Financial Overview
M. BAHT
M. BAHT
80,000 70,000
69,672
70,301
72,105
8,000 69,941
69,494
7,000 6,493
60,000
6,000
50,000
5,000
40,000
4,000
30,000
3,000
20,000
2,000
10,000
2008
2007
2006
2005
2004 Year
1,000
5,829
6,487
6,106
6,066
2006
2005
2008
Total Assets
2007
2004 Year
Net Profit Unit : Million Baht
2007
2006
2005
2004
Total Assets
69,672.44
70,300.93
72,105.05
69,940.54
69,494.19
Total Revenues
43,801.85
46,072.34
51,848.22
44,836.83
40,416.43
6,492.90
5,829.40
6,106.04
6,066.36
6,487.03
10,876.44
10,172.99
10,430.12
10,343.52
10,433.79
4.48
4.02
4.21
4.18
4.47
28.26
25.85
23.93
21.72
19.63
2.20
2.10
2.10
2.00
2.00
Net Profit EBITDA (Million Baht) Earnings Per Share (Baht/share) Book Value Per Share (Baht/share) Dividend Per Share (Baht/share)
010
2008
Financial Ratios Liquidity Ratio
2008
2007
2006
2005
2004
Current Ratio
(Times)
2.15
2.11
2.02
2.05
1.86
Acid Test Ratio or Quick Ratio
(Times)
1.90
1.89
1.81
1.80
1.67
Liabilities Ratio
(Times)
0.70
0.64
0.73
0.96
0.72
Accounts Receivable Turnover Ratio
(Times)
6.04
5.48
6.64
6.68
8.54
(Days)
60
66
55
54
43
(Times)
6.94
6.34
7.58
7.43
7.54
(Days)
52
57
48
49
48
2008
2007
2006
2005
2004
Cash Flow from Operation to Current
Average Collection Period Accounts Payable Turnover Ratio Average Payment Period
Profitability Ratio Ratio of Gross Profit to Net Sales
(%)
16.71
13.00
14.74
17.16
18.99
Ratio of Net Profit to Net Sales
(%)
14.82
12.65
11.78
13.53
16.05
Rate of Return on Equity
(%)
16.55
16.15
18.45
20.24
24.39
2008
2007
2006
2005
2004
Efficiency Ratio Rate of Return on Assets
(%)
9.28
8.19
8.60
8.70
9.50
Rate of Return on Fixed Assets
(%)
22.39
19.70
19.14
18.17
18.14
(Times)
0.63
0.65
0.73
0.64
0.59
Ratio of EBITDA to Assets
(%)
15.54
14.29
14.69
14.84
15.27
Ratio of EBITDA to Fixed Assets
(%)
26.13
23.09
22.48
21.43
20.86
2008
2007
2006
2005
2004
(Times)
0.70
0.88
1.08
1.22
1.44
(Times)
2.18
2.24
2.41
2.33
2.52
Assets Turnover Ratio
Financial Policy Ratio Debt to Equity Ratio Debt Service Coverage Ratio (DSCR)
011
Highlights of Operation in 2008 receive stable cash flows from the Ratchaburi power plant. The power units of the plant are expected to maintain their operating performance in line with the PPA targets.
2. Awards of Success 2.1 Good Corporate Governance Notifications
• “Excellent” Rating for Corporate Governance
1. Company Rating and Outlook TRIS Rating Company Limited affirms the credit rating of the Company and its subsidiary as follows.
1.1 Affirming the Company’s rating at AAwith “Stable” outlook. The rating reflects the strong and reliable streams of dividends paid by its Independent Power Producer (IPP) subsidiary. Ratchaburi Electricity Generating Co., Ltd. (RATCHGEN) and Tri Energy Co., Ltd. (TECO), a power plant portfolio of good quality, and a conservative investment policy. The rating also takes into consideration investment plans to develop hydroelectric power projects in Laos and power plants in Thailand. The “Stable” outlook reflects the expectation that RATCH will receive reliable dividend income from RATCHGEN and its power plant investments. With Bt 5,000 – Bt 6,000 million in dividends received per annum, RATCH should be able to fund most of its investments with internal cash flow.
2008 The Company was in the top 22 companies which were rated “Excellent” in the Corporate Governance Report of Thai Listed Companies 2008 (CGR) organized by the Thai Institute of Directors Association (IOD) and sponsored by the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET). Under this program, 448 listed companies were surveyed. • “Excellent” Rating for Shareholders’ General Meeting Ratchaburi Electricity Generating Holdings Public Company Limited received “Excellent” rating from the assessment of the Annual General Shareholders’ Meeting (AGM) arrangement, organized by SEC, in cooperation with the Thai Investors’ Association and the Association of Thai Listed Companies. The assessment was based on information about listed companies collected from the information disclosed to investors and from the observation of AGM by representatives of the Thai Investors’ Association on the shareholder meeting date. The two awards mentioned above clearly reflected the Company’s systematic implementation of management under the good corporate governance principle, resulting in transparency and confidence from shareholders, investors, stakeholders and the general public.
1.2 Affirming the Ratchaburi Electricity 2.2 Awards from Social and Environmental Activities Generating Co., Ltd. (RATCHGEN) and its senior secured debentures rating at AA The Company ranked 7th in the Outstanding Corporate Social Responsibility (CSR) Rankings with “Stable” outlook. The ratings reflect RATCHGEN’s stable cash flow from the well-structured and state-of-the-art Ratchaburi power plant, long experience in power sector, and its proven record of managing power plants. The “Stable” outlook reflects TRIS Rating’s expectation that RATCHGEN will continue to 012
in Thailand and 33rd of Asian listed companies ranking which was organized jointly by CSR Asia and Asian Institute of Technology.
2.3 Outstanding Labor Relations and Remuneration Ratchaburi Electricity Generating Company Limited won an Outstanding Organization Award
– Labor Relations and Remuneration, in the Participants also learned more about the small business with no labor union category. benefits from the forests so that they love and want to protect the environment. Sixty Pathom 5 2.4 Ratchaburi Power Plant’s Success on and 6 students from school in Bangkok and 2,500,000 Hour-Man with No Accident suburban areas, Ratchaburi Province and Ratchaburi Power Plant has constantly Phetchaburi Province were recruited to join the implemented strict safety measures to prevent camp. accidents in the plant, covering electricity generating area and general area. As a result, 3.2 Bio Farming Demonstration Field in Ratchaburi Power Plant the plant has achieved significant success and in November 2008 celebrated 2,500,000 hour-man The Ratchaburi Electricity Generating with no accident. Company Limited created a demonstration bio-farm in the power plant premise. The project was initiated and implemented under 3. Social and Eenvironment an agreement between the company and the 3.1 Kla Yim “Love the Forest and the Military Engineering Department in Ratchaburi Community” - Model Community Forest Province with an aim to maximize the use of Project Competition waste water and reduce the volume of waste water released to the Bang Pa Canal as well as In 2008, the Company, in cooperation with the Royal Forestry Department, initiated the Kla to maximize the use of empty land within the Yim “Love the Forest and the Community” power plant premise. Both parties agreed to project. Under the project, the community use the waste water from the power plant for forest competition was launched aiming to agricultural activities. The project was very honour the model community forest that has successful and the demonstration farm has successfully conducted activities following satisfactorily yielded 38,190 kilograms of rice Their Majesties the King and Queen’s initiative on 40-rai farm area. in forest preservation, forest and community living harmony, and sufficiency economy. 4. Power Plant Project Developments The winners shall receive a trophy from HRH 4.1 IPP Projects in Thailand Princess Maha Chakri Sirindhorn. The competition was overwhelmingly successful with 698 The Company has prepared for the next projects participated in the competition and 125 IPP bid by selecting and preparing high projects won the awards. The Khao Wong potential area for power plant development. Community Forests, Nong Bua Rawae District, The Company considered the key factors, Chaiyapum Province, won the national grand including location, water sources, transmission prize and a trophy from HRH Maha Chakri system and fuel sources. Environmental impact Sirindhorn, an accolade plate and Baht 200,000 and community’s acceptance are also taken funding to support the project operation. into consideration.
1. Hongsa Thermal Power Plant The Hongsa Thermal Power Plant will have a total generating capacity of 1,653 megawatts. Using lignite to generate electricity, the plant is located in Hongsa, Xayaburi Province, Lao PDR. The project is jointly developed with Banpu Power Company Limited and Lao Holding State Enterprise (“LHSE”) and the Company has 40 percent stake in the joint venture. 2. The Nam Ngum 3 Hydroelectric Power Plant Located in Xaysomboun Province, Lao PDR, the Nam Ngum 3 project has total generating capacity of 440 megawatts. The project is operated by a joint venture among GMS Lao Company Limited, Lao Holding State Enterprise, Marubeni Corporation and the Company, 25 percent stake in the joint venture is held by the Company. 3. The Xe-Pian, Xe-Namnoy Hydroelectric Power Plant Under a joint venture agreement between SK Engineering & Construction Company Limited, Korea Western Power Company Limited, the Lao PDR Government and the Company which holds 25 percent, the project has total generating capacity of 390 megawatts. 4. Nam Bak 1 and 2 Hydroelectric Power Plant The project has a total generating capacity of 140 megawatts and is located in Xaysomboun Province, Lao PDR. The Company jointly develops this project through SouthEast Asia Energy Limited, which won a development right from the Lao PDR. The Company holds 33.33 percent of its shares.
4.3 Wind Farm Power Plant Projects 3.2 Youth Camp : Kla Yim “Love the Forest 4.2 Overseas Power Plant Projects The Company has invested in a Wind Farm and the Community ” In 2008, Ratchaburi Electricity Generating Power Plant in Khao Khor District, Phetchabun
In 2008, the Company organized the Kla Yim “Love the Forest and the Community” Youth Camp at Baan Nong Ri, Nong Ya Plong District, Phetchaburi Province during 16th-18th October 2008. The main objectives are to encourage young people to learn and recognize their responsibility towards natural forests and environment by allowing them to have an opportunity to learn about way of lives and how community and forests depend on each other.
Holding Public Company Limited has developed with its joint venture in various power plants in overseas markets of which the activities include the negotiation in project’s agreements, such as Power Purchase Agreement (PPA), Shareholder Agreement and Concession Agreement. The Company also prepared funds to support these project developments. At present there are four overseas power plant projects as follows:
Province which has 60 megawatts generating capacity. The Company holds 26 percent in this venture. The project comprises 30 wind-turbines, each with two megawatts generating capacity. The project receives Baht 3.50 Adder per unit for 10 year. The investment is part of the Company’s business plan and is in line with the Government’s policy to promote renewable energy.
013
Message from the Chairman Dear shareholders, In 2008, all business encountered the global financial crisis which affects Gross Domestic Product growth and business and industrial expansion. However, the Company was able to achieve its target with the generating results in Baht 6,493 million net profit which increased Baht 664 million from last year. As of 31st December 2008, the Company has retained earnings of Baht 24,943 million which clearly reflects its strong financial health in create confidence towards its stakeholders. The Company is also able to maintain its credit rating at AA- announced by the TRIS Rating Company Limited as same as the previous year. Amid domestic and global economic recession in 2009, the Company, as the country’s leading electricity generating company responsible for ensuring sufficient power supply to meet domestic demand, has prepared well for operational development, investment expansion, and new business opportunities to boost its growth. The Company has been operating business with utmost care and prudence, has had risk management measures in place that covers investment decisions, finance and operation management to be at the appropriate level. In addition, the Company has prepared its liquidity to correspond to the current economic conditions. The year 2008 was a pleasant year that the Ratchaburi Power Company Limited had commercially operated its two blocks of Combined Cycle Power Plant with 700 megawatts generating capacity each. The first block was commercially operated in March and second block in June 2008. The Company holds 25 per cent stake therefore, the Company’s total generating capacity increased to 4,346.75 megawatts. For Nam Ngum 2 Hydroelectric Power Plant Project with 615 megawatts generating capacity in Lao PDR which the Company holds 25 per cent stake and the project is under construction, the Company has participated in the management to assure that its construction is following the plan and will be commercially operating by 2010 as scheduled. This will greatly contribute to the Company’s business growth in the future. The Company continues its commitment in investment and joint investment with competent partners in developing projects in and outside Thailand. At present, the Company has power plant projects located in Lao PDR that are under development as follows. • Xe-Pien, Xe-Namnoy Hydroelectric Power Project that is 390 megawatts generating capacity. The Company is jointly developed this project with SK Engineering & Construction Company Limited, Korean Western Power Company Limited. and the Government of Lao PDR. The Company holds 25 per cent stake in this project. • Nam Ngum 2 Hydroelectric Power Project that is 440 megawatts generating capacity. The Company entered into the project development with Marubeni Corporation, GMS Lao Company Limited. and Lao Holding State Enterprise. The Company holds 25 per cent stake in this project. • Hongsa Thermal Power Plant that is 1,653 megawatts generating capacity. This project uses lignite as primary fuel. The Company develops this project with Banpu Power Company Limited and Lao Holding State Enterprise and the Company holds 40 per cent stake. 014
Besides the business growth, the Company has given significance important towards the development of the society and environment according to its corporate social responsibility (CSR) policy that is centered on supporting communities’ participations, developing and strengthening communities for their improved and sustainable quality of life. This also includes the environmental conservation and resuscitation in order to balance man and nature. In 2008, the Company has cooperated with the Royal Forestry Department in conducting CSR activities under the Kla Yim “Love the Forest and the Community” project. During 5 years period, community forest competition will be organized and the winner will receive a trophy from HRH Princess Maha Chakri Sirindhorn. The Company hopes that this project will inspire people to take part in forest preservation and to support communities to be strong and have systematic in conserving and developing forests. In addition, the Company hopes these communities will become role models and a learning center for other communities to follow. In the end, the Company hopes this project will allow people to live in harmony with the forest. In addition, the Company has continuously organized other supporting activities such as employee volunteer, youth camp and community forest network. The Company is honoured being ranked 7th among Thai companies and 33rd among listed Asian companies in terms of outstanding corporate social responsibility and environment arranged by CSR Asia Institute and Asian Institute of Technology. In addition, with the Board of Directors and executives’ determination to follow the Company’s corporate governance principles, resulted on the “Excellent” rating in the Corporate Governance Report of Thai Listed Companies 2008 by the Thai Institute of Directors Association (IOD) sponsored by the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET). Moreover, the Company has been rated at the highest level, “Excellent” in Annual General Shareholders’ Meeting 2008 (AGM) quality assessment by the SEC. On behalf of the Board of Directors, I am grateful for the great support we have received from our shareholders, suppliers, business partners, management team and all employees that has brought us this impressive success. Please rest assured that, the Company will be committed to the good governance in its operations in order to achieve the vision to be the regional leading independent power producer trusted by the public at large.
“...Besides the business growth, the Company has given significance important towards the development of the society and environment according to its corporate social responsibility...”
Mr.Pongpayome Vasaputi Chairman of the Board of Directors 015
Board of Directors
1
2
3
4
5
6
7
9
016
8
10
11
12
13
1
2
Mr.Pongpayome Vasaputi
Mr.Lae Dilokvidhyarat
Board of Directors Chairman RATCH Shareholding Close Relatives to Management
None None
• Board of Directors Member • Human Resources and Remuneration Committee Chairman RATCH Shareholding None Close Relatives to Management None
Age 60 years
Age 61 years
Education/Training • Master of Development Administration (Hons.), National Institute of Development Administration • Bachelor of Political Science (Hons.), Chulalongkorn University • Diploma, National Defense College (Class 38) • Certificate, Senior Governing Officers Course (Class 20), The Institute of Administration Development • Certificate, District Officers Course (Class 16), The Institute of Administration Development Training related to Director’s Roles Certificate, Role of Chairman Program, Finance for Non-Finance Director Program, and Understanding the Fundamental of Financial Statements Program, Thai Institute of Directors Association (IOD) Previous Working Experiences 2007-2008 Board of Directors Member, The Electricity Generating Authority of Thailand /1 2007-2008 Chairman, Provincial Electricity Authority /2 2006-2008 Permanent Secretary, Ministry of Interior 2006 Deputy Permanent Secretary, Ministry of Interior 2005 Governor of Nakornratchasima Province 2004 Director-General, Department of Disaster Prevention and Mitigation, Ministry of Interior 2003-2004 Director-General, Department of Local Administration, Ministry of Interior 1996-2003 Governor of Tak Province, Governor of Narathiwat Province, and Governor of Phuket Province Directorship in RATCH 1. Major Shareholder’s representative Director, The Electricity Generating Authority of Thailand 2. Second-term in current directorship. Being appointed Board of Directors Member since 1st December 2006 3. Being appointed Board of Directors Chairman since 24th April 2007 Attendance at the Board of Directors’ Meetings in Previous Year Attendance at the Board of Directors’ Meeting : 15 meetings from total 16 meetings
Education/Training • Master of Development Studies, Institute of Social Studies, Hague, The Netherlands • Bachelor of Political Science, Chulalongkorn University Training related to Director’s Roles Certificate, Director Certificate Program (DCP), Audit Committee Program, and Finance for Non-Finance Director Program, Thai Institute of Directors Association (IOD) Other Current Positions Since 2007 Adjunct Professor, Faculty of Economics, Chulalongkorn University Since 2007 Advisor, Labour and Management Development Centre, Faculty of Economics, Chulalongkorn University Since 2004 Board of Directors Member, The Electricity Generating Authority of Thailand /1 Previous Working Experiences 1993 Associate Professor (Director of Labour and Management Development Centre), Faculty of Economics, Chulalongkorn University 1992 National Programme Coordinator : International Programme on the Elimination of Child Labour (ILO-IPEC) 1990 Overseas Expert on Human Resource Development, Japan International Cooperation Agency (JICA) Directorship in RATCH 1. Major Shareholder’s representative Director, The Electricity Generating Authority of Thailand 2. Second-term in current directorship. Being appointed Board of Directors Member since 1st December 2006 3. Being appointed Chairman of the Human Resources and Remuneration Board since 28th April 2008 Attendance at the Board of Directors’ Meetings in Previous Year 1. Attendance at the Board of Directors’ Meeting : 16 meetings from total 16 meetings 2. Attendance at the Human Resources and Remuneration Committee’s Meeting : 4 meetings from total 4 meetings
Remarks
/1 Director/Management /3
of major shareholder Director/Management of subsidiary company
/2
Director/Management of energy business Director/Management of joint venture
/4
017
3
4
Mr.Chulasingh Vasantasingh
Mr.Payap Pongpirodom
Board of Directors Member RATCH Shareholding Close Relatives to Management
Board of Directors Member None RATCH Shareholding None Close Relatives to Management
None None
Age 58 years
Age 60 years
Education/Training • Honorary Doctorate Degree in Laws, Ramkamhaeng University • Master of Comparative Law (MCL.), University of Illinois, U.S.A. • Barrister-at-Law, The Institute of Legal Education • Bachelor of Laws (LLB.) (Hons.), Chulalongkorn University • Certificate, Harvard Business School, U.S.A. • Politics and Governance in Democratic Systems for Executives Course (Class 8), King Prajadhipok’s Institute • Diploma, National Defence College (Class 388) • Certificate, Institute of Administration Development • Certificate, Capital Market Academy Leader Program Training related to Director’s Roles Certificate, Director Certificate Program (DCP), and Audit Committee Program, Thai Institute of Directors Association (IOD) Other Current Positions Since 2008 Board of Directors Member, Thai Bar Association Since 2008 Board of Directors Member, Thai Airways International Public Company Limited Since 2005 Deputy Attorney General, Office of the Attorney General Since 2004 Board of Directors Member, The Electricity Generating Authority of Thailand /1 Since 2004 Board of Property Management of Chulalongkorn University Since 1998 Board of Directors Member, PTT Exploration and Production Public Company Limited /2 Previous Working Experiences 2005 Inspector-General, Department of Inspector General 2004 Director-General, Department of the Legal Counsel, Office of the Attorney General 2002 Director-General, Department of Litigation of Attorney General, Office of the Attorney General 2000 Director-General, Department of International Affairs, Office of the Attorney General Directorship in RATCH 1. Major Shareholder’s representative Director, The Electricity Generating Authority of Thailand 2. Second-term in current directorship. Being appointed Board of Directors Member since 22nd June 2004 Attendance at the Board of Directors’ Meetings in Previous Year Attendance at the Board of Directors’ Meeting : 13 meetings from total 16 meetings
Education/Training • Master of Engineering (Geotechnical Engineering), Asian Institute of Technology • Bachelor of Engineering (Civil Engineering), 2nd Class Honor, Chulalongkorn University • Certificate, Senior Executive Development Program-1, GE Company Limited U.S.A. • Certificate, Finance for Executive Decision Program, Continuing Education Center, Chulalongkorn University • Certificate, Senior Management Development Program, Harvard Business School Alumni Club of Malaysia Training related to Director’s Roles Certificate, Director Certificate Program (DCP), Thai Institute of Directors Association (IOD) Other Current Positions Since 2006 Deputy Governor-Fuel, The Electricity Generating Authority of Thailand /1 Since 2007 Board of Directors Member, EGAT International Company Limited /2 Previous Working Experiences 2003-2006 Assistant Governor-Solid Fuel Operation, The Electricity Generating Authority of Thailand /1 2000-2003 Vice President Fuel Business-Planning and Development, The Electricity Generating Authority of Thailand /1 Directorship in RATCH 1. Major Shareholder’s representative Director, The Electricity Generating Authority of Thailand 2. First-term in current directorship. Being appointed Board of Directors Member since 5th April 2008 Attendance at the Board of Directors’ Meetings in Previous Year Attendance at the Board of Directors’ Meeting : 11 meetings from total 11 meetings
018
5
6
Mr.Ratanapong Jongdamgerng
Mr.Apichart Dilogsopon
• Board of Directors Member • Risk Management Committee Member RATCH Shareholding 0.0005% (7,938 shares) Close Relatives to Management None
• Board of Directors Member • Human Resources and Remuneration Committee Member RATCH Shareholding None Close Relatives to Management None
Age 58 years
Age 58 years
Education/Training • Master of Business Administration, Thammasat University • Bachelor of Engineering (Electrical Engineering), Chulalongkorn University • Certificate, Finance for Executive Decision Program, Continuing Education Center, Chulalongkorn University • Certificate, Senior Executive Development Program-1, GE Company Limited U.S.A. • Certificate, Management of Public Economy for Executive Program, King Prajadhipok’s Institute • Certificate, Advanced Management Program, Harvard Business School • Certificate, Positioning Utility Executives for Change Program, University of Idaho, U.S.A. Training related to Director’s Roles Certificate, Director Certificate Program (DCP), Thai Institute of Directors Association (IOD) Other Current Positions Since 2007 Deputy Governor-Transmission System, The Electricity Generating Authority of Thailand /1 Since 2007 Board of Directors /2Member, EGAT International Company Limited Previous Working Experiences 2006-2008 Board of Directors Member, Ratchaburi Electricity Generating Company Limited /3 2006-2007 Deputy Governor-Policy and Planning, The Electricity Generating Authority of Thailand /1 2004-2006 Assistant Governor-Information Technology, The Electricity Generating Authority of Thailand /1 2003-2004 Assistant Governor-Administration and Finance, Group, The Electricity Generating Transmission System /1 Authority of Thailand 2000-2003 Assistant Governor-Power Purchase, The Electricity Generating Authority of Thailand /1 Directorship in RATCH 1. Major Shareholder’s representative Director, The Electricity Generating Authority of Thailand 2. First-term in current directorship. Being appointed Board of Directors Member since 5th April 2008 3. Being appointed Risk Management Committee Member since 28th April 2008 Attendance at the Board of Directors’ Meetings in Previous Year 1. Attendance at the Board of Directors’ Meeting : 11 meetings from total 11 meetings 2. Attendance at Risk Management Committee’s Meeting : 3 meetings from total 3 meetings
Education/Training • Master of Business Administration, Kasetsart University • Bachelor of Engineering (Civil Engineering), Chulalongkorn University • Certificate, Finance for Executive Decision Program, Continuing Education Center, Chulalongkorn University • Certificate, Senior Executive Development Program-1, GE Company Limited U.S.A. • Certificate, Positioning Utility Executives for Change Program, University of Idaho, U.S.A. Training related to Director’s Roles Certificate, Director Certificate Program (DCP), Thai Institute of Directors Association (IOD) Other Current Positions Since 2008 Deputy Governor to the Office of Governor, The Electricity Generating Authority of Thailand /1 Since 2007 Board of Directors Member, EGAT International Company Limited /2 Previous Working Experiences 2007 Deputy Governor-System Control, The Electricity Generating Authority of Thailand /1 2006 Deputy Governor-Administration and Acting EGAT Spokesman, The Electricity Generating Authority of Thailand /1 2005-2006 Assistant Governor-Services, The Electricity Generating Authority of Thailand /1 2004-2005 Assistant Governor-Demand Side Management, The Electricity Generating Authority of Thailand /1 Directorship in RATCH 1. Major Shareholder’s representative Director, The Electricity Generating Authority of Thailand 2. First-term in current directorship. Being appointed Board of Directors Member since 5th April 2008 3. Being appointed Human Resources and Remuneration Committee Member since 28th April 2008 Attendance at the Board of Directors’ Meetings in Previous Year 1. Attendance at the Board of Directors’ Meeting : 11 meetings from total 11 meetings 2. Attendance at the Human Resources and Remuneration Committee’s Meeting : 4 meetings from total 4 meetings
Remarks
/1 Director/Management /3
of major shareholder Director/Management of subsidiary company
/2
Director/Management of energy business Director/Management of joint venture
/4
019
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8
Mr.Chanin Vongkusolkit
Mr.Sathit Limpongpan
• Board of Directors Member • Human Resources and Remuneration Committee Member RATCH Shareholding None Close Relatives to Management None
Age 56 years Education/Training • Master of Business Administration (Finance), St. Louis University, U.S.A. • Bachelor of Economics, Thammasat University Training related to Director’s Roles • Certificate, Director Certificate Program (DCP), and Director Certificate Program Refresher Course, Thai Institute of Directors Association (IOD) Other Current Positions Since 2001 Chief Executive Officer, Banpu Public Company Limited /1 Since 1997 Board of Directors Member, BLCP Power Limited /2 Since 2004 Board of Directors Member, The Erawan Group Public Company Limited Since 1983 Board of Directors Member, Mitr Phol Sugar Company Limited Since 2005 Board of Directors Vice Chairman, Listed Companies Association Previous Working Experiences 1995-2002 Board of Directors Member, Tri Energy Company Limited /4 1977-2004 Board of Directors Member, United Standard Terminal Company Limited 1990-2004 Board of Directors Member, United Securities Public Company Limited Directorship in RATCH 1. Major Shareholder’s representative Director, Banpu Public Company Limited 2. Third-term in current directorship. Being appointed Board of Directors Member since 14th November 2003 3. Being appointed Human Resources and Remuneration Committee Member since 23rd April 2007 Attendance at the Board of Directors’ Meetings in Previous Year 1. Attendance at the Board of Directors’ Meeting : 13 meetings from total 16 meetings 2. Attendance at Human Resources and Remuneration Committee’s 020 Meeting : 7 meetings from total 7 meetings
• Board of Directors Member (Independent Director) • Audit Committee Chairman RATCH Shareholding None Close Relatives to Management None
Age 58 years Education/Training • Ph.D. (Development Administration), National Institute of Development Administration (NIDA) • Master in Economics, Sukhothai Thammathirat Open University • Master of Laws, Tulane University, U.S.A. • Barrister at Laws • Bachelor of Laws, Thammasat University • Diploma, the National Defense Course, Class 42, National Defense College • Certificate, Leaders in Development Program, Harvard University, U.S.A. • Certificate, Advanced Management Program, Oxford University, England Training related to Director’s Roles Certificate, Director Certificate Program (DCP) and Audit Committee Program, Thai Institute of Directors Association (IOD) Other Current Positions Since 2007 Deputy Permanent Secretary and Chief of Income Group, Ministry of Finance Previous Working Experiences 2004-2007 Director General, The Customs Department 2002-2004 Director General, The Excise Department 2000-2002 Director General, The Fiscal Policy Office Directorship in RATCH 1. Independent Director 2. First-term in current directorship. Being appointed Board of Directors Member since 5th April 2008 3. Being appointed Audit Committee Chairman since 28th April 2008 Attendance at the Board of Directors’ Meetings in Previous Year 1. Attendance at the Board of Directors’ Meeting : 10 meetings from total 11 meetings 2. Attendance at the Audit Committee Meeting : 5 meetings from total 5 meetings
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10
Mr.Nathi Premrasmi
Mr.Suchat Chanlawong
• Board of Directors Member (Independent Director) • Audit Committee Member RATCH Shareholding None Close Relatives to Management None
• Board of Directors Member (Independent Director) • Risk Management Committee Member RATCH Shareholding None Close Relatives to Management None
Age 60 years
Age 61 years
Education/Training • Bachelor of Political Science (Hons.), Thammasat University • Diploma, National Defense College (Class 45) • Certificate, Senior Executive Development Program (Class 36), Office of the Civil Service Commission • Certificate, Political Government in Democracy Regime Program for Senior Executive, King Prajadhipok’s Institution (Class 4) • Certificate, Senior Governing Officers Course (Class 26), Ministry of Interior Training related to Director’s Roles Certificate, Director Certificate Program (DCP), Thai Institute of Directors Association (IOD) Other Current Positions 2008 Permanent Secretary, Office of the Prime Minister Previous Working Experiences 2007-2008 Deputy Permanent Secretary, Office of the Prime Minister 2005-2007 Inspector-General, Office of the Permanent Secretary 2003-2005 Advisor of the Secretaries of the Cabinet 2001-2003 Assistant Secretary-General to the Cabinet Directorship in RATCH 1. Independent Director 2. First-term in current directorship. Being appointed Board of Directors Member since 5th April 2008 3. Being appointed Audit Committee Member since 28th April 2008 Attendance at the Board of Directors’ Meetings in Previous Year 1. Attendance at the Board of Directors’ Meeting : 10 meetings from total 11 meetings 2. Attendance at the Audit Committee’s Meeting : 5 meetings from total 5 meetings
Education/Training • Master of Science in Civil Engineering, University of Missouri at Rolla, U.S.A • Bachelor Degree of Engineering (Civil Engineering), Kasetsart University Training related to Director’s Roles Certificate, Director Certificate Program (DCP), Thai Institute of Directors Association (IOD) Other Current Positions 2008 Board of Directors Member and Audit Committee Member, Thai Storage Battery Public Company Limited Previous Working Experiences 2004-2008 Inspector General, Ministry of Energy 2001-2004 Deputy Director-General, Department of Industrial Works; Deputy Director-General, Department of Mineral Resources; Deputy Director-General, Department of Mineral Fuels Directorship in RATCH 1. Independent Director 2. First-term in current directorship. Being appointed Board of Directors Member since 21st January 2008 3. Being appointed Risk Management Committee Member since 28th April 2008 Attendance at the Board of Directors’ Meetings in Previous Year 1. Attendance at the Board of Directors’ Meeting : 15 meetings from total 15 meetings 2. Attendance at the Risk Management Committee’s Meeting : 3 meetings from total 3 meetings
Remarks
/1 Director/Management /3
of major shareholder Director/Management of subsidiary company
/2
Director/Management of energy business Director/Management of joint venture
/4
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11 Mr.Atchada Kesornsook
• Board of Directors Member (Independent Director) • Audit Committee Member RATCH Shareholding None Close Relatives to Management None
Age 59 years Education/Training • Master of Science (Industrial Engineering), Illinois Institute of Technology, Chicago, ILL, U.S.A. • Bachelor of Science (Civil Engineering), Mapua Institute of Technology, The Philippines • Certificate, Top Executives Program (Class 4), The Capital Market Academy • Mini Master of Modern Management Program (Class 3), National Defence College • Diploma in Public Law and Management for Executive Program (Class 3), King Prajadhipok’s Institute • Certificate, Politics and Government in Democratic System for Executive Program (Class 6), King Prajadhipok’s Institute • Certificate, The Joint-State Sectors Regular Course (Class 11), National Defence College • Certificate, International Management Program, The Association for Overseas Technical Scholarship (AOTS) • Certificate, Senior Executive Program (Class 7), Sasin Graduate Institute of Business Administration of Chulalongkorn University Training related to Director’s Roles • Certificate, Director Certificate Program (DCP), Audit Committee Program, Finance for Non-Finance Director Program, Monitoring the System of Internal Control and Risk Management Program (MIR), Monitoring the Internal Audit Function Program (MIA), and Monitoring the Quality of Financial Reporting Program (MFR), Thai Institute of Directors Association (IOD) • Seminar on “Corporate Governance Report of Thai Listed Companies”, Thai Institute of Directors Association (IOD), The Stock Exchange of Thailand, The Securities Exchange Commission, and Listed Companies Association Other Current Positions Since 2008 Chairman, Loyal Contact Limited Since 2008 Chairman, Ziberia International Productions Co., Ltd. Since 2007 Advisor to the Standing Committee on Energy, the Senate House 022
Since 2007 Advisor to Senator Since 2005 Advisor to B. GRIMM Group Since 2005 Director, Amata Power Limited
Previous Working Experiences 2006-2008 Advisor to the Chairman of the Standing Committee on Transportation, the National Legislative Assembly of Thailand 2005-2007 Board of Directors Chairman, TUV SUD (Thailand) Company Limited 2003-2006 Advisor to the Standing Committee on Economic Affairs, Commerce and Industry, the Senate House 2003-2006 Sub-Committee to the Economic Affairs, Commerce and Industry Committee, the Senate House 2003-2006 Advisor to the Chairman of the Senate House 1997-2000 Board of Directors Chairman, B.GRIMM Energy Technology Company Limited 1992-1997 Executive Vice Chairman, B.GRIMM Industrial and Commercial Services Company Limited 1987-1992 Board of Directors Vice Chairman, B.GRIMM Industrial and Commercial Services Company Limited Directorship in RATCH 1. Independent Director 2. First-term in current directorship. Being appointed Board of Directors Member since 21th April 2007 3. Being appointed Audit Committee Member since 24th April 2007 Attendance at the Board of Directors’ Meetings in Previous Year 1. Attendance at the Board of Directors’ Meeting : 15 meetings from total 16 meetings 2. Attendance at Audit Committee’s Meetings : 6 meetings from total 6 meetings
12
13
Mr.Metta Banturngsuk
Mr.Noppol Milinthanggoon
• Board of Directors Member (Independent Director) • Risk Management Committee Chairman None RATCH Shareholding Close Relatives to Management None
• Board of Directors Member • Managing Director RATCH Shareholding Close Relatives to Management
Age 57 years
Age 54 years
Education/Training • Bachelor Degree of Accounting, Chulalongkorn University • Bachelor Degree of Laws, Ramkamhaeng University • Diploma, National Defense College (Class 46) Training related to Director’s Roles Certificate, Director Certificate Program (DCP) and Director Accreditation Program (DAP), Thai Institute of Directors Association (IOD) Other Current Positions Since 2006 Director-General, Department of Energy Business, Ministry of Energy Previous Working Experiences 2008 Director, PTT Exploration and Production Public Company Limited/2 2003-2007 Director, PTT Public Company Limited/2 2002 Director-General, Energy Policy and Planning Office, Ministry of Energy 1995 Deputy Secretary-General, National Energy Policy Commission, The Prime Minister’s Office 1993 Director, Petroleum Department, National Energy Policy Office, The Prime Minister’s Office Directorship in RATCH 1. Independent Director 2. First-term in current directorship. Being appointed Board of Directors Member since 1st June 2008 3. Being appointed Risk Management Committee Chairman since 1st June 2008 Attendance at the Board of Directors’ Meetings in Previous Year 1. Attendance at the Board of Directors’ Meeting : 6 meetings from total 9 meetings 2. Attendance at the Risk Management Committee’s Meeting : 3 meetings from total 3 meetings
Education/Training • Master of Engineering (Nuclear Technology), Chulalongkorn University • Bachelor of Engineering (Electrical Engineering) 2nd Class Honor, Chulalongkorn University • Certificate, Management of Public Economy for Executive Program, Diploma in Public Law and Management, King Prajadhipok’s Institute • Certificate, Finance for Executive Decision Program, Continuing Education Center, Chulalongkorn University • Certificate, Senior Executive Development Program-1, GE Company Limited U.S.A. • Certificate, Senior Executive Development Program-2, Foundation for International Human Resource Development • Certificate, ASEAN Executive Development Program (AEDP), Thammasat Business School, Thammasat University • Certificate, Senior Command Course (Class 22), Institute of Police Administration Development Training related to Director’s Roles Certificate, Director Certificate Program (DCP), Thai Institute of Directors Association (IOD) Other Current Positions Since 2008 Engineer Level 13 (equivalent to Assistant Governor), The Electricity Generating Authority of Thailand /1 Since 2008 Board of Directors Member, SouthEast Asia Energy Limited /4 Since 2008 Board of Directors Member, Nam Ngum 2 Power Company Limited /4 Previous Working Experiences 2007-2008 Assistant Governor-Thermal Power Plant Construction, The Electricity Generating Authority of Thailand /1 2005-2007 Executive Vice President-Power Plant Engineering, The Electricity Generating Authority of Thailand /1 Directorship in RATCH 1. Executive Director 2. First-term in current directorship. Being appointed Board of Directors Member since 1st October 2008 Attendance at the Board of Directors’ Meetings in Previous Year Attendance at the Board of Directors’ Meeting : 3 meetings from total 3 meetings
Remarks
/1 Director/Management /3
of major shareholder Director/Management of subsidiary company
/2
Director/Management of energy business Director/Management of joint venture
/4
None None
023
Executive Officers
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1
2
3
4
5
6
7
8
9
10
2
1
Mr.Noppol Milinthanggoon Managing Director RATCH Shareholding Close Relatives to Management
Mr.Thawat Vimolsarawong Deputy Managing Director- Business Development None RATCH Shareholding 0.0005% (7,938 Shares) None Close Relatives to Management None
Age 54 years Education/Training
Age 59 years Education/Training
• Master of Engineering (Nuclear Technology), Chulalongkorn University nd • Bachelor of Engineering (Electrical Engineering) 2 Class Honor, Chulalongkorn University
• Bachelor of Engineering, Chulalongkorn University • Certificate, Effective Leadership Management, Strategic Resources International, U.S.A.
• Certificate, Strategic Asset Management, Power Management • Certificate, Management of Public Economy for Executive Institute, U.S.A. Program, Diploma in Public Law and Management, King • Certificate, Global Leadership 2000, School of Business and Prajadhipok’ s Institute Economics Institute of Research and Business Development, • Certificate, Finance for Executive Decision Program, Continuing U.S.A. Education Center, Chulalongkorn University • Certificate, Global 2000 Strategic Management, University of • Certificate, Senior Executive Development Program-1, GE Company California, U.S.A. Limited U.S.A. • Certificate, Psychological Operations Staff Course, Applied • Certificate, Senior Executive Development Program-2, Foundation for International Human Resource Development • Certificate, ASEAN Executive Development Program (AEDP), Thammasat Business School, Thammasat University
Psychology Institute • Certificate, Senior Executive Program, SASIN Graduate Institute of Business Administration, Chulalongkorn University
• Certificate, Director Certificate Program (DCP), Thai Institute of • Certificate, Senior Command Course (Class 22), Institute of Directors Association (IOD) Police Administration Development
Other Current Positions • Engineer Level 13 (equivalent to Assistant Governor), The Electricity Generating Authority of Thailand • Board of Directors Member, SouthEast Asia Energy Limited • Board of Directors Member, Nam Ngum 2 Power Company Limited
Previous Working Experiences • Assistant Governor-Thermal Power Plant Construction, The Electricity Generating Authority of Thailand • Executive Vice President-Power Plant Engineering, The Electricity Generating Authority of Thailand
Other Current Position Related to the Company’s Business • Chairman, Ratchaburi Energy Company Limited • Chairman, Ratchaburi Alliances Company Limited • Chairman, Ratch Udom Power Company Limited • Executive Director, Ratchaburi Power Company Limited • Director and Executive Director, SouthEast Asia Energy Limited
• Director and Executive Director, Nam Ngum 2 Power Company Limited
Previous Working Experiences • Director, Mechanical Maintenance Division, The Electricity Generating Authority of Thailand • Manager, Maintenance Service Management Division, The Electricity Generating Authority of Thailand • Manager, Maintenance Service Management Sub-division, The Electricity Generating Authority of Thailand
025
3
4
Mrs.Darunee Abhinoraseth
Mr.Prajuab Ujjin
Deputy Managing Director-Finance Deputy Managing Director-Planning and Portfolio RATCH Shareholding 0.0004% (5,300 Shares) Management 0.003% (43,500 Shares) Close Relatives to Management None RATCH Shareholding Close Relatives to Management None Age 57 years Age 58 years Education/Training Education/Training • Master of Business Administration (Executive), SASIN Graduate • Master of Science (Electrical Engineering), Institute of Business Administration, Chulalongkorn University University of Missouri-Columbia, U.S.A. • Bachelor of Accountancy (2nd Class Honor), Chulalongkorn University
• Bachelor of Engineering (Electrical Engineering), Chulalongkorn University
• Certificate, Certified Investment and Securities Analysts (CISA) • Certificate, Advanced Management Program (AMP), Harvard Business School, Boston MA, U.S.A. Level1 (Academic Year 2002), Securities Analysts Association • Certificate, Senior Executive Program, SASIN Graduate Institute • Certificate, Senior Executive Program, SASIN Graduate Institute of Business Administration, Chulalongkorn University of Business Administration, Chulalongkorn University • Certificate, Chief Financial Officer (CFO), Federation of Accounting • Certificate, Director Certificate Program (DCP), Thai Institute of Directors Association (IOD) Professions • Certificate, Director Certificate Program (DCP), Thai Institute of Other Current Position Related to the Company’s Business Directors Association (IOD) • Managing Director of the Ratchaburi Electricity Generating Other Current Position Related to the Company’s Business Company Limited Director, Tri Energy Company Limited
• Chairman, Ratchaburi Gas Company Limited
Previous Working Experiences
• Director, Chubu Ratchaburi Electric Services Company Limited
• Senior Director, seconded to be the Chief Financial Officer, Ratchaburi Power Company Limited
• Executive Director, Ratchaburi Power Company Limited
Previous Working Experiences
• Director, Accounting Division of Ratchaburi Electricity Generating • Director, Ratchaburi Power Plant Division, Holding Company Limited The Electricity Generating Authority of Thailand • Director, Finance Division of Ratchaburi Electricity Generating • Director, Efficiency Control Division, Holding Company Limited The Electricity Generating Authority of Thailand • Assistant Director, Portfolio Management Division, The Electricity Generating Authority of Thailand • Accountant Level 10, Portfolio Management Division, The Electricity Generating Authority of Thailand • Chief, General Accounting Department, Accounting Division, The Electricity Generating Authority of Thailand
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• Assistant Director, Efficiency Control Division, The Electricity Generating Authority of Thailand
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6
Mr.Peerawat Pumthong
Mr.Ni–run Wongchanglor
Assistant Managing Director-Business Development RATCH Shareholding None Close Relatives to Management None Age 50 years Education/Training
Assistant Managing Director–Planning and Portfolio Management RATCH Shareholding None Close Relatives to Management None
Age 48 years Education/Training
• Master of Business Administration, Monash University, Australia, • Master of Management, Asian Institute of Management (AIM), Philippines Certificate of Merit (Highest score) in International Business • Bachelor of Arts-Accounting, Thammasat University • Master of Engineering, Asian Institute of Technology (AIT) • Certificate Program, Chief Financial Officer (CFO), Federation • Bachelor of Engineering (2nd Class Honor), Khonkaen University of Accounting Professions • Certificate, ASEAN Executive Development Program (AEDP), • Certificate, ASEAN Executive Development Program (AEDP), Thammasat Business School, Thammasat University Thammasat Business School, Thammasat University • Certificate, Electric Power Development from Swedish Board • Certificate, The Job of the Chief Financial Officer, New York of Investment and Technical Support (BITS), Sweden Salomon Center & Singapore Institute of Management, Singapore • Certificate, Managerial Skills Enhancement, SASIN Graduate • Certificate, ASEAN Executive Program, Institute of Business Administration, Chulalongkorn University General Electric International Operation Company, Inc., U.S.A. • Certificate, Hydro Electric Power from Japan International Other Current Position Related to the Company’s Business Cooperation Agency (JICA), Columbo Plan, Japan • Managing Director, Ratchaburi Energy Company Limited • Certificate, Thermal and Hydro Power Project Planning from • Managing Director, Ratchaburi Gas Company Limited Snowy Mountain Engineering Cooperation, Columbo Plan, • Managing Director, Ratch Udom Power Company Limited Australia • Managing Director, Ratchaburi Alliances Company Limited
Other Current Position Related to the Company’s Business Previous • Director, Ratchaburi Energy Company Limited • Joint Development Committee, Hongsa Thermal Power Plant Project
Previous Working Experiences • Senior Director, Business Management Division, Ratchaburi Electricity Generating Holding Public Company Limited • Chief, Business Venture Group Portfolio Management Division, The Electricity Generating Authority of Thailand • Chief, Contract Negotiation and Management Group, Domestic Power Purchase Division, The Electricity Generating Authority of Thailand • Chief, Engineering and Project Implementation Group, Business Venture Division, The Electricity Generating Authority of Thailand
• Senior Director, Portfolio Management Division, Ratchaburi Electricity Generating Holding Public Company Limited • Senior Director, Finance Division, Ratchaburi Electricity Generating Holding Public Company Limited • Senior Director, seconded to be the Director-Finance & Accounting of the Tri Energy Company Limited • Vice President level 11 Banpu Public Company Limited Group, seconded to be the Director–Finance and Accounting, Tri Energy Company Limited • Senior Manager–Investment Division, Banpu Public Company Limited • Senior Manager–Finance Division, Banpu Public Company Limited • Manager – Finance Division, Banpu Public Company Limited • Assistant Finance Manager–Finance and Accounting Division, Banpu Public Company Limited • Senior Project Finance officer, The Industrial Finance Corporation of Thailand (IFCT) 027
7
Mr.Prayut Thongsuwan
8
Mr.Somnuk Jindasup
Assistant Managing Director–Corporate Administration Assistant Managing Director RATCH Shareholding None RATCH Shareholding 0.0005% (7,300 Shares) Close Relatives to Management None Close Relatives to Management None Age 50 years Education/Training
Age 50 years Education/Training
• Master of Public and Private Management, The National Institute • Master of Engineering (Electrical Engineering), Chulalongkorn of Development Administration University • Bachelor of Political Sciences (Public Administration), Thammasat University • Certificate, ASEAN Executive Program, General Electric International Operation Company, Inc., U.S.A.
• Bachelor of Science (Electrical Engineering) (2nd Class Honor), King Mongkut’s Institute of Technology North Bangkok Campus • Certificate, ASEAN Executive Program, General Electric International Operation Company, Inc., U.S.A.
• Certificate, Senior Executive Program, SASIN Graduate Institute • Certificate, Senior Executive Program, SASIN Graduate Institute of Business Administration, Chulalongkorn University of Business Administration, Chulalongkorn University • Certificate, Advanced Mini MBA, Chulalongkorn University
• Certificate, Advanced Mini MBA, Chulalongkorn University • Graduate Diploma in Public Law and Management,
Other Current Position Related to the Company’s Business King Prajadhipok’s Institute None
Previous Working Experiences
• Certificate, Executive Development Program, Thai Listed Company Association (TLCA)
• Director, General Administration Division, Ratchaburi Electricity Other Current Position Related to the Company’s Business Generating Holding Public Company Limited Deputy Managing Director of the Ratchaburi Electricity Generating • Director, Ratchaburi Power Plant Communication Center Company Limited • Chief-Procurement and General Services Department, Demand Side Management and Planning Division, The Electricity Generating Authority of Thailand
Previous Working Experiences • Director, Operating Division, Ratchaburi Electricity Generating Company Limited • Chief, Plant Maintenance Department Wang-Noi Power Plant, The Electricity Generating Authority of Thailand • The Cogen (SPP) Operation Project Team Leader, The Electricity Generating Authority of Thailand
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10
Mr.Vatchara Noomahan Assistant Managing Director RATCH Shareholding Close Relatives to Management
Mr.Worasak Ariyaprayoon Assistant Managing Director None RATCH Shareholding 0.0005% (7,938 Shares) None Close Relatives to Management None
Age 56 years Education/Training
Age 58 years Education/Training
• Master Degree in Management, SASIN Graduate Institute of • Bachelor of Engineering, Chulalongkorn University Business Administration, Chulalongkorn University • Certificate, Senior Executive Program, SASIN Graduate Institute • Master Degree in Electrical Engineering, Chulalongkorn University of Business Administration, Chulalongkorn University • Bachelor Degree in Electrical Engineering (2nd Class Honors), • Certificate, Finance for Executive Decision Program, Kasetsart University Continuing Education Center Chulalongkorn University
Other Current Position Related to the Company’s Business Other Current Position Related to the Company’s Business President of the Tri Energy Company Limited
Previous Working Experiences
Managing Director of the Chubu Ratchaburi Electric Services Company Limited
• Senior Director, Ratchaburi Electricity Generating Holding Previous Working Experiences Company Limited, seconded to be the President of the Tri Energy • Director, South Bangkok Power Plant–Maintenance Division, Company Limited The Electricity Generating Authority of Thailand • President of the Tri Energy Company Limited, Banpu Public • Director, Bang Pakong Power Plant–Maintenance Division, The Electricity Generating Authority of Thailand Company Limited Group • Director-Operations of the Tri Energy Company Limited, Banpu • Director, Bang Pakong Power Plant–Production Division, The Electricity Generating Authority of Thailand Public Company Limited Group • Assistance Vice President of Business Development–Power, Banpu Public Company Limited • Chief of Operation Training Division–Training Department, The Electricity Generating Authority of Thailand • Shift Charge Engineer–North Bangkok Power Plant, The Electricity Generating Authority of Thailand • Unit Engineer–South Bangkok Power Plant, The Electricity Generating Authority of Thailand
029
Ratchaburi Electricity Generating Holding Public Company Limited’s and the Grouped Companies’ Securities held by the Directors and the Executives of the Company as at 31st December, 2008
Note (1) (2) (3) (4)
The numbers of RATCH shares held by the Directors and the Executives of RATCH have included those held by their spouse and their minor children (in accordance with the SEC regulation No. Sor jor 14/2540). The table shows the securities that held by Directors, Managing Director, all Executives in the 1st to 4th rank in position from Managing Director, and the Division Director of Accounting and Finance (in accordance with the SEC regulation No. Gor jor 17/2551). The numbers of the debentures and common shares of the Joint venture companies’s held by the Directors and the Executives of RATCH represent only the part that held by each Director and the Executive solely (in accordance with the Public Company Limited Act, Section 88 (2)). The numbers of Ratchaburi Electricity Generating Company Limited debenture 1/2005 in this table represent the debenture holdings of each Director and Executive solely. 3.1 Ratchaburi Electricity Generating Company Limited debenture 1/2005 Series 2 : 5 years, issued 29th July, 2005 at the value of Baht 1,000 per unit The Shareholding of the Director or the Executive who resigned from his/her position during the Year represents the number of securities held by that person until the date of his/her retirement or resignation from the Company.
The Abbreviations of Companies’s Names
030
EGAT = the Electricity Generating Authority of Thailand (1) RATCH = Ratchaburi Electricity Generating Holding PLC. (2) RG = Ratchburi Electricity Generating Co., Ltd. (3) RGAS = Ratchaburi Gas Co., Ltd. (4) RUDP = Ratch Udom Power Co., Ltd. (5) RA = Ratchaburi Alliances Co., Ltd. (6) RE = Ratchaburi Energy Co., Ltd. (7) TECO = Tri Energy Co., Ltd. (8) RPCL = Ratchaburi Power Co., Ltd. (9) Siam Ethanol = Siam Ethanol Co., Ltd. (10) CRESCO = Chubu Ratchaburi Electric Services Co., Ltd. (11) SEAN = SouthEast Asia Energy Ltd.
Changes of Director/Executive Positions During the Year 2007 1 2 3 4 5 6 7 8 9
Mr.Kraisi Karnasuta and Miss Sutharat Angchanpen have resigned since 4th April 2008 at the 2007 Annual General Shareholders’ Meeting Year 2007 dated 4th April 2008. Mr.Vinit Tangnoi, Mr.Suchart Thada-Thamrongvech and Mr.Areepong Bhoocha-oom have retired by rotation of office since 4th April 2008 at the 2007 Annual General Shareholders’ Meeting dated 4th April 2008. Mr.Panich Pongpirodom and Mr.Kurujit Nakornthap have resigned since 1st January 2008 and 1st June 2008 repectively. Mr.Narong Sitasuwan has retired since 1st October 2008 and the Board of Directors acknowledged the resignation at the Meeting No.13/2008 dated 26th September 2008. Mr.Metta Banturngsuk was elected as members of the Board of Directors on 1st June 2008 at the Board of Directors’ Meeting No. 7/2008 dated 26th May 2008. Mr.Suchart Chanlawong was elected as members of the Board of Directors on 21st January 2008 at at the Board of Directors’ Meeting No. 2/2008 dated 21st January 2008. Mr.Apichart Dilogsopon, Mr.Payap Pongpirodom and Mr.Ratanapong Jongdamgerng were elected on 5th April 2008 at the 2007 Annual General Shareholders’ Meeting dated 4th April 2008 Mr.Nathi Premrasmi and Mr.Sathit Limpongpan were elected on 5th April 2008 at the 2007 Annual General Shareholders’ Meeting dated 4th April 2008. Mr.Noppol Millinthanggoon has taken a position of Managing Director since 1st october 2008 at the Board of Directors’ Meeting No. 13/2008 dated 26th September 2008.
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Organization Chart
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033
Management Structure Board of Directors The Board of Directors has duties to supervise oversee the Management’s operations and has appointed three subcommittees to screen various projects special issues as assigned. They include the Audit Committee, Human Resources and Remuneration Committee, and Risk Management Committee. As of 31st December 2008, the Board of Directors consisted of 13 members whose names are listed as follows : Name 1. Mr. Pongpayome Vasaputi 2. Mr. Lae Dilokvidhyarat 3. Mr. Chulasingh Vasantasingh 4. Mr. Payap Pongpirodom 5. Mr. Ratanapong Jongdamgerng 6. Mr. Apichart Dilogksophon 7. Mr. Chanin Vongkusolkit 8. Mr. Sathit Limpongpan 9. Mr. Nathi Premrasmi 10. Mr. Atchada Kesornsook 11. Mr. Metta Banturngsuk 12. Mr. Suchart Chanlawong 13. Mr. Noppol Milinthanggoon
Position Second-term Director Second-term Director Second-term Director First-term Director First-term Director First-term Director Third-term Director First-term Director First-term Director First-term Director First-term Director First-term Director First-term Director
Chairman Director and Chairman of the Human Resources and Remuneration Committee Director Director Director and Member of the Risk Management Committee Director and Member of the Human Resources and Remuneration Committee Director and Member of the Human Resources and Remuneration Committee Independent Director and Chairman of the Audit Committee Independent Director and Member of the Audit Committee Independent Director and Member of the Audit Committee Independent Director and Chairman of the Risk Management Committee Independent Director and Member of the Risk Management Committee Director, Managing Director and Secretary to the Board of Directors
The Managing Director is appointed as the Secretary to the Board of Directors. The “Corporate Secretary Office”, reporting directly to the Managing Director, is set up to handle meetings, administration works and coordination of activities of the Board of Directors. Profiles and status of the Directors are published under the “Board of Directors” Section.
Authorized Directors as the Company’s Signatory To maintain independence of the Independent Directors, the Company stated in the Affidavit that the authorized Directors, except Independent Directors, as the Company’s signatory are the signature of Mr. Pongpayome Vasaputi, Chairman of the Board, or Mr. Noppol Milinthanggoon, Managing Director, with the Company’s Seal : or the joint signatures of two Directors out of six Directors namely Mr. Lae Dilokvidhyarat, Mr. Chulasingh Vasantasingh, Mr. Chanin Vongkusolkit, Mr. Apichart Dilogksopon, Mr. Payap Pongpirodom and Mr. Ratanapong Jongdamgerng, with the Company’s Seal.
034
Composition of the Board of Directors Qualifications and Terms of Members According to the Company’s Articles of Association, the composition of the Board of Directors, qualifications and terms of their members shall be as follows : 1. Composition of the Board of Directors 1.1 The number of Directors shall be no less than seven but and not exceed thirteen 1.2 No more than one-third of all Directors shall be Executive Directors 1.3 No less than one-third of all Directors shall be Independent Directors, with a minimum number of three Independent Directors 1.4 No less than half of all Directors shall be the resident of Thailand 1.5 Chairman of the Board shall be a Non-Executive Director and not the same person as the Managing Director. The Board of Directors shall appoint elect the Chairman from Directors. 2. Qualifications of Director A Director shall have the stated qualifications and shall not have prohibited qualifications by law. Directors’ qualifications are as follows : 2.1 Director shall not be a bankrupt person 2.2 Director shall not be an incapable or quasi-incompetent person 2.3 Director shall not have been convicted in a legal proceeding to have violated laws related to assets in a fraudulent action 2.4 Director shall never be terminated or expelled from a government or private organizations due to fraudulent action 2.5 Director shall never been deprived from being a director, manager, employee or an authorized executive in other organization 2.6 Director shall not be politicians, members of the Parliament, senators, and members of local administrative offices or executive of local administration 2.7 Director shall have educational and work experience or other experience qualifications as specified by the Company 2.8 Director shall devote sufficient time and full capability for the best benefits of the Company, and shall have duties to regularly attend regular meetings 2.9 Director shall not manage or make any arrangement that would cause the conflict with the Company’s interests or would provide advantages to other person or entity, and whatever made for personal or other person’s benefit 3. Terms of Directors 3.1 Directors shall be appointed elected by the Annual General Shareholder’s Meeting (AGM). At every AGM, one- third of the Directors shall retire from office. Directors with the longest term stay in office shall retire. A retiring Director by a rotation of office may be re-elected 3.2 In case any Director resigns by reasons other than a rotation of office, the Board of Directors shall elect any person to replace the resigned Director. The newly elected Director shall retain his/her office during such time only as the resigned Director is entitled to retain. 035
3.3 Directors of the Company shall remain in their offices for no more than three consecutive terms and his/her age shall not exceed 72 years old. Full version of the Company’s regulations related to the Board of Directors is available on the Company’s website : www.ratch.co.th
Directors’ Authority and Duties As a shareholder’s representative, the Board of Directors has a duties and authorities to manage all the Company’s business, comply with laws, the Company’s objective, Article of Association, resolutions of the shareholders’s meeting. The Board of Directors is authorized to do the actions as prescribed in the Company’s Memorandum of Association. The Board of Directors has role, duties and responsibilities to manage the Company with integrity and avoid conflict of interests to protect the organization’s benefits rather than any particular groups of shareholders or shareholder. The Board of Directors’ duties and responsibilities are as follows: 1. Setting strategies, business plan and budget as follows : 1.1 Considering and discussing strategies proposed by the Management, and approving important issues related to the Company’s direction and policies 1.2 Considering and approving annual business plan, capital expense budget and performance target and new initiatives proposed by the Management to enable the Company to achieve its goals 2. Authorizing the Managing Director to take action, make agreement and approve payment for any expenses under the approved business plan and capital expense budget in compliance with the Company’s relevant rules and regulations or as deemed appropriate. 3. Monitoring and following-up activities as follows : 3.1 Monitoring the progress of any strategic operation, covering all plans that may affect the Company’s strategic success or cause major significant strategic change 3.2 Monitoring corporate performance and compare it with the target or projection at least once in on each quarterly basis. In case the operational performance does not meet the target, discussions shall be held to find the best possible solution. The target shall cover short and long-term targets, performance efficiency index, and comparison with competitors. 4. Managing human resources as follows: 4.1 Working with the Management in considering and approving the visions and strategies related to human resources and executive development plan 4.2 Working with the Management in considering and approving the remuneration strategy and performance- related performance-based remuneration plan based on performance to attract and maintain high potential employees, including special rewards for senior executives 4.3 Ensuring clear, transparent, appropriate and useful criteria, method and process of recruiting, withdrawing, or terminating Directors and senior executives to ensure that the Company’s Management has the right qualification, knowledge, proficiency and experience to efficiently and successfully operate the Company. 4.4 Ensuring that efficient performance appraisal of senior executives is in place. Executives’ performance shall be compared with the quarterly and annual target. That were earlier agreed.
036
5. Being responsible for the completion of the following : 5.1 Reviewing and approving the Company’s vision, strategies, and mission ; ensuring sufficient Business Ethics, Ethics of Directors, Executives and Employees; and communicating these guidelines to employees at all levels 5.2 Approving annual report to ensure that shareholders receive qualityfied financial report 5.3 Regularly monitoring regularly the Company’s operations to ensure that Executive Directors who are Executives and the Management operate the business in compliance with the law and determined policies 5.4 Monitoring the internal audit process and ensuring it remains a crucial control measure 5.5 Overseeing and ensuring efficiency of auditor through regular appraisal of the auditor and nomination of auditors who have proper qualifications; and ensuring that the independent auditor’s report and the Management’s analysis and comment recommendations are submitted to the Board of Directors within four months after book closing date. In case of delay, the Board of Directors must request clarification from the Management. 5.6 Ensuring the appropriate system or process that is able to indicate the point or situation that contain risks, appraising, monitoring and managing significant risks management. 5.7 Ensuring transparent process and management of connected transactions as well as regular report presented submitted to the Board of Directors 5.8 Arranging for effective control system, correct, complete and reliable information disclosure, and ensuring practice that complies with the Company’s policy, rules and regulations, and laws, related to asset management, efficient use of property and resources to their maximum capacity 5.9 Ensuring appropriate balance of power between the Management and/or major shareholders by considering placing importance on the number of Independent Directors in the Board of Directors 5.10 Supervising to ensure that sufficient information is provided for the Board of Directors to completely and perfectly perform their duties within the scope of authority and responsibilities 5.11 Overseeing that meeting document is prepared and delivered prior to the meeting date and ensuring that the minutes of the meeting report covers all important information and that the document is properly kept and controlled in order that no change can be made to the document after minutes of the meeting report is rectified. 5.12 Monitoring problems and possible issues on conflict of interests 5.13 Protecting and strengthening the Company’s reputation 6. Communicating with the stakeholders and the general public by 6.1 Having an appropriate communications system in place to effectively communicate with the Company’s stakeholders and the general public, as well as following-up the application 7. Establishing and setting roles and responsibilities of subcommittees as follows : 7.1 Setting up subcommittees as appropriate and necessary to assist the Board of Directors, consisting of the Audit Committee, the Human Resources and Remuneration Committee, the Risk Management Committee and others 7.2 Considering and Approving roles and responsibilities of subcommittees, changes within the organization composition, and other significant changes to the subcommittees’ operations 8. Appraising the Board of Directors as follows : 8.1 Formulating criteria and process to appraise the Board of Directors’ performance and effectiveness on regular basis 8.2 Conducting self-appraisal on yearly basis and reporting corporate performance and corporate governance which is published in the annual report 037
Independent Director In 2008 the definition of the Company’s “Independent Director” was adjusted to comply with the regulations enforced by the Capital Market Supervisory Board. The Company’s shareholding rules are much stricter than those regulated by the Capital Market Supervisory Board as follows: 1. holding shares not exceeding 0.5 per cent of the total number of voting rights of the company, its parent company, subsidiary, affiliate or juristic person which may have conflicts of interest, including the shares held by related persons of the independent director; 2. neither being nor having been an executive director, employee, staff, or advisor who receives salary, or a controlling person of the company, its parent company, subsidiary, affiliate, same-level subsidiary or juristic person who may have conflicts of interest unless the foregoing status has ended not less than two years prior to the date of application filing with the Office; 3. not being a person related by blood or registration under laws, such as father, mother, spouse, sibling, and child, including spouse of the children, executives, major shareholders, controlling persons, or persons to be nominated as executive or controlling persons of the company or its subsidiary; 4. not having a business relationship with the company, its parent company, subsidiary, affiliate or juristic person who may have conflicts of interest, in the manner which may interfere with his independent judgement, and neither being nor having been a major shareholder, non-independent director or executive of any person having business relationship with the company, its parent company, subsidiary, affiliate or juristic person who may have conflicts of interest unless the foregoing relationship has ended not less than two years prior to the date of application filing with the Office. The term “business relationship” aforementioned under paragraph one includes any normal business transaction, rental or lease of immovable property, transaction relating to assets or services or grant or receipt of financial assistance through receiving or extending loans, guarantee, providing assets as collateral, including any other similar actions, which result in the applicant or his counterparty being subject to indebtedness payable to the other party in the amount of three percent or more of the net tangible assets of the applicant or twenty million Baht or more, whichever is lower. The amount of such indebtedness shall be calculated according to the calculation method for value of connected transactions under the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Act of Listed Companies Concerning the Connected Transactions mutatis mutandis. The combination of such indebtedness shall include indebtedness taking place during the course of one year prior to the date on which the business relationship with the person commences; 5. neither being nor having been an auditor of the company, its parent company, subsidiary, affiliate or juristic person who may have conflicts of interest, and not being a major shareholder, non-independent director, executive or partner of an audit firm which employs auditors of the company, its parent company, subsidiary, affiliate or juristic person who may have conflicts of interest unless the foregoing relationship has ended not less than two years from the date of application filing with the Office; 6. neither being nor having been any professional advisor including legal advisor or financial advisor who receives an annual service fee exceeding two million Baht from the company, its parent company, subsidiary, affiliate or juristic person who may have conflicts of interest, and neither being nor having been a major shareholder, non-independent director, executive or partner of the professional advisor unless the foregoing relationship has ended not less than two years from the date of application filing with the Office;
038
7. not being a director who has been appointed as a representative of the company’s director, major shareholder or shareholders who are related to the company’s major shareholder; 8. not having any characteristics which make him incapable of expressing independent opinions with regard to the company’s business affairs. After having been appointed as independent director with qualifications complying with the criteria under (a) to (h) of paragraph one, the independent director may be assigned by the board of directors to take part in the business decision of the company, its parent company, subsidiary, affiliate, same-level subsidiary or juristic person who may have conflicts of interest on the condition that such decision must be a collective one. To recruit an Independent Director, the Company follows the nomination procedures in recruiting directors and senior executives, the details of which are described under the same topic. On 31st December 2008, the Company has five Independent Directors based on the definition described above, which accounts for 38.46 per cent of the 13 members of the Board. Their names are listed as follows: 1. Mr. Sathit Limpongpan 2. Mr. Nathi Premrasmi 3. Mr. Suchat Chanlawong 4. Mr. Metta Banturngsuk 5. Mr. Atchada Kesornsook
The Audit Committee The Audit Committee of the Company consists of three Independent Directors appointed by the Board of Directors based on their expertise, experiences and qualifications, as defined by the regulation of the Stock Exchange of Thailand (SET). The names of the committee are listed as follows : 1. Mr. Sathit Limpongpan/1 Chairman of the Audit Committee /1 2. Mr. Nathi Premrasmi Member of the Audit Committee 3. Mr. Atchada Kesornsook Member of the Audit Committee Mr. Sathit Limpongpan was appointed the Chairman of the Audit Committee and Mr. Nathi Premrasmi was appointed a member of the Audit Committee on 28th April 2008. Prior to that, Mr. Suchart Thada-thamrongvech was the Chairman of the Audit Committee and Mr. Areepong Bhoocha-oom was a member of the Audit Committee, and both retired at the end of their terms.
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The Audit Committee’s term is three year. Member of the Audit Committee who is retired by the rotation of office may be re-elected. The Committee reports directly to the Board of Directors and shall perform their tasks and responsibilities as assigned by the Board of Directors as follows:
Duties and Responsibilities of the Audit Committee 1. Review and ensure that the Company has accurate correct and adequate financial report 2. Review and make sure ensure that the Company has an appropriate and effective internal control system 3. Review and ensure that the Company complies with the Securities and Exchange Commission Acts and the Stock Exchange of Thailand’s rules and regulations and other laws related to the Company’s business
039
4. Consider the selection and nomination of the Company’s auditors and recommend the auditor’s fee, and attend at least one meeting per year with the auditors without presence of the Management 5. Consider connected transaction or items that may have conflict of interests based on the Stock Exchange of Thailand’s rules and regulations 6. Prepare the Audit Committee report to be published in the annual report. The report shall be signed by the Chairman of the Audit Committee and comprise details at least as follows : 6.1 Opinions about the accuracy correctness, adequacy and reliability of the Company’s financial reports 6.2 Opinions about the adequacy of the Company’s internal audit system 6.3 Opinions about compliance with the securities and stock exchange law, the Stock Exchange of Thailand’s regulations and laws related to the Company’s business 6.4 Opinions about appropriateness of the auditors 6.5 Opinions about issues that may cause conflict of interests 7. Review the Internal Audit Division’s work in the following areas : 7.1 Consider the scope of operation, annual audit plan, budget and personnel recruitment to ensure it is sufficient to support the Internal Audit Division’s operations 7.2 Consider the appointment, reshuffle or termination of the Internal Audit Division Director 7.3 Consider operational report 7.4 Consider the independence of the Internal Audit Division 8. Consider and review audit criteria and process to ensure that they always comply with current business environment 9. Summarize and report the Audit Committee’s tasks and movement to the Board of Directors 10. Report following found or suspected issues which may have significant impact on the Company’s financial status or operating performance, to the Board of Directors in order to correct them within the timeframe agreed by the Audit Committee 10.1 Transactions that may cause conflict of interests 10.2 Fraud or irregularities or significant defect in the Internal Audit system 10.3 Breach of Securities and Exchange Commission Acts and the Stock Exchange of Thailand’s Rules and Regulations and other laws relating related to the Company’s business In case that a Company’s Director or executive does not adjust and correct the transaction within the timeframe stated in the first paragraph, any member of the Audit Committee may report the transaction or the action under the first paragraph to the Securities and Exchange Commission or the Stock Exchange of Thailand. 11. Complete the tasks stated in Item 1-10 above for subsidiaries as assigned or requested by subsidiaries within its scope of responsibilities 12. Take other actions assigned by the Board of Directors which is agreed by the Audit Committee
040
Authority of the Audit Committee 1. Invite Directors, or employees regardless of their positions to attend the meeting or to clarify and answer any question relating to the Committee’s duties and responsibilities 2. Discuss with the Company’s experts or consultants (if any) or from time to time hire a third-party consultant or specialist if necessary at the Company’s expense 3. Request the Company’s employees to submit document evidences about the Company’s operations for auditing 4. Audit and investigate to complete its tasks under its scope of responsibilities 5. Assign employee (s) to take particular actions within Audit Committee’s duties to support auditing activities 6. Take action specified in 1-5 above in relations to subsidiaries as assigned or requested by subsidiaries and within its scope of responsibilities In 2008, the Board of Directors revised the scope of responsibility and authority of the Audit Committee in compliance with the announcement Notification of the Capital Market Supervisory Board No. Tor Jor 14/2551 on Application and Approval of New Shares Offering and the Stock Exchange of Thailand’s 2008 Notification on the Qualifications and Scope of Authority of Audit Committee issued in September 2008. The duties and scope of responsibilities of the Audit Committee is formulated as the Company’s and Audit Committee Regulations under the Audit committee. Full version can be viewed at the Company’s website: www.ratch.co.th In 2008, the Audit Committee held six meetings in February, May (twice), August, November and December. The Chairman of the Audit Committee presided over at the meetings. All the Committee members had attended the meetings, except the February meeting in which one Audit Committee member was not able to attend.
The Human Resources and Remuneration Committee The Human Resources and Remuneration Committee consists of three Directors who are appointed by the Board of Directors and Ms. Darunee Abhinoraseth, Deputy Managing Director – Finance, acts as the Committee’s secretary. The list of the Human Resources and Remuneration Committee members are as follows : 1. Mr. Lae Dilokvidhyarat /1 Chairman of the Human Resources and Remuneration Committee /1 2. Mr. Apichart Dilogsopon Member of the Human Resources and Remuneration Committee 3. Mr. Chanin Vongkusolkit Member of the Human Resources and Remuneration Committee Mr. Lae Dilokvidhyarat was appointed the Chairman of the Human Resources and Remuneration Committee and Mr. Apichart Dilogsopon was appointed a member of the Committee on 28th April 2008. Prior to that Mr. Areepong Bhoocha-oom was the Chairman of the Human Resources and Remuneration Committee, Mr. Vinit Tangnoi was a member, and retired by rotation of office at the end of their term.
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The Human Resources and Remuneration Committee term is three years. A retiring Director by a rotation of office may be re-elected. Its authorities and responsibilities as assigned by the Board of Directors cover the entire tasks concerning the management of human resources and remuneration of the Board of Directors, Subcommittees, and senior executives of the Company (meaning the Managing Director, Deputy Managing Director and Assistant Managing Director). Its tasks are as follows :
041
Duties and Responsibilities of the Human Resources and Remuneration Committee 1. Formulate the Company’s visions and strategies on human resources management of the Company well as their Management Development Plan 2. Review and ensure that the Board of Directors of the Company has appropriate size and good components responsively to the changing environment 3. Establish the clear, transparent and appropriate policy, criteria and procedure in nominating, selecting, removing or terminating Directors and senior executives of the Company to ensure that all companies in the Company’s Group have qualified management team who have appropriate qualification, knowledge, competency and experiences to run the Company’s business successfully and effectively 4. Select and nominate persons with required qualifications to be the Managing Director and senior executives of the Company’s Group. Specialists can be invited to join in the selection process if necessary at the Company’s expenses 5. Prepare succession plan for key executives posts and conduct a regular review, by appraising the importance of the position, recruiting and developing potential persons to ensure that the successor has knowledge, experience and other required qualifications that are useful for the organization to enhance the Company’s efficiency, effectiveness and growth 6. Establish a policy and strategies on compensation which includes salary, meeting allowance, per diem, bonus and other benefits to Directors and senior executives in the Company’s Group before proposing them to the Board of Directors for further approval. Consideration and approval will be based on clear and transparent criteria in order to induce, retain and motivate high qualified and high potential human resources 7. Formulates effective guidelines, criteria, procedures and process for assessing the performance of the Board of Directors and senior executives of the Company against the target mutually agreed in advance each year. These targets shall be relevant to the Company’s Business Plan and set up in order to review the Management’s annual remunerations by taking duties, responsibilities, related risks and long term values to shareholders into consideration 8. Disclose policy related to remuneration as well as amount of remunerations for the Board of Directors and senior executives in the Company’s annual report
Authority of the Human Resources and Remuneration Committee 1. Discuss with the Company’s specialist or consultant (if any) or hire a third party consultant or specialist if necessary at the Company’s expenses 2. Require the Company’s Group operational employees to provide document or information of the Company’s Group for its remuneration consideration 3. Assign operational employees to handle a tasks that shall support the operation of the Human Resources Management and Remuneration Committee The duties and responsibilities of the Human Resources and Remuneration Committee are formulated as the Company’s rules and Regulations on the Human Resources and Remuneration Committee. Full version can be viewed at the Company’s website. In 2008, the Human Resources and Remuneration Committee convened seven meetings in January, February, March, May, July, September and December. The Chairman of the Human Resources and Remuneration Committee presided over the meeting and all members had attended every arranged meeting.
042
The Risk Management Committee The Risk Management Committee consists of three members appointed by the Board of Directors. Mr. Ni-raun Wongchanglor, Assistant Managing Director – Planning and Investment Management, acts as its Secretary. The names of the members are listed as follows : 1. Mr. Metta Banturngsuk/1 Chairman of the Risk Management Committee /1 2. Mr. Ratanapong Jongdamgerng Member of the Risk Management Committee Member of the Risk Management Committee 3. Ms. Suchart Chanlawong/1 Mr. Metta Banturngsuk was appointed the Chairman of the Risk Management Committee, Mr. Ratanapong Jongdamgerng and
Mr. Suchart Chanlawong were appointed the Committee members on 28th April 2008. Prior to that, Mr. Kurujit Nakornthap was the Chairman of the Risk Management Committee while Mr. Panich Pongpirodom and Ms. Sutharat Angchanpen were members. They retired by rotation of office.
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The Risk Management Committee term is three years. A retiring Director by a rotation of office may be re-elected. The committee reports directly to the Board of Directors. Its tasks as assigned by the Board of Directors are as follows :
Duties and Responsibilities of the Risk Management Committee 1. Review the Company’s risk management policy and framework, which would cover all the major risks ; namely financial risk, investment risk, and corporate reputation risk, before proposing them to the Board of Directors for approval 2. Formulate risk management strategies and framework in compliance with the Company’s risk management policy. The committee shall assess, monitor and control risk at the appropriate level 3. Monitor and ensure that risk management activities are in line with the Company’s policy and framework approved by the Board of Directors 4. Set risk measurement criteria and limit at the acceptable level 5. Set appropriate risk management measures for different situations 6. Review the sufficiency and effectiveness of risk management policy and system 7. Report regularly to the Board of Directors about the management, operation, risk status, changes and areas of improvement to keep risk management in line with the Company’s policy and strategy 8. Appoint a risk management working group if necessary 9. Support the risk managing working group in terms of personnel, budget and other necessary resources under the scope of responsibilities of the working group
Authority of the Risk Management Committee 1. Invite Directors, and/or operational employees to discuss, clarify or answer questions related to their scope of duties and responsibilities 2. Discuss with the Company’s specialist or consultant (if any) or hire a third-party advisor or specialist, if necessary, at the Company’s expense 3. Require the Company’s Group operational employees to provide document or information of the Company’s Group for its consideration relating to their scope of duties and responsibilities
043
4. Investigate related matters to achieve the goals under their scope of duties and responsibilities 5. Assign operational employees to handle a tasks that shall support the operation of the Risk Management Committee The duties and responsibilities of the Human Resources and Remuneration Committee are formulated in the Company’s rules and Regulations under on the Risk Management Committee section. Full version can be viewed at the Company’s website. The Risk Management Committee has established a Risk Management Working Group, including comprising Deputy Managing Director – Planning and Investment Management as the group chairman, executives from various divisions as members and Risk Management Division Manager as the Secretary. Its duties and responsibilities include to identify nature of the risks and risk factors, study and analyze all internal and external risk factors that may affect the Company’s operation, study and suggest guidelines for the Risk Management Committee’s approval, monitor and ensure that risk management activities are implemented in compliance with the approved policy and, finally, write a corporate risk management report for the Risk Management Committee’s consideration every quarter. In 2008, the Risk Management Committee convened four meetings in February, July, November and December. The Chairman of the Risk Management Committee presided over the meeting and all members had attended every arranged meeting.
The Corporate Secretary The Board of Directors has appointed Mrs. Boontiva Dansamsatid, Director of Corporate Secretary Office, as the Company’s Secretary., The Company’s Secretary is responsible for organizing the Board of Directors’ and general shareholders’ meetings, preparing and keeping the Company’s important documents, including Directors’ Registration, the Board of directors’ meeting’s notice and minutes annual report, the shareholders’ meeting notice and miniutes and Directors and Management’s conflict of interests report in compliance with the Securities and Stock Exchange Act.
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Recruitment and Nomination Procedures of Directors and Senior Executives Board of Directors’ Selection The Human Resources and Remuneration Committee is responsible for selecting, recruiting and screening nominees for the Board of Directors’ consideration. Directors’ appointment includes: Case 1 : A Director position is vacant due to reasons other than rotation of office : The Board of Directors has the authority to elect any person to replace the resigned Director. The Director so elected shall retain his/her office during such time only as the resigned Director is entitled to retain. At least three fourths of the remaining Directors shall approve the appointment. Case 2 : A Director position is vacant due to rotation of office: The Board of Directors shall propose to the shareholders’ meeting for consideration at the Annual General Shareholders’ Meeting. Criteria and process as specified in the Company’s rules Articles of Association are as follows: 1. Each shareholder’s votes are equal to the number of shares held. One share equals one vote 2. A shareholder may vote for one or more nominees but must not exceed the number of Directors to be appointedelected 3. In case a shareholder chooses more than one nominee, he/she has the right to vote for each nominee at the number of votes equivalent to the number of shares held. The shareholder cannot vote more for any particular nominee 4. The nominees who receive the second highest votes respectively will be selected as the Directors according to the number of new directors to be selected. If the number of nominees receiving the same number of votes is higher than the number of new directors to be selected, the chairman of the meeting will make final decision The Human Resources and Remuneration Committee shall recruit the Directors and senior executives of the Company’s Group by reviewing the nominee’s educational background, knowledge, skills and work experiences, which should benefit their designated missions and the Company’s overall operations. The nominees must not possess prohibited qualifications stated by laws and has qualifications stated in the Company’s Regulations under on the Board of Directors’ section. The nominee shall be an Independent Director and has must have the specified qualifications as defined for “Independent director”. In addition, to nominate the Company’s Director, consideration must also be made on the basis of necessary qualifications, of an individual to work together as a team. Also taken into consideration is diversity of age, skills dedication and commitment to devote time and effort in performing the Director’s duties. The ultimate goal is to ensure a strong Board of Directors that can fulfill the Company’s need at a particular point of time.
Senior Executive Recruitment Senior executive includes the Managing Director, Deputy Managing Director and Assistant Managing Director. The recruitment of the senior executive is undertaken by the Human Resources and Remuneration Committee who will select and screen before propose it for the Board of Directors’ approval. The Committee shall review the nominee’s educational background, knowledge skills, and work experiences, which should benefit their designated missions and the Company’s overall operations, efficiency, effectiveness and growth. Directors representing major shareholders such as EGAT and Banpu Public Company Limited, that have right to nominate their representatives to the Company’s Board of Directors, have been through the selection procedure in which background and qualifications proper and necessary in governing the Company’s businesses are taken into consideration. The Managing Director, who is EGAT’s senior executive and seconded to work at the Company, has also been nominated to the Human Resources and Remuneration Committee for consideration and screening prior to the Board of Directors’ consideration and/or the shareholders’ meeting’s consideration according to the proper selecting procedure as well.
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Major Shareholders Top 10 Major Shareholders Ratchaburi Electricity Generating Holding Public Company Limited As 2nd September 2008
046
1. The Electricity Generating Authority of Thailand (EGAT) 45.00% 2. Banpu Public Company Limited (Grouped) 14.99% 3. Social Security Office 4.92% 4. NORTRUST NOMINEES LIMITED (Grouped) 3.85% 5. INVESTORS BANK AND TRUST COMPANY 2.66% 6. The Government Savings Bank Fund 2.60% 7. LITTLEDOWN NOMINEES LIMITED (Grouped) 2.20% 8. AMERICAN INTERNATIONAL ASSURANCE COMPANY (Grouped) 1.39% 9. STATE STREET BANK AND TRUST COMPANY (Grouped) 1.16% 10. THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED 0.93% Shareholders
Number of Shares
%
Shares held by Top 10 Major Shareholders
1,155,704,971
79.70
294,295,029
20.30
1,450,000,000
100.00
Portion of Shares held by Minor Shareholders Total Shares
Share distribution by Nationality Shareholders Thai Foreign Total of Shareholders
Number of Number of Shareholders Shares 16,787 1,239,543,038 76 210,456,962 16,863
1,450,000,000
% 85.49 14.51 100.00
* Ratch’s Article of Association has forbidden the foreign shareholders not to hold the company’s shares in excess of 25 percent from the total of shares sold.
Source : Thailand Securities Depository Company Limited
047
Top 10 Major Shareholders No. Shareholders 1 The Electricity Generating Authority of Thailand (EGAT) 2 Banpu Public Company Limited (Grouped) Banpu Public Company Limited Banpu Power Company Limited 3 Social Security Office Social Security Office Social Security Office by MFC Asset Management Public Company Limited 4 NORTRUST NOMINEES LIMITED (Grouped) NORTRUST NOMINEES LIMITED NORTRUST NOMINEES LIMITED-NORTHERN TRUST GUERNSEY CLIENTS NORTRUST NOMINEES LIMITED-NTGS NORTRUST NOMINEES LIMITED-IBM DIVERSIFIED GLOBAL EQUITY FUND 5 INVESTORS BANK AND TRUST COMPANY 6 The Government Savings Bank Fund 7 LITTLEDOWN NOMINEES LIMITED (Grouped) LITTLEDOWN NOMINEES LIMITED LITTLEDOWN NOMINEES LIMITED 38 8 AMERICAN INTERNATIONAL ASSURANCE COMPANY (Grouped) AMERICAN INTERNATIONAL ASSURANCE COMPANY, LIMITED-APEX AMERICAN INTERNATIONAL ASSURANCE COMPANY, LIMITED-TIGER AMERICAN INTERNATIONAL ASSURANCE COMPANY, LIMITED-AIA- D-PLUS 9 STATE STREET BANK AND TRUST COMPANY (Grouped) STATE STREET BANK AND TRUST COMPANY, FOR LONDON STATE STREET BANK AND TRUST COMPANY STATE STREET BANK AND TRUST COMPANY, FOR AUSTRALIA STATE STREET BANK AND TRUST COMPANY, FOR CANADA 10 THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED Total of Shares held by Top 10 Major Shareholders Portion of Shares held by Minor Shareholders Total Shares
As 2nd September 2008 Number of Shares 652,500,000 217,400,000
Shares %
71,032,800 338,400
71,371,200
4.92
55,370,400 299,000 114,300 24,600
55,808,300
3.85
38,525,499
2.66
37,686,300
2.60
31,800,000 100,000
31,900,000
2.20
10,220,100 6,961,200 3,000,000
20,181,300
1.39
13,317,500 2,548,672 592,100 388,900
16,847,172
1.16
13,485,200
0.93
1,155,704,971
79.70 20.30 100.00
110,300,000 107,100,000
294,295,029 1,450,000,000
45.00 14.99
Source : Thailand Securities Depository Company Limited Note : 1. Electricity Generating Authority of Thailand (EGAT) is a state-owned enterprise that operates and co-invests with other parties in
electricity power and related business. EGAT is the largest shareholder of the Company, it has 7 representatives in the Company’s
13-member Board of Directors. 2. Banpu Group is a group of Banpu Public Company Limited and its associated company that engageged in core business on coal and
electricity power in Thailand and overseas. The Vongkusolkit family and their related companies are its major shareholders. Banpu
Public Company Limited has 1 representative in the Company’s 13-member Board of Directors.
048
049
Nature of Business Founded on 7th March 2000, the Company is currently registered with Baht 14,500 million paid-up capital. Its business is to invest in subsidiaries and affiliated companies as a holding company. Its revenues come mainly from dividends of its affiliated companies and subsidiaries. At present, the Company owns 99.99 per cent shares of its five subsidiaries as follows :
1. Ratchaburi Electricity Generating Company Limited
2. Ratchaburi Energy Company Limited
3. Ratchaburi Gas Company Limited, which holds 50 per cent stake in Tri Energy Company Limited
4. Ratch Udom Power Company Limited, which holds 99.99 per cent stake in Ratchaburi Alliances Company Limited
5. Ratchaburi Alliances Company Limited, which holds 25 per cent stake in Ratchaburi Power Company Limited.
Ratchaburi Electricity Generating Holding Public Company Limited also directly invests in two affiliated companies as follows :
1. Holding 33.33 per cent in SouthEast Asia Energy Limited which holds 75 per cent stake in Nam Ngum 2 Power Company Limited
2. Holding 49.99 per cent stake in Chubu Ratchaburi Electric Services Company Limited
The Company has formulated its strategies and business plans that correspond to its development and expansion goals focusing on investment in the power sector and other related business where it provides adequate seed money for investment and actively participating in the formulation and monitoring of the operations of the companies it has invested in.
Subsidiaries
Ratchaburi Electricity Generating Company Limited
Location
:
128 Moo 6, Phikunthong Subdistrict, Muang District, Ratchaburi, 70000 Thailand Tel. (66) 2978 5111-9, 0 3236 5740 ext 3210 Fax. (66) 2978 5110, 0 3236 5740 ext 3204
Nature of business
:
Electricity generation
Shareholding Equity
:
99.99 per cent
Registered capital
:
Baht 18,275 million
Paid registered capital
:
Baht 18,275 million
Status
:
Supervises the operations of Ratchaburi Power Plant. The plant comprises two units of Thermal Power Plants, each of which has 735 megawatts generating capacity, and three blocks of Combined - Cycle Power Plants, each with 725 megawatts generating capacity. Total generating capacity is 3,645 megawatts. The company has a 25-year Power Purchase Agreement (PPA) with EGAT and has started commercial operations since October 2000.
050
Ratchaburi Gas Company Limited
Location
:
19 SCB Park Plaza, East Building 3, 20th Fl, Ratchadapisek Road, Chatuchak, Bangkok 10900 Thailand Tel. (66) 2978 5200 Fax. (66) 2937 9321
Nature of business
:
Investing in electricity generating business
Shareholding Equity
:
99.99 per cent
Registered capital
:
Baht 500 million
Paid registered capital
:
Baht 500 million
Status
:
Holds 50 per cent stake in Tri Energy Company Limited, whose 350 megawatts of total 700 megawatts generating capacity are for the Company.
Ratch Udom Power Company Limited
Location
:
19 SCB Park Plaza, East Building 3, 20th Fl, Ratchadapisek Road, Chatuchak, Bangkok 10900 Thailand Tel. (66) 2978 5000 Fax. (66) 2937 9321
Nature of business
:
Investing in electricity generating business
Shareholding Equity
:
99.99 per cent
Registered capital
:
Baht 420.90 million
Paid registered capital
:
Baht 420.90 million
Status
:
Holds 99.99 per cent in Ratchaburi Alliances Company Limited’s shares.
Ratchaburi Alliances Company Limited
Location
:
19 SCB Park Plaza, East Building 3, 20th Fl, Ratchadapisek Road, Chatuchak, Bangkok 10900 Thailand Tel. (66) 2978 5000 Fax. (66) 2937 9321
Nature of business
:
Investing in electricity generating business
Shareholding Equity
:
99.99 per cent
Registered capital
:
Baht 420.20 million
Paid registered capital
:
Baht 420.20 million
Status
:
Holds 25 per cent stake in Ratchaburi Power Company Limited, whose 350 megawatts of its total 1,400 megawatts generating capacity are for the Company.
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Ratchaburi Energy Company Limited
Location Nature of business Shareholding Equity Registered capital Paid registered capital Status
: : : : : :
19 SCB Park Plaza, East Building 3, 21th Fl, Ratchadapisek Road, Chatuchak, Bangkok 10900 Thailand Tel. (66) 2978 5200 Fax. (66) 2937 9541 Investing in renewable-energy power generating business and in related businesses 99.99 per cent Baht 140 million Baht 140 million Oversees the operations of a new electricity generating project using associated gas which is by-product of oil refining from Pradu Thao-A rig, lacated in Baan Tham Mai Krai, Kong Subdistrict, Kong Krailat District, Sukhothai Province, with 1.75 megawatts generating capacity. The project is supported by the Natural Fuel Resources Department, Ministry of Energy. It starts operation in June 2007.
Affiliated Companies
Tri Energy Company Limited
Location Nature of business Shareholding Equity Registered capital Paid registered capital Status
: : : : : :
1550 Thanaphum Tower, 16th Fl, New Petchburi Road, Makkasan, Ratchatavee Bangkok 10320 Thailand Tel. (66) 2207 0307-14 Fax. (66) 2207 0315-16 Electricity generation 50 per cent held by Ratchaburi Gas Company Limited Baht 4,100 million Baht 3,423.80 million Located in Ratchaburi Province, Tri Energy Power Plant operates one block of Combined - Cycle Power Plant with 700 megawatts generating capacity, and has a 20-year PPA with EGAT. The company started commercial operation since July 2000. Its shareholders are Chevron Thailand Energy Company 1 and Ratchaburi Gas Company Limited which holds 50 per cent of its shares each.
Ratchaburi Power Company Limited 052
Location Nature of business Shareholding Equity Registered capital Paid registered capital
: : : : :
1828 Sukhumvit Road, Bang Chak, Pra Khanong, Bangkok 10900 Thailand Tel. (66) 2344 5111 Fax. (66) 2332 3882 Electricity generation 25 per cent held by Ratchaburi Alliances Company Limited Baht 7,325 million Baht 7,325 million
Status
:
Oversees the operations of the Ratchaburi Power Plant which is located in the same premise of Ratchaburi Electricity Generating Plant, Ratchaburi Province. It has a long-term PPA for 25 years. The company has two blocks of Combined - Cycle Power Plant, each of which generates 700 megawatts. The first block has begun its commercial operations in March 2008 and the second block in June 2008. Ratchaburi Power Company Limited’s shareholders consist of Hong Kong Electric International Power (Mauritius) Limited holding 25 per cent, Chubu Electric Power Company International B.V. holding 15 per cent, PTT Public Company Limited holding 15 per cent, Union Energy Company Limited holding 10 per cent, Toyota Tsusho Corporation holding 10 per cent, and Ratchaburi Alliances Company Limited holding 25 per cent.
SouthEast Asia Energy Limited
Location Nature of business Shareholding Equity Registered capital Paid registered capital Status
: : : : : :
587 Viriyathavorn Bldg, 20th Fl, Sutthisarn Vinijchai Road, Din Daeng, Bangkok 10400 Thailand Tel. (66) 2275 4873 Fax. (66) 2691 8307 Investing in electricity generating business in Lao PDR 33.33 per cent Baht 6,606.75 million Baht 4,132.52 million SouthEast Asia Energy Limited holds 75 per cent stake in Nam Ngum 2 Power Company Limited in Lao PDR. Its total generating capacity is 615 megawatts and its generating capacity accounts for 153.75 megawatts of the Company’s total generating capacity. Its shareholders include Ch. Kanchang Public Company Limited holding 38 per cent, Bangkok Expressway Public Company Limited holding 16.67 per cent, while P.T. Construction & Irrigation holding 5.33 percent, Shalapak Development Company holding 5.33 per cent, Team Consulting and Management Company Limited holding 1.34 per cent and the Company holding 33.33 per cent.
Nam Ngum 2 Power Company Limited
Location Nature of business Shareholding Equity Registered capital Paid registered capital Status
: : : : : :
Lao PDR Tel. (007) 856 21 223 215 Fax. (007) 856 21 21 5500 Electricity generating 75 per cent held by SouthEast Asia Energy Limited Baht 8,809 million Baht 5,148.67 million Operating Nam Ngum 2 Hydroelectric Power Plant, with 615 megawatts generating capacity in Lao PDR. Nam Ngum 2 Power Company Limited signed a Long-term PPA with EGAT for 27 years from the initial operation date and expected to start commercial operations in 2013. Its shareholders include SouthEast Asia Energy Limited and Lao PDR holding 75 and 25 per cent respectively. 053
Chubu Ratchaburi Electric Services Company Limited
Location Nature of business Shareholding Equity Registered capital Paid registered capital Status
: : : : : :
128 Moo 6, Pikunthong Subdistrict, Muang District, Ratchaburi 70000 Thailand Tel. (66) 0 2978 5180, 0 3236 5740 ext 3210 Fax. (66) 0 2978 5126, 0 3236 5740 ext 3204 Operate and maintain power plants 49.99 per cent Baht 40 million Baht 20 million Chubu Ratchaburi Electric Services Company Limited signed Operation and Maintenance Agreement with Ratchaburi Power Company Limited (“RPCL”) for a total period of 14 years, effective since the commercial operations of RPCL’s plants in June 2008. Its major shareholders are Chubu Electric Power (Thailand) Company Limited and the Company, holding 49.99 per cent each, and other minor shareholders holding 0.02 per cent.
Revenue Structure of the Company, Subsidiaries and Affiliates in 2008 In 2008, the Company’s major income is from electricity sales by Ratchaburi Electricity Generating Company Limited made to the Electricity Generating Authority of Thailand (EGAT) under the 25-year Power Purchase Agreement. Fundamental income structure under the Ratchaburi Power Plant’s Power Purchase Agreement is divided into two parts as follows: 1. Availability Payment (AP) Availability Payment is set to cover all investments, including loans, loan interests, shareholders’ return, and fixed operating expenses, such as maintenance expenses and management expenses. Generally, the AP depends on the power plant’s ability to generate and distribute electricity according to EGAT’s requirement. 2. Energy Payment (EP) Energy Payment will be received when power is generated and distributed to EGAT’s grid system. It comprises 1) Fuel Payment 2) Variable Operating and Maintenance Payment In addition to income from electricity sales by Ratchaburi Power Plant, the Company also earns from electricity sales from the 1.75 megawatt Natural Resource Enhancing Project-Pratu Tao, located in Kong Subdistrict, Kong Krailat District, Sukhothai Province, which is operated by Ratchaburi Energy Company Limited. The income is derived from the sales of electricity generated from associated gas which is by-product of oil refining from Pradu Thao-A rig to EGAT. The Company also has other incomes from its affiliated companies as follows : 1. Tri Energy Company Limited, 50 per cent stake in which is held by Ratchaburi Gas Company Limited, and Ratchaburi Power Company Limited (in which Ratchaburi Alliances Company Limited holds 25 per cent stake). Both companies are affiliates whose electricity sales comprise Availability Payment (AP) and Energy Payment (EP), similar to those of Ratchaburi Electricity Generating Company Limited. 2. Chubu Ratchaburi Electric Services Company Limited, in which the Company holds 49.99 per cent stake. The company generates income from operating and maintaining power plant service. It has 14 year contract, starting from the power plant commercial operation date, with Ratchaburi Power Company Limited. Ratchaburi Power Company Limited has two blocks of 700 megawatts Combined Cycle Power Plant that started commercial operation since 1st March 2008 and 1st June 2008 respectively. 054
2008 and 2007 Income Structure of the Company
Types of Income
Incomes from sales of power - AP - EP - EP
By Ratchaburi Electricity Generating Company Limited Ratchaburi Electricity Generating Company Limited Ratchaburi Energy Company Limited *
Company’s shareholding Ratio 99.99 99.99 99.99
12,043.67 27.50 30,138.87 68.81 27.71 0.06
Ratchaburi Electircity Generating Holding Public Company Limited
Profit (loss) sharing in affiliated companies
Tri Energy Company Limited Ratchaburi Power Company Limited Siam Ethanol Exports Company Limited** Chubu Ratchaburi Electric Services Company Limited SouthEast Asia Energy Limited
50 25 15 49.99 33.33 ***
586.50 1.34 313.71 0.72 (0.52) - 49.13 0.11 (17.12) (0.04)
820.97 1.78 (28.74 ) (0.06 ) (2.15 ) (0.01 ) 13.56 0.03 (11.01 ) (0.02 )
Interest incomes
Ratchaburi Electircity Generating Holding Public Company Limited Ratchaburi Electricity Generating Company Limited Ratchaburi Energy Company Limited Ratch Udom Power Company Limited
99.99 99.99 99.99
342.04 79.73 0.75 -
0.78 0.18 - -
400.15
0.87
179.72 0.65 0.01
0.39 - -
Ratchaburi Electricity Generating Company Limited
99.99
-
-
707.77
1.54
Gain from selling investment Ratchaburi Energy Company Limited in affiliated company
99.99
4.65
0.01
-
-
99.99 99.99
1.22 109.68 0.05
- 0.25 -
0.57 113.58 7.24
Others
* ** ***
Ratchaburi Electircity Generating Holding Public Company Limited Ratchaburi Electricity Generating Company Limited Ratchaburi Energy Company Limited Total
121.78
0.28
11,359.07 24.65 32,448.54 70.43 13.08 0.03
Service incomes
Insurance compensation from fire cause
Income 2008 2007 Baht % Baht %
43,801.85 100.00
49.33
0.11
- 0.25 0.01
46,072.34 100.00
Ratchaburi Energy Company Limited started to generate revenue from PTO – A Associated Gas Power Plant on 27th June 2007. On 7th October 2008, the Company has completely sold the investments in Siam Ethanol Exports Company Limited to Siamgas and Petrochemicals Public Company Limited. The Company has increased the shareholding in SouthEast Asia Energy Limited from 25 percent to 33.33 percent, on 2nd January 2008.
055
Dividend Payment Policy Ratchaburi Electricity Generating Holding Public Company Limited has a policy to pay dividend at no less than 40 per cent of its total net profit according to the consolidated financial statements after deducting reserve required by laws and other reserves. However, dividend payment also depends on the Company’s cash flow. Ratchaburi Electricity Generating Company Limited, the Company’s major subsidiary, has a policy to pay dividend to the Company at 100 per cent of its net profit after deducting the reserve required by laws and other reserves and after other conditions in loan agreement. Dividend paid to shareholders since the inauguration of its operations is as follows : Year 2001 2002 2003 2004 2005 2006 2007 2008
Net Profit (Million Baht) 3,060 4,729 5,424 6,487 6,066 6,106 5,829 6,493
Net Profit after reserves % of dividend Paid Dividend No. of shares Dividend required by laws (Million Baht) payment (Million Baht) (Million) per share (Baht) 2,907 49.9 1,450 1,450 1.00 4,492 48.4 2,175 1,450 1.50 5,153 49.2 2,537 1,450 1.75 6,162 47.1 2,900 1,450 2.00 5,763 50.3 2,900 1,450 2.00 5,955 51.1 3,045 1,450 2.10 52.2 3,045 1,450 2.10 5,829 6,493/1 49.13 3,190 1,450 2.20 /2
/1 The Company has to deduct no less than 5 per cent of its annual net profit for legal reserve requirement until the reserve is no less than
10 per cent of its registered capital or Baht 1,450 million. The Company has achieved this since 2006.
/2
056
The proposed agenda for shareholders’ consideration in the 2009 Annual General Shareholders’ Meeting to be held on 31st March 2009. The Company paid interim dividend for the first 6 months of its operations in 2008 (January – June 2008) at Baht 1.10 per share on 12th September 2008.
“Kla Yim” Youth Camp at Baan Nong Ri, Phetchaburi Province during 16th-18th October 2008
Power Industry and Competitions Power Consumptions In 2008, Thailand’s power demand hit its peak on 21st April 2008, at 22,568 megawatts, which is 18 megawatts lower than the previous year. Of this, 8,897.31 megawatts belonged to EGAT, representing 37.2 percent, while 11,451.59 megawatts were purchased from independent power producers (IPP) which is 50.7 per cent of the total generating capacity. In addition, 2,079.1 megawatts or 9.2 per cent of the total generating capacity were purchased from small power producers (SPP), and 640 megawatts, or 2.8 per cent of the total generating capacity were purchased from overseas producers (See Chart No. 1). The total installed capacity of the entire power system in April is 29,964.25 megawatts, and the total reserves is 32.7 per cent of the total generating capacity during the peak period.
Chart No. 1 : Generating capacity during the peak period in 2008 which is 22,568 megawatts 2,079.10 MW (9.2%)
640.00 MW (2.8%) 8,397.31 MW (37.2%)
11,451.59 MW (50.7%)
EGAT
IPP
SPP
Imported
Progress of Independent Power Producers’ and EGAT’s Project The total number of independent power producers (IPP) in Thailand increased by four companies, bringing the number of the country’s total IPPs to fourteen companies. They include Rayong Electricity Generating Company Limited, Kanom Electricity Generating Company Limited, Independent Electricity Generating Company Limited, Tri Energy Company Limited, Bo Win Power Company Limited, Eastern Power Company Limited, BLCP Power Company Limited, Gulf Power Generating Company Limited, Ratchaburi Power Company Limited, and Ratchaburi Electricity Generating Company Limited. Four additional companies were awarded the right to generate electricity, namely Gecco-One Company Limited (The power purchase agreement signed on 10th September 2008 ; Siam Energy Company Limited, Power Generation Supply Company Limited (both signed the agreement on 10th October 2008) and National Power Supply Company Limited. In 2008, The Combined-Cycle Power Plant of the Ratchaburi Power Company Limited in which the Company holds 25 per cent stake commercially operated. Its total generating capacity is 1,400 megawatts. This is the last IPP under the Phase 1 of the Energy Ministry’s power purchase. while Jana Combined-Cycle Power Plant is a new EGAT’s project that started its commercial operations with 710 megawatts generating capacity. Under EGAT’s power purchase from other countries, two power plants in Lao PDR are under construction. The Nam Tern 2 Hydroelectric Power Plant has a total generating capacity of 920 megawatts and is scheduled to operate commercially in 2009. The Nam Ngum 2 Hydroelectric Power Plant has 615 megawatts generating capacity, including 596 megawatts contracted capacity under the power purchase agreement (PPA) with EGAT. The plant, in which the Company holds 33.33 per cent stake through SouthEast Asia Energy Limited, will start its commercial operations in 2013. In addition, three EGAT’s power plants are under construction. The Bang Pakong Combined Cycle Power Plant Block 5 with 719 megawatts generating capacity is scheduled to start its commercial operations in 2009. The South Bangkok Combined Cycled Power Plant Block 3 has 057
715 megawatts generating capacity and will start its commercial operations in 2009. The North Bangkok Combined Cycled Power Plant Block 1 with total generating capacity of 685 megawatts will start commercial operations in 2010.
Energy Policy The essence of the government’s Energy Policy proposed to the Parliament on 7th October 2008 is as follows : 1. To enhance electricity security to ensure sufficient supply to support the country’s development and national energy independence as well as the people’s quality of life. The government will focus more on exploring energy resources in the country and increase local production of energy. Relationship with neighboring countries will be strengthened in terms of energy-related cooperation plans. The government will also invest in energy business in overseas markets, formulate electricity production plan that best suit the country’s current economic conditions, and study alternative energy choices that required advanced technology in order to support the government’s decision. 2. To promote energy price stability and regulation to best address the volatile global energy market, current economic and investment environment. The government will set energy price structure that best reflects the actual costs and is fair to the public, which will encourage more competition and investment in energy business. The government will also regulate the industry effectively in order to ensure high quality business, service and safety. 3. To promote on-going alternative energy research and development by making alternative energy a national agenda with focus on biofuels, such as gasohol and biodiesel. The government will promote the use of natural gas in public transport, high potential renewable energy production in the country, and set promotional measures for appropriate alternative energy production and usage that are attractive to both producers and consumers while reinforcing the balance between food, energy and environment. 4. To seriously and continuously promote energy saving and conservation through campaign for energy saving among the general public. The government will also promote energy usage efficiency through energy-saving building standard, energy-saving consumer, electrical product standard, public transport system, goods transport management, electrical train and rail system in order to reduce fossil fuel dependence, thus reduce pollutions and traffic in the city. 5. To promote the development, production and use of energy in parallel to environment conservation by introducing energy production and fuel standards in order to reduce impact on the environment. The government will encourage global warming reduction efforts by promoting the Clean Development Mechanism (CDM).
National Power Development Plan The National Energy Policy Committee approved the PDP 2007 Revision1, effective since January 2008. Under the plan, power purchase from IPPs will be reduced while purchase from neighboring countries will be increased. In 2021, the total generating capacity will be 58,200 megawatts, including 25,090 megawatts (43.1%) from EGAT, 18,306 megawatts (31.5%) from IPPs and SPPs, and 14,804 megawatts (25.4%) will be purchased from neighbor countries. Reserve is 16%, as seen in Table No. 1. Since the current volatile economic situation may significantly increase generating capacity reserve, the government has assigned the Energy Ministry to review the Power Development Plan to best address the current economic development as already mentioned in the “Future Projects” section.
058
Table No. 1 : PDP 2007 Revision 1
Year
EGAT Projects
Total generating capacity until 2007 Total generating capacity until 2008 Total generating capacity until 2009 2011 2012 Wang Noi Block 4 2013 Bangpakong Block 6 2014
IPP MW.
IPP (MW.)
%
Fuel
Imported
SPP Total IPP Generation (MW.) (MW.)
%
Total Generating Peake Demand Capacity (MW.) (MW.)
Reserve (%)
Projects
MW.
% 2.0% 4.8% 4.6%
31,377 32,456 33,642 34,194 36,819
23,957 25,225 26,635 27,994 29,625
23.6 21.1 22.7 18.5 20.6
39,369
31,384
22.0
16,507 52.6% 16,578 51.1% 17,539 52.1% 700 700
800 600 800 540
Gas* Coal* Gas* Coal*
14,230 45.4% 14,318 44.1% 14,543 43.2% 25 245 200 200
Nam Ngum 2 Tern Hin Boon (expansion) Nam Ngum 3 Hongsa 1 Hongsa 1-3 Nam Tern 1 Nam Neiep Nam Ou 1
640 1,560 1,560 597 220 440 490 980 523 261 200
41,533
33,216
21.1
2015 Lignire Unit 700 Total generating Capacity Until 2015 19,019 43.5% 2016 Lignite Unit 2-3 1,400 2017 Lignite Unit 4 700 South Bangkok Unit 4-5 1,400 700 2018 Southern Combined Cycle 700 2019 North Bangkok Unit 2 2020 Thermal Unit 1-2 2,000 2,000 2021 Thermal Unit 3-4
1,600 4,400 700
Gas* Coal G/C
210 670 18,579 42.5% 200 200
Nam Ou 2 Imported
843 6,114 14.0% 510
43,711 43,711 44,563 47,565
35,251
19.8
37,382 39,560
17.2 16.7
700
G/C Uo Uo
175
Imported Imported Imported Imported
1,780 2,600 2,600 1,200
50,179 52,190 55,200 58,200
41,795 44,082 46,481 48,958
16.6 15.5 17.4 16.2
Total generating capacity until 2021 25,090 43.1%
14,804 25.4%
58,200
5,800
13,244
31,744
Total additional generating capacity 11,000 of 2007 - 2021
18,306 31.5% 1,700
Source : EGAT, PDP 2007 Revision 1 on January 2008 Remarks 1. The generating capacity shown in the table has considered the power plant that EGAT discharged from its system. 2. *Announcement of IPP bidding winners has been made.
Competitions Local electricity generating industry is part of the basic infrastructure sector under the supervision of the National Energy Policy Committee, the Ministry of Energy, and the National Energy Regulatory Board. The government encourages competition in the electricity generating business through various measures. The Energy Ministry has ensured sufficient supply of natural gas for electricity generating that meets with power purchase demand while calling bids for long-term power generation and purchase. These measures encourage investors from other industries and countries to compete in the bid. The latest IPP bidding also attracted a number of new investors, reflecting clearly higher competition in the industry.
059
Table No. 2 : Generating capacity and producers in Thailand as of December 2008 Total Generating Capacity MW. Percentage
Power Plant Producers
Ratchaburi Electricity Generating Company Limited Electricity Generating Public Company Limited Independent Electricity Generating (Thailand) Company Limited Tri Energy Company Limited Bo Win Power Company Limited Eastern Power Company Limited BLCP Power Company Limited Gulf Power Generation Company Limited Ratchaburi Power Company Limited Small Power Producer Total Domestic Generating Capacity Purchased Total Foreign Generating Capacity Purchased Total EGAT’s Generating Capacity Total
3,481.00 1,993.09 700.00 700.00 713.00 350.00 1,346.50 1,468.00 1,400.00 2,079.10 14,230.69 640.00 15,020.96 29,891.62
11.6% 6.7% 2.3% 2.3% 2.4% 1.2% 4.5% 4.9% 4.7% 7.0% 47.6% 2.1% 50.3% 100
Remarks : Ratchaburi Electricity Generating Company Limited has a total installed capacity of 3,645 megawatts and contracted capacity of 3,481 megawatts sold to EGAT.
As of December 2008, the Company’s total generating capacity is 4,181 megawatts, representing 14 per cent (compared to the total industry’s generating capacity of 29,891.65 megawatts). This includes 3,481 megawatts from Ratchaburi Electricity Generating Company Limited, 350 megawatts from Tri Energy Company Limited and another 350 megawatts from Ratchaburi Power Company Limited, detailed in chart No. 2 (excluding the 1.75 megawatts generating capacity from the Natural Resource Enhancing Project – Pratu Tao which is produced and sold to EGAT under the non-firm power purchase agreement with small power producers.)
Chart No. 2 : Installed generating capacity of the entire system as of December 2008
Source: EGAT 2008 EGAT
Other major producers
Small producers
Foreign producers
RATCH
The Company has prepared for more intense competition by increasing efficiency of production cost management, human resource management, information technology development and seeking new production resources. These measures will help the Company maintain its profitability and growth potential. 060
Tree growing in Bang Krachao Community on 10th May 2008
Risks from Business Operations The Company’s Board of Directors has agreed that when operating its business the Company may experience a variety of risk factors due to high competition and economic fluctuation in the country and in the global market. To meet the international standards of risk management and the Company’s vision and mission through good corporate governance, the Company’s Board of Directors has set the philosophy and policy for risk management as follows :
Risk Management Philosophy
“The Company is confident and aware of the importance of effective risk management and control, which will enable the Company to run its business with stability, continuity, and an acceptable level of risk. It is used as a management tool to enhance the Company’s success opportunity as much as possible, while minimizing the possibility of failure and loss, and reduce the uncertainty in the Company’s overall performance. All these will help the Company achieve all its objectives.”
Risk Management Policy
1. Promoting the culture of risk management to stimulate understanding, conscience and responsibility concerning risk, control and the effect of risk on the Company in the process of management and operations throughout the Company. 2. Having in place sufficient and accepted international standard process, framework and measures for indicating, analyzing, assessing, ranking, managing, controlling, monitoring, reporting, evaluating and communicating the information of risks continuously, regularly and across the board in the Company. 3. Measuring the risk both in terms of quality, such as the Company’s reputation and image, and in terms of quantity, such as loss, revenue decrease, and expense increase based on the possibility that could happen and affect the Company. 4. Setting risk limit at the level that the Company accepts to control the level of damage, and also identifying circumstances and risk degrees that are warning signs for the operators to manage risk under control level. 5. Having operational regulations in writing for the executives and operators to abide by in order to control the operational risk. The Company’s Board of Directors has appointed the Risk Management Committee comprising three directors who are in charge of screening policy, setting strategies and risk management framework, controlling, following up, maintaining risk level, and effectively managing risks of the entire organization. The Company has established a Risk Management Working Committee (Working Committee) comprising the Company’s high-level executives. The Working Committee is responsible for analyzing and assessing risks, managing risks to comply with the policy agreed by the Risk Management Committee, and preparing quarterly risk management report for the Risk Management Committee’s review. In 2008, the Risk Management Committee reviewed both internal and external factors that may affect the Company’s ability to achieve its goals and agreed to define the Company’s risks into three categories as follows : 1. Investment Risks – risks deviating the Company’s investment plan and affecting the returns below the Company’s acceptable level, etc. 2. Financial Risks – risks derived from the lack of liquidity, sufficiency and timeliness of capital to fund investment projects 3. Management risks – risks from mistakes in management, operations and personnel as well as external factors
1. Investment Risks
The Company has a policy to invest in electricity generating and related businesses, in and outside the country, taking into account the return for shareholders, employees and the public. The Company has considered and managed the risk factors, critical risks and their impacts against the Company’s investment as follows : 061
1.1 Economic Risks and Government Policies
1.2 Project Selection Risks
Future electricity demand mainly depends on the country’s domestic economic growth. The economic crisis in 2008 seriously affected electricity demand and the Energy Ministry planned to reduce future power demand. These factors have high impact and out of the Company’s control. The government’s policy to open bid to purchase limited amount of electricity and to encourage competition, especially from foreign companies with financial strength, advanced technology and experience, also have strong impact on the industry. It is likely that the government will not call bids to purchase electricity from large private electricity generating firms in the next five years. This factor significantly affects the Company’s investment target, and the Company may seek more investment in overseas market. At the same time, risk management related to investment will have to be reinforced through close monitoring of the government’s policy and economic development in order that the Company can formulate appropriate and timely risk management plans. There are several important factors to consider in project selection. Those factors include location, source of fuel, infrastructure, communities, environment, equipment price, construction costs and project time frame. The Company’s selection criteria cover project feasibilities, related rules and regulations and return on investment that must be in the Company’s accepted level. In making decision to invest overseas, the Company also has to consider other risks factors, such as economic conditions, social and political factors, regulations, interest rate, exchange rate and tax.
1.3 Joint Investor Selection and Joint Investment Policy
1.4 Project Management Risks
1.5 Commercial Operations Risks
062
In each project considered, the Company thoroughly studied the feasibility and investment gains. In selecting joint investors, the Company would consider financial risks, conflict of interest and the joint investors’ policies which must be in line with the Company’s investment policy and strategy. Roles of each joint investor were clearly set in order to create synergy. In addition, the Company considered risks related to environment impact, risks related to agreement with business partners and risks related to public and community acceptance. The Company has established the Construction Management Division in order to follow-up on agreements and administrations, such as procurement, project quality and costs, which will help reduce risks and possible adverse impact. At present, the Company has one project under construction – Nam Ngum 2 Hydroelectric Power Plant with 615 generating capacity, in which the Company holds 25 per cent stake. In 2008, Ratchaburi Energy Company Limited, one of the Company’s subsidiaries, withdrew its investment, made through Siam Ethanol Exports Company Limited, in an alcohol production plant with 30 million litres production capacity. The Company earlier invested in this project because it wished to use waste water from the plant to generate electricity. However, it was found according to the feasibility study that investment gains from this project is below the Company’s accepted level and alcohol manufacturing is not the Company’s core business. The Company has given high priority to the risks related to commercial operations because of direct impact on its income and profit. Major risks related to the operations and management under long-term agreement with business partners are Available Payment risks, efficiency of machinery, maintenance, quality and quantity of fuel, political and legal risks, volume of water used in production, excessive waste and accident insurance. The Company allows some impact within the accepted level. In December 2008, the Company’s dependable contracted capacity is at 4,182.75 megawatts, according to the Power Purchase Agreement (PPA). This includes :
1) 2) 3) 4)
Ratchaburi Electricity Generating Company Limited : 3,481 megawatts generating capacity ; the Company holds 99.99 per cent stake in the subsidiary which has a 25-year long-term PPA with EGAT which will expire in 2027. Tri Energy Company Limited : 350 megawatts generating capacity ; the Company holds 50 per cent stake in the subsidiary which has 20-year PPA with EGAT that will expire in 2020. Ratchaburi Energy Company Limited : 1.75 megawatts generating capacity ; the Company holds 99.99 per cent in the subsidiary which has five-year non-firm PPA between Small Power Producers and EGAT that will expire in 2013 (can be renewed). Ratchaburi Power Company Limited : 350 megawatts generating capacity ; the Company holds 25 per cent in this affiliated company which has 25-year PPA with EGAT that will expire in 2033.
2.1 Financial Liquidity
2. Financial Risk
Amid global economic instability, the Company has implemented strict control on financial liquidity by ensuring sufficient funds for project investment and continuously monitoring its plans. This includes: • Preparation of short and long-term cash flow forecast in order to closely monitor capital needs, timely prepare appropriate funding plan and credit line • Management of cash flow considering stability and liquidity of Company group as first priority. The Company’s Investment Committee is responsible for continuously considering and monitoring movements in the monetary market.
2.2 Debt Payment Ability
The Company does not have loan commitment with any financial institutions. However, Ratchaburi Electricity Generating Company Limited, the Company’s major subsidiary, has secured loans Baht 24,262 million from six financial institutions in the country under the loan agreement dated 23rd June 2005. As of 31st December 2008, the accrued loan balance under the agreement is Baht 20,739 million. On 29th July 2005, the subsidiary company issued and debentures in Thai baht worth Baht 10,000 million. On 31st December 2008, accrued debt is Baht 2,250 million. Since Ratchaburi Electricity Generating Company Limited has been operating and drawing loans, it has never paid late nor shown any fault related to debt payment ability or failure to respect loans agreement. The Company realizes the importance of debt payment management therefore Ratchaburi Electricity Generating Company Limited has been instructed to allocate financial reserves for loans and interest payments.
2.3 Interest Rate
The interest rate of long-term loan and the five-year debentures (for the interest paid in the 3rd - 5th year) of Ratchaburi Electricity Generating Company Limited is in accordance with MLR rate. According to the PPA entered with EGAT, Ratchaburi Electricity Generating Company Limited will receive compensation for fluctuation of the interest rates from EGAT. Hence, there is no risk from interest rate volatility.
2.4 Foreign Exchange Rate
Although all income, loans and most of the expenses of Ratchauri Electricity Generating Company Limited are in Thai baht, there are some risks from exchange rate fluctuation because the Company has to purchase equipment and spare parts from overseas suppliers. For the imported equipment and spare parts, EGAT has compensated to the exchange rate volatility for importing cost on a part of revenue under the PPA entered with EGAT. 063
In addition, the Company has studied various financial tools to reduce risks from foreign exchange volatility as appropriate.
3. Management Risk
3.1 Human Resource
The Company realizes that employees are the most important factor in driving its success and, therefore, manages well the risks related to its employees. The Company ensures effective recruitment in order to secure qualified employees, provides appropriate and fair remunerations and benefits to maintain good human resource, develops people capability, and regularly reviews operational process and system to support the Company’s business expansion. In 2008, the Company launched an organizational restructure and manpower plan to support the Company’s business expansion. Competency-based human resource management (HRM) was introduced as the basic human resource development standard, which is aimed at increasing capability and potential of the Company’s employees. The action is to increase capability of its employees in all levels to be able to replace vacancies when needed and meet its business expansion. The Company studied and reviewed its remuneration structure in order to maintain and attract qualified employees and to be competitive in the market. The Company also improved its Human Resource Information System (HRIS) and performance appraisal system by introducing key performance indicator (KPI) as a benchmark for performance appraisal and performance-based remuneration in order to attract and maintain qualified employees and ensure that its human resource operations effectively supports the Company’s policy. 3.2 Corporate Reputation and Image The Company has communicated, educate and create understanding on electricity generation business to community and consistently operate community relations activities. The Company has also been involved in the development and management of public projects through the Ratchaburi Power Plant’s Community Development Project in order to promote quality of life in nearby communities and society at large. For risk related to corporate communication that may affect the Company’s operations, the Company gives high priority to fair, consistent and equal treated provision of information to the public in accordance to the corporate governance principles of listed companies. In 2008, the Company focused on educating the community on power business and its operations and activities to promote greater cooperation in community development in the future. In new project development, the Company has set clear policy to encourage community participation from project initiation stage. With emphasis on community benefits, the Company ensures that its project brings mutual benefits to all involved parties and is accepted by the surrounding communities, which strongly promotes sustainable community development in parallel to the Company’s project development. In addition to securing trust from the surrounding communities, the Company has expanded its corporate social responsibility (CSR) projects to many communities across the nation. Some of the projects are Kla Yim “Love the Forest and the Community” that stimulate forest conservation under the community forest theme. These five-year projects are aimed to promote communities’ involvement in growing and maintaining forests. The success of these projects will encourage the public at large to pay more attention to conserving natural resources, especially the community forests.
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Mangrove Plantation in Bann Laem, Phetchaburi Province on 18th August 2008
Future Projects Thailand Load Forecast Subcommittee (TLFS) has adjusted its electricity demand forecast to correspond to the country’s current conditions, slower economic growth resulted from the global financial crisis and local political uncertainty. As future demands for electricity are falling, there is a need to adjust the Power Development Plan (PDP). Thus, PDP 2007; the 2nd revised edition, dated on January 2009, had revised new production capacity during 2009-2021 with subject to the policy to buy power from neighboring countries and from domestic power producers ranging from Independent Power Producers (IPP), Small Power Producers (SPP) and Very Small Power Producers (VSPP) as well as the diversification of primary fuels. Based on the government’s policies and economic factors mentioned above, as one of Thailand’s major private power producers, the Company has designed its business development policy and directions to increase the production capacity both in Thailand and abroad. The Company also plans to invest in several types of power plants, ranging from thermal to combined cycle, hydroelectric and renewable power plant. To increase returns to our its shareholders and to maintain its status as the region’s leading power producer through cleaner and modern technology, The Company has set up a guideline to develop future projects as follows.
1. Domestic Power Plant Projects The Company is prepared to take part in the next IPP bidding round with a proposal to sell electricity through its affiliated company. It also plans to co-invest with other strategic partners in other potential projects. The Company will select coal or natural gas as a fuel based on conditions in each project taken into consideration environmental impacts and acceptance by local communities. As such, the following IPP projects are contained in project development plan.
1.1 Ratchaburi Combined Cycle Power Plant Block 4
This is the most well-prepared project to compete in the bidding because a site furnished with power plant facilities and utilities is now ready for construction of the power plant. 1.2 Pathum Thani Combined Cycle Power Plant The Company has already selected a suitable area in Pathum Thani Province to build a natural-gas combined cycle power plant. So far, based on its strategy to buy a high potential land and to win acceptance from local communities, the Company has bought a land to develop a power plant for the next IPP bidding. An environmental impact assessment study was already conducted, the report of which was submitted for approval from the Office of Natural Resources and Environmental Policy and Planning (ONEP) in September 2008. 1.3 New Combined Cycle Power Plant Project The Company has already set the feasibility study planning on the targeted area that was surveyed and potential ranked in order to enhance the availability of developing the new combined cycle power plant on the next round of electricity bidding. The key factors of the project development are location, water supply, transmission line system and fuel source including the environmental impacts and acceptance and participation of the surrounding communities of the power plant.
065
2. Overseas Power Plant Projects As domestic demands for electricity will rise only a little due to local economic slowdown as mentioned earlier, the Company plans to expand its investment to countries whose demands for electricity remain constant such as Vietnam, Cambodia and Indonesia. Its plan to invest overseas is consistent with its study of investment opportunities overseas conducted last year. To achieve its business expansion plan, the Company will discuss with business groups in target countries and negotiate with related agencies there. The Company will also studies and surveys new energy resources such as coal in Indonesia to turn them into reserves for its local and overseas power plants.
3. Power Plant Projects in Lao PDR The Company has invested in several power plant projects in Lao PDR. Electricity from these projects is to be sold to Thailand under the PPA signed with EGAT. The power plants project in Lao PDR have been under development as follows.
3.1 Hongsa Thermal Power Plant Project
The Company signed a Joint Development Agreement (JDA) with Banpu Power Company Limited on 11th December 2007 to jointly invest in a power plant using lignite from a mine around the plant. Located in Hongsa, Xayaburi Province, which is about 35 kilometers from the Thai border at Nan Province, the Hongsa Thermal Plant will have a generating capacity of 1,653 megawatts. The Company also signed a Tariff MOU with EGAT on 27th December 2007. Yet, in 2008, the project was greatly affected by a dramatic increase of oil prices, which made its construction costs much higher. As a result, the Tariff MOU has been requested for revision. Later, the US economy crisis occurred and affected worldwide including Thailand where the US economy demands for electricity are growing at a much lower rate. As a consequence, a plan to purchase power from this project will be postponed according to the newly revised PDP. 3.2 Nam Ngum 3 Hydroelectric Power Plant Project The Company and GMS Laos Company Limited have completed their discussion with EGAT regarding details and conditions in power purchased from the project. All parties were able to achieve what was agreed in the MOU regarding the tariff rate. In the end, the PPA was signed on 11th October 2007. The Project is located in Xaysomboun Province, Lao PDR with generating capacity of 440 megawatts. Yet, a high price of oil did escalate the construction costs of the project. The project has already asked to adjust the tariff rate to reflect the rising costs. Again, with economic slump that leads to lower demands for electricity in Thailand, power purchased from this project has to be postponed in a similar manner as in the Hongsa Thermal Power Plant Project.
3.3 Xe-Pian, Xe-Namnoy Hydroelectric Power Plant Project The Company signed a Joint Development Agreement (JDA) with South Korea’s SK Engineering & Construction Company Limited and Korean Western Power Company Limited on 6th August 2007 to develop a power plant project in Attapu and Champasak Provinces in southern Laos. With a generating capacity of 390 megawatts the project conducted a geological survey, an environmental impact assessment and a study of the project’s cost - effectiveness in relation to its investment. The results were submitted to the Lao PDR Government, which approved the feasibility study of the project and its Environmental and Social Impact Assessment Report on 4th January 2008. The Company and the other developers have already submitted the project and the tariff rate to the Energy Ministry and EGAT for their approval. The project is currently waiting for EGAT and the Energy Ministry’s decision to set a proper price. On 14th November 2008, the developers signed a Project Development Agreement with the Lao PDR Government.
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The Company and the other developers will further the negotiation on concession agreement with the Lao PDR Government, PPA with EGAT and the Lao Electricity de Lao, shareholder agreement, and loans agreement. 3.4 Nam Bak 1 and 2 Hydroelectric Power Plant The Company has invested in the project through SouthEast Asia Energy Limited, in which the Company holds 33.33 per cent of its shares. SouthEast Asia Energy Limited has been granted the rights to develop the project by the Lao PDR Government. The feasibility study reveals that there are various ways to develop the project. At present, an alternative that offers good returns with loss environmental impacts is being considered. It is expected that the project will have a total capacity to generate 140 megawatts of electricity.
3.5 Other Hydroelectric Power Plants in Lao PDR The Company has studied the possibilities of various power plants projects in Lao PDR to select the most potential one(s) for investment. This includes new projects where rights to develop must be sought and joint venture projects with those already granted development rights from the Lao PDR Government. The Company’s priority is to invest in projects, which will sell power to Thailand.
4. Renewable Power Plant Projects Due to global warming resulted from the use of fossil fuel, the Company has put an emphasis on renewable energy, which is increasingly important at a national level. The government has a policy to subsidize investment in renewable energy projects by giving adders onto purchased power for investors in projects that do not yet achieve an economy of scale. The adders will be varied according to each type of renewable energy. The Company had jointly invested in Wind Farm Project that is located in Khaokor District, Phetchabun Province with 26 per cent investment proportion. This project has installed generating capacity of 60 megawatts and consists of 30 wind turbines with 2 megawatts generating capacity each. The adder subsidized to this project is at 3.50 Baht per unit for 10 year period. The Wind Farm project investment is made in accordance with the Company’s business plan and corresponding to the government renewable energy policy. At the same time, the Company is keeping an eye on new technological development in renewable energy by considering technology suitable for Thailand. It is also seeking investors with synergy expertise or access to other renewable energy to collaborate a project together in the future.
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Transaction with Related Companies For Fiscal Year Ending 31st December 2008
Connected Transaction
Value Related parties (million baht)
Reasons
Ratchaburi Electricity Generating Holding Public Company Limited 1. Management Service Agreement Ratchaburi 1.1 Providing services related to internal audit, legal, Electricity secretarial works of the Board of Directors, Generating information technology and financial management Company Limited • Service income in 2008 was Baht 3.11 million (agreement signed • As of December 31st December, 2008, other on 4th January 2006) account receivable and accrued service income in December 2008 were Baht 0.31 million
3.11
Ratchaburi Electricity Generating Company Limited does not have employees with this skill while the Company does. Service is charged on actual time spent based on market rate.
Ratchaburi Energy Company Limited (agreement signed on 23rd May 2008)
0.85
Ratchaburi Energy Company Limited does not have employees with this skill while the Company does. Service fee is at the market rate at Baht 0.74 million per annum (excluding VAT) plus actual expenses at market rate.
1.3 Assigning 3 representatives to Tri Energy Company Tri Energy Limited as the Managing Director, Accounting Company Limited and Finance Manager and Administration and (agreement signed Contract Management Manager on 14th November • In 2008, service income was Baht 22.13 million 2003) • As of 31st December, 2008, other account receivable and accrued service fees for December 2008 were Baht 2.03 million
22.13
Tri Energy Company Limited requests for the service and the Company has experts in this area. The service is based on market rate, which according to the agreement starts at Baht 1.42 million per month (excluding VAT) and increases 6 per cent per every year.
Chubu Ratchaburi Electric Services Company Limited (agreement signed on 1st January 2006)
8.61
Chubu Ratchaburi Electric Services Company Limited requests for the service and the Company has experts in this area. The service is based on market rate.
1.5 Assigning an executive to Ratchaburi Power Ratchaburi Power Company Limited as its Financial Manager Company Limited • In 2008, service income was Baht 3.85 million (agreement signed on 1st March 2007)
3.85
Ratchaburi Power Company Limited requests for the service and the Company has experts in this area. The service is based on market rate at Baht 0.32 million per month (excluding VAT).
1.2 Providing management and operation service to the power generating from Natural Resource Enhancing project - Pratu Tao to Ratchaburi Energy Company Limited • In 2008, service income was Baht 0.85 million • As of December 31st December, 2008, other account receivable and accrued service fees for December 2008 were Baht 0.07 million
1.4 Providing management service by assigning 2 executives to Chubu Ratchaburi Electric Services Company Limited as the Managing Director and the Administration and Finance at Chubu Ratchaburi Electric Services Company Limited • In 2008, service income was Baht 8.61 million • As of 31st December 2008, other account receivable and accrued service fees for December 2008 were Baht 0.77 million
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Connected Transaction
Value Related parties (million baht)
Reasons
Ratchaburi Electricity Generating Holding Public Company Limited
1.6 Assigning two persons to SouthEast Asia Energy SouthEast Asia Limited to work in engineering and finance units Energy Limited • In 2008, service income was Baht 4.40 million (agreement signed • As of 31st December 2008, account receivable on 10th April 2006) and accrued service fee for December 2008 were Baht 0.39 million
4.40
SouthEast Asia Energy Limited requests for the service and the Company has experts in this area. The service is based on market rate at Baht 0.32 million per month (excluding VAT) with 7 percent increase every year.
1.7 Providing internal audit, secretarial works of the Siam Ethanol Board of Directors, legal and accounting and Exports Company finance services to Siam Ethanol Exports Limited Company Limited (agreement signed • In 2008, service income was Baht 0.56 million on 2nd January • As of 31st December 2008, other accounts 2008) receivables and accrued service fees for December 2008 were Baht 0.01 million
0.56
Siam Ethanol Exports Company Limited Export does not have employees with this skill while the Company has experts in this area. Service is charged on actual hour spent based on market rate, which is Baht 0.06 million per month (excluding VAT) plus other actual expenses.
2. Public Relations Service Agreement with Ratchaburi Ratchaburi Power Power Company Limited (RPCL) Company Limited • In 2008, service income was Baht 5.80 million (agreement signed on 1st June 2004)
5.80
Ratchaburi Power Plant Public Relations Communication Center provides publicity services to RPCL by charging actual expenses as agreed which is fair and reasonable.
Ratchaburi Power Company Limited (agreement signed on 27th February 2004)
68.76
The Company provides community relations service and consultation on construction technique, power plant operations and maintenance at US$625,000, paid in advance every three months, starting from the commencement of the commercial operations of the first unit of the Ratchaburi Power Plant (1st March 2008). The contract lasts for 25 years and three months.
47.84
The loan was extended to Ratchaburi Alliances Company Limited for investing in Ratchaburi Power Company Limited. Interest rate charge was based on Siam Commercial Bank Plc’s one-year fixed deposit for corporate customers plus one per cent, which is considered reasonable.
3.51
The loan was used to fund the Nam Bak 1 and 2 Hydroelectric Power PlantI Project feasibility study. Baht 250 million was borrowed from the shareholders at Krung Thai Bank, Thai Military Bank and Siam City Bank’ s average MLR rate plus one per cent which is considered reasonable.
* Ratchaburi Energy Company Limited sold all its ordinary shares in Siam Ethanol Exports Company Limited to Siam Gas and Petrochemicals Public Company Limited on 7th October 2008
3. Management Agreement with Ratchaburi Power Company Limited • In 2008, project development income was Baht 68.76 million
4. The Company’s Loan Extension to Subsidiaries Ratch Udom 4.1 Loan Extended to Ratch Udom Power Company Power Company Limited through promissory notes. As of Limited 31st December 2008, the total amount was Baht (The Board of 1,412.78 million Directors’ • In 2008, the interest income was Baht 47.84 million resolution • As of 31st December 2008, other account No. 2/2006) receivable and accrued interest were Baht 65.38 million 4.2 Loan Extended to SouthEast Asia Energy SouthEast Asia Limited, Vientienne Office under Energy Limited Shareholders’ Loan Agreement. The total loan (agreement signed as of 31st December 2008 was Baht 62.50 million on 4th September • In 2008, interest income was Baht 3.51 million 2007) • As of 31st December 2008, other account receivables and accrued interest were Baht 3.65 million
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Connected Transaction 5. Office Design and Construction Supervision The Company contracted EGAT to design, manage and control the interior decoration of its new office at Energy Complex, 7th Fl., covering 2,580 square meter area • In 2008, total expense was Baht 1.72 million • As of 31st December 2008, total account payable was Baht 1.60 million
Value Related parties (million baht) EGAT (agreement signed on 3rd November 2008)
1.72
Reasons
The Company has no employees with expertise in this area. EGAT had earlier decorated the Company’s current office and delivered satisfactory work in managing interior decoration for the Company. The service fee under this agreement is Baht 3.83 million (excluding VAT) which is considered reasonable.
Ratchaburi Electricity Generating Company Limited
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1. Power Purchase Agreement (PPA) - Ratchaburi Power Plant Ratchaburi Electricity Generating Company Limited entered a 25-year PPA with EGAT • In 2008, power sales income was Baht 42,182.54 million • As of 31st December 2008, connected transactions are as follows : o Trade account receivables at Baht 6,621.87 million o Long-term trade account receivables at Baht 14.85 million
EGAT (agreement signed on 9th October 2000)
2. Fuel Oil Supply Agreement • In 2008, fuel and bunker oil expenses were Baht 1,638.55 million
EGAT
3. Station Service Power and Power System for Water Supply Purchase Agreement • In 2008, expenses were Baht 155.32 million • As of 31st December 2008, the connected transactions were : o Account payable for November at Baht 20.92 million o Accrued expenses for December at Baht 17.82 million
EGAT (agreement signed on 24th July 2001)
155.32 Ratchaburi Electricity Generating Company Limited had to buy electricity from EGAT for its power plant operation and water supply system at the same rate as other users.
4. Power Plant Operation and Maintenance Service Agreement Ratchaburi Electricity Generating Company Limited hired EGAT to operate and maintain Ratchaburi Power Plant, including general maintenance and major overhaul, for nine years.
EGAT (agreement signed on 26th October 2000)
985.50 EGAT has experience and expertise in operating and maintaining power plant. According to the agreement, the service charge starts from Baht 633 million per year and is adjusted according to the consumer price index, which is a normal business practice.
42,182.54 Ratchaburi Electricity Generating Company Limited has to supply power produced at its power plant to EGAT and in turn receives income from EGAT according to the conditions set in the PPA, which is in line with normal business practice.
1,638.55 According to the PPA, EGAT is responsible for supplying fuel and bunker oil at market price.
Connected Transaction
Value Related parties (million baht)
Reasons
• In 2008, total expenses were Baht 985.50 million • As of 31st December 2008, connected transaction details are as follows : o Account payable was Baht 6.43 million o Accrued expenses were Baht 17.26 million o Prepaid expenses and OMA charges were Baht 10.33 million 5. Parts of Gas Turbine Management Agreement Ratchaburi Electricity Generating Company Limited signed a 12-year agreement with EGAT for Parts of Gas Turbine Model MS9001FA management. Service fees are divided into monthly charge and actual expenses. • In 2008, total expenses were Baht 14.43 million • As of 31st December 2008, the connected transaction details are as follows : o Account payable at Baht 1.27 million o Accrued expenses for December at Baht 1.27 million
EGAT (agreement signed on 1st August 2002)
14.43 Ratchaburi Electricity Generating Company Limited does not have employees specialized in this area while EGAT does. Starting service charge, according to the agreement, is Baht 12 million per year and adjusted according to Consumer Price Index, which is in line with normal business practice.
6. Land Lease Agreements Ratchaburi Power 6.1 Ratchaburi Electricity Generating Company Company Limited Limited lease a 143-rai plot of land to (Agreement Ratchaburi Power Company Limited for signed on 7th power plant construction. June 2004) • In 2008, total income was Baht 11.17 million • As of 31st December 2008, advanced income received was Baht 1.40 million
11.17 Ratchaburi Power Plant has appropriate facilities and infrastructure for electricity generating business. Annual land lease fee is Baht 10.90 million and adjusted according to Consumer Price Index every five years, which is in line with normal business practice.
6.2 Ratchaburi Electricity Generating Company Ratchaburi Power Company Limited Limited lease 2-rai plot of land to (Agreement Ratchaburi Power Company Limited for signed on 21th construction of a gas receiving station. October 2005) • In 2008, income was Baht 0.16 million • As of 31st December 2008, advanced income received was Baht 0.02 million
0.16 Ratchaburi Power Plant has appropriate facilities and infrastructure for electricity generating business. Annual land lease fee is Baht 0.15 million and adjusted according to Consumer Price Index every five years, which is in line with normal business practice.
6.3 Ratchaburi Electricity Generating Company Chubu Ratchaburi Limited allowed Chubu Ratchaburi Electric Electric Services Services Company Limited to rent 140 Company Limited square meter space for its office. (Agreement signed • In 2008, the income was Baht 0.13 million on 30th April 2007)
0.16 Chubu Ratchaburi Electric Services Company Limited provides the power plant operation and maintenance service to Ratchaburi Power Company Limited at Baht 0.04 million per month and infrastructure at Baht 0.02 million (excluding VAT), which is similar to market price.
071
Connected Transaction
Value Related parties (million baht)
7. Facility Usage Agreement Ratchaburi Power • In 2008, the income was Baht 35.02 million, Company Limited including (agreement o Environmental activity related services at signed on 25th Baht 2.86 million November 2005) o Diesel tank rental fee at Baht 2.04 million o Storm water collection charge at Baht 1.07 million o Water tank for use in the power plant at Baht 28.89 million o Other services at Baht 0.16 million • As of 31st December 2008, the connected transaction was other account receivables of Baht 10.40 million
8. Environmental Service Agreement 8.1 Environmental Quality Monitoring Service Agreement for Ratchaburi Power Plant in 2007 • In 2008, total expenses were Baht 1.94 million 8.2 Environment Quality Monitoring Service for Bunker Oil Supply System in 2007 • In 2008, expenses were Baht 0.42 million
35.02 Ratchaburi Electricity Generating Company Limited has appropriate facilities and infrastructure to support electricity generating business. Service charges are as follows: • Environmental service of Baht 2.67 million per year (excluding VAT), diesel oil tank rental charge of 2.00 million per year and is adjusted according to Thailand’s Consumer Price Index every five years, which is a normal business practice • Infrastructure service charged at the earlier agreed rate and Baht 0.89 million Treated Sewage & Oily Drain service (excluding VAT). The charge is adjusted according to Thailand’s Consumer Price Index on yearly basis, which is a normal business practice.
EGAT (agreement signed on 31st January 2007)
1.94 Ratchaburi Electricity Generating Company Limited does not have employees specialized in this area while EGAT does. Service charge, according to the agreement, is Baht 3.88 million (excluding VAT), which is in line with normal business practice.
EGAT (agreement signed on 31st January 2007)
0.42 Ratchaburi Electricity Generating Company Limited does not have employees specialized in this area while EGAT does. Service charge, according to the agreement, is Baht 0.84 million per year (excluding VAT), which is in line with normal business practice.
8.3 Environmental Monitoring for Ratchaburi EGAT Power Plant Agreement in 2008 (agreement • In 2008, total expenses were Baht 1.98 signed on million 31st January 2008) • As of 31st December 2008, total advanced payment was Baht 0.39 million
1.98 Ratchaburi Electricity Generating Company Limited does not have employees specialized in this area while EGAT does. Service is charged at Baht 3.91 million (excluding VAT) which is in line with normal business practice.
8.4 Environmental Monitoring for the Bunker EGAT Oil Distribution System in 2008 (agreement • In 2008, total expenses were Baht 0.39 million signed on • As of 31st December 2008, advanced 31st January 2008) payment were Baht 0.08 million
0.39 Ratchaburi Electricity Generating Company Limited does not have employees specialized in this area while EGAT does. Service is charged at Baht 0.78 million (excluding VAT) which is in line with normal business practice.
9. Preparation and Monitoring of Environmental Management System (ISO 14001) • In 2008, total expenses were Baht 0.48 million
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Reasons
EGAT (agreement signed on 13th August 2002)
0.48 Ratchaburi Electricity Generating Company Limited does not have employees specialized in this area while EGAT does. The service is charged according to the actual expenses, which is in line with normal business practice.
Connected Transaction
Value Related parties (million baht)
Reasons
Ratchaburi Energy Company Limited EGAT 1. Power Purchase Agreement (PPA) (agreement Ratchaburi Energy Company Limited signed signed on 11th PPA with EGAT to sell and buy power from September 2006) the Natural Resource Enhancing Project Pra Tao, located in Sukhothai Province with 1.75 megawatts • In 2008, the total income from power sales was Baht 27.27 million • As of 31st December 2008, account receivables were Baht 6.75 million
27.71 Ratchaburi Energy Company Limited has to supply electricity produced from associated gas which is by-product of oil refining from Pratu Tao-A rig, located in Sukhothai Province to EGAT. Ratchaburi Energy Company Limited shall receive payment from EGAT according to the non - firm PPA, which is in line with normal business practice.
Relationships between Parties Engaged in Connected Transaction is are as Follows : 1. The Company and Ratchaburi Electricity Generating Company Limited 1.1 The Company holds 99.99 per cent share in Ratchaburi Electricity Generating Company Limited 1.2 Some of the Company’s executives are directors of Ratchaburi Electricity Generating Company Limited 2. The Company and Ratchaburi Energy Company Limited 2.1 The Company holds 99.99 per cent in Ratchaburi Energy Company Limited 2.2 Some of the Company’s executives are directors of Ratchaburi Energy Company Limited 3. The Company and Ratchaburi Gas Company Limited 3.1 The Company holds 99.99 per cent in Ratchaburi Gas Company Limited 3.2 Some of the Company’s executives are directors of Ratchaburi Gas Company Limited 4 The Company and Ratch Udom Power Company Limited 4.1 The Company holds 99.99 per cent in Ratch Udom Power Company Limited 4.2 Some of the Company’s executives are directors of Ratch Udom Power Company Limited 5 The Company and Ratchaburi Alliances Company Limited 5.1 Ratch Udom Power Company Limited, a subsidiary of the Company, holds 99.99 per cent in Ratchauri Alliances Company Limited 5.2 Some of the Company’s executives are directors of Ratchaburi Alliances Company Limited 6 The Company and Tri Energy Company Limited 6.1 Ratchaburi Gas Company Limited, which is a subsidiary of the Company, holds 50.00 per cent in Tri Energy Company Limited 6.2 Some of the Company’s executives are directors of Tri Energy Company Limited. 7. The Company and Ratchaburi Power Company Limited 7.1 Ratchaburi Alliances Company Limited, which is a subsidiary of the Company, holds 25.00 per cent in Ratchaburi Power Company Limited 7.2 Some of the Company’s executives are directors of Ratchaburi Power Company Limited 8. The Company and EGAT 8.1 EGAT is the major shareholder holds 45.00 per cent in the Company 8.2 Some of EGAT’s directors and executives are directors of the Company 9. The Company and Siam Ethanol Exports Company Limited 9.1 Ratchaburi Energy Company Limited, which is a subsidiary of the Company, holds 15 per cent in Siam Ethanol Exports Company Limited 9.2 Some of the Company’s executives are directors of Siam Ethanol Exports Company Limited. 10. The Company and SouthEast Asia Energy Limited 10.1 The Company holds 33.33 per cent in SouthEast Asia Energy Limited 10.2 Some of the Company’s executives are directors of SouthEast Asia Energy Limited 11 The Company and Chubu Ratchaburi Electric Services Company Limited 11.1 The Company holds 49.99 per cent in Chubu Ratchaburi Electric Services Company Limited 11.2 Some of the Company’s executives are directors of Chubu Ratchaburi Electric Services Company Limited 12 Ratchaburi Electricity Generating Company Limited and EGAT 12.1 Some of EGAT’s executives are directors of Ratchaburi Electricity Generating Company Limited 13 Ratchaburi Energy Company Limited and EGAT 13.1 EGAT is the major shareholder in the Company with 45.00 per cent stake 13.2 The Company holds 99.99 per cent in Ratchaburi Energy Company Limited 073
Management Discussion and Analysis 1. The Operating Performance. The Company has invested in several power plant projects in Laos People’s Democratic Republic (Lao PDR). Electricity from these projects is to be sold to Thailand under the Power Purchase Agreement (PPA) signed with EGAT. The progress of power plant projects are as follows
1.1 Hongsa Thermal Power Plant
On 11st December 2007, the Company entered into the Joint Development Agreement (JDA) with Banpu Power Limited, a subsidiary of Banpu Public Company Limited ; with the purpose of joint completing the development of Hongsa Thermal Power Plant in Hongsa, Xayaburi Province, Lao PDR as the Head of Agreement (Project Development Agreement) dated 18th December 2006 between the Government of the Lao PDR and Banpu Power Limited. The Company and Banpu Power Limited will have the same interests in the Hongsa Thermal Power Plant Project for 40% and in the Lignite Mining Project for 37.5%. The remaining interests of 20% and 25% in the Hongsa Thermal Power Plant Project and Lignite Mining Project, respectively are held by Lao Holding State Enterprise (LHSE), nominated by the Government of the Lao PDR. In addition, JDA was approved by the Government of the Lao PDR on 10th January 2008. In August 2008, the Company and Banpu Power Limited submitted letters to Electricity Generating Authority of Thailand (EGAT) to terminate the Tariff MOU dated 27th December 2007 so that the Company and Banpu Power Limited could
re negotiate the tariff to make it in line with the current project constructions costs. On 29th December 2008, the Company received formal letter from EGAT agreed with the termination of the Tariff MOU. The re negotiation process for the new tariff for the project is underway. On 5th February 2008, the Company entered into the Shareholders Agreement with LHSE and Banpu Power Limited to make arrangements for setting up Hongsa Power Company Limited and Phu Fai Mining Company Limited that the Company will have the share proportion of 40% and 37.50% respectively, in relation to operate the Hongsa Thermal Power Plant Project in Lao PDR.
1.2 The Nam-Ngum 3 Hydroelectric Power Plant On 26th April 2006, the Company, GMS Lao Company Limited (previously MDX Lao Company Limited) and Marubeni Corporation entered into an MOU on the joint project development of the Nam-Ngum 3 Hydroelectric Power Plant and on
18th December 2006, the Company, GMS Lao Company Limited and Marubeni Corporation entered into an MOU with EGAT in relation to the sales and purchases of power from Nam-Ngum 3 Hydroelectric Power Plant located in Xaysomboon Province,
Lao PDR. The period of power’s sales and purchases in this agreement shall be 27 years with the commercial operation date (COD) expected to be in 2013. This project has total generating capacity of 440 megawatts and the total project cost of approximately US Dollars 708 million. However, this MOU was expired on 18th June 2008, the re negotiation process for the new tariff for the project is underway. On 13th May 2008, the Company entered into the Shareholders Agreement with the other three shareholders which are GMS Lao Company Limited, Marubeni Corporation, and LHSE to form a company under the policies and laws of Lao PDR with the initial authorised share capital of approximately US Dollars 9 million, comprising 90,000 ordinary shares with a par value of US Dollars 100 per share. The Company will hold 25% of the company’s ordinary shares. The formed company will be established to engage in and pursue project management of the Nam-Ngum 3 Hydroelectric Power Plant Project.
1.3 Xe-Pian, Xe-Namnoy Hydroelectric Power Plant On 14th November 2008, the Company entered into Project Development Agreement with SK Engineering & Construction Company Limited, Korea Western Power Company Limited and the Government of the Lao PDR in order to develop Xe-Pian, Xe-Namnoy Hydroelectric Power Plant Project, located in Attapu and Champasak Provinces, Lao PDR. The
074
Project has total generating capacity of 390 megawatts.This is in accordance with JDA on 6th August 2007 with the proportion of investment of 25%.
1.4 Approval to Set-Up RATCH-Lao Services Company Limited
The resolutions of the Board of Directors’ meetings of the Company on 17th December 2007 and 28th April 2008 approved the establishment of RATCH-Lao Services Company Limited in Lao PDR in order to provide operation and maintenance services for power plant projects in Lao PDR. RATCH-Lao Services Company Limited will have registered capital of US Dollars 500,000, comprising of 500,000 ordinary shares with a par value of US Dollar 1 per share. The Company will hold 99.99% of the registered share capital with 20% paid up. Its establishment is progressing.
2. Management Discussion and Analysis Report According to Consolidated
Financial Statement Million Baht Revenue Cost of sales and expenses Net Profit Earnings per share (Baht)
2008 2007 43,801.85 46,072.34 37,308.95 40,242.94 6,492.90 5,829.40 4.48 4.02
Increase (Decrease) (2,270.49) (2,933.99) 663.50 0.46
% (4.93) (7.29) 11.38 11.38
2.1 Analysis of Income
Total revenues for the year 2008 were Baht 43,801.85 million, decreasing by Baht 2,270.49 million or 4.93 percent from Baht 46,072.34 million in the year 2007. The main reasons of this matter were as follows : 2.1.1 The electricity sales of Ratchaburi Power Plant for the year 2008 were Baht 42,182.54 million, decreasing by Baht 1,625.07 million or 3.71 percent from Baht 43,807.61 million in the year 2007. This main reasons were due to (1) Revenue received from the AP for the year 2008 was Baht 12,043.67 million, increasing by Baht 684.60
million or 6.03 percent from Baht 11,359.07 million in the year 2007 due to in the year 2008 only
Ratchaburi Power Plant Block 3 was shutdown for major overhaul, whereas, in the year 2007, three
Power Plants, Ratchaburi Thermal Power Plant Unit 1 and 2 and Ratchaburi Combined Cycle
Power Plant Block 2, were shutdown due to major overhaul. (2) Revenue received from the EP for the year 2008 was Baht 30,138.87 million, decreasing by Baht
2,309.67 million or 7.12 percent from Baht 32,448.54 million in the year 2007. This mainly due to
the decreased in fuel consumption from the previous year which result from in the year 2008 Ratchaburi
Thermal Power Plant Unit 1 and 2 were reserved shutdown, the details were as follows : Ratchaburi Thermal Power Plant
Period of Reserve Shutdown
- Unit 1
23th Jun. 08 - 2nd Jul. 08, 2nd Nov. 08 – 31st Dec. 08
- Unit 2
21st May 08 – 31st Dec. 08
2.1.2 The management service income for the year 2008 was Baht 121.78 million, increasing by Baht 72.45 million or 1.47 times from Baht 49.33 million in the year 2007. The main reason was the Power Plants of Ratchaburi Power have started their commercial operation since 1st March 2008, the Company received development fee from Ratchaburi Power Limited more than previous year in the amount of Baht 63.21 million. 075
2.1.3 Interest income for the year 2008 was Baht 422.52 million, decreasing by Baht 158.01 million or 27.22 per cent from Baht 580.53 million in the year 2007. This mainly was due the interest rate from cash at bank and investment in financial instrument was lower than the previous year, which depend on money market situation at present. 2.1.4 In the year 2007, the Company received insurance compensation from fire cause at the Flue Gas Desulfurisation of Ratchaburi Thermal Power Plant Unit 1 in the amount of Baht 707.77 million. 2.1.5 Share of profit of joint ventures for the year 2008 was Baht 931.70 million, increasing by Baht 139.07 million or 17.55 per cent from Baht 792.63 million in the year 2007. The main reason was from the operating performance of two joint ventures as follows : (1) Ratchaburi Power Company Limited The Company recorded 25 per cent share of profit in Ratchaburi Power Company Limited for the year
2008 increasing by Baht 342.45 million from the previous year. This mainly was the Power Plant Block
1 and 2 of Ratchaburi Power Company Limited have started their commercial operation since
1st March 2008 and 1st June 2008 respectively. According to the Company’s share proportion,
Ratchaburi Power Company Limited recorded losses on foreign exchange rate in the amount of Baht
204.98 million in the year 2008, whereas, it recorded gains on foreign exchange rate in the amount of
Baht 63.10 million in the year 2007. However, the operating income of Ratchaburi Power Company
Limited for the year 2008 before losses on foreign exchange rate increased in the amount of Baht
610.53 million from the previous year. (2) Tri Energy Company Limited The Company recorded 50 per cent share of profit in Tri Energy Company Limited for the year 2008
decreasing by Baht 234.47 million from the previous year. This resulted from Tri Energy Company
Limited paid corporate income tax for the Company’s share proportion in the amount of Baht 33.56
million, ending its tax exemption from the Board of Investment of Thailand therefore, Tri Energy
Company Limited has to pay Corporate Income Tax since 1st July 2008. According to the Company’s share
proportion, Tri Energy Company Limited recorded losses on foreign exchange rate in the amount of Baht
46.90 million in the year 2008, whereas, it recorded gains on foreign exchange rate in the amount of Baht
162.60 million in the year 2007. However, the operating income of Tri Energy Company Limited before
losses on foreign exchange rate decreased in the amount of Baht 24.97 million from the previous year.
2.2 Analysis of Cost of Sale and Expenses
Cost of sale and expenses for the year 2008 totalled Baht 37,308.95 million, decreasing by Baht 2,933.99 million or 7.29 per cent from Baht 40,242.94 million in the corresponding period in the year 2007. The underlying reasons were as follows : 2.2.1 Cost of sale for the year 2008 was Baht 35,158.58 million, decreasing by Baht 2,963.67 million or 7.77 percent from Baht 38,122.25 million in the year 2007. The main reason were (1) Fuel costs for the year 2008 was Baht 29,923.26 million, decreasing by Baht 2,348.07 million or 7.28
percent from Baht 32,271.33 million in the year 2007. The main reason was due to in the year 2008
Ratchaburi Thermal Power Plant Unit 1 and 2 were reserved shutdown as referred in item 2.1.1 (2). (2) The maintenance and spare parts expenses for the year 2008 were decreasing by Baht 413.77 million
and Baht 276.76 million respectively, due to the Ratchaburi Power Plant were shutdown for major
overhaul less than the previous year as referred in item 2.1.1 (1). 2.2.2 Interest expenses for the year 2008 was Baht 1,293.37 million, decreasing by Baht 71.17 million or 5.22 per cent from Baht 1,364.54 million in the year 2007. The main result of such decrease was quarterly repayment. 076
2.2.3 Corporate Income Tax for the year 2008 was Baht 217.35 million, increasing by Baht 120.31 million or 1.24 times from Baht 97.04 million in the year 2007. The main reason was due to the Ratchaburi Thermal Power Plant Unit 1 and 2 have ended its tax exemption from the Board of Investment of Thailand. Therefore, Ratchaburi Electricity Generating Company Limited has to pay corporate income tax since 31st October 2008.
3. Analysis of Financial Status Current Asset Non Current Assets Total Assets
As at 31st Dec 08 As at 31st Dec 07 19,520.08 21,070.98 50,152.36 49,229.95 69,672.44 70,300.93
Million Baht Increase (Decrease) (1,550.90) 922.41 (628.49)
% (7.36) 1.87 (0.89)
3.1 Analysis of Assets
As at 31st December 2008 the total assets was Baht 69,672.44 million decreasing by Baht 628.49 million from the year 2007 (Baht 70,300.93 million). The main reasons were as follows : 3.1.1 A decrease in current assets by Baht 1,550.90 million due to cash and cash equivalents, short-term
investments and investment in promissory notes and bills of exchange was decreased by Baht 964.56 million and trade receivable decreased by Baht 718.01 million, due to the decreased in the EP as referred in item 2.1.1 (2). 3.1.2 Non-current assets increased by Baht 922.41 million due to (1) Interests in joint ventures increased by Baht 1,685.98 million due to in the year 2008 the Company
recorded the operating result of joint venture as follows : - Recorded share of profit in Tri Energy Company Limited increasing by the amount of Baht 224.10
million and the adjustment share of profit in Tri Energy Company Limited in the amount of Baht
191.84 million according to the announcement of Federation of Accounting Professions relating to
amendment of TAS 43 (Revised), Business Combinations, which requires the Group to adjust
negative goodwill from business combinations which is brought forward as of 1st January 2008 with
retained earnings brought forward. - Additional investment and recorded share of profit in Ratchaburi Power Company Limited increasing
by Baht 488.75 million and 313.70 million respectively. - Additional investment in SouthEast Asia Energy Limited in the amount of Baht 486.44 million.
Whereas the Nam-Ngum 2 Hydroelectric Power Plant Project is under construction, the Company
recorded share of loss in the year 2008 in the amount of Baht 17.12 million. (2) Other assets increased by Baht 1,487.47 million include the amounts in relation to the Hongsa Thermal
Power Plant Project in accordance with JDA and other agreements amounting to US Dollars 20 million
(equivalent to Baht 665.51 million). In additions, during the year 2008, The Company recorded a
Hongsa Thermal Power Plant development costs was Baht 454 million and a deferred operation and
maintenance charge increased by Baht 312.44 million. (3) Net property, plant and equipment decreased by Baht 2,492.03 million due to the depreciation of the
period in the amount of Baht 2,745.80 million, whereas in 2008 an increasing in construction in
progress in the amount of Baht 236.70 million. 077
3.2 Analysis of Liabilities and Shareholders’ Equity
Current Liabilities Non Current Liabilities Total Liabilities Shareholders’ Equity Total Liabilities and Shareholders’ Equity
As at 31st Dec 08 As at 31st Dec 07 9,058.12 10,006.71 19,639.78 22,814.42 28,697.90 32,821.13 40,974.54 37,479.80 69,672.44 70,300.93
Million Baht Increase (Decrease) (948.59) (3,174.64) (4,123.23) 3,494.74 (628.49)
% (9.48) (13.92) (12.56) 9.32 (0.89)
As at 31st December 2008 liabilities and shareholders’ equity were Baht 69,672.44 million decreasing by Baht 628.49 million from the year 2007 (Baht 70,300.93 million). The main reasons were as follows : 3.2.1 Current liabilities decreased by Baht 948.59 million. The main reasons were due to (1) Trade payable decreased by Baht 1,210.83 million due to the decreased in fuel consumption in the
period of November and December 2008 as referred in the item 2.1.1 (2). (2) Other current liabilities decreased by Baht 881.78 million, the main reason was the Company recorded
accrued expenses of the Joint Development Right Fee on the participation of the Hongsa Thermal
Power Plant Project amounting to US Dollars 19 million (equivalent to Baht 666.57 million) and accrued
Corporate Income Tax increased by Baht 136.14 million which was result from the ending of tax
exemption of Ratchaburi Thermal Power Plant Unit 1 and 2 from the Board of Investment of Thailand
on 30th October 2008. 3.2.2 Non-current liabilities decreased by Baht 3,174.64 million. The underlying factor was the repayment of debenture and long-term loan in the year. 3.2.3 Shareholders’ Equity increased by Baht 3,494.74 million. The main reason was due to (1) Retained earnings increased from the operating result of the year 2008 with the net profit amounting
to Baht 6,492.90 million and the adjustment of negative goodwill comply with TAS 43 (Revised) as
referred in item 3.1.2 (1) in the amount of Baht 191.84 million (2) The Company’s shareholders approved the allotment of the Company’s profit for the dividend payment for
the operating results in the second half year of 2007 in the amount of Baht 1,595.00 million, in
accordance with the Annual General Shareholders’ Meeting on 4th April 2008, which was paid on
30th April 2008. (3) The Board of Directors of the Company held on 18th August 2008, passed the resolutions to approve
the interim dividend payment for the operating results for the first six month period of 2008 in the
amount of Baht 1,595 million (Baht 1.10 per share), which was paid on 12th September 2008. The total shareholders’ equity in the amount of Baht 40,974.54 million comprises of authorized share capital (issued and paid-up share capital) Baht 14,500 million, premium on share capital Baht 1,531.78 million, legal reserve Baht 1,450 million and unappropriated retained earnings Baht 23,492.76 million.
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4. Significant Financial Ratios of the Year 2008 and 2007.
1) Current Ratio 2) Ratio of Net Profit 3) Rate of Return on Equity 4) Rate of Return on Assets 5) EBITDA 6) Ratio of EBITDA to Assets 7) Debt to Equity Ratio 8) Debt Service Coverage Ratio 9) Book Value per Share 10) Earning per Share
(Times) (%) (%) (%) (Million Baht) (%) (Times) (Times) (Baht) (Baht)
5. Analysis of Cash Flows As at 31 Dec 08 As at 31 Dec 07 6,664.44 6,740.89 3,047.05 (1,936.27) (6,804.85) (6,184.46) st
Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Net increased (decreased) in cash and cash equivalents Add Beginning balance Ending balance
2,906.64 1,744.65 4,651.29
st
(1,379.84) 3,124.49 1,744.65
2008
2007
2.15 14.82 16.55 9.28 10,876.44 15.54 0.70 2.18 28.26 4.48
2.11 12.65 16.15 8.19 10,172.99 14.29 0.88 2.24 25.85 4.02
Million Baht Increase (Decrease) (76.45) 4,983.32 (620.39) 4,286.48 (1,379.84) 2,906.64
% (1.13) 257.37 (10.03) 310.65 (44.16) 166.60
The ending balance of cash and cash equivalents of the Company and its subsidiaries as at 31st December 2008 was Baht 4,651.29 million with an increase of Baht 2,906.64 million or 166.60 per cent, from Baht 1,744.65 million on 31st December 2007. The details are summarized below : 5.1 Net cash provided by operating activities decreased in the amount of Baht 76.45 million. This was due to lower in changing in operations assets and liabilities from the previous year decreased the cash flow by Baht 1,150.28 million according to the reduction of fuel consumption in the year 2008 was decreased as referred in item 2.1.1 (2) which caused the change in trade receivable and the trade payable decreased in the amount of Baht 580.13 million and Baht 522.78 million respectively. However, the increasing in operating result from the previous year increased cash flow in the amount of Baht 964.90 million. 5.2 Net cash payments from investing activities increased in the amount of Baht 4,983.32 million. The main reason was a maturity of investment in financial product for the year 2008 in the amount of Baht 4,851.66 million. 5.3 Net cash payment in financing activities decreased in the amount of Baht 620.39 million. The main reason was in the year 2008 the net repayment for the borrowed long-term loan from financial institution and debenture increased in the amount of Baht 476.50 million from the previous year. In addition, the cash paid for dividends to shareholders was increased by Baht 143.89 million from the previous year. 079
Good Corporate Governance Report The Board of Directors has been strongly committed to good corporate governance practice and has adopted the “Corporate Governance Policy” since 2003 as a guideline for the Company’s Management with an aim to achieve sustainable growth. The policy has been introduced to the Company’s Management and employees at all levels, as well as published on the Company’s website. The policy is reviewed on yearly basis. The Company is confident that the policy remains an appropriate guideline at present. The policy is based on the six key pillars of the good corporate governance principles, including Accountability, Responsibility, Equitable Treatment, Vision to Create Long Term Value, Promotion of Best Practice and Social and Environment Awareness. The Company has included the good corporate governance guideline in its vision, mission and policy in order to ensure that the policy is concretely implemented. The Company has also established the “Corporate Governance Working Committee” as a mechanism to encourage participation, enable the Company to monitor, supervise, improve and introduce the policy from top management to operating level employees, and to learn about problems, obstacles and suggestions from employees in all levels, as well as to evaluate the implementation effectiveness.
In 2008, the Company followed the guidelines recommended by the Stock Exchange of Thailand (SET) as follows:
1. Shareholders’ Right The Board of Directors adheres to the “Good Corporate Governance Policy” which was written and announced in 2007. The policy is disseminated through the Company’s internal communications channel and website. It is used as a guideline in treating its shareholders who are the owners of the business. This reflects the Company’s respect of the basic rights of shareholders, including, the right to register as the share owner, share transfer, the right to receive accurate, adequate and timely information and significant information about the Company, the right to attend the shareholders’ meeting, the right to appoint or terminate a director, and the right in profit sharing of the Company. The Company ensures that the shareholders receive the aforementioned rights and does not take any action that may infringe or eliminate the shareholders’ right.
1.1 Information Disclosure
To ensure sufficient information is delivered equally to shareholders, which is one of their basic rights, the Board of Directors has arranged for correct, adequate, timely, and transparent disclosure of quality information for all shareholders. The Company provided the information in accordance with the SET’s regulation on information disclosure of listed company within the required period. The information was submitted to the Securities and Exchange Commission of Thailand (SEC) and the Stock Exchange of Thailand (SET) through SET’s ELCID. This includes 20 periodic reports, such as annual and quarterly financial statements, annual report, and Form 56-1; 22 non periodic reports, such as date, time and place for annual shareholders’ meeting, meeting agenda, the date of closing of the Company’s registration book for shareholders to receive the right to receive dividend, report on resolutions made at the Annual General Shareholders’ Meeting, the appointment of chairman and members of the Audit Committee and independent directors, the report on the operation commencement of the Ratchaburi Power Project, the report on the agreement signing to develop the Nam Ngum 3 hydroelectric Power Plant, the sales of ordinary shares of Siam Ethanol Exports Company Limited, the retirement of the Managing Director and the appointment of the new Managing Director.
080
In the past year, the Company has strictly followed the regulations on significant information disclosure and has never been punished for not disclosing or delayed disclosure of the required information. To eliminate limitation to access to the Company’s significant information, the Board of Directors and the Management are committed to providing sufficient communications channels, other than those required by laws, for shareholders, investors, interested persons and the general public to have easy access to the most updated information about the Company. The website www.ratch.co.th contains information both in Thai and English. The information is categorized in different sections for easy access and searching. The number of visits to the Company’s website per month is 10,000 on average. The Company arranged four analyst meetings, organized press conference to announce the Company’s financial performance on quarterly and annual basis, and distributed 28 press releases to media. The Company arranged 54 overseas road shows to meet with investors in other countries, as well as shareholders, institutional investors and analysts’ visit to Ratchaburi Power Plant, which is the Company’s core business. In 2008, two visits were organized in May with 115 participants.
1.2 Shareholders’ Meeting
The Board of Directors fully values and respects shareholders’ rights by encouraging the shareholders, who are regarded as the Company’s owners, to participate in the shareholders’ meeting in order that they are updated of the Company’s performance, involved in significant decision making, and audit the performance of the Company’s Board of Directors and Management. The Company has arranged shareholders’ meeting in accordance with related laws and the AGM Checklist prepared by Thai Investors Association, the Listed Companies Association and the Securities and Exchange Commission of Thailand (SEC). The Company and its Management take this as their responsibility to ensure that the shareholders’ meeting is transparent, fair and equally benefits all shareholders and stakeholders. In 2008, the Company held one shareholders’ meeting “the 2007 Annual General Shareholders’ Meeting” on 4th April 2008, at 10.00 a.m., at Vibhavadi Ballroom, the Sofitel Centara Grand Bangkok, located at 1695 Paholyothin Road, Chatuchak, Bangkok. The meeting venue is within easily accessed through public transport system, which provides great convenience for shareholders to travel to the venue. The place is big enough to accommodate a large number of participants. The Company fully provided meeting facilities, including audio-visual equipment to support presentation on each agenda, computer and barcode system that facilitates fast registration and accurate and transparent ballot. In the shareholders’ meeting, registration was open at 8.00 a.m., two hours before the meeting time. Shareholders who arrived after the meeting began could register until the meeting adjourned. The Company did not limit the shareholders’ right to attend the meeting and vote on the agenda under consideration and that resolution was not yet made. The Company also provided opportunity for shareholders to decide whether to attend the entire meeting or to attend the meeting for some specific agenda. In the 2007 Annual General Shareholders’ Meeting, 815 shareholders registered before the meeting began, and after that there were more shareholders registering to attend the meeting. When the meeting adjourned, the total number of shareholders registered is 973. The Company also set simple process for checking identification document that shareholders have to present to attend the meeting as informed earlier in the meeting notice.
081
At the meeting, the Chairman of the Board of Directors acted as the meeting’s chairman according to the Company’s Articles of Association. Two directors were engaged in other businesses and could not attend the meeting. The total number of directors attending the meeting is 11 out of 13 members, accounting for 82.30 per cent. The Chairman of the Board of Directors, Managing Directors and the Chairman of the Audit Committee also attended the meeting. Others attending the meeting to provide more information and answer questions are the Company’s entire Management team, auditor and legal advisors.
1.2.1 Prior to the Meeting
The Company provided sufficient and timely information that assist shareholders’ decision prior to the meeting. After the Board of Directors resolved to organize a shareholders’ meeting, the Company informed the shareholders of the date, time, place and agenda together with details via SET’s ELCID before 9.00 a.m. of the next working day after the Board made decision. The Company advertised the Annual General Shareholders Meeting schedule in Thai-language newspapers on 23rd-25th March 2008 and in English-language newspapers on 26th-28th March 2008, which are three-consecutive-day advertisement and no less than three days before the meeting date as required by the Company’s Articles of Association. The Company delivered to the shareholders the meeting notice to inform them of date, time, meeting place together with a map, meeting agenda which is arranged according to their priority, background, reasons and key issue of each agenda tabled for consideration or acknowledgement. The information included the Board of Directors’ opinion on each agenda to support shareholders’ decision. The Company also delivered to the shareholders the related document as follows : (1) The Company’s rules related to shareholders’ meeting which enable the shareholders to clearly
understand meeting rules, proxy appointment, voting rules, directors’ qualification and retiring,
directors’ remuneration, dividend payment, profit allocation, auditor appointment and auditing fee (2) All documents that shareholders have to present to attend the meeting, proxy appointment,
registration, and voting rules (3) Previous meeting report that shareholders will have to rectify (4) The Company’s annual report which contains information about the Company’s operation in the
past year and future project, financial statements and notes, and auditor’s report (5)
Profile and brief information of nominees for director election, including information about
shareholding status, director or management level position held in other listed companies,
companies or other business, the relationship of the nominee, who is an independent director, with
the company, definition of the Company’s independent director. In 2007, the Company proposed to
the meeting to appoint new independent directors to replace those retired in rotation of office.
(6)
Proxy appointment, all three forms, as designed by the Department of Business Development. Form A
is a simple one. Form B is a proxy appointment that lists specific instructions for the proxy. Form C
is a proxy appointment that is used only when the shareholder is a foreign investor with a custodian
in Thailand. In 2007, the Department of Business Development allowed a shareholder to appoint up
to three proxies. However, only one person can represent the shareholder at the shareholders’
meeting.
082
The three proxy forms are prepared in accordance to the official requirement. Shareholders can also
download the proxy appointment form from the Company’s website. In addition to the proxy appointment form designed by the government, the Company also provided opportunity for the shareholders to prepare their own form as appropriate. In the proxy appointment form attached to the meeting notice, the Company proposed three independent directors and Managing Director with their conflict of interest status on each concerned agenda for shareholders to appoint as their proxy to attend the meeting and vote on their behalf. Their profiles can be studied from the Annual Report. In 2008, 75 shareholders assigned the Company’s independent directors as their proxy while 24 shareholders assigned the Managing Director as their proxy. Shareholders who could not attend the meeting can assign representatives to attend the meeting and vote on their behalf. The Company has a policy to protect shareholders’ right and encourage shareholders to attend the shareholders’ meeting, which are shareholders’ basic rights. As a result, the number of shareholders attending the meeting has been increasing. Shareholders representing 85.84 per cent of total shares offered attended the 2007 Annual General Shareholders’ Meeting compared to 73.90 per cent in 2003. The Company provided sufficient time for shareholders to study information and document prior to the meeting. The notice to the 2007 shareholders meeting and related document, which are the same as those sent to shareholders by post mentioned above, were also published on the Company’s website since 3rd March 2008, a month before the meeting. The Company also assigned the Thailand Securities Depository Company Limited, which is the Company’s share registrar, to distribute the 2007 shareholders meeting notice to all shareholders on 20th March 2008, no less than 14 days prior to the meeting date as required by law. Last year, the Company has adopted the SET’s guideline encouraging listed companies to offer opportunity for minor shareholders to propose meeting agenda and nominate persons for director election in advance. The Company published an invitation to the shareholders through ELCID and the Company’s website on 20 th November 2007, providing clear details about criteria, method, process and channel of agenda proposing. The announcement was published more than one and a half month time (during 20th November and 31st December 2007), giving the shareholders sufficient time to consider and ensuring transparent and the real benefit to the Company. However, no one nominate a director, and one person proposed an agenda but the Board of Directors did not include it in the meeting agenda because it does not meet the Company’s criteria. The Board of Directors also set other agenda (if any) to open opportunity for shareholders to propose other matters to the meeting according to the Company’s Articles of Association. Other agenda must be proposed by shareholders whose combined number of shares must be no less than one third of the total share offered. In this meeting, however, there was no other agenda proposed for consideration but some suggestions as recorded in the meeting report. Realizing the importance of quality, accurate and adequate information disclosure, the Company informed the shareholders in the meeting invitation and on its website that they were encouraged to ask questions or asked for more information about the topics as stated in the meeting agenda, or provided suggestions and opinions that are useful for the Company’s operation prior to the meeting date through post, fax and email to corporatesecretary@ratch.co.th. The Company would then clarify or provide additional information at the meeting. In the 2007 Annual General Shareholders’ Meeting,
no shareholders sent in questions or suggestions to the Company prior to the meeting. The Board of Directors and the management realized their duties of not infringing or limiting shareholders’ right. In every ordinary shareholders’ meeting, the Company has never informed the meeting of additional important information or added agenda or changed critical information without prior notice. The Chairman of the Board who acted as the
083
chairman of the meeting controlled the meeting process in the same order as informed in the meeting notice without no agenda switching. The Chairman of the meeting also opened full opportunity for the shareholders to ask the Board of Directors and the Management questions related to the meeting agenda, and encouraged additional agenda (if any), to offer opportunities for shareholders to ask questions about the Company’s operation as well as express their opinion and make suggestions on the meeting agenda prepared earlier by the Board of Directors.
1.2.2 During the Meeting
At the beginning of the 2007 Annual General Shareholders’ Meeting the chairman of the meeting announced the quorum and assigned a Company’s employee to record the meeting, introduced the directors, Management, auditor and legal advisors attending the meeting. The meeting chairman also declared all the meeting procedures including vote counting to meet with the shareholders’ meeting best practices of listed companies designed by the SET and to ensure that all shareholders clearly understand all the details as earlier informed in the meeting notice. The chairman also informed the meeting of voting rules, including separate ballots for each agenda for each shareholder that each shareholder already received when register. Voting process was made simple. The chairman asked the meeting to raise hands if disagree or do not wish to vote in order that the Company’s staff members would collect their ballots. Computerized and barcode systems were used in vote counting. The chairman also informed the meeting that the Company invited a representative from its legal advisor to act as an independent third-party inspector to ensure the meeting was transparent and complied well with the laws and the Company’s Articles of Association, to check other process, including checking document presented by the shareholders or their proxy, the quorum, conflict of interests who must not exercise their voting rights; to ensure that the vote counting process complied with the Company’s Articles of Association and the rules announced by the chairman; and to ensure that all ballots were collected from all shareholders attending the meeting and that meeting resolutions and voting results counting were correct. During the Annual General Shareholders’ Meeting, the chairman conduct the assembly according to the orders that were notified earlier in the meeting’s agenda. In the 2007 Annual General Shareholders’ Meeting, the agenda proposed were abided by laws which the Company’s Board of Directors and executives did not propose any extra agenda for special consideration. Each of the agenda was started by the detailed background and significance information presented by the Management to shareholders following by the proposal to the meeting. After full information was provided for each agenda, the meeting chairman allocated appropriate, sufficient and equal time for discussions and encouraged the meeting attendants to ask questions and make useful suggestions on related matters. The chairman of the meeting, chairmen of subcommittees, directors, Managing Director and the Management answered questions and clarified all issues discussed. Before the end of each agenda, the chairman reported voting results by dividing into “agree”, “disagree” and “abstention” votes. In each agenda, the Company provided ballots for each shareholder. A computerized system was used to provide convenience for vote counting. Each agenda is voted and considered separately. The director election and remuneration are treated as two different agendas and are voted separately. For new director election, the voting was done one by one. The Company provided a meeting evaluation form to collect opinions and recommendations from the meeting attendants. The information collected is used for further improve the organization of shareholders’ meeting for transparency, efficiency and benefits of both the Company and shareholders.
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1.2.3 After the Meeting
The Company submitted to the SET the resolutions of the 2007 Annual General Shareholders’ Meeting, stating voting results of each agenda with details of the agree, disagree and abstention votes, and their percentage. The results were documented and submitted to the SET by post and through the SET’s ELCID on the same day after the meeting ended. The 2007 Annual General Shareholders’ Meeting minutes were written recording the essence of each agenda, the summary of questions by the shareholders and clarifications by the Board of Directors and Management, the recommendations from the meeting, and the meeting resolution, including detailed voting results in all categories. The Company submitted the complete meeting minutes signed by the chairman of the meeting to the SET, the SEC and the Registrar (the Department of Business Development) for reference. The minutes were published on the Company’s website on 11th April 2008, before the 14-day deadline required by law, to offer opportunities for shareholders to express their opinions without waiting until the next meeting. Shareholders did not ask the Company to amend, add or adjust the minutes.
2. Equitable Treatment of All Shareholders The Company and the Management realized the duty of maintaining equitable treatment of all shareholders, regardless of major or minor shareholders, and Thai or foreign investors as prescribed in the Company’s Shareholders Policy and in the SET’s regulations for the listed companies. The Company supervised and ensured that shareholders are equally treated and their basic rights are protected. Shareholders, who are the owners of the Company according to their shareholding proportion, also have the right to profit sharing. Dividend paid to the shareholders is, therefore, based on the Company’s performance. For the year 2007,
the Company paid Baht 2.10 dividend per share, representing 52.24 per cent of the net profit after deduction of reserves by law and other reserves. To protect shareholders’ basic right to have equal access to the Company’s information, the Company has published
the information on its website as an alternative communications channel, in addition to following information disclosure regulations set by the SEC and the SET. The Company’s website contains information in both Thai and English languages and is constantly updated. The information published on the website includes the Company’s performance announcement, media releases, stock analysts’ meeting, and shareholders’ visit to the Company as stated in the Shareholders’ Right section. The Company strictly followed proxy appointment guidelines set by government authorities and provided the proxy appointment form to shareholders. Shareholders may use other proxy appointment form or create their own form as appropriate. The Company also nominated independent directors and the Managing Director for shareholders, who cannot attend the meeting, to appoint as their proxy to attend the meeting and vote on their behalf. The Company provided different ballots for each agenda. For director election, voting was done one by one. Details about the shareholders’ policy, procedures and process related to organizing the 2007 Annual General Shareholders’ Meeting, which give much importance in equitable treatment of all shareholders in pre, during and post meeting, as clarified in the Shareholders’ Right section.
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Allowing minor shareholders propose topics for the Board of Directors to include in the meeting agenda and nominate
a director in advance for last year shareholders’ meeting is another measure launched to ensure equitable treatment of shareholders. The Board of Directors has formulated measures to prevent Directors and the management from using insider information for abusive self-dealing, which takes advantage of shareholders. The Board of Directors has formulated written guidelines for internal information keeping and prevention of internal information usage. The guidelines were announced in 2000 and is effective today. Under the guidelines, the Company prohibits directors, executives, employees, temporary staff, and their spouses and children who have not attained manhood from using the Company’s internal information for their own or others’ interests. In the past year, the directors and the Management acknowledged and strictly followed the regulations set by
the SEC and the SET regarding the report of their holding movements of the Company’s shares. The Board of Directors set up a regular agenda declaring the changes of the holding of the Company’s shares of its Directors and executives, their spouses, and children who have not attained manhood. In 2003, the Company also announced that it required its executives, employees, and temporary staff to directly report any movements in the Company’s shares of themselves, their spouses, and children who have not attained manhood to the Company’s Managing Director within three working days after the changes happen. The announcement continues to be effective until now. With strong commitment to equitable treatment of shareholders, the Board of Directors tried to maintain transparency in conflict of interest management, especially on transaction between the Company and stakeholders or related persons. The Board of Directors set guidelines prohibiting concerned Directors or executives who have conflict of interests with the transaction from being involved in decision making process concerning such transaction. A Company’s regulation on the Board of Directors stated that any directors having conflict of interest in particular projects do not have the right to vote on the matter. The regulation has been strictly implemented. In the past year, the Board of Directors convened to consider the Joint Development Agreement (JDA) with Hongsa Power Company Limited and Phu Fai Mining Company Limited of the Hongsa Thermal Power Plant Project in Lao PDR, Mr.Chanin Vongkusolkit, a Director, who is a representative of Banpu Public Company Limited which has 100 per cent stake in Banpu Power Company Limited have conflict of interest on this project,
did not attend the meeting. The Company acknowledged the connected transaction guidelines formulated by the Audit Committee in 2003 which remains effective at present. In brief, when an agreement or any commitment, which is considered connected transaction,
is made, the Management shall seek agreement from the Audit Committee before implementation. The Internal Audit Division, which acts as the Secretary of the Audit Committee, is required to submit connected transaction reports to the Audit Committee for acknowledgement. The Audit Committee then reported them to the Board of Directors. In addition, the Company strictly follows the SEC and SET’s regulations on disclosure of information related to connected transaction. The Company has strictly followed the regulations on connected transactions and the disclosure enforced by the Capital Market Supervisory Board and the SET; for examples the disclosure about the connected transaction on the entering into the Shareholders Agreement for the Hongsa Thermal Power Plant Project in Lao PDR.
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3. Roles of Stakeholders
3.1 Stakeholders Policy
Since the establishment of the Company in 2000, the Board of Directors has fully respected the stakeholders’ rights. Policy and guidelines were made in writing, called Code of Conduct which has been strictly adhered to by the directors, executives and employees. The Code of Conduct comprises three documents, namely the Corporate Code of Conduct, Code of Ethics for Executives and Code of Ethics for Employees. The full copies of the Code of Conduct are published on the Company’s website. The Code of Conduct covers the Company’s responsibilities towards various groups of stakeholders including, shareholders, business partners, creditors, competitors, employees, the public and environment. The full copies of the document are published on the Company’s intranet and website. When the Company announced the Good Corporate Governance Policy in 2003, the stakeholders care principle was incorporated into the policy for Directors, executives and employees to use as guidelines. It is stated in the policy that the Company shall “promote and supervise to ensure that legal rights of stakeholders, such as customers, employees, business partners, shareholders, investors, creditors, competitors, independent auditor, government and communities in which the Company operates its business, are well protected and treated”. Since 2007, the Board of Directors has also prepared and implemented specific policy for each group of stakeholders, which has been published on the Company’s internal communication channel and on its website. The policies include the Shareholders Policy, Employees Policy, and Social and Environment Policy. In 2009, the Company plans to prepare policy on other stakeholder groups-creditors and partners (including business partners, suppliers and subcontractors). Based on the policies on the three groups of stakeholders announced by the Board of Directors, the Company took various actions in 2008 as follows: Shareholders:
Implementation of activities under the Shareholders’ Policy related to basic right protection; equitable treatment
of shareholders, quality information disclosure; encouraging shareholders to attend shareholders’ meeting to
participate in decision making on significant matters and to acknowledge the Company’s operations and
activities, as well as to monitor the Board of Directors and the Management’s performance; implementation of
measures to prohibit the use of insider information for personal interest of the Board of Directors or the
Management to protect shareholders’ benefit; and ensuring no infringement of shareholders’ right. Details are as
reported in the Good Corporate Governance’s Section 1: Shareholders’ Right and Section 2: Equitable Treatment of
Shareholders.
In 2008, there was no complaint about the shareholders right infringement or the insider trading of the Board
of Directors and executives. Employees:
The Company has highly valued its employees and in 2008 upgraded the responsible unit to the “Human
Resources Division”. The Company’s Employees Policy announced by the Board of Directors is used as
guidelines. Human resources are viewed as the most valuable assets and a significant factor driving the
Company to achieve its goal. The Company, therefore, carefully recruits capable and experienced persons and
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constantly develops their skills to ensure they have sufficient capability to support the Company’s sustainable
growth. The Company provides appropriate employee’s benefits and remuneration, good and safe work
environment in order that the employees have good security and confidence to dedicate and contribute for good
performance under their duty and responsibility.
In consistently and systematically promoting skills and competencies, the Company provided specific training
plan for each position. The Company provided internal and external trainings and supported seminars within and
outside the country.
The Company has developed the Human Resources Information System to enhance efficiency in human
resources operation. Systematic performance appraisal is in place where employees’ performance is appraised
every six months. Supervisor and the employee have to work together in setting goal. Appraisal result is taken
into account when considering annual pay rise.
In addition, the Company ensures that the position structure include clear career path development to help
employees to grow to their full capability.
To encourage employees to participate in organizational development, the Company arranged for the election
of Employees’ Welfares Committee as required by law, as well as developed another internal communication
channel, the Intranet which will be used to communicate policy and information throughout the organization
while receiving opinion and useful recommendation from employees. The Company also organizes regular
internal meetings of employees in all levels and responsibilities, as well as a meeting between the Management
and employees.
In the past year, there was no conflict or dispute between the Company and its employees and no accident that
is too serious that employees cannot go to work. In September 2008, Ratchaburi Electricity Generating Company
Limited won an Outstanding Organization Award-Labor Relations and Welfares, in the small enterprise with no
labor union category. In November 2008, Ratchaburi Power Plant also celebrated an occasion that it has achieved
2,500,000 hour-man with no accident.
Society and Environment
The Social and Environmental Policies are combined. The Board of Directors takes into account issues that have
direct impact on the Company’s business and operations. The policy includes guideline for the Company’s
practices towards community in which the Company is operating, and the public at large, which finally result in
the Company’s sustainable growth.
The Company strongly values community’s good understanding towards the Company. Therefore, the Company
is committed to providing information and fact, and listening to constructive and useful opinions to ensure
mutual benefits of the Company, concerned government agencies and people in community in which the
Company operates its business. This is to ensure “good neighbor” environment as announced by the Board of
Directors. The Company established the “Ratchaburi Power Plant Communication Center”. The Center is
responsible for providing information to ensure that people in the community has clear and correct understanding
of electricity generating process and the Company’s business philosophy which centers in mutual benefits.
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Community participation guideline is included in the Company’s community relations plan which covers all
operational details. The Company conducts a survey to collect primary information about the area and to study
the community’s structure, economic and social environment. Such information is considered when drafting
the community participation plan and key messages for all communications and activities to ensure community’s
good understanding of the Company’s projects. Public hearings will be held to gauge community’s opinions.
In 2008, the “Community Forest” was made a key activity under the corporate social responsibility (CSR).
The Company also initiated the Kla Yim “Love the Forest and the Community” Project which also comprised
various activities, such as community forest competition under which the winner receives a trophy from HRH
Princess Maha Chakri Sirindhorn, employee volunteers to grow forest and a youth program where participants
are educated about community forests and preservation.
In 2008, there was no complaint about the impact from the Company’s operation on society and environment.
3.2 Channels to Communicate with Stakeholders
Stakeholders can communicate directly with the Company or via provided channels, namely the Company’s website through which they can contact the Company’s Secretary, Public Relations Department, and Investors Relations Department, or other channels that stakeholders consider appropriate. Stakeholders can also inform the Company’s Independent Directors or Audit Committee of any illegal or unethical practice, wrong financial report, or internal control weakness for further investigation or report to the Board of Directors. For employees, who are an important stakeholder group, the Board of Directors has included a channel for complaining in the Company’s regulation under Personnel ManagementComplaint section. In summary, the Company has strictly followed the guidelines provided by its Code of Business Ethics, Good Corporate Governance Policy, and other policies related to stakeholders. In 2008 there is no report, allegation or complaint between the Company and any stakeholder.
4. Information Disclosure and Transparency
4.1 Quality of Disclosed Information
The Board of Directors is well aware that corporate information and financial or non-financial information have impact on the Company’s share price, decision of shareholders and investors, shareholders’ benefits and stakeholders. The Company, therefore, gives high priority to the accurate, complete, transparent and equal disclosure of significant information to meet expectation of shareholders, investors and stakeholders, as well as to demonstrate the Company’s responsibility towards its duty and operational transparency. The disclosed information shall be correct, factual, not ambiguous or too exaggerated, which will affect share prices; or not exaggerated which will affect share prices; or final and sufficient to support investment decision; and distributed mainly through the SET’s communication channels to ensure adequate and equal access to the information.
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4.2 Information Disclosure Channels
Chairman of the Board, Managing Director and Deputy Managing Director are authorized to disclose information and important information to outsiders. According to the SET’s guideline, executives of listed companies are recommended to disclose required information or selected information at a specific period. The Company’s Board of Directors and Management strictly followed the SEC’s and the SET’s rules and regulations on information disclosure by listed companies, including periodic reports and non-periodic reports. Major channels for the Company’s information disclosure is printed document delivered to the SEC and the SET and through the SET’s ELCID. The Company has also added new channels for greater access to information, which are the Company’s website (www.ratch.co.th), press conference, press release dissemination, analysts meeting, shareholders’ visits to Ratchaburi Power Plant, participation in activities arranged by concerned agencies, local and international investor road shows, Annual Disclosure Form (Form 56-1) and Annual Report (Form 56-2). The quality disclosure of significant information to outsiders demonstrates to the public the Company’s commitment to maintain operational transparency. In addition, it promotes confidence and credibility of investors and stakeholders. The Board of Directors and the management, therefore, have ensured that the assigned persons disclose significant information not only at the minimum legal requirement but also by taking into account equal rights of investors to have access to such information.
4.3 Investors Relations
The Company established the “Investors Relations Department” to be the center for communicating, providing information and news, as well as fairly and equally arranging activities to create and strengthen relationship between the Company and its shareholders, institutional investors, individual investors, analysts and concerned government agencies.
The department is also responsible for preparing annual investors’ relations plan, in which the Company’s top executives regularly participate. The Managing Director and top executives are responsible for announcing the Company’s performance, providing more information, answering questions and clarifying matters raised at the analysts meeting. Interested persons may contact the Investors Relations Department by sending letter to the Company, or call (66) 2978 5086-7 or fax (66) 2937 9321 or through the Company’s website www.ratch.co.th or sending emails to ir@ratch.co.th.
5. The Board of Directors’ Responsibility
5.1 The Board of Directors Structure
The Company carefully reviewed the existing Board of Directors structure in order to ensure it appropriately matches their duties and complies with the rules and guidelines provided by laws and concerned agencies. Matters under review included the number of directors, ratio of executive directors to non-executive directors, independent directors and their skill mix. Based on the Company’s Articles of Association agreed at a shareholders’ meeting and the Company’s regulation on Board of Directors formulated by the Board, the Board of Directors comprises 13 directors, which fits well with the Company’s business. Directors have diversified skills, knowledge (engineering, economics, accounting, business administration, human resource development, law and political sciences), experience, specialization and age. Such diversity provides greater benefits to the Board of Directors, especially in oversighting the executives’ management and operation and providing in-depth opinions that includes all concerned factors in each matter. (Profile of each director which states age, 090
position held in the Company, stakes held in the Company, relationship with executives, education/training, training on responsibility of directors, other current positions, experience, status as a director representing major shareholders, terms and date of being appointed to the Board of Directors, and meeting attendance in the past year are published in the “Board of Directors” section). All of the members of the Board of Directors have no offence against property history and no involvement in transaction that may cause conflict of interest to the Company. The only executive director is the Managing Director. Chairman of the Board is a non-executive director and not the same person as the Managing Director who is the top executive of the Management. Duties of Chairman of the Board and the Managing Director are clearly separated. The Chairman of the Board is the representative of EGAT which is a major shareholder holding 45 per cent of the Company’s total stake. The Board of Directors comprises five independent directors, more than one third of the total number of directors. As a result, the directors can independently perform their duties as the shareholders’ representatives and there is a proper balance of control. (Definition of the independent directors as approved by the Board of Directors and the Company’s regulations is in line with those provided by the Capital Market Supervisory Board. The Company allows its independent directors to hold no more than 0.5 per cent stake in the Company, while the Capital Market Supervisory Board allows independent director to hold no more than one per cent stake in a company as reported in the Management Structure). The Chairman of the Board independently performs his duty and does not dominate or convince other directors during discussions, encourages all directors to discuss and express opinion openly by giving sufficient time to find unanimously resolution on all matters considered at the Board of Directors’ meeting. The number of directors (not including independent directors) in the Board is maintained in the proportion that reflects the amount of investment of each shareholder. There are seven directors representing EGAT (which holds 45 per cent in the Company) and one director representing Banpu Public Company Limited (which holds 14.99 per cent in the Company). Each director remains in office for no more than three consecutive 3-year terms and his/her age shall not exceed 72 years old. The directors shall have all the required qualification and shall not have legally prohibited qualifications as stated by the Board of Directors in the Company’s regulations on the Board of Directors. (Details of the Board of Directors, qualifications and terms are reported in the Management Structure). None of the Company’s directors holds positions in more than five other listed companies, which complies with the SET’s recommendation on efficiency and time contribution. According to the Company’s regulation, the Managing Director, who holds the top position in the Management, may holds directorship in no more than five state enterprises or listed companies, not including subsidiary, affiliates or joint ventures that the Company has to be involved in their management to protect the Company’s benefit. Last year, any Mr. Narong Sitasuwan, the Managing Director who retired on 1st October 2008 and Mr. Noppol Milinthanggoon, the current Managing Director, is not a director in other company than the Company’s subsidiaries and joint ventures. The Company on the Board of Directors’ approval also allowed other executives to hold directorship and management positions in subsidiaries and joint ventures which are in line with their responsibilities. The Board of Directors has formulated the Company’s regulations on subsidiaries, affiliates and joint ventures supervision guidelines. The guidelines are part of the Board of Directors’ policy formulated through the Company’s or its subsidiaries’ representatives assigned to be directors or shareholders in the companies in which the Company invests. The Board of Directors has also set clear criteria for the appointment and responsibilities of these representatives to ensure supervision efficiency of subsidiaries and companies in which the Company invests. Information about directors and executives holding positions in other companies are reported in the Board of Directors and the Management. 091
The Board of Directors has set a director selection process that is transparent and beneficial to the Company. Nominees are screened by the Human Resources and Remuneration Committee. The appointment of directors who retire of other reasons than rotation of office is approved by the Board of Directors’. The appointment of directors who retire due to rotation of office, however, must be proposed at the Annual General Shareholders Meeting for approval. (Details about director selection are reported in the chapter on Management Structure). The Managing Director is appointed the Board of Directors’ Secretary by the Board. The Corporate Secretary Office, which reports directly to the Managing Director, is responsible for the Board of Directors’ meeting arrangement and coordination of the Board’s activities. The Board of Directors appointed an employee as the Company’s Secretary to do the duties and responsibilities as enforced by the Securities Acts. The Board Chairman informed the SET about the appointment of the Company Secretary and the filing place. (Details about the appointment and responsibilities of the Company’s Secretary are reported in the chapter on Management Structure).
5.2 Subcommittees
The Board of Directors has appointed three subcommittees as appropriate and necessary to assist it in studying information and making recommendation, which enables the Board to perform its duty more efficiently. The three subcommittees are as follows:
5.2.1 The Audit Committee:
The three members appointed by the Board of Directors are independent directors. Mr.Sathit Limphongpan is the Chairman of the Audit Committee and he has good knowledge and experience in auditing the financial statements. The Board of Directors approved and included the qualifications of the Audit Committee which are in compliance with related criteria, terms and responsibility in the Company’s regulations on the Audit Committee. In 2008, the responsibilities of the Committee was adjusted to best comply with the Capital Market Supervisory Board and SET’s regulations. The information, including the number of meetings and each Committee member’s attendance, is published under the Management Structure chapter. The Audit Committee disclosed its opinions on its works as assigned by the Board of Directors in the section on the Audit Committee. The Committee arranges at least one joint meeting with the Company’s Independent Auditor without executives’ presence. In 2008, the meeting was held in August 2008.
5.2.2 Human Resources and Remuneration Committee
The Committee was appointed by the Board of Directors to be responsible for selecting directors and top executives (Assistant Managing Director level up) and their remuneration. Although all the three members are representatives of the Company’s major shareholders, they are experts and executives with great experience in human resource management and development. The Board of Directors already sets the Company’s regulations on the composition, terms, and roles and responsibilities of the Committee members. All the information about this and the number of the Committee meetings and the members’ attendance in 2008 are reported under the Management Structure chapter.
5.2.3 Risk Management Committee
Two out of three Committee members are independent directors, namely Mr.Metta Banturngsuk, Risk Committee Chairman, and Mr.Suchart Chanlawong, member. The Board of Directors has formulated a regulation on the Risk Management Committee, including its terms, role and responsibility, which are disclosed together with the number of meetings held and the number of meeting attendance of each director in 2008 under the Management Structure chapter.
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5.3 Role, Duty and Responsibility of the Board of Directors
The Board of Directors comprises directors who have knowledge, capability, skills and experience in different fields that enable the Board to perform its duty efficiently. As the leader of the organization, the Board of Directors plays
a significant role in leading the Company to achieve success. The Board formulates effective strategies and appropriate policies to increase competitive advantages, or growth of the Company, increases long-term added value to shareholders, and has responsibility towards all stakeholders. The Board of Directors oversights and ensures the Company’s operations fully comply with laws, related regulations and the resolutions of the shareholders’ meeting and are based on integrity and ethical practice under the Code of Business Ethics. The Board of Directors also directs the Management to achieve goals and produce maximum benefits for shareholders while promoting the betterment of the public at large. Each of the Company’s directors realizes the responsibility towards the shareholders who are the business owners and have the right to appoint the directors. The directors perform and take responsibility in operating the business for the best benefits of the shareholders, or fiduciary duty. Their four duties are duty of care, duty of loyalty, duty of obedience and duty of disclosure. The Company’s directors maintain independence in decision making for the best possible benefits of the Company and its shareholders. The directors play a vital role in formulating, approving, and reviewing vision, mission, key policies, financial goals and budget, and strategic plans, monitoring operation results of the Management to regularly keep track of business progress, providing timely advice and help in adjusting plans that may not on the right track, ensuring sufficient internal control and regular monitoring, and providing policy on appropriate risk management which is a very important and urgent policy that the Company has to implement and materialize. The directors approved annual key performance indices and evaluation criteria in the beginning of the year and required performance report on regular basis for efficient monitoring, reviewing and adjustment. By the end of the year, the indices and criteria will be used for evaluating performance of the Management and the Board of Directors, which is linked to remuneration determination. (Details about the Board of Directors’ responsibility are disclosed in the chapter on Management Structure). The subcommittees including the Audit Committee, Risk Management Committee and Human Resource and Remuneration Committee also play crucial roles in supervising and monitoring closely the Management performance.
Segregation of Responsibilities The Board of Directors has clearly separated the authority and responsibility in formulating policy, directing and routine work management.
Chairman of the Board of Directors The Chairman of the Board, who is a non-executive director and not the same person as the Managing Director and has no relations with the Management, is the leader of the Board. The Chairman has a key role in deciding on the Company’s policies which are the result of the Board of Directors’ meeting and shared target as discussed earlier with the Management. The Chairman also has the duty to lead and direct the meeting efficiently and effectively by encouraging all directors to participate and openly express their opinion, to provide regular recommendation to the Management through the Managing Director on the Company’s operations. The Chairman shall not intervene in routine management work which is responsible by the Management.
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Managing Director The Managing Director who holds the highest rank in the Management is responsible for routine operations of the Company to achieve the objectives and comply with rule and regulations of the Company, as well as the resolutions of the Board of Directors’ meeting and the shareholders’ meeting. The Managing Director’s responsibilities are as follows: • Authority to hire, appoint, punish or terminate employees; adjust salary of employees, excluding the Assistant
and Managing Director level up who are hired, appointed, punished or terminated by the Board of Directors. • Authority to issue order or announcement specifying the Company’s operations and management process which
is not against the Company’s regulations and the Board of Directors’ meeting resolution.
• Authority to decide on work condition and terms of employees at all levels. • Authority to represent the Company in dealing with and making agreement with outsiders. The Managing Director
can deal with and make agreement with the persons who may have conflict or conflict of interest with the Company
or its affiliate only when approved by the Board of Directors’ meeting which is attended by independent director.
In this regard, the Managing Director may assign others to represent him in any business engagement, except
the project that may hold the Company’s responsible as a borrower or purchaser or an organization that hires others
to work on a project with total value exceeding Baht 30 million. Any juristic act that the Managing Director is
engaged with by breaching the Company’s regulations or the Board of Directors’ meeting resolution shall not legally
hold the Company responsible for such act, except when the Board of Directors rectify it.
• The Board of Directors allows the Managing Director to approve any purchase of up to Baht 30 million. If the
amount of the purchase exceeds Baht 30 million, the Board of Directors has to approve it. • The Managing Director is authorized to approve donation to charity within Baht 100,000 limit. Donation exceeds
Baht 300,000 or higher must be approved by the Chairman of the Board or the Board of Directors respectively.
Acting Managing Director The Company clearly sets the responsibility of the Managing Director and Acting Managing Director. When the Managing Director is not in office or cannot perform his duty or this position is vacant, a Deputy Managing Director, in the order specified by the Board of Directors, shall be appointed to take this position and has the same authority and scope of responsibility as the Managing Director, except for the authority as the member of the Board of Directors.
Code of Conduct To provide guidelines for sustainable growth that enables the Company to maintain its leadership in the industry, the Board of Directors has approved the written Code of Conduct. This comprises three documents including Corporate Code of Conduct, Code of Ethics for Executives, and Code of Ethics for Employees. The Board of Directors clearly communicates these guidelines throughout the organization by distributing the Code of Conduct booklet to the directors, executives and employees when they are appointed to the office. The three documents are published on the Company’s Intranet for reference. The Board of Directors closely monitors the implementation and encourages all employees to follow the Code of Conduct. (Details about Code of Conduct are published under the Stakeholders section and on the Company’s website.)
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The Board of Directors also approved the Good Corporate Governance Policy (disclosed under the Good Corporate Governance: Shareholders’ Rights). The policy is made in writing, reviewed at least once a year and communicated to all employees at all levels. The approved policy was written and distributed to all executives, from department manager level up, in all units, published on the Company’s internal electronic communications system where all employees have easy access at all time. In internal meetings at different levels, such policy and good corporate governance policy are repeated to ensure mutual understanding and encourage everyone in the organization to embrace and implement such policies.
Conflict of Interest The Board of Directors has also set guidelines on Conflict of Interest which can be used as reference. Related matters must be scrutinized by the Audit Committee which will consider benefits that the Company will receive compared to those received from dealing in similar projects by other organizations or persons. Related matters shall be reported to the Audit Committee and the Board of Directors respectively to acknowledge the action, details, rationale and necessity. The Internal Audit Division, which also acts as the Secretary of the Audit Committee, is a key mechanism in directing the project under the pre-set process. The Company also has a regulation prohibiting the persons who may have interest in the project from participating in the decision making process on the transaction that may have conflict of interest. The Company disclosed the information on transactions that may have conflict of interest in 2008 in the Connected Transaction Chapter, in Form 56-1, and on the Company’s website.
Internal Control System The Board of Directors gives much importance to internal control system in all operational levels. The Board clearly specifies and documented responsibility and authority of the Management and employees in writing to ensure sufficient and appropriate internal control. The Company provides the control on the Company’s assets and property utilization and clearly identifies scope of responsibility of every level of operational staff to create proper check and balance. Accurate, systematic and timely financial reports are provided for the Management and public disclosure. The Internal Audit Division, which reports directly to the Audit Committee, was set up to be responsible for reviewing all activities to ensure that the Company’s operations are in accordance with the policy and guidelines set by the Board and the Management, and achieve the goals and objectives. The Company has assessed the sufficiency and appropriateness of the internal control system according to the COSOInternal Control Integrated Framework, covering Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring. The Internal Audit Division reports on the operating results according to the annual internal audit plan covering financial audit, operations audit, and compliance audit, to the Audit Committee every quarter. The Internal Audit Division also reviewed, amended, corrected and assessed the sufficiency and appropriateness of the internal control system to keep the report updated. It is reported to the Audit Committee every year. In 2009, the report submitted to the Audit Committee and the Board of Directors revealed that there is no irregular transaction and that the Company’s internal control system is sufficient and appropriate for the Company’s business.
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Financial Statements The Board of Directors is responsible for the financial statements and information of the Company and affiliates as published in the annual report. The financial statements are prepared in compliance to generally accepted accounting standards in Thailand. The Company adopts the appropriate and implements the accounting policy, and uses its best consideration and forecast in preparing the report. Significant information is sufficiently disclosed in the financial statements notes. The Board of Directors has provided for an effective internal control system in order that all accounting items are recorded correctly, adequately and sufficiently to maintain the Company’s assets and to reveal weakness, enabling the Company to prevent fraud or irregular significant transactions. The Audit Committee is responsible for the quality of the financial statements and internal control system. The Audit Committee’s opinions on this matter are published in the Audit Committee report. The Board of Directors agrees that the Company’s internal control system is at satisfactory level and can create creditability of the financial statements on 31st December 2008 of the Company, subsidiaries and its affiliates. The Board of Directors’ responsibility towards the financial report is disclosed in the said Chapter.
Risk Management Risk management is responsible by the Risk Management Committee. Internal Control Division Director acts as the Secretary. The Committee has set up the “Risk Management Working Committee” to assist in monitoring, assessing and reporting results. “Risk Management Department“ under the Corporate Business Plan Division is responsible for cooperation on this matter. The Board of Directors formulated and implemented the risk management policy, which is prepared in writing and is disclosed under the Risk of Business Operations Chapter. (The full risk management policy is also published on the Company’s website.) The policy, which has been used as the guideline for the entire Company since 2003, is reviewed every year and remains in use at present. The Company regular reviews the adequacy and effectiveness of the risk management. The Company pays high attention to early warning signs and irregular transactions which enable the Company to timely change or adjust its strategies, plans and management process.
5.4 The Board of Directors’ Meeting
For maximum benefits of the Company and its shareholders, the Company maintains the Board of Directors’ independence in decision making. All members of the Board of Directors perform their duty with integrity and for the best benefit of the Company. As representatives of shareholders, the Board of Directors closely lead, monitor the operations, guide, assist and support the Management’s operations. The Board of Directors approved the Board’s and subcommittees’ meeting schedules for the entire year and informed every director of the schedule. In 2008, the Board of Directors’ meetings were scheduled at 4 p.m. of every third Monday of the month. The next Board of Directors’ meeting scheduled was confirmed at the meeting. The Board of Directors has clearly set meeting agenda, including matters to be informed by the Chairman, approval of the last meeting minutes, follow-up matters from the last meeting, matters for consideration, matters for acknowledgement, and others business (if any). Regular matters to be proposed to the Board of Directors at the specific period, such as monthly, quarterly and annual agenda are set in advance. Schedule of monthly performance analysis report and progress of projects that the Company invests in are also reported to the Board of Directors’ meeting every month.
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The Chairman and the Managing Director as the Board of Directors’ Secretary, jointly considered the matters to be included in each agenda to ensure that all significant matters are submitted to the meeting and informed the directors in advance in the meeting notice at the appropriate time according to the Company’s regulation. Directors, however, are free to propose other matters to be included in the agenda and have to inform this 10 days before the meting date. In case of urgent matters which may directly or indirectly affect the Company, directors can propose such matters for consideration or acknowledgement when the Board of Directors considers other agenda at the meeting. (Method for deciding matters to be included in the agenda, and the method for directors to propose other matters are stated in the Company’s regulations on the Board of Directors.) The Company sends meeting notice, agenda and related documents to each director seven days prior to the meting date, providing them with sufficient time to study the information. Directors may ask for more information from the Managing Director and the Corporate Secretary Office. (Members of subcommittees can ask for more information related to their tasks from the Managing Director and through the secretary of each subcommittee.) During the meeting, the Board of Directors’ Chairman who chaired the meeting always encouraged every director to fully express his opinion and to use careful consideration, and provided sufficient time for the Management to present matters and related information and for directors to discuss significant matters. Directors can freely express opinions.
The Board of Directors made decision for the best benefit of the Company. Directors have duty to attend every meeting except when it is unavoidable. Top executives and concerned executives who are directly in charge of the matter were invited to attend the meeting to clarify or provide additional information to enable the Board of Directors to make the right decision and to acknowledge the Board of Directors’ work. Each meeting lasted 1.5 hours to two hours on average. The Corporate Secretary Office is assigned to handle Corporate Secretary’s work, including meeting arrangement, preparation of the meeting document for the Board of Directors’, subsidiaries, affiliates and the shareholders’ meetings, recording the meeting, preparing and keeping the minutes of the Board of Directors’ and shareholders’ meetings for the Company and subsidiaries, providing the related, accurate and sufficient information to assist decision making, and providing support and facilitate on all activities and administrative works for the Board of Directors of the Company and subsidiaries. Meeting minutes are prepared in writing and cover all important details, including date and time the meeting begins and ends, list of attending directors and executives, list of absent directors, summary of the matters presented in the meeting, summary of the discussed matters, opinions and observation of the directors, the resolution of the Board of Directors, and the name of the person who take notes. The Board of Directors assigned the Director of the Corporate Secretary Office to take notes and prepare meeting minutes. The meeting minutes is rectified and signed by the Chairman of the meeting. Meeting minutes were completed within 1-3 days after the meeting, delivered to all directors for amendment and submitted to the meeting’s Chairman to sign. After the meeting, concerned units are informed of the Board of Directors’ meeting resolution for acknowledgement or implementation. The Company provides a place and
a system for keeping meeting minutes, which can be checked and referred to any time. The Corporate Secretary Office,
is responsible for keeping the meeting minutes and preventing any changes made without the Board of Directors’ approval. In 2008, the Board of Directors and subcommittees held meetings which are under their scope of responsibilities and the nature of business as follows: - The Board of Directors held twelve regular meetings (on monthly basis) and four special meetings, totaling
sixteen meetings - The Audit Committee held six meetings - The Risk Management Committee held four meetings - The Human Resources and Remuneration Committee held seven meetings. 097
Details of directors’ attendance are as follows: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
Name of Directors Mr.Pongpayome Vasaputi Mr.Suchart Thada-thamrongvech Mr.Kurujit Nakornthap Mr.Atchada Kesornsook Mr.Areepong Bhoocha-oom Mr.Chulasingh Vasantasingh Mr.Lae Dilokvidhyarat Mr.Kraisri Karnasuta Ms.Sutharat Angchanpen Mr.Vinit Tangnoi Mr.Chanin Vongkusolkit Mr.Narong Sitasuwan Mr.Suchart Chanlawong Mr.Sathit Limpongpan Mr.Nathi Premrasmi Mr.Payap Pongpirodom Mr.Ratanapong Jongdamgerng Mr.Apichart Dilogsopon Mr.Metta Banturngsuk Mr.Noppol Milinthanggoon
Remarks : (1) (2) 3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
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Board of Directors 15/16 5/5 7/7 15/16 5/5 13/16 16/16 5/5 5/5 5/5 13/16 13/13 15/15 10/11 10/11 11/11 11/11 11/11 6/9 3/3
Human Resources Risk Management Audit and Remuneration Committee Committee Committee 1/1 1/1 6/6 0/1
3/3 4/4 1/1 3/3 7/7 3/3
5/5 5/5 3/3 4/4 3/3
The figure before / shows the number of meetings the director attended The figure behind / shows the total number of meetings held while the director was in office Mr.Suchart Thada-thamrongvech retired from Director and Chairman of the Audit Committee on 5th April 2008 Mr.Kurujit Nakornthap retired from Director and Chairman of the Risk Committee on 1st June 2008 Mr.Areepong Bhoocha-oom retired from Director, member of the Audit Committee, and Chairman of the Human Resources and Remuneration Committee on 5th April 2008 Mr.Kraisi Karnasuta retired from Director on 5th April 2008 Ms.Sutharat Angchanpen retired from Director and a member of Risk Management Committee on 5th April 2008 Mr.Vinit Tangnoi retired from Director and a member of the Human Resources and Remuneration Committee on 5th April 2008 Mr.Narong Sitasuwan retired from Managing Director on 1st October 2008 Mr.Suchart Chanlawong was appointed as a Director on 21st January 2008 and a member of the Risk Management Committee on 28th April 2008 Mr.Sathit Limpongpan was appointed as a Director on 5th April 2008, and the Chairman of the Audit Committee on 28th April 2008 Mr.Nathi Premrasmi was appointed Director on 5th April 2008, and a member of the Audit Committee on 28th April 2008 Mr.Payap Pongpirodom was appointed a Director on 5th April 2008 Mr.Ratanapong Jongdamgerng was appointed a Director on 5th April 2008 and a member of the Risk Management Committee on 28th April 2008 Mr.Apichart Dilogsopon was appointed a Director on 5th April 2008 and a member of the Human Resources and Remuneration Committee on 28th April 2008 Mr.Lae Dilokvidhyarat was appointed the Chairman of the Human Resources and Remuneration Committee on 28th April 2008 Mr.Metta Banturngsook was appointed a Director and the Chairman of the Risk Management Committee on 1st June 2008 Mr.Noppol Milinthanggoon was appointed the Managing Director on 1st October 2008
To encourage the meeting among non-executive directors, the Board of Directors prescribed on the regulation on the Board of Directors, requiring the non-executive directors’ meeting at least once a year. In 2008, the meeting was held in December to discuss the Company’s performance, matters to be improved, and recommendations. After the meeting, the meeting minutes were sent to the Managing Director for acknowledgment. 5.5. Directors’ Self Assessment In addition to appraising the Company’s performance against the preset criteria, the Board of Directors has implemented self-assessment since 2002. In 2008, the Company implemented an assessment form that the Board of Directors has already agreed in principle. The form comprises two parts-the entire Board of Directors assessment and an individual assessment. The factors considered cover many important areas, including directors’ readiness, strategy formulation and business planning, risk management and internal control, conflict of interest prevention, financial and performance report monitoring, the Board of Directors’ meeting and nomination of the Board of Directors and the Management. Results were used in reviewing and improving their future work process.
5.6 Remuneration for Directors and Executives
Since 2005, the Company has set a written policy and criteria on remuneration of directors and the Management in order to ensure that the remuneration is based on the clear and appropriate criteria, method and process, in line with the current situation, provides maximum benefits to the operations of the Company Group and motivate and retain qualified human resources. Remuneration for the directors and top executives is related to the goal and performance of the Company Group, their responsibility, and the practice in other companies in the same industry in terms of business and size. The remuneration is also determined to motivate and retain human resources of required knowledge, capability, skills and experience that contribute to the success of the Company. The directors who are assigned to take extra responsibility, such as being appointed to committees, will receive additional remuneration. The executive director will receive remuneration as a director that is linked to both corporate and the Board’s performance. The remuneration of Board of Directors and members of all committees is reviewed by the Human Resources and Remuneration Committee and submitted to the shareholders’ meeting for approval on annual basis. Currently, the remuneration is classified into 2 types: annual bonus and meeting allowances. Meeting allowances, paid on monthly basis, comprises fixed payment (75 per cent) and attendance payment (25 per cent).
Subcommittees’ members will receive meeting allowances for every meeting. Remuneration of the top executives, including the Managing Director, Deputy Managing Directors and Assistant Managing Directors, is in line with the policy and criteria set by the Board, and is considered and reviewed by the Human Resources and Remuneration Committee based on the annual key performance indices set earlier.
In considering remuneration of the top executives, persons who may have conflict of interest did not attend the meeting. The Board of Directors approved the remuneration of the top executives which is in accordance with appraisal results. The Chairman of the Board informed the Managing Director of the resolution. The details about remunerations for the Board of Directors and Management are as follows :
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Meeting Allowance for the Company’s Board of Directors and Subcommittees Amount (Baht) The Board of Directors • Chairman • Director The Audit Committee • Chairman • Director The Human Resources and Remuneration Committee • Chairman • Director The Risk Management Committee • Chairman • Director
100
50,000 40,000 30,000 24,000 30,000 24,000 30,000 24,000
5.6.1 Ratchaburi Electricity Generating Holding Public Company Limited • Remuneration for the Board of Directors and Subcommittees Meeting Allowance for 2008 No.
Names
The Board of Directors
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23.
Mr.Pongpayom Vasaputi 7/ Mr.Lae Dilokvidhyarat 10/ Mr.Chulasingh Vasantasingh Mr.Payap Pongpirodom 1/ Mr.Ratanapong Jongdamgerng 1/ Mr.Apichart Dilogsopon 1/, 13/ Mr.Chanin Vongkusolkit 13/ Mr.Sathit Limpongpan 1/, 8/, 14/ Mr.Nathi Premrasmi 1/, 11/, 14/ Mr.Suchart Chanlawong 1/, 12/, 14/ Mr.Metta Banturngsuk 1/, 9/, 14/ Mr.Atchada Kesornsook 4/, 11/, 14/ Mr.Noppon Milintanggoon 1/ Mr.Kurujit Nakornthap 3/, 4/, 13/ Mr.Suchart Thada-Thamrongvech 2/ Mr.Panich Pongpirodom 3/ Mr.Areepong Bhoocha-oom 2/ Mr.Cherdpong Siriwit 5/ Mr.Viravat Chlayon 5/ Mr.Kraisi Karnasuta 3/ Ms.Sutharat Angchanpen 3/ Mr.Vinit Tangnoi 2/ Mr.Narong Sitasuwan 3/ Total
587,500.00 480,000.00 470,000.00 356,000.00 356,000.00 356,000.00 460,000.00 356,000.00 346,000.00 460,645.16 260,000.00 480,000.00
Notes :
200,000.00 124,000.00
The Human The Risk The Audit Resources and Management Committee Remuneration Committee Committee
2007 6/ Bonus 1,173,287.68 1,000,000.00 1,000,000.00
120,000.00
48,000.00 96,000.00 168,000.00
1,000,000.00
150,000.00 120,000.00 48,000.00 60,000.00 144,000.00
698,630.14 30,000.00
30,000.00
124,000.00
124,000.00 124,000.00 124,000.00 5,788,145.16 444,000.00
90,000.00
24,000.00 72,000.00 546,000.00 210,000.00
Unit : Baht Total 1,760,787.68 1,600,000.00 1,470,000.00 356,000.00 404,000.00 452,000.00 1,628,000.00 506,000.00 466,000.00 508,645.16 320,000.00 1,322,630.14
698,630.14 928,630.14 1,000,000.00 1,154,000.00 1,000,000.00 1,000,000.00 888,933.33 1,102,933.33 376,712.33 376,712.33 267,897.71 267,897.71 888,933.33 1,012,933.33 1,000,000.00 1,148,000.00 1,000,000.00 1,196,000.00 1,000,000.00 1,000,000.00 12,993,024.66 19,981,169.82
The Board of Directors consists of 13 members. 1/ In 2008, eight new directors were appointed to the Board. - Mr.Suchart Chanlawong was assigned on 21st January 2008; Mr.Payap Pongpirodom, Mr.Ratanapong Jongdamgerng, Mr.Apichart Dilogsopon, Mr.Sathit Limpongpan and Mr.Nathi Premrasmi were assigned on 5th April 2008; Mr.Metta Banturngsuk was assigned on 1st June 1008; Mr.Noppon Milinthanggoon was assigned on 1st October 2008 2/ In 2008, three directors resigned from the Board due to end of term. - Mr.Suchart Thada-Thamrongvech, Mr.Areepong Bhoocha-oom and Mr.Vinit Tangnoi resigned at the end of their terms on 5th April 2008 3/ In 2008, five directors resigned from the Board - Mr.Panich Pongpirodom resigned on 1st January 2008; Mr.Kraisi Karnasuta and Ms.Sutharat Angchanpen resigned on 5th April 2008; Mr.Kurujit Nakorntap resigned on 1st June 2008; Mr.Narong Sitasuwarn resigned on 1st October 2008 4/ In 2007, two new directors were appointed to the Board. - Mr.Kurujit Nakorntap and Mr.Atchada Kesornsook were assigned on 21st April 2007 5/ In 2007, two directors resigned at the end of their terms - Mr.Cherdpong Siriwit and Mr.Viravat Chlayon resigned on 21st April 2007 6/ The 2007 Bonus paid to Directors in April 2008 was approved at the 2007 Annual General Shareholders’ Meeting on 4th April 2008 7/ Chairman of the Company’s Board of Directors 8/ Chairman of the Audit Committee 9/ Chairman of the Risk Management Committee 10/ Chairman of the Human Resources and Remuneration Committee 11/ Audit Committee member 12/ Risk Management Committee member 13/ Human Resources and Remuneration Committee member 14/ Independent director
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• Remuneration of the Company’s Executives
Remuneration Salaries Bonus Provident Fund Total
Unit : Million Baht
Number of persons
Amount
8 1/ 8 1/ 8 1/
26.74 16.91 1.57 45.22
1/
5.6.2 Ratchaburi Electricity Generating Company Limited
The Company has 10 executives. During the year, two executives were assigned secondment in Ratchaburi Electricity Generating Company Limited.
Remuneration 2.1 Board of Directors Meeting Allowance Bonus 2.2 Executives Salaries Bonus Provident Fund
Total
Total
Unit : Million Baht
Number of persons
Amount
11 8 1/ 6 6 6
2.75 6.04 8.79 16.24 7.97 1.28 25.49
1/
The Board of Directors of Ratchaburi Electricity Generating Company Limited consisted of nine members. During the year, there were directors vacating office and being appointed to hold office on various occasions, and some directors also held directorship in Ratchaburi Electrcity Generating Holding Public Company Limited and therefore did not receive bonus from Ratchaburi Electricity Generating Company Limited.
5.6.3 Ratchaburi Gas Company Limited, Ratch Udom Power Company Limited, Ratchaburi Alliances Company Limited and Ratchaburi Energy Company Limited
The Directors and executives of these companies did not receive remuneration because they were appointed from the executives of Ratchaburi Electricity Generating Public Company Limited’s Group.
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5.7 Development of Directors and the Management
To assist the newly appointed directors in their assignment, the Company provided them with a summary of the Company’s businesses, the Company Group’s structure, Articles of Association, rules and regulations, key policies, Code of Conduct and best practices of directors required by the SET and the SEC. The Company also held a briefing on the energy industry outlook, the Company Group’s nature of business, performance, key current and future projects as well as Ratchaburi Power Plant visit. Newly appointed directors were also encouraged to attend seminars related to directors on the Company’s expense. To promote understanding of roles, duty and responsibility as well as necessary skills for the directors to do their job best as the directors of a listed company, the Company has a policy to encourage the directors to participate in seminars arranged by related organizations, such as the IOD and SET. The directors who attended trainings and seminars organized by IOD are as follows: Courses No.
Directors
Role of the Chairman
Audit Committee
Role of the Finance for Compensation Non-Finance Committee Director
¸
Dilokvidhyarat
¸
¸
¸
Mr.Chulasingh
Vasantasingh
¸
¸
4
Mr.Payap
Pongpirodom
¸
5
Ms.Ratanapong Jongdamgerng
¸
6
Mr.Apichart
Dilogsopon
¸
7
Mr.Chanin
Vongkusolkit
¸
8
Mr.Sathit
Limpongpan
¸
¸
9
Mr.Nathi
Premrasmi
¸
10
Mr.Suchart
Chanlawong
¸
11
Mr.Metta
Banturngsook
¸
12
Mr.Atchada
Kesornsook
¸
¸
13
Mr.Noppol
Milinthanggoon
¸
1
Mr.Pongpayome Vasaputi
2
Mr.Lae
3
¸
Director Director Certificate Accreditation Program Program
¸
¸
Operating a business based on full compliance with rules and regulations set by the government’s supervising agencies are the Company’s crucial principles. At the Board of Directors meetings, the Management prepared information summary and presented to the Board of Directors for their acknowledgement of such announcement, rules, regulations and memorandum, both newly written and amendment version issued by the SEC and the SET.
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The Company also sent concerned staff members to attend training courses for the Board of Directors Secretary, good corporate governance, internal audit, human resources management, as well as other relevant courses organized by the organizations and institutions. This is to improve their knowledge and understanding of their responsibility which are crucial to support the Board of Directors’ and subcommittees’ operations. The Board of Directors has assigned the Human Resources and Remuneration Committee to prepare succession plan. The succession plan for the Managing Director complies with the policy of the major shareholder-EGAT. EGAT will recruit a person whose qualifications and knowledge are appropriate and will provide the best benefits to the Company’s operations. The Human Resources Division has also prepared a management development plan which is made ready to support internal appointment and the Company’s growth plan. Directors and executives perform duties as entrusted and assigned for the benefit of the Company. In case there is any lawsuit claiming due to such performance, the Legal Division will be responsible for its defense until the case becomes final. The Company has set aside Baht 2 million a year as a reserve for loss, including damages, cost of legal defense, fines, compensations by court’s order, civil penalties as provided by the law or any other money which is considered punishment or warning where the Company will be liable for such loss if the duty is duly performed as a result of his/her authority whether or not such action is taking place now or was done in the pass unless it is a fraud or corruption which the Company shall not be responsible for any loss incurred and will demand all expenses resulting from defending such a case from the corrupted or fraudulent directors or executive officers. As a result of the Company’s commitment to serious and continuous implementation of the good corporate governance principles to achieve sustainable growth, the Company won several awards and notifications in 2008 as follows: (1)
The Company participated in the assessment of the Annual General Shareholders’ Meeting arrangement,
organized by SEC in July 2008 and was evaluated more than 100 scores (from full scores of 100, plus 10
points bonus), which is in the “Excellent” level. There are 486 companies participating in this program. The
appraisal criteria is categorized into five levels which are “Excellent”, “Very Good”, “Good”, “Average” and
“Need Improvement”.
(2)
The Company ranked 7th in the Outstanding Corporate Social Responsibility (CSR) Rankings in Thailand and
33rd of Asian listed companies ranking which was organized jointly by CSR Asia and Asian Institute of
Technology in October 2008. The rankings are appraised based on transparency and CSR information
disclosure. Details are published under the Social and Environmental Responsibility
(3)
The Company was in the top 22 companies which were given 90-100 scores and was ranked “Excellent”
in the Corporate Governance Report of Thai Listed Companies 2008 (CGR) in November 2008. organized
by the Thai Institute of Directors Association (IOD). Under this program, 448 listed companies were surveyed
in regards of shareholders’ rights, equitable treatment of the shareholders, stakeholdes’ roles, information
disclosure and transparency and the responsibilities the Board of Directors. The rankings are classified into
six levels depending on the scores, including Excellent, Very Good, Goods, Satisfactory, Pass and N/A.
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“Kla Yim” seminar at Khao Wong Community Forest, Chaiyaphum Province during 28th-29th January 2009
Environmental and Social Responsibilities As the result of clearly set corporate policy in 2008 the Company intensively put top priority on social and environmental responsibilities. All activities related to social and environmental responsibilities are conducted in accordance with good corporate governance principles, ensuring equal and fair treatment of all stakeholders and mutual benefits of the entire society. In addition to efficiency in power generation which is aimed at preventing and minimizing possible impact on communities and demonstrating the Company’s responsibility towards the society, the Company also adopted and continuously implemented corporate social responsibility activities.
Corporate Social Responsibility : CSR In 2008, the Company, in cooperation with the Royal Forestry Department, introduced the Kla Yim “Love the Forest and the Community” Project to promote human-forest harmonious living. This initiative responds to the concept recommended by their Majesties the King and the Queen who have encouraged people to adopt and apply forest development theory to better address local context and create maximum benefits of the community while promoting sufficient economy. Key activities introduced in 2008 are as follows :
Kla Yim “Love the Forest and the Community” Project - Model Community Forest Project
Competition
•
The model community forest project spans for five years (2008-2012) and the winners will receive a trophy from HRH Princess Maha Chakri Sirindhorn. The application is open on yearly basis to existing nationwide community forest projects approved by the Royal Forestry Department. The objectives of the competition are to appreciate and celebrate good community projects and publicly promote them. The awards are granted to outstanding community forest projects with systematic forestry conservation and development plans, system and operation process as well as those that promote community members participation. The winners are the projects that can become a knowledge and learning center for other communities. News and information about the winning projects will be disseminated publicly to inspire others and establish forest conservation attitude among people in various communities. The competition is highly successful and achieved its goals. In 2008, 698 projects nationwide participated in the competition and 125 projects won the awards. – National Award - national level : The 2008 winner is Khao Wong Community Forest Project, Nong Bua Ra We
District, Chaiyaphum Province. The winner received a trophy from HRH Princess Maha Chakri Sirindhorn,
a plaque, and Baht 200,000 funding for project management. – Regional Awards - regional level : The 2008 winners are: • North : Mae Harn Community Forest Project, Mae Sa Rieng District, Mae Hong Son Province • South : Ban Tham Pueng Community Forest Project, Panom District, Surat Thani Province • Central-East-West region: Baan Pu Yang Community Forest Project, Pak Thor District, Ratchaburi Province;
and • Northeast: Nonyai Community Forest Project, Pho Sri Suwan Disctrict, Si Saket Province Each of the four winners received a trophy from the Minister of Natural Resource and Environment, a plaque,
and Baht 100,000 funding for their project management. – Provincial Awards: each of the 120 projects won certification from the Director General of the Royal Forestry
Department and Baht 25,000 funding for their project management. 105
• Employee Volunteers The Company strongly believes that a continuous and sustainable CSR activity can be the most effective only when the person who takes care of it has strong commitment and is willing to do it for the benefit of the society. As
a result, the Company organized various activities, encouraging its employees and their families to participate in social responsibility activities on weekends and special occasions. In addition to self contentment from meaningful contribution to the society, the employees will develop strong spirit for social contribution, a creative and powerful drive. In 2008,
the Company arranged four CSR programs, namely mangrove plantation in Baan Laem Subdisctrict, Petchaburi Province; tree growing in Bang Krachao Community, Samut Prakarn Province; check dam construction at Baan Thammarat Village, Chachoengsao Province; and youth camp buddies. • Kla Yim’s Youth Camp “Love the Forest and Community” The project’s main objective is to inspire young people to embrace natural resources preservation as their own.
Key mechanism is to allow project participants to have hands on experience and learn about how communities, people and forests rely on each other, and benefits of forests, which will finally encourage these young people to love and feel it’s their responsibility to protect and preserve natural resources. In 2008, the Company selected 60 students in Prathom 5-6 level from schools in Bangkok and suburban areas
as well as Phetchaburi Province to attend the youth natural study camp at Baan Nong Ree Community Forest, Nong Ya Plong District, Phetchaburi Province, during 16th-19th October 2008.
Community Relations In addition to CSR and quality of life development activities, the Company is strongly committed to the responsibility for communities surrounding the Company’s premises. Special units, such as Ratchaburi Power Plant Communication Center and the New Project Office, were set up to take care of community relations such as creating understanding and building good relationship between the Company and people in the communities surrounding the Company’s area. In 2008, major activities are as follows: • Healthcare Activities Mobile medical and dental service units are operated with supports from both government and private organizations, including municipal offices, subdistrict administrative office, subdistrict health center, village healthcare volunteers, and Muang Ratch Hospital, provided medical team and dental services to people in the communities surrounding the Company’ power plant. Ratchaburi Hairdresser’s Association provided hair cut service while Thai Masseuses’ Association of Ratchaburi provided massage service. Eye check and eye-glasses making service was provided to 240 elders. In 2008, 6,592 persons received these services. They included 2,294 people seeking general medical service, 770 people receiving dental service, 1,265 people receiving Thai traditional massage, 993 people having eyes check-up and 1,270 had hair cut. • Education and Sports The Company offered educational opportunity to young people by encouraging participation from community to be in line with the community’s need. The Company cooperated with different parts in the community in setting scholarship criteria for each area, including the scholarships for those with good academic result but lack of funding and the scholarships for those who contribute to the society. In 2008, the Company granted 1,211 scholarships to 48 schools with total amount of Baht 2,553,800. 106
The Company also continued its “Little Angels Project” aimed at increasing the number of professional nurses to support communities surrounding Ratchaburi Power Plant with a goal to have one professional nurse for each subdisctrict. With support from Boromratchachonnani Nursing School in Ratchaburi Province, students were recruited to attend the nursing school. In 2008, three students in the community surrounding Ratchaburi Power Plant were recruited to attend the school. The Tambon Administration and Municipality also planned to hire them after graduation, offering them good career opportunity. The Company is provided full financial support to them for the whole course. In terms of sports, the Company initiated the Ratchaburi Power Plant’s Mini Football Academy. The program is aimed at promoting Ratchaburi youth football skill development and upgrading the skills to meet those of the international level, and to offer opportunity for young football prodigies to pursue their dreams and become professional football players. Under this program, 30 youth aged between 14-16 years who were auditioned by Thailand Football Associations’ coaches were recruited to attend the training. The talents were trained by A License coaches for 24 weeks in Ratchaburi Power Plant. • Children and Youth Activities The Company, in cooperation with groups of school network nearby the Ratchaburi Power Plant, including community leaders, Municipality administration, Tambon Administration, women’s group and media such as Thailand’s Radio Network in Ratchaburi Province and a local cable TV station, organized the Children’s Day activities to educate and entertain children on the National Children’s Day. Activities held focused on providing opportunities for the children to develop their skills and emotional quotient and have fun. In this fourth consecutive year, the Company’s Children’s Day activities attracted 7,500 children and parents.
Community, Social and Environment Activities The Ratchaburi Power Plant Development Project is created by the Company with an intention to support the People Development Association (PDA) in the latter’s plan to help enhance development of communities located within five kilometers from the power plant. The project has been operating successfully for five years and the communities are stronger, have better quality of life and environment. Key successes are as follows: • Ratchaburirom Park Project : with an objective to make it a district park, the Company has already completed the construction and handed over to the community six parks, from five in 2007. In addition to the rest in 2007, The Pikulthong Park was completed last year while Bang Pa Park is under construction. The company is studying a plan to build Tha Rab Community Project. In 2008, the construction plan of the Wat Kaew Community Park started and the construction preparation is underway. By the time all projects are complete, there will be nine community parks around the Ratchaburi Power Plant. • Village Bank and Funds : In 2008, two more village banks were established in Wat Kaew Subdisctrict, making the total number of 28 banks. There are 4,474 members. Total fund is Baht 20,643,386, divided into Baht 14,566,461 from members’ shares, Baht 5,525,760 from the project, Baht 551,165 from project dividend, and net profit of Baht 2,768,477 as of 31st December. • Community Development : major activities under this project are production support, product development and marketing. There are 61 skill groups with a total of 1,541 members. Twenty six groups have been granted product quality certifications, including 12 registered SME groups, two groups certified by the Food and Drug Administration, seven groups with community products standard certifications, four OTOP groups, and one group with product quality certification. (As of
30th September 2008.)
107
• Khlong Bang Pa Conservation : The project is aimed at creating awareness on water resource development and promoting cooperation which comes in the form of management committee comprising representatives from the government and communities. The project participants cooperated in conducting Khlong Bang Pa survey to collect information about problems and to find the best possible solutions. At present, 12 clubs were established in four sub-districts, namely Sam Ruan, Pikul Thong, Baan Rai and Pang Puay. One Khlong Bang Pa conservation network was established, 16 Khlong Bang Pa conservation and development plan and 13 water resource management activities. The Company continued the “Community’s Participation in Khlong Bang Pa’s Water Quality Improvement, and Pollution Reduction” project for the second consecutive year. The project is undertaken by the PDA on behalf of Ratchaburi Power Plant Development Project, in cooperation of the Sirindhorn International Technology Center, and CIDA-AIT SEA-UEMA of the Asian Institute of Technology (AIT) in Khlong Bang Pa survey for further development.
Supports for Nearby-Power-Plant-Area Community Development Funds The Energy Ministry uses tax collected from power generating businesses to establish the Clean Energy Fund in the provinces where power plants are located. The objective is to spend the energy tax on developing quality of life of people who live nearby power plants. In Ratchaburi Province, three funds were established. Ratchaburi Electricity Generating Company Limited and Ratchaburi Power Company Limited jointly contributed to one of the three funds called the “Ratchaburi Community Development Fund for the Community Surrounding the Ratchaburi Electricity Generating Company Limited and Ratchaburi Power Company Limited”. A fund manager was appointed and the fund management office was set up. The Company has educated and helped the community surrounding the power plants to get ready for quality of life development projects with funding from the Clean Energy Fund. The Company also participated in meetings with the community to ensure that the local residents have clear understanding about the funds and their objectives, provide information about the funds to community members nearby Ratchaburi Power Plant, and strengthen career groups and provide them with easy access to the funds for income generation. In 2008, the “Ratchaburi Community Development Fund for the Community Surrounding the Ratchaburi Electricity Generating Company Limited and Ratchaburi Power Company Limited” Committee approved Baht 111,368,804 funding to support 215 projects initiated by the community.
Social Projects in Cooperation with Government Agencies Ratchaburi Electricity Generating Company Limited signed a Memorandum of Understanding (MOU) on bio-agricultural farms demonstration in Ratchaburi Power Plant under the cooperation agreement between Ratchaburi Electricity Generating Company Limited and the Military Engineering Department, Ratchaburi Province. The MOU is part of an attempt to reduce the volume of waste water released to Bang Pa Canal with an objective to recycle waste water from the power plant. The recycled water is used in the 350 rai of agricultural area in the Ratchaburi Power Plant. Activities held at the MOU signing ceremony was broadcasted through local and national media channels, such as the “Khon… Khun Kha” television program on Channel 9.
108
Environmental Conservation Activities In 2008, Ratchaburi Electricity Generating Company Limited continued and extended various environment preservation activities as follows: • “Collect, Separate, Return… Revitalize the Environment” Project The project was initiated to promote cooperation between the Ratchaburi Power Plant and communities in reducing mercury contamination in the environment caused by fluorescence tubes. In 2008, Ratchaburi Electricity Generating Company Limited further expanded the coverage of the “Collect, Separate, Return… Revitalize the Environment” Project from communities in the nine subdistricts surrounding the power plant to engage government organizations in the area, including Damnoensaduak Hospital, Potaram Hospital and Kradangnga Subdistrict Municipality. Participating communities and government agencies successfully collected 9,113 units of old fluorescence tubes, 6,225 of which were transported for proper elimination at Thai Toshiba Lighting Plant and the remaining 2,888 tubes at GENCO plant. • “Recycled Garbage Bank at Ratchaburi Power Plant” Project To promote awareness and cooperation among employees in environmental protection and resources maximization, as well as to increase effectiveness in environmental activity management in compliance with ISO 14001 standards, Ratchaburi Electricity Generating Company Limited initiated the “Recycled Garbage Bank” project. Wastes and garbage are separated for recycle and proper treatment and elimination, resulting in less garbage for landfill in community. In 2008, 14,660 kilograms of paper, 870 kilograms of plastic, 330 kilograms of metal and 990 kilograms of glasses were separated and recycled from total operating wastes.
Assessment of Environmental Management According to ISO 14001 Ratchaburi Electricity Generating Company Limited also assessed its environmental management operation under
the ISO 14001 standards in order to continuously maintain quality of environmental impact management at the plant.
The assessment was organized regularly on annual basis. In 2008, four assessments were conducted, two were audited by internal auditor and other two by independent auditor DNV’s Surveillance Auditor. The reports showed that all the Company’s environment preservation programs complies with the ISO 14001 • Waste Water Recycling Project The Company started a feasibility study for using plants in treating waste water from the power plant in order to find the best waste water treatment solution and to ensure that the quality of water released to public water resources is as good as natural water resource. The project was cooperated by Kasetsart University’s Kampangsaen Campus. The research will last for two years. • The Reduction of Waste Water Released to the Bang Pa Canal Project The Ratchaburi Electricity Generating Company Limited started to recycle the waste water from the power plant and use it for agricultural purpose. The project is an alternative to using waste water to water trees within the power plant premise. It is aimed to maximize the benefit from waste water, reduce the volume of water release to Bang Pa Canal, and maximize the use of the 350 rai empty land within the Ratchaburi Power Plant. Under a cooperation agreement between the company and the Military Engineering Department in Ratchaburi Province, both organizations agreed to operate a demonstration bio-farming in the power plant. The result shows that the demonstration farm has satisfactorily yielded 38,190 kilograms of rice on 40-rai farm area. 109
• Cooling Water Reuse Project To reduce consumption of water from public resource, Ratchaburi Electricity Generating Company Limited in 2008 started the Cooling Water Reuse Project. It involves treatment of waste water from power plant to demineral. The treated water was reused in the power generating process. The project will be completed in early 2009.
Safety Activities In addition to emphasis on environment, the Company regards employees as valuable resources who contribute largely to the company’s success. As a result, workplace environment promotion is one of the Company’s key focus areas. It has ensured good workplace environment and health and safety standard meet international requirements and comply with the Company’s policy related to employees based on the Board of Directors’ guidelines. In 2008, Ratchaburi Electricity Generating Company Limited continuously adopts strict safety measures to control and prevent work-related accidents within the power plant, including electricity generating area and general area. In November 2008, the Ratchaburi Power Plant celebrated a new milestone as it achieved 2,500,000-hour-man safety with no accident. The Company also implemented various measures to create safety awareness among those who work in the Ratchaburi Power Plant and encourage them to realize the benefits from workplace safety to themselves, the organization and their families. Major activities are as follows: • Controlled and checked safety and workplace security, equipment, fire extinguishing equipment, water pump and other fire prevention equipment; security checked on people, vehicles and assets being transported in and out of the controlled area; and searched people, vehicles or assets in case of suspicion • Provided all concerned persons with training in order to review training rules for specific work and areas; provide training for trainees and subcontractors who have to wok in the Ratchaburi Power Plant so that they are aware of and fully comply with rules • Organized emergency training, fire drill and rescue for level-3 crisis at bunker oil storage, Thermal Power Plant on
th 16 October 2008. The training was chaired by the Ratchaburi Governor and supported by fire prevention units in the nearby areas, such as the Ratchaburi Municipality, Lak Muang Municipality, Baan Singh Subdistrict Municipality, Baan Rai Municipality, PTT’s pipe system region 5, Ratchaburi Center Hospital and Ratchaburi Power Plant. In addition, there were trainings on disaster rescue and patients transfer • Organized emergency training, fire drill and recue for level-1 crisis in each department, for level-2 crisis in the Thermal Power Plant and Combined Cycle Power Plant • Checked and assessed risks of damage to people, assets and environment. The Company’s Committee on Workplace Health and Safety also sets measures to prevent disaster and reduce impact from work, which are applied to subcontractors before they are allowed to enter into the production area.
110
Audit Committee’s Report The Audit Committee of the Ratchaburi Electricity Generating Holding Public Company Limited comprised of
3 independent members. Mr.Satit Limpongpan is the Chairman of the Audit Committee. Mr.Atchada Kesornsook and Mr.Nathi Premrasmi are audit committee members. Mr.Thoedpan Indramaha, Director of Internal Audit Division acts as the Committee’s secretary. The Chairman of the Audit Committee has strong knowledge and experience to audit financial statements. In 2008, the Audit Committee held 6 meetings, including 1 meeting between the committee and the auditors without the presence of the management. All the Audit Committee members attended all the meetings. The management of the Company and its subsidiaries and the auditors participated in the meetings to present information, and adopt the committee’s opinions and suggestions that are useful to the management of the Company. The results of each meeting were reported to the Board of Directors of the Company and its subsidiaries. Significant activities last year are as follows: • Reviewing the accuracy, sufficiency and reliability of quarter and annual financial statements of the
Company and its subsidiaries prior to presentation to the Board of Directors of each company. • Reviewing that the internal control is sufficient and appropriate to ensure efficiency and effectiveness
in preventing fraud and conflict of interest. • Ensuring that the Company conforms to the securities and stock market laws, the Stock Exchange of
Thailand’s regulations and other laws and regulations related to the Company’s business operations. • Reviewing transactions that may involve conflict of interest. Connected transactions were reported to
the Audit Committee for consideration before it is forwarded to the Board of Directors for approval. The
Company’s management reported progress and change in these transactions to the Audit Committee
for acknowledgement on quarterly basis. In summary, the Audit Committee considered that the financial statements prepared by the Company
and its subsidiaries clearly meet with generally accepted accounting standard, that the information disclosure
is sufficient, accurate, complete and reliable, that the internal control is efficient and sufficient to prevent fraud and conflict of interest. All departments have clear roles and responsibilities. And, the operations of the Company and its subsidiaries fully comply with the laws regulating the securities and the Stock Exchange of Thailand
or other related laws. The Audit Committee agree to appoint Mr. Vairoj Jindamaneepitak (C.P.A.(Thailand) No. 3565) or Mr. Ekkasit Chuthamsatid (C.P.A.(Thailand) No. 4195) or Mr. Charoen Phosamritlert (C.P.A.(Thailand) No. 4068) of KPMG Phoomchai Audit Ltd. as the auditors for the Company and its subsidiaries in 2009. The total audit fee is Baht 1,590,000, Baht 690,000 of which is the audit fee for the Company.
(Mr. Sathit Limpongpan) Chairman of the Audit Committee)
111
Board of Directors’ Report on Its Responsibility to Financial Report Regulated by the Public Company Act, B.E 2535 (1992), the Accounting Act B.E 2543 (2000), the Securities and Stock Exchange Act B.E 2535 (1992) and the Notification of the Securities and Exchange Commission’s regarding the Preparation and Submission of Financial Statements, Financial Reports and Operating Results of the Securities Issuers the Board of Directors must ensure that there is a preparation for the financial statements that represent the Company’s last year financial status, operation results and cash flow, that are accurate and reasonable for the benefit of the shareholders and investors in a transparent manner. The consolidated financial statements and the Company financial statement of the Company for the year ending 31st December 2008 have been audited by the Company’s Auditor, namely Price Waterhouse Coopers ABAS Limited. In auditing, the Board of Directors provided all relevant information and documents to enable the Auditor to examine and express his opinion in conformity with generally accepted standards. The Auditor’s opinion, which appears in the Auditor’s report, is already shown in this annual report. In this regard, the Board of Directors has appointed the Audit Committee to review the accounting policies, the quality of the financial reports, the internal control, and internal audit system. The opinions of the Audit Committee with regard to these matters, which appeared in the Report of the Audit Committee, are already shown in this annual report. The Board of Directors has provided and maintained the appropriate and efficient internal control system to reasonably ensure that the accounting data are accurate, complete, and sufficient to maintain its assets to prevent fraud and significantly irregular operation. The Board of Directors agree after assessing the five elements of the internal control, including organizational structure and environment, risk management, information and communication system. control activities and monitoring system that the overall internal control system of the Company is at satisfactory level and ensure the consolidated financial statements and the Company financial statements for the year ending 31st December 2008 are reliable and prepared in conformity with generally accepted accounting standards and carried out accurately in accordance with law and all relevant rules and regulations.
112
Pongpayome Vasaputi Chairman
Noppol Milinthanggoon Director and Managing Director
AUDITOR’S REPORT To the Shareholders of Ratchaburi Electricity Generating Holding Public Company Limited I have audited the accompanying consolidated and company balance sheets as at 31st December 2008 and 2007, and the related consolidated and company statements of income, changes in shareholders’ equity, and cash flows for the years then ended of Ratchaburi Electricity Generating Holding Public Company Limited and its subsidiaries, and of Ratchaburi Electricity Generating Holding 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 audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the consolidated and company financial statements referred to above present fairly, in all material respects, the consolidated and company financial positions as at 31st December 2008 and 2007, and the consolidated and company results of operations, and cash flows for the years then ended of Ratchaburi Electricity Generating Holding Public Company Limited and its subsidiaries, and of Ratchaburi Electricity Generating Holding Public Company Limited, respectively, in accordance with generally accepted accounting principles.
Nangnoi Charoenthaveesub Certified Public Accountant (Thailand) No. 3044 PricewaterhouseCoopers ABAS Limited Bangkok 16 February 2009
113
Balance Sheets Ratchaburi Electricity Generating Holding Public Company Limited As at 31st December 2008 and 2007 Notes
Consolidated 2008 2007 Baht Baht
Company 2008 2007 Baht Baht
Assets Current assets Cash and cash equivalents Short-term investments - held-to-maturity Investment in bills of exchange used as collateral Long-term investments due within one year - Promissory notes and bills of exchange, net - Marketable securities - held-to-maturity Trade receivable from a related party Dividend receivables Advances to and other receivables from related parties Short-term loan to a related party Spare parts and supplies, net Other current assets
4 5
4,651,285,114 5,956,611,709 1,100,000
1,744,650,069 9,294,757,779 1,000,000
4,033,725,053 4,900,000,000 -
1,205,728,237 8,211,519,555 -
12,554,796 6,628,620,087 122,739,645 24,443,882 1,953,066,574 169,662,883
543,271,142 2,430,381 7,346,627,596 32,784,384 1,931,767,947 173,686,785
1,918,683,755 3,584,767 107,095,534
543,271,142 382,064,071 10,878,487 8,000,000 83,875,998
5
21 7 21 21 6
Total current assets
19,520,084,690 21,070,976,083 10,963,089,109 10,445,337,490
Non-current assets Long-term trade receivable from a related party Long-term investments, net - Marketable securities - held-to-maturity, net Long-term loans to related parties Long-term receivable from related parties Investments in subsidiaries Interests in joint ventures Property, plant and equipment, net Land for future development projects Other non-current assets
21 5 21 21 7 7 8 9
14,852,492
19,803,323
-
-
314,052,208 116,621,510 310,000,000 100,000,000 62,500,000 17,500,000 1,475,281,000 941,331,000 3,650,251 138,773 69,030,511 17,678,532 - 20,001,802,558 20,001,802,558 7,362,008,244 5,676,028,712 1,387,506,500 901,062,500 40,078,924,125 42,575,471,568 32,313,172 39,248,822 304,514,400 300,000,000 304,514,400 300,000,000 2,011,856,884 524,387,930 1,243,142,935 66,741,186
Total non-current assets
50,152,358,604 49,229,951,816 24,823,591,076 22,367,864,598
Total assets
69,672,443,294 70,300,927,899 35,786,680,185 32,813,202,088
The notes to the consolidated and company financial statements on pages 120 to 153 are an integral part of these financial statements. 114
Balance Sheets (Continued) Ratchaburi Electricity Generating Holding Public Company Limited As at 31st December 2008 and 2007 Notes
Consolidated 2008 2007 Baht Baht
Company 2008 2007 Baht Baht
Liabilities and shareholders’ equity Current liabilities Trade payable Trade payable to a related party Current portion of long-term loans, net - Long-term loans from financial institutions - Debentures Amounts due to related parties Other payables Unearned revenue and accrued expenses to related parties Other current liabilities - Corporate income tax payable - Value added tax payable - Dividend payables - Others
4,462,748,371 -
5,339,394,359 334,180,756
-
-
1,691,866,122 1,499,472,315 30,221,728 31,798,806 52,261,061
1,670,527,873 1,915,089,830 96,252,343 13,549,440 229,753,205
1,599,928 14,497,167
268,303 -
156,485,061 197,598,694 10,169,666 925,500,091
20,347,862 110,788,050 9,783,302 267,041,919
13,457,100 2,558,873 10,169,666 755,316,271
46,172 937,127 9,783,302 86,539,866
9,058,121,915
10,006,708,939
797,599,005
97,574,770
18,889,869,821 749,912,750
20,565,331,806 2,249,084,746
-
-
Total non-current liabilities
19,639,782,571
22,814,416,552
-
-
Total liabilities
28,697,904,486
32,821,125,491
797,599,005
97,574,770
14,500,000,000
14,500,000,000
14,500,000,000
14,500,000,000
14,500,000,000 1,531,778,000
14,500,000,000 1,531,778,000
14,500,000,000 1,531,778,000
14,500,000,000 1,531,778,000
1,450,000,000 23,492,760,808
1,450,000,000 19,998,024,408
1,450,000,000 17,507,303,180
1,450,000,000 15,233,849,318
Total shareholders’ equity
40,974,538,808
37,479,802,408
34,989,081,180
32,715,627,318
Total liabilities and shareholders’ equity
69,672,443,294
70,300,927,899
35,786,680,185
32,813,202,088
21 10
21 21
Total current liabilities Non-current liabilities Long-term loans, net - Long-term loans from financial institutions - Debentures
10
Shareholders’ equity Share capital Authorised share capital Issued and paid-up share capital Premium on share capital Retained earnings Appropriated - Legal reserve Unappropriated
11
12
The notes to the consolidated and company financial statements on pages 120 to 153 are an integral part of these financial statements.
115
Statements of Income Ratchaburi Electricity Generating Holding Public Company Limited For the years ended 31st December 2008 and 2007
Sales Cost of sales Gross profit Administrative expenses Profit (loss) from sales Other income - Service income - Interest income - Insurance compensation from fire cause - Dividends income - Gains on disposal of interest in a joint ventures - Others Directors’ remuneration Operating profit Share of profit of joint ventures Profit brfore interrest and tax Interest expenses Corporate income tax
Notes
Consolidated 2008 2007 Baht Baht
21 21
42,210,249,342 43,820,694,071 (35,158,577,459)(38,122,250,346)
21
Company 2008 2007 Baht Baht -
-
7,051,671,883 5,698,443,725 (608,489,826) (631,340,341) (350,395,454) (371,412,016) 6,443,182,057 5,067,103,384
(350,395,454) (371,412,016)
21
13
17
121,781,258 422,515,351 4,645,049 110,951,345 (31,156,919)
49,330,722 125,742,455 57,720,075 580,525,088 391,075,659 425,793,065 707,772,479 - 5,358,930,855 6,704,621,510 121,389,859 1,215,372 604,937 (27,775,447) (21,176,163) (19,056,507)
13 7
7,071,918,141 6,498,346,085 5,505,392,724 6,798,271,064 931,701,182 792,631,790 -
14
8,003,619,323 7,290,977,875 5,505,392,724 6,798,271,064 (1,293,368,150) (1,364,542,297) (217,352,719) (97,035,168) (41,938,862) (35,320,960)
Net profit for the year
6,492,898,454 5,829,400,410 5,463,453,862 6,762,950,104
Attributable to 6,492,898,454 5,829,400,410 5,463,453,862 6,762,950,104 -
Equity holders of the parent Minority interest Earnings per share for profit attributable to the equity holders of the parent (Baht) Basic earnings per share
15
4.48
4.02
3.77
The notes to the consolidated and company financial statements on pages 120 to 153 are an integral part of these financial statements. 116
4.66
Statements of Changes in Shareholders’ Equity Ratchaburi Electricity Generating Holding Public Company Limited For the years ended 31st December 2008 and 2007 Consolidated Notes
Issued and paid-up Premium on share capital share capital baht baht
Legal reserve baht
Retained earnings Baht
Total Baht
Opening balance as at 1st January 2008 Adjustments (Note 2.4)
14,500,000,000 -
1,531,778,000 -
1,450,000,000 19,998,024,408 37,479,802,408 191,837,946 191,837,946
Opening balance as at 1st January 2008 after adjustments Net profit for the year Dividends paid
14,500,000,000 -
1,531,778,000 -
1,450,000,000 20,189,862,354 37,671,640,354 - 6,492,898,454 6,492,898,454 - (3,190,000,000) (3,190,000,000)
Closing balance as at 31st December 2008
14,500,000,000
1,531,778,000
1,450,000,000 23,492,760,808 40,974,538,808
Opening balance as at 1st January 2007 Net profit for the year Dividends paid
14,500,000,000 -
1,531,778,000 -
1,450,000,000 17,213,623,998 34,695,401,998 - 5,829,400,410 5,829,400,410 - (3,045,000,000) (3,045,000,000)
14,500,000,000
1,531,778,000
1,450,000,000 19,998,024,408 37,479,802,408
16
16
Closing balance as at 31st December 2007
Company Opening balance as at 1st January 2008 Net profit for the year Dividends paid
14,500,000,000 -
1,531,778,000 -
1,450,000,000 15,233,849,318 32,715,627,318 - 5,463,453,862 5,463,453,862 - (3,190,000,000) (3,190,000,000)
Closing balance as at 31st December 2008
14,500,000,000
1,531,778,000
1,450,000,000 17,507,303,180 34,989,081,180
Opening balance as at 1st January 2007 adjustments
14,500,000,000 -
1,531,778,000 -
1,450,000,000 17,213,623,998 34,695,401,998 - (5,697,724,784) (5,697,724,784)
Opening balance as at 1st January 2007 after adjustments Net profit for the year Dividends paid
14,500,000,000 -
1,531,778,000 -
1,450,000,000 11,515,899,214 28,997,677,214 - 6,762,950,104 6,762,950,104 - (3,045,000,000) (3,045,000,000)
14,500,000,000
1,531,778,000
1,450,000,000 15,233,849,318 32,715,627,318
Closing balance as at 31st December 2007
16
16
The notes to the consolidated and company financial statements on pages 120 to 153 are an integral part of these financial statements.
117
Statements of Cash Flows Ratchaburi Electricity Generating Holding Public Company Limited For the years ended 31st December 2008 and 2007 Notes
Consolidated 2008 2007 Baht Baht
Company 2008 2007 Baht Baht
Cash flows from operating activities Net profit before tax Adjustments to reconcile net profit before tax to net cash provided by operations: - Depreciation - Amortisation of the right in transmission line - Allowance for obsolescence of spare parts - Interest income - Interest income from related parties - Interest expenses - Amortisation of deferred financing fee - Unrealised currency exchange (gain) loss - Gain on disposal of interest in a joint venture - Share of profit of joint ventures - Dividends income from subsidiaries and a joint venture - Gains on disposal of property, plant and equipment - Losses on written off property, plant and equipment - Losses on disposals of spare parts and supplies - Reserve for loss from fire cause - Others Cash flows before changes in operating assets and liabilities Changes in operating assets and liabilities: (excluding the effects of acquisition and disposal) - Trade receivable from a related party - Advances to and other receivables from related parties - Accrued income from related parties - Spare parts and supplies - Other current assets and non-current assets - Trade payable and trade payable to a related party - Amounts due to related parties and other payables - Unearned revenue and accrued expenses to related parties - Other current liabilities
6,710,251,173
5,926,435,578
5,505,392,724
6,798,271,064
2,745,797,727 1,365,551 79,328,823 (419,478,238) (3,511,479) 1,293,368,150 46,326,753 34,841,258 (4,645,049) (931,701,182)
2,745,639,118 697,948 104,856,876 (581,346,302) (138,772) 1,364,542,297 30,822,296 (346,855) (792,631,790)
12,822,265 (338,520,488) (52,555,171) 34,329,200 -
13,955,024 (400,009,149) (25,783,916) (62,095) -
(1,788,468) 6,295 2,135,195 474,366
(560,920) 573,000 (211,631,517) 959,987
(5,358,930,855) (969,953) 6,295 -
(6,704,621,510) (537,811) -
9,552,770,875
8,587,870,944
(198,425,983)
(318,788,393)
722,958,339
1,303,086,608
-
-
5,625,263 2,715,239 (102,762,645) (790,575,681) (1,210,826,744) (44,508,714)
(2,104,417) (3,551,532) (237,665,738) (166,189,511) (688,048,161) (108,298,497)
7,199,775 (515,414,889) (268,303)
(1,752,807) (60,211,402) (3,226,293)
(177,492,143) 81,413,843
194,713,936 (655,108,800)
14,497,167 3,681,642
19,749,211
8,039,317,632 (1,293,594,640) (81,285,232)
8,224,704,832 (1,364,672,721) (119,141,863)
(688,730,591) (28,527,934)
(364,229,684) (34,999,506)
Net cash receipts from (payments in) operating activities
6,664,437,760
6,740,890,248
(717,258,525)
(399,229,190)
Cash flows from investing activities Net cash receipts (payments) of short-term investments Net cash payment of short - term investment used as collateral
3,318,815,189 (100,000)
(1,532,840,796) (1,000,000)
3,290,000,000 -
(1,283,222,969) -
Cash generated from (used for) operations - Interest paid - Income tax paid
8 6
10 7
13
The notes to the consolidated and company financial statements on pages 120 to 153 are an integral part of these financial statements. 118
Statements of Cash Flows (Continued) Ratchaburi Electricity Generating Holding Public Company Limited For the years ended 31st December 2008 and 2007 Notes Cash receipts from disposals of long-term investments Cash payments of long-term investments Short-term loans to related parties Cash receipts from short-term loans to related parties Payments for additional share capital and additional paid-up shares of joint ventures Cash receipt from disposal of interest in a joint venture Long-term loans to related parties Receipts from long-term loans to related parties Dividends received from subsidiaries and joint ventures Cash receipts from interest income Cash receipts from interest income of related parties Cash payment for joint development project Proceeds from disposal of property, plant and equipment Purchases of property, plant and equipment Purchases of land for future development projects
Consolidated 2008 2007 Baht Baht
Company 2008 2007 Baht Baht
501,250,324 (210,000,000) -
333,266,222 -
499,279,804 (210,000,000) (6,220,000,000) 6,228,000,000
(8,000,000) -
(975,194,000) 45,000,000 (45,000,000) 249,659,000 454,147,249 (33,275,600) 4,636,314 (258,373,155) (4,514,400)
(1,357,275,000) (17,500,000) 459,802,910 554,876,771 1,912,368 (77,516,266) (300,000,000)
(486,444,000) (533,950,000) 3,822,311,170 385,336,985 1,297,137 (33,275,600) 2,927,125 (6,099,244) (4,514,400)
(566,062,500) (797,500,000) 360,200,000 6,322,557,439 360,358,736 11,980,561 1,889,200 (12,353,725) (300,000,000)
3,047,050,921
(1,936,273,791)
6,734,868,977
4,089,846,742
6,560,000,000
-
-
-
(6,560,000,000)
-
-
-
(1,698,340,000) (1,916,900,000) (3,189,613,636)
(805,498,400) (2,333,240,000) (3,045,716,984)
(3,189,613,636)
(3,045,716,984)
Net cash payments in financing activities
(6,804,853,636)
(6,184,455,384)
(3,189,613,636)
(3,045,716,984)
Net increase (decrease) in cash and cash equivalents Beginning balance
2,906,635,045 1,744,650,069
(1,379,838,927) 3,124,488,996
2,827,996,816 1,205,728,237
644,900,568 560,827,669
Ending balance
4,651,285,114
1,744,650,069
4,033,725,053
1,205,728,237
280,430,967 4,370,854,147 4,651,285,114
240,148,598 1,504,501,471 1,744,650,069
133,725,053 3,900,000,000 4,033,725,053
151,969,117 1,053,759,120 1,205,728,237
3,619,378 632,236,400
9,888,109 12,595,200 10,194,770 -
3,619,378 632,236,400
1,868,541 -
7 7 7
Net cash receipts from (payments in) investing activities Cash flows from financing activities Cash receipts from short-term loans from financial institutions Cash repayments for short-term loans from financial institutions Cash repayments of long-term loans from financial institutions Cash repayments of debentures Dividends paid to shareholders
Cash and cash equivalents are made up as follows: - Cash in hand and deposits at financial institutions - Short-term investments - maturity within three months Non-cash transactions: - Purchase of machinery and equipment and construction in progress which has not been paid - Transfer other assets to property, plant and equipment - Transfer property, plant and equipment to other assets - Project development cost - Hongsa Lignite Project
10 10
The notes to the consolidated and company financial statements on pages 120 to 153 are an integral part of these financial statements.
119
Notes to the Consolidated and Company Financial Statement Ratchaburi Electricity Generating Holding Public Company Limited For the years ended 31st December 2008 and 2007
1. General Information Ratchaburi Electricity Generating Holding Public Company Limited (Company) is a public company limited, incorporated and resident in Thailand. The address of the Company’s registered office is 19 SCB Park Plaza, Tower 3 East, 20 th Floor, Ratchadapisek Road, Chatuchak, Bangkok, Thailand. The Company is listed on the Stock Exchange of Thailand. For reporting purposes, the Company and its subsidiaries and joint ventures are referred to as the Group. The principal business of the Group is to generate and sell electricity to Electricity Generating Authority of Thailand (EGAT) and to invest in other companies, whose objectives are equivalent or similar to the Company’s objective, which is the Power Plant business. These consolidated and company financial statements were authorised by the Board of Directors on 16th February 2009.
2. Accounting Policies The principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out below. 2.1 Basis of preparation The consolidated and company financial statements have been prepared in accordance with Thai generally accepted accounting principles under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the Accounting Profession Act B.E. 2547, and the financial reporting requirements of the Securities and Exchange Commission under the Securities and Exchange Act B.E. 2535. The consolidated and company financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below. The preparation of financial statements in conformity with Thai generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses in the reported periods. Although these estimates are based on management’s best knowledge of current events and actions, actual results may differ from those estimates. An English version of the consolidated and company financial statements have been prepared from the statutory consolidated and company 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 consolidated and company financial statements shall prevail.
2.2 New accounting standard and amendments to accounting standards
During 2007 and 2008, the Federation of Accounting Profession (FAP) has announced new standard and amendments to Thai Accounting Standard (TAS) as follows:
120
Revised TAS TAS 25 “Cash Flow Statements” TAS 29 “Leases” TAS 31 “Inventories” TAS 33 “Borrowing Costs” TAS 35 “Presentation of Financial Statements” TAS 39 “Accounting Policies, Changes in Accounting Estimates and Errors” TAS 41 “Interim Financial Reporting” TAS 43 “Business Combinations” TAS 49 “Construction Contracts” New TAS TAS 51 “Intangible Assets” The amendments to accounting standards and the new accounting standard are effective for the period beginning on or after 1st January 2008 except TAS 29 “Leases” which is effective for the lease contract started on or after 1st January 2008. The Group’s management has determined that the revised accounting standards and a new accounting standard will not significantly impact the financial statements being presented except accounting standards which mention in Note 2.3 The revised accounting standards that are not yet effective and have not early adopted by the Group. TAS 36 Impairment of Assets TAS 54 Non-current Assets Held for Sale and Discontinued Operations Those two accounting standards are not expected to have a material impact on the financial statements being presented.
2.3 Effect from amendments to Thai Accounting Standards and a new accounting standard
TAS 35 (Revised 2007) requires presentation of minority interest and other additional information disclosures as discussed in Note 3. TAS 43 (Revised 2007) “Business Combinations” and TAS 51 “Intangible Assets” require the Group to adjust negative goodwill from business combinations which is brought forward as of 1st January 2008 with retained earnings brought forward. This is a change in accounting policy with no retrospective adjustments required. The effect of the change in accounting policy is mentioned in Note 2.4. TAS 51 “Intangible Assets” requires cessation of amortisation of intangible assets with indefinite life but to test impairment annually. The Group estimates that all Group’s goodwill has definite useful life in accordance with Power Purchase Agreements of the acquirees. Therefore, the Group amortises those goodwill amounts from business combinations throughout periods of Power Purchase Agreements. TAS 49 “Construction Contracts” is not relevant for the Group.
2.4 Change in accounting policy
According to the announcement of Federation of Accounting Professions relating to amendment of TAS 43 “Business Combinations”, TAS 43 (Revised) requires the Group to adjust negative goodwill from business combinations which is brought forward as of 1st January 2008 with retained earnings brought forward. This is the change in accounting policy with no retrospective adjustments required. The announcement is effective from 1st January 2008. 121
The effects of the changes to the consolidated balance sheet as at 1st January 2008 are as follows :
Million Baht Increase in interests in a joint venture brought forward Increase in retained earnings brought forward
192 192
2.5 Group accounting - investments in subsidiaries and interests in joint ventures
2.5.1 Investments in subsidiaries Subsidiaries are all 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 are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus costs directly attributable to the acquisition. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. Inter company transactions, balances and unrealised gains (losses) on transactions between group companies are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group. In the Company’s separate financial statements, investments in subsidiaries are reported using the cost method of accounting. A list of the Group’s principal subsidiaries is shown in Note 7. 2.5.2 Interests in joint ventures The Group’s interests in jointly controlled entities are accounted for by the equity method and cost method of accounting in the consolidated and company financial statements, respectively. The Group recognises the portion of gains or losses on the sale of assets by the Group to the joint venture that it is attributable to the other venturers. The Group does not recognise its share of profits or losses from the joint venture that result from the Group’s purchase of assets from the joint ventures until it resells the assets to an independent party. However, if a loss on the transaction provides evidence of a reduction in the net realisable value of assets or an impairment loss, the loss is recognised immediately. A list of the Group’s principal joint ventures is shown in Note 7.
2.6 Foreign currency translation
Items included in the financial statements of each entity in the Group are measured using Thai Baht. The consolidated and company financial statements are presented in Thai Baht.
122
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. 2.7 Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flows statement, cash and cash equivalents comprise cash on hand, deposits held at call with banks, short - term highly liquid investments with original maturities of three months or less.
2.8 Trade accounts receivable
Trade accounts receivable are carried at original invoice amount less allowance for doubtful receivables based on a review of all outstanding amounts at the year end. The amount of the allowance is the difference between the carrying amount of the receivable and the amount expected to be collectible. Bad debts are written off during the year in which they are identified.
2.9 Spare parts and supplies
Spare parts and supplies are stated at cost less allowance for obsolescence. Cost is calculated based on the moving average basis. The spare parts are categorised as fuel, specific spare parts and common spare parts. Specific spare parts are used for specific plant equipment in the power plant. The allowance for specific spare parts is calculated using the straight-line method to write off the balances of specific spare parts on hand at the year end over the remaining useful life of the power plant.
2.10 Investments
Investments other than investments in subsidiaries and interests in joint ventures are classified as held-tomaturity. The classification is dependent on the purpose for which the investments were acquired. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. Investments with fixed maturity that the management has the intent and ability to hold to maturity are classified as held-to-maturity and are included in non-current assets, except for maturities within 12 months from the balance sheet date, which are classified as current assets. Purchases and sales of investments are recognised on the trade date, which is the date that the Group commits to purchase or sell the investments. Cost of investment includes transaction costs. Held-to-maturity investments are carried at amortised cost using the effective interest rate. A test for impairment is carried out when there is a factor indicating that an investment might be impaired. If the carrying value of the investment is higher than its recoverable amount, impairment loss is charged to the consolidated and company statements of income.
123
2.11 Intangible assets
2.11.1 Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary or joint venture at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of joint ventures is included in interests in joint ventures. Goodwill is amortised using the straight-line method over its definite useful life in accordance with Power Purchase Agreements of the acquirees. Goodwill is tested for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity sold. 2.11.2 Development expenditure Development expenditure is recognised as an expense as incurred. Costs incurred on development projects are recognised as intangible assets when it is probable that the project will be a success considering its commercial and technological feasibility, and only if the cost can be measured reliably. Other development expenditure is recognised as an expense as incurred. Development expenditure previously recognised as an expense is not recognised as an asset in a subsequent period. Development expenditure that has been capitalised is amortised from the commencement of the commercial operation on a straight-line basis over the period of its expected benefit.
2.12 Property, plant and equipment
Property, plant and equipment are initially recorded at cost. Plant and equipment are stated at historical cost less accumulated depreciation. Depreciation is calculated using the straight-line method to write off the cost of each asset, except for land which is considered to have an indefinite life, to their residual values over their estimated useful lives as follows
Years Power plant, substations and transmission system Flared gas fuelled small Power plant Equipment for Gas Turbine power plant Operating and maintenance equipment and Equipment for Wind power plant Buildings and structures Building improvements Furniture, fixtures and office equipment Vehicles
25 8 5 - 25 5 20 5 5 5
Equipment for the Gas Turbine power plant will be depreciated when it is in use. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Repair and maintenance expenses 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. 124
Repair and maintenance expenses of equipment for the operation of gas turbines in the combined cycle power plant are in accordance with the Contractual Service Agreement for the combined cycle power plant between Ratchaburi Electricity Generating Company Limited and the Consortium of General Electric International Operations Co., Inc. and GE Energy Parts, Inc.
It is recorded by using the straight-line method relating to the contract period and charged to the income statement during each financial period (Note 22). Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit.
2.13 Deferred income taxes and income taxes
The Group does not recognise income taxes payable or receivable in future periods in respect of temporary differences arising from differences between the carrying amounts and tax base of assets and liabilities in the consolidated or company financial statements. Subsidiaries have certain promotional privileges from the Board of Investment, which include exemption of income tax for certain periods as described in Note 19. Income tax presented in the consolidated and company statements of income relates to non - BOI promoted activities.
2.14 Borrowings
Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective interest rate method, 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.
2.15 Employees’ benefits
The Group operates a provident fund that is a defined contribution plan, the assets of which are held in a separate trust fund and managed by fund managers. The provident fund is funded by payments from employees and by the relevant Group companies. Contributions to the provident fund are charged to the consolidated and company statements of income in the year to which they relate. The Group does not recognise liabilities in respect of employee benefit potentially payable under the Thai Labour Law.
2.16 Revenue recognition
Ratchaburi Electricity Generating Company Limited, a subsidiary, has entered into a 25-year Power Purchase Agreement with EGAT whereby the subsidiary will deliver the Net Electrical Generation to EGAT. Revenue comprises Availability Payments and Energy Payments. Availability Payments are recognised according to the terms set out in the Power Purchase Agreement, as conditions are met essentially Contracted Availability Hours, net amount of sales taxes and discounts. Energy Payments are calculated based on electricity delivered. Ratchaburi Energy Company Limited, a subsidiary, has entered into a 5-year Power Purchase Agreement with EGAT. The subsidiary will deliver the Net Electrical Generation to EGAT. Energy Payment are recognised according to the actual electricity delivered and monthly payment rate which refer to the change in natural gas price specified in the agreement. Interest income is recognised on an accrual basis unless collectability is in doubt. Dividend income is recognised when the shareholder’s right to receive payment is established.
125
2.17 Dividends Dividends are recorded in the consolidated and company financial statements in the period in which they are approved by the Board of Directors or Shareholders.
2.18 Provisions
Provisions, which exclude the provisions relating to 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, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.
2.19 Segment reporting
The Group engages in the power plant business through its own operations and through investments. Management considers its activities as an integrated and complementary line of business and determines that the Group has only one major business segment. Moreover, in terms of operating locations and market areas, the Group has presented only one geographical segment because it mainly operates in Thailand.
2.20 Comparatives
The comparative figures have been adjusted to conform with changes in presentation in the current year.
3. Additional Information
Additional information as required by TAS 35 (Revised 2007) is as follows :
3.1 Critical accounting estimates, assumptions and judgements
Estimates, assumptions and judgements 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. Estimated useful life of the power plant Estimated useful life of the power plant is determined by the Power Purchase Agreement. Project Development Cost Management determines the probability of the success of the projects under development, considering its commercial and technological on a regular basis. Costs incurred on development projects are recognised as intangible assets when it is probable that the project will be success and written off as expenses when management considers that the project will not be success.
3.2 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.
126
4. Cash and Cash equivalents Consolidated As at Cash on hand Deposits held at call with banks Short-term investments - maturity within three months
31st December 2008 Baht 300,000 280,130,967 4,370,854,147 4,651,285,114
31st December 2007 Baht 300,000 239,848,598 1,504,501,471 1,744,650,069
Company 31st December 2008 Baht 170,000 133,555,053 3,900,000,000 4,033,725,053
31st December 2007 Baht 170,000 151,799,117 1,053,759,120 1,205,728,237
As at 31st December 2008, deposits held at call with banks bear interest at the rates of 0.50% to 1.75% per annum (2007 : 0.50% to 2.63% per annum) and short-term investments - maturity within three months bear interest at the rates of 2.50% to 3.98% per annum (2007: 3.30% to 3.51% per annum).
5. Short-Term and Long-Term Investments - Held-to-Maturity On 23rd June 2005, Ratchaburi Electricity Generating Company Limited, a subsidiary, had entered into the refinancing facilities agreement. The new loan agreement does not require the subsidiary to pledge investments as collateral and to maintain cash reserves for repayment of principal and interest. However, at the Board of Director’s meeting of the subsidiary held on 11st July 2005, it has approved the policy to maintain cash reserves for repayment of principal and interest in the next quarter. As at 31st December 2008, such reserves amounting to Baht 962.48 million were included in short-term investments and long-term investments (as at 31st December 2007 : Baht 1,032.70 million). Short-term and long - term investments - held - to - maturity are as follows :
Consolidated
Company
31 December 2008 Baht
31 December 2007 Baht
31 December 2008 Baht
31st December 2007 Baht
Short-term investments - held-to-maturity Time deposits Promissory notes Bills of exchange, net
2,054,000,000 1,200,000,000 2,702,611,709
1,850,000,000 7,444,757,779
2,000,000,000 1,200,000,000 1.700,000,000
1,850,000,000 6,361,519,555
Total short-term investments - held-to-maturity
5,956,611,709
9,294,757,779
4,900,000,000
8,211,519,555
Long-term investments due within one year - Promissory notes and bills of exchange, net - Marketable securities - held-to-maturity
12,544,796
543,271,142 2,430,381
-
543,271,142 -
Total long-term investments due within one year
12,544,796
545,701,523
-
543,271,142
Long-term investments, net - Marketable securities - held-to-maturity, net
314,052,208
116,621,510
310,000,000
100,000,000
Total long-term investments, net
314,052,208
116,621,510
310,000,000
100,000,000
6,283,208,713
9,957,080,812
5,210,000,000
8,854,790,697
st
As at
Total short-term investments and long-term investments - held-to-maturity
st
st
As at 31st December 2008, short-term investments bear interest at the rates of 3.24% to 4.25% per annum (2007 : 3.25% to 3.63% per annum) and long-term investments bear interest at the rates of 4.45% to 6.90% per annum (2007: 4.60% to 4.75% per annum).
127
The maturity of long-term investments is as follows :
Consolidated As at
31st December 2008 Baht
- Within 1 year - Later than 1 year and not later than 5 years - Later than 5 years Total investments Add Premium
12,204,940 313,808,360 326,013,300 593,704 326,607,004 (12,554,796) 314,052,208
Less Current portion
Company
31st December 31st December 31st December 2007 2008 2007 Baht Baht Baht 501,250,324 116,013,300 617,263,624 45,059,409 662,323,033 (545,701,523) 116,621,510
310,000,000 310,000,000 310,000,000 310,000,000
499,279,804 100,000,000 599,279,804 43,991,338 643,271,142 (543,271,142) 100,000,000
6. Spare Parts and Supplies, Net Consolidated As at Fuel Specific spare parts Common spare parts Spare parts in transit Total Less Allowance for obsolescence Spare parts and supplies, net
31st December 2008 Baht 683,460,492 1,613,511,277 94,993 13,684,327 2,310,751,089 (357,684,515) 1,953,066,574
31st December 31st December 31st December 2007 2008 2007 Baht Baht Baht 601,392,207 1,568,218,308 94,993 40,418,131 2,210,123,639 (278,355,692) 1,931,767,947
Allowance for obsolescence represents allowance against specific spare parts.
128
Company
-
-
7. Investments in Subsidiaries and Interests in Joint Ventures
7.1 The Group’s principal subsidiaries and joint ventures that were incorporated as a limited company in Thailand are as follows :
Subsidiaries Ratchaburi Electricity Generating Company Limited, a 99.99% owned subsidiary of the Company, has objective to develop and operate the Ratchaburi Power Plant comprising Thermal Generating Units and Combined Cycle Generating Units. The output is sold to EGAT under a 25-year Power Purchase Agreement. Ratchaburi Energy Company Limited, a 99.99% owned subsidiary of the Company, has objective to develop and operate power plant including investing in the power energy business. The output is sold to EGAT under a 5-year Power Purchase Agreement. Ratchaburi Gas Company Limited, a 99.99% owned subsidiary of the Company, has objective to invest in the power energy business. Ratch Udom Power Company Limited, a 99.99% owned subsidiary of the Company, has objective to invest in the power energy business. Ratchaburi Alliances Company Limited, a 99.99% owned subsidiary of Ratch Udom Power Company Limited, has objective to invest in the power energy business. Joint ventures Tri Energy Company Limited, a 50.00% owned joint venture of Ratchaburi Gas Company Limited, has objective to generate electricity for sale solely to EGAT under a 20-year Power Purchase Agreement. Ratchaburi Power Company Limited, a 25.00% owned joint venture of Ratchaburi Alliances Company Limited, has objective to develop the 1,400-Megawatt power project, the location is within the existing power plant complex of Ratchaburi Electricity Generating Company Limited in Ratchaburi province. The output is sold to EGAT under a 25-year Power Purchase Agreement. Chubu Ratchaburi Electric Services Company Limited, a 49.99% owned joint venture of the Company, has objective to provide operation and maintenance services for the gas-fired combined cycle power plant to Ratchaburi Power Company Limited. SouthEast Asia Energy Limited, a 33.33% owned joint venture of the Company, has objective to operate the hydro electric power plant project (Nam Ngum 2) in the Laos People’s Democratic Republic.
7.2 Investments in subsidiaries and interests in joint ventures are as follows : Consolidated As at Investments in subsidiaries Interests in joint ventures Total investments in subsidiaries and interests in joint ventures
31st December 2008 Baht’000
Company
31st December 31st December 31st December 2007 2008 2007 Baht’000 Baht’000 Baht’000
7,362,008
5,676,028
20,001,803 1,387,506
20,001,803 901,062
7,362,008
5,676,028
21,389,309
20,902,865 129
The movements in investments in subsidiaries and interests in joint ventures can be analysed as follows :
Consolidated For the years ended 31st December Opening book value Add Effect from changes in accounting policy (Note 2.4) Opening book value after adjusted Payment for additional share capital and additional paid-up shares of joint ventures Share of profit of interests in joint ventures Disposal of interest in a joint venture Dividends received from a joint venture Closing book value
2008 Baht’000
2007 Baht’000
Company 2008 Baht’000
2007 Baht’000
5,676,028
3,985,924
20,902,865
20,336,803
191,838 5,867,866
3,985,924
20,902,865
20,336,803
975,194 931,701 (40,354) (372,399) 7,362,008
1,357,275 792,632 (459,803) 5,676,028
486,444 21,389,309
566,062 20,902,865
Additional paid-up shares in joint ventures Ratchaburi Power Company Limited During the year ended 31st December 2008, Ratchaburi Power Company Limited, a joint venture, called for additional paid-up share capital in respect of its issued shares. Ratchaburi Alliances Company Limited, a subsidiary, paid an amount of Baht 488.75 million for the additional paid-up share capital according to its original investment of 25%. SouthEast Asia Energy Limited During the year ended 31st December 2008, SouthEast Asia Energy Limited, a joint venture, called for additional paid-up share capital. The Company paid for the additional paid-up share capital in the investment portion of 33.33% amounting to Baht 486.44 million Disposal of interest in a joint venture On 19th September 2008, the Board of Directors of Ratchaburi Energy Company Limited, a subsidiary, approved for the sales of total 15% investment in Siam Ethanol Exports Company Limited, its joint venture. On 7th October 2008, the subsidiary has completely sold the investments in this joint venture for Baht 45 million. Dividends received from a subsidiary The resolution of Shareholder’s Annual General Meeting Year 2007 of Ratchaburi Electricity Generating Company Limited, a subsidiary, held on 18th March 2008 approved to pay additional dividends in respect of 2007 performance for 1,827.50 million shares of Baht 0.46 per share, totalling Baht 837.35 million. The Company received dividends in May 2008. In addition, the Board of Directors also approved the payment of interim dividends in respect of 2008 quarterly performance as follows:
130
Quarter 1, interim dividends for 1,827.50 million shares of Baht 0.64 per share, totalling Baht 1,164.63 million.
The Company received dividends in July 2008. Quarter 2, interim dividends for 1,827.50 million shares of Baht 0.65 per share, totalling Baht 1,188.67 million.
The Company received dividends in October 2008. Quarter 3, interim dividends for 1,827.50 million shares of Baht 0.98 per share, totalling Baht 1,795.98 million. The Company will receive such dividends in January 2009 so that they are presented as dividend receivables on Company balance sheet as at 31st December 2008. A resolution of Board of Director’s meeting of Ratchaburi Gas Company Limited, a subsidiary, held on 11st June 2008 and 11st December 2008, approved to pay interim dividends in respect of 2008 performance for 50 million shares, totalling Baht 362.30 million. During the year 2008, the Company received the dividends totalling Baht 239.60 million. The Company will receive outstanding dividends amounting to Baht 122.70 million in March 2009 so that they are presented as dividend receivables on company balance sheet as at 31st December 2008. Dividends received from a joint venture During the year ended 31st December 2008, the Board of Directors of Tri Energy Company Limited, approved to pay dividends for 34.237 million shares of Baht 10.40 per share and Baht 10.77 per share. Ratchaburi Gas Company Limited, a subsidiary, received dividends for its investment portion of 50.00% amounting to Baht 178.03 million in June 2008 and amounting to Baht 61.63 million in December 2008. The subsidiary will receive outstanding dividends amounting to Baht 122.73 million in March 2009 so that they are presented as dividend receivables on consolidated balance sheet as at 31st December 2008. During the year ended 31st December 2008, the Board of Directors of Chubu Ratchaburi Electric Services Company Limited, a joint venture, approved to pay dividends for 400,000 shares of Baht 50.00 per share. The Company received the dividends for its existing portion of 50% totalling Baht 10.00 million in December 2008. Reduction in share capital of a joint venture On 2nd January 2008, SouthEast Asia Energy Limited, a joint venture, registered the decrease of its authorised share capital with the Ministry of Commerce to Baht 6,606.75 million (660.67 million shares with a par value of Baht 10 per share) from previous amounts of Baht 8,809 million (880.90 million shares with a par value of Baht 10 per share). The decreased 220.225 million shares are reduction of 25% investment portion of the Government of Laos People’s Democratic Republic (Lao PDR) in the joint venture. However, Lao PDR will bring this capital for the direct investment in Nam Ngum 2 Power Company Limited. As a result of the restructuring, investment proportion in Nam Ngum 2 Power Company Limited. by the joint venture will reduce to 75%, leaving 25% hold by Lao PDR. The investment proportion of the Company in Nam Ngum 2 Power Company Limited indirect invests through its joint venture, remain 25%.
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7.3 The principal investments in subsidiaries and interests in joint ventures in the company financial statements are as follows: Company Business Subsidiaries Ratchaburi Electricity Generating Co., Ltd. Ratchaburi Gas Co., Ltd. and its joint venture Tri Energy Co., Ltd. Ratch Udom Power Co., Ltd. and its subsidiary Ratchaburi Alliances Co., Ltd. and its joint venture Ratchaburi Power Co., Ltd. Ratchaburi Energy Co., Ltd.
Joint ventures Chubu Ratchaburi Electric Services Co., Ltd. SouthEast Asia Energy Limited
132
Portion of investment (%)
31st December 31st December 2008 2007 Cost Method Cost Method Baht’000 Baht’000
Electricity generating Investing in power energy business Investing in power energy business
99.99 99.99
18,275,000 1,165,903
18,275,000 1,165,903
99.99
420,900
420,900
Electricity generating
99.99
140,000 20,001,803
140,000 20,001,803
Provide operation and maintenance services Investing in electricity generating business (construction phase)
49.99
10,000
10,000
1,377,506
891,062
1,387,506
901,062
33.33 (2007 : 25.00%)
7.4 The principal interests in joint ventures including goodwill in the consolidated financial statements are as follows: Consolidated
31st December 2008 Portion of investment (%) Electricity generating 50.00 Electricity generating 25.00 Provide operation and 49.99
Business
Tri Energy Co., Ltd. Ratchaburi Power Co., Ltd. Chubu Ratchaburi Electric Services Co., Ltd. SouthEast Asia Energy Limited
maintenance services Investing in electricity generation business (construction phase)
33.33
Cost method Equity method Baht’000 Baht’000
Dividends Baht’000
1,809,210 1,831,250 10,000
4,069,594 1,894,310 64,222
362,399 10,000
1,377,507
1,333,882
-
5,027,967
7,362,008
372,399
Consolidated
31st December 2007 Business Tri Energy Co., Ltd. Ratchaburi Power Co., Ltd. Siam Ethanol Exports Co.,Ltd.
Chubu Ratchaburi Electric Service Co., Ltd. SouthEast Asia Energy Limited
Electricity generating Electricity generating (construction phase) Product alcohol for export (construction phase) Privide operation and maintenance services Investing eletricity generating business (construction phase)
Portion of investment (%) 50.00 25.00
Cost method Equity method Baht’000 Baht’000
Dividends Baht’000
1,809,210 1,342,500
3,653,657 1,091,848
459,803 -
15.00
45,000
40,876
-
49.99
10,000
25,088
-
25.00
891,062
864,559
-
4,097,772
5,676,028
459,803
Ratchaburi Power Company Limited, a joint venture, has commercially operated the Power Plant unit 1 on 1st March 2008 and the Power Plant unit 2 on 1st June 2008.
133
7.5 The Group’s share of the assets, liabilities, revenues and expenses of the joint ventures according to the investment proportions are as follows: 31st December 2008 Chubu Ratchaburi Ratchaburi Power Electric Services Co., Ltd. Co., Ltd. Baht’000 Baht’000
Tri Energy Co., Ltd. Baht’000 Balance Sheets Current Assets Non-Current Assets Current Liabilities Non-Current Liabilities Net assets
1,308,925 5,293,472 (1,315,029) (1,217,766) 4,069,602
2,107,056 5,836,914 (1,171,418) (5,448,150) 1,324,402
SouthEast Asia Energy Limited Baht’000
92,980 13,242 (42,000) 64,222
72,891 6,309,345 (217,921) (4,397,153) 1,767,162
For the year ended 31st December 2008 Tri Energy Co., Ltd. Baht’000
Statements of income Revenues Expenses Profit (loss) before income tax Income tax Net profit (loss) Joint venture proportion (%)
134
Chubu Ratchaburi Ratchaburi Power Electric Services Co., Ltd. Co., Ltd. Baht’000 Baht’000
SouthEast Asia Energy Limited Baht’000
5,163,817 (4,543,755) 620,062 (33,565) 586,497
3,697,023 (3,363,548) 333,475 333,475
439,925 (369,678) 70,247 (21,113) 49,134
282 (21,601) (21,319) (474) (21,793)
50
25
49.99
33.33
31st December 2007 Tri Energy Co., Ltd. Baht’000 Balance Sheets Current Assets Non-Current Assets Current Liabilities Non-Current Liabilities Net assets
1,184,171 5,526,371 (1,160,599) (1,704,438) 3,845,505
Chubu Ratchaburi Siam Exthanol Electric Services Ratchaburi Power Exports Co., Ltd. Co., Ltd. Co., Ltd. Baht’000 Baht’000 Baht’000 737,667 4,215,304 (582,449) (3,868,344) 502,178
5,185 73,825 (13,352) (24,782) 40,876
33,120 6,381 (14,413) 25,088
SouthEast Asia Energy Limited Baht’000 62,721 2,886,375 (194,241) (1,898,961) 855,894
For the year ended 31st December 2007 Tri Energy Co., Ltd. Baht’000 Statements of income Revenues Expenses Profit (loss) before income tax Income tax Net profit (loss) Joint Venture proportion (%)
Chubu Ratchaburi Ratchaburi Power Siam Exthanol Electric Services Exports Co., Ltd. Co., Ltd. Co., Ltd. Baht’000 Baht’000 Baht’000
SouthEast Asia Energy Limited Baht’000
5,412,565 (4,606,948) 805,617 805,617
64,237 (92,974) (28,737) (28,737)
66 (2,211) (2,145) (2,145)
80,040 (60,610) 19,430 (5,873) 13,557
47 (11,054) (11,007) (11,007)
50.00
25.00
15.00
49.99
25.00
8. Property, Plant and Equipment, Net As at 31st December 2008, land, buildings, power plant and equipment of Ratchaburi Electricity Generating Company Limited, a subsidiary, amounting to Baht 39,714.81 million (31st December 2007: Baht 42,382.73 million) have been mortgaged and pledged as collateral in accordance with the long-term loans agreements (Note 10). As at 31st December 2008, subsidiaries and joint ventures have outstanding commitments relating to the purchase of machinery and equipment as disclosed in Note 22.
135
751,456,864 -
751,456,864
751,456,864 -
751,456,864
751,456,864 -
751,456,864
At 31st December 2007 Cost Less Accumulated depreciation
Net book value
Year ended 31st December 2008 Opening net book value Additions Transfers Disposal, net Depreciation charge (Note 13)
Closing net book value
At 31st December 2008 Cost Less Accumulated depreciation
Net book value
Land Baht
296,682,172 38,745,777,207
497,040,435 57,441,383,670 (200,358,263) (18,695,606,463)
296,682,172 38,745,777,207
318,678,920 41,321,471,756 1,038,915 11,240,788 1,876,730 111,143,924 (24,912,393) (2,698,079,261)
318,678,920 41,321,471,756
494,124,790 57,318,998,958 (175,445,870) (15,997,527,202)
15,826,151
15,826,151 -
15,826,151
90,865,889 (75,039,738) -
90,865,889
90,865,889 -
52,977,720
235,535,469 (182,557,749)
52,977,720
74,912,756 3,125,177 600,000 (2,854,140) (22,806,073)
74,912,756
246,187,884 (171,275,128)
Total Baht
40,078,924,125
42,575,471,568 252,104,424 (2,854,140) (2,745,797,727)
42,575,471,568
216,204,011
40,078,924,125
216,204,011 59,157,446,600 - (19,078,522,475)
216,204,011
18,085,383 236,699,544 (38,580,916) -
18,085,383
18,085,383 58,919,719,768 - (16,344,248,200)
Power plants Equipment for substation & Gas Turbine transmission power plant system and which has not Buildings Office and building operating & been put in equipment Construction maintenance improvements equipment use and vehicles in progress Baht Baht Baht Baht Baht
Consolidated
8. Property, Plant and Equipment, Net (Continued)
136 26,995,722
146,115,860 (119,120,138)
26,995,722
39,248,822 2,532,631 (1,963,466) (12,822,265)
39,248,822
152,430,688 (113,181,866)
5,317,450
5,317,450 -
5,317,450
5,317,450 -
-
-
Office equipment Construction and vehicles in progress Baht Baht
Company
32,313,172
151,433,310 (119,120,138)
32,313,172
39,248,822 7,850,081 (1,963,466) (12,822,265)
39,248,822
152,430,688 (113,181,866)
Total Baht
9. Other Non-Current Assets Other non-current assets include amounts in relation to the Lignite Mining Project and the Lignite-Fired Power Project (Hongsa Lignite Project) in accordance with Joint Development Agreement and other agreements amounting to US Dollars 20 million, equivalent to Baht 665.51 million; and project development costs amounting to Baht 454 million (See Note 22 under heading Lignite Mining Project and the Lignite-Fired Power Project).
10. Long-Term Loans, Net The long-term loans are Thai Baht loans as follows:
Consolidated As at Current portion of long-term loans from financial institutions and debentures Current portion of long-term loans from financial institutions Less Deferred financing fee amortised within one year Current portion of long-term loans from financial institutions, net
31st December 2008 Baht
Company
31st December 31st December 31st December 2007 2008 2007 Baht Baht Baht
1,732,306,800
1,698,340,000
-
-
(40,440,678)
(27,812,127)
-
-
1,691,866,122
1,670,527,873
-
-
1,500,000,000 (527,685)
1,916,900,000 (1,810,170)
-
-
1,499,472,315
1,915,089,830
-
-
19,006,850,800
20,739,157,600
-
-
(116,980,979) 18,889,869,821
(173,825,794) 20,565,331,806
-
-
750,000,000
2,250,000,000
-
-
(87,250) 749,912,750
(915,254) 2,249,084,746
-
-
Total long-term loans from financial institutions and debentures Less Deferred financing fee
22,989,157,600 (158,036,592)
26,604,397,600 (204,363,345)
-
-
Total long-term loans from financial institutions and debentures, net
22,831,121,008
26,400,034,255
-
-
Current portion of unsubordinated and secured debentures Less Deferred financing fee amortised within one year Current portion of unsubordinated and secured debentures, net Long-term loans from financial institutions and debentures Long-term loans from financial institutions Less Deferred financing fee amortised later than one year Long-term loans from financial institutions, net Unsubordinated and secured debentures Less Deferred financing fee amortised later than one year Unsubordinated and secured debentures, net
137
The movements in long-term loans can be analysed as follows:
Consolidated For the years ended 31st December Opening net book amount Repayments of long-term loans Repayments of debentures Amortisation of deferred financing fee Closing net book amount
2008 Baht
2007 Baht
26,400,034,255 (1,698,340,000) (1,916,900,000) 46,326,753 22,831,121,008
29,507,950,358 (805,498,400) (2,333,240,000) 30,822,297 26,400,034,255
Company 2008 Baht
2007 Baht -
-
On 16th June 2005, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into an underwriting agreement with four local financial institutions. Under the agreement, these four financial institutions had jointly agreed to underwrite the refinancing facilities totalling Baht 34,262 million, which comprised Tranche A long-term credit facilities of Baht 24,262 million, debenture facilities of Baht 10,000 million and Tranche C short-term credit facilities of Baht 10,000 million as temporary facilities before completion of debenture issuance to refinance the full amount of existing loans. On 23rd June 2005, such subsidiary entered into a loan agreement with six local financial institutions which comprised Tranche A long-term credit facilities of Baht 24,262 million and Tranche C short-term credit facilities of Baht 10,000 million. On 25th July 2005, the subsidiary drew down the Tranche A and Tranche C credit facilities totalling of Baht 34,262 million to repay the full amount of the existing loans. On that day the subsidiary redeemed the mortgage and pledge as collateral of land, buildings, power plant and equipment and investment in securities toward the existing loans, and mortgaged and pledged land, building, power plant and equipment as collateral in accordance with the refinancing agreement and debentures. During 26th to 29th July 2005, the subsidiary issued and distributed the unsubordinated debentures, bearing the name of the holders, secured, with the debenture holder representative and principal installment repayments to the general public and institutional investors. The debenture comprised Tranche B1 of Baht 7,000 million with a three-year repayment period and a fixed interest rate of 3.67% per annum and Tranche B2 of Baht 3,000 million with a five-year repayment period and a fixed interest rate of 3.67% per annum for the first and second year and Minimum Lending Rate (MLR) minus 2 per annum throughout the remaining periods. The subsidiary used proceeds from issuing of debentures amounting to Baht 10,000 million to repay the full amount of Tranche C short-term credit facilities on 29th July 2005. Long-term credit facilities (Tranche A) are subject to the Minimum Lending Rate (MLR) minus margins as follows :
138
Periods
Interest Rate (%)
25th July 2005 - 24th July 2007 25th July 2007 - 24th July 2009 25th July 2009 - 24th July 2015
MLR - 2.5 MLR - 2.0 MLR - 1.5
The maturities of long-term loans are as follows:
Consolidated As at - Within 1 year Long-term loans from financial institutions Unsubordinated and secured debentures - Later than 1 year and not later than 5 years Long-term loans from financial institutions Unsubordinated and secured debentures - Later than 5 years long-term loans from financial institutions Total long-term loans from financial institutions and unsubordinated and secured debentures
31st December 2008 Baht
Company
31st December 31st December 31st December 2007 2008 2007 Baht Baht Baht
1,732,306,800 1,500,000,000
1,698,340,000 1,916,900,000
-
-
18,286,269,400 750,000,000
11,116,848,400 2,250,000,000
-
-
720,581,400
9,622,309,200
-
-
22,989,157,600
26,604,397,600
-
-
11. Share Capital and Premium on Share Capital ณ วันที่ As at 31st December 2006 Issue of shares As at 31st December 2007 Issue of shares As at 31st December 2008
Number of Shares 1,450,000,000 1,450,000,000 1,450,000,000
Premium on Ordinary shares share capital Baht Baht 14,500,000,000 14,500,000,000 14,500,000,000
1,531,778,000 1,531,778,000 1,531,778,000
Total Baht 16,031,778,000 16,031,778,000 16,031,778,000
As at 31st December 2008, the total authorised number of ordinary shares is 1,450,000,000 shares (31st December 2007: 1,450,000,000 shares) with a par value of Baht 10 per share (31st December 2007: Baht 10 per share). All issued shares are fully paid.
139
12. Legal Reseve Consolidated
Opening Balance Appropriation during the year Closing Balance
Company
2008 Baht
2007 Baht
2008 Baht
2007 Baht
1,450,000,000 1,450,000,000
1,450,000,000 1,450,000,000
1,450,000,000 1,450,000,000
1,450,000,000 1,450,000,000
Under the Public Companies Act B.E. 2535, the Company is required to set aside as a statutory reserve at least 5% of its net profit until the reserve is not less than 10% of the registered capital. The reserve is non-distributable.
13. Operating Profit The following expenditure items have been charged in arriving at operating profit :
Consolidated
Fuel costs Depreciation on property, plant and equipment (Note 8) Amortisation of the right in transmission line Service charges for normal operation and maintenance (Note 22) Service charges for major maintenance (Note 22) Spare parts and repair expenses Insurance premium Staff costs Amortisation of deferred financing fee Insurance compensation from fire cause (presented with other income)
140
Company
2008 Baht
2007 Baht
2008 Baht
2007 Baht
29,930,344,201
32,282,549,637
-
-
2,745,797,727 1,365,551
2,745,639,118 697,948
12,822,265 -
13,955,024 -
814,545,165 137,299,899 1,104,704,357 218,843,542 227,659,486 46,326,753
779,861,390 549,640,659 1,296,369,394 241,787,347 191,539,643 30,822,297
160,233,706 -
131,009,331 -
-
(707,772,479)
-
-
14. Corporate Income Tax The Company is entitled for reduction in corporate income tax according to the Royal Decree No. 475, B.E. 2551 from applying tax rate at 30% to 25% for the amount of the net taxable profit which is not over Baht 300 million on the accounting period begin in or after 1st January 2008 for 3 consecutive accounting periods. Two subsidiaries have certain promotional privileges from the Board of Investment (BOI), which include exemption of corporate income tax. Corporate income tax is calculated at 30% on taxable income from Non-BOI promoted activities. Corporate income tax of Baht 217.35 million and Baht 41.94 million, which are presented in the consolidated and company statements of income for the year ended 31st December 2008, are calculated at the tax rates as mentioned above.
15. 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.
Consolidated 2008 Net profit attributable to shareholders (Baht) Weighted average number of ordinary shares in issue (Shares) Basic earnings per share (Baht)
2007
Company 2008
2007
6,492,898,454
5,829,400,410
5,463,453,862
6,762,950,104
1,450,000,000 4.48
1,450,000,000 4.02
1,450,000,000 3.77
1,450,000,000 4.66
There are no dilutive potential ordinary shares in issue during the years presented.
16. Dividends The resolution of Board of Director’s meeting held on 18th August 2008 approved the interim dividends payment in respect of 2008 performance for 1,450 million shares of Baht 1.10 per share, totalling Baht 1,595 million. These interim dividends were paid to the shareholders in September 2008. The resolution of Shareholder’s Annual General Meeting Year 2007 held on 4th April 2008 approved the dividend payment in respect of 2007 performance as follows: a) Interim dividends for 1,450 million shares of Baht 1.00 per share, totalling Baht 1,450 million. These interim dividends were paid to the shareholders in September 2007. b) Dividends for 1,450 million shares of Baht 1.10 per share, totalling Baht 1,595 million. These dividends were paid to the shareholders in April 2008. The resolution of Shareholder’s Annual General Meeting Year 2006 held on 20th April 2007 approved the dividend payment in respect of 2006 performance as follows: a) Interim dividends for 1,450 million shares of Baht 1.00 per share, totalling Baht 1,450 million. These interim dividends were paid to the shareholders in September 2006. b) Dividends for 1,450 million shares of Baht 1.10 per share, totalling Baht 1,595 million. These dividends were paid to shareholders in May 2007. 141
17. Directors’ Remuneration Directors’ remuneration for the year ended 31st December 2008 in the consolidated and company statements of income are Baht 31.16 million and Baht 21.18 million, respectively (2007: Baht 27.78 million and Baht 19.06 million, respectively) comprises meeting fees and bonus.
18. Provident Fund The Group joined the contributory employees’ provident fund of EGAT for their employees. Membership of the fund is on a voluntary basis. The contributions comprise the employees’ and the Group’s contribution at the same rate. The funds are managed by authorised fund managers in accordance with the Provident Fund Act B.E. 2530.
19. Promotional Privileges Ratchaburi Electricity Generating Company Limited On 22th November 2000, Ratchaburi Electricity Generating Company Limited, a subsidiary, received promotional privileges from the Office of the Board of Investment for two promotional certificates comprising Thermal Generating Power Plant and Combined Cycle Generating Power Plant. Under these privileges, the subsidiary has received exemption from certain taxes and duties as detailed in the certificates, including exemption from corporate income tax for a period of 8 years from the date of the first revenue earned (31st October 2000 for the Thermal Generating Power Plant and 18th April 2002 for the Combined Cycle Generating Power Plant). As a promoted entity, the subsidiary is required to comply with the terms and conditions as specified in the promotional certificates.
Ratchaburi Energy Company Limited
On 29th December 2006, Ratchaburi Energy Company Limited, a subsidiary, received promotional privileges from the Office of the Board of Investment for Flared gas fuelled small power plant project. Under these privileges, the subsidiary has received exemption from certain taxes and duties as detailed in the certificate, including exemption from corporate income tax for amounts not exceeding 100% of capital investment excluding cost of land and working capital for a period of 8 years from the date of the first revenue earned. As a promoted entity, the subsidiary is required to comply with the terms and conditions as specified in the promotional certificate. The subsidiary started to earn revenue from promoted business activities on 27th June 2007. The revenues for promoted and non-promoted business activities for the years ended 31st December that were included in the consolidated financial statements are as follows : 2008 2007 Baht Baht
BOI promoted activities Non BOI promoted activities
142
41,337,896,248 1,061,763,039 42,399,659,287
44,601,317,692 228,335,468 44,829,653,160
20. Financial Instruments Foreign Currency Risk The Group has no significant foreign currency risk since the major business transactions of the Group are carried out in Thai Baht. In respect of currency exchange risk, which mainly relates to the purchase of spare parts and maintenance expenses in US Dollars, the Group manages its short-term exchange risk by entering into forward exchange contracts, normally of a maturity of no longer than 30 days. Trading for speculative purposes is prohibited. All derivative transactions are in compliance with Group’s policy which has established limits by transaction type and by counter party.
Credit Risk
The Group has no significant concentrations of credit risk relating to its cash and investments. The Group places its cash and investments with high quality financial institutions. The Group’s policy is designed to limit exposure with any one financial institution and to invest its excess cash in low risk investment accounts. The Group has not experienced any losses on such accounts. The Group has no significant credit risk with any single counterparty or group counterparties as the only customer of the Group is EGAT, a State Enterprise.
Interest Rate Risk
Interest rate risk arises from the fluctuations in market interest rates, which may have a negative effect on current and future operations of the Group. Management believes that exposure to interest rate risk is minimal because the floating interest rate according to the condition in the long-term loans agreements (Note 10) is included in the availability payment as specified in the Power Purchase Agreement (Note 22). Therefore, the Group does not enter into a hedging agreement to protect against such risk.
21. Related Party 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. A major shareholder of the Company is Electricity Generating Authority of Thailand (“EGAT”) which holds 45% of the Company’s total ordinary shares, and EGAT Employee’s Provident Fund, which holds about 0.30% of the Company’s total ordinary shares. Information regarding the Company’s subsidiaries and joint ventures is shown in Note 7. During the year, the Group has entered into a number of transactions with related parties; the terms are agreed in the agreement. Purchases of fuel oil and electricity from EGAT are at market price. Details of the agreements made with the related parties are shown in Note 22.
143
The following material transactions were carried out with related parties: (a) Sales, management service income, interest income and other income
Consolidated For the years ended 31st December Sales - Electricity Generating Authority of Thailand (Note 22) Management service income - Subsidiaries - Joint ventures Interest income - Subsidiaries - Joint ventures Other income - Electricity Generating Authority - Joint ventures
2008 Baht’000
Company
2007 Baht’000
2008 Baht’000
2007 Baht’000
42,210,249
43,820,695
-
-
114,119
49,331
3,961 114,119
8,389 49,331
3,511
139
49,044 3,511
25,645 139
46,483
6,673 24,644
-
-
(b) Purchases of goods and services
Consolidated For the years ended 31st December Purchases of fuel oil - Electricity Generating Authority of Thailand Purchases of electricity - Electricity Generating Authority of Thailand Operation and major maintenance expenses - Electricity Generating Authority of Thailand (Note 22) Restoration expenses of Flue Gas Desulphurisation - Electricity Generating Authority of Thailand (Note 22) (The expense was compensated by the insurance company) Management service expense - A subsidiary 144
2008 Baht’000
Company
2007 Baht’000
2008 Baht’000
2007 Baht’000
1,638,548
1,902,833
-
-
155,319
133,456
-
-
999,797
1,318,197
-
-
-
114,253
-
-
-
-
9
31
(c)
Outstanding balances arising from sales/purchases of goods and services
Consolidated As at Trade receivable from a related party - Electricity Generating Authority of Thailand
31st December 2008 Baht’000
Company
31st December 31st December 31st December 2007 2008 2007 Baht’000 Baht’000 Baht’000
6,628,620
7,346,627
-
-
14,852
19,803
-
-
Trade payable to a related party - Electricity Generating Authority of Thailand
-
334,181
-
-
Amounts due to a related party - Electricity Generating Authority of Thailand
30,222
96,252
1,600
268
36,348 15,913 52,261
228,337 1,416 229,753
14,497 14,497
-
Outstanding trade receivable from a related party as above has the credit term within 1 month. Long-term trade receivable from a related party - Electricity Generating Authority of Thailand
Unearned revenue and accrued expenses to related parties - Electricity Generating Authority of Thailand - Joint ventures
(d) Amounts due from/to, advances and loans to related parties
Consolidated As at Advances to and other receivables from related parties - Electricity Generating Authority of Thailand - Subsidiaries - Joint ventures Short-term loan to a related party - A subsidiary
31st December 2008 Baht’000
Company
31st December 31st December 31st December 2007 2008 2007 Baht’000 Baht’000 Baht’000
10,849 13,595 24,444
17,604 15,180 32,784
386 3,199 3,585
4,828 6,050 10,878
-
-
-
8,000 145
(d) Amounts due from/to, advances and loans to related parties (continued)
Consolidated As at Long-term loans to related parties - A subsidiary - A joint venture Long-term receivables from related parties - Subsidiaries - A Joint venture
31st December 2008 Baht’000
Company
31st December 31st December 31st December 2007 2008 2007 Baht’000 Baht’000 Baht’000
62,500 62,500
17,500 17,500
1,412,781 62,500 1,475,281
923,831 17,500 941,331
3,650 3,650
139 139
65,380 3,650 69,030
17,540 139 17,679
Long-term loans to related parties Movements in long-term loans to related parties can be analysed as follows :
For the year ended 31st December 2008 Opening balance Additions during the year Repayments during the year Closing balance
Consolidated
Company
Baht’000
Baht’000
17,500 45,000 62,500
941,331 533,950 1,475,281
During the year ended 31st December 2008, the Company granted additional long-term loans to Ratch Udom Power Company Limited, a subsidiary, amounting to Baht 488.95 million which are promissory notes held at call under the existing agreement and condition. As at 31st December 2008, the outstanding balance was Baht 1,412.78 million, bearing interest at the rate of 3.38% to 4.00% per annum (as at 31st December 2007: Baht 923.83 million bearing interest at the rate of 3.38% to 6.00% per annum). During the year ended 31st December 2008, the Company granted long-term loans to SouthEast Asia Energy Limited, Vientiane Branch, a joint venture, amounting to Baht 45.00 million in accordance with Shareholders’ Loan Agreement. As at 31st December 2008, the outstanding balance was Baht 62.50 million, bearing interest at the rate of 7.92% to 8.42% per annum (as at 31st December 2007: Baht 17.50 million bearing interest at the rate of 8.04% per annum). The Company classified these loans as long-term loans because the joint venture will repay the loans and interest for the earlier of (i) within 18 months from the signing date of Shareholders’ Loan Agreement or (ii) after the joint venture receives loan approval from the financial institutions. In addition, the resolution of the Board of Director’s meeting held on 16th February 2009 approved the extension of repayment terms of such loans (See Note 23 Post balance sheet events) 146
22. Significant Agreements, Commitments and Contingent Liabilities a) Power Purchase Agreement with a related party On 9th October 2000, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into a 25-year Power Purchase Agreement with EGAT whereby the subsidiary will deliver the Net Electrical Generation from the Thermal Generating Units 1 and 2 and the Combined Cycle Generating Blocks 1, 2 and 3 to EGAT at the agreed conditions. Under the Power Purchase Agreement, the subsidiary will receive revenue from EGAT comprising of an Availability Payment (AP) and an Energy Payment (EP). The Availability Payment (AP) covers repayment of principal and interest of loan, equity return for shareholders, fixed expenses in operation and maintenance, and administrative expenses. Expenses will be adjusted to cover the change of interest rate, Consumer Price Index and exchange rate. The Energy Payment (EP) covers production costs comprising of fuel costs variable costs in operation and maintenance, which will be adjusted in accordance to the fuel costs, efficiency ratio and Consumer Price Index. On 3rd December 2008, Ratchaburi Energy Company Limited, a subsidiary, entered into a 5-year 2 Megawatts Power Purchase Agreement with EGAT. The contract can be extended for a period of five years subject to the provision of written notice to the counterparty within 30 days before the contract expiry date. b) Fuel Purchase Agreements On 27th October 2000, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into a 25-year Gas Sales Agreement with PTT Public Company Limited (“PTT”) whereby PTT will supply natural gas to the subsidiary at an agreed quantity and price. On 1st June 2004, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into a three-year Diesel Purchase Agreement with PTT Public Company Limited (“PTT”), which can be extended for a period of one year until the end of contract. However, without the six-month advance written notice designated the intention to terminate the contract from PTT, PTT would sell diesel to the Company at the agreed quantity and price as stated in the contract. On 17th January 2006, Ratchaburi Energy Company Limited, a subsidiary, entered into a Gas Sales Agreement (gas is a by-product from crude oil production) with PTTEP Siam Company Limited and PTT Exploration and Production Public Company Limited for its 2 Megawatts power plant project with the initial price of Baht 26.65 per 1 million B.T.U. for eight years from the date of commencement of commercial operation, which was 27th June 2007. c) Operation and Maintenance Agreement and Other Service Agreement On 26th October 2000, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into an Operation and Maintenance Agreement with EGAT for a period of approximately 9 years whereby EGAT will operate and provide general maintenance services including major overhaul for the subsidiary. The original operation and general maintenance charge is approximately Baht 633 million per annum, adjusted by the annual Consumer Price Index. The service charges for major overhaul have been specified in the contract which will vary based on nature of the work. However, such agreement was terminated and replaced by an Operation and Maintenance Agreement dated 7th January 2009, see Note 23 Post balance sheet events. On 1st August 2002, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into a Parts Management Agreement for Gas Turbine Model MS9001FA for the Combined Cycle Generating with EGAT for a period of 12 years with an original contract price approximately Baht 12 million per annum, adjusted by the annual Consumer Price Index. In addition, there are additional charges based on actual costs incurred. However, such agreement was terminated and replaced by an Operation and Maintenance Agreement dated 7th January 2009, see Note 23 Post balance sheet events. 147
On 10th March 2008, Ratchaburi Energy Company Limited, a subsidiary, entered into the Operation and Maintenance Agreement with a service provider having operation service fee of approximately Baht 2.58 million per year. The agreement is effective for a period of one year. As at 31st December 2008, a subsidiary has outstanding commitments amounting to Baht 1.51 million. d) Contractual Service Agreement On 29th December 2005, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into a Contractual Service Agreement for the Combined Cycle Generating Power Plant between the subsidiary and the Consortium of General Electric International Operations Co.,Inc. and GE Energy Parts, Inc. The agreement is effective from the agreement date until the end of the operation of gas turbine according to Power Purchase Agreement in year 2027 with a total contract price of US Dollars 429 million with adjustments as conditions specified in the contract. As at 31st December 2008, such subsidiary has outstanding commitments amounting US Dollars 340.02 million (as at 31st December 2007: Baht 369 million). As at 31st December 2008, Ratchaburi Electricity Generating Company Limited, a subsidiary, has outstanding commitments amounting of US Dollars 4.39 million for additional extra work under a Contractual Service Agreement for the Combined Cycle Generating Power Plant with GE Energy Parts, Inc. (as at 31st December 2007: US Dollars 8.79 million). e) Land Lease Agreement and Common Facility Agreement On 7th June 2004 and 21st October 2005, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into a land lease agreement with Ratchaburi Power Company Limited to let Ratchaburi Power Company Limited lease an area of 145 rais in the Ratchaburi Power Plant area for a power plant project for a period of 25 years and 3 months commencing from Ratchaburi Power’s commercial operation date. In addition, on 25th November 2005, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into Common Facility Agreement with Ratchaburi Power Company Limited whereby the subsidiary will provide certain facilities, utilities, services, right to use and access rights relating to the construction and operation of the facility to Ratchaburi Power Company Limited as agreed in the contract. This agreement is effective starting from the agreement’s date until the expiry date of the land lease agreement dated 7th June 2004. f) Management Service Agreement Under Management Service Agreement dated 27th February 2004, the Company will receive management fee from Ratchaburi Power Company Limited amounting to US Dollars 2.5 million per year for a period of 25 years and 3 months from the commercial operation date of the first unit of Ratchaburi Power Company Limited, with total contract value of US Dollars 63.125 million. g) Agreements in relation to investment in a joint venture, Ratchaburi Power Company Limited Under the terms and conditions of Loan Agreement between Ratchaburi Power Company Limited, joint venture, and the lenders, the Company entered in to the Sponsor Agreement dated 14th December 2005 committed to guarantee to the joint venture’s lenders to provide financial support for the construction of power plant of Ratchaburi Power Company Limited for its proportion of 25% investment, approximately US Dollars 53.5 million. As at 31st December 2008, the Company totally supported the subsidiary to pay for the additional paid-up capital of Ratchaburi Power Company Limited according to its investment portion.
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h) Agreements in relation to investment in a joint venture, Chubu Ratchaburi Electric Service Company Limited
On 29th September 2005, the Company and Chubu Electric Power (Thailand) Company Limited has entered into a Shareholders Agreement to set up Chubu Ratchaburi Electric Services Company Limited. The Company made the first payment of paid-up capital in October 2005 totalling Baht 10 million. As at 31st December 2008, the Company has commitment to make payment for the unpaid share capital amounting to Baht 10 million. In addition, under this Shareholders Agreement, should the Chubu Ratchaburi Electric Services Company Limited require additional funding exceed its registered capital, the Company agreed to provide financial support in the form of shareholder loans or guarantees to Chubu Ratchaburi Electric Services Company Limited in proportion of the Company’s shareholding of 50.00%. There are no specific amounts of financial supports specified in the agreement. As at 31st December 2008, the Company has not provided any loans or guarantees in according to this agreement.
i) Agreements in relation to investment in a joint venture, SouthEast Asia Energy Limited
An Equity Contribution Agreement dated 26th May 2006 between shareholders and lenders from financial institutions in order to obligate the capital contribution payment to SouthEast Asia Energy Limited, a joint venture. The Company has commitment to pay capital contribution to the joint venture totalling Baht 2,202.25 million. As at 31 st December 2008, the Company has outstanding commitments amounting to Baht 824.74 million (31st December 2007: Baht 1,311.19 million). On 4th September 2007, Ch. Karnchang Public Company Limited, Bangkok Expressway Public Company Limited and the Company have entered into a shareholders’ loan agreement with SouthEast Asia Energy Limited, Vientiane Branch, a joint venture, amounting to Baht 250.00 million. The Company will provide loans amounting to Baht 62.50 million according to the proportion of investment of 25.00%. As at 31st December 2008, the Company has no outstanding commitment (as at 31st December 2007: Baht 45.00 million). j) The Lignite Mining Project and the Lignite-Fired Power Project (Hongsa Lignite Project) On 11st December 2007, the Company entered into the Joint Development Agreement (“JDA”) with Banpu Power Limited (a subsidiary of Banpu Public Company Limited) with the purpose of joint completing the development of the LigniteFired Power Project and the Lignite Mining Project at Hongsa Province, Lao People’s Democratic Republic (“Lao PDR”) as the Head of Agreement (Project Development Agreement) dated 18th December 2006 between the Government of the Lao People’s Democratic Republic (“GOL”) and Banpu Power Limited in developing two projects, being the Lignite-Fired Power Project and the Lignite Mining Project. According to the Joint Development Agreement, the Company and Banpu Power Limited will have interests in the Lignite-Fired Power Project at 40% and 40%, respectively, and in the Lignite Mining Project for 37.5% and 37.5%, respectively. The remaining interests of 20% and 25% in the Lignite-Fired Power Project and Lignite Mining Project, respectively are held by Lao Holding State Enterprise (“LHSE”), nominated by GOL. In addition, JDA was approved by GOL on 10th January 2008. According to the Joint Development Agreement, the Company has commitments as follows: 1) After signing the JDA until the completed establishment of the project company, the Company shall be responsible for Project Development Costs until such aggregate costs and expenses borne by the Company equal the Project Development Cost incurred by Banpu Power Limited for the pre-development of the Projects prior to the execution and effective date of this agreement, estimated to be Baht 452 million. After that, the Company and Banpu Power Limited shall share the costs and expenses equally. As at 31st December 2008, the Company has paid for Project Development Cost amounting to Baht 454 million which recorded as other asset in the financial statement (see Note 9).
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2) The Company and Banpu Power Limited have to provide financial support equally in the form of loans to LHSE for its administrative expenses during the development of the project until LHSE receives dividends from the Project Company. The amounts of financial support are preliminarily estimated at US Dollars 410,000 (US Dollars 205,000 for Company’s portion) and can be adjusted to the requirements of LHSE.
According to the JDA, the Company agreed to pay the Joint Development Right Fee on the participation of the Hongsa Lignite Project at a maximum amount not exceeding US Dollars 16 million and a minimum amount of no less than US Dollars 10 million depending on the Levelised Tariff as agreed with EGAT. The Tariff Memorandum of Understanding has now been agreed with EGAT and the Company has to pay a Joint Development Right fee amounting to US Dollars 10 million to Banpu Power Limited. In addition, on 29th April 2008, the Company entered into the agreement with Banpu Public Company Limited for the purpose of acquiring the rights to the Proprietary information in relation to this project amounting to US Dollars 6 million. However, the Board of Directors has approved for the total amount of US Dollars 20 million on the participation in this project. The Company made an initial payment for US Dollars 1 million. Next instalment payment is after the signing the Power Purchase Agreement between the Project company and EGAT with the last payment occurring upon the financial close. The Company has recorded for full amount for transactions in relation to this project in the financial statement (See Note 9). In August 2008, the Company and Banpu Power Limited submitted letters to EGAT to terminate the Tariff Memorandum of Understanding dated 27th December 2007 so that the Company and Banpu Power Limited could re negotiate the tariff to make it in line with the current project constructions costs. On 29th December 2008, the Company received formal letter from EGAT agreed with the termination of the Tariff Memorandum of Understanding dated 27th December 2007. The re negotiation process for the new tariff for the project is underway. On 1st December 2008 and 31st January 2009, the Company and Banpu Power Limited entered into the First and the Second Amendments to the Joint Development Agreement dated 11th December 2007.
k) Hydro Power Plant Project, Nam Ngum 3
In accordance with the Memorandum of Understanding (“MOU”) on the joint project development - Hydro Power Plant Project, Nam Ngum 3 dated 26th April 2005 between the Company, GMS Lao Company Limited (previously named MDX Lao Company Limited) and Marubeni Corporation. The Company has committed to pay project development cost of this project in the proportion of 32.47%. The Company will be able to transfer the project development costs which were already paid as equity of the formed company which will be established to engage in and pursue project management of the Hydro Power Plant Project, Nam Ngum 3. On 18th December 2006, the Company, GMS Lao Company Limited (previously MDX Lao Company Limited) and Marubeni Corporation entered into a Memorandum of Understanding with EGAT in relation to the sales and purchases of power from Hydro Power Plant Project, Nam Ngum 3, located in the Laos People’s Democratic Republic. The agreement period shall be 27 years with the commercial operation date expected to be in 2013. This project has total capacity of 440 megawatts and the total project cost of approximately US Dollars 708 million. However, this Memorandum of Understanding was expired on 18th June 2008, the re negotiation process for the new tariff for the project is underway.
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On 13th May 2008, the Company entered into the Shareholders Agreement with the other three shareholders which are GMS Lao Company Limited, Marubeni Corporation, and Lao Holding State Enterprise to form a company under the policies and laws of Lao People’s Democratic Republic with the initial authorised share capital of approximately US Dollars 9 million, comprising 90,000 ordinary shares with a par value of US Dollars 100 per share. The Company will hold 25% of the company’s ordinary shares. The formed company will be established to engage in and pursue project management of the Hydro Power Plant Project, Nam Ngum 3. On 13th May 2008, the Company and Marubeni Corporation entered into the Financial Support Agreement with GMS Lao Company Limited in order to provide financial support for share capital payment for Hydro Power Plant Project, Nam Ngum 3 to GMS Lao Company Limited. The Company has committed to provide financial support in the form of collateral or guarantee and direct funding for the total initial amount of not exceeding US Dollars 1.22 million. As at 31st December 2008,
the Company has not yet provided any guarantee or loan in accordance with the conditions under this agreement.
l) Xe-Pian Xe-Namnoy, Hydroelectric Power Project
On 14th November 2008, the Company entered into Project Development Agreement with SK Engineering & Construction Co., Ltd., Korea Western Power Co., Ltd and the Government of the Laos People’s Democratic Republic in order to joint develop Xe-Pian Xe-Namnoy, Hydroelectric Power Project located in Attopeu and Champassak provinces. This is in accordance with Joint Development Agreement that the Company entered on 6 August 2007 with the proportion of investment of 25.00%. m) Approval to set-up a subsidiary in the Laos People’s Democratic Republic The resolutions of the Board of Directors’ meetings of the Company on 17th December 2007 and 28th April 2008 approved the establishment of RATCH-Lao Services Company Limited in the Laos People’s Democratic Republic (Lao PDR) in order to provide operation and maintenance services for power plant projects in Lao PDR. RATCH-Lao Services Company Limited will have registered capital of US Dollars 500,000, comprising of 500,000 ordinary shares with a par value of US Dollar 1 per share. The Company will hold 99.99% of the registered share capital with 20% paid up. Its establishment is progressing.
n) Guarantees
As at 31st December 2008, the Company has commitment in respect of bank guarantee for which Ratchaburi Power Company Limited, a joint venture, has to comply with certain obligations in accordance with Power Purchase Agreement made with EGAT amounting to Baht 175 million. According to the guarantee agreement dated 27th December 2005, the Company, as a shareholder of Chubu Ratchaburi Electric Services Company Limited, has provided the performance guarantee to Ratchaburi Power Company Limited in respect of the service provided under the Operation and Maintenance Agreement, in a proportion of 50.00% of total contract price of the Operation and Maintenance Agreement per annum. As at 31st December 2008, Ratchaburi Electricity Generating Company Limited, a subsidiary, has commitment in respect of bank guarantee for electricity usage amounting to Baht 60.81 million (31st December 2007: Baht 60.77 million). As at 31st December 2008, Ratchaburi Energy Company Limited, a subsidiary, has commitment in respect of bank guarantee for electricity usage amounting to Baht 1 million.
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o) Pledge of share agreement On 15th November 2005, the Board of Directors’ meeting of Ratchaburi Alliances Company Limited, a subsidiary, approved to pledge all of share certificates of Ratchaburi Power Company Limited, a joint venture, held by such subsidiary as collateral for loans from lenders of such joint venture. p) Capital commitment of a subsidiary As at 31st December 2008, Ratchaburi Electricity Generating Company Limited has outstanding commitments of a contract for the supply and installation of Cooling Water Reuse Plant amounting to Baht 5.88 million (31st December 2007: Baht 126 million). Commitments and contingent liabilities of joint ventures are as follows: Ratchaburi Power Company Limited As at 31st December 2008, a joint venture has outstanding capital commitment totalling Baht 7.10 million (represented 25% of investment proportion) (As at 31st December 2007: Baht 1,857.32 million). SouthEast Asia Energy Company Limited As at 31st December 2008, a subsidiary of a joint venture has outstanding capital commitments according to investment proportion of significant agreement as follows: 1) Hydro Power Plant Nam Ngum 2 Project Construction agreement to a related company, totalling Baht 1,118.40 million and US Dollars 14.28 million (represented 25% of investment proportion in a subsidiary of a joint venture). The construction is in process (As at 31st December 2007: Baht 1,755.10 million and US Dollars 27.05 million). 2) Consulting and Other Service Agreement for Hydro Power Plant Project Nam Ngum 2 and Hydro Power Plant Project Nam Barg 1-2, totalling Baht 82.80 million, Swiss Franc 1.28 million, and US Dollars 0.15 million (represented 25% of investment proportion in a subsidiary of a joint venture). The construction is in process (As at 31st December 2007: Baht 173.08 million, Swiss Franc 2.10 million, and US Dollars 0.58 million). As at 31st December 2008, a guarantee, held by a subsidiary of the joint venture, was issued by a bank as collateral for Power Purchase Agreement with EGAT, totalling of US Dollars 6.25 million (represented 25% of investment) (As at 31st December 2007: US Dollars 6.25 million).
23. Post Balance Sheet Events On 7th January 2009, Ratchaburi Electricity Generating Company Limited, a subsidiary, entered into an Operation and Maintenance Agreement with EGAT. The contract is valid from 1st January 2009 until the termination dates of the Power Purchase Agreements for Thermal Generating Units and Combined Cycle Generating Units. The total operation and general maintenance charge including services charges for major maintenance are approximately Baht 16,608 million, adjusted by the annual Consumer Price Index. On 20th January 2009, SouthEast Asia Energy Limited, a joint venture, called for the additional paid-up share of Baht 0.27 per share for 120.22 million shares with a par value of Baht 10 per share. The Company paid for the additional paid-up share for its holding of 33.33%, amounting to Baht 32.46 million.
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On 5th February 2009, the Company entered into Shareholders’ Agreement among Lao Holding State Enterprise (LHSE), Banpu Power Limited and the Company to set up Hongsa Power Company Limited with registered share capital of US Dollars 100,000 for electricity generation concession of Hongsa Lignite Project. The Company, Banpu Power Limited and LHSE will have interests in this company for 40%, 40% and 20%, respectively. On 5th February 2009, the Company entered into Shareholders’ Agreement among Lao Holding State Enterprise (LHSE), Banpu Power Limited and the Company to set up Phu Fai Mining Company Limited with registered share capital of US Dollars 50,000 for lignite mining concession of Hongsa Lignite Project. The Company, Banpu Power Limited and LHSE will have interests in this company for 37.5%, 37.5% and 25%, respectively. The resolution of the Board of Director’s meeting held on 16th February 2009 approved the extension of repayment terms of loans to SouthEast Asia Energy Limited, Vientiane Branch, from the existing repayment term that the joint venture will repay the loans and interest for the earlier of (i) within 18 months from the signing date of Shareholders’ Loan Agreement or (ii) after the joint venture receives loan approval from the financial institutions to that the joint venture will repay the loans and interest for the earlier of (i) within 30 months from the signing date of Shareholders’ Loan Agreement or (ii) after the joint venture receives loan approval from the financial institutions. The resolution of the Company Board of Director’s meeting held on 16th February 2009 approved the additional dividends payment in respect of 2008 performance for 1,450 million shares of Baht 1.1 per share, totalling Baht 1,595 million. The Board’s resolution will be presented to the Shareholder’s Annual General Meeting on 31st March 2009 for approval. The resolution of the Board of Directors’ meeting of Ratchaburi Electricity Generating Company Limited, a subsidiary, held on 16th February 2009, approved the payment of interim dividends in respect of quarter 4’ 2008 performance for 1,827.50 million shares of Baht 0.70 per share, totalling Baht 1,274.90 million.
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General Information Ratchaburi Electricity Generating Holding Public Company Limited
Registration No.
:
Location :
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0107543000031 19 SCB Park Plaza, East Building 3, 20th Floor, Ratchadapisek Road, Chatuchak, Bangkok 10900, Thailand Tel. (66) 2978 5000 Fax. (66) 2937 9321
Website
:
www.ratch.co.th
E-Mail address
:
contactinfo@ratch.co.th
Core Business
:
Investing in power generating companies
Registered capital
:
Baht 14,500 million
Paid up capital
:
Baht 14,500 million
: Shares registrar
Thailand Securities Depository Company Limited Stock Exchange of Thailand Building 62 Ratchadapisek Road, Klong Toey, Bangkok 10110, Thailand Tel. (66) 2229 2800 Fax. (66) 2359 1259
Auditor :
Pricewaterhouse Coopers ABAS Limited 179/74-80 Bangkok City Tower, 15th Floor, South Sathorn Road, Thoong Mahamek, Sathorn, Bangkok 10120, Thailand Tel. (66) 2286 9999, (66) 2344 1000 Fax. (66) 2286 5050, (66) 2286 0500
Legal Advisor : :
Honton & Williams (Thailand) Limited 1 Q.HOUSE Lumpini Building, 34th Floor South Sathorn Road, Thoong Mahamek, Sathorn, Bangkok 10120, Thailand Tel. (66) 22645 8800 Fax. (66) 22645 8880 Baker & Mckenzie Company Limited 25th Floor, Abdulrahim Place 990 Rama IV Road, Bangkok 10500, Thailand Tel. (66) 2636 2000 Fax. (66) 2636 2111
Corporate Secretary : E-Mail address :
Ms.Boontiva Dansamasatid corporatesecretary@ratch.co.th Tel. (66) 2978 5076 Fax. (66) 2937 9321
Corporate Relations Division : E-Mail address :
Ms. Charusuda Boonkerd PR@ratch.co.th Tel. (66) 2978 5220 Fax. (66) 2937 9541
Investor Relation Department : E-Mail address :
Mr.Polagorn Kheosiplard IR@ratch.co.th Tel. (66) 2978 5086 Fax. (66) 2937 9321
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