and non-financial benefits. In addition, the Committee also account for the nominationof the President, the executive succession plan including the appointment, rotation and removal of the executives includingtheir remuneration package. The Committee is also assigned to be the performance evaluator at the corporate level todetermine the bonus and annual salary increase of the Group and to recommend the Company‘s salary structure and otherfringe benefits

There were 5 meetings in 2003.

12. INTERNAL CONTROLThe Board of Directors entrusts the Audit Committee with the responsibility to review the effectiveness and

efficiency of the internal control systems established by the management. The review is to ensure a sound internal controlsystem of the Group companies to protect their assets and the shareholders benefits. The Internal Audit Division is assigned to audit the operation of each working unit, assess the efficiency and adequacy of the internal control system, and monitor risk management activities to mitigate risks that will bar the Group companies from meeting their objectives. The assessment result was reported to the Audit Committee and at the Board of Directors’ Meeting held on 19 March 2004. The membersof Audit Committee and Independent Directors also attended the Meeting. The Board of Directors considered the internalcontrol assessment result and was of the opinion that the company had an appropriate and adequate internal control system.

The EGCO internal control system is composed of the following components. - Control EnvironmentThe Board set forth the annual business objectives of EGCO and subsidiaries by establishing the key performance

indicators covering finance, learning and development, customer satisfaction, and business process to be notified to allemployees to align their efforts in pursuit of the corporate achievement.

One of the control environments is the issuance of the Code of Conducts as guiding principles for directors andemployees in discharging their duties. The Code of Conducts are communicated and distributed to all employees. Theresponsible units are assigned to ensure compliance with the Code with penalty imposed in case of violation.

In addition, the Company has reorganized its structure to suit the changing business environment as well as toensure higher efficient work process.

- Risk Assessment and ManagementThe Company has embedded the risk assessment both at the corporate and activity level to indicate and analyze

risk factors, risk owners as well as countermeasures to mitigate risks. With the aim to cultivate risk management as the corporate culture, the Audit Committee is entrusted to review the

Company’s risk management. The risk management committee has been established at the management level comprisingtop Group executives with the ultimate responsibility for providing a framework to manage risks across the organization.The Committee will maintain a commitment to ensure that effective risk management at all levels is in existence.

As a result of EGCO restructuring, Risk Management Section has been set up to update and amend RiskManagement Manual in order to keep up with the changes in environment. The manual will provide guidance for EGCO management and staffs to manage risks. A systematic approach to control or mitigate risks will be delivered. The RiskManagement Section will also organize risk management workshop for all employees regularly.

- Control ActivitiesEGCO has established the written investment guidelines together with the relating regulations with clear accountability

and authorization to ensure that management and employees carry out their duties in compliance with the Company’spolices.

- Information and CommunicationsEGCO set the efficient system to ensure right, adequate and timely flow of information to support the decision making

of the Board and Management. Discussion and resolution of each committee’s meeting are clearly recorded. Various channels are used for internal communications. For external communications, the Company establishes appropriate information system such as the Company’s web site to ensure that the shareholders and investors can assess the disclosed information at theirconvenience. Communications with shareholders/investors are also conducted as appropriate. Relevant documents supporting the accounting entries are fully maintained as required by law.

- MonitoringThe Executive Committee Meeting is held regularly at least once a month to consider and follow up the Company’s

048A n n u a l R e p o r t 2 0 0 3


performance against the target to be reported to the Board of Directors. Extra meetings can be called as necessary. The Internal Audit Division is responsible for internal auditing and reports directly to the Audit committee, which usually heldapproximately 10 meetings a year. Each division head is responsible to review important issues in his/her daily operation.

In auditing financial statements, the certified external auditor reviews the internal accounting control system of theaccounting and finance of the Company to determine the approach, timeframe and scope of work. In 2003, the auditorsdid not find any significant area of concern with respect to the internal accounting control system.

13. RELATIONSHIP WITH INVESTORSBeing aware of the impact of the Company‘s information on the decision of investors and stakeholders, the Board

set the policy to disclose both the financial and non-financial information in a materially sufficient, adequate, reliable andtimely basis. Investor Relations Section is responsible to communicate with institutional and individual investors, analystsand concerned government agencies.

The Company fosters trust by announcing the financial information as early as possible and within the timeframestipulated by laws via the SET's ELCID system of which the information will be passed through to investors and the analystsat www.set.or.th. At the same time, the Company announces such information via its website at www.egco.com as well assubmits the information by the electronic mail to the investors and the analysts subscribing to the mailing list.

Furthermore, the Company carries out the following activities to support information disclosure to the public.- Launching quarterly reports on Management Discussion and Analysis to provide information to investors and analysts.- Holding the analyst meetings to provide information and clarify any inquiries.- Joining the overseas road show arranged by the Stock Exchange of Thailand or financial institutes to provide

information and to clarify inquiries of foreign investors.- Welcoming company visit to provide investors and analysts with the opportunity to discuss with the management

the policy and strategy of the company as well as any inquiries. Usually, company visits are arranged every week.- Arranging the annual plant visit to equip investors and analysts with better understanding of the company‘s business.- Issuing the annual report to provide yearly report on the company‘s information to shareholders, investors, and

other interested parties.- Disclosing significant information, presentations to analysts and answers to frequently asked questions in the web

page www.egco.com for convenience in retrieving the Company‘s information.In 2003, the Company was honored the Disclosure Award hosted by SEC for proving quality disclosure for the second

consecutive year.

14. ACHIEVEMENTSWith the adherence to the good corporate governance, EGCO was honored the following awards.- Board of the Year Award and Top Fifty Listed Companies in term of Good Corporate Governance by the Thai

Institute of Directors (IOD).- One of the 15 companies receiving the SET's award for best corporate governance report in conformance with the

fifteen good corporate governance principles issued by the Stock Exchange of Thailand.- The best company in utility sector, the forth best in Thailand and 40th best companies in term of governance rating

from 132 big companies in the emerging markets by Euromoney Magazine.- Disclosure Award by SET.

1. Source : The Cabinet resolutions / www.thaigov.go.th

2. Source : The Ministry of Energy / www.energy.go.th

049A n n u a l R e p o r t 2 0 0 3


RELATED PARTY TRANSACTIONS WITHPERSONS WHO MAY HAVE CONFLICT OFINTERESTS WITH THE COMPANY

THE CONNECTED TRANSACTIONS

The connected transactions with persons, who may have conflict of interests with EGCO are between the

affiliated companies of EGCO and EGAT, EGCO's major shareholders, as follows:

The affiliated companies of EGCO:

- EGCO's subsidiaries: REGCO, KEGCO, TLP Cogen and Roi-et Green

- Subsidiaries of EGCO Joint Venture, GEC: GCC, SCC and NKCC

- A joint venture of EGCO Joint Venture, EGCOJD: APB

Person who may have conflict of interests: EGAT

Name of Person who may Position Remark

have conflict of interests

EGAT EGCO

Mr.Sommai Phasee Director Chairman Resign 30 Apr. 03

Mr.Sitthiporn Ratanopas Director and Governor Chairman Appointed 30 Apr. 03

Mr.Somchai Wongsawat Director Director -

Ms.Angoon Komolyabutr Director Director Resign 30 Apr. 03

Ms.Pannee Satavarodom Director Director Appointed 30 Apr. 03

M.L.Chanaphun Kridakorn Director Director Resign 1 Oct. 03

Mr.Narong Sitasuwan Director Director Appointed 27 Oct. 03

Mr.Kraisi Karnasuta Deputy Governor Director and President Resign 15 Dec. 03

Mr.Chalermchai Ratnarak Engineering Level 14 Director and President Appointed 15 Dec. 03

Relationship: As of December 31, 2003, EGAT is a major shareholder of EGCO at the proportion of 25.41%.

Type of business of Person who may have conflict of interests: Power Business

Transactions:

1. The sale of electricity

EGCO's affiliated companies sell electricity to EGAT under the Power Purchase Agreement (PPA) as follows:

The Affiliated Effective Date/ Maturity Remarks

Company Starting Commercial

Operation Date

1. REGCO Dec. 7, 1994 20 Years The first amendment to PPA dated

January 30, 1998

2. KEGCO Jun. 19, 1996 15 & 20 Years The first amendment to PPA dated

January 30, 1998

3. GCC Sep. 3, 1998 21 Years -

050A n n u a l R e p o r t 2 0 0 3


The Affiliated Effective Date/ Maturity Remarks

Company Starting Commercial

Operation Date

4. SCC Aug. 23, 1999 21 Years -

5. NKCC Oct. 12, 2000 21 Years -

6. APB Sep. 2001 21 Years -

7. TLP Cogen Jan. 28, 2003 21 Years -

8. Roi-Et Green May. 29, 2003 21 Years -

The capacity and energy payment, which are determined in the PPAs of REGCO and KEGCO, have been

reviewed by National Energy Policy Council and approved by the cabinet

The connected transactions with EGAT of GCC, SCC, NKCC, APB, TLP Cogen, and Roi-et Green are under the

agreed prices as determined in the PPAs, which are based for all Small Power Producers. Moreover, GCC, SCC, NKCC,

APB, TLP Cogen and Roi-Et Green have lodged the bank guarantees as collateral against the premature termination

of the PPAs. These guarantees will be returned at PPA's maturity.

2. The Major Maintenance

REGCO and KEGCO have extended the Major Maintenance Agreement (MMA) with EGAT for the latter to provide

major maintenance services, repair services, administrative services, and additional services related to its power

plant as follows.

Company Effective Date Maturity

REGCO Dec. 7, 2000 6 Years

KEGCO June 19, 2002 6 Years

The agreed price as determined in the MMAs have been reviewed by National Energy Policy Council and

approved by the cabinet.

The value of connected transactions (EGCO portion only) as of December 2003:

unit : million Baht

Item REGCO KEGCO GEC APB TLP Roi-Et

Cogen Green

Transactions

1. Sales of Electricity 5,946.52 3,795.70 2,170.86 215.76 939.05 83.54

2. Major Maintenance Expenses 221.75 76.54 - - - -

Outstanding Balance

1. Trade Account Receivable 509.20 191.83 380.78 36.17 168.89 25.86

3. Commitments

The Company has commitments under Sponsor Support Agreements, which were made in respect of loans of

Subsidiaries/Joint Ventures and Guarantee on Bank Guarantee in respect of performance bonds of subsidiaries on

behalf of the Company. The details are as follows:

1. The company : EGCO

Person who may have conflict of interests : TLP Cogeneration Co., Ltd. (TLP Cogen)

Type of business of Person who may have

conflict of interests : Small Power Producer

051A n n u a l R e p o r t 2 0 0 3


EGCO has commitment under the Sponsor Support Agreement, which was made in respect of loan of TLP

Cogen. The total obligations are not exceeding the existing principal plus the interest amount. EGCO's commitment

proportion will be 80%. Hence, as of December 31, 2003, EGCO will account for THB 1,634.33 million.


Person who may have conflict of interests : Roi-Et Green Co., Ltd.



EGCO has commitment under the Sponsor Support Agreement, which was made in respect of loan of Roi-Et

Green. The total obligations are not exceeding the existing principal plus the interest amount. Hence, as of December

31, 2003, EGCO will account for Yen 1,041.80 million equivalent to THB 386.31 million.


Person who may have conflict of interests : EGCO Engineering and Service Co., Ltd. (ESCO)



As of December 31, 2003, EGCO has commitment for the bond of ESCO to the BNP Paribar Bank in the amount

of THB 3.99 million.

The transactions No. 1-3 must be approved by the Board of Directors of EGCO under the Company's order

namely Terms of Authority.

ln addition, The details of connected person or business in the notes to financial statements ending December

31, 2003.

EGCO held directly 40% and indirectly 40% stake in TLP Cogen,

Chairman of TLP Cogen was the Management of EGCO

Name of person who may

have conflict of interest

Mr. Somyos Polachan

Relationship : As of February 20, 2004

on TLP Cogen's company affiliate

Position

EGCO TLP Cogen

ChairmanSEVP - Asset Management

and Planning

EGCO held directly 74% in EGCO Green Energy Co., Ltd. (EGCO Green)

while EGCO Green held directly 94.77% in Roi-Et Green Co., Ltd.

Chairman of Roi-Et Green was the Management of EGCO



Mr. Somyos Polachan

Relationship : As of February 23,

2004 on Roi-Et Green's company

affiliate

Position

EGCO Roi-Et Green

ChairmanSEVP - Asset Management

and Planning

EGCO held directly 99.99% stake in ESCO. Chairman and committee

of ESCO was the Management of EGCO



1. Mr. Chalermchai Ratnarak

2. Mr. Somyos Polachan

3. Mr. Sakda Sreesangkom

Relationship : As of January 28,

2004 on ESCO's company affiliate

Position

EGCO ESCO

Chairman

Managing Director

Committee

President

SEVP - Asset Management

and Planning

SEVP - Finance

052A n n u a l R e p o r t 2 0 0 3


MANAGEMENT DISCUSSION AND ANALYSIS

1. BUSINESS EXPANSION ANALYSIS

The Electricity Generating Public Company Limited (EGCO), the first Independent Power Producer (IPP) in

Thailand, was established in 1992. Our vision is to be the leading Thai integrated electric power company offering

comprehensive energy services in Thailand and in the Asean region, with full commitment to environmental protection

and social development support. EGCO focuses on growing market share in Thailand and neighbouring countries by

developing or acquiring IPPs that provide economies of scale with acceptable risk and return. At the same time, we

proactively track, manage, and identify operational improvement opportunities in our Small Power Producers (SPP)

in order to create greater operational efficiency across business units. We plan to divest our non-core businesses at

appropriate prices under our investment policy.

Thailand's new Electricity Supply Industry (ESI) framework proposed by the Ministry of Energy with the aim

of enhancing efficiency in the country's electricity system received cabinet approval in December 2003. The new ESI

framework, known as Enhanced Single Buyer (ESB) model, still has the Electricity Generating Authority of Thailand

(EGAT) as the generator of electricity and controller of the electricity transmission system. Meanwhile, the Electricity

Regulatory Commission (ERC) will be set up by the Ministry of Energy to be in charge of forecasting demand and

supply of electricity, planning future investments, ensuring the security and reliability of power supply, and determining

the optimal pricing of electricity. Therefore, we believe that the ERC will ensure fairness for future capacity approval

based on competitive bidding process.

Thailand's electricity demand in 2003 reported 8.6% growth over that of last year, which was higher than the

projected demand growth of 6.9% according to EGAT's Power Development Plan (PDP) 2003. It is anticipated that

the revised PDP 2003 will indicate lower minimum reserve margin, higher long-term energy demand and a need for

more new capacity through 2015.

As a result, the new ESI framework coupled with the expectation of higher electricity demand for the whole

kingdom will provide opportunities for IPP companies, including EGCO, to expand in the future. Given our operational

efficiency with over 11 years of experience in the electricity business, we are confident that we will be able to expand

our market share in the new competitive bidding framework.

Currently, EGCO has 12 operating plants totaling 2,414 equity MW, of which 85% is produced from two gas-fired

IPP power plants: the 1,232 MW Rayong Electricity Generating Co., Ltd. (REGCO) plant and the 824 MW Khanom

Electricity Generating Co., Ltd. (KEGCO) plant. Apart from our existing assets, our growth priorities will come from

3 major projects under development, representing an additional 1,003 equity MW as follows:

1) The expansion project at KEGCO, 385 MW natural gas-fired power plant, will be wholly owned by EGCO. This

plant is scheduled to have commercial start up in January 2007 to meet some of the electricity shortfall in southern

Thailand. EGCO is presently negotiating a Power Purchase Agreement (PPA) with EGAT and expects to conclude

negotiation by 2004.

2) The Khaeng Khoi 2 (KK2) project, 700 MW natural gas-fired power plant in Saraburi province, was previously

known as "the Bo Nok project". In December 2003, Gulf Electric Public Company Limited (GEC), 50% owned by

EGCO, increased the stake in Gulf Power Generation Co.,Ltd (GPG), which is the developer of KK2, from 60% to

100%. This results in EGCO holding 50% stake in GPG. The project is scheduled to commence commercial operation

in March 2008. Due to the expected shortfall in power supply in the northeast of Thailand, there is a possibility that

this project will commence commercial operation earlier than the current schedule.

3) The Nam Theun 2 project, 1,070 MW hydroelectric power plant, in which EGCO has 25% stake. This project

is targeted for commercial operation in the second half of 2009 with the contracted capacity to EGAT of 995 MW.

In the absence of unforeseen circumstances, the Company intends to distribute approximately 40% of the

available profits of the Company by way of dividend. This dividend policy may change in the light of investment

opportunities that may become available to the Company or as a result of other economic or financial factors or

when a dividend payment may have a significant impact on the normal operation of the company.

053A n n u a l R e p o r t 2 0 0 3


2. REPORT AND ANALYSIS OF THE OPERATING RESULTS

EGCO is structured as a holding company that invests in integrated electricity generation business as well as

energy service business. The main sources of its income are dividends and the share of revenues and profits from

investments in its subsidiaries, joint ventures, and associates. The objective of the holding company structure is to

provide flexibility for business expansion and to raise the ability to efficiently manage subsidiaries' projects as well

as to finance new projects with non-recourse to existing ones.

The Board of Directors has approved changing two principal accounting policies and the details are as follows:

- Specific Spare Parts Policy: To follow Thailand's Energy Industry general practices, EGCO's Group has

changed the accounting policy in respect of major repair and maintenance to record capital spare parts whose

estimated useful life is more than 1 year on the replacement basis. Capital spare parts are capitalized and

depreciated on the straight-line method over the estimated useful life when used in major repair and

maintenance processes. Previously, capital spare parts used in major repair and maintenance processes

were expensed when incurred.

- Recording of Development Expense Policy: EGCO's group has adopted the provisions of Thai Accounting

Standard (TAS) no.51: Intangible Assets, previously certain items recognized as separate assets in the

Balance Sheet. With concrete practice specified in TAS 51, the recording of development expense is required to

enhance the standardized report. These items mainly relate to development expenditure of Nam Theun 2

project and Bo Nok Project.

Commencing in 2003, the new accounting policies will be adopted for EGCO's financial statements. The company

has not restated the consolidated financial statements as at January 1, 2003 as the net effect is not material.

Therefore, the aforesaid expenses were adjusted in the 2003 financial statements as the details below;

Development Expenses Specific Spare Parts Net Effect

NT2 Bo Nok REGCO KEGCO GEC

Upto 2003 (506) (273) 529 444 19 213 2003 (74) (45) 240 (47) 35 109

Total (580) (318) 769 397 54 322

This report contains the analysis of the financial statements of EGCO and its subsidiaries as follows:

2.1 Operational Results

EGCO's consolidated net profit for 2003, as of December 31, 2003, was Baht 5,994 million, an increase of Baht

3,035 million or 103% compared to 2002.

Net Profit of 2003 Net Profit of 2002

Before FX After FX Before FX After FX

EGCO (50) (50) (692) (692)IPP Group 5,350 5,805 3,187 3,347SPP Group 296 579 158 199Overseas (416) (447) 44 18

Others 108 108 88 88

Others 1.66%

SPP 8.92%

IPP 89.42%

NNeett PPrrooffiitt aafftteerr FFXX

Remarks : - IPP : REGCO, KEGCO - SPP : GEC, AEP, APB, TLP Cogen, Roi-Et Green- Overseas : Conal, Nam Theun 2 - Others : ESCO, EGCOM TARA

Unit : Million Baht

Unit : Million Baht

054A n n u a l R e p o r t 2 0 0 3


The net profit for 2003 included an unrealized foreign exchange gain of Baht 707 million whereas the company

incurred a foreign exchange gain of Baht 174 million in 2002.

A foreign currency exchange gain or loss is an accounting number in accordance with the Thai accounting

standard. It incurs from the difference of the translation of the 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, 2003)

and the previous period (December 31, 2002).

Excluding the effect of foreign currency exchange gain, the net profit was Baht 5,287 million, an increase of

Baht 2,502 million or 90% over 2002.

Important Financial Ratios for the period were as follows;

- Gross Profit Ratio was 61%.

- Net Profit Ratio (excluding the effect of foreign exchange) was 34%.

- Earnings (excluding the effect of foreign exchange) per share (EPS) was Baht 10.07

The net profit (excluding the effect of foreign exchange) margin of 34% was higher than last year's margin of

23%, primarily as a result of the higher rate of increase in revenues, which increased by 30%, compared to expenses,

which increased by 12%.

2.2 Income Analysis

In 2003, the total revenues of EGCO and its subsidiaries as well as the share of profits from its associates and

interest in joint ventures were Baht 15,731 million, an increase of Baht 3,671 million or 30% compared to 2002. The

details are as follows:

Total Revenues:

2003 2002 %Changes

EGCO 548 286 92%

IPP Group 9,972 9,276 8%

SPP Group 4,443 1,243 258%

Overseas 334 880 (62%)

Others 434 375 16%

1) EGCO's Revenues, amounting to Baht 548 million, represented an increase of Baht 262 million or 92% from

last year, substantially driven by dividends received from Krung Thai Dividend Selected Flexible Portfolio Fund (KTSF).

2) Revenues from the IPP Group, consisting of two principal subsidiaries, REGCO and KEGCO, were Baht

9,972 million. The details are as follows:

- Sales of electricity was Baht 9,742 million, representing an increase of Baht 779 million or 9% compared to

last year. The increase was derived from the sales from REGCO of Baht 1,341 million while the sales from

KEGCO decreased by Baht 562 million, in accordance with the capacity payment formula calculated on a

"Cost Plus Basis" under the PPAs, and was in line with the company's projection.

Sales of Electricity - IPP Group:

2003 2002 %Changes

REGCO 5,947 4,605 29%

KEGCO 3,796 4,358 (13%)

The PPAs cover the full amount of the projected fixed costs, debt financing charges and major maintenance

charges, which are used in calculating the electricity tariffs for each period. Moreover, the calculation of the capacity

Unit : Million Baht

Unit : Million Baht

055A n n u a l R e p o r t 2 0 0 3


payment is adjusted to include compensation of the exchange rate effect from debt services and expenses of major

maintenance parts denominated in US Dollar. 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 vice versa.

In 2003, REGCO and KEGCO received compensation for the exchange rate effect of Baht 1,012 million.

- Interest income and others amounted to Baht 230 million, decreasing by Baht 84 million or 27%, mainly

from REGCO and KEGCO's reduction in interest rate and less deposits at banks and financial institutions as

funds were used to pay down loans, amounting to Baht 69 million.

3) Revenues from the SPP Group were Baht 4,443 million, an increase of Baht 3,200 million or 258%

compared to 2002. The SPP Group incorporates five companies, Gulf Electric Public Co.,Ltd. (GEC), Amata-

EGCO Power Co.,Ltd. (AEP), Amata Power Bangpakong Co.,Ltd. (APB), TLP Cogeneration Co.,Ltd.(TLP

Cogen) and Roi-Et Green Co.,Ltd. (Roi-Et Green). The details are as follows:

- Sales of electricity of the SPP Group were Baht 4,318 million, representing an increase of Baht 3,137 million

or 266% compared to the same period of last year.

Sales of Electricity - SPP Group:

2003 2002 %Changes

GEC 2,622 937 180%

TLP Cogen 1,335 - n/a

APB 277 244 13%

Roi-Et Green 84 - n/a

The major factors which led to this sharp increase were the electricity sales of Nongkhae Cogeneration Co.,Ltd

(NKCC) and Samutprakarn Cogeneration Co.,Ltd (SCC), the subsidiaries of GEC, were firstly realized in November

2002, as well as the electricity sales from TLP Cogen and Roi-Et Green were firstly realized after the completion of

their construction in January and May of this year, respectively. Moreover, APB received an increase of electricity

sales from customers in the industrial park.

- Interest income and others amounted to Baht 67 million, increasing by Baht 56 million, mainly from GEC's

other income and interest income increasing by Baht 55 million.

- Share of profit of associates and joint ventures totaled Baht 58 million, up Baht 7 million or 15%, mainly

from AEP.

4) Revenues from the Overseas Group were Baht 334 million, a decrease of Baht 546 million or 62% compared

to 2002. The overseas group refers to the CONAL Holdings Corporation (CONAL) and Nam Theun 2 Electricity

Consortium (NTEC). The details are as follows:

- Sales of electricity of the overseas group were Baht 892 million, a decline of Baht 66 million or 7% compared

to last year, resulting from transferring Northern Mindanao Power Corporation (NMPC), 58 MW, to National

Power Corporation (NPC) in July 2003.

- Interest income and others amounted to Baht 45 million, decreasing by Baht 3 million or 6%.

- Share of expenses of associates and joint ventures totaled Baht 603 million, an increase of Baht 477

million or 380% as comparing to 2002. This resulted from the new accounting policy adjustment impacting

the share of development expenses of Nam Theun 2 Project (Nam Theun 2 Electricity Consortium or NTEC)

whereas the 2002 development cost was Baht 126 million.

5) Revenues from the Other Business Group were Baht 434 million, increasing by Baht 59 million or 16%.

The other business group includes two subsidiaries, the EGCO Engineering and Service Co.,Ltd. (ESCO) and the

EGCOM TARA Co., Ltd (EGCOM TARA). The details are as follows:

Unit : Million Baht

056A n n u a l R e p o r t 2 0 0 3


Revenues from group of other business

- Others:

2003 2002 % Changes

Service Income - ESCO 283 237 19%

Sales of Water - EGCOM TARA 142 123 16%

- Service income from ESCO amounted to Baht 283 million, up by Baht 46 million or 19% resulting from an

increase of operation and maintenance (O&M) services with customers.

- Sales of water from a subsidiary, EGCOM TARA, was Baht 142 million, up by Baht 19 million, or 16%,

thanks to an increase of both water tariff and sales quantity under the Water Purchase Agreement, which

were in line with the company's projection.

- Interest income and others amounted to Baht 9 million, decreasing by Baht 3 million or 27%, mainly from

the decrease in ESCO's deposit and interest rate.

- Share of expense of associates and joint ventures totaled Baht 1 million, increased by Baht 3 million or

129%, mainly from Agro Energy Co., Ltd.(AE).

2.3 Expenses Analysis

Total expenses from EGCO, its subsidiaries and joint ventures in 2003 was Baht 10,141 million, an increase of

Baht 1,102 million or 12% from last year. The details are as follows.

Total Expenses:

2003 2002 % Change

EGCO 599 978 (39%)

IPP Group 4,622 6,089 (24%)

SPP Group 4,093 1,093 275%

Overseas 520 603 (14%)

Others 306 276 11%

1) Total expenses of EGCO were Baht 599 million, a significant decrease from last year by Baht 379 million.

The total expenses of EGCO included administration expenses, amounted to Baht 413 million, Bo Nok's written-off

development expense of Baht 66 million (written-off development expense amounted to Baht 342 million in 2002)

and interest expenses of Baht 120 million. Compared to 2002, the general administration expenses, excluding

development expenses, were down by Baht 23 million or 6% and interest expenses decreased by Baht 80 million or

40% as a result of interest rate swap and a reduction of the principal of EGCO debenture.

2) The IPP Group's expenses were Baht 4,622 million, a decrease of Baht 1,467 million or 24% due to the

following reasons:

- Cost of sales, with the total of Baht 2,218 million, decreased by Baht 1,279 million or 37% compared to 2002,

mainly from an impact of new Accounting Policy to KEGCO and REGCO bringing down the cost of sales of

KEGCO and REGCO by Baht 777 and 501 million respectively.

Unit : Million Baht

Unit : Million Baht

057A n n u a l R e p o r t 2 0 0 3


Cost of Sales - IPP Group:

2003 2002 %Changes

REGCO 1,312 1,813 (28%)

KEGCO 907 1,684 (46%)

- Administration expenses and other expenses were Baht 340 million, an increase of Baht 112 million or 49%,

mainly from REGCO's first corporate tax payment amounting to Baht 133 million. Since the REGCO's BOI Tax

Privilege ended on April 19, 2003, the 50% Corporate Tax Reduction will be applied for the next 5 years,

ended April 19, 2008.

- Interest expenses were Baht 2,064 million, a decrease of Baht 300 million or 13%, resulting from the

decrease in interest expenses at REGCO and KEGCO of Baht 166 million and Baht 135 million respectively,

owing to lower principal amounts.

3) The SPP Group's expenses were Baht 4,093 million, an increase of Baht 3,001 million or 275%, according

to the following reasons:

- Cost of Sales were Baht 3,335 million, an increase of Baht 2,432 million or 269%, mainly driven by an

increase of cost of sales at GEC, amounting to Baht 1,294 million. An increase of Baht 1,294 million was from

NKCC and SCC, which was consistent with their increased sales of electricity. Moreover, the cost of sales

from TLP Cogen, Roi-Et Green and APB increased by Baht 1,056 million, Baht 59 million and Baht 23 million

respectively.

Cost of Sales - SPP:

2003 2002 %Changes

GEC 2,022 728 178%

TLP Cogen 1,056 - n/a

APB 199 175 13%

Roi-Et Green 59 - n/a

- Administration expenses and other expenses were 410 million, an increase of Baht 325 million or 378%,

mainly from Bo Nok's written-off development cost amounting to Baht 147 million, impairment expenses of

Bo Nok's land amounted to Baht 104 million and expenses of GEC, owing to NKCC and SCC, amounted to

Baht 65 million.

- Interest expenses were Baht 348 million, an increase of Baht 244 million or 237%, mainly driven by the

increase in interest expenses at GEC of Baht 147 million, resulting from the increase of investment in NKCC

and SCC projects. For TLP Cogen and Roi-et Green, owing to an increase of loan drawndown, their interest

expenses increased Baht 94 million and Baht 7 million respectively. The interest expenses of APB decreased

Baht 4 million owing to lower principal amount.

4) The Overseas Group's expenses were Baht 520 million, a decrease of Baht 83 million or 14% compared

to 2002, owing to the following reasons:

- Cost of Sales were Baht 236 million, a decrease of Baht 93 million or 28% as compared to last year. This

resulted from a decrease of Northern Mindanao Power Corporation (NMPC)'s depreciation cost caused by

a lower forecasted electricity production and transferring NMPC, 58 MW, to NPC.

- Administration expenses and other expenses were Baht 200 million, an increase of Baht 42 million or 27%.

Unit : Million Baht

Unit : Million Baht

058A n n u a l R e p o r t 2 0 0 3


- Interest expenses were Baht 84 million, a decrease of Baht 32 million or 27% owing to lower principal

amount.

5) The Other Business Group's expenses were Baht 306 million, an increase of Baht 30 million or 11%, owing

to the following reasons:

- Service costs were Baht 171 million, an increase of Baht 29 million or 20%, resulting from an increase of

ESCO's operation and maintenance (O&M) services to customers which was consistent with its revenue.

- Cost of water sales of EGCOM Tara was Baht 56 million, an increase of Baht 1 million or 2% which was in

line with an increase of EGCOM TARA revenue.

- Administration expenses and other expenses were Baht 64 million, an increase of Baht 8 million or 15%,

mostly from ESCO's corporate income tax payment amounted to Baht 26 million, and offset by the decrease

of Baht 2 million, or 13%, at EGCOM Tara.

- Interest expenses were Baht 16 million, a decrease of Baht 8 million or 34%, resulting from the lower principal

amount as well as the lower interest rate at EGCOM Tara.

3. REPORT AND ANALYSIS OF FINANCIAL POSITION

3.1 Asset Analysis

As at December 31, 2003, total assets of EGCO, its subsidiaries, associates and joint ventures amounted to

Baht 56,437 million, increasing by Baht 613 million or 1% from December 31, 2002. The important details are as follows:

1) Cash, deposit at banks and financial

institutions, and short term and long term

marketable securities were Baht 7,815 million or

14% of the total assets, up Baht 2,314 million or 42%,

resulting mostly from Operating Activities. This

was categorized by an increase of Baht 1,373

million in Deposit at banks and financial institutions,

an increase of Baht 1,083 million in long term

investments in marketable securities and others,

an increase of Baht 402 million in short term

marketable securities whereas the cash and cash

equivalent were down by Baht 544 million.

2) Short term and long term investments

used as collateral were Baht 9,954 million or

18% of the total assets. The investments were

down Baht 458 million or 4% due to REGCO and

KEGCO's loans repayment with the partial cash

reserve of debt repayment in US Dollars in the

amount of USD 71 million.

3) Investment in subsidiaries and associates

and interests in joint ventures amounted to

Baht 369 million or 0.66% of the total assets,

down by Baht 453 million or 55%. This resulted

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059A n n u a l R e p o r t 2 0 0 3


from the acknowledgement of written-down investment in Nam Theun 2 owing to the new accounting policy which

amounted to Baht 603 million whereas the new investment in Nam Theun 2 of Baht 91 million was injected this year.

Another is AEP, up by Baht 58 million from shares of profit of subsidiaries.

4) Property, plant and equipment totaled Baht 31,543 million or 56% of total assets. They were down Baht

491 million or 2% because of the depreciation of assets of EGCO and group companies of Baht 2,960 million, the

disposals and transfer of Baht 144 million and the translation adjustments of Baht 180 million whereas an increase

amounted to Baht 1,804 million was primarily from capitalisation of capital spare parts owing to new accounting

policy. Moreover, an increase of Baht 990 million was mainly from newly purchased land totaling Baht 132 million

(GEC - Baht 107 million, TLP Cogen - Baht 19 million, Roi-Et Green - Baht 5 million), the construction of TLP Cogen,

Roi-Et Green and GEC totaling Baht 376 million, Baht 174 million and Baht 183 million respectively, the construction

of ESCO's workshop totaling Baht 47 million and others of Baht 77 million.

5) Other assets were Baht 6,755 million or 12% of the total assets, down Baht 300 million or 4% mainly from

the decrease of trade accounts receivable from related companies (mainly from EGAT) of Baht 366 million and other

non-current assets of Baht 100 million.

3.2 Liability Analysis

As at December 31, 2003, the company's total liabilities were Baht 29,736 million, down Baht 5,141 million or

15% as a result of loans and debentures repayment at EGCO, REGCO and KEGCO. The liabilities consisted of the

following:

1) Long term loans and debentures totaled Baht 27,913 million, or 94% of total liabilities, down Baht 5,008

million or 15%. The details are as follows:

- USD loans in the amount of USD 388 million

- Yen loans in the amount of Yen 1,028 million

- Philippine Peso loans in the amount of Peso 106 million

- Baht loans in the amount of Baht 4,115 million

- Debentures in the amount of Baht 8,005 million

In 2003, the amount of loans denominated in USD, Baht and Peso, including Debenture decreased by Baht

5,132 million compared to 2002. This resulted from principal repayment by EGCO, REGCO, KEGCO, Conal, EGCOM

TARA, and APB as well as GEC's refinancing. On the other hand, the amount of loan denominated in Yen was up Baht

150 million, which was due to the loan for the construction of Roi-Et Green.

2) Other liabilities amounted to Baht 1,823 million or 6% of total liabilities, mostly resulted from bank

overdrafts and short term loans of Baht 320 million, trade accounts payable of Baht 617 million, interest payable of

Baht 161 million, value added tax payable of Baht 154 million and others of Baht 571 million.

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, 2003, the company had a reserve fund of Baht 500 million and an additional allocation of

Baht 83 million is in the process.

3.3 Shareholders' Equity Analysis

As at December 31, 2003, Shareholders' Equity (excluding treasury stock) amounted to Baht 26,701 million,

USD 55.05%SPP 8.92%

Debenture 28.60%

THB 14.70%

JPY 1.37 %

060A n n u a l R e p o r t 2 0 0 3


which was Baht 5,753 million higher than the amount as at December 31, 2002. This was due mainly to the profits

from operation during 2003.

The analysis of the company's capital structure as at December 31, 2003 is summarized as follows:

Shareholders' equity was Baht 26,701 million or 47%.

Liabilities were Baht 29,736 million or 53%.

Important financial ratios were as follows;

- Debt to equity ratio was 1.11 times, lower than 1.66 times at the end of last year.

- Book value per share was Baht 49.21, higher than Baht 38.51 at the end of last year.

4. REPORT AND ANALYSIS OF CASH FLOW POSITIONCash Flow Statement shows the change in cash flows from operating activities, investing activities, and

financing activities at the end of the accounting period, and indicates the ending balance of the cash and the cash

equivalents. As at December 31, 2003, the ending balance of the cash and the cash equivalent was Baht 1,731

million, down by Baht 544 million from the end of 2002. The details of the sources and uses of funds are as follows;

- Net cash received from operating activities totaled Baht 7,270 million, an increase of Baht 1,115 million as

compared to 2002. Most of the changes were due to operation increased by Baht 1,742 million whereas cash

received from working capital decreased by Baht 627 million.

- Net cash payment for investing activities was Baht 2,385 million Baht 1,838 million was for the net purchase

of short-term and long-term financial investments. The amount spent on the construction of TLP Cogen,

Roi-Et Green and GEC was Baht 370 million, Baht 159 million, and Baht 154 million respectively. The

investment in subsidiaries and interests in joint ventures amounted to Baht 186 million. This included GEC's

acquisition of the stake of Edison Mission Energy (EME) in Bo Nok Project, amounted to Baht 94 million,

investment in NT2 amounting of Baht 91 million, and ESCO's increased capital in AE in the amount of Baht

2 million. The company also received dividends from Eastern Water Resources Development and

Management Public Co.,Ltd. (EASTW) and the Krung Thai Dividend Selected Flexible Portfolio Fund (KTSF)

of Baht 36 million and Baht 435 million respectively.

- Net cash payment for financing activities was Baht 5,416 million, mainly owing to long-term loans and

debentures repayment by EGCO, REGCO, KEGCO in the amount of Baht 1,295 million, Baht 1,676 million and

Baht 1,195 million respectively. Moreover, EGCO also paid dividends of Baht 1,287 million. Loan drawdown

from TLP Cogen and Roi-Et Green increased by Baht 448 million and Baht 138 million respectively, while

GEC's short term loan and refinancing of loans for NKCC and SCC led to the net decrease in loans of Baht

157 million.

Equity 47%

Debt 53%

FINANCIALSTATEMENT

061A n n u a l R e p o r t 2 0 0 3


062A n n u a l R e p o r t 2 0 0 3


STATEMENT OF DIRECTORS' RESPONSIBILITIES

According to the Public Limited Companies Act B.E. 2535, the Accounting Act B.E. 2543 and the Notification

of the Securities and Exchange Commission re: "Disclosure of Financial Statements and Performance of Listed

Companies", the Board of Directors is responsible for having the management prepare the consolidated and company's

financial statements in accordance with the Thai Accounting Standards issued by the Institute of Certified Accountants

and Auditors of Thailand to disclose the company's financial position and operating results of each financial year.

The Board of Directors is well aware of its duties and responsibilities as the directors of a listed company to

ensure the accurate, clearly sufficient and transparent financial statements financial statements according to the

generally accepted accounting principles in Thailand internal control systems to safeguard the company's assets

from losses unlawful conduct and abnormalities cause by or uses by unauthorized persons and to reveal any weakness

as a protection against.

To ensure the effective oversight of the financial statements, the Board of Directors has issued the company's

regulation on accounting, financial and budget B.E. 2544 to be adhered to by the Management. In addition, the Audit

Committee has been appointed to oversee that the company's financial statements be prepared in a justified and

prudent manner, in accordance with the generally accepted accounting principles and appropriate accounting policies

with adequate disclosure of significant information in the notes to the financial statements. Also, the Audit Committee

has reviewed the risk management and internal control system to ensure its adequacy and effectiveness.

The Board of Directors is of the opinion that the consolidated and company's financial statements of the

year 2003, is reliable and in compliance with the generally accepted accounting principles and all governing rules

and regulations.

063A n n u a l R e p o r t 2 0 0 3


AUDIT COMMITTEE'S REPORT

The Audit Committee of the Electricity Generating Public Company Limited (EGCO) is composed of three

independent directors. The Chairman of the Audit Committee was Mr.Aswin Kongsiri, while the members were Mr.

Worawit Khamkanist and Dr. Chaipat Sahasakul. Mr. Worawit Khamkanist was later succeeded by Mr. Charu-Udom

Ruangsuwan, independent director, after the change in the composition of the Board of Directors and the Subcommittee

on April 30, 2003.

The Audit Committee has performed its duties in conformity with the mission entrusted to it by the Board of

Directors. During 2003, the Committee held 8 meetings. The summary of major activities is as follows:

- Review of the financial statements with both the external auditor and the management. The Committee

provided comments and recommendations to reflect the accuracy and sufficiency of the financial statements.

- Consideration and recommendations regarding the selection of the external auditor, as well as the audit

fees for endorsement by the Board of Directors and approval by the shareholders.

- Review of the Audit Committee Charter for more clarity as well as increased scope of the committee's

duties and responsibilities to conform to the Audit Committee Best Practices as recommended by the Stock

Exchange of Thailand.

- Consideration and recommendations of the internal audit reports, as well as the results of the Quality

Assurance Review of the internal audit function that was performed by an independent expert. The objective

of the Quality Assurance Review was to ensure that the operations of the internal audit division comply with

the Standards for the Professional Practice of Internal Auditing.

- Consideration and improvement of the guidelines for EGCO Group's Code of Conduct to ensure more clarity

and the ability to cope with changing situations as well as establishing a Director's Code of Conduct.

- Review with management the policy and sufficiency of EGCO Group's risk management program.

- Site visit to Rayong and TLP Cogeneration power plants for information gathering and the observation

of operation and maintenance procedures.

Upon considering the above performance, the Committee is of the opinion that, in the year 2003, EGCO

conducted its business consistent with the practices of good corporate governance. The risk management and internal

control systems are appropriate and adequate to ensure that the financial statements and the significant financial

information disclosures are correct and reliable.

After reviewing the performance of EGCO's auditor, PricewaterhouseCoopers (PwC) during the past year, the

Committee proposed to the Board of Directors that PwC be re-appointed by the shareholders as EGCO's auditor for

2004.

Aswin Kongsiri

Chairman of the Audit Committee

064A n n u a l R e p o r t 2 0 0 3


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 2003, and the

related consolidated and company statements of income, changes in shareholders' equity, and cash flows for the

year 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 audit. The consolidated and

company financial statements for the year ended 31 December 2002, presented herewith for comparative purposes,

were audited by another auditor in the same firm as myself and the other auditor expressed an unqualified opinion

on those statements in her report dated 14 February 2003.

I conducted my audit in accordance with generally accepted auditing standards. Those standards require that

I plan and perform the audit 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 audit provides

a reasonable basis for my opinion.

In my opinion, the consolidated and company financial statements referred to above present fairly, in all

material respects, the consolidated and company financial position as at 31 December 2003, and the consolidated

and company results of operations, and cash flows for the year 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.

Bangkok

23 February 2004

Prasan Chuaphanich

Certified Public Accountant (Thailand) No. 3051PricewaterhouseCoopers ABAS Limited

2003 2002 2003 2002

Notes Baht Baht Baht Baht

ASSETS

Current Assets

Cash and cash equivalents 6 1,730,769,987 2,274,707,433 771,787,368 1,125,362,249

Short term investments 7, 30 (b)

- Deposits at banks and financial institutions 2,263,086,838 890,239,269 1,664,238,178 400,000,000

- Marketable securities 520,371,530 118,382,925 481,157,557 120,122,605

Short term investments used as collateral 8

- Deposits at banks and financial institutions 6,453,363,026 5,892,270,051 - -

- Marketable securities 599,618,644 743,468,994 - -

Trade receivables, net 9 313,126,937 265,053,235 - -

Trade receivable from a related party 29 1,331,680,537 1,722,439,587 - -

Dividend receivable from subsidiaries - - 1,198,651,785 1,204,677,104

Amounts due from and short term loan

to related companies 29 56,922,021 52,879,732 50,265,993 11,716,721

Spare parts and supplies, net 3, 10 2,878,128,572 2,872,730,085 - -

Other current assets 29 357,863,696 294,278,832 30,681,411 31,528,865

Total Current Assets 16,504,931,788 15,126,450,143 4,196,782,292 2,893,407,544

Non-Current Assets

Long term investments in marketable securities

and others 11, 29 3,301,033,617 2,218,133,560 3,345,842,131 2,274,596,787

Long term investments used as collateral 8, 29

- Deposits at banks and financial institutions 1,517,742,847 1,791,946,894 - -

- Marketable securities 1,383,074,768 1,983,673,639 - -

Loan to an associate 29 32,490,000 32,490,000 32,490,000 32,490,000

Investments in subsidiaries 3, 12 493,258 424,066 15,805,338,336 13,365,021,418

Investments in associates 12 338,008,946 279,930,149 - -

Interests in joint ventures, net 3, 12 30,968,202 541,984,376 3,201,547,887 3,632,785,227

Goodwill, net 13, 15 1,289,033,352 1,219,432,814 - -

Property, plant and equipment, net 3, 14 31,543,404,888 32,033,957,904 793,534,131 841,457,296

Other non-current assets, net 3, 15 495,437,416 595,525,257 49,865,604 84,146,574

Total Non-Current Assets 39,931,687,294 40,697,498,659 23,228,618,089 20,230,497,302

Total Assets 56,436,619,082 55,823,948,802 27,425,400,381 23,123,904,846

The notes to the consolidated and company financial statements on pages 72 to 100 are an integral part of these financial statements.

065A n n u a l R e p o r t 2 0 0 3


BALANCE SHEETSElectricity Generating Public Company Limited

As at 31 December 2003 and 2002

CONSOLIDATED COMPANY

Sakda Sreesangkom

(for) Director


066A n n u a l R e p o r t 2 0 0 3


2003 2002 2003 2002


LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

Short term loans from banks 319,695,900 487,889,040 - -

Trade payables 541,240,286 547,501,942 - -

Trade payable to a related party 29 75,566,776 80,944,471 - -

Current portion of long-term loans and

debentures, net 17, 18, 28 5,677,962,956 4,645,196,779 1,400,650,000 1,295,000,000

Amounts due to related parties 29 16,709,196 19,878,052 37,753 -

Short term loan from a co-investor in a joint venture 16 - 250,000,000 - -

Current portion of long-term loans from

a co-investor in a joint venture 16 50,000,000 - - -

Other current liabilities

- Interest payable 29 160,660,260 197,795,871 21,797,223 41,941,667

- Value added tax payable 154,439,356 107,538,847 - -

- Others 537,123,483 500,311,333 105,942,966 98,746,104

Total Current Liabilities 7,533,398,213 6,837,056,335 1,528,427,942 1,435,687,771

Non-Current Liabilities

Long-term loans, net 17, 28 16,450,328,892 19,744,561,588 - -

Debentures, net 18, 28 5,559,274,603 8,005,485,168 - 1,400,650,000

Long-term loan from a co-investor

in a joint venture, net 16 175,000,000 275,000,000 - -

Other non-current liabilities 17,581,614 14,116,100 - -

Total Non-Current Liabilities 22,202,185,109 28,039,162,856 - 1,400,650,000

Total Liabilities 29,735,583,322 34,876,219,191 1,528,427,942 2,836,337,771

Shareholders' Equity

Share capital

Authorised share capital 19 5,300,000,000 5,300,000,000 5,300,000,000 5,300,000,000

Issued and paid-up share capital 5,264,650,000 5,264,650,000 5,264,650,000 5,264,650,000

Premium on share capital 19 8,601,300,000 8,601,300,000 8,601,300,000 8,601,300,000

Retained earnings

Appropriated

- Legal reserve 21 530,000,000 530,000,000 530,000,000 530,000,000

Unappropriated 3 10,474,834,519 5,769,104,168 10,474,834,519 5,769,104,168

Unrealised gains on investments in marketable

securities - available-for-sale 1,206,631,950 185,797,319 1,261,160,586 249,931,927

Translation adjustments (182,803,390) (75,249,744) (182,803,390) (75,249,744)

Total parent's shareholders' equity 25,894,613,079 20,275,601,743 25,949,141,715 20,339,736,351

Minority interest 20 858,591,957 724,297,144 - -

Total Shareholders' Equity 26,753,205,036 20,999,898,887 25,949,141,715 20,339,736,351

Less Treasury stock (52,169,276) (52,169,276) (52,169,276) (52,169,276)

Total Shareholders' Equity, net 26,701,035,760 20,947,729,611 25,896,972,439 20,287,567,075

Total Liabilities and Shareholders' Equity 56,436,619,082 55,823,948,802 27,425,400,381 23,123,904,846


BALANCE SHEETSElectricity Generating Public Company Limited

As at 31 December 2003 and 2002

067A n n u a l R e p o r t 2 0 0 3


2003 2002 2003 2002


Revenues

Sales and service income 29 15,377,946,042 11,462,724,852 - -

Cost of sales and cost of services 22, 29 (6,016,517,135) (4,926,288,591) - -

Gross profit 9,361,428,907 6,536,436,261 - -

Administrative expenses 22 (1,084,656,185) (900,275,725) (398,246,032) (420,802,788)

Profit (loss) from sales and services 8,276,772,722 5,636,160,536 (398,246,032) (420,802,788)

Other income

- Interest income 29 290,510,273 364,242,365 51,004,726 66,418,334

- Dividend income 479,866,774 211,059,565 479,800,206 208,608,455

- Others 127,828,790 94,149,306 79,949,939 44,125,487

Impairment charge 15 (170,481,405) (342,000,000) (66,132,951) (342,000,000)

Directors' remuneration 25 (21,757,823) (15,738,590) (18,404,823) (14,520,000)

Currency exchange gains 707,214,785 174,034,226 - -

Operating profit (loss) 9,689,954,116 6,121,907,408 127,971,065 (458,170,512)

Share of profit (loss) of subsidiaries,

associates and joint ventures (545,482,321) (72,527,046) 6,001,183,311 3,639,877,471

Profit before interest and tax 9,144,471,795 6,049,380,362 6,129,154,376 3,181,706,959

Interest expenses 29 (2,631,117,287) (2,807,288,643) (135,212,943) (223,228,382)

Income tax (216,588,719) (47,247,242) - -

Profit before minorities 6,296,765,789 3,194,844,477 5,993,941,433 2,958,478,577

Profit attributable to minorities 302,824,356 236,365,900 - -

Net profit for the year 5,993,941,433 2,958,478,577 5,993,941,433 2,958,478,577

Basic earnings per share 23

Profit before minority interest 11.99 6.07 11.41 5.62

Profit attributable to minorities 0.58 0.45 - -

Net profit for the year 11.41 5.62 11.41 5.62


STATEMENT OF INCOMEElectricity Generating Public Company Limited

For the years ended 31 Decmber 2003 and 2002


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070A n n u a l R e p o r t 2 0 0 3


STATEMENTS OF CASH FLOWSElectricity Generating Public Company Limited

For the years ended 31 December 2003 and 2002


2003 2002 2003 2002

Baht Baht Baht Baht

Cash flows from operating activities

Net profit for the year 5,993,941,433 2,958,478,577 5,993,941,433 2,958,478,577

Adjustments to reconcile net profit to net cash

provided by operations:

- Depreciation and amortisation 3,067,815,537 2,196,489,440 64,985,183 64,507,716

- Impairment charge and write-off development costs 317,935,733 342,000,000 66,132,951 342,000,000

- Unrealised currency exchange gains (718,716,365) (165,005,175) - -

- Losses on disposals of marketable securities - 1,082,521 - 1,082,521

- Gains on disposals of property, plant and equipment (3,492,700) (1,543,484) (478,995) (2,292,096)

- Allowance for obsolescence 28,726,924 38,811,511 - -

- Dividends received from other companies (479,800,206) (211,059,565) (479,800,206) (208,608,455)

- Share of (profit) loss of subsidiaries,

associates and joint ventures 545,482,321 72,527,046 (6,001,183,311) (3,639,877,471)

- Minority interest 302,824,356 236,365,900 - -

- Others 7,623,413 48,688,823 - 20,400,000

Cash flows before changes in operating assets

and liabilities 9,062,340,446 5,516,835,594 (356,402,945) (464,309,208)

Changes in operating assets and liabilities:

(excluding the effects of acquisition and disposal)

- Short term and long term investments used as

collateral 70,306,139 331,479,530 - -

- Trade receivables and trade receivable

from a related party 362,031,049 128,293,434 - -

- Amounts due from related parties (45,750,911) (2,309,996) (38,549,272) (3,297,989)

- Spare parts and supplies (1,964,717,481) (216,002,056) - -

- Other current assets (66,072,517) 133,955,765 847,455 (9,748,944)

- Other non-current assets 35,466,489 16,238,431 34,240,970 15,204,138

- Trade payables and trade payable to a related party (250,986,960) 137,264,891 - -

- Amounts due to related parties 11,671,295 5,731,971 37,753 -

- Other current liabilities 47,066,208 106,918,344 (13,681,795) 19,037,085

- Other non-current liabilities 9,143,391 (3,554,942) - -

Net cash receipts (payments) from operating activities 7,270,497,148 6,154,850,966 (373,507,834) (443,114,918)


2003 2002 2003 2002


Cash flows from investing activities

Acquisition of subsidiaries, net of cash acquired (93,658,578) (2,047,772,500) - -

Proceeds from reduction of authorised

share capital of a subsidiary 12 - - 100,000,000 -

Investments in subsidiaries and interests

in joint ventures 12 (92,614,136) (182,617,686) (172,470,346) (1,423,389,816)

Net purchases of short-term investments (1,842,758,990) (331,221,873) (1,614,178,498) (223,033,820)

Purchases of long-term investments (59,999,687) (10,000,000) (59,999,688) (10,000,000)

Disposals of long-term investments 65,057,363 98,210,596 27,027,027 95,944,506

Net purchases of property, plant and equipment (785,694,474) (2,488,232,292) (16,543,023) (11,657,419)

Advance payment to subcontractor (34,387,633) - - -

Loans and advances made to a joint venture

and related parties (21,091,376) (44,620,044) - (50,000,000)

Loans and advances received from a joint venture - 37,348,267 - 50,000,000

Dividends received from subsidiaries

and joint ventures 12 - - 3,858,774,219 2,910,117,979

Dividends received from other companies 479,800,206 211,059,565 479,800,206 208,608,455

Others 453,092 (2,163,780) - -

Net cash receipts (payments)

from investing activities (2,384,894,213) (4,760,009,747) 2,602,409,897 1,546,589,885

Cash flows from financing activities

Proceeds from issue of ordinary shares 19 - 15,555,000 - 15,555,000

Proceeds from issue of ordinary shares

from minorities 20 12,164,577 81,651,620 - -

Payments on treasury stock - (52,169,276) - (52,169,276)

Net proceed (payment) from short-term loans (166,827,632) 282,385,281 - -

Net proceed (payment) from short-term loan

from a co-investor in a joint venture 16 (250,000,000) 250,000,000 - -

Proceeds from long-term loans 17 3,319,797,052 2,194,425,335 - -

Payments on long-term loans and debentures 17, 18 (6,798,536,013) (4,189,768,716) (1,295,000,000) (1,197,350,000)

Proceed from long-term loan from a co-investor

in a joint venture 16 - 275,000,000 - -

Payment on long-term loan from a a co-investor

in a joint venture 16 (50,000,000) - - -

Dividends paid to shareholders 24 (1,479,044,078) (1,412,493,664) (1,287,476,944) (1,269,051,586)

Proceed (payment) from advances

from a related party (3,982,400) 2,160,000 - -

Net cash payments from financing activities (5,416,428,494) (2,553,254,420) (2,582,476,944) (2,503,015,862)

Net decrease in cash and cash equivalents (530,825,559) (1,158,413,201) (353,574,881) (1,399,540,895)

Beginning balance 2,274,707,433 3,434,787,785 1,125,362,249 2,524,903,144

Effects of exchange rate changes (13,111,887) (1,667,151) - -

Ending balance 1,730,769,987 2,274,707,433 771,787,368 1,125,362,249

Cash and cash equivalents are made up as follows:

- Cash in hand and at banks 1,501,208,960 1,434,963,887 200,159,481 623,776,730

- Short-term investments - maturity within

three months 229,561,027 839,743,546 571,627,887 501,585,519

1,730,769,987 2,274,707,433 771,787,368 1,125,362,249

Supplementary information for cash flows:

Interest paid 2,627,323,359 3,006,069,450 153,960,581 228,758,268

Tax paid 78,999,763 13,786,490 - -

Non-monetary items

- Acquisition of a subsidiary 12.5 317,902,000 - - -

- Acquisition of property, plant and

equipment under lease agreements 9,307,276 - - -


071A n n u a l R e p o r t 2 0 0 3


STATEMENTS OF CASH FLOWSElectricity Generating Public Company Limited



072A n n u a l R e p o r t 2 0 0 3


1. GENERAL INFORMATION

Electricity Generating Public Company Limited ("the Company") is a public company limited, incorporated and resident in

Thailand. The address of its registered office is 15th Floor EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok

10210.

The Company is listed on the Stock Exchange of Thailand. For reporting purposes, the Company and its subsidiaries, associates

and joint ventures are referred to as the "Group".

The principal business operations of the Group is to generate electricity for sale to government sectors both in Thailand and an

other country.

The Group has operations in two countries and employs 885 people (2002:786 people).

2. ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out

below.

2.1 Basis of preparation

The 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 approved under law by the Board of Supervision of Auditing Practice appointed by the Minister of Commerce under

the Auditor Act B.E. 2505, and the financial reporting requirements of the Securities and Exchange Commission under the Securities and

Exchange Act B.E. 2535. The Group has early adopted in year 2003, prior to its effective date, Thai Accounting Standard no. 51, Intangible

Assets (see Note 3).

The accounting principles applied may differ from generally accepted accounting principles adopted in other countries and

jurisdictions. The accompanying consolidated and company financial statements are therefore not intended to present the financial position,

results of operations and cash flows in accordance with jurisdictions other than Thailand. Consequently, these consolidated and company

financial statements are only addressed to those who are informed about Thai generally accepted accounting principles and practices.

The consolidated and company financial statements have been prepared under the historical cost convention except as disclosed

in the accounting policies below.

The preparation of financial statements in conformity with Thai generally accepted accounting principles requires management

to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and

liabilities at the date of the financial statements and the amounts of revenues and expenses in the reported periods. Although these

estimates are based on management's best knowledge of current events and actions, actual results may differ from those estimates.

For the convenience of the user, an English translation of the consolidated and company financial statements has been prepared

from the statutory financial statements that are issued in the Thai language.

2.2 Group accounting - investments in subsidiaries, associates and interests in joint ventures

2.2.1 Investments in subsidiaries

Subsidiaries, which are those entities in which the Group has power to govern the financial and operating policies are consolidated.

The existence and effect of potential voting rights that are presently exercisable or presently convertible are considered when assessing

whether the Group controls another entity.

Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from

the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an

acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus costs

directly attributable to the acquisition. The excess of the cost of acquisition over the fair value of the net assets of the subsidiaries acquired

is recorded as goodwill (see Note 2.9.1). Intercompany transactions, balances and unrealised gains on transactions between group companies

are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, accounting policies of subsidiaries

have been changed to ensure consistency with the policies adopted by the Group.

In the Company's separate financial statements investments in subsidiaries are reported using the equity method of accounting.

A list of the Group's principal subsidiaries and the financial effects of the acquisitions and disposals of subsidiaries is shown in

Note 12.

2.2.2 Investments in associates

Investments in associates are accounted for by the equity method of accounting in the consolidated financial statements. Under

this method the Group's share of the post-acquisition profits or losses of associates is recognised in the income statement and its share of

post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the cost

of the investment. Associates are entities over which the Group generally has significant influence, but which it does not control. Unrealised

NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTSElectricity Generating Public Company Limited


073A n n u a l R e p o r t 2 0 0 3


2. ACCOUNTING POLICIES (continued)2.2 Group accounting - investments in subsidiaries, associates and interests in joint ventures (continued)

gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the associates;

unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The Group's investment

in associates includes goodwill (net of accumulated amortisation) on acquisition. When the Group's share of losses in an associate equals

or exceeds its interest in the associate, the Group does not recognise further losses, unless the Group has incurred obligations or made payments

on behalf of the associates.

In the Company's separate financial statements the equity method is applied to account for investments in associates.

A list of the Group's principal associates is shown in Note 12.

2.2.3 Interests in joint ventures

The Group's interest in jointly controlled entities are accounted for by proportionate consolidation in the consolidated financial

statements. The Group combines its share of the joint ventures' individual income and expenses, assets and liabilities and cash flows on a

line-by-line basis with similar items in the Group's financial statements. The Group recognises the portion of gains or losses on the sale of

assets by the Group to the joint venture that it is attributable to the other venturers. The Group does not recognise its share of profits or

losses from the joint venture that result from the purchase of assets by the Group from the joint venture until it resells the assets to an

independent party. However, if a loss on the transaction provides evidence of a reduction in the net realisable value of current assets or an

impairment loss, the loss is recognised immediately.

In the Company's separate financial statements, the equity method is applied to account for interests in joint ventures.

A list of the Group's principal joint ventures is shown in Note 12.

2.2.4 Dilution gains or losses

Dilution gains or losses arise when subsidiaries increase their authorised share capital and the Group does not increase its interest

in the subsidiaries according to the original proportion held. The Group recognises changes in investments in such subsidiaries to gains or

losses on deemed disposal of interest on dilution of investments in subsidiaries in the consolidated and company statements of income.

2.3 Foreign currency translation

Items included in the financial statements of each entity in the Group are measured using Thai Baht. The consolidated financial

statements are presented in Thai Baht.

Foreign currency transactions are translated into Thai Baht using the exchange rates prevailing at the date of the transaction.

Monetary assets and liabilities denominated in foreign currency are translated to Thai Baht at the exchange rate prevailing at the balance

sheet date. Gains and losses resulting from the settlement of foreign currency transactions and from the translation of monetary assets

and liabilities denominated in foreign currencies, are recognised in the statement of income. Liabilities which are covered by currency swap

contracts are translated into Thai Baht at the contract rate.

Translation differences on investments in debt securities and other monetary financial assets measured at fair value are included

in foreign exchange gains and losses. Translation differences on non-monetary items such as available-for-sale investments are included in

the fair value reserve in equity.

Statements of income and cash flows of foreign entities are translated into the Group's reporting currency at the weighted average

exchange rates for the year and balance sheets are translated at the exchange rates ruling on the balance sheet date. Currency translation

differences arising from the retranslation of the net investment in foreign entities are taken to shareholders' equity. On disposal of a foreign

entity, accumulated currency translation differences are recognised in the statement of income as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the

foreign entity and are translated at the closing rate.

2.4 Financial instruments

Financial assets carried in the balance sheets include cash and cash equivalents, investments, trade receivables and trade receivable

from a related party. Financial liabilities carried in the balance sheet include trade payables, trade payable from a related party, loans and

debentures. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.

The Group is also party 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 contracts, are not recognised in

the consolidated and company financial statements on inception.

Interest rate swap contracts protect the Group from movements in interest rates. Any differential to be paid or received on interest

rate swap contracts is recognised as a component of interest expenses as incurred.

Currency and interest rate swap contracts protect the Group from movements in exchange rates and interests rates. Any

differential in interest rate to be paid or received is recognised as a component of interest expense as incurred. Gains or losses are

therefore offset for financial reporting purposes and are not recognised in the consolidated financial statements.

Disclosures about financial instruments to which the Group is a party are provided in Note 28.

2.5 Cash and cash equivalents

Cash 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 in hand, deposits held at banks, short term highly liquid investments with maturities of three months or less and

bank overdrafts.

2.6 Trade receivables

Trade receivables are carried at original invoice amount less allowance for doubtful receivables based on a review of all

outstanding amounts at the year end. The amount of the allowance is the difference between the carrying amount of the receivable and

the amount expected to be collectible. Bad debts are written off during the year in which they are identified.

2. ACCOUNTING POLICIES (continued)

2.7 Spare parts and supplies

Spare parts and supplies are stated at cost less allowance for obsolescence. 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 and "common

spare parts", which are for general use.

The allowance for specific spare parts is calculated by dividing the balances of specific spare parts in hand at the year end by

the number of years remaining under the Power Purchase Agreements with the Electricity Generating Authority of Thailand, except for

capital spare parts whose estimated useful life is more than 1 year. Carrying amount is considered and when it 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 use of the asset and the amount obtainable from the sale of the asset less any costs of disposal.

The allowance for common spare parts is generally provided based on an aging analysis.

2.8 Other investments

Investments other than investments in subsidiaries, associates and interests in joint ventures are classified into the following

three categories: held-to-maturity, available-for-sale and general investments. The classification is dependent on the purpose for which the

investments were acquired. Management determines the appropriate classification of its investments at the time of the purchase and

re-evaluates such designation on a regular basis. Investments with fixed maturity that the management has the intent and ability to hold

to maturity are classified as held-to-maturity and are included in non-current assets, except for maturities within 12 months from the

balance sheet date which are classified as current assets. Investments intended to be held for an indefinite period of time, which may be

sold in response to liquidity needs or changes in interest rates, are classified as available-for-sale; and are included in non-current assets

unless management has expressed the intention of holding the investment for less than 12 months from the balance sheet date or unless

they will need to be sold to raise operating capital, in which case they are included in current assets. Investments in non-marketable equity

securities are classified as general investments.

Purchases and sales of investments are recognised on the trade date, which is the date that the Group commits to purchase or

sell the investments. Cost of investment includes transaction costs. Available-for-sale investments are subsequently carried at fair value.

Held-to-maturity investments are carried at amortised cost using the effective yield method. Unrealised gain and losses arising from

changes in the fair value of investments classified as available-for-sale are recognised in equity. The fair value of investments are based on

quoted bid price by reference to the Stock Exchange of Thailand and the Thai Bond Dealing Center. When investments classified as

available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains and losses

from investment in securities.

General investments are carried at cost less impairment.

A test for impairment is carried out when there is a factor indicating that an investment might be impaired. If the carrying value

of the investment is higher than its recoverable amount, impairment loss is charged to the consolidated and company statements of income.

On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited

to the consolidated and company statements of income. When disposing of part of the Group's holding of a particular investment in debt or

equity securities, the carrying amount of the disposed part is determined by the weighted average carrying amount of the total holding of

the investment.

2.9 Intangible assets

2.9.1 Goodwill

Goodwill 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 undertakings or joint ventures at the date of acquisition. Goodwill on acquisitions of subsidiaries or joint ventures is

reported in the consolidated balance sheet as an intangible asset. Goodwill is amortised using the straight-line method over its estimated

useful life. Management determines the estimated useful life of goodwill based on its evaluation of the respective companies at the time of

the acquisition, considering factors such as existing market share, potential growth and other factors inherent in the acquired companies.

Goodwill arising on acquisitions of the Group is amortised over its estimated useful life which are between the periods of 3.5 - 20 years.

At each balance sheet date the Group assesses whether there is any indication of impairment. If such indications exists an analysis

is performed to assess whether the carrying amount of goodwill is fully recoverable. A write down is made if the carrying amount exceeds

the recoverable amount.

2.9.2 Development expenditure

Development expenditure is recognised as an expense as incurred. Costs incurred on development projects are recognised as

intangible assets when it is probable that the project will be a success considering its commercial and technological feasibility, and only if

the cost can be measured reliably. Other development expenditure is recognised as an expense as incurred. Development expenditure

previously recognised as an expense is not recognised as an asset in a subsequent period. Development expenditure that has been

capitalised is amortised from the commencement of the commercial operation on a straight-line basis over the period of its expected benefit.

2.10 Property, plant and equipment

All property, plant and equipment are initially recorded at cost. All plant 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 which is considered to

have an indefinite life, to their residual values over their estimated useful lives as follows:

074A n n u a l R e p o r t 2 0 0 3


075A n n u a l R e p o r t 2 0 0 3


2. ACCOUNTING POLICIES (continued)2.10 Property, plant and equipment (continued)

Years

Power plants 15, 18, 20 and 21

Water plants and transmission line 30

Buildings and structures 10 and 20

Substation and transmission system 20 and 21

Operating and maintenance equipment 5

Office equipment, furniture and computers 3, 5 and 10

Motor vehicles 5

Capital spare parts whose estimated useful life is more than 1 year are capitalised and depreciated on the straight line method

over the estimated useful life when used in major repair and maintenance processes.

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 from the sale of the asset less any cost of disposal.

Repairs and maintenance are charged to the income statement during the financial period in which they are incurred. The cost

of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the

originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining

useful life of the related asset.

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit.

Interest costs on borrowings to finance the construction of property, plant and equipment are capitalised as part of cost of the

asset, during the period of time that is required to complete and prepare the property for its intended use. All other borrowing costs are

expensed. The borrowing costs include:

- Interest on long term loans;

- Amortisation of ancillary costs incurred in connection with the arrangement of borrowings; and

- Certain currency translation differences arising from foreign currency borrowings but limited to the amount which would have been

incurred had the loan been borrowed in Thai Baht.

2.11 Borrowings

Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs incurred. Borrowings are sub-

sequently stated at amortised cost using the effective yield method; any difference between proceeds (net of transaction costs) and the

redemption value is recognised in the consolidated and company statements of income over the period of the borrowings.

2.12 Deferred income taxes

The Group does not recognise income taxes payable or receivable in future periods in respect of temporary differences arising

from differences between the tax base of assets and liabilities and their carrying amounts in the consolidated or company financial state-

ments.

2.13 Provident fund

The Group operates a provident fund that is a defined contribution plan, the assets of which are held in a separate trust fund.

The provident fund is funded by payments from employees and by the relevant Group companies. Contributions to the provident fund are

charged to the consolidated and company statements of income in the year to which they relate.

2.14 Treasury stock

Treasury stock is carried at cost and shown as a deduction from total shareholders' equity. Gains on disposal of treasury stock

are determined by reference to its carrying amount and are taken to "Premium on treasury stock". Losses on disposal of treasury stock are

determined by reference to its carrying amount and are taken to "Premium on treasury stock" and "Retained earnings" consecutively.

2.15 Revenue recognition

Sales are recognised on delivery of electricity and customer acceptance. Sales are shown net of sales taxes and discounts, and

after eliminating sales within the Group.

Revenue from construction service is recognised according to the percentage of completion method based on the ratio of actual

cost incurred to the total estimated cost of the relevant contract. Revenue from other services is recognised when the services have been

rendered in accordance with the term of the agreements or invoices have been issued.

Interest income is recognised on an accrual basis unless collectibility is in doubt.

Dividend income is recognised when the shareholder's right to receive payment is established.

2.16 Related parties

Enterprises 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 individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant

influence over the enterprise, key management personnel, including directors and officers of the Company and close members of the family

of these individuals and companies associated with these individuals 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.

076A n n u a l R e p o r t 2 0 0 3


2. ACCOUNTING POLICIES (continued)

2.17 Dividends

Dividends are recorded in the consolidated and company financial statements in the period in which they are approved by the

shareholders.

2.18 Segment reporting

The segmental reporting has been prepared based on the Company's method of internal reporting, which desegregates its business

by geographical areas.

2.19 Comparatives

Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.

3. CHANGES IN ACCOUNTING POLICIES

Commencing 2003, the Group has adopted Thai Accounting Standard no. 51: Intangible Assets and has changed its accounting

policy as detailed below.

a) Intangible assets : Thai Accounting Standard no. 51

The Group has adopted the provisions of Thai Accounting Standard no. 51: Intangible Assets. Previously certain items were

recognised as separate assets in the financial statements, however under the provisions of TAS 51 these items do not meet the definition

of, or recognition criteria for intangible assets. Accordingly, these items have now been derecognised. These items mainly relate to development

expenditure of Nam Theun 2 project and Bo Nok project.

b) Major repair and maintenance expenses

The Group has changed its accounting policy in respect of major repair and maintenance expenses to record capital spare parts

whose estimated useful life is more than 1 year on the replacement basis. Capital spare parts are capitalised and depreciated on the straight

line method over the estimated useful life when used in major repair and maintenance processes. Previously, capital spare parts used in

major repair and maintenance processes were expensed when incurred.

The Group has not restated the consolidated and company financial statements as at 1 January 2003 as the net effect is not

material as shown below:

ConsolidatedRestated Previously reported

Baht Baht

Spare parts and supplies, net 2,878,393,879 2,872,730,085

Interests in joint ventures, net 36,092,443 541,984,376

Property, plant

and equipment, net 33,020,404,263 32,033,957,904

Other non-current assets, net 322,538,449 595,525,257

Retained earnings

as at 1 January 2003 5,982,335,580 5,769,104,168

Company Restated Previously reported

Baht Baht

Investments in subsidiaries 14,357,131,571 13,365,021,418

Interests in joint ventures, net 2,853,906,486 3,632,785,227

Retained earnings

as at 1 January 2003 5,982,335,580 5,769,104,168

4. STATEMENTS OF FLOWSChanges in short term and long term investments used as collateral is included in the statement of cash flows as cash flows from

operating activities because proceeds from sales of electricity must be maintained as short term and long term investments used as

collateral in accordance with the Master Agreements and loan agreements as described in Note 8.

5. SEGMENT INFORMATION

Financial information by geographical segments

077A n n u a l R e p o r t 2 0 0 3


5. SEGMENT INFORMATION (continued)

For the year ended 31 December 2003

Thailand Philippines Consolidated

Baht Baht Baht

Revenue from sales and service income 14,485,608,916 892,337,126 15,377,946,042

Cost of sales and services (5,780,686,344) (235,830,791) (6,016,517,135)

Segment results 8,704,922,572 656,506,335 9,361,428,907

Administrative expenses (991,404,688) (115,009,320) (1,106,414,008)

Impairment charge (170,481,405) - (170,481,405)

Other income 853,601,526 44,604,311 898,205,837

Currency exchange gains (losses) 738,034,428 (30,819,643) 707,214,785

Operating profit 9,134,672,433 555,281,683 9,689,954,116

Shares of loss from associates

and a joint venture (545,482,321) - (545,482,321)

Interest expenses (2,546,850,379) (84,266,908) (2,631,117,287)

Profit before tax 6,042,339,733 471,014,775 6,513,354,508

Income tax (159,017,326) (57,571,393) (216,588,719)

Profit before minority interest 5,883,322,407 413,443,382 6,296,765,789

Minority interest 72,833,339 229,991,017 302,824,356

Net profit 5,810,489,068 183,452,365 5,993,941,433

Segment assets 54,275,443,684 2,161,172,398 56,436,619,082


Thailand Philippines Consolidated

Baht Baht Baht

Revenue from sales and service income 10,504,337,404 958,387,448 11,462,724,852

Cost of sales and services (4,597,255,165) (329,033,426) (4,926,288,591)

Segment results 5,907,082,239 629,354,022 6,536,436,261

Administrative expenses (819,590,973) (96,423,342) (916,014,315)

Other income 622,149,565 47,301,671 669,451,236

Impairment charge (342,000,000) - (342,000,000)

Currency exchange gains (losses) 200,306,135 (26,271,909) 174,034,226

Operating profit 5,567,946,966 553,960,442 6,121,907,408

Shares of loss from associates

and a joint venture (72,527,046) - (72,527,046)

Interest expenses (2,691,262,017) (116,026,626) (2,807,288,643)

Profit before tax 2,804,157,903 437,933,816 3,242,091,719

Income tax (13,316,013) (33,931,229) (47,247,242)

Profit before minority interest 2,790,841,890 404,002,587 3,194,844,477

Minority interest 3,443,932 232,921,968 236,365,900

Net profit 2,787,397,958 171,080,619 2,958,478,577

Segment assets 53,310,724,536 2,513,224,266 55,823,948,802

6. CASH AND EQUIVALENTS

As at 31 December 2003 the interest rates on saving accounts were 0.25 % to 3.75% per annum (2002: 0.25% to 3% per annum)

and the interest rate on deposits held at call with banks were 0.5% to 3.9% per annum (2002: 0.5% to 3% per annum).

7. SHORT TERM INVESTMENTS

Short term investments comprised deposits at banks and financial institutions and marketable securities.

Deposits at banks and financial institutions

Deposits 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 2003 these bear at interest rates of 0.5% to 3.9% per annum (2002: 0.5% to 3.75% per annum).

078A n n u a l R e p o r t 2 0 0 3


7. SHORT TERM INVESTMENTS (continued)

Marketable securities

Consolidated Company

2003 2002 2003 2002

Baht Baht Baht Baht

Available-for-sale

Debt securities 508,895,498 110,460,005 469,681,525 112,199,685

Changes in fair value

of investments 11,476,032 7,922,920 11,476,032 7,922,920

Short term investments in

marketable securities 520,371,530 118,382,925 481,157,557 120,122,605

8. SHORT TERM AND LONG TERM INVESTMENTS USED AS COLLATERAL

- Subsidiaries of the Company

Deposits at banks and financial institutions used as collateral are those of Rayong Electricity Generating Company Limited

(REGCO) and Khanom Electricity Generating Company Limited (KEGCO), and comprise cash reserves required to be maintained under their

loan agreements and debentures for the purpose of repayment of principal and interest due within one year, and as a reserve to minimise

exchange rate risk. These cash reserves are provided from the proceeds of sale of electricity. As at 31 December 2003, these cash reserves

amounted to Baht 4,137 million (2002 : Baht 4,066 million). The remaining balance of short term and long term investments used as

collateral of Baht 2,033 million (2002 : Baht 1,640 million) represent collateralised deposits maintained in accordance with the loan

agreements, but which can be used subject to certain lender approvals.

The cash reserve for minimising exchange risk represents deposits in US Dollars. The two subsidiaries have to provide this

reserve until such account 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 2003, the two subsidiaries provided this reserve at 25% of their outstanding unhedged US Dollar loans in a total

amount of US Dollars 71 million.

- Subsidiaries of Gulf

Deposits at banks and financial institutions of Gulf of Baht 617 million are mainly of three subsidiaries which have been pledged

as collateral to secure credit facilities according to long term loan agreements. However, withdrawals can be made from the pledged

accounts to provide working capital in the normal course of business of the subsidiaries.

Short term investments and long term investments used as collateral comprise deposits at banks and financial institutions and

marketable securities.

Deposits at banks and financial institutions used as collateral

As at 31 December 2003, short term and long term deposits under these reserves bear interest at the rates of 0.9% - 2.26% per

annum for the foreign currency deposits and 0.25% - 8.00% per annum for the Thai Baht deposits.

Short term investments in marketable securities used as collateral

Consolidated

31 December 2003

Current portion ofinvestments

Available-for-sale held-to-maturity TotalBaht Baht Baht

Debt securities 545,567,803 54,036,152 599,603,955

Changes in fair value of investments 14,689 - 14,689


marketable securities used as collateral 545,582,492 54,036,152 599,618,644

Consolidated

31 December 2002

Current portion ofinvestments

Available-for-sale held-to-maturity TotalBaht Baht Baht

Debt securities 664,855,601 78,574,451 743,430,052

Changes in fair value of investments 38,942 - 38,942


marketable securities used as collateral 664,894,543 78,574,451 743,468,994

079A n n u a l R e p o r t 2 0 0 3


8. SHORT TERM AND LONG TERM INVESTMENTS USED AS COLLATERAL (continued)

Long term investments in marketable securities used as collateral

Consolidated

31 December 2003

Available-for-sale Held-to-maturity Total

Baht Baht Baht

Debt securities 1,322,916,997 93,570,000 1,416,486,997

Changes in fair value of investments (33,412,229) - (33,412,229)

Long term investments in

marketable securities used as collateral 1,289,504,768 93,570,000 1,383,074,768

Consolidated

31 December 2002

Available-for-sale Held-to-maturity Total

Baht Baht Baht

Debt securities 1,827,212,416 148,061,983 1,975,274,399

Changes in fair value of investments 8,399,240 - 8,399,240

Long term investments in

marketable securities used as collateral 1,835,611,656 148,061,983 1,983,673,639

The above held-to-maturity investments are due within 2-5 years.

The Group has 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 guidelines stipulated in the loan agree-

ments with the Group's lenders.

9. TRADE RECEIVABLES, NET


2003 2002 2003 2002

Baht Baht Baht Baht

Trade receivables 313,126,937 268,388,235 - -

Less Allowance for trade - (3,335,000) - -

receivables

Trade receivables, net 313,126,937 265,053,235 - -

Outstanding trade receivables as at 31 December can be analysed as follows:


2003 2002 2003 2002

Baht Baht Baht Baht

Up to 3 months 273,952,471 241,777,402 - -

3 - 6 months 21,040,673 2,225,089 - -

6 - 12 months - 907,676 - -

Over 12 months 18,133,793 23,478,068 - -

313,126,937 268,388,235 - -

Less Allowance for trade receivables - (3,335,000) - -

Trade receivables, net 313,126,937 265,053,235 - -

080A n n u a l R e p o r t 2 0 0 3


10. SPARE PARTS AND SUPPLIES, NET


2003 2002 2003 2002

Baht Baht Baht Baht

Fuel 316,840,382 331,054,631 - -

Specific spare parts - -

- Capital spare parts 846,966,457 931,365,632 - -

- Other specific spare parts 1,775,780,394 1,755,704,542 - -

Common spare parts 81,268,999 65,093,255 - -

Spare parts in transit 15,018,843 2,273,664 - -

3,035,875,075 3,085,491,724 - -

Less Allowance for obsolescence (157,746,503) (212,761,639) - -

Spare parts and supplies, net 2,878,128,572 2,872,730,085 - -

11. LONG TERM INVESTMENTS IN MARKETABLE SECURITIES AND OTHERS


2003 2002 2003 2002

Baht Baht Baht Baht

Available-for-sale

Debt securities 137,726,769 184,381,495 192,141,254 176,710,114

Equity securities 1,859,346,693 1,859,346,693 1,859,346,693 1,859,346,693

Changes in fair value of investments 1,291,660,155 172,105,372 1,282,054,184 236,239,980

Total long term investments in

marketable securities 3,288,733,617 2,215,833,560 3,333,542,131 2,272,296,787

Others equity security 12,300,000 2,300,000 12,300,000 2,300,000

Long term investments in marketable

securities and others 3,301,033,617 2,218,133,560 3,345,842,131 2,274,596,787

12. INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND INTERESTS IN JOINT VENTURE, NET


2003 2002 2003 2002

Baht Baht Baht Baht

Investments in subsidiaries 493,258 424,066 15,805,338,336 13,365,021,418

Investments in associates 338,008,946 279,930,149 - -

Interests in joint ventures 30,968,202 541,984,376 3,609,680,838 3,974,785,227

Less Provision for impairment - - (408,132,951) (342,000,000)

Investments in subsidiaries,

associates and interests in

joint ventures, net 369,470,406 822,338,591 19,006,886,223 16,997,806,645

081A n n u a l R e p o r t 2 0 0 3


12. INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND INTERESTS IN JOINT VENTURE, NET (continued)

The movements in investments in subsidiaries, associates and interests in joint ventures can be analysed as follows:

2003


Baht Baht

Opening net book value 822,338,591 16,997,806,645

Call for additional paid up share capital

of subsidiaries and joint ventures (Notes 12.2 and 12.5) 92,614,136 172,470,346

Share of profit (loss) from investments

in subsidiaries, associates

and joint ventures (545,482,321) 6,001,183,311

Goodwill impairment charge (Note 15) - (66,132,951)

Dividends received from subsidiaries and joint ventures - (3,852,748,900)

Capital reduction of a subsidiary - (100,000,000)

Change in fair value of marketable securities

(available-for-sale) of a subsidiary - (38,138,580)

Translation adjustments - (107,553,648)

Closing net book value 369,470,406 19,006,886,223

The investments in subsidiaries, associates and interests in joint ventures are unchanged from 2002.

12.1 The principal subsidiaries, which are all incorporated in Thailand except EGCO International B.V.I which is incorporated in

the British Virgin Islands, are as follows:

Company

31 December 2003

Paid-up Portion of Cost Equityshare capital Investment Method Method Dividend

Business Baht'000 (%) Baht'000 Baht'000 Baht'000

(Including

indirect

holding)

Rayong Electricity Generating Co., Ltd. Electricity generating 4,700,000 99.99 4,700,000 7,216,975 2,572,268

Khanom Electricity Generating Electricity generating 4,850,000 99.99 4,850,000 6,183,211 1,078,438

Co., Ltd.

EGCO Engineering and Service Power plant 250,000 99.99 250,000 297,562 44,192

Co., Ltd. and its subsidiary maintenance

and joint venture services

- Subsidiary

Agro Energy Co., Ltd. Trading / delivery 99.99

services of natural

scrap

- Joint venture

Amata Power-Esco Service Co., Ltd. Power plant operation 50.00

Egcom Tara Co., Ltd. Tap water business 345,000 70.00 398,475 328,743 -

EGCO Green Energy Co., Ltd. Investing in biomass 139,384 74.00 129,500 120,167 -

and its subsidiary fueled electric

generating plant

- Roi-Et Green Co., Ltd. Develop, design, 95.00

construct and test

operation of fueled

electric generating

plant from husk

082A n n u a l R e p o r t 2 0 0 3





(Including

indirect

holding)

EGCO International B.V.I Investing in power

energy projects - 99.99 - 536,265 -

Thai LNG Power Corporation

Limited and its subsidiary Investing in power

energy projects 525,000 100.00 525,000 516,460

- TLP Cogeneration Co.,Ltd. Electricity generating 1,060,000 80.00 424,000 605,955 -

11,276,975 15,805,338 3,694,898

Company

31 December 2002



(Including

indirect

holding)

Rayong Electricity Generating Electricity generating 4,700,000 99.99 4,700,000 5,914,849 2,085,803

Co., Ltd.

Khanom Electricity Generating Electricity generating 4,850,000 99.99 4,850,000 388,981 1,751,318

Co., Ltd.

EGCO Engineering and Service Power plant 350,000 99.99 350,000 384,284 -

Co., Ltd. and its subsidiary maintenance services

and joint venture

- Subsidiary

Agro Energy Co., Ltd. Trading / delivery 99.99

services of natural

scrap

- Joint venture

Amata Power-Esco Service Power plant operation 50.00

Co., Ltd.

Egcom Tara Co., Ltd. Tap water business 345,000 70.00 398,475 289,747 -

EGCO Green Energy Co., Ltd. Investing in biomass 139,384 74.00 103,144 93,738 -

and its subsidiary fueled electric

generating plant

- Roi-Et Green Co., Ltd. Develop, design, 95.00

construct and test

coperation of fueled

electric generating

plant from husk

EGCO International B.V.I Investing in power

energy projects - 99.99 - 378,686 -

Thai LNG Power Corporation

Limited and its subsidiary Investing in power

energy projects 525,000 100.00 525,000 522,547 -

- TLP Cogeneration Co.,Ltd. Electricity generating 1,060,000 80.00 424,000 392,189 -

11,350,619 13,365,021 3,837,121

083A n n u a l R e p o r t 2 0 0 3



The investment in Agro Energy Company Limited was accounted for under the equity method but not consolidated in the

consolidated financial statements as at 31 December 2003 and 2002 because its financial statements were not material to the Group.

12.2 Principal movements in investments in subsidiaries during the year ended 31 December 2003

(a) EGCO Engineering and Service Company Limited

In March 2003, EGCO Engineering and Service Company Limited, a wholly owned subsidiary of the Company, reduced its authorised

share capital from Baht 350 million to Baht 250 million in order to reduce excess liquidity and to have an appropriate working capital structure

relative to its business size. The Group continues to hold share capital in the same proportion as its original investment.

(b) EGCO Green Energy Company Limited

In January 2003, EGCO Green Energy Company Limited, a subsidiary of the Company, called for additional paid-up share capital

of Baht 1.85 per share on a total 17 million shares, totalling Baht 32 million. The Group paid for the additional paid-up share capital in the

same proportion as its original investment. In addition in March 2003 this subsidiary issued 400,000 new ordinary shares at par value of

Baht 10, which were priced at Baht 10. The Group purchased new shares in the same proportion as its original investment.

(c) Agro Energy Company Limited

In February 2003 Agro Energy Company Limited, which is a subsidiary of the Company, called for additional paid-up share capital

of Baht 7.50 per share on a total 0.20 million shares, totalling Baht 1.50 million. The Group paid for the additional paid-up share capital in

the same proportion as its original investment.

12.3 The principal associate, which is incorporated in Thailand, is as follows:

Consolidated

Portion of 31 December 2003 31 December 2002

Invesment Cost method Equity method Cost method Equity method

Business % Baht'000 Baht'000 Baht'000 Baht'000

Amata-EGCO Power Electricity generating 14.85 200,475 338,009 200,475 279,930

Limited

200,475 338,009 200,475 279,930

12.4 The principal joint ventures, which are incorporated in Thailand except Conal Holdings Corporation which is incorporated

in the Philippines, are as follows:

Consolidated

Portion of 31 December 2003 31 December 2002

Invesment Cost method Equity method Cost method Equity method

Business % Baht'000 Baht'000 Baht'000 Baht'000

Amata Power-Esco Power plant operation 50 1,000 6,187 1,000 5,490

Service Co., Ltd.

Nam Theun 2 Electricity generating 25 753,249 24,781 662,135 536,494

(development phase)

754,249 30,968 663,135 541,984

The investments in Amata Power-Esco Service Company Limited and Nam Theun 2 were accounted for under the equity method

but not proportionately consolidated in the consolidated financial statements as at 31 December 2003 and 2002 because their financial

statements were not material to the Group.

084A n n u a l R e p o r t 2 0 0 3



Company

31 December 2003



EGCO Joint Venture and

Development Co., Ltd Investing in power

energy business 696,720 50.00 348,360 548,781 55,100

Gulf Electric Public Co., Ltd. (Gulf)

Electricity generating 4,110,000 50.00 2,230,000 2,366,060 102,750

Conal Holdings Corporation (Conal) Investing in power

energy business 729,320 40.00 1,002,467 670,059 157,579

Nam Theun 2 Electricity generating

(development phase) 10,565 25.00 753,249 24,781 -

4,334,076 3,609,681 315,429

Less Provision for impairment - (408,133) -

4,334,076 3,201,548 315,429

Company

31 December 2002

Portion of Cost method Equity method Cost method Equity methodBusiness Investment (%) Baht'000 Baht'000 Baht'000 Baht'000

EGCO Joint Venture and Investing in power

Development Co., Ltd energy business 696,720 50.00 348,360 463,979 -

Gulf Electric Public Co., Ltd. (Gulf) Electricity generating 4,000,000 50.00 2,175,000 2,194,876 -

Conal Holdings Corporation (Conal) Investing in power 729,320 40.00 1,002,467 779,436 378,686

energy business

Nam Theun 2 Electricity generating 10,565 25.00 662,135 536,494 -

(development phase)

4,187,962 3,974,785 378,686

Less Provision for impairment - (342,000) -

4,187,962 3,632,785 378,686

The Nam Theun2 Project

A joint venture of the Company, which planned to operate the Nam Theun2 Project has postponed the signing of the Power

Purchase Agreement (PPA) with the Electricity Generating Authority of Thailand and Electricite de Laos. The signing of the PPA was scheduled

for 18 July 2003, but a co-investor of a joint venture, EDF International, announced the withdrawal from the project before the signing on

the PPA. However, such co-investor of a joint venture currently confirms to continue its involvement in this project.

On 8 November 2003, such joint venture entered into two Power Purchase Agreements (PPAs) with EGAT and Electricite de Laos,

the contracted capacities are 995 megawatt and 75 megawatt, respectively. The agreements are effective for a period of 25 years,

commencing from the commercial operation date. The expected commercial operation date will be in the second half of year 2009.

085A n n u a l R e p o r t 2 0 0 3



12.5 Principal movements in interests in joint ventures during the year ended 31 December 2003

(a) Gulf

In May 2003, Gulf issued 11 million new ordinary shares at par value of Baht 10 per share priced at Baht 10 per share. The Group

purchased new shares in the same proportion as its original investment.

(b) Gulf Yala Green Company Limited

In April 2003, Gulf Yala Green Company Limited, a wholly owned subsidiary of Gulf, called for additional paid-up share capital of

Baht 7.50 per share on 0.1 million shares, totalling Baht 0.75 million and Gulf paid for the additional paid-up capital in the same proportion

as its original investment. Additionally, in August 2003, this subsidiary issued 19.9 million new ordinary shares at a par value of Baht 10

which were priced at Baht 10 per share and called up the shares at Baht 5.80 per share. The Group purchased the new shares issued in the

same proportion as its original investment.

(c) Trang Biomass Company Limited

Trang Biomass Company Limited, a wholly owned subsidiary of Gulf, incorporated on 12 May 2003 with a total registered

number of ordinary shares of 0.10 million shares with a par value of Baht 10 each and called up at Baht 2.50 each. Gulf has acquired all

ordinary shares issued, and as a result, Gulf has a 99.93% interest in such company. Consequently, the Group has an interest of 50%.

(d) Samutprakarn Cogeneration Company Limited and Nongkhae Cogeneration Company Limited

In November 2003, Samutprakarn Cogeneration Company Limited and Nongkhae Cogeneration Company Limited, which are

wholly owned subsidiaries of Gulf, reduced their share capital from Baht 1,291 million to Baht 982 million and Baht 1,678 million to Baht 1,242

million, respectively, according to loan agreements. The Group continues to hold share capital in the same proportion as its original investments.

(e) Gulf Power Generation Company Limited

On 25 December 2003, Gulf acquired 40% of the share capital of Gulf Power Generation Company Limited (Gulf Power), previously

a joint venture of Gulf. As a result, Gulf Power is a wholly owned subsidiary of Gulf. The consideration of Baht 506 million was partially

settled in cash on the same day of Baht 186 million. The remaining amount of Baht 320 million will be settled in April 2004. The net book

value, amounting to Baht 87 million, as at 25 December 2003 was applied as the fair value of the net identifiable assets at the date of

acquisition. The resulting goodwill of Baht 166 million (Note 13) will be amortised on a straight-line basis over the remaining years of the

Power Purchase Agreement which are not over the periods of 25 years.

Gulf Power is under the development phase, therefore, the acquired business contributed neither revenue or operating loss to

the Group for the period from 25 December 2003 to 31 December 2003.

Net assets acquired in Gulf Power in the consolidated financial statements and the resulting goodwill are as follows:

As at 25 December 2003

Consolidated Gulf

Million Baht Million Baht

Property, plant and equipment, net (Note 14) - -

Other assets less liabilities (87) (173)

Book value of net assets (87) (173)

Goodwill (Note 13) 166 333

Total purchase consideration 253 506

13. GOODWILL. NET


Consolidated Baht

Opening net book value 1,219,432,814

Acquisition (Note 12.5) 166,635,837

Amortisation (91,364,537)

Translation adjustments (5,670,762)

Closing net book value 1,289,033,352

086A n n u a l R e p o r t 2 0 0 3


14. PROPERTY, PLANT AND EQUIPMENT, NET

Consolidated

Power plants &

substation,

Building transmission

and land system plants Equipment and Cnstruction in

Land improvement and water motor vehicles progress Total

Baht Baht Baht Baht Baht Baht

At 31 December 2002

Cost 1,722,666,926 3,425,266,743 37,659,436,195 369,379,165 2,653,180,934 45,829,929,963

Less Accumulated

depreciation - (1,091,581,912) (12,482,385,549) (222,004,598) - (13,795,972,059)

Net book value 1,722,666,926 2,333,684,831 25,177,050,646 147,374,567 2,653,180,934 32,033,957,904

Year ended 31 December 2003

Opening net book value 1,722,666,926 2,333,684,831 25,177,050,646 147,374,567 2,653,180,934 32,033,957,904

Translation adjustments (1,561,449) (914,414) (176,741,639) (694,720) (230,396) (180,142,618)

Additions 132,050,047 5,980,479 209,062,388 59,277,852 583,826,096 990,196,862

Capitalisation of capital spare parts - - 1,804,045,415 - - 1,804,045,415

Disposals/Transfer (18,261,459) 137,900,944 2,896,406,424 26,030,750 (3,186,273,818) (144,197,159)

Depreciation charge

(Note 22) - (181,531,837) (2,714,414,274) (64,509,405) - (2,960,455,516)

Closing net book value 1,834,894,065 2,295,120,003 27,195,408,960 167,479,044 50,502,816 31,543,404,888

At 31 December 2003

Cost 1,834,894,065 3,567,584,778 42,391,022,104 445,258,674 50,502,816 48,289,262,437

Less Accumulated

depreciation - (1,272,464,775) (15,195,613,144)q (277,779,630) - (16,745,857,549)

Net book value 1,834,894,065 2,295,120,003 27,195,408,960 167,479,044 50,502,816 31,543,404,888

Company

Building Equipment and

Land land improvement vehicles Total

Baht Baht Baht Baht

At 31 December 2002Cost 284,429,029 619,834,930 168,011,465 1,072,275,424Less Accumulated

depreciation - (122,502,982) (108,315,146) (230,818,128)

Net book value 284,429,029 497,331,948 59,696,319 841,457,296

Year ended 31 December 2003Opening net book value 284,429,029 497,331,948 59,696,319 841,457,296Additions - - 19,354,760 19,354,760Disposals/Transfer - - (2,332,742) (2,332,742)Depreciation charge (Note 22) - (34,158,996) (30,786,187) (64,945,183)

Closing net book value 284,429,029 463,172,952 45,932,150 793,534,131

At 31 December 2003Cost 284,429,029 619,834,930 179,443,922 1,083,707,881Less Accumulated depreciation - (156,661,978) (133,511,772) (290,173,750)

Net book value 284,429,029 463,172,952 45,932,150 793,534,131

087A n n u a l R e p o r t 2 0 0 3


14. PROPERTY, PLANT AND EQUIPMENT, NET(continued)

As at 31 December 2003, land, buildings and equipments amounting to Baht 30,575 million have been mortgaged and pledged

as collateral in accordance with the loan agreements and debentures as described in Notes 17 and 18.

Borrowing costs from two subsidiaries of the Company of Baht 13 million (2002: Baht 45 million), arising on financing specifically

entered into for the construction of a new power plants, were capitalised during the year and are included in 'Additions' of the consolidated

financial statements.

15. OTHER NON-CURRENT ASSETS, NET


2003 2002 2003 2002

Baht Baht Baht Baht

Deposits 12,602,847 10,036,933 8,493,166 7,496,166

Refundable tax 64,479,765 71,031,775 41,175,771 71,031,775

Advance to subcontractor 34,387,633 - - -

Land project development costs and

advances for Bo Nok Project (Note 3) 352,336,046 671,552,419 - -

Others 135,979,579 64,886,698 196,667 5,618,633

599,785,870 817,507,825 49,865,604 84,146,574

Less Provision for impairment (104,348,454) (221,982,568) - -

495,437,416 595,525,257 49,865,604 84,146,574

As at 31 December 2003, expenses related to the Bo Nok Project, which is operated by a subsidiary of Gulf, previously a joint

venture of Gulf, consist of project development costs, advances, and land purchased for the project, which are shown as other non-current

assets in these consolidated financial statements, amounting to Baht 248 million (2002: Baht 450 million). In October 2003, the subsidiary

of Gulf submitted a new proposal in respect of the Bo Nok Project to Electricity Generating Authority of Thailand (EGAT) with regard to fuel

switching from coal to gas, location switching from Prachuabkirikhun province to Saraburi province, and also a change in the project name

to "Khaeng Khoi 2", and including a revised proposed tariff rate. Under the proposed tariff rate, the subsidiary of Gulf will be reimbursed

for certain project costs paid by it relating to the Bo Nok project.

Due to the uncertainty of the project, the Company has assessed the recoverability of its investment in this project, an impairment

loss for land and goodwill arising from the acquisition of Bo Nok project amounting to Baht 104 million and Baht 66 million, respectively

have been recognised in the consolidated and company statements of income for the year ended 31 December 2003. In addition, project

development costs and advances for the project of Baht 147 million were written off during the year.

16. SHORT TERM AND LONG TERM LOANS FROM A CO-INVESTOR IN A JOINT VENTURE


2003 2002 2003 2002

As at 31 December Baht Baht Baht Baht

Electric Power Development Co., Ltd

- Short term loans - 250,000,000 - -

- Current portion of long term loans 50,000,000 - - -

- Long term loans 175,000,000 275,000,000 - -

Total loans from a co-investor in

a joint venture 225,000,000 525,000,000 - -

Short term loans from a co-investor in a joint venture bear fixed interest at the rate of 5% per annum. Long term loans from a

co-investor in a joint venture bear fixed interest at the rates of 5%, 5.25% and 5.75% per annum for the first three years and at the fixed

deposit rate plus a certain margin for subsequent years. Principal and interest are repayable on annually and quarterly basis, respectively.

088A n n u a l R e p o r t 2 0 0 3


17. LONG TERM LOANS, NET

The long term loans are as follows:


2003 2002 2003 2002

Baht Baht Baht Baht

Current portion of

long term loans, net

US Dollars 2,572,035,902 2,370,967,845 - -

Peso Philippines 12,889,857 14,652,587 - -

Thai Baht 617,502,804 588,201,815 - -

Japanese Yen 36,102,109 - - -

Less Deferred financing fee (6,638,141) (4,152,543) - -

3,231,892,531 2,969,669,704 - -

Long term loans, net

US Dollars 12,834,558,820 15,480,251,924 - -

Peso Philippines 63,660,780 87,019,192 - -

Thai Baht 3,272,647,322 3,988,351,512 - -

Japanese Yen 347,562,332 233,656,963 - -

Less Deferred financing fee (68,100,362) (44,718,003) - -

16,450,328,892 19,744,561,588 - -

Total long term loans, net 19,682,221,423 22,714,231,292 - -

After taking account of interest rate swaps, the weighted average effective interest rate exposure of the long term loans of the

Group was approximately USD : 7.58% , YEN : 3.06% , PESO : 11.70% , THB : 9.41% respectively.

Long term loans are secured liabilities. The long term loans are secured over land, buildings, power plants and equipment of

subsidiaries and join ventures. The subsidiaries and joint ventures have to maintain cash reserves which are provided from the proceeds of

sales of electricity for the purpose of repayment of principal and interest due within one year and as a reserve for minimising the exchange

risk (referred to Note 8). In addition, the Power Purchase Agreements, the Asset Purchase Agreements, the Major Maintenance Agreements,

insurance policies and other related agreements with the lenders have been assigned as collateral in accordance with the conditions under

the Master Agreements.

The interest rate exposure on the long term loans of the Group is as follows:


2003 2002 2003 2002

Baht Baht Baht Baht

Long term loans, net

- at fixed rates 12,599,083,606 15,719,253,200 - -

- at floating rates 7,083,137,817 6,994,978,092 - -

Total long term loans, net 19,682,221,423 22,714,231,292 - -

The movements in the long term loans can be analysed as follows:


For the year ended

31 December 2003 Baht Baht

Opening amount, net 22,714,231,292 -Cash receipts from long term loans 3,319,797,052 -Repayments of long term loans (5,122,868,798) -Unrealised exchange gains (1,049,706,045) -Amortisation of deferred financing fee 6,161,670 -Translation adjustments (185,393,748) -

Closing amount, net 19,682,221,423 -

089A n n u a l R e p o r t 2 0 0 3


17. LONG TERM LOANS, NET (continued)

Principal movements in long term loans during the year ended 31 December 2003 are as follows:

Subsidiaries of the CompanyAdditional loans for the year ended 31 December 2003 mainly relate to draw downs by TLP Cogeneration Company Limited and

Roi-et Green Company Limited amounting to US Dollars 2.4 million, Japanese Yen 248 million and Thai Baht 345 million. The US Dollar loanbears interest based on LIBOR plus a certain margin, the Japanese Yen loan bears a fixed interest rate at 3.25% per annum and Thai Bahtloan bears interest based on MLR plus a certain margin. Repayments will be made in semi-annual installments from 2003 to 2016. The loansare mortgaged by land and buildings and pledged by equipment of power plants and promissory notes.

In April 2003, the lender of Egcom Tara Company Limited, a subsidiary of the Company, accepted to reduce the fixed interest rateunder its loan agreement from 8% per annum to 5.50 % per annum until September 2004, and thereafter at the rate of MLR plus a certain margin. Other loan conditions remain unchanged.

Gulf and subsidiaries of GulfGulf has credit facilities with a local commercial bank in an amount of Baht 250 million bearing interest at the money market

rate. Gulf has pledged the common shares of its two subsidiaries, Gulf Cogeneration Company Limited and Samutprakarn CogenerationCompany Limited for such credit facility.

On 1 October 2003, Gulf pre-settled a short term loan from a local commercial bank amounting to Baht 217 million. The sourceof funds for making such prepayment derived from a major shareholder. Gulf was not required to pay any prepayment fees to the bank.

Two subsidiaries of Gulf refinanced their long term loans with local commercial banks and financial institutions and entered intonew Credit Facility Agreements each dated 20 February 2003. Additions and repayments of loans, therefore, represented the refinancingof long term loans of US Dollars 16 million and Baht 1,399 million to long term loans of US Dollars 41 and Baht 947 million. The refinancingof long term loans has converted interest rates for US Dollar long term loans to LIBOR plus a certain margin and for Thai Baht long termloans to MLR minus a certain margin as well as conversion of the repayment schedule for US Dollar long term loans to a semi-annual basis and for Thai Baht long term loans to a quarterly basis. The repayment term has been extended to 2014. Expenses related to early settlement of long term loans amounting to Baht 12 million is charged to the consolidated statements of income. Deferred refinancing fee representsinterest prepayment of the refinanced long term loans.

Another subsidiary of the Company, Gulf Yala Green Company Limited, entered into a Credit Facility Agreement dated 14 May 2003 with a total credit facility of US Dollars 11.5 million and bearing an interest rate of LIBOR plus a certain margin per annum. The utilisation of US Dollars 11.5 million shall be subjected to the terms and conditions under the Credit Facility Agreement under which at least 20% ofthe proposed amount of each utilisation shall be provided to such subsidiary in Baht currency bearing interest at the rate of MLR per annum.As at 31 December 2003, such subsidiary has already drawn down its credit facility amounts of US Dollars 1 million and Baht 10.5 million.The interest is repayable on a monthly basis commencing 31 August 2003. The subsidiary will repay the principal within 6 months after theproject completion date or within 30 months after the utilisation date. In addition, such subsidiary has also been provided facilities for working capital totalling Baht 12.5 million, bearing interest at the rate of MOR per annum.

Maturity of long term loans is as follows:


2003 2002 2003 2002

Baht Baht Baht Baht

Within 1 year 3,231,829,531 2,969,669,704 - -Later than 1 year and not later than 5 years 11,623,543,784 13,268,909,887 - -Later than 5 years 4,826,785,108 6,475,651,701 - -

19,682,221,423 22,714,231,292 - -

Credit facilities

As at 31 December 2003, the available credit facilities for long term loans from banks and financial institutions were US Dollar 12

million, Thai Baht 682 million and Japanese Yen 231 million.

18. DEBENTURES

The debentures are debentures in Thai Baht of the Company and its two subsidiaries as follows:


2003 2002 2003 2002

Baht Baht Baht Baht

Current portion of debentures 2,446,070,425 1,675,527,075 1,400,650,000 1,295,000,000Debentures, net 5,559,274,603 8,005,485,168 - 1,400,650,000

Total debentures 8,005,345,028 9,681,012,243 1,400,650,000 2,695,650,000

090A n n u a l R e p o r t 2 0 0 3


18. DEBENTURES (continued)

After taking account of interest rate swaps, the weighted average effective interest rate exposure of the debentures of the Group

and the Company were approximately 10.57% and 6.6%, respectively.

Debentures of Baht 6,813,242,500 are secured liabilities. The subsidiaries are required to maintain reserves for principal and

interest due within one year as described in Note 8 and to pledge the relevant agreements as collateral as described in Note 29.

The movements of debentures can be analysed as follows:


For the year ended

31 December 2003 Baht Baht

Opening amount 9,681,012,243 2,695,650,000

Issue of debentures - -

Repayments of debentures (1,675,667,215) (1,295,000,000)

Closing amount 8,005,345,028 1,400,650,000

Maturity of debentures is as follows:


2003 2002 2003 2002

Baht Baht Baht Baht

Within 1 year 2,446,070,425 1,675,527,075 1,400,650,000 1,295,000,000

Later than 1 year but not later

than 5 years 3,339,028,477 5,051,514,211 - 1,400,650,000

Later than 5 years 2,220,246,126 2,953,970,957 - -

8,005,345,028 9,681,012,243 1,400,650,000 2,695,650,000

19. SHARE CAPITAL AND PREMIUM ON SHARE CAPITAL

Ordinary Premium on

Number shares share capital Total

of shares Baht Baht Baht

At 1 January 2002 525,946,500 5,259,465,000 8,590,930,000 13,850,395,000

Issue of shares 518,500 5,185,000 10,370,000 15,555,000

At 31 December 2002 526,465,000 5,264,650,000 8,601,300,000 13,865,950,000

Issue of shares - - - -

At 31 December 2003 526,465,000 5,264,650,000 8,601,300,000 13,865,950,000

The total authorised number of ordinary shares is 530,000,000 shares (2002: 530,000,000 shares) with a par value of Baht 10

per share (2002: Baht 10 per share). The amount of 526,465,000 shares are issued and fully paid up.

20. MINORITY INTEREST


2003 2002 2003 2002

Baht Baht Baht Baht

Opening balance 724,297,144 641,215,920 - -

Additional paid-up share capital of

subsidiaries and a joint venture 12,164,577 81,651,620 -

- Dissolution of a subsidiary - (70,446) - -

Disposal of a subsidiary of a joint venture - 6,286 - -

091A n n u a l R e p o r t 2 0 0 3



2003 2002 2003 2002

Baht Baht Baht Baht

Reclassification - (93,675,022) - -

Shares of net profit of subsidiaries and

joint ventures 302,824,356 236,365,900 - -

Change in fair value of investment 97,993 - -

Translation adjustments 801,782 522,086 - -

Dividend payment of a joint venture (181,593,895) (141,719,200) - -

Closing balance 858,591,957 724,297,144 - -

21. LEGAL RESERVE


2003 2002 2003 2002

Baht Baht Baht Baht

Opening balance 530,000,000 442,832,100 530,000,000 442,832,100

Appropriation during the year - 87,167,900 - 87,167,900

Closing balance 530,000,000 530,000,000 530,000,000 530,000,000

Under the Public Companies Act, the Company is required to set aside as a statutory reserve 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. NET PROFIT

The following items have been charged in arriving at net profit:


2003 2002 2003 2002

Baht Baht Baht Baht

Depreciation on property, plant and

equipment (Note 14) 2,960,455,516 2,124,541,018 64,945,183 64,467,716

Major repair and maintenance expense 581,614,120 1,202,020,075 - -

Staff costs 778,046,883 649,833,116 195,162,419 134,608,620

Impairment charge (Note 15) 170,481,405 342,000,000 66,132,951 342,000,000

23. EARNING PER SHARE

Basic 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, net of treasury stock.


2003 2002 2003 2002

Baht Baht Baht Baht

Net profit attributable to

shareholders (Baht) 5,993,941,433 2,958,478,577 5,993,941,433 2,958,478,577

Weighted average number of ordinary

share in issue (share) 525,164,200 525,164,200 525,164,200 525,164,200

Basic earnings per share (Baht) 11.41 5.62 11.41 5.62

There are no dilutive potential ordinary shares in issue during the periods presented, so no diluted earnings per share is presented.

092A n n u a l R e p o r t 2 0 0 3


24. DIVIDENDS

At the Annual General Shareholders' meeting dated 30 April 2003, it was unanimously resolved to pay dividends in respect of

the operating results for the second half year ended 2002 for 525,164,200 shares at Baht 1.25 per share, totalling Baht 656 million (2002

: 525,826,500 shares at Baht 1.25 per share, totalling Baht 657 million). These dividends were paid in May 2003.

At the Board of Directors' meeting dated 25 August 2003, it was approved to pay interim dividends in respect of the operating

results of the six-month period ended 30 June 2003 for 525,164,200 shares of Baht 1.25 per share, totalling Baht 656 million. These

dividends were paid in September 2003.

In addition, the Company reversed long outstanding dividend payable, payable to foreign investors, who were unable to exercise

rights to receive such dividends amounting to approximately Baht 25 million during this period.

25. DIRECTORS' REMUNERATION

Directors' remuneration in the consolidated and company statements of income for the year ended 31 December 2003 amounted

to Baht 22 million and Baht 18 million, respectively (2002 : Baht 16 million and Baht 15 million, respectively) and comprised meeting fees

and bonus. Expenses were approved at the Annual General Meeting of Shareholders.

26. PROVIDENT FUND

The Group has provident funds for those employees who apply to join. The contributions comprise the employees and the Group's

contribution at the same rate. The funds are managed by authorised fund managers in accordance with the Provident Fund Act B.E. 2530.

27. PROMPTIONAL PRIVILEGES

Rayong Electricity Generating Company Limited, Khanom Electricity Generating Company Limited, TLP Cogeneration Company

Limited , Egcom Tara Company Limited and Roi-Et Green Company Limited, which are the Company's subsidiaries, have received promotional

privileges from the Office of Board of Investment under promotion certificates issued on 15 June 1995, 6 November 1996, 7 June 1999,

6 December 2000 and 19 October 2001, respectively, in respect of generating electricity and tap water. Under these privileges, these

subsidiaries have received exemption from certain taxes and duties as detailed in the certificates including exemption from corporate

income tax for a period of 8 years from the date of first earning revenue. As a promoted industry these subsidiaries are required to

comply with the terms and conditions as specified in the promotion certificates.

The promotional privilege of Rayong Electricity Generating Company Limited (REGCO), with regard to the 8-year corporate

income tax exemption, has been expired since 20 April 2003. Consequently, REGCO has entitled for corporate income taxes at the rate of

50% of normal corporate income rate for a period of 5 years beyond the 8-year of corporate income tax exemption.

Three subsidiaries of Gulf have been granted promotional privileges by the Office of Board of Investment for the generation and

distribution of electricity. Under these privileges, these subsidiaries have received exemption from corporate income tax for a period of 8

years from the date of first earning revenue from the promoted activities. As a promoted industry these subsidiaries are required to

comply with the terms and conditions as specified in the promotion certificates.

The three subsidiaries of Conal have been registered with the BOI under the Omnibus Investments Code of 1987 as new operators

of power generating plants on a pioneer status. Under the terms and conditions of the registration, the three subsidiaries are entitled to

certain tax and non-tax incentives, including income tax holiday for a period of 6 years up to 1999 for a subsidiary and 2003 for the other

two subsidiaries.

28. FINANCIAL INSTRUMENTS

The 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 derivative 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 rate swaps as stated in Note 28 (a). In respect of currency exchange risk which mainly results from

the US Dollar loans, this is minimised through the formulae for the calculation of sales of electricity charged to EGAT and National Power

Corporation (NPC) as described in Note 29 (a).

Trading for speculative purposes is prohibited. All derivative transactions are subject to approval by the Group Management

Committee before execution. Decisions on the level of risk undertaken are confined to the Group Management Committee which has

established limits by transaction type and by counter party.

(a) Financial assets and liabilities

As at 31 December, the Group has outstanding foreign currency assets and liabilities after taking accounts of currency swaps as

follows:

093A n n u a l R e p o r t 2 0 0 3


2003


Currency Million Currency Million

Baht Baht Baht Baht

AssetsUS Dollars 137 5,398 - -Euro 0.2 11 - -

5,409 -

LiabilitiesUS Dollars 461 17,462 - -Japanese Yen 1,028 384 - -

17,846 -

2002


Currency Million Currency Million

Baht Baht Baht Baht

AssetsUS Dollars 151 6,505 - -Euro 0.5 21 - -

6,526 -

LiabilitiesUS Dollars 447 18,126 - -Euro 0.3 15 - -Japanese Yen 651 236 - -

18,377 -

Foreign currency assets represent cash and cash equivalents, trade receivables, US Dollars deposits with foreign and local banksand financial institutions and investments in US Dollars for the future payments of foreign currency liabilities. Foreign currency liabilitiesrepresent trade payables, other payables, interest payable and long term loans.

As at 31 December 2003 the Group has not entered into forward exchange contracts to cover its exchange risk to long term loansin US Dollars, which net of deposits in US Dollars amounted to US Dollars 297 million (2002: US Dollar 224 million).

Objectives and significant terms and conditionsIn order to manage risks arising from fluctuations in interest rates and currency exchange rates, the Group uses the following

derivative financial instruments.

Interest rate swapsSwap contracts are entered into to manage exposures to fluctuations in interest rates on specific transactions. As at 31 December

2003 the fixed interest rates for long term loans in US Dollars and Baht amounting to US Dollars 117 million and Baht 480 million variedfrom 8% to 8.22% per annum (2002 : 8% to 8.22% per annum) and fixed interest rate for debentures of Baht 1,401 million was at the rateof 6.95% per annum (2002 : fixed interest rate of 6.95% per annum).

The remaining notional principal amounts of the outstanding interest rate swap contracts at 31 December were:


2003 2002 2003 2002

Baht Baht Baht Baht

Within 1 year 3,139,717,574 3,015,371,967 1,400,650,000 1,295,000,000 Later than 1 year

but not later than 5 years 4,059,368,500 7,045,885,107 - 1,400,650,000 Later than 5 years - 571,611,480 - -

7,199,086,074 10,632,868,554 1,400,650,000 2,695,650,000

094A n n u a l R e p o r t 2 0 0 3


28. FINANCIAL INSTRUMENTS (continued)

Currency and interest rate swap

A swap contract is entered into to manage exposure to fluctuations in foreign currency exchange and interest rates on specific

transactions. As at 31 December 2003 the long term loans of US Dollars 60 million has a fixed exchange rate at Baht 25.23 per US Dollar 1

(2002 : Baht 25.23 per US Dollar 1) and a fixed interest rate at the rate of 11% per annum (2002 : 11% per annum). The agreement is effec-

tive from 19 June 1996 to 14 June 2008.

The remaining notional principal amounts of the outstanding currency and interest rate swap contract at 31 December were:


2003 2002 2003 2002

Baht Baht Baht Baht

Within 1 year 252,300,000 201,840,000 - -

Later than 1 year

but not later than 5 years 1,261,500,000 1,311,960,000 - -

Later than 5 years - 201,840,000 - -

1,513,800,000 1,715,640,000 - -

(b) Credit risk

The 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. The Group has not experienced any losses on such accounts.

(c) Fair value

The carrying amounts of the following financial assets and financial liabilities approximate to their fair values: cash and cash

equivalents, investments, trade receivables and payables, amounts due from and due to related companies, dividend receivables, other

receivables and payables, short term loans, and long term loans at floating rate. Information on the fair values of long term loans, debentures,

interest rate swap contracts and a currency and interest rate swap contract are detailed below.

The contract amounts and fair values of certain long term loans and debentures are as follows:

31 December 2003


2003 2002 2003 2002

Baht Baht Baht Baht

Long term loans 19,757 14,242 - -

Debentures 8,005 9,685 1,401 1,447

31 December 2002


2003 2002 2003 2002

Baht Baht Baht Baht

Long term loans 22,763 24,302 - -

Debentures 9,681 12,160 2,696 2,852

The fair values of long term loans are based on discounted cash flows using a discount rate based upon market rates at the

balance sheet date.

The fair values of debentures are based on discounted cash flows using a discount rate based upon the market interest rate

available on the latest trading date in the Bond Dealing Center quoted bid price within the balance sheet date.

The fair values of the derivative financial instruments at the balance sheet are as follows:

095A n n u a l R e p o r t 2 0 0 3


28. FINANCIAL INSTRUMENTS (continued)


2003 2002 2003 2002

Million Baht Million Baht Million Baht Million Baht

Favorable (unfavorable) interest rate swaps (435) (627) 14 39

Favorable currency and interest rate swap 608 883 - -

The fair values of interest rate swap and currency and interest rate swap contracts have been calculated by using rates quoted

by the Group's bankers to terminate the contracts at the balance sheet date except for contracts that prohibit early termination. The fair

value of such contract approximates the original contract.

29. RELATED PARTY TRANSACTIONS

Major shareholders of the Company are the Electricity Generating Authority of Thailand (EGAT) and CLP Power Projects

(Thailand) Limited. They hold 25.41% and 22.42%, of the Company's shares, respectively. The remaining Company shares are widely held.

Information on the Company's subsidiaries, associates, and joint ventures is stated in Note 12.

The following material transactions were carried out with related parties:

(a) Sales of electricity


2003 2002 2003 2002

Million Baht Million Baht Million Baht Million Baht

Sales of electricity

- Electricity Generating

Authority of Thailand 13,151 8,963 - -

Subsidiaries of the Company

Two subsidiaries of the Company, which are Rayong Electricity Generating Company Limited and Khanom Electricity Generating

Company Limited, have entered into Power Purchase Agreements (PPAs) with EGAT. The agreements are effective for periods of 15 and 20

years. According to the resolutions 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 as collateral with the subsidiaries lenders under the Master Agreements.

In addition, these two subsidiaries are eligible to take into consideration and receive compensation for exchange rate effects to

adjust the formulae for calculation of electricity sold to EGAT in each month pertaining to "The First Amendment to Power Purchase

Agreements" dated 30 January 1998 over the periods of the PPAs. Compensation for the years ended 31 December 2003 and 2002 amounted

to Baht 1,012 million and Baht 1,153 million 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 Company Limited. To date, the subsidiaries have not entered into such purchase agreements. Therefore, the calculation of

revenues from the portion of energy sales of electricity does not include a calculation of the natural gas cost.

Subsidiaries of Gulf

Three subsidiaries of Gulf have entered into the Power Purchase Agreements (PPAs) with EGAT. According to the agreements,

these subsidiaries must start to sell electricity to EGAT within September 1998, August 1999 and October 2000 with such sales quantity

and electricity rates in compliance with the agreement. These agreements are effective for a period of 21 years each commencing from the

first commercial operation dates. In addition, another subsidiary has also entered into a PPA with EGAT for a period of 25 years. All aforesaid

subsidiaries have pledged bank guarantees as collateral for cancellation of the PPA in the amount of Baht 612 million. These guarantees will

be returned on maturity.

096A n n u a l R e p o r t 2 0 0 3


29. RELATED PARTY TRANSACTIONS (continued)

(b) Service income


2003 2002 2003 2002

For the years ended 31 December Million Baht Million Baht Million Baht Million Baht

Service income


Authority of Thailand 53 29 - -

EGCO Engineering and Service Company Limited has entered into Subcontract for Major Maintenance Agreements with EGAT to

provide major maintenance services, repair services, administrative services, and additional services related to the power plants. The

compensation for such service is calculated based on "Cost plus Basis". The agreements are effective for a period of 6 years commencing

26 January 2001 and 26 July 2002.

(c) Major maintenance expenses


2003 2002 2003 2002

For the years ended 31 December Million Baht Million Baht Million Baht Million Baht

Major maintenance expenses



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 services and additional services related to the subsidiaries' power plants. The price for such services is calculated

under the agreements, based on the "Cost plus basis" and will be adjusted annually according to the Consumer Price Index. The agreements

have been extended for a period of six years, commencing from 7 December 2000 and 19 June 2002. These agreements have been pledged

as collateral with the lenders under the Master Agreements.

(d) Trade receivable from and trade payable to a related party


2003 2002 2003 2002

As at 31 December Million Baht Million Baht Million Baht Million Baht

Trade receivable


Authority of Thailand 1,332 1,722 - -

Outstanding trade receivable as

at 31 December can be analysed

as follows:

Up to 3 months 1,330 1,721 - -

3-6 months 1 - - -

6-12 months- - - -

Over 12 months 1 1 - -

1,332 1,722 - -

Trade payable



097A n n u a l R e p o r t 2 0 0 3



(e) Amounts due from and amounts due to related parties


2003 2002 2003 2002


Amounts due from related parties

Subsidiaries

- Electricity Generating Public Co.,Ltd. 2 - - -

- Rayong Electricity Generating Co., Ltd. - - 10 -

- Khanom Electricity Generating Co., Ltd. 6 - 10 1

- EGCO Engineering and Service Co., Ltd. 9 - 8 1

- TLP Cogeneration Co.,Ltd. - - 5 -

- Roi-Et Green Co., Ltd. - - 2 -

Joint ventures

- EGCO Joint Venture and

Development Co., Ltd. 19 6 1 1

- Amata Power-Esco Service Co., Ltd. - 3 - -

- Conal Holdings Corporation 10 30 - -

Associates

- Amata-EGCO Power Co., Ltd. 11 9 11 9

- Others - 5 3 -

57 53 50 12

Amounts due to related parties

Subsidiary

- Egcom Tara Co., Ltd. - 8 - -

Joint ventures

- EGCO Joint Venture and

Development Co., Ltd. 1 2 - -

- Gulf Electric Public Co., Ltd. - 2 - -

- Conal Holdings Corporation 16 8 - -

17 20 - -

(f) Loan to an associate


2003 2002 2003 2002


Loan to an associate

- Amata-EGCO Power Co., Ltd. 32 32 32 32

The loan to Amata-EGCO Power Company Limited is a long term loan which was given on commercial terms and conditions. The

repayment of principal and interest of these loans is restricted until certain conditions specified in the loan agreements, such as a required

amount of cash reserves, are met.

098A n n u a l R e p o r t 2 0 0 3



(g) Investments in debentures issued by a subsidiary and the Company's debentures held by the subsidiaries and related interests


2003 2002 2003 2002


Investments in debentures

- Khanom Electricity Generating Co., Ltd. - - 53 60

Interest receivable

- Khanom Electricity Generating Co., Ltd. - - - 1

The Company's debentures held by

- Rayong Electricity Generating Co., Ltd. - - 14 27


Interest payable

- Rayong Electricity Generating Co., Ltd. - - - 1


For the years ended 31 December

interest income on investments in

debentures of


Interest expenses on the Company's

debentures held by

- Rayong Electricity Generating Co., Ltd. - - 2 3


30. COMMITMENTS AND CONTINGENT LIABILITIES

Commitments and contingent liabilities of the Company

(a) As at 31 December 2003, the Company has commitments under Sponsor Support Agreements, which were made in respect of

loans of associates and a joint venture and performance bonds of subsidiaries on behalf of the Company totalling Baht 2,328 million and

Baht 5 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 extra return in the form of interest income and increased financial stability. As at 31 December 2003, the reserve

fund balance amounted to Baht 500 million. The Company is in the process of making an additional reserve in the amount of Baht 83

million.

Commitments and contingencies of joint ventures

(c) The joint venture of Gulf is obliged to provide capital amounting to Baht 150 million for the establishment of two compensation

funds as insurance against any adverse environmental impact from the power plant throughout the project period. These funds will be

managed by the Tripartite Committee, and these funds will be expired when the joint venture ceases the power plant project.

Significant agreements

Power Purchase Agreements (PPAs) and Energy Conversion Agreements (ECAs)

The subsidiaries of the Company, of Gulf and of EGCO JD have entered into the Power Purchase Agreements (PPAs) with the

Electricity Generating Authority of Thailand (EGAT) for periods between 15-25 years. According to the PPAs, these subsidiaries have to

provide securities, totalling Baht 659 million, in the form of bank guarantees against the early cancellation of, and conformity with, the

agreements. The collateral is to be returned to such subsidiaries upon the expiry of the agreements and the commercial operation date to

EGAT, respectively.

Under the ECAs with the National Power Corporation (NPC) entered into by the subsidiaries of Conal which are effective for

periods of 10-18 years, a subsidiary of Conal shall transfer to NPC all its rights, title and interest in the power stations without any

compensation upon the expiration of the specified periods in the agreements. The ECAs of another two subsidiaries may be renewed upon

the sole option of NPC. All aforesaid subsidiaries are eligible to receive the compensation amounts from NPC, in the event of amendment,

modification or repeal of any Philippines laws or any government regulations that will materially reduce, prejudice or otherwise adversely

affect these subsidiaries' interest in the project or the power plant/ station, and/ or these subsidiaries' economic return on their investments.

099A n n u a l R e p o r t 2 0 0 3


30. COMMITMENTS AND CONTINGENT LIABILITIES (continued)

Water Supply Agreement

A subsidiary of the Company has entered into the Water Supply Agreement with the Provincial Waterworks Authority (PWA) for

a period of 30 years. Under the agreement, such subsidiary has to produce water for sale to Ratchaburi and Samutsongkram Waterworks.

PWA has the obligation to purchase water at the minimum volume and price as agreed.

Fuel Purchase Agreements

Subsidiaries of the Company, of Gulf and of EGCO JD have entered into the Gas Purchase Agreements with PTT Public Company

Limited. These agreements are effective for periods between 16-21 years and can be extended for another 4-5 years.

A subsidiary of the Company has entered into the Fuel Supply Agreement (Rice Husk) with a related company. The agreement is

effective for a period of 21 years.

A subsidiary of Gulf has entered into the Fuel Supply Agreement with one of its shareholders. The agreement is effective for a

period of 25 years.

Long term Parts Agreements

The two subsidiaries of the Company have entered into the Long term Parts Agreements with a supplier. Under the agreements,

the subsidiaries have committed to purchase a number of gas turbines as specified in the agreements. The agreements, totalling US Dollars

58 million, are each effective for a period of 6 years. As at 31 December 2003, the total outstanding contract balances were US Dollars 21

million.

Operation and Maintenance Agreements

A subsidiary of the Company has entered into an Operation and Maintenance Agreements for gas turbines with a customer. The

agreement, totalling Baht 20 million is effective for a period of 4 years. In addition, such subsidiary has also entered into the Supply of Spare

parts and Maintenance Services with Republic of Sudan National Electricity Corporation, totalling US Dollars 8 million, which is effective

from the execution date to March 2007.

The subsidiaries of Gulf have entered into the long term spare parts agreements with a supplier. The agreements, totalling US

Dollars 12 million and Baht 50 million, are each effective for a period of 12 years. As at 31 December 2003, the total outstanding contract

balances were US Dollars 9 million and Baht 38 million.

31. INTERESTS IN JOINT VENTURES

Interest in EGCO Joint Venture and Development Company Limited

EGCO Joint Venture and Development Company Limited is a joint venture between the Company and Unocal Bang Pakong

Limited (UBP). The joint venture is governed by the Joint Venture Agreement in which the Group has a 50% interest as described in Note 12.

Interest in Gulf Electric Public Company Limited

Gulf Electric Public Company Limited is joint venture between the Company and Electric Power Development Company Limited

(EPDC). The joint venture is governed by the Joint Venture Agreement in which the Group has a 50% interest as described in Note 12.

Interest in Conal Holdings Corporation

Conal Holdings Corporation (Conal) is joint venture between the Company and Alson Consolidated Resource, Inc. The joint venture

is governed by the Joint Venture Agreement in which the Group has a 40% interest as described in Note 12.

The following amounts represent the Group's share of the assets, liabilities, revenues and expenses of the joint ventures included

in the consolidated financial statements ended 31 December:

2003

EGCO Joint Venture and Gulf Electric

Development Public Conal Holdings

Company Limited Company Limited Corporation

Million Baht Million Baht Million Baht

Balance sheets

Current assets 150 1,165 882

Non-current assets 751 5,676 1,279

Current liabilities (56) (1,074) (318)

Non-current liabilities (297) (3,474) (1,043)

Net assets 548 2,293 800

100A n n u a l R e p o r t 2 0 0 3


31. INTERESTS IN JOINT VENTURES (continued)


For the year ended 31 December 2003 Million Baht Million Baht Million Baht

Profit and Loss

Revenues 339 2,682 707

Expenses 199 2,314 524

Net profit 140 368 183

Joint venture proportion (%) 50 50 40

2002

EGCO Joint Venture and Gulf Electric

Development Public Conal Holdings

Company Limited Company Limited Corporation

Million Baht Million Baht Million Baht

Balance sheets

Current assets 165 1,376 897

Non-current assets 702 5,469 1,616

Current liabilities (60) (1,421) (298)

Non-current liabilities (343) (3,453) (1,382)

Net assets 464 1,971 833


For the year ended 31 December 2003 Million Baht Million Baht Million Baht

Profit and Loss

Revenues 299 940 773

Expenses 194 820 602

Net profit 105 120 171

Joint venture proportion (%) 50 50 40

32 PRIVATISATION

Thailand

On 9 September 2003, the Cabinet had finalised the resolution for restructuring Electricity Supply Industry (ESI) by having the

"Enhanced Single Buyer" model instead of the "Power Pool" model. In the new ESI of "Enhanced Single Buyer" Model, the regulatory body

will be set up under Ministry of Energy to regulate the power sector efficiently. It is expecting that the new structure of ESI and the

establishment of regulatory body will be completed in 2004. Furthermore, the Cabinet has resolved that EGAT will be privatised as a whole

and listed in the Stock Exchange of Thailand (SET) by the second quarter of 2004. EGAT shall retain and operate both generation and

transmission systems as well as system operator. As at 31 December 2003, the effects of the laws on the Group cannot presently be determined.

Philippines

RA No. 9136, otherwise known as "Electricity Power Industry Reform Act of 2001" (the Act) was effective on 26 June 2001,

providing for the privatisation of National Power Corporation (NPC) and the restructuring of the electric power industry. Subsequently,

additional laws with regard to the NPC privatisation were announced and effective on 22 March 2002. Such laws are currently in the process

of being complied with the rules and regulations stipulated in the Act. In November 2003, the electricity market corporation entity was

incorporated to undertake the preparatory work and initial operation of the wholesales electricity spot market and to act as its governing

body. As at 31 December 2003, the effects of the laws on the Group cannot presently be determined.

egco 03

Documents

manufacturersholding

head office egco tower

khanom electricity

site office

r e p o r t

power generator

rayong highway

amphur muang