Contents 3
Vision and Value
119 Related Transactions
10
2008 Highlight
124 Statement of Directors, Responsibilities
14
Financial Overview
125 Audit Committee,s Report
16
Message from the Chairman
128 Auditor,s Report
19
129 Report and Consolidated
30
Board of Directors and Management Positions of EGCO,s Management
33
Organization Chart
182 Audit Fee
34
Group Structure and Shareholders
183 Report on the donation on behalf
37
Business Characteristics
of all shareholders who elect to receive
44
Power Industry and Competition
the Annual Report in the electronic form
46
Shareholding and Management Structure
184 General Information
67
Corporate Governance Report
189 Referenced Persons
96
EGCO & Shareholders and Investors
190 Index of Articles Required for
99
EGCO Group and Employees
102 EGCO Group and Corporate Social Responsibility
107 Management Discussion and Analysis
Financial Statements
the 56-2 Form
191 Glossary
Contents 3
Vision and Value
119 Related Transactions
10
2008 Highlight
124 Statement of Directors, Responsibilities
14
Financial Overview
125 Audit Committee,s Report
16
Message from the Chairman
128 Auditor,s Report
19
129 Report and Consolidated
30
Board of Directors and Management Positions of EGCO,s Management
33
Organization Chart
182 Audit Fee
34
Group Structure and Shareholders
183 Report on the donation on behalf
37
Business Characteristics
of all shareholders who elect to receive
44
Power Industry and Competition
the Annual Report in the electronic form
46
Shareholding and Management Structure
184 General Information
67
Corporate Governance Report
189 Referenced Persons
96
EGCO & Shareholders and Investors
190 Index of Articles Required for
99
EGCO Group and Employees
102 EGCO Group and Corporate Social Responsibility
107 Management Discussion and Analysis
Financial Statements
the 56-2 Form
191 Glossary
Circle of Success
Since we believe that a good start will lead to a successful outcome, we, Electricity Generating Public Company Limited or EGCO Group, are committed to carry out our business while taking care of the community, society and the environment. The smiles and happiness of our shareholders, employees and Thai people are always important to us. Because every beginning is meaningful, we will endeavor to ensure that we do everything right from the start. As a result, we will achieve a sustainable business growth together with the happiness of the society and the nation.
The Electricity Generating Public Company Limited and all the subsidiaries, intend to conduct our vision, mission, commitment and values as follows.
Vision
To be the leading Thai integrated electric power company with comprehensive energy services in Thailand and in the ASEAN region, with full commitment to environment protection and social development support
Mission
• To maximize shareholder’s value • To offer reliable quality power supply at reasonable price • To create a work environment which promotes professionalism, good teamwork and equitable
treatment • To be a good corporate citizen and be sensitive to society and environment
Commitment
We commit to promote the value and foster corporate culture in consistent with the good
corporate governance principles as follows. • Account for shareholders and other stakeholders by protecting the company assets as well as
the good reputation. • Establish clear responsibilities in accordance with the entrusted mission with discipline and
awareness of existing and future risks. • Have clear and transparent decision making and working procedures. • Treat the stakeholders equitably and avoid bias or situation that may raise any conflict of
interest. • Create sustainable wealth and long-term value. • Constantly adopt the best practices to continuously increase the competitiveness. • Be sensitive to community and environment concerns.
Value
• We wil conduct our business with honesty, integrity and ethics. • We wil carry out our business in compliance with all applicable business and commercial laws. • We wil show respect and take into account the local traditions and cultures. • We wil use natural resources in an efficient and environmentally responsible manner. • We expect our employees to carry out their responsibilities in a professional manner and with team
spirit.
2008 Highlights EGCO Group’s philosophy is to conduct the business ethically for the benefits of the stakeholders namely shareholders, customers, suppliers, employees, communities and environment for sustainable development.
Awards and Recognition EGCO
10
May • Being ranked 8th for best top ten companies in Thailand and 4th for best public companies in
power and utility industry in a poll conducted by Finance and Banking Magazine June • Being ranked 7th for best investor relations and 4th for being most committed to a strong
dividend policy for listed companies in Thailand in a poll conducted by FinanceAsia. July • Being rated the score of 105 from the quality assessment of 2008 Annual General Shareholders’
Meeting organized by the Securities and Exchange Commission November 21 • Top Corporate Governance Report Award from the Stock Exchange of Thailand • Best Shareholders Award from Thailand Securities Depository Company Limited • Excellent Corporate Governance Report Rating from the Thai Institution of Directors • One of final shortlisted candidates for best CSR awards
Group Companies
May 8 • KEGCO was awarded the “National Safety Awards for 2008” for Safety and Occupational Health
at the 22nd National Work Safety Week” by Department of Labor Protection and Welfare, Ministry
of Labor for the ninth consecutive year. May 8 • Roi Et Green was awarded the “Safety Excellence Award in Provincial Level” at the 22nd National
Work Safety Week” by Safety Promotion Committee, Ministry of Labor August 27 • KEGCO was awarded the certificate for “Working over 4,000,000 mil ion hours with no disabling
injury” by the Ministry of Labor September 23 • KEGCO was awarded the “Outstanding Workplace for Labor Relations and Welfare” by
the Department of Labor Protection and Welfare, Ministry of Labor for the second consecutive year. October 21 • ESCO was certified “Safety, Health and Environment Management with High Standard” from PTT
for its performance for Gas Separation Plant Unit 2’s turnaround during January 14-28, 2008
for the third consecutive year December 11 • ESCO was rated “Excellent Supplier” in providing a service to the PTT Gas Separation Plant
in Rayong 2008.
Business Activities EGCO
April 21 • 2008 Annual General Shareholders’ Meeting May 7 • 2007 Final Dividend Payment at 2.50 baht per share May 15 • Signing the agreement on the divestment of entire shares in EGCO JD and AMESCO held by
EGCO and ESCO, respectively. September 11 • 2008 Interim Dividend Payment at 2.50 baht per share
11
November 29 • EGCO BVI’s acquisition of 90% of the outstanding shares of GPI Quezon Ltd.. This purchase
provided EGCO BVI with a 23.4% indirect ownership interest in Quezon Power (Philippines) Limited
which owns, operates and maintains 502.50 MW (gross installed capacity) coal fired electric
generation or 117.6 equity MW.
Group Companies
February 27 • Pre-Commercial Operation Date of the 755 MW Kaeng Khoi 2 Power Plant : Unit 2 before
Commercial Operation Date on March 1, 2008 May 6-9 • KEGCO passing the surveil ance audit for ISO 9001:2000, TIS 18001:1999 & OHSAS 18001: 1999, and
ISO 14001:2004 by TUV NORD July 21-24 • REGCO passing re-certificate audit for the TIS 18001:1999 & OHSAS 18001: 2007 (Occupational
Health and Safety Management System for the scope “electricity power generation”) and re-audit for ISO14001:2004 by MASCI (Management System Certification Institute-Thailand) August 14 • REGCO passing the re-certificate audit for ISO 9001:2000 by TUV NORD September 23 • KEGCO passing the surveil ance audit for ISO 9001:2000 by TUV NORD December 9 • Roi-Et Green passing the re-audit for ISO 9001:2000 by Moody International Certification Group December 19 • ESCO passing the certificate audit for ISO 9001:2000 in the provision of Maintenance Services for
Power Plant and Industries by SGS UKAS
Activities for Investors A. Opportunity Day/Analyst Meeting
February 20 May 18 August 20 November 19
• Opportunity Day/Analyst Meeting No. 1/2008 to announce 2007 annual performance • Opportunity Day/Analyst Meeting No. 2/2008 to announce 2008’s first quarter performance • Opportunity Day/Analyst Meeting no. 3/2008 to announce 2008’s second quarter performance • Opportunity Day/Analyst Meeting No. 4/2008 to announce 2008’s third quarter performance
B. Investor Meeting February 26 • TISCO Corporate Day hosted by TISCO Securities at TISCO Building April 28 • Investor Forum hosted by Thailand Elite in Hong Kong May 8-11 • “Money Expo 2008” at Queen Sirikit National Convention Center, Bangkok May 12-13 • Global Infrastructure Conference, United Kingdom hosted by Macquarie Securities June 3-5 • Cal GEMS- Merril Lynch Global Emerging, USA. hosted by Phatra Securities September 17-19 • SET’s Thailand Focus 2008 at Plaza Athenee Hotel, Bangkok. November 7-9 • “Money Expo Chiang Mai 2008” in Chiang Mai Province November 20-23 • “SET in the City 2008” at Paragon Hall, 5th Floor, Siam Paragon, Bangkok. December 11 & 19 • Non-deal Roadshow for institutional investors in Bangkok by Bualuang Securities 12
C. Knowledge Sharing and Site Visit
March 24 June 26 August 21 September 10
• BLCP Focus Seminar hosted by EGCO Group at EGCO Tower • Site Visit No. 1/2008 to Kaeng Khoi 2 Power Plant, at Saraburi Province • Site Visit No.1/2008 to Kaeng Khoi 2 Power Plant, at Saraburi Province • Company Visit to BLCP Power Plant, Rayong Province, hosted by Thai Investors Association
January-December January 28 February 7-8 February 19-23 March 6 March 17-18 March 26 April 2 April 24 May 9 May 25-27 July 21 September 25 October 3 October 17-19 December 18 December 19 December 26
• Activity “Smile@Library” • Communication Day no. 1 • Knowledge Sharing on “O&M Skil Improvement Project” • EGCO Group’s Environment Conservation Camp at Doi Intanond Natural Park, Chiangmai • Selection of the Employees’ Welfare Committee • Orientation for New Employees • Annual Physical Check up for Employees • Communication Day no. 2 • EGCO Group Sport Day • EGCO Group Green Heart Party • Training on “The 7 Habits of Highly Effective People” • Knowledge Sharing on “ESCO’s Offshore Business” • President’s Farewell Party • Communication Day no. 3 • Family Trip • Seminar on Hamburger Crisis and Whistle blower • Farewell Party for Employees who mandatory retire by the end of the year • EGCO Sport Day and New Year Party
Activities for Employees
Activities for Society and Environment Continuous Activities January-December • “Green Learning” project, Khon Kaen province : Cooperating with Tai Wisdom Organization in
organizing 10 Environment Learning Camps for Primary School students from Khon Kaen and
Mahasarakham Province. • Cooperating with Nua Mueang Tambon Administration Office to construct the “Local Wisdom
Learning Centre Building” in Roi-Et Province, and organizing demonstration workshop on “Husk Ashes
Organic Fertilizer” for communities. • Plauk Daeng Heath Care Market - Sponsoring 17 health care mobile units in Plauk Daeng district,
Rayong • “Biological Agriculture for Sustainable Living Project” - Hosting seminar and demonstration workshop
on “How to use Effective Microorganisms (EM) for agricultural purpose” at Chedi Luang School,
Khanom, Nakorn Sritharmrat. January-August • Increasing population of Blue Swimming Crabs Project at Khanom beach, Nakorn Srithamarat Province
by releasing 2,400,000 megalopa blue swimming crabs into the sea. February-August • Supporting Rayong Polytechnic students to repair electrical appliances for 5 places in Huay Pong
Community, Rayong Province. • Youth Development Project - Presenting 210 scholarships to students in Khanom District, Nakorn
Sritharmarat, and a Study Trip for 90 students to visit The Science and Technology Exhibition 2008
at BITEC, Bangkok. May-December • Supporting 4 mobile “Medical Units” Services in Mabkha community, Rayong province • Cleaner Canal, Better Living Project - Sponsoring “Clear Water Day” community event at Lad
Tanod Community’s Football Field, Laksi District, setting up 5 of “Guarding Station for Ladtanod
Canal”, and distributing community newsletter “Klong Daew Kun” to promote to use of Effective
Microorganisms (EM) to help protect the canal from being polluted by chemicals. July-December • EGCO Green Blood Network - Cooperating with members of EGCO Forest Conservation Youth
Camp in selecting leading members to run social and environmental related activities in the North
and Central Part of Thailand. July-October • How to Fight Global Warming with Sustainable Living Project: Cooperating with Thailand Environment
Institute (TEI) in organizing Site Visit Activity to one of the Learning Centrend in Prachinburi Province,
launching “Course Model& Teacher’s Tool Kit Contest”, and organizing the 2 Seminar and Workshop
for lead teachers at Sirindhorn International Environment Park, Petchburi Province. Periodical Activities 19-23 March, • EGCO Forest Conservation Youth Camp No. 26th and No. 27th at Doi inthanon National Park, Chiengmai
26-30 March Province and 28th Youth Camp at Khao Luang Natural Park, Nakorn Sritharmarat Province. and 13-16 October 21 -22 May • “New Home for undersea Livings Project” 2nd Year at Khanom Beach, Nakorn Srithamrat Province -
Sponsoring “The Land of Pink Dolphins” container painting competitions, and placing painted
containers into the sea to be artificial coral reef. 7-9 July, • Khao Chamao - Khao Wong Youth Camp 1st-2nd : Arranging youth camps for 100 junior high
28-30 July school students at Khao Chamao - Khao Wong Natural Park, Rayong Province. 30 July - 3 August • Planting 600 saplings of Rhododendron, under the project “Forest: The Circle of Life 2 nd Year”
at Kew Mae Pan Nature Trail, Doi Indhanon National Park, Chiang Mai province. • Cooperating with Provincial Waterworks Authority-regional office 3, Ratchburi in organizing a study
21 August trip for primary school students visiting Pang Pouy Water Treatment Plant EGCOM TARA, Ratchburi
Province in order to support the project “Saving Water at Schools”. 17 September • Supporting “Angel Mushroom Farming project” in Rayong province November Launching “EGCO Green Gump Gadget” contest, inviting young people to present Energy Savings
and Environmental Friendly Unbelievable Invention, under the “EGCO Green Blood” project.
13
Financial Overview Consolidated Financial Statements
14
2008 2007* 2006* 2005 2004 2003 2002 2001 2000 1999 10,320 10,939 13,839 16,022 15,620 15,378 11,463 10,732 9,697 8,541 378 655 848 805 852 898 669 880 854 910 5,890 5,711 5,815 8,151 7,593 6,017 4,926 4,033 3,462 2,776 1,759 1,680 2,154 2,202 1,894 1,323 963 936 1,031 905 - - - - - - - (34) 170 342 630 839 1,166 1,859 2,220 2,631 2,807 3,299 3,325 2,984 4,619 5,051 (83) 27 35 (77) 8 29 (545) (73) 86 134 169 264 232 303 236 203 (38) (94) 6,952 8,281 5,299 4,378 4,595 5,287 2,784 3,175 2,694 2,889 (25) 121 716 (285) 67 707 174 (236) (1,478) (241) 6,927 8,402 6,016 4,093 4,662 5,994 2,958 2,939 1,217 2,648 58,330 53,600 50,459 61,250 55,066 56,437 55,824 52,965 55,112 49,898 12,788 11,604 14,661 29,136 25,963 29,736 34,876 33,780 37,664 33,079 45,066 41,475 35,289 31,041 28,173 25,895 20,276 18,544 16,979 16,762 476 521 469 56 509 1,073 982 859 724 641 - - - (52) (52) (52) - - - - 5,265 5,265 5,265 5,265 5,265 5,265 5,265 5,259 5,244 5,243 13.21 15.73 10.07 8.32 8.75 10.07 5.30 6.04 5.14 5.51 13.16 15.96 11.43 7.78 8.88 11.41 5.62 5.60 2.32 5.05 85.60 78.78 67.03 58.96 53.55 49.21 38.51 35.26 32.28 32.00 5.00 4.75 4.00 3.25 3.00 2.75 2.50 2.25 2.00 2.00 2.58 4.22 1.65 2.27 3.25 2.19 2.21 2.80 2.85 6.97 1.11 1.20 1.58 1.29 1.33 1.01 1.02 1.01 0.97 1.29 42.93 47.80 57.98 49.13 51.39 60.88 57.02 62.42 64.30 67.50 45.22 50.48 41.19 24.28 28.25 38.10 24.53 25.23 11.62 27.99 16.01 21.89 18.14 13.83 17.28 26.02 15.26 16.55 7.21 16.85 12.38 16.15 10.77 7.04 8.36 10.68 5.44 5.44 2.32 5.57 0.28 0.28 0.41 0.91 0.89 1.11 1.66 1.76 2.16 1.97 Remarks: * From January 1, 2007, EGCO Group has changed the accounting policy for interests in joint ventures in the consolidated financial statements from“Proportionate Consolidation” to the “Equity Method”; and adopted the accounting policy regarding Employee Benefits. The retrospective adjustments have been made on 2006 financial statements.
FINANCIAL PERFORMANCE (Mil ion Baht) Sales and service income Other income Cost of sales and cost of services Administrative expenses and others Impairment charge Finance costs Share of profit (loss) from subsidiaries, an associate and joint ventures Profit (loss) attributable to minorities Net Profit (loss) before Fx Fx gain (loss) Net Profit (loss) FINANCIAL POSITION (Mil ion Baht) Total Assets Total Liabilities Parent’s shareholders’ equity Minority Interest Treasury Stock Issued and paid-up share capital PER SHARE DATA (Baht) Net Profit (loss) before Fx Net Profit (loss) Book Value Dividend RATIO ANALYSIS Liquidity ratio (Time) Cashflows liquidity ratio (Time) Gross profit ratio (%) Earnings ratio (%) Return on equity ratio (%) Return on assets ratio (%) Debt to equity ratio (Time)
Unit : Mil ion Baht
Total Revenues 20,000 15,000 10,000
10,698
11,594
14,687
16,827
16,471
16,276
12,132
11,612
10,551
9,452
2002
2001
2000
1999
5,000 -
2008
2007*
2006*
2005
2004
2003
Total Expenses Excluding Currency Exchange Gains or Losses 15,000 10,000
8,279
12,212 8,230
9,135
2007*
2006*
11,673
15 10,141
9,039
8,268
7,818
6,665
2002
2001
2000
1999
2,784
3,175
2,694
2,889
5,000 -
2008
2005
2004
2003
Net Profit Excluding Currency Exchange Gains or Losses 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 -
6,952
2008
8,281 5,299
2007*
2006*
58,330
53,600
50,459
2008
2007*
2006*
5,287
4,378
4,595
2005
2004
2003
2002
2001
2000
1999
61,250
55,066
56,437
55,824
52,965
55,112
49,898
2005
2004
2003
2002
2001
2000
1999
Total Assets 7,000 6,000 5,000 4,000 3,000 2,000 1,000 -
Message from the Chairman
16
We, the EGCO Board of Directors, are thankful for the shareholders’ continued support. We are committed to creating the sustainable shareholders’ value and treating the stakeholders fairly. This can be achieved by the strong commitment to oversee EGCO business with care and diligence and to ensure the full compliance with the spirit of the laws. The significant events in 2008 to be reported to the shareholders are as follows: Power Business The year 2008 is a challenging one. The promising global and domestic economic outlook in the first half year turned gloomy in the third quarter due to the impact from the global financial crisis and the domestic political turmoil. The slow down in GDP growth had a direct impact on the electricity demand. As at December 31, 2008, the total installed capacity of Thailand’s power system was 29,892 MW while the peak demand was in April at 22,568 MW which was 0.08% 17 lower than the peak demand in 2007. Due to the declining power consumption, the Ministry of Energy is in the process of revising the PDP 2007 for the second round. EGCO Growth As at December 31, 2008, EGCO Group operated 13 power plants with the equity MW of 3,967.6 which accounted for 13.27% of the total installed capacity of Thailand. It should be noted that the equity MW of EGCO operating assets increased by 458.5 MW from 3,509.1 equity MW in 2007. Significant events were as follows. • The 755-MW Kaeng Khoi 2 (Block 2) started the pre-commercial operation on February 27, 2008 which was before
the commercial operation date on March 1, 2008. • EGCO divested its entire shares in EGCO Joint Venture& Development Company Limited (EGCO JD) while EGCO
Engineering and Service Co., Ltd. (ESCO) divested all its shares in Amata Power-ESCO Service Co., Ltd which
provided operation and maintenance services to power plants under EGCO JD on May 15, 2008. The rationales
were that the assets comprised mature business in which EGCO held minority interests. Disposal of these minority
assets allowed EGCO to deploy the proceeds and its resources on new investment opportunities with potential for
expansion and earnings upside. • EGCO International (BVI) Co., Ltd, EGCO’s wholly owned subsidiary, acquired 90% ownership of GPI Quezon Ltd
shares. This purchase provided EGCO BVI with a 23.4% indirect ownership interest in Quezon Power (Philippines)
Limited which owned, operated and maintained a 502.5 MW (gross installed capacity) coal fired electric
generation representing 117.6 equity MW on November 29, 2008. This acquisition was in line with EGCO’s business
plan to invest in power businesses in the ASEAN region. EGCO is the first independent power producer that uses diversified fuel for power generation which is in line with the Government’s policy to foster the reliability of the power generation system. If including the capacity of Nam Theun II hydropower plant, EGCO’s first hydropower plant, which has the scheduled COD in December 2009, EGCO MW equity wil increase to 4,239.3 comprising the gas and oil fired power plants, coal fired power plant, hydropower plant and biomass power plant which accounts for 73.5%, 19.7%, 6.4% and 0.4% of EGCO capacity, respectively. With regard to future growth, although the current economic circumstances are negative for new project development, EGCO believes in Thailand’s potential and views that there is stil an opportunity to invest in projects that provide acceptable returns. EGCO wil seek to invest in operating assets or assets under construction and wil continue to explore the opportunities to develop renewable energy such as wind, solar and biomass to sustain our leadership and strength in the power sector.
Social and Environment Commitment
18
EGCO Group is well aware that the business growth will go hand in hand with the social and environment commitment. As such, EGCO will develop the business in a way that is friendly to the environment and the nearby communities taking into account the sustained benefits of all stakeholders. The major social and environment projects in 2008 were as follows. • Mitigation of business impact on the environment: The initiatives include the strict adherence to the Government’s
standards and continuous monitoring of the air and noise quality. • Best and economical use of energy and natural resources: The programs include recycling of water and waste. • Energy and natural resource conservation including the fight against the global warming: The initiatives include
fostering awareness on energy and natural resources conservation and reforestation. • Community Development: The projects include the investment in the community to increase the vil agers’ income. EGCO will continue its social and environment commitment. In this regard, EGCO will try its best to reduce the impact from its operation on the community and the environment and to extend the initiatives to enhance the quality of life of surrounding communities. Operating Result
The 2008 operating result is in line with the expectation. EGCO posted the net profit of 6,927 million baht representing the earnings per share of 13.16 baht. The interim dividend payment from the first half year operation was paid at 2.50 baht per share. EGCO is confident that it can maintain the dividend payment at an appropriate and consistent rate. In addition, EGCO wil endeavor to ensure that the company’s financial status remains strong to serve future investment.
Achievements
EGCO’s strong commitment has been honored by various institutions. For example, EGCO was ranked seventh in Thailand for best investor relations and fourth for being most committed to a strong dividend policy in a poll conducted by FinanceAsia. In addition, it was ranked eighth for best top ten companies in Thailand and fourth for best public companies in power and utility industry in a poll conducted by Finance and Banking Magazine. EGCO also received various 2008 SET Awards, being the Top Corporate Governance Report Award from the Stock Exchange of Thailand, best Shareholders Award from Thailand Securities Depository Company Limited, and excellent Corporate Governance Report Rating from the Thai Institution of Directors. EGCO was also shortlisted as one of the ten shortlisted candidates for CSR award. EGCO Group power plants were also successful. Khanom Power Plant or KEGCO was awarded the “National Safety Awards for 2008” for Safety and Occupational Health for the ninth consecutive year and the “Outstanding Workplace for Labor Relations and Welfare” by the Department of Labor Protection and Welfare, Ministry of Labor, for the second consecutive year. Meanwhile, Roi Et Green Power Plant was also awarded the “Safety Excellence Award in Provincial Level” We realize that all the success has resulted from kindest support and cooperation from stakeholders including shareholders, customers, business partners, and the public which enables us to operate efficiently with commitment to environment conservation and social development. On behalf of EGCO, I would like to express my gratitude to the shareholders and all stakeholders in supporting our business. Your support is the strongest motivation for EGCO Group people to further develop our business and to make a fair return to our shareholders while treating other stakeholders fairly and ethically for the sustainable benefits of the Thai people. We, EGCO Group, wil continue our path as a responsible power generator with full wil power. Sanit Rangnoi Chairman
Board of Directors and Subcommittee Members The positions of EGCO’s Board of Directors as of December 31, 2008
1. Mr. Sanit Rangnoi
2. Mr. Aswin Kongsiri
3. Mr. Chaipat Sahasakul
Age 60 • Chairman of the Board of Directors • Chairman of Executive Committee Education - M.Sc. (Industrial Engineering) from Pennsylvania State University, USA - B.Eng. (Industrial Engineering) from Chulalongkorn University. - B.A. (Economics), Sukhothai Thammathirat University - National Defence Course (NDC 43) , National Defence College - Certificate of Directors Accrediation Program, Thai Institute of Directors Association - Certificate of Directors Finance for Non- Finance Directors, Thai Institute of Directors Association - Certificate of Directors CertificationProgram, Thai Institute of Directors Association - Senoir Executive Program, Sasin Graduate Institute of Business Dispute - Family Relationship between the management - Amount of Shares 0.000%
Working Experience
2007 - Sept, 30, 2008 Oct, 2006 - Oct, 2008 2006 - Jan, 2007 2004
2003 2002
Director-General, Department of Revenue Ministry of Finance Director Electricity Generating Authority of Thailand Director-General, Department of Excise Ministry of Finance Deputy Permanent Secretary Ministry of Finance Director-General, Department of the Comptroller General Ministry of Finance Inspector-General, Ministry of Finance
Age 64 • Independent Director • Vice Chairman of the Board of Directors • Nomination and Remuneration Committee Member
Education - Bachelor’s Degree ( Honours) in Philosophy, Politics and Economics, Oxford University, England - Banff School of Advanced Management, Alberta, Canada - National Defence College, The National Defence Course for the Joint State-Private Sectors, Class 6 - Certificate of Chairman 2000 Program, Thai Institute of Directors Association - Certificate of Directors Certification Program, Thai Institute of Directors Association Dispute - Family Relationship between the management - Amount of Shares 0.000% Working Experience Oct. 2007 - Chairman Present Ch. Karnchang Public Company Limited 2005 - Director and Chairman of Present Risk Management Committee Bangkok Aviation Fuel Services Public Company Limited 2005 - Director and Executive Director Present Krung Thai Bank Public Co., Ltd. 1999 - Director and Chairman of Present Audit Committee The Oriental Hotel (Thailand) Public Company Limited 1993 - Director and Audit Committee Member Present Thai Reinsurance Public Company Limited 2003 - Member May 2008 Thai-German Ceramic Industry Public Company Limited 2003 - Nov, Member 2007 Thai Rating and Information Services Company Limited 1992 - Director and Audit Committee March 2006 Member, Risk Management Committee Member and Chairman of Nomination and Remuneration Committee Muang Thai Life Assurance Company Limited 1981 - Director and Audit Present Committee Member Padaeng Industry Public Company Limited 19 94 - Director Sept, 2007 Ch. Karnchang Public Company Limited
Age 54 • Independent Director • Chairman, Audit Committee
Education
- Ph.D. in Economics, University of Rochester, USA - M.A. in Economics, Thammasat University B.A. in Economics, Thammasat University Certificate of Directors CertificationProgram, Thai Institute of Directors Association Dispute - Family Relationship between the management - Amount of Shares 0.000% Working Experience
2005 - Present 2001 - Present 2005 - 2006
Independent Director, Audit Committee Member Pylon Public Company Limited Secretary - General Agricultural Futures Trading Commission Director, Audit Committee Member and Chairman of Risk Management Committee Government Housing Bank
1998 - 2001 Senior Executive Vice President
MFC Asset Management Public Company Limited
1991 - 1996 Senior Vice President and Spokesman Stock Exchange of Thailand 1989 - 1991 Executive Vice President Morgan Grenfell Thai Co., Ltd.
19
4. Mr. Thanapich Mulapruk
5. Mrs. Wattanee Phanachet
Age 71 • Independent Director • Audit Committee Member Education Education - National Defence College, 1998 (Class 41st) - M.A. Degree in Accounting, University of Alabama, USA - LL.B., Chulalongkorn University Bachelor Degree in Accounting, - Thai Bar Certificate, Thai Barrister at law - Chul alongkorn University, Bangkok, Thailand of Thailand - Certified Public Accountant (CPA), - LL.M., Chulalongkorn University Thailand License No. 1091 - Certificate of Directors Certification - Certificate of Directors Certification Program, Thai Institute of Directors Association Program (class 79th ), Thai Institute of Dispute - Directors Association Family Relationship between the management - Dispute - Family Relationship between the management - Amount of Shares 0.000% Working Experience Amount of Shares 0.000% Oct, 2007 - Independent Director and Working Experience Present Audit Committee Member nov, 2008 - Spokesman ESSO (Thailand) Public Company Present Office of Attorney - General Limited 29 April, 2008 - Director 1999 - Independent Director and Audit Bangkok Mass Transit Authority Present Present Committee Member 22 April, 2008 - Director Thai Poly Acrylic Public Present Port Authority of Thailand Company Limited 2000 - Present Director, Transport Company 1999 - Present Independent Director and Audit Committee Limited Capital Nomura Securities 16 Oct, 2007 - Director 1999 2006 Independent Director and Feb, 2008 The Marketing Organization Audit Committee, for Farmers, Ministry of Delta Electronics (Thailand) Agriculture and Cooperatives Public Company Limited Office of Attorney-General 2006 - 2007 Committee on Curriculum Quality Guarantee, Faculty of 1 Dec, 2006 - Director General of Commerce and Accountancy Present Department of Economic Chulalongkorn University Crime Litigation 2005 2007 Head, Sub-Committee on 2005 Director General of Certi f i e d Public Accountant’s Department of Qualification, appointed by Administrative Litigation the Federation of Accounting 2003 - 2005 Deputy Director General of Professions. Department of Administrative Federation of Accounting Professions Litigation
2002 - 2003 Executive Director of Office of Economic Crime Litigation 1
20
Age 60 • Independent Director • Audit Committee Member
6. Mr. Witoon Simachokedee
Age 54 • Independent Director (Vacating the office by resignation on August 1, 2008) Education - MBA, Thammasat University - B.Eng. (Electrical Engineering), Kasetsart University - LL.B., Thammasat University Dispute - Family Relationship between the management - Amount of Shares 0.000% Working Experience
2006 - Present Deputy Permanent Secretary Ministry of Industry 2006 - Present Chairman, the Association of QC Headquarters of Thailand 2003 Inspector - General 2003 Director, Bangkok Fashion City Project 2002 Deputy Director-General, Department of Industrial Works
7. Mr. Somphot Kanchanaporn
Age 62 • Independent Director • Audit Committee Member Education - MBA, National Institute of Development Administration (NIDA) - B.S. (Police Science and Administration), California State University at Los Angeles - Certificate of Directors Accreditation Program (DAP), Thai Institute of Directors Association - National Defence College, (Class 41st) Certificate of Executive Program, Class 7, Capital Market Academy Dispute - Family Relationship between the management - Amount of Shares 0.000% Working Experience
2008 - Present 2008 - Present 2007 Oct, 2006 - 2008 Dec, 2006 - 2008
Chairman of the Inspector General Committee, Ministry of Energy Independent Director PTT Aromatics and Refining Public Company Limited Independent Director Aromatics (Thailand) Public Company Limited Member The National Legislative Assembly Chairman of Standing Committee on Energy The National LegislativeAssembly
8. Mr. Phaiboon Siripanoosatien 9. Mr. Chareon Prajumtan
Age 45 • Independent Director • Nomination and Remuneration Committee Member Education - Master of Political Science, Sukhothai Thammathirat Open University - Bachelor of Engineering, Chulalongkorn University - Certificate of Directors Certification Program, Thai Institute of Directors Association - Certificate of Public Law and Management, Class 1, King Prajadhipok’s Institute Certificate of Democratic Politics and Governance for High-Level Administrators, Class 7, King Prajadhipok Institute - Certificate of Management of Public Economy, Class 1, King Prajdhipok’s Institute - Certificate of Executive Program, Class 3, Capital Market Academy Dispute - Family Relationship between the management - Amount of Shares 0.000% Working Experience
2008 - Present Independent Director Syrus Securities Public Company Limited 2008 - Present Director
Metrostar Property Public Company Limited
1997 - Present Managing Director
2004 - 2006 Nov, 2003 - Deputy Director (Executive Nov, 2005 Level 10) The National Intelligence Agency Deputy Secretary-General Aug. - Nov. 2003 - The Office of the National Security Council
Trinity Plus Company Limited
Specialist, Commission of Budget Management Monitoring, National Assembly
Age 62 21 • Independent Director • Nomination and Remuneration Committee Member (Vacating the office by rotation in AGM on April 21, 2008) Education - B.Eng. (Civil Engineering), King Mongkut’s University of Technology Thonburi, - B.A. (Law), Sukhothai Thammatirat Open University - MPA, Thammasat University - Certificate of High Level of Engineering Management, Chulalongkorn University and Public Works - Certificate of High Level Administration, The Institute of Administration Department of Provincial Administration - Certificate of Executive Department of The Civil Service Commission - Certificate of Change Management, RIPA International, London - Certificate of Directors Certification Program, Thai Institute of Directors Association - Certificate of Audit Committee Program Dispute - Family Relationship between the management - Amount of Shares 0.000% Working Experience
2006 - 30 Sept, 2007 2002 - 2005 2002 2001
1999
Inspector-General, Ministry of Energy Ministry of Energy Deputy Director-General (level 9), Department of Business Energy Ministry of Energy Policy and Plan Specialist (Public Works) Ministry of Energy Inspector General Ministry of Energy Director of Fuel and Gas Control Division (Engineer level 8) Ministry of Energy
10. Mr. Chamnong Wongsawarng 22
Age 62 • Director (Authorized Director) (Vacating the office by resignation in AGM on April 21, 2008) Education
- B.Eng. (Electrical Power Engineering), 2nd Class Honors, Chulalongkorn University - Certificate of Directors Certification Program, Thai Institute of Directors Association
11. Mr. Sombat Sarntijaree
Age 59 • Director • Executive Committee Member (Authorized Director)
Education
- Master of Engineering (Mechanical Engineering), Lamar University, USA - B.Eng. (Mechanical Engineering), Kasetsart University - Certificate of Directors Certification Program, Thai Institute of Directors Association Dispute -
12. Mr. Narongsak Vichetpan
Age 63 • Director • Nomination and Remuneration Committee Member • Corporate Social Responsibility Committee Member (Authorized Director) Education - Bachelor of Civil Engineering, Chulalongkorn
University - Master of Hydraulic Engineering, Asian Institute of Technology (AIT) - Senior Executive Program (SEP 14), Sasin Dispute - - Advanced Management Program (AMP 163), Family Relationship between the management - Harvard Business School , U.S.A. Amount of Shares 0.000% ficate of Directors Family Relationship between the management - - - Certi Certi f i c ati o n Program, Thai Insti tute of Working Experience Amount of Shares 0.000% Di r ectors Associ a ti o n 2006 - Deputy Governor-Transmission Working Experience Dispute - 30 Sept, 2007 System Nov, 12, 2007 - Governor Family Relationship between the management - Electricity Generating Authority Present Electricity Generating Authority Amount of Shares 0.000% Working Experience of Thailand of Thailand 2005 Senior Executive VicePresident- Oct, 2006 - Deputy Governor-Generation May 8, 2007 - Director 2008 Electricity Generating Authority Nov, 11, 2007 Electricity Generating Authority Oct, Transmission System of Thailand of Thailand Electricity Generating Authority Nov, 2006 - Advisor March, 2006 - Deputy Governor - Operation June 2007 Electricity Generating Public of Thailand Company Limited Sept, 2006 and Mai n tenance 2003 - 2005 Deputy Governor-Transmission Oct, 2005 - Advisor El e ctri c i t y Generati n g Authori t y System Sept, 2006 Electricity Generating Authority of Thailand 2001 - 2003 Assistant Governor-Transmission of Thailand Aug, 2005 - Senior Executive Vice President - Oct, 2003 - Director System Operation March 2006 Operation and Maintenance Sept, 2005 Ratchaburi Electricity Electricity Generating Authority Electricity Generating Authority Generating Holding Public of Thailand Company Limited of Thailand Acting Governor June, 2005 - Executive Vice President-Power 3 Apr, - 5 Sep, 2004 Electricity Generating Authority Oct, July 2006 Plant 1 land Electricity Generating Authority 1 Jan, 2004 - ofSeniThai or Deputy Governor - of Thailand Sept, 2005 Development Group Oct, 1, 2003 - Assistant Governor - Power Plant 1 Electricity Generating Authority of Thailand June 2005 Electricity Generating Authority Oct, - Deputy Governor - Policy of Thailand Dec, 2003 and Planning Oct, 2000 - Vice President – Generation El e ctri city Generating Authority Sept, 2003 Business 1-Power Plant of Thailand Electricity Generating Authority Oct, 2000 - President - Fuel Business of Thailand Sept, 2003 Electricity Generating Authority of Thailand
13. Mr. Peter Albert Littlewood
Age 59 • Director (Authorized Director) Education
14. Mr. Richard McIndoe
Age 44 • Director • Chairman, Nomination and Remuneration Committee - MA (1st Class Honours), • Execcutive Committee Member Cambridge University, UK (Authorized Director) Dispute - Family Relationship between the management - (Vacating the office by rotation in AGM on April 21, 2008) Amount of Shares 0.000% Education Working Experience 2003 - Present Executive Director and Chief - Insead Business School (France), Master of Business Administration Operating Officer - Cambridge University (U.K.), Master of CLP Power Asia Limited, Arts, Modern History Hong Kong
Mr. Hideaki Tomiku 15.
Age 51 • Director • Executive Committee Member (Authorized Director) Education - International Law, Tokyo University
Dispute -
Family Relationship between the management - Amount of Shares 0.000% Working Experience
2006 - Present Director and Executive Vice President OneEnergy Limited 2003 - 2006 Deputy General Manager, Dispute - 2001 - Present Director Head of International IPP Family Relationship between the management - BLCP Power Limited Mitsubishi Corporation Amount of Shares 0.000% 2000 - 2005 Director 2001 - 2003 Assistant General Manager, Working Experience Rayong Electricity Power, Generation & 2006 - present Group Director and Generating Co., Ltd. Marketing for Japanese Managing Director, 2000 - 2005 Director Market TRUenergy Australia Khanom Electricity Generating Mitsubishi Corporation CLP Group and TRUenergy Co., Ltd. Australia 2000 - 2005 Director 2006 Group Director & Managing 2005 EGCO Engineering & Service Director-Asia Pacific Co., Ltd. CLP Power Asia Limited, 1999 - 2003 Project Manager for CLP’s Hong Kong generating plant projects 2005 Managi ng Director 2003 CLP Group CLP Power Asia Limited, 1998 General Manager for CLP’s Hong Kong generation business group Finance Director 2002 and later for CLP strategic CLP Power International Ltd., development Hong Kong CLP Group 1998 - 2002 Managing Director InterGen, China 1998 - 2002 Vice President - Development and Finance InterGen, China 1998 - 2002 DirectorUBS Warburg, Hong Kong
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16. Mr. Mark Takahashi
17. Mr. Hideo Kuramochi
18. Mr. Visit Akaravinak
Age 60 • Director and President • Executive Committee Member • Chairman, Risk Management Committee • Chairman, Group Business Committee • Chairman, Good Corporate Dispute - Governance Committee Family Relationship between the management - • Chairman, Corporate Social - MBA, Wharton School, University of Amount of Shares 0.000% Pennsylvania, USA Responsibility Committee - BSc. (civil engineering) from the University of Working Experience (Authorized Director) 2008 Deputy General Manager and (Mr. Visit Akaravinak’s contract as Colorado, USA Head of Southeast Asia IPP, Dispute - President expired on September 30, Power Generation and Family Relationship between the management - 2008) Marketing International Unit, Amount of Shares 0.000% Education Mitsubishi Corporation Working Experience Member of Executive Committee - B.Eng. (Electrical) Chulalongkorn University Oct, 2006 - Managing Director Master of Management from SASIN, OneEnergy Limited Present OneEnergy Limited Chulalongkorn University. 2007 Head of International IPP, Power - Certificate of Management of Public July 2006 Group Director - Corporate Generation and Marketing Economy” at the King Prajadhipok’s Institute Development International Unit - Certificate of the Directors Certificate Program, CLP Holdings Limited 2006 Head of Southeast Asia IPP, Thai Institute of Directors Association (IOD). Dec, 2003 - Director of Group Treasury Power Generati o n and - Certificate of the Role of the Chairman July 2006 CLP Holdings Limited Marketi n g Internati o nal Uni t Program, Thai Institute of Directors 1995 - 2003 Regional Finance Association (IOD). 2002 Power Generati o n and Intergen (Hong Kong) Di spute - Marketi n g Internati o nal Uni t VP/Corporate Treasurer Fami ly Relationship between the management - Mitsubishi Corporation Intergen, Boston, USA Amount of Shares 0.000%
Age 50 24 • Director • Executive Committee Member • Chairman, Nomination and Remuneration (Authorized Director) Education
Age 46 • Director (Authorized Director) Education - B.Sc. (Electronics and Telecommunication), Waseda University, Tokyo
Working Experience
Aug, 2005 - Chairman Sept, 30, 2008 Rayong Electricity Generating Company Limited
Khanom Electricity Generating Company Limited
EGCO Engineering and Service Company Limited Aug, 1, 2005 - Director Sept, 30, 2008 Gulf Electric Public Company Limited
19. Mr. Vinit Tangnoi
2003 - July 2005
Director Rayong Electricity Generating Company Limited Khanom Electricit Generating Company Limited EGCO Engineering and Service Company Limited Nov, 2006 - Director Sept, 30, 2008 BLCP Power Co., Ltd. June 28, 2005 - Senior Executive Vice Aug, 30, 2005 President - Operation and Maintenance EGAT Public Company Limited 2003 - 2005 Senior Executive Vice President - Operation and Maintenance Electricity Generating Authority of Thailand 1999 - 2003 Assistant Governor - Bangpakong Power Plant Electricity Generating Authority of Thailand 1997-1999 Director, Thermal Power Plant Construction Electricity Generating Authority of Thailand
Age 56 • Director (During April 21, 2008-September 30, 2008) • Executive Committee Member • Chairman, Risk Management Committee • Chairman, Group Business Committee • Chairman, Good Corporate Governance Committee • Chairman, Corporate Social Responsibility Committee (Authorized Director) (Appointed to be President on October 1, 2008) Education - Master of Science (Industrial Engineering), University of Texas at Arlington, U.S.A. - B.Eng. (Mechanical), Kasetsart University - Certificate of Advance Management Program, Harvard Business School, Harvard University, U.SA. - Certificate of Senior Executive Program, Sasin Graduate Institute of Business Administration of Chulalongkorn University - Certificate of Army War College Regular Program, Institute of Army Academics - Certificate of Directors Certification Program, Thai Institute of Directors Association
Oct 10, 2008 - Director 25 BLCP Power Co., Ltd. Present Dec, 2007 - Deputy Governor Generation Sept, 30, 2008 Electricity Generating Authority of Thailand Director EGAT International Co., Ltd. March 31, Deputy Governor system 2006 Control Oct, 1, 2005 Senior Executive Vice President- System Control June 24, 2005 Assistant Chief Executive Officer-Planning Oct, 1, 2004 Assistant Governor-Policy and Planning Oct, 1, 2003 Assistant Governor-Fuel Management Electricity Generating Authority of Thailand
Amount of Shares 0.000%
Dispute - Family Relationship between the management - Working Experience Oct, 1, 2008 - Chairman Present Rayong Electricity Generating Company Limited Khanom Electricity Generating Company Limited EGCO Engineering and Service Company Limited
The Positions of the Management and Control Persons as of December 31, 2008
1. Mr. John M. Palumbo 26 Age 45 • Senior Executive Vice President - Business Development • Risk Management Committer Member • Good Corporate Governance Committee Member Education - Bachelor of Science in Mechanical Engineering (Honors), Columbia University, School of Engineering and Applied Science, New York. Dispute - Family Relationship between the management Amount of Shares 0.000% Working Experience 2004 - Present Director Gulf Electric Public Company Limited 2005 - Director May 2008 EGCO Joint Ventures & Development Company Limited 30 Jan 07- Director Present BLCP Power Company Limted 2004 - Director Apr, 2007 Nam Theun 2 Power Company Limited 2003 - 2004 Independent Consultant to the Managing Director and the Head of the Southeast Asia Business China Light & Power Group (Hong Kong) 2003 - 2004 Team Leader & Infrastructure ADB Technical Assistance Program 2003 Specialist, Independent Consultant to Chief Executive Officer International Power PLC. 1995 - 2003 Principal and Managing Director Delta Associates (Thailand) Limited
2. Mr. Sakda Sreesangkom Age 47 • Senior Executive Vice President - Finance • Risk Management Committee Member • Group Business Committee Member • Good Corporate Governance Committee Member • Corporate Social Responsibility Committee Member Education
- M.A. (Economics), Keio University, Japan - B.A. (Economics), Thammasat University Dispute - Family Relationship between the management Amount of Shares 0.000% Working Experience Apr, 2008 - Director Present Nam Theun 2 Power Company Limited 30 Jan 07 - Director Present BLCP Power Company Limited 2004 - Present Director Gulf Electric Public Company Limited 2002 - Present Director Rayong Electricity Generating Company Limited 2002 - Present Director Khanom Electricity Generating Company Limited 2002 - Present Director EGCO Engineering & Service Company Limited 2002 - Present Director EGCO International (BVI) Limited 2001 - 2002 Senior Vice President Glow Company Limited, Tractebel Group 2000 - 2001 Asian Development Bank Consultant to Public Debt Management Office, Ministry of Finance ADB Technical Assistance Program 1999 - 2000 Financial Consultant Debt management consultancy to EGAT and PEA 1997 - 1999 Executive Director SBC Warburg (Hong Kong, Bangkok) 1990 - 1997 Vice President Credit Suisse First Boston (New York, Singapore, Bangkok) 1987-1989 Analyst Nikko Securities (Tokyo)
3. Mr. Chumsak Desudjit Age 55 • Senior Executive Vice President • Risk Management Committee Member • Good Corporate Governance Committee Member Education - B. Eng. (Mechanical Engineering),
Chulalongkorn University Dispute - Family Relationship between the management Amount of Shares 0.000% Working Experience 2008 - Present Director and Managing Director Rayong Electricity Generating Company Limited 2007 - Present Chairman EGCO Cogeneration Company Limited April 08 - Director Present Gulf Cogeneration Company Limited Nongkhae Cogeneration Company Limited Samutprakarn Cogeneration Company Limited 2006 - 2007 Director EGCO Cogeneration Company Limited 2001 - 2007 Deputy Managing Director Operation Group Rayong Electricity Generating Company Limited 1998 - 2000 Operation Division Manager 1994 - 1997 Maintenance Division Manager
4. Mr. Chankij Jearaphunt Age 54 • Senior Executive Vice President • Risk Management Committee member • Good Corporate Governance Committee Member • Corporate Social Responsibility Committee Member Education
- Master of Public Administration (MPA) National Institute of Development Administration (NIDA) - B. Eng. (Electrical Engineering), Chulalongkorn University Dispute - Family Relationship between the management Amount of Shares 0.000% Working Experience 2004 - Present Director and Managing Director Khanom Electricity Generating Company Limited April 07 - Chairman Present Roi-Et Green Company Limited April 07 - Chairman Present EGCO Green Energy Company Limited April 2008 - Director Present Gulf Energy Company Limited Gulf IPP Company Limited Gulf Power Generation Company Limited 2006 - April 07 Director EGCO Green Energy Company Limited Roi-Et Green Company Limited 2002 - April 08 Director Gulf Cogeneration Company Limited Nongkhae Cogeneration Company Limited Samutprakarn Cogeneration Company Limited 1998 - 2004 Deputy Managing Director- Operation, Khanom Electricity Generating Company Limited 1996 - 1998 Manager - Production Control Division Khanom Electricity Generating Company Limited
5. Mr. Piya Jetasanon
Mr. Suvapan Chomchalerm 6. Age 52 Age 49 27 • First Senior Vice President - Finance • Senior Vice President - Accounting Division and Budget Division Education Education
- MBA, Ramkhamhaeng University - B.A. (Economics), Thammasat University Dispute - Family Relationship between the management Amount of Shares 0.000% Working Experience 2007 - Present Director EGCO Cogeneration Company Limited 2007 Director Thai LNG Power Corporation Ltd. 2005 - Present First Senior Vice President - Finance Electricity Generating Public Company Limited 2003 - 2005 Senior Vice President - Finance 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
- M.Sc. (Accounting), Thammasat University Dispute - Family Relationship 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
Company's Management
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5 4 2
1. Mr. Voravit Potisuk
Executive Vice President Business Development
Executive Vice President Corporate Service
Executive Vice President Finance
2. Ms. Vasana Vongpromek
3. Ms. Pikul Sreesastra
3
4. Ms. Daranee Sriwattana
Executive Vice President Asset Management and Planning
Executive Vice President Project Management
5. Dr. Sakul Pochanart
1
3 8
6
7 4 2
5
1. Mr. Rasda Pongpaew
ESCO Managing Director
Operation REGCO Deputy MD
2. Mr. Narong In-Eav 3. Mr. Thongchai Chotkajornkiat
Finance & Administration ESCO Deputy MD
4. Ms. Krisna Pinkaew
Finance & Administration KEGCO Deputy MD
5. Ms. Warunee Tantiwong
Finance & Administration REGCO Deputy MD
Operation ESCO Deputy MD
Operation KEGCO Deputy MD
6. Mr. Wajarapong Palakawong Na Ayudhya 7. Mr. Mana Vitavasakul 8. Ms. Ngamphis Chitphromphan
Working as the Secondment in Deputy Managing Director & Chief Financial Officer for BLCP Power Limited
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Business Characteristics EGCO : The First Independent Power Producer EGCO is the first independent power producer in Thailand incorporated on May 12, 1992 by Electricity Generating Authority of Thailand (“EGAT”). Such incorporation marked the commencement of the Thai government’s privatization initiatives to allow broader private sector investment in the electricity generating sector. On March 23, 1994, EGCO was transformed into a public company and then listed on the Stock Exchange of Thailand (“SET”) on January 16, 1995. Significant Events EGCO’s investment is a long term one. As at December 31, 2008, 37 EGCO Group operated 13 power plants with 3,967.60 equity MW which accounted for 13.27% of the total installed capacity of Thailand. It should be noted that the equity MW of operating assets increased by 458.50 MW from 3,509.10 equity MW in 2007. Significant events were as follows : 1. Kaeng Khoi 2, Gulf Power Generation’s project with the capacity of 755 MW,
started the pre-commercial operation date on February 27, 2008 which was before the commercial operation
date on March 1, 2008. 2. EGCO International (BVI) Co., Ltd., (“EGCO BVI”) EGCO’s wholly owned subsidiary, acquired 90% ownership of GPI
Quezon Ltd. shares. This purchase provided EGCO BVI with a 23.4% indirect ownership interest in Quezon Power
(Philippines) Limited Co. which owned, operated and maintained a 502.5 MW (gross installed capacity) coal fired
electric generation representing 117.6 equity MW on November 29, 2008. This acquisition was in line with
EGCO’s business plan to invest in power businesses in the ASEAN region. The acquisition strengthened EGCO’s
presence in the Republic of the Philippines which should provide opportunities for future growth. 3. EGCO’s divested its entire shares in EGCO Joint Venture & Development Company Limited (“EGCO JD”) which
held shares in Amata EGCO Power Co., Ltd. and Amata Power (Bang Pakong) Co., Ltd. on May 15, 2008. The
divestment reasons was that the assets comprised mature business in which EGCO held minority interests.
Disposal of these minority assets allowed EGCO to deploy the proceeds and its resources on new investment
opportunities with potential for expansion and earnings upside. 4. EGCO Engineering and Service Co., Ltd. (“ESCO”), EGCO’s wholly owned subsidiary, divested all its shares in
Amata Power-ESCO Services Co., Ltd. which provided operation and maintenance services to power plants
under EGCO JD on May 15, 2008. 5. The 1,086.8 MW Nam Theun 2 hydropower plant developed by Nam Theun 2 Power Company Limited
(“NTPC”) of which EGCO holds a 25% ownership achieved the overall progress of 95.1% at the end of 2008
which was as planned. The project was expected to achieve the COD within December 2009 as scheduled.
Business Lines EGCO businesses can be divided into 4 groups as follows: 1. Independent Power Producer (“IPP”) Group: This Group comprises 4 companies being Rayong Electricity
Generating Co., Ltd., Khanom Electricity Generating Co., Ltd, BLCP Power Limited and Gulf Power
Generation Co., Ltd. The combined equity MW is 3,528 MW which accounts for 88.92% of EGCO’s total
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operating asset capacity. 2. Small Power Producer (“SPP”) Group: This Group comprises 6 companies being EGCO Cogeneration Co., Ltd.,
Roi-Et Green Co., Ltd., Gulf Cogeneration Co., Ltd., Nong Khae Cogeneration Co., Ltd., Samutprakarn
Cogeneration Co., Ltd., and Gulf Yala Green Co., Ltd. The combined capacity is 293.1 equity MW which
represents 7.39% of EGCO’s total operating asset capacity. 3. Overseas Power Producer Group: This Group comprises 4 companies being Western Mindanao Power
Corporation, Southern Philippines Power Corporation, Quezon Power (Philippines) and NTPC. The combined
equity MW (excluding NTPC of which the project is under construction) is 146.5 MW representing 3.69% of
EGCO’s total operating asset capacity. 4. Other Business Group: This Group comprises 3 companies being ESCO, Egcom Tara Co., Ltd., Eastern Water
Resources Development and Management Public Company Limited Details of each project are shown in the table at the end of this report. Revenue Profile The major source of income is from IPP group. The 2008 net profit before foreign exchange gain and loss of each business line is as shown below.
Overseas 0.26% SPP 7.41%
Others 3.38%
IPP 88.94%
Profit before FX - 2008
EGCO IPP SPP Overseas Other Business Total
Unit : Million Baht Profit of 2008 Profit of 2007 Before FX After FX Before FX Afte FX (598) (565) (393) (393) 7,195 6,707 6,965 7,795 599 452 564 947 21 274 7,491
57 275 6,927
1.32 255 7,392
(197) 250 8,402
Remarks: - Profit before FX separate out foreign exchange impact from EGCO, subsidiaries and joint ventures. - IPP : REGCO, KEGCO, BLCP, GPG - SPP : GCC, SCC, NKCC, GYG, AEP, APBP, EGCO Cogen, Roi-Et Green - Overseas : Conal, NTPC, Quezon - Others : ESCO, ET, AMESCO Details of the revenue profile analysis is shown in the Management Discussion and Analysis on page 109. Competitiveness The decline in power demand due to the economic slowdown (See details in the report on Power Industry and Competition) including the energy policy which focuses on efficiency, renewable energy and the social and environment responsibility make the competition stronger as each company competes to foster its growth. However, the position of
EGCO as the first IPP put EGCO at advantage in terms of location, qualified workforce and reputation on corporate social responsibility which earns the trust from the government and the public at large. Due to limited investment opportunity in Thailand over a short term, EGCO adjusts its strategy to invest in quality overseas projects, fuel-related projects and domestic renewable energy projects which includes the solar, wind power and biomass plants to maintain its leadership and market shares and to strengthen EGCO Group.
EGCO prudently prepares to cope with volatile situations by way of cost control and expense reduction. EGCO also keeps up monitoring the energy and economic circumstances in a bid to foster the appropriate strategy to foster EGCO’s growth. Details of EGCO’s Business Line 1. IPP Group 1.1 Rayong Electricity Generating Company Limited (“REGCO”) EGCO directly holds a 100% stake in REGCO which owns and operates Rayong power plant known as the first IPP in Thailand located in Rayong province. It is a 1,232-megawatt power plant combining of four identical 308-megawatt combined cycle power blocks using natural gas as primary fuel to generate and sell all net electricity output to EGAT under the 20-year power purchase agreement (“PPA”). In 2008, Rayong power plant generated and sold 2,248.89 mil ion kilowatt-hour electricity output to EGAT, while its plant Equivalent Availability Factor was 90.52%. 1.2 Khanom Electricity Generating Company Limited (“KEGCO”) EGCO directly holds a 100% stake in KEGCO which owns and operates Khanom power plant known as the largest power plant in the southern area of Thailand located in Nakhon Sri Thammarat province. It is a 824-megawatt power plant combining of two 75-megawatt thermal power units and one 674-megawatt combined cycle power unit all using natural gas as a primary fuel to generate and sell all net electricity output to EGAT under the 15-year and 20-year PPAs. In 2008, Khanom power plant generated and sold 5,577.13 mil ion kilowatt-hour electricity output to EGAT, while its plant Equivalent Availability Factor was 90.26%. 1.3 BLCP Power Limited (“BLCP”) EGCO directly holds a 50% stake in BLCP which owns and operates an IPP coal-fired power plant located in Rayong province. It is a 1,434-megawatt power plant comprised of two identical 717-megawatt pulverized coal-fired power units using high quality bituminous imported from Australia as a primary fuel to generate and sell all net electricity output to EGAT under the 25-year PPA under the IPP program. In 2008, BLCP power plant generated and sold 10,174.60 mil ion kilowatt-hour electricity output to EGAT, while its plant Equivalent Availability Factor was 92.83% for unit 1 and 99.97% for unit 2. 1.4 Gulf Power Generation Company Limited (“GPG”) EGCO indirectly holds a 50% stake in GPG via its 50% ownership in Gulf Electric Public Company Limited (“GEC”). GPG owns and operates an IPP gas-fired power plant, called Kaeng Khoi 2 power plant (“KK2”), located in Saraburi province. It is a 1,510-megawatt power plant combining of two 755-megawatt combined cycle power blocks using natural gas as a primary fuel to generate and sell all net electricity output to EGAT under the 25-year PPA under the IPP program. The commercial operation date of KK2 Block 2 was on March 1, 2008.
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In 2008, GPG power plant generated and sold 8,960.32 mil ion kilowatt-hour electricity output to EGAT, while its plant Equivalent Availability Factor was 95.52% for block 1 and 96.89% for block 2. 2. SPP Group 2.1 EGCO Cogeneration Company Limited (“EGCO Cogen”) EGCO directly holds an 80% stake in EGCO Cogen which owns and operates a SPP cogeneration power plant located in Rayong province. It is a 117-megawatt cogeneration power plant with steam supply of 30 tons per hour selling both electricity and steam outputs by using natural gas as a primary fuel. Under the SPP firm cogeneration program, it signed 60-megawatt contracted capacity with EGAT under the 21-year PPA, while other net contracted capacity of 52.76 megawatt was signed with the industrial users in Rayong Industrial Park under the long-term PPAs. In 2008, EGCO Cogen power plant generated and sold 704.96 million kilowatt-hour electricity output to the customers, while its plant Equivalent Availability Factor was 95.05% and the steam output to the industrial user was 55,250 tons. 2.2 Roi-Et Green Company Limited (Roi-Et Green) EGCO holds a 70.3% stake in Roi-Et Green via EGCO Green Co., Ltd. Roi-Et Green owns and operates a SPP renewable power plant located in Roi-Et province. It is a 9.9-megawatt biomass-fired power plant using rice husk as a primary fuel. Under the SPP firm renewable program, it signed 8.8-megawatt contracted capacity with EGAT under the 21year PPA. In 2008, Roi-Et Green power plant generated and sold 57.81 mil ion kilowatt-hour electricity output to EGAT, while its plant Availability Factor was 89.90%. 2.3 Gulf Cogeneration Company Limited (“GCC”) EGCO indirectly holds a 50% stake in GCC via its 50% ownership in Gulf Electric Public Company Limited (“GEC”). GCC owns and operates a SPP cogeneration power plant located in Saraburi province. It is a 110-megawatt cogeneration power plant with steam supply of 16 tons per hour selling both electricity and steam outputs by using natural gas as a primary fuel. Under the SPP firm cogeneration program, it signed 90-megawatt contracted capacity with EGAT under the 21-year PPA, while other net contracted capacity of 20 megawatt was signed with the industrial users under the long-term PPAs. In 2008, GCC power plant generated and sold 758.32 mil ion kilowatt-hour electricity output to the customers, while its plant Equivalent Availability Factor was 99.16% and the steam output to the industrial users was 186,068 tons. 2.4 Nong Khae Cogeneration Company Limited (“NKCC”) EGCO indirectly holds a 50% stake in NKCC via its 50% ownership in GEC. NKCC owns and operates a SPP cogeneration power plant located in Saraburi province. It is a 126-megawatt cogeneration power plant with steam of 24 tons per hour selling both electricity and steam outputs by using natural gas as a primary fuel. Under the SPP firm cogeneration program, it signed 90-megawatt contracted capacity with EGAT under the 21-year PPA, while other net contracted capacity of 36 megawatt was signed with the industrial users under the long-term PPAs. In 2008, NKCC power plant generated and sold 842.57 mil ion kilowatt-hour electricity output to the customers, while its plant Equivalent Availability Factor was 97.82% and the steam output to the industrial users was 216,819 tons. 2.5 Samutprakarn Cogeneration Company Limited (“SCC”) EGCO indirectly holds a 50% stake in SCC via its 50% ownership in GEC. SCC owns and operates a SPP cogeneration power plant located in Samutprakarn province. It is a 126-megawatt cogeneration power plant with steam
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of 24 tons per hour selling both electricity and steam outputs by using natural gas as a primary fuel. Under the SPP firm cogeneration program, it signed 90-megawatt contracted capacity with EGAT under the 21-year PPA, while other net contracted capacity of 36 megawatt was signed with the industrial users under the long-term PPAs. In 2008, SCC power plant generated and sold 841.66 mil ion kilowatt-hour electricity output to the customers, while its plant Equivalent Availability Factor was 98.60% and the steam output to the industrial users was 143,024 tons. 2.6 Gulf Yala Green Company Limited (“GYG”) EGCO indirectly holds a 50% stake in GYG via its 50% ownership in GEC. GYG owns and operates a SPP renewable power plant located in Yala province. It is a 23-megawatt biomass-fired power plant using parawood residue as a primary fuel. Under the SPP firm renewable program, it signed 20.2-megawatt contracted capacity with EGAT under the 25-year PPA. In order to alleviate the investment risks for power generation from renewable energy in the three southernmost provinces, the National Energy Policy Committee (“NEPC”) agreed to add the Special Adder for renewable plant located in the three provinces. For GYG, the company has received the adder of 1.0 Baht/kWh for a period of 7 years from March 1, 2008 to the end of February 2015. In 2008, GYG power plant generated and sold 148.37 mil ion kilowatt-hour electricity output to EGAT, while its plant Availability Factor was 91.02%. 3. Overseas Group 3.1 Conal Holdings Corporation (CHC) EGCO holds a 40% stake in CHC via EGCO International (B.V.I.) Limited (“EGCO BVI”). CHC is the largest IPP in the Mindanao Island, Philippines. CHC holds the shares in 2 electricity generating companies and 1 operation and maintenance service company. Western Mindanao Power Corporation (“WMPC”) WMPC owns and operates an IPP power plant located in Zamboanga city, Philippines. It is a 109.6-megawatt diesel power plant using bunker-c fuel oil as a primary fuel. Under the Build-Operate-Own (“B-O-O”) scheme, it generates and sells all net electricity output to National Power Corporation (NPC) under the 18-year Energy Conservation Agreement (“ECA”). In 2008, WMPC power plant generated and sold 106.74 mil ion kilowatt-hours electricity output to NPC, while its plant Equivalent Availability Factor was 95.37%.
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Southern Philippines Power Corporation (“SPPC”) SPPC operates and owns an IPP power plant called Gen Santos located in Sarangani province, Philippines. It is a 54.8-megawatt diesel power plant using bunker-c fuel oil as a primary fuel. Under the B-O-O scheme, it generates and sells all net electricity output to NPC under the 18-year ECA. In 2008, SPPC power plant generated and sold 164.43 mil ion kilowatt-hours electricity output to NPC, while its plant Equivalent Availability Factor was 92.56%. Alto Power Management Corporation (“APMC”) APMC provides operation and maintenance services including plant management and consulting to the two abovementioned power plants and also third-party power plants. 3.2 Quezon Power (Philippines), Limited Co. (“QPL”) On November 29, 2008, EGCO acquired indirectly 23.4% ownership interest in QPL via EGCO BVI. QPL is a 502.5-megawatt (gross) pulverized coal-fired power unit using high quality coal imported from Indonesia as a primary fuel to generate and sell all net electricity output under the 25-year PPA with Manila Electric Company (“Meralco”), the country’s largest power distribution company, and provide additional load stability for the Luzon power grid. 3.3 Nam Theun 2 Power Company Limited (“NTPC”) NTPC has the installed capacity of 1,086.8 megawatt located in Lao PDR. It has an initial registered capital of USD 1 mil ion. Currently, EGCO holds a 25% stake of NTPC, while EDF International (a subsidiary of Electricite de France), Laos State Holdings Enterprise (LHSE), and Italian-Thai Development Public Company Limited own 35%, 25%, and 15%, respectively. NTPC signed a 25-year Concession Agreement with the Government of Lao PDR on October 3, 2002. NTPC also signed PPAs with EGAT and EDL on November 8, 2003 to supply 995 megawatt to EGAT and additional 75 megawatt to EDL for 25 years after the COD. On April 29, 2004, the project achieved the Financial Close and the first drawdown was on June 15, 2005. At the end of 2008, the overall project progress was 95.1% as planned. It was expected that the project could achieve the COD within December 2009 as scheduled. 4. Other Businesses 4.1 EGCO Engineering & Service Company Limited (“ESCO”) ESCO is EGCO’s wholly owned subsidiary which provides operation, maintenance, engineering and construction services to power plants, petrochemical plants, oil refineries and other industries including the Group companies. 4.2 Egcom Tara Company Limited (“ET”) EGCO holds 70% in ET via ESCO. Under a 30-year agreement, ET produces tap water according to Thai Industrial Standard (“TIS”) and supplies to the three water stations of the Provincial Waterworks Authority of Thailand (PWA), namely, Pak Tor Water Station, Damnoen Saduak Water Station and Samut Songkhram Water Station. 4.3 Eastern Water Resources Development and Management Public Company Limited (“East Water”) At the end of 2008, EGCO holds 18.72% of shares in East Water which is responsible for development and operation in the main raw water pipe network in the Thailand Eastern Seaboard area covering 7 provinces namely, Rayong, Chonburi, Chachoengsao, Prachinburi, Srakaew, Chantaburi and Trad.
Revenue Structure of EGCO and Subsidiaries /
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Power Industry and Competition
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The peak demand in 2008 was on April 21, 2008 at 22,568 MW, which was lower than the peak demand recorded in 2007 at 22,586 MW or 0.08% decrease from the previous year (figure 1). As of December 31, 2008, the total installed capacity of Thailand’s power system was 29,892 MW. Of that amount, approximately 50% (15,021 MW), 41%(12,152 MW), 7% (2,079 MW) was owned by EGAT, IPPs, and SPPs while approximately 640 MW or 2% was imported from Laos and Malaysia (figure 2) During the first half of the year 2008, the world’s economy and the Thai’s economy were in a good condition. However, after the third quarter, Thailand has faced both world economy decline and its political turmoil, which lowered the GDP growth. This had a direct impact on the electricity demand. As a result, the Ministry of Energy is revising the PDP 2007 for the second round and it is now in the process. Thailand’s last round of IPP bidding was ended in December 2007. Four power plant licenses were awarded by the Ministry of Energy with a total capacity of 4,400 MW, comprising 3,200 MW from gas fired projects and 1,200 MW from coal fired projects. Recently, only GHECO-One has passed the EIA approval process and started construction while the rests are waiting for the EIA approval and PPA sign with the tendency to delay the COD to be in line with the economic downturn situation. Losing an opportunity to invest in projects from the recent round of IPP bidding, EGCO and RATCH are missing out on domestic expansion opportunities during 2010-2013. GLOW is the only listed IPP that won a 660 MW coal-fired power plant, which is scheduled to commence operation in October 2011. With the unpleasant growth outlook in Thailand which limits upside for Thai power company, EGCO and other power companies need to adjust the business strategy to expand their investment in neighboring countries such as Lao PDR, Myanmar and Cambodia, which wil supply electricity back to Thailand, and also on investing in the project relating to fuel supply such as LNG. Moreover, EGCO wil pursue the investment possibility in renewable energy projects such as wind, waste and biomass power plants.
Figure 1 : Peak Demand 2004-2008
Peak Demand 2004-2008 24,000
MW
22,000 20,000
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18,000 16,000
Jan
Feb Mar Apr May Jun Jul 2004 2005 2006
Aug Sep Oct Nov Dec 2007 2008
Source : EGAT Figure 2 : Installed Capacity of Thailand’s Power System 2008 Installed Capacity of Thailand’s Power System 2008 EGAT 15,021 MW (50%)
IPPs 12,152 MW (41%)
Import from Laos and Malaysia 640 MW (2%) Source : EGAT
SPPs 2,079 MW (7%)
Shareholding and Management Structure EGCO is a listed company on the Stock Exchange of Thailand with the registered capital as shown in the following table. Category Registered Capital Paid Up Capital
No. of Shares (Mil ion shares) 530 526.465
Amount (mil ion baht) 5,300.00 5,264.65
The top ten shareholders as of September 1, 2008, the closing date of shareholders’ roster for the right to receive the interim dividend payment on September 11, 2008, are as follows. No.
Shareholders/1
Shares
% of Total
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1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Electricity Generating Authority of Thailand OneEnergy Thailand Ltd. Littledown Nominees Limited Chase Nominees Limited 1 State Street Bank and Trust Company, for London Bangkok Life Assurance Public Company Limited Chase Nominees Limited 73 HSBC (Singapore) Nominees Pte Ltd State Street Bank and Trust Company for Australia Norbax Inc.,13
133,773,662 118,023,606 25,872,900 12,643,800 10,399,170 8,835,000 6,377,200 6,348,597 5,063,340 4,769,200
25.41 22.42 4.91 2.40 1.97 1.68 1.21 1.21 0.96 0.91
Remarks /1 Excluding 48,215,531 shares under Thai NVDR which account for 9.158% of the total outstanding shares. Such
NVDR holders do not have the right to vote at the shareholders’ meeting. EGCO’s two major controlling shareholders are as follows : 1. Electricity Generating Authority of Thailand (“EGAT”): EGAT was incorporated under the criteria set forth in the
State Enterprise Capital Act with the objectives to generate, purchase, transmit and distribute electricity. EGAT
also provides the operation and maintenance services and invests in electricity related business. As a major shareholder, EGAT has four representative directors of all 15 directors. 2. OneEnergy Thailand Ltd. OneEnergy Thailand Ltd. is a 50:50 joint venture between CLP Holdings Limited
and Mitsubishi Corporation. OneEnergy Thailand Ltd. has the objective to invest in power business in the Southeast
Asia and Taiwan. As a major shareholder, OneEnergy Thailand Ltd. has four representative directors in EGCO. Information of investors under Thai NVDR Co., Ltd. was shown on the website: www.set.or.th/nvdr/
Organization Structure At the top of EGCO’s organization structure is the Board of directors, the standing committees, the President and the top management. 1. Board of Directors The Board of Directors has main responsibility to conduct a business in a way that wil benefit EGCO, shareholders and stakeholders including the employees and communities where EGCO operates its business. The Board works with the Management in formulating EGCO’s vision and policy and to approve the annual budget. Currently, the Board comprises 15 members: • 14 non-executives (including six independent directors), and • President, the only one executive member. The Board of Directors and their share ownership in EGCO as of December 31, 2008 are as listed below: No.
Name
1 Mr. Sanit Rangnoi 2 Mr. Aswin Kongsiri 3 Mr. Chaipat Sahasakul 4 Mrs. Wattanee Phanachet 5 Mr. Thanapich Mulapruk 6 Mr. Somphot Kanchanaporn 7 Mr. Phaiboon Siripanoosathien 8 Mr. Sombat Sarntijaree 9 Mr. Narongsak Vichetpan 10 Mr. Peter Albert Littlewood 11 Mr. Hideaki Tomiku 12 Mr. Mark Takahashi 13 Mr. Hideo Kuramochi 14 Mr. Visit Akaravinak1 15 Mr. Vinit Tangnoi2
Position
No. of No. of shares Shares Appointment December 31, December 31, Increase Date (Decrease) 2008 2007
Chairman November 27, 2006 Independent Director / April 24, 2006 Vice Chairman Independent Director April 25, 2005 Independent Director December 1, 2006 Independent Director April 23, 2007 Independent Director January 28, 2008 Independent Director September 9, 2008 Director April 23, 2007 Director June 29, 2007 Director April 25, 2005 Director April 23, 2007 Director October 30, 2006 Director April 21, 2008 President / Director April 23, 2007 President October 1, 2008
- -
- -
- -
- - - - - - - - - - - - -
- - - - - - - - - - - - -
- - - - - - - - - - - - -
Remarks 1 Mr. Visit Akaravinak’s contract as President expired on September 30, 2008. However, he continued his
directorship until his resignation on December 31, 2008. 2 Mr. Vinit Tangnoi was appointed a director and the President on April 21, 2008 and October 1, 2008
respectively.
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The lists of directors whose terms expired or who resigned in 2008 together with their share ownership in EGCO are as shown below. No.
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1 2 3 4
Name
Position
Mr. Richard McIndoe Director Mr. Chareon Prajumtan Independent Director Mr. Chamnong Wongsawarng Director Mr. Witoon Simachokedee Independent Director
Independent Directors
No. of shares
Retiring/ Resigning Date
December 31, 2008
December 31, 2007
April 21, 2008 April 21, 2008 April 21, 2008 August 1, 2008
- - - -
- - - -
No. of Shares Increase (Decrease)
- - - -
The Board in the meeting no. 7/2008 on September 8, 2008 has early adopted the qualifications of independent directors which is stronger than the previous one to comply with the notification of the Capital Market Supervisory Board no. 14/2008 re: “Filing for and Approval of Newly Issued Shares�. Under the new definition, EGCO independent director shall have the following qualifications. 1. Holding shares not more than 1% of the paid-up capital with the voting right of EGCO, parent company,
subsidiary company, associated company or any legal entity that may have the conflict of interest (including the
connected persons as stipulated in section 258 of securities laws) 2. Not being a director that takes part in the management (executive director, director who has the same
responsibility as management except for the signature in transactions approved by the Board and the joint
signing with other directors), employees, advisors who receive regular salary, and controlling person of EGCO,
parent company, subsidiary company, associate company and fellow subsidiary (subsidiary of the same holding
company) or any entity that may have a conflict of interest during the period of two years before his/her
appointment. 3. Not being a person who is related by maternity and by registration as parent, spouse, brother, sister, and son
and daughter including their spouses of the management, or major shareholders, controlling persons or persons
who wil be nominated to be the Management or controlling persons of EGCO or its subsidiaries. 4. Not having business relationship with and not being a major shareholder, non-independent director or
management of EGCO, parent company, subsidiary company, associate company or any entity that may have
a conflict of interest in a way that would affect the giving of independent opinions during the period of two
years before the filing date. 5. Not being an auditor or a major shareholder, director, management or partner of the audit firm that provides
auditing services to EGCO, parent company, subsidiary company, associate company or any entity that may
have a conflict of interest during the period of two years before the filing date. 6. Not providing any professional service or being a major shareholder, non- independent director, management or
partner of the company that provide professional service which include financial and legal advices with the fee
higher than 2 mil ion baht per year during the period of two years before the filing date. 7. Not being appointed as a representative to safeguard interests of EGCO director, majority shareholders or
shareholders who are related to EGCO’s majority shareholders. 8. Not having any constraint that would affect the performance of giving independent judgment on EGCO. The Nomination and Remuneration Committee shall review the appropriateness of the independent director definition.
Currently, there are 6 independent directors of all 15 directors who meet the above qualifications which accounts for more than one-third of all directors.
Authorized Directors
EGCO determines that the authorized directors comprise Chairman or President to sign and affix the company’s seal independently, or any two directors to sign jointly and affix the company’s seal. Such authorized directors exclude (1) independent directors to maintain their independence under the good corporate governance principle and (2) directors who are also directors of the financial institutions to avoid the limitation that such financial institutions cannot provide future financial service to EGCO.
Appointment, Resignation, and Dismissal of Directors
The Board of Directors, which comprises not less than five and not more than 15 directors, shall be elected by shareholders, provided that not less than half of them must reside in Thailand. If a directorship becomes vacant for any reason other than by rotation, the Board in the subsequent meeting shall elect a person who is qualified to fil in the vacancy by the votes of not less than three-forth (3/4) of the remaining directors. The director who fil s in the vacancy shall retain the office for only the remaining term of office of the director whom s/he replaces. At every annual ordinary meeting, one-third of the directors shall retire from office. If the number of directors is not a multiple of three, the number nearest to one-third must retire from office. Additionally, any director who wishes to resign from office may do so by submitting a resignation letter to the company. Such resignation shall be effective from the date the resignation letter reaches EGCO. In voting for the dismissal of any directors from office before the expiration of his or her term of directorship, a fourfifth (4/5) vote of eligible shareholders present at the meeting shall be required.
Board of Directors’ Duties and Responsibilities
The duties and responsibilities of the Board of Directors are as prescribed below.
1. Duties to EGCO
• To devote time to EGCO and conduct the business in compliance with the governance principles and EGCO’s
code of conduct. • To demonstrate independent judgment in overseeing EGCO business. • To have full ethical and legal responsibility towards shareholders while taking into account the interests of other
stakeholders. • To endeavor to recruit competent key management who wil fully devote themselves for the benefit of EGCO. • To monitor EGCO’s business and the compliance with the laws, rules, regulations and contract provisions and wil
require the Management to submit report on EGCO’s significant matters to ensure effective corporate performance.
2. Duties to the Shareholders
• To endeavor to ensure that EGCO is financially viable, properly managed and constantly improved so as to
protect and enhance the interests of the shareholders. • To endeavor to ensure that the information disclosure is material y correct, complete, transparent and timely. • To endeavor to ensure that shareholders are treated on equitable basis. • Not to submit fault information and to ensure that true and accurate information regarding the operating results
and financial position is reported in accordance with the disclosure requirements.
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3. Duties to Creditors
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• To endeavor to ensure that EGCO complies with the loan provision and EGCO’s financial status is correctly
disclosed. • To seek professional advice in case of doubt about the likely impact on lenders such as when EGCO’s financial
position is uncertain or insolvency may be pending.
4. Duties to other Stakeholders
• To endeavor to ensure that EGCO complies with the governing laws and regulations while taking into account the impact on employees, other stakeholders, community, society and environment.
5. Due Diligence
• To attend all Board meetings but where attendance at meetings is not possible, directors wil take appropriate
step to obtain leave of absence. • To acquire knowledge about EGCO, the statutory and regulatory requirements affecting directors in the discharge
of their duties as EGCO director, and to be aware of the environment that has the impact on EGCO. • To endeavor to ensure that necessary data are provided in advance to allow adequate time to analyze, make
thorough judgment and so discharge the duties of care and diligence. • To endeavor to ensure independent judgment and in case of dissent to any Board’s resolution, may request the
record of objection in the Minutes of Meeting. • To endeavor to ensure that the system is established within EGCO to provide the Board, on a regular and timely
basis, with necessary data to enable directors to make a reasoned and careful judgment. • To endeavor to make sure that relations between the Board and the auditors are open and that the auditor can
work independently and efficiently with the full co-operation from management and the internal auditors. • To strive to ensure that EGCO complies with the governing laws, rules, regulations and business standard
and ethics. • In any case of doubt in the capacity of directors and committee members, to seek advise from EGCO’s
advisors who are experts in each areas and to engage independent advisors for the governance benefits
such as legal advisors, financial advisors, HR advisors, other professional advisors on EGCO’s expenses.
Board of Director Evaluation
The Board approved the self appraisal form reviewed by the Nomination and Remuneration Committee. In 2008, the Board adopted the same self appraisal from as 2007 which was based on the forms recommended by the New Zealand Institute of Directors and the forms adopted by other peer companies in the energy sector. The self appraisal form comprises two parts: collective appraisal form and individual appraisal form. The collective appraisal form comprised 14 sections, namely (1) shareholders, (2) stakeholders, (3) the Company, (4) legal/ethical duties, (5) monitoring performance and agenda setting, (6) size, composition and independence of the Board, (7) director orientation and development, (8) Board leadership and teamwork, (9) the CEO, (10) Board (and Committee) meetings, (11) individual Board member contributions, (12) director and Board evaluation and compensation, (13) management evaluation, compensation and ownership and (14) succession Planning. The individual appraisal form comprised 7 sections, namely (1) strategic thought, (2) good corporate governance,
(3) competence, (4) independence, (5) preparedness as a director, (6) personal attributes and (7) awareness of stakeholders. Result of the appraisals as well as directors’ recommendation will be used to enhance the Board’s performance each year.
2. Standing Committees’ Structure The board of directors has appointed 4 standing committees to help scrutinize significant matters. The details of the standing committees are as follows.
Audit Committee
The Audit Committee comprises at least 3 independent directors for a 3-year term of service, with one year for this purpose meaning the period between the Annual General Meeting (“AGM”) of shareholders when s/he is appointed and the next succeeding AGM. As at December 31, 2008, the Audit Committee has four members as listed below: No.
Name
Position
1 Mr. Chaipat Sahasakul Chairman 2 Mrs. Wattanee Phanachet Director 3 Mr. Somphot Kanchanaporn Director 4 Mr. Thanapich Mulapruk Director
Remarks Independent director with finance and accounting
background Independent director with finance and accounting
background Independent director Independent director
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. The responsibilities of the Audit Committee are detailed below. 1. Review the accuracy and adequacy of EGCO’s financial reporting. 2. Review the appropriateness and effectiveness of internal control systems, and internal audit functions and
determine the Internal Audit Division’s independence, as well as to approve the appointment, rotation and
removal, and performance development and appraisal of the Chief Internal Audit. 3. The Chief Internal Audit shall present the appointment, rotation, promotion, removal, and performance
development as well as appraisal of internal audit staff to the Audit Committee to consider whether the motion of dissent would be raised. 4. Monitor EGCO’s compliance with Securities and Exchange Acts and Regulations of the SET, and any other laws
relevant to EGCO’s business. 5. Recommend the Board of Directors an independent person to be EGCO’s auditor as well as the audit fees for
appointment by the shareholders to audit EGCO’s financial statements. 6. Attend a non-management meeting with an auditor at least once a year. 7. Consider the connected transactions or any transactions that may cause conflict of interest complying well as
the audit fees for appointment by the shareholders to audit EGCO’s financial statements. 8. Review the Internal Audit Charter prior to submission to the Board of Directors for approval. 9. Approve the internal audit plan as well as budget and personnel. 10. Review the internal audit function, including: independence of internal audit division and reporting obligation. 11. Review or modify code of conduct prior to submission to the Board of Directors for consideration. 12. Review with the Management to ensure that the Management wil act as the role models in complying with the
code of conduct, and that the staffs comply with EGCO’s Code of Conduct. 13. Review with the Management the preparation of the Management’s Discussion and Analysis or MD&A and its
disclosure in the Annual Report.
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14. Review with the Management the risk management policy, the practice compliance with such policy, as well as
EGCO’s risk management guidelines. 15. Prepare a report that describes the Audit Committee’s activities and responsibilities. This report shall be signed by
the Chairman of the Audit Committee and published in the annual report to the shareholders. The Audit
Committee’s Report shall consist of at least the following information: (a) an opinion on the accuracy, completeness and creditability of EGCO’s financial report, (b) an opinion on the adequacy of EGCO’s internal control system, (c) an opinion on the compliance with the law on securities and exchange, the Exchange’s regulations, or
the laws relating to EGCO’s business, (d) an opinion on the suitability of an auditor, (e) an opinion on the transactions that may lead to conflicts of interests, (f) the number of the Audit Committee meetings, and the attendance of such meetings by each
committee member, (g) an opinion or overview comment received by the Audit Committee from its performance of duties in
accordance with the charter, and (h) other transactions which, according to the Audit Committee’s opinion, should be known to the
shareholders and general investors, subject to the scope of duties and responsibilities assigned by the
Board of Directors. 16. Inspect any suspiciousness reported by EGCO’s auditor, that the President, the Management or any person
responsible for EGCO’s operation commits an offence under the Securities and Exchange Act (No. 4) B.E. 2551
and report the result of preliminary inspection to the Office of the Securities and Exchange Commission and the
auditor within thirty days after being informed by the auditor. 17. Review the Audit Committee Charter at least annually. 18. Perform any other act as assigned by the Board of Directors with approval of the Audit Committee. With regard to the above responsibilities, the Committee is accountable to EGCO Board of Directors whereas the Board of Directors remains responsible for EGCO’s action against the third parties. The Audit Committee conducts the self-appraisal annually and reports the result to the Board. For 2008, the Audit Committee used the questionnaire which was adapted from the Booklet: “Audit Committee – Good practices for meeting market expectations - 2nd edition” which was studied by PricewaterhouseCoopers’ Global Corporate Reporting. The result indicated that the composition, qualifications and performance of the Audit Committee were in line with the recommendations of the SET and the international best practice. There were 13 meetings in 2008 of which the attendance rate was 97.44%.
Executive Committee
The Executive Committee comprises 5 directors of which the office term is the same as their directorship. As at December 31, 2008, the Executive Committee comprises the following directors. No. 1 2 3 4 5
Name Mr. Sanit Rangnoi Mr. Sombat Santijaree Mr. Mark Takahashi Mr. Hideaki Tomiku Mr. Vinit Tangnoi
Position Chairman Director Director Director Director
Remarks Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Executive Director
The Executive Committee governs EGCO business within its delegated authority as well as scrutinizes other matters to be proposed to the Board. The detailed responsibilities are described below. 1. To consider EGCO’s business plan and annual budget for presentation to the Board. 2. To consider and to approve investments and divestments of assets, credit, borrowings, debt restructuring, expenditures, other financing transactions and financial instruments, according to EGCO’s table of authority
approved by the Board. 3. To formulate the overall investment strategy and investment policies in line with the EGCO’s own policy, and to
approve investment guidelines and investment requests in accordance with EGCO’s regulations. 4. To consider and take action on other important issues relating to EGCO’s operations. 5. To screen issues and make recommendations prior to their submission to the Board. 6. To propose the establishment and assessment of corporate KPI for approval by the Nomination and Remuneration 53 Committee. 7. To propose/endorse the organizational structure, restructuring and governance of EGCO (Division level up) 8. To consider issues which are assigned by the Board. There were 15 meetings in 2008 of which the attendance rate was 91%.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee comprises 4 directors for a 3-year term of service with one year for this purpose meaning the period between the AGM of shareholders when s/he is appointed and the next succeeding AGM. In order to maintain continuity, members may be re-elected. As at December 31, 2008 the Nomination and Remuneration Committee comprises the following directors.
No.
Name
Position
1 2 3 4
Mr. Mark Takahashi Mr. Narongsak Vichetpan Mr. Aswin Kongsiri Mr. Phaiboon Siripanoosatien
Chairman Director Director Director
Remarks Non-Executive Director Non-Executive Director Independent Director Independent Director
The mission of the Nomination and Remuneration Committee is detailed below. 1. To recommend the structure and composition of the Board and committee together with the qualification of its
members. 2. To recommend the list of nominees for the Board of Directors to be proposed to the shareholders’ annual
general meeting in case of vacancies by rotation and to the board in case of casual vacancies. 3. To recommend committee members as well as directors to oversee the functions and participate as members in
EGCO’s risk management committee. 4. To scrutinize the list of nominees for EGCO President in case of vacancy including the establishment of the
succession plan for executives. 5. To approve the appointment, promotion, rotation and removal of the senior executives of EGCO (Executive Vice
Presidents and Senior Executive Vice Presidents) and to nominate senior executives of subsidiary/joint venture
companies that EGCO had the right to nominate for a position equivalent to EGCO’s EVP level and upward.
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6. To nominate EGCO representatives to be directors of the subsidiary or associated companies according to equity
proportion or shareholders’ agreement. 7. To endorse the performance evaluation of EGCO President. 8. To endorse the performance evaluation of EGCO Management (Senior Executive Vice President and Executive
Vice President). 9. To recommend the remuneration structure of the directors and senior executives of EGCO and subsidiary and
associated companies including meeting allowances, bonus, welfare and other benefits both in monetary and
non-monetary terms. 10. To recommend policies and guidelines in determining the remuneration package of the senior executives on an
annual basis. 11. To evaluate the corporate performance of EGCO to determine the bonus and annual salary increase across
EGCO Group. 12. To recommend EGCO’s salary structure and other benefits. There were 10 meetings in 2008 of which the attendance rate was 98%.
Corporate Social Responsibility Committee (CSR Committee)
The Corporate Social Responsibility Committee comprises 5 directors with the President as the Chairman. Two of the CSR members shall be directors/director nominees and the other two shall be Management. The term of office of each CSR director member is three years and can be re-elected. The term of CSR management member is as deemed appropriate by the Board of Directors but should not exceeding their service term. In order to maintain continuity, members may be re-elected. As at December 31, 2008 the Corporate Social Responsibility Committee comprises the following directors. No. 1 2 3 4 5
Name Mr. Vinit Tangnoi Mr. Narongsak Vichetpan Dr. Chaiyod Bunyakidj Mr. Sakda Sreesangkom Mr. Chankij Jearaphunt
Position Chairman Director Director Director Director
Remarks Executive Director Non-Executive Director Outside Director Management Management
The mission of the Corporate Social Responsibility Committee is detailed as follows. 1. To consider and endorse EGCO Group social and environment policies for Board’s approval. 2. To review and endorse Group’s strategies and activities to meet Group CSR goals and policies. 3. To endorse annual plan and budget for CSR activities for the Executive Committee and Board’s approval. 4. To review and monitor progress of CSR activities and to appraise the achievements and the quality of CSR
projects. There were 3 meetings in 2008 of which the attendance rate was 100%.
3. Management Structure The President acts as the head of the Management team with 4 business units: • Three major business units namely Business Development, Asset Management and Planning and Finance with
Senior Executive Vice President as a Group Head, • One supporting business units namely Corporate Services with Executive Vice President as a Group Head, • Four divisions under the President’s supervision namely Corporate Communications, Controller, Internal Audit and
Corporate Secretary. The last two divisions report administratively to the President, but directly report to the Audit
Committee and the Board of Directors, respectively.
President
The President is responsible for managing EGCO’s business in consistent with the objectives, articles of associations, regulations and the resolution of the Board. The President is also in charge of supervising employees and completing 55 activities assigned by the Board including the following activities. • To manage EGCO’s day-to day business, • To hire, appoint, remove, transfer, promote, demote, assign, and take disciplinary action against employees and
workers from division managers downward (excluding the internal audit manager and corporate secretary), • To ensure the implementation of the policies, plans, and budgets approved by the Board. In this respect, the President is allowed to delegate his authority to other employees but is stil accountable for the decision of his delegates.
Management
The list of the Management team and their share ownership in EGCO as at December 31, 2008 is as follows :
No. of Shares No. of Shares No. Name Title December December Increase 31, 2008 31, 2007 (Decrease) 1 Mr. Vinit Tangnoi President and acting as Senior - - - Executive Vice President-Asset Management and Planning /1 President and acting as Senior - - - 2. Mr. Visit Akaravinak Executive Vice President-Asset Management and Planning 3 Mr. Sakda Sreesangkom Senior Executive Vice President-Finance - - - 4 Mr. John Palumbo Senior Executive Vice President-Business - - - Development 5 Mr. Chumsak Desudjit Senior Executive Vice President and Managing - - - Director of REGCO 6 Mr. Chankij Jearaphunt Senior Executive Vice President and Managing - - - Director of KEGCO 7 Mr. Piya Jetasanon First Senior Vice President - Finance Division - - - 8 Mr. Suvapan Chomchalerm Senior Vice President - Accounting and Budget Division - - -
Remarks 1 Mr. Visit Akaravinak’s contract as President expired on September 30, 2008.
Corporate Secretary
The Board in the meeting no. 6/2008 appointed Ms. Busakorn Kakanumpornwong the Corporate Secretary effective August 18, 2008 with the duty and responsibility as prescribes in the Securities and Exchange Act (No. 4) B.E. 2551.
Ms. Busakorn also serves as the Board secretary to handle functions to assist the Board as well as to coordinate subsequent actions under the Board’s resolution.
Management Committees
EGCO has set up the following committees to ensure the appropriateness and efficiency of business management.
Group Business Committee:
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The Board of Directors appoints the Group Business Committee which comprises outside professionals and Executives of EGCO Group in the appropriate number. The Committee is chaired by the President. The term of office for the outside professionals is 1 year, with a year for this purpose meaning the period between the AGM of REGCO KEGCO and ESCO’s shareholders when s/he is appointed as a director and the next succeeding AGM. The term of office for the executives is the same as their executive terms. As at December 31, 2008, the members of the Group Business Committee are as shown below: Title 1. President 2. Senior Executive Vice President-Finance 3. Senior Executive Vice President-Asset Management and Planning 4. Senior Executive Vice President and Managing Director of REGCO 5. Senior Executive Vice President and Managing Director of KEGCO 6. Executive Vice President and Managing Director of ESCO 7. Mr. Kwok Wing Ho 8. Mr. Nopporn Phansaengdao 9. Senior Vice President - Corporate Secretary Division
Position Chairman Member Member Member Member Member Member (outside professional) Member (outside professional) Secretary
The Group Business Committee is accountable for the following responsibilities 1. To act as the Board of Directors of the 100% equity subsidiaries namely REGCO, KEGCO, and ESCO. 2. To oversee that the operating assets comply with laws, regulations, governing documents and company’s
regulations. 3. To consider and endorse the business plan, annual budget and KPIs for the operating assets to the Executive
Committee for its consideration. 4. To direct asset management function to comply with the corporate plan and budget and meet both the
short-term and medium-term corporate targets. 5. To oversee EGCO’s operating assets to ensure that the operating results and return on investment are in line with
the plan and projection under the support of the Asset Management and Planning Group. 6. To propose/endorse the organizational structure, restructuring and governance of Group Companies (Division
level up). 7. To recommend the appointment, rotation and removal of the Managing Directors and Deputy Managing
Directors of the wholly owned subsidiaries for the Nomination and Remuneration Committee’s approval. The Group Business Committee’ meetings are called as necessary. In 2008, there were 8 meetings.
EGCO Management Committee:
The President has set up EGCO Management Committee which currently comprises the following members.
Title
1. President 2. Senior Executive Vice President-Finance 3. Senior Executive Vice President-Business Development 4. Senior Executive Vice President-Asset Management and Planning 5. Senior Executive Vice President and Managing Director of REGCO 6. Senior Executive Vice President and Managing Director of KEGCO 7. Executive Vice President and Managing Director of ESCO 8. Executive Vice President-Corporate Service 9. Senior Vice President-Corporate Secretary
Position Chairman Member Member Member Member Member Member Member Secretary
EGCO Management Committee is responsible for formulating business policy of EGCO Group, scrutinizing all proposals to be presented to the Board and standing committees and monitoring the operation of the Group. The EGCO Management Committee meetings are called as necessary. In 2008, the Committee held 25 meetings.
Good Governance Committee:
The President sets up the Good Governance Committee which currently comprises the following members.
Title
1. President 2. Senior Executive Vice President-Finance 3. Senior Executive Vice President-Business Development 4. Senior Executive Vice President-Asset Management and Planning 5. Senior Executive Vice President and Managing Director of REGCO 6. Senior Executive Vice President and Managing Director of KEGCO 7. Executive Vice President and Managing Director of ESCO 8. Executive Vice President-Corporate Services 9. Senior Vice President-Legal 10. Senior Vice President-Corporate Communications 11. Senior Vice President-Human Resources 12. Senior-Vice President-Corporate Secretary 13. Senior-Vice President-Internal Audit
Position Chairman Member Member Member Member Member Member Member Member Member Member Member and Secretary Member and Secretary
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The Good Corporate Committee is in charge of the following responsibilities. 1. To consider international criteria and practices of Good Corporate Governance and those of the SET and SEC, 2. To formulate the policy, guidelines and practices of the Group in compliance with the Good Corporate
Governance, and 3. To revise the Code of Conduct to suit the business environment and convey it to all employees as well as
providing cooperation to promote the practice in the Group. The Good Corporate Governance Committee meets when necessary. In 2008, there was only one meeting.
Risk Management Committee:
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The President establishes the Risk Management Committee which comprises of the following members.
Title
1. President 2. Senior Executive Vice President-Finance 3. Senior Executive Vice President-Business Development 4. Senior Executive Vice President-Asset Management and Planning 5. Senior Executive Vice President and Managing Director of REGCO 6. Senior Executive Vice President and Managing Director of KEGCO 7. Executive Vice President and Managing Director of ESCO 8. Executive Vice President - Corporate Services 9. Senior Vice President-Internal Audit
Position Chairman Member Member Member Member Member Member Member Secretary
The Risk Management Committee meets when necessary and directly reports to the Audit Committee. Its responsibilities are as follows. 1. To determine the risk management criteria for EGCO and subsidiaries, 2. To determine the risk management evaluation and mitigation, 3. To monitor compliance with risk management framework 4. To revise EGCO’s risk factors to comply with the regulations of Good Governance authorities, and 5. To report its performance to the Audit Committee and the Board of Director. In 2008, the Risk Management Committee held six meetings.
Safety Health and Environment Committee:
The President establishes the Safety Health and Environment Committee which comprises of the following members.
Title
1. Executive Vice President-Project Management 2. Vice President-Human Resources of REGCO 3. Vice President-Safety of KEGCO 4. Vice President-Safety of ESCO 5. Power Plant Manager-EGCO Cogen 6. Power Plant Manager-Roi-Et Green 7. Manager-Tap Water of Egcom Tara 8. Senior Vice President-Asset Management 9. Assistant Vice President-Asset Management
Position Chairman Member Member Member Member Member Member Member and Secretary Member and Assistant Secretary
The Safety Health and Environment Committee is in charge of the following responsibilities. 1. To determine the policy and plan regarding the safety, health and environment (SHE) of EGCO Group to be in
compliance with the strategic plan. 2. To implement the SHE for EGCO Group. 3. To monitor and evaluate the SHE performance of EGCO Group. 4. To improve and develop the SHE implementation of EGCO Group. In 2008, there were 3 Safety Health and Environment Committee meetings. 4. Director and Management Selection To ensure the appropriateness of director and management selection for efficient governance, EGCO sets up the following framework.
Director Election and Appointment
EGCO endeavors to select capable directors to govern the company, designate the corporate policies and sanction its business plans for the benefit of EGCO and shareholders. With respect to this, EGCO puts an emphasis on the director nomination and selection process taking into account the following qualifications and experiences in considering each individual candidates. 1. Legal requirement and regulations and notifications of SET and SEC regarding the directors’ qualifications, 2. Directors’ qualifications prescribed in Directors’ Code of Conduct namely honesty, virtue, initiative and
achievement, excellence, accountability, justice, independence, equality of shareholder opportunity, 3. Knowledge and experiences beneficial to EGCO’s business, 4. Trainings and experience at the policy making level in corporate governance, 5. Wil ingness to represent the best interests of all shareholders, 6. Wil ingness to devote time and effort to contribute to EGCO’s development.
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The Board has delegated to the Nomination and Remuneration Committee the duty of selecting and recommending prospective nominees, whether they are to become the shareholders’ representatives or independent directors, for the Board’s approval. The Nomination and Remuneration Committee is also responsible for assessing the appropriate mix of skil s and characteristics required of Board members in the context of the needs of the Board at a given point in time and shall periodically review and update the criteria as deemed necessary. The nomination of directors to succeed those who retire by rotation must be individually approved at the shareholders’ meeting based on the voting 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 at such time. 3. In a case that a shareholder elects more than one director, s/he may exercise all the votes s/he has, provided
that s/he may not split his votes among any such persons. 4. The persons receiving the highest number of votes in respective order shall be appointed directors depending on
the requirements 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. Directors must be appointed by the vote 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, EGCO shall present details of a given nominee such as education background, occupation, directorship in other companies, relevant experiences, and il egal 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 Nomination and Remuneration Committee wil 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 fil s in the vacancy shall retain the office for only the remaining term of office of the director whom s/he 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.
Right of Minority Shareholders
To ensure that EGCO treats shareholders equitably, the Board encourages minority shareholders to make recommendation on the director candidates with clear and transparent procedures as posted on EGCO website.
Director Orientation and Training
All new directors must participate in EGCO’s orientation program. This orientation wil include presentations by senior management to familiarize new directors with EGCO’s significant issues, Directors’ Manual and EGCO’s Code of Conduct for Directors and Employees. Any sitting directors and other top management may attend the orientation program. The information of the directors’ manual comprises role, duty and responsibility, Securities’ Dealing by Directors, Notification of Personal Interest of Director, Meeting Management, Disclosure Policy, Contact with management, Board’s and Committees’ Remuneration and Fringe Benefits, Table of Authority and EGCO general information.
EGCO encourages directors to attend courses to enhance their knowledge and understanding on good corporate governance. Directors can apply for the training courses at the Thai Institute of Directors or relevant organizations on EGCO’s expenses.
Management Selection and Appointment
The Board determines policies and principles for selection of the President and policies regarding succession in the event of an emergency or the retirement of the President taking into account educational background, experiences, capabilities, ethics and leadership. The Nomination and Remuneration Committee shall consider and propose the qualified candidates to the Board. The President is entrusted to select the knowledgeable, competent and experienced Executives in accordance with the qualifications and selection process stated in EGCO Regulation on Human Resource Management B.E. 2550 and the 61 resolution of the Board as follows. 1. The Nomination and Remuneration Committee shall approve the appointment of Senior Executive Vice President,
Executive Vice President, the subsidiaries’ Managing Director and Deputy Managing Director. 2. The President shall appoint the division and section managers. The appointment of Secretary to the Board and
the Assistant Secretary to the Board shall be approved by the Board of Directors while the appointment of
Division Manager of Internal Audit shall be endorsed by the Audit Committee. 5. Director and Management Remuneration EGCO sets the policy to reward directors and management with appropriate remuneration. In this respect, the Nomination and Remuneration Committee is entrusted to review the appropriate rate that comparable to the responsibility, company’s financial status and peer practices.
Director Remuneration
The guidelines for director remuneration are as follows. • The remuneration comprises monthly retainer fee, meeting allowance and bonus. • Directors who serve as committee members wil be entitled to extra remuneration to match the increased in
responsibilities. • The Management who serve as directors and committee members shall refrain from remuneration. In 2008, the Shareholders’ Meeting resolved that the directors’ remuneration comprised the monthly retainer fee and meeting allowance to reflect the liabilities, time devotion and meeting attendance of each director. On the other hand, the bonus payment was tied with the company’s achievement. Details were as follows. 1. Monthly retainer fee at 30,000 baht and meeting allowance at 10,000 baht each. In case of director resignation,
retainer fee would be paid to each director/ committee member 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 of 20 mil ion baht would be allocated taking into account the success of governing the operating assets,
the progress of new projects and the recognition on good corporate governance. The allocation would be at
the Board’s discretion.
In this regard, the directors’ remuneration for 2008 is summarized below. Total Remuneration in 2008 No. of months Meeting (Monthly Retainer Appoi n ment in service Attendance Meeting Allowance) Bonus /2 Total No. Name Date (9 Director Standing 2008 2007 Remuneration Times/Year) Committee/1 1. Mr. Sanit Rangnoi November 12 12 8/9 550,000.00 700,000.00 1,490,080.00 2,740,080.00 27, 2006 2. Mr. Aswin Kongsiri April 24, 2006 12 12 9/9 450,000.00 288,000.00 1,323,990.00 2,061,990.00 April 25, 2005 12 12 9/9 450,000.00 612,500.00 1,323,990.00 2,386,490.00 3. Mr. Chaipat Sahasakul 12 9/9 450,000.00 490,000.00 1,323,990.00 2,263,990.00 4. Mrs. Wattanee Phanachet December 12 1, 2006 5. Mr. Thanapich Mulapruk April 23, 2007 12 8 9/9 450,000.00 232,400.00 885,430.00 1,567,830.00 12 - 8/8 414,000.00 444,000.00 - 858,000.00 6. Mr. Somphot Kanchanaporn January 28, 2008 7. Mr. Phaiboon Siripanoosatien September 4 - 2/2 132,000.00 89,600.00 - 221,600.00 9, 2008 8. Mr. Sombat Sarntijaree April 23, 2007 12 12 8/9 440,000.00 560,000.00 1,299,030.00 2,299,030.00 June 29, 2007 12 6 9/9 450,000.00 388,000.00 664,340.00 1,502,340.00 9. Mr. Narongsak Vichetpan 12 8/9 440,000.00 - 1,207,070.00 1,647,070.00 10. Mr. Peter Albert Littlewood April 25, 2005 12 April 23, 2007 12 12 9/9 450,000.00 400,000.00 1,272,230.00 2,122,230.00 11. Mr. Hideaki Tomiku October 12 12 8/9 440,000.00 718,800.00 1,323,990.00 2,482,790.00 12. Mr. Mark Takahashi 30, 2006 13. Mr. Hideo Kuramochi April 21, 2008 9 - 7/7 320,000.00 - - 320,000.00 /3 April 23, 2007 12 12 9/9 110,000.00 - - 110,000.00/3 14. Mr. Visit Akaravinak April 21, 2008 9 - 7/7 210,000.00/4 - - 210,000.00/4 15. Mr. Vinit Tangnoi The directors retired by rotation and tendered their resignation during 2007-2008 April 26, 2004 - 3 - - - 1,052,350.00 1,052,350.00 1. Mr. Worawit Khamkanist November - 6 - - - 726,520.00 726,520.00 2. Dr. Pornchai Rujiprapa 27, 2006 3. Mr. Kitti Sirikwin April 26, 2004 - 3 - - - 862,510.00 862,510.00 April 21, 2008 4 12 2/2 131,000.00 88,800.00 1,323,990.00 1,543,790.00 4. Mr. Chareon Prajumtan April 21, 2008 4 12 0/2 111,000.00 231,000.00 1,183,720.00 1,525,720.00 5. Mr. Richard McIndoe 12 2/2 131,000.00 - 1,282,240.00 1,413,240.00 6. Mr. Chumnong Wongsawarng April 21, 2008 3 12 3/3 130,000.00 - - 130,000.00 7. Mr. Witoon Simachokedee August 1, 2008 4 Total 6,259,000.00 5,243,100.00 18,545,470.00 30,047,570.00
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Standing Committee are 1. Executive Committee 2. Audit Committee 3. Nomination and Remuneration
Committee 4. Corporate Social Responsibility Committee /2 Bonus for Board of Directors in 2007 was paid in May 2008, as resolved by the Shareholders in the Annual
General Meeting No.1/2008 on April 21, 2008 /3 The retainer fee and meeting allowance be paid to Mr. Visit Akaravinak during October 1, 2008- December
30, 2008 as the director. /4 The retainer fee and meeting allowance be paid to Mr. Vinit Tangnoi during April 21, 2008 - September
30, 2008 as the director. /1
Management Remuneration
The Management’s remuneration which comprises both salary and bonus is determined to be linked with the corporate and individual achievement based on the remuneration structure approved by the Board. EGCO periodically conducts the survey of the executive remuneration to ensure that the rate is comparable to their work and those of the peer companies. In this regard, the Management’s remuneration for 2008 was summarized below. (Unit : Baht) 2008 /1 Total Remuneration Remuneration Executive Director (1 Person) Management (6 Persons) /2 Total Salary - 17,998,140.00 17,998,140.00 /3 Bonus - 6,224,660.00 6,224,660.00 Meeting Allowance - - - Total - 24,222,800.00 24,222,800.00
/1 Executive Director is defined as director who is also management of EGCO. In this regard, the President is the
executive director. He is not entitled to the retainer fee or meeting allowance as members of the standing
committees. /2 These included 6 management namely the President, Senior Executive Vice President - Asset Management
and Planning (SEVP-AMP) (President is acting as SEVP-AMP but he receives the remuneration only for the
position of President), Senior Executive Vice President –Business Development, Senior Executive Vice President -
Finance, two Senior Executive Vice Presidents who are seconded to be the Managing Directors of REGCO and KEGCO. Since the MDs of REGCO and KEGCO are paid by those companies. EGCO is responsible for the
remuneration of only four managements. /3 The 2008 Bonus was paid in January 2009.
Total Remuneration of Core Subsidiaries’ Management
The remuneration of the Management of core subsidiaries (REGCO, KEGCO and EGCO Cogen) in 2008 is detailed below.
Remuneration Directors (10 Persons) Salary - /1 Bonus - Meeting - /2 Allowance Total -
19,210,464.23
19,210,464.23
-
20,041,065.00
20,041,065.00
Directors (5 Persons) - - - -
EGCO Cogen Management /3 Total (1 Person) Remuneration 1,416,000.00 1,416,000.00 552,004.00 552,004.00 - - 1,968,004.00
1,968,004.00
The 2008 bonus was paid in January 2009. EGCO was responsible for the meeting allowance of REGCO and KEGCO Board. /3 EGCO COGEN Management was assigned from EGCO under the Service Agreement between EGCO and EGCO
COGEN.
/1
/2
REGCO Management Total (7 Persons) Remuneration 13,380,560.00 13,380,560.00 5,829,904.23 5,829,904.23 - -
Year 2008 KEGCO Directors Management Total (10 Persons) (7 Persons) Remuneration - 13,984,620.00 13,984,620.00 - 6,056,445.00 6,056,445.00 - - -
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Other Remuneration
In 2008, EGCO and its core subsidiaries contributed their parts to the provident fund for their respective Managements as follows.
(Unit : Baht)
Members 3 7 7 1
Provident fund 606,759.00 1,333,254.00 1,398,462.00 141,600.00
6. Employees
EGCO
As of December 31, 2008, EGCO has 121 headcounts which include the President, two Senior Executive Vice Presidents, ten executives who are seconded to be management of Group companies and 108 staffs. The number of staffs in each reporting line is as show below: Key Areas 1. President 2. Business Development 3. Asset Management and Planning 4. Finance 5. Corporate Services Total
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Company EGCO REGCO KEGCO EGCO Cogen
Year 2008
Members (Persons) 31 14 28 24 24 121
Core Subsidiaries
A. REGCO and KEGCO: Employees 1. Operation 2. Maintenance 3. Others Total
Total (Persons) REGCO KEGCO 74 77 46 55 30 25 150 157
B. EGCO Cogen: There are three permanent staff members who serve EGCO Cogen. The general manager is assigned from EGCO under the service agreement between EGCO and EGCO Cogen. The Operation and Maintenance staffs of 31 headcounts are ESCO employees who work under the O&M service agreement between ESCO and EGCO Cogen. EGCO did not have the significant change in number of employees. Besides, there is no il egal labor dispute in the past three years.
7. Employee Remuneration EGCO has the policy that the employees in the Group have fair remuneration which is comparable to the peer companies. Remuneration of employees of EGCO and core subsidiaries in 2008 is as shown below: (Unit : Baht) Amount Remunerati o n /1 EGCO REGCO KEGCO EGCO Cogen /2 Total Salary 116,258,050.33 99,879,454.96 126,656,040.00 2,624,800.00 /3 40,956,066.66 44,566,538.73 57,344,057.00 1,033,426.85 Bonus Provident Fund 10,069,992.77 9,869,487.68 12,632,703.00 299,810.00 Total 167,284,109.76 154,315,481.37 196,632,800.00 3,888,036.85
Include salary and bonus of the executive on one year contract Include the salary and bonus of EGCO COGEN General Manager and the salaries of three permanent employees. /3 The 2008 bonus was paid in January 2009. 8. Human Resource Development Policy EGCO Group believes in the value of our human resources and will strive to be the employer of choice by promoting the participative management and equal opportunity for career advancement. Employees are encouraged to enter the development program to enhance their capabilities to bring out their highest working potentials to undertake tasks in competent manner and maintain our leadership in the business. To ensure the consistent human resource development, the responsible unit prepares the human resource development plan to ensure clarity as well as efficient implementation. Employees are encouraged to attend both technical and managerial training in to enhance their competency to international level. The human resource development policies of the Group are as follow: • Promote employees’ development in all areas including behaviors, knowledge, technical skil s and expertise, and
management in order to gain opportunities for accepting higher responsibilities. • Promote employees’ development by continuously developing “On the Job Training Program”, attending seminar,
and participating in professional training, and etc. To ensure that the human resource development wil be a successful one, EGCO set the key competencies for each position as a part of the career path development plan. 9. Other information related to the Board of Directors and Management In 2008, there were no director and management who were recorded to be prosecuted by the following cases. • Criminal prosecution, except the violation of traffic rules, minor offence or other offence in the same respect. • Bankruptcy or receivership. /1 /2
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Corporate Governance Report
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The Board of Directors (“Board”) intends to conduct the business under the Good Corporate Governance Principles issued by the Stock Exchange of Thailand (“SET”) and the Best Practices for Directors of Listed Company issued by the Securities and Exchange Commission (“SEC”) to ensure efficient governance and sustainable business growth. SET asks listed companies to adopt the SET’s Good Corporate Governance Principles for year 2006 as deemed appropriate and to notify with reasons and substitute measures/ actions to the SET for items which can not be complied. The Board then prepares this report accordingly. 1. Rights of Shareholders EGCO realizes the importance of Good Corporate Governance and respects the shareholders’ rights as an investor and an owner of EGCO based on acceptable and reliable standard. EGCO encourages the shareholders to exercise their rights including legal basic rights, for example the right to share in the profit, the right to receive adequate information, and the right to attend and vote for significant matters at the shareholders’ meeting such as appointment or removal of directors, remuneration of directors, appointment of auditor, auditors’ remuneration and other significant issues which impact EGCO. Beyond such basic rights, EGCO endeavors to provide significant information to shareholders via the website, newsletters and shareholders’ site visit.
1.1 Corporate Governance Policy
The Board has established the written good corporate governance policies which includes the statutory rights of shareholders as well as the Best Practices issued by SET. The good corporate governance policies are comprised of 7 principles. 1. Structure and Responsibilities of the Board of Directors 2. Guiding Business Principles 3. Rights and Equitable Treatment of Shareholders 4. Rights of Stakeholders 5. Disclosure and Transparency 6. Internal Control, Risk Management and Code of Conduct 7. Conflict of Interest
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The Board annually reviews the good corporate governance policies and discloses the policies on EGCO website. In 2008, the Board endeavored to ensure that directors, Management and employees adopted the above policies as the guiding principles in discharging their duties. The Board also set the adherence to the good corporate governance policies as one of the key corporate performance indicators of which the progress was monitored on a quarterly basis. In 2008, the Board of Directors revised the Good Corporate Governance Policy as follows: • Early adoption of the definition of Independent Directors as introduced in the Notification of Capital Market Supervisory Committee No. Tor Jor 14/2551. Such definition is stricter than the previous one. • Additional communication channel for stakeholders to directly contact the Audit Committee apart from notifying the Board and the Management. • Increase of responsibilities of the Audit Committee (1) to review with the Management to ensure that the Management wil act as the role models in complying with the code of conduct, and that the staff comply with EGCO’s Code of Conduct and (2) to inspect any suspiciousness reported by EGCO auditor, that the President, the Management or any person responsible for EGCO’s operation commits an offence under the Securities and Exchange Act (No. 4) B.E. 2551 as well as reporting the result of preliminary inspection to the Office of the SEC and the auditor within thirty days after being informed by the auditor.
1.2 Shareholders’ Meeting
The Board ensures that the processes and procedures of the Shareholders’ Annual General Meeting (“AGM”) accommodate the shareholders to take part in EGCO’s governance. With respect to this, the AGM Checklist issued by the Thai Investors Association, Listed Companies Association and SEC is used as the guidelines. Details are as follows. Before the Shareholders’ Meeting: EGCO prepares and delivers the notice of the meeting as well as supporting document in advance so that shareholders wil have adequate information to support their judgments. The Board also encourages shareholders to attend the meeting either in persons or by proxy. The practices in 2008 were as follows. - EGCO disclosed the schedule and the agenda of the AGM via the SET’s Community Portal system and EGCO website on February 25, 2008, which was 56 days before the shareholder meeting date. - EGCO delivered the notices of the meeting as well as the agenda document which included the objectives, Board’s opinions, and conditions to attend the meeting on March 21, 2008, which was 30 days before the AGM. All relevant information was posted on EGCO’s website to facilitate shareholders to study the information in advance before receiving the hard copies. - Shareholders who could not attend in person could vote by proxy. The three proxy forms as introduced by Department of Business Development, Ministry of Commerce were provided which included the form that allowed the shareholders to direct the voting. Three independent directors who did not have the conflict of interests with the AGM agenda were offered as volunteer proxies. In a bid to facilitate the shareholders, the proxy forms could be downloaded from EGCO’s website.
- EGCO encouraged shareholders to forward their questions with regard to the meeting agenda in advance to directors@egco.com or facsimile number 0-2995-0956 in order that the shareholders could gain the most benefits from the meeting and that their rights would be fully observed. On Shareholders’ Meeting Date: EGCO ensures that the meeting is conducted in a way that is convenient and transparent as well as encouraging shareholders for open discussion on EGCO business. The practices in 2008 were as follows: - Directors, Management and the external auditor were encouraged to attend the shareholders’ meeting and answer shareholders’ questions. All 15 directors which included the Chairman attended the meeting which accounted for 100% of the Board members. The directors who were members of each standing committee 69 also presented information to shareholders and answer shareholders’ questions. - Services to facilitate shareholders who attended the meeting were provided including shuttle services between the meeting place and the subway, adequate registration counters and refreshments. Mini-exhibition was displayed in front of the meeting hall to provide information about EGCO business. - The Chairman convened the meeting in accordance with the priority notified in the agenda document. - The barcode system was implemented for the second year to facilitate shareholders’ registration process. - Voting cards were provided for all agenda items for transparency and future reference. - Director election process allowed shareholders to vote on individual nominee. - The shareholders who came late were allowed to vote for the ongoing agenda item and the remaining agenda items. - Shareholders were treated equitably and were allowed adequate time to address their concerns at the meeting. The Chairman paid attention to clarify all shareholders’ inquiries which would be recorded in the minutes of meeting. - PricewaterhouseCoopers Legal & Tax Consultants Ltd., (“PwCLT”) were engaged as the inspectors to look over registration documents, meeting quorum, compliance of the voting procedure with EGCO Articles of Association and the Chairman’s notification, voting card collection and vote counting. In this regard, PwCLT reported that the meeting and the voting procedure of 2008 AGM was transparent and in compliance with the governing laws and the Articles of Association. - The form to assess the quality of the AGM was disseminated to gather feedbacks for future improvement. The result of the survey in 2008 indicated that shareholders were satisfied with the quality of the notice to the meeting, meeting arrangement and meeting conduct. In AGM 2008, there were 298 and 529 shareholders attended the meeting in person and by proxy, respectively, representing 397,459,277 shares which accounted for 75.496% of the total units of shares After the Shareholders’ Meeting: After the AGM no. 1/2008 on April 21, 2008, EGCO posted the draft minutes of the meeting for shareholders’ review on EGCO website www.egco.com on May 6, 2008 which was within 14 days after the meeting date as required by SET.
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As a result of the above efforts, EGCO achieved the following awards. • EGCO AGM was rated the score of 105 out of the full score of 110 which was higher than last year’s score of 104.63. • EGCO was presented a 2008 Shareholder Award from the Thai Deposit Securities Public Company Limited. • EGCO was ranked 4th in Thailand for the commitment on strong dividend payments from FinanceAsia Magazine.
2. Equitable Treatment of Shareholders
2.1 Fair Treatment
The Board regularly reviews the governance structure and framework to ensure that the shareholders, including minority and foreign shareholders, are treated equitably and that EGCO procedures do not make it unduly difficult or expensive to observe shareholders’ rights. The Board encourages shareholders to take part in EGCO’s governance and ensures that they are well informed about the significant decisions of EGCO as prescribed by laws and the Articles of Association. Apart from this, EGCO strictly follows its policy not to raise any agenda items which had not been submitted to the shareholders in advance, to make sure that other shareholders would have a great deal of time to study relevant information before making their decision. Every shareholder has a right to cast vote according to their numbers of shares on “a one share one vote” basis. EGCO has never granted a privilege for some specific shares which limits the rights of other shareholders. In AGM 2008, EGCO announced via EGCO’s website and the SET's Community Portal system the clear and transparent procedures for shareholders to recommend AGM agenda and to nominate director candidates to the Board within the period of December 20, 2007-January 31, 2008. The shareholders who would like to propose the agenda or director candidates must hold not less than 100,000 shares which are lower than the SET’s recommended practice of holding not less than 0.5% of the total voting rights of the company. In 2008 no minor shareholders recommended AGM agenda nor nominated director candidates.
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2.2 Prohibition of Abusive Conduct by Insiders
EGCO has set up the written guidelines in the Code of Conduct for Directors and employees to prohibit improper insider trading and abusive conduct by insiders to ensure fairness to all shareholders.
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 as a director of EGCO while in possession of information, which, if disclosed publicly, would be likely to material y affect EGCO share price. • 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 EGCO’s securities.
Employees:
• Employees shall at all times observe the rules and regulations issued by the SET, the SEC and other governing laws which include the equitable disclosure to shareholders and the public. • Using inside information for the benefit of their security trading when that information has not been made public is considered violating the Code of Conduct. • Any information disclosure to the public that wil affect the business and EGCO’s stock must be approved by the President. Only the President or the assigned staff member is authorized to disclose such information. • The Corporate Communications Division, the Corporate Secretary Division and the Investor Relations Section are responsible for disclosing EGCO information to the public while it is the responsibility of the information owner to provide the fact sheets. Additionally, EGCO has the policy that directors and Management should disclose to the Board their securities holdings at every Board meeting.
2.3 Disclosure of Directors and Management’s Interest in EGCO’s Business
The Board sets the guidelines that directors and Management discloses to the Board whether they have a material interest in any transaction or matter affecting EGCO to ensure transparency and to prevent conflicts of interest. • Directors wil promptly notify EGCO when they or their family member is a partner or shareholder of any entity which may incur benefits or conflicts of interest with EGCO, acquire a direct or indirect interest in any contract
made with EGCO, or hold shares or debentures of EGCO or any affiliate. • If an employee or a family member is engaged in activities that create or even appear to create a conflict of interest, s/he shall immediately inform the President/Managing Director in writing. In 2008, the Board did not get any complaints for not respecting shareholders’ rights or any accusation regarding director’ and Management’s insider trading.
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Directors and Management should inform their conflicts of interest to the Corporate Secretary and the Board. In addition, they have to refrain from the debate or voting on the matter. 3. Role of Stakeholders Apart from observing the rights of the shareholders, the Board takes due regard of and deal fairly with various stakeholders and encourages active cooperation with them which include both business and corporate social responsibility matters. The Board has set up the guidelines to respond to the requirements of each stakeholder in “EGCO Group’s Code of Conduct” with the expectations that directors, Management and employees shall be guided by those principles in discharging their duties.
Employees:
EGCO believes in the value of its human resources and wil strive to be the employer of choice. This is achieved by promoting the participative management, supporting the employees’ professional development and providing fair remuneration and suitable benefit scheme. It should be noted that during the past year, there was no legal dispute between the employees and EGCO. In addition, there was no loss time injury in all subsidiaries. EGCO is proud to announce that the Rayong Electricity Generating Co., Ltd. (REGCO) and the Khanom Electricity Generating Co., Ltd. (KEGCO) have been certified the OHSAS 18001: 1999 (Occupational Health and Safety Assessment Series) by RWTUV (Thailand). Furthermore, KEGCO has been honored the National Distinguished Workplace in terms of Safety, Occupational Health and Environment for 9 years consecutively.
Customers:
EGCO always commits to provide good quality and reliable services in accordance with the agreements with EGAT and all customers. To ensure consistent quality service, the ISO 9001:2000 has been implemented at REGCO, KEGCO, Roi-Et Green Co., Ltd. and Egcom Tara Co., Ltd. During the past year, EGCO and its subsidiaries can generate the contracted electricity with higher equivalent availability factors (EAF) than the value stipulated in the power purchase agreement. REGCO also made a superior record in being awarded the EAF bonus for 12 years consecutively.
Creditors, Suppliers and Contractors:
For creditors, EGCO wil endeavor to ensure that it complies with the loan provision and the company's financial status is correctly disclosed. With regard to the suppliers and contractors, EGCO requires that all aspects of procurement of goods and services be conducted in compliance with ethical standards. In addition, EGCO aims at developing and securing sustainable relationship with suppliers and contractors on the bases of value for money, technical conformance and mutual trust. As such, EGCO wil ensure that the procurement process prescribed in the Regulation on Procurement and Supply and the Code of Conduct are fully observed.
- - - -
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 fulfil ment 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 2008, there was no complaint from lenders, suppliers and contractors.
Corporate Social Responsibility:
EGCO has a policy to operate the business with commitment to social contribution and environment conservation. In this regard, EGCO wil foster the corporate culture that employees at all levels wil be fully responsible for social and environment impact when discharging their duties. Detailed information on Corporate Social Responsibility is presented under Stakeholder report.
3.2 Channel to Direct Corporate Issues to the Board of Directors and Corporate Secretary
To increase the corporate value, the stakeholders can direct their recommendations and concerns on corporate issues to the Board of Directors and the standing committee at the following address. Electronic Mail Board of Directors directors@egco.com Audit Committee auditcommittee@egco.com Mail Board of Directors Electricity Generating Public Company Limited EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210 Audit Committee Electricity Generating Public Company Limited EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210
The Corporate Secretary will be responsible for forwarding those communications to the standing committee or relating directors. The Corporate Secretary wil summarize all directors’ communications received during the most recent quarter to the Board, except for mails addressed to the Audit Committee which would be directly forwarded to the Audit Committee without screening. Apart from sending messages to the directors, stakeholders can direct their communication to the Corporate Secretary at the following address. Electronic Mail CS@egco.com Mail Corporate Secretary Electricity Generating Public Company Limited EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok
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3.3 Whistleblower System and Whistleblower Protection
Upon receiving the filing on suspected violations, the Internal Audit Division wil direct preliminary investigations and report the result to the Good Corporate Governance Committee. To foster trust, EGCO set the approach to protect the whistleblower and wil keep the filing confidential from irrelevant persons.
3.4 Sustainable Development
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EGCO Group endeavors to optimize the usage of natural resources, taking into account the impacts on the environment. In this regard, EGCO has monitored the situation and set the measures to alleviate such impacts. In addition, REGCO and KEGCO have implemented the Occupational Health and Safety Management System TIS 18001:1999 & OHSAS 18001. EGCO Group also factors in the following activities to ensure that EGCO business has taken into account the social and environment issues for sustainable development. • Preparing the investment plan with fuel diversification as one of the agenda to reduce the risk of heavy dependence on one fuel type. • Investing in renewable projects to alleviate global warming and decrease the fossil fuel import. • Operating business with environment concern and strict adherence to relevant laws and regulations including the regulations of local administrative agencies. • Supporting economic and social development while respecting the local tradition and culture. EGCO wil support the government policy and take a good care of communities surrounding the power plants so that they wil not only be protected from the negative impact of EGCO business, but wil also have a better quality of life. EGCO set up a Corporate Social Responsibility (CSR) Committee to oversee the management of environment and society with a focus on impacts to shareholders and stakeholders. In 2008, EGCO set CSR plans and activities covering safety, health and working environment along with social responsibility plans such as plans to foster environment conservation, community learning, and quality of life. Details are presented in Sustainability Report. 4. Disclosure and Transparency
4.1 Information Disclosure
Being aware of the impact of EGCO’s information on the decision of investors and stakeholders, the Board set a policy to disclose the information via the SET’s Community Portal system and the Company’s web site at www.egco.com as well as the annual report and the annual registration statement. The disclosed information includes roles and responsibility of the Board and standing committees, directors’ meeting attendance, remuneration policy for the Board of Directors and top management and annual registration from which was prepared in both Thai and English. For 2008, EGCO revised the group’s disclosure guidelines to enhance effective communication to regulators, investors, analysts, media and public. In this respect, EGCO established a Disclosure Committee comprising President, Senior Executive Vice President-Finance, Senior Executive Vice President-Business Development, Senior Executive Vice PresidentAsset Management, Senior Vice President-Corporate Secretary, Senior Vice President- Corporate Communication and VicePresident-Investor Relations. The meetings are called on quarterly basis in order to set communication plan, review disclosure policy, and prepare significant disclosure to ensure that the information is correct and efficiently communicated.
In 2008, EGCO continuously and consistently disclosed information in line with the business strategy and direction, taking into account quality of disclosure. The significant activities were summarized as follows. • Information disclosure as required by SET and SEC • Management Discussion and Analysis report for investors and analysts which includes an analytical briefing of financial, operational performance and major changes via the SET’s ELCID along with the financial statements. • Information disclosure through Investor Relations’ activities such as road shows, site visits, opportunity days, analyst meeting, newsletters and electronic mails • Information disclosure through media by arranging 4 press conferences, 3 site visits, 10 Executive Interview and 30 pieces of press releases. 75 Only the President or the assigned staff member is authorized to disclose EGCO information. The Investor Relations Section is responsible for communicating with institutional and individual investors, along with analysts on an equitable basis. Annual Investor relations plan is prepared and senior management always takes parts in providing information to investors and analysts. Quality of the disclosure was assessed after every meeting with shareholders, investors and analysts for future improvement. Investors and shareholders can contact the Investor Relations Section at telephone number 0-2998-5145-7 or by e-mail to ir@egco.com. Additionally, EGCO always updates the information on EGCO website and also assigns the Corporate Secretary Division to do the significant disclosure to meet the SET and SEC’s requirements. In 2008, EGCO was ranked 7th of Thailand’ Best Investor Relations Company by FinanceAsia.
4.2 Financial Statement Preparation
To foster the stakeholders’ confidence that EGCO’s financial reports are accurate, complete, transparent, and in line with the generally accepted accounting standards to protect EGCO assets against fraud or abnormalities. The Board has entrusted the Audit Committee to assume key duties and responsibilities of reviewing the financial statements to ensure its correctness and adequacy and compliance with the accounting standards and relevant regulation. The Audit Committee set the policy to have a non-management meeting with the auditor at least once a year to ask questions and discuss with the auditors about various significant issues. Apart from disclosing the Auditor Report in the annual report, the Board also prepares the report on Board of Directors’ Responsibilities on Financial Statements which covers important topics as prescribed in the SET’s Best Practices for Directors of Listed Companies. In 2008, EGCO appointed auditors from PricewaterhouseCoopers ABAS Limited as the auditor given that they had professional knowledge and had no conflicts of interest to defect their independent judgment. This was aimed at fostering the Board’s and shareholders’ trust that EGCO’s financial statements truly reflected the actual financial status and operating result. It should be noted that SEC has never informed EGCO to re-state the financial statements.
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5. Responsibilities of the Board
5.1 Board’s structure
Structure and Composition: Currently, the Board comprises not less than 5 directors and not more than 15 directors as stipulated in the Articles of Associations. The number of the directors wil be reviewed periodically. The change in number of directors requires the shareholders’ approval with the four-fifth majority votes of shareholders who attend the meeting and have the rights to vote. As at January 31, 2008, the Board comprised 15 directors, 14 of whom were outside directors which accounted for 93% of the Board. From these outside directors, 6 were qualified as independent directors which accounted for 40% of the total directors. The Nomination and Remuneration Committee is entrusted to select and recommend prospective nominees, whether they are to become the shareholders’ representatives or independent directors. The Nomination and Remuneration Committee is also responsible for assessing the appropriate mix of skil s and characteristics required of Board members in the context of the needs of the Board at a given point in time and shall periodically review and update the criteria as deemed necessary. The Board views that the existing structure and composition of the Board which comprises directors with the background of engineering, economics and finance, laws and political science, and accounting at the ratio of 50%, 33%, 13% and 7%, respectively, was appropriate with useful mix of skil s and experience and an appropriate balance of power. Term and Age Limit: One third of the directors shall retire by rotation at the annual general meeting as prescribed in the Public Limited Company Act. The Board views that there should not be limit on the number of terms a director may serve. Term limits may cause the loss of experience and expertise important to the optimal operation of the Board. However, to ensure that the Board remains composed of high functioning members able to keep the commitments to Board service, the Nomination and Remuneration Committee wil evaluate the qualifications and performance of each incumbent director before recommending the nomination of that director for an additional term. On the other hand, the age limit policy is imposed that director candidates can not stand for election after age 72. Given such age limit on the election date, directors wil be able to serve on the Board until the expiry of their terms. Chairman: The Board elected Mr. Sanit Rangnoi, a representative director of the Electricity Generating Authority of Thailand (EGAT), as the Chairman because of his knowledge in both finance and engineering together with his leadership to lead EGCO to achieve the corporate vision and mission. Although the Chairman is not an independent director, the Board remains independent and objective due to the following mechanisms:
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1. The Chairman is a non-executive director, is not the same person as the President and has no relations with the management. His authorities are separated from those of the President, and there is a clear distinction between supervisory policy-making and day-to-day business administrative roles. 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 with any routine activities under the President’s responsibilities; 2. The Chairman is not an EGAT’s employee but is entrusted by the Finance Ministry to be on EGAT Board of Directors to protect the national benefits. The Board believes that the Chairman wil act in the best interest of all shareholders and stakeholders. 3. The Board is mostly comprised of non-executive directors; 4. The Board has assigned Board committees to oversee task where there is a potential for conflict of interest and to balance the need of each stakeholder. With respect to this, the Audit Committee is entrusted for oversight of the integrity of financial and non-financial reporting and review and management of related party transaction. The Nomination and Remuneration Committee is assigned to take care of selection of Board members and key executives and their remuneration; and 5. There are effective mechanisms to take into account the recommendations of other stakeholders such as enabling stakeholders to contact the Board directly and allowing minority shareholders to recommend annual meeting agenda and director candidates to the Board via both mail and emails. Besides, in December 2008, the Board appointed Mr. Aswin Kongsiri, Independent Director, Vice Chairman, to jointly review agenda items with the Chairman to ensure that the agenda items proposed by the Management and directors were independent and transparent. Definition of Independent Director: The Board has defined the qualifications of independent directors to meet the independence standard set forth in the notification of the Capital Market Supervisory Board no. 14/2008. Independent directors set up the policy to call meetings as needed at least 2 times/year to discuss and exchange their views regarding the corporate governance and interesting issues without the Management and wil report the result to the Board with a copy to the Management. In 2008, independent directors met to discuss about the improvement of good corporate governance and submitted their recommendations to the Board. (Please see the definition of independent director in the article “Shareholding and Management Structure”.)
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Policy and the Procedure for Other Positions of Directors: To ensure that the Board wil be able to devote time for the efficient governance of EGCO, the Board agrees that a director should not serve more than 4 companies if being executive director and 6 companies if being non-executive director. Management should not hold directorship in more than 3 companies excluding the wholly owned subsidiaries to ensure sufficient time for their governance. Corporate Secretary: The Board has appointed Ms. Busakorn Kakanumpornwong as the Corporate Secretary with the duty and responsibility as prescribes in the Securities and Exchange Act (No. 4) B.E. 2551. Ms. Busakorn also serves as the Board secretary to handle functions to assist the Board as well as to coordinate subsequent actions under the Board’s resolution. • To provide primary advice pertaining to EGCO’s regulations and Articles of Associations, and to monitor to ensure regulatory compliance on a regular basis, and report any significant changes to the directors, • To arrange meetings of shareholders and the Board in accordance with the laws and regulations, including EGCO’s articles of associations and procedures, • To prepare meeting minutes of shareholders and the Board of Directors, and to monitor to ensure compliance with resolutions of shareholders’ and Board meetings, • To ensure that corporate information disclosure to regulatory agencies is in accordance with the laws and the SEC’s and SET’s regulations, • To inform general shareholders of their legitimate rights including EGCO’s news, • To facilitate the Board activities including director orientation, • To file and keep record of EGCO’s documents such as directors’ registration, notice to the meeting, minutes of meetings, annual reports, notice to shareholders’ meetings, shareholders’ minutes of meetings and reports on directors’ and management’ interest.
5.2 Board’s Standing Committees
With the objective to enhance the governance efficiency, the Board assigns directors with knowledge and expertise to be the members of the Board committees namely Audit Committee, Executive Committee, Nomination and Remuneration Committee, and Corporate Social Responsibility Committee. Each Board committee has its own charter which prescribes functions, composition, term of office, responsibilities and meeting conduct. The charter, which is approved by the Board, will be reviewed as deemed appropriate. Each Committee can retain outside counsels, experts and professional advisors, as deems appropriate at EGCO’s expense. The Audit Committee comprises 4 independent directors. The Audit Committee’s mission covers the review of the financial statements, legal compliance, internal control and appointment of auditor. The Audit Committee also reviews the connected transaction or transaction with conflicts of interest to ensure that such transaction is in compliant with the SET’s requirement, well grounded and wil be for the best interest of EGCO. The Nomination and Remuneration Committee comprises 4 non-executive directors, two of whom are independent. The Board with the recommendation of the Nomination and Remuneration Committee appointed Mr. Mark Takahashi, a representative director from OneEnergy as the Chairman of the Committee as he has a wealth of experience in policy implementation, human resources management and governance management. The Board trusts that regardless of whom the Committee Chairman is represented, the Nomination and Remuneration Committee has the appropriate process and mechanisms to mandate transparent procedure of (1) recruitment of directors and Management in line with the best practices taking into account the recommendations from all shareholders; and (2) transparent and clear guidelines for
remunerating directors and Management at a rate comparable to those of the peer companies and aligned with the long term benefit of EGCO and the shareholders. The Executive Committee comprises 5 directors and has the responsibility to govern EGCO’s business and endorse recommendations to the Board of Directors. Since this Committee is delegated to approve business decision within its delegated authority, the Chairman of the Board is appointed the Chairman of the Executive Committee. He has proven to be efficient chairman who conducts the meeting efficiently and be attentive to other members’ recommendations. The Corporate Social Responsibility Committee comprises 5 members with the President as the Chairman of the Committee. Two of the CSR members shall be directors/nominees and the other two shall be Management. The Corporate Social Responsibility Committee has the responsibility to oversee EGCO’s positions and practices on issues of corporate social responsibilities, principally in relation to social and environmental matters that affect shareholders and other key stakeholders. The structure and duties and responsibilities of each Board committee as well as the number of meetings are reported in the other article on “Shareholding and Management Structure”.
5.3 Role and Responsibility of the Board of Directors
Duty and Responsibilities: The Board has significant responsibilities as follows. - To set the corporate vision, targets and business strategies including risk management policy, annual budget and business plan as well as setting the corporate performance targets while monitoring the implementation, the result, significant investment cost, acquisition and disposal of the assets; - To recruit, set the remuneration rate, monitor the performance and if necessary to change the key management and plan for a smooth succession plan; - To review the remuneration of directors and key management and to ensure that the director selection process is procedural and transparent; - To monitor and resolve the conflicts of interests which may incur by Management, directors and shareholders, and to ensure the independent audit and internal control with the focus on risk monitoring, financial control and legal compliance; - To monitor the effectiveness of the existing governance tools and instruments and to implement change if necessary; - To monitor the information disclosure and communications; and - To direct self - appraisal annually and to declare in the annual report how well they carry out their duties and oversee EGCO. Code of Conduct: To maintain high ethical standards, EGCO has set up a Code of Conduct as a guideline so that directors, management and employees perform their duties with regard to ethical values. Directors’ Code of Conduct focuses on business ethics, ethics for directors, directors’ commitment, duties and responsibilities, conflicts of interest and use of information. Employees’ Code of Conduct covers 1. Guiding principles, 2. Making the system work, 3. Compliance with laws and regulations, 4. Business ethics, 5. Human resources, 6. Safety, health and environment and 7. Accountability. EGCO continuously conducts the training on adherence to the Code of Conduct for the employees as well as provides clarification on frequently asked questions. Directors, Management and employees must obey and respect the spirit of the Code of Conduct. Managers at all levels are required to promote the compliance with the Code of Conduct and act as role models.
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Internal Control: Realizing the importance of sufficiency and suitability of internal control in every level, EGCO clearly determines responsibilities and authority of Management and employees in writing, taking into account segregation of duties, check and balance, and control. EGCO also set a correct and timely financial report system. Apart from this, EGCO sets up an Internal Audit division which directly reports to the Audit Committee in order to make sure of its transparent auditing process. The Audit Committee has a responsibility to approve internal audit plan, and to consider and review the independence and the performance report of the Internal Audit Division. The Board set the policy to annually review EGCO’s internal control system. Employees from section managers upward are assigned to evaluate the quality of the internal control of which the result will be proposed to each subsidiary’s Board of Directors, the Audit Committee and EGCO Board of Directors, respectively. The evaluation result in 2008 showed that EGCO and its subsidiaries had sufficient and appropriate internal control system. The details are presented in Internal Control in this annual report on page 88 To ensure compliance with internal control systems, rules and regulations, and Code of Conduct, employees of EGCO and subsidiaries at senior vice president level and upward are required to thoroughly review their 2008 work practices before signing the Code of Conduct Compliance Statement and the General Representation Letter to their managers up to the President. The President also signed the Code of Conduct Compliance Statement and the General Representation Letter addressed to the Chairman of the Board. Risk Management: The Board of Directors entrusts the Audit Committee to review with the Management the risk management policy, implementation and guidelines. The Audit Committee reports the update on risk management issues to the Board twice a year to consider the adequacy and effectiveness of risk management system with focus on early warning system and irregularities so that the strategies, plan and measures can be adjusted or put in place at an appropriate timing. In this regard, EGCO Risk Management Committee is shored up comprising top management of the Group companies so that they can closely monitor the risk management of the Group. Risk Management Section was also set up under Internal Audit Division to be fully responsible for risk management. EGCO has adopted the risk management policy and risk management manuals as guidelines since 2001. Conflicts of Interest: EGCO has set the policy in the Code of Conduct for directors and employees to avoid the conflicts between the personal interest and the corporate interest as follows. - Directors and employees shall not be engaged as directors or advisors of other companies, organizations, and associations that may conflict with the interest and the business of EGCO. Acknowledgment by the Board must be sought before taking such engagement; - Directors wil promptly notify the Board when any of the conflict of interest occurs 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; - The list of major shareholders is disclosed. Directors and designated Management wil report the change in their security holding to the regulatory body. The Corporate Secretary is assigned to report the security holdings of directors and Management to the Board at every meeting; - Employees should not borrow money from the customers/suppliers or from individuals or firms having business dealings other than financial institutions as it may influence the way they handle EGCO business; and - Transaction that may induce the conflict of interest shall be reported to the Board for consideration. The details
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of such transaction such as transaction price, contractors, and rationale are to be disclosed in compliance with the requirements of the SEC and SET. The Corporate Secretary will identify the type of transaction and the approval body and will submit the reports on connected transactions and any conflict of interests to the Audit Committee for acknowledgement twice a year and disclose the information in the annual report and annual registration form (Form 56-1).
To foster trust among all concerned parties that the connection transactions are aimed at optimizing the benefits of EGCO and the shareholders, the Audit Committee is assigned to review the information and provide comment with regard to the connected transaction that needs to be approved by the Board and the shareholders and to ensure that the disclosure is adequate.
5.4 Board Meeting
To ensure that the Board takes full responsibility to meet the expectations of the shareholders, the Board reviews significant business policy and corporate calendar. In this regard, it is determined that the Board meeting wil be held at least once every two months. Extra Meeting can be called if there is any major unplanned event that needs the Board’s consideration. The Board can also authorize the Committees to scrutinize or approve the management’s activities within the delegated authority during the meeting interval. The Board also instructed management to provide monthly performance report so that the Board can follow up the business progress despite not having the Board meeting. To facilitate the directors, EGCO plans the meeting dates and the agenda for the whole year in advance. The Chairman and President fix the agenda for the Board’s meeting. Each director can propose the agenda to the Chairman and can deliver their independent judgment. The Corporate Secretary delivers the notice, agenda, and meeting document to the directors for consideration well in advance. Agenda is prioritized in terms of significance i.e., Matter Arising, Matter for Consideration, Matter for Information to ensure that items that need the most careful deliberation are given adequate time. The Chairman allocates adequate time for Management to present their issues and to permit directors to conduct extensive discussion of agenda items and other topics of interest. The minutes of meeting are drafted for the Board’s review within 14 days after the meeting prior to the adoption at the next meeting. The Board had called 9 meetings in 2008 comprising 7 scheduled and 2 extra meetings. Each meeting took approximately 2 hours and a half. The average attendance rate is 96.93%.
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Since EGCO has a number of directors who do not reside in Thailand, EGCO has set the policy to allow those directors to attend the meeting by teleconference so that EGCO and the Board will benefit from their opinion and recommendation. Such attendance is not considered the meeting quorum and those who attend the meeting by teleconference do not have the right to vote. The Board encourages the President to invite top Management being the senior executive vice presidents to attend all the Board’s meeting. Other Managements are invited to join the meeting as deemed necessary to provide additional insights into the items being discussed because of personal involvement in those areas. Managers with future potential are given exposure to the Board to support the consideration of the succession planning. The Board can request for additional necessary information from the President or the Corporate Secretary or other assigned management within the extent of the established policy. The Board can also engaged independent advisor for the benefits of the business on EGCO’s expenses. Details of directors’ attendance in 2008 are il ustrated in Table 1. In 2008, the Board set up a policy for non-executive directors to call a meeting at least once a year. The first meeting was called on December 2008 while the next meeting was scheduled in June 2009. The agenda items cover board of directors’ meetings, risk management, structure, roles and responsibilities of directors and management, good corporate governance and human resource management.
5.5 Board Self Assessment
The Board regularly conducts self assessment for future improvement. In 2008, the Board agreed to use the 2007 self appraisal form based on the forms recommended by the New Zealand Institute of Directors and the forms adopted by other peer companies in the energy sector. There are two parts, the collective appraisal form and the individual appraisal form. The result of the appraisal is concluded as follows. Collective Self appraisal: The collective self appraisal form comprised 14 sections, namely (1) shareholders, (2) stakeholders, (3) the Company, (4) legal/ethical duties, (5) monitoring performance and agenda setting, (6) size, composition and independence of the Board, (7) director orientation and development, (8) Board leadership and teamwork, (9) the President, (10) Board (and Committee) meetings, (11) individual Board member contributions, (12) director and Board evaluation and compensation, (13) management evaluation, compensation and ownership and (14) succession Planning. The result can be concluded that the Board protected the benefits of shareholders, stakeholders and EGCO and that EGCO had good corporate governance. The average score was 85% of which the highlights were as follows:
• EGCO’s objectives reflect shareholders’ expectation and full and accurate reporting on EGCO affair had been made; • The Board understands who the key stakeholders are and have good relationship with them; • The strategic plan is carried out of sufficient quality and content and is well reflected at operational level with key performance indicators; • The Board communicates proper ethical and legal responsibilities to its members and ensures ethical behavior and proper compliance standards throughout the organization. The Board also sets the right “tone at the top” by its own behavior, and monitors compliance systems to ensure that all legal/ethical requirements met satisfactorily. The Board also feels that EGCO is a “good employer” ; • The Board defines its roles and responsibility and communicates the scope of its authority, identifies, prioritizes and schedules the issues that it believes should be discussed/reviewed by the Board on a regulator basis. The Board also effectively monitors operation and financial performance including the integrity of the processes involved and 83 EGCO’s internal control system; • The Board is sufficiently independent of management; • The Board has defined and communicated its expectations concerning its expectations concerning director responsibilities. New directors are provided with adequate information about the Company and the Board. Directors receive proper training in corporate governance matters. Directors should receive continuing education on the issues; • The Board has leadership both at the Board and the committee level and effectively manages the conduct of Board business as a team; • The job description of the President is clearly defined. The Board works well with the President and other managers to create an open culture that encourages frank discussion. The Board avoids excessive intrusion in the President and/or management’s responsibility; • The Board and committee meeting are productive. The number of scheduled meeting is sufficient. The number of committees is stil appropriate and they are fulfil ing their terms of reference; • The Chairman carries out the role satisfactorily and encourages director participation in a debate; • The Board regularly evaluates the performance of the President and creates an appropriately designed management compensation plan; • The Board has a company wide succession plan in place; and • The Board has a working knowledge of competitors in the sector and plays a role in public service and lead EGCO in charitable, educational and cultural activities. The Board viewed that plan should be made to ensure that the succession planning and the management appraisal are perfect. Individual Self Appraisal: The individual appraisal form comprised 7 sections, namely strategic thought, good corporate governance, competence, independence, preparedness as a director, personal attributes and awareness of stakeholders. From the individual self appraisals, most of the scores were higher than 80% which could be concluded that the directors had appropriate deliberations and contributions in accordance with the recommended best practices.
5.6 Remuneration for Directors and Management
EGCO set the directors’ remuneration at the appropriate rate which is comparable to that of the leading companies in the same sector. The remuneration comprises monthly retainer fee, meeting allowance and bonus which is paid once a year and is tied with EGCO’s achievement. The Nomination and Remuneration Committee shall recommend the
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remuneration framework to be endorsed by the Board before proposing to the shareholders. EGCO has a policy to disclose the remuneration of each director for transparency. Directors that also serve as committee members will be entitled to extra remuneration to match the increase in responsibilities. Management who serve as directors and committee members shall refrain from taking director remuneration. The non-executive directors shall appraise the President’s performance annually in accordance with the established corporate goals including his competencies and the comparison with peers. The Nomination and Remuneration Committee shall appraise the performance of Senior Executive Vice Presidents and Executive Vice Presidents based on each individual achievement. EGCO periodically conducts the survey of the executive remuneration to ensure that the rate is comparable to that of the peer companies and adequate to attract and motivate the qualified executives. The remuneration of directors and management is disclosed under the topic of shareholding and management structure in this annual report.
5.7 Board and Management Training
The Board pays attention to continuous development of directors and management. In 2008, the following director development plan was implemented. Director Orientation and Trainings: EGCO arranged Directors’ orientation and updated Directors’ manual to equip incoming directors with knowledge about EGCO, governing laws and regulations as well as having a chance to meet with the Management. Directors were encouraged to attend training programs at the Institute of Thai Directors (IOD) or other relating academic institutes on EGCO’s expenses to enlarge and enrich their understanding on governance issues. List of directors who passed the training courses arranged by IOD and other institutes is shown in Table 2. Additionally, EGCO arranged a seminar and provided information on Responsibilities of Directors under Securities and Exchange Act (revision 4) to the Board. The seminar on an overview of industry, business characteristics of the Group companies, and current and future plans were also provided to the Board. EGCO also arrange a Board visit to Khanom Power Plant in Surat Thanee province, Nam Theun 2 Power Plant in Laos and Nuclear Power Plants in France to educate our directors on power business and future trend. Management Development and Succession Plan: EGCO supports the executive development program to enhance Management capacities and skil s to be suitable to perform their duties and to assign the suitable and challenging job.
The Board determines policies and principles for selection of the President and his successor in the event of an emergency or the retirement of the President taking into account educational background, experience, capabilities, ethics and leadership. The Nomination and Remuneration Committee shall consider and propose the qualified candidates to the Board. The President is entrusted to select the knowledgeable, competent and experienced executives in accordance with the qualifications endorsed by the Nomination and Remuneration Committee and selection process stated in the Company’s Regulation on Human Resource Management B.E. 2550 and the resolution of the Board as follows. • The Nomination and Remuneration Committee shall approve the appointment of Senior Executive Vice President, Executive Vice President, and nominate senior executives of subsidiary/joint venture companies that EGCO has the right to nominate for a position equivalent to EGCO’s EVP level and upward. 85 • The President shall appoint the division and section managers. • The appointment of Secretary and the Assistant Secretary to the Board shall be approved by the Board while the appointment of Division Manager of Internal Audit shall be endorsed by the Audit Committee. Management development plan was prepared covering in-house training, outside-training and job assignment. As of 2008, 6 executives attended Executive Leadership Program (ELP-NIDA Wharton) while 7 executives joined Senior Executive Program- Sasin and 15 executives took a Director Certification Program course. 6. Achievements The Board of Directors consists of knowledgeable, capable, and experienced professionals from diverse related fields, thereby enabling EGCO to perform efficiently. The Board’s efficiency was evidenced as it won the Board of the Year for Distinctive Practice for 2006/2007 and Board of the Year with Consistent Practice organized by Institute of Directors, SET, Board of Trade of Thailand, Federation of Thai Industries, Thai Bankers Association, Listed Companies Association Federation of Thai Market Capital Association. In 2008, EGCO was awarded Top Corporate Governance Report Award from the Stock Exchange of Thailand. Besi des, EGCO was rated 92 score for Excellent Corporate Governance Report reviewed by the Thai Institution of The score was higher than the 2006’s which was rated at 89 score. Directors. 7. Good Governance: Continuous Improvement The Good Corporate Governance report as detailed above reflects the commitment and devotion of the Board to create value to EGCO through management, good corporate governance and corporate social responsibility. EGCO has provided information to relevant parties for the benefit of enhancing the good corporate governance in Thailand such as the project to survey the director remuneration, the hearing on qualifications of independent directors and connected transactions. EGCO wil continue to study and adopt the appropriate best practices to enhance EGCO’s and shareholders’ value and to maintain the reputation of Thai industrial sector.
Table 1: Board and Committee Meeting Attendance Report No. Name
MEETING (Times)
Board Meeting Audit Committee Executive Nomination and 13 Remuneration 9 times/year Committe Committee times/year 15 times/year 10 times/year
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
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1
Mr. Sanit Rangnoi 8/9 15/15 Chairman Mr. Aswin Kongsiri 9/9 10/10 Vice Chairman Independent Director Mr. Chaipat Sahasakul 9/9 13/13 Independent Director Mr. Thanapich Mulapruek 9/9 1/1 1/3 Independent Director Mr. Charoen Prajumtan1 2/2 3/3 Independent Director Mrs. Wattanee Phanachet 9/9 13/13 Independent Director Mr. Witoon Simachokedee2 3/3 Independent Director Mr. Somphot Kanchanaporn3 8/8 11/12 Independent Director Mr. Phaiboon Siripanoosatien4 2/2 2/2 Independent Director Mr. Chamnong Wongsawang5 2/2 Director Mr. Sombat Sarntijaree 8/9 15/15 Director Mr. Narongsak Vichetpan 9/9 10/10 3/3 Director Mr. Peter Albert Littlewood 8/9 Director Mr. Richard McIndoe6 0/2 3/3 3/4 Director Mr. Hideaki Tomiko 9/9 11/12 Director Mr. Mark Takahashi 8/9 12/15 5/5 Director
Mr. Hideo Kuramochi Director
7/7
Mr. Visit Akaravinak7 9/9 Director and President Mr. Vinit Tangnoi8 7/7 Director and President
Retired by rotation in Shareholders’ Annual General Meeting no. 1/2008 on April 21 Resigned on August 1, 2008 3 Being appointed director on January 28, 2008 4 Being appointed director on September 9, 2008 5 Resigned in Shareholders’ Annual General Meeting no. 1/2008 on April 21 6 Retired by rotation in Shareholders’ Annual General Meeting no. 1/2008 on April 21 7 Resigned due to the end of contract on September 30, 2008 8 Being appointed President on October 1, 2008 2
Corporate Social Responsibility Committee 3 timeห/year
12/12 3/3
3/3
Table 2 : List of Directors who attended the courses at IOD and outside institutes Course Directors
Chairman Directors’ The Role Audit Raising the 2000 Certification of Committee Awareness of Program Chairman Program Corporate Program Fraud in Thailand
1. Mr. Sanit Rangnoi Chairman 2. Mr. Aswin Kongsiri Vice Chairman Independent Director 3. Mr. Chaipat Sahasakul Independent Director 4. Mrs. Wattanee Phanachet Independent Director 5. Mr. Chareon Prajumtan Independent Director 6. Mr. Thanapich Mulapruek Independent Director 7. Somphot Kanchanaporn Independent Director 8. Mr. Phaiboon Siripanoosatien Independent Director 9. Mr. Chamnong Wongsawang Director 10. Mr. Sombat Sarntijaree Director 11. Mr. Narongsak Vichetpan Director 12. Mr. Visit Akaravinak Director and President 13. Mr. Vinit Tangnoi Director and Presidentŕšˆ
Accounting for nonaccounting Audit Committee
Finance Director The Role Quality of for Non- Accreditation of the Financial Finance Program Compensa Report Directors (DAP) tion Committee Program
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Controlling System and Internal Audit
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The Board of Directors is responsible for ascertaining that EGCO and its subsidiaries have in place the financial control, operating control, and compliance control which are in line with the guidelines of The Stock Exchange of Thailand’s (SET) and the internal control framework of The Committee of Sponsoring Organizations of the Treadway Commission (COSO). In this respect, the Board has entrusted the Audit Committee the responsibility to review the effectiveness and efficiency of the internal control systems and the internal audit function. For this reason, the internal audit division independently discharges its duties and functionally reports to the Audit Committee. The internal control system and the control operations of EGCO are as follows: Control Environment EGCO appropriately set the control environment. To ensure effective control, the Board sets the corporate vision, mission, and objectives while the organization structure has been properly designed and periodically reviewed to suit the changing environment. Short term and long term business goals as well as Key Performance Indicators are identified and clearly communicated throughout EGCO to provide business direction. In addition, there are written policy, procedures, and Table of Authority for each management level. The written Code of Conduct and the good Corporate Governance guidelines which are periodically reviewed to ensure their appropriateness are used as the guiding principle for the Board and employees to live by in discharging their duties. Risk Management The details of Risk Management of EGCO and subsidiaries are to be disclosed under “ Risk Factors” on page 91 Control Activities To ensure that the policies and directives of the Board and the Management are met, the Management set up control activities for accounting, finance, operation and governance. In this respect, regulations, internal order, job description and Table of Authority which contains scope of authority of each management level are clearly spelled out. The process for financial investment and project investment are appropriately and adequately established so that employees know about the steps to follow through before getting the approval from authorized persons. Steps to prevent the conflict of interest and penalties in the event of violations are stipulated in EGCO’s Code of Conduct and other relevant regulations. In addition, the management has set up a monitoring unit to follow up the Group’s operations, to set
the relevant procedure and to make regularly updated report to ensure that they are in compliance with EGCO’s objectives. The Corporate Secretary is entrusted to ensure that EGCO and the Board’s practices are in compliance with the Securities and Exchange Acts, the notification and regulation of the SET and Securities and Exchange Commission (SEC) including other related laws and regulations. For this purpose, the compliance database is developed for reference and tracking. The Legal Division is responsible to update the compliance database and provide recommendation to users. Information and Communication At EGCO, information are maintained and communicated to support the decision making of each committees and the Management. Significant information such as power plant operation data along with information on accounting, budgeting and finance are recorded and maintained in the Management Reporting System. This reporting system is regularly updated and secured against unauthorized use. Apart from the above information, discussion, remarks and recommendations of the Board and standing committees including resolutions are recorded in the minutes of meetings for future reference. EGCO keeps accounting records and supporting documents which wil be used to support the preparation of the financial statements in complete and orderly manner. There is no deficiency in those documents informed by the auditor. The meeting among the Audit Committee, external auditors and related management are held to review the compliance of the accounting records with General Accepted Accounting Principles and other significant issues in the Management Letter from the external auditor. Communication efficiency between EGCO and its overseas subsidiaries and joint ventures are also enhanced to ensure the efficient monitoring of those companies. To ensure that all relevant parties get the complete, correct, timely and adequate information to support their decision making, EGCO has established appropriate communication channels both within and outside the company. For internal communication, intranet is used to broadcast policies and regulations applicable to the employees. In addition, there are various level of meetings to communicate to the employees who, in turn, can provide the feedback on how to enhance the efficiency of their work and the working systems. For external communication, EGCO broadcasts significant information via its website, SET’s system and quarterly analyst meeting and press conference so that shareholders and investors can have the update information on EGCO. Monitoring EGCO assigns the responsible unit to follow up, monitor and set appraisal criteria to benchmark the cooperate performance against the plan. Gap analysis is carried out and scheduled reports are submitted to the Management and the Board. The Internal Audit Division reviews the internal control system to provide management with assurances about the effectiveness of this system. Reports on exceptions found including recommendations to enhance the internal control efficiency including the Management’s responses are submitted to the Audit Committee and the Board.
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Besides the above mentioned systems and practice, EGCO has set up the internal audit division of which the audit scope covers accounting and finance, operation, compliance, information technology, and management audit of EGCO and subsidiaries. The Internal Audit Manager reports functionally to the Audit Committee and administratively to the President. Duties and responsibilities of the Internal Audit Division are set by the Board and described in the Internal Audit Charter endorsed by the Audit Committee and approved by the Board of Directors. The Board has ordered that the internal control be evaluated annually to assure compliance practice with the established system. The evaluation form has been designed following 5 components of SET’s internal control guidelines and COSO’s internal control framework. The evaluation results have been reported to the Audit Committee and the Board of Directors by the internal audit division. The 2008 evaluation results can be concluded that the internal control of EGCO and subsidiaries are sufficient and appropriate. To ensure the compliance with internal control systems, rules and regulations, and Code of Conduct, employees from Senior Vice President and upwards of EGCO and subsidiaries are required to thoroughly review their 2008 work practices before signing the Code of Conduct Compliance Statement and the General Representation Letter to his/her managers up to the President. The President also signed the Code of Conduct Compliance Statement and the General Representation Letter addressed to the Chairman of the Board. With regard to the auditor’s review of the financial statements, the auditor has also reviewed internal control on accounting and finance to define the audit approach, duration and scope of work. In 2007, no significant finding, regarding the improvement on internal control systems, has been found. The Board has focused on the likelihood of the irregularities, risk mitigation and early warning systems. In the meeting on February 23, 2009, which was attended by all independent directors, the Board has considered EGCO’s practices together with the internal control evaluation of EGCO group as well as the evaluation form and agreed with the Audit Committee that the internal control system of EGCO and subsidiaries is appropriate and that it sufficiently safeguards EGCO’s assets from misuse or unauthorized use. The Audit Committee and the Board have not received significant deficiency report on the internal control system from external auditors and internal audit division.
Risk Factors
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To create long term value for shareholders, EGCO recognizes the importance of properly analyzing and managing its business risks. The Board of Directors has included the written risk management policy in the Risk Management manual to foster understanding among all employees and to be used as a guideline for standardized practices throughout EGCO group. Such policy expects each and every subsidiary to continuously manage its risk as well as to set up the early warning system. For new investment projects, risk analysis and associated mitigation measures reviewed by each relevant committee are compulsory. To ensure prudent risk management, the Audit Committee is entrusted to oversee EGCO’s risk management and Management is required to report and update risk management activities to the Board. To fulfil the responsibility, the Management set up the Risk Management Committee comprising EGCO’s top executives and the Managing Directors of EGCO subsidiaries as members and EGCO’s President as the chairman. The subsidiaries such as REGCO and KEGCO also have their own risk management committees to help ensure that their particular risks wil be properly managed. A summary of key risk factors and associated mitigation measures is as follows: 1. New Development Project Risk
1.1 Risks from New Project Development
EGCO plans to expand its investment in order to maintain continuous growth, both in Thailand and in foreign countries. To achieve the growth objective, EGCO analyzes and identifies all key risks involved. These include economic downturn, financial crisis, and business risks such as intense competition among the growing number of competitive companies, cost of capital, cost of machinery and construction, partnership, environment impact, social acceptance, and laws and regulations as well as political risks. As the above risk factors persists, EGCO has altered business strategy to cope with the circumstances by thoroughly analyzing project data and conducting feasibility study and due diligence under EGCO’s Investment Guidelines to ensure that the project’s risk is manageable and the invested project is a quality one which wil enhance shareholders’ value and stability of EGCO Group.
1.2 Country Risk
EGCO focuses to increase its presence overseas both in the familiar countries such as the Philippines and Lao PDR, and other Mekong and other ASEAN countries.
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For new overseas projects, the countries’ macroeconomics, industry status, political, economic and social policies along with relevant laws and regulations wil be thoroughly analyzed to ensure that the project risk is acceptable. EGCO wil continue to monitor the project’s risk factors so that appropriate countermeasures wil be made in time. For certain countries, political risk wil be mitigated by securing political risk guarantee as required by the lenders. 2. Project Construction Risk EGCO’s project under construction is Nam Theun 2, which is being developed pursuant to a long-term Power Purchase Agreement (PPA) with EGAT. The scheduled commercial operation date is in December 2009. Typical major risks of project under construction are construction delay and cost overrun. Construction delay may also lead to increasing project cost which may negatively impact the return on investment and delay the revenue recognition of such project. The construction of Nam Theun 2 is on schedule. The social and environmental work, which is an integral part of the hydropower project’s implementation, also progresses as planned. Since the overall progress is 90%, the overall construction risk reduces. Nevertheless, EGCO has imposed measures to help its staffs monitor and mitigate potential risks including: • Have the items in the construction price fixed to the maximum extent possible and secure qualified and
experienced contractors to carry out the work. EGCO may engage outside specialists as needed to advise its
core staffs to mitigate construction risks. • Assign responsible personnel to follow up the progress of construction and budget control. Such individuals wil
attend all regular project meetings and provide comments and insights in the report to be presented to
Management. • Prepare the project progress reports to the Board of Directors on a regular basis. • Perform regular internal audits of the project by EGCO’s internal audit division. 3. Operational Risks
3.1 Risk of Failure to Reach Target Return on Investment
EGCO has the responsibility to properly monitor and manage plant operations in order to reach or exceed targeted performance parameters. In year 2008, the operating results were in accordance with the specified revenue structure. Typical measures imposed to mitigate such risks are as follows: • Assign EGCO Group management and personnel to be representative directors or management of its subsidiaries
and joint ventures. • Set up the EGCO’s Asset Management Division to regularly monitor operating performances of each facility and
its staff and to analyze and update the actual return on investment against the set target. • Prepare regular progress reports and exceptional performance report to senior management and the Board of
Directors so that a timely and appropriate action can be taken.
3.2 Main Customer Risks
EGCO Group’s business is to generate and distribute electricity to EGAT under the PPA. Electricity sale revenue to EGAT accounts for 83% of the total sale and service revenue in 2008. The high dependency on one major customer may lead to the revenue risk. Considering that EGAT has the responsibility to ensure the reliable power supply system and that EGAT is a reputable state enterprise with strong financial status, EGCO’s revenue risk exposure is considered to be low. The decline in power consumption due to the economic slowdown does not impact EGCO Group’s revenue as the sale revenue is mostly calculated from the availability payment while the energy payment is only a small portion.
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3.3 Plant Performance Risks
A commitment to generate and deliver electricity pursuant to a Power Purchase Agreement with EGAT entails the following performance risks:
3.3.1 Plant Efficiency
There are various efficiency benchmarks under a PPA with EGAT i.e., Equivalent Availability Factor (EAF) and Heat Rates. Failure to meet these performance requirements will result in penalties and potential PPA termination in certain extreme cases. With EGCO Group’s consistent maintenance work, this risk is considered to be low. Despite that, the management focuses on running all measures to ensure that all relevant performance targets are met. These procedures include the following: • Include the key plant efficiency parameters in the corporate Key Performance Indicators of power plants in
EGCO group to ensure that the production efficiency is closely monitored and all employees take part in
ensuring the plant efficiency. • Set up Early Warning Systems for critical information regarding the plant operation processes. • Ensure that the scheduled preventive maintenance of power plant equipment is carried out on a regular basis by qualified staff. • Ensure that spare part inventory is adequate and well managed. • Implement the Quality Management System (ISO: 9001:2000) at REGCO, KEGCO and Roi-Et Green to ensure
that those power plants operate in accordance with their PPA terms. • Continuously develop the competencies of the firms’ human resources.
3.3.2 Raw Water Shortage for Electricity Generating
The raw water shortage risk can result in plant outages and revenue shortfall including penalty payment in the worst case. Although EGCO Group has never before experienced any water shortage during the past years, the measures are set to prevent and mitigate such risk by increasing their raw water storage capacity, seeking additional sources of raw water supply and setting measures to maximize the benefit of water usage.
3.3.3 Fuel Shortage for Electricity Generating
The risks of fuel shortage for electricity generating can result in plant shutdowns and revenue shortfall or in the worse case the penalty payment. The statistic indicates that this risk is low and a responsible unit is assigned to continuously monitor the fuel supply status.
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EGCO Group’s gas fired power plants have entered into a long term gas supply agreements with PTT, except for REGCO and KEGCO which EGAT is the gas supplier under the PPA terms. The quantity and quality of natural gas and other key parameters are all spelled out in the relevant agreements. With PTT and/or EGAT as the main suppliers, the risk of fuel gas shortfall is low. With regard to BLCP which is a coal fired power plant, a long term coal supply & transportation agreement has been entered into with Australian Coal Holdings Pty Ltd. (ACH). ACH is obliged to supply coal with the quantity and quality as specified in the agreement. In case of ACH’s failure to supply coal, BLCP may purchase coal from other suppliers which ACH wil shoulder the increased expenditure (if any). Despite such cushion, BLCP continuously monitors and maintains a sufficient amount of reserve coal at site and through long-term arrangements with potential alternative suppliers to ensure the adequacy supply under the terms of the PPA. Biomass power plants which use rice husk and Para wood chip as fuel may face the fuel risk in terms of inadequate supply and volatile pricing. This is because those agricultural products may have alternative uses in the market. Since long term fuel supply agreements cannot be established as there are few creditworthy suppliers of such feedstock, the primary risk prevention measures are to reserve more fuel and to seek alternative fuel sources in surrounding areas. This mitigation measures can help manage the fuel price at a certain level. However, the biomass fuel is stil a seller’s market. It should be noted that the revenue from biomass power plants such as Roi Et Green accounts for 3% of 2008 revenue from EGAT. As such, the impact of the inadequate fuel on EGCO’s total revenue is quite low.
3.3.4 Safety Health and Environment
EGCO is well aware that electricity generating process which uses natural gas and coal as primary fuel may have certain impacts on the safety, environment and quality of life of surrounding communities. Consequently, EGCO has taken the following actions to reduce potential impacts and likelihood of such risks: • Implement the measures specified in the Safety, Health and Environment (SHE) Management Manual. The
Manual contains SHE policy, work plans, and practices, including review process to ensure that the operations,
waste treatment and related work processes are efficient from a SHE standpoint. It should be noted that apart from complying with SHE policy, REGCO and KEGCO are also certified and have maintained the Environment
Management System (ISO: 14001) as well as Thai Industrial Standards for the Occupational Health and Safety
Management (TIS: 18001 & OHSAS: 18001). • Prepare the work manuals and emergency plan, implement training plan and testing of plan, equipment, and
warning system while ensuring strict compliance with the manual. • Develop a list of governing laws and regulations and designate responsible person to monitor the compliance
with such list. • Monitor and ensure the compliance with Safety, Health and Environment (SHE) Management Manual
3.3.5 Accident, Resistance, and Sabotage
Accident may cause fire. In addition, EGCO business may subject to the community resistance if the generation process has negative impact on the community. Beside, power plant may also be the sabotage target. The Management is well aware of the above risks and set the following measures to reduce the impact and the likelihood of those risks. • Strongly encourage employees to prudently discharge their duties with the belief that carelessness may lead to
significant damage. • Periodically maintain all equipment as scheduled to ensure that they can work efficiently. • Strengthen relationship with surrounding communities to foster the right perception about EGCO business
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• Set the security plan with regular dril s and provide necessary equipment such as closed circuit TV. • Secure the insurance policy that cover all risks, machinery breakdown, business interruption and third party
liability to assure that EGCO Group’s assets and personnel will be adequately protected even in an
unexpected case.The insurance policy on terrorist attack is also procured for some power plant in EGCO Group. 4. Financial Risks EGCO’s investment is capital intensive by nature. Since the primary funding sources are loans from domestic and international bank loan markets, foreign exchange rate and interest rate fluctuation are important risks to be monitored and mitigated. Mitigation measures are established as follows:
4.1 Foreign Exchange Rate Fluctuation
EGCO Group has a policy to mitigate currency mismatches for each of its investment projects to prudent levels. In general, this is achieved by matching currencies of project development and construction costs with funding source currencies and subsequently matching the currency of long-term funding profiles with those of each project’s revenue stream during the operation phase. However, if the portions of foreign currency of revenue and expenses are not matched, the depreciation or appreciation of baht may have a negative impact on EGCO. For example, if the portion of dollar indexed electricity revenue is higher than the debts in dollar, baht appreciation wil reduce the net profit. Therefore, EGCO Group uses “Revenue Swap” as an instrument to mitigate foreign exchange rate fluctuation risk. As a consequence, the Group’s revenues are stable and can be projected accurately.
4.2 Interest Rate Fluctuation
EGCO Group has a policy to manage risk of interest rate fluctuation by using financial hedging instrument to fix floating interest rate exposures to the maximum extent commercial y possible to provide the most predictable cash flow of loan expenditure over its long-term power purchase contracts. If interest rate fixtures are not available for the full project terms required, EGCO would seek to enter into or have its project company enter into financial instruments that can best mitigate the interest rate risks subject to market availability and cost. As of December 31, 2008, most of EGCO Group’s loan floating interest rate was already fixed.
EGCO & Shareholders and Investors
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EGCO has a commitment to our shareholders as stated in the Code of Conduct to strive to achieve growth based on our potential and core competencies so that our shareholders receive sustainable benefit from our productive performance and good operating results. Being aware of the impact of information disclosure on investors’ valuation of the company, EGCO discloses both financial and non-financial information in a sufficient, adequate, reliable and timely basis as required by the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET). Share Price In 2008, EGCO’s average share price was 81.27 baht per share, down by 25.22% from 2007 with the highest trading price of 109 baht on January 2, 2008 and the lowest trading price of 51.50 baht on November 21, 2008. The averages price/earning (P/E) ratio was approximately 5.21. Dividends In the absence of unforeseen circumstances, EGCO has a policy to dividend approximately 40% of the consolidated net profit after tax, or to increase the dividend amount in a steady manner, to the shareholders. This dividend policy may change in the light of investment opportunities that may become available to EGCO 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 EGCO. The dividend payment shall not exceed the retained earnings of the separate financial statements. The dividend payout of EGCO Baht/Share 6 5.5 4.75 5.00 5 4.5 4.00 2.50 4 2.50 3.5 3.00 3.25 2.00 3 2.50 2.75 1.75 2.5 2.00 2.00 2.25 1.25 1.50 1.50 2.00 2 1.25 1.27 1.5 1.00 2.50 2.25 2.00 2.00 2.00 2.00 1 1.50 1.50 1.27 1.00 1.25 1.25 0.5 1.00 Year 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Annual
Interim Dividend
Final Dividend
Remarks: 1. In 1997 EGCO reported net losses on the annual operation following the baht float; as a result, no dividend was paid to shareholders in that year. 2. EGCO also set a policy that the subsidiaries in which EGCO has significant control pay dividend at 100% of their net income after tax or to increase the dividend amount in a steady manner. EGCO aims to pay dividend twice a year. In 2008, the 2007 final dividend of 2.50 baht per share was paid on May 7, while the 2008 interim dividend at 2.50 baht per share was paid on September 11.
Shareholder and Investor Relations EGCO believes in keeping the investment community informed of all major developments in a timely and accurate manner and welcomes the recommendations from the shareholders. Investors and stakeholders can contact our investor relations directly at 662 998-5145-7 or e-mail address ir@egco.com. Furthermore, EGCO arranges various communication channels and investor relations programs for the investment community as follows: a. Shareholder Meeting EGCO considers that a shareholder meeting is a significant event of EGCO Group. Directors and Management wil attend the meeting to discuss and clarify shareholders’ questions. EGCO also hosts the mini-exhibition and shareholder corner at the meeting venue to provide knowledge about EGCO Group business and to answer shareholders’ questions. b. Annual Report and Annual Registration Form EGCO prepares the annual report and annual registration form to present signification information to shareholders and investors. The two reports are also posted on EGCO website. Since 2004, EGCO has prepared the annual report in a CD-ROM format which incurs the cost saving and indirectly reduces tree-cutting. The cost saving is donated to the Thai Forest Conservation Foundation on behalf of EGCO shareholders. A hard copy of the annual report is available on request to Corporate Secretary for free of charge. In 2008, EGCO made a donation of 1,735,326 baht to the Thai Forest Conservation Foundation on behalf of EGCO shareholders. c. Website Recognizing the importance of fair disclosure, EGCO’s website (www.egco.com) can be accessed for recent announcements by EGCO including annual financial results, presentations, and annual reports to shareholders as well as EGCO news and investor relations activities. Shareholders, investors and stakeholders can contact EGCO via our website to recommend the annual general meeting’s agenda and the candidates for director nominees before EGCO submitted the meeting notice to the shareholders. d. Contact with the Board and Corporate Secretary Shareholders can contact the Board, Standing Committee or individual director at the following address: Electronic Mail Mail
Board of Directors directors@egco.com Board of Directors Electricity Generating Public Company Limited EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210
Audit Committee auditcommittee@egco.com Audit Committee Electricity Generating Public Company Limited EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210
The Corporate Secretary wil be responsible for forwarding those communications to relating directors or the standing committee and summarizing all directors’ communications received during the most recent quarter to the Board. Communications to the Audit Committee wil be delivered directly to the Audit Committee without any screening. e. Analyst Meetings/EGCO Opportunity Day Analysts Presentations which SET calls “Opportunity Day” are held shortly after EGCO announces quarterly financial results. Besides, EGCO also holds a seminar to provide the knowledge about EGCO business to the investment community. The 2008 seminar topic was “BLCP Focus”.
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f. Plant Visit To enable our investment community to have a better understanding of the EGCO business and to meet our Management, EGCO always brings the investment community to visit our power plant every year. Application for shareholder trip can be made at the annual general shareholder meeting or at EGCO website within 2 weeks after the annual shareholder meeting. In 2008, EGCO organized two visits to KKII and one visit to BLCP Power Plant, under the “Company Visit” with SET. Activities included touring the power plant, listening to presentation from EGCO Group’s senior executives. About 200 shareholders and investors joined the programs. g. Roadshows In 2008, EGCO Management participated in domestic roadshows organized by the SET such as “SET in the City 2008”, “Thailand Focus 2008”, “Money Expo 2008 in Bangkok and Chiang Mai Province” and “Money Expo in Nakhon Ratchasima and Chiang Mai Province” organized by the Money and Banking Magazine. In addition, EGCO Management ran domestic roadshows to meet our local institutional investors in Bangkok and international roadshows to meet institutional investors in the United States, the United Kingdom and Hong Kong. h. Newsletter EGCO launches a quarterly newsletter to shareholders to provide information, operating results, and major activities of the company including the activity plan. i. Press Conferences and Media Relations EGCO distributes information via various channels to report the business progress and to publicize EGCO activities. In 2008, EGCO hosted four press conferences to announce (1) the annual operating performance for 2007 and business direction for 2008, (2) the operating result of the first quarter and the soft launch of new TV commercial, (3) the operating result of the first half of 2008, and (4) the launch of “EGCO Green Gump Gadget” contest. Three media trips were also arranged to witness the Thai Forest Conservation Youth Camp no. 26 at Doi Inthanond National park, and the Forest: The Circle of Life at Doi Inthanond National park and the New Home for Undersea Livings Project along Khanom Power Plant, Nakorn Sri Thammarat province. During the past year, EGCO had arranged 10 exclusive interviews with the media with regard to the power industry trends, the overall picture of Thai power industry, EGCO’s performance and the social and community activities. There were 30 press and photo releases. j. Quality of Disclosure Quality of the disclosure was assessed after every meeting with shareholders, investors and analysts for future improvement. k. Feed Back Form Feed back forms sent out with EGCO annual report is our means to obtain shareholders’ views on the report and on additional information that they would like to receive in the following year’s annual report, together with questions that they would like the President to answer at the Annual General Meeting. The feed back forms were well received by shareholders. EGCO thanks all the shareholders who provided feedbacks via the feedback forms and other various channels for us to improve our corporate performance and add value to the EGCO and the shareholders.
EGCO Group and Employees
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EGCO believes that our employees are the most valuable resources. As such, we design the organization structure and working system in a way that allows the employees to work efficiently with opportunity for professional development. This is aimed at fostering teamwork and loyalty so that our employees wil look at EGCO as their second home. Employee Profile At present, EGCO has the headcounts of 121 comprising 56 female and 55 male employees. Of all employees, 89 graduated with master degree. The average age and length of service of 42 years old and 10 years reflect their experience and loyalty to EGCO. It is noted that EGCO employee turnover is low. Fair Treatment and Opportunity EGCO Group has a policy to treat employees with respect and honor and wil take action to ensure that qualified applicants are given equal opportunity to be employed taking into account the required qualification, educational background, experience and other requirements on a non-discriminatory basis regarding gender, age, nationality or religion. By the same token, employees must refrain from any deliberate discrimination or harassment in word or action against others based on the basis of race, gender, religion, age, and physical or mental disability.
Orientation Executive team will provide an orientation to new employees. Presentations include the corporate vision, mission, business profile, management, working systems and benefit schemes. The orientation program also includes the site visit to EGCO Group’s power plants to foster understanding about power generation which is EGCO Group’s core business. Training and Development EGCO believes that career advancement is one of the maintenance factors to incentivize the employees to work with care and loyalty. As such, EGCO prepares the training plan and succession plan to maximize employees’ potentials and to gloom them for professional advancement. The employee training program which is competency based include the enhancement of core competency, managerial competency and functional competency. Employees wil be continuously trained to bring out their highest potential to retain EGCO business excellence. Apart from competency training, EGCO also set up programs to foster
understanding and promote good relationship among Group employees. Training needs are gathered and analyzed each year to support the development of training road map and individual development plan. EGCO promotes the lifelong learning by encouraging the employees to develop their knowledge and skil s by intranet training or visiting EGCO library. EGCO also supports the knowledge sharing program by inviting internal experts to make presentation to other employees of which the topics and timing are set in advance. In 2008, EGCO has allocated the budget of 15 mil ion baht for human resource development which account for 5.5% of the total personnel budget. As at the end of the year, the average training days of the employees was 5.24 day/ person/year, which is above the target. Safety, Health and Working Environment Policy 100 EGCO pays attention to the employees’ quality of life and endeavors to provide a comfortable working environment. Employees are encouraged to promote healthy living through active participation in sports and exercise at facilities provided by EGCO. EGCO also host sport days for EGCO and EGCO Group to promote teamwork. Physical annual check up is also provided. In addition, EGCO procures the health insurance for all employees and contributes to the social welfare Fund and the Provident Fund as securities for all employees. EGCO is committed to ensuring the safety of the employees as well as people living and working in communities near the facilities. This is achieved by fostering the corporate culture where safety comes first and that accident can be prevented through the active participation of every employee. In this regard, EGCO is committed to continuous efforts to identify and eliminate or manage safety risks associated with its activities. In addition, EGCO wil strictly comply with all applicable laws and regulations and wil arrange for the proper design of tool and equipment, regulations, training and the control tools with the target to achieve zero accident. EGCO provides safety training to employees so that they understand and have adequate knowledge to be safeguarded from unsafe machine, working procedures and occupational il nesses. Such safety trainings include fire dril , training on working in confined space, etc. In addition, safety and prevention of work injury is also set as one of the corporate KPIs of Group companies. To support the promotion of safety, health and environment (“SHE”), a SHE Committee is set up to plan and implement activities to promote SHE in a workplace. For 2008, EGCO is proud to report that no incident occurred which led to disabling injury in EGCO’s subsidiaries. In addition, Rayong Electricity Generating Co., Ltd. and Khahom Electricity Generating Co., Ltd. (“KEGCO”) passed the recertificate audit for the TIS 18001 & OHSAS 18001: 1999 (Occupational Health and Safety Assessment Series). KEGCO also won the”National Safety Awards” for Safety and Occupational Health for 9 years consecutively. Labor Relations EGCO intends to promote strong labor relations. At present, there are two labor unions: one at staff level and the other at the manager level. Both unions work in concert with the Management to enhance labor relations. Apart from freedom of association as stated above, EGCO also set up the welfare committee of which the members are elected by employees to represent them for welfare issues. The joint efforts between the Management, labor unions and the welfare committee result in a good working environment with no labor disputes. In addition, EGCO and the two unions also work in concert to run social and community programs.
Two-Way Communication Being aware of the significance of working environment, EGCO promotes the participative management such as two-way communication. For these purposes, Communication Day is launched to keep the employees well informed of EGCO activities and to allow employees to voice their concerns and feedback to the Management. Three Communication Days were hosted in 2008. Complaints EGCO sets the written procedure for complaint and grievance. Employees are encouraged to bring dissent issues forward to their immediate supervisor or the next higher supervisor if such issues involve with the immediate supervisor. Dissent may be related to working environment, engagement conditions, supervision, assignment, remuneration or other benefits including the inappropriate treatment between EGCO and/or the supervisor and the employees or between themselves. The supervisor wil review and resolve such issues as soon as possible and wil inform the result to EGCO and the employee who make the compliant. If such issue is above the supervisor’s authority, he or she has to progressively bring the issue forward to the higher management. Whistle Blower and Fraud Prevention To ensure fairness and transparency, EGCO set up the check and balance working system with clear working procedure and delegation. To prevent fraud and to resolve the problem situation as soon as possible, employees have the responsibility to report suspected fraudulent conducts and violations of the Code of Conduct by employees and other stakeholders to the Good Governance Committee. They may also choose to report such issues directly to the Audit Committee at auditcommittee@egco.com. The whistle blower shall be projected in accordance with EGCO’s internal procedure. Performance Appraisal EGCO employs an equitable and transparent performance appraisal system using Key Performance Indicators (KPIs) which are committed in advance to measure individual achievement. Competency appraisal is also adopted to appraise the potential and behavior of each employee of which the results are used for individual development and career path advancement. KPIs appraisal wil be carried out by immediate supervisor while the competency appraisal wil be under the 360-degree approach. In this regard, EGCO has developed the computer program for both appraisals to ensure transparency under the good corporate governance principle. Remuneration EGCO sets up the remuneration system that is in line with the economic status and also motivates employees toward long term corporate goals. To ensure that the remuneration package is comparable to those of peer companies, salary surveys and study on new salary management tools are conducted on a regular basis. Employee Volunteerism EGCO encourages the employees to run personal interest programs to enhance the working environment and promote teamwork. For example, there are currently internal programs covering sports and entertainment club, photo club, Buddhism club and smiling at library program. Apart from those, employees volunteer to work together in providing benefits to the society and the environment. Programs in 2008 included hosting lunches for orphans at Sra Kaew Temple and Phayathai Babies Care Center. We, EGCO, believe that the happy workforce wil do their best to provide the benefits to the Company and all stakeholders.
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EGCO Group and Corporate Social Responsibility
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EGCO Group, the first independent power producer in Thailand, carries out the business with care for the environment, society and community. With the strong belief that “a good start wil lead to a successful outcome” EGCO commits to efficiently generate electricity, which is the infrastructure for social and economic development, while treating the stakeholders fairly to maintain the balance between economics return and social and environment contribution which wil lead to sustainable development. EGCO’s corporate social responsibility is reflected through the following activities. 1. Economy EGCO Group recognizes that a power producer plays an essential role in Thailand’s overall social and economic development. As such, it puts the first priority on evaluating the benefits and the impacts from its operation. In this respect, EGCO chooses to strengthen its business with continuous growth under the good corporate governance along with the development of alternative and renewable energy to support the stability of the energy supply system and to provide sustainable benefits for all stakeholders. At present, EGCO Group, which is the first independent power producer in Thailand, owns and develops generation units which cover diversified fuels such as natural gas, coal, diesel oil, hydropower and biomass, in accordance with the government’s policy on fuel diversification to ensure energy stability. 2. Environment Since generating electricity involves with the usage of natural resources, EGCO Group commits to make the best use of natural resources while minimizing the impact on environment. This can be achieved by using environment-friendly technology and actively fostering environment conservation awareness among our employees and contractors. To ensure that the corporate direction of each business unit is aligned, EGCO Group set up a Safety, Health and Environment (SHE) Committee comprising representatives from power plants in EGCO Group.
In 2008, EGCO Group carried out a number of environment-friendly initiatives:
2.1 Projects to mitigate the business impact on the environment.
EGCO Group continuously monitors the impact of the power plant operation on the environment. Initiatives in this area include the cross checking of stack emission measuring twice a year, the checking of efficiency of air pollution control treatment equipment and noise level measurement at worksites on a quarterly basis, and the checking of the quality of the waste water on a monthly basis. EGCO Group is proudly to say that there is not even one item that exceeds the government standards. Beyond meeting the basic requirements, the Rayong Power Plant (REGCO) initiates the project to inject water into the combustion chamber in a bid to reduce the Nitrogen Oxide (NOx) emission. The Khanom Power Plant (KEGCO) also runs the project to maintain the water ecological system by monitoring the species and density of plankton and other benthic animals twice a year in the rainy season and the hot season.
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2.2 Projects to promote power saving awareness
EGCO Group has a strong commitment to maximize the benefit from using natural resource. The programs in 2008 include the following: • Energy conservation center at KEGCO to demonstrate how to save energy and use renewable energy. The
building uses the solar cell technology. The construction has been completed and the center is now available for
public visit. • Reuse of treated water to watering trees around the power plants. • Waste separation and recycling
2.3 Project to enhance the environment around the power plants and the nearby communities.
EGCO Group runs projects and activities to enhance the environment around the power plants and nearby communities. The initiatives in 2008 include the following: • Eight-year plan program (2007-2014) by REGCO to plant tree saplings in 120 rai of land at the Map Ta Phut
Industrial Estate. (REGCO planted saplings for a total area of 40 rai in 2007. The number of total of planted
area now rises to 75 rai) • Landscape improvement of Chai Son Mountainous area: KEGCO plants the 14 plants which represent 15 southern
provinces. • Reservoir Construction: KEGCO builds a new reservoir to reserve water for its use so that it does not have to
take the water from the check dam which is for community usage. 3. Social Contribution Being aware of the importance of the society as the business supporters, EGCO Group pays attention to social development. This starts from our small community of which the members are our personnel. Employees are trained to bring out their maximum potential while EGCO provides a fulfil ed working environment that they can work efficiently. EGCO treats employees with respect that they are a part of EGCO success while encouraging them to take part in activities for communities and environment development.
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EGCO Group enlarges its contribution to cover outside societies. Our corporate social responsibility (CSR) programs focuses on three areas, namely environment conservation, development of public awareness among youths, and enhancement of community’s quality of life. Significant activities in 2008 are as follows:
3.1 Projects to conserve the natural resources and environment.
• Thai Forest Conservation Youth Camp: EGCO Group has initiated this project in 1997 in cooperation with Doi
Inthanond Natural Park in Chiangmai. The project was later extended to be hosted at the Khao Luang National
Park and the Peaceful Southern Park in 2004 and 2006, respectively. For 2008, two more camps were hosted at
the Khao Chamao Park in Rayong province. • Forest: The Circle of Life: EGCO Group joins hands with the employees, investors, media and interested public to
launch this project in a bid to create awareness about the importance of the forest and watershed area which
is a source of life. Participants joined hands to plant tree saplings and return the balance to the nature. In 2008,
EGCO plants 600 Rhododendron saplings at the Kiew Mae Pan Walking Trail at Doi Inthanond National Park in
Chiangmai province. • How to Fight Global Warming with Sustainable Living: EGCO works in concert with the Thai Environment Institution
to promote high potential schools to be “the learning center to fight against global warming by way of
sustainable living”. The center wil be open for other schools and communities and wil act as the network center
for the schools and communities both in the same and different regions across the country to join the fight
against climate change and global warming. In 2008, a site visit to the learning center in Pracheenburi province
was arranged. The network was extended to cover 21 schools. In addition, the second workshop was run at the
Sirindhorn Enviornmental Park in Pechaburi province.
• Green Learning Project: EGCO works in concert with the Tai Wisdom Association to provide the opportunity for
primary school students to learn about environment awareness via activities and books. Children will be
encouraged to learn from nature by way of researching and observations and to record what they learn and
make presentation to the group. The project camp is enriched with interesting and joyful activities. The Office of
the Tai Wisdom Association is also developed to be a learning center for natural resource, energy and
3.2 Learning Ability and Public Mind Development
environment for children and youth in the northeastern region and nearby provinces. • EGCO Green Blood Project: EGCO extends the project to increase environment conservation awareness among
youths by encouraging those who have attended the Thai Forest Conservation Youth Camp to form a network
and launch social and environment projects. In 2008. The Green Blood networks were set up in the northern and
central regions.
3.3 Projects to invest in community development.
EGCO wants to be a good neighbor to the community and wil invest to support their quality of life. Major programs in 2008 are as follows. 105 • Cleaner Canal: Better Living Project at Lad Tanod Canal • Study of dolphin population and behaviors at Khanom District • Health market and Vocational Student Volunteer for Community project by REGCO • Breeding of snappers and blue Swimming Crab, artificial coral launching, and bio-life training for youth by KEGCO • Husk Ashes Organic Fertilizer and the Local Wisdom Learning Centre by Roi Et Green • Angle mushroom farming and the mobile medical unit by EGCO Cogeneration. EGCO Group also publishes the “Green News” which is a monthly electronic magazine to broadcast the progress of social environment projects and to provide the knowledge on the corporate social responsibility to EGCO Group employees. CSR sharing workshop is also hosted for power plant representatives for experience exchange and sharing on the issue with the aim to lift up the Group standard to the international level and to provide long term benefits to stakeholders. With our commitment to operate with social responsibility and thanks to support from all concerned party, EGCO Group was shortlisted as candidate for CSR Awards by SET in 2008. KEGCO is also the only power plant that joined the CSR-DIW project arranged by the Department of Industrial Works and the Management System Certification Institute. Looking to the future, EGCO Group wil continue to pursue its business growth while implementing social development programs in order to ensure Thailand’s future sustainable development.
Management Discussion and Analysis
1. Executive Summary The Electricity Generating Public Company Limited (EGCO) is structured as a holding company which invests in subsidiaries, associates and interests in joint ventures, totaling 15 companies. All of EGCO’s subsidiaries, associates and interests in joint ventures can be categorized into four investment groups as follows: 107 1. Independent Power Producer (IPP) consists of Rayong Electricity Generating
Co., Ltd. (REGCO), Khanom Electricity Generating Co., Ltd. (KEGCO), BLCP
Power Limited (BLCP) and Gulf Power Generation Co., Ltd (GPG). 2. Small Power Producer (SPP) consists of Gulf Electric Public Company Limited
(GEC)(excluding GPG), EGCO Cogeneration Co., Ltd. (EGCO Cogen), Roi-Et Green Co., Ltd.
(Roi-Et Green), Amata-EGCO Power Ltd. (AEP) and Amata Power (Bangpakong) Ltd. (APBP). 3. Overseas consists of Conal Holdings Corporation (Conal), Nam Theun 2 Power Co., Ltd. (NTPC) and Quezon
Power (Philippines) Limited Co. (Quezon). 4. Other Business consists of EGCO Engineering & Service Co., Ltd. (ESCO), Egcom Tara Co., Ltd. (ET) and Amata
Power-ESCO Service Co.,Ltd. (AMESCO). EGCO, Subsidiaries, Associates and Interests in Joint Ventures entities hereinafter collectively referred to as EGCO Group1 possesses 13 operating plants, totaling 3,967.6 equity MW at present. In 2008, EGCO Group’s significant events, which increased revenues and equity MW, are summarized as follows: - Combined cycle gas turbine IPP project of GPG, the Kaeng Khoi 2 (KK2) unit 2, with the installed capacity of 755
MW achieved its Commercial Operating Date (COD) on February 27, 2008. - The sale of shares in AEP, APBP and AMESCO to Amata Power Ltd. (Amata Power) in May 2008. - The purchase of 23.4% stake in Quezon which owns, operates and maintains a 502.50 MW (installed capacity)
coal-fired power plant on November 29, 2008. The decrease in the demand for electricity of Thailand caused by the economic slowdown has an influence on the future growth, financial position and operating results of EGCO Group. Therefore, to sustain EGCO Group’s market share and strength in the energy sector, EGCO’s business strategy will place more emphasis on expanding investment opportunities in (i) ASEAN markets, (ii) fuel-related projects, and (ii ) prospective domestic projects using renewable energy as fuel sources. EGCO Group’s consolidated net profit for 2008 ended December 31, 2008 was Baht 6,927 mil ion, a decrease of Baht 1,475 mil ion or 18% compared to 2007. Excluding the loss on foreign exchange rate due to the Baht depreciation, which was mostly an accounting number to be shown in accordance with the Thai Accounting Standard, EGCO Group’s profit was Baht 7,491 mil ion, an increase of Baht 99 mil ion or 1.34% mainly resulting from GPG’s recognition of the KK2 unit 2’s operating result, which achieved COD on February 27, 2008. Meanwhile, the decrease in KEGCO’s electricity sales was from a decrease in the Base Availability Credit. 1
Subsidiaries: REGCO, KEGCO, EGCO Cogen, Roi-Et Green, ESCO and ET Associate: AEP Interests in joint ventures: BLCP, GPG, APBP, GEC (excluding GPG), Conal, NTPC, Quezon and AMESCO
2. Business Expansion Analysis EGCO is the first IPP in Thailand established on May 12, 1992. EGCO is structured as a holding company with a number of subsidiaries, associates and joint ventures. The company’s vision is to be the leading Thai integrated electric power company with comprehensive energy services in Thailand and in the ASEAN region, and full commitment to environmental protection and social development. Our major business is to produce electricity and supply it to Electricity Generating Authority of Thailand (EGAT) under long-term power purchase agreements (PPAs). EGCO focuses its investment on pursuing opportunities in power generation in Thailand and also seeks to expand its business in ASEAN countries with the aim to provide strong returns to shareholders by improving the profitability of our existing assets and acquiring new projects with acceptable risk and return profile. At the end of the year 2008, Thailand’s total generating capacity was reported at 29,891.65 MW.1 During the year 2008, the peak demand reached 22,568 MW1 in April 2008, which was 0.08% slightly lower than the peak demand in April 2007. 108 During the year 2008, the declining economy has lowered the demand for electricity, which has urged EGAT to postpone the COD in many projects, including the three independent power producers who won 2007 IPP bidding, for another year. EGAT would also delay a number of coal fired and nuclear power plants, as well as an agreement with neighboring countries to push back supplying power to EGAT by another year. In the meantime, the Ministry of Energy is revising the SPP plan in order to stimulate private investment after EGAT agreed to delay the operation date of its power plants and the three IPPs. The PDP2007 is now in the process of being revised. To sustain EGCO Group’s market share and strength in energy sector, EGCO’s business strategy will place more emphasis on expanding investment opportunities in ASEAN markets, fuel-related projects, and prospective domestic projects using renewable energy as fuel sources. As of December 31, 2008, EGCO Group has 13 operating plants2 with capacity totaling 3,967.6 equity MW representing 13.27% of Thailand’s total generating capacity, of which 3,589.5 equity MW is contracted for sale to EGAT under long-term PPAs. Out of EGCO’s total equity MW portfolio, 51.82% comprises two natural gas-fired IPPs which are the 1,232 MW REGCO plant and the 824 MW KEGCO plant. Moreover, EGCO Group has 50% stake in BLCP Power facility or 717 equity MW which represents 18.07% of EGCO’s total equity MW portfolio. BLCP Power facility is a 1,434 MW coal-fired power plant, using high quality imported coal from Australia, located in Map Ta Phut Industrial Estate in Rayong Province. EGCO Group also has 50% stake in KK2 project (by holding 50% of shares in GEC which holds 99.99% in GPG, the project owner) or 755 equity MW which represents 19.03% of EGCO’s total equity MW portfolio. KK2 project is a 1,510 MW natural gas-fired power plant located in Saraburi province comprising two combined cycle units, 755 MW each. The COD for KK2 project unit 1 was on May 5, 2007 and the COD for unit 2 was on February 27, 2008. On November 29, 2008, EGCO International (B.V.I.) Ltd. (EGCO BVI), a wholly owned subsidiary of EGCO, purchased 90% of the outstanding shares of GPI Quezon Ltd. (GPIQ). This purchase provided EGCO BVI with a 23.4% indirect ownership interest in Quezon which owns, operates and maintains 502.50 MW (installed capacity) coal-fired electric generation or 117.60 equity MW. EGCO is also a shareholder in Nam Theun 2 project which is currently under development with the project’s COD targeted for December 2009. This project represents an additional 271.70 equity MW. The project is a 1,086.80 MW (installed capacity) hydroelectric power plant located in the Lao PDR. EGCO holds a 25% ownership in the project company, NTPC. EGAT is contracted to take off 995 MW and the balance wil be sold to the Lao PDR. At the end of December 2008, the overall project progress was 95.1% complete. In the absence of unforeseen circumstances, the company has a policy to dividend 40% of the consolidated net profit after taxation, or to increase the dividend amount in a steady manner, to the shareholders. This dividend policy may change in the light of investment opportunities that may become available to the company or as a result of other 1 2
Source: EGAT EGCO sold off its entire 50% stake in two power plants: AEP and APBP to Amata Power in May 2008. This represents a disposal of 41.3 equity MW.
economic or financial factors or when a dividend payment may have a significant impact on the normal operation of the company. The dividend payment shall not exceed the retained earnings of the company financial statements. Interim dividend for the first-half operating results of 2008 was paid at the rate of Baht 2.50 per share. 3. Report and Analysis of the Operating Results This report contains the analysis of the financial statements of EGCO, subsidiaries, associates and interests in joint ventures as follows:
3.1 Operational Results
Unit : Mil ion Baht 109
Overseas 0.26% SPP 7.41%
Others 3.38%
IPP 88.94%
Profit before FX- 2008
Profit of 2008 Profit of 2007 Before FX After FX Before FX After FX
EGCO IPP SPP Overseas Other Business Total
(598) (565) 7,195 6,707 599 452 21 57 274 275 7,491 6,927
(393) 6,965 564 1.32 255 7,392
(393) 7,795 947 (197) 250 8,402
Remarks: - Profits before FX separate out foreign exchange impact from EGCO, subsidiaries and joint ventures. - IPP : REGCO, KEGCO, BLCP, GPG - SPP : GEC (excluding GPG), AEP, APBP, EGCO Cogen, Roi-Et Green - Overseas : Conal, NTPC, Quezon - Others : ESCO, ET, AMESCO
EGCO Group’s profit before the effect of foreign exchange rate of EGCO Group for 2008 ended December 31, 2008 was Baht 7,491 mil ion, representing an increase of Baht 99 mil ion or 1.34% as compared to 2007 thanks to the increase in the share of profit from KK2 unit 2 (which achieved COD on February 27, 2008) that was greater than the decline in KEGCO’s profit caused by a decrease in the Base Availability Credit. Taking the loss on foreign exchange rate caused by the Baht depreciation into account, EGCO Group’s profit for 2008 was Baht 6,927 mil ion, a decrease of Baht 1,475 mil ion or 18% compared to the previous year. In 2008, EGCO Group’s loss on foreign exchange rate totaled Baht 564 mil ion while in 2007 it registered a foreign exchange gain of Baht 1,011 mil ion. This creates a difference caused by foreign exchange rate of Baht 1,575 mil ion between 2007 and 2008. The gain (loss) on foreign exchange rate is mostly an accounting number to be shown in accordance with the Thai Accounting Standard. It incurs from the difference of the translation of the net debt denominated in foreign currency into the Thai Baht equivalent amount using the foreign exchange rate at the end of this accounting period (December 31, 2008) and the previous period (December 31, 2007). The loss on foreign exchange rate of 2008 are as follows: - The loss on foreign exchange rate of EGCO and subsidiaries of Baht 25 mil ion, an increase in the loss of Baht
146 million compared to the previous year, which recorded the gain from foreign exchange rate of Baht
121 mil ion. - The loss on foreign exchange rate of joint ventures of Baht 539 mil ion, an increase in the loss of Baht 1,428
mil ion compared to the previous year, which showed the gain from foreign exchange rate of Baht 890 mil ion.
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Gain (Loss) on FX from Joint Ventures: BLCP GPG GEC (excluding GPG) APBP and AEP Conal NTPC Quezon Total Gain (Loss) from FX
2008 (231) (287) (61) 6 53 (8) (10) (539)
Unit : Mil ion Baht 2007 591 170 316 11 11 (210) - 890
The gross profit of EGCO and subsidiaries was reported at Baht 4,430 mil ion, down by Baht 799 mil ion or 15% as compared to the previous year, as a result of lower contracted electricity sales of KEGCO and EGCO Cogen’s higher cost of sales due to maintenance cost under planned outage. The operating profit of EGCO and subsidiaries was reported at Baht 3,735 mil ion, a decrease of Baht 1,223 mil ion or 25% as compared to 2007. The additional reason for the lower operating profit in 2008 is the gain from the disposal of open-ended funds in 2007 while there was no such gain in 2008. As for EGCO Group, excluding the effect of foreign exchange loss of Baht 564 mil ion, finance costs of Baht 2,618 mil ion, income tax of Baht 913 mil ion and depreciation and amortization of Baht 4,410 mil ion, the earnings before finance costs, tax, depreciation and amortization (EBITDA) for 2008 would be Baht 15,432 mil ion, representing an increase of Baht 479 million or 3% as compared to 2007, in which the EBITDA was Baht 14,953 million, excluding the effect of foreign exchange gain of Baht 1,011 mil ion, finance costs of Baht 2,663 mil ion, income tax amounting to Baht 753 mil ion and depreciation and amortization amounting to Baht 4,146 mil ion.
Important Financial Ratios for the period were as follows: - - - - - - -
Gross Profit Ratio was 42.93% Operating Profit Ratio was 36.19% Net Profit Ratio was 45.22% Net Profit Ratio (excluding the effect of foreign exchange of EGCO and subsidiaries) was 45.39% Earnings per share (EPS) was Baht 13.16 Earnings (excluding the effect of foreign exchange of EGCO and subsidiaries) per share (EPS) was Baht 13.21 Return on Equity (ROE) was 16.01%
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The gross profit margin of 42.93% was lower than the previous year’s margin of 47.80% due to a decrease in gross profit of KEGCO from lower electricity sales; whereas the net profit ratio (excluding the effect of foreign exchange of EGCO and subsidiaries) was reported at 45.39%, lower than 2007 ratio of 49.75% mainly due to a decrease of share of profits from BLCP.
3.2 Income, Expense and Share of profits from Joint Ventures Analysis
The 2008 annual operating results, excluding FX of EGCO Group and profit attributable to minorities (MI), are as follows: - Total revenues were Baht 10,712 mil ion, a decrease of Baht 882 mil ion or 8% compared to 2007. - Total expenses were Baht 8,293 mil ion, an increase of Baht 63 mil ion or 1% from the previous year. - The share of profits from joint ventures for 2008 was Baht 5,157 mil ion, an increase of Baht 995 mil ion or 24%
compared to the previous year. The details according to their groups of business are as follows: Total Expenses and Share of Profits (Loss) from JVEs: Total Revenues, Unit : Mil ion Baht
EGCO 2008 2007 Total Revenues 249 498 Total Expenses 847 891 Profits of Share of Profits (Loss) from JVEs (598) (393) Share of Profits (Loss) from JVEs - - Net Profit bf FX and MI (598) (393)
IPP SPP Overseas Others Total 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 7,195 7,910 2,234 2,186 - - 1,034 1,000 10,712 11,594 4,767 4,813 1,961 1,822 - - 717 703 8,293 8,230 2,428 3,097 273 364 - - 317 297 2,419 3,364 4,767 3,868 365 290 21 1.32 3.68 2.29 5,157 4,162 7,195 6,965 638 654 21 1.32 320 300 7,576 7,526
1) EGCO’s total revenues in 2008, amounting to Baht 249 mil ion decreased by Baht 248 mil ion or 50%, which mainly resulted from other income of Baht 61 mil ion, down by Baht 240 mil ion or 80% lower because there was a gain from the disposal of open-ended funds in 2007 while there was no such gain in 2008; in addition, dividend income in 2008 decreased by Baht 56 mil ion or 42% due to Eastern Water Resources Development and Management Public Company Limited (EASTW) being the only source of dividend of Baht 78 million. Meanwhile, interest income of Baht 110 million increased by Baht 47 mil ion or 75% from a higher deposit amount. Total expenses of EGCO were Baht 847 mil ion, a decrease from 2007 by Baht 44 mil ion or 5%. This resulted mainly from the decrease in advertising expenses and project development expenses which included consulting fees.
2) IPP’s total revenues were Baht 7,195 mil ion, a decrease of Baht 715 mil ion or 9% as compared to previous year, meanwhile the total expenses were Baht 4,767 mil ion, down by Baht 46 mil ion or 1%. The share of profits from joint ventures was reported at Baht 4,767 mil ion, an increase by Baht 899 mil ion or 23% as compared to 2007. The details are as follows: Total Revenues, Total Expenses and Share of Profits (Loss) from JVEs of IPP: Total revenues Total expenses 112 Profits Share of Profits (Loss) from JVEs Share of Profits (Loss) from JVEs Net Profit bf FX and MI
Unit : Mil ion Baht
REGCO KEGCO BLCP GPG 2008 2007 2008 2007 2008 2007 2008 2007 3,952 3,600 3,243 4,311 - - - - 2,448 2,183 2,319 2,630 - - - - 1,505 1,416 923 1,681 - - - - - - - - 3,200 3,315 1,567 553 1,505 1,416 923 1,681 3,200 3,315 1,567 553
Total 2008 2007 % chg 7,195 7,910 (9%) 4,767 4,813 (1%) 2,428 3,097 (22%) 4,767 3,868 23% 7,195 6,965 3%
• Sales of electricity of IPP were Baht 7,105 mil ion, representing a decrease of Baht 704 mil ion or 9% compared to the previous year. The decrease was a result of KEGCO’s lower electricity sales by Baht 1,024 mil ion to register Baht 3,211 mil ion caused by a decrease in the Base Availability Credit for KEGCO. Meanwhile, REGCO’s electricity sales increased by Baht 320 mil ion to register Baht 3,894 mil ion from an increase in the Capacity Rate. These changes were in accordance with the capacity payment formula calculated on a “Cost Plus Basis” under the PPAs and in line with the company’s projection. Moreover, to minimize exchange rate risk, on November 8, 2007, REGCO entered into a revenue swap contract with a financial institution to fix the exchange rate to be used in the conversion of part of the USD-linked revenue provided in the PPA. As at December 31, 2008, the electricity revenues under the foreign currency forward contract of USD 24.29 mil ion were fixed at Baht 33.80 per US Dollar. The contract is effective from November 8, 2007 to January 5, 2010. Sales of Electricity - IPP: Unit : Mil ion Baht REGCO KEGCO Total Sales of Electricity - IPP
2008 3,894 3,211 7,105
2007 3,574 4,235 7,809
%Changes 9% (24%) (9%)
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 tariff for each period. Moreover, the calculation of the capacity payment is adjusted to include compensation for 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 bil ing period. They receive higher capacity charge than that stated in the original PPAs before the inclusion of foreign exchange indexation if the exchange rate is above Baht 28 per US Dollar and vice versa. In 2008, REGCO and KEGCO received compensation for the exchange rate effect of Baht 320 mil ion.
• Interest income and others amounted to Baht 90 mil ion, a decrease of Baht 11 mil ion or 11%, mainly from the decrease of KEGCO’s and REGCO’s interest income by Baht 42 mil ion and Baht 8 mil ion, respectively, owing to lower interest rates. Meanwhile, other income of REGCO increased by Baht 41 mil ion mainly from environmental management fee. • Cost of sales totaled Baht 3,451 million, an increase of Baht 19 million or 0.55% compared to 2007 from an increase of KEGCO’s cost of sales totaling Baht 18 mil ion due to higher maintenance cost. Cost of Sales - IPP: 2008 2007 REGCO 1,842 1,841 KEGCO 1,609 1,591 Total Cost of Sales - IPP 3,451 3,433
Unit : Mil ion Baht %Changes 0.07% 1% 113 0.55%
• Administrative expenses and income taxes were Baht 974 mil ion, an increase of Baht 132 mil ion or 16%, mainly from higher tax payment at REGCO that amounted to Baht 246 mil ion or 114% higher due to a higher revenue and the end of corporate tax reduction BOI privilege on April 19, 2008. Meanwhile, tax payment at KEGCO decreased by Baht 167 mil ion or 47% due to lower revenues. KEGCO currently enjoy 50% corporate tax reduction BOI privilege on profits from power generation, ending on September 25, 2009. • Finance costs were Baht 342 mil ion, a decrease of Baht 197 mil ion or 37%, resulting from KEGCO’s lower principal amounts of debentures and KEGCO’s completion of loan repayment in June 2008. • Share of profits from joint ventures, BLCP and GPG, was recognised in the amount of Baht 4,767 million, an increase by Baht 899 mil ion or 23% that resulted from KK2 unit 1 and 2’s sales of electricity which achieved COD in May 2007 and February 2008, respectively. 3) SPP’s total revenues were reported at Baht 2,234 mil ion, an increase of Baht 48 mil ion or 2% compared to 2007. The total expenses were Baht 1,961 mil ion, an increase from the previous year by Baht 139 mil ion or 8%. The share of profits from joint ventures was reported at Baht 365 mil ion, up by Baht 75 mil ion or 26% as compared to the previous year. The details are as follows: Total Revenues, Total Expenses and Share of Profits (Loss) from JVEs of SPP: EGCO Cogen Roi-Et Green GEC APBP and AEP (exclude GPG) 2008 1,947 1,804 143 - 143
2007 1,944 1,670 274 - 274
2008 2007 287 242 157 153 130 90 - - 130 90
2008 2007 - - - - - - 324 189 324 189
2008 2007 - - - - - - 41 102 41 102
Total revenues Total expenses Profits bf Share of Profits (Loss) from JVEs Share of Profits (Loss) from JVEs Net Profit bf FX and MI
Unit : Mil ion Baht Total 2008 2007 % Chg 2,234 2,186 2% 1,961 1,822 8% 273 364 (25%) 365 290 26% 638 654 (2%)
• Sales of electricity of SPP were Baht 2,216 mil ion, representing an increase of Baht 63 mil ion or 3% compared to the previous year. Most of the increase of SPP group’s electricity sales was from Roi-Et Green in the amount of Baht 54 mil ion, resulting mainly from higher Energy Charge due to higher fuel oil cost, which was in accordance with the tariff formula. Moreover, EGCO Cogen’s electricity sales also increased by Baht 9 mil ion mainly from a higher steam sales of Baht 13 mil ion. Sales of Electricity - SPP: 2008 2007 EGCO Cogen 1,935 1,926 Roi-Et Green 281 226 2,216 2,152 114 Total Sales of Electricity - SPP
Unit : Mil ion Baht %Changes 0.48% 24% 3%
• Interest income and others amounted to Baht 19 mil ion, a decrease of Baht 15 mil ion or 44%, mainly because the four-year subsidy for guarantee fee from UNDP for Roi-Et Green ended in 2007, causing a lower other income of Baht 9 mil ion, and the lower interest rates caused a decrease in interest income of Roi-Et Green and EGCO Cogen of Baht 6 mil ion. • Cost of Sales of SPP was reported at Baht 1,836 mil ion, an increase of Baht 159 mil ion or 9% as compared to 2007. This was substantial y driven by an increase in cost of sales of EGCO Cogen and Roi-Et Green in the amount of Baht 152 mil ion and Baht 7 mil ion, respectively, as a result of higher fuel cost and maintenance cost from planned outage. Cost of Sales - IPP: 2008 2007 1,546 EGCO Cogen 1,698 Roi-Et Green 138 131 Total Cost of Sales - SPP 1,836 1,677
Unit : Mil ion Baht %Changes 10% 5% 9%
• Administrative expenses and income taxes were Baht 38 mil ion, down by Baht 11 mil ion or 23% as compared to 2007. This mainly resulted from a decrease of income tax by Baht 16 mil ion due to income tax payment in 2007 following Thai LNG Power Co., Ltd. (TLPC)’s liquidation. • Finance costs were Baht 87 mil ion, a decrease of Baht 9 mil ion or 10%, mainly from a lower debt principal of EGCO Cogen. • Share of profits from joint ventures, GEC (excluding GPG), APBP and AEP, totaled Baht 365 mil ion, an increase of Baht 75 mil ion or 26% compared to the previous year as a result of an increase of electricity sales at GEC (excluding GPG). However, the share of profits from APBP and AEP covered the operating results until May 15, 2008 before the selling of the stake in these power plants. 4) Overseas share of profits from joint ventures was reported at Baht 21 mil ion, an increase of Baht 20 mil ion or 1,517% mainly from a decrease in Conal’s interest expenses, owing to the prepayment of long term loans and the recognition of Quezon’s share of profit.
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5) Other Business’s total revenues were Baht 1,034 mil ion, an increase of Baht 34 mil ion or 3% as compared to 2007 and total expenses were Baht 717 mil ion, an increase of Baht 14 mil ion or 2%. The share of profit from the joint venture was reported at Baht 3.68 mil ion, an increase of Baht 1.39 mil ion or 61% as compared to the previous year. The details are as follows: Total Revenues, Total Expenses and Share of Profits (Loss) from JVEs of Other Business: ESCO 2008 2007 Total revenues 796 773 Total expenses 641 631 Profits bf Share of Profits (Loss) from JVEs 155 142 Share of Profits (Loss) from JVEs 3.68 2.29 Net Profit bf FX and MI 159 144
Unit : Mil ion Baht ET Total % Chg 2008 2007 2008 2007 3% 238 228 1,034 1,000 2% 76 72 717 703 7% 161 156 317 297 61% - - 3.68 2.29 7% 161 156 320 300
• Service income from ESCO amounted to Baht 770 mil ion, up by Baht 10 mil ion or 1%, resulting mostly from higher maintenance service income and spare parts sale to overseas power plants. • Sales of water from ET, were Baht 229 million, up by Baht 12 million, or 5%, thanks to the increase of the minimum take and tariff under the long-term Water Purchase Agreement with Provincial Waterworks Authority. • Interest income and others amounted to Baht 35 mil ion, an increase of Baht 12 mil ion or 55% due to a gain from the sale of shares in AMESCO totaling Baht 15 mil ion. • Cost of services was Baht 531 mil ion, a decrease of Baht 4 mil ion or 1%. • Cost of water sales of ET was Baht 71 mil ion, an increase of Baht 5 mil ion or 8%. • Administrative expenses and income taxes totaled Baht 115 million, an increase of Baht 15 million or
14% compared to 2007, mostly from an increase in ESCO’s income taxes by Baht 15 mil ion from higher revenues. • ESCO’s share of profit from a joint venture, AMESCO, totaled Baht 3.68 million, an increase of Baht 1.39
mil ion or 61%.
4. Report and Analysis of Financial Position
4.1 Asset Analysis
As at December 31, 2008, total assets of EGCO Group amounted to Baht 58,330 mil ion, an increase of Baht 4,730 mil ion or 9% from December 31, 2007. The important details are as follows:
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60,000 58,330 53,600 50,000 40,000 30,000 20,000 10,000 6,032 5,493 0 Total Assets
Cash,ST & LT Investment
Unit : Mil ion Baht 2008
24,494
20,233
2007
17,041 18,638 9,596 8,322
1,166 915 ST & LT Investment as Collateral
Inv, in Subs. & Interests in JVEs
Property, Plant and Equip (net)
Others
1) Cash and deposits at financial institutions, and short-term and long-term marketable securities were Baht 6,032 mil ion or 10% of the total assets, up Baht 540 mil ion or 10%. This resulted mainly from an increase of cash and cash equivalent by Baht 1,228 mil ion due to cash receipts from operating activities of Baht 4,881 mil ion, the short-term loan amounting to Baht 3,500 mil ion, dividends from joint ventures totaling Baht 2,007 mil ion, cash receipts from the sale of shares in EGCO Joint Ventures & Development Co., Ltd. (EGCO JD) and AMESCO totaling Baht 815 mil ion, and dividend of Baht 78 mil ion received from EASTW. Meanwhile, the investment in joint ventures was Baht 5,235 mil ion, debentures and loans repayment totaled Baht 1,563 mil ion and dividend payment to shareholders amounted to Baht 2,753 mil ion. 2) Short-term and long-term investments used as collateral were Baht 1,166 mil ion or 2% of the total assets, up Baht 251 mil ion or 27%. This increase mainly came from the use of deposit of Baht 450 mil ion as collateral for Standby Letters of Credit related to the investment in Quezon Project of EGCO. Meanwhile, there is the use of cash to pay the principal and interest of the debt of KEGCO and EGCO Cogen. 3) Investment in subsidiaries and interests in joint ventures recorded under the equity method in the consolidated financial statements as at December 31, 2008 amounted to Baht 24,494 mil ion or 42% of the total assets, up Baht 4,261 mil ion or 21%. The major change can be defined as follows: 3.1) an increase in share of profit from investment according to the equity method amounting to Baht 4,712 mil ion. 3.2) an investment in additional paid-up shares of NTPC and Quezon’s shares amounting to Baht 4,360 mil ion. 3.3) dividends received from BLCP, GEC and Conal by Baht 3,823 mil ion. 3.4) the sale of shares in EGCO JD and AMESCO amounting to Baht 835 mil ion.
3.5) transferring from investment in joint ventures to subsidiaries amounting to Baht 10 mil ion. 3.6) loss from translation adjustment totaling Baht 143 mil ion. For the company financial statements, the original cost was applied to record the investment in subsidiaries and interests in joint ventures at the beginning. The book value as at December 31, 2008 was Baht 34,325 mil ion, up Baht 4,671 mil ion, thanks to the additional paid-up shares in joint ventures, namely Quezon, NTPC and Sustainable Energy and Environmental Development Co.,Ltd. (SEED), amounting to Baht 4,172 million, Baht 886 million and Baht 10 million, respectively. Meanwhile, the sale of shares in EGCO JD amounted to Baht 348 mil ion and the impairment recognition of Conal amounted to Baht 48 mil ion. 4) Property, plant and equipment (net) totaled Baht 17,041 mil ion or 29% of the total assets. They were down Baht 1,597 million or 9% due to the decrease in property, plant and equipment from the depreciation of EGCO and subsidiaries’ assets totaling Baht 2,169 mil ion and the reclassification of unutilised capital spare parts from property, plant and equipment to spare parts and supplies at REGCO, KEGCO and EGCO Cogen totaling Baht 259 mil ion. Meanwhile, there was a recording of capital spare parts as property, plant and equipment following the major maintenance at REGCO, KEGCO and EGCO Cogen in the amount of Baht 744 mil ion and net purchase of property, plant and equipment totaling Baht 87 mil ion. 5) Other assets were Baht 9,596 million or 16% of the total assets, up Baht 1,275 million or 15% mainly from an increase of dividends receivable from a joint venture by Baht 1,815 mil ion. Meanwhile, spare parts and supplies were down Baht 493 mil ion.
4.2 Liability Analysis
As at December 31, 2008, the EGCO Group’s total liabilities were Baht 12,788 mil ion, which was Baht 1,183 mil ion or 10% higher than the amount as at December 31, 2007. The total liabilities consist of the following: 1) Short-term loans totaled Baht 3,500 mil ion or 27% of total liabilities. This came from EGCO’s drawn down of a short-term loan amounting to Baht 3,500 million according to a long-term promissory note agreement with a Thai commercial bank. 2) Long-term loans and debentures totaled Baht 7,770 mil ion, or 61% of total liabilities, down Baht 1,468 mil ion or 16%. This mainly came from the long-term loans and debentures repayment from KEGCO, EGCO Cogen and Roi-Et Green. The details are as follows: USD 8% THB Debenture - USD loans in the amount of USD 18 mil ion 29% - Yen loans in the amount of Yen 772 mil ion JPY 4% - Baht loans in the amount of Baht 4,636 mil ion - Baht debentures in the amount of Baht 2,227 mil ion THB 59%
Maturity of long-term loans and debentures as of December 31, 2008 EGCO KEGCO EGCO Cogen Within 1 Year - 817 157 1-5 Years - 1,410 858 > 5 Years 4,000 - 229 Total 4,000 2,227 1,244
Unit : Mil ion Baht Roi-Et Green 39 158 101 299
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Long-term loans and debentures are secured liabilities over land, buildings, power plants and equipment of subsidiaries and joint ventures. The subsidiaries and joint ventures have to maintain cash reserves as at December 31, 2008 totaling Baht 203 mil ion for the purpose of payment of principal and interest due within one year. 2) Other liabilities amounted to Baht 1,518 million or 12% of total liabilities, representing a decrease of Baht 849 mil ion or 36% which was mostly from a decrease in net liabilities in a joint venture by Baht 783 mil ion as a result of the increased capital and the recognition of NTPC’s share of loss totaling Baht 886 mil ion and Baht 103 mil ion, respectively. In addition, trade payables decreased by Baht 203 mil ion mainly from EGCO Cogen and KEGCO. Meanwhile, income tax payable increased by Baht 129 mil ion from REGCO.
4.3 Shareholders’ Equity Analysis
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As at December 31, 2008, Shareholders’ Equity amounted to Baht 45,542 mil ion, which was Baht 3,546 mil ion or 8% higher than the amount as at December 31, 2007. This was due mainly to the net profit in the consolidated financial statements amounting to Baht 6,927 mil ion. Meanwhile, appropriated dividend totaled Baht 2,603 mil ion. The analysis of the company’s capital structure as at December 31, 2008 can be summarized as follows: Debt Shareholders’ equity was Baht 45,542 mil ion or 78.08%. 21.92% Liabilities were Baht 12,788 mil ion or 21.92%. Equity 78.08% Important financial ratios were as follows: - Debt to equity ratio was 0.28 times, same as the end of 2007. - Book value per share was Baht 85.60, higher than Baht 78.78 at the end of 2007. 5. 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 cash and cash equivalents. As at December 31, 2008, the ending balance of cash and cash equivalents was Baht 4,979 mil ion, which was Baht 1,228 mil ion higher than the amount as at December 31, 2007. The details of the sources and uses of funds are as follows: - Net cash received from operating activities totaled Baht 4,881 million. This was cash received from operating activities of Baht 5,813 mil ion and cash payment for working capital of Baht 932 mil ion. - Net cash payment for investing activities was Baht 2,217 mil ion mainly due to the investment in joint ventures of Baht 5,235 mil ion. Meanwhile, dividends from joint ventures were Baht 2,007 mil ion, cash receipts from the sale of shares in EGCO JD and AMESCO totaled Baht 815 mil ion and dividend received from EASTW was Baht 78 mil ion. - Net cash payment for financing activities was Baht 1,435 mil ion. The payment includes the payment of principal and interest of EGCO, KEGCO, EGCO Cogen and Roi-Et Green’s debentures and loans totaling Baht 1,563 mil ion. The dividend payment to shareholders amounted to Baht 2,753 mil ion. Meanwhile, the company drew down short-term loan amounting to Baht 3,500 mil ion. For 2008, the analysis of the company’s liquidity ratios was as follows: - Current ratio was 2.58 times, compared to 4.22 times in 2007. - Quick ratio was 1.34 times, compared to 2.26 times in 2007. Both ratios were lower than the ratios in 2007 because EGCO drew down the short-term loan amounting to Baht 3,500 mil ion.
Related Transactions
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In conducting the normal business courses, there are related transactions between EGCO or its subsidiaries and persons who may have potential conflict of interest. EGCO endeavors to ensure that these transactions are justified and in compliance with the Stock Exchange of Thailand (SET) and the Capital Market Supervisory Board’s rules and regulations. Apart from designating the authorized persons to approve the transaction in accordance with the Table of Authority, the Audit Committee is also entrusted to review the related transactions that need to be approved by the Board of Directors. The details of the related transactions are disclosed under item 31 and 32 of the Notes to 2008 Financial Statements for the period ended December 31, 2008. Procedure to Approve the Related Transactions EGCO lives by the following policies and guidelines in treating and approving the related transactions. • In case of entering into any contracts or any related transactions between EGCO, subsidiaries, joint venture
companies, associated companies and/or outside parties, EGCO wil consider the necessity and justification of
such transactions for the best interest of the Company. Transaction prices are charged at fair market price like
the transactions with other outside parties (Arm’s Length Basis). If there is no such price, EGCO wil apply the
price of similar market transactions. EGCO may also compare the price with the one recommended by
independent appraiser to ensure that such price is reasonable to maximize the Company’s benefits. • Related transactions that are considered connected transactions in accordance with the SET’s regulation wil be
treated in accordance with the requirements of the SET’s and Securities & Exchange Commission and must be
reviewed by the Audit Committee in case such transaction must be approved by the Board of Directors. • Financial assistance or guarantee provided to Group companies or connected persons will be conducted
prudently to ensure the utmost benefits of the Group companies. Fee wil be charged using the market rate as
at the transaction date. • The summary of transactions with commercial term that an ordinary person will agree to deal with the
counterparty under similar circumstances, on the basis of commercial negotiation and without any dependent
interest resulted from the status of the director, executive or related person, as the case may be, shall be
reported to the Audit Committee on the quarterly basis. This is aimed to ensure that such transaction is well
grounded and provide optimal benefit to the Company and in line with the approved process. • In a case that a shareholders’ approval is needed, the major shareholder who is the connected person can
attend the meeting in order to constitute a quorum but wil not have a voting right. Since the voting wil be
based on the number of shareholders who are eligible for voting, this criterion does not have the negative
impact on the quorum or the voting. • Directors with potential conflict of interest wil not be allowed to vote or attend the meeting
Guidelines for Treating Future Related Transactions EGCO wil seek to ensure that all the future related transactions are normal business transactions with no objective to siphon profits between EGCO or its subsidiaries and parties with potential conflict of interest. EGCO wil entrust the Audit Committee, the auditor or independent consultants to review and recommend the appropriate pricing and the justification of those transactions. In addition, material information about such transactions which includes types, value and the reasons for entering into those transactions wil be disclosed to the shareholders in accordance with the regulations of the SET and SEC. EGCO will also provide the updated information, rules and regulation with regard to the related transaction to relevant parties to foster understanding which will lead to full compliance, transparency and the benefit of the shareholders. Details of related transactions in 2008 are as summarized below. 120 1. Power Sold to EGAT Group companies namely Rayong Electricity Generating Company Limited (REGCO), Khanom Electricity Generating Company Limited (KEGCO), EGCO Cogeneration Company Limited (EGCO Cogen) and Roi-Et Green Company Limited (Roi-Et Green) entered into the Power Purchase Agreement (PPA) with the Electricity Generating Authority of Thailand (EGAT), a major shareholder which has 4 representative directors on EGCO Board. The terms for the first and second PPA are twenty years and fifteen years while the terms for the third and the fourth are twenty one years each. Such transactions are based on the agreed prices in the standard contracts which have been endorsed by relevant government agencies. Companies
Relationship
Transaction value for the period ended December 31, 2008 (mil ion baht) Financial Statements Traded Receivable Company Only Consolidated from a Related Party - 3,894.24 707.86 - 3,210.67 338.58 - 1,164.81 236.46 - 280.55 50.01
REGCO KEGCO Subsidiary EGCO Cogen Roi-Et Green The value of the related transactions between joint venture companies with EGAT are as shown in the following table. Since EGCO has recorded the share of profit from joint venture companies using equity method, the value of such transactions is not shown on the consolidated financial statements. Transaction value for the period ended December 31, 2008 (mil ion baht) GEC(including subsidiaries) 13,356.46 BLCP Joint Ventures 10,127.39 APBP* 113.43 AEP* 87.37 Remark Transaction value of APBP and AEP were calculated as at May 15, 2008. Companies
Relationship
2. Maintenance Service to EGAT ESCO, an O&M service provider, entered into a Maintenance Agreements with EGAT to provide major maintenance work including other administrative and relating services to the power plants. The price is charged on a “cost plus basis”. The agreement is effective for a period of eight years commencing September 24, 2007, respectively. Companies ESCO
Relationship Subsidiary
Transaction value for the period ended December 31, 2008 (mil ion baht) Company Consolidated - 39.93
121 3. Maintenance Service by EGAT Group companies have entered into the agreements with EGAT for the latter to provide maintenance services. These transactions are considered the transactions to support normal business of which the general trading terms and conditions were applied and the agreed price can be calculated from the assets or the referenced price in accordance with SET’s guidelines. • REGCO and KEGCO each extend the Major Maintenance Agreement (MMA) with EGAT for the latter to provide
major maintenance services, repair services, administrative services, and additional services related to their power
plants for another 8 years and 6 years with the execution date on December 7, 2006 and June 19, 2002,
respectively. • ESCO enters into the agreement with EGAT to purchase power plant equipment. EGAT must supply spare parts
and maintenance service with the same terms and conditions as the agreements between ESCO and the
Republic of Sudan National Electricity Corporation. The agreements were effective for the period of 3-4 years,
commencing September 23, 2003 and September 1, 2004, respectively.
Companies
Relationship
REGCO KEGCO Subsidiary ESCO
Transaction value for the period ended December 31, 2008 (mil ion baht) Consolidated Company - 114.02 - 140.91 - 2.00
• GEC has engaged EGAT as advisor for maintenance work. The fee is charged in accordance with the agreed
price. Transaction value for the period ended December 31, 2008 (mil ion baht) Companies Relationship Transaction value Traded Receivable from a Related Party GEC Subsidiary 1.71 0.00
4. EGCO and Subsidiaries EGCO has entered into three agreements with subsidiaries and joint venture companies, namely the agreements to provide office space, the agreements to provide building services and the agreements to provide management services which include internal audit, legal counseling, Board’s secretarial work, technology, public and community relations and financial work (exclude ESCO and EGCOM Tara). Such transactions are well grounded because those Group companies do not have internal staff to take care of such work while the EGCO has the capability to provide the services. The office space is charged in accordance with the agreed price on an annual basis. The management service is charged in accordance with the actual operating hours based on the cost plus basis. 122
Companies
Relationship
REGCO KEGCO ESCO EGCO Cogen Subsidiary EGCO Green Roi-Et Green EGCOM Tara EGCO BVI
Transaction value for the period ended December 31, 2008 (mil ion baht) Company Consolidated 26.28 - 25.06 - 9.32 - 8.49 - 0.86 - 7.19 - 2.29 - 0.56 -
5. Financial Support EGCO provides the financial support to subsidiaries and joint ventures in accordance with its ownership in such respective companies. Such supports are normal business practices and are aimed at optimizing shareholders’ return. They are duly approved by the Board in accordance with the Table of Authority and disclosed in the notes to financial statements as at December 31, 2008.
5.1 Inter-company Loan
REGCO On 26 December 2006, EGCO entered into an agreement to provide loan to REGCO in the amount of 2,600 mil ion baht. Principal and interest payment is scheduled semi-annually on June 7, and December 7, commencing June 2007 to December 2009. The interest rate is fixed at 6% per annum. The outstanding loan amount as at December 31, 2008 was 920.40 mil ion baht. ESCO On 22 November 2006, EGCO entered into an agreement to provide loan to ESCO in the amount of 780 mil ion baht. Principal payment of 45,882,350 baht each is scheduled annually commencing December 2009 to December 2025. The interest rate is MLR minus a certain margin and payable on a semi-annual basis. The outstanding loan amount as at December 31, 2008 was 780 mil ion baht
5.2 Loan Guarantee
EGCO provided the loan guarantee to subsidiary, joint venture and associated companies. Significant information is as follows.
5.2.1 Contingent Liabilities
EGCO Cogen As of December 31, 2008, EGCO Cogen’s sponsors had a commitment to provide the loan guarantee covering the outstanding loan and interest payment in the amount not exceeding 200 mil ion baht. Since EGCO holds an 80% stake in EGCO Cogen, its guarantee portion was not exceeding 160 mil ion baht. Roi-Et Green EGCO had a commitment to provide the loan guarantee in the amount not exceeding the total outstanding loan and interest payment. As at December 31, 2008, the total commitment amounted to 777.86 mil ion yen or equivalent to 303.22 mil ion baht.
5.2.2 Letter of Guarantee
EGCO had the commitment to the banks which issued the letter of guarantee or the Standby Letter of Credit (SBLC) to the subsidiaries and joint ventures as detailed below. KEGCO EGCO requested HSBC to issue the SBLC to guarantee the release of cash in the KEGCO’s US dollar and baht Debt Service Reserve Accounts. As at December 31, 2008, the value of the SBLC was 572.28 mil ion baht. NTPC The Nam Theun II project’s finance was structured in a way that would allow sponsors who invested in Lao PDR to inject equity on a back-end basis while lenders would allow loan drawn down during the first phase. As such, lenders requested the banks on behalf of the sponsors to issue the SBLC to guarantee future capital injection. The face value of the SBLC wil reduce in accordance with each capital injection. With respect to the above, EGCO requested Sumitomo Mitsui Banking Corporation to issue SBLC under the Shareholders’ Support Agreement. As at December 31, 2008, the guarantee value was US 24.03 mil ion dollar (equivalent to 843.03 mil ion baht) and US 93.92 mil ion dollar (equivalent to 1,530.68 mil ion baht), respectively. QPL EGCO requested HSBC to issue the SBLC for the purpose of providing a back –to-back guarantee to support GECC’s reimbursement obligations for the GPIQ DSR Letter of Credit. As at December 31, 2008, the guarantee value was US 9.82 mil ion dollar (equivalent to 344.44 mil ion baht). With respect to this, EGCO purchased a bil of exchange (“B/E”) with the face value of 450 mil ion baht and pledged that B/E in favor of HSBC as SBLC security until its expiring date.
123
Statement of Directors’ Responsibilities
124
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. The Board of Directors has also issued the Company’s regulation on accounting, finance and budgeting B.E. 2550 to which the Management must adhere. In addition, the Audit Committee has been entrusted to ensure that the Company’s financial statements have been prepared in a justified and prudent manner in compliance with such rules and regulations. The appropriate accounting policies were consistently applied. Also, the Audit Committee has reviewed the Company’s internal control systems to ensure its adequacy and effectiveness as a means to safeguard the company’s assets from unauthorized persons and reveal the weakness to prevent unlawful conduct and abnormalities. Management has prepared both consolidated and Company financial statements for the year ended 31 December 2008 in compliance with the Thai Generally Accepted Accounting Principles under the Federation of Accounting Professions under the Royal Patronage. The appropriate accounting policies were consistently applied and the financial statements were prepared in a prudent and justified manner with adequate disclosure of significant information in the notes of the financial statements. The Board of Directors is of the opinion that both the consolidated and company financial statements for the year 2008, present the company’s financial position, operating results and cash flows in a correct and reliable manner and that such statements are in compliance with the Generally Accepted Accounting Principles and all governing rules and regulations. Mr. Sanit Rangnoi Chairman
AUDIT COMMITTEE’S REPORT The Board of Directors appoints the Audit Committee (Committee) members, all of whom are independent Directors under the definition of the Stock Exchange of Thailand (SET). By the Board’s resolution, the number of Audit Committee members has increased from 3 to 4 since September 9, 2008. The Board has set the compositions, qualifications, terms of office, and responsibilities of the Committee as specified in the Audit Committee Charter. In 2008, the Committee held 13 meetings, 12 of which had a 100% attendance rate. There was only one meeting that one of the Committee members could not attend. Attendance of each member was presented on page 86 of Corporate Governance Report. The Audit Committee regularly reports the Committee’s Minutes of Meeting to the Board of Directors. For the year 2008, the Audit Committee completely performed the duties as specified in the Audit Committee 125 Charter as follows: • Reviewing the 2008 quarterly financial statements and the annual financial statements with both the external
auditor and the Management. This was accomplished by asking questions and providing comments and useful
recommendations to ensure that the process to prepare the financial statements and major disclosures were
consistently complete, accurate, reliable, and in compliance with related laws and regulations as well as the
generally accepted accounting principles. • Considering the accuracy and adequacy of EGCO’s disclosure on related-party transactions or any transactions
that may cause conflict of interest. • Reviewing with the management the risk management policy, the compliance with such policy, and EGCO’s risk
management guidelines. • Reviewing the sufficiency and effectiveness of the internal control systems taking into account the internal
auditor’s and the external auditor’s reports, along with the results of the internal control evaluation of EGCO and
its subsidiaries. The Committee also review the appropriateness of the internal control questionnaires which were
prepared in compliance with the guidelines of the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). In addition, the Committee requested the Internal Audit Division to perform a management
control audit to ensure that (1) EGCO had sufficient and appropriate procedures and practices in place to
prevent and mitigate risks that might occur and that (2) the approval of transaction was in compliance with the
policy and the approval authority. • Reviewing and noting the Code of Conduct Compliance Statement and General Representation Letter submitted
by the President to the chairman. The process of preparing those statements as well as their contents provided
the assurances to the Committee that EGCO’s operations were in compliance with the Code of Conduct and
the internal control systems and that the financial information and disclosures were accurate, complete and
reliable. • Approving the audit plan, the scope of work, the budget and the manpower of the Internal Audit Division. The
Committee also conducted the performance appraisal of the internal audit manager who functionally reported to
the Committee. • Reviewing with Management EGCO’s compliance procedures to ensure that the Management and operations
complied with the securities and exchange laws and regulations of the SET or laws relating to the business of
EGCO. • Considering other services performed by the audit firm’s group companies for EGCO and its subsidiaries during
2008. It was determined that the scope of work and fees for other services was not significant and did not
influence the independence of the auditor.
• Holding exclusive meeting with the external auditors to ensure their independence. • Reviewing the Management Discussion and Analysis (MD&A) with Management to ensure its accuracy, adequacy
and usefulness to shareholders and investors for making their investment decisions. • Reviewing the Audit Committee Charter to ensure that the duties entrusted to them in 2008 were achieved and
that the Committee’s duty and responsibility is in accordance with international practices and those specified by
the SET’s Audit Committee Best Practice Guidelines, while also being appropriate for EGCO’s business. • Assessing the Committee’s performance for the year 2008 by completing the Audit Committee’s Self-Assessment
Form which complied with SET’s regulations and international good practice. The result of this self-assessment was
reported to the Board of Directors. • Enhancing other good corporate governance practices such as providing the channel for employees and
shareholders to direct their complaints, suspected violation of laws and Code of Conducts and questions
about the financial statements and internal control system to the Chairman of the Audit Committee by email. 126 With regard to the appointment of EGCO and its subsidiaries’ auditors for the year 2009, the Committee requested the Management to send invitation letter to leading audit firms to submit their quotations. The auditors’ reputations, work experiences and qualifications were the most important factors for EGCO’s consideration. After the Committee had reviewed the auditors’ reputations, experiences, qualifications and audit fees, the Committee proposed to the Board of Directors to seek the Shareholders’ approval to appoint Ms. Nangnoi Charoenthaveesub Certified Public Accountant (Thailand) No. 3044, Mr. Prasan Chuaphanich Certified Public Accountant (Thailand) No. 3051 , and Mr. Somchai Jinnovart Certified Public Accountant (Thailand) No. 3271 working for PricewaterhouseCoopers ABAS Ltd. as EGCO’s auditors for 2009. Based on the above practices, the Committee is of the opinion that EGCO’s 2008 financial statements is accurate, complete, and reliable. The internal control system is adequate, appropriate and in compliance with the Securities and Exchange Act, SET regulations and relevant laws. In addition, information disclosure in case of related transaction or conflict of interest is correct and complete. Mr. Chaipat Sahasakul Chairman of the Audit Committee
Auditor's Report
128
Electricity Generating Public Company Limited
Balance Sheets
As at 31 December 2008 and 2007
129
Electricity Generating Public Company Limited
Balance Sheets (Continued) As at 31 December 2008 and 2007
130
Electricity Generating Public Company Limited
Balance Sheets (Continued) As at 31 December 2008 and 2007
131
Electricity Generating Public Company Limited
Statements of Income
For the years ended 31 December 2008 and 2007
132
Electricity Generating Public Company Limited
Statements of Changes in Shareholders' Equity For the years ended 31 December 2008 and 2007
133 133
134 134
Electricity Generating Public Company Limited
Statements of Changes in Shareholders' Equity (Continued) For the years ended 31 December 2008 and 2007
Electricity Generating Public Company Limited
Statements of Cash Flows
For the years ended 31 December 2008 and 2007
135
Electricity Generating Public Company Limited
Statements of Cash Flows (Continued) For the years ended 31 December 2008 and 2007
136
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
137
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
138
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
139
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
140
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
141
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
142
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
143
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
144
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
145
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
146
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
147
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
148
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
149
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
150
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
151
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
152
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
153
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
154
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
155
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
156
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
157
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
158
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
159
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
160
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
161
162
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements
Notes to the Consolidated and Company Financial Statements
For the years ended 31 December 2008 and 2007
For the years ended 31 December 2008 and 2007
Electricity Generating Public Company Limited
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
163
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
164
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
165
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
166
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
167
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
168
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
169
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
170
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
171
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
172
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
173
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
174
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
175
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
176
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
177
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
178
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
179
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
180
Electricity Generating Public Company Limited
Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2008 and 2007
181
Audit Fee Audit Fee In 2008, the Company and its subsidiaries paid the audit fee of Baht 4,436,667 to the Office of the Auditors, comprising the Company’s audit fee of Baht 2,166,167 and subsidiaries’ audit fee of Baht 2,270,500. No audit fee had been paid to the auditors or other related parties to the auditors and the Auditors’ office. Non-Audit Fee The following non-audit fee was paid by the Company and its subsidiaries as the advisor fee for the special review. Payment to the Office of the Auditors: 182 The amount of Baht 796,000 was paid to the Office of the Auditors for the service fee of the Company and its subsidiaries and there is no outstanding amount for the undelivered work. Payment to the Auditors or Other Related Parties of the Auditors and the Auditors’ Office: In 2008, the Company paid non-audit fee of Baht 222,965 to other related parties of the Auditors’ office. The Company would also be responsible for the expenses of undelivered work of US Dollars 20,131 and Singapore Dollars 140,000. The engagements of the office of the Auditors to provide the non-audit work were reported to be not involved the conflict of interest or the review of their own work which would contaminate the independence judgment of the auditors
Report on the donation on behalf of all shareholders who elect to receive the Annual Report in the electronic form Starting from 2004, the Company had the policy to present the annual report in CD ROM format to save the cost and to reduce tree cutting over the long term. The Company committed to make a donation to the “Thai Forest Conservation Foundation� which had the objective to conserve the environment on behalf of all shareholders who opt for electronic form. In 2008, the Company donated the cost saving in this regard to the Thai Forest Conservation Foundation on behalf of all shareholders in the amount of 1,735,326 baht. The Company thanks all our shareholders and stakeholders who have made this donation and the Company looks forward to your support in the future.
183
General Information Company
Business
Electricity Generating Public Company Limited (EGCO) Holding Company focusing on Power Registration 0107537000866 (No.BorMorJor.333) business and others related to power business Head Office 222 EGCO Tower, Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210, Thailand Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9 Sector Energy & Utilities Industry Resources Foreign Limit 44.81% Share of Minor Shareholder (% Free Float) 51.90% www.egco.com 184 Website
Subsidiaries Company
Business
Rayong Electricity Generating Company Limited (REGCO) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0931 Site Office 35 Rayong Highway No. 3191 Huay Pong District, Amphur Muang, Rayong 21150, Thailand Tel. 66 0 3868-1012, 66 0 3868-1016, 66 0 3868-1020 Fax 66 0 3868-1784 Khanom Electricity Generating Company Limited (KEGCO) Office EGCO Tower Tel. 66 0 2998-5000 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 EGCO Engineering & Service Company Limited (ESCO) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0933 Site Office 35 Rayong Highway No. 3191 Huay Pong District, Amphur Muang, Rayong 21150, Thailand Tel. 66 0 3868-2611-4 Fax 66 0 3868-2823
Independent Power Producer (IPP) Electricity Generating and supply business
Registered Par Value Paid-up Ownership Interest Share Capital (Baht) Share Capital (Direct+Indirect) (Mil ion Baht) (Mil ion Baht) (%) 5,300 10 5,264.65 -
Registered Par Value Paid-up Ownership Interest Share Capital (Baht) Share Capital (Direct+Indirect) (Mil ion Baht) (Mil ion Baht) (%) 4,702
10
4,702
99.99
5,000
10
4,850
99.99
400
10
400
99.99
IPP Electricity Generating and supply business Engineering, operation and maintenance services for power plants and manufacturers
Subsidiaries Company
Registered Par Value Paid-up Ownership Interest Share Capital (Baht) Share Capital (Direct+Indirect) (Mil ion Baht) (Mil ion Baht) (%) /1 /1 /1 34.8668 12.20 100 Holding company focusing on investment 12.20 in electricity generating companies in foreign countries (350,000 USD) (1 USD) (350,000 USD) Small Power Producer (SPP) 1,060 10 1,060 80 Electricity and steam generating and supply business 185 Holding company focusing on power 10 175 74 175 business SPP utilizing Biomass as primary fuel 180 10 180 70.30 Trading/delivery service of fuel from 10 2 99.99 2 natural scrap Piped water generating and supply 345 10 345 70.076 business
Business
EGCO International (B.V.I.) Limited (EGCO B.V.I.) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9 Overseas office Romasco Place, Wickhams Cay 1, PO Box 3140, Road Town, Tortola, British Virgin Islands EGCO Cogeneration Company Limited (EGCO Cogen) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9 Site Office 222 Moo 8, Mabkha District,Amphur Nikhom Phattana Rayong 21180, Thailand Tel. 66 0 3863-7051-8 Fax 66 0 3863-7063 EGCO Green Energy Company Limited (EGCO Green) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9 Roi-Et Green Energy Company Limited (Roi-Et Green) (EGCO Green is the company’s 95.00% shareholder) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9 Site Office 222 Moo 10, Nua-Muang District, Amphur Muang Roiet 45000, Thailand Tel. 66 0 4351-9825-6 Fax 66 0 4351-9827 Agro Energy Company Limited (AE) (ESCO is the company’s 99.99% shareholder) Office GCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9 Egcom Tara Company Limited (ET) (ESCO is the company’s 70.076% shareholder) Office EGCO Tower Tel. 66 0 2998-5000 Fax 66 0 2955-0945 Site office - Plant 1 332 Moo 2, Pongsawai District, Amphur Muang Ratchburi 70000, Thailand - Plant 2 250 Moo 1, Pangpuay District, Amphur Damneansaduak Ratchburi 70130, Thailand
Joint Ventures:
Registered Par Value Paid-up Ownership Interest Share Capital (Baht) Share Capital (Direct+Indirect) (Mil ion Baht) (Mil ion Baht) Holding company focusing on IPP and SPP 14,000 10 13,784.35 50 Gulf Electric Public Company Limited (GEC) Office 11th FL., M. Thai Tower I, All Seasons Place, 87 Wireless Road, Lumpini, Phathumwan, Bangkok 10330, Thailand Tel. 66 0 2654-0155 Fax 66 0 2654-0156-7 Website www.gulfelectric.co.th Independent Power Producer (IPP) 9,607 10 9,607 50 Gulf Power Generation Company Limited (GPG) Electricity Generating and supply business (GEC is the company’s 100% shareholder) Site office 64 Moo 2 Ban Pa District, Amphur Kaeng Khoi, Saraburi 18110, Thailand Tel. 66 0 3624-8305 Fax. 66 0 3624-8314, 66 0 3625-1344 186 Gulf Cogeneration Company Limited (GCC) 850 10 850 50 Small Power Producer (SPP) Electricity and steam generating and (GEC is the company’s 100% shareholder) supply business Site office 79 Moo 3 Tandeow District, Amphur Kaeng Khoi, Saraburi 18110, Thailand Tel. 66 0 3624-6531 Fax 66 0 3624-8020 1,241.72 74 1,241.72 50 Nong Khae Cogeneration Company Limited (NKCC) Small Power Producer (SPP) Electricity and steam generating and (GEC is the company’s 100% shareholder) Site office 111/11 Moo 7 Nongplamor District, supply business Amphur Nong Khae, Saraburi 18140, Thailand Tel. 66 0 3637-3676 Fax 66 0 3637-3691 981.54 76 981.54 50 Samutprakarn Cogeneration Company Limited (SCC) Small Power Producer (SPP) Electricity and steam generating and (GEC is the company’s 100% shareholder) supply business Site office 745 Moo 2 Bang Pu Mai District, Amphur Muang, Samutprakarn 10280, Thailand Tel. 66 0 2709-0751 Fax 66 0 2709-1842 Gulf Yala Green Company Limited (GYG) SPP utilizing Biomass as primary fuel 460 10 460 50 (GEC is the company’s 100% shareholder) Site office 80 Moo 1, Pron District, Amphur Muang, Yala 95160, Thailand Tel. 66 0 7325-2721 Fax 66 0 7325-2722 73.25 /2 586.00 /2 40 Holding company focusing on power business 586.00 /2 Conal Holding Corporation (Conal) in the Philippines (EGCO B.V,I, is the company’s 40% shareholder) (800,000,000 (100 (800,000,000 Office EGCO Tower PESO) PESO) PESO) Tel. 66 0 2998-5000 Fax 66 0 2955-0956-9 Overseas office 2286 Alsons Building, Pasong Tamo Extension, Makati City, Philippines Tel. 816-6740, 892-4632 Fax 814-0625 Operation and maintenance 14.65 /2 73.25 /2 7.33 /2 24 Alto Power Management Corporation (APMC) services for power plants and consulting (Conal is the company’s 60% shareholder) (20,000,000 (100 (10,000,000 Oversea office 2285 Solid House Building, PESO) PESO) PESO) Pasong Tamo Extension, Makati City, Philippines Tel. 812-0294 Fax 812-1005 Company
Business
Subsidiaries
Registered Par Value Paid-up Ownership Interest Share Capital (Baht) Share Capital (Direct+Indirect) (Mil ion Baht) (Mil ion Baht) (%) /2 /2 /2 366.25 73.25 330.80 17.6
Business
Western Mindanao Power Corporation (WMPC) (Conal is the company’s 44% indirect shareholder) Overseas office 2285 Solid House Building, Pasong Tamo Extension, Makati City, Philippines Tel. 812-0294 Fax 812-1005 Site office Sitio Malasugat, Sangali, Zamboanga City, Philippines Southern Philippines Power Corporation (SPPC) (Conal is the company’s 44% indirect shareholder) Overseas office 2285 Solid House Building, Pasong Tamo Extension, Makati City, Philippines Tel. 812-0294 Fax 812-1005 Site office Bo. Baluntay, Alubel, Sarangani, Philippines Quezon Power (Philippines), Limited Co. (QPL) Overseas office 62 H. dela Costa, Mauban, Quezon Province, Republic of Philippines BLCP Power Limited (BLCP) (Since January 30, 2007) Office No. 9, I-8 Road, Map Ta Phut Industrial Estate, Amphur Map Ta Phut, Rayong 21150, Thailand Tel. 66 0 3892-5100, Fax. 66 0 3892-5199 Nam Theun 2 Power Company Limited (NTPC) Office Unit 9, Tat Luang Road Nongbone Vil age, P.O. Box 5862 Vientiane, Lao PDR Tel. (856-21) 263 900 Fax (856-21) 263 901 Sustainable Energy and Environmental Development (SEED) Office 88/8 Trac Building floor 4 Rama 9 Huaykwang Bangkok Talang Green Company Limited (Talang Green) Office 222 EGCO Tower Vibhavadi Rangsit Rd. Laksi Bangkok
IPP Electricity Generating and supply business (500,000,000 (100 PESO) PESO) IPP 219.75 /2 73.25 /2 Electricity Generating and supply business (300,000,000 (100 PESO) PESO) IPP 152.10 /2 Electricity Generating and supply business (207,641,268 PESO) IPP Electricity Generating and supply business 12,000 100 IPP 15,690.06 /1 3,486.68 /1 Electricity Generating and supply business 450,000,000 100 USD Mil ion USD Feasibility study on Renewable Energy 100 11 project in Thailand 100 Feasibility study on MSW project in Phuket 9.5
Company
(451,600,000 PESO)
202.54 /2
17.6
(276,500,000
187
PESO)
152.10 /2
23.4
(207,641,268 PESO) 12,000
50
7,769.32 /1
25
222,828,581 USD Mil ion 10
100
9.5
100
Other: Company
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
: The Exchange rate as at December 30, 2008 188 Note /1, /3 1 USD = Baht 34.8668 /2 1 PESO = Baht 0.7325
Registered Par Value Paid-up Ownership Interest Share Capital (Baht) Share Capital (Direct+Indirect) (Mil ion Baht) (%) 1,665 10 1,299.69 18.72
Referenced Persons
Regulator Regulator Share and Debenture Registrar Auditor
The Securities and Exchange Commission, Thailand GPF Witthayu Towers, 93/1 Wireless Road, Lumpini, Patumwan, Bangkok 10330, Thailand Tel 66 0 2695-9999, 66 0 2263-6499 Fax. 66 0 2256-7711 Corporate Affairs Department ext. 9535, 9509 E-mail: info@sec.or.th Website: www.sec.or.th The Stock Exchange of Thailand The Stock Exchange of Thailand Building, 62 Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand Tel. 66 0 2229-2000, 0 2654-5656 Fax. 66 0 2229-2030, 0 2654-5649 S-E-T Call Center 66 0 2229-2222 E-mail: SETCallCenter@set.or.th Website: www.set.or.th Thailand Securities Depository Company Limited The Stock Exchange of Thailand Building, 62 Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand Tel. 66 0 2229-2800 Fax. 66 0 2359-1259 Call Center 0 2229 2888 E-mail: contact.tsd@set.or.th Website: www.tsd.co.th 1. Mr. Suchart Luengsuraswat Certified Public Accountant (Thailand) No.2807 2. Mrs. Nattaporn Phan-Udom Certified Public Accountant (Thailand) No.3430 3. Mr. Kajornkiat A-roonpairotekul Certified Public Accountant (Thailand) No.3445 PricewaterhouseCoopers ABAS Limited 15th Floor, Bangkok City Tower, 179/74-80 South Sathorn Road,Bangkok 10120, Thailand Tel. 66 0 2286-9999, 66 0 2344-1000 Fax. 66 0 2286-5050
189
Index of Articles Required for the 56-2 Form This is prepared in accordance with the notice of the Securities and Exchange Commission no. Kor Jor 40/2540 re: Criteria and Conditions of information Disclosure on financial status and operation performance of Listed Company
190
Page No. 1. Genneral information 184 2. Financial Summary 14 3. Business Characteristics 3.1 Business Operation 37 3.2 Revenue Structure 43 3.3 Industrial trend and Competition 44 4. Risk Factors 91 5. Shareholding and Management Structure 5.1 Shareholders 46 5.2 Management Structure 47 5.3 Director and Management Selection 50 5.4 Remuneration 53 5.5 Good Corporate Governance Report 67 5.6 Inside Information 71 5.7 Internal Control 88 6. Related Transaction 119 7. Management Discussion and Analysis 107 8. Financial Statements 8.1 Financial Statements 129 8.2 Audit Fee 182
Topics
Glossary 1. Companies EGCO Electricity Generating Public Company Limited Group companies, EGCO Group Electricity Generating Public Company Limited and its subsidiaries and jointventure companies. AE Agro Energy Company Limited APMC Alto Power Management Corporation BLCP BLCP Power Limited CHC, Conal Conal Holdings Corporation East Water Eastern Water Resources Development and Management Public Company Limited EGAT Electricity Generating Authority of Thailand EGCO BVI EGCO International (BVI) Limited EGCO Cogen EGCO Cogeneration Company Limited EGCO Green EGCO Green Energy Company Limited Egcom Tara Egcom Tara Company Limited ESCO EGCO Engineering and Service Company Limited GCC Gulf Cogeneration Company Limited GEC, Gulf Gulf Electric Public Company Limited GECC General Electric Capital Corporation GEN Gulf Energy Company Limited GIPP Gulf IPP Company Limited GPG Gulf Power Generation Company Limited GPIQ GPI Quezon Company Limited GYG Gulf Yala Green Company Limited KEGCO Khanom Electricity Generating Company Limited NKCC Nong Khae Cogeneration Company Limited NMPC Northern Mindanao Power Corporation NTPC Nam Theun 2 Power Company Limited OneEnergy OneEnergy Thailand Limited QPL Quezon Power (Philippines) Limited Company REGCO Rayong Electricity Generating Company Limited Roi-Et Green Roi-Et Green Company Limited SCC Samutprakarn Cogeneration Company Limited SPPC Southern Philippines Power Corporation WMPC Western Mindanao Power Corporation 2. Government Organizations EPPO Energy Policy and Planning Office NEPC National Energy Policy Council PWA Provincial Waterworks Authority SEC Securities and Exchange Commission, Thailand SET Stock Exchange of Thailand 3. Other Institutions IOD Thai Institute of Directors JBIC Japan Bank for International Corporation 4. Technical Terms COSO The Committee of Sponsoring Organization of the Treadway Organization IPP Independent Power Producer PDP Power Development Plant
SPP Small Power Producer
191
Contents 3
Vision and Value
119 Related Transactions
10
2008 Highlight
124 Statement of Directors, Responsibilities
14
Financial Overview
125 Audit Committee,s Report
16
Message from the Chairman
128 Auditor,s Report
19
129 Report and Consolidated
30
Board of Directors and Management Positions of EGCO,s Management
33
Organization Chart
182 Audit Fee
34
Group Structure and Shareholders
183 Report on the donation on behalf
37
Business Characteristics
of all shareholders who elect to receive
44
Power Industry and Competition
the Annual Report in the electronic form
46
Shareholding and Management Structure
184 General Information
67
Corporate Governance Report
189 Referenced Persons
96
EGCO & Shareholders and Investors
190 Index of Articles Required for
99
EGCO Group and Employees
102 EGCO Group and Corporate Social Responsibility
107 Management Discussion and Analysis
Financial Statements
the 56-2 Form
191 Glossary