Management Discussion and Analysis

For the Financial Results of Quarter 2 Year 2012 Ended June 30, 2012

Note: This Management Discussion and Analysis (MD&A) was made to disclose information and the vision of the management in order to assist investors to better understand the company's financial status and operation. It also supports the "Good Corporate Governance Project" of the Securities and Exchange Commission (SEC).

An English version of the MD&A has been prepared from the Thai version. In the event of a conflict or a difference in interpretation between the two languages, the Thai version shall prevail.

The objective of this MD&A is to present the information and the explanation of financial status and operating results as of the date hereof. However, the information provided in this MD&A may vary if any factors or situation are changed in the future; the investors are, therefore, required to have their own discretion regarding the usage of this information for any purpose. For further detail, please contact Investor Relations Section of the Electricity Generating Public Company Limited at Tel: 662-998-5145-8 or Email: ir@egco.com

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Management Discussion and Analysis 1. Executive Summary

1.1 Significant events for April – June, 2012 are summarized as below: - On May 11, 2012, EGCO has entered into the definitive agreement to acquire an

additional 45.875% indirect ownership interest in Quezon Power (Philippines) Limited Co. (Quezon) and 100% ownership interest in InterGen Management Services (Philippines), Ltd. (IMS). Quezon owns, operates and maintains a 503 MW (gross) coal fired electric generation and transmission facility in the Republic of the Philippines. IMS provides project management and administrative services and support to Quezon under a long-term Project Management Service Agreement. The acquisition were completed on June 11, 2012.

- On May 15, 2012, EGCO invested in a Biodiesel Plant Project through the acquisition of 50% stakes in Absolute Power P Co., Ltd. (APPC). The Biodiesel Plant is located in Rojana Industrial Park, Rayong provice. The total capacity of this project was 300,000 litres/day (100,000 tons/year). The project has operated since October 2011.

- On May 23, 2012, EGCO acquired 99.99% stakes in SPP Two Company Limited (SPP2) from SunEdison Energy Holding (Singapore) Pte. Ltd. SPP2 owns and develops the solar power plant project with the capacity of 8 MW. SPP2, located in Saraburi province, has the PPA with Provincial Electricity Authority (PEA) under the the very small power purchase scheme. The project is subsidized with an adder of 8 baht per KWh for 10 years from the Power Department Fund Management Division, Office of the Energy Regulatory Commission. The commercial operation was on May 2, 2012. The acquisition were completed on June 8, 2012.

- On June 18, 2012, EGCO acquired 99.99% stakes in SPP Five Company Limited (SPP5) from SunEdison Energy Holding (Singapore) Pte. Ltd. SPP5 owns and develops the solar power plant project with the capacity of 8 MW. SPP5, located in Roi Et province, has the PPA with PEA under the the very small power purchase scheme. The project is subsidized with an adder of 8 baht per KWh for 10 years from the Power Department Fund Management Division, Office of the Energy Regulatory Commission. The commercial operation was on June 22, 2012. The acquisition were completed on June 28, 2012.

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1.2 Business overview EGCO Group has invested in the Independent Power Producer (IPP), Small

Power Producer (SPP), Very Small Power Producer (VSPP), Biodiesel (BIO), Operating and Maintenance (O&M), Management and Administrative Services (Management Services) and Rayong power plant as an operating company, details of each plant are as follows:

(1) Subsidiaries which can be categorized into 2 businesses: - Power Generation Khanom Electricity Generating Co., Ltd. (KEGCO) Quezon Power (Philippines) Limited Co. (Quezon)

IPP IPP

EGCO Cogeneration Co., Ltd. (EGCO Cogen) SPP Roi-Et Green Co., Ltd. (Roi-Et Green) SPP2 Co., Ltd. (SPP2) SPP3 Co., Ltd. (SPP3) SPP4 Co., Ltd. (SPP4) SPP5 Co., Ltd. (SPP5) Yanhee EGCO Holding Co., Ltd. (Yanhee) which invested in

Solarco Company Limited (Solarco) Theppana Wind Farm Co., Ltd. (Theppana)

SPP VSPP VSPP VSPP VSPP Holding Co. VSPP VSPP

- Others EGCO Engineering and Service Co., Ltd. (ESCO), which invested in

O&M

Egcom Tara Co., Ltd. (Egcom Tara) Water Pearl Energy Philippines Operating Inc. (PEPOI) InterGen Management Services (Philippines), Ltd. (IMS)

O&M Management Services

(2) Joint Ventures which can be categorized into 2 businesses: - Power Generation Gulf Electric Public Company Limited (GEC), which invested in Holding Co.

Gulf Cogeneration Co., Ltd. (GCC) SPP Nong Khae Cogeneration Co., Ltd. (NKCC) SPP Samutprakarn Cogeneration Co., Ltd. (SCC) SPP Gulf Yala Green Co., Ltd. (GYG) SPP Gulf Power Generation Co., Ltd (GPG) IPP

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BLCP Power Co., Ltd. (BLCP) IPP Conal Holdings Corporation (Conal), which invested in Holding Co. Western Mindanao Power Corporation (WMPC) IPP Southern Philippines Power Corporation (SPPC) IPP Alto Power Management Coporation (APMC) O&M Nam Theun 2 Power Co., Ltd. (NTPC) IPP Natural Energy Development Co., Ltd. (NED) G-Power Source Co., Ltd. (GPS)

SPP VSPP

- Others Absolute Power P Co., Ltd. (APPC) BIO

(3) Other investments Other investments, which are long-term financial investment in marketable

securities : - EGCO holds 18.72% of the outstanding shares in East Water Resources

Development and Management Public Company Limited (East Water). - EGCO holds 12.50% of the outstanding shares in Xayaburi Power

Company Limited (XPCL).

As of June 30, 2012, EGCO Group’s portfolio comprises 20 operating plants with total contracted capacity with Electricity Generating Authority of Thailand (EGAT) under long-term PPAs of 3,862 MW. This resulted in EGCO Group’s market share in Thailand of 12% from a total installed capacity of 31,451 MW.

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2. Report and Analysis of the Operating Results The analysis of the financial statements of EGCO is as follows:

Quarter 2 of 2012, Ended June 30, 2012 Unit : Million Baht Power Generation Others Total Change Quarter 2 Quarter 2 Quarter 2 Increase/

% 2011 2012 2011 2012 2011 2012 (Decrease) Total Revenues 1,800 2,262 224 320 2,024 2,582 558 28% Total Expenses (1,912) (2,309) (154) (215) (2,066) (2,524) 458 22% Share of Profit (Loss) 1,826 1,926 - - 1,826 1,926 100 5% NCI* before FX (11) 14 (9) (12) (20) 2 22 110% Profit (Loss) before FX 1,703 1,893 61 93 1,764 1,986 222 13% FX (22) (19) 7 (4) (15) (23) 8 53% Profit (Loss) after FX 1,681 1,874 68 89 1,749 1,963 214 12% Gain on business combination - 4,310 - - - 4,310 4,310 - Net profit (loss) 1,681 6,184 68 89 1,749 6,273 4,524 259% * NCI: Non-Controlling Interests

Profit from operating of EGCO Group before FX for quarter 2 of 2012 ended June 30, 2012 was 1,986 million baht, an increase 222 million baht compared to the same period of last year. This was mainly due to an increase in the profit before FX in power generation business of 190 million baht and in other businesses of 32 million baht.

The profit before FX in power generation business increased 190 million baht mainly due to an increase in the profit of NTPC, BLCP, Quezon, Rayong power plant and Roi-Et Green of 97 million baht, 94 million baht, 69 million baht, 28 million baht and 15 million baht, respectively. Meanwhile, KEGCO and EGCO Cogen reported a decrease in the profit of 104 million baht and 73 million baht, respectively.

The profit before FX in other businesses increased 32 million baht mainly due to an increase in the profit of ESCO of 25 million baht.

EGCO also had extraordinary item in quarter 2 of 2012 of 4,310 million baht was from the gain on revalue of 52.125% investment in Quezon to fair value, in accordance with accounting standard, which EGCO had held prior to the purchase of 45.875% investment. Including loss on foreign exchange of 23 million baht, EGCO Group’s profit before FX would have been 6,273 million baht, an increase of 4,524 million baht from the same period of last year.

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2.1 The Analysis of the Operating in Power Generation business Profit (loss) before FX for quarter 2 of 2012 ended June 30, 2012, the operating in power generation business increased 190 million baht. This was mainly due to an increase in profit from EGCO, NTPC, BLCP, Quezon, Rayong Power Plant and Roi-et Green while the profit in KEGCO and EGCO Cogen decreased. The details are as follows: NTPC: Unit : Million Baht Quarter 2 2011 2012 Increase/(Decrease) % Electricity Revenue 614 805 191 31% Other income 5 3 2 40% Total revenues 619 808 189 31% Cost of sale (190) (203) 13 7% Other expenses (219) (298) 79 36% Total expenses (409) (501) 92 22% Profit (Loss) before FX 210 307 97 46%

- NTPC’s profit (loss) before FX increased 97 million baht. This was mainly due to an increase in EP of 191 million baht because higher electricity rate and higher generation compared to the same period of last year. However, an increase in other expenses of 79 million baht mainly due to interest expenses and an increase in cost of sales of 13 million baht because the maintenance schedule was postponed from quarter 1 to quarter 2.

BLCP: Unit : Million Baht Quarter 2 2011 2012 Increase/(Decrease) % Electricity Revenue 2,404 2,513 109 5% Other income 35 11 (24) (69%) Total revenues 2,439 2,524 85 3% Cost of sale (1,555) (1,561) 6 1% Other expenses (253) (238) (15) (6%) Total expenses (1,808) (1,799) (9) (1%) Profit (Loss) before FX 631 725 94 15%

- BLCP’s profit (loss) before FX increased 94 million baht, mainly due to an increase in EP and AP of 86 million baht and 23 million baht, respectively, which resulted from higher generation compared to the same period of last year. The decline in other expenses of 15 million baht mainly due to interest expenses, while a decline in other income of 24 million baht and an increase in cost of sale of 6 million baht.

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Quezon: Unit : Million Baht Quarter 2 2011 2012 Increase/(Decrease) % Electricity Revenue 1,427 1,903 476 33% Other income - - - - Total revenues 1,427 1,903 476 33% Cost of sale (814) (1,139) 325 40% Other expenses (348) (430) 82 24% Total expenses (1,162) (1,569) 407 35% Profit (Loss) before FX 265 334 69 26%

- Quezon’s profit (loss) before FX increased 69 million baht. This was mainly due to an additional shares of 45.875%, which resulted in an increase in electricity revenue of 476 million baht. However, cost of sale and other expenses also increased at 325 million baht and 82 million baht, respectively. The higher other expenses were mainly from interest expenses and income tax.

Rayong Power Plant: Unit : Million Baht Quarter 2 2011 2012 Increase/(Decrease) % Electricity Revenue 562 553 (9) (2%) Other income 13 12 (1) (8%) Total revenues 575 565 (10) (2%) Cost of sale (424) (394) (30) (7%) Other expenses (62) (54) (8) (13%) Total expenses (486) (448) (38) (8%) Profit (Loss) before FX 89 117 28 31%

- Rayong power plant’s profit (loss) before FX increased 28 million baht. This was mainly due to the decline in fuel cost of 24 million baht due to an improving of the effective operation of the plant. The decline was from other expenses and major maintenance costs of 8 million baht and 6 million baht, respectively. However, EP increased 28 million baht due to higher generation compared to the same period of last year, while AP declined 37 million baht, according to the PPA.

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Roi-et Green: Unit : Million Baht Quarter 2 2011 2012 Increase/(Decrease) % Electricity Revenue 71 94 23 32% Other income 2 3 1 50% Total revenues 73 97 24 33% Cost of sale (34) (44) 10 29% Other expenses (23) (22) (1) (4%) Total expenses (57) (66) 9 16% Profit (Loss) before FX 16 31 15 94%

- Roi-et Green’s profit (loss) before FX increased 15 million baht. This was mainly due to an increase in EP of 23 million baht due to an increase of bunker oil price according to the PPA. However, maintenance costs and fuel cost increased 7 million baht and 3 million baht, respectively.

KEGCO: Unit : Million Baht Quarter 2 2011 2012 Increase/(Decrease) % Electricity Revenue 594 404 (190) (32%) Other income 3 2 (1) (33%) Total revenues 597 406 (191) (32%) Cost of sale (440) (381) (59) (13%) Other expenses (93) (65) (28) (30%) Total expenses (533) (446) (87) (16%) Profit (Loss) before FX 64 (40) (104) (163%)

- KEGCO’s profit (loss) before FX decreased 104 million baht. This was mainly due to the decline in AP, according to the PPA, of 185 million baht. However, maintenance costs decreased by 59 million baht and other expenses decreased by 28 million baht mainly due to interest expenses and income tax.

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EGCO Cogen: Unit : Million Baht Quarter 2 2011 2012 Increase/(Decrease) % Electricity Revenue 503 288 (215) (43%) Other income 2 2 - - Total revenues 505 290 (215) (43%) Cost of sale (449) (334) (115) (26%) Other expenses (32) (5) (27) (84%) Total expenses (481) (339) (142) (30%) Profit (Loss) before FX 24 (49) (73) (304%)

- EGCO Cogen’s profit (loss) before FX decreased 73 million baht, mainly due to plant’s interruption from a damage of plant’s equipment on February 11, 2012. This led to the decline in EP and AP of 155 million baht and 60 million baht, respectively. However, fuel cost and maintenance costs decreased by 98 million baht and 17 million baht, respectively. Other expenses also decreased 27 million baht, due to income tax.

GEC (GCC, NKCC, SCC, GYG): Unit : Million Baht Quarter 2 2011 2012 Increase/(Decrease) % Electricity Revenue 945 886 (59) (6%) Other income 12 8 (4) (33%) Total revenues 957 894 (63) (7%) Cost of sale (814) (783) (31) (4%) Other expenses (69) (80) 11 16% Total expenses (883) (863) (20) (2%) Profit (Loss) before FX 74 31 (43) (58%)

- GEC’s profit (loss) before FX decreased 43 million baht, mainly due to NKCC plant’s interruption from a damage of plant’s equipment on April 7, 2012. This led to the decline in electricity revenue and cost of sale of 59 million baht and 31 million baht, respectively.

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Conal: Unit : Million Baht Quarter 2 2011 2012 Increase/(Decrease) % Electricity Revenue 143 157 14 10% Other income 36 11 (25) (69%) Total revenues 179 168 (11) (6%) Cost of sale (52) (62) 10 19% Other expenses (79) (88) 9 11% Total expenses (131) (150) 19 15% Profit (Loss) before FX 48 18 (30) (63%)

- Conal’s profit (loss) before FX decreased 30 million baht, mainly due to a decline in other income of 25 million baht because of the proceeds from an insurance company compared to the same period of last year. Cost of sale and other expenses increased 10 million baht and 9 million baht, respectively. A rise in other expenses was due to interest expenses.

EGCO and Other Subsidiaries in Power Generation business: Unit : Million Baht

EGCO SPP2 SPP3 Quarter 2 Quarter 2 Quarter 2 2011 2012 2011 2012* 2011 2012**

Electricity Revenue - - - 14 - 45 Other income 50 56 - - - 1 Total revenues 50 56 - 14 - 46 Cost of sale - - - (5) - (14) Other expenses (366) (311) - (7) - (20) Total expenses (366) (311) - (12) - (34)

Profit (Loss) before FX (316) (255) - 2 - 12 * SPP2 : EGCO acquired on May 23, 2012 ** SPP3 : EGCO acquired on February 29, 2012

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EGCO and Other Subsidiaries in Power Generation business (continued): Unit : Million Baht SPP4 Yanhee Total Change

Quarter 2 Quarter 2 Quarter 2 Increase / 2011 2012* 2011 2012** 2011 2012 (Decrease) %

Electricity Revenue - 35 - - - 94 94 - Other income - - - - 50 57 7 14% Total revenues - 35 - - 50 151 101 202% Cost of sale - (11) - - - (30) 30 Other expenses - (11) - (14) (366) (363) (3) (1%) Total expenses - (22) - (14) (366) (393) 27 7%

Profit (Loss) before FX - 13 - (14) (316) (242) (74) (23%) * SPP4 : EGCO acquired on January 23, 2012 ** Yanhee : EGCO acquired on February 27, 2012

Other Joint Ventures in Power Generation business: Unit : Million Baht GPG NED GPS Total Change Quarter 2 Quarter 2 Quarter 2 Quarter 2 Increase / 2011 2012 2011* 2012 2011 2012** 2011 2012 (Decrease) %

Electricity Revenue

2,966 3,790 - 103 - 54 2,966 3,947 981 33%

Other income 13 16 - - - - 13 16 3 23% Total revenues 2,979 3,806 - 103 - 54 2,979 3,963 984 33% Cost of sale (2,234) (3,072) - (26) - (16) (2,234) (3,114) 880 39% Other expenses (144) (131) (4) (33) - (24) (148) (188) 40 27% Total expenses (2,378) (3,203) (4) (59) - (40) (2,382) (3,302) 920 39% Profit (Loss) before FX

601 603 (4) 44 - 14 597 661 64 11%

* NED : The commercial operation was on December 22, 2011 ** GPS : EGCO acquired on March 23, 2012

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2.2 The Analysis of the Operating in Other businesses Profit (loss) before FX for quarter 2 of 2012 ended June 30, 2012, the operating in other businesses increased 32 million baht. This was mainly due to ESCO and other subsidiaries as follows: ESCO: Unit : Million Baht Quarter 2 2011 2012 Increase/(Decrease) % Service income 90 170 80 89% Other income 2 3 1 50% Total revenues 92 173 81 88% Cost of sale (65) (117) 52 80% Other expenses (11) (15) 4 36% Total expenses (76) (132) 56 74% Profit (Loss) before FX 16 41 25 156%

- ESCO’s profit (loss) before FX increased 25 million baht, mainly due to the profit from maintenance services, operation and maintenance services and engineering & energy services increased 10 million baht, 8 million baht and 7 million baht, respectively.

Other Subsidiaries in Other business: Unit : Million Baht EGCOM

TARA PEPOI IMS Total Change

Quarter 2 Quarter 2 Quarter 2 Quarter 2 Increase / 2011 2012 2011 2012 2011 2012* 2011 2012 (Decrease) %

Water Revenue 69 74 - - - - 69 74 5 7% Service income - - 62 68 - 3 62 71 9 15% Other income 1 2 - - - - 1 2 1 100% Total revenues 70 76 62 68 - 3 132 147 15 11% Cost of sale (19) (20) (37) (40) - (2) (56) (62) 6 11% Other expenses (24) (21) (7) (12) - - (31) (33) 2 6% Total expenses (43) (41) (44) (52) - (2) (87) (95) 8 9% Profit (Loss) before FX

27 35 18 16 - 1 45 52 7 16%

* IMS : EGCO acquired on May 11, 2012

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The six-month period ended June 30, 2012 Unit : Million Baht Power Generation Others Total Change Increase/

% 2011 2012 2011 2012 2011 2012 (Decrease) Total Revenues 3,641 4,005 348 675 3,989 4,680 691 17% Total Expenses (3,659) (3,985) (250) (489) (3,909) (4,474) 565 14% Share of Profit (Loss) 2,943 3,278 - - 2,943 3,278 335 11% NCI* before FX (28) 9 (17) (20) (45) (11) (34) (76%) Profit (Loss) before FX 2,897 3,307 81 166 2,978 3,473 495 17% FX (25) 184 20 (4) (5) 180 185 3,700% Profit (Loss) after FX 2,872 3,491 81 166 2,978 3,653 675 23% Gain on business combination - 4,310 - - - 4,310 4,310 - Net profit (loss) 2,872 7,801 101 162 2,973 7,963 4,990 168% * NCI: Non-Controlling Interests

3. Report and Analysis of Cash Flow Position

As at June 30, 2012, the ending balance of cash and cash equivalents was 4,978 million baht, which was 3,424 million baht lower than the amount as at December 31, 2011. The details of the sources and uses of funds are as follows:

- Net cash received from operating activities was 728 million baht, mainly from operating activities of 1,698 million baht and payment for working capital of 970 million baht.

- Net cash payment for investing activities was 8,701 million baht mainly due to

The investment in subsidiaries and joint ventures, QUEZON, GPS, SPP5, SPP3, SPP2, SPP4, NED, Absolute, Yanhee and Theppana totaled 13,200 million baht.

Loans to a related party totaled 428 million baht. Cash payments in purchases of equipment totaled 57 million baht. Meanwhile, the dividend received from joint ventures and other company totaled

3,017 million baht and proceeds from short-term investment and dividends received from decreasing in registered share capital from joint ventures of 1,607 million baht and 376 million baht, respectively.

- Net cash received from financing activities was 4,549 million baht. This was mainly due to proceeds from short-term loans of 6,326 million baht. Meanwhile, dividend payment to shareholders and the interest payments were reported at 1,481 million baht and 292 million baht, respectively.

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4. Financial ratios Quarter 2 Profitability Ratios 2011 2012 Gross Profit Ratio 24.90% 26.57% Operating Profit Ratio before FX* 49.00% 45.61% Profit Ratio before FX* 16.60% 16.42% Profit before FX per share (Baht)* 3.35 3.77 Other Financial Ratios 2011 2012 Debt to equity ratio (Time) 0.25 0.56 Book value per share (Baht) 110.13 125.44 Current ratio (Time) 11.72 1.92 Quick ratio (Time) 6.69 0.84

* Excluding gain on business combination