Harmonization
Standardization
The Path to Prosperity Electricity Generating Public Company Limited | annual report 2004
Relativity
Collaboration
Efficiency
Contents 002 006 010 014 016 017 020 024 026 035 038 046 047 052 053 061 063 065 068 070
2004 Highlights Financial Overview Message from the Chairman Group Structure and Shareholders Contribution to the Community Organization Chart World Economy 2004 Power Industry Status and Competition Board of Directors and Subcommittees Directors' Remuneration Corporate Governance Report Directors and Management Selection Business Operation Revenue Structure of EGCO and subsidiaries for the past three years Management Discussion and Analysis Risk Factors Related Transaction General Information Relationship with Investment Community Financial Statement
Ever since we began our business in the power sector, we have understood the importance of fostering environment and community friendly facilities. Our business creed is that the power industry and the environment that we live in must coexist in harmony. This harmony must also extend to the communities that we serve and draw our expert resources from. We are convinced that this approach is vital to EGCO's continued success.
2004 Highlights
Business Activities
February 23
Extraordinary General Shareholders’ Meeting no. 1/2004
April 26
2004 Annual General Shareholders’ Meeting
May 12
2003 Final Dividend Payment at THB 1.50 per share
May 13
Inaugural Ceremony of TLP Cogeneration Co., Ltd., SPP with the installed capacity of 117 MW.
July 28
MoU on the cooperation in power plant operation and maintenance services between the Electricity Generating Authority of Thailand (EGAT) and EGCO Engineering and Service Co., Ltd. (ESCO)
September 22
2004 Interim Dividend Payment at THB 1.50 per share
October 8
Yala Green Project Ceremony receiving a grant of USD 2 million from the Global Environmental Fund
October 28
Gulf Power Generation Co., Ltd. signing the Power Purchase Agreement with the Electricity Generating Authority of Thailand and the Gas Supply Agreement with PTT Pcl.
November 15
Gulf Power Generation Co., Ltd. signing the Credit Facilities Agreement with the consortium of Thai Banks
Activities for Shareholders
March 2
Analyst Meeting no. 1/2004
May 26
EGCO Seminar to present its Business to interested investors
June 24-25
Investors’ visit to Rayong Power Plant
August 24
Analyst Meeting no. 2/2004
September 22
First issue of EGCO Newsletter
Activities for Society and Environment
January 8
Painting Competition on “Roi-Et, a good living province”
March 8-12
Thai Conserve Forest Youth Camp at Doi Inthanond, Chiangmai
and 15-19 April 2
Support to the construction of the library to commemorate the 6th cycle birthday of H.M. the Queen at Mab Kha School in Rayong Province
June 30
Project to conserve environment and marine lives at Nakorn Srithamarat Province
July 23
Weir construction at Nurach Canal, Nakorn Srithamarat
September 21
Donation of rice to those who suffered from the flooding in Roi-Et Province
October 12-14
Thai Conserve Forest Youth Camp at Kao Luang, Nakorn Srithamarat Province
November 12
Annual Kathin Ceremony at Huay Pong Temple, Rayong Province
December 3
Campaign to conserve the environment at Mab Ta Pud, Rayong Province
December
Donation to help those suffering from the tsunami via ITV Television Station, Stock Exchange of Thailand, and the Energy Ministry.
002
Awards and Recognition EGCO -
Being ranked “Very good” in governance rating with the score of 8.05 by Thai Rating and Information Services Co., Ltd.
-
Top quartile in terms of governance by Thai Institute of Directors Association
-
2nd Best Governance in Thailand and 14 th in the emerging market by Euromoney
-
Top five in corporate governance disclosures among SET50 companies by Standard and Poor’s
-
Best Corporate Governance Report Award by SET
-
One of the three candidates for Best Performance Award by SET
-
8th Best Investor Relations in Thailand by FinanceAsia.Com
Group Companies -
Roi-Et Green Power Plant winning the Prize of Excellence in New and Renewable Sources of Energy Project Management in Thailand and Asian Region on on-grid scheme.
-
KEGCO winning the “National Distinguished Workplace in terms of Safety, Occupational Health and Environment” for 5 years consecutively
-
KEGCO being the first power plant in Thailand to be certified the OHSAS 18001:1999 (Occupational Health and Safety Assessment Series) by RWTUV (Thailand)
-
REGCO and KEGCO being certified the quality system “ISO 9001:2000” and environment management system “ISO 14001”
003
Morality and Ethics We recognize the importance of laying a strong foundation by educating employees about morality and ethics, and the importance of consistently carrying out their responsibilities in this regard on behalf of EGCO and affiliates. In addition to this, we encourage creative thinking about taking care of the environment and the communities in which we operate.
Financial Overview
Consolidated Financial Statements
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
15,620
15,378
11,463
10,732
9,697
8,541
8,802
7,709
5,987
3,859
880
353
597
915
777
919
1,504
1,159
946
403
Cost of sales and cost of services
7,593
6,017
4,926
4,033
3,462
2,776
3,677
2,982
2,250
1,318
Administrative expenses and others
1,894
1,323
963
936
1,031
905
383
936
672
544
(34)
170
342
-
-
-
-
-
-
-
2,220
2,631
2,807
3,299
3,325
2,984
3,302
3,181
2,315
1,460
FINANCIAL PERFORMANCE (M.BAHT) Sales and service income Other income and share of profit (loss) from subsidiaries, an associate and joint ventures
Impairment charge Interest expenses Profit (loss) attributable to minorities
232
303
236
203
(38)
Net Profit (loss) before Fx gain (loss)
4,595
5,287
2,784
3,175
2,694
Fx gain (loss)
(94) 2,889
(4) 1,771
-
-
1,696
940
67
707
174
(236)
(1,478)
3,232
(7,235)
(145)
-
4,662
5,994
2,958
2,939
1,217
2,648
6,181
(5,464)
1,551
940
Total Assets
55,066
56,437
55,824
52,965
55,112
49,898
45,113
45,610
43,855
22,699
Total Liabilities
25,963
29,736
34,876
33,780
37,664
33,079
30,351
36,256
28,052
14,024
Parent’s shareholders’ equity
28,173
25,895
20,276
18,544
16,979
16,762
14,663
9,280
15,803
8,675
982
859
724
641
469
56
49
36
-
-
-
-
-
-
-
-
-
Net Profit (loss)
(241)
(5) 2,950
FINANCIAL POSITION (M.BAHT)
Minority Interest Treasury Stock
(52)
(52)
(52)
Issued and paid-up share capital
5,265
5,265
5,265
5,259
5,244
5,243
5,227
5,200
5,200
4,400
8.75
10.07
5.30
6.04
5.14
5.51
5.65
3.40
3.42
2.30
PER SHARE DATA (BAHT) Net Profit (loss) before Fx Net Profit (loss) Book Value Dividend
RATIO ANALYSIS
8.88
11.41
5.62
5.60
2.32
5.05
11.83
(10.49)
3.12
2.30
53.55
49.21
38.51
35.26
32.38
32.00
28.07
17.82
31.83
21.21
n.a.
2.75
2.50
2.25
2.00
2.00
1.27
-
2.00
1.00
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
Liquidity ratio (Time)
3.25
2.19
2.21
2.80
2.85
6.97
4.08
4.77
6.47
8.72
Cashflows liquidity ratio (Time)
1.33
1.01
1.02
1.01
0.97
1.29
0.68
1.83
2.58
2.24
51.39
60.88
57.02
62.42
64.30
67.50
58.22
61.31
62.41
65.84
Gross profit ratio (%) Earnings ratio (%)
27.86
37.38
24.06
24.80
11.66
28.27
60.00
(61.64)
22.37
22.06
Return on equity ratio (%)
16.71
25.16
14.74
16.05
7.10
16.80
51.45
(43.50)
12.67
12.36
Return on assets ratio (%)
8.36
10.68
5.44
5.44
2.32
5.57
13.75
(12.21)
4.66
4.31
Debt to equity ratio (Time)
0.89
1.11
1.66
1.76
2.16
1.97
2.06
3.89
1.78
1.62
Remarks: During 2003, the Group has adopted Thai Accounting Standard No. 51: “Intangible Assets” and has changed two principal accounting policies, Specific Spare Parts Policy and Recording of Development Expense Policy; the impact is shown in “Management Discussion and Analysis”
006
10,306
1999
1998
4,262
6,933 3
9,460
2000
10000
8,867 8
10,474
15000
11,647 7
12,060 6
15,731
20000
16,500 0
total revenues
5000
1995
3 3,322
6000
1996
5,237
1997
7,100
7,326
8000
6,665
2001
8,268
10000
2002
9,039
2003
10,141 4
12000
11,673
2004
7,818 8
0
4000 2000 0 2002
2001
2000
1999
1998
1997
1996
1995
940
2000
1,696 6
1999
1,768
2000
2,945 5
2,795
3000
2 2,656
4000
3,379
3,021 1
5000
2003
5,590
6000
4,827
2004
1000
1996
1995
43,855 3
2000
1997
4 45,610
2001
50000
1998
45,113 5
2002
55,112 5
2003
2001
52,965
2002
5 55,824
2003
56,437
60000
55,066
2004
49,898
0
22,699
40000 30000 20000 10000 0 2004
1999
1998
1997
1996
1995
007
d
Compliance with Rules To gain the acceptance and respect of our shareholders, customers, stakeholders, we strictly comply with all established laws, rules, regulations, and business standards. We remain open to changes that will improve our operating standards and strengthen our business practices.
Message from the Chairman
Mr. Chai-Anan Samudavanija Chairman of the Board
The gloomy clouds of misery cast their shadows over the last period of 2004. Only a few days before year end, the tsunami disaster devastated hundreds of thousands of lives along the coasts of Sumatra Islands and the Indian Ocean, including Thailand’s Andaman coast. For the first time in history, Thailand suffered a monstrous loss of lives and property in one single catastrophe. The incident has had a traumatic effect on Thailand and the world alike. However, against this tragic backdrop we have seen the heartfelt unity among Thais who have generously extended financial support and encouragement to all victims regardless of race or religion. Disaster relief in Thailand was given high marks by the world, and it demonstrated that while the tsunami could damage lives and property, it could not damage the hope, faith, love, and unity that prevail among all Thais.
As a registered public company in the Stock Exchange of Thailand (SET) and a member of Thai society, the Electricity Generating Public Company Limited (EGCO) feels deep compassion for those who suffered in the disaster. The Company realizes that this is the time for collaboration to help restore the affected provinces that suffered most from the tragic incident. In this regard, EGCO has contributed funds through various relief organizations, and has coordinated directly with local authorities to provide assistance with a hope that the beauty of our Andaman coast will be quickly restored.
Regarding the power sector, Thailand is experiencing considerable growth in the demand for electricity. This growth has signaled relevant bodies to be prepared for power requirements in the future. The government is currently working to establish a central authority to supervise the country's electricity industry to better serve the evolving scope of the country's fast growing and capital intensive power industry.
Apart from the efficient operation of its existing facilities, EGCO has constantly endeavoured to expand into new investment projects, such as the Nam Theun 2 project in Lao People’s Democratic Republic and the Kaeng Khoi 2 project in Saraburi. At the same time, the Company is preparing itself for upcoming opportunities in electricity-related businesses, including a new round of independent power projects that will be offered to private developers.
Regarding operating performance in fiscal year 2004, EGCO has achieved its targets. The Company posted a total net profit of 4,662 million baht, or 8.88 baht per share. EGCO's dividend payment for its performance in the first half of 2004 was Baht 1.50 per share. The Company is confident that it will keep the dividend no less than that of the previous year.
With respect to corporate activities, EGCO sees the great importance of investing in the development of its human resources through extensive training and competitive compensation plans. The Company also strives to maintain good relationships with its
010
shareholders through various investor relations activities such as providing investors with information about the Company's businesses, investors-meet-executives project, and power plant visits. Regarding the Company's strong relationship with the Electricity Generating Authority of Thailand (EGAT), EGCO Engineering and Services Co., Ltd. (ESCO), a member of EGCO Group, has signed a memorandum of understanding (MOU) with EGAT to promote extensive business cooperation in power plant maintenance and related services both domestically and in the international market.
The Company adheres to the good corporate governance principle. It has been rated 8.05 (Very Good) for best practices on corporate governance by Thai Rating and Information Services Co., Ltd. The Company has also received awards from several distinguished institutes in Thailand and abroad for its business accomplishments.
As examples of well managed facilities, the main power plants of EGCO, Rayong Power Plant and Khanom Power Plant, have been awarded for several aspects of their operations. The Group's Roi-Et Green Power Plant, a small biomass power plant, has also been named an "Excellent Project" for renewable energy in Thailand, as well as a winner for On-Grid projects in the Asian Region.
The Company hopes that its continued adherence to good business practices will provide sustainable benefit to its shareholders and Thai society as a whole. With acceptance and support from all parties, the Company will strive to grow constantly in a responsible way. On behalf of the Board of the Electricity Generating Public Company Limited, I would like to express my deep gratitude to all shareholders and supporters who have placed their trust in EGCO, and most importantly, to all staff who are devoted to doing their jobs with perseverance and pride. EGCO has achieved success because of your contributions and trust. The Company sincerely wishes to continue receiving such good cooperation from all parties in the years to come.
011
Communication brings people and EGCO closer together
Relativity
Provide a means for education as well as other forms of support for community development
Respect for Local Heritage We encourage our employeees to be respectful of the distinct beliefs and ways of life in each of the communities in which we operate, and we strongly encourage broad participation in community activities. In this regard, we believe the true path toward prosperity comes with accepting and supporting our neighbors.
Group Structure and Shareholders As of December 31, 2004
014
015
Contribution to the Community
The Company believes that the existence and the growth of the Company depends on the support from the society especially the trust of the public, which is a prime driver for the Company's success. Consequently, the Company has adopted business policies, guidelines and practices to minimize any adverse impact from its operations on the society and the environment. In the light of this, REGCO and KEGCO have implemented an ISO 14001 environment management system and ensure the compliance with the relevant environment regulations. Both power plants won the EIA awards from the Ministry of Natural Resources and Environment.
In addition, the Company supports the Government policy to use the biomass residue for power generation in a bid to reduce fuel imports and to promote business opportunities for local people. Roi-Et Green Co., Ltd., the Company's subsidiary which uses rice husk as fuel, won the top award in New and Renewable Sources of Energy Project Management in Thailand and the ASEAN Region. It also obtained the financial support from the Global Environment Fund. In the future, the Company plans to explore further investments in biomass-fueled facilities in Yala provinces.
The Company aims at being a good corporate citizen by allocating budget to support development in the local communities near the power plants to ensure quality of life and best ecological practices. As a part of the effort to foster the concept and practice of conservation among our nation's youth, the Company has hosted the Thai Youth Camps at Doi Inthanond National Park twice a year since 1997 of which more than 16 camps have been hosted and approximately 1,550 youths have attended the camps to date. The objective of the Youth Camps is to educate the youth about how to live in harmony with nature, to understand the relationship between wildlife and the forest, and to have the knowledge about Doi Inthanond which is an important source of water in our ecological system. In 2004, the Company also joined KEGCO, its wholly owned subsidiary, in hosting the Youth Camp at the Kao Luang National Park in the South which was attended by 55 youths from nearby communities. The camp proved to be very successful and will be continued in the future.
The Company truly believes that it has a corporate responsibility to be a strong community supporter as well as a generator of profits for shareholders. The balance between the two will be a key success driver for sustainable growth.
Project to conserve environment and marine lives in the community surrounding the Khanom Power Plant
016
EGCO Youth camp for forest conservation at Doi Inthanond, Chiangmai
Donation for tsunami victims
Organization Chart
board of directors
Business Development Group
Risk Management Committee
Audit Committee
Internal Audit Division
Asset Management & Planning Group
Corporate Planning Division Executive Committee
president Asset Management Division
Nominating & Remuneration Committee
Corporate & Investor Relations Division
Group Companies' Management (excl. REGCO/KEGCO)
Finance Group Group Business Committee
Finance Division
Accounting & Budget Division
Controller Group
Controller Division
General Counsel & Corporate Secretary Group
Legal Division
Corporate Secretary Division
Corporate Services Group
Human Resources Division
Management Information System Division
Procurement & Administration Division
017
Choose environmentally friendly technology
Support conservation
o Produce clean energy
Closely monitor impacts of our facilities
Environmental Stewardship We believe that EGCO has an obligation to take an active role in preserving the environment in which our facilities operate. In this regard, we try to motivate each employee to be a part of the overall conservation effort by consciously choosing and applying modern technology and practices in the most efficient way. We continually endeavor to mitigate any adverse side effects on the environment in which we develop and operate our facilities.
World Economy 2004
In 2004, the world economy showed strong growth in the first half of the year, but has slowed down since the third quarter, notably in major advanced economies such as the U.S., the EU, Japan, China and other Asian countries. This has been underpinned by rising oil prices, increased interest rates and tighter fiscal policyies in order to ease pressures on prices and to create a more stable economic environment. Amidst downside risks, global growth in 2004 remained solid.
Correspondingly, global growth is projected at 4.6% in 2004, higher than that of 3.9% in 2003, led by stronger growth in the U.S., Japan, EU, Malaysia, Singapore and Hong Kong and thanks to an extended perisd of low interest rate policies since 2002 which helped spur private consumption. Private investment also continued to expand robustly, accompanied by a corresponding improvement in business sentiment, low interest rates, a pickup in electronics cycle in the U.S. and a buoyant real estate investment in response to higher demand for housing.
In Asian countries, economic growth was mainly driven by strong domestic demand and, increasingly strong export growth in of exports across the region.
Several countries were faced with inflationary pressures that built up during the latter half of the year and are likely to continue. However, inflation is still at manageable levels. In 2004, the inflation rate in industrial and developed countries reached 2.1%, slightly higher than 1.8% in 2003, amidst rising oil prices and hikes in iron, copper and basic metal prices.
THAI ECONOMY IN 2004 The Thai economy in 2004 maintained its growth rate above 6%, with inflation of 2.7%. Key supportive factors to this growth were a high export growth owing to currency advantage, strong aggregate domestic demand especially in the automotive industry, continued expansion in the real estate sector, increases in private income in both the agricultural and corporate sectors, relatively low cost of borrowing and continued government spending. Negative factors consisted of soaring global oil prices, further bird flu outbreaks and political unrest in the deep south. The Tsunami's impact on Thailand's economy was marginal due to its occurrence in the last week of the year.
Liquidity Excess liquidity in the money market remained high throughout the first half of 2004 followed by liquidity absorption through the issuance of government bonds totaling Baht 90 billion in August and September to fund the losses at the Financial Institutions Development Fund. Some part of the excess liquidity was absorbed by the increase in commercial bank loans. The deposit to loan ratio continued to increase since the end of the second quarter.
Interest Rate After a series of 0.25% increases in the Fed Funds Rate which reached 2.25% in December, the Bank of Thailand's Monetary Policy Committee responded with a decision to raise its 14-day repurchase rate for the first time in 14 months on 25th August 2004; the tightening was done in a series of 0.25 % increases which moved the repo rate from 1.25% in August to 2.0% in December. However, both deposit and loan interest rates of 5 major commercial banks were kept mostly unchanged, partly because excess liquidity remained high.
Exchange Rate During 2004, the Thai baht moved in the range of Baht 38.83 to 41.64 per U.S. dollar; demonstrating less volatility compared to 2003. The Thai baht started to appreciate in September as a result of a continued depreciation in the U.S. dollar value. By the end of 2004, the exchange rate reached Baht 39.06 per U.S. dollar, a 1.3% appreciation compared to the end of 2003.
WORLD ECONOMIC TREND IN 2005 The world economy in the year 2005 will remain vulnerable to significant risks including rising interest rates, high oil prices, and a move towards a balanced fiscal policy. Global growth is expected to slowdown from 4.6% in 2004 to 3.8% due to the slowdown in major
020
economies including the U.S., Japan, China, and Asian countries which notably show a slowdown trend from the second half of 2004. The EU economy is likely to maintain its strong growth momentum in 2005 due to its investment cycle. Nonetheless, slowdown trends in those major economies and China will put more constraints on exports and as a result, the Asian economies may not be able to expand at the same rates of growth seen in 2003-2004. In 2005, it is expected that developing countries will have higher incomes and purchasing power due to the rise in commodity prices. While agricultural production is likely to increase marginally, many countries also experienced drought conditions that adversely affect production. As demand has been rising, price levels are also expected to increase in 2005.
Several forecasting agencies project that the slowdown of the global economy in 2005 will not be severe and expect expansion of 3.8% with the inflation of 2.1% for developed countries and around 5.5% for other countries. Trade volume will increase by 8%. Federal Funds Rate will rise to 3.25% at the end of 2005, while official rates of the EU, Japan and UK will remain subdued at 2.0%, 0.0% and 4.75%, respectively.
THAILAND ECONOMIC TREND IN 2005 The Thai economy in 2005 will have the same supportive factors as in year 2004. However, these factors are likely to weaken. Consequently, the economy is likely to decelerate to an expansion of around 5.5-6.5%. The supportive factors to private consumption consist of relatively low interest rates, increased employment, salary increases in the state sector, tax reductions and the enormous spending brought about by the election campaign. The investment climate remains favorable. The supporting factors to private investment are increasing capacity utilization rate, relatively low real cost of borrowing, and higher corporate profits. Increasing government spending in infrastructure and other mega project investments will be a major supportive factor in 2005. These investment plans, totaling in excess of Baht 820 billion, were approved by the cabinet on October 19, 2004 under the five-year infrastructure development strategic plan. Export volume of goods is expected to grow by 5.8%, slightly lower than 7.1% in 2004, owing to global economic slowdown. Export volume of services may increase following the Tourism Authority of Thailand’s promotion to meet the higher target for foreign tourists at 11.5% growth. In sum, export of goods and services is projected to rise by 6.4%
Electricity consumption is expected to grow by 7.86%, an increase from 7.13% in 2004 following tracking the expansion in the economy. In conclusion, the Thai economy in 2005 is expected to expand at a lower growth rate due to the slowdown in the major economies. Supportive factors for private investment and household consumption are still in effect. Increasing government spending on infrastructure and mega projects will be a key supporting factor. However, the factors that can negatively affect the domestic economic expansion are increasing oil prices, rising interest rates and the impact of bird flu. Other negative factors are the appreciation of the Thai baht exchange rate and U.S. policies to reduce its current account deficit.
Notes: 1. Economic figures are from the Office of the National Economic and Social Development Board (NESDB) 2. Electricity consumption figures are from the Energy Policy and Planning Office
021
Professionalism and Teamwork Our human resources are the key in driving EGCO and its affiliates forward. We therefore invest extensively in training and skill development to raise the competence of our staff.
Power Industry Status and Competition
Following economic growth in 2004, the peak power demand continued to pick up, albeit at slightly slower pace than the previous year. The peak load was in March with the consumption of 19,325.80 MW, 6.65 % higher than peak demand in 2003 (figure1) but 1.40% lower than the forecast of 19,600 MW. The gross electricity generation throughout the year amounted to 129,760.41 million kWh, 7.77% higher than previous year.
For the year 2005, the latest projection prepared by Thailand Load Forecast Subcommittee in January 2004 indicated that the country’s electricity demand and energy generation will grow by 7.87% and 7.86% in the moderate economic growth scenario. As a result, EGAT has revised the power development plan (PDP2004) covering the power development strategy during the period of 2004-2015.
The PDP2004 incorporates the Government’s policy on peak demand cutting to save investment on peaking plant installation as well as the policy on a collaborative strategy in energy among neighboring countries. The new capacity of 11,025 MW to be added during 2004-2010 comprises the following: ●
Projects to be undertaken by EGAT: Krabi Combined Cycle Power Plant, Bang Pakong Combined Cycle Power Plant, South Bangkok Combined Cycle Power Plant, North Bangkok Combined Cycle Power Plant, Lam Takhong Hrdro Power Plant.
●
Projects to be undertaken by IPPs or neighboring countries: BLCP Power Co.,Ltd, Gulf Power Generation Co.,Ltd, Ratchaburi Power Co.,Ltd, Nam Theun 2 (located in Lao PDR).
The total installed capacity of the new power plant projects during 2011-2015 is 13,230 MW. It is expected that the biddings will be open for EGAT, private companies and hydroelectric projects from neighboring countries. The Power Development Plan 2004 (PDP2004) also designates 5% capacity of every new fossil fuel-fired power station to be Renewable Portfolio Standard (RPS) from 2011 onward.
At the beginning of 2004, the government attempted to move forward with privatization of EGAT but the initiative was halted due to the opposition by employees and the Labor Union. The government delayed the planned privatization and listing of EGAT on the Stock Exchange of Thailand (SET) from the original schedule to provide an opportunity to resolve the difference in opinions. Currently, Energy Policy and Planning Office (EPPO) and EGAT are working to seek the most suitable privatization model for EGAT. In addition, the National Energy Policy Committee (NEPC) has approved a proposal to establish an interim regulator to oversee the power industry (Electricity Commission of Thailand: ECT). A seven-member Board of Commissioners will be appointed to oversee the ECT with one member voted as Chairman.
It is expected that the work on the details of the privatization of EGAT and establishment of regulatory body may be completed in 2005.
024
MW. 20,000.00 19,000.00
18,000.00 17,000.00
16,000.00
15,000.00
14,000.00
13,000.00
12,000.00 Jan
Feb
Mar
Apr
May
Jun
Jul
2001
Aug
Sep
2002
Oct
Nov
2003
Dec
2004
Source : EGAT
MW. 12,000.00
11,000.00
10,000.00
9,000.00
8,000.00
7,000.00 Jan
Feb
Mar
Apr
May
Jun
2001
Jul
Aug
2002
Sep
Oct
2003
Nov
Dec
2004
Source : EGAT
025
Board of Directors and Subcommittees (As at December 31, 2004)
02
01
01 Mr. Chai-Anan Samudavanija
●
Age 60
03
Certificate of Chairman 2000 Program,
Working Experience
Thai Institute of Directors Association
●
2005 - Present : Director and Nomination and
●
Chairman
Dispute -
Remuneration Committee Member,
●
Chairman, Nominating and
Family Relation Between the Management -
Krung Thai Bank Public Company
Remuneration Committee
Amount of Shares (%) 0.000
(Authorized Director)
Working Experience ●
Education
2004 - Present : Chairman,
Honorary Ph.D., National Institute of Development
Gulf Electric Public Company
Administration
Limited
●
Honorary Ph.D. University of Edgewood
Thai Bond Dealing Centre
●
Honorary Ph.D. and Distinguished Alumni,
ASEAN Potash Mining
University of Wisconsin
Public Company Limited
●
●
Honorary Certificate, National Defence College
●
Certificate in Social Planning United Nations
Thai Military Bank Public Company
Asian Institute
Limited
Ph.D. University of Wisconsin (Madison), USA
●
M.A. University of Wisconsin (Madison), USA
●
B.A. Victoria University of Wellington, New Zealand
●
Law major, Faculty of Political Science, Chulalongkorn University
●
Information Services Company Limited ●
2003 - Present : Director, Thai-German Ceramic
●
1999 - Present : Director and Chairman of Audit
Industry Public Company Limited Committee, The Oriental Hotel (Thailand) Public Company Limited ●
2002 - Feb 2005 : Chairman, Thai Maritime 1998 - 2004 : Deputy Permanent Secretary,
●
1998 - 2003 : Director, Electricity Generating
Public Company Limited ●
Ministry of Finance
Muang Thai Life Assurance Company Limited ●
Family Relation Between the Management -
●
2004 - Present : Chairman, Electricity Generating
03 Mr. Aswin Kongsiri Age 59 ●
Independent Director
●
Chairman, Executive Committee
Thai Airway Public Company
●
Nominating and Remuneration Committee Member
Limited,
Education
Krung Thai Bank Public Company
●
Authority of Thailand ●
1999 - Present : Independent,
1999 - Present : Vice President, The Royal Institute
●
1996 - Present : Director, Vajiravudh College
1994 - Present : Director, Ch. Karnchang Public
●
1998 - 2004 : Director and Executive Director,
Company Limited The Industrial Finance Corporation of Thailand ●
●
Public Company Limited ●
National Defence College, The National Defence
●
Director
●
Nominating and Remuneration Committee Member
●
Thai Institute of Directors Association Dispute Family Relation Between the Management -
●
M.Sc. (Economics), Thammasat University
Amount of Shares (%) 0.000
●
M.Sc. (Economics), Planning and Development),
026
1997 - 1998 : Chairman of Executive Committee, Bangkok Bank of Commerce Public
Certificate of Directors Certification Program,
Education
Vanderbilt University, USA
Limited ●
Thai Institute of Directors Association
02 Mr. Sommai Phasee Age 60
Certificate of Chairman 2000 Program,
1998 - 1999 : Chairman, Bangkok Commercial Asset Management Company
Course for the Joint State-Private Sectors, Class 6 ●
1999 - 2003 : Director and Executive Director, Siam Commercial Bank
Banff School of Advanced Management, Alberta, Canada
of Thailand ●
BA ( Honours), Philosophy, Politics and Economics,
Public Company Limited ●
Oxford University, England
Limited ●
1981 - Present : Director and Audit Committee Member, Padaeng Industry
Amount of Shares (%) 0.000 Working Experience
1992 - Present : Director and Audit Committee Member,
Authority of Thailand
Dispute -
1993 - Present : Director and Audit Committee Member, Thai Reinsurance
Navigation Company Limited ●
2003 - Present : Director and Audit Committee Member, Thai Rating and
2003 - Present : Chairman of Executive Committee,
●
●
Limited ●
Company Limited ●
1990 - 1998 : President, The Industrial Finance Corporation of Thailand
04
04. Mr. Worawit Khamkanist
05
●
1991 - 1992 : Deputy Permanent Secretary,
Age 65 ●
Independent Director
●
Audit Committee Member
●
Risk Management Committee Member
●
●
1990 :
Family Relation Between the Management -
Inspector-General,
Amount of Shares (%) 0.000
Ministry of Industry
Working Experience
M.Sc. (Mechanical Engineering),
●
University of Alabama, USA
●
Certificate of Directors Certification Program, Thai Institute of Directors Association
Indorama Polyers Public
●
Independent Director
●
Chairman, Audit Committee
Working Experience
Education
1997 - 2000 : Managing Director, Electricity Generating Public
Company Limited ●
Family Relation Between the Management -
Aqua Plus Company Limited
Bangkok 1974 - Present : Independent Director,
06 Mr. Chaipat Sahasakul
Amount of Shares (%) 0.009 2001 - Present : Managing Director,
Advisor, Baker & McKenzie, ●
Age 50
●
Ph.D. in Economics, University of Rochester, USA
●
M.A. in Econimics, Thammasat University
●
B.A. in Economics, Thammasat University
●
Certificate of Directors Certification Program,
1999 - Present : Independent Director, Siam Commercial Bank Public Company Limited
●
1994 - Present : Director, Serm Suk Public
●
1978 - 2003 : Chairman and Senior Partner,
Company Limited Baker & McKenzie, Bangkok
Thai Institute of Directors Association
Company Limited
●
2004 - Present : Honorary Chairman and Senior
Resource
Dispute -
●
●
General, Department of Mineral
●
●
Dispute -
Ministry of Industry
1984 - 1989 : Deputy Director-General,
Education
●
06
Dispute -
08 Mr. Norkun Sitthiphong
Electricity Generating Authority
Family Relation Between the Management -
Age 51
of Thailand
Amount of Shares (%) 0.000
●
Director
Working Experience
●
Executive Committee Member
1996 - 1997 : President, Mining Business,
1990 - 1995 : Assistant Governor, Mae Moh Power Plant, Electricity Generating
●
2001 - Present : Secretary - General, Agricultural Futures Trading Commission
Authority of Thailand ●
1998 - 2001 : Senior Executive Vice President,
05 Mr. Charu-Udom Ruangsuvan ●
Age 72
(Authorized Director) Education ●
Ph.D. (M.E.) Oregon State University, USA
MFC Asset Management
●
M.S. (M.E.) Oregon State University, USA
Public Company Limited
●
B.Eng. (Mechanical), Chulalongkorn University
1991 - 1996 : Senior Vice President and
Dispute -
●
Independent Director
Spokesman, Stock Exchange
Family Relation Between the Management -
●
Audit Committee Member
of Thailand
Amount of Shares (%) 0.000
●
Education
1989 - 1991 : Executive Vice President,
●
National Defence College, 1984 (Class 27th)
Morgan Grenfell Thai Co., Ltd.,
●
LL.B., Thammasat University
Bangkok, Thailand
●
B.Eng. (Mining), The University of Adelaide,
Working Experience ●
2003 - Present : Deputy Permanent Secretary,
●
2003 - Present : Director, Electricity Generation
●
2003 - 2004 : Director, Ratchaburi Energy
●
2002 - 2003 : Director, Ratchaburi Holdings
●
2001 - 2003 : Deputy Dean (Research and Asset),
●
1998 - 2000 : Deputy Dean (Education),
Ministry of Energy
Australia ●
Authority of Thailand
Certificate of Directors Accrediation Program,
07 Mr. John William Hancock
Thai Institute of Directors Association
Age 58 ●
Dispute -
Independent Director
Family Relation Between the Management -
Education
Amount of Shares (%) 0.000
●
LL.B., University of Adelaide, South Australia
Working Experience
●
Certificate of Chairman 2000 Program,
●
Thai Institute of Directors Association
1993 - 1996 : President/Chief Executive Officer, Malaysia-Thailand Joint Authority
●
Certificate of Directors Certification Program,
Company Limited Public Company Limited Chiang Mai University Chiang Mai University
Thai Institute of Directors Association
027
07
09 Mr. Narong Sitasuwan
08
●
1998 - 2003 : Director, Civil Engineering Division,
Age 56
09
●
●
Director
●
Group Business Committee Member
of Thailand ●
1994 - 1998 : Assistant Governor - Thermal Power
(Authorized Director)
Plant Construction,
Cambridge University (U.K.), Master of Arts, Modern History
Electricity Generating Authority
Dispute Family Relation Between the Management Amount of Shares (%) 0.000
Education
Electricity Generating Authority
Working Experience
●
of Thailand
●
2003 - Present : Managing Director, CLP Power
●
2002 :
●
1998 - 2002 : Managing Director, InterGen, China
●
1998 - 2002 : Vice President - Development and
●
1998 - 2002 : Director, UBS Warburg, Hong Kong
MSc. (Mechanical and Aerospace Engineering), Illinois Institute of Technology
●
●
Asia Limited, Hong Kong
B.Eng. (Mechanical), 2nd Class Honors, Chulalongkorn University
11 Mr. Peter Albert Littlewood
Certificate of Directors Certification Program,
Age 53
Thai Institute of Directors Association
●
Director
●
Group Business Committee Member
Dispute Family Relation Between the Management Amount of Shares (%) 0.000 Working Experience ●
●
●
2003 - Present : Senior Deputy Governor -
(Authorized Director)
Finance Director, CLP Power International Ltd., Hong Kong
Finance, InterGen, China
Education ●
MA (1st Class Honours), Cambridge University, UK
Dispute -
13 Mr. Michael Irl Nikkel
Generation Group,
Family Relation Between the Management -
Age 40
Electricity Generating Authority
Amount of Shares (%) 0.000
●
Director
of Thailand
Working Experience
●
Executive Committee Member
2002 - 2003 : President - Maintenance Business,
●
(Authorized Director)
2003 - Present : Executive Director and
Electricity Generating Authority
Chief Operating Officer,
Education
of Thailand
CLP Power Asia Limited,
●
1998 - 2002 : Vice President - Maintenance Business, Electricity Generating
●
2000 - Present : Director,
Authority of Thailand
Juris Doctor Degree - Law, University of Minnesota Law School
Hong Kong ●
Bachelor of Arts Degree - Education, Southwestern Oklahoma State University
Rayong Electricity Generating Co., Ltd.,
Dispute -
Khanom Electricity Generating
Family Relation Between the Management -
10 Mr. Kitti Sirikwin
Co., Ltd.,
Amount of Shares (%) 0.000
Age 59
EGCO Engineering & Service
Working Experience
Co., Ltd.
●
●
Director (Authorized Director)
Education ●
●
Certificate, Advanced Management Program (AMP), Harvard Business School, USA
●
●
2003 - Present : Executive Director-Head of Southeast Asia, CLP Power Asia
1999 - 2003 : Project Manager for CLP's
Limited
generating plant projects, CLP Group ●
1998
General Manager for CLP's
Master of Engineering (Structural Engineering &
generation business group and later
Mechanics) Asian Institute of Technology
for CLP strategic development,
B.Eng. (Civil Engineering), 2nd Class Honors,
CLP Group
●
1999 - 2003 : Director, Vice President and Chief Financial Officer, AES China Generating Company Limited
●
1998 - 2003 : Director and Vice President,
●
1996 - 1999 : Legal Counsel, The AES
Chulalongkorn University ●
AES Orient, Inc., Hong Kong
Certificate of Directors Certification Program, Thai Institute of Directors Association
Corporation, Washington, USA
12 Mr. Richard McIndoe
Dispute -
Age 39
Family Relation Between the Management -
●
Director
Amount of Shares (%) 0.000
●
Nomination and Remuneration Committee
14 Mr. James Richarde Truscott
Member (Authorized Director)
Age 41
Working Experience ●
2003 - Present : Deputy Governor - Transmission System Development, Electricity Generating Authority of Thailand
028
Education
●
Director
●
●
Risk Management Committee Member
Insead Business School (France), Master of Business Administration
(Authorized Director)
10
11
EGCO Engineering and Service
Education ●
●
●
2003 - 2004 : Senior Deputy Governor -
Family Relation Between the Management -
Development Group, Electricity
Amount of Shares (%) 0.000
Generating Authority of Thailand
Working Experience 1999 - Present : Managing Director, CLP Power
●
2001 - 2003 : Managing Director, BLCP Power
●
1999 :
●
Electricity Generating Authority of
Purchase, Electricity Generating
Director Project Development,
Authority of Thailand
●
2000 - 2003 : Director, Egcom Tara Company
●
1996 - 1999 : Executive Director & Project Director,
Limited Limited Thai-Lao Power Company Limited
17 Mr. John M. Palumbo Age 41
Director Project Development,
Coastal Power Company
2003 - Present : Chairman, Egcom Tara Company
1997 - 2000 : Assistant Governor - Power
Company Limited
1996 - 1998 : Southeast Asia, Jakarta, Indonesia,
Limited ●
Thailand ●
Southeast Asia, Bangkok, Thailand
●
Amata - EGCO Power Company
2000 - 2003 : Deputy Governor - Hydro Plant,
(Thailand) Limited
Coastal Power Company
Development Company Limited,
Company Limited ●
●
2003 - Present : Director, EGCO Joint Ventures &
2004 - Present : Director, Gulf Electric Public
MBA, Texas A&M University, USA
Dispute -
●
Company Limited
B.Sc. (Mechanical Engineering), Texas A&M University, USA
12
●
16 Mr. Somyos Polachan
Senior Executive Vice President -Business Development
Age 59
●
Risk Management Committee Member
●
Senior Executive Vice President - Asset
●
Good Corporate Governance Committee Member
Management and Planning
Education ●
●
Risk Management Committee Member
15 Mr. Chalermchai Ratnarak
●
Group Business Committee Member
Age 59
●
Good Corporate Governance Committee Member
Bachelor of Science in Mechanical Engineering (Honors), Columbia - University, School of Engineering and Applied Science, New York.
●
Director and President
Education
Dispute -
●
Executive Committee Member
●
B. Eng. (Honors), Chulalongkorn University
Family Relation Between the Management -
●
Chairman, Risk Management Committee
●
High Certificate in Nuclear Engineering,
Amount of Shares (%) 0.000
●
Chairman, Group Business Committee Chairman,
Chulalongkorn University
Working Experience
Advance Certificate in Electricity Utilities
●
Good Corporate Governance Committee
●
Company Limited,
Dispute -
Education ●
2004 - Present : Director, Gulf Electric Public
Management, Austin, Texas, USA
(Authorized Director)
Nam Theun 2 Power Company
Master of Engineering (Water Science and
Family Relation Between the Management -
Engineering) Asian Institute of Technology
Amount of Shares (%) 0.000
Limited ●
2003 - 2004 : Independent Consultant to the
●
B.Eng. (Civil Engineering), Chulalongkorn University
Working Experience
Managing Director and the Head
●
Certificate of Directors Certification Program,
●
of the Southeast Asia Business,
●
2000 - Present : Director and Managing Director,
Thai Institute of Directors Association
EGCO Engineering & Service
Certificate of the Civil Service Executive
ompany Limited
Development Program 1, Office of Civil Service
●
2003 - Present : Director, Rayong Electricity
China Light & Power Group (Hong Kong) ●
2003 - 2004 : Team Leader & Infrastructure
Generating Company Limited,
Commission Dispute -
Khanom Electricity Generating
Family Relation Between the Management -
Company Limited
Amount of Shares (%) 0.000 Working Experience ●
2004 - Present : Engineer, Level 14, Electricity
●
2004 - Present : Chairman,
Generating Authority of Thailand
●
Specialist, ADB Technical Assistance Program ●
2003 - Present : Chairman, Thai LNG Power
Limited,
Independent Consultant to Chief Executive Officer,
Corporation Limited, TLP Cogeneration Company
2003
International Power PLC. ●
1995 - 2003 : Principal and Managing Director, Delta Associates (Thailand) Limited
EGCO Green Energy Company
Rayong Electricity
Limited,
Generating Company Limited,
Roi-Et Green Company Limited
Khanom Electricity Generating Company Limited,
029
13
18 Mr. Sakda Sreesangkom Age 43 ● Senior Executive Vice President - Finance ● Risk Management Committee Member ● Group Business Committee Member ● Good Corporate Governance Committee Member Education ● M.A. (Economics), Keio University, Japan ● B.A. (Economics), Thammasat University Dispute Family Relation Between the Management Amount of Shares (%) 0.000 Working Experience ● 2002 - Present : Director, Rayong Electricity Generating Company Limited, Khanom Electricity Generating Company Limited, EGCO Engineering & Service Company Limited, EGCO International (BVI) Limited, EGCO Joint Ventures Development Company Limited, Egcom Tara Company Limited, Amata-EGCO Power Company Limited, Amata Power (Bangpakong) Company Limited ● 1992 - 1997 : Vice President, Credit Suisse First Boston ● 2001 - 2002 : Senior Vice President, Glow Company Limited ● 1999 - 2001 : Asian Development Bank Consultant to Public Debt Management Office, Ministry of Finance ● 1997 -1999 : Executive Director, Debt Capital Markets, Warburg Dillion Read
19 Mr. Sinchai Nerngjumnong Age 57 ● Senior Executive Vice President ● Risk Management Committee Member ● Good Corporate Governance Committee Member Education ● B. Eng. (Mechanical Engineering), 2nd Class Honors, Chulalongkorn University Dispute Family Relation Between the Management Amount of Shares (%) 0.000
030
14
15
Working Experience 2002 - Present : Director and Managing Director, Rayong Electricity Generating Company Limited ● 2001 - 2002 : Director and Managing Director, (Mar 17, 02) Khanom Electricity Generating Company Limited ● 1997 - 2001 : Deputy Managing Director, (Mar 25, 01) Rayong Electricity Generating Company Limited ● 1994 - 1996 : Operation Division Manager, Rayong Electricity Generating Company Limited
Dispute Family Relation Between the Management Amount of Shares (%) 0.000 Working Experience ● 2003 - Present : Senior Vice President - Finance Division, Electricity Generating Public Company Limited ● 1996 - 2003 : Manager - Finance Division, Khanom Electricity Generating Company Limited ● 1994 - 1996 : Manager - Treasury Management Section, Electricity Generating Public Company Limited
20 Mr. Chankij Jearaphunt Age 50 ● Senior Executive Vice President ● Risk Management Committee Member ● Good Corporate Governance Committee Member Education ● Master of Public Administration (MPA) National Institute of Development Administration (NIDA) ● B. Eng. (Electrical Engineering), Chulalongkorn University Dispute Family Relation Between the Management Amount of Shares (%) 0.000 Working Experience ● 2004 - Present : Director and Managing Director, (Mar 20, 04) Khanom Electricity Generating Company Limited ● 2002 - Present : Director, Gulf Cogeneration Company Limited, Nongkhae Cogeneration Company Limited, Samutprakarn Cogeneration Company Limited ● 1998 - 2004 : Deputy Managing Director(Mar 19, 04) Operation, Khanom Electricity Generating Company Limited ● 1996 - 1998 : Manager - Production Control Division, Khanom Electricity Generating Company Limited
22 Mr. Suvapan Chomchalerm Age 43 ● Senior Vice President - Accounting and Budget Division Education ● M.Sc. (Accounting), Thammasat University Dispute Family Relation Between the Management Amount of Shares (%) 0.000 Working Experience ● 2000 - Present : Senior Vice President Accounting and Budget Division, Electricity Generating Public Company Limited ● 1994 - 2000 : Manager - Accounting and Budget Analysis Section, Accounting and Budget Division, Electricity Generating Public Company Limited
●
21 Mr. Piya Jetasanon Age 47 ● Senior Vice President - Finance Division Education ● MBA, Ramkhamhaeng University ● B.A. (Economics), Thammasat University
23 Ms. Vasana Vongpromek Age 46 ● Executive Vice President- Corporate Services ● Secretary to Board of Directors ● Risk Management Committee Member ● Good Corporate Governance Committee Member Education ● MBA, Kasetsart University ● B.A. (Honors), Chulalongkorn University Dispute Family Relation Between the Management Amount of Shares (%) 0.000 Working Experience ● Senior Vice President Corporate Secretary Division, Electricity Generating Public Company Limited
Board Committee Member
(As at December 31, 2004) Executive Committee Name
Position
Starting Date
Mr. Aswin Kongsiri
Chairman
July 1, 2004
Mr. Norkun Sitthipong
Member
July 1, 2004
Mr. Michael Irl Nikkel
Member
July 1, 2004
Mr. John William Hancock
Member
July 1, 2004
Name
Position
Starting date
Mr. Chaipat Sahasakul
Chairman
July 1, 2004
Mr. Charu-Udom Ruangsuvan
Member
July 1, 2004
Mr. Worawit Khamkanist
Member
July 1, 2004
Name
Position
Starting Date
Mr. Chai-Anan Samudavanija
Chairman
July 1, 2004
Mr. Aswin Kongsiri
Member
July 1, 2004
Mr. Sommai Phasee
Member
July 1, 2004
Mr. Richard McIndoe
Member
July 1, 2004
Name
Position
Starting Date
Mr. Chalermchai Ratnarak
Chairman
July 1, 2004
Mr. Worawit Khamkanist
Member
July 1, 2004
Audit Committee
Nominating and Remuneration Committee
Risk Management Committee
Mr. James Richarde Truscott
Member
July 1, 2004
Mr. Somyos Polachan
Member
July 1, 2004
Mr. John M. Palumbo
Member
July 1, 2004
Mr. Sakda Sreesangkom
Member
July 1, 2004
Mr. Sinchai Nerngjumnong
Member
July 1, 2004
Mr. Chankij Jearaphunt
Member
July 1, 2004
Ms. Vasana Vongpromek
Member
July 1, 2004
Name
Position
Starting Date
Mr. Chalermchai Ratnarak
Chairman
July 1, 2004
Mr. Prasart Payackapan
Member
July 1, 2004
Mr. Somyos Polachan
Member
July 1, 2004
Group Business Committee
Mr. Sakda Sreesangkom
Member
July 1, 2004
Ms. Pilai Peampongsan
Member
July 1, 2004
Mr. Peter A. Littlewood
Member
July 1, 2004
Mr. Kwok Wing Ho
Member
July 1, 2004
Mr. Visit Akaravinak
Member
July 1, 2004
Mr. Narong Sitasuwan
Member
July 1, 2004
031
032
D, X
D, S
8 Mr. Norkun Sitthiphong
9 Mr. Narong Sitasuwan
and Planning, R, S, G
SEVP, R, G
20 Mr. Chankij Jearaphunt
D, Managing Director
D
D
DD
D
D
4
D
Director
D, Managing
DD
D
D
5
D
6 8 9 10
DD DD DD DD
7
D
DD
11
D
D
DD
12
D
13
D
14
D
15
D
16
D
D
D
17
D
D
18
D
19
D
20
D
21
D
22
D
23 24
D
25
D
26
= = = = = = =
Electricity Generating Authority of Thailand CLP Power Projects (Thailand) Limited Rayong Electricity Generating Co.,Ltd Khanom Electricity Generating Co., Ltd. Egco Engineering and service Co., Ltd. EGCO International (BVI) Ltd. Thai LNG Power Corporation Ltd.
8 9 10 11 12 13 14 = = = = = = =
TLP Cogeneration Co., Ltd. EGCO Green Energy Co., Ltd. Roi-Et Green Co., Ltd. Egcom Tara Co., Ltd. Gulf electric Public Company Limited Gulf Power Generation Co., Ltd. Gulf Cogeneration Co., Ltd.
15 16 17 18 19 20 21
= = = = = = =
Nongkhae Cogeneration Co., Ltd. Samutprakarn Cogeneration Co., Ltd. EGCO Joint Venture & Development Co., Ltd. Amata EGCO Power Co., Ltd. Amata Power (Bang Pakong) Co., Ltd. Nam Theun 2 Power Co., Ltd. Conal Holdings Corporation
22 = Northern Mindanao Power Corporation 23 = Alsing Power Holdings, Inc 24 = Alto Power Management Corporation 25 = Southern Philippines Power Corporation 26 = Western Mindanao Power Corporation
1 2 3 4 5 6 7
D, Managing Director
D
D
DD
D
D
3
Joint Ventures
B
2
Subsidiaries
DD = Chairman D = Director XX = Chairman of Executive Committee X = Executive Committee Member I = Independent Director AA = Chairman of Audit Committee A = Audit Committee Member NN = Chairman of Nominating and Remuneration Committee N = Nominating and Remuneration Committee Member RR = Chairman of Risk Management Committee R = Risk Management Committee SS = Chairman of Group Business Committee S = Group Business Committee Member GG = Chairman of Good Corporate Governance Committee G = Good Corporate Governnance Committee Member
SVP-Accounting and Budget
Level14
Engineering
Deputy Governor
D
DD
1
Major Shareholders
A
Remarks
22 Mr. Suvapan Chomchalerm
SVP-Finance
SEVP, R, G
21 Mr. Piya Jetasanon
SEVP-Finance, R, S, G
18 Mr. Sakda Sreesangkom
SEVP-Business Development, R, G
19 Mr. Sinchai Nerngjumnong
17 Mr. John Palumbo
SEVP-Asset Management
D, R
14 Mr. James Richarde Truscott
16 Mr. Somyos Polachan
D, X
D, President, X, RR, SS, GG
D, N
12 Mr. Richard McIndoe
13 Mr. Michael Irl Nikkel
15 Mr. Chalermchai Ratnarak
D, S
11 Mr. Peter Albert Littlewood
D
I,X
10 Mr. Kitti Sirikwin
I, AA
6 Mr. Chaipat Sahasakul
I, A
I, A, R
7 Mr. John William Hancock
5 Mr. Charu-Udom Ruangsuvan
4 Mr. Worawit Khamkanist
I, N
I, XX, N
2 Mr. Sommai Phasee
DD, NN
1 Mr. Chai-Anan Samudavanija
3 Mr. Aswin Kongsiri
EGCO
Name
The position of EGCO's Management and the control persons in EGCO group companies as of December 31, 2004
033
& Administration
DD = Chairman
1 = Khanom Electricity Generating Co., Ltd. 2 = Egco Engineering and service Co., Ltd. 3 = EGCO International (BVI) Ltd.
A
B
D = Director
D
D D
D
D
D
DD
2
D
D
D
D, Managing Director
4 = Thai LNG Power Corporation Ltd. 5 = TLP Cogeneration Co., Ltd. 6 = EGCO Green Energy Co., Ltd.
General Affairs Division Manager
16 Mr. Supachai Pongthong
Remarks
Operation Division Manager
Account & Budget Division Manager
14 Mr. Pasagorn Sasanawin
Maintenance Division Manager
15 Ms. Chutiporn Prapong
13 Mr. Narong In-Eav
Deputy Managing Director-Finance
Deputy Managing Director - Operations
12 Ms. Pikul Srisastra
11 Mr. Chumsak Desudjit
D
D
D
D
9 Mr. Visit Akaravinak
D
D
D
7 Somyos Polachan
8 Mr. Kwok Wing Ho
10 Mr. Narong Sitasuwan
D
D
D
5 Mr. Sakda Sreesangkom
6 Mr. Prasart Payackpan
D
D
D
3 Mr. Peter Albert Littlewood D
DD
1
4 Ms. Pilai Peampongsan
DD
D, Managing Director
1 Mr. Chalermchai Ratnarak
REGCO
2 Mr. Sinchai Nerngjumnong
Name
D
3
D
DD
5
DD
6
Other Subsidiaries
7 = Roi-Et Green Co., Ltd. 8 = Egcom Tara Co., Ltd. 9 = Gulf Electric Public Company Limited
D
DD
4
The position of REGCO's Management and the control persons in EGCO group companies as of December 31, 2004
DD
7
D
D
9
D
D
10
D
D
11
10 = EGCO Joint Venture & Development Co., Ltd. 11 = Amata EGCO Power Co., Ltd. 12 = Amata Power (Bang Pakong) Co., Ltd.
D
DD
D
8
D
12
034
DD = Chairman D = Director 1 = Rayong Electricity Generating Co., Ltd. 2 = Egco Engineering and service Co., Ltd. 3 = EGCO International (BVI) Ltd. 4 = Thai LNG Power Corporation Ltd. 5 6 7 8 = = = =
D
D
D
D, Managing Director
TLP Cogeneration Co., Ltd. EGCO Green Energy Co., Ltd. Roi-Et Green Co., Ltd. Egcom Tara Co., Ltd.
General Affairs Division Manager
Account & Budget Division Manager
Operation Division Manager
Maintenance Division Manager
& Administration
Deputy Managing Director-Finance
D
D
D
D
D
D
DD
2
D
3
9 10 11 12 = = = =
D
DD
4
D
DD
6
A B
DD = Chairman D = Director 1 = Rayong Electricity Generating Co., Ltd. 2 = Khanom Electricity Generating Co., Ltd. 3 = Egco Engineering and service Co., Ltd. 4 = Thai LNG Power Corporation Ltd.
Remarks
5 Mr. Wataru Okuyama
D
5 6 7 8 = = = =
EGCO Green Energy Co., Ltd. Roi-Et Green Co., Ltd. Egcom Tara Co., Ltd. Gulf Electric Public Company Limited
9 10 11 12
= = = =
D
DD
D
D, Managing Director
D, Managing Director
D
3 Ms. Daranee Sriwattana
4 Mr. Supoth Chantavilartkul
D
4
D
D
3
D
2
DD
1
1 Mr. Somyos Polachan
TLP Cogen
2 Mr. Chumsak Desudjit
Name
DD
7
D
D
6
D
D
7
Gulf Power Generation Co., Ltd. Gulf Cogeneration Co., Ltd. Nongkhae Cogeneration Co., Ltd. Samutprakarn Cogeneration Co., Ltd.
D
D
D
5
D
8
Other Subsidiaries
D
DD
D
8
Other Subsidiaries
Gulf Electric Public Company Limited Gulf Cogeneration Co., Ltd. Nongkhae Cogeneration Co., Ltd. Samutprakarn Cogeneration Co., Ltd.
D
DD
5
The positions of TLP Cogeneration Co., Ltd. and the control persons in EGCO group companies as of December 31, 2004
A B
Remarks
16 Mr. Pairote Boonma
15 Ms. Ngamphis Chitphromphan
14 Mr. Amnat Tippayasak
13 Mr. Tanit Kalunkul
12 Ms. Daranee Sriwattana
Deputy Managing Director - Operations
D
D
D
9 Mr. Visit Akaravinak
10 Mr. Narong Sitasuwan
11 Mr. Mana Vitvaskul
D
D
D
7 Mr. Somyos Polachan
8 Mr. Kwok Wing Ho
D
D
D
D
5 Mr. Sakda Sreesangkom
D
D
DD
1
6 Mr. Prasart Payackpan
D
D
3 Mr. Peter Albert Littlewood
D, Managing Director
DD
KEGCO
4 Ms. Pilai Peampongsan
2 Mr. Chankij Jearaphun
1 Mr. Chalermchai Ratnarak
Name
The positions of KEGCO's Management and the control persons in EGCO group companies as of December 31, 2004
D
9
D
D
9
D
11
D
12
D
D
13
D
11
D
12
14 D
D
D
D
14
13
13 = EGCO Joint Venture & Development Co., Ltd. 14 = Amata EGCO Power Co., Ltd. 15 = Amata Power (Bang Pakong) Co., Ltd.
D
10
13 = EGCO Joint Venture & Development Co., Ltd. 14 = Amata EGCO Power Co., Ltd. 15 = Amata Power (Bang Pakong) Co., Ltd.
D
10
D
15
D
15
Directors' Remuneration
â—?
explicit remuneration
(1) Total Remuneration of all Board Members As of December 31, 2004, the Board of Directors is composed of fifteen directors. (Unit : Baht) Appointment No.
Name
Period Period of Service of Service in 2003 in 2004
Date
1.
Mr. Chai-Anan Samudavanija
2.
Mr. Sommai Phasee
3.
Mr. Aswin Kongsiri
/4
/3
Period of Service
26 Apr 04
Total Remuneration in 2004
Meeting Attendance 4/4
Total
Board Director
Bonus
committee /1
9
-
356,250.00
12 May 92
12
12
7/8
430,000.00
25 Jun 01
12
12
8/8
440,000.00
29 Apr 97
12
12
7/8
430,000.00
30 Apr 03
12
9
8/8
440,000.00
245,000.00
Remuneration
/2
-
601,250.00
264,000.00
828,690.00
1,522,690.00
2,045,000.00
752,190.00
3,237,190.00
618,000.00
764,940.00
1,812,940.00
440,000.00
573,710.00
1,453,710.00
4.
Mr. Worawit Khamkanist
5.
Mr. Charu-Udom Ruangsuvan
6.
Mr. Chaipat Sahasakul
22 Apr 02
12
12
8/8
440,000.00
562,500.00
764,940.00
1,767,440.00
7.
Mr. John William Hancock /4
28 Jun 04
7
-
3/3
213,000.00
960,000.00
-
1,173,000.00
8.
Mr. Norkun Sitthiphong
26 Apr 04
9
-
4/4
285,000.00
960,000.00
-
1,245,000.00
9.
Mr. Narong Sitasuwan /3/4
27 Oct 03
12
3
5/8
410,000.00
729,750.00
191,240.00
1,330,990.00
10. Mr. Kitti Sirikwin
/4
26 Apr 04
9
-
4/4
285,000.00
-
-
285,000.00
11. Mr. Peter Albert Littlewood
22 Feb 99
12
12
5/8
410,000.00
795,000.00
739,440.00
1,944,440.00
12. Mr. Richard McIndoe
16 Dec 02
12
12
7/8
430,000.00
608,000.00
752,190.00
1,790,190.00
13. Mr. Mike Irl Nikkel
15 Dec 03
12
1
8/8
260,000.00
640,000.00
63,750.00
963,750.00
19 Mar 04
10
-
5/6
333,000.00
144,000.00
-
477,000.00
15 Dec 03
12
1
8/8
-
-
63,750.00
63,750.00
14. Mr. James Richarde Truscott
/3/4
15. Mr. Chalermchai Ratnarak /3 16. Mr. Sitthiporn Ratanopas
/3/5/6
17. Mr. Andrew J. Pickering /5 /5
30 Apr 03
4
9
3/3
182,500.00
116,000.00
1,147,409.00
1,445,909.00
28 Oct 02
2
12
0/2
59,000.00
-
752,190.00
811,190.00
30 Apr 03
4
9
3/3
146,000.00
-
573,710.00
719,710.00
19. Mr. Somchai Wongsawat /5
25 Jun 01
4
12
2/3
136,000.00
-
726,690.00
862,690.00
20. Mr. Seri Chintanaseri /5
30 Apr 03
4
9
4/4
156,000.00
-
573,710.00
729,710.00
21. Mr. Boonshai Jiwalai /6
-
-
4
-
-
-
254,980.00
254,980.00
-
-
4
-
-
-
254,980.00
254,980.00
-
-
9
-
-
-
573,710.00
573,710.00
-
-
10
-
-
-
586,450.00
586,450.00
-
-
1
-
-
-
51,000.00
51,000.00
9,127,250.00 10,989,669.00
25,958,669
18. Mrs. Pannee Sathavarodom
22. Mrs. Angoon Kamolyabutr
/6
23. M.L. Chanaphun Kridakorn
/6
24. Mr. James Seymour Dickson Leach 25. Mr. Kraisi Karnasuta
/6
/6
5,841,750.00 /1
Board Committees are 1) Executive Committee, 2) Audit Committee, 3) Nominating and Remuneration Committee, 4) Risk Management Committee and 5) Group Business Committee.
/2
Directors' bonus was paid in May 2004 in accordance with the shareholders' resolution in the AGM no. 1/2004 on April 26, 2004.
/3
In 2004 AGM, all five directors who retired by rotation were re-elected namely Mr. Worawit Khamkanist, Mr. Sitthiporn Ratanopas, Mr. Narong Sitasuwan, Mr. James Richard Truscott and Mr. Chalermchai Ratnarak.
/4
In 2004, five directors were appointed. - Mr. James Richarde Truscott was appointed in the Board of Directors' meeting no. 3/2004 on March 23, 2004. - Mr. Chai-Anan Samudavanija, Mr. Norkun Sitthiphong and Mr. Kitti Sirikwin were appointed in the Board of Directors' meeting no. 4/2004 on April 26, 2004. - Mr. John William Hancock was appointed in the Board of Directors' meeting no. 5/2004 on June 28, 2004.
/5
In 2004, five directors resigned. - Mr. Andrew J. Pickering with effect on February 20, 2004 - Mr. Sitthiporn Ratanopas, Mr. Somchai Wongsawat, Mrs. Pannee Sathavarodom and Mr. Seri Chintanaseri with effect on April 26, 2004
/6
In 2003, five directors resigned and one retired by rotation.
035
(2) Total Remuneration of the Executive Board and the Management (Unit : Baht) Year 2004 Executive Director (1 Persons) /1
Remuneration
/1
Management (6 Persons) /2
Total Remuneration
Total Salary
-
1,343,480.00
1,343,480.00
Bonus /3
-
5,813,419.07
5,813,419.07
Meeting Allowance
-
-
-
Total
-
7,156,899.07
7,156,899.07
Executive Director is defined as a director who is also management of the Company. EGCO has only one Executive Director, the President. He is not entitled to director's retainer fee, meeting allowance and bonus as a Director or a member of the standing committee.
/2
There are six Managements i.e., President, SEVP- Asset Management and Planning, SEVP-Business Development, SEVP-Finance, and two SEVPs who are seconded to be the Managing Directors of REGCO and KEGCO and were paid by those companies. Consequently EGCO accounted for the remuneration of only four executives. Such remuneration does not include the remuneration for Manager of Accounting and Budget Division and Manager of Finance.
/3
2004 bonus was paid in January 2005.
(3) Total Remuneration of Core Subsidiaries' Management (Unit : Baht) Year 2004 REGCO
Remuneration
KEGCO
TLP Cogen
Directors
Management
Total
Directors
Management
Total
Directors
Management
Total
(10 Persons)
(7 Persons)
Remuneration
(10 Persons)
(7 Persons) /3
Remuneration
(5 Persons)
(1 Persons) /4
Remuneration
Salary
-
Bonus /1
-
11,427,108.00 11,427,108.00 4,240,523.42
4,240,523.42
-
-
10,818,111.74 10,818,111.74 4,283,325.04
4,283,325.04
-
1,017,555.00 1,017,555.00 424,001.87
424,001.87
allowance /2
-
-
-
-
-
-
-
-
-
Total
-
15,667,631.42 15,667,631.42
-
15,101,436.78 15,101,436.78
-
Meeting
/1
1,441,556.87 1,441,556.87
2004 bonus was paid in January 2005
/2
There was no directors' remuneration paid at the three core subsidiaries.
/3
One management mandatory retired and a successor was appointed.
/4
EGCO employee was assigned to be TLP Cogen's General Manager under the service agreement between TLP Cogen and EGCO.
â—?
other remuneration
Provident Fund
In 2004, the company and its core subsidiaries made provident fund contributions to executive management as follows: (Unit : Baht) Year 2004 Company
036
Members
Provident fund
EGCO
4
686,088.00
REGCO
7
1,142,710.80
KEGCO
7
878,709.24
TLP Cogen
1
63,365.93
employee and remuneration
Headcounts as at December 31, 2004 -
EGCO's workforce comprises 113 headcounts which include the President, three Senior Executive Vice Presidents, six management members who are seconded to work at the subsidiaries and 103 employees. The workforce structure is as follows: Key Areas
Members (Persons)
1.
President
13
2.
Business Development
16
3.
Asset Management and Planning
13
4.
Finance
19
5.
Controller
6
6.
General Counsel & Corporate Secretary
9
7.
Corporate Services
27
-
REGCO has a workforce of 151 headcounts, which includes a Managing Director, a Deputy Managing Director, and one person performing the role of Deputy Managing Director (since April 1, 2004) and 148 officers.
-
KEGCO has a workforce of 164 headcounts, which includes a Managing Director, a Deputy Managing Director and one person performing the role of Deputy Managing Director (since April 1, 2004) and 161 officers.
The workforce structures of REGCO and KEGCO is as shown in the following table: Total (Persons) Employee
REGCO
KEGCO
1.
Operation
69
72
2.
Maintenance
48
57
3.
Others
31
32
-
TLP Cogen has a workforce of 35 headcounts, 3 of whom are permanent staff and a General Manager who is assigned from EGCO under the service agreement with TLP Cogen. The other 31 employees are ESCO's employees who serve TLP Cogen under a service contract.
Remuneration of EGCO and the core subsidiaries for 2004 is as shown in the following table. (Unit : Million Baht) Amount Remuneration
EGCO /1
REGCO
KEGCO
Total Salary
91.14
/1
69.82
104.41
1.97
36.57
25.43
40.60
0.79
6.57
6.86
8.80
0.09
135.27
102.11
153.81
2.83
Bonus
/3
Provident Fund Total
TLP Cogen/2
/1
Includes salary and bonus of Management on a one year contract
/2
Includes salary and bonus of TLP Cogen Management, an EGCO employee who is assigned to be TLP Cogen's General Management under the service agreement and other 3 permanent staff.
/3
2004 bonus was paid in January 2005.
037
Corporate Governance Report
1.
corporate governance policy
The Board of Directors has established the following corporate governance policy consistent with the "Best Practices for Directors of Listed Company" and the "Principles of Good Corporate Governance" issued by the Stock Exchange of Thailand (SET) with regard to the vision, mission, code of conduct, risk circumstances and responsibilities of the Company as a good corporate citizen. -
Be responsible to shareholders and other stakeholders by protecting the company assets as well as its good reputation,
-
Establish clear responsibilities in accordance with the entrusted mission with disciplines and awareness of existing and future risks,
-
Have clear and transparent decision making process and working procedures,
-
Treat the stakeholders equitably and avoid bias or situation that may raise any conflicts of interest,
-
Foster the Company's sustainable growth and long term shareholders' value,
-
Continuously enhance competitiveness, and
-
Be sensitive to the community and concern about the environment.
The Company is well aware that a good corporate governance system needs a good governance policy and system as well as a consistent corporate culture. Consequently, the Company cultivates the following fundamental business values that all employees shall live by in conducting the business on behalf of the EGCO Group.
2.
-
We will conduct our business with honesty, integrity, and ethics.
-
We will carry out our business in compliance with all applicable business and commercial laws.
-
We will show respect and take into account local traditions and cultures.
-
We will use natural resources in an efficient and environmentally responsible manner.
-
We will carry out our responsibilities in a professional manner and with team spirit.
shareholders: rights and equitable treatment
The Company has established the following guidelines to observe the fundamental rights of shareholders. -
Ensure that shareholders have equitable fundamental rights to attend and to vote in shareholders' meetings.
-
Present significant matters to the shareholders' meetings for approval and avoid conflicts of interest.
-
Set up a transparent disclosure procedure to ensure that shareholders have adequate, necessary and correct information to evaluate the Company's performance in compliance with the notifications of the SET and the Securities and Exchange Commission (SEC).
-
Ensure that shareholders can get their actual return on investment by having a simple holding structure between the Company and the subsidiary and associate companies with no common share and cross holding. Internal regulations to prevent insider trading and conflicts of interest are also established
3.
relations with investors
Being aware of the impact of the Company's information on the decision of investors and stakeholders, the Board set the policy to disclose both the financial and non-financial information in a materially sufficient, adequate, reliable and timely basis. The Investor Relations Section is responsible for communicating with institutional and individual investors, analysts and concerned government agencies. The Company fosters trust by announcing the financial information as early as possible and within the timeframe stipulated by laws via the SET's ELCID system of which the information will be passed through to investors and the analysts at www.set.or.th. At the same time, the Company announces such information via its website at www.egco.com and submits the information by electronic mail to the investors and the analysts subscribing to the mailing list. The Company also prepares the Management Discussion and Analysis reports on a quarterly basis to allow shareholders to monitor the performance of the Company. For 2004, significant events with regard to investor relations are as follows. -
Two analyst meetings to present the half-year performance and to clarify related inquiries on March 2 and August 24, 2004 respectively.
-
A seminar on the Company's business for interested investors on May 26, 2004.
-
A plant visit to Rayong Power Plant on June 24-25, 2004 to allow investors to discuss with Management and to learn about power plant's operation.
-
"EGCO's Newsletter" to communicate the Company's significant information to shareholders and investors.
In addition, the Company joined events hosted by the SET such as Thailand Focus, SET Road Shows and SET in the City. The
038
Company also took part in the CLSA Investors' Forum and the JP Morgan Asia Pacific Equity Conference. Significant information with impact on investors' decision, presentation material presented to analysts and the Frequently Asked Questions are presented on the Company's web page for convenient search by investors. The Company was honored as the 8th best company in terms of investor relations in a survey by FinanceAsia.Com.
4.
rights of various stakeholders
It is the policy of the Board of Directors to respect the rights of all stakeholders as set forth in the Code of Conduct. Shareholders: The Company will strive to achieve growth based on its potential and core competencies so that shareholders over the long term will benefit from the productive performance and good operating results of the Company. In absence of unforeseen circumstances, the Company intends to distribute dividend at approximately 40% of the net profit after tax. This dividend policy may change in the light of investment opportunities that may become available to the Company or as a result of other economic or financial factors or when a dividend payment may have a significant impact on the normal operation of the Company. Employees: The Company believes in the value of its human resources and aims to foster pride among all employees by promoting the participative management and equal opportunity for career advancement and ensuring fair remuneration. Employees are encouraged to enter development programs in core and functional competencies to bring out their highest working potentials to undertake tasks in competent manner and to maintain the Company's business leadership. In addition, the Company encourages the employees to voice their suggestions as well as grievances to their immediate supervisors, the Employees' Welfare Committee and the Good Corporate Governance Committee. All their voices are attended to with appropriate remedies for the benefits of all concerned parties and a good working relationship. The Company pays attention to safety, health and environment. It should be noted that during the past year, there was no disabling injury. In addition, the Khanom Electricity Generating Co., Ltd. (KEGCO) has been honored as the National Distinguished Workplace in terms of Safety, Occupational Health and Environment for 5 consecutive years. Customers: The Company always commits to provide good quality and reliable services in accordance with the agreements with EGAT and other customers. The ISO 9001:2000 has been implemented at the Rayong Electricity Generating Co., Ltd. (REGCO) and KEGCO. During the past year, the Company's subsidiaries can generate electricity in accordance with their contracts with the availability factors higher than those stipulated in the power purchase agreements. REGCO was also awarded a bonus for running the power plant with higher equivalent availability factor than the contract for 8 years consecutively. Suppliers and Contractors: The Company requires that all aspects of procurement of goods and services be conducted in compliance with ethical standards. In addition, the Company aims at developing and securing sustainable relationship with suppliers and contractors on the basis of value for money, technical conformance and mutual trust. As such, the Company requires that all aspects of procurement of goods and services be conducted to the highest ethical standards and consistent with the following principles: ●
Competitive tendering with equal information.
●
Objective evaluation of tenders and selection of suppliers and contractors.
●
Appropriate forms of contract.
●
Effective monitoring systems and management controls to ensure the proper fulfillment of contractual obligations, and to detect and prevent bribery, fraud or other malpractice throughout all stages of the procurement process.
●
Prompt payment consistent with the mutually agreed terms of trade.
For 2004, there has been no complaint from suppliers and contractors. Society and Environment: The Company's policy is to conduct its business with commitment to social and environment concerns as follows. -
Encourage employees to have strong concern and be responsible for clean environment,
-
Communicate with the public on environmental matters, share its experience with other agencies to facilitate environmental improvements in industry performance, knowledge and operating practices, and
-
Alleviate adverse effects on the environment. Undertake appropriate reviews and evaluations of its performance to measure and to ensure compliance with this environmental policy.
039
Based on the above policies, the Management has carried out activities such as promotion of the alternative energy and environment conservation, and support to schools and communities, religion, customs and traditions.
5.
shareholders' meetings
The Company regards the annual general meeting as a significant event. With respect to this, the Board of Directors has established the policy for all directors and management to attend the shareholders' meetings and to clarify shareholders' inquiries. For 2004, The Company held 2 Shareholders' Meetings. The Shareholders' Extraordinary meeting on February 23, 2004 was attended by the Chairman, Chairmen of Board's standing committees, directors and external auditors. However, the Chairman who was the same person as the Chairman of the Nominating and Remuneration Committee was absent with apology from the Shareholders' Annual General Meeting on April 26, 2004 due to specific circumstance. The shareholders then unanimously appointed Mr. Sommai Phasee, a shareholder and independent director, to chair the meeting. The Company follows the best practices recommended by the SET. The notices of the meetings as well as the agenda document were delivered to the shareholders not less than 14 days prior to the meeting date. The proxy form was also attached so that the shareholders, who could not attend the meeting, could assign any of the six independent directors as their proxy. The number of shareholders attending each meeting in person and by proxy was higher than one-third of the total shares as required by law. The Company clarified and disclosed all the necessary information, allowed adequate time to answer shareholders' inquiries and announced the voting result. The minutes of meetings were disclosed for shareholders' review via the SET and the Company's website within 14 days after the meeting. The Company also conducted a survey on shareholders' satisfaction to the Annual General Meeting no. 1/2004 of which the result indicated the shareholders were satisfied with the materially complete and correct information in the notices of the meeting, the meeting arrangement, registration, meeting conduct and minutes of meetings. The shareholders also provided useful recommendations with regard to the meeting place, which the Company would improve in the next meeting.
6.
leadership and vision
The Board of Directors strives to achieve growth and create shareholders' value by recruiting competent executives. The Board also works with the Management in setting the business direction, vision, policies as well as the budget so that the business plan would be well committed. Executives are delegated adequate authorities to run the Company to achieve the corporate goals. The Board of Directors has conducted its duties with diligence and care in compliance with the governing laws and regulations to set example for the employees as well as to foster public trust. In this regard, the Board of Directors launched the Code of Conduct for EGCO Group Directors embracing the eight values: honesty, integrity, enterprise, excellence, accountability, justice, independence, and equality of shareholder opportunity. In 2004, the Board approved the business directions for 2004-2008, which have been formulated to suit the changing internal and external environment with the major policies as follows. -
Foster growth in power business based on the Company's competitiveness and acceptable risk,
-
Efficiently manage the existing portfolio and maintain financial stability with appropriate cost of capital,
-
Develop human resources and encourage Group synergy,
-
Ensure that the internal control is adequate and the audit is independent with the focus on risk monitoring, financial control, legal compliance and adequacy of internal control system by assigning responsible unit, evaluating the adequacy of the internal control system and monitoring the conflicts of interest in which management, directors and shareholders may be involved,
-
Develop an efficient and effective governance system as follows. ●
Equip incoming directors with knowledge of the Company, governing laws and regulations and the Management by providing Directors' orientation and Directors' manual as well as encouraging Directors to attend the courses at the Institute of Thai Directors Association (IOD),
●
Appraise the performance of the Board and Audit Committee so that the outcome can be used to improve the governance efficiency,
●
Set the authority between shareholders, Board, Board's standing committees and Management to ensure efficiency, transparency and clear responsibility. This is based on the principle that the Board is accountable for setting business direction, policy and strategies while the Management is accountable for normal operation, and
●
Set the guidelines to assess the corporate success by adopting the balanced scorecard concept of which the result is monitored on a quarterly basis.
All directors are knowledgeable about the business and the duties of directors. The list of directors who attended the courses at IOD is as follows.
040
Name
Position
Courses
1. Mr. Aswin Kongsiri
Independent Director
Directors' Certification Program
2. Mr. Sommai Phasee
Independent Director
Chairman 2000
3. Mr. Worawit Khamkanist
Independent Director
Directors' Certification Program
4. Mr. Chaipat Sahasakul
Independent Director
Directors' Certification Program
5. Mr. John William Hancock
Independent Director
Directors' Certification Program
6. Mr. Charu-Udom Ruangsuvan
Independent Director
Directors' Accreditation Program
Chairman 2000
Finance for Non-Finance Director
Chairman 2000
7.
7. Mr. Narong Sitasuwan
Director
Directors' Certification Program
8. Mr. Kitti Sirikwin
Director
Directors' Certification Program
9. Mr. Chalermchai Ratnarak
Director and President
Directors' Certification Program
conflicts of interests
The Company has set the policy in the Code of Conduct for Directors and Employees to avoid the conflicts between personal interests and corporate interests.
Inside Information Directors -
Directors must not make improper use of information acquired by virtue of the directors' position.
-
Directors must not disclose matters such as trade secrets, or sensitive business information to outsiders.
-
Directors must not buy or sell shares while in possession of information, which, if disclosed publicly, would likely materially affect the price of the Company's shares.
-
Directors must not provide to anyone any information which is not publicly available and which would have a material effect on the price or value of the Company's securities. Such information includes, but not limited to, profit forecasts, proposed shares issues, borrowings, impending takeovers, impending litigation, significant changes in operations, new investment, new discoveries, and liquidity problems.
Employees -
Employees must conduct the Company business in compliance with the SET's and SEC's requirements and relevant laws which include fair disclosure policy to the investors/public.
-
The use of inside information for personal share trading is prohibited.
-
Disclosure of information that has an impact on business and share price must be approved by the President and only the Company's spokespersons can disclose information.
Conflicts of Interests -
Directors and employees shall not be engaged as directors or advisors of other companies, organizations, or associations that may conflict with the interests and the business of the Company. Acknowledgment by the Board of Directors must be sought before taking such engagement.
-
Directors will promptly notify the Board when any of the conflicts of interests occur and must consider whether to refrain from participating in the debate and/or voting on the matter, whether to be absent from discussion of the matter, whether to arrange that the relevant board papers are not sent, or, in an extreme case, whether to resign from the Board.
-
Directors and designated Management will report the change in their securities holding to the regulatory body. The Corporate Secretary is assigned to report the securities holdings of directors and management to the Board at every meeting.
-
Transactions that may induce the conflicts of interests shall be reported to the Board of Directors for consideration. The details of such transactions such as transaction price, contractors, and rationale are to be disclosed in compliance with the requirements of the SEC and SET.
-
Employees should not borrow money from the Company's customers/suppliers or from individuals or firms having business dealings other than the financial institutions as it may influence the way they handle company business.
The Company shall impose disciplinary action if the Management use inside information for their own benefits.
8.
code of conduct
The Company has set up the Code of Conduct for directors and employees as guidelines for best practices so that directors, Management team and employees would perform their duties in accordance with ethical values. Managers at all levels are required to promote the compliance with the Code of Conduct and act as role models. The Company set the procedure to ensure that the President presents the Code of Conduct to new
041
employees. The Good Corporate Governance Committee is entrusted to promote the compliance with the Code of Conduct. This aims at ensuring that the employees abide by the spirit of the governance policies, which is the most important factor to make the good corporate governance system work. The Code of Conduct will be reviewed at least every two years.
9.
balance of power by non-executive directors
The Board has set the policy to monitor and balance the Management's performance as follows. -
There are 14 non-executive directors which account for 93% of the whole Board of 15 directors, 6 of whom or 40% of the Board are qualified as independent directors.
-
Apart from the Audit Committee, independent directors are appointed members of the Board's standing committees namely the Executive Committee, the Nominating and Remuneration Committee and the Risk Management Committee.
-
The Board can hold meeting without the Management's attendance on some agenda items. The Board and the standing committees can also seek outside professional advice as deemed appropriate at the Company's expense.
-
The Audit Committee is authorized to access all information and to invite any concerned directors, management or staff of EGCO and/ or the group companies to a meeting for further clarification. The Audit Committee shall report to the Board of Directors for corrective actions within the time deemed appropriate when suspicions arise on any transactions or activities that would materially impact financial position and results of operation of the Company including the transaction which causes conflicts of interest, fraud or irregularity or material defect of internal control system and breaches of the Securities and Exchange Act, SET Regulations or laws related to the business of the Company.
-
The Management is assigned to report the operating performance including problems and obstacles on a monthly basis so that the Board can monitor the performance and adjust plans and strategies as appropriate.
10.
aggregation or segregation of positions
To ensure clear responsibility and authority, the Chairman is a non-executive director and is not the same person as the President. The Chairman takes the role of the leader and assures that the Board's meetings are conducted efficiently by encouraging involvement by all directors and providing recommendations to Management via the President. The Board will not intervene in any routine activities under the Management's responsibilities.
11.
remuneration for directors
The Company set the directors' remuneration at the appropriate rate, which is comparable to that of leading companies in the same sector. The Nominating and Remuneration Committee shall propose the directors' remuneration for endorsement by the Board and approval by the Shareholders. The Company has a policy to disclose the remuneration of each director for transparency. In 2004, the Shareholders' Meeting resolved that the directors' remuneration comprised of the monthly retainer fee and meeting allowance to reflect the liabilities, time devotion and meeting attendance of each director. On the other hand, the bonus payment was tied with the company's achievement. Details are as follows. 1.
Monthly retainer fee at Baht 30,000 and meeting allowance at Baht 10,000 each. In the case that substituted directors/committee members are appointed, retainer fee would be paid to each person in proportion of the service time in the month. Members who did not attend the Meeting would not receive the allowance, which would also affect the bonus remuneration. Chairman of the Board received 25% additional remuneration for both the retainer fee and the meeting allowance.
2.
Bonus would be allocated at 0.5% of the net profit after tax of the consolidated financial statement but not exceeding Baht 12 million at the Board's discretion.
Directors that also serve as committee members will be entitled to extra remuneration to match the increase in responsibilities. Remuneration for top executives is determined in accordance with the principles and policies of the Board of Directors and linked with the corporate and individual achievement. The Company periodically conducts a survey of executive remuneration to ensure that the rate is comparable to that of peer companies and adequate to attract and motivate qualified executives. The Nominating and Remuneration Committee is accountable for considering and proposing the appropriate package to be approved by the Board of Directors.
12.
board meeting
The Board schedules meetings at least every two months. Extra Meetings can be called if there is any major unplanned event that needs the Board's consideration. The Board can also authorize the Committees to scrutinize or approve the management's activities within the delegated authority during the meeting interval. To protect the company's interest, the Company plans the meeting dates and the agenda for the whole year in advance. Each meeting takes approximately 2.50 hours. The average attendance rate is 87%. Agenda is prioritized in terms of significance i.e., Matter Arising, Matter for Consideration, and Matter for Information to ensure that items needding the most careful deliberation are given adequate time. Directors can propose
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the agenda to the Chairman and can deliver their independent judgement. The minutes of meetings are put in writing. The draft minutes are circulated to every director within 14 day after the meeting for review prior to the adoption at the next meeting. Certified version of the minutes is securely filed and available for review by directors or concerned parties. At the end of the year, the original copy of the minutes would be bound together with 1 extra copy. The electronic file is also stored for convenient retrieving. The Board of Directors called 8 meetings in 2004 comprising 7 scheduled and 1 extra meetings. The Management delivered the notice, agenda, and meeting documents to the directors for consideration well in advance. The list of directors and attendance record in 2004 is shown below. The Board of Directors Name
Position
Appointment Date
Attendance (no.)
Mr. Chai-Anan Samudavanija
Chairman
April 26, 2004
4/4
Mr. Sitthiporn Ratanopas 1
Chairman
April 30, 2003
3/3
Mr. Sommai Phasee
Independent Director
May 12, 1992
7/8
Mr. Aswin Kongsiri
Independent Director
June 25, 2001
8/8
Mr. Worawit Khamkanist
Independent Director
April 29, 1997
7/8
Mr. Charu-Udom Ruangsuvan
Independent Director
April 30, 2003
8/8
Mr. Seri Chintanaseri 2
Independent Director
April 30, 2003
4/4
Mr. Chaipat Sahasakul
Independent Director
April 22, 2002
8/8
Mr. John William Hancock
Independent Director
June 28, 2004
3/3
Mr. Somchai Wongsawat 3
Director
June 25, 2002
2/3
Ms. Pannee Sathavarodom 4
Director
April 30, 2003
3/3
Mr. Norkun Sitthiphong
Director
April 26, 2004
4/4
Mr. Narong Sitasuwan
Director
October 27, 2003
5/8
Mr. Kitti Sirikwin
Director
April 26, 2004
4/4
Mr. Peter Albert Littlewood
Director
February 22, 1999
5/8
Mr. Richard McIndoe
Director
December 16, 2002
7/8
Mr. Andrew J. Pickering 5
Director
October 28, 2002
0/2
Mr. Michael Irl Nikkel
Director
December 15, 2003
8/8
Mr. James Richarde Truscott
Director
March 19, 2004
5/6
Mr. Chalermchai Ratnarak
Director and President
December 15, 2003
8/8
1
Vacating the office by resignation on April 26, 2004
2
Vacating the office by resignation on April 26, 2004
3
Vacating the office by resignation on April 27, 2004
4
Vacating the office by resignation on April 27, 2004
5
Vacating the office by resignation on February 20, 2004
The Board also conducted self-appraisal, which showed that most directors were satisfied with the current practices on Qualifications, Meeting, Communications, Procedure and Relationship with the Management.
13.
board-committees
The Board of Directors appoints directors with knowledge and expertise to be the members of the sub-committees to ensure thorough consideration and appropriate review of information related to key issues to enhance the governance efficiency as follows. â—?
Audit Committee The Audit Committee comprises of 3 independent directors for a 3-year term of service. One year in the term of service is the period between the Annual General Meeting of shareholders when he/she is appointed and the next Annual General Meeting. The Audit Committee undertakes its responsibilities as described in the Audit Committee Charter, which is reviewed annually to be consistent with the changing internal and external environment. In summary, the Audit Committee's mission covers the review of the financial statements, legal compliance, internal control, disclosure of connected transaction or conflicts of interest and appointment of auditor. The Audit Committee conducted a self-appraisal annually and reported the result to the Board. The result in 2004 indicated that the composition, qualifications and performance of the Audit Committee are in line with the recommendations of the SET and the international best practices. There were 9 meetings in 2004 of which the attendance rate is 100%.
043
●
Executive Committee The Executive Committee comprises of 5 directors, whose term of office coincides with their board directorship. The Executive Committee considers, approves and supervises the company's business operation within its delegated authority, screens and endorses recommendations to the Board of Directors, as well as approves Company representatives to be directors of the subsidiary or associate companies. The Committee meets regularly and the meeting results are reported to the Board. There were 25 meetings in 2004 of which the attendance rate is 98%.
●
Nominating and Remuneration Committee The Nominating and Remuneration Committee comprises of 4 directors for a 3-year term of service with a year in this case meaning the period between the Annual General Meeting of shareholders when he/she is appointed and the next Annual General Meeting. The mission is to determine the structure, composition and remuneration of the Board of Directors, to nominate directors, members of the Board committees and President, to set the executive succession plan including the appointment, rotation and removal of the executives including their remuneration package. The Committee is also assigned to be the performance evaluator at the corporate level to determine the bonus and annual salary increase of the Group companies and to recommend the Company’s salary structure and other fringe benefits. There were 10 meetings in 2004 of which the attendance rate is 98%
●
Risk Management Committee The Risk Management Committee comprises of 10 members, including 2 directors appointed by the Board, and the Management which include Group Heads and Managing Directors of wholly-owned subsidiaries. The term of office of each member is the same as their directorship in the case of directors and their position holding in the Company in the case of Management. The mission is to ensure the establishment of a risk management framework which includes policies and procedures to identify all areas of potential risks associated to the business in EGCO group as well as to review policies and control processes implemented for assessment, management, and control of risks, including monitoring and reporting procedures. There were 4 meetings in 2004 of which the attendance rate is 90%.
●
Group Business Committee The Group Business Committee comprises of 9 members, including 2 directors appointed by the Board, and the President shall be the Chairman of the Committee. The term of office of the Group Business Committee member is 1 year. The mission is to oversee the Company's operating assets to ensure that the operating results and return on investment are in line with the plans and projections and that the operation is in compliance with governance laws and regulations. There were 7 meetings in 2004 of which the attendance rate is 92%.
14.
internal control system and internal audit
The Board of Directors supervises the company to ascertain that adequate internal control and monitoring system of the Company and subsidiaries are in place. The Board has entrusted the Audit Committee with the responsibility to review the effectiveness and efficiency of the internal control system to protect the Group companies' assets. To set the scope and plan for the audit of the Company's and subsidiaries' financial statements, the auditor has to review financial reporting controls. In year 2004, the auditor did not encounter any significant deficiencies in the areas reviewed. The Board and the Audit Committee reviewed the information on inernal control assessment of EGCO and subsidiaries during the Board’s meeting on March 18, 2005, which all independent directors attended. They believe that the company has an appropriate and adequate internal control system in place to protect the Group's assets from misuse or misapplication by the management. No major internal control weaknesses have been found during the assessment. The internal control system of the Company and the subsidiaries follows the Internal Control Framework of COSO (The Committee of Sponsoring Organizations of the Treadway Commission), which consists of the following components. ●
Control Environment The Company's control environment is influenced by the Board and the management to suit its nature of business and operations. The
044
organizational structure is well designed and periodically adapted to the changing business environment. Business objectives and plans are clearly set and communicated throughout the organization. Codes of Conduct for both directors and employees are comprehensive and followed. Other written policies and procedures are also used as part of management tools. Due to changed business conditions, the Controller Unit has been set up to review and adjust rules and orders to match organizational changes to ensure the presence of updated guidelines on the scope and authority of management and the authority to approve different sizes of transactions that the Board of Directors have delegated to the President and the Management in hierarchical order. ●
Risk Management Internal control system was designed to reduce unacceptable risks, using results of risk assessment. The Risk Management Committee has been established to thoroughly review the risk management activities of the Group. Since the Board of Directors views the risk management process as vital, two directors have been assigned to be part of the Risk Management Committee. The Company has embedded the risk management both at the corporate level and at activity level for every company within the Group. Risks are identified and analyzed; countermeasures are set to prevent/reduce impacts of those risks and risk owners are also identified. Diagnostic control system is used to monitor and communicate critical performance variables for timely responses. The Risk Management Section is responsible for following up on the risk management activities and regularly reports results to the Risk Management Committee.
●
Control Activities Control activities are policies and procedures used to ensure management directives are met. They are divided into three categories, based on the nature of the objectives to which they relate, i.e., operations, financial reporting, or compliance. Scope of authority and specific limits of authorization of each level of management were clearly written and communicated. Investments are carefully considered before approval. In addition, the management has set up a monitoring unit to oversee operations of the subsidiaries and joint ventures and a compliance unit to ensure the Group's compliance with related laws and regulations.
●
Information and Communication At the Company, information is identified, captured, and communicated in a form and timeframe that enables the directors and the management to carry out their responsibilities. For instance, operation and financial data are maintained within the Management Reporting System. This reporting system is regularly updated and secured against unauthorized use. During meetings, discussions and inquiries are recorded and minutes of meetings produced. Accounting records and supporting documents are complete and kept in an orderly and efficient manner. No deficiencies have ever been identified by the auditor. Accounting policies are carefully selected and consistently applied to suit the nature of the Company's business. Information is disseminated through several channels to concerned parties, such as the shareholders and employees. Updated information is posted on the Company's website or can be requested through the Corporate and Investor Relations Division.
●
Monitoring Internal control system needs to be monitored - a process that assesses the quality of the system's performance over time. The management accomplishes this task through on-going monitoring activities and separate evaluations. Actual results are periodically compared to budgets or planned performance with variances being fully investigated and explained for. Results are reported to the Executive Committee and the Group Business Committee during meetings. The Internal Audit Division reviews the internal control system and its compliance to provide the management reasonable assurance about the effectiveness of the system. Exceptions found are reported and followed up. Impartial judgement and opinions of the internal audit function are achieved due to its independence in chain of commands and reporting. It reports directly to the Audit committee, which composes only of independent directors.
15.
directors' reporting
The Board of Directors is accountable for ensuring that the preparation of the consolidated financial statements of the Company and the subsidiaries including all financial information are in line with the Generally Accepted Accounting Principles in Thailand and that all significant information is adequately disclosed in the Notes to the Financial Statements. With respect to this, the Board of Directors assigned the Audit Committee to be accountable for the quality of the financial reporting and the internal control system. The Audit Committee has the opinion as shown in the annual report that the consolidated financial statements of the Company as at December 31, 2004 are correct, adequate and reliable.
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Directors and Management Selection
In addition to a review of a candidate profile and interviews by the Nominating and Remuneration Committee for efficient governance, the Company shall ensure that the directors have the following qualifications. -
Qualifications in accordance with the Public Company Act,
-
Knowledge and experience that will benefit the Company,
-
Observance of values set forth in the Code of Conduct for directors namely honesty, integrity, enterprise, excellence, accountability, justice, independence and equality of shareholder opportunity.
-
Devotion of time and effort to the Company’s business.
The candidates, for both shareholder-representative and independent directors, shall be scrutinized and endorsed by the Nominating and Remuneration Committee of which the members are major shareholders’ representative directors and independent directors. The nomination of directors to succeed those who retire by rotation must be individually approved by the shareholders’ meeting based on the guidelines in the Articles of Association as follows. (1) Each shareholder shall be entitled to the number of votes equivalent to the number of shares held by him/her; one share shall have one vote. (2) Each shareholder shall elect one or more directors, provided that they shall not exercise their votes in excess of the number of directors required to be elected at such time. (3) In the case that a shareholder elects more than one director, he/she may exercise all the votes he/she has, provided that he/she does not split his his/her votes among any such persons. (4) The persons receiving the highest number of votes in respective order shall be appointed directors depending on the requirement of directors set at such time. In the event that a number of persons receive an equal number of votes for the last directorship, the Chairman of the meeting shall have a casting vote. (5) A director must be appointed by a vote of not less than four-fifth of the shareholders present and having the right to vote. To ensure that shareholders have adequate information to make their selection the Company shall present details of a given nominee such as education background, occupation, directorship in other companies, relevant experiences, and illegal acts committed (if any) in the notice of shareholders’ meeting. In case of the re-election, the attendance records and performance during the past year shall also be presented. In the case of casual vacancies, the Nominating and Remuneration Committee will nominate a qualified candidate who does not possess any forbidden characteristics as stipulated under the Public Company Act for approval at the subsequent Board of Directors’ meeting. The director who fills in the vacancy shall retain the office for only the remaining term of office of the director whom he/she replaces. The resolution of the Board of Directors in this respect shall consist of not less than three-fourth the votes of the remaining directors. With regard to independent directors, the Company adopted the definition for independent directors as follows. (1) Having no shares representing more than 0.5% of the respective paid-up capital of the company, an affiliated company, associated company or related company, (2) Not being involved in the management and not being an employee, staff member or an adviser receiving a regular salary or other regular benefit from the Company or any affiliated company, associated company, related company or legal entities that may cause conflicts of interest, (3) Not being a close relative of the management or major shareholders of the Company, subsidiary, associated company or the person who may have conflicts of interest and not being appointed as the representative to take care of the profit of a director or major shareholders, (4) Having no direct or indirect business relationship/ profit/ stake in the finance and management of the company, affiliated companies, associated companies and the person who may have conflicts of interest, which would contaminate his/her independence. Currently, there are 6 independent directors under this definition. However, all directors are free to deliver independent judgments for the benefits of the Company and the stakeholders as defined under the Directors’ Manual and Code of Conduct for Directors. With regard to the recruitment of Management, the Nominating and Remuneration Committee shall take into account the aduction background, experience and capabilities to serve the Company when endorsing the appropriate candidate for approval by the Board of Directors. Based on the governance rating report by Thai Rating and Information Services Co., Ltd. in 2004, the top five executives are well qualified in terms of knowledge, expertise and experience to efficiently run the Company.
046
Business Operation
We aim at being a leading company to provide comprehensive energy services in the ASEAN region with full commitment to environment protection and social development support. Consequently, we seek to expand our market share through developing or acquiring well structured, technically sound power generation facilities in Thailand and elsewhere in ASEAN. In our development and acquisition activities, we focus on transactions that will enhance shareholder value and we conduct these activities with a view to follow the best international industry practices. For the 2004's operating results, our consolidated net profit amounted to Baht 4,662 million, a decrease of Baht 1,332 million or 22% compared to 2003.
subsidiaries 1. Rayong Electricity Generating Company Limited (REGCO) REGCO was established on June 1, 1994 to acquire all 4 units of Rayong combined-cycle power station with the total capacity of 1,232 megawatts from EGAT and to generate and supply the electric power from these units to EGAT under a 20-year Power Purchase Agreement (PPA). In 2004, the company's net generation sold to EGAT was 7,269 million kilowatt-hours, an increase of 25.09% from the previous year, which resulted in the electricity revenue and net profit of Baht 5,520.35 million and Baht 2,452.86 million respectively. These results are down by 8.38% and 26.95% from 2003. However, REGCO was able to maintain its solid availability performance achieving an average Equivalent Availability Factor (EAF) for 2004 of 90.84%, 0.34% better than the target, which merited a bonus payment from EGAT for the eighth consecutive year. Being aware of the impact from its operation on the environment and society, REGCO has implemented the ISO 14001 Environment Management System since 2001 and was able to maintain the system for the past three years with a re-certification on December 25, 2004. In keeping with its past commitment to providing a safe working environment for its employees, REGCO plans to implement the Thai Industrial Standards Institute (TISI) for the Occupational Health and Safety Management (TIS 18001:1999). We believe this will help to reduce risks and accidents involving its staff and other concerned parties. 2. Khanom Electricity Generating Company Limited (KEGCO) KEGCO was founded on February 20, 1995 with the purpose of acquiring EGAT's largest power station in Southern Thailand. The Khanom facility is an 824 megawatt complex with installed capacity comprising two thermal power plants and one combined-cycle power plant. In 2004, KEGCO generated 5,975.45 million kilowatt-hours of net electrical output, representing a decrease of 2.58% compared to the previous year. However, the electricity revenue was Baht 4,307.07 million, up by 13.47% due mainly to a tariff increase. The net profit of Baht 1,626.89 million compared to Baht 1,454.82 million in 2003 represented an increase of Baht 172.07 million. Accounting for 55% of the generation in the south of the country, KEGCO is well aware of its entrusted mission to run the power plant efficiently. To ensure the reliability of the power system, KEGCO implements and adheres to the best international working standards, and the management actively promotes human resource development. As a result, KEGCO has been able to maintain ISO 9001:2000 Quality Management System certification since 2001. In addition, KEGCO was the first power plant in Thailand to be certified the TIS 18001:1999 and OHSAS 18001 Certifications from RWTUV (Thailand) Limited on September 3, 2004 and September 27, 2004, respectively. As a result of continuous efforts to improve safety and working conditions at its facilities, KEGCO won "The 2004 National Award for Outstanding Workplace - Safety, Occupational Health, and Working Environment" hosted by the Ministry of Labor and Social Welfare on May 10, 2004. KEGCO has now won this award for five consecutive years. With the commitment to community and environment conservation, KEGCO implemented the ISO 14001 Environmental Management System in February 2001 and was granted re-certification on March 5, 2004. 3. EGCO Engineering & Service Company Limited (ESCO) ESCO was established on September 8, 1995 to provide operation, maintenance, engineering and construction services to power plants, petrochemical plants, oil refineries and other industries. With its top quality services based on a highly skilled workforce, and world class technology and equipment, ESCO has been consistently successful in expanding its product slate and customer base. In 2004, the total revenue was Baht 504.50 million, representing a 3.32% increase compared to 2003. The major source of revenues was from O&M and maintenance services, its core business, which contributed the revenue of Baht 366.98 million. However, the net operating profit was Baht 40.97 million, a 31.67% decrease from 2003 due to the allocation of reserve for bad debt of Baht 17.77 million from Agro Energy Co., Ltd. (AE),
047
ESCO's subsidiary, which suffered from the rising fuel cost because the fuel supplier breached the contract by not supplying rice husk at the contracted price and quantity. ESCO's subsidiaries are as follows. Amata Power-ESCO Service Company Limited (AMESCO) was established on February 28, 1997, as a 50:50 venture between ESCO and Amata Power Company Limited. AMESCO provides operation and maintenance services to Amata-EGCO Power Plant and Amata Power (Bang Pakong) Power Plant. In 2004, AMESCO continued its good service record as indicated in the average availability factors of Amata-EGCO Power Plant and Amata Power (Bang Pakong) Power Plant of 95.70% and 95.65% (excluding damage outside AMESCO's work scope) which was higher than the target specified in the O&M Contract. Agro Energy Company Limited (AE) was established as a wholly owned subsidiary on November 2, 1999 to procure and supply agricultural waste such as rice husk to Roi-Et Green Power Plant, a Group power plant. In 2004, AE ceased its operation because its fuel supplier failed to supply the rice husk at the contracted price and quantity, which caused AE to shoulder the gap at a higher cost. AE has filed the lawsuit against this supplier to claim for the damage. 4. EGCO International (BVI) Limited (EGCO BVI) EGCO BVI, a wholly owned subsidiary, was established in the British Virgin Islands on April 12, 2000 to be the overseas investment vehicle with a registered and paid up capital of USD 50,000 and a share premium of USD 25.09 million. For the investment in the Philippines, EGCO adopted a two tier structure for tax efficiency with the establishment of EGCO BVI as the first-tier and EGCO Energy International (Denmark) Limited Aps. (EGCO Denmark) as the second-tier. EGCO BVI held 100% stake in EGCO Denmark while the latter held 40% shares of Conal Holdings Corporation (Conal) in the Philippines. Later, due to the change in the Danish tax law effective July 2001 resulting in the elimination of the tax efficiency structure, EGCO Denmark was dissolved in May 2002 and its shareholding in Conal was transferred to EGCO BVI. 5. Thai LNG Power Corporation Limited (TLPC) TLPC was founded on September 28, 1995 with a registered capital of Baht 750 million to undertake Liquefied Natural Gas (LNG) importation and powering businesses. Initially, EGCO held a 10% share of TLPC. In 1997, TLPC purchased a Small Power Producer (SPP) project in Rayong Industrial Park from Rayong Power Company Limited and established TLP Cogeneration Company Limited to develop the project. Presently, EGCO owns 100% of TLPC. 6. TLP Cogeneration Company Limited (TLP Cogen) EGCO acquired a 60% stake in TLP Cogen from TLPC on February 14, 2001 and later sold a 20% stake to Electric Power Development Company Limited (EPDC or J-Power). Currently, EGCO holds an 80% stake in TLP COGEN by holding a 40% share directly and holding another 40% share through TLPC. TLP Cogen was established to develop a 117 megawatt combined cycle plant under the Small Power Producer Program with a steam generating capacity of 30 tons per hour located in Mabkha Subdistrict, Nikom Pattana District, Rayong Province. TLP Cogen has been in commercial operation since January 28, 2003. Electricity is sold to industrial users in the Rayong Industrial Park with total signed contracts of 46.16 megawatts while electricity of 60 megawatts is sold to EGAT under a 21-year PPA. Net electricity sale for the year 2004 was 712.96 million kilowatt-hours, of which 421.06 million kilowatt-hours were distributed to EGAT and 291.90 million kilowatt-hours to the industrial customers. The electricity revenue was Baht 1,611.12 million and net profit was Baht 295.42 million. The availability of the power plant was 97.64 % 7. EGCO Green Energy Company Limited (EGCO Green) EGCO Green was established on April 27, 2000 with EGCO and EPDC holding 74% and 26% shares in the company respectively with the aim of investing in green projects. The initial registered capital of Baht 100,000 was later increased to Baht 171 million and Baht 175 million on June 4, 2001 and March 28, 2003, respectively. Currently, EGCO Green invested in Roi-Et Green Company Limited (Roi-Et Green) to develop a rice husk power plant project in Roi-Et Province.
048
8. Roi-Et Green Company Limited ("Roi-Et Green") Roi-Et Green was established on July 27, 2000 by EGCO Green Energy Company Limited and Sommai Rice Mill Partnership, which hold 95% and 5% stakes respectively. The registered capital is Baht 180 million, The company's core mission is to operate a biomass power plant using rice husk as fuel, with 9.9 megawatts of installed capacity. The power plant is located at Nua Muang Subdistrict, Muang District of Roi-Et Province. The company has been financed by the Industrial Finance Corporation of Thailand (IFCT) and was granted investment promotion privileges from the Office of Board of Investment (BOI). To promote efficient utilization of renewable energy especially the recycling of agricultural waste as fuel in electricity generating process, the Global Environment Facility (GEF) partly subsidizes the company's guarantee fee for the IFCT loan. A PPA covering the sale of 8.8 megawatts to EGAT was signed under the SPP program for a 21-year period. The company started commercial operation on May 29, 2003. In 2004, company generated the total output of 50.86 million kilowatt-hours, with the consumption of 72,058.96 tons of rice husk. The electricity revenue was Baht 141.61 million. Roi-Et Green Power Plant is supported by the Energy for Environment Foundation (E for E) as a pilot biomass power plant with effective environmental management and is well accepted by the local community. In 2004, Roi-Et Green won the top prize for on-grid alternative energy power plant from the Alternative Power Development Department, Ministry of Energy and the Asean Energy Forum held in the Philippines. 9. Egcom Tara Company Limited (ET) ET was established on April 23, 1999 with a registered capital of Baht 345 million. ET 's shareholders comprise EGCO and Eastern Water Resources Development and Management Public Company Limited (East Water) which hold 70% and 15% of the total outstanding shares respectively while R.E.Q. Water Services Company Limited, Tyco Earth Tech (Thailand) Limited and Mr. Jaturong Saduagkan hold the shares at 5% of the total outstanding shares. The company's core mission is to produce tap water according to Thai Industrial Standard (TIS) and supply it to the three water stations of Provincial Waterworks Authority of Thailand ("PWA") which are Pak Tor Water Station, Damnoen Saduak Water Station and Samut Songkhram Water Station. ET has entered into a 30-year agreement, which started in April 7, 2001, with PWA for the production of water supply. ET has a capacity of 36,000 cubic meter/day. The total length of water pipes from water treatment plants to PWA's Water Station is 31 kilometers. ET has obtained a privilege from the Office of the Board of Investment (BOI) to have 8 years of corporate income tax holiday. In 2004, the fourth year of operation, ET successfully continued to produce and supply tap water that met the TIS standard tap white incurring the total water loss in 2004 of only 1.12%. Moreover, the tap water, supplied to PWA in the service area of Pak Tor Water Station, has officially been certified and declared as drinkable water. With regard to financial performance, ET posted the net profit of Baht 87.33 million, up by 32.79% from the year 2003 due to the increase in water sale by 10.65% and the decrease in the interest payment by 34.90%. ET has adopted and applied Good Corporate Governance consistent with EGCO group policy by taking into account the benefits of all stakeholders. ET is well aware of its corporate social responsibility and safety and has maintained the station and officer environment in accordance with the criteria set by the Department of health, Ministry of Public Health. Year 2004 marked another step of continuous improvement as the ISO 9001-2000 quality management system was implemented with the target to be certified in 2005 to ensure the achievement of its mission as the efficient water supply committee with risk awareness and commitment to safety and environment.
joint ventures 1.
gulf electric public company limited (ged)
GEC was established on November 12, 1998 with a registered capital of Baht 5,000 million. GEC is a holding company with EGCO, Electric Power Development Company Limited (EPDC or J Power) and Mit-Power (Thailand) Limited holding 50%, 49% and 1% of the shares, respectively, Its subsidiaries are as follows. 1. Operating Companies 1.1 Gulf Cogeneration Company Limited (GCC) owns and operates the Kaeng Khoi cogeneration power plant. The facility has an installed capacity of 107 megawatts and a steam generating capacity of 16 tons per hour, located in Kaeng Khoi District, Saraburi Province.
049
Net electricity sales for the year were 592 million kilowatt-hours distributed to EGAT and 68 million kilowatt-hours to industrial customers, totaling 660 million kilowatt-hours, a 4.14% decrease from the previous year. The total electricity revenue was Baht 1,586.88 million, 0.64% lower than the previous year. GCC earned Baht 2.70 million and 0.11 million from interest income and other income, respectively. The operating expenses (not including gain or loss on foreign exchange) were Baht 1,385.41 million and net profit before gain or loss on foreign exchange was about Baht 204.24 million. The availability of the power plant was 90.41%. 1.2 Nong Khae Cogeneration Company Limited (NKCC) owns and operates the Nong Khae gas-fired cogeneration power plant. The facility has a gross electrical capacity of 126 megawatts, and an average steam generating capacity of 24 tons per hour. The power plant is located in Nong Khae District, Saraburi Province. Net electricity sales for the year 2004 were 625 million kilowatt-hours distributed to EGAT and 175 million kilowatt-hours to the industrial customers, totaling 800 million kilowatt-hours, a 2.87% increase from the previous year. The total revenue was Baht 1,842.07 million, 4.06% higher than the previous year. NKCC earned revenue from steam of Baht 55.46 million and interest income of Baht 7.11 million. The operating expenses (excluding foreign exchange gain or loss) was Baht 1,643.30 million and net profit before gain or loss on foreign exchange was about Baht 261.44 million. The availability of the power plant was 96.28%. 1.3 Samutprakarn Cogeneration Company Limited (SCC) owns and operates the Samutprakarn gas-fired cogeneration power plant. The facility has a net output capacity of 126 megawatts of power and 35 tons per hour of steam. The power plant is located in Bangpoo Subdistrict, Samutprakarn Province. Net electricity sales for the year were 592 million kilowatt-hours distributed to EGAT and 185 million kilowatt-hours to industrial customers, totaling 777 million kilowatt-hours, a 5.22% decrease from the previous year. The total electricity revenue was Baht 1,754.95 million and another Baht 40.57 million was earned from steam sale. SCC earned Baht 5.84 million from interest income and other income. The operating expenses (not including gain or loss on foreign exchange) were Baht 1,807.32 million. The loss before gain or loss on foreign exchange was about Baht 5.77 million. The availability of the power plant was 95.00%. 2. Assets in Development 2.1 Gulf Power Generation Company Limited (GPG) is developing the Kaeng Khoi 2 (KK2) project which will be a 1,468 MW natural gas-fired power plant in Saraburi Province. EGCO indirectly holds a 50% stake in this project through its 50% ownership stake in Gulf Electric Public Co.Ltd (GEC) which in turn owns 100% shares in GPG. GPG, the project developer, signed a 25-year Power Purchase Agreement (PPA) with EGAT on October 28, 2004. The commercial operation dates (COD) for unit 1 and unit 2, each with capacity of 734 megawatts, are scheduled on March 1, 2007 and March 1, 2008, respectively. 2.2 Yala Green Company Limited which EGCO holds a stake of 47.5% in this entity through its ownership of GEC. This company is developing a project called the Gulf Yala Green Project, a 23 MW parawood-fuel biomass power plant located in Yala Province. The project's scheduled COD is August 2005. Due to the security situation in the three most southern provinces of Thailand since the start of 2004, construction is behind schedule and negotiation is underway with EGAT to postpone the COD for several months. 2.3 Trang Biomass Company Limited is incorporated in 2003 to develop a 10 megawatt biomass project located at Trang Province using parawood and palm shell as fuel. GEC and Woodwork Co.,Ltd. hold 95% and 5% stake in this company.
2.
egco joint ventures & development company limited (eggo jd)
EGCO JD was established on September 4, 1995 with a registered and paid-up capital of Baht 800 million and Baht 447.72 million respectively. Initially, EGCO was the major shareholder holding 99.99 % of shares in EGCO JD with the objective to join with other strategic alliances for investment in power plant projects and relating business In 2000 EGCO entered into a joint venture with Unocal Bang Pakong Limited (UBP) by using EGCO JD as a vehicle. The joint venture was finalized on December 28, 2001. On January 2, 2002, EGCO JD increased the registered capital from 80,000,000 to 116,843,386 and the paid-up capital was also increased to Baht 696.72 million resulting in an equal ownership by both shareholders. Accordingly, EGCO JD became one of the shareholders of two co-generation power plants operating under the SPP Program delivering power and steam to industrial users in Amata Nakorn Industrial Park as follows: 2.1 Amata-EGCO Power Limited (AEP) was established on October 24, 1995 with a registered and paid-up capital of Baht 1,500 million and Baht 1,350 million respectively. The shareholders comprise Amata Power Limited, which holds 69.3% of AEP's shares, EGCO JD, which holds 29.7% of AEP's shares, and the other small shareholders which, in total, hold the balance of 1% of AEP's shares. The company owns and operates a 165 megawatt co-generation plant. During the year 2004 AEP delivered power and steam to 39 industrial users with a total contracted capacity of 70 megawatts. The remaining power of 90 megawatts is delivered to EGAT under a 21-year PPA starting from September 1998. In 2004, AEP's plant achieved plant availability
050
of 96%. The total electricity and steam sales were Baht 2,595.52 million, an 8.70% increase from the previous year due to the increase in the electricity tariff. The company's operating expenses (excluding gains and/or losses on foreign exchange) was Baht 2,253.86 million, a 3.23% increase from the previous year due to the increase of natural gas cost and maintenance expenses. AEP net profit before gain or loss on foreign exchange was Baht 351.80 million, a decrease by 66.61% from the previous year. 2.2 Amata Power (Bang Pakong) Limited (APBP) was established in May 1999. Its current registered capital is Baht 560 million, which was fully paid up. The existing shareholders comprise Amata Power Limited, the major shareholder which holds 70% of APBP shares and EGCO JD which holds the remaining 30%. APBP owns and operates a 112 megawatt co-generation plant. During the year 2004, APBP delivered power and steam to 25 industrial users with a total contracted capacity of 39 megawatts. The remaining power of 90 megawatts is delivered to EGAT under a 21-year PPA starting from September 1999. In 2004, the plants were achieving a 91% availability factor. The total electricity and steam sales were Baht 1,812.64 million, a 1.95% decrease from the previous year. The company's operating expenses (excluding gains and/or losses on foreign exchange) was Baht 1,494.93 million, a 2.20% increase from the previous year due to the increase of natural gas cost and maintenance expenses. APBP net profit before gain or loss on foreign exchange was Baht 320.72 million, decrease by 17.67% from the previous year.
3.
conal holdings corporation (conal)
Conal is an Independent Power Producer (IPP) in Mindanao, the Philippines' largest island which accounts for one-third of the Philippines' total land area. Its head office is in Manila. The power generation business is conducted through three subsidiaries and the operation and maintenance service is conducted by another subsidiary as follows : 3.1 Northern Mindanao Power Corporation (NMPC) is a diesel-fired power plant, which comprises two units of 60.9 and 42 megawatts, respectively, totaling 102.9 megawatt installed capacity. From July 2003, only 42 megawatts at Unit 2 was in operation due to the expiry of the Unit 1's PPA. 3.2 Western Mindanao Power Corporation (WMPC) is a diesel-fired power plant with a total capacity of 100 megawatts. 3.3 Southern Philippines Power Corporation (SPPC) is also a diesel-fired power plant with a total capacity of 50 megawatts. 3.4 Alto Power Management Corporation (APMC) provides operation and maintenance services including plant management to the three above-mentioned power plants and also third party power plants. EGCO holds 40% stake in Conal through EGCO BVI.
4.
nam theun 2 power company limited (ntpc)
NTPC was incorporated on August 28, 2002 with an initial registered capital of USD 1 million. EGCO holds 25% stake of NTPC, while EDF International (a subsidiary of Electricite´ de France), EDL (Electricite´ du Laos), and Italian-Thai Development Public Company Limited own 35%, 25%, and 15% respectively. The company was established to implement Nam Theun 2 Hydropower Project in Lao PDR. NTPC signed a Concession Agreement with the Government of Lao PDR on October 3, 2002. The Government granted NTPC the right to implement the Project for a period of 25 years. NTPC also signed PPAs with EGAT and EDL on November 8, 2003. Under the PPAs, NTPC will supply 995 megawatts to EGAT and additional 75 megawatts to EDL for 25 years after the Commercial Operation Date. Currently, this project is in the stage of acquiring financing from Thai and international banks as well as multilateral agencies. The Nam Theun 2 project is awaiting a decision by the World Bank and related multilateral agencies to provide financial support, including political risk guarantee, which will allow the project to achieve financial close by the first half of 2005. This project is targeted for COD in the second half of 2009.
others Eastern Water Resources Development and Management Public Company Limited (East Water) EAST Water was established by a Cabinet resolution on September 12, 1992 which assigned the PWA to set up a company to be responsible for supplying raw water in the Eastern Seaboard of Thailand. East Water's initial registered capital on October 15, 1992 was Baht 10 million and was wholly owned by PWA. The company's service areas initially covered 7 provinces namely, Rayong, Chonburi, Chachoengsao, Prachinburi, Srakaew, Chantaburi and Trad. The company was converted to a public company in 1997 and was listed in the SET in 1998. As at December 31, 2004 the registered capital is Baht 1,296.94 million. At present, EGCO holds 18.96% of shares in East Water. The other shareholders comprise Provincial Waterworks Authority (PWA) 40.71%, Industrial Estate Authority of Thailand (IEAT) 4.63%, and public investors 35.70%. In 2004, a dividend of Baht 2.00 per share was paid in respect of the 2003's operating result.
051
Revenue Structure of EGCO and Subsidiaries for the past three years
( Million Baht ) Product
2004
Service
Transaction
Electricity
REGCO
Shareholding %
Energy Charge
%
Revenue
%
Revenue
%
5,348.25
32.41%
5,867.04
37.30%
4,521.65
37.49%
100.10
0.61%
79.48
0.51%
83.41
0.69%
4,211.11
25.52%
3,782.94
24.05%
4,345.75
36.04%
12.49
0.08%
12.76
0.08%
12.29
0.10%
2,639.97
16.00%
2,622.41
16.67%
936.81
7.77%
717.19
4.35%
892.34
5.67%
958.39
7.95%
271.90
1.65%
277.31
1.76%
244.43
2.03%
1,629.46
9.88%
1,334.88
8.49%
-
-
141.61
0.86%
83.54
0.53%
-
-
99.99%
Capacity Charge Energy Charge GEC
50.00%
Energy Charge CONAL
40.00%
Energy Charge EGCO JD (APBP)
15.00%
Energy Charge TLPC (TLP Cogen)
80.00%
Energy Charge EGCO Green (Roi-Et Green)
2002
Revenue
99.99%
Capacity Charge KEGCO
2003
70.30%
Energy Charge Water
ET
70.00%
157.04
0.95%
141.95
0.90%
122.59
1.02%
Service
ESCO /1
99.99%
390.40
2.37%
283.31
1.80%
237.40
1.97%
Interest
EGCO /2
84.09
0.51%
40.76
0.26%
53.97
0.45%
income
REGCO /3
99.99%
66.02
0.40%
84.36
0.54%
142.88
1.18%
KEGCO /4
99.99%
102.76
0.62%
125.02
0.79%
135.84
1.13%
ESCO, EGCO JD, ET, TLPC TLP Cogen, EGCO Green,
Others
Roi-Et Green
9.56
0.06%
4.96
0.03%
8.64
0.07%
GEC, CONAL
34.91
0.21%
35.41
0.23%
22.92
0.19%
EGCO /5
502.46
3.05%
507.19
3.22%
231.55
1.92%
REGCO
99.99%
3.21
0.02%
18.90
0.12%
25.83
0.21%
KEGCO
99.99%
2.01
0.01%
1.42
0.01%
8.78
0.07%
ESCO, EGCO JD, ET, TLPC TLP Cogen, EGCO Green, Roi-Et Green
18.97
0.11%
11.83
0.08%
10.92
0.09%
GEC, CONAL
27.80
0.17%
68.35
0.43%
28.13
0.23% 0.02%
Share of
ESCO (AMESCO)
99.99%
0.51
0.00%
(0.73)
0.00%
2.53
profit (loss)
EGCO JD (AEP)
14.85%
52.91
0.32%
58.08
0.37%
52.89
0.44%
NTPC
25.00%
(24.78)
(0.15)%
(602.83)
(3.83)%
(127.95)
(1.06)%
16,499.92
100%
15,730.69
100%
12,059.64
100%
Total revenues (Revenues item in Consolidated) Notes /1
For year 2004, ESCO’s service income was Baht 390,402,518.42 (excluding related party transactions which were the maintenance service income of REGCO, TLP Cogen and Roi-Et Green amounted to Baht 32,872,258.00, Baht 40,774,749.97 and Baht 26,345,000.61, respectively and revenues from selling spare parts to TLP Cogen amounted to Baht 3,613,988.80)
/2
EGCO’s interest income in 2004 was Baht 84,088,685.79 (excluding related party transaction which was Baht 9,447,652.69 of KEGCO’s debenture)
/3
REGCO’s interest income in 2004 was Baht 66,018,088.92 (excluding related party transactions which were Baht 625,975.50 and Baht 1,575,010.71 of EGCO’s and KEGCO’s debenture respectively)
/4
KEGCO’s interest income in 2004 was Baht 102,758,420.66 (excluding related party transaction which was Baht 5,260,195.13 of EGCO’s debenture)
/5
EGCO’s other income in 2004 was Baht 502,455,033.75 (excluding related party transactions which were office rental and service income from REGCO, KEGCO, ESCO, EGCO JD, ET, TLPC, TLP Cogen, EGCO Green and Roi-Et Green amounted to Baht 18,768,000.00, Baht 17,876,400.00, Baht 17,061,600.00, Baht 450,000.00, Baht 3,643,200.00, Baht 216,000.00, Baht 5,060,800.00, Baht 216,000.00 and Baht 21,763,136.88, respectively)
052
Management Discussion and Analysis
1.
business expansion analysis
EGCO, the first Independent Power Producer (IPP) in Thailand, was established in 1992 and organized as a holding company. Its vision statement is to be the leading Thai electric power company providing comprehensive and environmentally friendly energy services in Thailand and in the ASEAN region.
EGCO seeks to expand its market share through developing or acquiring IPP projects in Thailand and in the Asean region. It invests in well-structured projects taking into consideration our areas of expertise, forecast returns, (which should be in excess of the Company's financial cost of capital) and risk profile. EGCO focuses on achieving sustainable long-term growth while having strong management and good corporate governance.
As at the end of December 2004, Thailand’s total generating capacity was reported at 26,056 MW1, of which 9.1% of the total capacity was generated by EGCO. In March 2004, the peak demand reached 19,326 MW2, which was 6.65% higher than the peak demand in May 2003. According to EGAT’s Power Development Plan (PDP 2004), Thailand will require 18 units of new power stations together with renewable energy power stations equivalent to 5% of the future additional capacity comprising a total of 13,230 MW2 to be brought on line during 2011-2015. The new capacity bidding, in which EGCO plans to participate, is expected in the near future.
Currently, EGCO has 12 operating plants totaling 2,414 equity MW, of which 85% is produced from two natural gas-fired IPP power plants: a 1,232 MW REGCO plant and a 824 MW KEGCO plant. In addition to our existing assets, we are developing 3 power plant projects, representing an additional 1,012 equity MW as follows:
1.
The Kaeng Khoi 2 (KK2) project, a 1,468 MW natural gas-fired power plant in Saraburi Province, previously 734 MW and formerly known as “Bo Nok project”. EGCO holds a 50% stake in this project by holding 50% of shares in GEC, which holds 100% shares in GPG. GPG, the project developer, recently signed a 25-year Power Purchase Agreement (PPA) with EGAT on October 28, 2004. The commercial operation dates (COD) for unit 1 and unit 2 with the capacity of 734 megawatts each are scheduled on March 1, 2007 and March 1, 2008, respectively. Since the majority of the investment of this project is in imports of spare parts and equipment denominated in Euros, Swiss Francs and U.S. dollars while the revenue of the project is linked approximately half to Baht and half to U.S. dollar, the return to the project is affected by currency fluctuation. The project has hedged part of its currency exposure with financial institutions and plans to further hedge the remaining exposure. Other risks to the project include timely obtainment of permits related to the construction of the power plant and timely completion of the extension of a gas pipeline by PTT Public Company Limited to deliver natural gas to the first power plant unit. The delay in natural gas delivery may cause the power plant to run on diesel until the gas is available and thus increase the equipment investment and maintenance costs.
2.
The Nam Theun 2 project, a 1,070 MW hydroelectric power plant in the Lao PDR, in which EGCO has a 25% stake in the project company, Nam Theun 2 Power Co.,Ltd. The PPA was signed in November 2003. This project is targeted for COD in the second half of 2009 with the contracted capacity to EGAT of 995 MW. Presently, this project is in the stage of acquiring financing from Thai and international banks as well as multilateral agencies. The Nam Theun 2 project is awaiting a decision by the World Bank and related multilateral and bilateral agencies to provide financial support, including political risk guarantees, which will allow the project to achieve financial close by the first half of 2005.
3.
The Gulf Yala Green Project, in which EGCO holds a stake of 47.5% through its ownership of GEC, is a 23 MW parawood-fuel biomass power plant in Yala Province. The project’s scheduled COD is August 2005. Due to the security situation in the three most southern provinces of Thailand since the start of 2004, construction is behind schedule and negotiation is underway with EGAT to postpone the COD.
In the absence of unforeseen circumstances, the Company intends to distribute approximately 40% of the available profits of the Company by way of dividend. This dividend policy may change in the light of investment opportunities that may become available to the Company or as a result of other economic or financial factors or when a dividend payment may have a significant impact on the normal operation of the company.
2.
report and analysis of the operating results
EGCO is structured as a holding company and it invests primarily in electricity generation and energy service businesses. The main sources of its income are dividends and the sharing of revenues and profits from investments in its subsidiaries, joint ventures, and associates. The objective of the holding company structure is to provide flexibility for business expansion and to facilitate the financing of new projects without recourse to existing ones. 1 2
Souce : EGAT Souce : EGAT's Power Development Plan 2004-2015 (PDP2004)
053
During 2003, the Group adopted Thai Accounting Standard No. 51: “Intangible Assets” and has changed two principal accounting policies, which are the specific spare parts and development expense policies. The Company has not restated the consolidated financial statements as at January 1, 2003 as the net effect was not material. Therefore, the aforesaid expense categories were adjusted in the 2003 annual financial statements ended December 31, 2003.
To demonstrate the effect of these changes on the Consolidated and Company balance sheet as at December 31, 2003 and statements of income for the year ended December 31, 2003, please see the following summary:
December 31, 2003 Consolidated
Company
Baht’000
Baht’000
Balance Sheets Increase in investments in subsidiaries
-
Decrease in interests in joint ventures, net
992,110
(505,892)
Increase in spare parts and supplies, net
(778,879)
5,664
-
Increase in property, plant and equipment, net
986,446
-
Decrease in other non-current assets, net
(272,987)
Increase in retained earnings as at December 31, 2003
213,231
213,231
December 31, 2003 Consolidated
Company
Baht’000
Baht’000
Decrease in cost of sales
992,110
-
Increase in administrative expenses
(102,505)
-
Increase in impairment charge
(170,482)
(66,133)
Increase (decrease) in share of profit of subsidiaries and joint ventures
(505,892)
279,364
Increase in net profit
213,231
213,231
Statements of Income
This report contains the analysis of the financial statements of EGCO and its subsidiaries as follows:
2.1 Operational Results EGCO’s consolidated net profit for 2004, as of December 31, 2004, was Baht 4,662 million, a decrease of Baht 1,332 million or 22% compared to 2003.
Unit : Million Baht Net Profit of 2004
Overseas 0.09% SPP 6% Others 2%
EGCO IPP Group SPP Group Overseas
IPP 89%
EGCO 3%
Others
Net Profit of 2003
Before FX
After FX
Before FX
134
119
(51)
4,055
4,119
5,350
5,805
282
303
296
579
11
4
(416)
(447)
112
116
108
108
Remarks: - IPP : REGCO, KEGCO
(51)
- SPP : GEC, AEP, APBP, TLP Cogen, Roi-et Green
- Overseas : Conal, Nam Theun 2 - Others : ESCO, ET
054
After FX
The net profit for 2004 included foreign exchange gain of Baht 67 million whereas the Company incurred a foreign exchange gain of Baht 707 million in 2003. An unrealized foreign currency exchange gain in the amount of Baht 72 million is an accounting number in accordance with the Thai accounting standard. It incurs from the difference of the translation of the net debt denominated in foreign currency to the Thai Baht equivalent amount using the foreign exchange rate at the end of this accounting period (December 31, 2004) and the previous period (December 31, 2003).
Excluding the effect of foreign currency exchange, the profit would be Baht 4,595 million, representing a decrease of Baht 692 million or 13% as compared to 2003. In 2004, without the impact of foreign currency exchange gain of Baht 67 million and tax amounting to Baht 597 million, the 2004 profit would be Baht 5,191 million, a decrease of Baht 99 million or 2% as compared to 2003 profit of 5,290 million, which excluded the increase in net profit from the new accounting policies amounting to Baht 213 million, foreign currency exchange gain of Baht 707 million and tax amounting to Baht 217 million.
Important Financial Ratios for the period were as follows; - Gross Profit Ratio was 51%. - Net Profit Ratio (excluding the effect of foreign exchange) was 28%. - Earnings (excluding the effect of foreign exchange) per share (EPS) was Baht 8.75
The net profit margin (excluding the effect of foreign exchange) of 28% was lower than last year’s margin of 34%, primarily as a result of the decrease in REGCO's and GEC’s net profit together with the change in the accounting policies in 2003. Excluding the impact of accounting policy change, the net profit margin of 2003 was 32%
2.2 Income Analysis In 2004, the total revenues of EGCO and its subsidiaries as well as the share of profits from its associates and interest in joint ventures were Baht 16,500 million, an increase of Baht 769 million or 5% compared to 2003. The details are as follows:
Total Revenues:
Unit : Million Baht 2004
2003
587
548
7%
IPP Group
9,846
9,972
(1%)
SPP Group
4,778
4,443
8%
EGCO
%Changes
Overseas
730
334
119%
Others
559
434
29%
1) EGCO’s Revenues, amounting to Baht 587 million, represented an increase of Baht 39 million or 7% from last year, driven mostly by an increase in interest income of Baht 43 million whilst a dividend income from financial investments decreased by Baht 5 million as compared to 2003.
EGCO’s revenues are essentially dividends from Krung Thai Dividend Selected Flexible Portfolio Fund (KTSF) in the amount of Baht 428 million representing a decrease of Baht 7 million as compared to 2003; dividends from marketable securities of Baht 41 million, up by Baht 5 million; and interest income of Baht 84 million, up by Baht 43 million as a result of interests received from shareholder loans to GEC and Nam Theun 2 amounting to Baht 20 million each, in addition, bank deposits earned an interest of Baht 44 million and other revenue amounted to Baht 27 million.
2) Revenues from the IPP Group, consisting of two principal subsidiaries, REGCO and KEGCO, were Baht 9,846 million. The details are as follows: ●
Sales of electricity were Baht 9,672 million, representing a decrease of Baht 70 million or 1% compared to last year. The decrease was a net effect from a fall in REGCO’s electricity sales of Baht 498 million caused by a decrease of the Capacity Rate, which was partially offset by an increase of Baht 428 million in KEGCO’s electricity sales due to an increased Base Availability Credit. This was in accordance with the capacity payment formula calculated on a “Cost Plus Basis” under the PPAs and in line with the company’s projection.
Sales of Electricity - IPP Group:
Unit : Million Baht 2004
2003
%Changes
REGCO
5,448
5,947
(8%)
KEGCO
4,224
3,796
11%
055
The PPAs cover the full amount of the projected fixed costs, debt financing charges and major maintenance charges, which are used in calculating the electricity tariffs for each period. Moreover, the calculation of the capacity payment is adjusted to include compensation of the exchange rate effect from debt services and expenses of major maintenance parts denominated in US Dollar. REGCO and KEGCO receive the compensation monthly for each billing period. They receive higher capacity charge if the exchange rate is above Baht 28 per US Dollar and vice versa. In 2004, REGCO and KEGCO received compensation for the exchange rate effect of Baht 1,007 million. ●
Interest income and others amounted to Baht 174 million, a decrease by Baht 56 million or 24%, mainly from REGCO and KEGCO’s lower amount of deposits at banks and financial institutions as funds were used to pay down loans, which caused a drop in return of Baht 41 million. Moreover, in 2003, REGCO’s other revenues included an extraordinary item, the supplier penalty fees for late delivery.
3) Revenues from the SPP Group were Baht 4,778 million, an increase of Baht 335 million or 8% compared to 2003. The SPP Group incorporates five companies, GEC, AEP, APBP, TLP Cogen and Roi-Et Green. The details are as follows: ●
Sales of electricity of the SPP Group were Baht 4,683 million, representing an increase of Baht 365 million or 8% compared to last year.
Sales of Electricity - SPP Group:
Unit : Million Baht 2004
2003
%Changes
GEC
2,640
2,622
1%
TLP Cogen
1,629
1,335
22%
APBP
272
277
(2%)
Roi-Et Green
142
84
70%
The major factor, which led to an increase of sales in the SPP group was an increase of electricity sales at TLP Cogen and Roi-Et Green, which achieved a normal full year operation in 2004 after the completion of their construction in January 28 and May 29, 2003, respectively. TLP Cogen and Roi-Et Green’s revenues increased by Baht 295 million and Baht 58 million, respectively. ●
Interest income and others amounted to Baht 42 million, a decrease of Baht 24 million mainly from GEC’s other income.
●
Share of profit of associates and joint ventures was from AEP totaling Baht 53 million, a decrease of Baht 5 million as compared to 2003 due to scheduled major maintenance.
4) Revenues from the Overseas Group were Baht 730 million, an increase of Baht 396 million compared to 2003. The overseas group refers to CONAL and NTPC. The details are as follows: ●
Sales of electricity of the overseas group were Baht 717 million, a decline of Baht 175 million or 20% compared to last year, resulting from the transfer of 58 MW at Northern Mindanao Power Corporation (NMPC) to National Power Corporation (NPC) in July 2003.
●
Interest income and others amounted to Baht 38 million, a decrease of Baht 7 million or 15%.
●
Share of expenses of associates and joint ventures totaled Baht 25 million, a decrease of Baht 578 million as compared to 2003. This is because the new accounting policy adjustment that led to an increase of Baht 506 million in the share of development expenses of Nam Theun 2 Project prior to 2003 included this amount in the 2003 financial statements.
5) Revenues from the Other Business Group were Baht 559 million, an increase by Baht 125 million or 29%. The other business group includes two subsidiaries, ESCO and ET. The details are as follows:
Revenues from the Other Business Others:
Unit : Million Baht 2004
2003
% Changes
Service Income - ESCO
390
283
38%
Sales of Water - ET
157
142
11%
056
●
Service income from ESCO amounted to Baht 390 million, up by Baht 107 million or 38%, resulting mostly from an increase of operation and maintenance (O&M) services to Elgali 2 Power Plant in Sudan.
●
Sales of water from a subsidiary, ET, were Baht 157 million, up by Baht 15 million, or 11%, thanks to an increase of both water tariff and sales quantity under the Water Purchase Agreement.
●
Interest income and others amounted to Baht 11 million, an increase by Baht 2 million or 18%, mainly from ESCO's other revenues.
●
ESCO’s share of profit of associates and joint ventures totaled Baht 0.51 million, an increase by Baht 1.24 million, mainly from Amata Power Esco Service Co.,Ltd (AMESCO) whereas the Agro Energy Co.,Ltd (AE)’s share of loss amounted to Baht 0.49 million causing the investment in AE to be zero.
2.3 Expense Analysis Total expenses from EGCO, its subsidiaries and joint ventures in 2004 were Baht 11,673 million, an increase of Baht 1,532 million or 15% from last year. The details are as follows:
Total Expenses:
Unit : Million Bath 2004
EGCO
2003
% Changes
452
599
(24%)
IPP Group
5,791
4,622
25%
SPP Group
4,428
4,093
8%
Overseas
581
520
12%
Others
420
306
37%
1) Total expenses of EGCO were Baht 452 million, a decrease from last year by Baht 146 million, as a result of lower interest expenses from Baht 120 million in 2003 to Baht 46 million, a decrease by Baht 74 million or 61%, and a lower administration expenses from Baht 479 million to Baht 406 million, a decrease by Baht 73 million or 15% as there was a write-off of the Bo Nok’s development expense of Baht 66 million in the previous year of 2003. Excluding the write-off of Bo Nok, the expenses decreased by Baht 7 million or 2% as compared to 2003.
2) The IPP Group’s expenses were Baht 5,791 million, an increase of Baht 1,168 million, mainly a result of the new accounting policy. The details are as follows: ●
Cost of sales, with the total of Baht 3,329 million, an increase by Baht 1,111 million or 50% compared to 2003, mainly from the result of the impact of the new accounting policy prior to 2003 on REGCO and KEGCO that was included in the 2003 financial statements and thus reduced the cost of sales of REGCO and KEGCO by Baht 529 million and Baht 443 million in 2003, respectively. Excluding the impact of the new accounting policy prior to 2003, the cost of sales of REGCO decreased by Baht 35 million from lower insurance expenses and the cost of sales of KEGCO increased by Baht 173 million due to major maintenance.
Cost of Sales - IPP Group:
Unit : Million Baht 2004
2003
%Changes
2003*
%Changes
REGCO
1,806
1,312
38%
1,841
(2%)
KEGCO
1,523
907
68%
1,350
13%
* excluding the impact of new accounting policy prior to 2003
●
Administration expenses and other expenses were Baht 669 million, an increase of Baht 328 million or 96%, mainly from REGCO’s corporate tax payment amounting to Baht 435 million, up Baht 302 million. The 50% Corporate Tax Reduction is effective for the next 5 years, starting from April 20, 2003 and ending on April 19, 2008. REGCO’s corporate tax-exempt status from BOI Tax Privilege that was effective for 8 years from the date of the receipt of operating revenues ended on April 19, 2003.
●
Interest expenses were Baht 1,793 million, a decrease of Baht 271 million or 13%, resulting from the decrease in interest expenses at REGCO and KEGCO of Baht 155 million and Baht 116 million, respectively, owing to lower principal amounts.
057
3) The SPP Group’s expenses were Baht 4,428 million, an increase of Baht 335 million or 8%, according to the following reasons: ●
Cost of Sales were Baht 3,711 million, an increase of Baht 375 million or 11%, substantially driven by an increase in cost of sales of GEC amounting to Baht 188 million, a result of major maintenance and the impact of new accounting policies and a rise in TLP Cogen cost of sales amounting to Baht 160 million, which was consistent with their increased sales of electricity. An increase of Roi-Et Green’s cost of sales amounted to Baht 24 million, which was consistent with their increased sales of electricity as well.
Cost of Sales - SPP:
Unit : Million Baht 2004
2003
%Changes
GEC
2,210
2,022
9%
TLP Cogen
1,216
1,056
15%
203
199
2%
82
59
40%
APBP Roi-Et Green
●
Administration expenses and other expenses were 421 million, an increase of Baht 10 million or 2%, coming substantially from TLP Cogen which saw an increase of Baht 21 million, in line with an increase in electricity sales in 2004 following construction completion and expense recognition from January 28, 2003 onwards.
GEC’s administration expenses were down by Baht 14 million. This was partly a result of the offsetting of the write-off of Bo Nok’s development expenses amounting to Baht 103 million and the impairment expenses of Bo Nok’s land amounting to Baht 104 million whereas there was a write-back of impairment expense of Bo Nok’s land amounting to Baht 44 million in 2004. If excluding the aforementioned, the 2004 administration expenses increased by Baht 238 million according to the project cost of KK2 such as Development Cost, Community Relation and Public Relation, Forward Contract, Standby Letter of Credit Fee and the goodwill of NKCC and SCC amounting to Baht 43 million.
●
Interest expenses were Baht 297 million, a decrease of Baht 50 million or 14%, mainly driven by the decrease in interest expenses at GEC of Baht 54 million, resulting from lower principal and interest rates thanks to the refinancing of certain loans. In addition, the interest expenses of TLP Cogen and APBP decreased by Baht 2 million and Baht 1 million owing to the lower principal amount. For Roi-Et Green, owing to an increase of loan drawndown, its interest expenses increased by Baht 6 million.
4) The Overseas Group’s expenses were Baht 581 million, an increase of Baht 61 million or 12% compared to 2003, owing to the following reasons: ●
Cost of Sales were Baht 229 million, a decrease of Baht 7 million or 3% as compared to last year. This resulted from a decrease of Northern Mindanao Power Corporation (NMPC)’s depreciation caused by a lower forecasted electricity production and the transfer of NMPC’s 58 MW to NPC.
●
Administration expenses and other expenses were Baht 279 million, an increase of Baht 79 million or 40% as a result of the expiry of the six-year income tax holiday in 2003 for the Western Mindanao Power Corporation (WMPC) and the Southern Philippines Power Corporation (SPPC).
●
Interest expenses were Baht 73 million, a decrease of Baht 11 million or 13% owing to lower principal amount.
5) The Other Business Group’s expenses were Baht 420 million, an increase of Baht 114 million or 37%, owing to the following reasons: ●
Service costs were Baht 269 million, an increase of Baht 99 million or 58%, resulting from an increase of ESCO’s operation and maintenance (O&M) services to customers which was consistent with its increased revenue.
●
Cost of water sales of ET was Baht 55 million, a decrease of Baht 1 million or 2% mainly from a decrease of operating and maintenance service costs.
●
Administration expenses and other expenses were Baht 86 million, an increase of Baht 22 million or 34%, mostly from ESCO’s expenses which was in line with an increase of ESCO revenue.
●
Interest expenses were Baht 10 million, a decrease of Baht 5 million or 35%, resulting from the lower principal amount as well as the lower interest rate at ET.
058
3.
report and analysis of financial position
3.1 Asset Analysis As at December 31, 2004, total assets of EGCO, its subsidiaries, associates and joint ventures amounted to Baht 55,066 million, a decrease of Baht 1,370 million or 2% from December 31, 2003. The important details are as follows: 2004 2003
60,000
55,066 56,437
Unit: Million Baht
50,000
31,283 31,543
40,000
30,000
8,626 6,755 398 369
10,000
7,419 9,954
7,340 7,815
20,000
0 Total Assets
Cash, ST & LT Investment
ST & LT Investment as collateral
Investment in Sub and Asso
Property, Plant and Equip (net)
Others
1) Cash and deposits at financial institutions, and short term and long term marketable securities were Baht 7,340 million or 13% of the total assets, down Baht 476 million or 6%. This was categorized by a decrease of Baht 854 million in deposits at financial institutions and short-term marketable securities, and a decrease of Baht 580 million in long-term investments in marketable securities and others following additional investments in GEC and extensions of shareholder loans to GEC and NTPC as well as a diminished market value of marketable securities; whereas the cash and cash equivalent were up by Baht 958 million. 2) Short-term and long-term investments used as collateral were Baht 7,419 million or 13% of the total assets, down Baht 2,535 million or 25% after KEGCO obtained lenders’ approval in quarter 3 of 2004 to release the Foreign Exchange Reserve Account (FEXRA) amounting to USD 27 million and release Debt Service Reserve Account (DSRA) amounting to USD 12 million by pledging a Bank Guarantee. For REGCO, the cash reserve in FEXRA amounted to USD 26 million. 3) Investment in subsidiaries and associates and interests in joint ventures amounted to Baht 398 million or 1% of the total assets, up by Baht 29 million or 8%. This increase is mainly a result of the recognition of the share of losses after expensing Baht 25 million of the development cost of Nam Theun 2 according to the new accounting policy whereas the share of profit of AEP and AMESCO amounted to Baht 53 million and Baht 1 million, respectively. 4) Property, plant and equipment (net) totaled Baht 31,283 million or 57% of the total assets. They were down Baht 260 million or 1% due to the depreciation of EGCO and subsidiaries’ assets totaling Baht 2,440 million, the reclassification of unutilised capital spare parts from property, plant and equipment to inventories of KEGCO, GEC, REGCO and TLP Cogen amounting to Baht 336 million, Baht 196 million, Baht 96 million and Baht 6 million, respectively, GEC’s impairment of its power plant of Baht 11 million and the translation adjustment downward of Baht 31 million. An increase in property, plant and equipment was substantially from GEC’s construction of Baht 2,147 million and others of Baht 359 million as well as the recording of capital spare parts as property, plant and equipment according to the major maintenance of REGCO, KEGCO and TLP Cogen in the amount of Baht 110 million, Baht 234 million and Baht 7 million, respectively. 5) Other assets were Baht 8,626 million or 16% of the total assets, up Baht 1,871 million or 28% mainly from accounts receivable and accounts receivable from related companies, up Baht 714 million, shareholder loans to GEC amounting to Baht 175 million and NTPC amounting to Baht 464 million, and an increase of Spare Parts and Supplies by Baht 558 million. Remaining other assets were up by Baht 100 million.
059
3.2 Liability Analysis As at December 31, 2004, the company’s total liabilities were Baht 25,963 million, down Baht 3,772 million or 13% as a result of the loans and debentures repayment at EGCO, REGCO and KEGCO. The total liabilities consist of the following: 1) Long-term loans and debentures totaled Baht 23,933 million, or 92% of total liabilities, down Baht 3,980 million or 14%. The details are as follows: - USD loans in the amount of USD 324 million Debenture 23% USD 53%
- Yen loans in the amount of Yen 1,163 million - Philippines Peso loans in the amount of Peso 87 million THB 22%
- Baht loans in the amount of Baht 5,390 million PHP 0.26%
JPY 2%
- Baht Debentures in the amount of Baht 5,558 million In 2004, the amount of loans and debentures denominated in Baht, USD, and Peso, including debenture decreased by Baht 5,178 million as compared to 2003, mostly from principal repayment by EGCO, REGCO, KEGCO, APBP, TLP Cogen, Conal and ET as well as GEC’s loan refinancing. On the other hand, the amount of loans denominated in Yen were up Baht 57 million, which was due to the loan drawdown for the construction of Roi-Et Green. 2) Other liabilities amounted to Baht 2,030 million or 8% of total liabilities, mostly resulted from bank overdrafts and short-term loans of Baht 75 million, trade accounts payable of Baht 476 million, related companies’ trade accounts payable of Baht 185 million, interest payable of Baht 152 million, value added tax payable and income tax payable of Baht 482 million, dividend payable of Baht 41 million and others Baht 620 million. 3.3 Shareholders’ Equity Analysis As at December 31, 2004, Shareholders’ Equity (excluding treasury stock) amounted to Baht 29,103 million, which was Baht 2,402 million higher than the amount as at December 31, 2003. This was due mainly to the profits from operation of 2004, partially offset by a decrease of the unrealized gain on investments in marketable securities totaling Baht 847 million that came from a fall in share prices of marketable securities. The analysis of the company’s capital structure as at December 31, 2004 is summarized as follows: Shareholders’ equity was Baht 29,103 million or 52.85%.
Equity 52.85% Debt 47.15%
Liabilities were Baht 25,963 million or 47.15%. Important financial ratios were as follows: - Debt to equity ratio was 0.89 times, lower than 1.11 times at the end of last year. - Book value per share was Baht 53.55, higher than Baht 49.21 at the end of last year.
4
report and analysis of cash flow position
Cash Flow Statement shows the change in cash flows from operating activities, investing activities, and financing activities at the end of the accounting period, and indicates the ending balance of the cash and the cash equivalents. As at December 31, 2004, the ending balance of the cash and cash equivalents was Baht 2,688 million, up by Baht 958 million from the end of 2003. The details of the sources and uses of funds are as follows: -
Net cash received from operating activities totaled Baht 8,534 million. Most of this was cash from operating activities that amounted to Baht 6,968 million. Short-term and long-term investments used as collateral dropped by Baht 2,482 million, trade receivable from a related party increased by Baht 708 million and spare parts and supplies increased by Baht 485 million.
-
Net cash payment for investing activities was Baht 1,974 million. The investment in GEC’s construction of Power Plant amounted to Baht 2,101 million and shareholder loans to GEC and NTPC amounted to Baht 175 million and Baht 464 million, respectively. Whereas the cash inflow was Baht 582 million from the net disposals of short-term and long-term investments, the dividends from KTSF and Eastern Water Resources Development and Management Public Company Limited (EASTW) amounted to Baht 428 million and Baht 40 million, respectively.
-
Net cash payment for financing activities was Baht 5,605 million, mainly owing to long-term loans and debentures repayment by EGCO, REGCO, KEGCO, TLP Cogen, Roi-Et Green, APBP and GEC in the amount of Baht 5,862 million and dividend payment to shareholders amounting to Baht 1,571 million while the loan drawdown from GEC, TLP Cogen and Roi-Et Green increased by Baht 2,074 million.
060
Risk Factors
EGCO is a holding company with major investments in the generation and sale of electricity. Risk factors are thus those arising from or associated with its making and managing of investments in its core electricity businesses. A summary of EGCO's key risk factors is provided below
investment risks Risk from New Project Development EGCO's policy is to expand its business scope by focusing upon new high-potential development projects. With regard to the evaluation of new project development opportunities, EGCO management has developed a process to identify significant project risks and it has trained its staff to seek measures to mitigate risks that might, if left unattended, prohibit EGCO from investing in new projects or from obtaining consistent and acceptable levels of return on its investments. Risk factors in this area include, but are not limited to, the target market government policies towards their respective electricity industries, overall economic performance in the target market countries, competition, financing terms and conditions, as well as partner, technology, fuel, site and community issue risks. Senior management has developed a process for identifying key risk factors during project evaluation and for working in cooperation with the Board to mitigate such risks in a manner consistent with EGCO's overall investment guidelines. Before seeking Board of Directors' approval, the management must prepare satisfactory technical, commercial and financial feasibility analysis of each project which includes an analysis of identified key risks and the means that will be taken to mitigate such risks. Risk from Delays in Implementation EGCO currently has several projects under development. Large projects, like Nam Theun 2 Hydropower Project and Kaeng Koi 2 Combined Cycle Power Plant Project, which are developed pursuant to long-term power purchase agreements (PPA) with EGAT, typically have contractually determined commercial operating and other key milestone dates. In the case of a delay in achieving such milestones, EGCO could be subject to increased development costs and a diminution in its forecast investment returns. To mitigate such consequences, EGCO generally assigns a project manager together with highly qualified team members for each new project. The project manager is responsible for regular monitoring of project progress and for the preparation of periodic reports that are delivered to the management and the Board of Directors. In addition, each project is thoroughly evaluated in advance in the manner identified in the previous section to ensure that project construction and equipment has been carefully selected, that project sponsors are experienced professionals, that sufficient project funding is committed in advance, and that social and environmental impact for each project has been thoroughly considered and addressed. Failure to Reach Target Return on Investment Project returns could deviate from projection due to inappropriate management policy, inefficient performance of equipment, or contract frustration among other factors. To mitigate such risks, EGCO has established asset management policy which includes assigning senior level EGCO representatives to monitor all operation related aspects of its subsidiaries and new investment projects. The comparison between operating results to the targets has to be reported to the management and the Board Committee so that timely adjustments can be made if unplanned events effecting performance arise. Country Risk In addition to Thailand, EGCO has invested in the Philippines and will soon be investing in its first project in the Lao PDR. Before making decisions to take on more exposure in existing markets or in new target markets that EGCO is exploring, EGCO gathers extensive macroeconomic and industry specific information to enable its Board of Directors to better understand the risks of investing in each of its target markets. Country risk is always a key factor used to determine the specific target return on investment that EGCO aims to achieve in its various markets. All factors, that have impacts on counry risk, are regularly monitored and when necessary, revised conditions are reported to the Board of Directors.
financial risks Foreign Exchange Rate Fluctuations EGCO has a policy to mitigate foreign exchange risks in its investment projects. In general, this is achieved to the maximum extent possible by matching the currencies of project funding with implementation costs and matching the currencies of project revenues and expenditures (including debt service) during the operation phase. It is not always possible for EGCO to achieve a 100% mitigation of such risks, but it endeavours to ensure that such mitigation is consistent with global market practice. After the introduction of the managed float system promulgated by the Thai Government on July 2, 1997, EGAT agreed to compensate Independent Power Producers (IPP) and Small Power Producers (SPP) for increased costs incurred as a result of the Baht devaluation beyond a fixed reference rate. Such compensation for REGCO and KEGCO was achieved by adjusting the capacity charge to cover increased foreign exchange denomiaated costs incurred above the reference rate of Baht 28 per 1 US Dollar.
061
In the case of the Nam Theun 2 and Kaeng Koi 2 projects, foreign exchange risk mitigation is somewhat different than that used for the earlier IPPs and SPPs. For Kaeng Koi 2, the PPA with EGAT provides for 50% of the capacity payments (which portion is to be paid in US Dollars) to be adjusted upwards or downwards in line with a fixed contractual reference rate of 40 Baht per 1 US Dollar. With respect to Nam Theun 2, 50% of the energy payments are denominated in US Dollars and 50% are denominated in Baht. There will be no adjustments with respect to any reference exchange rates. Interest Rate Fluctuation EGCO has a policy on managing risk of interest rate fluctuation by matching interest expenses to the maximun extent possible to revenue streams provided by power purchase agreements. If such means could not be arranged, financial instruments would be sought to mitigate the interest rate risk subject to market availability and cost. Most of EGCO Group's loans have interest rate swap agreements to convert floating interest rates to fixed interest rates in order to mitigate the interest rate fluctuation risk. KEGCO entered into a currency and interest rate swap agreement to convert a US Dollar loan with a floating interest rate to Thai Baht loan at a fixed interest rate. In the case of Nam Theun 2, interest rates on Thai Baht and US Dollar loans are expected to be partially hedged subject to the level of availability of such products in the market at the time of financing. With respect to the Kaeng Khoi 2 project, the PPA with EGAT provides for a one-time capacity charge adjustment to enable the project to mitigate a portion of its interest rate risk. Contingent Liabilities EGCO has a policy to set aside reserves for any guarantee liabilities. Each year, management considers and establishes the proper level of reserves to be consistent with what it considers prudent practice. Such reserves must be separated from EGCO's ordinary accounts and the duration of such reserves must match duration of the associated liability. Summaries of EGCO Group's contingent liabilities are shown in Related Transactions.
operational risk Efficiency Risk EGCO Group's power plants need to achieve and maintain several efficiency benchmarks, such as Equivalent Availability Factor (EAF) and Heat Rate according to the Power Purchase Agreements with EGAT. There are risks of the power plants being penalized by EGAT if they do not meet required efficiency, i.e. EAF is lower than target. Thus, the management has set up systematic procedures to secure the efficiency of its various functions in operations, maintenance, and personnel development. A reporting system is in place to ensure the timeliness of information needed for crucial decision making in this regard. In addition, important operating figures are closely monitored and recorded, and maintenance work is performed as scheduled by competent staff. Furthermore, in an effort to reduce maintenance costs, both operation and maintenance officers at EGCO's main subsidiaries, REGCO and KEGCO, are specially trained and the subsidiaries follow quality management system of ISO 9001:2000 to ensure the continuity and efficiency of operations. Health, Safety, and Environment Risks EGCO Group has clear policies on health, safety, and protection of the environment. We also maintain our commitments to comply with related laws and regulations. The Company has developed emergency plans for a number of health, safety and environmental scenarios and it has organized and implemented regular training and test of its staff under these scenarios. As a result of these programs, EGCO's personnel are aware of relevant containment and prevention measures, and are well prepared to respond in emergency situations to mitigate potential impacts and losses. In addition to prevention measures, EGCO Group has also acquired insurance against All Risks, Machinery Breakdown, Business Interruption, and Public Liability. REGCO and KEGCO are certified under the environmental management system of ISO14001. In addition to the ISO 14001 Certification, KEGCO is certified under TIS18001 & OHSAS18001, which represent the standard of safety, health, and environment. REGCO is in the process of acquiring this certification as well. Society and Community Risks There are risks that EGCO's power generation activities might have adverse impacts on communities, and the environment. Complaints might be filed by affected parties and in the worst case, the power plants might have to stop their operation for some period which would impact on EGCO's earnings. In order to mitigate against such risks, REGCO and KEGCO have implemented quality and environmental management systems to ensure that their electricity generating processes, waste management, and other aspects of their plant operations are efficient and either meet or exceed required standards. Furthermore, EGCO Group makes a great deal of effort to regularly communicate with the public about its activities and their potential impacts on surrounding communities.
062
Related Transactions
There were connected transactions with regard to the power purchase and the maintenance services between EGAT, EGCO's major shareholders with 25.41% stake, and EGCO's affiliated companies. All the above transactions are based on the agreed price and are disclosed in the manner prescribed by the SET and SEC. A summary of the connected transactions that took place in 2004 is as follows.
1.
electricity sales
IPPs and SPPs within EGCO Group have entered into the Power Purchase Agreement (PPA) with EGAT as follows: Effective Date/Starting Affiliated Company
Commercial Operation Date
Maturity
Remarks
1.
REGCO
Dec.
7, 1994
20 Years
First amendment to PPA dated January 30, 1998
2.
KEGCO
June 19, 1996
15 & 20 Years
First amendment to PPA dated January 30, 1998
3.
GCC
Sep.
3, 1998
21 Years
-
4.
SCC
Aug. 23, 1999
21 Years
-
5.
NKCC
Oct. 12, 2000
21 Years
-
6.
APB
Sep.
2001
21 Years
-
7.
TLP Cogen
Jan. 28, 2003
21 Years
-
8.
Roi-Et Green
May 29, 2003
21 Years
-
All the above are normal business transactions. The tariff rates of REGCO and KEGCO have been reviewed by the National Energy Policy Council and approved by the cabinet. The tariff rates of GCC, SCC, NKCC, APB, TLP Cogen, and Roi-et Green are the same as other SPP operators. In addition, GCC, SCC, NKCC, APB, TLP Cogen and Roi-Et Green have issued the bank guarantees as collateral against the premature termination of the PPAs. These guarantees will be returned at the end of the PPA terms.
2.
maintenance services
2.1 REGCO and KEGCO have entered into a Major Maintenance Agreement (MMA) with EGAT for the latter to provide the major maintenance, repair, administrative and additional services related to the REGCO and KEGCO power plant facilities. Company
Effective Date
Maturity
REGCO
Dec.
7, 2000
6 Years
KEGCO
June 19, 2002
6 Years
2.2 ESCO, a service company in the EGCO Group, engaged EGAT as its subcontractor for providing services to power plant facilities both within and outside the EGCO Group. All of such subcontracts were entered into on commercial terms and with clear reference pricing. -
ESCO renewed its contract with EGAT for the provision of O&M services to the National Electricity Corporation of the Republic of Sudan. The renewal took effect from February 1, 2004 and was set to expire on January 31, 2005. The contract value is Euro 970,000.
-
ESCO also engaged EGAT as its consultant for steam piping engineering work for the Kaeng Khoi Project. The contract value for this work is Baht 6.4 million.
The value of connected transactions (EGCO portion only) as of December 31, 2004 is as shown in the following table: unit : million Baht Item
REGCO
KEGCO
GEC
APB
TLP Cogen
Roi-Et Green
ESCO
5,448.35
4,223.60
2,120.57
197.85
973.03
141.61
-
212.93
242.46
-
-
-
-
26.90
950.81
454.80
369.16
24.61
175.97
25.29
54.71
Transactions 1. Sales of Electricity 2. Major Maintenance Expenses Outstanding Balance 1. Trade Accounts Receivable
3.
commitments
3.1 Sponsor Support EGCO, as a project sponsor, has commitments for various affiliated companies pursuant to Sponsor Support Agreements as described below. TLP Cogeneration Company Limited (TLP Cogen): EGCO holds 80% stake (40% directly and the other 40% via TLPC) in TLP Cogen, The Sponsor Support Agreement requires sponsors to guarantee the repayment of TLP Cogen's outstanding loan and the making of interest payments in the amount not exceeding Baht 200 million. As at December 31, 2004, EGCO's maximum liability was Baht 160 million.
063
Roi-Et Green Company Limited (Roi-Et Green): EGCO holds 70.3% of the shares of Roi-Et Green which operates the biomass power plant. The Sponsor Support Agreement requires EGCO to guarantee repayment of the outstanding loan plus the interest expenses. As at December 31, 2004, EGCO's obligation was Yen 1,041.80 million equivalent to Baht 443.95 million. Egcom Tara Company Limited (EGCOM TARA): EGCO holds 70% in EGCOM TARA which operates in the bulk water supply/sales business. The Sponsor Support Agreement requires the sponsor to provide support in case of operating cash shortfalls up to Baht 51 million. EGCO's obligation as at December 31, 2004 in accordance with its shareholding was Baht 35.7 million. Amata Egco Power Company Limited (AEP): EGCO holds 30% stake in AEP, The Sponsor Support Agreement requires the sponsors to provide support in the following cases. -
Take or pay support for the Gas Supply Agreement with PTT
-
AEP's inability to fulfill its reserve requirements
-
Drop in PTT's gas pressure leading to performance shortfall
In 2004, EGCO had the obligation of USD 4.23 million equivalent to Baht 165.80 million. This obligation will reduce proportionately over the guarantee period of 14 years starting from February 10, 1997. 3.2 Performance/Credit Support Guarantees EGCO has obligations outstanding with financial institutions, which institutions issued performance bonds and/or Standby Letters of Credit to subsidiary and joint venture companies of EGCO. Those instruments are summarized below. Khanom Electricity Generating Company Limited (KEGCO) As at December 2004, EGCO had the obligation as the applicant for the Hongkong and Shanghai Banking Corporation Limited (HSBC) to issue the Standby Letters of Credit in substitution for cash reserve account requirements in respect of KEGCO's Baht and USD debt service reserve accounts. The face value of the SBLCs amounted to Baht 671.31 million and USD 11.77 million (equivalent to Baht 461.56 million) respectively. Gulf Electric Public Company Limited (GEC) EGCO holds a 50% stake in GEC. GEC's wholly owned subsidiary GPG is undertaking the development of the 1,468 MW Kaeng Khoi 2 facility. Sponsors of the project have agreed to act as the guarantor to a syndicate banks providing bridge financing to GPG. To back this obligation and fulfil a further follow-on obligation to fund equity commitments for the project, EGCO and its investment partner in the project have guaranteed a GEC SBLC with the face value of USD 185 million from a syndicate of international banking institutions. Under the guarantee, EGCO is liable for 50% of the SBLC obligations which amount to USD 92.5 million. As at December 31, 2004, this obligation was equivalent to Baht 3,626.23 million. Nam Theun 2 Power Company Limited (NTPC) EGCO holds a 25% stake in NTPC which is the developer of the Nam Theun 2 project. Siam Commercial Bank PCL. has issued the Initial Development Security for the Concession Agreement with the government of Laos and for the PPA with EGAT on behalf of EGCO in the amounts of Baht 13.07 milion and Baht 65.34 million respectively. It should be noted that prior to entering any commitments such as those noted above, approval must be sought from the Board of Directors as prescribed in the Company's Table of Authority. In addition, all such liabilities are disclosed in the Notes to Financial Statements as of December 31, 2004. Approval Procedure All connected transactions are treated in accordance with the requirements of the SET. All such transactions will be reviewed by the Management and approved by the Board and/or the shareholders as the specific case may require. In addition, the Company's internal regulations also require that directors who have a conflict of interest shall refrain from voting or attending the discussion on such matters. Policy and Future Trend The Company aims to ensure strict compliance with the requirements of the SET and SEC with regard to any connected transaction. With regard to this, the Company continuously promotes understanding among its employees by educating them about new regulations/requirements for such transactions and by establishing clear, written practices for dealing with such transactions,
064
General Information
Company Electricity Generating Public Company Limited Registration Number 333 Head Office EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210, Thailand Tel. 66 0 2998-5000, 66 0 2998-5999 Fax 66 0 2955-0956-9 Sector Energy & Utilities Industry Resources Foreign Limit 44.81% Share in Minor Shareholder 30.79% Website www.egco.com
Business Holding Company focusing on Power business and others related to power business
subsidiaries Company
Business
Registered Share Capital (Million Baht) 5,300
Par Value (Baht) 10
Registered Share Capital (Million Baht)
Par Value (Baht)
Paid-up Share Capital (Million Baht) 5,264.65
Paid-up Share Capital (Million Baht)
Ownership Interest (Direct+Indirect) (%) -
Ownership Interest (Direct+Indirect) (%)
Rayong Electricity Generating Company Limited (REGCO) Office EGCO Tower Tel. 66 0 2998-5000, 66 0 2998-5999 Fax 66 0 2955-0931 Site Office 35 Rayong Highway No. 3191 Huay Pong, Amphur Muang, Rayong 21150, Thailand Tel. 66 0 3868-1012, 66 0 3868-1016,66 0 3868-1020 Fax 66 0 3868-1784
Independent Power Producer (IPP) Electricity Generating and supply business
4,700
10
4,700
99.99
Khanom Electricity Generating Company Limited (KEGCO) Office EGCO Tower Tel. 66 0 2998-5000, 66 0 2998-5999 Fax 66 0 2955-0932 Site Office 112 Moo 8, Tongnean District, Amphur Khanom Nakhon Sri Thammarat 80210, Thailand Tel. 66 0 7552-9173, 66 0 7552-9179 Fax 66 0 7552-8358
IPP Electricity Generating and supply business
5,000
10
4,850
99.99
EGCO Engineering & Service Company Limited (ESCO) Office EGCO Tower Tel. 66 0 2998-5000, 66 0 2998-5999 Fax 66 0 2955-0933 Site Office 35 Rayong Highway No. 3191 Huay Pong, Amphur Muang, Rayong 21150, Thailand Tel. 66 0 3868-2611-4 Fax 66 0 3868-2823
Engineering, operation and maintenance services for power plants and manufacturers
250
10
250
99.99
EGCO International (BVI) Limited (EGCO BVI) Office EGCO Tower Tel. 66 0 2998-5000, 66 0 2998-5999 Fax 66 0 2955-0956-9 Oversea Romasco Place, Wickhams office Cay 1, PO Box 3140, Road Town, Tortola, British Virgin Islands
Holding company focusing on investment in electricity generating companies in foreign countries
2 1/
39.952886 1/ (50,000 USD)
2 1/ (1 USD)
100 (50,000 USD)
Thai LNG Power Corporation Limited (TLPC) Office EGCO Tower Tel. 66 0 2998-5000, 66 0 2998-5999 Fax 66 0 2955-0956-9
Holding company focusing on SPP
750
10
525
99.99
TLP Cogeneration Company Limited (TLP Cogen) (TLPC is the company’s 40% shareholder) Office EGCO Tower Tel. 66 0 2998-5000, 66 0 2998-5999 Fax 66 0 2955-0956-9
Small Power Producer (SPP) Electricity and steam generating and supply business
1,060
10
1,060
80
065
Company
Business
Registered Share Capital (Million Baht)
Par Value (Baht)
Paid-up Share Capital (Million Baht)
Ownership Interest (Direct+Indirect) (%)
EGCO Green Energy Company Limited Office EGCO Tower Tel. 66 0 2998-5000, 66 0 2998-5999 Fax 66 0 2955-0956-9
Holding company focusing on power business
175
10
175
74
Roi-Et Green Energy Company Limited (EGCO Green Energy Company Limited is the company’s 95.00% shareholder) Office EGCO Tower Tel. 66 0 2998-5000, 66 0 2998-5999 Fax 66 0 2955-0956-9
SPP utilizing Biomass as fuel
180
10
180
70.30
Agro Energy Company Limited (AE) (ESCO is the company’s 99.99% shareholder) Office EGCO Tower Tel. 66 0 2998-5000, 66 0 2998-5999 Fax 66 0 2955-0956-9
Trading/delivery service of fuel from natural scrap
2
10
2
99.99
Egcom Tara Company Limited (ET) Office EGCO Tower Tel. 66 0 2998-5000, 66 0 2998-5999 Fax 66 0 2955-0945 Site office - Plant 1 332 Moo 2, Pongsawai, Amphur Muang Ratchburi 70000, Thailand - Plant 2 250 Moo 1, Pangpuay, Amphur Damneansaduak, Ratchburi 70130, Thailand
Piped water generating and supply business
345
10
345
70
joint ventures Company
Business
Gulf Electric Public Company Limited (GEC) Holding company focusing Office 11th FL., M. Thai Tower I, on IPP and SPP All Seasons Place, 87 Wireless Road, Lumpini, Phathumwan, Bangkok 10330, Thailand Tel. 66 0 2654-0155 Fax 66 0 2654-0156-7 Website www.gulf.co.th
Registered Share Capital (Million Baht)
Par Value (Baht)
Paid-up Share Capital (Million Baht)
Ownership Interest (Direct+Indirect) (%)
14,000
10
5,874.04
50
1,168.43
10
662.33
50
EGCO Joint Ventures and Development Company Limited (EGCO JD) Office EGCO Tower Tel. 66 0 2998-5000, 66 0 2998-5999 Fax 66 0 2955-0956-9
Holding company focusing on SPP business and other energy related business
Amata-EGCO Power Company Limited (AEP) (EGCO JD is the company’s 29.70% shareholder ) Office 33 Soi Lertnava, Krungthepkreetha Rd, Huamark Bangkapi, Bangkok 10240, Thailand Tel. 66 0 2379-4333, 66 0 2379-4246 66 0 2710-3400, 66 0 2710-3000 Fax 66 0 2379-4245. 66 0 2379-4257
SPP Electricity and steam generating and supply business
1,500
10
1,350
14.85
Amata Power (Bang Pakong) Limited (APBP) (EGCO JD is the company’s 30% shareholder ) Office 33 Soi Lertnava, Krungthepkreetha Rd, Huamark Bangkapi, Bangkok 10240, Thailand Tel. 66 0 2379-4333, 66 0 2379-4246 66 0 2710-3400, 66 0 2710-3000 Fax 66 0 2379-4245, 66 0 2379-4257
SPP Electricity and steam generating and supply business
560
10
560
15
066
Company
Business
Amata Power - ESCO Service Company Limited (AMESCO) (ESCO is the company 50% shareholder) Office EGCO Tower Tel. 66 0 2998-5000, 66 0 2998-5999 Fax 66 0 2955-0956-9
Power plant operation and maintenance services
Conal Holding Corporation (Conal) Office EGCO Tower Tel. 66 0 2998-5000, 66 0 2998-5999 Fax 66 0 2955-0956-9 Oversea Alsons Building, 2285 Pasong office Toma Extension, Makati, City Metro Manila 1231, Philippines
Holding company focusing on power business in the Philippines
Nam Theun 2 Power Company Limited (NTPC) Office 26 Khun Boulom Road, PO Box 5862, Vientiane, Lao PDR Tel. 856-21-217421/2 Fax 856-21-217420
IPP Electricity Generating and supply business
Eastern Water Resources Development and Management Public Company Limited (EASTW) Office 9/9 Vibhavadi Rangsit Road, Talad Bangkhen, Laksi Bangkok 10210, Thailand Tel. 66 0 2940-9974-6 Fax 66 0 2561-3793 Website www.eastwater.com
Water resources development and management for supplying raw water to the customers
Registered Share Capital (Million Baht)
Par Value (Baht)
Paid-up Share Capital (Million Baht)
2
10
2/
91.17 2/
(800,000,000
(100
(800,000,000
PESO)
PESO)
PESO)
729.32
2
729.32
2/
13,945.80 3/
4,226 3/
42.26 3/
(300,000,000
(100
(1,000,000
USD)
USD)
USD)
1,665
10
1,296.94
Ownership Interest (Direct+Indirect) (%) 50
40
25
18.96
Note : The Exchange rate as of Investment Date 1 USD = Baht 39.952886 (July 13, 21, 2000) 2/ 1 PESO = Baht 0.91165 (August 25, 2000) 3/ 1 USD = Baht 42.26 (August 30, 2002) 1/
reference persons Regulator Securities and Exchange Commission, Thailand 93/1 15th Floor, Diethelm Towers B, Wireless Road, Lumpini, Patumwan Bangkok 10330, Thailand Tel. 66 0 2695-9999 Corporate Affairs Department ext. 6008, 9509 E-mail: info@sec.or.th Website http://www.sec.or.th
Regulator The Stock Exchange of Thailand 62 The Stock Exchange of Thailand Building, Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand Tel 66 0 2229-2222 Fax. 66 0 2654-5426-7 S-E-T Call Center 66 0 2229-2222 E-mail: clientsupport@set.or.th Website: http://www.set.or.th
Share and Debenture registrar Thailand Securities Depository Company Limited 62 The Stock Exchange of Thailand Building, Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand Tel. 66 0 2229-2800, 66 0 2654-5599 Fax. 66 0 2359-1259 Call Center 0 2229 2888 E-mail: contact.tsd@set.or.th Website: http://www.tsd.co.th
Auditor 1. Mr. Prasarn Chuaphanich Certified Public Accountant (Thailand) No.3051 2. Mr. Suchart Luengsuraswat Certified Public Accountant (Thailand) No.2807 3. Mr. Prasit Yuengsrikul Certified Public Accountant (Thailand) No.4174 PricewaterhouseCoopers ABAS Llimited 15 th Floor, Bangkok City Tower, 179/74-80 South Sathorn Road, Bangkok 10120, Thailand Tel. 66 0 2286-9999, 66 0 2344-1000 Fax. 66 0 2286-5050
Financial Advisor National Securities Company Limited 18 th, 14 th and 11th Floor, MBK Tower, 444 Phayathai Road, Pathumwan, Bangkok 10330, Tel. 66 0 2217- 9595, 66 0 2217-6922 Fax. 66 0 2216-9261
067
Relationship with Investment Community
shareholders and dividend payment The Company is well aware that accurate, complete, transparent, and timely information about the Company are necessary for the investment community. To facilititate this process, the company has appointed spokespersons to disclose the Company information and has also appointed contact persons to manage and clarify news about the Comany and its activities to the public through the Stock Exchange of Thailand on a regular basis. In addition, the Investor Relations Section is responsible for compiling and maintaining the investment community’s information center which can be accessed through the Company’s website: www.egco.com and direct correspondence through E-Mail: ir@egco.com or telephone: 662-998-5131-3. With respect to ensuring the investment community of equal treatment and fair information disclosure, the Company arranges various investor relations activities to help the investment community understand our operations such as Opportunity Day or Analyst Meeting functions as well as through local road shows arranged by the Stock Exchange of Thailand. Furthermore, the Company has always maintained focus on value creation for shareholders, sustainable long-term business growth and dividend growth. According to the company’s dividend policy, EGCO intends to distribute approximately 40% of the available profits of the company by way of dividend. This dividend policy may change in the light of investment opportunities that may become available to the company or as a result of other unforeseen economic or financial factors. The historical dividend payout of EGCO is summarized in the following chart.
2.00
2.00
2.00
2.5
1999
2000
2.50
2.25 2
3.0
2.75 5
Bath/ share
1.27 2
1.50
2.0
1.00
1.5
1.0
0.5
0.0 1995
1996
1997 * 1998
2001
2002
2003 1H04
year
* In 1997, the Company reported net losses on the annual operations due to the changed foreign exchange regime, therefore, no dividend is paid to shareholders. The Company also set a policy that the subsidiaries in which the Company has significant control pay dividend at 100% of their net income after tax.
ensuring quality service for customers The Company aims to provide quality power supply at a reasonable price to its customers, which include the Electricity Generating Authority of Thailand and several industrial customers. To ensure the quality of our services, the Company continuously takes measures to improve the quality of its management systems. For example, KEGCO was proud to be the first power plant in Southeast Asia to be certified compliant with ISO 9002: 1994 by RWTUV (Thailand) in September 1998. REGCO followed suit and was certified compliant ISO 9002:1994 by RWTUV (Thailand) on January 30, 2001. Subsequently, both companies converted to the ISO 9001:2000 management system and both are certified thereunder. The same system is currently under implementation at EGCO’s Roi-Et Green Co., Ltd. subsidiary. In addition, EGCO has also adopted a policy to benchmark performance of all Group companies with local and international peer companies to ensure continuous improvement, which will benefit our current and future customers. We are proud to note that there have been no complaints from customers regarding any service-related matter in 2004. In addition, all the power plants in the EGCO Group met or exceeded the reliability and availability requirements stated in their respective power purchase/sales contracts.
068
employees Key success factors for excellent companies include effective policies and management systems as well as well trained, productive human capital comprising individuals who are committed to support the Company in developing and implementing business strategies for sustainable growth. Company management believes in the value of its human resources and is committed to improving the workforce skills as well as promoting the opinions of all employees through participative management. In this regard, employees are regularly encouraged to share their ideas and provide recommendations via immediate supervisors, the Employees’ Welfare Committee and the Good Corporate Governance Committee. Company management strives to ensure that the employees’ remuneration is fair and comparable with peer companies in the power sector. In addition, the pay by performance concept is implemented based on the corporate, functional and individual key performance indicators. With the knowledge that information technology can increase the effectiveness and efficiency of our human resources, the Company is implementing a Human Resources Information System (HRIS) to ensure timely and reliable information for human resource management and services as well as for paper work reduction. Based on the continuous commitment in human resource management, the Company believes that our employees are knowledgeable and capable of discharging their duties in an ethical way. With this fundamental grounding, we believe that our staff is better prepared to work in harmony with society and the environment to promote sustainable growth and shareholders’ value.
safety and occupational health The Company believes that the safety and health of its employees are fundamental responsibilities and that the continued success of our operation depends upon the protection of our resources, both personnel and material. The Company regards safety as one of the key performance indicators of all subsidiaries and encourages all employees to adhere to the safety and health philosophy set forth in the Code of Conduct in all company activities. -
We will strive to prevent accident, injury and occupational illnesses through the active participation of every employee. We are committed to continuous efforts to identify and eliminate or manage safety risks associated with our activities.
-
We will strictly comply with all applicable laws and regulations. In case that no enforceable body of law exists, we will apply reliable standards of our own.
-
We will arrange for the proper design of tool and equipment, regulations, training and the control tools in a manner that safeguards workers, property and the communities in which we operate from machine, working procedures and occupational illnesses.
-
Employees who report to work with illegal drugs in their system or with level of alcohol or other chemical substances that could impair performance are subject to disciplinary actions.
-
Each employee is provided with an annual physical check-up at the Company's expense
Based on the above commitment, KEGCO won the top award as the national distinguished workplace in terms of safety, occupational health and environment for 5 consecutive years and is also the first power plant in Thailand to be certified the TIS 18001:1999 and Occupational Health and Safety Assessment Series: OHSAS 18001 by RWTUV. REGCO is implementing the same system to be certified in 2005. In addition, REGCO also hosted the seminar on safety, health and environment among CLP Group companies during November 18-19, 2004 which is a forum of exchanging knowledge and experience on the issue for further improvement. Year 2004 is remarkable as there is no disabling injury in all the subsidiaries that the Company is the major shareholder. The safety hours of each company is illustrated below. Safety Hours (manhours) Company
2004
Accumulative
Rayong Electricity Generating Co., Ltd.
331,575
1,779,395
Khanom Electricity Generating Co., Ltd.
713,006
2,881,646
EGCO Engineering and Services Co.,Ltd.
736,975
1,833,870
TLP Cogeneration Co., Ltd. Roi-Et Green Co., Ltd. Egcom Tara Co., Ltd.
63,487
121,828
102,117.5
172,985.5
144,936
578,952
069
Statement of Directors' Responsibilities
According to the Public Limited Companies Act B.E. 2535, the Accounting Act B.E. 2543, the Securities and Exchange Act B.E. 2535, and the Notification of the Securities and Exchange Commission re: "Disclosure of Financial Statements and Performance of Listed Companies", the Board of Directors is responsible to prepare the true and fair financial statements of the Company.
Being well aware of its duties and responsibilities to ensure the effective oversight of the financial statements, the Board of Directors has issued the Company's regulation on accounting, financial and budget B.E. 2544 to be adhered to by the Management. In addition, the Audit Committee has been appointed to oversee that the Company's financial statements be prepared in a justified and prudent manner, in accordance with the Generally Accepted Accounting Principles under the Accounting Profession Act B.E.2547 and appropriate accounting policies with adequate disclosure of significant information in the Notes to financial statements. Also, the Audit Committee has reviewed internal control system to ensure its adequacy and effectiveness to safeguard the Company's assets from unauthorized persons and detect the control weakness or irregularities on time to prevent the fraudulent actions.
The Board of Directors is of the opinion that the consolidated and company's financial statements of the year 2004 presented the company's financial position and operating results in a correct and reliable manner and in compliance with the Generally Accepted Accounting Principles and all governing rules and regulations.
Chai-Anan Samutavanija Chairman
070
Audit Committee's Report
The Audit Committee of the Electricity Generating Public Company Limited (EGCO) is composed of three independent directors. The Chairman of the Audit Committee is Dr. Chaipat Sahasakul, and the other two members are Mr. Worawit Khamkanist and Mr. Charu-Udom Ruangsuvan. The Audit Committee performed its duties in accordance with the Charter of the Audit Committee which illustrates the Committee's responsibilities and was approved by the Board of Directors. The Committee held 9 meetings in 2004. Three more meetings were held in the first quarter of year 2005 to review the financial statements and other reports to be disclosed in the 2004 annual report, form 56-1, and the selection of external auditors. The summary of major activities is as follows: - Reviewed the quarterly financial statements with the external auditor and management. The Committee has provided valuable comments and recommendations to help the management ensure accurate and adequate disclosure of financial reporting. - Reviewed the effectiveness of the internal controls. The Committee's opinion was based mainly on the results of the internal control self-assessment (applying the SEC guideline). Internal audit reports and the auditor's report were considered as well. - Reviewed the scope of work and approved the annual plan of the Internal Audit Division. The Committee ascertains the independence of the internal audit function by requiring the Internal Audit Division to report directly to the Committee, allowing the internal auditors to render an objective, unbiased, unrestricted opinion. Performance of the Senior Vice President - Internal Audit is also evaluated annually by the Committee. - Reviewed with the management the procedures implemented to ensure the Company's compliance with the securities and exchange law, regulations of the Exchange or laws relating to business of the company. - Selected the external auditor and recommended the remuneration for the year to be nominated in the shareholders' meeting. To promote the auditor's independence, a policy of selecting a new auditor every 5 years has been established. PricewaterhouseCoopers (PwC) was selected as the Company's auditor for year 2004 and will be reappointed for 2005. Other engagements, of PwC, were also reviewed to ensure that they would not affect the independence of the auditor. - Met privately with the external auditor to enhance the auditor's independence. - Oversaw that the management has sufficiently and accurately disclosed connected transactions and transactions that may lead to conflicts of interest. - Reviewed the annual Management Discussion and Analysis (MD&A) for its accuracy, adequacy, and usefulness. - Reviewed the Audit Committee Charter for any changes and updated it as necessary to agree with current responsibilities, which usually follow the Audit Committee Best Practices recommended by the Stock Exchange of Thailand. - Conducted a review with the management on treasury management, together with related measures to manage risks, and commented upon the proposed Treasury Management Guidelines. After considering information gained from performing aforementioned responsibilities, the Committee opined that EGCO has conducted its business in a manner consistent with the practices of good corporate governance. The existing internal control procedures are considered to be adequate, effective, and consistently followed. In addition, the internal audit division functions independently, is adequately staffed, and performs effectively. After the Committee had reviewed the audit scope, remuneration, and qualifications of the Company's auditor, PwC, the Committee recommended to the Board of Directors and shareholders, that PwC be re-appointed by the shareholders as the Company's auditor for 2005.
Dr. Chaipat Sahasakul Chairman of the Audit Committee
071
Auditor's Report
To the Shareholders of Electricity Generating Public Company Limited
I have audited the accompanying consolidated and company balance sheets as at 31 December 2004 and 2003, and the related consolidated and company statements of income, changes in shareholders’ equity, and cash flows for the years then ended of Electricity Generating Public Company Limited and its subsidiaries (“the Group”), and of Electricity Generating Public Company Limited (“the Company”), respectively. These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the consolidated and company financial statements referred to above present fairly, in all material respects, the consolidated and company financial position as at 31 December 2004 and 2003, and the consolidated and company results of operations, and cash flows for the years then ended of the Group and of the Company, respectively, in accordance with generally accepted accounting principles.
PRASAN CHUAPHANICH Certified Public Accountant (Thailand) No. 3051 PricewaterhouseCoopers ABAS Limited Bangkok
25 February 2005
072
Electricity Generating Public Company Limited
Balance Sheets
As at 31 December 2004 and 2003
Consolidated
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
2,688,294,662
1,730,769,987
1,596,409,755
771,787,368
1,697,681,724
2,263,086,838
1,088,583,721
1,664,238,178
232,242,286
520,371,530
171,223,726
481,157,557
- Deposits at financial institutions
5,116,367,743
6,453,363,026
-
-
- Marketable securities
1,234,354,006
599,618,644
-
-
Notes
ASSETS
Current Assets Cash and cash equivalents
5
Short-term investments
6
- Deposits at financial institutions - Marketable securities Short-term investments used as collateral
7
Trade receivables, net
8
300,916,286
313,126,937
-
-
Trade receivable from a related party
28
2,058,353,736
1,331,680,537
-
-
-
-
1,846,359,243
1,198,651,785
28
60,351,726
56,922,021
34,260,443
50,265,993
Spare parts and supplies, net
9
3,436,470,177
2,878,128,572
-
-
Other current assets
28
284,794,949
357,863,696
34,978,632
30,681,411
17,109,827,295
16,504,931,788
4,771,815,520
4,196,782,292
2,721,444,881
3,301,033,617
2,727,696,993
3,345,842,131
1,016,570,061
1,517,742,847
-
-
52,000,000
1,383,074,768
-
-
Dividend receivable from subsidiaries Amounts due from related parties
Total Current Assets
Non-Current Assets Long-term investments in marketable securities and others Long-term investments used as collateral
10 7
- Deposits at financial institutions - Marketable securities Long-term loans to related parties, net
28
671,930,676
32,490,000
846,930,676
32,490,000
Investments in subsidiaries
11
-
493,258
15,139,665,256
15,805,338,336
Investment in an associate
11
390,914,094
338,008,946
-
-
Interests in joint ventures, net
11
7,192,140
30,968,202
4,030,919,828
3,201,547,887
Property, plant and equipment, net
12
31,283,164,366
31,543,404,888
747,248,867
793,534,131
Goodwill, net
13
1,158,532,024
1,289,033,352
-
-
Other non-current assets, net
14
Total Non-Current Assets
Total Assets
654,775,880
495,437,416
27,725,719
49,865,604
37,956,524,122
39,931,687,294
23,520,187,339
23,228,618,089
55,066,351,417
56,436,619,082
28,292,002,859
27,425,400,381
The notes to the consolidated and company financial statements on pages 82 to 112 are an integral part of these financial statements.
For Director
073
Electricity Generating Public Company Limited
Balance Sheets (continued)
As at 31 December 2004 and 2003
Consolidated
Notes
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
75,000,000
319,695,900
-
-
475,572,404
541,240,286
-
-
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities Bank overdrafts and short-term loans from financial institutions Trade payables Trade payable to a related party
28
155,859,931
75,566,776
-
-
Amounts due to related parties
28
29,489,350
16,709,196
92,681
37,753
3,400,078,411
5,677,962,956
-
1,400,650,000
15
50,000,000
50,000,000
-
-
28
151,936,725
160,660,260
-
21,797,223
- Value added tax payable
251,645,627
154,439,356
-
-
- Income tax payable
230,017,821
127,132,000
-
-
Current portion of long-term loans from financial institutions and debentures, net
16, 17
Current portion of long-term loans from a co-investor in a joint venture Other current liabilities - Interest payable
- Others Total Current Liabilities
448,899,797
409,991,483
122,402,594
105,942,966
5,268,500,066
7,533,398,213
122,495,275
1,528,427,942
Non-Current Liabilities Long-term loans from financial institutions, net
16
15,431,101,852
16,450,328,892
-
-
Debentures, net
17
4,926,846,523
5,559,274,603
-
-
15
125,000,000
175,000,000
-
-
Long-term loans from a co-investor in a joint venture, net Other non-current liabilities Total Non-Current Liabilities
Total Liabilities
211,967,268
17,581,614
-
-
20,694,915,643
22,202,185,109
-
-
25,963,415,709
29,735,583,322
122,495,275
1,528,427,942
The notes to the consolidated and company financial statements on pages 82 to 112 are an integral part of these financial statements.
074
Electricity Generating Public Company Limited
Balance Sheets (continued)
As at 31 December 2004 and 2003
Consolidated
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
Authorised share capital
5,300,000,000
5,300,000,000
5,300,000,000
5,300,000,000
Issued and paid-up share capital
5,264,650,000
5,264,650,000
5,264,650,000
5,264,650,000
18
8,601,300,000
8,601,300,000
8,601,300,000
8,601,300,000
19
530,000,000
530,000,000
530,000,000
530,000,000
Notes
LIABILITIES AND SHAREHOLDERS’ EQUITY (continued)
Shareholders’ Equity Share capital
Premium on share capital
18
Retained earnings Appropriated - Legal reserve - Capital reserve for treasury stock Unappropriated
52,169,276
-
52,169,276
-
13,530,545,410
10,474,834,519
13,530,545,410
10,474,834,519
359,887,106
1,206,631,950
408,150,340
1,261,160,586
Unrealised gains on investments in marketable securities - available-for-sale Translation adjustments Total parent’s shareholders’ equity Minority interest
(182,803,390)
(165,138,166)
(182,803,390)
25,894,613,079
28,221,676,860
25,949,141,715
981,691,358
858,591,957
-
-
29,155,104,984
26,753,205,036
28,221,676,860
25,949,141,715
(52,169,276)
(52,169,276)
(52,169,276)
(52,169,276)
Total Shareholders’ Equity, net
29,102,935,708
26,701,035,760
28,169,507,584
25,896,972,439
Total Liabilities and Shareholders’ Equity
55,066,351,417
56,436,619,082
28,292,002,859
27,425,400,381
Total Shareholders’ Equity Less Treasury stock
20
(165,138,166) 28,173,413,626
The notes to the consolidated and company financial statements on pages 82 to 112 are an integral part of these financial statements.
075
Electricity Generating Public Company Limited
Statements of Income
For the years ended 31 December 2004 and 2003
Consolidated
Notes
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
Revenues Sales and service income
28
15,619,522,030
15,377,946,042
-
-
Cost of sales and services
28
(7,592,661,519)
(6,016,517,135)
-
-
8,026,860,511
9,361,428,907
-
-
(1,275,985,210)
(1,084,656,185)
(396,833,166)
(398,246,032)
6,750,875,301
8,276,772,722
(396,833,166)
(398,246,032)
297,328,054
290,510,273
93,536,339
51,004,726
475,214,682
479,866,774
475,214,682
479,800,206
79,221,026
127,828,790
112,295,489
79,949,939
12, 14
34,220,274
(170,481,405)
-
(66,132,951)
24
(21,829,251)
(21,757,823)
(17,499,939)
(18,404,823)
Gross profit Administrative expenses
28
Profit (loss) from sales and services Other income - Interest income
28
- Dividend income - Others Impairment charge Directors’ remuneration Currency exchange gains (losses)
67,103,820
707,214,785
(15,222,981)
-
7,682,133,906
9,689,954,116
251,490,424
127,971,065
11
28,635,828
(545,482,321)
4,462,601,416
6,001,183,311
7,710,769,734
9,144,471,795
4,714,091,840
6,129,154,376
Interest expenses
28
(2,219,929,424)
(2,631,117,287)
(52,266,543)
(135,212,943)
Income tax
26
Operating profit Share of profit (loss) from subsidiaries, an associate and joint ventures Profit before interest and tax
Profit before minorities
(596,578,876)
(216,588,719)
-
-
4,894,261,434
6,296,765,789
4,661,825,297
5,993,941,433
Profit attributable to minorities
20
232,436,137
302,824,356
-
-
Net profit for the year
21
4,661,825,297
5,993,941,433
4,661,825,297
5,993,941,433
Basic earnings per share
22
Profit before minorities
9.32
11.99
8.88
11.41
Profit attributable to minorities
0.44
0.58
-
-
Net profit for the year
8.88
11.41
8.88
11.41
The notes to the consolidated and company financial statements on pages 82 to 112 are an integral part of these financial statements.
076
20
Minority interest
Closing balance as at 31 December 2004
20
Ordinary shares
marketable securities - available-for-sale
Unrealised gain (losses) on investments in
Legal reserve
8,601,300,000
-
-
-
-
-
-
8,601,300,000
8,601,300,000
-
-
-
530,000,000
-
-
-
-
-
-
530,000,000
530,000,000
-
-
-
-
-
-
530,000,000
Baht
The notes to the consolidated and company financial statements on pages 82 to 112 are an integral part of these financial statements.
5,264,650,000
-
-
-
-
Net profit for the year
Dividends paid
23
-
Translation adjustments
5,264,650,000
Opening balance as at 1 January 2003
5,264,650,000
20
-
Closing balance as at 31 December 2004
Minority interest
marketable securities - available-for-sale
Unrealised gain (losses) on investments in
-
Dividends paid
23
-
-
-
Net profit for the year
Capital reserve for treasury stock
8,601,300,000 -
5,264,650,000
Baht Baht
earnings
Retained
(52,169,276)
4,661,825,297
-
-
-
5,993,941,433
-
5,769,104,168
-
-
-
- 10,474,834,519
-
-
-
- (1,288,211,082)
-
-
-
52,169,276 13,530,545,410
-
-
- (1,553,945,130)
-
52,169,276
-
- 10,474,834,519
Baht
stock
share capital
capital Baht
for treasury
Premium on
paid-up share
-
Translation adjustments
Notes
Capital reserve
Issued and
Statements of Changes in Shareholders' Equity
Opening balance as at 1 January 2004
077
1,206,631,950
-
-
1,020,834,631
-
-
-
185,797,319
359,887,106
-
(846,744,844)
-
-
-
-
1,206,631,950
Baht
reserve
Fair value
(182,803,390)
-
-
-
-
-
(107,553,646)
(75,249,744)
(165,138,166)
-
-
-
-
-
17,665,224
(182,803,390)
Baht
adjustments
Translation
Electricity Generating Public Company Limited
858,591,957
302,824,356
12,164,577
97,993
(181,593,895)
-
801,782
724,297,144
981,691,358
232,436,137
3,175
(109,652,400)
-
-
312,489
858,591,957
Baht
interest
Minority
Total Baht
(52,169,276)
4,713,994,573
17,977,713
232,436,137
(846,741,669)
5,993,941,433
(106,751,864)
302,824,356
12,164,577
1,020,932,624
(52,169,276) 26,701,035,760
-
-
-
- (1,469,804,977)
-
-
(52,169,276) 20,947,729,611
(52,169,276) 29,102,935,708
-
-
- (1,663,597,530)
-
-
-
(52,169,276) 26,701,035,760
Baht
stock
Treasury
Consolidated
For the years ended 31 December 2004 and 2003
-
Dividends paid
-
Dividends paid
5,264,650,000
8,601,300,000
-
-
-
-
8,601,300,000
8,601,300,000
-
-
-
-
-
8,601,300,000
Baht
The notes to the consolidated and company financial statements on pages 82 to 112 are an integral part of these financial statements.
Closing balance as at 31 December 2004
marketable securities - available-for-sale -
-
Net profit for the year
Unrealised gain (losses) on investments in
-
5,264,650,000
Opening balance as at 1 January 2003
Translation adjustments
5,264,650,000
Closing balance as at 31 December 2004
marketable securities - available-for-sale
23
-
Capital reserve for treasury stock
-
-
Net profit for the year
Unrealised gain (losses) on investments in
-
5,264,650,000
Baht
capital
Translation adjustments
23
Notes
for treasury
Premium on share capital
paid-up share
-
-
-
-
-
-
52,169,276
-
-
-
52,169,276
-
-
Baht
stock
Capital reserve
Issued and
Statements of Changes in Shareholders' Equity
Opening balance as at 1 January 2004
078 Baht
earnings
Retained
(52,169,276)
4,661,825,297
-
-
5,993,941,433
-
5,769,104,168
530,000,000 10,474,834,519
-
- (1,288,211,082)
-
-
530,000,000
530,000,000 13,530,545,410
-
- (1,553,945,130)
-
-
-
530,000,000 10,474,834,519
Baht
Legal reserve
1,261,160,586
1,011,228,659
-
-
-
249,931,927
408,150,340
(853,010,246)
-
-
-
1,261,160,586
Baht
reserve
Fair valueŸĂ
Electricity Generating Public Company Limited
Translation
(182,803,390)
-
-
-
(107,553,646)
(75,249,744)
(165,138,166)
-
-
-
-
17,665,224
(182,803,390)
Baht
adjustments
Baht
Total
(52,169,276)
4,713,994,573
17,665,224
(853,010,246)
5,993,941,433
(107,553,646)
1,011,228,659
(52,169,276) 25,896,972,439
-
- (1,288,211,082)
-
-
(52,169,276) 20,287,567,075
(52,169,276) 28,169,507,584
-
- (1,553,945,130)
-
-
-
(52,169,276) 25,896,972,439
Baht
stock
Treasury
Company
For the years ended 31 December 2004 and 2003
Electricity Generating Public Company Limited
Statements of Cash Flows
For the years ended 31 December 2004 and 2003
Consolidated
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
4,661,825,297
5,993,941,433
4,661,825,297
5,993,941,433
2,528,919,794
3,067,815,537
53,010,216
64,985,183
12, 14
(34,220,274)
170,481,405
-
66,132,951
13
43,286,192
-
-
-
- Write-off development costs
76,920,966
147,454,328
-
-
- Write-off bad debt
22,960,494
-
-
-
Notes Cash flows from operating activities Net profit for the year Adjustments to reconcile net profit to net cash provided by operations: - Depreciation and amortisation of goodwill - Impairment charge - Write-off goodwill
- Allowance for obsolescence
12,165,128
28,726,924
-
-
- Unrealised currency exchange (gains) losses
(71,952,827)
(718,716,365)
14,857,812
-
3,533,216
(3,492,700)
944,372
(478,995)
(475,214,682)
(479,800,206)
(475,214,682)
(479,800,206)
11
(28,635,828)
545,482,321
(4,462,601,416)
(6,001,183,311)
20
232,436,137
302,824,356
-
-
(4,301,625)
7,623,413
-
-
6,967,721,988
9,062,340,446
2,481,526,063
70,306,139
(708,136,550)
362,031,049
-
5,193,258
(45,750,911)
48,838,493
- Spare parts and supplies
(485,119,227)
(1,964,717,481)
- Other current assets
(105,914,010)
(66,072,517)
(37,130,176)
32,394,708
35,466,489
22,099,887
200,581,826
(250,986,960)
-
-
(33,458,774)
11,671,295
54,929
37,753
179,400,742
47,066,208
66,000
9,143,391
8,534,256,024
7,270,497,148
- Lossess (gains) on disposals of property, plant and equipment - Dividends received from other companies - Shares of (profit) loss from subsidiaries, an associate and joint ventures - Minority interest - Others Cash flows before changes in operating assets and liabilities
(207,178,401)
(356,402,945)
Changes in operating assets and liabilities: (excluding the effects of acquisition and disposal) - Short-term and long-term investments used as collateral
-
-
- Trade receivables and Trade receivable from a related party - Amounts due from related parties
- Other non-current assets
-
(38,549,272) 847,455 34,240,970
- Trade payables and trade payable to a related party - Amounts due to related parties - Other current liabilities - Other non-current liabilities Net cash receipts (payments) from operating activities
(5,836,620) (179,151,888)
(13,681,795) (373,507,834)
The notes to the consolidated and company financial statements on pages 82 to 112 are an integral part of these financial statements.
079
Electricity Generating Public Company Limited
Statements of Cash Flows
For the years ended 31 December 2004 and 2003
Consolidated
Notes
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
-
(93,658,578)
-
-
-
-
-
100,000,000
Cash flows from investing activities Acquisition of subsidiaries, net of cash acquired Proceeds from reduction of authorised share capital of a subsidiary Investments in subsidiaries and interest in a joint venture
11
Net (purchases) disposals of short-term investments Net (purchases) disposals of long-term investments Net purchases of property, plant and equipment Advance payment to a subcontractor Loans and advances made to related parties Proceed from loans to a related party
-
(92,614,136)
812,203,120
(1,842,758,990)
(882,020,000) 889,265,698
(172,470,346) (1,614,178,498)
(230,283,668)
5,057,676
(230,283,668)
(32,972,661)
(2,149,604,956)
(785,694,474)
(7,629,324)
(16,543,023)
-
(34,387,633)
(755,693,489)
(21,091,376)
50,000,000
(158,951,200)
-
-
(929,298,489)
-
-
100,000,000
-
-
-
-
-
-
4,542,621,476
3,858,774,219
475,214,682
479,800,206
475,214,682
479,800,206
Payment on investment in a subsidiary of a joint venture Dividends received from subsidiaries and a joint venture
11
Dividends received from other companies Others Net cash receipts (payments) from investing activities
(17,293,030)
453,092
-
-
(1,974,408,541)
(2,384,894,213)
3,957,870,375
2,602,409,897
-
12,164,577
-
-
Cash flows from financing activities Proceeds from issue of ordinary shares from minorities
20
Payments on finance lease
(1,281,087)
-
-
-
(244,687,540)
(166,827,632)
-
-
15
-
(250,000,000)
-
-
16
2,073,514,068
3,319,797,052
-
-
16, 17
(5,861,602,257)
(6,798,536,013)
50,000,000
-
-
-
15
(50,000,000)
(50,000,000)
-
-
23
(1,571,312,994)
(1,479,044,078)
-
(3,982,400)
(5,605,369,810)
(5,416,428,494)
Net proceed (payment) from short-term loans Net payment on short-term loan from a co-investor in a joint venture Proceeds from long-term loans from financial institutions Payments on long-term loans from financial institutions and debentures
(1,400,650,000)
(1,295,000,000)
Proceed from long-term loan from a co-investor in a joint venture Payment on long-term loan from a co-investor in a joint venture Dividends paid to shareholders Payment on advances to a related party Net cash payments on financing activities
(1,553,446,100) (2,954,096,100)
The notes to the consolidated and company financial statements on pages 82 to 112 are an integral part of these financial statements.
080
(1,287,476,944) (2,582,476,944)
Electricity Generating Public Company Limited
Statements of Cash Flows (continued)
For the years ended 31 December 2004 and 2003
Consolidated 2004 Notes
Company
2003
2004
2003
Baht
Baht
Baht
Baht
954,477,673
(530,825,559)
824,622,387
(353,574,881)
1,730,769,987
2,274,707,433
771,787,368
1,125,362,249
3,047,002
(13,111,887)
-
-
2,688,294,662
1,730,769,987
1,596,409,755
771,787,368
811,419,326
1,501,208,960
120,451,185
200,159,481
1,876,875,336
229,561,027
1,475,958,570
571,627,887
2,688,294,662
1,730,769,987
1,596,409,755
771,787,368
2,167,566,958
2,627,323,359
21,037,519
153,960,581
258,490,436
23,840,439
-
-
-
317,902,000
-
-
25,414,944
9,307,276
-
-
12
350,990,173
-
-
-
12
437,169,030
-
-
-
Net increase (decrease) in cash and cash equivalents Beginning balance Effects of exchange rate changes Ending balance
Cash and cash equivalents are made up as follows: - Cash in hand and deposits at financial institutions - Short-term investments - maturity within three months
Supplementary information for cash flows: Interest paid Tax paid
Non-cash transactions Acquisition of a subsidiary Increase in property, plant and equipment by other payables Reclassification of utilised capital spare parts to property, plant and equipment Reclassification of unutilised capital spare parts from property, plant and equipment
The notes to the consolidated and company financial statements on pages 82 to 112 are an integral part of these financial statements.
081
Notes to the Consolidated and Company Financial Statements
1.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
general information Electricity Generating Public Company Limited (“the Company”) is a public limited company, incorporated and resident in Thailand. The address of its registered office is 15 th Floor EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210. The Company is listed on the Stock Exchange of Thailand. For reporting purposes, the Company and its subsidiaries, an associate and joint ventures are referred to as “the Group”. The principal business operation of the Group is the generation of electricity for sale to the government sector and industrial users both in Thailand and overseas. The Group has operations in over two countries and employs over 916 people (2003: 885 people).
2.
accounting policies The principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out below.
2.1
Basis of preparation The consolidated and company financial statements have been prepared in accordance with Thai generally accepted accounting principles under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued 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 Group adopted Thai Accounting Standard no. 51, Intangible Assets in 2003, prior to its effective date. The accounting principles applied may differ from generally accepted accounting principles adopted in other countries and jurisdictions. The accompanying consolidated and company financial statements are therefore not intended to present the financial position, results of operations and cash flows in accordance with jurisdictions other than Thailand. Consequently, these consolidated and company financial statements are only addressed to those who are informed about Thai generally accepted accounting principles and practices. The consolidated and company financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below. The preparation of financial statements in conformity with Thai generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses in the reported periods. Although these estimates are based on management’s best knowledge of current events and actions, actual results may differ from those estimates. Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year. For the convenience of the user, an English translation of the consolidated and company financial statements has been prepared from the statutory financial statements that are issued in the Thai language.
2.2 Group accounting - investments in subsidiaries, an associate and interests in joint ventures 2.2.1 Investments in subsidiaries Subsidiaries, which are those entities in which the Group has power to govern the financial and operating policies are consolidated. The existence and effect of potential voting rights that are presently exercisable or presently convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus costs directly attributable to the acquisition. The excess of the cost of acquisition over the fair value of the net assets of the subsidiaries acquired is recorded as goodwill (see Note 2.9.1 for the accounting policy on goodwill). Intercompany transactions, balances and unrealised gains on
082
Notes to the Consolidated and Company Financial Statements
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
2. accounting policies (continued) 2.2 Group accounting - investments in subsidiaries, an associate and interests in joint ventures (continued) 2.2.1 Investments in subsidiaries (continued) transactions between group companies are eliminated; unrealised losses are also eliminated unless costs cannot be recovered. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group.
In the Company’s separate financial statements investments in subsidiaries are reported using the equity method of accounting. A list of the Group’s principal subsidiaries and the financial effects of the acquisitions and disposals of subsidiaries is shown in Note 11.
2.2.2 Investments in associates Investments in associates are accounted for using the equity method of accounting in the consolidated financial statements. Under this method the Group’s share of the post-acquisition profits or losses of associates is recognised in the income statement and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the cost of the investment. Associates are entities over which the Group generally has significant influence, but which it does not control. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The Group’s investment in associates includes goodwill (net of accumulated amortisation) on acquisition. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless the Group has incurred obligations or made payments on behalf of the associates. In the Company’s separate financial statements the equity method is applied to account for investments in associates. A list of the Group’s principal associates is shown in Note 11.
2.2.3 Interests in joint ventures The Group’s interests in jointly controlled entities are accounted for by proportionate consolidation in the consolidated financial statements. The Group combines its share of the joint ventures’ individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with similar items in the Group’s financial statements. The Group recognises the portion of gains or losses on the sale of assets by the Group to the joint venture that it is attributable to the other venturers. The Group does not recognise its share of profits or losses from the joint venture that result from the purchase of assets by the Group from the joint venture until it resells the assets to an independent party. However, if a loss on the transaction provides evidence of a reduction in the net realisable value of current assets or an impairment loss, the loss is recognised immediately. In the Company’s separate financial statements, the equity method is applied to account for interests in joint ventures. A list of the Group’s principal joint ventures is shown in Note 11.
2.3
Foreign currency translation Items included in the financial statements of each entity in the Group are measured using Thai Baht. The consolidated financial statements are presented in Thai Baht. Foreign currency transactions are translated into Thai Baht using the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated into Thai Baht at the exchange rate prevailing at the balance sheet date. Gains and losses resulting from the settlement of foreign currency transactions and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognised in the statement of income. Liabilities which are covered by currency swap contracts are translated into Thai Baht at the contract rate. Translation differences on investments in debt securities and other monetary financial assets measured at fair value are included in foreign exchange gains and losses in the income statement, except for translation differences on available-for-sale investments which are included
083
Notes to the Consolidated and Company Financial Statements
2. 2.3
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
accounting policies (continued) Foreign currency translation (continued) in the fair value reserve in equity. Statements of income and cash flows of foreign entities are translated into the Group’s reporting currency at the weighted average exchange rates for the year and balance sheets are translated at the exchange rates ruling on the balance sheet date. Currency translation differences arising from the retranslation of the net investment in foreign entities are taken to shareholders’ equity. On disposal of a foreign entity, accumulated currency translation differences are recognised in the statement of income as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing rate.
2.4
Financial instruments Financial assets carried in the balance sheets include cash and cash equivalents, investments, trade receivables and trade receivable from a related party. Financial liabilities carried in the balance sheet include trade payables, trade payable from a related party, loans and debentures. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. The Group is also party to financial instruments that reduce exposure to fluctuations in foreign currency exchange and interest rates. These instruments, which comprise interest rate swap contracts and currency and interest rate swap contract, are not recognised in the consolidated and company financial statements on inception. Interest rate swap contracts protect the Group from movements in interest rates. Any differential to be paid or received on interest rate swap contracts is recognised as a component of interest expenses as incurred. Currency and interest rate swap contract protects the Group from movements in exchange rates and interests rates. Any differential in interest rate to be paid or received is recognised as a component of interest expense as incurred. Gains or losses are therefore offset for financial reporting purposes and are not recognised in the consolidated financial statements. Disclosures about financial instruments to which the Group is a party are provided in Note 27.
2.5
Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand, deposits held at financial institutions, short-term highly liquid investments with maturities of three months or less and bank overdrafts.
2.6
Trade receivables Trade receivables are carried at the 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 receivables and the amount expected to be collectible. Bad debts are written off during the year in which they are identified.
2.7
Spare parts and supplies Spare parts and supplies are stated at cost less allowance for obsolescence. Cost is calculated based on the moving average basis. The spare parts are categorised as “specific spare parts”, which are used for specific plant equipment in power plants and “common spare parts”, for general use. The allowance for specific spare parts is calculated by dividing the balances of specific spare parts on hand at the year end by the number of years remaining under the Power Purchase Agreements with the Electricity Generating Authority of Thailand, except for capital spare parts whose estimated useful life is more than one year. Carrying amount is considered and when it is greater than its estimated recoverable
084
Notes to the Consolidated and Company Financial Statements
2. 2.7
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
accounting policies (continued) Spare parts and supplies (continued) amount, it is written down immediately to its recoverable amount. Estimated recoverable amount is the higher of the anticipated discounted cash flows from the use of the asset and the amount obtainable from the sale of the asset less any costs of disposal. The allowance for common spare parts is generally provided based on an aging analysis.
2.8
Other investments Investments other than investments in subsidiaries, associates and interests in joint ventures are classified into the following three categories: held-to-maturity, available-for-sale and general investments. The classification is dependent on the purpose for which the investments were acquired. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. Investments with fixed maturity that the management has the intent and ability to hold to maturity are classified as held-to-maturity and are included in non-current assets, except for maturities within 12 months from the balance sheet date which are classified as current assets. Investments intended to be held for an indefinite period of time, which may be sold in response to liquidity needs or changes in interest rates, are classified as available-for-sale; and are included in non-current assets unless management has expressed the intention of holding the investment for less than 12 months from the balance sheet date or unless they will need to be sold to raise operating capital, in which case they are included in current assets. Investments in non-marketable equity securities are classified as general investments. Purchases and sales of investments are recognised on the trade date, which is the date that the Group commits to purchase or sell the investments. Cost of investment includes transaction costs. Available-for-sale investments are subsequently carried at fair value. Held-tomaturity investments are carried at amortised cost using the effective yield method. Unrealised gain and losses arising from changes in the fair value of investments classified as available-for-sale are recognised in equity. The fair value of investments is based on the quoted bid price by reference to the Stock Exchange of Thailand and the Thai Bond Dealing Centre. When investments classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains and losses from investment in securities. General investments are carried at cost less impairment. A test for impairment is carried out when there is a factor indicating that an investment might be impaired. If the carrying value of the investment is higher than its recoverable amount, impairment loss is charged to the consolidated and company statements of income. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the consolidated and company statements of income. When disposing of part of the Group’s holding of a particular investment in debt or equity securities, the carrying amount of the disposed part is determined by the weighted average carrying amount of the total holding of the investment.
2.9 Intangible assets 2.9.1 Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired subsidiary undertakings or joint ventures at the date of acquisition. Goodwill on acquisitions of subsidiaries or joint ventures is reported in the consolidated balance sheet as an intangible asset. Goodwill is amortised using the straight-line method over its estimated useful life. Management determines the estimated useful life of goodwill based on its evaluation of the respective companies at the time of the acquisition, considering factors such as existing market share, potential growth and other factors inherent in the acquired companies. Goodwill arising on acquisitions of the Group is amortised over its estimated useful life, which is between 3.5 and 20 years. At each balance sheet date the Group assesses whether there is any indication of impairment. If such indications exist, an analysis is performed to assess whether the carrying amount of goodwill is fully recoverable. A write down is made if the carrying amount exceeds the recoverable amount.
085
Notes to the Consolidated and Company Financial Statements
2. 2.9
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
accounting policies (continued) Intangible assets (continued)
2.9.2 Development expenditure Development expenditure is recognised as an expense as incurred. Costs incurred on development projects are recognised as intangible assets when it is probable that the project will be a success considering its commercial and technological feasibility, and only if the cost can be measured reliably. Other development expenditure is recognised as an expense as incurred. Development expenditure previously recognised as an expense is not recognised as an asset in a subsequent period. Development expenditure that has been capitalised is amortised from the commencement of the commercial operation on a straight-line basis over the power plants’ life.
2.10 Property, plant and equipment All property, plant and equipment is initially recorded at cost. All plant and equipment is stated at historical cost less accumulated depreciation. Depreciation is calculated using the straight-line method to write off the cost of each asset to their residual values over their estimated useful life, except for land which is considered to have an indefinite life, as follows: Years Power plants
15, 18, 20 and 21
Water plants and transmission line
30
Buildings and structures
10 and 20
Substation and transmission system
20 and 21
Operating and maintenance equipment Office equipment, furniture and computers
5 3, 5 and 10
Motor vehicles
5
Capital spare parts whose estimated useful life is more than 1 year are capitalised and depreciated using the straight line method over the estimated useful life when used in major repair and maintenance processes. The capital spare parts, which are replaced by the major overhaul will be removed and recorded as spare parts and supplies at the net book value at the date of replacement. 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. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit. Interest costs on borrowings to finance the construction of property, plant and equipment are capitalised as part of the cost of the asset during the period of time that is required to complete and prepare the property for its intended use. All other borrowing costs are expensed. The borrowing costs include: ●
Interest on long-term loans;
●
Amortisation of ancillary costs incurred in connection with the arrangement of borrowings; and
●
Certain currency translation differences arising from foreign currency borrowings but limited to the amount which would have been incurred had the loan been in Thai Baht.
2.11
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 yield method; any difference between proceeds (net of transaction costs) and the redemption value is recognised in the consolidated and company statements of income over the period of the borrowings.
086
Notes to the Consolidated and Company Financial Statements
2. accounting 2.12 Income taxes
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
policies (continued)
The Group calculates income taxes in accordance with the Revenue Code and records income taxes on an accrual basis. The Group does not recognise income taxes payable or receivable in future periods in respect of temporary differences arising from differences between the tax base of assets and liabilities and their carrying amounts in the consolidated or company financial statements.
2.13 Employee benefits The Group operates a provident fund that is a defined contribution plan, the assets of which are held in a separate trust fund. The provident fund is funded by payments from employees and by the relevant Group companies. Contributions to the provident fund are charged to the consolidated and company statements of income in the year to which they relate.
2.14 Treasury stock Treasury stock is carried at cost and shown as a deduction from total shareholders’ equity. Gains on disposal of treasury stock are determined by reference to its carrying amount and are taken to “Premium on treasury stock”. Losses on disposal of treasury stock are determined by reference to its carrying amount and are taken to “Premium on treasury stock” and “Retained earnings” consecutively.
2.15 Revenue recognition Sales are recognised on delivery of electricity and customer acceptance. Sales are shown net of sales taxes and discounts, and after eliminating sales within the Group. Revenue from construction service is recognised according to the percentage of completion method based on the ratio of actual cost incurred to the total estimated cost of the relevant contract. Revenue from other services is recognised when the services have been rendered in accordance with the terms of the agreements or invoices have been issued. Interest income is recognised on an accrual basis unless collectibility is in doubt. Dividend income is recognised when the shareholder’s right to receive payment is established.
2.16 Related parties Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Company and close members of the family of these individuals and companies associated with these individuals also constitute related parties. In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form.
2.17 Dividends Dividends are recorded in the consolidated and company financial statements in the period in which they are approved by the shareholders and the Board of Directors.
2.18 Segment reporting The segmental reporting has been prepared based on the Company’s method of internal reporting, which desegregates its business by geographical areas.
3.
statements of cash flows Changes in short-term and long-term investments used as collateral are included in the statement of cash flows as cash flows from operating activities because proceeds from sales of electricity must be maintained as short-term and long-term investments used as collateral in accordance with the Master Agreements and loan agreements as described in Note 7.
087
Notes to the Consolidated and Company Financial Statements
4.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
segment information Financial information by geographical segment For the year ended 31 December 2004 Thailand
Philippines
Baht
Baht
Baht
Revenue from sales and service income
14,902,330,021
717,192,009
15,619,522,030
Cost of sales and services
(7,364,148,319)
(228,513,200)
(7,592,661,519)
Segment results Administrative expenses A reversal of impairment charge
Consolidated
7,538,181,702
488,678,809
8,026,860,511
(1,182,390,106)
(115,424,355)
(1,297,814,461)
34,220,274
-
34,220,274
813,778,591
37,985,171
851,763,762
73,783,466
(6,679,646)
67,103,820
7,277,573,927
404,559,979
7,682,133,906
28,635,828
-
28,635,828
(2,146,654,996)
(73,274,428)
(2,219,929,424)
5,159,554,759
331,285,551
5,490,840,310
(460,306,303)
(136,272,573)
(596,578,876)
4,699,248,456
195,012,978
4,894,261,434
94,281,454
138,154,683
232,436,137
4,604,967,002
56,858,295
4,661,825,297
53,105,459,059
1,960,892,358
55,066,351,417
Thailand
Philippines
Consolidated
Baht
Baht
Baht
Revenue from sales and service income
14,485,608,916
892,337,126
15,377,946,042
Cost of sales and services
(5,780,686,344)
(235,830,791)
(6,016,517,135)
8,704,922,572
656,506,335
9,361,428,907
Administrative expenses
(991,404,688)
(115,009,320)
(1,106,414,008)
Impairment charge
(170,481,405)
-
(170,481,405)
853,601,526
44,604,311
898,205,837
Other income Currency exchange gains (losses) Operating profit Shares of profit from an associate and a joint venture Interest expenses Profit before tax Income tax Profit before minority interest Minority interest Net profit
Segment assets
For the year ended 31 December 2003
Segment results
Other income Currency exchange gains (losses) Operating profit Shares of loss from associates and a joint venture Interest expenses Profit before tax Income tax Profit before minority interest Minority interest Net profit
Segment assets
5.
738,034,428
(30,819,643)
707,214,785
9,134,672,433
555,281,683
9,689,954,116
(545,482,321)
-
(545,482,321)
(2,546,850,379)
(84,266,908)
(2,631,117,287)
6,042,339,733
471,014,775
6,513,354,508
(159,017,326)
(57,571,393)
(216,588,719)
5,883,322,407
413,443,382
6,296,765,789
72,833,339
229,991,017
302,824,356
5,810,489,068
183,452,365
5,993,941,433
54,275,446,684
2,161,172,398
56,436,619,082
cash and cash equivalents As at 31 December 2004 the interest rates on saving accounts were 0.25 % to 1.75% per annum (2003: 0.25% to 3.75% per annum) and the interest rate on deposits held at call with financial institutions were 0.25% to 4% per annum (2003: 0.5% to 3.9% per annum).
088
Notes to the Consolidated and Company Financial Statements
6.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
short-term investments Short-term investments comprised deposits at financial institutions and marketable securities.
Deposits at financial institutions Deposits at financial institutions of the Group mainly comprise deposits at financial institutions and promissory notes issued by local financial institutions. As at 31 December 2004 these bear interest at rates from 0.25% to 4% per annum (2003: 0.5% to 3.9% per annum).
Marketable securities Consolidated
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
220,815,684
508,895,498
159,797,124
469,681,525
11,426,602
11,476,032
11,426,602
11,476,032
232,242,286
520,371,530
171,223,726
481,157,557
Available-for-sale Debt securities Changes in fair value of investments
Short-term investments in marketable securities
7.
short-term and long-term investments used as collateral Subsidiaries of the Company Deposits at financial institutions used as collateral are those of Rayong Electricity Generating Company Limited (REGCO) and Khanom Electricity Generating Company Limited (KEGCO), and comprise cash reserves required to be maintained under their loan and debenture agreements for the purpose of repayment of principal and interest due within one year, and as a reserve to minimise exchange rate risk. These cash reserves are provided from the proceeds of sales of electricity. As at 31 December 2004, these cash reserves were Baht 2,084 million (2003: Baht 4,137 million). The remaining balance of short-term and long-term investments used as collateral of Baht 2,804 million (2003: Baht 2,033 million) represents collateralised deposits maintained in accordance with the loan agreements, but which can be used subject to certain lender approvals. During the year, the lenders allowed KEGCO to pledge a letter of credit issued on behalf of the Company instead of providing the partial cash reserves for both US Dollar and Thai Baht Debt Service Reserve Accounts (D/R Accounts). The cash reserve for minimising exchange risk represents deposits in US Dollars. The two subsidiaries have to provide this reserve until the account equals the lower of 25% of the aggregate outstanding unhedged US Dollar loans or an amount of US Dollars 103 million. During the year, the lenders allowed KEGCO not to provide the cash reserve for Foreign Exchange Reserve Account (FX Reserve Account). Thus, the remaining reserve balance of US Dollars 26 million as at 31 December 2004 was for REGCO only.
Subsidiaries of Gulf Gulf’s deposits at financial institutions used as collateral of Baht 1,006 million are mainly for five subsidiaries and have been pledged as collateral to secure credit facilities according to long-term loan agreements. However, withdrawals can be made from the pledged accounts to provide working capital in the normal course of business of the subsidiaries. The two of Gulf’s subsidiaries are constructing their power plants and, therefore, have no earnings from sales of electricity. They will provide the reserves when they commence commercial operation. Short-term investments and long-term investments used as collateral comprise deposits at financial institutions and marketable securities.
Deposits at financial institutions used as collateral As at 31 December 2004, short-term and long-term deposits under these reserves bear interest at the rates of 1.5%- 2.33% per annum for the foreign currency deposits (2003: 0.9%-2.26% per annum) and 0.25% - 6.5% per annum for the Thai Baht deposits (2003: 0.25%-8% per annum).
089
Notes to the Consolidated and Company Financial Statements
7.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
short-term and long-term investments used as collateral (continued) Short-term investments in marketable securities used as collateral Consolidated 31 December 2004 Current portion of investments
Debt securities Changes in fair value of investments
Available-for-sale
held-to-maturity
Total
Baht
Baht
Baht
1,230,799,583
41,575,422
1,272,375,005
(38,020,999)
-
(38,020,999)
1,192,778,584
41,575,422
1,234,354,006
Short-term investments in marketable securities used as collateral
Consolidated 31 December 2003 Current portion of investments
Debt securities Changes in fair value of investments
Available-for-sale
held-to-maturity
Total
Baht
Baht
Baht
545,567,803
54,036,152
599,603,955
14,689
-
14,689
545,582,492
54,036,152
599,618,644
Short-term investments in marketable securities used as collateral
Long-term investments in marketable securities used as collateral Consolidated 31 December 2004 Available-for-sale
Held-to-maturity
Total
Baht
Baht
Baht
Debt securities
-
52,000,000
52,000,000
Changes in fair value of investments
-
-
-
-
52,000,000
52,000,000
Long-term investments in marketable securities used as collateral
Consolidated 31 December 2003
Debt securities Changes in fair value of investments
Available-for-sale
Held-to-maturity
Total
Baht
Baht
Baht
1,322,916,997
93,570,000
1,416,486,997
(33,412,229)
-
(33,412,229)
1,289,504,768
93,570,000
1,383,074,768
Long-term investments in marketable securities used as collateral The above held-to-maturity investments are due within 2-3 years. The Group had engaged an International Fund Manager to manage funds in US Dollar denominated Collateral Accounts. Most funds are invested in short-term and long-term marketable debt securities under the investment guidelines stipulated in the loan agreements with the Group’s lenders.
090
Notes to the Consolidated and Company Financial Statements
8.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
trade receivables, net Consolidated
Trade receivables Less Allowance for doubtful receivables Trade receivables, net
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
304,251,286
316,461,937
-
-
(3,335,000)
(3,335,000)
-
-
300,916,286
313,126,937
-
-
Outstanding trade receivables as at 31 December can be analysed as follows: Consolidated 2003
2004
2003
Baht
Baht
Baht
Baht
287,385,400
273,952,471
-
-
3 - 6 months
8,772,276
21,040,673
-
-
6 - 12 months
7,560,949
-
-
-
532,661
21,468,793
-
-
304,251,286
316,461,937
-
-
(3,335,000)
(3,335,000)
-
-
300,916,286
313,126,937
-
-
Up to 3 months
Over 12 months Less Allowance for doubtful receivables Trade receivables, net
9.
Company
2004
spare parts and supplies, net Consolidated
Fuel
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
355,662,995
316,840,382
-
-
Specific spare parts - Capital spare parts
1,311,386,023
846,966,457
-
-
- Other specific spare parts
1,804,023,233
1,775,780,394
-
-
Common spare parts
70,680,517
81,268,999
-
-
Spare parts in transit
55,730,694
15,018,843
-
-
3,597,483,462
3,035,875,075
-
-
(161,013,285)
(157,746,503)
-
-
3,436,470,177
2,878,128,572
-
-
Less Allowance for obsolescence Spare parts and supplies, net
10.
long-term investments in marketable securities and others Consolidated
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
Available-for-sale Debt securities Equity securities Changes in fair value of investments
360,304,357
137,726,769
372,821,872
192,141,254
1,905,222,903
1,859,346,693
1,905,222,903
1,859,346,693
443,617,621
1,291,660,155
437,352,218
1,282,054,184
2,709,144,881
3,288,733,617
2,715,396,993
3,333,542,131
12,300,000
12,300,000
12,300,000
12,300,000
2,721,444,881
3,301,033,617
2,727,696,993
3,345,842,131
Total long-term investments in marketable securities Other equity securities Long-term investments in marketable securities and others
091
Notes to the Consolidated and Company Financial Statements
11.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
investments in subsidiaries and an associate and interests in joint ventures, net Consolidated 2004
2003
2004
Baht
Baht
Baht
Baht
-
493,258
15,139,665,256
15,805,338,336
390,914,094
338,008,946
-
-
7,192,140
30,968,202
4,425,325,993
3,609,680,838
-
-
(394,406,165)
(408,132,951)
398,106,234
369,470,406
19,170,585,084
19,006,886,223
Investments in subsidiaries Investments in an associate
Company
Interests in joint ventures Less Provision for impairment
2003
Investments in subsidiaries and an associate and interests in joint ventures, net
The movements in investments in subsidiaries and an associate and interests in joint ventures can be analysed as follows: 2004 Consolidated Opening net book value
Company
Baht
Baht
369,470,406
19,006,886,223
Increase in share capital of a joint venture (Note 11.4)
-
882,020,000
28,635,828
4,462,601,416
Dividends received from subsidiaries and a joint venture
-
(5,190,329,104)
Change in fair value of marketable securities available-for-sale of a subsidiary
-
(8,258,675)
Translation adjustments
-
17,665,224
Closing net book value
398,106,234
19,170,585,084
Share of profit of investments in subsidiaries and an associate and joint ventures
The percentage of holdings in subsidiaries and an associate and interests in joint ventures is unchanged from 2003.
11.1
The principal subsidiaries, which are all incorporated in Thailand except EGCO International B.V.I, which is incorporated in the British Virgin Islands, are as follows: Company 31 December 2004
Business
Paid-up
Portion of
Cost
Equity
share capital
Investment
Method
Method
Dividend
Baht’000
(%)
Baht’000
Baht’000
Baht’000
(Including indirect holding)
Rayong Electricity Generating
Electricity generating
4,700,000
99.99
4,700,000
6,565,810
3,104,029
Electricity generating
4,850,000
99.99
4,850,000
5,821,158
1,980,882
250,000
99.99
250,000
281,567
56,968
Co., Ltd. Khanom Electricity Generating Co., Ltd. EGCO Engineering and Service
Power plant operation
Co., Ltd. and its subsidiary
and maintenance
and joint venture
services
- Subsidiary - Agro Energy Co., Ltd.
Trading / delivery
99.99
services of natural scrap - Joint venture - Amata Power-Esco Service Co., Ltd.
092
Power plant operation
50.00
Notes to the Consolidated and Company Financial Statements
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
11.
investments in subsidiaries and an associate and interests in joint ventures, net (continued)
11.1
The principal subsidiaries, which are all incorporated in Thailand except EGCO International B.V.I, which is incorporated in the British Virgin Islands, are as follows: (continued) Company 31 December 2004
Business
Paid-up
Portion of
Cost
Equity
share capital
Investment
Method
Method
Dividend
Baht’000
(%)
Baht’000
Baht’000
Baht’000
(Including indirect holding)
Egcom Tara Co., Ltd.
Tap water business
345,000
70.00
398,475
382,613
-
EGCO Green Energy Co., Ltd.
Investing in biomass
139,384
74.00
129,500
142,719
-
and its subsidiary
fueled electricity generating plant
- Roi-Et Green Co., Ltd.
Develop, design,
95.00
construct and test operation of husk fueled electricity generating plant EGCO International B.V.I
Investing in power
-
99.99
-
593,889
-
525,000
100.00
525,000
509,410
-
1,060,000
80.00
424,000
842,499
-
11,276,975
15,139,665
5,141,879
energy projects Thai LNG Power Corporation
Investing in power
Limited and its subsidiary
energy projects
- TLP Cogeneration Co.,Ltd.
Rayong Electricity Generating
Electricity generating
Electricity generating
4,700,000
99.99
4,700,000
7,216,975
2,572,268
Electricity generating
4,850,000
99.99
4,850,000
6,183,211
1,078,438
250,000
99.99
250,000
297,562
44,192
Co., Ltd. Khanom Electricity Generating Co., Ltd. EGCO Engineering and Service
Power plant operation
Co., Ltd. and its subsidiary
and maintenance
and joint venture
services
- Subsidiary - Agro Energy Co., Ltd.
Trading / delivery
99.99
services of natural scrap - Joint venture - Amata Power-Esco Service
Power plant operation
50.00
Co., Ltd. Egcom Tara Co., Ltd.
Tap water business
345,000
70.00
398,475
328,743
-
EGCO Green Energy Co., Ltd.
Investing in biomass
139,384
74.00
129,500
120,167
-
and its subsidiary
fueled electricity generating plant
- Roi-Et Green Co., Ltd.
Develop, design,
95.00
construct and test operation of husk fueled electricity generating plant
093
Notes to the Consolidated and Company Financial Statements
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
11.
investments in subsidiaries and an associate and interests in joint ventures, net (continued)
11.1
The principal subsidiaries, which are all incorporated in Thailand except EGCO International B.V.I, which is incorporated in the British Virgin Islands, are as follows: (continued) Company 31 December 2004
Business
Paid-up
Portion of
Cost
Equity
share capital
Investment
Method
Method
Dividend
Baht’000
(%)
Baht’000
Baht’000
Baht’000
(Including indirect holding)
EGCO International B.V.I
Investing in power
-
99.99
-
536,265
-
525,000
100.00
525,000
516,460
-
1,060,000
80.00
424,000
605,955
-
11,276,975
15,805,338
3,694,898
energy projects Thai LNG Power Corporation
Investing in power
Limited and its subsidiary
energy projects
- TLP Cogeneration Co.,Ltd.
Electricity generating
The investment in Agro Energy Company Limited was accounted for under the equity method but not consolidated in the consolidated financial statements as at 31 December 2004 and 2003 because its financial statements were not material to the Group.
11.2
The principal associate, which is incorporated in Thailand, is as follows: Consolidated Portion of
31 December 2003
Investment
Cost method
Equity method
Cost method
Equity method
(%)
Baht’000
Baht’000
Baht’000
Baht’000
14.85
200,475
390,914
200,475
338,009
200,475
390,914
200,475
338,009
Business Amata-EGCO Power
31 December 2004
Electricity generating
Limited
11.3
The principal joint ventures, which are all incorporated in Thailand, except Conal Holdings Corporation and Nam Theun 2 Power Company, which are incorporated in the Philippines and in the Republic of Laos, respectively, are as follows: Consolidated Portion of
Amata Power-Esco
31 December 2004
31 December 2003
Investment
Cost method
Equity method
Cost method
Equity method
Business
(%)
Baht’000
Baht’000
Baht’000
Baht’000
Power plant operation
50
1,000
7,192
1,000
6,187
Electricity generating
25
753,249
-
753,249
24,781
754,249
7,192
754,249
30,968
Service Co., Ltd. Nam Theun 2 Power Company Limited
(development phase)
The investments in Amata Power-Esco Service Company Limited and Nam Theun 2 Power Company Limited were accounted for under the equity method but not proportionately consolidated in the consolidated financial statements as at 31 December 2004 and 2003 because their financial statements were not material to the Group.
094
Notes to the Consolidated and Company Financial Statements
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
11.
investments in subsidiaries and an associate and interests in joint ventures, net (continued)
11.3
The principal joint ventures, which are all incorporated in Thailand, except Conal Holdings Corporation and Nam Theun 2 Power Company, which are incorporated in the Philippines and in the Republic of Laos, respectively, are as follows: (continued) Company 31 December 2004
Business EGCO Joint Ventures and Development Co., Ltd
Investing in power
Paid-up
Portion of
Cost
Equity
share capital
Investment
Method
Method
Dividend
Baht’000
(%)
Baht’000
Baht’000
Baht’000
696,720
50.00
348,360
605,454
48,450
5,874,040
50.00
3,112,020
3,160,610
-
729,320
40.00
1,002,467
659,262
57,624
10,565
25.00
753,249
-
-
5,216,096
4,425,326
106,074
-
(394,406)
-
5,216,096
4,030,920
106,074
energy business
(EGCO JD) Gulf Electric Public Co., Ltd. (Gulf)
Investing in power energy business
Conal Holdings Corporation (Conal) Nam Theun 2 Power Company Limited
Investing in power energy business Electricity generating (development phase)
Less Provision for impairment
Company 31 December 2003
Business EGCO Joint Ventures and Development Co., Ltd
Investing in power
Paid-up
Portion of
Cost
Equity
share capital
Investment
Method
Method
Dividend
Baht’000
(%)
Baht’000
Baht’000
Baht’000
696,720
50.00
348,360
548,781
55,100
4,110,000
50.00
2,230,000
2,366,060
102,750
729,320
40.00
1,002,467
670,059
157,579
10,565
25.00
753,249
24,781
-
4,334,076
3,609,681
315,429
-
(408,133)
-
4,334,076
3,201,548
315,429
energy business
(EGCO JD) Gulf Electric Public Co., Ltd. (Gulf)
Investing in power energy business
Conal Holdings Corporation (Conal) Nam Theun 2 Power Company Limited
Investing in power energy business Electricity generating (development phase)
Less Provision for impairment
11.4
Principal movements in interests in joint ventures occurring during the year ended 31 December 2004
gulf Gulf issued 176.40 million new ordinary shares at a par value of Baht 10 per share which were priced at Baht 10 per share. The Group purchased all new shares issued in the same proportion as its original investment.
the subsidiaries of gulf (a)
Gulf Yala Green Company Limited (GYG) In March 2004, GYG called for additional paid-up share capital at Baht 4.20 each from 20 million shares, totalling Baht 84 million. The Group paid for additional paid-up shares in the same proportion as its original investment.
095
Notes to the Consolidated and Company Financial Statements
(b)
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
Gulf Power Generation Company Limited (GPG) In September 2004, GPG called for additional paid-up share capital for 20 million shares at Baht 3.65 each, totalling Baht 73 million. The Group paid for additional paid-up shares in the same proportion as its original investment.
(c)
Gulf Energy Company Limited (GEN) and Gulf IPP Company Limited (GIPP) In October 2004, Gulf Energy Company Limited and Gulf IPP Company Limited were established for holding the investment in Gulf Power Generation Company Limited with a registered share capital of 82 million common shares each, with a par value of Baht 10 per share and were priced at Baht 10 each, totalling Baht 820 million. The Group had transferred all its investment in GPG to GEN by exchanging with 50% of common shares in GEN. Then, GEN transferred all its investment in GPG to GIPP by swapping with all common shares in GIPP. As a result, GEN and GIPP became indirect joint ventures of the Group. In November 2004 and December 2004, GEN issued 120 million new common shares and 200,000 shares, respectively, with a par value of Baht 10 per share. The Group purchased all the new shares issued in the same proportion as its original investment. In November 2004 and December 2004, GIPP issued 120 million new common shares and 100,000 shares, respectively, with a par value of Baht 10 per share. The Group purchased all the new shares issued in the same proportion as its original investment.
(d)
SPP General Services Company Limited (SPP) In October 2004, SPP was established with 90,000 common shares with a par value of Baht 10 per share and were priced at Baht 10 each, totalling Baht 900,000. The three subsidiaries of Gulf purchased all the new shares at issued at 33.33% each. As a result, SPP became an indirect joint venture of the Group.
11.5
The Group’s share of the assets, liabilities, revenues and expenses of the joint ventures is as follow: Interest in EGCO Joint Venture and Development Company Limited EGCO Joint Venture and Development Company Limited is a joint venture between the Company and Unocal Bang Pakong Limited (UBP). The joint venture is governed by the Joint Venture Agreement in which the Group has a 50% interest.
Interest in Gulf Electric Public Company Limited Gulf Electric Public Company Limited is a joint venture between the Company and Electric Power Development Company Limited (EPDC). The joint venture is governed by the Joint Venture Agreement in which the Group has a 50% interest.
Interest in Conal Holdings Corporation Conal Holdings Corporation (Conal) is a joint venture between the Company and Alson Consolidated Resource, Inc. The joint venture is governed by the Joint Venture Agreement in which the Group has a 40% interest. The following amounts represent the Group’s share of the assets, liabilities, revenues and expenses of the joint ventures included in the consolidated financial statements ended 31 December: 2004 EGCO Joint Venture and Development
Gulf Electric Public
Conal Holdings
Company Limited
Company Limited
Corporation
Million Baht
Million Baht
Million Baht
Balance sheets Current assets
137
1,591
785
Non-current assets
789
7,238
1,176
Current liabilities
096
(58)
(789)
(337)
Non-current liabilities
(263)
(5,326)
(824)
Net assets
605
2,714
800
Notes to the Consolidated and Company Financial Statements
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
11.
investments in subsidiaries and an associate and interests in joint ventures, net (continued)
11.5
The Group’s share of the assets, liabilities, revenues and expenses of the joint ventures is as follow: (continued) For the year ended 31 December 2004 EGCO Joint Venture and Development
Gulf Electric Public
Conal Holdings
Company Limited
Company Limited
Corporation
Million Baht
Million Baht
Million Baht
Profit and Loss Revenues
330
2,678
755
Expenses
(225)
(3,194)
(698)
Net profit (loss)
105
(516)
57
50
50
40
Joint venture proportion (%)
2003 EGCO Joint Venture and Development
Gulf Electric Public
Conal Holdings
Company Limited
Company Limited
Corporation
Million Baht
Million Baht
Million Baht
Current assets
150
1,165
882
Non-current assets
751
5,676
1,279
Balance sheets
Current liabilities
(56)
(1,074)
(318)
Non-current liabilities
(297)
(3,474)
(1,043)
Net assets
548
2,293
800
For the year ended 31 December 2003 EGCO Joint Venture and Development
Gulf Electric Public
Conal Holdings
Company Limited
Company Limited
Corporation
Million Baht
Million Baht
Million Baht
Revenues
339
2,682
707
Expenses
(199)
(2,314)
(524)
Net profit
140
368
183
50
50
40
Profit and Loss
Joint venture proportion (%)
097
Notes to the Consolidated and Company Financial Statements
property, plant and equipment, net
(312,932)
-
Depreciation charge (Note 21)
-
Provision for impairment
1,895,010,140
-
Net book value
1,895,010,140
Accumulated depreciation
Cost
Less
At 31 December 2004
1,895,010,140
-
Impairment charge (Note 21)
Closing net book value
-
Transfer
(91,244,384)
-
Disposals, net
-
Capitalisation of capital spare parts
Transfer capital spare parts out
151,673,391
Translation adjustments
Additions
1,834,894,065
Year ended 31 December 2004
Opening net book value
1,834,894,065
-
Net book value
1,834,894,065
Accumulated depreciation
Less
2,118,086,258
-
(1,453,732,619)
3,571,818,877
2,118,086,258
(181,954,556)
-
2,021,031
(1,830,153)
-
-
4,910,463
(180,530)
2,295,120,003
2,295,120,003
(1,272,464,775)
3,567,584,778
Baht
Baht
25,017,740,760
(10,500,000)
(17,502,827,750)
42,531,068,510
25,017,740,760
(2,200,363,686)
(10,500,000)
125,407,518
(54,537,069)
(437,169,030)
350,990,173
81,578,401
(33,074,507)
27,195,408,960
27,195,408,960
(15,195,613,144)
42,391,022,104
Baht
water plants
system and
improvements
transmission
and land
substation,
Power plants,
Buildings
Land
Cost
At 31 December 2003
12.
098 147,845,116
-
(346,007,617)
493,852,733
147,845,116
(57,238,752)
-
(125,714)
(1,110,989)
-
-
38,941,249
(99,722)
167,479,044
167,479,044
(277,779,630)
445,258,674
Baht
motor vehicles
Equipment and
Electricity Generating Public Company Limited
2,104,482,092
-
-
2,104,482,092
2,104,482,092
-
-
(127,302,835)
(50,478,189)
-
-
2,229,375,803
2,384,497
50,502,816
50,502,816
-
50,502,816
Baht
in progress
Construction
31,283,164,366
(10,500,000)
(19,302,567,986)
50,596,232,352
31,283,164,366
(2,439,556,994)
(10,500,000)
-
(199,200,784)
(437,169,030)
350,990,173
2,506,479,307
(31,283,194)
31,543,404,888
31,543,404,888
(16,745,857,549)
48,289,262,437
Baht
Total
Consolidated
For the years ended 31 December 2004 and 2003
Notes to the Consolidated and Company Financial Statements
12.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
property, plant and equipment, net (continued) Company Buildings and
Equipment
Land
land improvement
and vehicles
Total
Baht
Baht
Baht
Baht 1,083,707,881
At 31 December 2003 Cost Less Accumulated depreciation Net book value
284,429,029
619,834,930
179,443,922
(156,661,978)
(133,511,772)
(290,173,750)
284,429,029
463,172,952
45,932,150
793,534,131
-
Year ended 31 December 2004 Opening net book value
284,429,029
463,172,952
45,932,150
793,534,131
Additions
-
-
7,108,000
7,108,000
Disposals/Transfer
-
(270,964)
(152,083)
(423,047)
Depreciation charge (Note 21)
-
(31,672,540)
(21,297,677)
(52,970,217)
Closing net book value
284,429,029
431,229,448
31,590,390
747,248,867
1,087,198,460
At 31 December 2004 Cost Less Accumulated depreciation Net book value
284,429,029 284,429,029
619,473,510
183,295,921
(188,244,062)
(151,705,531)
(339,949,593)
431,229,448
31,591,390
747,248,867
As at 31 December 2004, land, buildings and equipment amounting to Baht 28,221 million have been mortgaged and pledged as collateral in accordance with the loan agreements and debentures, as described in Notes 16 and 17. Borrowing costs from two subsidiaries of Gulf of Baht 9.5 million (2003: Baht 13 million), arising on financing specifically entered into for the construction of new power plants, were capitalised during the year and are included in ‘Additions’ in the consolidated financial statements. A capitalisation rate of 4.75% (2003: 4.5%) was used representing the actual borrowing cost of the loan used to finance the power plants.
13.
goodwill, net For the year ended 31 December 2004 Consolidated Baht Opening net book value
1,289,033,352
Amortisation
(86,958,146)
Write off goodwill
(43,286,192)
Translation adjustments
(256,990)
Closing net book value
1,158,532,024
Goodwill written off in this year is in respect of Samutprakarn Cogeneration Company Limited and Nong Khae Cogeneration Company Limited, which are wholly owned subsidiaries of the joint venture - Gulf. Subsequent to acquisition and the initial determination of goodwill, adjustment has been made to the fair value of certain receivables acquired, resulting in adjustment being made against goodwill, being a reduction of goodwill of Baht 43 million.
099
Notes to the Consolidated and Company Financial Statements
14.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
other non-current assets, net Consolidated
Deposits Refundable tax Advance to subcontractor
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
14,985,738
12,602,847
11,490,166
8,493,166
158,386,505
64,479,765
5,137,672
41,175,771
33,709,183
34,387,633
-
-
Land and advances for Khaeng Khoi2
347,828,180
352,336,046
-
-
Others
159,494,454
135,979,579
11,097,881
196,667
714,404,060
599,785,870
27,725,719
49,865,604
(59,628,180)
(104,348,454)
-
-
27,725,719
49,865,604
Less Provision for impairment
654,775,880
495,437,416
As at 31 December 2004, land purchased for the Bo Nok Project, which is operated by a subsidiary of Gulf, is shown as other non-current assets in these consolidated financial statements of Baht 348 million (2003: Baht 348 million). The project was postponed by the Thai government on 10 May 2002. The subsidiary of Gulf submitted a new power plant proposal to the Electricity Generating Authority of Thailand (“EGAT”) on 13 October 2003, which made significant changes to the original proposal by switching the fuel from coal to gas, changing the location of the Bo Nok project to Saraburi province, revising the proposed tariff rate and also changing the project name to “Khaeng Khoi2”.
On 28 October 2004, the subsidiary of Gulf entered into a new Power Purchase Agreement with EGAT which allows relocation to the new location, Saraburi province, and a switch of fuel to be natural gas. The land, which is included in ‘Other non-current assets’, amounting to Baht 348 million, and was acquired for the purpose of leasing by the subsidiary to operate the Bo Nok project, has been appraised by an independent appraiser. The appraised value is Baht 288 million. However, the Group already set up an impairment loss for land of Baht 104 million in the consolidated financial statements for the year ended 31 December 2003. Therefore, a reversal of the impairment loss of Baht 44 million has been recognised in the consolidated financial statements in the current year.
15.
long-term loans from a co-investor in a joint venture Consolidated As at 31 December
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
Electric Power Development Co., Ltd - Current portion of long-term loans
50,000,000
50,000,000
-
-
- Long-term loans
125,000,000
175,000,000
-
-
Total loans from a co-investor in a joint venture
175,000,000
225,000,000
-
-
Long-term loans from a co-investor in a joint venture bear fixed interest at the rates of 5%, 5.25% and 5.75% per annum for the first three years and at the fixed deposit rate plus a certain margin for subsequent years. Principal and interest are repayable on an annual and quarterly basis, respectively.
100
Notes to the Consolidated and Company Financial Statements
16.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
long-term loans, net The long-term loans are as follows: Consolidated
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
US Dollars 2,
112,037,902
2,572,035,902
-
-
Filipino Peso
12,536,587
12,889,857
-
-
614,669,090
617,502,804
-
-
Japanese Yen
36,656,687
36,102,109
-
-
Less Deferred financing fee
(6,627,855)
(6,638,141)
-
-
2,769,272,411
3,231,892,531
-
-
10,578,848,773
12,834,558,820
-
-
49,379,450
63,660,780
-
-
4,600,693,232
3,272,647,322
-
-
403,987,227
347,562,332
-
-
(201,806,830)
(68,100,362)
-
-
15,431,101,852
16,450,328,892
-
-
18,200,374,263
19,682,221,423
-
-
Current portion of long-term loans, net
Thai Baht
Long-term loans, net US Dollars Filipino Peso Thai Baht Japanese Yen Less Deferred financing fee
Total long-term loans, net
After taking account of interest rate swaps, the weighted average effective interest rate exposure of the long-term loans of the Group was approximately USD: 8.36% , YEN: 2.76% , PESO: 11.44% , THB: 11.07%. Long-term loans are secured liabilities. The long-term loans are secured over land, buildings, power plants and equipment of subsidiaries and joint ventures. The subsidiaries and joint ventures have to maintain cash reserves which are provided from the proceeds of sales of electricity for the purpose of repayment of principal and interest due within one year and as a reserve for minimising the exchange risk (referred to Note 7). In addition, the Power Purchase Agreements, the Asset Purchase Agreements, the Major Maintenance Agreements, insurance policies and other related agreements with the lenders have been assigned as collateral in accordance with the conditions under the Master Agreements. The interest rate exposure on the long-term loans of the Group is as follows: Consolidated
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
11,891,256,755
12,599,083,606
-
-
6,309,117,508
7,083,137,817
-
-
18,200,374,263
19,682,221,423
-
-
Consolidated
Company
Baht
Baht
19,682,221,423
-
2,073,514,068
-
Long-term loans, net - at fixed rates - at floating rates Total long-term loans, net
The movements in the long-term loans can be analysed as follows:
For the year ended 31 December 2004 Opening net book amount Additions of long-term loans Repayments of long-term loans Unrealised exchange gains Amortisation of deferred financing fee Translation adjustments Closing net book amount
(3,413,909,752)
-
(123,219,490)
-
8,359,851
-
(26,591,837)
-
18,200,374,263
-
101
Notes to the Consolidated and Company Financial Statements
16.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
long-term loans, net (continued) Principal movements in long-term loans during the year ended 31 December 2004 are as follows:
Subsidiaries of the Company (a)
TLP Cogeneration Company Limited has additionally drawn down loans of US Dollars 0.3 million and Thai Baht 17 million, bearing interest at the rates of LIBOR plus a certain margin and MLR plus a certain margin, respectively. Principal is repayable on a semi-annual basis from 2004 to 2014. Interest of US Dollar and Thai Baht loans is repayable on a semi-annual and monthly basis, respectively. The loans are secured by the mortgage of land and construction thereon and a pledge of power plant equipment and investments in promissory notes. In March 2004, the subsidiary refinanced both of US Dollar and Thai Baht loans to change the interest rate from a floating rate to a fixed rate of 4.915% plus a certain margin for US Dollar loans and at 3.75% per annum for the first two years, at 4% per annum for the third following years and MLR plus certain margin for the remaining period for Thai Baht loans, which will be effective for the remaining repayment period.
(b)
Roi-Et Green Company Limited has drawn down Japanese Yen 232 million. The interest rate is fixed at the rate of 3.25% per annum and principal and interest are repayable semi-annually from 2004 to 2016. The loans are secured by the mortgage of land and construction thereon and a pledge of power plant equipment and investments in promissory notes.
A subsidiary of Gulf A subsidiary of Gulf entered into the Common Terms Agreement, Onshore Facilities Agreement, Shareholders Undertaking and, Sponsors Undertaking Agreement on 15 November 2004 with a total credit facility of US Dollars 154 million and Baht 6,425 million, bearing interest at the rates of LIBOR plus a certain margin and FDR plus a certain margin per annum, respectively. In addition, the Company has also been provided with facilities for working capital and letters of guarantee totalling Baht 578 million, bearing interest at the fixed rate of 1.25% per annum. The principal of US Dollar and Thai Baht loans is repayable on a quarterly basis commencing from August 2008. The interest on US Dollar and Thai Baht loans is repayable on a quarterly and monthly basis, respectively. These loans are secured loans by the mortgage of land and construction thereon including a pledge of power plant machinery and equipment, which are under construction. In addition, deposits at financial institutions, the Power Purchase Agreement, Fuel Supply Contract, EPC contract and other contracts related to credit facilities have been pledged as collateral in accordance with the Credit Facilities Agreement. Maturity of long-term loans is as follows: Consolidated
Within 1 year Later than 1 year and not later than 5 years Later than 5 years
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
2,769,272,411
3,231,892,531
-
-
10,366,824,588
11,623,543,784
-
-
5,064,277,264
4,826,785,108
-
-
18,200,374,263
19,682,221,423
-
-
Credit facilities As at 31 December 2004, the available credit facilities for long-term loans from financial institutions were US Dollar 167.34 million and, Thai Baht 5,910 million.
17.
debentures The debentures are debentures in Thai Baht of the Company and its two subsidiaries as follows: Consolidated 2003
2004
Baht
Baht
Baht
Baht
630,806,000
2,446,070,425
-
1,400,650,000
Debentures, net
4,926,846,523
5,559,274,603
-
-
Total debentures
5,557,652,523
8,005,345,028
-
1,400,650,000
Current portion of debentures
102
Company
2004
2003
Notes to the Consolidated and Company Financial Statements
17.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
debentures (continued) After taking account of interest rate swaps, the weighted average effective interest rate exposure of the debentures of the Group and the Company was approximately 12.27% and 7.46%, respectively. Debentures of Baht 5.6 billion are secured liabilities. The subsidiaries are required to maintain reserves for principal and interest due within one year as described in Note 7 and to pledge the relevant assets and agreements as collateral as described in Note 28. The movements of debentures can be analysed as follows: Consolidated For the year ended 31 December 2004 Opening amount Issue of debentures
Company
Baht
Baht
8,005,345,028
1,400,650,000
-
Repayments of debentures
(2,447,692,505)
Closing amount
5,557,652,523
(1,400,650,000) -
Maturity of debentures is as follows: Consolidated
Within 1 year
18.
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
630,806,000
2,446,070,425
-
1,400,650,000
Later than 1 year but not later than 5 years
3,516,419,427
3,339,028,477
-
-
Later than 5 years
1,410,427,096
2,220,246,126
-
-
5,557,652,523
8,005,345,028
-
1,400,650,000
Number of
Ordinary shares
on share capital
Total
shares
Baht
Baht
Baht
526,465,000
5,264,650,000
8,601,300,000
13,865,950,000
-
-
-
-
526,465,000
5,264,650,000
8,601,300,000
13,865,950,000
-
-
-
-
526,465,000
5,264,650,000
8,601,300,000
13,865,950,000
share capital and premium on share capital Premium
At 1 January 2003 Issue of shares At 31 December 2003 Issue of shares At 31 December 2004
The total authorised number of ordinary shares is 530,000,000 shares (2003: 530,000,000 shares) with a par value of Baht 10 per share (2003: Baht 10 per share). 526,465,000 shares are issued and fully paid up.
19.
legal reserve Consolidated
Opening balance Appropriation during the year Closing balance
Company
2004
2003
2004
Baht
Baht
Baht
2003 Baht
530,000,000
530,000,000
530,000,000
530,000,000
-
-
-
-
530,000,000
530,000,000
530,000,000
530,000,000
Under the Public Companies Act B.E.2535, the Company is required to set aside as a legal reserve at least 5% of its net profit after accumulated deficit brought forward (if any) until the reserve is not less than 10% of the registered capital. The legal reserve is non-distributable.
103
Notes to the Consolidated and Company Financial Statements
20.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
minority interest Consolidated
Opening balance
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
858,591,957
724,297,144
-
-
-
12,164,577
-
-
232,436,137
302,824,356
-
-
3,175
97,993
-
-
312,489
801,782
-
-
Additional paid-up share capital of subsidiaries and a joint venture Shares of net profit of subsidiaries and joint ventures Change in fair value of investment Translation adjustments
21.
Dividend payment of a joint venture
(109,652,400)
(181,593,895)
-
-
Closing balance
981,691,358
858,591,957
-
-
net profit The following items have been charged in arriving at net profit: Consolidated
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht 64,945,183
Depreciation on property, plant and equipment (Note 12)
22.
2,439,556,994
2,960,455,516
52,970,217
Major repair and maintenance expense
843,729,993
581,614,120
-
-
Staff costs
782,740,551
778,046,883
170,201,542
195,162,419
Impairment charge (Notes 12)
10,500,000
170,481,405
-
66,132,951
A reversal of an impairment loss (Note 14)
(44,720,274)
-
-
-
earnings per share Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares in issue during the year, net of treasury stock. Consolidated
Company
2004
2003
2004
2003
4,661,825,297
5,993,941,433
4,661,825,297
5,993,941,433
526,465,000
526,465,000
526,465,000
526,465,000
Net profit attributable to shareholders (Baht) Number of ordinary share in issue (share) Less Treasury stock (share)
(1,300,000)
(1,300,000)
(1,300,000)
(1,300,000)
Weighted average number of ordinary share in issue (share) Basic earnings per share (Baht)
525,164,200
525,164,200
525,164,200
525,164,200
8.88
11.41
8.88
11.41
There are no dilutive potential ordinary shares in issue during the periods presented, so no diluted earnings per share is presented.
23.
dividends The Annual General Shareholders’ meeting on 26 April 2004 approved the payment of dividends in respect of the operating results for the second half of the year ended 2003 for 525,164,200 shares at Baht 1.50 per share, totalling Baht 788 million. These dividends were paid to the shareholders in May 2004 (2003: Dividends for 525,164,200 shares of Baht 1.25 each, totalling Baht 656 million). The Board of Directors’ meeting on 23 August 2004 approved the payment of an interim dividend in respect of the operating results for the six-month period ended 30 June 2004 for 525,164,200 shares at Baht 1.50 per share, totalling Baht 788 million. These dividends were paid to shareholders in September 2004. (2003: Dividends for 525,164,200 shares of Baht 1.25 each, totalling Baht 656 million). In addition, the Company reversed long-outstanding dividend payable, payable to foreign investors, who were unable to exercise rights to receive such dividends amounting to approximately Baht 22 million during this year (2003: Baht 25 million).
104
Notes to the Consolidated and Company Financial Statements
24.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
directors’ remuneration Directors’ remuneration in the consolidated and company statements of income for the year ended 31 December 2004 amounted to Baht 22 million and Baht 17 million, respectively, comprised meeting fees and bonus. Expenses were approved at the Annual General Meeting of Shareholders (2003: Baht 22 million and Baht 18 million in the consolidated and company statements of income, respectively).
25.
employee benefits The Group has provident funds for those employees who apply to join. The contributions comprise the employees and the Group’s contributions at the same rate. The funds are managed by authorised fund managers in accordance with the Provident Fund Act B.E. 2530.
26.
promotional privileges Rayong Electricity Generating Company Limited (REGCO), Khanom Electricity Generating Company Limited (KEGCO), TLP Cogeneration Company Limited (TLP Cogen), Egcom Tara Company Limited (TARA) and Roi-Et Green Company Limited (Roi-Et), which are the Company’s subsidiaries, have received promotional privileges from the Office of the Board of Investment under promotion certificates issued on 15 June 1995, 6 November 1996, 7 June 1999, 6 December 2000 and 19 October 2001, respectively, in respect of generating electricity and tap water. Under these privileges, these subsidiaries have received exemption from certain taxes and duties as detailed in the certificates including exemption from corporate income tax for a period of 8 years from the date of first earning revenue. As a promoted entity these subsidiaries are required to comply with the terms and conditions as specified in the promotion certificates.
The promotional privileges of REGCO and KEGCO with regard to the 8-year corporate income tax exemption expired on 20 April 2003 and 26 September 2004, respectively. Consequently, REGCO and KEGCO are eligible for corporate income taxes at the rate of 50% of the normal corporate income rate for a period of 5 years beyond the 8-year corporate income tax exemption.
Four subsidiaries of Gulf have been granted promotional privileges by the Office of the Board of Investment for the generation and distribution of electricity. Under these privileges, these subsidiaries have received exemption from corporate income tax for a period of 8 years from the date of first earning revenue from the promoted activities. As a promoted entity these subsidiaries are required to comply with the terms and conditions as specified in the promotion certificates. In addition, one of the four subsidiaries has requested for promotional privileges for the generation and distribution of electricity for the Khaeng Khoi2 project. However, the approval has not yet been finalised until the date of this report.
The three subsidiaries of Conal have been registered with the BOI under the Omnibus Investments Code of 1987 as new operators of power generating plants on a pioneer status. Under the terms and conditions of the registration, the three subsidiaries are entitled to certain tax and non-tax incentives, including income tax holiday for a period of 6 years up to 1999 for one subsidiary and 2003 for the other two subsidiaries.
27.
financial instruments The principal financial risks faced by the Group are interest rate and exchange rate risks. The Group borrows at both fixed and floating rates of interest and exchange to finance its operations.
The objectives of using derivative financial instruments are to reduce the uncertainty over future cash flows arising from movements in interest and exchange rates, and to manage the liquidity of cash resources. Interest rate exposures are managed through interest rate swaps and currency and interest rate swaps as stated in Note 27 (a). In respect of currency exchange risk, which mainly results from the US Dollar loans, this is minimised through the formulae for the calculation of sales of electricity charged to EGAT and National Power Corporation (NPC) as described in Note 28 (a).
Trading for speculative purposes is prohibited. All derivative transactions are subject to approval by the Group Management Committee before execution. Decisions on the level of risk undertaken are confined to the Group Management Committee, which has established limits by transaction type and by counter party.
105
Notes to the Consolidated and Company Financial Statements
27.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
financial instruments (continued) (a)
Financial assets and liabilities As at 31 December, the Group has outstanding foreign currency assets and liabilities after taking account of currency swaps as follows: 2004 Consolidated
Company
Currency
Million
Currency
Million
Million
Baht
Million
Baht
US Dollars
115
4,461
12
465
Euro
0.3
16
-
Assets -
4,477
465
Liabilities US Dollars
342
Japanese Yen
1,163
14,620
-
-
441
-
-
15,061
-
Consolidated
Company
2003 Currency
Million
Currency
Million
Million
Baht
Million
Baht
US Dollars
137
5,398
-
-
Euro
0.2
11
-
-
Assets
5,409
-
Liabilities US Dollars Japanese Yen
461 1,028
17,462
-
-
384
-
-
17,846
-
Foreign currency assets represent cash and cash equivalents, trade receivables, US Dollars deposits with financial institutions and investments in US Dollars for the future payments of foreign currency liabilities. Foreign currency liabilities represent trade payables, other payables, interest payable and long-term loans. As at 31 December 2004 the Group has not entered into any forward exchange contracts to cover its exchange risk to long-term loans in US Dollars, which net of deposits in US Dollars amounted to US Dollars 195 million (2003: US Dollar 297 million).
Objectives and significant terms and conditions In order to manage risks arising from fluctuations in interest rates and currency exchange rates, the Group uses the following derivative financial instruments.
Interest rate swap contracts I n t e re s t r a t e s w a p c o n t r a c t s a re e n t e re d i n t o t o m a n a g e e x p o s u re s t o f l u c t u a t i o n s i n i n t e re s t r a t e s o n s p e c i f i c transactions. As at 31 December 2004 the fixed interest rates under the swaps for long-term loans of US Dollars 83 million was 8.0275% per annum (2003: US Dollars 117 million at the rates between 8.0275%-8.22% per annum) and of Baht 330 million was 8% per annum (2003: Baht 480 million at 8% per annum).
106
Notes to the Consolidated and Company Financial Statements
27.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
financial instruments (continued) (a)
Financial assets and liabilities (Continued) The remaining notional principal amounts of the outstanding interest rate swap contracts at 31 December were: Consolidated
Within 1 year
Company
2004
2003
2004
Baht
Baht
Baht
2003 Baht
941,209,500
3,139,717,574
-
1,400,650,000
2,622,996,750
4,059,368,500
-
-
3,564,206,250
7,199,086,074
-
1,400,650,000
Later than 1 year but not later than 5 years
Currency and interest rate swap A swap contract is entered into to manage exposure to fluctuations in foreign currency exchange and interest rates on specific transactions. As at 31 December 2004 the long-term loans of US Dollars 50 million have a fixed exchange rate of Baht 25.23 per US Dollar 1 (2003: US Dollars 60 million was fixed at Baht 25.23 per US Dollar 1) and a fixed interest rate of 11% per annum (2003: 11% per annum). The agreement is effective from 19 June 1996 to 14 June 2008. The remaining notional principal amounts of the outstanding currency and interest rate swap contract at 31 December were: Consolidated
Within 1 year
Company
2004
2003
2004
2003
Baht
Baht
Baht
Baht
302,760,000
252,300,000
-
-
958,740,000
1,261,500,000
-
-
1,261,500,000
1,513,800,000
-
-
Later than 1 year but not later than 5 years
(b)
Credit risk The Group has no significant concentrations of credit risk relating to its cash and investments. The Group places its cash and investments with high quality institutions. The Group’s policy is designed to limit exposure with any one institution and to invest its excess cash in low risk investment accounts. The Group has not experienced any losses on such accounts.
(c)
Fair value The carrying amounts of the following financial assets and financial liabilities approximate their fair values: cash and cash equivalents, investments, trade receivables and payables, amounts due from and due to related companies, other receivables and payables, and short-term loans due to the short maturities of these instruments. The contract amounts and fair values of certain long-term loans and debentures are as follows: 31 December 2004 Consolidated
Long-term loans Debentures
Company
Contract amounts
Fair values
Contract amounts
Fair values
Million Baht
Million Baht
Million Baht
Million Baht
18,409
19,243
-
-
5,558
6,820
-
31 December 2003
Consolidated
Long-term loans Debentures
Company
Contract amounts
Fair values
Contract amounts
Fair values
Million Baht
Million Baht
Million Baht
Million Baht
19,757
14,242
-
-
8,005
9,685
1,401
1,447
107
Notes to the Consolidated and Company Financial Statements
27.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
financial instruments (continued) (c)
Fair value (Continued) The fair values of long-term loans are estimated by discounting the future contractual cash flows at the current market rates available to the Group. The fair values of debentures are estimated by discounting the future contractual cash flows at the market interest rate available on the latest trading date in the Bond Dealing Center quoted bid price within the balance sheet date. The fair values of the derivative financial instruments at the balance sheet are as follows: Consolidated For the year ended 31 December
Company
2004
2003
2004
2003
Million Baht
Million Baht
Million Baht
Million Baht
Favourable (Unfavorable) interest rate swaps
258
(514)
-
14
Favorable currency and interest rate swap
520
608
-
-
The fair values of interest rate swap contracts and currency and interest rate swap contract have been calculated using rates quoted by the Group’s bankers to terminate the contracts at the balance sheet date, except for the contract that prohibits early termination. The fair value of such contract approximates the original contract.
28.
related party transactions Major shareholders of the Company are the Electricity Generating Authority of Thailand (EGAT) and CLP Power Projects (Thailand) Limited. They hold 25.41% and 22.42%, of the Company’s shares, respectively. The remaining Company shares are widely held. Information on the Company’s subsidiaries, associates, and joint ventures is stated in Note 11. The following material transactions were carried out with related parties: (a)
Sales of electricity Consolidated For the years ended 31 December
Company
2004
2003
2004
2003
Million Baht
Million Baht
Million Baht
Million Baht
13,105
13,151
-
-
Sales of electricity - Electricity Generating Authority of Thailand
Subsidiaries of the Company Two subsidiaries of the Company, Rayong Electricity Generating Company Limited (REGCO) and Khanom Electricity Generating Company Limited (KEGCO), have entered into Power Purchase Agreements (PPAs) with EGAT. The agreements are effective for periods of 15 and 20 years, respectively. According to the resolutions of the Cabinet meetings dated 15 February 1994 with REGCO and 23 January 1996 with KEGCO, the electricity revenues from such agreements are calculated on a “Cost plus basis”. There is a limitation on sales of electricity to third parties as specified in the agreements. These agreements have been pledged as collateral with the subsidiaries lenders under the Master Agreements. In addition, these two subsidiaries are eligible to take into consideration and receive compensation for exchange rate effects by adjusting the formulae for calculation of electricity sold to EGAT each month pertaining to “The First Amendment to the Power Purchase Agreements” dated 30 January 1998 over the periods of the PPAs. Compensation for the years ended 31 December 2004 and 2003 amounted to Baht 1,007 million and Baht 1,012 million, respectively. Under the PPAs, EGAT has to bear the natural gas cost until the subsidiaries enter into natural gas purchase agreements with PTT Public Company Limited. To date, the subsidiaries have not entered into such purchase agreements. Therefore, the calculation of revenues from the portion of energy sales of electricity does not include a calculation of the natural gas cost.
Subsidiaries of Gulf Three subsidiaries of Gulf have entered into Power Purchase Agreements (PPAs) with EGAT. According to the agreements, these subsidiaries must start to sell electricity to EGAT by September 1998, August 1999 and October 2000, with the sales quantity and electricity rates in compliance with the agreements. These agreements are effective for a period of 21 years each, commencing from the first commercial operation dates.
108
Notes to the Consolidated and Company Financial Statements
28.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
related party transactions (continued) (b)
Service income Consolidated For the years ended 31 December
Company
2004
2003
2004
2003
Million Baht
Million Baht
Million Baht
Million Baht
84
53
-
-
Service income - Electricity Generating Authority of Thailand
EGCO Engineering and Service Company Limited has entered into Subcontract for Major Maintenance Agreements with EGAT to provide major maintenance services, repair services, administrative services, and additional services related to the power plants. The compensation for such services is calculated on a “Cost plus Basis”. The agreements are effective for a period of 6 years commencing from 26 January 2001 and 26 July 2002. (c)
Major maintenance expenses Consolidated For the years ended 31 December
Company
2004
2003
2004
2003
Million Baht
Million Baht
Million Baht
Million Baht
482
298
-
-
Major maintenance expenses - Electricity Generating Authority of Thailand
Two subsidiaries of the Company, REGCO and KEGCO, have entered into Major Maintenance Agreements with EGAT in order for the latter to provide major maintenance services, repair services, administrative services and additional services related to the subsidiaries’ power plants. The price for such services is calculated under the agreements on a “Cost plus basis” and will be adjusted annually according to the Consumer Price Index. The agreements have been extended for a period of 6 years, commencing from 7 December 2000 and 19 June 2002 for REGCO and KEGCO, respectively. These agreements have been pledged as collateral with the lenders under the Master Agreements. (d)
Trade receivable from and trade payable to a related party Consolidated As at 31 December
Company
2004
2003
2004
2003
Million Baht
Million Baht
Million Baht
Million Baht
2,058
1,332
-
-
Trade receivable - Electricity Generating Authority of Thailand
Outstanding trade receivable as at 31 December can be analysed as follows: 2,046
1,330
-
-
3-6 months
Up to 3 months
9
1
-
-
6-12 months
2
-
-
-
Over 12 months
1
1
-
-
2,058
1,332
-
-
156
76
-
-
Trade payable - Electricity Generating Authority of Thailand
109
Notes to the Consolidated and Company Financial Statements
28.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
related party transactions (continued) (e)
Amounts due from and amounts due to related parties Consolidated As at 31 December
Company
2004
2003
2004
2003
Million Baht
Million Baht
Million Baht
Million Baht
- Electricity Generating Public Co.,Ltd.
-
2
-
2
- Rayong Electricity Generating Co., Ltd.
-
-
-
10
- Khanom Electricity Generating Co., Ltd.
4
6
2
10
- EGCO Engineering and Service Co., Ltd.
2
9
-
8
- Egcom Tara Co., Ltd.
-
-
-
1
- TLP Cogeneration Co.,Ltd.
-
-
-
5
- Roi-Et Green Co., Ltd.
-
-
-
2
Amounts due from related parties Subsidiaries
Joint ventures - EGCO Joint Ventures and Development Co., Ltd. - Conal Holdings Corporation - Nam Theun 2 Power Company Limited
17
19
-
1
5
10
-
-
19
-
19
-
13
11
13
11
60
57
34
50
6
-
-
-
7
1
-
-
16
16
-
-
29
17
-
-
Associate - Amata-EGCO Power Co., Ltd. Amounts due to related parties Subsidiary - Egcom Tara Co., Ltd. Joint ventures - EGCO Joint Venture and Development Co., Ltd. - Conal Holdings Corporation
(f)
Loan to an associate and joint ventures Consolidated As at 31 December
Company
2004
2003
2004
2003
Million Baht
Million Baht
Million Baht
Million Baht
32
32
32
32
Loan to an associate - Amata-EGCO Power Co., Ltd. Loan to joint ventures - Gulf Electric Public Company Limited - Current portion of long-term loan - Long-term loan, net
50
-
-
-
125
-
350
-
175
-
350
-
465
-
465
-
672
32
847
32
- Nam Theun 2 Power Company Limited
The loan to Amata-EGCO Power Company Limited is a long-term loan which was given on commercial terms and conditions. The repayment of principal and interest of these loans is restricted until certain conditions specified in the loan agreements, such as a required amount of cash reserves, are met.
110
Notes to the Consolidated and Company Financial Statements
28.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
related party transactions (continued) (f)
Loan to an associate and joint ventures (Continued) The Company entered into a Credit Facility Agreement with Gulf Electric Public Company Limited (GEC) on 24 February 2004 to provide a term loan of Baht 450 million to GEC for the prepayment of a long-term loan with a local financial institution. Principal is repayable within 5 years at Baht 100 million per year, commencing 30 June 2005. The interest rates are fixed at 5.25% and 5.75% per annum for the first two years and at FDR plus 4% per annum for the remaining period. The interest is repayable on a quarterly basis. The Company also entered into a Sponsors Loan Agreement with Nam Theun 2 Power Company Limited (NTPC) on 19 December 2003 to provide a sponsor loan for the Nam Theun 2 Hydroelectric project of US Dollars 24 million. The sponsor loan bears interest at LIBOR plus a certain margin. The repayment date of this loan together with interest is the earlier of 24 months from the signing date of this agreement and the date of the proceeds of the first drawdown, and the issuance of a notice declaring the outstanding loans made by non-defaulting shareholders. As at 31 December 2004, the Company has provided the loan to NTPC at a total amount of US Dollars 11.90 million.
(g)
Investments in debentures issued by a subsidiary and the Company’s debentures held by the subsidiaries and related interests Consolidated As at 31 December
Company
2004
2003
2004
2003
Million Baht
Million Baht
Million Baht
Million Baht
-
-
47
53
-
-
1
1
- Rayong Electricity Generating Co., Ltd.
-
-
-
14
- Khanom Electricity Generating Co., Ltd.
-
-
-
128
-
-
-
2
-
-
9
10
- Rayong Electricity Generating Co., Ltd.
-
-
1
2
- Khanom Electricity Generating Co., Ltd.
-
-
5
14
Investments in debentures - Khanom Electricity Generating Co., Ltd. Interest receivable - Khanom Electricity Generating Co., Ltd. The Company’s debentures held by
Interest payable - Khanom Electricity Generating Co., Ltd. For the years ended 31 December Interest income on investments in debentures of - Khanom Electricity Generating Co., Ltd. Interest expenses on the Company’s debentures held by
29.
commitments and contingent liabilities Commitments and contingent liabilities of the Company (a)
As at 31 December 2004, the Company has commitments under Sponsor Support Agreements, which were made in respect of loans of subsidiaries and an associate totalling Baht 805 million.
(b)
As at 31 December 2004, the Company has commitments under Counter Guarantee and Standby Letters of Credit issued on behalf of the Company to a subsidiary and joint ventures of Baht 4,838 million.
(c)
On 30 December 2004, the Company entered into the Revolving Credit Facility Agreement with two foreign financial institutions to obtain the revolving credit facility up to US Dollars 100 million for a period of 5 years as a financial resource used for prospective projects of the Company.
(d)
As a credible, high-quality company, the Company is committed to administering its obligations in compliance with good corporate governance. The contingent liabilities are considered, in term of default risk, into two categories: low risk and high risk liabilities. The Company has, accordingly, set up a reserve fund of 10% of high risk liabilities totaling Baht 407 million. As at 31 December 2004, the Company has fully reserved such fund. This is included in cash and cash equivalents in the balance sheet.
111
Notes to the Consolidated and Company Financial Statements
29.
Electricity Generating Public Company Limited For the years ended 31 December 2004 and 2003
commitments and contingent liabilities (continued) Significant agreements Power Purchase Agreements (PPAs) and Energy Conversion Agreements (ECAs) The subsidiaries of the Company, of Gulf and joint ventures of EGCO JD have entered into Power Purchase Agreements (PPAs) with the Electricity Generating Authority of Thailand (EGAT) for periods between 15-25 years. According to the PPAs, these subsidiaries have to provide securities, totalling Baht 671 million, in the form of bank guarantees against the early cancellation of, and conformity with, the agreements. The collateral is to be returned to such subsidiaries upon the expiry of the agreements. Under the ECAs with the National Power Corporation (NPC) entered into by the subsidiaries of Conal which are effective for periods of 10-18 years, a subsidiary of Conal shall transfer to NPC all its rights, title and interest in the power stations without any compensation upon the expiration of the specified periods in the agreements. The ECAs of another two subsidiaries may be renewed upon the sole option of NPC. All aforementioned subsidiaries are eligible to receive the compensation amounts from NPC, in the event of amendment, modification or repeal of any Filipino laws or any government regulations that will materially reduce, prejudice or otherwise adversely affect these subsidiaries’ interest in the project or the power plant/ station, and/ or these subsidiaries’ economic return on their investments.
Water Supply Agreement A subsidiary of the Company has entered into a water supply agreement with the Provincial Waterworks Authority (PWA) for a period of 30 years. Under the agreement, the subsidiary has to produce water for sale to Ratchaburi and Samutsongkram Waterworks. PWA has the obligation to purchase water at the minimum volume and price as agreed.
Fuel Purchase Agreements Subsidiaries of the Company, of Gulf and joint ventures of EGCO JD have entered into the gas purchase agreements with PTT Public Company Limited. These agreements are effective for periods between 16-26 years and can be extended for another 4-5 years. A subsidiary of the Company has entered into the sales/ purchase of heavy fuel oil agreement with PTT Public Company Limited. The agreement shall be effective for a period of 3 years from 1 January 2005 to 31 December 2008 and can be extended by one year automatically (in the event that there is no cancellation of the automatic extension). In addition, the other subsidiary of the Company has also entered into a Fuel Supply Agreement (Rice Husk) with a related company. The agreement is effective for a period of 21 years. A subsidiary of Gulf has entered into a Fuel Supply Agreement with one of its shareholders. The agreement is effective for a period of 25 years.
Long-Term Parts Agreements The two subsidiaries of the Company have entered into long-term parts agreements with a supplier. Under the agreements, the subsidiaries have committed to purchase a number of gas turbines as specified in the agreements. The agreements, totalling US Dollars 58 million, are each effective for a period of 6 years. As at 31 December 2004, the total outstanding contract balances were US Dollars 10 million.
Operation and Maintenance Agreements A subsidiary of the Company has entered into an operation and maintenance agreement for gas turbines with a customer. The agreement, totalling Baht 20 million is effective for a period of 4 years. In addition, the subsidiary has also entered into a supply of spare parts and maintenance services agreement with Republic of Sudan National Electricity Corporation, totalling US Dollars 8 million, which is effective from the execution date to March 2007. The subsidiaries of Gulf have entered into long-term spare parts agreements with a supplier. The agreements, totalling US Dollars 14 million and Baht 59 million, are each effective for a period of 12 years commencing from 1999 to 2011. During the year 2004, the subsidiaries have entered into the amended and restated contracts with the existing supplier in order to reduce the service fee to US Dollars 8.83 million with a period of 12 years, commencing from 1 January 2005. As at 31 December 2004, the total outstanding contract balances were US Dollars 8.83 million.
Capital expenditure The two subsidiaries of Gulf have entered into the EPC Contract, Construction Contract and Supply Contract. Total contracts, totalling US Dollars 151.52 million, CHF 322.44 million, Euros 124.54 million, Japanese Yen 59.88 million and Baht 3,495.36 million, are effective for a periods of 2.5 to 3.5 years. As at 31 December 2004, the Group had outstanding capital expenditure under contracted but not recognised in the consolidated financial statements for the total amount of US Dollars 64.66 million, CHF 137.88 million, Euros 53.25 million, Japanese Yen 26.95 million and, Baht 1,462 million.
30.
privatisation Thailand At the beginning of the year, the Cabinet put off the privatization plan and listing of EGAT on the Stock Exchange of Thailand (SET) from originally scheduled. On 22 April 2004, The National Energy Policy Committee (NEPC) has approved to establish the regulatory body for electricity industry (Electricity Commission of Thailand, ECT). It is expected that EGAT privatization and the establishment of regulatory body may be completed in 2005. As at 31 December 2004, the effects of the laws on the Group cannot presently be determined
The Philippines RA No. 9136, otherwise known as “the Electricity Power Industry Reform Act of 2001” (the Act) became effective on 26 June 2001, providing for the privatisation of the National Power Corporation (NPC) and the restructuring of the electric power industry. Subsequently, additional laws with regard to the NPC privatisation were announced and became effective on 22 March 2003. Such laws are currently in the process of being complied with the rules and regulations stipulated in the Act. In November 2004, the electricity market corporation entity was incorporated to undertake the preparatory work and initial operation of the wholesale electricity spot market and to act as its governing body. As at 31 December 2004, the effects of the laws on the Group cannot presently be determined.
112
Electricity Generating Public Company Limited EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210 Tel. 66 (0) 2998-5000, 66 (0) 2998-5999 Fax. 66 (0) 2955-0956-8 www.egco.com