รายงานประจำปี EastWater

EVERY DROP OF WATER, SHAPES LIFE

Eastern Water Resources Development and Management Public Company Limited Eastwater Building 1 Vipavadeerangsit Soi 5 Vipavadeerangsit Rd. Jomphol Jatujak Bangkok 10900 Tel : 02-272-1600 Fax : 02-272-1601-3 www.eastwater.com

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Contents Highlights of the year Vision Mission Message from Chairman Board of Directors and advisors.

Corporate executives Organization Structure Stakeholders Satisfaction Industry and Competition Business Profile and subsidiary shareholding ratio Risk Factors Management Discussion and Analysis for the accounting year 2010 Good Corporate Governance Definition of Independent Directors Internal Control Corporate Governance Report of the Audit Committee Good Corporate GovernanceReport of the Corporate Governance Committee Report of the Board of Directors’ Responsibility toward Financial Statement Report Auditor’s Report Balance Sheets Notes to consolidated and company financial statements Related Parties Transactions The Remuneration of Auditors General Information The List of Top 10 Major Shareholders Dividend Payment Policy

Highlights of the year Water distribution capacity and raw water consumption volume during 2003-2010

3 months

Oct-Dec

2003 2004 2005 2006 2007 2008 2008 20091 20101 156.52 177.65 190.10 199.36 211.20 227.69 51.86 221.27 244.88 328.00 343.00 423.00 423.00 473.00 473.00 473.00 473.00 473.002

Unit : Million Cubic Meters/Year Total water consumption Water distribution capacity Water distribution capacity to water consumption ratio (Unit : Times) 2.10 1.93 2.23 2.12 2.24 2.08 2.28 2.28 1 Accounting period from 1 January – 31 December 2 The raw water pipeline construction project of Nong Pla Lai - Map Ta Phut, line 3, which under construction and scheduled for completion in 2011 in order to increase of water distribution capacity of 105.00 million cubic metres per year.

1.93

Financial Ratio

Company Financial Statement Consolidated Financial Statement 3 months

3 months

Description Oct-Dec

Oct-Dec

2007 2008 2008 20091 20101 2007 2008 2008 2009 20101 Book value per share 3.35 3.47 3.54 3.63 3.74 3.50 3.59 3.68 3.81 3.98 0.33 0.31 0.08 0.44 0.50 0.33 0.34 0.09 0.49 0.55 Net profit per share 2 0.25 0.25 - 0.35 0.13 0.25 0.25 - 0.35 0.132 Dividend per share 3 30.20 27.873 4 Net profit to total income 22.98 25.30 25.10 30.92 19.86 18.13 23.45 23.03 28.04 19.444 3 12.83 13.413 Return on shareholders 4 equity 9.58 10.09 8.68 12.20 13.48 9.36 10.70 9.66 12.96 14.034 3 9.66 9.463 4 Return on assets 4.86 5.87 5.79 8.63 9.77 4.49 5.97 6.26 8.73 9.564 Debt to equity ratios 0.97 0.52 0.48 0.35 0.41 1.09 0.56 0.53 0.44 0.49 1 Accounting period from 1 January – 31 December 2 The interim dividend payment announced in accordance with the resolution of the Board of Directors’ Meeting No. 8/2010 on August 23, 2010.

3 Excluding the revenue, cost, profit and tax effects related to the project construction of pipeline connecting Prasae reservoir to Klong Yai in Rayong Province from the calculation in order to compare in part of the Company’s operating results 4reservoir Including the revenue, cost, profit and tax effects related to the project construction of pipeline connecting Prasae reservoir to Klong Yai reservoir in Rayong Province

Comparison of total revenue

and net profit in 2007 – 2010 (million Baht)

Source of income (million Baht)

Do you Know ?

Water on Earth, Ocean store most of the earth’water of which is frozen

water is fresh water

Water on Earth, million

cubic miles

Is sea water Is groundwater in aquifers Is frozen in polar ice caps

million

cubic miles

million

cubic miles

million

cubic miles

Vision

To be the valued leader of water management for economic development and longevity of society following the concept of “Water solution for all”.

Mission

• To develop and manage tap water system, water reuse system, and waste water management system with appropriate technology and cost • To be the regional center of water technology knowledge • To encourage pride among staff as the leader of the water management • To perform business with social responsibility toward society and local communities with environmental care (Corporate Social Responsibility) • To maintain business growth with transparency and integrity • To provide water source supply and raw water pipeline network management for consumption and industry with sufficiency in accordance with vision and mission by 4 stipulated strategies covering 4 important aspects – finance and investment, stakeholders, management, and corporate learning development as well as information technology with the details as follows:

1. Finance and Investment 1.1 Increase of main revenues and continuity of bussiness development 1.2 Appropriate cost control 1.3 Financial management for investment 1.4 Related and other businesses development 1.5 Oversea businesses and alliances development 1.6 Appropriate raw water price policy with the cost

2. Stakeholders 2.1 Satisfaction for all stakeholders 2.2 Corporate image enhancement

3. Management 3.1 Water resource and water reserve resource provision 3.2 Increase of water volume distribution 3.3 Stable maintenance and water pumping efficiency enhancement 3.4 Good corporate governance 3.5 Assets management to achieve utmost efficiency and effectiveness 3.6 Corporate structure arrangement to connect the group of companies

4. Corporate learning development and information technology 4.1 Knowledge and skill development as well as staff professional encouragement with appropriate compensation 4.2 Support of staff’s quality of life and office’s environment 4.3 Integration and development of Enterprise System developments 4.4 Stable and efficient maintenance of computer system and network of the group companies

Do you Know ?

In one day Leaking tabs can waste up to

a person can use up to litres of water.

litres of water

per day.

A person

consume 2 litres

of water daily to live

about

liters

of whole life.

At least litres of water

is needed to grow or produce food

for a family of four.

A

cow needs toatdrink least

to produce

3.5

litres of milk.

Producing

Chicken

meat

from

one chicken

litres of water

uses litres of water.

Message from

Chairman

In 2010, the operating results of Eastern Water Resources Development and Management Pcl. showed continuous business growth with the focus on the efficiency of internal management and systematic problem solving to balance of all stakeholders’ benefits as well as to create vision of progression in the direction of sustainability business opportunity.

The Company has maintained its efficient internal management in terms of operating results with cost control strategy such as electricity power reduction from water pumping, financial cost management to reduce interest expenses, and staff’s expenditure budget control, etc. As a result, it helped support the Company’s better net profit from 2009 which led to the Company’s interim dividend payment of 2010 fiscal year. In addition, the Company has continuously developed with efficiency, such as preparation for the change of Thai Accounting Standards to new accounting international standards, establishment of Knowledge Management Center, and development of Enterprise Resources Planning system for data management and systematic Company’s operation support, personnel development for definite candidate, including prior informed information provision to consortium companies with equality, which is beneficial to efficiency management and important project cost following the Company’s operating plans The Company is well realized that the Company’s business stability depends mainly on shared and conserved natural resources. Thus, the Company’s water management plan is performed with demand and supply balance, starting with the support of the Royal Rain Making to provide sufficient and seasonal rain in the Eastern Thailand, including the Company’s water pumping system with complete efficiency to reduce dependency on natural water resources by turning water in the rainy season to store at the reservoir and raw water is reserved in ponds of the Company to provide sufficient raw water pumping during the drought, and raw water pumping capability enhancement with the construction project of the third Nong Plalai-Map Ta Phut pipeline to serve the future growing demand within10 year-period. In terms of the supply, the Company, in cooperation with the Ministry of Natural Resources and Environment organized the “3Rs Innovation” project award to encourage the innovation of water consumption reduction, water reuse, and water recycle (Reduce, Reuse, Recycle) with effectiveness and of which the result can be extended to be the model of 3s innovation for actual practice of communities.

Moreover, the Company’s persistence and determination to social and environmental development by providing budget to support projects and staff’s participation has aimed to create accurate understanding of the Company’s business, continual good relationship with local communities and government agencies, and to reduce any conflicts which may occur in the future. In 2010, the Company initiated several important activities such as “Volunteer Minds” project which promoted the participation among staff to learn the community’s ways of life and create good relationship with the community, “Reduce expenses, Increase Income, Follow Economic Sufficiency” project which focused on self-sufficiency of communities within 36 project areas, following the Royal’s initiation of economic sufficiency by providing knowledge and professional advice to communities, “Village’s Tap Water” project which served the community’s need of basic factors, and “East Water Young Leader Project” which created community’s new generation network to provide the importance of water resource awareness. All of these projects are continuous important projects to enhance the “giving” level to the society as the Company is to be the social corporate.

Moreover, the shareholders are the main factor of the Company’s last year accomplishment. Thus, the Company will maintain the policy of creating good relationship with the shareholders at all occasions, either at the business meeting with the major shareholders of the Company, providing Company Visit, continuous offering individual shareholders’ right to propose meeting agendas and candidates to be appointed as the Company’s Directors, or the participation of the Company’s major shareholders’ founding anniversary.

Lastly, the Board of Directors of the Company would like to thank the shareholders and all stakeholders, including alliances from the government and the private sectors for continuous support to the Company. We can assure you that the Company will perform its business on the basis of the Good Corporate Governance Policy with transparency as well as focusing on the utmost efficiency of operation to create ultimate value to the Company’s business and create balancing return to all stakeholders with high attention to all concern’s benefit.

Mr.Utid Tamwatin Chairman ( Independent Director )

Board of Directors and advisors.

1 Mr. Utid Tamwatin

4

5 1

6

2

Age 61

Position Chairman (Independent Director) Education Master of Law

University of California, Berkeley USA

Barrister at Law

LL.B (honour) Thammasat University Special Course

DCP 3/2000, NDC 399 Work Experience MAY 08 - Present Chairman MAY 07 - APR 08 Director “Eastern Water Resources JAN 03 - JAN 07 Development and Management PLC” APR 09 - Present Director, Thai Oil PLC SEP 10 - Present Director, Siam Commercial New York Life PLC

Present Director, Pan Rajdheevee Group PLC JUL 09 - SEP 09 Deputy Permanent Secretary, Ministry of Finance DEC 03 - SEP 09 Director, Sukhumvit Asset Management Co.,Ltd. FEB 09 - SEP 09 Director, MAR 08 - JAN 09 Airports of Thailand PLC OCT 08 - JUN 09 Director - General, of The Customs Department NOV 06 - SEP 08 “Deputy Permanent Secretary ,Ministry of Finance Ministry Of Finance” OCT 04 - OCT 06 Director - General, The Excise Department EW Shareholding None

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3

2 Mr. Kanoksakdi Bhinsaeng

Age 54

Position Director

(1) Chairman of the Executive and

Invesment Committee

(2) Member of the Remuneration Committee Education Master of Public Administration

(Public Policy and Human Resource

Management ) Sripatum University

Bachelor of Liberal Art ( Political Science )

Ramkamhaeng University Special Course DCP 106/2008, DAP 73/2008

NDC 4414, ICMA 9 Work Experience MAY 08 - Present Director “Eastern Water Resources

Development” and Management PLC Present Director

Ekarat Engineering PLC MAR 09 - JUL 10 Director Universal Utilities Co., Ltd. EW Shareholding None

3 Pol. Lt. Gen. Somyot Poompanmoung

Age 56

Age 56

Position Director

(1) Chairman of the Evaluation Committee

(2) Member of the Executive and

Invesment Committee

(3) Member of the Risk Management Committee Education Master of Political Science

Puna University, India

Bachelor of Political Science

Police Cadet Academy Special Course

DCP 107/2008, FSD 2/2008

NDC 2547, BYS 13, ICMA 10 Work Experience MAY 08 - Present Director, “Eastern Water Resources

Development” and Management PLC FEB 09 - Present Director, The Provincial Electricity Authority DEC 09 - Present Director, Mass Rapid Transit Authority of Thailand OCT 08 - Present Assistant Commissioner General APR 08 - MAR 10 Director The Provincial Waterworks Authority JUN 08 - SEP 08 Commissioner Central Investigation Bureau FEB 08 - MAY 08 Commissioner of the Office of Inspector - General EW Shareholding None

5 Mrs. Monta Pranootnorapal

Position Director

(1) Chairperson of the Risk

Management Committee

(2) Member of the Evaluation Committee Education Master of Public Administration

National Institute of Development

Administration (NIDA)

LL.B (honour) Thammasat University Special Course

DCP 84 / 2007, NDC 4818 Work Experience JAN 08 - Present Director

“Eastern Water Resources Development”

and Management PLC MAY 08 - Present Director and Governor

Industrial Estate Authority of Thailand OCT 04 - DEC 07 Deputy Governor 11 ( Industrial Port )

Industrial Estate Authority of Thailand EW Shareholding None

4 Mr. Wiset Chamnarnwong

Age 59

6 Mrs.Niskorn Tadthiemrom

Age 62

Position Director

(1) Chairman of the Corporate Governance Committee

(2) Member of the Risk Management

Committee Education M.Eng. (Water Resources Eng.)

Asia Institute of Technilogy

B.Eng (Civil) Chulalongkorn University

B.LL. Sukhothai Thammathirat Open University Special Course

DCP 121/2009 Work Experience MAY 09 - Present Director

“Eastern Water Resources Development”

and Management PLC MAY 09 - Present Director and Governor

The Provincial Waterworks Authority (PWA) OCT 08 - APR 09 Deputy Governer (Operation 3) (PWA) OCT 07 - SEP 08 Deputy Governer (Administration and Finance) (PWA) JAN 07 - SEP 07 Deputy Governer (Operation 4) (PWA) JAN 05 - DEC 06 Deputy Governer (Operation 3) (PWA) EW Shareholding None

(DCP) Directors Certification Program (FSD) Financial Statement for Directors (MFR) Monitoring the Quality of Financial

Position Director (Independent Director)

(1) Chairperson of the Audit Committee

(2) Member of the Nominating Committee

(3) Member of the Evaluation Committee Education MBA

University of Winconsin , Madison , U.S.A.

BA. (Economics 2nd Class Honor)

Chulalongkorn University Special Course

DCP 120/2009, ACP 27/2009

NDC 4414, RCP 24/2010 Work Experience MAY 09 - Present Director

“Eastern Water Resources Development”

and Management PLC Present Director and Secretary

Committee of Budgeting Accounting Financing

and Internal Auditing

The Thai Red Cross Society OCT - Present The Audit Committee University of Phayao APR 05 - DEC 08 Deputy Secretary General

The National Telecommunications Commission OCT 04 - APR 05 Advisor Bureau of the Budget

Bureau of the Budget EW Shareholding None

(DAP) Directors Accreditation Program (ACP) Audit Committee Program (RCC) Role of the Compensation Committee Program (RCP) Reporting Role of Chairman Program

11

11 8

13 10

14 9

12 7

Board of Directors and advisors.

7 Mr. Boonmee Juntaravong

Age 64

Position Director (Independent Director)

Chairman of the Renumeration Committee

Memember of Audit Committee

Education Master of Science (Agricultural Economics)

Iowa State University, USA

Bachelor Degree

Kasetsart University Special Course

DCP120/2009, ACP 27/2009

NDC 4212, KPI 3 Work Experience MAY 09 - Present Director

“Eastern Water Resources Development”

and Management PLC MAR 09 - JAN 11 Director Metropolitant Electricity Authority JAN 09 - JAN 11 Director The Transportation Co.,LTD OCT 05 - SEP 06 Chairman of the Audit Committee

Bank for Agriculture and Agricultural

Cooperatives AUG 98 - SEP 01 Director General of Cooperatives Promotion

Department OCT 03 - SEP 06 Ministry of Agriculture and Cooperatives EW Shareholding None (DCP) Directors Certification Program (FSD) Financial Statement for Directors (MFR) Monitoring the Quality of Financial

12

8 Mrs. Leena Charoensri

Age 65

Position Director

Memember of Nominating Committee

Memember of Risk Mamnagement Committee Education B.Acc. Thammasat University Special Course

KPI 6, DCP 129/2010 Work Experience MAY 09 - Present Director

“Eastern Water Resources Development”

and Management PLC Present Director

Nava Nakorn Public Company Limited AUG 08 - Present Member of Audit and Evaluation Committee

Ministry Of Finance FEB 09 - JUN 10 Director

The Provincial Waterworks Authority (PWA) JAN 00 - DEC 08 Director

NEP Realty and Industry Public Company

Limited OCT 04 - SEP 05 Deputy Permanent Secretary

Ministry of Finance OCT 02 - SEP 04 Inspector General Ministry of Finance EW Shareholding None

(DAP) Directors Accreditation Program (ACP) Audit Committee Program (RCC) Role of the Compensation Committee Program (RCP) Reporting Role of Chairman Program

12 Gen. Chayuth Suwanamas

Age 58

Age 60

Position Director

Member of the Renumeration Committee

Member of the Evaluation Committee Education Bachelor of Sience (Mech. Eng)

Prince of Songkla University Special Course

DCP 94/2007 Work Experience JAN 08 - Present Director

Eastern Water Resources Development

and Management PLC MAR 06 - Present Managing Director

EGCO Engineering and Service Co.,Ltd SEP 98 - MAR 06 Deputy Managing Director

EGCO Engineering and Service Co.,Ltd EW Shareholding None

13 Mr. Nakorn Jirasavetakul

Position Advisor Education Bachelor of Civil Engineering branch structure

Chulalongkorn University

Post Graduate Diploma Branch Hydrological

Engineering (Dip.H.Delft) Netherlands Work Experience APR 10 - Present Advisor

“Eastern Water Resources Development”

and Management PLC MAR 09 - Present Director Universal Utilities Co., Ltd. FEB 07 - SEP 07 Deputy Governor (Planning and Technical) JAN 07 - FEB 07 Deputy Governor (Operation 4) AUG 06 - DEC 06 Deputy Governor (Operation 4)

And acting Governor

The Provincial Waterworks Authority EW Shareholding None

11 Mr. Chakarn Saengruksawong

14 Mr. Praphant Asava-aree

Age 54

9 Pol. Maj. Gen. Pimol Sinthunava

Age 69

10 Mr. Rasda Pongpaew

Age 60

Age 60

Position Director (Independent Director)

(1) Chairman of the Nominating Committee

(2) Member of the Audit Committee

(3) Member of the Corporate Governance

Committee Education Master of Education in Education

Program Administration Naresuan University

Bachelor of Art (Political Science)

Police Cadet Academy Special Course

DCP 104/2008, DAP 72/2008, ACP 22/2008 Work Experience MAY 08 - Present Director

“Eastern Water Resources Development”

and Management PLC MAY 09 - Present Director; EGCOMP Tara Co., Ltd., OCT 99 - NOV 01 Assistant Commissioner Provincial Police

Region 6 Phitsanulok Province EW Shareholding None

Position Advisor Education Master of Science (Agricultural Extension),

Kasetsart University

Bachelor of Sience (Agricultural)

Chaing Mai University Special Course

NDC 4414, KPI 8 Work Experience MAY 08 - FEB 09 Director

“Eastern Water Resources Development”

and Management PLC. JAN 09 - Present Chairman The Provincial Waterworks Authority SEP 09 - SEP 10 Director General of Cooperatives Promotion

Department Ministry of Agriculture and

Cooperatives FEB 09 - Present Director Airports of Thailand PLC. JAN 09 - Present Director Expressway Authority of Thailand OCT 05 - SEP 09 Deputy Permanent Secretary

Ministry of Agriculture and Cooperatives OCT 02 - SEP 05 Director - General, Depertment of Agriculture

Ministry of Agriculture and Cooperatives์ EW Shareholding None

Position Advisor Education M.A. Industrial Psychology

Tennesses State University USA Work Experience MAY 08 - Present Advisor

“Eastern Water Resources Development”

and Management PLC APR 03 - Present Policy and Plan Attached to Deputy Supreme

Commander Office of Supreme Command Present Advisor ; CPB Equity Co., Ltd.

Operating companies of Crown Property Bureau Present Director and Audit Committee

Rajadamri Hotel PLC AUG 07 - SEP 10 Director Christiani & Nielsen (Thai) PLC JAN 07 - MAY 08 Director

“Eastern Water Resources Development”

and Management PLC EW Shareholding None

Position Director Education Bachelor of Arts (Political Science)

Ramkamhaeng University Special Course

DCP 101/2008, ACP 21/2007 Work Experience MAY 08 - Present Director JAN 07 - JAN 08 Director

“Eastern Water Resources Development”

and Management PLC. APR 07 - Present President & CEO

“Eastern Water Resources Development”

and Management PLC. MAR 07 - Present Director; Universal Utilities Co.,Ltd AUG 09 - Present Director KT ZMICO Securities Company Limited APR 09 - Present Director Thai Listed Companies Association APR 09 - Present Director Thai San Miguel Liquor Co., Ltd., MAY 07 - Present Director Seamico Securities Plc. EW Shareholding None

13

2

1 5 3 4 6

Corporate executives 1 Mr. Praphant Asava-aree

2 Mr. Jaroensuk Worapansopak

Age 47 Position Director Position Acting Executive Vice President Project Education Bachelor of Arts (Political Science)

Planning and Customer Service

Ramkamhaeng University Education M.Sc. in Hydraulic Engineering, Special Course

International Institute for Hydraulic and

DCP 101/2008, ACP 21/2007

Environmental Engineering (IHE), Delft, the Work Experience MAY 08 - Present Director

Netherlands.

JAN 07 - JAN 08 Director Work Experience

“Eastern Water Resources Development” Mar 10 - Present Acting Executive Vice President Project

and Management PLC.

Planning and Customer Service APR 07 - Present President & CEO Jan 09 Feb 10 Vice President, Customer Service

“Eastern Water Resources Development”

and Management PLC.

Department and Acting Executive Vice MAR 07 - Present Director Universal Utilities Co.,Ltd

President Project Planning and Customer Service AUG 09 - Present Director KT ZMICO Securities Company Limited Eastern Water Resources Development and APR 09 - Present Director Thai Listed Companies Association Management Plc. APR 09 - Present Director Thai San Miguel Liquor Co., Ltd., Aug 08 May 09 Director, Egcom Tara Co.,Ltd. MAY 07 - Present Director Seamico Securities Plc. Nov 02 - Dec 08 Vice President, Project Planning Department

Eastern Water Resources Development and

Management Plc.

14

Age 54

3 Mrs. Namphon Rassadanukul

Age 48 Senior Vice President, President and CEO Office Corporate Secretary B.A. in Public Administration, the Faculty of Political Science, Thammasat University M.A. in Public Administration, Glasgow College of Technology, UK. M.A. in Political Science (Politics and Governments), Sukhothai Thammathirat Open University Certificate in Computer Programming and Information Processing, UK

Position

Education

Special Course

Director Certification Program - DCP 4/2000, IOD

Advanced Certificate, Public Administration and

Law for Executives. (1), KPI

Advanced Certificate, Politics and Governance

in Democratics systems for Executives. (11), KPI Work Experience

Eastern Water Resources Development and

Management Plc. Jun 07 - Present Senior Vice President, President and CEO Office

and Corporate Secretary Feb 04 - Jun 07 Senior Vice President, Internal Audit Department

and Corporate Secretary Nov 01 - Feb 04 Vice President Internal Audit Department Mar 01 - Oct 01 Vice President, President and CEO Office

4 Mrs.Thidarut Kraiprasit

Age 47 Position Senior Vice President, Internal Audit

Department Education MBA, Kasetsart University Special courses

Audit Committee Program - ACP 26/2009

Executive Development Program - EDP 4

Certificate, Management of Public Economy 5 Work experience

Eastern Water Resources Development and

Management Plc. Jan 09 - Present Senior Vice President, Internal Audit

Department Jun 07 - Dec 08 Senior Vice President, Finance and

Accounting Department Oct 04 - Jun 07 Senior Vice President, Finance and Human

Resources Department 2001 - Oct 04 Vice President, Finance and Human

Resources Department 1997 - 2001 Vice President, Finance and Procurement

Department

(DCP) Directors Certification Program (FSD) Financial Statement for Directors (MFR) Monitoring the Quality of Financial

5. Mr. Cherdchai Pitiwacharakul

Age 46 Position Vice President, Customer Service Department Education MS (Information Technology),

King Mongkut’s Institute of Technology, Lat

Krabang Work experience Mar 10 - Present Vice President, Customer Service Department Jan 09 - Mar 10 Vice President, Business Development

Department

Eastern Water Resources Development and

Management Plc. Aug 08 - Jan 09 Acting Managing Director,

Universal Utilities Co.,Ltd. Jul 08 - Jan 09 Director, Universal Utilities Co.,Ltd. Mar 08 - Present Director, Egcom Tara Co.,Ltd. Nov 07 - Nov 08 Vice President, Special Project Department

Eastern Water Resources Development and

Management Plc. Mar 07 - Jan 09 Director, Bangpakong Water Supply Co.,Ltd.,

Chachoengsao Water Supply Co.,Ltd.,

Nakornsawan Water Supply Co.,Ltd. Gement Nov 01- Nov 07 Vice President, Chachoengsao Operation Center,

Acting Vice President, Rayong Operation Center

Eastern Water Resources Development and

Management Plc. Oct 2000 - Oct 01 Vice President, Mapatapud Operation Center

6. Mr. Potjana Bunsiri Age 49 Position Vice President, Operation Department Education MBA, Burapha University Work experience

Eastern Water Resources Development and

Management Plc. Jan 09 - Present Vice President, Project Planning Department Nov 07 - Dec 08 Vice President, Operation Department Nov 03 - Oct. 07 Vice President, Chachoengsao Operation

Center Mar 01 - Oct 03 Manager, Large-scale Construction

Project Office 1998 - 2001 Senior Engineers

(DAP) Directors Accreditation Program (ACP) Audit Committee Program (RCC) Role of the Compensation Committee Program (RCP) Reporting Role of Chairman Program

15

7 8 10 9

Corporate executives 7 Ms. Fuangfa Nimcharoen

Age 47 Position Vice President, Information Technology

Department Education M. Sc. in Resources Management (Resource

Economics), Kasetsart University, Bang Khen Work experience Eastern Water Resources Development and

Management Plc. Jun 07 - Present Vice President, Information Technology

Department Nov 02 - Jun 07 Vice President, Corporate Affairs Department Nov 01 - Oct 02 Acting Vice President, Corporate Affairs

Department Mar 01 - Oct 01 Assistant to Vice President, Corporate Affairs

Department

8 Mr. Namsak Wannavisute Age 45 Position Vice President, Finance and Accounting

Department Education MS. (Finance), University of Colorado, USA. Work experience Eastern Water Resources Development and

Management Plc. Jan 09 - Present Vice President, Finance and Accounting

Department Jun 07 - Dec 08 Vice President, General Affairs Department

and Acting Vice President, Human

Resources Department Nov 02 - Jun 07 Vice President, Business Development

Department Nov 01 - Oct 02 Acting Vice President, Business

Development Department Mar 01 - Oct 01 Manager, Business Development Division

16

9 Mrs. Wirawan Tharanont

Age 52 Position Vice President, Corporate Affairs Department Education MBA, Sasin Graduate Institute of Business

Administration of Chulalongkorn University Work experience Eastern Water Resources Development and

Management Plc. Jan 09 - Present Vice President, Corporate Affairs Department Jun 07 - Dec 08 Vice President, Internal Audit Department Oct 06 - Jun 07 Vice President, Department of President and

CEO Office Oct 05 - Sep 06 Managers, Department of President and

CEO Office 2004 - 2005 Corporate Risk Manager

10 Duangkaew Ungsrithong, Ed.D Age 49 Position Vice President, Human Resources

Department Education Doctor of Education, Human Resources

Development

Western Michigan University, USA. Work experience Jan 09 - Present Vice President, Human Resources

Department

Eastern Water Resources Development and

Management Plc. Aug 07 - Mar 08 Director, Human Resources Division

Challenge Hospitality Co.,Ltd. Feb 06 - Apr 07 Vice President, Human Resources Division

T.C.C. Capital Land Limited May 00 - Dec 05 Human Resources Manager

HMC Polymers Co.,Ltd.

Organization Structure Board of Directors

Eastern Water Resources Development and Management Plc.

Audit Committee

Corporate Governance Committee

Remuneration Committee

Management and Investment Committee

Nomination Committee

Risk Management Committee

Regulation Enforcement and Operating Results Assessment Committee

President & CEO

President & CEO Office and Corporate Secretary

Audit Department

Executive Vice President, Finance and Accounting

Executive Vice President, Operations

Project Planning Department

Business Operation and Corporate Customer Services Communications Development Department Department Department

Human Resources Department

Corporate Affairs Department

Finance and Accounting Department

Information Technology Department

17

Do you Know ?

In one day Water used to process

coffee 97 litres

tea

Chicken 0.5 kg

1,084 litres

34 litres

Water Consistency 18

20 Grams of

beef + bread 1,934

litres

mixed salad

1 glass of

wine

117 litres

117 litres soda 16 oz 125 litres water 16 oz 1 pint of

0.473 litres

beer

75.7 litres

19

Stakeholders Satisfaction The company’s business not focuses only on the most profitable for the benefit of shareholders, but on the development relationships with shareholders’ common interests, balanced and comprehensive social and community clients as well as Shareholders and staffs of East Water.

In the Year 2010 company had projects and activities, which gave many great benefits to the group, and guided the development of a sustainable business.

Personnel Development

The Company realizes and the importance of all-level personnel development focuses on staff development following the Company’s mission, strategy, and main values. In 2010, the Company supported the staff with Competency Based training which provids management training for executives and professional skill development for staff through both in-house training and public courses, including business trip to encourage learning and exchange experiences with leading local and international organizations. In addition,

the Company placed an importance upon learning culture by encouraging corporate learning to stimulate staff’s learning desire which is an individual motive of self-development and working. The organized activity to encourage the learning desire is called Knowledge Sharing, provided an opportunity for the staff to learn from personnel within the Company as well as to share knowledge of the Company, aiming to apply with their works and positively create communication among the staff. Also, the Company’s Volunteer’s Mind project which fostered the DNA of community participation and taking part to the executives and staff led by 20-30 executives and staff visiting communities in operating areas. This helped the staff to learn how to work as a team and to participate in communities’ way of life.

20

In addition, the Company provided continuous education support with the business English test with English training for the staff. Moreover, the Company’s higher education support for staff was aimed to open an opportunity for a staff to develop one’s ability within interested field and to appropriately apply the knowledge with the work.

The Company is confident that good communication among all levels of staff will create understanding which leads to corporate mutual target.

The Company has provided communication form between the executives and the staff to acknowledge opinions of the staff and to continuously create good understanding with staff through communication channels such as CEO’s Mailbox, Meet with CEO activity, staff satisfaction survey, executives meeting with staff from each department, etc.

A s of December 31, 2010, there were 151 employees of which are 150 salary based employees, and 1 contracted employee, 10 Executives, and 141 staff.

Customer Relations Management (CRM)

In 2010, the Company organized meetings for the Company’s executives to meet with customers’ senior executives to receive opinions and suggestions as well as to consult on business expansion opportunity of the Company and to open direct communication among the executives.

In addition, the Company also set activities for customers’ staff to connect staff relationship such as football, bowling, customer meeting and Open House (2 trainings), 2 thank you parties for customers (The Zign Hotel and Centara Grand Hotel, Pattaya in Cholburi Province), etc.

2

1

4

3 1. Senior Executives from Pinthong Industrial Estate visited Rayong Operating Center on January 13, 2010.

2. 7 players football competition at Technique School, Ban Kai, on August 9, 2010.

3. Customer Meeting/ Open House 2010 on August 20, 2010 in Rayong-Pluak Daeng at Rayong Operating Center and on September 14, 2010 in Cholburi-Chachoengsao, at Cape Racha, Sri Racha District, CHolburi Province.

4. “Water Talk with East Water” Seminar at Fauna Ballroom, The Zign Hotel, Pattaya, Cholburi

21

The Company also provided support to customers’ project activities such as the anniversary of Provincial Waterworks Authority (PWA), academic meeting of World Water Day 2010 at Impact, Muang Thong Thani, PWA’s savings and credit cooperative report, customers’ New Year parties, water technology visit of Hemraj Land and Development Pcl., etc.

1. Joined the activity of Nuen Payom Public Park opening with SCG group on November 22, 2010 2. On March 4, 2010, “Power of Sharing” project fund presenting ceremony

1 2 In addition, the Company, in cooperation with customers, also sees the importance of Corporate Social Responsibility (CSR). In 2010, the Company held several activities with its customers such as providing drinking water to participants of SCG’s Nuen Payom Public Park opening, joining with the Industrial Estate Authority of Thailand to provide project fund for Power of Sharing project, joining the construction of Sala Thai building (building with four gable ends - tetrahedron) located in front of Chachoengsao’s City Hall, co-hosting the Royal robs presenting with the PWA at Loom Temple, Rayong Province, etc.

1. On February 26, 2010, the Company congratulated the 31st

3

anniversary of PWA 2. On March 24, 2010, the Company joined the event of “quality of water, quality of life” at Impact Muang Thong Thani.

3. Hemraj group visited the reverse osmosis system of Koh Lan tap water business and tap water system of Sattahip tap water business, CHolburi Province on November 11, 2010.

1 22

2

Quality of Life and Environmental Development

The corporate vision, “To be the valued leader of water management for economic development and longevity of society following the concept of “Water solution for all”, has guided the Company throughout the past 18 years with experiences, skills, and continuous capability developments. Moreover, all executives and staff determine with strong desire to implement the expertise to develop better communities’ living. Thus, the corporate social responsibility project (CSR) of the Company focuses on “Water” and never takes any neglect over opinions and needs of communities which is always repeated by President and CEO (Mr.Praphant AsavaAree) that “Community development should be based on the foundation of sustainability by focusing on fish teaching instead of providing fish.” In 2010, there were projects as follows:

Education Support and

Creating Innovation Project

East Water Young Leader Project has been organized for 3 consecutive years.

At present, there are totally 320 school networks with 1,200 young leaders completed the camp and received scholarship. In 2010, the Company supported schools attended the camp activities and received the fund to develop Canteen’s waste water management system under supervision of the Company and the Office of Natural Resources and Environment.

There were 80 targeted schools in Chachoengsao and Cholburi Provinces.

3R Innovation Award The project was first held by the Company in cooperation with the Ministry of Natural Resources and Environment in 2010 to encourage students in vocational schools and university to show their innovative ability and skill with scientific and technological creativity of water management for benefit of community and industry. The result can be extended to be the model of 3R innovation for actual practice of communities or industry. In this year, there were 22 teams from several universities across the country joining the competition. The winner went to Chulalongkorn University team which presented the innovation of plant cultivation and augmentation system.

The system helps save the water of more than 100 litres and can increase plant numbers, faster and much more than the existing system. In addition, the system can recycle the water.

23

Community tap water system improvement and training The project has been organized for 2 consecutive years to provide training to Tap Water Community Committee on improvement, maintenance, or development of water production system and water quality. The training includes knowledge of tap water business management, production cost, and business administration principles to promote efficient selfmanagement of tap water business management and to reduce dependency on the government. In 2010, the Company improved tap water system for 3 subdistricts (8 villages) and provided trainings to 17 subdistrict organization and administrations in 3 provinces as follows: Rayong Mae Nam Koo Choom Saeng Pluak Daeng Nikom Pattana Pana Nicom Nong Bua Nong Rai

Chachoengsao Klong Keon Bang Lao Bang Talad Bang Rong Kon Kaew

Cholburi Plu Ta Luang Khao Kan Song Bang Phra Nong Kham Bor Win

Development of Quality of Life and Environment Project

24

Professional training of “Reduce expenses, Increase Income, Follow Economic Sufficiency” With continuous community visits, it is evident that communities have the problem of exceeding expense over income. Thus, the Company initiated the project of “Reduce expenses, Increase Income, Follow Economic Sufficiency” by humbly inducing the Royal initiation of “Sufficient Economy” with the present economic situation for better quality of life of the people. The Housewife group is trained to make their own products and use them to reduce purchasing and household expenditure, or to make new products and learn food preservation methods, leading to new careers as alternative household income. In 2010, the Company provided training to housewife groups from 40 communities with 3,200 participants. The followings are training topics: • Dishwashing Liquid / Detergent / Fabric Softener / Shower Cream / Herbal Shampoo • Preserved Egg • Staff camphor doll • Mushroom Cultivation

Province Rayong Cholburi Chachoengsao

No. of Communities No. of Participants 16 1,440 8 725 16 1,035

Canal Dredging, Aquatic Animals Release, Mangrove Forestation

With the realization of natural resources value and glorification of National Mother’s Day on August 12, 2010, the Company organized activities as follows: 1. Canal dredging project was in cooperation with Maha Sura Sing Ha Nart Naval Camp, Royal Thai Marine Corps, government agencies - 7 communities in the area of Nong Bua Sub-District, Nong Rai Sub - District, Choeng Noen Sub-District in Rayong Provinces, in total 3 kilometers, to clean the canal, eliminate weed and to create efficiency of water consumption from the source 2. Releasing 1,000,000 fish Project was in cooperation with Nong Bua Sub-District Organization and Administration, Rayong Province and communities in the area 3. Releasing 500,000 fish project was in cooperation with Bang Pa Kong Sub - District Municipality, schools and communities, under the project “Youth’s loyalty to conserve the canal”

Youth Football League PAO - East Water Since the founding of the Company, sport community has always been supported. Known as one of the most popular sports, the Company with the cooperation of Rayong Provincial Administrative Organization, Rayong Sport Association, and Educational Service Area Office 1 and 2, jointly organized, for the first time, “Rayong Youth Football Championship Project “Youth Football League PAOEast Water 2010 for youth under 12. The league was aimed to encourage young people to exercise and stay away from drugs, including being more disciplined and sportsmanlike. There were 16 teams from communities in Rayong joining the games.

The Disabled Comfort With the increasing numbers of the disabled in every year, to help the social underprivileged disabled, the Company, in cooperation with Council of Disabled People of Chachoengsao, has set up “Friends Visit Friends” project which aimed to provide comfort to the disabled in terms of living happily in the society without any concern of being a burden of others. In addition, the Company’s “Leader Training of Health Support for the Disabled” project aimed to build to the understanding of health insurance policy, or medical benefits, and the disabled rehabilitation.

25

Clean drinking water for Community The Company has provided several forms of clean drinking water - Reversed Osmosis (RO) drinking water machine, RO mobile unit, bottled/ cupped drinking water - to people for better consumption of clean drinking water. The service has been continuously performed with increasing numbers of people, received the service. In 2010, there were many flood affected areas, the Company sent drinking water mobile units to help flood affected areas in the provinces of Ayuddhaya, Nakorn Rachasrima, and Songkla, as well as supported government agencies and private sectors with bottled- cupped water for furtner aistribution.

of Water Service in 2010 Summary RO mobile unit

358

631,864

Times Litre

829,680 No. of people

Bottled water, Cupped water

288

102,729

Litre

646

724,593

Times Litre

285,927 No. of people 1,115,607 No. of people

Religion, culture, and local tradition In 2010, the Company co-hosted religious ceremonies of presenting robes to the Buddhist monks in the end of Buddhist Lent at 4 temples as follows: 1. Nong Ko Temple Nong Bua Sub-District, Ban Kai District, Rayong Province 2. Nong Ma Pring Temple Mae Nam Koo SubDistrict, Pluak Daeng District, Rayong Province 3. Nong Ra Kam Temple P ana Nicom SubDistrict, Nicom Pattana District, Rayong Province 4. Khao Din Temple Khao Din Sub-District, Bang Pa Kong District, Chachoengsao Province

26

Times

Total

Investor is one of important factor to organization they have support the company to expand the investment.

Relationship with investors

The Company places an importance to create good relationship with investors, analysts, and shareholders. Since the sufficient and timely information is necessary to their decision making, The Company, then, emphasizes upon the information disclosure with equality, transparency, and within the time submission guidelines as stipulated by the Stock Exchange of Thailand (SET) and the Securities and Exchange Commission (SEC).

(Analyst Meeting)

Activities

Conference Call (Foreign retail and institute investors) Opportunity Day Event 4 Company Visit / One-on-One Meeting Site Visit Activity As of 30 November, 2010

Please also be noted that IR has obtained all activities evaluations on quality of information, presenter, venue etc. from the attendants. The recommendations has been analyzed and reported to the Management for further improvement.

In addition, the Company’s information is posted on the IR Page of the Company’s website at www.eastwater.com in Thai and English, consisting of the Company’s information, Annual Reports, Financial

The Company has opened opportunities for the investors, analysts, and shareholders to frequently meet with its Executives to build good understanding of the Company’s business as well as exchange mutual opinion. The Company’s Investor Relations activities can be contacted at Tel. 02 272 1600 ext.2317, Fax. 02 272 1601 or ir@eastwater.com. The annual investor relations plan has been established to provide the Company’s information through the following channels and activities:

Number (times) 1 9 4 15 2

Statements, Management Discussion and Analysis (MD&A), the Good Corporate Governance Reports, Operating result presentation, information reported to the SET through www.set.or.th, which are consistently updated to facilitate the access to the information with convenience, quickness, and equality. The Company also provides newsletter emailing service which interested person can apply for the service through the Company’s website.

27

Apart form being cared of shareholders and customer’s interest, East water also focuses on business chain by holding events for public

Relationship with trading

partners / tenants Tenants

Apart from the Company’s continuous sustainable growth of the main business, the Company also receives revenue from leased areas of East Water Building’s area. In 2010, the Company received the revenue from leased areas of the building approximately Baht 50 million from the leased area of 10,265 square meters, accounting for 99% of the total leased areas. There were 17 tenants from government agencies and private enterprises. The followings are activities organized with the tenants:

1. Social and Religious Activity The Company organized activities to promote good relationship with tenants such as quarterly blood donation, donation of consumer products to help the flood affected people. Also, there were activities to carry on traditions of important Buddhist’s days such as merit making by offering food to monks on important Buddhist’s days, or blessing for His Majesty the King and the Queen’s Birthdays. In addition, the Company set up meetings with tenants’ executives to receive opinions and suggestions for further service improvement.

28

2. Energy Conservation Activity The Company gives an importance upon energy conservation by including it in the 3-year operation plan, aiming to reduce the building’s electricity power utilization by 10%. There were several activities such as saving and using the energy training, automatic building management systemization, energy conservation exhibition and educational tour to visit government agencies and private enterprises, to promote energy reduction, These acitivities were welcomed.

They also receive well response from the tenants.

3. Safety Activity The Company puts an emphasis upon not only prevention of accidents at work but also protection for protect every dimension on staff’s safety, either in office hours or off duty. including prevention from sickness, and safety of life or protection of property.

The staff took part in many safety activities and campaigns for consistently providing education on occupational health and safety with guidelines to encouraging good occupational health and safety management which consists of:

1. Standard manuals of safety, occupational health and safety, work environment for work safety and reduction of accident risk 2. Safety Committee to examine the Company’s safety as stipulated by law 3. Accident report, investigation, and analysis to acknowledge the cause of accident and to set up measurement to prevent repeated accident 4. Control of contractors in large and small construction projects to safely perform with examination and operating report continuously presented to project meetings 5. Examination and safety assessment are consistently performed by external examiners 6. Consistent examination, maintenance, repair are performed as building and place risk management Moreover, the Company and the tenants had jointly organized safety activities such as annual “Basic Fire Extinguishing” training for tenants, fire extinguishing and Fire Evacuation as a preparation of the tenants for any emergency.

4. Increase of Communication Channels With the Company’s emphasis on the importance of communication, the Company has increased communication channels with the tenants through the Call Center number 2201. This helps increasing instant and convenience for the tenants to inform complaints and problems, related to services.

Also, in-house wired voice is established to disseminate news and events for informing the tenants. The SMS alert, which will be expanded to the tenants, will inform any emergency to concerned units.

Trading Partners

In 2010, the Company’s crucial projects were satisfactorily achieved. Those projects were in cooperation with several internal and external units, which included the Company’s partners whose parts drove the Company to achieve such an impressive result. The Company treated its partners following trading terms and/ or contract agreement with partners in terms of product purchasing and selling and services which are transparent, academic oriented, and examinable. In addition, the Company organized activities with partners as follows:

1. Trader Seminar The Company organized an activity for executives and staff of the Company to meet with traders to receive information on concerned policy and plan, to exchange ideas and problems occurred during the operation. The result from the activity was used to improve procurement process to be more appropriate and up-to-date for the Company’s competitiveness. The activity was intervened with knowledge in the form of stage seminar and speakers with experience of procurement and concerned laws were invited to present to trading partners and the Company’s staff. As a result, they could apply the knowledge with the operation to increase efficiency and effectiveness.

2. Site visit The Company’s site visit to traders’ enterprises was set up to open an opportunity for executives and concerned staff to visit the traders’ enterprises which provided main services. The local and oversea visits would strengthen confidence and create understanding of production process and services as well as open an opportunity for them to mutually share experiences and knowledge. The visits consisted of the plant of water pump maintenance, electricity control system, and water plump production plant, etc.

29

Do you Know ?

Bathrooms take up more than

of total water usage each day.

Flushing your toilet

uses upabout uses to

litres of water

The amount of water

each time.

ush your toilet

each time equals the amount of

drinking water

consumed by

30

a family in

day.

is used when brushing your teeth

Only litres of water

with

a glass,

but turning on the water tap can waste up to

5 shower minute

litres.

can take up

litres of water.

Showering

is better than

bath-tubing which can save up to litres of water.

31

Industry and Competition 1. Raw Water Business

The recovery of the World’s economic and the government’s continuous economic stimulus policy drove the distribution volume in 2010 to increase from 2009 by 9.9%.

General Factory.

7.83%

Private Estate.

25.94%

2549

2550

223.91

2551

220.71

2552

32.78%

245.44

2553

Remark: Water distribution volume in 2010

The Company’s total water distribution volume was at 243 million sq. m. which received support from rising trend of industry’s water utilization contributed by improved export volume from automobile industry and electronic parts industry. The support also came from raw water utilization for commercial production and from the test run of petrochemical industry in Map Ta Phut area which had started since in the middle of the year. In addition, on August 31, 2010, the Ministry of Natural Resources and Environment announced 11 types of business which severely affected community, allowing only 3 projects out of 76 projects in Map Ta Phut area to proceed after the Administrative Court had ordered cancellation of permits for “harmful” industries. The Company estimated that the problem did no harm to the total water distribution volume in 2010.

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33.90%

Consumption.

Water distribution (millions of cubic meters).

214.99 195.61

I-EA-T

The quantity of raw water (per cent).

2. The Company’s 4 marketing businesses:

• Water for consumption through the Provincial Waterworks Authority (PWA) such as Laem Chabang, Sri Racha, Cholburi, Pattaya, and others including private water business concession, utilizes raw water as high as 32.15% • Water utilization by the government’s industrial estates, such as Map Ta Phut Industrial Estate and Laem Chabang of the Industrial Estate Authority of Thailand (I-EA-T), utilizes raw water as high as 34.21% • Private industrial estates and industrial parks, such as Hemraj Land and Development PCL., RIL 1996 Co., Ltd. Industrial estate of SCG Chemical Co., Ltd., and Saha Pattana Phibul Industrial Park, utilize raw water of as much as 32.15% • The remain of 1% comes from the water utilization of other plants and businesses

3. Enhancement of Water Management Efficiency

In 2010, the Company increased water management efficiency in many ways to serve the water demand expansion in the Company’s operating areas with the details as follows: • Enhancement of Water Resources Efficiency: The Company has studied and revised the plan for water resource development and principles for pipeline system improvement in the Eastern area in order to revise the plan for water resource development and water pipeline system to serve the demand in the next 10 years. The studies are expected to be completed in 2011. In addition, the Company proceeded the construction project of reserved raw water pond Mab Kha 2 to increase stability of the system and water pumping. The reserved water will be used for emergency such as outage. The water can be continuously pumped. Also, it helps with the energy cost management of water pumping. The construction is expected to be completed in 2011.

• Enhancement of Water Pipeline System: The Company has improved the main water pipeline system in Cholburi and Rayong Provinces to increase capability of the main pipeline in terms of pumping ability and pumping system management. The improvement consisted of the construction of separated pipelining for raw water of Bang La Moong Water Filter (New), construction of Booster Pump in Nong Khao Reservoir, improvement of 2 stations of Map Ta Phut Water Pumping Stations which serve the increase of water utilization of no less than 22 million cubic meters. Also, the pipelining construction of the 3rd Nong Pla Lai – Map Ta Phut, constructed in the late 2009 with the progression of 65% and expected to be completed in the late 2011.

After its completion, it can serve the expansion of water utilization from consumption and industry in the areas of Map Ta Phut – Sattahip of no less than 105 million cubic meters.

• Enhancement of Water Management Capability: The Company has developed the Control Center System of the water pumping which is located in Map Ta Phut. The Company’s SCADA was enhanced to be standardized, up-to-date Central Control with the utmost efficiency.

The data base management system is stored

at the control center. Also, the control system of the Company was improved to serve the centralization of Rayong Operation Center and Chachoengsao-Cholburi Operation Center to be one operation center. As a result, parties related with the Company and customers can easily access to the information. The Control Center construction is expected to reach its completion in 2011.

4. Business Development

With experience of eastern water management and tap water operation with various technologies, the Company has tried to expand its opportunity in water business investment from its expertise to other areas, including studying new technologies for developing other areas of water business such as water production for waste water management service industry and waste water recycle, etc. This will lead to a complete water business operation of the Company.

In addition, the Company has studied for more opportunity to expand its investment to alternative energy to increase its revenue apart from its main revenue from water business as well as to enhance its role of environmental preservation. This also includes oversea investment in China, India, and ASEAN countries, and other potential countries for water business and alternative energy to increase investment expansion.

33

Business Profile and subsidiary shareholding ratio Core Business

Eastern Water Resources Development and Management Plc. or East Water was founded on October 15, 1992 and has been taking responsible for the development and management of main water pipeline systems in the Eastern Seaboard by supplying raw water to industrial estates, factories and water works via four main raw water pipeline systems in Chonburi, Rayong and Chachoengsao Province. The

four pipelines consist of the Nong Plalai-Dokkrai-Map Ta Phut-Sattahip pipeline, the Nong Kho-Laem Chabang-Pattaya-Bang Phra Pipeline, the Nong PlalaiNong Kho Pipeline, and the pipeline system in Chachoengsao, with the total length of 324 km water pipelines and pumping capacity of 478 million cubic meters per year.

Core Business Raw water Business Eastern Water Resources Development and Management Plc.

Related Business Tap Water Business

Utilities Co., Ltd. Universal 100%

Sattahip Waterworks Kholan Waterworks Si Chang Waterworks Bowin Waterworks Samui Waterworks Rayong Waterworks

34

Nakornsawan Water Supply Co., Ltd. 100%v

Egcom Tara Co., Ltd. 15.88%

Bangpakong Water Supply Co., Ltd. 100%

Chachoengsao Water Supply Co., Ltd. 100%

Major Development of Core Business

January 2010

March 2010

April 2010

The Company signed the contract of purchasing property from pipeline construction

project connecting Pra Sae Reservoir with Klong Yai Reservoit in Rayong Province (Pra Sae Project) The Company submitted the property of the Pra Sae Project to the Department of the Royal Irrigation Department the Property Inspection and Acceptance Committee of the Pra Sae Project signed to

accept the property of the project and the Company received transferred money of the property, accordinc to the contract from the Royal Irrigation Department Hence, after the Company had received the payment, the money was paid to the contractors, and the revenue from the transaction of the Pra Sae Project had already been recorded.

Related Business

Tap Water Business: Universal Utilities Co.,Ltd. (UU) is a concession tap water business in nine areas, covering Sattahip Waterworks, Bangpakong Waterworks, Chachoengsao Waterworks, Nakornsawan Waterworks, Sichang Waterworks, Bo Win Waterworks, Ko Samui Waterworks, Koh Lan Waterworks, and Rayong Waterworks.

It also provides tap water production service to Egcom Tara Co., Ltd. and Ratchaburi – Samutsongkram Waterworks, as well as provides water leakage reduction systems management for Service Area 2 of the Provincial Water Works, consisting of Om Noi-Samphran-Samut Songkhram Waterworks, Pathumthani-Rangsit Waterworks, and Pattaya Waterworks. Important development of Tap Water Business

March 2010 UU signed the agreement with Egcom Tara Co., Ltd. on March 15, 2010, on hiring contract

to produce and pump tap water, tap water system maintenance, and other related works in

the private joint-venture tap water project Ratchapburi - Samut Songkram under the period

of 3 years with the total production capacity of 48,000 sq. m. per day.

Administration and Management

February 2010

August 2010

November 2010

The Company received an evaluation rated “Very Good”from Corporate Governance Report of Thai Listed Companies 2010 by Thai Institute of Directors (IOD) The Company received an evaluation rated “Excellent” from the Annual General Meeting Quality Evaluation 2010 from Thai Investors Association.

The Company received 90.59% points from CSR award competition, held by Secrurities

and Exchange Commission (SEC).

35

Risk Factors

Eastern Water Resources Development and Management Pcl. has realized the importance of the risk management of the business operation. The risk management is the important part of the business operation processes of the Company and its affiliated companies. The Board of Directors has assigned the Risk Management Committee to consider the policy and supervision of the corporate risks which are significant to the group of companies. The management has annual performed the review of the risks and risk management plans with the stipulation of the acceptable risk level and risk management manual which will be proposed to the Risk Management Committee for consideration of approval, including the record of the operating results as stated in the risk management plan which will be quarterly proposed to the Risk Management Committee to continuously control the risks. In 2010, there were significant risks and the Company’s risk management can be summarized as follows:

The Company had allocated budget for quality of life and environmental development by creating relationship with the communities in the areas as well as providing accurate understanding and consistently providing local communities’ development project encouragement to reduce conflicts and increase good attitude toward the Company. The activities consisted of canal digging, drinking water mobile service, charity concerts, leader youth camp for conservation of water resources and environment with scholarship, mangrove forestation for environmental conservation, as well as consistently supporting activities for quality of life and environmental development for communities such as temples, schools, government agencies, and public charities.

In 2010 – 2011, the Company’s Implementation of Nong Pla Lai-Map Ta Phut (Line 3) Pipeline Project may cause the conflict with the communities in the operational area. The Company had already explained to the local leader within the project operational area prior to the initiation of the project, including provided community relations activities to create mutual good 1. Business Operation Risks relationship.

1.1 Insufficient water volume in water sources

to meet water demand

The Company followed the water volume in the reservoir on the weekly basis as well as continuously provided and followed the water pumping plan, prevention and solving the problem of water shortage plan. In 2010, the Company had no problem of the water shortage. With the estimation of the water resource assets, the piping system connecting the Prasae-Klong Yai reservoir of the Royal Irrigation Department could turn the water of 70-80 million cubic meters per year from Prasae reservoir to Klong Yai reservoir and Non Pla Lai reservoir which led to the Company’s 5-year sufficient water resource asset.

1.2 Conflicts of water utilization from the water resources in community

36

1.3 Damages of water pipeline system

There were possible problems of corrosion or other constructions of infrastructure along the pipeline area which might affect the Company’s water pipeline system to break or leak. However, the Company had set up prevention maintenance plan and continuous examination and maintenance of water pipeline system as planned. In addition, the Company had risk insurance with the insurance company which would be responsible for any damages with the pipeline system caused by any incidents, covering every pipeline as well as the Company’s asset insurance and third party insurance, including damages from the operation halt, to help the Company to continuously distribute water with efficiency.

1.4 Policy of the government and related government agencies

and the World’s oil prices, the Company had managed electricity usage by initially choosing the water pumping from low cost water resources and choosing pumping when the electricity fee went to the lowest level, as well as improving the efficiency of the water pump. In addition, the Company had set up an energy conservation plan which was continuously followed.

The instability of the policy of the government agencies relating to the Company’s operation may affect the Company such as the delay of certificate issuance from related government agencies, clarity of water pipeline leasing fee of Nong Pla Lau – Nong Pla Lai. However, the Company still received good cooperation from the related government agencies. 3 Legal risks Moreover, the establishment and business operation of The legal disputes which might affect the the Company followed the cabinet’s resolution to Company’s assets with the amount of more than 5% of promote the industrial investment and tourism in the the shareholders’ equity as of November 16, 2010 are area of the Southern Seaboard. as follows:

1. Law suit of assets purchased from the Legal 1.5 Sufficiency of reserved water volume in Execution Department case of emergency On March 28, 2003, the Company was filed as The Company’s agreement with the Provincial the 2nd Defendant in a case involving the purchase of Electricity Authority concerning the halt of electricity assets from the Legal Execution Department, Black distribution, the water reserve from the reserved ponds Case No. 1371/2546. Droitnes Associate Company is necessary to continuously distribute raw water to its Limited (Plaintiff) filed a case in the Court, demanding customers when there is an emergency. At present, revocation of the legal act, i.e. the buying and selling the Company’s water resources reserves for the of plots of land, between the Legal Execution emergency has a capacity of 101,600 cubic meters Department and the Company, or that the Department which provides the reserved water of approximately and the Company jointly, or on behalf of the other 6.30 hours. However, the Company has an operational party, pay damages at the claimed amount of Baht plan for any emergency to provides continuous water 302.2 million. Then, on January 26, 2006, the Court of distribution. Moreover, the Company has a plan to First Instance dismissed the case. The Plaintiff lodged increase its reserved water volume with the an appeal on March 21, 2006. The Company filed the construction of an additional reserved pond with the answer to the appeal on June 19, 2006. The capacity of 250,000 cubic meters in Map Kha area proceedings are still ongoing at the Court of Appeals which will provide the reserved water of 24 hours when at the time of this reporting. there is an emergency.

However, the Company believes that the

purchase of the aforementioned assets was legitimated and protected by law. The Company had 2 Financial Risks followed the auction procedures of selling stated by The water pumping from the new developed water resources pumped from the nearby water the Court’s order or the Official Receiver from the resources and the increase of the Ft charge led to the Legal Execution Department with honesty. The full increase of the energy used for water pumping. payment was completed and the transfer of ownership Though the Company could not control the electricity from the Legal Execution Department was duly fee which was changed due to the economic situation registered. The Company expects to win this case.

37

2. Law suit of procedures of selection of private sectors to produce tap water for distribution to the PWA within the area responsible by Rayong Waterworks Authority Tambon Bang But Administration Organization, 1st Plaintiff, Tambon Ban Khai Administration Organization, 2nd Plaintiff, and Mr. Sayan Yangdee, 3rd Plaintiff, filed a case against the Provincial Water Works Authority (PWA) to the Rayong Administrative Court on March 14, 2006. The case was related to an unlawful act committed by an administrative agency or a state official. Then on May 30, 2006, the Rayong Administrative Court had summoned the UU Group Consortium as the litigant and to prepare the statement for the case. It had the status in the case as the 2nd Defendant, because it was also a stakeholder of the dispute. On March 16, 2007, the Rayong Administrative Court passed a decision to revoke the process to select a private entity to produce tap water to sell to the PWA in the area under the jurisdiction of the Rayong Waterworks Authority. The Agreement No. For. Kor. Mor. 1/2549 dated 14 March 2006, a result from an unlawful selection process, was also revoked.

However, the PWA and its subsidiary submitted their appeal to the Rayong Administrative Court on April 12, 2007 and the Court accepted the appeal and sending

the appeal to the Supreme Court. At the time of this reporting, the appeal proceedings with the receipt no.

Aor. 278/50 were in process at the Supreme Administrative Court. According to the Act on Establishment of Administrative Courts and Administrative Court Procedure, B.E. 2542 (1999) under Section 70 stipulates that the PWA and the Company has to comply with the mutual agreement and to upheld the mutual rights and duties till the case reaches its final.

The management team of the Company’s subsidiary is confident that it will not receive any impact from the cancellation of the agreement. It is because upon the cancellation, the subsidiary will receive compensation of construction and tap water system improvement cost and other expenditures incurred to make the tap water systems operable.

Apart from the Risk Management Committee who closely monitors the corporate risks, the Company also has set up the risk management manual and risk management operation plan for other departments whose duty is to be responsible for controlling risk to be at the acceptable level. The risk is quarterly reviewed. The occurred situations are not limited to only risks from damages but also risk relating to other surrounding factors which indicate the opportunity of risk to the Company under ever changing situations.

Management Discussion and Analysis

for the accounting year 2010 1. Profit and Loss Analysis/ Overall Operating Result

38

For the accounting year 2010, the Company and subsidiaries reported net profits of Baht 908.94 million, an increase of Baht 101.23 million or 12.53%, from the same period of 2009. The Company report EBIT of Baht 1,380.49 million, an increase of Baht 130.09 million or 10.40%, from the same period during 2009, with EBITDA of Baht 1,781.92 million, an increase of Baht 194.83 million or 12.28%, which can be broken down into:

1.1 Revenue

During 2010, the Company and subsidiaries reported total revenue of Baht 4,674.80 million, an increase of Baht 1,796.30 million or 62.40% from the same period during the previous year due to the sales growth of raw water and tap water. The Company also transfered assets and received full payment for the

pipelining project Pra Sae to Klong Yai, valued Baht 1,567.29 million. The revenue breakdown is, as followed:

Revenue from raw water business Revenue from raw water business rose Baht 213.14 million, or an increase of 11.19% from the previous year, as the Company sold more raw water.

During 2010, the Company sold 22.98 million cubic meters higher than the same period in the previous year, or an increase of 10.99%. An average price of raw water of all areas was at Baht 9.10/cubic meter.

Revenue from tap water business The revenue from the tap water business increased by Baht 80.30 million or by 12.63%. The tap water distribution volume increased by 11.07% from the sales volume of 58.91 million cubic meters during 2010. The growth was from both existing and new customers. The Company also started distributing water to Cholburi Waterworks from April 2010. The Company sold 5.06 million cubic meter of tap water to Cholburi Waterworks during 2010, worth a total of Baht 49.30 million. The water sold to Rayong Waterworks also increased by 0.73 million cubic meters, which resulted in a Baht 11.62 million increase in sales to Rayong Waterworks.

Revenue from the sales of project assets The Company has transferred assets in the pipelining project Pra Sae to Klong Yai and recognized revenue from the asset sales on 2 April 2010 and 8 April 2010, respectively. The total project was valued 1,567.29 million.

Rental and service revenue Rental and service revenue declined by Baht 50.10 million, or 17.74%, as one of the Company’s subsidiary receive lower service revenue as the water management contract with the Pattaya Waterworks was expired in 2009 and the contract with the

Ommnai-Sampran-Samut Sakorn Waterworks of in February 2010. Also, the project values of the Patumthani-Rangsit Waterworks and Metropolitan Waterworks Authority (MWA) were reduced, which caused a Baht 73.90 million decline in water management fee in 2010. However, the building and office rental revenue improved by Baht 20.87 million from the previous year as the numbers of tenants increase with occupancy rate of 99.40% of total leasable area.

Other income Other revenues decreased by Baht 10.97 million, or 34.22%, from the same period during the previous year, as a subsidiary has recognized an expense write back from the provision, but later found that the amount could not be claimed as the case expire, valued Baht 10.70 million.

1.2 Expenses

During 2010, the Company and subsidiaries have total expenses of Baht 3,294.31 million, an increase of Baht 1,666.21 million or 102%, from the same period in the previous year, due to the following reasons.

Costs of sales: raw water Cost of raw water business increased Baht 123.30 million or 17.92% mainly due to the sales volume increased by 10.67%. Additional expenses are from changing accounting depreciation method from unit-of-production method to straight line method, which resulting in a depreciation expense increase of Baht 60.13 million for the 12-month period ending 31 December 2010. The raw water and electricity expenses increased by Baht 3.23 and 45.20 million, respectively, resulted from 10.99% increase in raw water sales volume.

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Costs of sales: tap water Cost of tap water business increased Baht 73.34 million or 22.14%, mainly due to the sales volume increase at 11.07%, as the company recognize the expenses from selling 5.06 million cubic meter of tap water to Cholburi Waterworks from April 2010, valued Baht 44.38 million. The expenses from Rayong Waterworks increased by Baht 7.33 million as the sales volume increased by 0.73 million cubic meters.

Costs from selling project assets The company recognized the cost of sales from pipelining project Pra Sae to Klong Yai Reservoir, in which the company transferred assets and received full payment on 2 April 2010 and 8 April 2010, respectively. The total cost were at Baht 1,507.46 million

Rental and service costs The rental and service costs decreased by 33.40 million Baht, or 13.92%, as the service engineering contract expired. However, the rental expenses increased by Baht 23.46 million as the tenants increased and the recognition of additional depreciation expenses of Baht 1.35 million after the civil court delivered its judgment on a lawsuit between the company and a building contractor.

Selling expense The Selling expenses increased by Baht 8.35 million, representing 20.22% as the Company continue to develop relationship with clients through Customer Relationship Management (CRM) activities, such as arranging thank you party to meet clients and take any feedback as well as the corporate PR activity through various medias to increase the company’s recognition.

However, those costs increase was in line with the budget plan.

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Administration expense The administration expense decreased by Baht 10.43 million or 4.79% due to the company continued cost control effort.

Expenses for life quality and environmental development The expenses for life quality and environmental development increased Baht 12.95 million, or 59.84%, as the Company foresee the risk of drought that may widely affect the people and the Company’s water reserve. The Company supports Eastern Royal Rain Project and the Royal Rain and Aviation for Agriculture Fund to make artificial rain to reduce damage from drought and lack of water problem in the agricultural activities. During 2010, the Company is constructing the third pipeline connecting Nongplalai – Maptaput.

The Company emphasized on promoting understanding and good relationship with the surrounding communities through Corporate Social Responsibility (CSR) activities such as Young Children Development Project in Rayong. Also, the Company also donated to assist flood relief and support “Her Majesty the Queen Jubilee” via Mother of Earth Foundation. The Company also support Cultural Ministry to arrange His Majesty the King celebration of 83rd birthday on 5 December 2010.

Finance cost The finance costs decreased Baht 30.31 million or 25.23% from the previous year as the Company pre-paid up long-term loans valued Baht 700 million during 2009 which reduced interest expenses

by Baht 32.00 million. The Company also financed its working capital by short-term loan with average interest cost of 2.75%, which is lower than the bank loans.

1.3 Financial ratio analysis for 2010 and 2009 Financial ratio 2010 2009 Difference 61.69 63.88 -2.19 Raw water – gross profit margin (%) 43.51 47.91 -4.40 Tap water – gross profit margin (%) 38.12 59.90 -21.78 Total gross profit margin (%) 57.10

-2.80 Total gross profit margin* excluding Pra Sae Project (%) 19.44 28.06 -8.62 Net profit margin to total revenue (%) 27.87

-0.19 Net profit margin to total revenue* excluding Pra Sae Project (%) 14.03 12.96 1.07 Return on equity (ROE) (%) 13.41

0.45 Return on equity (ROE)* excluding Pra Sae Project (%) 9.56 8.74 0.82 Return on assets (ROA) (%) 9.46 9.05 0.41 Return on assets (ROA) * excluding Pra Sae Project (%) 0.49 0.44 0.05 Debt to equity ratio (x) * The financial ratio that exclude revenue, cost of sales as well as profits and tax related to the pipelining project connecting Pra Sae Reservoir to Klong Yai Reservoir, Rayong Province to make comparison only on the Company’s normal operation.

Details of the Company’s profitability ratio are as followed.

• Gross profit margin • Raw Water - Gross profit margin was at 61.69%, down 2.19% from the previous year, as the Company change its depreciation calculation method, which makes depreciation expenses for the accounting year ended 31 December 2010 increased by Baht 60.13 million.

However, if the Company adjusts the gross margin for the year ended 31 December 2009 based on similar straight line depreciation method, the 2009 gross profit margin should be at 60.72%, which imply profitability improvement based on similar accounting practice.

•

•

Tap Water - Gross profit margin was at 43.51%, down 4.40% from the previous year. This is due to negative consumer price index (CPI) in 2009 at -0.8%, which result in lower water selling price as it is calculated based on the index. Also the CPI was at 3.30% during 2010, which affect the Company’s expenses.

Total gross profit margin was at 57.10%, down 2.80% from the previous year, as a result of what being explained in the clarification on raw and tap water businesses above.

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•

•

•

Net profit margin was at 27.87%, down 0.19% from the previous, due to a change in depreciation calculation method and reduced finance cost.

Return on equity (ROE and Return on Assets (ROA) were at 13.41% and 9.46%, respectively, an increase of 0.45% and 0.41%, respectively.

Debt-to-equity ratio (D/E Ratio) was at 0.49x, up 0.05x from the previous year, as the Company is constructing the third pipeline connecting Nongplalai – Maptaput, which result in an increased loan to finance such project. However, the Company has debt service coverage ratio of 3.82x, which imply good ability to service interest expense and repayment.

The Company’s debt ratio is still good compared 2.0x D/E ratio and 1.1x DSCR specified in the loan covenant.

2. Analysis of Balance Sheet 2.1 Assets

As of 31 December 2010, the Company and subsidiaries’ total assets were at Baht 9,870.60, increased by Baht 722.82 million, from total asset as of 31 December 2009.

Current assets decreased by Baht 290.07 million, driven by 1. The reduction of project asset worth Baht 646.49 million as the Company transferred assets from pipeline project Pra Sae – Klong Yai Reservoir to the Royal Irrigation Department (RID) on 2 April 2010 and collect full payment from RID on 8 April 2010.

2. An increase in cash and equivalent of Baht 318.32 million as the Company purchase a repurchase agreements (REPO) valued Baht 295 million to reserve

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cash flow for investment and working capital. The subsidiary also increased cash and equivalent by Baht 15.10 million as Chachongsao Waterworks Company Limited required that the subsidiary retain profits from operation after payment dividend in form of bank deposits.

3. An increase of other current assets by Baht 48.44 million mainly due to the subsidiary’s accounts receivable of Bath 46.73 million as a result of delay penalty of Baht 41.85 million as well as a receivable for an advance to relief its operation of Bath 2.68 million.

Both receivables would be fully charged back to the contractors.

• Non-current assets increased by Baht 1,012.89 million, driven by 1. An increase in plant, properties and equipment-net of Baht 1,015.10 million due to asset acquisition and depreciation. The Company receive part of the third pipeline connecting Nongplalai – Maptaput in 2010, valued Baht 1,215.60 million.

2. A decrease in the cost of deferred concession right – net valued Baht 14.43 million as the subsidiary has written off such right in 2010 wroth Baht 26.74 million. The Company also added the concession right from renovating main pipeline in Rayong Waterworks area and installing water meters in Sattahip area valued total of Baht 12.31 million.

3. An increase in other non-current asset worth Baht 16.17 million, due to two subsidiaries has pay Baht 18.00 million to secure referral right and advisory service from a foreign advisory firm according to the concession contract with Provincial Waterworks Authority (PWA). The subsidiary recorded such transaction as the accrued expenses, which will be amortized throughout the life of the remaining concession.

4. A reduction of bank guarantee deposit value Baht 7.00 million, which has been reclassified into current assets in current accounting period as the

Company negotiate with the Bank to not have to maintain fixed deposit with the bank.

5. An increase in long-term investment-net of Baht 6.08 million as the Company increased its investment in Egcom Tara from 15.00% to 15.88%.

2.2 Liabilities

As of 31 December 2010, the Company and subsidiaries has total liabilities of Baht 3,253.68 million, increased Baht 449.62 million, from 31 December 2009.

• Current liabilities increased by Baht 478.23 million, driven by 1. An increase in current portion of long-term loans of Baht 185.65 million, as the Company’s longterm loan increased by Baht 150.00 million from end2009 of Baht 100 million, making a total of Baht 250.00 million as of end-2010, according to the loan agreement between the Company and a financial institution.

2. An increase of short-term loan from financial institute of Baht 183.59 million as the Company issue bill of exchange to finance working capital and to pay capital expenditure (CAPEX) in plant, properties and equipment to manage finance cost.

3. An increase in account payable for fixed assets valued Baht 79.42 million, mainly driven by rising payable account from construction project of the third pipeline connecting Nongplalai – Maptaput that was Baht 51.64 million higher than the previous year.

The Company also record additional loan valued Baht 13.89 million in the lawsuit concerning head office building construction between the Company and contractor according to the judgment passed by the civil court, as well as the subsidiaries’ CAPEX to improve water distribution efficiency.

4. An increase in account payable of Baht 35.32 million as a subsidiary is negotiating with a

contractor by which the subsidiary hold back payment worth Baht 23.04 million and compensation valued Baht 11.85 million that the subsidiary must pay to PWA as the water distribution was below minimal requirement. However, the subsidiary is negotiating with the contractor to compensate for such losses in full amount.

• Non-current liabilities decreased 28.61%, driven by 1. A decrease in long-term loan of Baht 95.41 million as the Company and subsidiaries draw down loans to invest in various projects worth Baht 278.00 million, but net off with Baht 187.75 million repayments during 2010. The Company also reclassified Baht 373.41 million of long-term loans as the current portion of long-term loan.

2. An increase in guarantee payment valued Baht 65.62 million mainly due to the guarantee sum that the Company deduct from the construction project of the third pipeline connecting Nongplalai-Maptaput, valued Baht 57.64 million.

2.3 Shareholders’ equity

As of 31 December 2010, the Company’s shareholders’ equity was at Baht 6,614.14 million and minorities of Baht 2.79 million. The shareholders’ equity increased by Baht 273.20 million from 31 December 2009, which resulted from net profits during 1 January – 31 December 2010 of Baht 908.94 million net of dividend payment of Baht 632.20 million as well as the sales of assets transferred from customers valued Baht 3.40 million.

3. Cash flow analysis

For the accounting year 2010 ending 31 December 2010, the Company and subsidiaries reported cash and equivalent increase of Baht 318.32

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million, from the beginning balance of 124.57 million, driven by.

• Net cash inflow from operating activities of Baht 2,078.14 million, driven by - Improved operation. During 1 January – 31 December 2010, the Company reported net profit before tax of Baht 1,290.68 million, adjusted for noncash items (depreciation and amortization) of Baht 414.99 million and net off with dividend income, interest income, interest payment and interest write-off under financial lease valued Baht 68.04 million.

- Changes in operating assets and liabilities, which resulted in an increase in operating cash flow of Baht 692.64 million.

- The Company paid income tax of Baht 388.22 million.

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• Net cash outflow to investing activities of Baht 1,298.60 million, driven by - The CAPEX in fixed asset valued Baht 1,274.42 million, mainly in the construction of the third pipeline connecting Nongplalai-Maptaput.

- Purchase of the concession right and assets under waterworks business concession valued Baht 46.86 million.

- Purchase of Egcom Tara common shares worth Baht 6.08 million.

• Net cash outflow to financing activities of Baht 461.22 million, driven by - Net cash inflow of Baht 270.58 million from both short and long-term loans valued Baht 41.59 million, net off with debt repayment of Baht 191.01 million.

- Dividend payment of Baht 632.34 million and interest payment of Baht 99.46 million.

Therefore, as of 31 December 2010, the Company and subsidiaries has cash and equivalent of Baht 442.88 million.

Good Corporate Governance

The Company’s Board of Directors continuously values the operations under the Good Corporate Governance principles of which consider the rights and the utmost benefits of the shareholders, stakeholders as well as placing an emphasis upon responsibility toward society, community, and the environment. Last year, the Company focused on applying the Corporate Governance Report of Thai Listed Companies 2006 of the Stock Exchange of Thailand principles and guidelines on business operation and to enhance the Good Corporate Governance principles of the group of Companies by practicing the most out of them. Also, the Company had organized activities to promote the Good Corporate Governance principles among the group of companies, which led to the Company’s personnel from every level to work with “transparency, honesty, responsibility, and competitiveness.”

Corporate Governance Policy

T he Company’s Board of Directors has stipulated the Company’s Vision, Mission, and the written Good Corporate Governance Policy since August 1, 2003. The Corporate Governance Committee is assigned to propose to the Company’s Board of Directors to consider and revise the policy for the purpose of continuous development and keeping up-todate with the present situation.

In addition, the Company has placed the Good Corporate Governance principles into the curriculum of the orientation of new staff of group of companies as to create awareness of business ethic practice, one of the subjects in the principles of the Good Corporate Governance. The staff of group of companies will receive all documents and manuals for future practice.

The Company’s Directors have to sign as an acknowledgement to receive the manual of the Directors on the orientation day of the new Directors.

In 2010, the Company’s Board of Directors had considered the 5th revision on May 6, 2010, with written statement in the manual of the Directors and Corporate Governance Principles as follows:

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- Prevention of access to internal information policy as well as not to use the received fund from loan to - The Company’s stock trading policy oppose the objectives in the agreement made with - Responsibility to creditor policy loaner.”

Complaint Notification Rights of Shareholders Channels are established for notification of clue The Company has realized the rights of all or complaint on any act against law or morality, shareholders by focusing on basic rights of the shareholders as stipulated by laws and regulations, and inaccurate financial reports, or defective internal control by treating the shareholders with equality such as the system which will help efficiently protect informant who stipulation of policy and guidelines of the Good cooperates with the Company in taking care of the Corporate Governance, on time disclosure with actuality Company’s benefit. All complaints can be submitted to and transparency, etc. to create the Company’s the Audit Committee through the following channels: Email: The Audit Committee operating growth with value and sustainability.

AC_EW@eastwater.com

Postal Service: The Audit Committee The Rights of Stakeholders Eastern Water Resources Management and The Company’s work philosophy focuses on Development Public Company Limited responsibility and equality treatment with credibility East Water Building, 25th Floor, No. 1 toward all stakeholders as follows: Vipavadeerangsit Soi 5, Vipavadeerangsit Road, (1) The Company is responsible to its Jomphol, Chatuchak, Bangkok 10900 shareholders by providing appropriate and fair return of The policy is disclosed in the Annual Report investment to the shareholders as well as maintaining (56-2) and the complaints shall be notified via the stable financial situation which benefits to the existence channels on the Company’s and growth of the Company website: www.eastwater.com (2) The Company is responsible to customers

by providing quality water resources and products The Shareholders’ meeting management and development and other services to create the utmost satisfaction to customers.

Prior to the meeting date (3) The Company is responsible to its - The meeting date and the agendas of the employees by treating them with respect to their lawful Shareholders’ Annual General Meeting 2009 were rights and providing safe workplace environment, good informed at least 30 days prior to the meeting date via benefit, and fair employment condition truly reflecting the information system of the Stock Exchange of the market situation, including promoting the value of Thailand and the Company’s website. human resources at their full potential.

- Letter of meeting invitation and meeting (4) The Company is responsible to business agendas - objectives, reasons, opinions of the Board of partners with the relationship that creates the greatest Directors - and a proxy authorization letter both in Thai mutual benefit to contractors, suppliers, and joint and in English were sent to the shareholders. Also, the investors under the Good Corporate Governance document dissemination was informed to the (5) The Company is responsible to society and shareholders at least 14 days prior to the meeting date environment by operating the social responsibility and publicly announced in the newspapers at least 3 business with respect and conformity to laws and days prior to the meeting date. In addition, the related regulations to prevent against any impact which Company had posted the information of the may cause the loss to life or processions of an shareholders’ meeting invitation letter and meeting individual, community, and the environment. documents on the Company’s website 14 days in In 2010, the Board of Directors had additionally advance before the meeting date. stipulated the subject of responsibility toward creditors - When the shareholders cannot attend the “To treat creditors in accordance with conditions as meeting by themselves, they can exercise their rights to indicated in the contract, and not to cove the actual vote following the proxy authorization form A or B or C financial situations of the Company and its subsidiaries, stipulated by the Department of Internal Trade under

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the Ministry of Commerce. Also it is stipulated that two independent directors shall be proposed as the shareholders’ representatives to attend the meeting and exercise their votes.

- The individual shareholders are provided an opportunity to propose the AGM’s agendas and candidates to be chosen in the position of the Directors through the Company’s website in advance. In 2009, the Company provided the proposition to the individual shareholders from October 1 - December 31, 2009 and it had been informed in advance from September 28, 2009 via the information system of the Stock Exchange of Thailand and the Company’s website.

Meeting Date - The shareholders’ Annual General Meeting 2009 was on March 19, 2010 at Vibhavadi Ballroom, Sofitel Centara Grand Hotel Bangkok. The Company had utilized the E-Voting program with barcode system for vote counting of Thailand Securities Depository Co. Ltd. which facilitated the registration and vote counting for the shareholders at the meeting.

- There were 11 Directors of the Company (100% of the total Directors) attending the meeting of whom included Chairman of the Board, Chairman of Corporate Governance Committee, Chairman of Audit Committee, Chairman of Management and Investment Committee, Chairman of Nominating Committee, Chairman of Remuneration Committee, Chairman of Risk Management Committee, and Chairman of Regulation Enforcement and Operating Results Assessment Committee, senior executives of the group of companies, auditors and law consultants, attending the meeting to answer questions and acknowledge the shareholders’ opinions.

- Before the meeting started, Chairman of the meeting shall inform the voting method and vote counting at each agenda. Also, prior to the voting of every agenda, Chairman of the meeting shall provide an opportunity for all shareholders to equally examine the Company’s operation with inquiries, opinions, and suggestions under the informed appropriate time. The voting is performed after the Directors and Executives clearly provide answers to every question. However, the agenda of the Directors’ nomination, Chairman of the meeting shall inform the shareholders to vote each candidate as an individual in voting card.

- Chairman of the meeting shall inform the voting results in each meeting agenda for the meeting’s

acknowledgement prior to the end of the meeting.

Chairman of the meeting is entitled to perform the meeting in accordance with the Company’s regulations by performing the meeting following the agendas stipulated in the meeting invitation, unless, the meeting has a resolution to change agendas’ order with the voting result of no less than 2/3 of the attended shareholders. Hence, the meeting completely considers every agenda; Chairman shall inform the shareholders that the shareholders with the total of no less than 1/3 of the total sold shares may ask the meeting to consider other matters. In 2009, there was no change of the order of the meeting’s agendas as indicated in the meeting invitation and there was no additional agenda proposed.

After the meeting - The Company is entitled to provided the Shareholders’ Annual General Meeting report and submit to the Stock Exchange of Thailand and the Securities Exchange Commission within 14 days starting from the meeting date. All information are included in the meeting report as well as the clear meeting’s resolution with voting results of agreement, disagreement, and abstention.

- The Company shall disseminate the Shareholders’ Annual General Meeting report to the shareholders through the information system of the Stock Exchange of Thailand and the Company’s website within 14 days.

- The Thai Investors Association had organized the Annual General Meeting Quality Evaluation 2009 of which the Company was rated “Excellent” (which was better than “Very Good” from the Annual General Meeting Quality Evaluation 2008.)

Leadership and Vision

The Company’s Board of Directors plays an important role in defining of vision, policy, and strategy of the Company by setting the Corporate Plan every three years for the business. Each year, the Company’s management team will propose strategies and activities to the Management and Investment Committee and the Board of Directors of the Company, respectively, for further consideration, comments, and approval of the operating plan and annual budget. Apart from this, the management team will provide quarterly report of the progress of the annual operating plan and important

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problems to the Audit Committee’s meeting and to the Board of Directors for further acknowledgement. In addition, the management team will propose to the Board of Directors to consider approving important investment project procurement worth more than Baht 200 million.

The Company’s Board of Directors has closely followed the performance of the Management team by requesting for the report of the targeted operating results in comparison with the operating results of the Company. This is one of the Board of Directors’ meeting agendas RE: the report of quarterly financial status of the Company. In addition, the Board of Directors has realized the compliance of laws and regulations by requesting the management team to report any change of laws and regulations prescribed by the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET).

Conflict of Interest

The Company’s Board of Directors has established the policy concerning conflict of interest in the Good Corporate Governance principles and the manual of the Board of Directors as follows: - In the case when the Board of Directors assigns the Company’s personnel to perform duty on behalf of the Board of Directors, the assignment must be in written form or reported as the Board of Directors’ resolution in the Board of Directors’ meeting report, and the scope of the authorization is clearly stated the. The authorization shall exclude the approval of the authorized person to perform any duty which the authorized person may have conflict of interest.

- Dutifully, all level of personnel shall avoid any conflict of interest which may affect the group of companies’ benefit or which may create conflict at work.

- All staff has a duty to disclose any matter, which may lead to a conflict of interest, to the supervisor. The details of the matter shall be attached for further consulting with the President & CEO. - The power in the position of the Directors of the Company or the Company’s subsidiaries shall not be used to directly or indirectly seek for benefit of individual or close relatives.

The Board of Directors and Executives are dutifully subjected to report as follows: - The conflict of interest of individual and connected persons to the Company for

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acknowledgement and the Corporate Secretary shall submit the copy of the report to Chairman of the Board and Chairman of the Audit Committee for acknowledgement.

- The shareholding of the Board of Directors and Executives and connected persons is stipulated to be an agenda of every meeting of the Board of Directors.

The Company’s connected transaction shall strictly follow the practice guidelines of the Notification of the SEC and the SET. At the meeting of the Board of Directors, the management shall inform the meeting about the transaction and the Directors with conflict of interest concerning the matter shall be abstained from voting and shall leave the meeting of the Board of Directors.

The Company has prescribed suppliers or trading partners to report the conflict of interest with connected person as stipulated by the SEC’s regulations. The report serves as important information for the management team to approve any transaction of conflict of interest with carefulness. Any connected transaction of the Company and the affiliated companies, including the Company and all stakeholders will go through clear and accurate approval procedures by following pricing structure and trading condition as applied to other trading partners of the Company. The connected transaction will be disclosed in the Annual Report and the 56-1 Form.

Business Ethics

T o express the business operating determination under the Good Corporate Governance principles, the Board of Directors has stipulated the notification of “the Good Corporate Governance of the Group of Companies”, “the Board of Directors Manual”, and the Code of Business Ethics which was effectively announced on August 17, 2006. All of which have been constantly improved to be up-to-date and appropriate with any changing principles. The latest editions were made on May 6, 2010 in order to be standards for practicing following the Good Corporate Governance principles. All of Company’s directors are to sign in acceptance of the Manual. For the staff of the group of companies, the Company has continuously organized several projects to promote knowledge and understanding of the Good Corporate Governance.

Power check and balance of

Non-Executive Directors

There were 11 members of the Board of Directors, as ended December 31, 2010, consisting of:

1 Executive Director 6 Non-Executive Directors 4 Independent Directors

approval legal binding to the Company and no conflict of interest of finance and management of the Company and its affiliated companies.

Remunerations of Directors and Executives

12 12 12 12 12 12 12 12 12 12 - - - -

137,500 110,000 110,000 110,000 90,000 110,000 70,000 110,000 110,000 100,000 - - - -

- 210,000 230,000 70,000 80,000 220,000 210,000 80,000 260,000 80,000 - - - -

Directors’ Remuneration (Baht)

450,000 360,000 360,000 360,000 360,000 360,000 360,000 360,000 360,000 360,000 - - - -

Bonus (Baht)

Chairman Director Director Director Director Director Director Director Director Director Former Director Former Director Former Director Former Director

Period in position in 2009(Oct 08- Dec 09) (For Bonus Consideration)

1 Mr. Utid Tamwatin 2 Mr. Kanoksakdi Bhinsaeng 3 Pol. Lt. Gen. Somyot Poompanmoung 4 Mr. Wiset Chamnarnwong 5 Mrs. Monta Pranootnorapal 6 Mrs. Niskorn Tadthiemrom 7 Mr. Boonmee Juntaravong 8 Mrs. Leena Charernsri 9 Pol. Maj. Gen. Pimol Sinthunava 10 Mr. Rasda Pongpaew (1) 11 Mr. Chakarn Saengruksawong 12 Mr. Nattachak Pattamasingh Na Ayuthaya 13 Pol. Gen. Ajiravid Subarnbhesaj 14 Mr.Chanchai Tontisirin

Meeting Allowance of the Sub-Committee (Baht)

Names of Directors

Meeting Allowance of the Company’s Board of Directors (Baht)

Period in position in 2010 (months)

Remunerations of the Board of Directors and Executives are in accordance with the principles and policies which were stipulated by the Board of Directors. The Remuneration Committee shall consider the remuneration following the period in the position on the net profit, dividend payment, and operating Centralization and Decentralization of Power based results of the Company’s Directors. However, the The Board of Directors places an importance monthly remuneration shall be reduced in accordance upon transparency of business operation, decision with the economic situation which shall be annually making decentralization, and clear separation power of reconsidered. The appropriate remuneration shall be screening and consideration of approval. Chairman of proposed to the Board of Directors and shareholders (in the Board shall not be the same person as President & the part of the Board of Directors). In the fiscal year CEO, members of the Audit Committee shall be 2010, the Company paid the remunerations to the Independent Directors with no authority to sign Board of Directors and Executives as follows:

Remunerations of the Board of Directors and Executives in fiscal year 2010 Remunerations of the Board of Directors from January 1 – December 31, 2010 Unit: Baht

15 15 15 7 15 7 7 10 15 15 4 5 8 8

656,250 525,000 525,000 245,000 525,000 245,000 245,000 350,000 525,000 525,000 140,000 175,000 280,000 280,000

Remark: (1) The Baht 525,000 remuneration of a director, Mr. Rasda Pongpaew, was based on the regulations of Electricity Generating Pcl. (EGCO), which was directly transferred as director’s remuneration of directorship in other companies to the account of the Thai Forest Conservation Foundation - a foundation, established to raise awareness and create networking alliance for forests and water resources conservation and protection.

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Remunerations of Management

Eleven members of the Company’s Executives Directors and Executives received benefits for 2010 operating results in the form of salaries and remunerations, totaling Baht 37,624,638.35

Securities Holding As of December 31, 2010, none of 11 members of the Board of Directors held the Company’s securities as appeared in the summary in responsibility .

Eleven members of the Executives Directors and Executives of the Company held 1,235,580 ordinary shares (as of Oct 30, 2010)

Contributions to Provident Funds In the fiscal year 2010 as ending December 31, 2010, the Company’s contributions to the Provident Funds for 11 Executive Directors and Executives accounted for Baht 1,807,133.76

The Board of Directors Meetings

The Board of Directors’ monthly meetings are normally scheduled in advance for the whole year to be set on the third or the fourth week of the month which are planned in advance for the whole year to facilitate the Directors’ time for every meeting. The President &

CEO, serving as the Secretary to the Board of Directors, shall coordinately include the scopes, importance orders, and subjects as meeting agendas. The important matters will be included in meeting agendas for consideration and other subject will be ordered in certain agendas following its importance and urgency.

The letter of meeting invitation with meeting agendas and relevant documents will be sent in advance to the Board of Directors to review the information before attending every meeting. During the meeting, after the completion of the management’s presentation, Chairman shall ask the Directors to raise questions or express their opinion and mutually discuss problems.

Hence, the conclusion is received, Chairman shall provide conclusion as the resolution of the meeting for clarification and accuracy and mutual acknowledgement which lead to careful consideration as well as providing sufficient time for the Directors to mutually discuss the problems. If there is no objection of the meeting’s resolution, Chairman shall lead to the consideration of the following agenda. In the fiscal year 2010, there were 12 meetings of the Board of Directors.

Details on individual director’s attendance are summarized as follows:

1 2 3 4 5 6 7 8 9 10 11

Names of Directors Mr. Utid Tamwatin Mr. Kanoksakdi Bhinsaeng Pol. Lt. Gen. Somyot Poompanmoung Mr. Wiset Chamnarnwong Mrs. Monta Pranootnorapal Mrs. Niskorn Tadthiemrom Mr. Boonmee Juntaravong Mrs. Leena Charernsri Pol. Maj. Gen. Pimol Sinthunava Mr. Rasda Pongpaew Mr. Praphant Asava-Aree

Chairman Director Director Director Director Director Director Director Director Director Director

Meeting attended /No. of Meetings 12/12 12/12 12/12 12/12 10/12 12/12 7/12 11/12 12/12 11/12 12/12

The Board of Directors had a policy to set up meetings with Independent Directors in January and June 2010 and Directors meeting which excluded Executive Directors in January 2010.

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The Committees

The Board of Directors has appointed the Sub-Committees which consist of members with appropriate expertise to review and examine the works assigned to them to initially ensure their accuracy and clarity following the Company’s missions and policy prior to proposing them to the Board of Directors for approval, or ratification, or further providing additional recommendations, depending upon the case. Details on the committees appointed by the Board of Directors and their meeting attendance during the fiscal year 2010 are as follows:

Audit Committee As of December 31, 2010, the Audit Committee comprised three Independent Directors, and one advisor, namely: No.

Name- Surname

Position

No. of Meeting Attended / No. of Meeting

1.

Mrs. Niskorn Tadthiemrom

Chairman

10/10

2.

Pol. Maj. Gen. Pimol Sinthunava

Director

10/10

3.

Mr.Boonmee Juntaravong

Director

10/10

4.

Mr. Chakkrit Parapuntakul

Advisor to the Audit Committee

8/10

The Audit Committee is responsible for ensuring the accuracy and credibility of the Company’s financial statement following the generally accepted international accounting procedures prior to proposing to the Board of Directors. The Committee’s management procedures shall perform with effectiveness, independency, and focus on transparency and clear guidelines between the Board, the Internal Audit Department, the Management, and the External Auditor in order to revise and provide recommendation in terms of efficiency and effectiveness assessment of the Company’s internal

control system and the compliance with the law and regulations. Also, the consideration of connected transaction or conflict of interest transaction shall be performed with lawful and reasonable implementation and shall maintain the utmost benefit of the Company.

The disclosure of information shall be included into the Auditing Report in the Company’s annual report. In addition, the Committee is initially responsible for appointment and remuneration of the external auditors to further proposing to the Board of Directors and the shareholders.

As of December 31, 2010, the Management and Investment Committee comprised three Directors, namely: No

Name - Surname

Position

No. of Meeting Attended / No. of Meeting

1.

Mr. Kanoksakdi Bhinsaeng

Chairman

17/17

2.

Pol. Lt. Gen. Somyot

Director

16/17

3.

Mr. Praphant Asava-Aree

Director

17/17

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The Management and Investment Committee are assigned by the Board of Directors to be responsible for ensuring the efficiency and strength of the Company’s operation following the policy of the Board. The Committee is to consider revision business plan, operating plans and annual budgets, and other matters, particularly, concerning procurement of

investment project which is over the assigned authorization before proposing to the Board. In addition, the Management and Investment Committee are responsible for determination of procedures and principles for investment of projects and supporting management of the management in order to achieve the Company’s objectives and targets.

As of December 31, 2009, the Corporate Governance Committee comprised three Directors, namely: No

Name - Surname

Position

No. of Meeting Attended / No. of Meeting

1.

Mr. Wiset Chamnarnwong

Chairman

4/4

2.

Pol. Maj. Gen. Pimol Sinthunava

Director

4/4

3.

Mr. Praphant Asava-Aree Director

4/4

The Committee is responsible for supporting the operation of the Board of Directors with accuracy, transparency, and benefit maintaining of the Company’s shareholders and stakeholders by screening the manual of the Board of Directors, Business Ethics, Staff Ethics, and ensuring the practical result of development and best practices of the Good Corporate Governance

principles. Moreover, the Committee is to ensure that the Company follows important practice guidelines of the effective corporate governance procedures which are suitable and in accordance with notifications of the Stock Exchange of Thailand. The assessment shall be performed periodically in accordance with the policy.

As of December 31, 2010, the Risk Management Committee comprised five Directors, namely: No

Name - Surname

Position

No. of Meeting Attended / No. of Meeting

1.

Mrs. Monta Pranootnorapal

Chairman

3/3

2.

Pol. Lt. Gen. Somyot Poompanmoung

Director

3/3

3.

Mr. Wiset Chamnarnwong

Director

3/3

4.

Mrs. Leena Charernsri

Director

5.

Mr. Praphant Asava-Aree

Director

3/3 3/3

The Risk Management Committee’s major role ensure the appropriate implementation of the risk is to oversee and review the risk management policy management policy following the objectives by and plan, standard practices, and risk assessment, proposing to the Board of Directors. including providing suggestion to the management to

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As of December 31, 2010, the Nominating Committee comprised 3 directors, namely: No

Name - Surname

Position

No. of Meeting Attended / No. of Meeting

1.

Pol. Maj. Gen. Pimol Sinthunava

Chairman

5/5

2.

Mrs. Niskorn Tadthiemrom

Director

5/5

3.

Mrs. Leena Charernsri

Director

5/5

The Committee is appointed by the Board of Directors to select and nominate suitable persons to be members of the Board of Directors of the Company and its affiliated companies, representative directors of the

Company, the Sub-Committees of the Company, and President&CEO, including opining the management structure of the Board of Directors and the SubCommittees.

As of December 31, 2010, the Remuneration Committee comprised 3 directors, namely: No.

Name - Surname

Position

No. of Meeting Attended / No. of Meeting

1.

Mr. Boonmee Juntaravong

Chairman

4/4

2.

Mr. Rasda Pongpaew

Director

4/4

3.

Mr. Kanoksakdi Bhinsaeng

Director

4/4

The Committee’s main responsibility is to providing suggestion to the Board of Directors concerning policy, formation, and remuneration principles and other benefits of all-level personnel of the Company. The remuneration policy shall be disclosed and reported as stipulated. In addition, the Committee is to provide suggestion of performance evaluation of the Board of Directors of the Company and its affiliated companies, and President & CEO.

The Remuneration Committee shall suggest the criteria of the Directors’ bonus payment following the period in the position based on the net profit, dividend payment, and operating results of the Company’s Directors. However, the monthly remuneration shall be reduced in accordance with the economic situation which shall be annually reconsidered.

As of December 31, 2009, the Regulation Enforcement and Operating Results Assessment Committee comprised 4 directors, namely: No.

Name - Surname

Position

No. of Meeting Attended / No. of Meeting

1.

Pol. Lt. Gen. Somyot Poompanmoung

Chairman

5/5

2.

Mrs. Niskorn Tadthiemrom

Director

5/5

3.

Mrs. Monta Pranootnorapal

Director

5/5

4.

Mr. Rasda Pongpaew

Director

4/5

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The Regulation Enforcement and Operating Results Assessment Committee, appointed by the Board of Directors, are responsible for annual regulations enforcement and Corporate KPIs revision as well as to provide suggestion to the management in terms of operation and report to the Board of Directors.

The Board of Directors has a consistent and continuous a whole self-assessment every year to review performance, problem, and obstacles in the past year. The result of the assessment shall be considered for further suitable efficiency improvement of operation which is in accordance with the Good Corporate Governance principles. The self-assessment of the Board of Directors in 2010 showed the total average score of every director of 4.86 points out of 5 points.

The criteria which received the full points continued from 2009 consisted of 1) Distinctive allocation of duty and responsibility of the Board of Director and the management; 2) The establishment of prohibition of practice which may cause Conflict of Interest 3) Duty of Chairman at the meeting; and 4) Delivery of meeting’s minutes within appropriate period and examination and objection upon inaccuracy or incompleteness. In addition, the criteria which received an increase of points concerned the consideration of meeting’s agendas such as the Board’s fair opinion expression without prejudice but with independency, reasonability, and carefulness, including the criteria of equal treating toward the shareholders.

In addition, at the meeting when there were agendas concerning related transaction, the Company’s Directors whose parts were of conflict of interest had abstained from providing opinion and voting.

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Director Orientation

In 2010, there was no new Director. However, when there are new directors, the Company holds an orientation for new directors to inform business policy and other related internal information such as the shareholder structure, the Company structure, business operation, related law and regulations, including the past Board of Directors’ resolutions, etc. President & CEO and Corporate Secretary will present the aforementioned information. The new directors will receive the Board of Directors Manual and information for the directors which consist of: • The Company Profile • Operating results and activities of the Company • Thai version of annual report • Manual of the Board of Directors • Good Corporate Governance Principles • The Board of Directors’ meeting reports • Risk Management Manual • The Company’s Article of Association, certificates, rules and regulations

In addition, every year, the Company has a policy for new Directors to visit the Company’s operation, including the actual operating area to promote their understanding of the business.

Training of the Board of Directors

The Company pnts an emphasis upon training courses relating to development of knowledge, skill, understanding of the Good Corporate Governance principles, rules and regulations, including management roles and responsibility of the Company’s Directors in order to promote efficiency and morality.

Thus, the Company has continuously supported additional education and training for the Board of Directors. Moreover, the Company has applied for IOD members for Directors to receive information and additional knowledge. Apart from this, when the Company receives training invitation letters or training documents concerning Directors, the Company will pass the information to Directors for further studies.

Summary of Directors’ training courses

Members of the Board of Directors Mr. Utid Tamwatin Mr. Kanoksakdi Bhinsaen Mrs. Niskorn Tadthiemrom Pol. Lt. Gen. Somyot Poompanmoung Mrs. Leena Charernsri Mr. Wiset Chamnarnwong Pol. Maj. Gen. Pimol Sinthunava Mrs. Monta Pranootnorapal Mr. Rasda Pongpaew Mr. Boonmee Juntaravong Mr. Praphant Asava-Aree

DCP 3/2000 DCP 106/2008 DCP 120/2009 DCP 107/2008 DCP 130/2010 DCP 121/2009 DCP 104/2008 DCP 84/2007 DCP 94/2007 DCP 120/2009 DCP 101/2008

(DCP) Directors Certification Program (FSD) Financial Statement for Directors (MFR) Monitoring the Quality of Financial

Succession Plan Policy

DCP

DAP

DAP 73/2008

DAP 72/2008

ACP

ACP 27/2009

ACP 22/2008

ACP 27/2009 ACP 21/2007

IOD Training FSD RCC

FSD 2/2008

RCC 10/2010

MFR

MFR 10/2010

MFR 10/2010

RCP

RCP 24/2010

(DAP) Directors Accreditation Program (ACP) Audit Committee Program (RCC) Role of the Compensation Committee Program (RCP) Reporting Role of Chairman Program

Corporate Secretary

The Company has appointed Mrs. Namphon Rassadanukul, Senior Vice President Department of CEO office to be Corporate Secretary who directly report to President & CEO. Also, the position is a secretary to the Board of Directors of the Company with the responsibility of the meeting of the Board of Directors and the shareholders’ meeting, including the Company’s document preparation and storing, and supervision of following of law and regulations of the Company, concerning the public company. Moreover, the corporate secretary acts as the center of information or rules and regulations of the Securities Exchange Commission (SEC) and the Stock Exchange of Thailand (SET) with the supervision of Performance Evaluation of President & CEO compliance to the law and regulations relating the Company’s business operation. Corporate Secretary shall The President & CEO Evaluation Committee is stipulate work satisfaction of the secretary to the Board of assigned by the Board of Directors to evaluate the Directors for further improvement. performance of President & CEO. The Committee consists

of representatives from the Board of Directors who shall once a year perform evaluation on corporate management of President & CEO and propose the annual evaluation result of President & CEO to the Board of Directors for further consideration.

The Company has realized the importance of the efficient corporate management and stipulated the Succession plan policy as the principle and guideline for the Company to prepare candidates for the position of the Company’s management level by focusing on principles of transparency, equality, and examinable.

This is to increase capability of corporate management and create confidence among all stakeholders. The policy consists of standard of principle stipulation for personnel nomination, position screening, personnel potential assessment, and personnel preparation development.

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Selection of Directors and Executives

The Board of Directors of the Company will appoint its representatives from the Board to be Nominating Committee to select qualified candidates for directors and President of the Company as appropriated to each case. The Board of Directors of the Company has a resolution to approve the right of its individual shareholders to propose candidate’s names to the Nominating Committee for initial consideration prior to proposing to the Board of Directors. The Board, then, considers and specifies the names of the selected candidates on the shareholders’ meeting date.

In accordance to the Company’s Articles of Association, the Board of Directors shall consist of at least 5 directors, and not more than 11 directors, selected by the shareholders’ meeting and the Board of Directors will select Chairman and may select Vice President, including President & CEO and other positions

as appropriate among the Directors. And may select and appoint a director as President & CEO and may

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select Vice President, including Managing Director, and other positions as appropriated. No less than half of the Company’s Directors shall have residence in Thailand.

The nomination of the Company’s Directors performed by the shareholders’ meeting is based on the following criteria: 1. Each shareholder has one vote per share.

2. All shareholders shall exercise all their voting points stated in No.1 to elect a director or directors under the condition that the amount of voting points cannot be allocated to any specific director to receive many or less voting points.

3. The directors with the highest voting points and the runners-up shall be elected as directors. The number of elected directors must be equal to the required numbers of the election. In the case when the number of the runners-up with equal voting points is greater than that of the required director number of the election, the Chairman shall have to cast final vote.

4. The Board of Directors shall have qualification and no prohibited characteristic in accordance to the law of public company limited.

5. An independent director shall have complete qualification as stipulated by the Company’s definition of independent director which is in accordance with the regulations of the Securities and Exchange Commission (SEC) The shareholder’s meeting can have a resolution to demote any of directors prior to the term completion when the vote for support is not less than three fourths of all attended shareholders with the right to vote and the total shares accounts for no less than half of shares held by the attended shareholders with the right to vote.

The Board of Directors of the fiscal 2010, 3 of which were co-directors with the major shareholders: 1 director from Provincial Waterworks Authority, 1 director from Electricity Generating Pcl., and 1 from Industrial Estate Authority of Thailand.

Internal Information Access Control

T he Company stipulates the Internal Information Access Control guidelines of Directors, management teams, and employees of the Company in the Good Corporate Governance principles of which covering important matters as follows: 1. Directors, management teams, employees, outsourcers, freelancers shall have duty to accept lawful and ethical commitment to protect and not to disclose confidential information and document or confidential trading information which may importantly affect on the success and stability of the Company.

2. The confidential trading information must be undisclosed from the public. Any mutual use of internal information shall be performed under only assigned duty or responsibility.

3. The disclosure of information to the public must be approved under the consent of President & CEO. If the information concerns other joint-investors,

the disclosure of the information must be received the consent from the joint-investors. The center of the public information disclosure consists of Corporate Communications Department, Investor Relations Department and Accounting and Finance Department.

The Corporate Communications Department is also responsible for providing information to the Company’s staff.

In addition, the Company has informed the Directors and the executives of their duty to report the acquisition or disposal of shares of the Company of more than 5% of all disposed shares, as well as to report the shareholding to the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET) by following stipulated form and method. This is to be reported to at every Board of Directors’ meeting.

In 2010, the Board of Directors had established the Insider Trading System which was indicated in the manual of the Board of Directors and the Good Corporate Governance principles as follows: Access to Internal Information: “Directors, executives, permanent employees, including spouses and children under adulthood of the said persons shall not publicly disclose important information of the Company for share trading benefit, speculation, or taking advantage over an individual or a group of persons.”

Abstention of the Company’s share trading: “Directors, executives, permanent employees, including spouses and children under adulthood of the said persons shall be abstained from buying, selling, or transferring the Company’s shares within 1 month prior to the financial statement disclosure to the Stock Exchange of Thailand and within 3 days after the disclosure of information to the Stock Exchange of Thailand to provide sufficient time for the shareholders and investors to access and understand the importance of the Company’s information or after the completion of the financial statement submission to the Stock Exchange of Thailand.”

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Definition of Independent Directors

1 Not holding shares in excess of 1 per cent of the total voting right shares of the company, parent company, subsidiary company, associated company or related company, juristic persons which shall be possible of any conflict of interest (inclusive of related persons under Section 258 of the Securities and Exchange Act Issue 4 B.E. 2551 (A.D. 2008).

2 Not being related by blood or registered under law such as father, mother, spouses, sibling, children including spouses of the children of the executives, major shareholders, authorized persons, or the candidates to be proposed as the executives or authorized person of the Company and its affiliated. .

3 Not be an employee, staff, advisor who earns salary, or controlling person of the Company, parent company, subsidiary company, associate company, or person who may have conflicts of interest, or related company, subsidiary at the same level, or juristic person with conflict at present or in the past two years prior to the appointment.

4 Not having business of the same nature which significantly competes with the Company or subsidiary, or not taking part in partnership of any limited partnership or being executive director, employee, advisor with regular salary or holding more than 1% of total shares with voting rights of other companies which have the same business nature as the Company and significantly compete against the Company’s business operation or its subsidiary.

5 Not having business relationship with the Company. The auditor shall be exempted from being a Director. Other professional services such as law consultant, financial advisor, property assessor, etc

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shall possess the transaction value of no more than Baht 2 million per year. The details of the relationship stipulated by the SEC are as follows:

A. Relationship characteristics • Professional Services

1. Auditor and other professional services such as law consultant, financial advisor, property advisor, etc.

2. Significant level of dependency - Auditor: Prohibited - Other professional services: the transaction value of more than Baht 2 million per year • Trading/ Business Relationship (Following the SET’s connected transaction) - Relationship: Cover all types of business such as normal business transaction, leasing transaction/ property leasing, property service transaction, providing or receiving financial aids.

- Significant level of dependency: Transaction value is over or equal Baht 20 million or over or equal 3% of the Net Tangible Asset (NTA), depending on which value is lower.

B. In the case of the relationship follows A. with the juristic person, person of dependency such as major shareholders, directors (excepting Independent Directors/ Audit Committee) C. The relationship in A. and B. shall not be involved at present and 2 years prior to the appointment 6. Not being the Director appointed to be a representative of the Company’s Directors, major shareholders, or shareholders who are related to the Company’s major shareholders 7. Not possessing any characteristic which may prevent from expressing opinion with independency.

INTERNAL CONTROL The Company places an importance upon the internal control system by focusing on sufficient and appropriate internal control system as well as supportive to the business effectiveness in terms of finance, operation, risk management, and governance.

The important principles and information of sufficiency assessment of the internal control system can be categorized into 5 areas as follows:

Corporation and Environment

The Board of Directors plays an important role to stipulate vision, policy, and strategy of the Company which cover the principle of the Balanced Scorecard by specifying long-term business plan, including providing opinion and approving strategy, activities, and annual operation plan. In addition, the Key Performance Indicators (KPIs) are applied with the corporate performance assessment which lead to the fair and effective performance record and assessment, following the Company’s target and objectives.

The corporate internal management policy focuses on the power checking and balancing of the Board of Directors, management, and shareholders.

The Board of Directors consist of Independent Directors or external Directors of no less than onethirds of the total Company’s Directors in order to create the power checking and balancing with the Directors who have conflicts of interest against the Company. There are also communication channels for the investors to disseminate and communicate information of the Company for the public’s consistent acknowledgement. Moreover, the sets of committees are established to consider and provide decision of related important matter for the benefit maintenance of the shareholders. In addition, the Company has announced the compliance to the Good Corporate Governance of Eastern Water Resources Development and Management Pcl., the ethic of the Board of Directors, and the business ethic of the employees for every level of the Company’s employees to follow in order to create honesty and morality of the business operation.

Risk Management

T he Company follows the Enterprise Risk Management by assessing risks in each process and analyzing risk factors, present control measurement, and stipulating additional control measurements. All staff from every department are continuously encouraged to participate in assessment process and risk management of the Company. The risk management operation plan is established to increase and strengthen the efficiency of the Company’s internal control system as well as to decrease the risk to the acceptable level which is in accordance with the ever changing circumstances and risks. In addition, the Company has set up special units to be responsible for the record of operating results, risk management project, assessment, and provide risk management report to the Risk Management Committee and the Board of Directors for consideration and providing decision which will lead to the dynamic, consistent, and continuous risk management process of the Company.

Operation Control of the Management

T he Company has stipulated the scope of power and the authorization of approved financial amount of the management following the good internal control principles: the separation of duty and intertransaction review by separating the duty of approving, recording accounting item and information, and the duty of asset supervision. In addition, the Company has received the quality certification of standard system of ISO9001:2000 and ISO 14001:2004 which specifies that the Company shall provide manual and Work Procedures and Work Instructions as standards for operating reference, as well as provide trainings for employees to stimulate understanding which leads to accuracy of operation, following the operational process and methods stipulated by the Company.

W hen there is a transaction between the Company and its affiliated companies, including companies and persons with joint benefits shall go through the consideration of approval procedures with

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accuracy as stated in the conditions. They are treated in the same way as other trading partners of which the information is disclosed in the remark of the financial statements.

T he Company has closely followed the operation of the affiliated companies with continuity and consistent. The operating results of each affiliated company will be reported to the Board of Directors of the Company for acknowledgement. Also, the special unit will be assigned to closely record the operating results, following the resolute suggestion of the Board of Directors. In addition, the special unit will coordinate with every company to ensure the consistency of the operation direction with the policy of the Board of Directors. Moreover, the Compliance unit is established to supervised the Company’s operations to be in accordance with related laws, rules, and regulations.

Information Systems and Communications

T he Company provides enough important information to the Board of Directors for consideration.

The information will be submitted to the Board in advance for revision and initial study of the information.

Every agenda of the meeting of the Board of Directors and the Sub-Committee time will include details in the summary of background, previous meeting resolution, law indication relating to the meeting agenda (if any) for the Board’s acknowledgement with completeness and comprehension the Board also provide decision and suggestion which lead to continuous corporate improvement and development. Then, the fact of the management’s progress following the opinions of each Sub-Committee will be indicated which covers reasons, business sensitivity analysis, and difficulties or possible impact. However, the proposal of the suggestion for consideration will always include consideration, and/or optional consultation, and/or consideration. At every submission of the meeting report, the Company will inform each Director to correct the meeting report within the due period after receiving the report around 7 days.

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In addition, the Company has continuously applied and developed the information system and internal database system to facilitate all level of the Company’s the Company to access to the data and information concerning operation at appropriate level through the clear policy and system of the right to information. The information and the data are for consideration and decision making of the operation.

Tracking System

The Company’s operational recording system aims to continuously follow the targeted operation as stipulated in the long-term business plan and annual operation plan. The result of the operating progress and the KPIs will be quarterly presented to the Board of Directors for consideration of improvement of delay or weaknesses to be in accordance with the ever changing situation with the emphasis on prompt solving.

The Company greatly places an importance on internal auditing by focusing on increase value of the corporate internal auditing with the annual implementation of corporate risk assessment result, risk based audit, and hiring co-sourcing of internal auditing with the Audit Department. As a result, the Board of Directors and the management can be confident of the efficiency and effectiveness of the Company’s internal control system and the creditability of information such as finance and accounting information and operational information. All of the operations are performed in accordance with laws, rules, and regulations relating the Company. In addition, there is the operating results record process through the recording system, quality system, and the Company’s internal environment continuously following the international standard of ISO 9001:2000 and ISO 14001 : 2004.

A ccording to the consideration of the important information of the sufficiency assessment of the aforementioned internal control system, the Board of Directors is confident that the Company’s internal control system is sufficient and appropriate with the business operation, transparency of operation, and effectiveness support of the sustainability of the business operation.

Corporate Governance Report of the Audit Committee for the Fiscal Year 2010

The Board of Directors of Eastern Water Resources Development and Management Pcl. appoints the Audit Committee which consists of 3 Independent Directors whose qualifications are suitable following the stipulation of the Stock Exchange of Thailand. Moreover, the Board of Director has specified the qualification, position period, and responsibility of the Board of Directors written in the Charter of the Audit Committee.

In 2010, the Audit Committee had altogether 10 meetings which included the meetings with the Audit Department, the Company’s Executives, and the Auditors. The Audit Committee made inquiry and listened to the explanation of related persons at the meetings till the Committee was satisfied. The Audit Committee reported its meeting result to the Board of Director as a regular agenda. The Audit Committee had completely followed the stipulated Charter which can be summarized as follows:

1. Review the accuracy and creditability of the financial statements and the connected transaction

2. Supervision of the internal control system

The Audit Committee considered the auditing plan of 2010 which covered the scope of the examination based on the Risk Based Internal Audit Plan of which the information from the Company’s 2010 risks assessment results, interview with the Executives on their needs and concerns, financial statement analysis, and remarks received from the auditors, covering all of the Company’s units.

The Audit Committee reviewed the results of the efficiency and effectiveness assessment of the internal control system which were jointly tested by the Audit Department and the consultant company to ensure the compliance of the Company’s processes to the international standards. The Audit Committee provided additional suggestion which was beneficial to the operational improvement with effectiveness and efficiency to the Company. The management of the Company was closely followed by the Committee to ensure its improvement following the suggestion. The management shall report to every meeting of the Audit Committee.

The result of the assessment of the internal control system reported that the Company’s internal control system was sufficient and there was no important problem or defect detected which was in accordance with the Company’s auditors’ opinion.

The Audit Committee considered reviewing of the quarterly financial statement and the annual financial statement of 2010 of the Company with the auditors and the internal auditors, as well as received the explanation from the management to ensure the accuracy, creditability, and sufficiency of the accounting budgeting estimation, sufficient and in time 3. Compliance to related laws and information disclosure, and providing remark of the regulations important matter, beneficial to the Company.

The Audit Committee’s supervision is to ensure In 2010, the Audit Committee reviewed and the transparent information disclosure and the provided opinion concerning the International Financial Reporting Standards (IFRS) prior to proposing to the compliance to the laws concerning the business Board of Directors for consideration of approval of operation and the laws of the securities and exchange. implementation in 2011.

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4. Supervision of the internal auditing 6. Review of the manual and the The Audit Committee considers and approves Charter and self-assessment of the the operational plan, annual budget, and manpower of the Audit Department, including supports and Audit Committee encourages the independency of the operation of the Audit Department. In addition, to increase the efficiency of the operation, the Audit Department directly reports to the Audit Committee.

In 2010, the Audit Committee considered hiring a consultant company, KPMG Phoomchai Business Advisory Ltd. to join the internal auditing operation as co-sourcing with the Audit Department’s personnel in order to provide and exchange experience for better efficiency of the group of companies’ internal auditing. The findings from the auditing would continuously increase the value to the Company.

The Audit Committee had considered approval of the improvement of the revised the manual and the Charter of the Audit Committee which received an approval from the Board of Directors.

5. Review of the Auditors’ operation

The Audit Committee had special meetings with the Auditors to ensure the independency of the Auditors and to understand the Auditors’ plan and scope of work.

The Audit Committee has acknowledged the assessment result of the consideration of the appointment of the Auditors for 2011 from the management of the group of companies of the present Auditors from PricewaterhouseCoopers ABAS Ltd. (PwC). After receiving the assessment result and consideration of experience, qualification, and fee, the Audit Committee had presented to the Shareholders’ Annual General Meeting 2010 for approval of appointment auditors from PricewaterhouseCoopers ABAS Ltd. (PwC), consisting of Mr. Vichien Khingmontri. C.P.A. (Thailand) No. 3977, or Mr. Prasit Yuengsrikul C.P.A.(Thailand) No.4174, or Mr.Sudwin Panyawongkhanti C.P.A. (Thailand) No. 3534 to be the Company’s auditor in 2011 with the auditing fee of Baht 940,000.

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The Audit Committee reviewed the Charter and the manual of the Audit Committee (the 7th review) which was in accordance with the ever changing situation and could ensure the complete operation in the past year as assigned and ensure the compliance with the Best Practice guidelines of the Stock Exchange of Thailand (SET). This will be proposed to the Board of Directors’ meeting for approval. Moreover, the Audit Committee had performed self-assessment of the whole committee and performed cross individual assessment which followed the Good Corporate Governance and of which the results were reported to the Board of Directors for consideration. The selfassessment result of the whole committee and individual reported excellent.

In sum, the Audit Committee completely performed its duty as stipulated in the Charter of the Audit Committee approved by the Board of Directors which was in accordance with the stipulation of the SEC and the SET. The Audit Committee and the Auditors also had the same opinion toward the accuracy of the financial statements of the Company as they should be following the general accepted accounting standards of Thailand. Also, the disclosure of the connected transaction was complete and accurate. Moreover, the Company’s internal control system and auditing system were appropriate and effective. The operation throughout the year 2010, there was no significant findings of the non-compliance to the regulations, obligations, and related laws. There were operational improvements to continuously adjust with the ever changing business environment.

(Mrs. NISKORN TADTHIEMROM) Chairman of the Audit Committee

Good Corporate Governance

Report of the Corporate Governance Committee The Board of Directors of Eastern Water Resources Development and Management Public Company Limited have realized the importance of business management by following the corporate value with corporate sustainable growth under the intention of implementing the good corporate governance principles. The Company sees the importance of good corporate governance enhancement to create confidence and satisfaction among stakeholders. In 2010, the Corporate Governance Committee had approved and proposed the revision of the good corporate governance principles and guidelines of the Board of Directors to the Board of Directors as follows:

• The policy of internal information access prevention which stipulates that Directors, Executives, permanent employees, including spouse and under legal age child (dren) of the said persons of the Company, are prohibited to take forth important undisclosed information of the Company for their own benefit of stock trading and take advantage of a person or a group of persons • The Company’s stock trading policy stipulates that the abstention of the Company’s stock trading is prohibited within the period of 1 month prior to the Company’s report of financial statements to the Stock Exchange of Thailand and with in the period of 3 days after the completion of financial statement disclosure to the Stock Exchange of Thailand.

• Responsibility to creditor policy indicates treatment toward creditors following conditions as indicated in the contract, and not to cover the actual financial situations of the Company and its subsidiaries, as well as not to use the received fund from loan to oppose the objectives in the agreement made with loaner.

The Corporate Governance Committee insists to implement the corporate governance principles for listed companies 2006 as management guidelines as well as to keep them up-to-date in order to be appropriate with current social situation and changing economic situation. Also, the Committee shall perform its duty by implementing the good corporate governance principles as guidelines for actual operation with the determination to create sustainable value to the Company.

Mr. Wiset Chamnarnwong

Chairman of the Corporate Governance Committee

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Report of the Board of Directors’ Responsibility toward Financial Statement Report The Board of Directors of the Company had initiated financial statement preparation to present the Company’s financial positions and operating results for the year ended December 31, 2010 under the Public Company Act B.E. 2535. The Company’s Board of Directors has realized its duties and responsibility as Directors of listed company in the Stock Exchange of Thailand to be responsible for financial statements and consolidated financial statements of the Company, including financial information appeared in the annual report for the year ended December 31, 2010.

Thus, the Company’s Board of Director appointed the Audit Committee which consists of independent Directors and Non-Executive Directors of the Company who are responsible for the quality of financial statements and reviewing the adequacy and effectiveness of the internal control system of the Company and its affiliated companies to reasonably ensure that the records of accounting information are accurate, complete, and adequate to protect the Company’s assets, including being guidelines for the Company and its affiliated companies to significantly prevent corruption or irregular activity. The opinion of the Audit Committee shall appear in the Corporate Governance Report of the Audit Committee of the fiscal year 2010 as shown in this Annual Report.

Therefore, the Board of Directors considered that the Company’s financial statements were carefully and reasonably prepared with the best estimations under the appropriate accounting policies and consistent conformity with Thai generally accepted accounting standards, including the sufficient important information is already disclosed in the Notes to financial statements.

Mr. Utid Tamwatin Chairman

64

Mr. Praphant Asava-aree President & CEO

AUDITOR’S REPORT Limited

To the Shareholders of Eastern Water Resources Development and Management Public Company

I have audited the accompanying consolidated and company balance sheet as at 31 December 2010, and the related consolidated and company statements of income, changes in shareholders’ equity and cash flows for the year then ended of Eastern Water Resources Development and Management Public Company Limited and its subsidiaries and of Eastern Water Resources Development and Management Public Company Limited, respectively. The Company’s management is responsible for the correctness and completeness of information in these financial statements. My responsibility is to express an opinion on these financial statements based on my audit. The consolidated and company financial statements for the year end, 31 December 2009, of Eastern Water Resources Development and Management Public Company Limited and its subsidiaries and of Eastern Water Resources Development and Management Public Company Limited, respectively, were audited by another auditor whose report dated 15 February 2010, expressed an unqualified opinion on those statements and drew attention to two matters regarding 1) a pipeline connection project for which the Company undertook construction and made advance payments on behalf of a government agency amounting to Baht 646.5 million.

Subsequently, the Company and the government agency signed a sale and purchase agreement of such assets.

2) the compensation of the Company’s pipeline connecting project, the Company paid the compensation at a preliminary rate but this may change. The government agency was considering a deal for the Company to rent/ manage the project and to adjust the compensation rate. A resolution has not yet been reached.

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 2010, and the consolidated and company results of operations, and cash flows for the year then ended of Eastern Water Resources Development and Management Public Company Limited and its subsidiaries and of Eastern Water Resources Development and Management Public Company Limited, respectively, in accordance with generally accepted accounting principles.

Without qualifying my opinion on the aforementioned financial statements, I draw attention to Note 30.5 to the financial statements regarding the compensation of the Company’s pipeline connecting project. The Company is paying the compensation at a preliminary rate because the government agency is considering a deal for the Company to rent/manage the connecting projects and the compensation rate that may change.

Vichien Khingmontri

Certified Public Accountant (Thailand) No. 3977

PricewaterhouseCoopers ABAS Limited

Bangkok 14 February 2011

65

Balance Sheets Eastern Water Resources Development and Management Public Company Limited As at 31 December 2010 and 2009

Assets Current assets

Notes

Consolidated 2010

Cash and cash equivalents Trade accounts receivable Water loss treatment service income receivable - related party Inventories

6 7

29.2 8

Dividend receivable from related companies Project assets Other current assets

Total current assets

Non-current assets

Restricted bank deposits Investments in subsidiaries - net Long-term investments - net Property, plant and equipment - net Assets under concession contracts - net Deferred concession rights

Intangible assets - net Other non-current assets

Total non-current assets

Total assets

29.2 9 10

11 12 13 14 15

16 17

The accompanying notes on a integral part of the financial statements.

66

(Unit: Baht) 2009

442,884,324 310,761,108

16,612,643 9,558,954 - - 94,998,346

874,815,375

2,076,000 - 91,470,300 7,790,932,491 395,839,297

542,317,810 143,899,104 29,248,983

8,995,783,985

9,870,599,360

Company 2010

124,569,291 311,364,869

26,624,639 9,283,507

2009

328,370,034 226,877,314

- -

23,348,724 236,665,795

- 11,251

- - 18,038,996 646,486,465 - 646,486,465 46,554,884 38,686,672 30,682,396

1,164,883,655 593,934,020 955,233,627

9,076,000 2,076,000 9,076,000 - 510,000,000 511,499,930 85,387,500 91,470,300 85,387,500 6,775,830,440 7,571,510,696 6,588,144,986 390,518,418 - -

556,752,273 - - 152,247,842 - - 13,082,073 6,495,557 6,988,877

7,982,894,546 8,181,552,553 7,201,097,293

9,147,778,201 8,775,486,573 8,156,330,920

Balance Sheets (continued) Eastern Water Resources Development and Management Public Company Limited As at 31 December 2010 and 2009

Notes

Liabilities and shareholders’ equity

Current liabilities

18 Trade accounts payable 19 Short-term loans from financial institutions

Current portion of long-term liabilities under 20 finance lease agreements

Current portion of long-term loans from 21 financial institutions

Payable for purchase of fixed assets

Corporate income tax payable

Accrued expenses

Others current liabilities

Total current liabilities

Non-current liabilities

Long-term liabilities under finance lease 20 agreement 21 Long-term loans from financial institutions

Retentions payable Rental guarantees received from related parties 29.2

Total non-current liabilities

Total liabilities

Consolidated 2010 2009

100,909,667 65,593,830 552,587,913 369,000,000

2,823,812 2,948,681

373,406,060 187,755,474 150,790,877 71,369,506 133,787,088 140,261,483 189,703,526 181,706,288 7,977,425 15,121,219

1,511,986,368 1,033,756,481

2,481,480 1,308,420 1,632,406,466 1,727,812,526 106,804,273 41,184,931 - -

1,741,692,219 1,770,305,877

3,253,678,587 2,804,062,358

(Unit: Baht) Company 2010 2009

57,569,868 64,049,855 552,587,913 369,000,000

2,823,812 2,473,515

250,000,000 100,000,000 129,795,419 56,993,972 118,065,548 115,471,497 139,508,387 130,806,571 2,798,499 1,534,968

1,253,149,446 840,330,378

2,481,480 1,308,420 1,204,000,000 1,250,000,000 85,257,246 25,613,260 805,765 793,195

1,292,544,491 1,277,714,875

2,545,693,937 2,118,045,253

The accompanying notes on a integral part of the financial statements.

67

Balance Sheets (continued) Eastern Water Resources Development and Management Public Company Limited As at 31 December 2010 and 2009

Notes

Shareholders’ equity Share capital Registered share capitae Ordinary shares, 1,663,725,149 shares Baht 1 cash Issued and paid-up share capital Ordinary shares, 1,663,725,149 shares Paid - up Baht 1 cash Share premium Assets transferred from customers - net Retained earnings Appropriated - legal reserve Unappropriated

Total parent shareholder’ equity Minority interests

Total shareholders’ equity

Total liabilities and shareholders’ equity

22

22 23

24

(Mr. Utid Tamwatin)

Chairman

The accompanying notes on a integral part of the financial statements.

68

Consolidated 2010

1,663,725,149

1,663,725,149 2,138,522,279 38,549,670

166,500,000 2,606,838,578

6,614,135,676 2,785,097

6,616,920,773

9,870,599,360

(Unit: Baht) Company 2010

2009

1,663,725,149

1,663,725,149 2,138,522,279 41,947,193

166,500,000 2,330,480,390

6,341,175,011 2,540,832

6,343,715,843

9,147,778,201

1,663,725,149

1,663,725,149 2,138,522,279 38,549,670

166,500,000 2,222,495,538

6,229,792,636 -

6,229,792,636

8,775,486,573

(Mr. Praphant Asava-aree)

President & CEO

2009

1,663,725,149

1,663,725,149 2,138,522,279 41,947,193

166,500,000 2,027,591,046

6,038,285,667 -

6,038,285,667

8,156,330,920

Statements of Income Eastern Water Resources Development and Management Public Company Limited For the years ended 31 December 2010 and 2009

Revenues Sales - raw water Sales - tap water Sales - project assets Sales - others

Total sales Rental and service income Other income

Total revenues

Expenses Costs of sales - raw water Costs of sales - tap water Costs of sales - project asset Costs of sales - others

Total costs of sales Costs of rental and services Selling expenses Administrative expenses Expenses for development of life quality and enriranment Management benefit expenses

Total expenses

Profit before finance costs and income tax Finance costs

Profit before income tax Income tax

Net profit for the year

Net profit attributable to Equity holders of parent company Minority interests

Earnings per share for profit attributable to the equty haders of parent company Basic earnings per share

Notes

29.1 29.1 9 29.1

29.1 26

9

29.1

29.3

27

28

Consolidated 2010 2009

2,117,502,225 1,904,363,863 716,233,258 635,933,078 1,567,289,720 - 3,245,300 -

4,401,025,203 2,543,542,241 232,265,416 282,364,062 41,508,271 52,588,800

4,674,798,890 2,878,495,103

811,216,783 687,920,819 404,591,735 331,248,718 1,507,455,010 - - 688,205

2,723,263,528 1,019,857,742 206,492,269 239,889,074 49,641,874 41,293,356 208,715,462 235,218,818

34,604,368 21,650,029 71,589,357 70,187,202

3,294,306,858 1,628,096,221

1,380,492,032 1,250,398,882 (89,807,641) (120,116,069)

1,290,684,391 1,130,282,813 (381,746,492) (322,571,695)

908,937,899 807,711,118

908,553,615 807,270,583 384,284 440,535 908,937,899 807,711,118

0.55

0.49

(Unit: Baht) Company 2010 2009

2,228,405,523 2,012,496,010 243,463,695 224,072,165 1,567,289,720 - - 3,173,965

4,039,158,938 2,239,742,140 58,203,129 35,896,038 66,391,675 79,027,659

4,163,753,742 2,354,665,837

853,713,922 728,951,836 240,578,081 221,530,615 1,507,455,010 - - 155,937

2,601,747,013 950,638,388 55,075,432 30,136,726 46,690,899 39,494,406 158,086,823 173,478,400

32,095,002 18,816,040 49,535,013 45,174,813

2,943,230,182 1,257,738,773

1,220,523,560 1,096,927,064 (67,652,245) (104,770,351)

1,152,871,315 992,156,713 (325,771,396) (264,131,604)

827,099,919 728,025,109

827,099,919 728,025,109 - - 827,099,919 728,025,109

0.50

0.44

The accompanying notes on a integral part of the financial statements.

69

Statements of Changes in Shareholders’ Equity Eastern Water Resources Development and Management Public Company Limited For the years ended 31 December 2010 and 2009

Note

Opening balance

as at 1 January 2010 Amortization of assets transferred from customers Net profit for the year Dividend paid to minority interest by subsidiary Dividend paid Closing balance

as at 31 December 2010

Opening balance

as at 1 January 2009 Amortiz ation of assets transferred from customers Net profit for the year Dividend paid to minority interest by subsidiary Dividend paid Closing balance as at 31 December 2009

Issued and paid-up share capital

Consolidated Equity holder of the company Total Retained earnings Assets attributable to Share transferred from Appropriated - equity holders premium customers - net legal reserve Unappropriated of the company

1,663,725,149 2,138,522,279

41,947,193 166,500,000 2,330,480,390 6,341,175,011

Minority interests

Total

2,540,832 6,343,715,843

- -

- -

(3,397,523) -

- - (3,397,523) - 908,553,615 908,553,615

- (3,397,523) 384,284 908,937,899

25

- -

- -

- -

- - - - (632,195,427) (632,195,427)

(140,019) (140,019) - (632,195,427)

1,663,725,149 2,138,522,279

38,549,670 166,500,000 2,606,838,578 6,614,135,676

2,785,097 6,616,920,773

1,663,725,149 2,138,522,279

45,344,716 166,500,000 2,105,495,759 6,119,587,903

2,216,301 6,121,804,204

- -

- -

(3,397,523) -

- - (3,397,523) - 807,270,583 807,270,583

- (3,397,523) 440,535 807,711,118

25

- -

- -

- -

- - - - (582,285,952) (582,285,952)

(116,004) (116,004) - (582,285,952)

41,947,193 166,500,000 2,330,480,390 6,341,175,011

2,540,832 6,343,715,843

1,663,725,149 2,138,522,279

The accompanying notes on a integral part of the financial statements.

70

(Unit: Baht)

Statements of Changes in Shareholders’ Equity (continued) Eastern Water Resources Development and Management Public Company Limited and its subsidiaries For the year ended 31 December 2010 and 2009

(Unit: Baht)

Company

Opening balance

as at 1 January 2010 Amortization of assets transferred from customers Net profit for the year Dividend paid

Closing balance

as at 31 December 2010

Opening balance

as at 1 January 2009 Amortization of assets transferred from customers Net profit for the year Dividend paid

Closing balance

as at 31 December 2009

Note

Issued and paid-up share capital

Assets Share transferred from premium customers - net

Appropriated - legal reserve Unappropriated

Total

41,947,193

166,500,000 2,027,591,046 6,038,285,667

- - -

(3,397,523) - -

- - (3,397,523) - 827,099,919 827,099,919 - (632,195,427) (632,195,427)

1,663,725,149 2,138,522,279

38,549,670

166,500,000 2,222,495,538 6,229,792,636

1,663,725,149 2,138,522,279

45,344,716

166,500,000 1,881,851,889 5,895,944,033

- - -

(3,397,523) - -

- - (3,397,523) - 728,025,109 728,025,109 - (582,285,952) (582,285,952)

1,663,725,149 2,138,522,279

41,947,193

166,500,000 2,027,591,046 6,038,285,667

25

25

1,663,725,149 2,138,522,279

Retained earnings

- - -

- - -

The accompanying notes on a integral part of the financial statements.

71

Statements of Cash Flows Eastern Water Resources Development and Management Public Company Limited For the years ended 31 December 2010 and 2009

Cash flows from operating activities Profit before income tax Adjustments to reconcile profit before

income tax to net cash provided by

(paid from) operating activities: Losses on impairment of investment

in a subsidiary (reversal)

Losses on impairment of assets under

concession contracts

Losses on impairment of other assets

Losses on impairment of long-term investment

Allowance for diminution in value of

inventories (reversal)

Written off of inventories

Allowance for doubtful

accounts (reversal)

Reversal of provision for liabilities

Depreciation

Amortization of deferred concession rights

acquisition costs

Amortization of rights

Income from amortization of assets

transferred from customers

Losses on disposals/written off of fixed assets

Losses on written off of assets under

concession contracts

Dividend income

Interest income

Interest expenses and amortisation of deferred

interest under finance lease agreements Income from operating activities before changes in operating assets and liabilities (Increase) decrease in operating assets Trade accounts receivable Water loss treatment service income receivable - related party Inventories Project asset Other current assets Other non-current assets Increase (decrease) in operating liabilities Trade accounts payable Accrued expenses Other current liabilities Other non-current liabilities Cash provided by operating activities Income tax paid Net cash provided by operating activities The accompanying notes on a integral part of the financial statements.

72

Notes

14, 15

16 17

Consolidated 2010 2009

1,290,684,391 1,130,282,813

- -

1,400,000 16,790,000 245,003 840,496 - 90,000

(54,643) (45,225,848) 11,251 -

(21,528) (471,290) - (10,680,790) 369,732,485 305,836,713

26,743,488 25,905,787 8,348,738 8,348,738

(3,397,523) (3,397,523) 11,467,015 6,580,538

514,395 - (17,267,095) (18,505,785) (3,161,482) (2,037,685)

88,472,875 119,689,807

1,773,717,370 1,534,045,971

509,066 (70,938,082)

10,011,995 23,557,613 (286,698) 46,411,332 646,486,465 - (51,503,996) (13,492,937) (16,166,906) (5,407,665)

35,315,837 (1,929,055) 8,357,815 37,883,506 (5,703,388) (11,981,177) 65,619,342 3,783,669 2,466,356,902 1,541,933,175 (388,220,888) (320,728,494) 2,078,136,014 1,221,204,681

(Unit: Baht) Company 2010 2009

1,152,871,315 992,156,713

(172,166) 3,500,000

- - 245,003 840,496 - -

(54,643) (44,392,525) 11,251 -

(21,528) (100,000) - - 319,502,917 258,814,887

- - - -

(3,397,523) (3,397,523) 12,045,528 5,268,542

- - (45,827,091) (48,544,781) (2,283,469) (13,223,660)

66,441,971 104,424,349

1,499,361,565 1,255,346,498

9,788,481 (60,912,509)

- - - 44,548,462 646,486,465 - (9,100,871) (3,802,750) 493,320 (4,394,551)

(6,479,987) 11,125,084 8,701,816 24,276,872 2,708,060 5,905,374 59,656,556 45,052 2,211,615,405 1,272,137,532 (323,177,347) (268,626,849) 1,888,438,058 1,003,510,683

Statements of cash flows (continued) Eastern Water Resources Development and Management Public Company Limited and its subsidiaries For the years ended 31 December 2010 and 2009

Cash flows from investing activities Restricted deposits at financial institutions Proceed from sales of securities under resale agreement Proceeds from sale of current investments Purchases of long-term investments Cash received on long-term loan to a subsidiary Dividend received from a subsidiary and a related party Purchase of assets under concession contracts Purchase of deferred concession rights acquisition costs Interest received Proceeds from disposals of fixed assets Purchases of fixed assets Net cash (used in) provided by investing activities Cash flows from financing activities Increase in short-term loans from financial institutions Proceeds from long-term loans from financial institutions Payment on long-term loans from financial institutions Payment made on liabilities under finance lease agreements Interest paid Interest paid for fund borrowed specifically to acquire qualifying assets Dividends paid to shareholders Net cash used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at ending of the year Supplemental cash flow information Non-cash related transactions: Net increase in acquisition assets on credit Reclassification from property, plant and equipment to project assets

Consolidated Notes 2010 2009

7,000,000 -

- 261,010,051

- 83,584,275 13 (6,082,800) -

- -

17,267,095 26,593,739

(39,741,703) (43,228,716)

(7,115,986) (48,411,201)

3,131,290 3,167,047

1,364,493 2,819,525

(1,274,423,809) (300,048,173)

(1,298,601,420) (14,513,453)

19 183,587,913 361,500,000

21 278,000,000 364,500,000

21 (187,755,474) (1,195,716,000)

(3,253,743) (4,095,960)

(89,678,895) (127,973,573)

(9,783,916) - 25 (632,335,446) (582,401,956)

(461,219,561) (1,184,187,489)

318,315,033 22,503,739

124,569,291 102,065,552 6 442,884,324 124,569,291

79,421,371 45,700,606

- 4,287,265

(Unit: Baht) Company 2010 2009

7,000,000 -

- 261,010,051 - 83,584,275 (6,082,800) - - 300,000,000 63,866,087 52,618,739 - - - - 2,253,276 14,352,443 78,270 2,664,748 (1,225,709,461) (270,901,266) (1,158,594,628) 443,328,990

183,587,913 369,000,000

204,000,000 -

(100,000,000) (1,150,000,000)

(2,752,620) (2,480,641) (67,678,070) (112,842,078)

(9,783,916) - (632,195,427) (582,285,952) (424,822,120) (1,478,608,671) 305,021,310 (31,768,998) 23,348,724 55,117,722 328,370,034 23,348,724

72,801,447 49,327,045

- 4,287,265

The accompanying notes on a integral part of the financial statements.

73

Notes to consolidated and company

financial statements For the year and ed 31 December 2010 and 2009 1. General information

Eastern Water Resources Development and Management Public Company Limited (“the Company”) is a public limited company incorporated and resident in Thailand. The address of the Company’s registered office is as follows: 23rd - 26th Floors, East Water Building, No. 1 Soi Vipavadeerangsit 5, Vipavadeerangsit Road, Jomphol Sub-district, Chatujak District, Bangkok.

The Company is listed on the Stock Exchange of Thailand. For reporting purposes, the Company and its subsidiaries are referred to as the Group.

The principal business operations of the Group are development and management of the major water distribution pipeline systems in the Eastern Seaboard area of Thailand, supply of raw water, produce and supply of tap water, waterworks management, and engineering services.

These consolidated and company financial statements were authorised by the Board of Directors on 14 February 2011.

2.

Accounting policies

The principal accounting policies adopted in the preparation of these financial statements are set out below.

2.1

Basis of preparation of financial statements 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 under the Accounting Professions Act B.E. 2547, and the financial reporting requirements of the Securities and Exchange Commission under the Securities and Exchange Act. The consolidated and company financial statements have been prepared under the historical cost convention.

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 disclosures 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.

74

An English version of the consolidated and company financial statements has been prepared from the statutory financial statements that are in the Thai language. In the event of a conflict or a difference in interpretation between the two languages, the Thai language statutory financial statements shall prevail.

The consolidated financial statements include the financial statements for the years ended 31 December 2010 and 2009 of the Company and the following subsidiaries:

Company’s name

Nature of business

Subsidiaries held directly by the Company Production and supply of tap water, waste Universal Utilities Company Limited water treatment and sale of related tools, equipment and chemical products, and investment in three tap water supply companies Water Trades and Services Management of water vending machines Company Limited project (registered its dissolution on 24 November 2009) Subsidiaries held by Universal Utilities Company Limited Chachoengsao Water Supply Production and supply of tap water Company Limited Bangpakong Water Supply Production and supply of tap water Company Limited Nakornsawan Water Supply Production and supply of tap water Company Limited

2.2

Country of Percentage of incorporation Shareholding

2010 2009

% %

Thailand 100 100

Thailand

-

100

Thailand

99

99

Thailand

99

99

Thailand

100

100

New accounting standards, new financial reporting standards, new interpretation, amendments to accounting standards, accounting framework and termination of standard a) Accounting framework The amendment of accounting framework is effective on 26 May 2010. b) New accounting standards, new financial reporting standards, new interpretation and amendments to accounting standards The following new accounting standards, new financial reporting standards, new interpretation and amendments to accounting standards are mandatory for the accounting periods beginning on or after 1 January 2011 and 1 January 2013:

75

Effective for the periods beginning on or after 1 January 2011 TAS 1 (Revised 2009) Presentation of Financial Statements TAS 2 (Revised 2009) Inventories TAS 7 (Revised 2009) Statement of Cash Flows TAS 8 (Revised 2009) Accounting Policies, Changes in Accounting Estimates and Errors TAS 10 (Revised 2009) Events after the Reporting Period TAS 11 (Revised 2009) Construction Contracts TAS 16 (Revised 2009) Property, Plant and Equipment TAS 17 (Revised 2009) Leases TAS 18 (Revised 2009) Revenue TAS 19 Employee Benefits TAS 23 (Revised 2009) Borrowing Costs TAS 24 (Revised 2009) Related Party Disclosures TAS 26 Accounting and Reporting by Retirement Benefit Plans TAS 27 (Revised 2009) Consolidated and Separate Financial Statements TAS 28 (Revised 2009) Investments in Associates TAS 29 Financial Reporting in Hyperinflationary Economies TAS 31 (Revised 2009) Interests in Joint Ventures TAS 33 (Revised 2009) Earnings per Share TAS 34 (Revised 2009) Interim Financial Reporting TAS 36 (Revised 2009) Impairment of Assets TAS 37 (Revised 2009) Provisions, Contingent Liabilities and Contingent Assets TAS 38 (Revised 2009) Intangible Assets TAS 40 (Revised 2009) Investment Property TFRS 2 Share-based Payment TFRS 3 (Revised 2009) Business Combinations TFRS 5 (Revised 2009) Non-current Assets Held for Sale and Discontinued Operations TFRS 6 Exploration for and Evaluation of Mineral Resources TFRIC 15 Agreements for the Construction of Real Estate

Effective for the periods beginning on or after 1 January 2013 TAS 12 Income taxes TAS 20 (Revised 2009) Accounting for Government Grants and Disclosure of Government

Assistance TAS 21 (Revised 2009) The Effects of Changes in Foreign Exchange Rates

76

The Company’s management has determined that the new accounting standards, new financial reporting standards, new interpretation and amendments to accounting standards will have impact to the financial statements as follows: TAS 1 (Revised 2009), the revised standard will prohibit the presentation of items of income and expenses in the statement of changes in equity. Entities can choose whether to present one statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). Where entities restate or reclassify comparative information, they will be required to present a restated statement of financial position as at the beginning comparative period in addition to the current requirement to present statement of financial position at the end of the current period and comparative period. However, for the financial statements which period beginning on or after 1 January 2011 and are the first period apply this standard, an entity can choose to present statement of financial position only two statements without the statement of financial position as at the beginning comparative period. The group will apply TAS 1 (Revised 2009) from 1 January 2011. It is likely that both income statement and statement of comprehensive income will be presented as one statement.

TAS 12 deals with taxes on income, comprising current tax and deferred tax. Current tax assets and liabilities are measured at the amount expected to be recovered from or be paid to the taxation authorities, using tax rates and tax law that have been enacted or substantively enacted by the end of the reporting period. Deferred taxes are measured by based on the temporary difference between the tax base of an asset or liability and its carrying amount in the financial statements and using the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates and tax law that have been enacted or substantively enacted by the end of the reporting period. The group will early adopted this standard from 1 January 2011 retrospectively with an expectation to have impact to financial statements as at 1 January 2011 as follows:

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Deferred tax assets increase Deferred tax liabilities increase Retained earnings increase (decrease)

Consolidated Million Baht

30.61 43.47 (12.86)

Company Million Baht

17.61 0.31 17.30

TAS 16 (Revised 2009), the revised standard requires the entity to include in cost of PPE, an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, when the entity has obligation to do. An entity requires that an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately. The revised standard also requires an entity to review useful life, residual value and depreciation method at least at each financial year-end. The group will apply this standard from 1 January 2011 which has no impact to retained earnings as at 1 January 2011.

TAS 19 deal with accounting for employee benefit. The standard classifies employee benefit into 4 categories: a) short-term employee benefits b) post-employment benefits (including defined contribution plan and defined benefit plan) c) other long-term employee benefits and d) termination benefits. The standard requires the entity to measure the defined benefit plan and other long-term employee benefits by using the Projected Unit Credit method (PUC). An entity can choose to recognise any actuarial gain or loss for defined benefit plan either in other comprehensive income or profit and loss. Actuarial gain or loss for other long-term employee benefit shall recognise in profit and loss. The group will apply this standard from 1 January 2011 which has impact to financial statements by decrease in retained earnings and increase in retirement benefit obligations as at 1 January 2011 in consolidated financial statements and company financial statements amounting to Baht 56.98 million and Baht 33.94 million, respectively.

TAS 23 (Revised 2009), the revised standard requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed. The group will apply prospectively from 1 January 2011 but it is not expected to have any impact on the group’s financial statement because the group already apply capitalised model.

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TAS 24 (Revised 2009), the definition of related party has been expanded include parties with joint control over the entity, joint venture in which the entity is a venturer and postemployment benefit plan for the benefit of employees of an entity. The group will apply the revised standard from 1 January 2011 which may impact only to the disclosure of related parties information in the notes to the financial statements.

TAS 40 (Revised 2009), the standard has specific presentation and measurement requirements for investment property. The entity has to present an investment property separately in the statement of financial position. The entity can choose to measure it either cost model or fair value model. Under fair value model, any changes in fair value are recognised in profit or loss. The entity will apply the standard from 1 January 2011. The group will apply cost model for measurement and disclose fair value in the notes to the financial statements.

2.3

Change in accounting estimate During the first quarter 2010, the Company changed its accounting estimation for calculating depreciation of the raw water pipeline systems from units of production method which were computed from estimated volume of units sales and not exceeding the production capacity of the assets over 40 years to straight-line method over their remaining estimated useful lives of 34 - 37 years. The Company’s management considered that the straight-line method is more appropriate because those assets are depreciated over the time being used.

The changes in accounting estimation shall be recognised prospectively. The effects of the changes in depreciation method result to an increased in depreciation expense for the year ended 31 December 2010 by Baht 60.13 million and net profit before tax decreased by the same amount.

2.4

Group Accounting - Investment in subsidiaries Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible, including potential voting rights held by another entity, 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.

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The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest.

The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill.

If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.

Inter-company 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 the Group have been changed to ensure consistency with the policies adopted by the Company.

In the Company’s separate financial statements investments in subsidiaries are reported by using the cost less allowance for impairment (if any).

A list of the Group’s principal subsidiaries is set out in Note 12.

2.5

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.

2.6

Cash and cash equivalents Cash and cash equivalents comprise cash on hand, deposits held at call with banks but do not include deposits with banks which are held to maturity over three months, and other short-term highly liquid investments with maturities of three months or less from the date of acquisition.

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2.7

Trade accounts receivable/water loss treatment service income receivable Trade accounts receivable and water loss treatment service income receivable are carried at the original invoice amount and subsequently measured at the remaining amount less any 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 and recognised in the income statement within administrative expense. The Group record revenue that has been recognised as revenue but not yet billed to the customers under “Unbilled receivables” and “Unbilled water loss treatment service income receivable” which have been included in trade accounts receivable and water loss treatment service income receivable in the balance sheets.

2.8

Inventories Inventories are stated at the lower of cost or net realisable value. Cost is determined by the first-in, first-out method. The cost of purchase comprises both the purchase price and costs directly attributable to the acquisition of the inventory, such as import duties and transportation charges, less all attributable discounts. Allowance is made, where necessary, for obsolete, slow moving and defective inventories.

2.9

Investments Investments in held-to-maturity debt securities, classified as current investments or longterm investment in accordance with their remaining periods to maturity, are stated at amortised cost less allowance for impairment (if any). The premium/discount on debt securities is amortised using the straight-line method with the amortised amount included in statements of income.

Investment in non-marketable equity security held as other investment is determined at cost less allowance for impairment (if any).

Loss on impairment (if any) of investments is included in the statements of income.

2.10 Property, plant and equipment Land is stated at cost less allowance for impairment (if any). Plant and equipment are stated at cost less accumulated depreciation and allowance for impairment (if any).

Depreciation of plant and equipment is calculated on the straight-line basis to write off the cost of each asset, except for land which is considered to have an indefinite life over the estimated useful life as follows:

81

Pumping plants Buildings Land, leasehold and building improvements Machinery and equipment Office equipment Vehicles

33 years 15, 20, 25 years 5, 10, 15, 20 years 5, 10, 20, 25, 40 years 3, 5, 10 years 5 years

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

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 the 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 required to complete and prepare the property for its intended use. The borrowing costs include interest on short-term and long-term borrowings, related taxes and amortisation of discounts or premiums relating to borrowings. All other borrowing costs are recorded as expense in statement of income.

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2.11 Assets under concession contracts Assets under concession contracts are stated at cost less accumulated depreciation and allowance for impairment (if any). Depreciation of assets under concession contracts has been included in statements of income.which has been computed using the straight-line method over estimated useful life but not exceed the concession period of 15, 20 and 25 years, 2.12 Deferred concession rights acquisition costs Concession rights acquisition costs consist of expenses incurred directly in relation to obtaining the concession contracts from the Provincial Waterworks Authority. Deferred concession rights acquisition costs are stated at cost less accumulated amortisation and allowance for impairment (if any). Amortisation of deferred concession rights acquisition costs, which has been computed using the straight-line method over the concession periods of 27 and 30 years, has been included in statements of income.

2.13 Intangible assets Intangible assets presented as an asset in the consolidated balance sheets are rights to operate the subsidiaries’ businesses under concession awarded to the subsidiaries by the government agency or entity over a limited a concession period. Rights are stated at cost less accumulated amortisation and allowance for impairment (if any) and are amortised using the straight-line method over a period of 27 years, being the concession period awarded to the subsidiaries to carry out their business operation. The carrying amounts of intangible assets are written down when there is an impairment.

2.14 Impairment of assets Assets that have an indefinite useful life, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the assets exceeds its recoverable amount which is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows. Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

2.15 Provisions Provisions, excluding the provisions for employee benefits, are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

2.16 Leases - where a Group company is the lessee Leases of property, plant or equipment which substantially transfer all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated to the principal and to the finance charges so as to achieve a constant rate on the finance balance outstanding. The outstanding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the statement of income over the lease period so as to achieve a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant or

83

equipment acquired under finance leases is depreciated over the shorter period of the useful life of the asset or the lease term.

Leases not transferring a significant portion of the risks and rewards of ownership to the lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of income on a straight-line basis over the period of the lease.

When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

2.17 Employee benefits 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 statement of income in the year to which they relate.

The Group provides for post-employment benefits, payable to employees under the Thai Labour Law. The amounts payable in the future depend on the salary and years of service of the respective employees.

The Group recognise employee benefits as expenses when incurred.

2.18 Borrowings Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs incurred. Any difference between proceeds (net of transaction costs) and the redemption value is recognised in the statement of income over the period of the borrowings. Interest expenses is recognised as expenses on an accrual basis by using interest rate specified in the contracts 2.19 Dividends Dividends are recorded in the consolidated and company’s financial statements in the period in which they are approved by the shareholders or the Board of Directors in case of interim dividend.

2.20 Revenue recognition (a) Sales Sales of goods are recognised as revenue when significant risks and reward of

84

ownership of goods have passed to the buyer. Sales are the invoiced value, excluding value added tax, of goods supplied after deducting goods returns and discounts. (b)

Rental and service income Rental income is recognised as revenue over the rental period at the rate stipulated in the contracts.

Service income is recognised as revenue by the amount excluding value added tax when services have been rendered with reference to the stage of completion.

(c)

Revenue from pipeline installation project and water loss reduction project Revenue from water pipeline installation project and water loss reduction project are recognised as revenue under the percentage of completion method. The expected loss on unprofitable contracts is recognised as soon as such loss can be foreseen.

(d)

Interest and dividend income Interest income is recognised on an accrual basis. Dividend income is recognised when rights to receive dividends are established.

(e)

Other income Other income is recognised on an accrual basis.

2.21 Income tax Income tax is provided in the accounts based on taxable profits determined in accordance with tax legislation.

The Group does not recognise income taxes payable or receivable in future periods with respect to temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

3

2.22 Segment reporting Segment information is presented by business segment of the Group’s operations.

Critical accounting estimates, judgments and assumptions

Estimates, judgments and assumptions are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Significant accounting judgments and estimates are as follows:

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3.1 Value in use

Value in use is the present value of the future cash flows expected to be derived from assets, discounted by discount rates, determined by the management of the Group. The cash flow projections based on financial forecasts for the remaining useful lives of assets or concession periods and approved by the management of the Group are calculated based on estimated growth rates, which do not exceed their capacity and customers’ usage demand. Key assumptions used for value-in-use calculations are growth rates, expense to revenue ratios and gross margin rate. Management determines such rates based on their past performance, their expectations for market development, and business plan. The discount rates used are pre-tax and reflect specific risks relating to the business after considered the remaining useful lives. The value derived from the afore-mentioned method may vary due to changes in revenue structure, cost structure, discount rate, industrial conditions and economic conditions.

3.2 Leases

In determining whether a lease is to be classified as an operating lease or finance lease, the management is required to use judgment regarding whether significant risk and rewards of ownership of the leased asset has been transferred, taking into consideration terms and conditions of the arrangement.

3.3 Allowance for doubtful accounts

In determining an allowance for doubtful accounts, the management needs to make judgment and estimates based upon, among other things, past collection history, aging profile of outstanding debts and the prevailing economic condition.

3.4 Property plant and equipment/Depreciation

In determining depreciation of plant and equipment, the management is required to make estimates of the useful lives and salvage values of the plant and equipment and to review estimate useful lives and salvage values when there are any changes.

In addition, the management is required to review property, plant and equipment for impairment on a periodical basis and record impairment losses in the period when it is determined that their recoverable amount is lower than the carrying cost. This requires judgments regarding forecast of future revenues and expenses relating to the assets subject to the review.

3.5 Intangible assets

The initial recognition and measurement of intangible assets, and subsequent impairment testing, require management to make estimates of cash flows to be generated by the asset or the cash generating units and to choose a suitable discount rate in order to calculate the present value of those cash flows.

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4

3.6

Litigation The Group has contingent liabilities as a result of litigation. The Group’s management has used judgment to assess of the results of the litigation and believes that no significant loss will result. Therefore no contingent liabilities are recorded as at the balance sheet dates.

3.7

Fair value of financial instruments In determining the fair value of financial instruments that are not actively traded and for which quoted market prices are not readily available, the management exercise judgment, using a variety of valuation techniques and models. The input to these models is taken from observable markets, and includes consideration of liquidity, correlation and longerterm volatility of financial instruments. The critical fair value estimation of financial instruments is long-term loans from financial institutions. The Group estimates the fair value by calculating the present value of future principal and interest payment using the market interest rate for discounting.

Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

5

Segment information

The principal business operations of the Group are supply of raw water, produce and supply of tap water, waterworks management, and engineering services. These business operations are conducted only in one geographical area, which is Thailand.

The business segment information for the years ended 31 December 2010 and 2009 are summarised as follows:

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5.1

88

Operating results by business segment

(Unit: Baht’000)

Consolidated 2010 Sales Service income Supply of Supply of Waterworks

raw water tap water management Engineering

business business Other business services Others Elimination Total Revenue

Revenue from third parties 2,117,502 716,233 1,567,290 44,867 107,689 79,709 - 4,633,290 Revenue from inter- 110,903 - - 242,768 - 4,389 (358,060) - segment 2,228,405 716,233 1,567,290 287,635 107,689 84,098 (358,060) 4,633,290 Total revenue Cost of sales and services (853,714) (497,259) (1,507,455) (254,502) (94,094) (76,413) 353,681 (2,929,756)

59,835 33,133 13,595 7,685 (4,379) 1,703,534 Segment operating profit 1,374,691 218,974 Unallocated revenue and expenses

41,508 Other income

(49,642) Selling expenses

(243,320) Administrative expenses and other expenses

(71,589) Management benefit expenses

(89,807) Finance costs

(381,746) Income tax

908,938 Net profit

(Unit: Baht’000)

Sales

Consolidated 2009 Service income

Supply of Supply of Waterworks management Engineering raw water tap water

business business Other business services Others Elimination Total

Revenue

Revenue from third parties 1,904,364 635,933 3,245 40,624 182,548 59,192 - 2,825,906 Revenue from inter-segment 108,132 - 208 223,704 - 5,472 (337,516) - Total revenue 2,012,496 635,933 3,453 264,328 182,548 64,664 (337,516) 2,825,906 Cost of sales and services (728,952) (428,243) (688) (218,377) (166,186) (51,209) 333,908 (1,259,747) Segment operating profit 1,283,544 207,690 2,765 45,951 16,362 13,455 (3,608) 1,566,159

Unallocated revenue and expenses

52,588 Other income Selling expenses

(41,293) Administrative expenses and other expenses

(256,868) Management benefit expenses

(70,187) Finance costs

(120,116) Income tax

(322,572)

Net profit

807,711

89

5.2

90

(Unit: Baht’000) Consolidated 2010

Raw water Tap water Waterworks Unallocated distribution distribution management Engineering assets and

business business business services others Elimination

Trade accounts receivable 212,342 102,488 44,167 6,535 - (54,772) Water loss treatment service

income receivable - - - 16,613 - - Inventories - 3,019 4,785 1,755 - - Property, plant and equipment - net 6,914,674 5,957 210,523 529 659,249 - Assets under concession contracts - net - 249,248 146,591 - - - Deferred concession rights acquisition

costs - net - 421,222 121,095 - - - Intangible asset - net - 143,899 - - - - Unallocated assets and others - - - - 1,175,351 (514,671) Total assets 7,127,016 925,833 527,161 25,432 1,834,600 (569,443)

Total 310,760

16,613 9,559 7,790,932 395,839

542,317 143,899 660,680 9,870,599

(Unit: Baht’000)

Asset information by business segment

Consolidated 2009

Raw water Tap water Waterworks distribution distribution management Engineering

business business business services

Trade accounts receivable 204,942 96,138 59,243 9,402 Water loss treatment service

income receivable - - - 26,625 Inventories 11 3,258 3,065 2,950 Property, plant and equipment - net 5,918,403 7,953 178,180 844 Assets under concession contracts - net - 262,217 128,301 - Deferred concession rights acquisition

costs - net - 430,349 126,403 - Intangible asset - net - 152,248 - - Unallocated assets and others - - - - Total assets 6,123,356 952,163 495,192 39,821

Unallocated assets and others Elimination Total

71 (58,431) 311,365

- - 26,625 - - 9,284 670,450 - 6,775,830 - - 390,518

- - 556,752 - - 152,248 1,456,071 (530,915) 925,156 2,126,592 (589,346) 9,147,778

5.3

Sales of raw water by distribution networks 5.3.1 Sales volume of raw water classified by distribution networks

2010

Sales Volume

Cubic Meters’000

72,212 Nong Pla Lai - Map Ta Pud Network 85,712 Dok Krai - Map Ta Pud Network 64,428 Chachoengsao - Chonburi Network 22,530 Nong Pla Lai - Nong Khor Network Total 244,882

Company

2009 Sales Sales Volume Baht’000 Cubic Meters’000

663,627 71,322 787,341 62,344 573,725 70,096 203,713 17,504 2,228,406 221,266

Sales Baht’000 654,739 575,380 623,634 158,743 2,012,496

Sales of raw water from Chachoengsao - Chonburi Network consisted of:

(Unit: Baht’000)

Company

2010 2009

416,820 429,918 Nong Khor - Laem Chabang Network 1 109,850 138,016 Nong Khor - Laem Chabang Network 2 47,055 55,700 Chachoengsao Network Total 573,725 623,634

5.3.2 Proportion of raw water sold to end users

Industrial Estates Waterworks Authority Factories Total

%

Company 2010 51 32 17 100

%

2009 51 33 16 100

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6.

Cash and cash equivalents

Cash on hand Deposits with banks - current accounts - saving accounts - fixed accounts Promissory notes

Consolidated 2010 2009 525,000 625,500 7,000 145,300,055 2,052,269 295,000,000 442,884,324

102,247 120,130,366 3,711,178 - 124,569,291

Company 2010 80,000 4,000 31,233,765 2,052,269 295,000,000 328,370,034

(Unit: Baht) 2009 107,185 7,000 19,523,361 3,711,178 - 23,348,724

As at 31 December 2010, the interest rate on saving deposits with banks was 0.50% per annum (2009: 0.50% per annum). The fixed deposits with banks have maturity date within 3 months and interest rate at 0.75% per annum (2009: 0.75% per annum). The promissory notes have maturity date within 1 months and interest rate at 1.87 - 1.90% per annum.

7

92

Trade accounts receivable

Trade accounts receivable - billed - Third parties - Related parties (Note 29.2) Total trade account receivable - billed Unbilled receivables - Third parties - Related parties (Note 29.2) Total unbilled receivables

Consolidated 2010 2009

87,351,659 81,116,976 156,930,257 156,975,708 244,281,916 238,092,684

8,478,448 - 66,479,192 64,793,737 66,479,192 73,272,185 310,761,108 311,364,869

(Unit: Baht)

Company 2010 2009

87,231,819 81,276,992 139,645,495 155,388,803 226,877,314 236,665,795

- - - - - - 226,877,314 236,665,795

The age analysis of the trade accounts receivable-billed is as follows:

Within credit term Overdue below 3 months Overdue 3 - 6 months Overdue 6 - 12 months Overdue more than 12 months

8.

Company 2010 2009

224,648,014 218,169,635 1,202,918 7,447,279 688,631 7,626,225 337,751 3,360,944 - 61,712 226,877,314 236,665,795

Inventories

Finished goods Raw materials and supplies

9

Consolidated 2010 2009

222,062,902 219,596,524 21,192,632 7,447,279 688,631 7,626,225 337,751 3,360,944 61,712 - 244,281,916 238,092,684

(Unit: Baht)

(Unit: Baht)

Consolidated 2010 2009

11,251 - 9,558,954 9,272,256

9,558,954 9,283,507

Company 2010

- -

-

2009 11,251 -

11,251

Project assets By resolution of the Cabinet on 2 August 2005, it was resolved to approve projects to solve urgently a drought crisis in the Eastern region, which included a project to install a water distribution pipeline connecting the Pra-Sae reservoir to the Klong Yai reservoir in the Rayong Province (“the pipeline connecting project”), the Company was then assigned to construct such project under a budget of Baht 1,680 million, separated as below: a)

The budget was to be supported by the government of Baht 1,008 million, with the Company assigned to enter into contracts for pipeline connecting and annex building construction and contracts to procure and install water pumping machines and electricity system, with total contract values of Baht 919 million. The Company entered into such contracts on behalf of the government under the resolution as mentioned above. The Company will accept the assets and make payment to the sub-contrac tors when the assets are inspected for acceptance and received payment from the Royal Irrigation Department (“the RID”).

93

b). For the remaining budget of Baht 672 million, the Company was to make advance payments and the RID is to reimburse the Company by gradual offsetting of the charges for raw water that the Company will purchase from the RID each year. The Company had made advance payments totalling approximately Baht 646.5 million (comprising pipeline amounting to Baht 642 million and related fixtures amounting to Baht 4.5 million). These are presented as “Project assets�.

Thereafter, the RID issued a letter to the Company, notifying the intention to purchase the assets constructed under the pipeline connecting project by special method. In addition, on 15 January 2010, the Company and the RID signed an agreement to sell and purchase assets constructed under the pipeline connecting project. The contract value amounts to Baht 1,677 million (include value added tax).

On 2 April 2010, the Company delivered project assets to the RID and fully received payment on 8 April 2010. The Company recognised sale-project assets as revenues amounting to Baht 1,567 million and cost of sale-project assets amounting to Baht 1,507 million.

10 Other current assets

Other receivable (Notes 29.2 and 30.6) Prepaid expense Undued input taxes Advance for construction work Others

(Unit: Baht)

Consolidated 2010 2009

45,722,408 2,833,663 12,997,309 11,478,625 17,619,850 11,550,200 4,853,639 9,594,726 13,805,140 11,097,670

94,998,346 46,554,884

Company 2010 2009

2,200,408 2,833,663 10,784,398 9,089,432 13,760,766 8,208,024 - - 11,941,100 10,551,277

38,686,672 30,682,396

11 Restricted bank deposits As at 31 December 2010, the Company has pledged fixed deposit accounts with banks amounting to Baht 2.1 million (2009: Baht 9.1 million) to secure bank guarantees obtained from local commercial banks on behalf of the Group as described in Note 30.4 to the financial statements.

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12 Investments in subsidiaries As at 31 December 2010 and 2009, investments in subsidiaries which present in the separate financial statements are as follows:

Company

Company’s name

Nature of

Paid-up share capital Ownership interest Investment value Dividends income 2010 2009 2010 2009 2010 2009 2010 2009

Country of

business incorporation

Sale of Water Trades and Automatic vending Services Company Limited machine Thailand

Produce Universal Utilities and supply Company Limited of tap water Thailand

Million Baht Million Baht

-

510

%

5 -

510

Total investment in subsidiaries Less Allowance for impairment on investments in a subsidiary Investments in subsidiaries - net

100

%

100

Baht

Baht

- 4,999,930

Baht

-

Baht

-

100 510,000,000 510,000,000 28,560,000 30,039,000 510,000,000 514,999,930 28,560,000 30,039,000 - (3,500,000)

510,000,000 511,499,930

On 20 October 2009, a meeting of the Board of Directors of Universal Utilities Company Limited, a subsidiary of the Company, passed a resolution to approve the payment of an interim dividend of Baht 0.589 per share from the earnings for the period from 1 October 2008 to 31 August 2009, to the Company’s shareholders. This constitute a total dividend of Baht 30.04 million which will be paid in 5 monthly installments of Baht 6 million, each from 30 November 2009 to 31 March 2010.

On 29 October 2009, the Board of Directors’ Meeting No.10/2009 of the Company passed a resolution approving the exit plan of Water Trades and Services Company Limited (WTS). This company was established to manage the water vending machines project. WTS registered its dissolution with the Ministry of Commerce on 24 November 2009 and had completed its liquidation process on 12 February, 2010. The Company received a return of capital investment from a liquidated subsidiary of Baht 1.67 million on 28 April 2010.

On 19 April 2010 at the General Shareholders meeting of Universal Utilities Company Limited, the meetings have approved dividend payments of Baht 0.162 per share totaling, Baht 8.26 million.

The subsidiary already paid such dividend on 30 April 2010.

On 28 September 2010, at the Board of Directors’ meeting of Universal Utilities Company Limited, the meeting has approved interim dividend payment to shareholders, on operating results for the six-month period ended 30 June 2010, of Baht 0.398 per share, totalling Baht 20.30 million. The

95

13 Long-term investments - net

(Unit: Baht)

Opening net book amount Additions Closing net book amount

Consolidated 2010 2009

85,387,500 85,387,500 6,082,800 - 91,470,300 85,387,500

Company 2010 2009

85,387,500 85,387,500 6,082,800 - 91,470,300 85,387,500

As at 31 December 2010 and 2009, the Company has long-term investments which are investments in non-marketable equity security as follows:

Long-term investments General investments - Egcom Tara Company Limited - Joint Venture UUEEI

Less Allowance for impairment of investments

Total long-term investments - net

(Unit: Baht) Consolidated Company 2010 2009 2010 2009

91,470,300 85,387,500 91,470,300 85,387,500 90,000 - - -

91,470,300 85,477,500 91,470,300 85,387,500 - (90,000) - - 91,470,300 85,387,500 91,470,300 85,387,500 91,470,300 85,387,500 91,470,300 85,387,500

Egcom Tara Company Limited As at 31 December 2009, the Company had a long-term investment in equity securities of Egcom Tara Company Limited, a related company, which operation is to generate tap water for sale solely to the Provincial Waterworks Authority. The investment is classified as general investment and stated at cost of Baht 85.4 million and represents 15% of the paid-up share capital of that company. On 8 January 2010, the Company acquired 304,140 ordinary shares of Egcom Tara Company Limited from existing shareholders at Baht 20 per share, totalling to Baht 6.08 million.

Consequently, the Company’s holding portion had increased from 15.00% to 15.88%.

96

Egcom Tara Company Limited have approved dividend payments as follows:

Dividend per share Meeting Meeting Date Baht

0.84 The General Shareholders’ meeting 19 April 2010 0.77 The Board of Directors’ meeting 25 June 2010 0.78 The Board of Directors’ meeting 16 September 2010 0.75 The Board of Directors’ meeting 23 November 2010

Total

Million Baht Payment Date

4.6 29 April 2010 4.2 14 July 2010 4.3 29 September 2010 4.1 14 December 2010

Joint venture UUEEI As at 31 December 2009, a subsidiary had an investment in Joint Venture UUEEI, which is engaged in the maintenance and management of waste water treatment systems. Such investment comprised a 15% holding at a cost of Baht 90,000. In December 2009, a meeting of the Board of Directors of the subsidiary approved the dissolution of this joint venture. This joint venture completed its liquidation process on 24 February 2010 and was removed from the value added tax (VAT) system by the Revenue Department on 2 August 2010.

97

14 Property, plant and equipment - net

Land At 1 January 2009 Cost 359,566,906 Less Accumulated depreciation - 359,566,906 Net book amount For the year ended 31 December 2009 Opening net book amount 359,566,906 Additions - Transfer 8,089,375 Disposal - net - Depreciation charge - 367,656,281 Closing net book amount At 31 December 2009 Cost 367,656,281 Less Accumulated depreciation - 367,656,281 Net book amount For the year ended 31 December 2010 Opening net book amount 367,656,281 Additions 21,380 Transfer 5,537,491 Disposal - net - Depreciation charge - 373,215,152 Closing net book amount At 31 December 2010 Cost 373,215,152 Less Accumulated depreciation - 373,215,152 Net book amount

98

(Unit: Baht)

Consolidated

Pumping plants

Land, leasehold Machinery and building and Office Buildings improvements equipment equipment

Construction Vehicles in progress

Total

519,601,338

720,688,043

109,495,688 6,055,436,004

340,642,160

8,333,820

27,980,739 8,141,744,698

(100,383,500) 419,217,838

(69,629,468) 651,058,575

(39,395,228) (1,023,626,676) (192,774,347) 70,100,460 5,031,809,328 147,867,813

(3,251,024) 5,082,796

- (1,429,060,243) 27,980,739 6,712,684,455

419,217,838 - 13,403,334 -

651,058,575 400,000 2,887,313 (2,242,675)

70,100,460 5,031,809,328 11,677,470 33,522,002 51,527,849 107,219,446 (445,241) (6,746,685)

147,867,813 7,380,517 2,600,000 (2,740,651)

(13,906,089) 418,715,083

(30,407,057) 621,696,156

(14,686,631) (171,940,395) 118,173,907 4,993,863,696

(47,229,567) 107,878,112

(1,724,640) 3,298,166

- (279,894,379) 144,549,039 6,775,830,440

533,004,672

721,523,794

172,245,759 6,140,155,103

300,589,278

6,062,175

144,549,039 8,385,786,101

(114,289,589) 418,715,083

(99,827,638) 621,696,156

(54,071,852) (1,146,291,407) (192,711,166) 118,173,907 4,993,863,696 107,878,112

(2,760,009) 3,298,166

- (1,609,955,661) 144,549,039 6,775,830,440

418,715,083 - 14,960,209 -

621,696,156 13,179,977 2,308,483 (114,966)

118,173,907 4,993,863,696 3,664,018 8,859,009 47,980,502 89,814,507 - (12,680,345)

107,878,112 14,240,779 6,004,135 (1,906,568)

3,298,166 144,549,039 6,775,830,440 - 1,335,049,894 1,375,015,057 - (166,605,327) - (297,180) (3,370,151) (18,369,210)

(16,814,585) 416,860,707

(31,754,943) 605,314,707

(18,682,988) (228,247,213) 151,135,439 4,851,609,654

(44,761,935) 81,454,523

(1,282,132) - (341,543,796) 1,718,854 1,309,623,455 7,790,932,491

547,964,881

737,012,253

223,890,279 6,224,093,868

316,200,208

5,494,263 1,309,623,455 9,737,494,359

(72,754,840) (1,372,484,214) (234,745,685) 151,135,439 4,851,609,654 81,454,523

(3,775,409) - (1,946,561,868) 1,718,854 1,309,623,455 7,790,932,491

(131,104,174) (131,697,546) 416,860,707 605,314,707

5,082,796 27,980,739 6,712,684,455 - 302,415,138 355,395,127 - (185,727,317) - (59,990) (119,521) (12,354,763)

(Unit: Baht)

At 1 January 2009 Cost Less Accumulated depreciation Net book amount For the year ended 31 December 2009 Opening net book amount Additions Transfer Disposal - net Depreciation charge Closing net book amount At 31 December 2009 Cost Less Accumulated depreciation Net book amount For the year ended 31 December 2010 Opening net book amount Additions Transfer Disposal - net Depreciation charge Closing net book amount At 31 December 2010 Cost Less Accumulated depreciation

Net book amount

Company Land, leasehold and building Machinery and improvements equipment

Office equipment

Construction in Vehicles progress

Land

Pumping plants

Buildings

317,197,440

499,594,743

720,688,043

103,367,668

5,899,052,770

317,479,946

3,882,009

27,980,739

- 317,197,440

(95,628,698) 403,966,045

(69,629,468) 651,058,575

(37,418,114) 65,949,554

(978,936,417) (178,396,903) 4,920,116,353 139,083,043

(900,554) 2,981,455

- (1,360,910,154) 27,980,739 6,528,333,204

317,197,440 - - -

403,966,045 - 22,571,475 -

651,058,575 400,000 2,887,313 (2,242,675)

65,949,554 11,013,531 51,527,849 (445,241)

4,920,116,353 26,675,463 98,051,305 (6,690,326)

139,083,043 4,877,548 2,600,000 (2,536,357)

2,981,455 - - -

27,980,739 287,694,247 (177,637,942) (119,521)

6,528,333,204 330,660,789 - (12,034,120)

- 317,197,440

(15,306,320) 411,231,200

(30,407,057) 621,696,156

(13,929,063) 114,116,630

(154,897,594) 4,883,255,201

(43,507,067) 100,517,167

(767,786) 2,213,669

- 137,917,523

(258,814,887) 6,588,144,986

317,197,440

522,166,218

721,523,794

165,453,800

5,967,850,470

275,890,242

3,882,009

137,917,523

8,111,881,496

- (110,935,018) 317,197,440 411,231,200

(99,827,638) 621,696,156

(51,337,170) (1,084,595,269) (175,373,075) 114,116,630 4,883,255,201 100,517,167

(1,668,340) 2,213,669

317,197,440 21,380 5,537,491 -

411,231,200 - 14,960,210 -

621,696,156 13,179,977 2,308,483 (114,966)

114,116,630 3,507,719 47,960,505 -

4,883,255,201 6,424,424 68,070,955 (12,679,611)

100,517,167 12,170,301 5,318,180 (1,835,450)

2,213,669 137,917,523 - 1,285,565,005 - (144,155,824) - (3,370,152)

6,588,144,986 1,320,868,806 - (18,000,179)

- 322,756,311

(16,091,660) 410,099,750

(31,754,943) 605,314,707

(17,863,491) 147,721,363

(211,741,948) 4,733,329,021

(41,309,130) 74,861,068

(741,745) - 1,471,924 1,275,956,552

(319,502,917) 7,571,510,696

322,756,311 537,126,428 737,012,254 - (127,026,678) (131,697,547)

216,922,024 6,027,849,749 291,976,788 (69,200,661) (1,294,520,728) (217,115,720)

322,756,311

147,721,363

410,099,750

605,314,707

4,733,329,021

74,861,068

Total 7,889,243,358

- (1,523,736,510) 137,917,523 6,588,144,986

3,882,009 1,275,956,552 9,413,482,115 (2,410,085) - (1,841,971,419) 1,471,924 1,275,956,552

7,571,510,696

As at 31 December 2010, the costs of fully depreciation plant and equipment that are still in use of the Group and the Company amounted to Baht 442.9 million and Baht 416.2 million, respectively (2009: Baht 392.6 million and Baht 371.8 million, respectively).

As at 31 December 2010, the Group and the Company had motor vehicles and computer under financial lease agreements with net book value amounting to Baht 6.0 million and Baht 5.8 million, respectively (2009: Baht 4.9 million and Baht 3.9 million, respectively).

Borrowing costs of Baht 9.78 million (2009: Nil) arresting from financing specifically entered into a pipeline constructing project were capitalised during the year and are included in “Additions�.

99

15 Assets under concession contracts - net

At 1 January 2009 Cost Less Accumulated depreciation Net book amount For the year ended 31 December 2009 Opening net book amount Additions Transfer Depreciation charge Impairment charge Net book amount At 31 December 2009 Cost Less Accumulated depreciation Less Accumulated impairment Net book amount

100

(Unit: Baht)

Assets under concession contracts

Consolidated Construction in progress

Total

470,134,522 (87,687,631) 382,446,891

7,935,145 - 7,935,145

478,069,667 (87,687,631) 390,382,036

382,446,891 13,250,887 18,267,477 (25,942,334) (16,790,000) 371,232,921

7,935,145 29,617,829 (18,267,477) - - 19,285,497

390,382,036 42,868,716 - (25,942,334) (16,790,000) 390,518,418

501,652,886 (113,629,965) (16,790,000) 371,232,921

19,285,497 - - 19,285,497

520,938,383 (113,629,965) (16,790,000) 390,518,418

(Unit: Baht)

Assets under concession contracts

Consolidated Construction in progress

Total

371,232,921 10,692,140 35,396,159 (329,395) (28,188,689) (1,400,000)

19,285,497 24,731,823 (35,396,159) (185,000) - -

390,518,418 35,423,963 - (514,395) (28,188,689) (1,400,000)

387,403,136

8,436,161

395,839,297

At 31 December 2010 Cost Less Accumulated depreciation

547,240,021 (141,646,885)

8,436,161 -

555,676,182 (141,646,885)

Less Accumulated impairment

(18,190,000)

-

(18,190,000)

Net book amount

387,403,136

8,436,161

395,839,297

For the year ended 31 December 2010 Opening net book amount Additions Transfer Disposal - net Depreciation charge Impairment charge Closing net book amount

The subsidiaries have committed to transfer assets under concession contracts to the Provincial Waterworks Authority at the end of concession periods.

101

16. Deferred concession rights acquisition costs - net

102

At 1 January 2009 Cost Less Accumulated amortisation

Net book amount

For the year ended 31 December 2009 Opening net book amount Additions Transfer Amortisation charge

Closing net book amount

At 31 December 2009 Cost Less Accumulated amortisation

Net book amount

For the year ended 31 December 2010 Opening net book amount Additions Transfer Amortisation charge

Closing net book amount

At 31 December 2010 Cost

Less Accumulated amortisation Net book amount

(Unit: Baht)

Deferred concession rights acquisition costs

Consolidated Construction in progress

Total

234,835,194

350,896,200

585,731,394

(51,484,535) 183,350,659

- 350,896,200

(51,484,535) 534,246,859

183,350,659 - 268,272,748 (25,905,787)

350,896,200 48,411,201 (268,272,748) -

534,246,859 48,411,201 - (25,905,787)

425,717,620

131,034,653

556,752,273

503,107,942 (77,390,322)

131,034,653 -

634,142,595 (77,390,322)

425,717,620

131,034,653

556,752,273

425,717,620 - 132,486,334 (26,743,488)

131,034,653 12,309,025 (132,486,334) -

556,752,273 12,309,025 - (26,743,488)

531,460,466

10,857,344

542,317,810

635,594,276

10,857,344

646,451,620

(104,133,810) 531,460,466

- 10,857,344

(104,133,810) 542,317,810

17. Intangible assets - net

At 1 January 2009 Cost Less Accumulated amortisation

Net book amount

For the year ended 31 December 2009 Opening net book amount Amortisation charge

Closing net book amount

At 31 December 2009 Cost Less Accumulated amortisation

Net book amount

For the year ended 31 December 2010 Opening net book amount Amortisation charge

Closing net book amount

At 31 December 2010 Cost Less Accumulated amortisation

Net book amount

Remaining amortisation periods 31 December 2009 31 December 2010

(Unit: Baht) Consolidated

201,205,413 (40,608,833)

160,596,580

160,596,580 (8,348,738)

152,247,842

201,205,413 (48,957,571)

152,247,842

152,247,842 (8,348,738)

143,899,104

201,205,413 (57,306,309)

143,899,104

18 years 3 months 17 years 3 months

103

18. Trade accounts payable

(Unit: Baht)

Third parties Related parties (Note 29.2)

Consolidated 2010 2009

76,486,126 55,091,720 24,423,541 10,502,110

100,909,667 65,593,830

Company 2010 2009

13,696,822 14,354,373 43,873,046 49,695,482

57,569,868 64,049,855

19. Short-term loans from financial institutions

104

19.1 Promissory note (Unit: Baht)

Promissory note

Consolidated 2010 2009

369,000,000 -

- 369,000,000

Company 2010 2009

- 369,000,000

- 369,000,000

As at 31 December 2009, promissory note bears interest at the rates of 4.95% per annum and has maturity date within January 2010.

19.2 Bills of exchange

Face value Less Deferred interest

Bills of exchange - net

(Unit: Baht) Consolidated 2010

555,000,000 (2,412,087)

552,587,913

2009

- -

-

Company 2010

555,000,000 (2,412,087)

552,587,913

2009

- -

-

As at 31 December 2010, the Company issued unsecured bills of exchange to financial institutions as a borrowing to invest in property, plant and equipment. These bills of exchanges have matuarity date about 6 months and bear interest at the rates of 1.51% - 2.14% per annum.

20 Finance lease liabilities

Finance lease liabilities - minimum lease payments: (Unit: Baht)

Not later than 1 year Later than 1 year but not later than 5 years

Less Future finance charges on finance leases

Present value of finance lease liabilities

Consolidated 2010 2009

2,897,522 3,161,140

2,493,627 1,380,552

5,391,149 4,541,692

(85,857) (284,591)

5,305,292 4,257,101

Company 2010

2,897,522

2,493,627

5,391,149

(85,857)

5,305,292

2009 2,660,016

1,380,552

4,040,568

(258,633)

3,781,935

The present value of finance lease liabilities is as follows: (Unit: Baht)

Not later than 1 year (short-term portion) Later than 1 year but not later than 5 years (long-term portion)

Consolidated 2010 2009

2,823,812 2,948,681

2,481,480 1,308,420

5,305,292 4,257,101

Company 2010 2009

2,823,812 2,473,515

2,481,480 1,308,420

5,305,292 3,781,935

105

21 Long-term loans from financial institutions

Movements in the long-term loans from financial institutions during the year are summarised below.

106

Balances as at 1 January Add Additional borrowings Less Repayments

Balances as at 31 December

Consolidated 2010 2009

1,915,568,000 2,746,784,000 278,000,000 364,500,000 (187,755,474) (1,195,716,000)

2,005,812,526 1,915,568,000

Company 2010 2009

1,350,000,000 2,500,000,000 204,000,000 - (100,000,000) (1,150,000,000)

1,454,000,000 1,350,000,000

Outstanding credit facilities Consolidated Company

Credit limit 2010 2009 2010 2009 2010 2009

Million Baht Million Baht Million Baht Baht Baht Baht Baht

The Company 1,500 - - 1,250,000,000 1,350,000,000 1,250,000,000 1,350,000,000 a) 1,000 967.0 1,000.0 33,000,000 - 33,000,000 - b) 1,700 1,529.0 1,700.0 171,000,000 - 171,000,000 - c) The subsidiary 240 - - 102,852,000 148,568,000 - - a) 200 38.0 83.0 135,750,000 117,000,000 - - b) 300 - - 284,210,526 300,000,000 - - c) 200 171.0 200.0 29,000,000 - - - d)

Total 5,140 2,705.0 2,983.0 2,005,812,526 1,915,568,000 1,454,000,000 1,350,000,000 Less Current portion

(373,406,060) (187,755,474) (250,000,000) (100,000,000)

Long-term loans from financial institutions 1,632,406,466 1,727,812,526 1,204,000,000 1,250,000,000 - net of current portion

Long-term loans of the Company and its subsidiaries from financial institutions are shown below.

Long-term loans of the Company

Credit facility (Million Date of

Baht) agreement Objective Type of loan Period Interest rate a) 1,500 6 December 2007 To repay a Unsecured, 7 years - The 1st - 36th months Fixed bridging loan with status rate at 4.80 percent per equivalent to annum unsecured and - The 37th - 60th months unsubordinated Minimum Loan Rate (MLR) debts minus 1.75 percent per annum - The 61st month onwards Minimum Loan Rate (MLR) minus 1.50 percent per annum

b) 1,000 22 May 2009 To invest in Unsecured, 7 years - The 1st - 12th months pipeline with status Money Market Rate (MMR) maintenance equivalent to for loans with maturities of no project unsecured and more than 1 year from unsubordinated drawdown date debts - The 13th - 48th months Minimum Loan Rate (MLR) minus 1.75 percent per annum - The 49th month onwards Minimum Loan Rate (MLR) minus 1.50 percent per annum On 13 September 2010, the interest rate change to be fixed at 3.45% per annum for the first year; THBFIX+1.75% per annum for the second to the third years; and THBFIX+2% per annum for the fourth to the sixth years. c) 1,700 25 August 2009 Use in the Unsecured 10 years - The 1st - 4th years Fixed rate Company’s at 3.50 percent per annum pipeline - The 5th - 7th years Minimum construction Loan Rate (MLR) minus 2.25 percent per annum - The 8th - 10th years Minimum Loan Rate (MLR) minus 2.00 percent per annum

Repayment schedule Principal is repayable in semiannual installments, beginning after a grace period of 12 months from the agreement date as scheduled below.

- The 1st - 6th installments Baht 50 million each - The 7th - 12th installments Baht 200 million each

Debt covenant The Company is required to comply with certain conditions including the maintenance of a debt to equity ratio of not exceeding 2 times and not lower than 0 time, a debt service coverage ratio (DSCR) of not lower than 1.10 times, etc.

Principal with accrued interest (if any) is to be fully paid within 12 months from the agreement date.

On 13 September 2010, The condition for the repayment of the principal has changed to semi-annual installments, total 10 installments at Baht 100 each start from the end of November 2011.

The Company is required to comply with certain conditions including the maintenance of a debt to equity ratio of not exceeding 2 times and not lower than 0 time, a debt service coverage ratio (DSCR) of not lower than 1.10 times, etc.

Principal is repayable in 16 None semi-annual installments, beginning after a grace period of 30 months from the first draw down date.

107

Long-term loans of subsidiary - Universal Utilities Company Limited

a)

Credit facility (Million Baht) 240

Date of

agreement Objective 24 April 2006 To use in the subsidiary’s water tap production project

Type of loan Unsecured

b)

200

15 December To use in the 2008 subsidiary’s water tap projects

Unsecured

c)

300

16 September To settle an 2009 existing loan from the Company

Unsecured

d)

200

11 December To use in the 2009 subsidiary’s water tap project

Unsecured

108

Period Interest rate 7 years - The 1th - 48th months Minimum Loan Rate (MLR) minus 1.50 percent per annum - The 49th months onwards Minimum Loan Rate (MLR) minus 0.75 percent per annum On 11 December 2009, the subsidiary and a financial institution agreed to adjust the interest rate of the loans to be Minimum Loan Rate (MLR) minus 1.50 percent per annum, effective from the 49th months until the end of the loan agreement.

7 years - The 1th - 4th years Minimum Loan Rate (MLR) minus 1.75 percent per annum - The 5th years onwards Minimum Loan Rate (MLR) minus 1.50 percent per annum 10 years - The 1st - 5th years Minimum Loan Rate (MLR) minus 2.25 percent per annum - The 6th year onwards Minimum Loan Rate (MLR) minus 2.00 percent per annum

10 years - The 1st - 5th years Minimum Loan Rate (MLR) minus 2.25 percent per annum - The 6th year onwards Minimum Loan Rate (MLR) minus 2.00 percent per annum

Repayment schedule Principal is repayable equally in 21 quarterly installments, beginning after a grace period of 18 months from the agreement date.

Debt covenant The subsidiary is required to comply with certain conditions including the maintenance of a debt service coverage ratio (DSCR) of not lower than 1.25 times, etc.

Principal is repayable equally in 23 quarterly installments, beginning after a grace period of 18 months from the agreement date.

The subsidiary is required to comply with certain conditions including the maintenance of D/E ratio of not over than 2 times, and DSCR ratio of not lower than 1.25 times, etc.

Principal is repayable in 19 semiannual installments, beginning after a grace period of 12 months from the first draw down date and to be completed within 10 years from the first draw down date.

The subsidiary is required to comply with certain conditions including the maintenance of a debt service coverage ratio (DSCR) of not lower than 1.25 times, etc.

The subsidiary is required to comply with certain conditions including the maintenance of a debt service coverage ratio (DSCR) of not lower than 1.10 times, etc.

Principal is repayable in 18 semiannual installments, beginning after a grace period of 18 months from the first draw down date and to be completed within 10 years from the first draw down date.

22. Share capital

At 1 January 2009 Issue of shares At 31 December 2009 Issue of shares At 31 December 2010

Number of shares 1,663,725,149 - 1,663,725,149 - 1,663,725,149

Ordinary shares

1,663,725,149 - 1,663,725,149 - 1,663,725,149

Share premium 2,138,522,279 - 2,138,522,279 - 2,138,522,279

(Unit: Baht) Total 3,802,247,428 - 3,802,247,428 - 3,802,247,428

The total registered of ordinary shares have a par value of Baht 1 per share (2009: Baht 1 per share). All issued shares are fully paid.

23. Assets transferred from customers

Assets transferred from customers represent water distribution pipeline systems and water measured equipment transferred to the Company by customers in accordance with the water supply agreement. The Company recorded as property, plant and equipment against assets transferred from customers account which include in equity and recognise to revenue over the useful life of asset.

24. Legal reserve

Pursuant to section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside a legal reserve equal to at least 5 percent of its net profit for the year after deducting accumulated deficit brought forward (if any), until such reserve reaches 10 percent of the Company’s registered share capital. The legal reserve is non-distributable. As at 31 December 2010 and 2009, the Company’s legal reserve has been fully reached.

109

25 Dividends

Dividends declared during the year consist of the following.

Total Dividend

Approved by dividends Baht per share Baht Paid on

Year 2010

Dividend for the year 2009 Annual General Meeting

of the shareholders on

19 March 2010 415,917,787 0.25 5 April 2010

Board of Director’s Interim dividends on operating results for the meeting on 23 August

six-month period ended

2010 216,277,640 0.13 21 September 2010 30 June 2010

632,195,427

Year 2009 Dividend for the period ended Annual General Meeting

1 October 2007 to of the shareholders on 415,918,537 0.25 20 February 2009 30 September 2008 29 January 2009

Interim dividends on operating results for the Board of Director’s

six-month period ended 30 meeting on 24 August 2009 166,367,415 0.10 23 September 2009 June 2009

582,285,952

26. Other income

110

Interest income Dividend income (Note 29.1) Others

(Unit: Baht)

Consolidated 2010

3,161,482 17,267,095 21,079,694

41,508,271

2009 2,037,685 18,505,785 32,045,330

52,588,800

Company 2010

2,283,469 45,827,091 18,281,115

66,391,675

2009 13,223,660 48,544,781 17,259,218

79,027,659

27. Expenses by nature

Significant expenses by nature are as follow: (Unit: Baht)

Salary and wages and other employee benefits Depreciation and amortisation expenses Rental expenses Raw materials and consumables used Electricity expenses Purchases of raw water Hiring and service expenses Repair and maintenance expenses Losses on impairment and diminution in value of assets and provision for doubtful accounts Waterworks management expense Expenses for development of life quality and environment Cost of project asset Others

Consolidated 2010 2009

214,663,075 198,724,494 428,824,710 340,091,238 54,565,240 49,948,784 7,448,193 16,061,816 340,714,338 334,932,529 161,602,664 156,475,376 291,015,290 275,805,106 53,537,093 45,556,541

1,645,003 17,720,496 - -

34,604,368 21,650,029 1,507,455,010 - 198,231,874 171,129,812 3,294,306,858 1,628,096,221

Company 2010 2009

131,893,649 121,953,203 319,502,917 258,814,887 44,219,891 40,400,703 - - 301,887,499 248,451,030 151,582,267 146,984,148 36,020,876 32,686,739 33,483,876 29,209,559

245,003 4,340,496 186,605,005 169,803,465

32,095,002 18,816,040 1,507,455,010 - 198,239,187 186,278,503 2,943,230,182 1,257,738,773

28. Earnings 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 profit attributable to ordinary shareholders (Baht) Weighted average number of ordinary shares in issue (Share) Basic earnings per share (Baht)

Consolidated Company 2010 2009 2010 2009

908,553,615 807,270,583 827,099,919 728,025,109

1,663,725,149 1,663,725,149 1,663,725,149 1,663,725,149 0.55 0.49 0.50 0.44

There are no potential dilutive ordinary shares in issue for the years end 2010 and 2009.

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29. Related parties transactions

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.

The Company is a public listed company which major shareholder is the Provincial Waterworks Authority.

The following transactions were carried out with related parties:

29.1 Transactions incurred during the year

Sales - raw water

Major shareholders Industrial Estate Authority of Thailand Provincial Waterworks Authority Electricity Generating Public Company Limited Subsidiary Universal Utilities Company Limited Other related company Rayong Electricity Generating Company Limited

Sales - tap water Major shareholders Provincial Waterworks Authority Sales - others Subsidiary Universal Utilities Company Limited

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Consolidated 2010 2009

767,885,161 706,150,587 577,137,564 555,117,610

55,654,932 8,645,056

- -

26,079,552 - 1,400,677,657 1,295,992,805

529,499,097 466,304,780

- -

(Unit: Baht) Company 2010 2009

767,885,161 706,150,587 577,137,564 555,117,610

55,654,932 8,645,056

110,903,298 108,132,147

- 26,079,552 1,511,580,955 1,404,124,952

56,729,534 54,443,866

207,750 -

Rental and service income Major shareholders Provincial Waterworks Authority Subsidiaries Universal Utilities Company Limited Water Trades and Services Company Limited Other related company Egcom Tara Company Limited

Interest income Subsidiary Universal Utilities Company Limited Dividend income Subsidiary Universal Utilities Company Limited Other related company Egcom Tara Company Limited

Other income Subsidiary Universal Utilities Company Limited Costs of sales and costs of services Subsidiaries Universal Utilities Company Limited Water Trades and Services Company Limited

Consolidated 2010 2009

107,985,628 168,227,479

- -

- -

51,331,152 37,484,654 159,316,780 205,712,133

- -

- -

17,267,095 18,505,785 17,267,095 18,505,785

- -

- -

- - - -

Company 2010

-

3,359,006

-

- 3,359,006

-

28,559,996

17,267,095 17,267,095

4,986,614

242,777,960

- 242,777,960

2009

-

3,106,807

44,550

- 3,151,357

11,348,630

30,038,996

18,505,785 48,544,781

1,259,850

225,567,989

206,955 225,567,989

Sales of raw water are charged similar to market prices.

Sales of tap water, rental and service income and other income are charged at mutually - agreed prices as stipulated in the contracts.

Costs of sales and services are charged at mutually - agreed prices as stipulated in the contracts.

Interest income is charged at a fixed rate of 5.25% per annum.

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29.2 Outstanding balances at end of the years

114

Trade accounts receivable Major shareholders Provincial Waterworks Authority Industrial Estate Authority of Thailand Electricity Generating Public Company Limited Subsidiary Universal Utilities Company Limited Other related company Egcom Tara Company Limited

Unbilled receivables

Major shareholders Provincial Waterworks Authority Other related company Egcom Tara Company Limited

Water loss treatment service income receivables Major shareholder Provincial Waterworks Authority - billed - unbilled

Consolidated 2010 2009

80,648,034 75,559,897 67,939,271 67,112,828

3,604,828 3,345,236

- -

4,738,124 10,957,747 156,930,257 156,975,708

61,846,408 64,793,737

4,632,784 - 66,479,192 64,793,737

5,002,892 7,237,607 11,609,751 19,387,032 16,612,643 26,624,639

(Unit: Baht) Company 2010 2009

54,226,827 75,559,897 67,939,271 67,112,828

3,604,828 3,345,236

13,874,569 9,370,842

- - 139,645,495 155,388,803

- -

- - - -

- - - - - -

The age analysis of the water loss treatment service income receivable-billed is as follows:

Within credit term Past due less than 3 months Total water loss treatment service income receivable - billed

Consolidated 2010 2009 3,865,064 3,237,585 1,137,828 4,000,022

5,002,892 7,237,607

(Unit: Baht) Company 2010 2009 - - - -

- - (Unit: Baht)

Dividend receivable Subsidiary Universal Utilities Company Limited Other receivable Major shareholder Provincial Waterworks Authority Subsidiary Universal Utilities Company Limited

Trade accounts payable Major shareholder Provincial Waterworks Authority Subsidiary Universal Utilities Company Limited Other related company Egcom Tara Company Limited

Other accounts payable (include in other current liabilities) Subsidiaries Universal Utilities Company Limited Water Trades and Services Company Limited

Rental guarantees Subsidiaries Universal Utilities Company Limited Water Trades and Services Company Limited

Consolidated 2010 2009

- -

11,780 8,602

- - 11,780 8,602

24,423,541 9,177,359

- -

1,324,751 - 24,423,541 10,502,110

- - - -

Company 2010 2009

18,038,996 -

- -

1,077,248 1,510,860 1,077,248 1,510,860

3,461,711 -

40,411,335 49,695,482

- - 40,411,335 49,695,482

2,792,261 77,246

-

- -

-

- 2,792,261

805,765

6,955 84,201

780,765

- -

- -

- 805,765

12,430 793,195

In 2010, the Group and the Company paid salaries, bonuses, meeting allowance and gratuities to their directors and management in the consolidated and company financial statements totaling Baht 71.6 million and Baht 49.5 million, respectively (2009: Baht 70.2 million, and Baht 45.2 million, respectively).

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30. Commitments and contingent liabilities

30.1 Capital commitments As at 31 December 2010, the Group and the Company had commitments in respect of

in-progress construction and installation of the water distribution pipeline in the consolidated and company financial statements totaling Baht 1,177.0 million and Baht 1,094.5 million, respectively (2009: Baht 1,823.1 million and Baht 1,770.8 million, respectively).

30.2 Operating lease commitments The future aggregate minimum lease payments in respect of the lease of motor vehicles and computer under non-cancellable operating leases contracts are as follows.

Within 1 year 1 to 5 years

Consolidated 2010 11.3 13.8 25.1

2009 8.1 12.3 20.4

(Unit: Million Baht) Company 2010 2009 4.5 3.2 4.2 2.0 8.7 5.2

30.3 Raw water and tap water purchase agreements and long-term service

commitments

30.3.1 As at 31 December 2010 and 2009, the Company had commitment in respect of a raw water purchase agreement with the Royal Irrigation Department whereby it is to purchase raw water at the price specified in a Ministerial Regulation.

30.3.2 As at 31 December 2010 and 2009, the Company and its subsidiary had commitments in respect of raw water and tap water purchase agreements with private companies at the condition and price as described in Notes 32.6, 32.7 and 32.14 to the financial statements.

30.3.3 As at 31 December 2010, the Group and the Company had commitments in respect of service agreements payable in the future of approximately Baht 189.9 million and Baht 8.2 million, respectively (2009: Baht 251.8 million and Baht 28.4 million, respectively).

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30.4 Guarantees 30.4.1 As at 31 December 2010, the Group and the Company had contingent liabilities from letters of guarantee issued by local commercial banks to the Provincial Electricity Authority for electricity consumption, to the Ministry of Finance for management and operation of the major water distribution pipeline systems in the

Eastern Seaboard area, to the Provincial Electricity Authority and the Royal Irrigation Department for compliance to agreements, and to counterparty for bid bonds and performance bonds totalling Baht 266.1 million and Baht 138.1 million, respectively. (2009: Baht 227.9 million and Baht 51.6 million, respectively).

30.4.2 As at 31 December 2010 and 2009, the Group had contingent liabilities in respect

of being a guarantor to its three subsidiaries for letters of guarantee issued by local commercial banks to those subsidiaries in a credit limit of Baht 200 million for compliance to agreements with respect to their electricity consumption guarantee, tap water production and distribution and water consumers information records.

30.5 Project compensation A government agency is considering a deal for the Company to rent/manage the 2 pipeline connecting projects (“projects�) and adjust the compensation. A letter issued by this government agency stipulated that the Company was to initially pay compensation for the projects at a percentage of the raw water sales from the projects from the year operation commenced. In addition, if it is decided that a fair rate is more than the rate at which the Company already paid, the Company is to make additional payment, in full, as a lump sum; while if the fair rate is lower, the government agency agrees to pay back the surplus paid by offsetting it against the remuneration of the following years.

On 8 January 2010, the government agency as mentioned in first paragraph issued a letter to the Company notifying it that a deal for the Company to rent/manage the projects and the adjusting of compensation must be processed in accordance with the Act on Private Participation in a State Undertaking B.E. 2535, whereby a committee has, under Section 13, authority to set the compensation rate and negotiate benefits with the Company, in order to reach a preliminary conclusion. The conclusion will then be proposed to the Cabinet for a resolution in accordance with Section 21 of that Act. Currently, approval is being considered by the Office of the National Economic and Social Development Board, and the Ministry of Finance, in order to propose to the Cabinet, in accordance with Section 16 of the Act. In order to be properly and appropriately in the process, a committee under Section 13 assigned the government agency, as mentioned in first paragraph, to consult the Council of State in their consideration of whether the deal for the Company to rent/manage should begin with the process of the Act on Private Participation in a State Undertaking B.E. 2535 under Section 13 or section 6 before. Then, the Council of State notified the government agency that there are no matters of law for their consideration. Therefore, this case is currently being considered by the Office of the National Economic and Social Development Board, and the Ministry of Finance, in order to propose to the Cabinet as mentioned in the previous paragraph.

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30.6 Penalty for late work and deliver water below minimum requirement A subsidiary entered into a sale and purchase agreement for tap water for Chonburi Waterworks, Chonburi Province with the Provincial Waterworks Authority on 3 June 2009, which is scheduled to produce and supply water to the Provincial Waterworks Authority by 1 December 2009. Thereafter, the subsidiary entered into another sale and purchase agreement for tap water with a private company in order to construct a tap water production system to support the agreement with the Provincial Waterworks Authority as mentioned above. However, the private company could not complete the construction on time. As a result, the subsidiary has an obligation to pay compensation, which was calculated starting from December 2009 to March 2010 and a fine which was calculated starting from 1 December 2009 to actual completion date on 11 April 2010, totalling Baht 32.0 million to the Provincial Waterworks Authority. The subsidiary fully paid this liability on August 2010. However, the subsidiary will be able to charge for the compensation and fine together with interest charge 7.5% per annum from the private company by offsetting with the tap water cost that the subsidiary purchases every month from that private company. The subsidiary, therefore, recorded the balance after offsetting in part of other receivable included in other current assets of Baht 17.0 million in the consolidated financial statement as at 31 December 2010.

In addition, since the subsidiary began to supply water to the Provincial Waterworks Authority on 12 April 2010, the subsidiary has not delivered water to the daily minimum requirements. The subsidiary, therefore, recorded the compensation and fine in the financial statements as at 31 December 2010 of Baht 16.05 million. However, The Provincial Waterworks Authority issued a letter to the subsidiary to claim the compensation and fine for being unable to deliver water achieving the daily minimum requirements from April to November 2010, totaling Baht 62.1 million due to different basis for calculation being applied. Then, in February 2011, the Provincial Waterworks Authority notified the subsidiary that the calculation methods of the compensation have been revised to the same calculation basis as that of the subsidiary. Therefore, the subsidiary did not record the different amount as additional liabilities in the financial statements. In addition, the subsidiary is able to charge this compensation and fine to the private company as mentioned in the first paragraph.

31 Litigation

As at 31 December 2010 and 2009, the Company and its subsidiary were sued as defendants in litigation cases with significant claim as follows:

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31.1 On 28 March 2003, the Company was sued as a defendant in a litigation case in connection with the purchase of assets from the Legal Execution Department. The plaintiff petitioned the civil court to void the sales transaction or order the payment of compensatory damages amounting to Baht 302.2 million to the plaintiff. However, on 26 January 2006, the Court of First Instance issued an order dismissing the lawsuit and later the plaintiff lodged an appeal with the Court of Appeal on 22 March 2006. The Company

has already made its plea contesting the plaintiff’s appeal and as at 31 December 2010, the case is currently being heard by the Appeal Court. On 8 February 2011, the Appeal Court upheld the judgment of the Court of First Instance.

31.2 On 14 March 2006, Universal Utilities Company Limited, a subsidiary, was sued as a codefendant together with the Provincial Waterworks Authority (“PWA”) in a case brought in connection with illegal acts performed by administrative agencies or state officials. The plaintiff petitioned the administrative court to void the selection process by which a private operator was selected to produce tap water for distribution to the PWA in the area belonging to the Rayong Waterworks. On 16 March 2007, the Rayong Administrative Court ordered the selection process voided in accordance with the plaintiff’s petition, and also declared void the agreement appointing a private firm to produce water for sale to the Rayong Waterworks, which had resulted from an illegal selection process. However, the PWA and the subsidiary lodged appeals with the Rayong Administrative Court on 12 April 2007 and the Rayong Administrative Court has issued a court receipt for such appeal and then passed it to the Supreme Administrative Court. The case is currently at the stage of concluding the facts of the owner’s arbitrator at the appeals level of the Supreme Administrative Court under the court receipt No. Aor. 278/50. Since PWA and the subsidiary have to comply with conditions in the agreement and are further obliged to each other as stipulated in the agreement until the case is finalised, in accordance with Section 70 of the Royal Decree on Establishment of and Procedures for Administrative Court Act B.E. 2542, the subsidiary management therefore believes that the subsidiary will incur no losses as a result of the termination of the agreement because, if such a termination occurs the PWA will have to compensate the subsidiary for costs of construction and improvements made to the waterworks, and for other expenses incurred by the subsidiary.

Therefore, no provision has yet been made in the accounts.

31.3 On 20 October 2008, the Company was sued by a company in a lawsuit with a black case number 5930/2551 regarding a breach of a construction agreement. The litigation filed with the Civil Court by the plaintiff requested that the Company pay damages totaling Baht 40.2 million.

On 29 December 2008, the Company filed a lawsuit with a black case number 6848/2551 regarding a breach of a construction contract, suing the aforementioned company and a local commercial bank as the work guarantor of that company. The litigation filed with the Civil Court by the Company requested that the defendants pay damages totaling Baht 37.4 million.

On 26 January 2009, the Civil Court set a date for the settlement of issues under the lawsuit with the black case number 5930/2551. However, the attorney of the Company has petitioned the Court to merge the settlement of issues of the lawsuit with the black case number 6848/2551 to be in one case since both cases are based on the same factual information. The Court considered the request and set a date for the settlement of issues of these two lawsuits on 23 March 2009.

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On 23 March 2009, the Civil Court set a date for investigation of plaintiff’s witnesses during 17 - 19 February 2010 and a date for investigation of defendant’s witnesses during 23 - 24 February 2010.

On 30 July 2010, The Civil Court delivered its judgement of the red case number 3169/ 2553 and 3170/2553 which can be summarised as follows: 1. The litigant is required to pay a fine of Baht 8.8 million, return the advance payment of Baht 2.1 million and pay for wage supervisors during late work period of Baht 0.2 million, totalling a payment of Baht 11.1 million.

2. The Company is required to pay the 30th and 31st installment of construction cost according to the agreement of Baht 13.0 million together with the additional costs of Baht 7.0 million and the return of retention costs of Baht 3.8 million, totalling Baht 23.8 million. Moreover, the Company is required to return all eight bank guarantees to the litigant.

However, for the benefit of the Company a lawyer was appointed to lodge an appeal with the court on 29 October 2010 regarding the fine and the additional costs.

The Company has recorded liabilities of the construction costs and the retention costs of Baht 16.8 million in this interim financial statement. Moreover, the Company has not recorded the additional costs of Baht 7.0 million which has not yet finalised.

31.4 On 3 June 2009, the subsidiary was sued by a former employee under labor law with a black case number 3630/2552, in relation to the termination of the employment by the subsidiary. The plaintiff lodged the lawsuit with the Central Labor Court, seeking compensation amounting to Baht 36.9 million.

On 25 December 2009, the Central Labor Court issued an order dismissing the lawsuit.

Subsequently, the plaintiff did not lodge an appeal with the Court within the deadline, so the case has been finalised.

32. Significant agreements

The Company and its subsidiaries have the following significant agreements, besides other agreements as discussed in relevant notes to financial statements.

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The Company 32.1 On 26 December 1993, the Company entered into an agreement with the Ministry of Finance to manage and operate the major water distribution pipeline systems in the Eastern Seaboard area. The contract term is 30 years, from 1 January 1994 to 30 September 2023 and the Company is required to pay a minimum of Baht 2 million per

annum to the Ministry of Finance. In any years when the Company’s revenues from the sales of raw water exceed Baht 200 million, it is required to pay the Ministry of Finance with a sharing benefit at a rate of 1 percent of sales of raw water from the Nong Khor and Dok Krai reservoirs. In addition, when the Company’s annual rate of return on equity exceeds 20 percent, an additional sharing benefit at the rate of 15 percent of the return in excess of the paid 20 percent is to be paid to the Ministry of Finance. Nevertheless, the total sharing benefit is not to exceed 6 percent of the real value of the assets leased from the Ministry of Finance, as assessed according to the agreed time frame.

32.2 On 15 November 2000, the Company entered into an agreement with Universal Utilities Company Limited, a subsidiary, to receive waterworks management services for Sattahip Waterworks of the Provincial Waterworks Authority for the period of 10 years. The Company will pay the management fee from revenue after deducting license fee and related expenses as specified in the agreement. Moreover, the Company will receive the profit sharing from the subsidiary under the conditions specified in the agreement.

Subsequently on 18 October 2004, the Company amended the above-mentioned agreement to entitle the subsidiary to the Pattaya Waterworks and extend the manage water system of Sattahip Waterworks period for 30 years from

1 March 2001 but not exceeding the period the Provincial Waterworks Authority has granted the Company the rights to operate and manage the Sattahip Waterworks System.

32.3 On 28 November 2000, the Company entered into an agreement with Universal Utilities Company Limited whereby it grants the subsidiary the rights to operate the waterworks of the Municipality of Si Chang Island Sub-district for a period of 15 years commencing from the first tap water selling date. Under the agreement, the subsidiary is required to construct tap water production system and also required to provide maintenance services at least 5 years after termination of agreement. Moreover, the subsidiary is to transfer all the invested assets to the Company and/or the Si Chang Municipality on the earlier expiry date of the waterworks agreement operation or the waterworks management agreement.

The subsidiary is to pay in return to both the Municipality of Si Chang Island Sub-district and the Company at the rates as specified in the agreement.

32.4 On 11 May 2004, the Company entered into a waterworks management agreement with Universal Utilities Company Limited (the subsidiary) whereby the subsidiary is to provide water works management services in Bo Win Municipal area for a period of 25 years from the date the subsidiary completed the construction works of tap water production system and the Company agreed for commercial distribution of tap water (11 March 2005). Under the agreement, the subsidiary is to procure land and construct tap water production system sufficient to supply tap water throughout the agreement period. The subsidiary is to transfer all the invested assets to the Company and/or the Municipality on the earlier expiry date of the waterworks operation agreement or the waterworks management agreement. The Company is to pay an annual waterworks management fee at the rates specified in the agreement, determined on the monthly tap water sales and service fees, which can be collected from the users.

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Since later on 5 August 2005, the Company entered into a waterworks system operation and management agreement with the Bo Win Sub-district Administrative Organisation (“SAO”). The Company, therefore, entered into new agreement with the subsidiary dated 14 July 2006, which replaced aforementioned agreement dated 11 May 2004.

32.5 On 7 July 2004, the Company entered into a water supply agreement for the Koh Samui Waterworks with Universal Utilities Company Limited for a 15-year period from the first water distribution date (12 May 2005) whereby the subsidiary agreed to construct the reverse osmosis water production system with the water pipeline connected to both the water distribution pipeline of the purchasers in the specified area and the Provincial Waterworks Authority, and sell the tap water produced under such system.

32.6 On 13 December 2007, the Company entered into the raw water procurement agreements with a private company whereby the Company is required to purchase a minimum of 10 million cubic meters per annum over a 10-year period.

32.7 On 30 September 2009, the Company entered into raw water procurement agreements with a private company, whereby the Company is required to purchase a minimum of 6 million cubic meters for the first years, 8 million cubic meters for the second years and 10 million cubic meters for the third years or later over a 10-year period.

The Subsidiaries

32.8 Chachoengsao Water Supply Company Limited entered into the concession agreement dated 9 November 2000 with the Provincial Waterworks Authority. The subsidiary is privileged to produce and sell tap water to the Provincial Waterworks Authority at Chachoengsao office, Chachoengsao province. The concession period is 25 years from the date that first income is derived from selling tap water (1 April 2003).

32.9 Bangpakong Water Supply Company Limited entered into the concession agreement dated 9 November 2000 with the Provincial Waterworks Authority. The subsidiary is privileged to produce and sell tap water to the Provincial Waterworks Authority at Bangpakong office, Chachoengsao province. The concession period is 25 years from the date that first income is derived from selling tap water (1 April 2003).

32.10 Nakornsawan Water Supply Company Limited entered into the concession agreement dated 7 November 2000 with the Provincial Waterworks Authority. The subsidiary is privileged to produce and sell tap water to the Provincial Waterworks Authority at Nakornsawan office, Nakornsawan province. The concession period is 25 years from the date that first income is derived from selling tap water (1 March 2003).

32.11 Chachoengsao Water Supply Company Limited (CWS) and Bangpakong Water Supply Company Limited (BWS) entered into a know-how agreement dated 1 December 2000 with Australian Water Technologies PTY Limited of Australia, which transferred its entitlements under this agreement to its subsidiary, named AWT International (Thailand) Limited (“AWT”) on 15 October 2002, whereby AWT agreed to permit the use of its name for

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reference purposes and provide the know-how to enable both subsidiaries to perform their obligations. In consideration thereof, the subsidiaries agree to pay fees at the rate stipulated in the agreement. Then, Sydney Water Corporation, the parent company of AWT, declared its intention to liquidate AWT and issued comfort letters to both subsidiaries to confirm that it will take on all AWT’s duties and obligations under the know-how agreement. The subsidiaries’ Board of Directors considered to accept this proposal and negotiated to reduce their service fee. The service fee paid to AWT reduced from the present value of future estimated payment amounting to Baht 52.4 million to a one-time advance payment not exceeding Baht 18.0 million, which is a saving of the said service fee over the remaining contract. Consequently, the subsidiaries’ Board of Directors, on 18 January 2011, passed the resolution to terminate this contract. The subsidiaries recorded the advance service fee as a deferred expense in the consolidated financial statements as at 31 December 2010.

32.12 On 15 March 2010, Universal Utilities Company Limited entered into an agreement with Egcom Tara Company Limited, a related company, to produce tap water and to provide maintenance services for the tap water production system and tap water distribution pipeline of the production plants situated in Lak Muang, Ratchaburi province and Pangpuoy, Samut Songkram province. The agreement period is 3 years, from 7 April 2010 to 7 April 2013.

32.13 On 14 March 2006, Universal Utilities Company Limited and its subsidiaries entered into an agreement to produce tap water for sales to Rayong Waterworks, Rayong province with the Provincial Waterworks Authority for a 25-year period commencing from the first tap water selling date (12 July 2006). Under the agreement, the subsidiaries are required to construct tap water production system, water delivery system and water distribution system, and to expand the production capacity of the existing tap water distribution system of Rayong Waterworks. The subsidiaries are also required to provide maintenance services and to act on behalf of the Provincial Waterworks Authority in any related matters.

Ownership of assets, which have been invested by the subsidiaries, is to be transferred to the Provincial Waterworks Authority immediately upon completion of these activities, with the subsidiaries having the rights to occupy the assets in order to produce and supply tap water to the Provincial Waterworks Authority over the agreement period. The subsidiaries will receive income at the rates prescribed in the agreement.

32.14 On 25 May 2009, Universal Utilities Company Limited entered into a tap water purchase agreement for the Chonburi Waterworks, Chonburi Province with a private company. The agreement is effective from the date it is signed by both parties and will be terminated upon termination of the tap water purchase and sale agreement for the Chonburi Waterworks, Chonburi Province made with Provincial Waterworks Authority (“PWA”). The agreement requires a private company to construct a tap water production facility, of which ownership is not required to be transferred to the subsidiary. Prices are to be at the rates stipulated in the agreement.

32.15 On 3 June 2009, Universal Utilities Company Limited entered into the tap water purchase and sale agreement for the Chonburi Waterworks, Chonburi Province with PWA. The term

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of the agreement is 20 years from the date of tap water purchases commence. The agreement requires the subsidiary to construct a tap water production facility, of which ownership is not required to be transferred to the PWA. Prices are to be at the rates stipulated in the agreement.

32.16 On 29 December 2010, Universal Utilities Company Limited entered into a waterworks system operation and management agreement with the Sub-district Administrative Organisation (“SAO”) Nong Khaem for a 25-year period commencing from the beginning date of producing and selling tap water. The subsidiary has to transfer ownership of all invested and expanded assets in the waterworks system to SAO Nong Khaem free-ofcharge at the end of agreement.

33. Financial instruments

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33.1 Financial risk factors The Group’s financial instruments principally comprise cash and cash equivalents, trade accounts receivable, trade accounts payable, short-term and long-term loans and retentions payable. The Group’s activities expose it to a variety of financial risks, including the credit risk and interest rates risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The financial risk management is discussed below.

33.1.1 Credit risk The Group are exposed to credit risk primarily with respect to, trade accounts receivable, and other receivable. The Group manage the risk by adopting appropriate credit control policies and procedures and therefore does not expect to incur material financial losses. Although the Group may expose to concentration risk due to their having a few large customers, those customers are in government sector. The management believes that such risk is therefore low.

The maximum exposure to credit risk is limited to the carrying amounts of trade accounts receivables, and other receivable as stated in the balance sheets.

33.1.2 Interest rate risk The Group’s exposure to interest rate risk relate primarily to their deposits with financial institutions and short-term and long-term loans. However, since most of the Group’s financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the current market rate, the interest rate risk is expected to be minimal.

Significant financial assets and liabilities as at 31 December 2010 classified by type of interest rates are summarised in the table below, with those financial assets and liabilities that carry fixed interest rates further classified based on the maturity date, or the repricing date if this occurs before the maturity date.

Consolidated

Financial assets Cash and cash equivalents Trade accounts receivable - billed Water loss treatment service income receivable from related party - billed Other receivable (include in other current assets) Restricted bank deposits

Financial liabilities Trade accounts payable Short-term loans from financial institutions Long-term loans from financial institutions Payable for purchase of fixed asset Retentions payable

Fixed interest rates

Within 1-5 Over Floating Non-interest years Total Interest rate 1 year 5 years interest rate bearing (Thousand Baht) (% p.a.)

- - - 442,359 525 442,884 0.50 - 1.90 - - - - 244,282 244,282 -

- - - - 5,003 5,003 -

- - - - 44,587 44,587 - - 2,076 - - - 2,076 1.10 - 1.70

- 2,076 - 442,359 294,397 738,832

- - - - 100,910 100,910 -

552,587 - - - - 552,587 1.51 - 2.14

250,000 1,204,000 - 551,813 - 2,005,813 3.45 - 4.38

- - - - 150,791 150,791 - - - - - 106,804 106,804 - 802,587 1,204,000 - 551.813 358,505 2,916,905

Company

Financial assets Cash and cash equivalents Trade accounts receivable - billed Restricted bank deposits

Financial liabilities Trade accounts payable Short-term loans from financial institutions Long-term loans from financial institutions Payable for purchase of fixed asset Retentions payable

Fixed interest rates

Within 1-5 Over Floating Non-interest years Total Interest rate 1 year 5 years interest rate bearing (Thousand Baht) (% p.a.)

- - - 328,290 80 328,370 0.50 - 1.90 - - - - 226,877 226,877 - - 2,076 - - - 2,076 1.10 - 1.70 - 2,076 - 328,290 226,957 557,323

- - - - 57,570 57,570 -

552,587 - - - - 552,587 -

250,000 1,204,000 - - - 1,454,000 3.45 - 4.38

- - - - 129,795 129,795 - - - - - 85,257 85,257 - 802,587 1,204,000 - - 272,622 2,279,209

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33.2 Fair values of financial instruments Since the majority of the Group’s financial instruments are short-term. The Group expect that their fair values are not materially different from the amounts presented in the balance sheets except for long-term loans from financial institutions which as at 31 December 2010 having the net book values and fair values of Baht 1,801.8 million and Baht 1,790.7 million, respectively (Company: Baht 1,250.0 million and Baht 1,272.1 million respectively).

A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument.

34. Reclassification

Certain amounts in the financial statements for the year ended 31 December 2009, presented for comparative purpose, have been reclassified to conform with changes in presentation in the current year because it is more appropriate. There is no effect to previously reported net profit or shareholders equity.

The reclassification are as follows: (Unit: Baht)

Consolidated Company As previously As previously As reclassified reported As reclassified reported - - 64,049,855 25,912,192 1,534,968 39,672,631 - - 687,920,819 727,087,668 - - 331,248,718 319,903,426 - - 239,889,074 212,067,517 - -

Trade accounts payable Other current liabilities Cost of sales - raw water Cost of sales - tap water Cost of rental and services

35. Post balance sheet event

On 14 February 2011, a meeting of the Company’s Board of Directors passed a resolution to propose that the Annual General Meeting of shareholders to be held on 24 March 2011 adopt a resolution to pay a dividend of Baht 0.38 per share, or a total of Baht 632.22 million, from net profit for the year 2010. A 2010 interim dividend payment of Baht 0.13 per share, or a total of Baht 216.28 million, was paid to shareholders, from the earnings of the six months ended 30 June 2010, on 21 September 2010 according to the resolution of the Board of Directors no.8/2010 on 23 August 2010. The final dividend payment of Baht 0.25 per share, or a total of Baht 415.93 million, is to be paid and recorded after approved by the 2010 Annual General Meeting of shareholders.

126

Related Parties Transactions The Company and its affiliates engaged in the related parties transactions with the major shareholders; comprising the Provincial Waterworks Authority (PWA), the Industrial Estate Authority of Thailand (IEAT), Electricity Generating Public Company Limited (EGCO) and EGCOM Tara Co., Ltd. of which held 74.19% of shares by EGCO Engineering Service Co., Ltd., a subsidiary of EGCO. In this regard, the related parties transactions are presented in the Notes to the financial statements item 29.

Policy and Direction of the Future Related Parties Transactions

The Company shall perform the future related parties transactions with fairness and follow the market situation as in general business characteristic. The Company shall conform with the Securities and Exchange law, regulations, notifications, orders, or the regulations of the Stock Exchange of Thailand, including following Procedures of the Disclosure, Related Parties Transactions, and the Acquisition or Disposal of significant Assets.

Additionally, the related parties transactions shall be disclosed in Notes of the financial statements which are examined by the Company’s auditors.

127

The Remuneration of Auditors At the 2009 Annual General Meeting of Shareholders was held on 19 March 2009 has resolved to approve the appointment of Mr. Vichien Khingmontree Certified Public Accountant (Thailand) No. 3977 or Mr. Prasit Yuengsrikul Certified Public Accountant (Thailand) No. 4174 or Mr. Sudwin Panyawongkhanti Certified Public Accountant (Thailand) No. 3534 of PricewaterhouseCoopers ABAS Limited as the Company’s auditors.

Any one of the auditors shall be authorized to conduct the audit and express an opinion on the Company’s financial statement for the fiscal year 2010, beginning January 1, 2010 through ending December 31, 2010. The Auditors’ remuneration for the Company in the number of Baht 950,000 (Nine hundred and fifty thousand baht only) and its group Companies in the number of Baht 2,350,000 (Two million three hundred and fifty thousand baht only)

128

General Information Name: Eastern Water Resources Development and Management Public Company Limited Type of Business: The Company is responsible for water resource development and management through

main water pipeline systems for distribution to customers. In addition, the Company

provides clean water production system consultancy service, including water pipeline

systems consultancy service in industrial estates or factories, maintenance services,

supply-purchase all types of water pipelining material and machinery, as well as

consultancy service for maintenance of water pipeline and machinery and equipment,

and participates in joint venture projects with private sector Head Office: 1 Vipavadeerangsit Soi 5, Vipavadeerangsit Road, Jomphol, Chatuchak Bangkok 10900 Registered No.: 0107539000316 (Former Registered No. was Bor Mor Jor. 632) Website: www.eastwater.com Telephone: (662) 272-1600 Fax: (662) 272-1601-3 Common Shares Listed shares and paid-up stocks as of December 31, 2009 are as follows:

Listed shares of 1,663,725,149 shares with par value at Baht 1 per share, totaling Baht

1,663,725,149.

Paid-up stocks of 1,663,725,149 shares with par value at Baht 1 per share, totaling 1,663,725,149.

Lists of companies which the Company holds more than 100% of shares Name

Universal Utilities Company Limited (UU) Eastwater Building Fl. 23-25, 1 Vipavadeerangsit Soi 5 Vipavadeerangsit Rd. Jomphol Jatujak Bangkok 10900 Telephone: (662) 272-1688 Fax: (662) 272-1690 to 2 Water Trades and Services Company Limited (WTS) 1 Vipavadeerangsit Soi 5 Vipavadeerangsit Rd. Jomphol Jatujak Bangkok 10900 Telephone (662) 272-1600 Fax: (662) 272-1602 Remark The resolution of the WTS extraordinary meeting no. 1/2009 on November 20, 2009 approved to dissolve operations of the Company and in the process of accounting dissolution Nakornsawan Water Supply Company Limited Eastwater Building Fl. 23-25, 1 Vipavadeerangsit Soi 5 Vipavadeerangsit Rd. Jomphol Jatujak Bangkok 10900 Telephone : (056) 256-690 and (662) 272-1688 Fax: (056) 256-526 and (662) 272-1690 to 2

Registered and paid-up capital (million Baht)

No. of shares (%)

Manage waterworks Common business and wastewater share treatment system in the form of concession, hiring contract or vending machine Common share

510

100

5

100

Manage tap water busi- Common ness, including produce share and supply tap water to the Provincial Waterworks Authority at Nakornsawan Office and to consumers

40

UU holds 99.9999875

Type of business

Type of share

129

Name

Manage tap water business, including produce and supply tap water to the Provincial Waterworks Authority at Bangpakong Office and to consumers Chachoengsao Water Supply Company Limited Manage tap water busiEastwater Building Fl. 23-25, 1 Vipavadeerangsit Soi 5 ness, including produce Vipavadeerangsit Rd. Jomphol Jatujak Bangkok 10900 and supply tap water to Telephone: (038) 814-427 to 9 and (662) 272-1688 the Provincial Waterworks Fax: (038) 814-427 to (662) 272-1690 to 2 Authority at Chachoengsao Office and to consumers Manage tap water business, including produce and supply tap water to the Provincial Waterworks Egcom Tara Company Limited Produce and supply tap EGCO Tower, 222 Moo5, Vipavadee Rangsit Road, water Tungsonghong, Laksi, Bangkok 10210 Telephone: (662) 998-5710 Fax: (662) 955-0937

Bangpakong Water Supply Company Limited Eastwater Building Fl. 23-25, 1 Vipavadeerangsit Soi 5 Vipavadeerangsit Rd. Jomphol Jatujak Bangkok 10900 Telephone: (038) 539-365-7 and (662) 272-1688 Fax: (038) 539-368 and (662) 272-1690 to 2

Reference Firms Securities Registrar (Common Stock)

Accounting Auditor

130

Type of business

Type of share

Registered and paid-up capital (million Baht)

No. of shares (%)

Common share

40

40 UU holds 99.9999875

Common share

100

UU holds 98.99997

Common share

345

15.88

Securities Depository Co., Ltd. (Thailand) 62 The Stock Exchange of Thailand Building FL. 4,6,7 Ratchadapisek Road, Khlongtoey, Bangkok 10110 Tel: (662) 229-2800 Fax: (662) 359-1259 Ernst & Young Office Limited 193/136-137 Lake Rajada Office Complex, FL. 33 Rajadapisek Road, Khwaeng Khlongtoey, Khet Khlongtoey, Bangkok 10110 Tel: (662) 264-0777 Fax: (662) 264-0789

The List of Top 10 Major Shareholders

as of 30 December 2010 No. 1 2 3 4 5 6 7 8 9

Shareholder Provincial Waterworks Authority Electricity Generating Public Company Limited NORBAX INC.,13 The Industrial Estate Authority of Thailand Thai NVDR Company Limited BNP PARIBAS SECURITIES SERVICES, LONDON BRANCH Aberdeen Long Term Equity Aberdeen Growth AMERICAN INTERNATIONAL ASSURANCE COMPANY,

LIMITED-TIGER 10 HSBC (SINGAPORE) NOMINEES PTE LTD 11 Other (2,489 Shareholders)

Total

Number of Shares 668,800,000 311,443,190 169,324,700 76,000,000 40,716,050 38,912,100 22,584,300 18,356,700 16,778,000

Percentage 40.20% 18.72% 10.18% 4.57% 2.45% 2.34% 1.36% 1.10% 1.01%

16,670,800 284,139,309 1,663,725,149

1.00% 17.08% 100.00%

131

Dividend Payment Policy The Company’s Board of Directors has the policy to propose to the shareholder’s meeting for consideration of dividend payment to shareholders of no less than 30% of its consolidated net profit of each year after deduction of legal reserves. It is also subjected to the justifications and considerations that the Company deems appropriate.

132

EVERY DROP OF WATER, SHAPES LIFE

Eastern Water Resources Development and Management Public Company Limited Eastwater Building 1 Vipavadeerangsit Soi 5 Vipavadeerangsit Rd. Jomphol Jatujak Bangkok 10900 Tel : 02-272-1600 Fax : 02-272-1601-3 www.eastwater.com