Egco 10 by Brother Roger

010

The Electricity Generating Public Company Limited and all the subsidiaries, intend to conduct our vision, mission and business goals as follows.

Vision, Mission and Business Goals

PEOPLE FOCUS

• High Reforming for Change Readiness • High Performing & Harmonizing Culture • High Opportunity for Career Growth & Mobilisation • High Perspective views of Idea & Information

Dynamic Relationship Initiative Vision Focus Excellent

CORPORATE GOALS

PEOPLE STRATEGIC INTENT

for EGCO

Energy for Life

BRAND VISION

Reliable

BRAND VALUES + Dynamic + Helpful

A good start will lead to a successful outcome

011

BRAND FOCUS

1. GROWTH 2. RETURN 3. ORGANIZATION EXCELLENCE

1. To maximize shareholder’s value 2. To offer reliable quality power supply at reasonable price 3. To create a work environment which promotes professionalism, good teamwork and equitable treatment 4. To be a good corporate citizen and be sensitive to society and environment

BRAND ATTITUDE

BUSINESS GOALS & STRATEGIES PEOPLE ATTRIBUTES D-R-I-V-E

MISSION

VISION

GORORATE STRATEGY

a Dynamic Learning & Opportunity Organization

PEOPLE VISION

To become a Dynamic Learning & Opportunity Organization where people are highly competent, committed, collaboration and care for others and environment in attaining energy business vision

BIZ FOCUS

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

2010 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 May

August November

December

• 6th best listed companies in Thailand and 4th best public companies in energy and utility sector in a poll conducted by Finance and Banking Magazine • 8th best listed companies in Thailand for being most committed to a strong dividend policy in a poll conducted by FinanceAsia. • 8th best companies in the energy sector in a survey on 2010 Thailand’s most admired companies conducted by Thaicoon Magazine. • An excellent showcase for shareholder meeting with the full score of 100 in the quality assessment of 2010 Annual General Shareholders’ Meeting organized by the Thai Investors Association. • Being selected one of the 15 candidates for transparent organization in a contest hosted by the Office of the National Anti-Corruption Commission • Corporate Social Responsibility Award for listed company with the market capitalization over 10,000 million baht from the SET Awards hosted by the Stock Exchange of Thailand (“SET”) and the Finance and Banking Magazine. • Excellent Corporate Governance Performance in 2010 by IOD with the score of 94 and full score in two categories being the rights of shareholders and role of stakeholders

Khanom Electricity Generating Co., Ltd. (KEGCO) July 8 August 27

• “National Safety Awards for the 11th consecutive year, at the 24th National Work Safety Week by Ministry of Labor. • “Outstanding Establishment in the year 2010 for Achievement on Labor Relations and Welfare” for the 4 consecutive years, by Ministry of Labor.

Roi Et Green Co., Ltd. (Roi Et Green) July 8

• “National Safety Awards for the first year, at the 24th National Work Safety Week by Ministry of Labor.

EGCOM Tara Co., Ltd. (EGCOM Tara) September 24 October 7 October 18 December 16

012

• Certificate for Quality of Drinking Water by Ministry of Public Health for 8 consecutive years. • Certificate for Drugs Free Workplace: Excellent Level 2010 by Ministry of Labor. • Certificate audit for Environment Management System: EMS Stage II by Ministry of Industry. • Excellent Healthy Workplace by Ministry of Public Health for the 4 consecutive years.

Business Activities

A. Incorporation/Acquisition/Business Transfer/New Investment January 6 January 19 March 4 April 30 July 16 September 29 November 29 December 9 December 13

• EGCO Engineering & Service Co., Ltd. (ESCO)’s acquisition of additional ordinary shares in Egcom Tara Co., Ltd. (Egcom Tara), increasing its ownership interest from 70.07% to 74.19%. • Power Generation Services Co., Ltd. (PGS)’s business transfer and merging into BLCP Power Limited (BLCP) followed by PGS’s liquidation • Natural Energy Development Co., Ltd. (NED) signing a Power Purchase Agreement (PPA) with Electricity Generating Authority of Thailand (EGAT) to sell 55 MWs from solar power plant for a period of 5 years from the Commercial Operation Date (COD) • Commercial Operation of Nam Theun 2 project, hydroelectric power plant with the installed capacity of 1,086.80 MWs (948 MWs of which is contracted to EGAT) located in the Lao PDR. • Incorporation of North Pole Investment Company Limited in Mauritius • EGCO’s acquisition of additional 450,000 shares or 10% of the outstanding shares in Nam Theun 2 Power Company Limited (NTPC) from Italian-Thai Development Public Company Limited, increasing its ownership interest in NTPC from 25% to 35% • Incorporation of New Growth Cooperatief U.A. in the Netherlands. • Incorporation of New Growth B.V.in the Netherlands. • New Growth B.V.’s execution of Sale and Purchase Agreement with Covanta Energy International Investments Ltd. for the acquisition of 100% of the outstanding shares of Ogden Power Development Cayman Inc and 100% of the outstanding shares of Covanta Philippines Operating Inc. providing EGCO with an indirect 52.125% and 100% beneficial ownership interest in Quezon Power (Philippines) Limited Company and Covanta Philippines Operating Inc. respectively.

B. Accreditation of Standard Systems Rayong Power Plant March 16-18 May 6 December 13-15

• Passing surveillance audit for ISO14001:2004 and TIS./OHSAS 18001:2007 by MASCI (Management System Certification Institute - Thailand) • Passing surveillance audit for ISO9001:2008 by TUV NORD • Passing re-assessment ISO14001:2004 and surveillance audit TIS./OHSAS 18001:2007 by MASCI (Management System Certification Institute - Thailand)

KEGCO January 19-22 November 23

• Passing re-certificate audits for ISO 9001:2008 (Quality Management), TIS 18001:1999 & OHSAS 18001:2007 (Occupational Health and Safety Management), and ISO14001:2004 (Environmental Management) by TUV NORD • Passing surveillance audit for ISO 9001:2008 by TUV NORD 013

EGCO Engineering and Services Co., Ltd. (“ESCO”) June 3 November 4

• Passing surveillance audit no. 3 for ISO9001:2000 in the provision of Management of Operation and Maintenance of Power Plant and Factory by SGS • Passing surveillance audit no. 4 for ISO9001:2000 in the provision of Management of Operation and Maintenance of Power Plant and Factory by SGS and was up graded to ISO 9001:2008 version

EGCOM Tara February 17 April 1 August 9 December 9

• Passing surveillance audit no.1 for ISO14001:2004 by United Registrar of Systems (Thailand) Limited (URS : UKAS) • Passing certificate audit for ISO9001:2008 (Upgrade version) by United Registrar of Systems (Thailand) Limited (URS : UKAS) • Passing surveillance audit no. 2 for ISO9001:2008 and surveillance audit no. 2 for ISO14001:2004 by United Registrar of Systems (Thailand) Limited (URS : UKAS) • Passing Preparation audit no. 1 for TIS 17025-2543 & ISO/IEC 17025-2005 by Thai Industrial Standards Institute (TISI)

Roi Et Green December 21

• Passing 2nd surveillance audit for ISO9001:2008 by Moody International Certification Group

Activities for Shareholders and Investors

A. Shareholders’ Meeting April 22 May 6 September 17

• 2010 Annual General Shareholders’ Meeting • 2009 Final Dividend Payment at 2.75 baht per share • 2010 Interim Dividend Payment at 2.50 baht per share

B. Opportunity Day/Analyst Meeting March 4 August 24 November 23 014

• Opportunity Day/Analyst Meeting No. 1/2010 to announce 2009 annual performance • Opportunity Day/Analyst Meeting No. 2/2010 to announce 2010’s second quarter performance • Opportunity Day/Analyst Meeting No. 3/2010 to announce 2010’s third quarter performance

C. Investor Meeting February 25-26 May 26 October 5 November 18-21

• CLSA ASEAN Access Day Investor Conference, Singapore & Hong Kong • TISCO Corporate Day at TISCO Building • Non-Deal Road show for institutional investors in Bangkok by CLSA Securities • “SET in the City 2010” at Paragon Hall, Siam Paragon, Bangkok.

D. Knowledge Sharing and Site Visit June 8 August 24 August 25-26 September 28 December 22-24

• Site Visit to Rayong Power Plant, at Rayong Province • Nam Theun 2 Briefing hosted by EGCO Group at Sukhothai Hotel • Site Visit to Nam Theun 2 Power Plant, in Laos PDR • Site Visit to Rayong Power Plant, at Saraburi Province hosted by Thai Investors Association • Site Visit to a small hydro plant, at Chiangmai

Activities for Employees January-December January 19, June 1 and September 22 January 26, May 6 and December 17 May 14-16 May 31 and June 1 September 24 October 1 December 23

• Monthly “Smile @ Library” • Knowledge sharing no. 1-3 • Communication Day no. 1-3 • Family Trip • Annual Physical Check up for Employees • Annual fire drill. • EGCO Group Sport Day • EGCO New Year Party

Activities to Promote Good Corporate Governance January 19 and 26 November 25 December 3 December 16

• Refreshment on Risk Management • Corporate Governance Road Show at Khanom Power Plant • EGCO Head Office’s Corporate Governance Day • Corporate Governance Road Show at Rayong Power Plant 015

Activities for Society and Environment January - December • “A watershed Forest: A source of Energy for Life” Project, under the ‘Reduce Global Warming for His Majesty the King’ campaign: in collaboration with The Ministry of Energy by Department of Alterative Energy Development and Efficiency (DEDE), developing 2 mini hydro power plants for small villages in well protected watershed forest areas in Chiang Mai province. “How to Fight Global Warming with Sustainable Living” Project: Sharing workshop and seminar for leading teachers from 21 schools under the project, covering 5 regions. “Green Learning” Project: Environment Youth Camp and “The Miracle of Biomass” mobile learning camps for Primary School students, covering 9 provinces in the Northeast. “EGCO Green Blood” Project: Mangrove planting and reforestation activities, aiming to help conserve the nature by EGCO Green Blood in Central and Northern regions. March 22-26 • EGCO Forest Conservation Youth Camp: Youth camp no. 32th and 33th at Doi inthanon National and May 2-8 Park, Chiang Mai Province. March 31 • Employees from EGCO and Rayong power plant participating in “Natural Classroom…Mangrove Forest”, planting mangrove forest activity in Rayong province, hosted by CSR Club. October 23-25 • Forest: The Circle of Life” 4th Year: in cooperation with Thai Forest Conservation Foundation, and Doi Indhanon National Park, organizing tree planting activity at Pha Hin Tung, Doi Indhanon National Park, Chiang Mai province.

Rayong Power Plant February 3 February 25 May 12 May 25-26 and July 21-23 August 10 August 18 August 24-25 December 3 December 5 016

• “Cultivation of Baby Stag Horn Coral in East Coast of Thailand” Project: coral cultivation activity at Khao Laem Yaa Natural Park - Koh Samed, Rayong province. • Community Sports Day for communities surrounding Rayong power plant. • Seminar and Demonstration Workshop on Fire Prevention for communities surrounding Rayong power plant. • Khao Chamao - Khao Wong Youth Camp: Youth camp no. 5th - 6th at Khao Chamao - Khao Wong Natural Park, Rayong Province. • Community Cleaning Day by Rayong power plant and surrounding communities. • Environment & Social Activity: Rayong power plant and Mab Ta Pud community planting Banana trees and making salt lick, as food resources for wildlife at Khao Chamao - Khao Wong Natural Park, Rayong Province. • Electricity system check up service: Electricity system check up and in-building lighting system set up services for Nong Wai Som community, Rayong province. • Canal Cleaning Day: helping Huay Pong Community in cleaning Num-Cha canal and surrounding areas, Rayong province. • Bicycle Rally…for Green Community: Bicycle rally activity for surrounding communities.

KEGCO January - December • “Biological Agriculture for Sustainable Living” Project: Seminar and demonstration workshops on “How to use Effective Microorganisms (EM) for agricultural purpose” for 10 schools in Khanom District, Nakhon Sri Thammarat province. Breeding of Blue Swimming Crab Project: In cooperation with Nakhon Sri Thammarat Coastal Fisheries Research and Development Center, in breeding and releasing 2,226,300 blue swimming crabs into the sea, Khanom beach, Nakhon Sri Thammarat province, and organizing launching ceremony of the 2nd Breeding Unit at Ban Laem Pratub. February 16 • Youth Development Project: in cooperation with Ban Ta Moung School hosting 11th Knowledge and March 10 Competition at primary school level and presenting annual scholarship to the finalists. June 8 • New Home for undersea Livings Project” 4th Year: Organizing annual event, placing 18 containers into the sea to be an artificial coral reef. The event includes “The Land of Pink Dolphins” container painting competitions, and other edutainment activities to promote pink dolphin conservation. June 24 • Annual donation for youth development: Khanom Power Plant: Presenting 210 scholarships and sport equipment sets to 21 schools in Khanom District, Nakhon Sri Thammarat October 12-15 • EGCO Forest Conservation Youth Camp: 34th Youth Camp at Khao Luang Natural Park, Nakhon Si Tharmarat Province.

Roi Et Green October 12 November 13-28

• Electricity system check up service: Electricity system check up and maintenance services for Wat Pa Thammamonkol Wanaram, Roi-et province. • 2nd Roi-et Green Cup: Football match to enhance the relationship with local community and to promote healthy living by being away from drugs. 017

10.26 2.08 33.48 44.93 12.95 10.57 0.20

12.88 12.90 103.16 5.25

65,655 10,838 54,308 509 5,265

8.30 1.08 40.83 50.33 16.60 13.09 0.23

15.01 15.07 96.06 5.25

62,920 11,826 50,572 521 5,265

6,927

7,936

6,792

2.58 1.11 43.10 45.22 16.01 12.38 0.28

13.21 13.16 85.60 5.00 4.22 1.20 47.80 50.48 21.89 16.15 0.28

15.73 15.96 78.78 4.75

58,330 53,600 12,788 11,604 45,066 41,475 521 476 5,265 5,265

8,402

5,051 134 8,281 121

4,619 86 6,952 (25)

6,273 114 7,903 33

6,122 115 6,781 11

20072

10,320 10,939 655 378 5,872 5,711 1,776 1,680 839 630

2008

9,145 349 5,411 1,772 568

20091

8,609 386 5,727 1,925 569

2010

1.65 1.58 57.98 41.19 18.14 10.77 0.41

10.07 11.43 67.03 4.00

50,459 14,661 35,289 509 5,265

6,016

(83) 169 5,299 716

13,839 848 5,815 2,154 1,166

2006

2.27 1.29 49.13 24.28 13.83 7.04 0.91

8.32 7.78 58.96 3.25

61,250 29,136 31,041 1,073 5,265

4,093

27 264 4,378 (285)

16,022 805 8,151 2,202 1,859

2005

3.25 1.33 51.39 28.25 17.28 8.36 0.89

8.75 8.88 53.55 3.00

55,066 25,963 28,173 982 (52) 5,265

4,662

29 232 4,595 67

15,620 852 7,593 1,894 (34) 2,220

2004 2002

2,958

(73) 236 2,784 174

2.19 1.01 60.88 38.10 26.02 10.68 1.11

10.07 11.41 49.21 2.75 2.21 1.02 57.02 24.53 15.26 5.44 1.66

5.30 5.62 38.51 2.50

56,437 55,824 29,736 34,876 25,895 20,276 859 724 (52) (52) 5,265 5,265

5,994

(545) 303 5,287 707

15,378 11,463 898 669 6,017 4,926 1,323 963 170 342 2,631 2,807

2003

2.80 1.01 62.42 25.23 16.55 5.44 1.76

6.04 5.60 35.26 2.25

52,965 33,780 18,544 641 5,259

2,939

35 203 3,175 (236)

10,732 880 4,033 936 3,299

2001

018

Remarks: 1 According to the announcement published by the Department of Business Development regarding the 2009 financial statements format, the Group is required to present directors and management remuneration that used to be included in cost of sales. Therefore, comparative figures have been adjusted to conform with changes in presentation in the current year. 2 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.

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)

RATIO ANALYSIS

Net Profit (loss) before Fx Net Profit (loss) Book Value Dividend

PER SHARE DATA (Baht)

Total assets Total liabilities Parent’s shareholders’ equity Minority interests Treasury stock Issued and paid-up share capital

FINANCIAL POSITION (Million Baht)

Sales and service income Other income Cost of sales and services Administrative expenses and others Impairment charge Finance costs Share of profit (loss) from subsidiaries, an associate and interests in joint ventures Net Profit (loss) attributable to Minority interests Net Profit (loss) before Fx Fx gain (loss) Net Profit (loss) attributable to Equity holders of the Company

FINANCIAL PERFORMANCE (Million Baht)

Consolidated Financial Statements

Financial Overview

2010

8,995

20091

9,495

2008

10,698

20072

11,594

2006

14,687

2005

16,827

2004

16,471

2010

6,122

20091

6,273

2008

4,619

20072

5,051

2006

(83)

2010

8,221

20091

7,751

2008

8,279

20072

8,230

2006

9,135

2010

6,781

20,000

40,000

60,000

80,000

2010

65,655

Total Assets

10,000 8,000 6,000 4,000 2,000

20091

62,920

20091

7,903

2008

58,330

2008

6,952

20072

53,600

20072

8,281

2006

50,459

2006

5,299

Net Profit Excluding Currency Exchange Gains or Losses

5,000

10,000

15,000

Total Expenses Excluding Currency Exchange Gains or Losses

7,000 6,000 5,000 4,000 3,000 2,000 1,000 (1,000)

2005

61,250

2005

4,378

2005

12,212

2005

2004

55,066

2004

4,595

2004

11,673

2004

16,276

2003

56,437

2003

5,287

2003

10,141

2003

(545)

2003

Share of profit (loss) from subsidiaries, an associate and interests in joint ventures

5,000

20,000 15,000 10,000

Total Revenues

2002

55,824

2002

2,784

2002

9,039

2002

(73)

2002

12,132

2001

52,965

2001

3,175

2001

8,268

2001

11,612

019

Unit : Million Baht

Message from the Chairman

020

Thanks to the robust recovery of the global economy, the Thai economy has consolidated its rebound despite the impact of the prolonged political conflict. 2010 was thus a testing year for the business sector to streamline their strength and potential to cope with the challenges of the prevailing economic circumstances. It was by all means a successful year for businesses with good preparedness and clearly articulated and up-to-date operational strategies.

As regards the energy business situation, particularly that of electricity generation, the government has developed a power development plan (PDP) spanning 20 years from 2010-2030 with the focus on the stability of the electricity supply system and fuel diversification. To make it a green PDP, the focus also extends to promote the use of renewable energy in line with the 15-year alternative power development plan of the Ministry of Energy together with encouraging efficient power generation via the cogeneration system. Electricity Generating Public Company Limited or EGCO is committed to continuing developing our business as the first independent power producer in Thailand. To prepare for the emerging challenges and to enhance EGCO’s competitiveness, we strive to develop our personnel’s capabilities along with keeping abreast of the market outlook both at home and abroad. The endeavors also include carrying out a SWOT analysis to evaluate EGCO’s strengths, weaknesses, opportunities, and threats to articulate appropriate business strategies and to retain investment opportunities, creating added value for shareholders and other stakeholders as well as maintaining revenues and market shares as the leader in the energy business. EGCO Group has set its sights on expanding investment overseas and investing continuously in renewable energy projects. To that effect, EGCO acquired another 10% stake in Nam Theun 2 Power Company (NTPC), increasing the total stakes in such company to 35%. Commencing commercial operations and making its official debut in the fourth quarter of 2010, Nam Theun 2 hydropower plant is now the hydropower plant with the largest installed capacity in Southeast Asia. Further, to accommodate future overseas business expansion, EGCO Group incorporated North Pole Investment Company in Mauritius as well as New Growth Cooperative UA (COOP) and New Growth B.V. (BV) in the Netherlands. In addition, BV, EGCO’s wholly-owned subsidiary, acquired all outstanding shares in Ogden Power Development Cayman Inc and Covanta Philippines Operating Inc (CPOI), increasing EGCO’s stakes in Quezon Power (Philippines) Limited Company and in CPOI to 52.125% and 100%, respectively. As at the end of 2010, the acquisition resulted in EGCO having a combined megawatt equity of 4,361.08 from its 14 power plants, an increase of 380.38 megawatts or 10% from 2009. At present, the EGCO Group sells electricity to the Electricity Generating Authority of Thailand (EGAT) under a long-term power purchase agreement for 3,931.43 megawatts, accounting for 13.04% of the country’s combined generating capacity of 30,160 megawatts. Apart from the demonstrated commitment to achieve sustainable business progress, EGCO stresses the significance of contributing to social and environmental sustainability which are the bottom line of any successful business. To fulfill the Company’s vision, EGCO pledges to conduct business with “full commitment to environmental protection and social development support”. Top priority has been given to constantly taking care of and minimizing our operation impacts on society and the environment. Moreover, EGCO is dedicated to fostering synergistic efforts, potential, and collaboration with allied agencies from both government and private sectors to continuously carry out numerous projects beneficial to the community and society. The efforts encompass three areas: conservation of natural resources and the environment, promotion of learning and fostering public mindedness among youths, and promotion and development of the community’s quality of life. EGCO encourages its employees to constantly participate in these socially-beneficial activities

021

022

to develop their potential and capabilities together with instilling public consciousness, empowering EGCO employees to be quality and valuable assets for the Company and the society as a whole. For 2010, EGCO’s operating results were in line with expectations posting the annual net profit of 6,792 million baht, representing earnings per share of 12.90 baht. The interim dividend payment from the first half-year operation was paid at 2.50 baht per share. EGCO is confident that the Company can maintain the dividend payment at an appropriate and consistent level. The unwavering commitment and continued business development earned EGCO recognition from various institutions. For example, EGCO was honored by the Stock Exchange of Thailand (SET) and the Finance and Banking Magazine, the CSR Award for listed companies with a market capitalization of over 10 billion baht at the SET Awards 2010. In addition, EGCO was ranked the sixth best listed company in Thailand and fourth in the energy and utility sector by the Finance and Banking Magazine. Apart from being ranked eighth best listed companies in Thailand in the energy sector by Thaicoon Magazine, EGCO received an Excellent Rating and also received a special commendation for exemplary performance in the conducting of the AGM from the 2010 Annual General Shareholders Meeting (AGM) Assessment Program organized by the Thai Investors Association. On top of these, EGCO was assessed by the Thai Institute of Directors (IOD) to be at the ‘Excellent’ level of corporate governance recognition and was ranked eighth in Thailand for being most committed to a strong dividend policy by FinanceAsia. Additionally, the efficient operations of EGCO power plants have also been recognized by a consortium of institutions. Our Khanom Power Plant received the “National Safety Awards” for Safety and Occupational Health for the eleventh consecutive year and the Outstanding Workplace for Labor Relations and Welfare “for the fourth year running from the Ministry of Labor. Further, Roi-Et Green Power Plant was also awarded the Safety Excellence Award in National Level” at the National Safety Week organized by the Ministry of Labor. On behalf of Electricity Generating Public Company Limited, executives and all staff members, I would like to express my gratitude to our shareholders and all the supporters including customers, business partners, community, and society for your continued trust and support. They have contributed to all our accomplishments, empowering EGCO to operate efficiently and continue to grow steadily over the years. Nevertheless, EGCO will strive to pursue and establish an approach to achieve a stable and appropriate growth to optimize the return for shareholders with business integrity and fairness to all stakeholders together with contributing to the sustainable development of the EGCO Group and Thai society as a whole.

Pornchai Rujiprapa Chairman

023

Board of Directors and Subcommittee Members The positions of EGCO’s Board of Directors as of December 31, 2010

1. Mr. Pornchai Rujiprapa

2. Mr. Aswin Kongsiri

3. Mr. Chaipat Sahasakul

Age 58

Age 65

Age 56

• Chairman • Chairman, Investment Committee

• • • •

• Independent Director • Chairman, Audit Committee

Independent Director Vice Chairman Chairman, Corporate Governance and Social Responsibility Committee Nomination and Remuneration Committee Member

Education

- Ph.D. (Regional Economics.), University of Pennsylvania, USA - M.Sc. (Regional Economics.), from University of Pennsylvania, USA - M.P.A. (Programming Planning Administration) from National Institute of Development Administration (NIDA) - B.Sc. (Agro-Industry) from Kasetsart University - Certificate of Executive Program, Class 7, Capital Market Academy - Certificate of Directors Accreditation Program, Thai Institute of Directors Association - National Defence Course (Class 41), National Defence College Dispute Family Relationship between the management Amount of Shares 0.000%

- Bachelor’s Degree (Honours) in Philosophy, Politics and Economics, Oxford University, England - Banff School of Advanced Management, Alberta, Canada - The National Defence Course for the Joint State-Private Sectors, Class 6, National Defence College - Certificate of Chairman 2000 Program, Thai Institute of Directors Association - Certificate of Directors Certification Program, Thai Institute of Directors Association

Working Experience

Oct 2006 Present 2010 - Present 2006 Sep, 2010 Dec 2006 2008 2005 - 2009 2003 - 2006 1999 - 2003

024

Chairman, Electricity Generating Authority of Thailand Permanent Secretary, Ministry of Science and Technology Permanent Secretary, Ministry of Energy Director, PTT Public Company Limited Chairman, PTT Chemical Public Company Limited Deputy Permanent Secretary, Ministry of Energy Deputy Secretary - General, The National Economic and Social Development Board (NESBD), Office of the Prime Minister

Dispute Family Relationship between the management Amount of Shares 0.000% Working Experience

Oct 2010 Present Aug 2010 Present Apr 2010 Present Jan 2009 Present Oct 2007 Present 2007 - Present 2005 - Present

Chairman, Thai Orix Leasing Company Limited (TOLC) Governor, The Stock Exchange of Thailand Chairman, Krungthai - Axa Life Insurance Company Limited (KAL) Chairman, Thoresen Thai Agencies Public Company Limited Chairman, Ch. Karnchang Public Company Limited Chairman, Ton Poh Thailand Fund Independent Director, Bangkok Aviation Fuel Services Public Company Limited 1999 - Present Independent Director, The OHTL Public Company Limited (Mandarin Oriental Hotel) 1993 - Present Independent Director, Thai Reinsurance Public Company Limited 1981 - Present Independent Director, Padaeng Industry Public Company Limited 2005 - Aug 2010 Independent Director, Krung Thai Bank Public Company Limited 2003 - Nov 2008 Independent Director, Thai Rating and Information Services Company Limited 1992 - Mar 2006 Independent Director, Muang Thai Life Assurance Company Limited

Ph.D. in Economics, University of Rochester, USA M.A. in Economics, Thammasat University B.A. in Economics, Thammasat University The National Defence Course for the Joint Public-Private Sectors, Class 21, National Defence College Politics and Governance in Democratic Systems for Executives Course 11, King Prajadhipok’s Institute Certificate of Directors Certification Program, Thai Institute of Directors Association Certificate of Audit Committee and Continuing Development Program, Thai Institute of Directors Association Certificate of Monitoring Fraud Risk Management, Thai Institute of Directors Association Certificate of Monitoring the System of Internal Control and Risk Management, Thai Institute of Directors Association Certificate of Monitoring the Quality of Financial Reporting, Thai Institute of Directors Association

Dispute Family Relationship between the management Amount of Shares 0.000% Working Experience

Aug 2010 Present May 2010 Present May 2009 Present July 2005 Present 2001 - Apr 2009 2005 - 2006 1998 - 2001 1991 - 1996

Governor, The Stock Exchange of Thailand Independent Director and Audit Committee Member, Thai Vegetable Oil Public Company Limited Chairman, University Research Policy Committee, Bangkok University Independent Director and 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 Senior Executive Vice President, MFC Asset Management Public Company Limited Senior Vice President and Spokesman, Stock Exchange of Thailand

4. Mr. Thanapich Mulapruk

5. Police Lieutenant General Pijarn Jittirat

6. Mr. Somphot Kanchanaporn

Age 61

Age 62

Age 64

• Independent Director • Audit Committee Member

• • •

• Independent Director • Audit Committee Member

Independent Director Corporate Governance and Social Responsibility Committee Member Nomination and Remuneration Committee Member

Education

- Master of Public Administration, Chulalongkorn University - Bachelor of Public Administration, Police Cadet Academy - Advanced Course in Administration, Class 29, Institute of Administration Development - Advanced Course in Police Administration, Class 13 - National Defence College Class 44 - Certificate of The Board’s Role on Fraud Presentation and Detection, Thai Institute of Directors Association - Certificate of Role of the Compensation Committee, Thai Institute of Directors Association Dispute Family Relationship between the management Amount of Shares 0.000%

- 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 41) - Certificate of Executive Program, Class 7, Capital Market Academy - Certificate of Monitoring Fraud Risk Management, Thai Institute of Directors Association - Certificate of Monitoring the System of Internal Control and Risk Management, Thai Institute of Directors Association - Certificate of Monitoring the Quality of Financial Reporting, Thai Institute of Directors Association

LL.M., Chulalongkorn University LL.B., Chulalongkorn University Thai Bar Certificate, Thai Barrister at law of Thailand National Defence College, 1998 (Class 41) Certificate of Directors Certification Program (class 78), Thai Institute of Directors Association Certificate of Executive Program, Class 7, Capital Market Academy Certificate of Audit Committee and Continuing Development Program, Thai Institute of Directors Association - Certificate of Monitoring Fraud Risk Management, Thai Institute of Directors Association - Certificate of Monitoring the System of Internal Control and Risk Management, Thai Institute of Directors Association - Certificate of Monitoring the Quality of Financial Reporting, Thai Institute of Directors Association Dispute Family Relationship between the management Amount of Shares 0.000% Working Experience

Oct 2009 Present Feb 2009 Present Nov 2008 Present Apr 2008 Present Oct 2005 Present Apr 2008 Oct 2008 Dec 2006 Sep 2009 Oct 2007Feb 2008 2006 2004 - 2006 2003 - 2004

Director General of Department of Special Litigation, Office of Attorney - General Director, The Airports of Thailand Public Company Limited Spokesperson, Office of Attorney-General Director, The Port Authority of Thailand Director, The Transport Company Limited Director, The Bangkok Mass Transit Authority Director General of Department of Economic Crime Litigation, Office of Attorney - General Director, The Marketing Organization for Farmers, Ministry of Agriculture and Cooperatives Director General of Department of Administrative Litigation, Office of Attorney-General Deputy Director General of Department of Economic Crime Litigation, Office of Attorney-General Executive Director of Office of Economic Crime Litigation 1, Office of Attorney - General

Working Experience

2006 - 2008 2005 - 2006 2004 - 2005 2002 - 2004

Deputy Inspector-General, Royal Thai Police Commissioner, Office of Legal and Investigation, Royal Thai Police Deputy Commissioner, Office of Human Resources, Royal Thai Police Assistant Commissioner, Office of Human Resources, Royal Thai Police

Dispute Family Relationship between the management Amount of Shares 0.000% Working Experience

2008 Nov 2010 Jan 2009 June 2010 2008 Apr 2009 Oct 2006 2008 Dec 2006 2008 2007 Nov 2003 Nov 2005 Aug-Nov 2003

Chairman of the Inspector General, Ministry of Energy Director, B N B Inter Group Public Company Limited Independent Director, PTT Aromatics and Refining Public Company Limited Member, The National Legislative Assembly Chairman of Standing Committee on Energy, The National Legislative Assembly Independent Director, Aromatics (Thailand) Public Company Limited Deputy Director (Executive Level 10), The National Intelligence Agency Deputy Secretary - General, The Office of the National Security Council

025

7. Mr. Phaiboon Siripanoosatien Age 47

• • •

8. Mr. Wisudhi Srisuphan Age 60

Independent Director Corporate Governance and Social Responsibility Committee Member Nomination and Remuneration Committee Member

• Independent Director (Authorized Director)

Education

- Master of Political Science, Sukhothai Thammathirat 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%

- M.A.A. Business Economics, Thammasart University - M.E. (C.E.) Lamar University , USA - LLB. (Second Class Honour), Ramkhamhaeng University - B.Eng.in Civil Engineering, Chulalongkorn University - National Defence Course (Class 38), National Defence College - Politics and Governance in Democratic Systems for Executive Course (Class 6), King Prajadhipok’s Institute - CMA (Class 6), Capital Market Academy - Certificate of Role of Chairman 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

2009 - Present 2009 - Present 2008 - Present

2008 - Present 1998 - Present

Director, Government Saving Bank Independent Director, Asia Credit Securities Company Limited Independent Director and Audit Committee Member, Finansia Syrus Securities Public Company Limited Independent Director, Metrostar Property Public Company Limited Managing Director, Trinity Plus Company Limited

2008 - 2009 2006 - 2009 2006 - 2009 2007 - 2008 2006 - 2008 2007 2003 - 2007 2005 - 2006

Working Experience

Nov 2010 Present June 2010 Present Oct 2006 Present Aug 2004 Present June 2010 Sep 2010 Dec 2009 June 2010 Oct 2008 2010 July 2008 June 2010

026

2009

Independent Director, Pruksa Real Estate Public Company Limited Chairman, CAT Telecom Public Company Limited Director, Office of the Council of State Chairman of the Board, Real Estate Information Center Chairman, Sunshine Corporation Public Company Limited Chairman of the Board, Siam City Bank Public Company Limited Director, The Electricity Generating Authority of Thailand Vice Chairman, Dhipaya Insurance Public Company Limited

2002 - 2006 2000 - 2006 2000 - 2005 2002 - 2003 1999 - 2002

Director - General, The Custom Department, Ministry of Finance Deputy Permanent Secretary, Ministry of Finance Chairman of the Board, The Government Saving Bank Director, Thai Airways International Public Company Limited Director-General, The Custom Department, Ministry of Finance Chairman of the Board, Thailand of Tobacco Monopoly, Ministry of Finance Director-General, The Excise Department, Ministry of Finance Director-General, The Treasury Department, Ministry of Finance Chairman of the Board, CAT Telecom Public Company Limited Director, PTT Exploration and Production Public Company Limited Chairman of the Board, The Government Housing Bank Director, PTT Public Company Limited Director-General, Fiscal Policy Office, Ministry of Finance Comptroller-General, The Comptroller’s Department, Ministry of Finance

9. Mr. Apichart Dilogsopon

10. Mr. Sahust Pratuknukul

11. Mr. Somboon Arayaskul

Age 61

Age 55

Age 57

• Director • Executive Committee Member • (Authorized Director)

• Director • Nomination and Remuneration Committee Member (Authorized Director)

• Director • Investment Committee Member • Corporate Governance and Social Responsibility Committee Member (Authorized Director)

(Vacating the office by rotation in AGM on April 22, 2010) Education

Education

- Master of Business Administration,

- Bachelor of Engineering (Electrical Engineering), Chulalongkorn University - Certificate of the Joint Public-Private Sectors Regular Course, National Defence College - Certificate of Senior Executive Development Program-1, GE Company Limited - Certificate of Finance for Executive Decision Program, Continuing Education Center, Chulalongkorn University - Certificate of Directors Certification Program, Thai Institute of Directors Association Dispute Family Relationship between the management Amount of Shares 0.000%

Kasetsart University - Bachelor of Engineering (Civil Engineering), Chulalongkorn University - Certificate of Directors Certification Program, Thai Institute of Directors Association Dispute Family Relationship between the management Amount of Shares 0.000% Working Experience

Oct 2008 Oct 2009 Oct 2007 Sep 2008 Oct 2006 Dec 2007

Oct 2005 Sep 2006 Oct 2004 Sep 2005

Deputy Governor to Office of the Governor, Electricity Generating Authority of Thailand Deputy Governor-System Control, Electricity Generating Authority of Thailand Deputy Governor-Administration and Acting EGAT Spokesman, Electricity Generating Authority of Thailand Assistant Chief Executive Officer-Services, Electricity Generating Authority of Thailand Assistant GovernorDemand Side Management, Electricity Generating Authority of Thailand

Working Experience

Oct 1, 2010 Present Jan 1, 2008 Dec 2010 Oct 1, 2006 Oct 1, 2005

Oct. 1, 2003

Deputy Governor - Policy and Planning, Electricity Generating Authority of Thailand Director, EGAT International Company Limited Assistant Governor - Policy, Electricity Generating Authority of Thailand Assistant Chief Executive Officer - Planning, Electricity Generating Authority of Thailand Director, Energy Economic Division, Electricity Generating Authority of Thailand

Education

- Master of Engineering (Mechanical Engineering), Villanova University, USA - Bachelor of Engineering (Mechanical Engineering), Mapua Institute of Technology, Philippines - Certificate of Directors - Certification Program, Thai Institute of Directors Association - Certificate of the General Manager Program, Harvard Business School Dispute Family Relationship between the management Amount of Shares 0.000% Working Experience

Dec 2007 Present Apr 2008 Jan 2009 Oct 2006 Dec 2007

Deputy GovernorDevelopment, Electricity Generating Authority of Thailand Director, Ratchaburi Electricity Generating Holding Public Company Limited Vice President - Thermal Power Plant Construction, Electricity Generating Authority of Thailand

027

12. Mr. Peter Albert Littlewood

13. Mr. Hideaki Tomiku

14. Mr. Mark Jobling

Age 59

Age 53

Age 39

• Director (Authorized Director)

• Director • Investment Committee Member

• • •

(Authorized Director)

Director Chairman, Nomination and Remuneration Investment Committee Member (Authorized Director)

Education

- MA (1st Class Honours), Cambridge

- International Law, Tokyo University Dispute -

- Bachelor of Economics, Monash University

Family Relationship between the management Amount of Shares 0.000% Working Experience

University - Barrister and Solicitor (Victoria) - Solicitor (Hong Kong) Dispute -

University, UK Dispute Family Relationship between the management Amount of Shares 0.000% Working Experience

2009 - Present 2003 - Present

2001 - 2010 2000 - 2005

1999 - 2003 1998

028

Director, Natural Energy Development Company Limited Executive Director and Chief Operating Officer, CLP Power Asia Limited, Hong Kong Director, BLCP Power Limited Director, Rayong Electricity Generating Company Limited Director, Khanom Electricity Generating Company Limited Director, EGCO Engineering & Service Company Limited Project Manager for CLP’s generating plant projects, CLP Group General Manager for CLP’s generation business group and later for CLP strategic development, CLP Group

2009 - Present Director, Natural Energy Development Company Limited Chief Executive Officer, May 2009 Diamond Generating Asia, Present Limited 2006 - Present Director and Executive Vice President, OneEnergy Limited Deputy General Manager, 2003 - 2006 Head of International IPP, Mitsubishi Corporation Assistant General Manager, 2001 - 2003 Power, Generation & Marketing for Japanese Market, Mitsubishi Corporation

- Bachelor of Laws (Honours), Monash

Family Relationship between the management Amount of Shares 0.000% Working Experience

2009 - Present 2009 - Present

2006 - 2009 2003 - 2006

Director, Natural Energy Development Company Limited Managing DirectorSoutheast Asia, CLP Holdings Chief Executive Officer, OneEnergy Senior Vice President Business Development, OneEnergy General Counsel, CLP Power Asia

15. Mr. Shinji Tsuchiya

16. Mr. Vinit Tangnoi

Age 40

Age 59

• Director

• • • •

(Authorized Director)

President and Director Chairman, Risk Management Committee Chairman, Group Business Committee Chairman, Good Corporate Governance Committee

Education

- Bachelor of Engineering (Mechanical

Electricidad Auila de Tuxpan (Co.)

- Master of Science (Industrial Engineering), University of Texas at Arlington, USA - B.Eng. (Mechanical), Kasetsart University - Certificate of Advance Management Program, Harvard Business School, Harvard University, USA - 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 - Certificate of Leader Program, Capital Market Academy Dispute Family Relationship between the management Amount of Shares 0.000%

Electricidad Sol de Tuxpan

Working Experience

Engineering), Keio University Dispute Family Relationship between the management Amount of Shares 0.000% Working Experience

Apr 2009 Present

Nov 2005 Mar 2009 Nov 2005

Head of Southeast Asia IPP Team, Global Power Generation and Marketing Unit of Mitsubishi Corporation Manager, Power Generation and Marketing International Unit of Mitsubishi Corporation Commercial Director,

Aug 2009 Present Jan 2009 Present Oct 2008 Present

Oct 2008 Sep 2009 Dec 2007 Sep 2008

Chairman, Natural Energy Development Company Limited Chairman, Gulf Electric Company Limited Chairman, Khanom Electricity Generating Company Limited Chairman, EGCO Engineering and Service Company Limited Director, BLCP Power Company Limited Chairman, Rayong Electricity Generating Company Limited Deputy Governor Generation, Electricity Generating Authority of Thailand Director, EGAT International Company Limited

• Investment Committee Member • Corporate Governance and Social Responsibility Committee Member (Authorized Director)

2006 - 2008 Director, Ratchaburi Electricity Generating Holding Public Company Limited Deputy Governor - System Mar 2006 Control, Electricity Generating Authority of Thailand Senior Executive Vice Oct 2005 President - System Control, Electricity Generating Authority of Thailand June 2005 Assistant Chief Executive Officer - Planning, Electricity Generating Authority of Thailand Assistant Governor - Policy Oct 2004 and Planning, Electricity Generating Authority of Thailand Assistant Governor - Fuel Oct 2003 Management, Electricity Generating Authority of Thailand

029

Company’s Management The positions of the Management and the Control Persons as of December 31, 2010

Mr. John M. Palumbo

• • • • 2

Senior Executive Vice President - Business Development & Management Risk Management Committee Member Good Governance Committee Member EGCO Management Committee Member

Mrs. Pikul Srisastra

• • • • • 3

Senior Executive Vice President - Finance and Corporate Services Risk Management Committee Member Group Business Committee Member Good Governance Committee Member EGCO Management Committee Member

Mr. Piya Jetasanon

• Senior Executive Vice President - Finance and Corporate Services (Appointed to be Senior Executive Vice President - Finance and Corporate Services on January 1, 2011)

Senior Executive Vice President Director - Rayong Power Plant Risk Management Committee Member Group Business Committee Member Good Governance Committee Member EGCO Management Committee Member

Mr. Chankij Jearaphunt

• • • • • • 6

Mr. Chumsak Desudjit

• • • • • • 5

Senior Executive Vice President Managing Director - Khanom Electricity Generating Company Limited Risk Management Committee Member Group Business Committee Member Good Governance Committee Member EGCO Management Committee Member

Mr. Rasda Pongpaew

• Senior Executive Vice President

• Managing Director - EGCO Engineering & Service Company Limited • Risk Management Committee Member • Group Business Committee Member • Good Corporate Governance Committee Member • EGCO Management Committee Member

030

Dr. Sakul Pochanart

• Executive Vice President - Strategy & Corparate Management • Risk Management Committee Member • Good Governance Committee Member • EGCO Management Committee Member 8

Mr. Voravit Potisuk

• Executive Vice President - Business Development (Domestic) 9

10 Mr. Kiatichai Siljitsong

• Executive Vice President - Asset Management 11 Mrs. Ngamphis Chitphromphan

• Executive Vice President - Finance 12 Mrs.Vasana Vongpromek

• Executive Vice President - Corporate Services

Mr. Niwat Adirek

• Executive Vice President - Business Development (International)

031

Mr. Suvapan Chomchalerm

â&#x20AC;˘ Senior Vice President - Accounting and Budget (During 2000-April 2010) 14

Ms. Charatkhae Netthip

â&#x20AC;˘ Senior Vice President - Accounting & Budget (Appointed to be Senior Vice President Accounting & Budget on June 1, 2010)

032

Mr. Narong In-Eav

• Rayong Power Plant Deputy Director - Operation 16

Mr. Thongchai Chotkajornkiat

Mrs. Krisna Pinkaew

• KEGCO Deputy MD - Finance & Administration

Ms. Warunee Tantiwong

• Rayong Power Plant Deputy Director - Finance & Administration 19

• ESCO Deputy MD - Finance & Administration 17

Mr. Wajarapong Palakawong Na Ayudhaya

• ESCO Deputy MD - Operation 20

Mr. Mana Vitavasakul

• KEGCO Deputy MD - Operation

033

The positions of the Management and the Control Persons as of December 31, 2010 1. Mr. John M. Palumbo

2. Ms. Pikul Srisastra

Age 47

Age 60

• • • •

• • • • •

Senior Executive Vice President - Business Development & Management Risk Management Committee Member Good Governance Committee Member EGCO Management Committee Member

Senior Executive Vice President - Finance and Corporate Services Risk Management Committee Member Group Business Committee Member Good Governance Committee Member EGCO Management 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%

- B.Sc. (Accounting), Chulalongkorn University - Certificate of Senior Executive Program, Sasin Graduate Institute of Business Administration of Chulalongkorn University - Certificate of Directors Certification Program, Thai Institute of Directors Association - Executive Leadership Program (ELP-NIDA Wharton) Dispute Family Relationship between the management Amount of Shares 0.000%

Working Experience

Aug 2009 Present 2004 - Present 2007 Nov 2008 2005 May 2008 2004 Apr 2007 2003 - 2004

2003 - 2004 2003 1995 - 2003

Director, Natural Energy Development Company Limited Director, Gulf Electric Public Company Limited Director, BLCP Power Company Limited Director, EGCO Joint Ventures & Development Company Limited Director, Nam Theun 2 Power Company Limited Independent Consultant to the Managing Director and the Head of the Southeast Asia Business, China Light & Power Group (Hong Kong) Team Leader & Infrastructure Specialist, ADB Technical Assistance Program Independent Consultant to Chief Executive Officer, International Power PLC. Principal and Managing Director, Delta Associates (Thailand) Limited

Working Experience

Aug 2009 Present

2007 Aug 2009 2007 2006 2002 - 2005

2002 - 2003 2001 - 2002 2001

034

Director, Gulf Electric Public Company Limited Director, BLCP Power Company Limited Director, Khanom Electricity Generating Company Limited Director, EGCO Engineering & Service Company Limited Director, EGCO International (BVI) Limited Executive Vice President - Finance, Electricity Generating Public Company Limited Director, EGCO Joint Ventures & Development Company Limited Executive Vice President - Controller, Electricity Generating Public Company Limited Executive Vice President - Finance, Electricity Generating Public Company Limited Deputy Managing Director - Finance & Administration, Rayong Electricity Generating Company Limited Director, Gulf Electric Public Company Limited Director, EGCO Joint Ventures Development Company Limited Deputy Managing Director - Finance & Administration, Khanom Electricity Generating Company Limited Director, Amata - EGCO Power Company Limited

3. Mr. Piya Jetasanon

4. Mr. Chumsak Desudjit

5. Mr. Chankij Jearaphunt

Age 53

Age 56

Age 55

• Senior Executive Vice President Finance and Corporate Services (Appointed to be Senior Executive Vice President - Finance and Corporate Services on January 1, 2011) • EGCO Management Committee Member

• • • • • •

Senior Executive Vice President Director-Rayong Power Plant Group Business Committee Member Risk Management Committee Member Good Governance Committee Member EGCO Management Committee Member

Senior Executive Vice President Managing Director - Khanom Electricity Generating Company Limited Group Business Committee Member Risk Management Committee Member Good Corporate Governance Committee Member EGCO Management Committee Member

Education

- MBA, Ramkhamhaeng University - B.A. (Economics), Thammasat University - Certificate of Directors Certification Program, Thai Institute of Directors Association - Certificate of TLCP Executive Development Program, Thai Listed Companies Association Dispute Family Relationship between the management Amount of Shares 0.000%

- B. Eng. (Mechanical Engineering),

- Master of Public Administration (MPA), National Institute of Development Adminis tration (NIDA) - B. Eng. (Electrical Engineering), Chulalongkorn 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

Chulalongkorn University - Certificate of Directors Certification Program,

Thai Institute of Directors Association - Certificate in Executive Leadership Program, Joint Program NIDA-Wharton, University of Pennsylvania - Graduate Diploma in Management of Public Economy(MPE-7), King Prajadhipok’s Institute Dispute Family Relationship between the management Amount of Shares 0.000% Working Experience

Director and Managing Director, Rayong Electricity Generating Company Limited Chairman, Roi-Et Green Apr 2009 Company Limited Present Chairman, EGCO Green Energy Company Limited 2007 - Present Chairman, EGCO Cogeneration Company Limited 2008 - Present Director, Khanom Electricity Generating Company Limited, 2008 Sep 2009

EGCO Engineering & Service Company Limited

Apr 2008 June 09

2006 - 2007 2001 - 2007

1998 - 2000

Director, Gulf Cogeneration Company Limited, Nongkhae Cogeneration Company Limited, Samutprakarn Cogeneration Company Limited, Director, EGCO Cogeneration Company Limited Deputy Managing Director Operation Group, Rayong Electricity Generating Company Limited Operation Division Manager, Rayong Electricity Generating Company Limited

Working Experience

2004 - Present Director and Managing director, Khanom Electricity Generating Company Limited Director, EGCO Engineering & Service Company Limited Director, Rayong Electricity 2004 Generating Company Sep 2009 Limited Director, Gulf Energy Apr 2008 Company Limited; Gulf IPP Present Company Limited; and Gulf Power Generation Company Limited Chairman, Roi-Et Green Apr 2007 Company Limited; and Apr 2009 EGCO Green Energy Company Limited Director, Gulf Cogeneration 2002 Company Limited; Apr 2008 Nongkhae Cogeneration Company Limited Samutprakarn Cogeneration Company Limited Director, Roi-Et Green 2006 Company Limited; and Apr 2007 EGCO Green Energy Company Limited 1998 - 2004 Deputy Managing Director - Operation, Khanom Electricity Generating Company Limited

035

6. Mr. Rasda Pongpaew Age 60

• • • • • •

Senior Executive Vice President Managing Director - EGCO Engineering & Service Company Limited Group Business Committee Member Risk Management Committee Member Good Governance Committee Member

7. Mrs. Ngamphis Chitphromphan Age 55

• Executive Vice President - Finance

EGCO Management Committee Member

Education

- B.Sc (Mech.Eng), Prince of Songkla University

- Master of Business Administration, Catholic University of Leuven, Belgium (Governmental Scholarship) - Master of Science - Accounting, Thammasat University - Bachelor of Accountancy (Honors), Chulalongkorn University - Certificate of Senior Executive Program, Sasin Graduate Institute of Business Administration of Chulalongkorn University - NIDA - Wharton : Executive Leadership Program (ELP), Wharton, University of Pennsylvania, USA - Director Certification Program, Thai Institute of Directors Association (IOD) Dispute Family Relationship between the management Amount of Shares 0.000%

- NDT Level 2 : Sperry School for NDT Columbus, Ohio, USA - NDT Lever 3 : Combustion Engineering Training Centre Connecticut, USA - MINI MBA : Chulalongkorn University - NIDA - Wharton : Executive Leadership Program (ELP), Wharton, University of Pennsylvania, USA - Director Certification Program, Thai Institute of Directors Association (IOD) Dispute Family Relationship between the management Amount of Shares 0.000% Working Experience

Director, BLCP Power Company Limited Apr 2009 Present 2008 - Present Director, Eastern Water Resources Development and Management Public Company Limited 2006 - Present Managing Director, EGCO Engineering and Service Company Limited Director, Rayong Electricity Generating 2006 Company Limited Sep 2009 1998 - 2005 Deputy Managing Director, EGCO Engineering and Service Company Limited 1996 - 1998 Project Director Amata, Amata-EGCO Power Limited

Working Experience

Mar 2010 Present 2008 - 2010 2005 - 2008 1997 - 2005 2001- Present

036

Director, Nam Theun 2 Power Company Limited Deputy Managing Director & Chief Financial Officer (EGCO’s Representative), BLCP Power Limited Deputy Managing Director - Finance and Administrative, Khanom Electricity Generating Company Limited Accounting & Finance Division Manager, Khanom Electricity Generating Company Limited Certified Public Accountant (CPA)

8. Mr. Suvapan Chomchalerm

9. Ms. Charatkhae Netthip

Age 50

Age 48

• Senior Vice President - Accounting and Budget (During 2000-April 2010)

• Senior Vice President - Accounting & Budget (Appointed to be Senior Vice President - Accounting & Budget on June 1, 2010)

Education

- M.Sc. (Accounting), Thammasat University - B.Sc. (Accounting), Chulalongkorn University

- Master of Business Administration, Kasetsart University - Bachelor of Accounting, Chulalongkorn University Dispute -

Dispute Family Relationship between the management Amount of Shares 0.000% Working Experience

May 2010 Present 2000 - Apr 2010 1994 - 2000

Deputy Managing Director & Chief Financial Officer (EGCO’s Representative), BLCP Power Limited Senior Vice President Accounting and Budget, Electricity Generating Public Company Limited Manager - Accounting and Budget Analysis Section, Accounting and Budget Division

Family Relationship between the management Amount of Shares 0.000% Working Experience

June 2010 Present 2003 - 2010

Senior Vice President Accounting & Budget, Electricity Generating Public Company Limited Vice President - Accounting & Budget Analysis, Electricity Generating Public Company Limited

037

038

The Positions of EGCOâ&#x20AC;&#x2122;s Management and the Control Persons in the Subsidiaries and Other Related Companies as of December 31, 2010

039

The Positions of EGCO Cogen’s Management and the Control Persons in EGCO Group Companies as of December 31, 2010

The Positions of KEGCO’s Management and the Control Persons in EGCO Group Companies as of December 31, 2010

Corporate Secretary

Business Characteristics

044

The Electricity Generating Public Company Limited or EGCO is the first independent power producer in Thailand incorporated on May 12, 1992 by the 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. Since EGCO is a holding company, its main source of revenue is from the dividend income from subsidiaries and share of profits from joint ventures which are located in both Thailand and the Asian region. EGCO Group companies either operate in the power sector with long term PPA or conduct other related business.

Business Lines EGCO businesses can be categorized into 4 groups as follows: 1. Independent Power Producer (“IPP”) Group

This Group comprises 4 power plants being Rayong Power Plant, Khanom Electricity Generating Co., Ltd., BLCP Power Ltd., and Gulf Power Generation Co., Ltd. The combined megawatt equity is 3,528.00 megawatt which accounts for 80.90% of EGCO’s total operating asset capacity. 2. Small Power Producer (“SPP”) Group

This Group comprises 6 power plants 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 293.06 megawatt equity, representing 6.72% of EGCO’s total operating asset capacity. In addition, there is one power plant under construction namly, Natural Energy Development Co., Ltd., in Lopburi province. 3. Overseas Power Producer Group

This Group comprises 4 power plants being Western Mindanao Power Corporation, Southern Philippines Power Corporation, Quezon Power (Philippines) Ltd., Co., in Philippines and Nam Theun 2 Power Co., Ltd., in Lao PDR. The combined megawatt equity is 539.96 megawatt, representing 12.38% of EGCO’s total operating asset capacity. 4. Other Business Group This Group comprises 1 operation and maintenance company being EGCO Engineering & Service Co., Ltd., and 2 water supply companies being Egcom Tara Co., Ltd., and the Eastern Water Resources Development and Management Public Co., Ltd.

045

Significant Events As at December 31, 2010, EGCO Group operated 14 power plants with 4,361.02 megawatt equity. The power sold to EGAT under a long term PPA was 3,931.43 megawatt which accounts for 12.71% of the national installed capacity of 30,920.01 megawatt. EGCO’s megawatt equity in 2010 increased from 2009 by 380.38 megawatt. Highlights of the events in 2010 were as follows: 1. January 6, 2010, EGCO Engineering & Service Co., Ltd. (“ESCO”), a wholly owned subsidiary of EGCO, purchased additional ordinary shares in Egcom Tara Co., Ltd. (“Egcom Tara”) in a proportion of 4.12% of total outstanding shares, bringing an increasing EGCO’s ownership interest in Egcom Tara from 70.07% to 74.19%. 2. January 19, 2010, Power Generation Service Co. Ltd.’s (“PGS”) entire business was transferred to BLCP Power Ltd. (“BLCP”), a joint venture of EGCO. Dissolution of PGS was subsequently registered with the Ministry of Commerce on the same day. 3. March 4, 2010, Natural Energy Development Co., Ltd. (“NED”), a joint venture of EGCO, singed a Power Purchase Agreement (“PPA”) with Electricity Generating Authority of Thailand (“EGAT”) for the sale of all electricity generated by the 73 DC / 55 AC megawatt solar power plant in Lopburi province. The term of the PPA is 5 years from the Commercial Operation Date (“COD”) and can be renewed for 5-year contract each time. In addition to the non-firm tariff rate, the project will receive the adder at the rate of 8 baht per kilowatt-hour for 10 years from the COD. 4. April 30, 2010, Nam Theun 2 Power Co., Ltd. (“NTPC”), which is 25% held by EGCO, achieved the COD for Nam Theun 2 Hydro Power Plant with the installed capacity of 1,086.80 megawatt located in Lao PDR. 5. July 16, 2010, EGCO established North Pole Investment Co., Ltd. in Mauritius as a wholly owned subsidiary.

046

6. September 29, 2010, EGCO purchased an additional 10% ownership interest in Nam Theun 2 Power Co., Ltd. (“NTPC”), bringing an increase of EGCO’s ownership interest in NTPC from 25% to 35%. 7. November 29, 2010, New Growth Cooperatief U.A. (“Coop”) was established in the Netherland. It was hold by EGCO International (BVI) Ltd. and North Pole Investment Co., Ltd., which are wholly owned subsidiaries of EGCO, in the proportion of 99% and 1%, respectively. 8. December 9, 2010, New Growth B.V. (“BV”) was established in the Netherland as a wholly owned subsidiary of New Growth Cooperatief U.A. 9. December 13, 2010, EGCO signed the Sale and Purchase Agreement (“SPA”) with Covanta Energy International Investments Ltd. (“CEILL”) for acquisition of 100% of the outstanding shares of Ogden Power Development Cayman Inc. (“OPDCI”) and Covanta Philippines Operating Inc. (“CPOI”). The acquisition of such which is expected to close in the 1st quarter of 2011 will bring an increase of EGCO’s ownership interest in Quezon power (Philippines) Ltd., Co. (“QPL”) from currently 26.00% to 52.125%. 10. December 14, 2010, TJ Cogen, a wholly owned power plant project of EGCO, was selected one of the SPP firm cogeneration projects under the 2010 program for purchase of 2,000 megawatt from SPPs which was approved by the Energy Regulatory Commission (“ERC”).

Table 1.EGCO’s Business Line: 1. IPP Group

1.1 Rayong Power Plant Rayong power plant is the first IPP in Thailand located in Rayong province. It is a 1,232-megawatt power plant comprising four identical 308-megawatt combined cycle power blocks using natural gas as a primary fuel to generate and sell all net electricity output to EGAT under the 20-year power purchase agreement (“PPA”). In 2010, Rayong power plant generated and sold 4,782.82 million kilowatt-hour electricity output to EGAT. Its annual average Equivalent Availability Factor (“EAF”) was 94.91%.

1.2 Khanom Electricity Generating Company Limited (“KEGCO”) EGCO directly holds a 100% stake in KEGCO which owns and operates Khanom power plant which is known as the largest independent 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 2010, Khanom power plant generated and sold 5,475.78 million kilowatt-hour electricity output to EGAT. Its annual average EAF was 85.87%.

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 comprising 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. In 2010, BLCP power plant generated and sold 10,035.79 million kilowatt-hour electricity output to EGAT, while its annual average EAF were 93.73% for unit 1 and 86.61% 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 composed 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. In 2010, Kaeng Khoi 2 power plant generated and sold 9,857.33 million kilowatt-hour electricity output to EGAT. The annual average EAF for block 1 and block 2 were 85.77% and 95.32%, respectively.

047 7

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 using natural gas as a primary fuel. EGCO Cogen can sell both electricity and steam outputs. Under the SPP firm cogeneration program, it signed a 60-megawatt contracted capacity with EGAT under the 21-year PPA, while the rest of capacities were signed with the industrial users in Rayong Industrial Park under the long-term PPAs. In 2010, EGCO Cogen power plant generated and sold 713.10 million kilowatt-hour electricity output to the customers. Its annual average EAF was 98.71% and the steam output to the industrial user was 59,072 tons.

2.2 Roi-Et Green Company Limited (“Roi-Et Green”) EGCO indirectly holds a 70.3% stake in Roi-Et Green via EGCO Green Company Limited. Roi-Et Green owns and operates an 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 an 8.8-megawatt contracted capacity with EGAT under the 21-year PPA. In 2010, Roi-Et Green power plant generated and sold 63.89 million kilowatt-hour electricity output to EGAT, while its annual average EAF was 89.43%.

2.3 Gulf Cogeneration Company Limited (“GCC”) EGCO indirectly holds a 50% stake in GCC via 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 using natural gas as a primary fuel. GCC can sell both electricity and steam outputs. Under the SPP firm cogeneration program, it signed 90-megawatt contracted capacity with EGAT under the 21-year PPA, while the rest of capacities were signed with the industrial users under the long-term PPAs. In 2010, GCC power plant generated and sold 741.75 million kilowatt-hour electricity output to the customers, while its annual average EAF was 98.78% and the steam output to the industrial users was 179,419 tons.

2.4 Nong Khae Cogeneration Company Limited (“NKCC”) EGCO indirectly holds a 50% stake in NKCC via 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 using natural gas as a primary fuel. NKCC can sell both electricity and steam outputs. Under the SPP firm cogeneration program, it signed 90-megawatt contracted capacity with EGAT under the 21-year PPA, while the rest of capacities were signed with the industrial users under the long-term PPAs. In 2010, NKCC power plant generated and sold 831.34 million kilowatt-hour electricity output to the customers, while its annual average EAF was 97.17% and the steam output to the industrial users was 196,513 tons.

2.5 Samutprakarn Cogeneration Company Limited (“SCC”) EGCO indirectly holds a 50% stake in SCC via GEC. SCC owns and operates a SPP cogeneration power plant located in Samutprakarn province. It is a 126-megawatt cogeneration power plant with steam of 24 tons per hour using natural gas as a primary fuel. SCC can sell both electricity and steam outputs. Under the SPP firm cogeneration program, it 048

signed 90-megawatt contracted capacity with EGAT under the 21-year PPA, while the rest of capacities were signed with the industrial users under the long-term PPAs. In 2010, SCC power plant generated and sold 765.01 million kilowatt-hour electricity output to the customers, while its annual average EAF was 89.91% and the steam output to the industrial users was 145,825 tons.

2.6 Gulf Yala Green Company Limited (“GYG”) EGCO indirectly holds a 50% stake in GYG via 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 2010, GYG power plant generated and sold 161.93 million kilowatt-hour electricity output to EGAT, while its plant annual average EAF was 93.79%.

2.7 Natural Energy Development Company Limited (“NED”) EGCO directly holds a 33.33% stake in NED. NED develops and constructs a solar power plant project located in Lopburi province. NED signed a PPA with EGAT for the sale of all electricity output generated from the 73 DC / 55 AC megawatt solar power plant. The term of the PPA is 5 years from the Commercial Operation Date (“COD”) and can be renewed for 5-year contract each time. At the end of 2010, the progress of project construction was 22.5% a slight delay from the planned schedule. It is expected that the first phase of 8 megawatt AC could be achieved the COD in November 2011 as scheduled and the full scale generation of all seven phases could be achieved within May 2012. 3. Overseas Group

3.1 Conal Holdings Corporation (“CHC”) EGCO indirectly 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”) EGCO indirectly holds a 17.6% stake in WMPC via CHC. WMPC owns and operates an IPP power plant located in Zamboanga city, Philippines. It is a 109.6-megawatt diesel power plant using a 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 2010, WMPC power plant generated and sold 498.47 million kilowatt-hour electricity output to NPC, while its annual average EAF was 89.80%.

Southern Philippines Power Corporation (“SPPC”) EGCO indirectly holds a 17.6% stake in SPPC via CHC. 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 2010, SPPC power plant generated and sold 314.98 million kilowatt-hour electricity output to NPC, while its annual average EAF was 91.25%. 049

Alto Power Management Corporation (“APMC”) APMC provides operation and maintenance services including plant management and consulting to the two above-mentioned power plants and also third-party power plants.

3.2 Quezon Power (Philippines), Limited Co. (“QPL”) EGCO BVI indirectly holds 26% stake in QPL, which owns and operates a 502.5-megawatt pulverized coal-fired power plant using the high quality coal imported from Indonesia as a primary fuel. Under the 25-year PPA, it generates and sells net electricity output to Manila Electric Company (“MERALCO”), the country's largest power distribution company, and also provides additional load stability of Luzon power grid. In 2010, QPL power plant generated and sold 3,391.51 million kilowatt-hour electricity output to MERALCO, while its annual average EAF was 87.30%.

3.3 Nam Theun 2 Power Company Limited (“NTPC”) EGCO directly holds 35% stake in NTPC, which owns and operates a 1,086.80-megawatt Nam Theun 2 hydro power plant located in Lao PDR. It generates and sells 995-megawatt contracted capacity to EGAT and 75-megawatt contracted capacity to Electricite du Laos (“EDL”) under the 25-year PPAs. In 2010, NTPC generated and sold 4,692.24 million kilowatt-hour electricity output to EGAT and 283.70 million kilowatt-hours electricity output to EDL. 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 (“Egcom Tara”) As at December 31, 2010, EGCO holds 74.19% stake in Egcom Tara via ESCO. Under a 30-year agreement, Egcom Tara produces tap water according to Thai Industrial Standard (“TIS”) and supplies to the 3 water stations of the Provincial Waterworks Authority of Thailand (“PWA”) namely, Lak Muang Water Station, Damnoen Saduak Water Station and Samut Songkhram Water Station.

4.3 Eastern Water Resources Development and Management Public Company Limited (“East Water”) As at December 31, 2010, EGCO holds 18.72% of shares in East Water which is responsible for developing and operating the main raw water pipe network in the Thailand Eastern Seaboard area covering 7 provinces namely, Rayong, Chonburi, Chachoengsao, Prachinburi, Srakaew, Chantaburi and Trad.

050

Revenue Structure

051

Power Industry and Competition

The economic recovery of the country resulted in increasing power demand growth. The peak demand of 24,009.90 megawatts occurred on May 10, 2010, 8.91% higher than the peak demand of 22,044.90 MW in 2009. Figure 1: Peak Power Demand 2006-2010 26,000 25,000 24,000 23,000 22,000 21,000 20,000 19,000 18,000 17,000 Jan

Feb

Mar 2006

Apr

May 2007

Jun

Jul 2008

Aug

Sep 2009

Oct

Nov

Dec

2010

Source: EGAT

052

With regard to the power consumption in 2010, the total electricity sold by the Electricity Generating Authority of Thailand (EGAT) was 10.30% higher than that of 2009. The power consumption started to improve with a clear positive signal in August 2008. Such continuous improvement was in line with the global and domestic economic recovery which resulted in growth in manufacturing and export sectors and the higher consumersâ&#x20AC;&#x2122; confidence. In 2011, EGAT expects that the countryâ&#x20AC;&#x2122;s power demand will resume the growth rate of 5% as a result of the economic recovery. Table 1: Electricity sold by EGAT

Months

January Fabruary March 1st Quarter April May June 2nd Quarter July August September 3rd Quarter Octorber November December 4th Quarter Total

2010 (million units)

11,948.55 11,991.38 13,760.36 37,700.29 13.241.50 14,167.44 13,619.78 41,028.72 13,592.56 13,097.56 13,048.15 39,738..27 13,107.09 12,420.74 12,254.57 37,782.40 156,249.68

2009 (million units)

9,851.30 10,527.59 12,259.12 32,638.01 11,579.46 12,246.78 12,116.07 35,942.31 12,272.00 12,604.31 12,249.13 37,125.44 12,552.05 11,734.33 11,664.20 35,950.58 141,656.34

+ increase, - decrease (million units)

2,097.25 1,463.79 1,501.24 5,062.28 1,662.04 1,920.66 1,503.71 5,086.41 1,320.56 493.25 799.02 2,612.83 555.04 686.41 590.37 1,831.82 14,593.34

Increase/decrease (%)

21.29% 13.90% 12.25% 15.51% 14.35% 15.68% 12.41% 14.15% 10.76% 3.91% 6.52% 7.04% 4.42% 5.85 5.06% 5.10% 10.30%

Source: EGAT

053

As of December 31, 2010, the total installed capacity of the Thailand’s power system amounted to 30,920.01 MW, coming from the following sources: Power plant 1. Total installed capacity of EGAT Plc. 2. IPP 3. Small Power producers - Firm type 4. Foreign Country Total installed capacity Source: EGAT

Installed capacity (MW) 14,998.12 12,151.59 2,182.30 1,588.00 30,920.01

Fuel % 48.51 heavy oil, natural gas, diesel, lignite 39.30 heavy oil, natural gas, coal 7.06 heavy oil, natural gas, coal 5.13 100.00

EGCO Group is currently operating 14 IPPs and SPPs plants with the combined MW equity of 4,361.10, of which 3,931.40 is dispatched to EGAT under long-term PPAs which accounted for 12.71% of Thailand’s total installed capacity. (Figure 2) Figure 2: Installed Capacity of Thailand’s Power System 2010

Im port

EGCO

1,588.00 MW 5.13 % 2,182.30 MW 7.06 %

SPP

Im port 1,256.20 MW 4.06 % 1,983.00 MW 6.41 %

3,931.40 MW 12.71 %

SPP

IPP

EGAT

IPP

EGAT

12,151.59 MW 39.30 %

14,998.12 MW 48.51 %

8,751.29 MW 28.30 %

14,998.12 MW 48.51 %

Capacity of Thailand

Capacity separate EGCO Source: EGAT

054

Since December 2008, the electricity demand has decreased significantly due to depressed economic conditions. To portray a clear picture of power sector development, the Ministry of Energy has developed the new Power Development Plan (PDP 2010) which is designated to be a “Green PDP” highlighting greenhouse gas emission reduction, promotions of efficient energy utilization and electricity generation through cogeneration system. This PDP does not only include power purchase projects from domestic producers and neighboring countries that have been approved by the Cabinet but also power generation from renewable energy as indicated in the Alternative Energy Development Plan (AEDP) 2008 - 2022. Besides, opinions and comments obtained from the public hearing of PDP 2007 Revision 2 were taken into account. Therefore, the new PDP will be a complete guideline for power system development that encourages generation from renewable energy and lessens greenhouse gas emission, thus creating a balance of generation resources. Thailand Power Development Plan 2010 - 2030 (PDP 2010) has been developed within the following frameworks: 1. Extending the planning horizon from 15 years to 20 years (2010-2030), 2. Revising Thailand’s Load Forecast based on NESDB’s long term economic growth, 3. Analyzing and integrating the effects of Demand Side Management projects in both the load forecast and capacity planning 4. Combining the re-estimated amount of power purchase from renewable energy in accordance with AEDP 2008 - 2022 into the plan 5. Designating the amount of power purchase from SPPs in 2009-2015 in accordance with the National Energy Policy Council (NEPC)’s resolution on August 24, 2009 to promote power production by cogeneration system 6. Reconsidering power import from neighboring countries and identify only promising projects 7. Lowering greenhouse gas emission PDP 2010 was approved by NEPC and endorsed by the Cabinet on March 12, 2010 and March 23, 2010, respectively.

EGCO’s Competitiveness As a prototype privatization, EGCO has enjoyed several privileges initiated to encourage the private sector’s participation which makes EGCO at advantage in view of the following 1. EGCO is creditable among the financial sources and investors. 2. EGCO’s personnel are transferred from EGAT, which is the country’s sole source of personnel in power industry, thus contributing to efficient operations. Its rivals, which are just set up, on the contrary, need to recruit personnel that may not have enough expertise or be costly or take time for training. At present, there may be new entrepreneurs, especially the international power company, entering this industry. However, there are several obstacles due to the following: 1. Investment capital restriction: Since power plant construction is capital intensive, the New entrants must have a very strong financial position. 2. Human resource restriction: Personnel with expertise in this area are scarce, so recruitment is difficult and costly. It is noted that some strong international power companies have entered the Thailand’s power industry. EGCO has prepared the plan to enhance its competitiveness by sharpening the skills and knowledge of its personnel, studying the domestic and overseas market analysis, and conducting the strengths, weaknesses, opportunities and threats of EGCO in order to set up the appropriate strategic plan to maintain its leadership and investment opportunities in the market which will add value to shareholders and other stakeholders. 055

Shareholder and Management Structure

056

EGCO is a listed company on the Stock Exchange of Thailand. Details of the registered capital are as shown in the following table. Category

No. of Shares (Million Shares)

Registered Capital Paid Up Capital

Amount (Million Baht)

530 526.465

5,300 5,264.65

The top ten shareholders as of September 7, 2010, the closing date of shareholders’ roster for the right to receive the interim dividend payment on September 17, 2010, are as follows. No.

1 2 3 4 5 6 7 8 9 10

Shareholders /1

Electricity Generating Authority of Thailand OneEnergy Thailand Limited Littledown Nominees Limited Bangkok Life Assurance Public Company Limited CLP SEA Energy Limited State Street Bank and Trust Company, for London Chase Nominees Limited 1 Social Security Office (Two-types) Chase Nominees Limited 73 State Street Bank and Trust Company for Australia

% of Total

133,773,662 118,023,606 24,343,528 10,019,300 8,030,572 7,449,805 7,120,247 6,597,800 6,177,200 5,258,483

25.41 22.42 4.62 1.90 1.52 1.41 1.35 1.25 1.17 0.99

Remarks /1

Excluding 49,159,972 shares under Thai NVDR which account for 9.33% of the total outstanding shares. Such NVDR holders do not have the right to vote at the shareholders’ meeting. Information of investors under Thai NVDR Co., Ltd. is shown on the website: www.set.or.th/nvdr/.

The ultimate shareholders of EGCO’s major controlling shareholders are as follows. 1. Electricity Generating Authority of Thailand (EGAT):

EGAT is a state utility with the objectives to generate, purchase, transmit and distribute electricity. EGAT also provides the operation and maintenance services and invests in electricity related business. EGAT holds 25.41% of EGCO’s outstanding shares. EGAT has four representative directors of all 15 directors in EGCO. 2. CLP Holdings Limited (CLP): CLP is a premier company that invests in energy business in Asia and Australia. CLP indirectly holds 12.73% of EGCO’s outstanding shares including 11.21% ownership in EGCO via OneEnergy Thailand Limited and another 1.52% via CLP SEA Energy Limited. CLP has two representative directors of all EGCO’s 15 directors. 3. Mitsubishi Corporation (“MC”): MC is a technology development and trading company in industrial and energy sector. MC indirectly holds 11.21% of EGCO’s outstanding shares via OneEnergy Thailand Limited. MC has two representative directors of all EGCO’s 15 directors.

057

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 business in a way that will benefit EGCO, shareholders and stakeholders including the employees and communities where EGCO operates its business. In this regard, the Board works with the Management in formulating EGCO’s vision and policy and approving the corporate budget. Currently, the Board comprises 15 members: • 14 non-executive directors (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, 2010 are as listed below: No.

Name

1 Mr. Pornchai Rujiprapa

Position

Appointment Date

Chairman January 1, 2009 Independent Director / April 24, 2009 2 Mr. Aswin Kongsiri Vice Chairman 3 Mr. Chaipat Sahasakul Independent Director April 21, 2008 ice Lieutenant General Independent Director 4 Pol April 24, 2009 Pijarn Jittirat 5 Mr. Thanapich Mulapruk Independent Director April 23, 2007 6 Mr. Somphot Kanchanaporn Independent Director January 28, 2008 7 Mr. Phaiboon Siripanoosathien Independent Director September 9, 2008 8 Mr. Sahust Pratuknukul Director April 22, 2010 9 Mr. Somboon Arayaskul Director January 1, 2009 10 Mr. Wisudhi Srisuphan Director January 1, 2009 11 Mr. Peter Albert Littlewood Director April 21, 2008 12 Mr. Hideaki Tomiku Director April 23, 2007 13 Mr. Mark Jobling Director June 22, 2009 14 Mr. Shinji Tsuchiya Director June 22, 2009 15 Mr. Vinit Tangnoi President April 21, 2008 058

December 31, 2010

No. of shares December Increase 31, 2009 (Decrease)

The lists of directors who retired or resigned in 2010 together with their share ownership in EGCO are as shown below. No.

Name

1 Mr. Apichart Dilogsopol

Position

Appointment Date

Director

April 22, 2010

December 31, 2010

No. of shares December Increase 31, 2009 (Decrease)

Independent Directors

The Board in the meeting no. 7/2008 on September 8, 2008 had early adopted the definition of independent directors to comply with the qualifications of independent directors stated in the notification of the Capital Market Supervisory Board no. 14/2008 re: â&#x20AC;&#x153;Filling for and Approval of Newly Issued Sharesâ&#x20AC;? before the effective date. Under such 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), (Note: The Board in the meeting on February 28, 2011 resolved to reduce the shareholding under this item to 0.5%) 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 parents, spouse, brother, sister, and son and daughter including their spouses of the management, or major shareholders, controlling persons or persons who will 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 million 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 EGCOâ&#x20AC;&#x2122;s majority shareholders, and 8. Not having any constraint that would affect the performance of giving independent judgment on EGCO.

059

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 the 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 shall exclude (1) independent directors to maintain their independence under the good corporate governance principle, (2) Chairman who is a senior government officer, and (3) 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 fill in the vacancy by the votes of not less than three-forth (3/4) of the remaining directors. The director who fills 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 four-fifth (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 will 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 will require the Management to submit report on EGCO’s significant matters to ensure effective corporate performance.

060

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 materially 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. 3. Duties to Creditors

• To endeavor to ensure that EGCO complies with the loan provision and that 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 meeting attendance is not possible; directors will 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, to 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. 061

Board of Directors’ Performance Appraisal

The Board shall approve the self appraisal form which will be reviewed and endorsed by the Nomination and Remuneration Committee. In 2010 the Board adopted the same self appraisal form as 2009. Such form is 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 comprises 15 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, (14) succession Planning and (15) other issues. The individual appraisal form comprises 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’ recommendations 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. One of the members shall have finance and accounting background. (At present, Mr. Chaipat Sahasakul is the Audit Committee member that has such qualification.) 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 approving the appointment, rotation and removal, and performance development and appraisal of the Chief Internal Audit. 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. 3. Monitor EGCO’s compliance with Securities and Exchange Acts and Regulations of the SET, and any other laws relevant to EGCO’s business. 062

2010 - EGCO was presented

the CSR Award from the SET Awards 2010.

4. 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. 5. Attend a non-management meeting with an auditor at least once a year. 6. 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. 7. Review the Internal Audit Charter prior to submission to the Board of Directors for approval. 8. Approve the internal audit plan as well as budget and personnel. 9. Review the internal audit function, including: independence of internal audit division and reporting obligation. 10. Review with the Management the preparation of the Management’s Discussion and Analysis or MD&A and its disclosure in the Annual Report. 11. Review with the Management the risk management policy, the practice compliance with such policy, as well as EGCO’s risk management guidelines. 12. 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. 13. 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. 14. Review the Audit Committee Charter at least annually. 15. 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 actions against the third parties. The Audit Committee conducts the self-appraisal annually and reports the result to the Board. For 2010, 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. There were 13 meetings in 2010 of which the attendance rate was 100%. 063

Investment Committee

The Investment Committee comprises 5 directors. The office term is the same as their directorship. The Investment Committee has the responsibilities to scrutinize and endorse for the Board’s consideration the Management’s proposals especially on investment and funding along with other related activities except for the small and medium size transaction where it has the authority to approve with subsequent acknowledgement by the Board. The Investment Committee’s responsibilities are described below. 1. To consider EGCO’s strategic plan, business plan and annual budget for presentation to the Board, 2. To formulate the overall investment strategy and investment policies in line with the EGCO’s policy, 3. To review major acquisition, investment, divestment and funding requests, 4. To review the financial operations of EGCO, including Group-wide financial and treasury management policies and major financing transaction, 5. To approve activities in accordance with EGCO’s regulations, 6. To consider issues which are assigned by the Board, and 7. To review risks associated with investment and finance and other related issues. There were 12 meetings in 2010 of which the attendance rate was 85%. Nomination and Remuneration Committee

The Nomination and Remuneration Committee comprises 5 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. The mission of the Nomination and Remuneration Committee is detailed below. 1. To recommend the structure and composition of the Board and committees 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’ AGM in case of vacancies by rotation and to the board in case of casual vacancies, 3. To scrutinize the list of nominees for EGCO President in case of vacancy including the establishment of the succession plan for executives, 4. 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, 5. To approve EGCO representatives to be directors of the subsidiary or associated companies according to equity proportion or shareholders’ agreement, 6. To endorse the performance evaluation of EGCO President, 7. To endorse the performance evaluation of EGCO Management (Senior Executive Vice President and Executive Vice President), 064

8. 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, 9. To recommend policies and guidelines in determining the remuneration package of the senior executives on an annual basis, 10. To evaluate and approve the corporate performance of EGCO and the Group companies to determine the bonus and annual salary increase across the whole Group, 11. To recommend EGCO’s salary structure and other benefits, and 12. To review risks associated with people management. There were 11 meetings in 2010 of which the attendance rate was 94.5%. Corporate Governance and Corporate Social Responsibility Committee

The Corporate Governance and Corporate Social Responsibility Committee (“CC Committee”) comprises 5 directors being 3 independent directors, 1 non-executive director and President. The term of office of each CC director member is three years and can be re-elected. In order to maintain continuity, members may be re-elected. The mission of the CC Committee is detailed as follows. 1. To endorse corporate governance policy for consideration and adoption by the Board, to monitor compliance with that policy, and to review and adopt such policy on continual basis as appropriate, and 2. To endorse policy and framework for activities for EGCO Group’s CSR and to consider resources and budgets for CSR projects and activities. There was 1 meeting in 2010 of which the attendance rate was 100%. 3. Management Structure The President acts as the head of the Management team which comprises 3 groups as shown below: • Business Development and Management Group: This group is headed by a Senior Executive Vice President (“SEVP”). Under the SEVP, there are three Executive Vice Presidents (“EVP”) who supervise the business development (international), business development (domestic) and asset management. • Finance and Corporate Services Group: This group is headed by SEVP with two EVPs to supervise finance and corporate services performance. • President’s Direct Report Group: This group comprises the strategy and corporate management group headed by an EVP. There are also three divisions which are under the President’s supervision namely Controller, Internal Audit and Corporate Secretary. The last two divisions report administratively to the President, but functionally to the Audit Committee and the Board of Directors, respectively. 065

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 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), and • 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 still accountable for the decision of his delegates. Management Team

The list of the Management team and their share ownership in EGCO as at December 31, 2010 is as follows. No.

066

Name

Title

Mr. Vinit Tangnoi

President Senior Executive Vice PresidentFinance & Corporate Services Senior Executive Vice PresidentBusiness Development & Management Director - Rayong Power Plant Managing Director of KEGCO Managing Director of ESCO

Mrs. Pikul Srisastra

Mr. John Palumbo

4 5 6

Mr. Chumsak Desudjit Mr. Chankij Jearaphunt Mr. Rasda Pongpaew

Mrs. Ngamphis Chitphromphan Executive Vice President - Finance

Mr. Piya Jetasanon

Ms. Charatkhae Netthip

First Senior Vice President Finance Division Senior Vice President Accounting and Budget Division

No. of Shares December December 31, 2010 31, 2009

No. of Shares Increase (Decrease)

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. The Corporate Secretary directly report to the Board. The Board also delegates the Nomination and Remuneration Committee to appraise the performance of the Corporate Secretary. Management Committees

EGCO has set up the following committees to ensure the appropriateness and efficiency of business management. Group Business Committee:

The Board of Directors appoints the Group Business Committee which comprises outside professionals and executives of EGCO Group in 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 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. The Group Business Committee is accountable for the following responsibilities 1. To act as the Board of Directors of the 100% equity subsidiaries namely 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 Investment 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), and 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 2010, there were 5 meetings. EGCO Management Committee:

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.

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The EGCO Management Committee meetings are called as necessary. In 2010, the Committee held 11 meetings. Good Governance Committee:

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 to educate employees about the Codes as well as providing cooperation to promote the practice in the Group. The Good Corporate Governance Committee meets when necessary. In 2010, there were two meetings. Risk Management Committee:

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 the governing authorities, and 5. To report its performance to the Audit Committee and the Board of Director. In 2010, the Risk Management Committee held seven meetings. Safety Health and Environment Committee:

The Safety Health and Environment Committee is in charge of the following responsibilities. 1. To determine the policy and plan regarding safety, health and environment (“SHE”) of EGCO Group to be in compliance with the strategic plan, 2. To implement the SHE action plan for EGCO Group, 3. To monitor and evaluate the SHE performance of EGCO Group, and 4. To improve and develop the SHE implementation of EGCO Group. In 2010, there were one Safety Health and Environment Committee meeting. 4. Director and Management Selection To ensure the appropriateness of director and management selection for efficient governance, EGCO sets up the following framework.

068

Rayong Power Plant is the only combined cycle IPP equipped with the on-line fuel changeover system from gas to diesel oil. It is then plays an important role in the Blackout

Restoration Plan.

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. Willingness to represent the best interests of all shareholders, and 6. Willingness to devote time and effort to contribute to EGCO’s development. 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 skills 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/her votes among any such persons. 4. The persons receiving the highest number of votes in respective order shall be appointed directors depending on the 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 illegal acts committed (if any) in the notice of shareholders’ meeting. In case of the re-election, the attendance records and performance during the past year shall also be presented. In the case of casual vacancies, the Nomination and Remuneration Committee will nominate a qualified candidate who does not possess any forbidden characteristics as stipulated under the Public Company Act for approval at the 069

subsequent Board of Directors' meeting. The director who fills in the vacancy shall retain the office for only the remaining term of office of the director whom 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 will 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 both in-house and external 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 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. 070

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 takes into account the responsibility and the company’s financial status while being in line with the peer practices. Director Remuneration

Director remuneration is appropriately set at a rate comparable to that of peer companies. The remuneration comprises (1) monthly retainer fee to reflect directors’ responsibilities, (2) meeting allowance to reflect time devotion and meeting attendance, and (3) bonus which is paid in accordance with the shareholder value creation. The Nomination and Remuneration Committee will endorse the director remuneration for the Board’s endorsement before seeking the shareholders’ approval on an annual basis. The guidelines are as follows: • Retainer fee and meeting allowance will be set in accordance with peer practices, EGCO operating performance, business size, and responsibility, knowledge, competencies and experience of the directors as required by the company. • Bonus will be considered from the Company’s net profit or dividend paid to shareholders. In 2010, the Shareholders’ Meeting resolved the directors’ remuneration as shown below: 1. Monthly retainer fee of 30,000 baht and meeting allowance of 10,000 baht each. Members who do not attend the meeting will not receive the allowance. Chairman of the Board received 25% additional remuneration for both the retainer fee and the meeting allowance. 2. 2009 Bonus of 20 million baht, 2.5 million baht increase from 2008’s approved amount of 17.5 million baht taking into account the increase in net profit, the Company’s growth, the recognition in terms of good corporate governance, the stability of share price, peers’ director bonus, and dividend payout ratio. Such bonus payment accounted for 0.25% of the net profit which is the same as 2008. 3. Remuneration for Board’s Committees being Investment Committee, Audit Committee, Nomination and Remuneration Committee, and Corporate Governance and Social Responsibility Committee as follows. Committee

Investment Committee Audit Committee Nomination and Remuneration Committee Corporate Governance and Social Responsibility Committee

Retainer Fee (Baht) Chairman Member

Meeting Allowance (Baht) Chairman Member

25,000 25,000 25,000

20,000 20,000 20,000

25,000 25,000 25,000

20,000 20,000 20,000

30,000

24,000

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The overall directorsâ&#x20AC;&#x2122; remuneration for 2010 is summarized below. No. of months in service

No.

Name

Appointment Date

Meeting Attendance (8 Times/ 2010 2009 Year)

Total Remuneration in 2010 (Monthly Retainer, Meeting Allowance)

Director

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Standing Committee/1

Bonus/2

Total Remuneration

January 1, 2009 Mr. Pornchai Rujiprapa April 24, 2009 Mr. Aswin Kongsiri April 21, 2008 Mr. Chaipat Sahasakul Police Lieutenant General April 24, 2009 Pijarn Jittirat April 23, 2007 Mr. Thanapich Mulapruk Mr. Somphot Kanchanaporn January 28, 2008 Mr. Phaiboon SiripanooSeptember 9, 2008 sathien April 22, 2010 Mr. Sahust Pratuknukul

12 12 12

8/8 7/8 8/8

550,000.00 473,000.00 440,000.00

755,333.33 1,736,560.00 358,800.00 1,533,250.00 621,250.00 1,393,860.00

3,041,893.33 2,365,050.00 2,455,110.00

7/8

430,000.00

290,000.00

956,340.00

1,676,340.00

12 12

8/8 8/8

440,000.00 440,000.00

497,000.00 1,393,860.00 497,000.00 1,393,860.00

2,330,860.00 2,330,860.00

8/8

440,000.00

378,800.00 1,393,860.00

2,212,660.00

5/5

299,000.00

246,000.00

Mr. Somboon Arayaskul Mr. Wisudhi Srisuphan Mr. Peter Albert Littlewood Mr. Hideaki Tomiku Mr. Mark Jobling Mr. Shinji Tsuchiya Mr. Vinit Tangnoi

12 12 12 12 12 12 12

12 12 12 12 6 6 12

7/8 6/8 8/8 8/8 7/8 7/8 8/8

430,000.00 420,000.00 430,000.00 440,000.00 420,000.00 430,000.00

518,800.00 1,393,860.00 1,393,860.00 1,356,230.01 486,000.00 1,356,230.01 988,000.00 548,834.99 548,834.99 116,155.00

January 1, 2009 January 1, 2009 April 21, 2008 April 23, 2007 June 22, 2009

June 22, 2009 April 21, 2008

545,000.00 2,342,660.00 1,813,860.00 1,786,230.01 2,282,230.01 1,956,834.99 978,834.99 116,155.00

The summary of remuneration of Retired and resigned directors during 2009-2010 is as shown below 1 2 3 4 Total /1

Mrs. Wattanee Phanachet Mr. Mark Takahashi Mr. Hideo Kuramochl Mr. Apichart Dilogsopol

April 24, 2009 June 22, 2009 June 22, 2009 April 21, 2008

4 6 6 12

3/3

141,000.00 200,000.00

441,390.00 662,080.00 662,080.00 1,393,860.00

441,390.00 662,080.00 662,080.00 1,734,860.00

6,223,000.00 5,836,983.33 19,675,005.00 31,734,988.33

Standing Committees are 1. Executive Committee (Cancelled on April 22, 2010), 2. Investment Committee (Appointed on April 22, 2010), 3. Audit Committee, 4. Nomination and Remuneration Committee, 5. Corporate Social Responsibility Committee (Cancelled on April 22, 2010) and 6. Corporate Governance and Corporate Social Responsibility Committee (Appointed on April 22, 2010). /2 Bonus for Board of Directors in 2009 was paid in May 2010, as resolved by the Shareholders in the Annual General Meeting No.1/2010 on April 22, 2010

072

Management’s Remuneration

The Management’s remuneration which comprises both salary and bonus are designed in a way that will reflect 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. The summary of the Management’s remuneration for 2010 as shown below. (Unit: Baht) 2010 Management (6 Persons) /2

Remuneration Executive Director (1 Person) /1

Total Salary Bonus/3 Meeting Allowance Total

Total Remuneration

18,231,840.00 5,875,092.16 24,106,932.16

18,231,840.00 5,875,092.16 -

24,106,932.16

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 member of the standing committees. /2 These included 6 management namely the President, Senior Executive Vice President - Business Development and Management, Senior Executive Vice President - Finance & Corporate Services, Director-Rayong Power Plant, two Senior Executive Vice Presidents who are seconded to be the Managing Directors of KEGCO and ESCO. Since the salaries of MDs of KEGCO and ESCO are paid by those companies. EGCO is responsible for the remuneration of only four managements. /3 The 2009 Bonus was paid in January 2010.

Total Remuneration of Core Subsidiaries’ Management

The remuneration of the Management of core subsidiaries (subsidiaries of which the revenue account for more than 10% of the consolidated revenue (KEGCO and EGCO Cogen) in 2010 is detailed below. (Unit: Baht) 2010 Remuneration Directors (9 Persons)

Total Salary Bonus /1 Meeting Allowance /2 Total /1 /2 /3

KEGCO Management (7 Persons)

Total Remuneration

15,241,260.00 6,480,701.88 21,721,961.88

Directors (5 Persons) -

EGCO Cogen Management (1 Person) /3

Total Remuneration

1,444,000.00 593,658.00 2,037,658.00

The 2009 bonus was paid in January 2010. EGCO was responsible for the meeting allowance of KEGCO Board. EGCO COGEN Management was assigned from EGCO under the Service Agreement between EGCO and EGCO Cogen. 073

Other Remuneration

In 2010, EGCO and its core subsidiaries contributed their parts to the provident fund for their respective Managements as follows. (Unit: Baht) Year 2010 Company

EGCO KEGCO EGCO Cogen

Members

Provident fund

3 7 1

1,065,516.00 1,524,126 144,400.00

6. Employees EGCO

As of December 31, 2010, EGCO has 269 headcounts which include the President, five Senior Executive Vice Presidents, 8 executives who are seconded to be management of Group companies and 256 staffs. The number of staffs in each reporting line is as show below: Key Areas

Members (Persons)

1. President 2. Business Development and Management 3. Finance and Corporate Services 4. Strategic and Corporate Management 5. Rayong Power Plant - Operation - Maintenance - Others Total

27 29 50 15 76 38 34 269

Core Subsidiaries A. KEGCO Employees

1 Operation 2. Maintenance 3. Others Total

074

Total (person)

74 55 25 154

Khanom Electricity Generating Co Ltd’s (KEGCO) is the largest gas fired power plant in the south with the installed capacity of 824 megawatts.

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. There has been no significant turnover and no illegal labor dispute during 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 2010 is as shown below: (Unit: Baht) Amount

Remuneration

Total Salary Bonus /3 Provident Fund Total /1 /2 /3

EGCO/1

KEGCO

EGCO Cogen/2

125,344,993.67 45,796,078.67 10,824,997.76 181,966,070.10

135,985,444.00 59,171,716.86 13,570,108.00 208,727,268.86

2,766,400.00 1,086,510.45 244,000.00 4,096,910.45

Include salary and bonus of the executives on one year contract Include the salary and bonus of the General Manager who is seconded by EGCO and three permanent employees. The 2009 bonus was paid in January 2010.

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 with 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. EGCO Group puts high priority on continuous development of the employee's ability and proficiencies which includes core, functional, and managerial/leadership competencies. In this regard, various projects and training courses have been developed covering individual studies, training with experts or resource persons, and sharing of experiences among peers. As a result, we can develop our employees in all dimensions including intelligence quotient (“IQ”), emotional quotient (“EQ”), moral quotient (“MQ”), and adversity quotient (“AQ”). To ensure that the implementation of human resource development plan is a successful one, EGCO will prepare a list of required skill sets for each position as a part of the career path development plan. 9. Other information related to the Board of Directors and Management In 2010, 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 in respect of the same offence • Bankruptcy or receivership. 075

076

Police Lieutenant General Pijarn Jittirat Mr. Thanapich Mulapruk Mr. Somphot Kanchanaporn Mr. Phaiboon Siripanoosatien Mr. Sahust Pratuknukul Mr. Somboon Arayaskul Mr. Wisudhi Srisuphan Mr. Peter Albert Littlewood Mr. Hideaki Tomiku Mr. Mark Jobling Mr. Shinji Tsuchiya Mr. Vinit Tangnoi

Mr. Chaipat Sahasakul

Mr. Pornchai Rujiprapa Mr. Aswin Kongsiri

Remuneration

Member Member

Chairman

Audit Committee

Member

Member Member

Member

Chairman

Investment Committee

Chairman

Member Member

Member

Nomination and Remuneration Committee

Member

Chairman

Corporate Governance & Social Responsibility Committee

Standing Committee

Chairman

Group Business Committee

Chairman

EGCO Management Committee

Chairman

Good Governance Committee

Chairman

Risk Management Committee

Management Committee

The positions of EGCO's Board of Directors and Management in Standing Committees and Management Committees Safety Health and Environment Committee

Non-Executive Director Independent director Independent director with finance and accounting background Independent director Independent director Independent director Independent director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director President

Remark

077

Secretary

Chairman

Assistant Vice President-Asset Management

Power Plant Manager-EGCO Cogen Power Plant Manager-Roi-Et Green Manager-Tap Water of Egcom Tara Senior Vice President-Asset Management

Member Member Member Member Member Member & Secretary Member & Assistant Secretary

Secretary

Member Member

Safety Health and Environment Committee

Vice President-Safety of KEGCO Vice President-Safety of ESCO

Secretary

Member Member & Secretary Member & Secretary

Member Member

Member

Chairman Member

Risk Management Committee

Member

Secretary

Member Member

Member

Member Member Member

Chairman Member

Good Governance Committee

Chairman Member

EGCO Management Committee

Standing Committee

Vice President-Human Resources of Rayong Power Plant

Senior Vice President - Internal Audit

Senior Vice President - Corporate Secretary

Senior Vice Presiedent-Legal Senior Vice President - Corporate Communication Senior Vice President - Human Resources

Member

Member Member

Chairman Member

Group Business Committee

Mrs. Wattanee Phanachet

Member

CSR Committee

Member

Secretary

Nomination and Remuneration Committee

Mr. Nopporn Phansaengdao

Member

Executive Committee

Member

Secretary

Audit Committee

Standing Committee

Managing Director of ESCO Executive Vice President-Strategy & Corporate Management Executive Vice President-Asset Management Mr. Kwok Wing Ho

President Senior Executive Vice President-Finance & Corporate Services Senior Executive Vice President-Business Development & Management Director - Rayong Power Plant Managing Director of KEGCO

Remuneration

The positions of EGCO's Board of Directors and Management in Standing Committees and Management Committees

Member (outside professional) Member (outside professional) Member (outside professional)

Management

Management Management

Management

Management Management

Remark

Corporate Governance Report for 2010

078

The Board of Directors (“Board”) along with EGCO management and employees believe that the good corporate governance is a significant tool to ensure efficient and transparent management to foster shareholders’ and investors’ trust. The Board then intends to conduct the business under the Good Corporate Governance Principles issued by the Stock Exchange of Thailand (“SET”) and the rules and regulations of Listed Company issued by the Securities and Exchange Commission (“SEC”) and the Capital Market Supervisory Board (“CMSB”) to continuously raise the governance of EGCO to international level for efficient management and sustainable business growth. Corporate Governance Policies

For clarity and transparency, the Board has established the written corporate governance policies as guidelines for directors, management and employees. The Policies include the statutory rights of shareholders as well as the Best Practices issued by the SET. The Board annually reviews the good corporate governance policies to ensure adherence with the following core issues: • Encouraging more understanding of the expectations of stakeholders; • Improving the risk management practices; • Enhancing the reputation of the organization and fostering greater public trust; • Enhancing employee loyalty and morale and improving the safety and health of employees; • Increasing productivity and resource efficiency and reducing waste; and • Contributing to the long term viability of the organization. Communication of Corporate Governance Policies

The Board discloses the Corporate Governance Policies on EGCO website. Shareholders who want to receive a hard copy can submit the form attached in the annual report to the Corporate Secretary. During the past year, the Company communicates the Corporate Governance Policies to its employees via various channels as follows: • Good corporate governance E-newsletter was issued every Monday, Wednesday and Friday to communicate news on good corporate governance, director information and best practices of other companies. • Three trainings on good corporate governance were provided to the employees. The topics included EGCO’s Code of Conduct, happy workplace, and overall risk management. Good corporate governance was also included in the orientation presentation kit for new employees. • Governance road show was run at the head office, and the office of Rayong and Khanom power plants to provide knowledge and promote understanding about good corporate governance and the Code of Conduct. Monitoring of the Compliance with Corporate Governance Policies

The Board requires the compliance with the Corporate Governance Policies as one of the key performance indicators of EGCO Group of which the progress was monitored on a quarterly basis. In 2010, the Board endeavored to ensure that directors, Management and employees adopted the above policies as the guiding principles in discharging their duties. There is no report of any breach to the Corporate Governance Policies. Based on the above commitment, EGCO is well recognized as an excellent showcase of good corporate governance companies by various institutions. 079

• 6th best listed companies in Thailand and 4th best public companies in energy and utility sector in a poll conducted by Finance and Banking Magazine; • 8th best companies in the energy sector in a survey on 2010 Thailand’s most admired companies conducted by Thaicoon Magazine; • 8th best listed companies in Thailand for being most committed to a strong dividend policy in a poll conducted by FinanceAsia; • An excellent showcase for shareholder meeting with the full score of 100 in the quality assessment of 2010 Annual General Shareholders’ Meeting organized by the Thai Investors Association; • Corporate Social Responsibility Award for listed company with the market capitalization over 10,000 million baht from the SET Awards hosted by the Stock Exchange of Thailand (“SET”) and the Finance and Banking Magazine; • Excellent Corporate Governance Performance in 2010 by IOD with the score of 94 and full score in two categories being the rights of shareholders and role of stakeholders; and • One of the 15 candidates for transparent organization in a contest hosted by the Office of the National Anti-Corruption Commission. The 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 the Company based on acceptable and reliable standard. In this respect, EGCO encourages the shareholders to exercise their rights including legal basic rights. Examples are 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 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 documents in advance so that shareholders will 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 2009 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 22, 2010, which was 58 days in advance of the AGM date. 080

• EGCO delivered the notices of the meeting as well as the agenda document on March 22, 2010, which was 30 days before the AGM date. The notices included the objectives, Board’s opinions, and conditions to attend the meeting. All relevant information was posted on EGCO’s website to facilitate shareholders to study the information in advance before receiving the hard copies. Contact phone number was also provided for any relating inquiries. • EGCO joined hands with the Thailand Securities Depository Co., Ltd (“TSD”) to invite shareholders to notify the intention to attend the shareholder’s AGM in advance via IVR system so that EGCO would provide adequate facilities to accommodate shareholders. • EGCO encouraged shareholders to forward their questions with regard to the meeting agenda in advance to directors@egco.com or facsimile number 0-2995-0956-7 in order that the shareholders could gain the utmost 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 2010 were as follows: • Directors, Management and the external auditor were encouraged to attend the AGM and answer shareholders’ questions. All the fifteen directors including the Chairman attended the meeting which accounted for 100% of the Board members. The chairman and members of each standing committee also presented information to shareholders and answer shareholders’ questions. • Services to facilitate shareholders who attended the meeting were provided. Map for meeting venue was attached in the notice to the AGM. There were adequate registration counters and refreshments for shareholders. • Management, Investor Relation and Accounting Officers welcomed shareholders to the meeting and answered their inquiries about EGCO business at the mini-exhibition and shareholder corner in front of the meeting hall. • An officer from TSD, the company registrar, provided the shareholder services and answered questions regarding dividend cheque and share registration and certificates in front of the meeting room. • The barcode system was implemented to facilitate shareholders’ registration process. • The shareholders who came late were allowed to vote for the ongoing agenda item and the remaining agenda items. • The Chairman convened the meeting in accordance with the priority notified in the agenda document. Presentation for each agenda item included the background, supporting rationale and proposal. • The meeting was broadcasted via closed circuit television so that shareholders who were outside the meeting room could follow up the meeting proceedings. • Shareholders were equitably treated and were allowed adequate time to address their concerns at the meeting. The Chairman paid attention to clarify all shareholders’ inquiries of which the questions and the clarifications were 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 2009 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 2009 indicated that shareholders were satisfied with the quality of the notice to the meeting, meeting arrangement and meeting conduct. 081

There were 485 and 576 shareholders attending the 2010 AGM in person and by proxy, respectively, representing 410,811,147 shares which accounted for 78.032% of the total units of shares. The attendance rate was approximately the same as that of 2009 AGM in which 456 and 681 shareholders attended the meeting in person and by proxy, respectively, representing 412,805,276 shares which accounted for 78.411% of the total units of shares.

After the Shareholders’ Meeting • EGCO posted the draft minutes of the meeting for shareholders’ review on EGCO website www.egco.com on May 6, 2010 which was within 14 days after the meeting date (April 22, 2010) as required by the SET. The minutes of meeting had included the significant matter of each agenda items, shareholders’ inquiries and answers by the Board including the resolution and the voting for each proposal. The minutes of meeting was duly filed for future reference. • EGCO broadcasted on its web site that shareholders who could not attend the meeting could request for CD of the meeting for free of charge. • EGCO notified the meeting resolution on dividend payment via SET’s portal. EGCO also coordinated with the registrar to ensure that all the shareholders would receive the dividend. • EGCO took all the recommendations of the shareholders for consideration and improvement of the AGM. As a result of the above efforts, EGCO was honored as an excellent showcase for AGM of listed companies with the full score of 100 for the second year.

1.2 Shareholders’ Visit The Board sets the principle to invite shareholders to visit the Company and meet the management to better understand EGCO business and monitor EGCO’s performance. In 2010, there are four shareholders’ visits as follows: • Shareholders’ visit to Rayong Power Plant in Rayong province, • Analysts’ and investors’ visit to Nam Theun 2 Power Plant, • Shareholders’ and investors’ visit to Rayong Power Plant organized by the Thai Investors Association, and • Investors’ and analysts’ visit to One Watershed Forest, One Energy Source project. 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. • 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. 082

• To adhere to the best practice as recommended by the SET regarding the right of minority shareholders, EGCO announced via EGCO’s website and the SET’s portal the clear and transparent procedures for shareholders to recommend AGM agenda and to nominate director candidates to the Board during the period of November 2, 2010-January 31, 2010 (about 60 days before the AGM date). The shareholders who would like to propose the agenda or director candidates should 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 2010, no minor shareholders recommended AGM agenda nor nominate director candidates in advance. • Voting cards were provided for all agenda items for transparency and audit trail. Director election also allowed shareholders to vote on individual nominees. • 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. • Since most of the shareholders attending the meeting were Thai, the meeting was conducted in Thai. However, to facilitate foreign shareholders, EGCO prepared the notice of meeting in both Thai and English. English interpreting service was also provided at the meeting room. • With the awareness that some shareholders might not be able to read the minutes of meeting on the SET’s and EGCO’s website, a hard copy of the minutes of meeting no. 1/2010 were delivered to each shareholder for review.

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 materially 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. 083

• Any information disclosure to the public that will 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. EGCO also sets the policy that Management and employees who have the inside information relating to financial statements should refrain from their own security trading within 45 days before and 24 hours after a disclosure date. For other significant inside information, Management and employees should refrain from security trading from the day of acknowledgement until 24 hours after disclosure to public. In addition, EGCO has put in place the internal control system to prevent the leakage of any information before the public disclosure. Such measure was a part of significant risk management. Supervisors also have the responsibility to ensure that the measure to safeguard inside information is effective. Using inside information for own or other benefits of security trading when that information has not made public is considered violating the Code of Conduct.

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 will 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. Directors or management with potential conflict of interest shall refrain from discussing and voting on such agenda item. • Directors and Management should disclose to the Board their securities holdings at every Board meeting. There is also a statement informing directors at every meeting that directors, management including their spouses, minor children and related persons under Section 258 of the Securities and Exchange Act have a responsibility to prepare and disclose any change in shareholding of the Company to the SEC within three days. In 2010, the Board also sets the policy for directors and management including related persons to report their interest in the Company to comply with the Notification of the CMSB no. Tor Jor 2/2009 as follows: 1. Directors and executives should submit the form to report their interest to the Corporate Secretary on a quarterly basis. 2. In case of any change during the quarter, the updated form should be submitted to the Corporate Secretary as soon as possible. 3. The Corporate Secretary shall submit the form to the Chairman and the Chairman of the Audit Committee within 7 days after getting such report. In 2010, the Board did not get any complaints for not respecting shareholders’ rights or any accusation regarding director’ and Management’s insider trading. This shows the efficient control of the Board on such matter.

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3. Role of Stakeholders

3.1 Rights 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 the Corporate Governance Principle and “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 will 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. EGCO strives to prevent accident, injury and occupational illnesses. Physical check up was provided in accordance with the occupational health risks. It should be noted that during the past year, there was no legal dispute between the employees and EGCO. In addition, there was no disabling injury in all subsidiaries. EGCO is proud to announce that the Rayong Electricity Generating Co., Ltd. (“Rayong”) and the Khanom Electricity Generating Co., Ltd. (“KEGCO”) have been certified the OHSAS 18001: 1999 (Occupational Health and Safety Assessment Series) by RWTUV (Thailand) and KEGCO has been honored the National Distinguished Workplace in terms of Safety, Occupational Health and Environment for 11 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 Rayong, KEGCO, Roi-Et Green Co., Ltd. and Egcom Tara Co., Ltd. During the past year, EGCO and its subsidiaries could generate the contracted electricity with higher equivalent availability factors (“EAF”) than the value stipulated in the power purchase agreement. Rayong also made a superior record in being awarded the EAF bonus for 14 years consecutively. EGCO also prepared our power plant to meet any system emergency. It was notable that Rayong Power Plant could quickly execute the restoration plan in case of brown out using black start emergency diesel in order to power up the eastern region. As such, it is put in the restoration plan of the Electricity Generating Authority of Thailand, the Provincial Electricity Authority and the Metropolitan Electricity Authority. The testing of the restoration plan is carried in each region every year.

Creditors EGCO will endeavor to ensure that it complies with the loan provision and that the Company financial status is correctly disclosed. The Company will endeavor to solve the problem in case of doubt about the likely impact on lenders such as when the company’s financial position is uncertain or insolvency may be pending. During the past year, EGCO and all the subsidiaries well observed the conditions in the loan agreement and there was no event of default. 085

Suppliers and Contractors EGCO will treat suppliers and contractors fairly and would not seek undue benefit from them. EGCO will comply with the conditions in the agreements. 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.

Competitors EGCO will conduct its business on a fair play basis. We will not use a disgraceful approach such as bribery in order to get competitors’ sensitive confidential information. EGCO will also refrain from attacking the competitors with false allegations.

Community, Society and Environment EGCO has a policy to operate the business with commitment to social contribution and environment conservation. In this regard, EGCO will foster the corporate culture that employees at all levels will be fully responsible for any social and environment impact when discharging their duties. EGCO also sets guidelines in the Code of Conduct that employees must deliver their duties in a safe manner to avoid any impact on themselves as well as people living and working in communities near our facilities, and the environment. Our employees will strive to comply with relevant laws, prevent accident and pollution, and will use the natural resources in an efficient and environmentally responsible manner. In addition, EGCO has implemented the social projects which cover the following area: • Promotion and Development of Community’s “Quality of Life”: EGCO Group will put the prime focus on the quality of life of the surrounding communities both at the head office and at the power plants. In this regard, EGCO has initiated and provided supports to projects relating to education, villagers’ occupation and environment. • Conservation of “Watershed Forest: Source of Life”: Apart from taking care of the working environment and surrounding communities, EGCO Group plays a vital role in conserving the natural resources with the focus on watershed forests, which nourish the well being of all lives. • Promotion of Learning and fostering a Public Mindedness among “Youths” for Sustainable Social Development: We recognize that education is the key to national development. With the awareness that development starts from early childhood, EGCO has supported the projects to encourage youths from pre-elementary, elementary to high school level to learn from both inside and outside the classroom to children. We believe that such learning is the starting point for social and moral quotient, essential factors for long term national development. In 2010, EGCO set up the Corporate Governance and Social Responsibility Committee with the responsibility to endorse the governance policy along with CSR policy and framework with the prime focus on the impact to the shareholders and stakeholders. EGCO also prepare the CSR action plan comprising the plan on safety, occupational health, and working environment, and community projects. Details were presented in the Sustainability Development report. 086

It should be noted that in 2010 there was no claim against EGCO from the stakeholders. Detailed information on Corporate Social Responsibility is presented in the Stakeholders’ report.

3.2 Observation of Human Rights EGCO requires that its directors, management and employees fully observe the following human rights. • EGCO will treat our employees with respect and honor. • EGCO will provide a communication channel for employees to submit questions and complaints relating to work which we will seriously consider and remedy the problem to benefit and to promote good relations among all concerned parties. • EGCO encourages all employees to exercise their rights of citizenship in accordance with the constitution and relevant laws. • Employees’ personal information shall be kept with utmost discretion and confidentiality. Disclosure of personal information such as employee’ biodata, health record, working experience or any other personal information to non-related party without the permission of such employee is considered a violation of the Code of Conduct and may result in a range of disciplinary action except when it is done in accordance with the Company’s regulations or legal requirements. • EGCO did not support the violation of human rights and frauds. • 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. EGCO also set clear guidelines for labor engagement of the Company and its business partners to strictly comply with the Labor Act such as no engagement of child labor or abusive hiring. In addition, the working system is designed to put priority on safety and occupational health. There has never been any report on the violation of human rights by EGCO.

3.3 Intellectual Property EGCO will comply with the legal requirements on intellectual property and copy rights. Employees must check beforehand that the work or information that belongs to third parties can be used within EGCO Group without violating the intellectual property of others.

3.4 Measures against Corruption and Bribery EGCO set the policy to work against corruption and bribery. In this regard, EGCO Code of Conduct prescribes that employees are prohibited from soliciting or accepting any advantage from third parties that may impair their objectivity or weaken their ability to promote the best interests of EGCO Group. Employees shall refrain from offering the advantage to outside persons as a motive for him to do or refrain from doing any illegal and wrongful act. On November 9, 2010, EGCO joined the project on Collective Action Coalition to fight against corruption in the private sector. Such coalition was initiated by the IOD, the Thai Chamber of Commerce, international chambers of commerce and Thai Listed Companies Association. Such project was national project being supported by the government and the Office of the National Anti-Corruption Commission.

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3.5 Responsibility towards Environment and Resources 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, Rayong and Khanom power plants have implemented ISO 14001 environment management system and the TIS 18001:1999 & OHSAS 18001 Occupational Health and Safety management system. 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 part of the agenda to reduce the risk of heavy dependence on only one type of fuel. At present, EGCO is the IPP with the most diversified fuel types in Thailand. • 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 will support the government policy and take a good care of communities surrounding the power plants so that they will not only be protected from the negative impact of EGCO business, but will also have a better quality of life.

3.6 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 EGCO at the following address.

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Board of Directors Audit Committee Corporate Secretary Corporate Communications Investor Relations

Electronic mails

Telephone numbers

directors@egco.com auditcommittee@egco.com cs@egco.com Corp_com@egco.com ir@egco.com

0 2998 5020-6 0 2998 5021-5 0 2998 5130-3 0 2998 5145-7

The mailing address is 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 communications directed to the Board to the standing committee or relating directors. The Corporate Secretary will summarize all directorsâ&#x20AC;&#x2122; 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.

3.7 Whistleblower System and Whistleblower Protection The Board has set the channels for whistle blower programs at both management and director levels. For management channel, the report on any suspected violation or crime shall be made to the supervisor and the Good Corporate Governance Committee. For the Boardâ&#x20AC;&#x2122;s channel, such report can be directed to either the Board or the Audit Committee. It is the responsibility of the management to coach employees to meet their responsibilities under the requirements of relevant laws and regulations. Failure to observe the Code of Conduct will result in a range of disciplinary actions. The procedure to protect the whistleblower is also put in place. For example, information will be kept confidential and will be known only among responsible parties. The whistleblowers can identify themselves or can keep their identities anonymous. However, they must provide adequate information for the Company to investigate the claims. 089

In 2010, EGCO was honored the CSR Award for listed company with the market capitalization over 10,000 million baht from the 2010 SET Awards. In addition, Group companies also won the following awards. • KEGCO won “the EIA monitoring Awards for 7 consecutive years, National Safety Awards for 2009” for “the 11 consecutive years and Outstanding Achievement on Labor Relations and Welfare” for 4 consecutive years. • Roi Et Green Co., Ltd. won “the National Safety Award” for the first year. • EGCO Engineering and Services Co., Ltd. (“ESCO”) was awarded the Gold Certificate for HIV/AIDS and TB Prevention and Management in the Workplace by Ministry of Labor and Ministry of Public Health. • EGCOM Tara Co., Ltd. was presented the Certificate for Quality of Drinking Water for 8 consecutive years, Certificate for Drugs Free Workplace: Excellent Level 2010 by Ministry of Labor, Certificate audit for Environment Management System: EMS Stage II by Ministry of Industry, and excellent healthy workplace for 4 consecutive years. 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 material information in a timely and transparent manner in accordance with the requirements of the SEC and SET via the following channels: 1. SET’s Community Portal system and SEC; 2. Public channels such as newspapers, magazines, television, and corporate news; 3. Company’s web site at www.egco.com both in Thai and English; 4. Company’s visits; 5. Road shows for both domestic and overseas investors; 6. Analyst meetings; and 7. EGCO news via post Only the President or the assigned staff member is authorized to disclose the Company’s information. EGCO has established a Disclosure Committee comprising President, Senior Executive Vice President-Finance and Corporate Services, Senior Executive Vice President-Business Development and Management, Senior Vice President-Corporate Secretary, Senior Vice President- Corporate Communication and Vice-President-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.

Investor Relations Investor Relations is responsible for communication with institutional and individual investors, and analysts on an equitable basis. In this regard, annual Investor relations plan is prepared.

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The cost saving from using rice husk

instead of imported bunker oil of

290 million liters during the 21-year Power Purchase Agreement of Roi-Et Green is approximately 4,400 million baht.

EGCO puts priority on sharing information via investor relations activities. Senior management always takes parts in providing information to investors and analysts to create understanding on the Company, promote the relationship, and encourage them to provide the feedback to the Company. Significant activities in 2010 included meeting investors in SET in the City in Bangkok. Two trips were arranged for investors’ and shareholders’ visits to Rayong Power Plant. EGCO also hosted a trip for analysts and institutional investors to Nam Theun 2 in Laos PDR and a trip to visit the “one watershed forest, one source of energy” project. Besides, there were three analyst meetings in Thailand, two overseas road shows to Hong Kong and Singapore and one round-table discussion on EGCO business for investors. On top of that, there are newsletters and electronic mails. For those that cannot join the investor relations activities, EGCO has posted the presentations, operating results, financial statements and notice to the SET on our web sites.

Corporate Communications The Corporate Communications Division is responsible for communicating the movement of the Company to media for public disclosures. Major events in 2010 included 3 press conferences on corporate results and directions, 3 media trips, 14 executive Interview and 23 pieces of press releases.

Corporate Secretary The Corporate Secretary discloses information as required by the SET and SEC on a correct and transparent basis. In 2010, 12 notifications were submitted to the SET. EGCO always updates the information on EGCO website. Quality of the disclosure was assessed after every meeting with shareholders, investors and analysts for future improvement. In addition, EGCO also attached the feedback form for shareholders to provide feedback on the quality of the annual report, additional document required, and questions for the President to answer in the next AGM in the annual report and the notice to the AGM. Such feedback form was well received by shareholders.

4.2 Financial Statement Preparation EGCO aims at fostering the stakeholders’ confidence that EGCO’s financial reports are accurate, complete and transparent in line with the generally accepted accounting standards to protect EGCO assets against fraud or abnormalities. In this regard, 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 sets the policy to have a non-management meeting with the auditor at least once a year to ask questions and discuss with them 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 2010, EGCO appointed auditors from PricewaterhouseCoopers ABAS Limited as the Company’s 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. EGCO also prepares the report on Management Discussion and Analysis to provide analytic information on the Company’s financial status, operating results and major changes to investors and analysts on a quarterly basis. Such report is submitted via SET’s portal along with the Company’s financial statements. 091

4.3 Information Disclosure on EGCO Website In order that shareholders and investors can quickly search and retrieve EGCO’s public information, EGCO presented the following information on out website. 1. Corporate profile comprising history, vision and mission, and organization structure; 2. Corporate governance comprising corporate governance principle, board of directors, board committees, and senior management; 3. Investor Relations comprising financial information, shareholder information, analyst information, and investor calendar; 4. Corporate information comprising brand information and press center; and 5. Corporate social responsibility comprising information about EGCO social contribution activities. Investors can visit EGCO website at www.egco.com It should be noted that SEC has never demanded EGCO to re-state the financial statements. In addition, the quarterly and annual financial statements are disclosed before the deadline. 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 will 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, 2010, 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 skills 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 in engineering, economics and finance, and laws and political science at the ratio of 46.67%, 26.67%, and 26.66% respectively, was appropriate with useful mix of skills and experience and an appropriate balance of power. 092

Term and Age Limit One third of the directors shall retire by rotation at the AGM 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 will 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 will be able to serve on the Board until the expiry of their terms.

Chairman The Board elected Mr. Pornchai Rujiprapa, a representative director of EGAT, as the Chairman because of his knowledge in energy sector 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: 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 separate 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 efficiently conducted 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 State to be on EGAT Board of Directors to protect the national benefits. The Board believes that the Chairman will act in the best interest of all shareholders and stakeholders; 3. The Board is mostly comprised of non-executive directors and the Board’s seats are allocated in accordance with the shareholding in the Company comprising 4 EGAT representative directors, 4 OneEnergy Thailand Ltd. (“OneEnergy”) representative directors, and 6 independent directors which indicates a proper balance of power; 4. The Board has appointed the Vice Chairman who is an independent director to work with the Chairman in setting and scrutinizing the meeting agenda and the time allocation for each agenda item; and 5. The Board has assigned Board committees to oversee tasks where there may be 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. The result of the Board’s performance appraisal in 2010 indicates that the Chairman is effective in leading the meeting and encouraging directors to participate in the debate around the Board table.

093

Independent Director There are six independent directors on Board which is larger than one/third of the whole Board. Independent directors set up the policy to call meetings as needed. In 2010, there were 2 independent director meetings to discuss and exchange their views regarding the corporate governance and interesting issues without the Management and the result was reported to the Board. (Please see the definition of independent director in the article “Shareholding and Management Structure”.)

Segregation of Duties There is a segregation of duties between policy making, which is the responsibility of the Board and routine business, which is the responsibility of the Management. In this regard, the Table of Authority has been prepared and approved by the Board. The Board will not intervene with any routine activities under the President’s responsibilities.

Policy and the Procedure for Other Positions of Directors and Management To ensure that the Board will 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. Currently, there is not any director who serves more than 6 listed companies. The Board has already taken into account his meeting attendance as one of the criteria for his re-election. As regards the management, each of them should not hold directorship in more than 3 companies excluding the wholly owned subsidiaries to ensure sufficient time for their governance. Such directorship has to be approved by the Nomination and Remuneration Committee.

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; and • To file and keep record of EGCO’s papers 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. 094

In 2010, the Corporate Secretary attended seminars and provided opinion on the hearings hosted by the list company regulators so that information should be used to enhance the efficiency of corporate governance.

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, Investment 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 committee’s 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 committees will report their meeting results to the Board.

The Audit Committee comprises 3 independent directors. The Audit Committee’s mission covers the review of the financial statements, legal compliance, risk management policy, 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 will be for the best interest of EGCO.

The Nomination and Remuneration Committee comprises 4 non-executive directors, two of whom are independent. The Nomination and Remuneration Committee members appointed Mr. Mark Jobling, 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 Investment Committee comprises 5 directors and has the responsibility to screen and endorse for the Board’s consideration the Management’s proposals especially on the investments, funding and relating activities. Exception is made for medium and small sized investment where the Investment Committee can approve business decision with subsequent acknowledgement by the Board. Since this Committee is delegated to approve business decision within its delegated authority, the Chairman of the Board is appointed the Chairman of the Investment Committee. He has proven to be an efficient chairman who conducts the meeting efficiently and be attentive to other members’ recommendations both at the Board’s and the committee’s meeting. It should be noted that the Investment Committee was established in 2010. 095

The Corporate Governance and Social Responsibility Committee comprises 5 members being three independent directors, one shareholder representative and the President. The Chairman of the Committee shall be independent director. The Corporate Governance and Social Responsibility Committee has the responsibility to endorse the corporate governance principle and the 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 members well understand their role and responsibilities including the business of the Company. They well serve the Company with honesty and prudent judgments for the utmost benefit of the Company and the fairness to all shareholders. The Board has exercised independent judgment and devoted time in discharging their duties in accordance with the Corporate Governance Principle as follows. • To set the corporate vision, target and business strategy 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 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 implement change if necessary; • To monitor the information disclosure and communications; and • To direct self - appraisal annually and declare in the annual report how well they carry out their duties and oversee EGCO.

Leadership and Vision The Board works with the Management in setting the vision, mission, strategies, goals and business plans both over a short and long term. The corporate KPIs are designated for each key area being growth, finance and organization excellence. The Board also endeavors to ensure that the significant working system such as the internal control and risk management are in place. Management performance is also monitored through the President’s report which is prepared on a monthly basis to ensure that EGCO business is carried out in an efficient manner.

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 096

BLCP uses top-grade bituminous coal and applies Clean Coal Technology that reduces pollution from the ground to the stack.

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 their 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. Employees at senior vice president level and upward shall review their compliance with the Code of Conduct before signing and submitting the Code of Conduct Compliance Statement to their immediate boss annually.

Internal Control and Internal Audit Realizing the importance of having sufficient and suitable internal control at all levels, EGCO clearly determines responsibilities and authority of Management and employees in writing, taking into account segregation of duties, check and balance, and control of Company’s assets. 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 sets the policy to annually review EGCO’s internal control system using the questionnaires that were developed in line with the guidelines of the SET and the Committee of Sponsoring Organization of the Treadway Commission (“COSO”). Employees from section managers and upwards 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 2010 showed that EGCO and its subsidiaries had sufficient and appropriate internal control system. Details are presented in Internal Control in this annual report. To ensure compliance with internal control systems, and rules and regulations, employees of EGCO and subsidiaries at senior vice president level and upwards are required to thoroughly review their 2010 work practices before signing the General Representation Letter to their managers up to the President. The President also signed the General Representation Letter addressed to the Chairman of the Board. EGCO emphasizes on developing the capabilities of internal auditors by self development, experience sharing and attending inside and outside seminar. The Internal Auditor Division also provides consultation to relevant units to reduce the weaknesses in the system under the proactive audit plan.

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 so that the strategies, plan and measures can be adjusted or put in place at an appropriate timing. To implement enterprise risk management, the following measures are implemented: 097

• EGCO Risk Management Committee is shored up comprising top management of the Group companies with the President as the Chairman of the Committee. The objectives are to closely monitor the risk management of the Group and to present the result to the Audit Committee and the Board. In addition, Risk Management Committee is also set up at each power plant to set up the policy and monitor the implementation to meet the overall policy and the business characteristic of each power plant. • Risk Management Section was also set up under Internal Audit Division to be fully responsible and coordinating for risk management. • Risk management process is embedded into the working process. Management and employees are encouraged to take part in the process and to efficiently use the resources to identify, appraise and manage risks. • Risk management is implanted into the corporate culture. EGCO has adopted the risk management policy and risk management manuals as guidelines since 2001. Risk Management implementation is also included as one of the elements for internal control assessment. The result of such assessment in 2010 indicated that EGCO Group appropriately implemented risk management system.

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 of such engagement by the Board must be sought; • Directors will 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 will 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 • The step for implementing connected transaction along with the approval authority and the disclosure of such transaction shall be as required by the SET and SEC. 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 and disclose the information in the annual report and annual registration form (Form 56-1). Directors and management are required to prepare the report on the interest of their own and related parties to the Company to enable the Corporate Secretary to ensure transparent practices. The Corporate Secretary will submit a copy of such report to the Chairman and the Chairman of the Audit Committee. 098

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.

Fraud Risk Management With a view that fraud risk was significant, the Board set measures to manage fraud risk as follows. • Preventive Measures: The organization is well designed for the purpose of governing and managing business. The Code of Conduct is prepared in writing and the compliance with the Code is promoted. The internal control system is established and appraised. The whistleblower program is in place. • Investigation: Each supervisor assumes responsibility to prevent and control fraud risks and errors in the system. In addition, there is an internal audit unit which is independent from senior management to review the compliance with the regulations and test the early warning signals. • Fairness: The fraud investigation will be made by a panel to ensure fairness to the defenders. In addition, whistleblowers will be appropriately protected. • Lesson Learn: Case study on fraud risks both in Thailand and overseas will be used to train supervisors on fraud prevention. In 2010, there is no claim or any fraud found in EGCO Group due to the above efficient preventive measures.

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 will 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 shall serve written notice calling for the Board meeting at least one week in advance except for necessary or urgent case to preserve the rights or benefits of the Company where the meeting may be called by other methods and an earlier meeting date may be chosen. Meeting document are sent to the directors in advance to allow adequate time for digesting such information. 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 8 meetings in 2010. Each meeting took approximately 2 hours and a half. The average attendance rate is 94.16%. 099

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 2010 are illustrated in Table 1. The Board set up a policy for non executive directors to call a meeting at least once a year. There are two meetings in 2010. The agenda items cover board of directors’ meetings, risk management, structure, roles and responsibilities of directors and management, good corporate governance, President’s performance appraisal and human resource management.

5.5 Board Self Assessment The Board regularly conducts self assessment for future improvement. In 2010, the Board agreed to use the 2009 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 grading code is “excellent” for the score of 85 and above, “very good” for the score of 75 and above, good for the score of 65 and above, “fair” for the score of 50 and above and “poor” for the score below 50. 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 88% which was in the excellent level. The highlights were as follows: 100

• 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 is sufficiently independent of the Management. The Board has leadership and effectively managed the conduct of Board business as a team. • New directors are provided with adequate information about the Company and the Board. Director receives proper training in corporate governance. • 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 Chairman carries out the role satisfactory 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. • The Board has a working knowledge of competitors in the sector and plays a role in public service. Despite an excellent score, the Board viewed that plan should be made to ensure that the director development, succession planning, and director and management remuneration is 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 90% which could be concluded that the directors had appropriate deliberations and contributions in accordance with the recommended best practices.

Audit Committee Self Appraisal Apart from the Board, the Audit Committee also appraises themselves annually. The result of the self appraisal in 2010 indicates that the composition, qualifications and roles and responsibilities of the Audit Committee are still in line with the Audit Committee’s Charter B.E. 2551 and the international best practices.

5.6 Performance Appraisal of President and Top Executives All the non-executive directors will appraise the President performance against the corporate and individual achievement. Indicators include the following: • Qualitative indicators being leadership, relationship with the Board, risk management and internal control, human resources management, good corporate governance and Code of Conduct. • Corporate achievements based on the committed Key Performance Indicators. • Capabilities to enhance business development. The Nomination and Remuneration Committee is responsible for endorsing the performance appraisal of the senior executive vice presidents and executive vice presidents based on the individual achievement of each executive. 101

5.7 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 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 set the remuneration of the President taking into account the performance appraisal and the peer payment. The Board also approves the pay structure of the Company. 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.

5.8 Board and Management Training The Board pays attention to continuous development of directors and management. In 2010, The following development plan was implemented to ensure efficiency and effectiveness.

Director Development Continued development is encouraged for all directors: New Directors: Directors’ orientation is arranged where directors will have a chance to meet with Management. Directors’ manual is updated to equip incoming directors with knowledge about EGCO. Directors are also encouraged to attend training programs at the Institute of Thai Directors (“IOD”). Existing Directors: The Board encourages continued development covering in-house trainings and outside trainings at the IOD or other relating academic institutes. In 2010, EGCO’s in-house training programs for directors were risk management and fraud risk management, and new accounting principles and the Company’s governance. The seminar on an overview of industry, business characteristics of the Group companies, current and future plans were also provided to the Board. EGCO also arranged a Board visit to Rayong Power Plant, Khanom Power Plant, BLCP Power Plant, Nam Theun 2 Power Plant in Laos PDR and site visits to overseas power plants to educate our directors on power business and future trend. Company directors are well educated about the Company’s business and their responsibilities as a director. The list of directors who attended the courses at IOD and outside institutes as of February 2011 is shown in Table 2.

Management Development and Succession Plan EGCO supports the executive development program to enhance Management capacities and skills to be suitable to perform their duties and to assign the suitable and challenging job. 102

Nam Thuen 2 is

the largest hydropower plant in Southeast Asia with the installed capacity of 1,086.8 megawatts.

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 selection process is fair and transparent. 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. The approval of the candidates shall be as 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 upwards. • The President shall appoint the division and section managers. • The appointment of Corporate Secretary shall be by the Board while the appointment of Division Manager of Internal Audit shall be endorsed by the Audit Committee. The Nomination and Remuneration Committee has assigned the Management to prepare the succession plan for 17 key positions along with the executive development plan to ensure that qualified employees would be selected under the D-R-I-V-E people attributes as follows: Dynamic Relationship Initiatives Vision Focus Excellence

Full of energy and committed to take action proactively while striving for creating opportunities continuously to move EGCO Group forward. Committed to work cooperatively with diverse team across EGCO Group and other stakeholders and sustain integrity and clean environment with caring and harmonizing to achieve synergized superior goal. Committed to challenge existing ways of doing things and thing outside the box in light of better business results Committed to strive for accomplishment of EGCO Group vision through decision making, planning and communication in accordance with business strategies, objectives and goals. Committed to dedicate ourselves to keep abreast of best practices in professionalism and apply our in-depth of expertise based on calculated cost - benefits optimization to provide reliable deliverables with fully met customers and stakeholders’ delight.

The Management development plan is prepared to focus on development of core, managerial/leadership competencies and functional competencies. Key courses and numbers of trainees for each course are as shown below: Courses

Executive Leadership Program (ELP-NIDA Wharton) Director Certification Program Senior Management Training by Capital Market Academy Management of Public Economic for Executives at King Prajadhipok’s Institute

No. of participants

2 3 2 1 103

Table 1: Meeting Attendance Meeting (time) Nomination and Remuneration Committee 11 times/year

Corporate Governance and Social Responsibility Committee 1 time/year

10/11

1/1

7/6

5/6

1/1

8/8

11/11

1/1

5/5

1/1

Board Meeting 8 times/year No.

Name

Mr. Pornchai Rujiprapa Chairman Mr. Aswin Kongsiri Vice Chairman Independent Director Mr. Chaipat Sahasakul Independent Director Mr. Thanapich Mulapruek Independent Director Mr. Somphot Kanchanaporn Independent Director Police Lieutenant General Pijarn Jittirat Mr. Phaiboon Siripanoosatien Independent Director Mr. Somboon Arayaskul Director Mr. Wisudhi Srisuphan Director Mr. Apichart Dilogsopon1 Director Mr. Sahust Pratuknukul2 Independent Director Mr. Peter Albert Littlewood Director Mr. Hideaki Tomiko Director Mr. Shinji Tsuchiya Director Mr. Mark Jobling Director Mr. Vinit Tangnoi Director and President

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 1

Audit Committee 15 times/year

8/8

Meeting (time) Investment Committee 12 times/year

12/12

7/8 8/8

13/13

8/8

13/13

8/8

13/13

7/8

12/12

6/8 8/8 5/5

5/6

8/8 8/8

11/12

7/8 7/8

9/12

8/8

12/12

11/11

Retired by rotation in Shareholdersâ&#x20AC;&#x2122; Annual General Meeting no. 1/2010 on April 24 Being appointed director in Shareholdersâ&#x20AC;&#x2122; Annual General Meeting no. 1/2009 on April 24 Note: 3 members in Audit Committee comprising no. 3, 4, 5 5 members in Investment Committee comprising no. 1, 8, 13, 15, 16 6 members in Nomination and Remuneration Committee comprising no. 2, 6, 7, 8, 11, 15 5 members in Corporate Governance and Social Responsibility Committee comprising no. 2, 6, 7, 8, 16 2

104

1/1

105

1. Mr. Pornchai Rujiprapa Chairman 2. Mr. Aswin Kongsiri Vice Chairman, Independent Director 3. Mr. Chaipat Sahasakul Independent Director 4. Mr. Thanapich Mulapruek Independent Director 5. Mr. Somphot Kanchanaporn Independent Director 6. Mr. Somphot Kanchanaporn Independent Director 7. Police Lieutenant General Pijarn Jittirat Independent Director 8. Mr. Somboon Arayaskul Director 9. Mr. Wisudhi Srisuphan Director 10. Mr. Sahust Pratuknukul Director 11. Mr. Peter Albert Littlewood Director 12. Mr. Hideaki Tomiku Director 13. Mr. Shinji Tsuchiya Director 14. Mr. Mark Jobling Director 15. Mr. Vinit Tangnoi Director

Directors

•

Chairman 2000

Director

•

The Role of the Compensation Committee Program

IFRS

•

• •

•

The Board’s Role on Fraud Presentation

•

Monitoring the Internal Audit Function

•

Risk It all

•

Monitoring the Quality of Financial Reporting

•

Management

Monitoring Fraud Risk

•

Audit Committee and Continuing Development program

•

Program (DAP)

Accreditation

•

Accounting for nonaccounting Audit Committee

•

The Role of Chairman Program

Courses

•

Directors’ Certification Program

Table 2: List of directors who attended the courses at IOD and outside institutes

Accountability for Stakeholders

106

Employees EGCO Group firmly believes that “employees” are a key factor empowering the EGCO Group to achieve economic, social and environmental sustainability. The Group has thus committed itself to building employee engagement through various operational efforts that align with the corporate policies and best address the needs of employees. The efforts encompass three major areas: 1. Fundamentals Management consists of the following two components:

1.1 Compensation & Benefits EGCO Group has established competitive remuneration packages commensurate with the duties, responsibilities, and capabilities of each individual employee as well as providing welfare and benefits for employees and their families that meet their needs and wants based on appropriate rationales and principles. The annual adjustments in employee pay at all levels take into account the following two factors: • Corporate operating results, average annual salary adjustments of companies in the same industry, the year’s prevailing economic conditions, and the Management’s consideration • Performance and perseverance of each individual employee This ensures employees receive fair salary increase, enabling the Group to retain good and capable employees. Further more, EGCO Group constantly studies, analyzes, and compares its remuneration and benefit packages by reference to those of comparable companies in the same industry to ensure the remuneration and benefit packages for employees are appropriate and competitive with other companies. On top of this, the Wellness Committee was established comprising elected employees keen to monitor, keep track of, and give ideas and suggestions to assure efficient benefit management of the Group to satisfy the needs and expectations of employees in all levels. This, in turn, will help promote good labor relations between the employees and the Group.

1.2 Training & Development EGCO Group realizes that ongoing development of skills, competencies, and potential are fundamental to enhancing employees’ work efficiency and effectiveness and contributing to their future career advancement. The Group has provided the financial resources and opportunities in support of employee development encompassing core competencies, managerial competencies, and functional competencies through a broad spectrum of development programs and courses. Chief among them are job rotation, self-learning, training by experts or specialists, observation visits, idea sharing and learning among employees. In 2010, EGCO’s Human Resources Division embraced a 5-year Training Road Map (2010-2014) and the Individual Development Plan to train and develop its workforce, encapsulating the three competency bases. The objective was to develop the capabilities and work of each individual employee to align with the corporate operational plan and direction, empowering them to cope with the external evolving challenges.

1.3 Respects for Human Rights EGCO Group’s Code of Conduct set the guidelines that we will treat every employee with due respect. At the same time, 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.

107

In addition, EGCO endeavors to ensure that it and its business partners have strictly complied with Labor Act in all hiring and engagement activities which include child labor, labor enforcement, and safety and health in the workplace. EGCO is proud to announce that there has never been any report or complaint against EGCO Group relating to Human Rights. Similarly, there is no event of injury that employees cannot report at the next shift.

1.4 Labor Protection EGCO aims at promoting and strengthening labor relations between the companies and the labor unions as well as labor organizations by providing clear internal guidelines. At present, there are two labor unions; executive labor union and operational labor union. The two unions set the targets to work in concert with the company in promoting labor relations and community relations. 2. Relationship Management

Fully aware of the significance of individual differences and working as a team, EGCO Group is dedicated to building corporate value and culture that promote respect for, and recognition of, the unique differences that each individual employee brings to the workplace to ensure excellent coordination and collaboration. It is believed that good relationships will make employees happy at work. With a happy work life and enhanced capabilities to cope with job assignments as a result of ongoing training and development come better work efficiency which, in turn, enables the Group to accomplish its goals. In 2010, EGCO Group organized numerous activities designed to foster a closer relationship among employees as follows: • Communication Day: The activity opens up opportunities for the executives to meet with employees informally every quarter, keeping employees abreast of news, information and trends both internally and externally. At the same time, employees can make suggestions, exchange views, and make inquiries regarding various matters with the executives. • Employee Visit: This is an activity in which the President will visit employees at different subsidiaries to expound the corporate operations direction, chat, answer questions and enjoy a meal with them. For 2010, two Employee Visits were held with the directors and executives meeting with employees at Rayong Power Plant and Khanom Electricity Generating Company Limited. • EGCO Group Knowledge Sharing: The activity allows executives or employees to share their knowledge, capabilities, experience, and expertise with employees in the EGCO Group and also provides a venue where employees at all levels can share knowledge and learn together. Two Knowledge Sharing sessions were held in 2010. • EGCO Group Sports Day: The activity is designed to promote good relationships among employees through sports. It is held annually with each company in the Group taking turns to host the event to allow employees to learn and experience the operations of other subsidiaries and power plants in the EGCO Group. In 2010, it was EGCO that hosted the Sports Day in Bangkok. • Smile@Library: The event was held every Friday between 15.00-15.30 hours, Smile@Library is where executive and operating employees meet and chat to unwind from a week-long’s work and get to meet and exchange ideas with employees from different divisions in a relaxing atmosphere. • Family Trip: The activity is designed to foster good relationships among employees as well as their families since 108

Lopburi Solar Project has the combined installed capacity of 73 megawatts,

the largest of its kind in the world.

everyone belongs to this big family. A good rapport and strong ties will create a congenial work environment in which every employee works collaboratively like members of the same family. In addition, each company in the Group organizes their own activities dedicated to promoting good relationships, for example, New Year’s parties, farewell parties for retirees, and cultural and religious activities. They also provide constant support for activities of various employee clubs such as Photo Club, Buddhism Club, Golf Club, and Bird Watching Club. At the same time, EGCO communicates its information, news, and activities through a wide range of media including bulletin board, intercom, e-newsletter, e-mail, and mobile phone to exchange information between the Group and employees and to encourage the participatory engagement of employees in the activities organized by the Group. 3. Participatory Involvement and Social Contribution

With a firm belief in the “potential” and “value” of employees, EGCO Group supports and encourages its employees to combine their knowledge, expertise, and social-mindedness with the “wisdom” of the people in the community and society, enabling them to share and to learn about each other’s work experience and lifestyles alongside contributing to society and the environment. To that effect, EGCO encourages employees to be “volunteers” in the Group’s more than 20 social projects encompassing Conservation of Watershed Forest, Promotion of Learning and Fostering a Public Mindedness among Youths, and Promotion and Development of the Community’s Quality of Life. In 2010, aside from some 20 ongoing social projects, employees from EGCO, Rayong Power Plant, Khanom Power Plant, and ESCO use their skills, knowledge, and expertise in electricity generating to help develop and manage the “A Watershed Forest: A Source of Energy for Life” project. Jointly organized by EGCO Group and the Department of Alternative Energy Development and Efficiency (DEDE), Ministry of Energy, the project is dedicated to developing small community hydro power plants at Ban San Din Daeng, Amphoe Jomthong and Ban Pong Sayan Village, Amphoe Mae Jam, Chiang Mai.

Shareholders and Investors EGCO pledges its commitment to shareholders in the Code of Conduct stating that EGCO will strive to achieve growth, building on its potential and core competencies to ensure shareholders receive sustainable benefits from the Group’s efficient 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 stipulated by the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET). Share Price

In 2010, EGCO’s average share price was 86.52 baht per share, up by 18.33% from 2009 with the highest trading price of 106.5 baht on December 16, 2010 and the lowest trading price of 77 baht on February 9, 2010. The average price/earning (P/E) ratio was approximately 8.02. 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. 109

Graph Showing EGCO Dividend Payout Ratio

2.75

2.50

1.75

1.50

2.25

1.50

Interim Dividend

2.00

1.50

1.25

Annual

1.25

2.00

1.00

1.27

2.00

2.50

Bath/Share 6 5.25 5.00 5.5 4.75 5 4.00 4.5 4 3.25 3.00 3.5 2.75 2.50 2.50 3 2.00 2.00 2.25 2.00 2.5 2 1.00 1.27 1.5 1 0.5 0 - 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Year 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.

EGCO aims to pay dividend twice a year. In 2010, the 2009 final dividend of 2.75 baht per share was paid on May 6, 2010 while the 2009 interim dividend at 2.50 baht per share was paid on September 17, 2010.

Shareholder and Investor Relations EGCO has established Investor Relations Division as responsible for keeping the investment community informed of all major developments in a timely and accurate manner and welcomes 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:

1. Shareholder Meeting EGCO considers the shareholder meeting a significant event. Directors and Management will attend the meeting to discuss and clarify shareholdersâ&#x20AC;&#x2122; questions. EGCO also hosts the mini-exhibition and shareholder corner at the meeting venue to provide knowledge about EGCO Group business and to answer shareholdersâ&#x20AC;&#x2122; questions.

2. Annual Report and Annual Registration Form EGCO prepares the annual report and annual registration form to present signification information to shareholders and investors. They are also posted on EGCO website. Since 2004, EGCO has prepared the annual report in a CD-ROM format which adds to 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 free of charge.

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3. Website To facilitate and ensure equal access to information, 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.

4. Contact with the Board and Corporate Secretary Shareholders can contact the Board, Standing Committee or individual director at the following address: Board of Directors

Audit Committee

Electronic Mail

directors@egco.com

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 related directors or the standing committees and summarizing all directors’ communications received during the most recent quarter to the Board. Communications to the Audit Committee will be delivered directly to the Audit Committee without any screening.

5. Analyst Meeting Program EGCO organizes a presentation for analysts and investors to report the Group’s operating results on a quarterly basis. EGCO’s President, Senior Executive Vice President, and top executives are in attendance at every presentation to provide information and answer inquiries. In 2010, the analyst meeting program for the first quarter was cancelled due to the political turmoil in Thailand during April-May 2010. A special presentation was held in the second quarter to provide information about Nam Theun Power Plant to investors and analysts as part of analyst meeting program.

6. Plant Visit To enable our investment community to have a better understanding of the EGCO business and to meet our Management, EGCO brings the investment community to visit our power plant every year. Applications for the shareholder trip can be made at the Annual General Shareholder Meeting or at the EGCO website within 2 weeks after the Annual Shareholder Meeting. For 2010, EGCO arranged for the shareholders’ visit to the Rayong Power Plant in Rayong as well as arranging the Company Visit in cooperation with the Thai Investors Association, bringing investors to visit Rayong Power Plant in Rayong province. 111

7. Roadshows In 2010, EGCO set a program to meet with retail and institutional investors, both in Thailand and overseas. The Group also participated in many events organized by different institutions such as SET in the City 2010 organized by SET and a road show jointly held by TISCO Plc. and CLSA Plc. to meet with institutional investors in Bangkok. Moreover, EGCO carried out overseas road shows to meet institutional investors in Hong Kong and Singapore.

8. Newsletter To communicate with shareholders, EGCO prepares a quarterly newsletter to provide information, operating results, the activities undertaken by the company, and the activity plan.

9. Information Distribution through the Media EGCO puts priority on reporting information and the company’s business progress. The Group cooperates with the media in disclosing useful information to all stakeholders on an accurate, equitable, and timely basis that responds to the needs of the stakeholders. On top of this, EGCO arranges various activities designed to foster good relationships and participatory engagement through a diverse range of communications channels and activities. In 2010, EGCO hosted three press conferences to report the Company’s operating results, three media trips to observe the plants and corporate activities, 14 exclusive interviews and exchange of views with EGCO Management, and 24 pieces of press releases and articles. In addition, constant support was given to numerous social projects and activities initiated and carried out by the media throughout the year.

Promoting Participatory Involvement of Shareholders and Investors 1. Quality of Disclosure EGCO prepares evaluation forms to assess the quality of disclosure after every meeting with shareholders, investors, and analysts to find room for improvement in the quality of disclosure and investor relations.

2. Feedback Form Feedback forms sent out with the 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 feedback forms were well received by shareholders. EGCO thanks all the shareholders who provided feedback via the feedback forms and other various channels for us to improve our corporate performance and add value to the EGCO and the shareholders.

Customers Since creating customer’s satisfaction and trust is our way of enhancing the quality of life for Thai people, EGCO is proud of our role, duties, and responsibilities as ‘’a power producer’’ to generate power supply to the Electricity Generation Authority of Thailand (EGAT) and industrial customers in the industrial estates. We also provide integrated power services which include operation and maintenance, engineering, construction and training to power plant operators and industrial plants both inside and outside Thailand. In addition, we supply tap water to the Provincial Waterworks Authority (“PWA”). In discharging our duties, we adhere to our brand value of reliable, dynamic and helpful to ensure quality service at a fair price and with good relationship. 112

In 2010, EGCO was able to generate and distribute electricity that meets the service standard, quantity and conditions in the contract with EGAT and industrial users. We are full of pride to announce that our availability factor exceeded both the annual target and the value specified in the power purchase agreement. To top up the pride, Rayong power plant won the availability factor bonus for 14 years consecutively. In addition, we are well prepared to help serve the system in emergency situation. In case of a blackout, Rayong power plant can run its back start diesel and power up EGAT’s supply system in the eastern region. With such strength, Rayong power plant is included in the Blackout Restoration Plan of EGAT, the Metropolitan Electricity Authority and the Provincial Electricity Authority.

Availability Factor in 2009 (in percentage) Power Plant

Rayong Power Plant Kanom Power Plant Roi Et Green Power Plant EGCO COGEN Power Plant

Annual Targets

Actual Achievement

94.12 84.18 89.24 96.08

95.61 84.87 89.43 98.71

With regard to energy service, ESCO has managed to maintain a very good customer satisfaction at a high score of 89.31%. For water business, EGCO Group puts a prime focus on both quality and quantity in supplying tap water to the PWA’s Ratchaburi and Samut Songkram branches. In 2010, EGCO was able to find sufficient water to meet the customers’ demand of 36,000 cubic feet per day on average which was higher than the contract’s minimum take of 34,000 cubic feet per day. Also, the quality of tap water exceeds the Thai Industry Standard as certified to be a drinkable tap water by the Department of Health, the Ministry of Public Health from 2002-2010. In case of annual pipeline repair, EGCO will work in concert with the PWA to notify the public in advance and to prepare reserved water for units that need water around the clock such as hospitals and frozen industries.

Suppliers and Contractors With a view that the business partner is a part of sustainable business, EGCO will always treat our partner on a fair and equitable basis based on mutual benefits. In addition, EGCO has provided opportunities for the exchange of knowledge, experience, and expertise between EGCO and business partners and to support them in building trust and good relationship. EGCO respects fair play and will work by the rules and will not use dishonest means to take benefits over competitors. EGCO will share its comment on the rules and working practices for mutual benefits without unethically seeking for confidential or trade secret of competitors. We will not damage the reputation of the competitor by way of false allegation.

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Environment As the power business relies primarily on natural resources, EGCO Group stresses the importance of utilizing natural resources to the fullest. At the same time, top priority is given to the systematic development of environmental management encompassing the reduction of operating impacts and development of monitoring measures. To accomplish the goals, EGCO promotes the participatory engagement of every employee in contributing to improving the environment for a better quality of life for employees, suppliers and contractors, and neighboring communities along with environmental sustainability. EGCO has incorporated environmental management together with safety and occupational health strategies in the corporate business and budget plans. Further, the Safety, Health, and Environment (SHE) Committee was set up comprising representatives from power plants in EGCO Group to oversee the performance. Presided over by Senior Vice President for Asset Management & Planning, the Committee oversees to ensure the efficiency and effectiveness of the safety, occupational health, and environmental performance of EGCOâ&#x20AC;&#x2122;s existing and future power plants, making sure their operations align in the same direction. To that effect, the Committee is responsible for establishing guidelines, criteria, and plans regarding safety, occupational health, and the environment of the EGCO Group in line with the corporate policies, goals, and strategic plans. Their responsibilities also extend to systematic monitoring, assessment as well as continuous improvement and development of the companyâ&#x20AC;&#x2122;s affairs. EGCO Safety, Health and Environment Committee has established requirements for safety, occupational health, and the environment to provide guidelines for companies in the Group and to extend the scope to Egcom Tara Co.,Ltd, a subsidiary which produces tap water in accordance with the Thai Industrial Standards and supplies it to the water stations of the Provincial Waterworks Authority of Thailand. The key principle focuses on working cooperatively to enable transfer of experience, know-how, and skills to ensure the operations of all companies in the Group conform to the same standards. The Committee also constantly monitors and assesses the performance, based on EGCO standard assessment criteria jointly developed and modeled after the criteria used at Khanom and Rayong Power Plants. 114

In parallel to developing knowledge management tools, the EGCO SHE Management System Database was established to provide information and a body of knowledge about safety, occupational health, and the environment of EGCO Group. The objectives are also extended to promoting the involvement of companies in the Group in accessing information and giving suggestions equitably, allowing for continuous improvement by the Committee and EGCO Group. Over the years, EGCO has strived to develop its safety, occupational health, and environmental management to conform to the international standards and best practices as well as applicable laws and standards to improve the safety, occupational health, and environmental requirements to be upheld by ECGO Group. Aside from minimizing the operating impact of its power plants on the environment by fully complying with the environmental standards prescribed by the government and constantly monitoring the quality of air, water, and noise, EGCO has carried out projects to preserve energy and natural resources. Chief among its efforts include the reuse of treated waste water and some types of material waste and development of environmental management that best responds to current environmental circumstances, especially global warming which has now become a grave environmental issue. In 2010, EGCO Group in cooperation with Thailand Environment Institute organized the “Carbon Footprint Calculator in Electricity Generation of EGCO Group” pilot project to develop the means to calculate greenhouse gas emission of EGCO Group and to develop employees into a core work group capable of collecting and analyzing data about greenhouse gas emission from electricity generation. The participating staff from Rayong and Khanom Power Plants jointly developed the “EGCO Greenhouse Gas Emission Calculator Handbook” to transfer the body of knowledge, skills, and experience to other power plants in the Group. Moreover, EGCO plans to join forces with Thailand Environment Institute to carry out a feasibility study and develop a project to help mitigate global warming in the future.

Community and Society EGCO conducts business with unwavering commitment to contributing to a better community and society. In addition to developing eco-friendly manufacturing processes and joining hands with the communities to conserve the environment and people’s way of life, EGCO is committed to disseminating information, news, and corporate activities together with providing knowledge about energy and the environment through various media and activities on a regular basis. For activities beneficial to community and society, EGCO focuses on the following three areas: 1. Promotion and Development of ‘Community Quality of Life’

EGCO Group places a strong emphasis on surrounding communities at the head office and the power plants, working collaboratively with the communities to maintain a good environment and develop a broad array of projects in the areas of education, livelihood, and hygiene for a better quality of life for the communities. 2. Conservation of “Watershed Forest: Source of Life”

EGCO Group stresses the importance of conserving forest and water resources, especially watershed forests which serve as natural sources of water production and storage. It is also the source of rivers and streams which nourish and sustain all lives.

115

3. Promotion of Learning and Fostering Public Mindedness among “Youth” for Sustainable Social Development

EGCO believes that learning and experience outside classrooms are keys to the development of children and youths who will be a major driving force of the nation’s future development. The Group joins forces with children, youths, teachers, and experts in child development and the environment to produce learning kits and develop various activities for children and youths from pre-elementary to elementary, high school and tertiary levels. At present, a group of young people have formed a network called ‘EGCO Green Blood Youth Network’ to take care of the country and our world. (For more information, visit www.egcogreenblood.egco.com) Innovation on Development of Watershed Power Plants in Accordance with Conservation and Sufficiency Approaches

In 2010, apart from continuing more than 20 projects and activities carried out by the company, EGCO Group and the Department of Alternative Energy Development and Efficiency, Ministry of Energy, jointly organized the “A Watershed Forest, A Source of Energy for Life” project as part of the “Reducing Global Warming in Tribute to the King” project in honor of H.M. the King. The goal was to build small community hydro power plants at six watershed forests spanning three years from February 2010 to January, 2013 in response to H.M. the King’s and H.M. the Queen’s remarks on “Watershed Forest Conservation”. The objectives also extended to supporting government policy on “Renewable energy development” and aligning with EGCO’s mission to be “Creator of Energy for Life”. In the previous year, two power plants at Ban San Dindaeng, Amphoe Jomthong and Ban Pong Sayan, Amphoe Maejam, Chiang Mai province were completed. They were based on the development concepts and formats of conservation and sufficiency approaches as shown in the diagram.

116

1. Dam: The dam was constructed, using natural materials to conserve the ecosystem and the environment. 2. Pipeline: The 200-meter-long pipeline was made of High Density Polyethylene (HDPE) resins which featured high resistance to water pressure and could be curved to the contour of a waterfall without cutting down any trees. 3. Powerhouse: The powerhouse was built on a location away from the falling over of a big tree. It was designed and constructed using materials that blend with the natural surroundings. 4. Outflow: It was designed to allow water passing through the turbine to flow back to the stream for use in the community’s agriculture. 5. Powerline: The 1.4-kilometer-long power line used large trees as natural power posts which were linked with expandable cables to accommodate the growing trees. 6. Electrical device: No more than 8 energy-saving lamps were installed per household. As part of the “A Watershed Forest, A Source of Energy for Life” project, many learning activities were organized to promote the participatory involvement of university students and educational institutes including: • Lighting System Development Volunteer Camp at Ban San Dindaeng by volunteers from Chiang Mai University • Watershed Power Plant Landscape Development Volunteer Camp at Ban San Dindaeng by volunteers from Maejo University, Chiang Mai • Watershed Energy Development and Cultural Center Construction Volunteer Camp at Ban Pong Sayan by the Volunteer Club, Maejo University • Experience sharing through two short documentaries by volunteer students To maintain a symbiotic and sustainable coexistence among “forest, watershed, community, and energy”, Ban San Dindaeng Power Management Committee was established. The structure of the Committee which comprises 22 representatives chosen by the villagers is as follows:

Chairman

(1 person) Deputy Chairman

Advisory Board

• Deputy VillageHeadman • Teachers • Officers of Thai Forest Conservation Foundation

(2 persons) Treasury

Secretary

Skilled Craftsman

(1 person)

(7 person)

Committee Members

(10 person)

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Operating Performance

Social Dimension Ban San Dindaeng and Society as a Whole EGCO has contributed to a better quality of life for the community in three areas including: Education • Providing non-formal education for the community in the evening • Providing greater access to information and learning opportunities via computers, video CDs, and satellite broadcasting

Career Development • Promoting weaving as supplementary occupation to farming in the evening • Providing more occupation opportunities such as barbers, motorcycle mechanics • Opening up career opportunities in food processing - coffee bean roasting

Public Health • Providing a refrigerator at the school for keeping medicine and vaccines that need to be kept cool for use by people in the community, eliminating the need to travel to the town or other villages to obtain the medicine

Within EGCO Group Enhancing skills, knowledge, capabilities, and work experience for EGCO employees in generating electricity from renewable energy, development of watershed power plant in accordance with the conservation and sufficiency approaches, and working with the community. In addition to developing the capabilities of each individual employee in line with the company’s core business of electricity generating, participating in the One Watershed Forest, One Energy Source project helped raise social awareness of EGCO Group employees, empowering them to be quality human resources who are assets to the business and society and key to driving the company toward sustainable success in the long term. 118

Environment Dimension â&#x20AC;˘ Reducing carbon dioxide emissions in Thailand by 225 tons/year â&#x20AC;˘ Conserving more than 23,000 rai** of watershed forest areas per year as a result of Ban San Dindaeng locals realizing the value and benefits of watershed forest both directly for everyday consumption and indirectly as the source of electricity **Remarks: Ban San Dindaeng Watershed Power Plant traces its origin to Ban Mae Pon watershed forest spanning Ban San, Ban Klang, and Ban Huai Wok. At present, the three communities have divided the Ban Mae Pon watershed forest areas into three different utilization zones as follows:

1. Forest zone for livelihood and habitat 2. Protected forest zone 3. Protected forest zone for utilization Total Equivalent to

2,668.96 6,275.70 14,458.84 23,403.50 37.45

rai rai rai rai square kilometers

Economy Dimension Achieving electricity savings of 600,000 baht per year from the construction of a small community power plant with 20 kilowatts of capacity. The development and operating budget amounted to 4 million baht. For further information: http//www.watershedforest.egco.com

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Internal Control

The Board of Directors has entrusted the Audit Committee the responsibility to review the appropriateness and effectiveness of the internal control system provided by the management. This is to ensure that EGCO’s internal control system is adequate, appropriate and 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). EGCO’s internal control covers management control, operational control, financial control, and compliance control. The Board set out the duties and responsibilities of the Internal Audit division in the Internal Audit Charter which was reviewed by the Audit Committee and approved by the Board. The Internal Audit division independently discharges its duties and functionally reports to the Audit Committee. Meanwhile, the administrative tasks of the Internal Audit division are reported to the President. The internal audit scopes of EGCO and its subsidiaries are financial audit, operational audit, compliance audit, information system audit, and management audit. EGCO control framework and operation are described as follows: Control Environment

• The Board carefully set up the clear and measurable business objectives and clear policies to be a guideline for the management and employees. The operation is periodically reviewed to ensure conformity with the business objectives while the fair treatment to stakeholders is also considered for long-term benefit of EGCO. • To support business growth, the organization structure has been adjusted to comply with EGCO’s and subsidiaries’ objectives and business characteristics. • Code of Conduct is written. All employees are advised to understand their responsibilities to uphold the Code of Conduct which includes the measure to avoid the conflict of interest. Failure to observe the Code of Conduct may result in a range of disciplinary actions. • Regulations, instructions and Table of Authority for accounting, finance, budget, procurement, and human resource functions are established and clearly announced to all employees for acknowledgment and practices. • Individual Development Plan (IDP) has been prepared for all levels of employees. Besides, the assessment of employees’ knowledge and competence has been carried out to ensure that the employees are capable of performing their duties efficiently. 120

Risk Management

EGCO recognizes the importance of risk management. The Board of Directors has focused on the likelihood of the irregularities, risk mitigation and early warning systems. The Board entrusts the Audit Committee to review with the management the risk management policy and the compliance with such policy. The Risk Management Committee (RMC) has been set up at the Management level which comprises of EGCO’s top executives. EGCO’s President serves as the chairman of the committee. RMC reviews risk management evaluation and mitigation of EGCO and subsidiaries and regularly reports to the Audit Committee and the Board. The details of Risk Management of EGCO and subsidiaries are disclosed under “Risk Factors”. Control Activities

To ensure efficient control of management, operation, accounting, finance, and governance, the following activities are implemented. • Transactions and amount for approval authority of management are set forth in the Table of Authority. • Approval authority, operation or accounting record, and safeguard of asset functions are segregated. • The Asset Management division is responsible for regularly monitor the operation results of EGCO’s subsidiaries and joint ventures. • Approval process of connected transactions is clearly set out. The connected transactions are to be approved by directors or management who has no conflicts of interest taken into account the best benefit to EGCO. • The Corporate Secretary is entrusted to ensure that EGCO and the Board’s practices together with EGCO’s information disclosure are in compliance with the Securities and Exchange Acts, the notification and regulation of the SET, Securities and Exchange Commission (SEC), and other related laws and regulations. The Legal division also provides consultation based on case by case basis. • The Internal Audit Division is responsible for regularly reviewing adequacy and appropriateness of internal control system. Internal Audit Plan is set to cover all major functions. • To ensure the compliance with Computer Related Crime Act, the Computer Related Crime Act has been clearly communicated to all employees for acknowledgment and compliance. All employees are required to sign IT Compliance Statement to confirm the non-violation of the law. Information and Communication

EGCO has established information system and communication channels as follows: • For internal communication, all employees will receive information about the company’s policies, regulations, instructions and good corporate governance via intranet and different level of meetings. Employees are encouraged to provide feedback on the improvement of operations efficiency in the meetings. • For external communication, EGCO’s information has been disclosed via the SET’s Community Portal system and EGCO’s web site at www.egco.com as well as the quarterly analyst meeting, EGCO newsletter, and press conference. • The meetings among the Audit Committee, external auditors and concerned Management are held to review the compliance of financial accounting with the General Accepted Accounting Principles and International Accounting Standards. • Information are recorded and maintained completely, correctly, timely and adequately to support the decision making. Information such as power plant operation data along with information on accounting, budgeting and finance are recorded and maintained. 121

• Accounting records and supporting documents which will be used to support the financial statements preparation are completely kept in orderly manner. There is no deficiency in those documents informed by the auditor. • The compliance database is developed for reference and tracking. The Legal division is responsible for updating the compliance database and providing recommendation to employees. • The Board of Directors receives invitation letters, meeting agendas and supporting documents far enough in advance of the meeting. Discussion, remarks and recommendations of the Board and standing committees including resolutions are recorded in the minutes of meetings for future reference or audit trail. • Communication channel is provided for employees to report suspected violations of EGCO’s Code of Conduct to the Management or to the Board of Directors (whistleblower). The message providers are well protected by the company. Monitoring

To ensure that the established internal control system is sufficient and appropriate, the following activities are implemented. • The responsible unit is assigned to follow up, monitor and set appraisal criteria to benchmark EGCO’s and its subsidiaries’ performance against the plan. Gap analysis is carried out and scheduled reports are submitted to the Management and the Board. • The Internal Audit division is entrusted to review the internal control system to ensure that the company’s practices are in compliance with the established internal control system, the Securities and Exchange Acts and other related laws and regulations. The Internal Audit division prepares audit result reports including recommendations to improve the internal control efficiency together with the Management’s actions responding to such recommendations. The audit reports are submitted to the Audit Committee. • External auditors are independent and regularly report to the Audit Committee. • EGCO and its subsidiaries’ internal controls have been evaluated annually. The evaluation form has been designed following SEC’s and SET’s internal control guidelines as well as 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 2010 evaluation results can be concluded that the internal control of EGCO and its subsidiaries are sufficient and appropriate. • To ensure the compliance with rules, regulations and Code of Conduct, employees from Senior Vice President and upwards of EGCO and its subsidiaries are required to thoroughly review their 2010 work practices before signing the Code of Conduct Compliance Statement and the General Representation Letter to his/her managers up to the President. EGCO’s President and the Managing Directors of EGCO’s subsidiaries also sign the Code of Conduct Compliance Statement and the General Representation Letter addressed to the Chairman of the Board of each company. • 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 2010, no significant finding, regarding the improvement on internal control systems, has been found. The Audit Committee reviews the internal control system and risk management throughout the year and regularly reports the result to the Board of Directors. As a consequence, the Board agrees with the Audit Committee that the internal control system of EGCO and its 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. In addition, the 2010 Audit Committee’s Report is included in this Annual Report. 122

Risk Factors

To create long term value for shareholders, EGCO recognizes the importance of properly analyzing and managing its business risks. The Board of Directors entrusted the Audit Committee to review the Company’s risk management policies while the Management has the responsibility to implement such policies and report the progress to the Audit Committee and the Board. In this regard, the Risk Management Committee has been set up at the Management level which comprises EGCO’s top executives and the Managing Directors of EGCO subsidiaries. EGCO’s President serves as the chairman of the Committee. Rayong Power Plant and EGCO subsidiaries such as KEGCO, and ESCO also have their own risk management committees to help ensure that their particular risks will be managed adequately. EGCO Group has setup the risk management policy in a Risk Management Manual which serves as a guideline for the EGCO Group. The Audit Committee considers and reviews key corporate risks regularly. In 2010, the Audit Committee also considered terrorism risk and continued to emphasize on fraud risk management by discussion with the Management on the likelihood, prevention and remedial actions. A summary of key risk factors and associated mitigation measures is as follows: 1. Investment Risk EGCO invests in electricity generating business. Its main sources of income are dividends from subsidiaries and joint ventures which sell and distribute power under long term Power Purchase Agreements (PPA). EGCO plans to continuously invest in new projects in accordance with EGCO’s strategy. Such project development may entail risks that will affect EGCO’s investment target. The investment risks are as follow: 1.1 Risks from Project Development

EGCO plans to expand its investment in order to maintain continuous growth, both in Thailand and foreign countries. Key projects are listed in the investment plan so that EGCO can appropriately allocate resources to those projects. Failure to add new assets to the portfolio either through Greenfield development or Acquisition will affect EGCO’s long-term outlook. 123

However, the environment of the project and the project itself are the risk factors of project development caused by uncertainty and business competition which can occur regularly. To ensure the success of project development, EGCO Business Development Team has analyzed and identified the key risks involved. These include economic, political, and social policies of target countries, economic situation, financial costs, as well as machine, equipment, and construction costs. Moreover, compliance with laws and regulations to prevent environmental, social, and health impacts are concerned as well. EGCO has prepared risk mitigation measures. For instance, fundamental analysis of target countries was conducted by gathering necessary information such as electricity and tax structure. Project information such as factors of electricity generating will be studied to appraise whether the projects are feasible with acceptable cost and competitive prices. Besides the project feasibility, EGCO also set up the mechanisms and process to review and scrutinize new investment. Such mechanisms include the review by EGCO Management Committee which comprise EGCO’s top management, and the Investment Committee which is the Board’s committee to ensure that all material risks are identified and managed. The committees will also review the major conditions of the Shareholders’ Agreement such as dividend policy, rights to audit before submitting those agreements for the Board’s consideration. 1.2 Risk from renew PPA extension - Rayong Power Plant

On October 1, 2009, EGCO accepted the transfer of Rayong Electricity Generating Co., Ltd. (REGCO) and its key contracts which included the Power Purchase Agreement (PPA) with the Electricity Generating Authority of Thailand (EGAT). The term of REGCO PPA is 20 years and will expire on December 7, 2014. There is a provision in the PPA that offers a possibility for REGCO and EGAT to negotiate for PPA extension. Such negotiation may commence in good faith with EGAT and the relevant authorities not less than 2 years but not longer than 4 years before the PPA’s expiry date. Due to the expiry of the PPA term, EGCO will be exposed to the risks of not getting the approval from government authorities to extent the PPA. As a result, the installed capacity of EGCO will reduce by 1,232 MW. Based on EGCO’s Investment plan, EGCO still have investment projects in the pipeline. Moreover, Rayong Power Plant is in good operational conditions that can further generate power. As the PPA offers a possibility to negotiatean extension of the PPA, EGCO will propose the PPA extension with the best alternatives with competitive tariff rate that will be beneficial to the country. The main benefit of PPA extension is to maximize the benefits from the power plants of which a lot of money has been invested in imported technology and equipment. As the plant has been properly and regularly maintained, it can be effectively operated for another 10 years. The strengths of the Rayong Power Plant have been confirmed as follows: • Having event free track record and good relation with the community • Location of Rayong Power Plant being close to industrial factories in the eastern seaboard which reduce power loss from source to destination • Automatic Fuel Transfer from natural gas to diesel during plant operation can be executed in case of emergency gas shortage • Ability to quickly execute EGAT’s restoration plan in case of brown out using black start emergency diesel 124

2. Operational Risks 2.1 Risk of Failure to Get Target Return on Investment

EGCO has the responsibility to properly monitor and manage its investment in order to reach or exceed targeted return on investment. Without efficient mechanism to manage investment assets, EGCO may not get return on investment at target. Typical measures imposed to mitigate relevant risks are as follows: • Establish asset management policies and, where possible, assign management and staffs to be EGCO Group representatives’ directors or management of its subsidiaries and investment projects. • Monitor operating performances of each facility and analyze the actual return on investment against the planned target. • Prepare regular progress reports to senior management and the Board of Directors so that a timely and appropriate action can be taken. The exceptional operating performance is to be reported as well. • Coordinate with partners for joint-audit in investment companies to ensure the adequacy and effective of internal control system. With these actions, EGCO will achieve target return on investment. According to the 2010 operating performance report, the incomes from EGCO’s portfolio have been received in line with modeled results.

The cause of such risk may be power plant aging. With consistent, professional maintenance being a policy in place for each of EGCO Group’s power plants, this risk is considered to be low. Despite that, the management has established systematic procedures to ensure that all relevant performance targets are met. These procedures are as follows: • To include the key plant efficiency parameters in the Corporate Key Performance Indicators of power plants in the EGCO group in order to ensure that the production efficiency is closely monitored and all employees take part in the plant efficiency. • To set up Early Warning Systems for critical information regarding the plant operation processes. • To ensure that the scheduled preventive maintenance of power plant equipment is carried out on a regular basis by qualified staff. • To ensure that spare part inventory is adequate and well managed. • To implement the Quality Management System (ISO: 9001:2000) to ensure that those power plants operate n accordance with the terms of their PPAs • To continuously develop the competencies of the firms’ human resources. With consistent operation along with these mitigation actions, the chance of this risk is low.

2.2 Plant Performance Risks

A commitment to generate and deliver electricity pursuant to a PPA with EGAT entails the performance risks which may caused by staff, equipment and management approach. The significant performance risks are as summarized below: (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 would result in penalties and potential termination in certain extreme cases.

(2) Raw Water Shortage for Electricity Generation The risk of a raw water shortage can result in plant stoppages, revenue shortfall, or penalty payments. The risk could be caused by climate change, overall increasing of water usage. Although EGCO Group has never before experienced any water shortage, the measures are set to prevent and mitigate such risks by increasing the raw water storage capacity, seeking additional sources of raw water supply and setting measures to maximize the benefit of water usage. 125

(3) Fuel Shortage for Electricity Generation The risks of a fuel shortage for electricity generation can result in plant stoppages, revenue shortfall or penalty payments. The shortage of “coal and biomass” fuel type could be caused by increasing demand or price fluctuation. From the past record, EGCO Group has never before experienced any fuel shortage. The measures are set to prevent and mitigate such risk for continuous power generation as follows: EGCO Group’s gas fired power plants, which contributed 60 % of 2010 total electricity sales revenues, have enjoyed long term Gas Supply Agreements with PTT, except for Rayong Power Plant and KEGCO which EGAT is the gas supplier under the terms of their PPAs. The quantity and quality of natural gas and other key parameters are all specified in the relevant agreements. With PTT and/or EGAT being the main suppliers, the risks of fuel gas shortage is considered low. EGCO Group’s coal fire power plants “BLCP and Quezon”, which contributed 32% of 2010 total electricity sales revenues, have long term Coal Supply & Transportation Agreement. The suppliers must supply coal with the quantity and quality as specified in the agreement. Efficient coal reserve management is a significant measure which can reduce this type of risk as well. Moreover, coal procurement from potential alternative suppliers when necessary is another measure to ensure the adequacy supply under the terms of the PPA. EGCO Group’s biomass power plants using rice husks and Para wood chips as fuel, which contributed 2% of 2010 total electricity sales revenues, 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 can not 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 still a seller’s market. As such, the impact of the inadequate of such fuel on EGCO’s revenues is low. 126

(4) Safety Health Environment and Social EGCO realizes that the electricity generating process which uses natural gas and coal as primary fuels will have certain impacts on the safety, environment and quality of life of employees and surrounding communities. The cause of risk can arise from the inefficiency of power plant or the inadequate measurement. Consequently, EGCO has taken the following actions to mitigate any potential negative impacts and reduce the likelihood of such risks as follows: • Develop and live by EGCO group’s Corporate Social Responsibility policy • Develop Safety, Health and Environment (“SHE”) Management Manual for all EGCO owned plant as guidelines for implementation and audit. • 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 related laws. • Monitor and ensure the compliance with SHE Management Manual By complying with the above measures regularly, we can be ensured that this risk likelihood is quite low.

(5) Accident, Resistance, and Sabotage EGCO business may face risk from accident that may cause fire. Besides, the operation may subject to the community resistance if the electricity generating process has negative impacts on the community. Such risks may be caused by the power plant aging condition, personnel operation, or sabotage event. With existing mitigation actions and situation monitoring, this risk likelihood is quite low. Management is well aware of the above risks and has set the following measures to mitigate and reduce the likelihood of those risks. • To strongly encourage employees to prudently discharge their duties with the belief that carelessness may lead to significant damages. • To periodically maintain all equipment as scheduled to ensure that they can work efficiently. • To strengthen relationship with surrounding communities to foster the right perception about EGCO business. • To strengthen relationship with local government authorities. • To set the security plan with regular drills and provide equipment such as closed circuit TV. • To secure the insurance policy that covers all risks, machinery breakdown, business interruption and third party liability to assure that assets and personnel will be properly and adequately protected and the damages will be recovered even in an unexpected case 3. Financial Risks The investments of EGCO Group are capital-intensive. Since the primary funding sources are loans from domestic and international bank loan markets, foreign exchange rate fluctuation and interest rate fluctuation, are important risks to be monitored and mitigated. This risk may be caused by mismatch of revenue and loan structure including the change of foreign currency and interest rate. In case that the change of foreign currency and interest rate are negative to EGCO structure, it will lead to decline in the Group’s operating performance. Therefore, the mitigation measures are established as follows: 3.1 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. 3.2 Interest Rate Fluctuation

EGCO Group has a policy to manage risk of interest rate fluctuation by using financial hedging instruments (namely interest rate swaps) to fix floating interest rate exposure to prudent levels in order to provide the most predictable cash flows over its long-term power purchase contracts. If interest rate fixtures are not available for the full project terms required, EGCO will seek to enter into or cause its project company’s to enter into financial instruments that can best mitigate the interest rate risks subject to market availability and cost. With these measures, the impacts to EGCO group are not much 127

Management Discussion and Analysis

128

1. Executive Summary The Electricity Generating Public Company Limited’s (EGCO) significant events in 2010 can be summarized as follows: • EGCO Engineering & Service Co., Ltd. (ESCO) purchased additional ordinary shares in Egcom Tara Co., Ltd. (ET) on January 6, 2010, increasing its ownership interest from 70.07% to 74.19%. • Power Generation Services Co., Ltd.’s (PGS) entire business was acquired and merged to BLCP Power Limited (BLCP). Liquidation of PGS was subsequently registered with the Ministry of Commerce on January 19, 2010. • On March 4, 2010, Natural Energy Development Co., Ltd. (NED) signed a Power Purchase Agreement (PPA) with Electricity Generating Authority of Thailand (EGAT) for the sale and purchase of all energy output of its planned solar power plant facility. The plant will have total installed capacity of 73 MW (DC)/55 MW (AC). The term of the PPA is 5 years from the Commercial Operation Date (COD) which is scheduled to be in November of 2011. The PPA may be extended for an additional 5 year period every 5 years. • Nam Theun 2 project, hydroelectric power plant with installed capacity of 1,086.80 MW (995 MW is contracted to EGAT and 75 MW is contracted to Electricite du Laos) located in the Lao PDR, achieved its COD on April 30, 2010. Subsequently, EGCO purchased an additional 10% interest in the Nam Theun 2 Power Co., Ltd. (NTPC) from the Italian-Thai Development Public Company Limited (ITD) on September 29, 2010, bringing EGCO’s total ownership interest in NTPC to 35%. • On December 13, 2010, EGCO entered into a definitive purchase agreement to acquire an additional interest in Quezon Power (Philippines) Limited Co. (Quezon) of 26.125% bringing total interest in Quezon to 52.125%; and 100% of the outstanding shares of Covanta Philippines Operating Inc., the entity which provides all operation and maintenance services to Quezon through a long-term Operation and Maintenance Agreement. The acquisitions are expected to close in early 2011. EGCO has invested in subsidiaries and joint ventures businesses, which can be categorized into four groups as follows: 1. Independent Power Producer (IPP) consisting of Rayong power plant, Khanom Electricity Generating Co., Ltd. (KEGCO), BLCP and Gulf Power Generation Co., Ltd (GPG), a subsidiary of Gulf Electric Public Company Limited (GEC). 2. Small Power Producer (SPP) consisting of EGCO Cogeneration Co., Ltd. (EGCO Cogen), Roi-Et Green Co., Ltd. (Roi-Et Green), NED and four subsidiaries of GEC, which are Gulf Cogeneration Co., Ltd. (GCC), Nong Khae Cogeneration Co., Ltd. (NKCC), Samutprakarn Cogeneration Co., Ltd. (SCC) and Gulf Yala Green Co., Ltd. (GYG). 3. Overseas consists of Conal Holdings Corporation (Conal), NTPC and Quezon. 4. Other Business consists of ESCO and ET. 129

Moreover, EGCO holds 18.72% of shares in East Water Resources Development and Management Public Company Limited (East Water) as long-term investments in marketable securities. EGCO, the Rayong power plant, each subsidiary and each of the joint venture, are hereinafter collectively referred to as EGCO Group./1 In total, the EGCO Group holds interests in 14 operating plants, totaling 4,361.08 MW (equity share). This represents an increase of 380.38 MW or 10% from last year due to occurrence of the COD for Nam Theun 2 and EGCO’s subsequent acquisition of an additional 10% interest in that project. EGCO Group has a 12.71% market share in Thailand from a total installed capacity of 30,920 MW/2 as of December 31, 2010. In total, 3,931.43 MW of the Group’s plants are contracted with EGAT under long-term PPAs. EGCO Group’s consolidated net profit for the annual operating results ended December 31, 2010 was Baht 6,792 million, a decrease of Baht 1,143 million or 14% compared to last year. This is mainly due to the decline in electricity sales of Rayong power plant and BLCP as well as an increase of GPG’s cost of sales.

2. Business Expansion Analysis EGCO Group is the first IPP in Thailand established on May 12, 1992 and has invested in a number of subsidiaries and joint ventures in the power generation sector. Our vision is “To be the leading Thai integrated electric power company with comprehensive energy services in Thailand and in the ASEAN region, with full commitment to environmental protection and social development”. Our core business is to produce and supply electricity to EGAT under long-term PPAs. EGCO Group 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 optimum returns to shareholders by improving the profitability of our existing assets and acquiring new projects with reasonable risk and return profiles. As at the end of December 2010, Thailand’s total generating capacity was reported at 30,920 MW/2, of which 12.71% was attributable to EGCO Group. The economic recovery of the country resulted in increasing power demand growth. The peak demand of 24,010 MW/2 occurred on May 10, 2010, 8.91% higher than the peak demand in April 2009. Since December 2008, the electricity demand has decreased significantly due to depressed economic conditions. To portray a clear picture of power sector development, the Ministry of Energy has developed the new Power Development Plan (PDP 2010) and designated as a “Green PDP” which highlights on greenhouse gas emission reduction, promotion of energy efficiency and cogeneration. PDP 2010 not only includes power purchase from domestic producers and neighboring countries, but also from renewable sources as indicated in the 15-year Alternative Energy Development Plan. Therefore, PDP 2010 represents a complete guideline for power system development that encourages generation from renewable sources and the minimization of greenhouse gas emissions, within an overall scheme of balanced generation resources. PDP 2010 has been developed within the following framework: (1) Extend the planning horizon from 15 years to 20 years (2010-2030) (2) Revise Thailand’s Load Forecast based on NESDB’s long term economic growth (3) Analyze and integrate the effects of DSM projects in both the load forecast and the generation expansion planning /1

Subsidiaries: KEGCO, EGCO Cogen, Roi-Et Green, ESCO and ET Interests in joint ventures : BLCP, GPG, GCC, NKCC, SCC, GYG, Conal, NTPC, Quezon and NED /2 Source: EGAT 130

(4) Combine the re-estimated amount of power purchase from renewable energy regarding AEDP 2008 - 2022 into the plan (5) Review the amount of power purchase from SPPs in 2009-2015 and further regarding the NEPCâ&#x20AC;&#x2122;s resolution on 24 August 2009 to promote power production by cogeneration system (6) Reconsider power import from neighboring countries and identify only promising projects (7) Lower greenhouse gas emission To maintain its growth, EGCOâ&#x20AC;&#x2122;s business strategy places emphasis on expanding its investment scope to include the ASEAN markets in addition to Thailand, to complement its traditional strengths in the domestic wholesale and renewable energy generation sectors. The company has a policy to dividend approximately 40% of consolidated net profits after tax, or to increase the dividend amount in a steady manner. This dividend policy may change in the light of investment opportunities that become available to the company or as a result of other economic or financial factors or when a dividend payment may have a significant impact on the normal operation of the company. The dividend declaration shall not exceed the retained earnings of the company financial statements.

3. Report and Analysis of the Operating Results This report contains the analysis of the financial statements of EGCO Group as follows: Overseas Other 3% 11% SPP 7%

IPP 79%

EGCO IPP SPP Overseas Other Business Total

2010 (798) 5,961 593 830 207 6,792

Unit : Million Baht 2009 % Change (529) (51%) 7,148 (17%) 623 (5%) 523 59% 171 21% 7,936 (14%)

2010 Net Profit Remark - IPP: Rayong power plant, KEGCO, BLCP, GPG - Overseas: Conal, NTPC, Quezon

- SPP: GCC, NKCC, SCC, GYG, EGCO Cogen, Roi-Et Green, NED - Others: ESCO, ET 131

3.1 Operating Results

EGCO Group’s net profit for 2010 ended December 31, 2010 was Baht 6,792 million, representing a decrease of Baht 1,143 million or 14% compared to last year. This is mainly due to the decreases in electricity sales of Rayong power plant and BLCP due to the lower capacity rate, which were in accordance with the the capacity payment formula in power purchase agreements and in line with the company's projection, as well as the increase in GPG’s cost of sales due to scheduled maintenance. The earnings before finance costs, tax, depreciation and amortization (EBITDA) for 2010 was Baht 10,286 million, representing a decrease of Baht 1,273 million or 11% as compared to the same period of 2009, in which the EBITDA was Baht 11,559 million. The gross profit was reported at Baht 2,882 million, down by Baht 852 million or 23%, as a result of lower contracted electricity sales of Rayong power plant. The same reason caused the operating profit to fall to Baht 1,810 million, a decrease of Baht 1,155 million or 39%. Important Profitability Ratios for 2010 operating results were as follows: • Gross Profit Ratio was 33.48% • Operating Profit Ratio was 21.02% • Net Profit Ratio was 44.93% • Earnings per share (EPS) was Baht 12.90 • Return on Equity (ROE) was 12.95% The gross profit ratio of 33.48% was lower than the previous year’s margin of 40.83% due to lower electricity sales of Rayong power plant; whereas the net profit ratio was reported at 44.93%, lower than the same period of 2009 ratio of 50.33% mainly due to the decreases in electricity sales of Rayong power plant and the share of profit BLCP. 3.2 Revenue, Expense and Share of Profits (Losses) from Joint Ventures Analysis

The 2010 operating results before the effect of foreign exchange (FX) from EGCO and subsidiaries and before profit attributable to minority interest (MI), are as follows: • Total revenues were Baht 8,996 million, a decrease of Baht 499 million or 5%. • Total expenses were Baht 8,221 million, an increase of Baht 470 million or 6%. • The share of profits (losses) from joint ventures (Share of profits (losses)) was Baht 6,122 million, a decrease of Baht 151 million or 2%. Total Revenues, Total Expenses and Share of Profits (Losses): Unit : Million Baht EGCO 2010

2009

IPP 2010

2009

SPP 2010

2009

Overseas 2010

Total Revenues 303 242 5,387 6,124 2,315 2,237 Total Expenses 1,101 771 4,419 4,333 1,980 1,972 Profits bf Share of Profits (Losses) (798) (529) 968 1,791 335 265 Share of Profits (Losses) 4,993 5,362 299 389 830 Net Profit bf FX and MI (798) (529) 5,961 7,153 634 654 830 132

Others

Total

2009

2010

2009

991 721

891 674

8,996 9,495

270

217

775 1,744

6,122 6,273

270

217

6,897 8,017

523 523

2010

2009

8,221 7,751

The details according to their groups of business are as follows: 1) EGCO’s total revenues of Baht 303 million increased by Baht 61 million or 25% mostly from an increase of service charge from joint ventures. The total expenses of EGCO were Baht 1,101 million, an increase of Baht 330 million or 43%. This resulted mainly from an increase in administrative expenses by Baht 217 million mainly from consulting fee for project development and advertising expense; and finance costs by Baht 113 million from the interest of long-term loan totaling Baht 4,000 million in September 2009. 2) IPP’s total revenues were Baht 5,387 million, a decrease of Baht 737 million or 12%. The total expenses were Baht 4,419 million, up by Baht 86 million or 2%. The share of profits (losses) was reported at Baht 4,993 million, a decrease by Baht 369 million or 7%. The details are as follows: Unit : Million Baht Total Revenues, Total Expenses and Share of Profits (Losses) of IPP: Rayong power plant 2010

2009

KEGCO 2010

2009

2,589 3,787 2,798 Total Revenues 2,088 2,427 2,331 Total Expenses Profits bf Share of 501 1,359 467 Profits (Losses) Share of Profits (Losses) Net Profit bf FX and MI 501 1,359 467

BLCP 2010

2009

GPG 2010

Total

2009

2010

2009

2,337 1,906 431 - 2,867 3,226 2,126 2,136 431 2,867 3,226 2,126 2,136

5,387

6,124

(12%)

4,419

4,333

968

1,791

(46%)

4,993

5,362

(7%)

5,961

7,153

(17%)

• Sales of electricity were Baht 5,324 million, representing a decrease of Baht 716 million or 12%. The decrease was a result of Rayong power plant’s lower electricity sales by Baht 1,187 million to register Baht 2,535 million, caused by a decrease in the Capacity Rate. Meanwhile, KEGCO’s electricity sales increased by Baht 471 million to register Baht 2,789 million from an increase in the Base Availability Credit. 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 projections. Unit : Million Baht

Sales of Electricity - IPP: 2010

2009

%Changes

Rayong power plant KEGCO

2,535 2,789

3,722 2,318

(32%) 20%

Total Sales of Electricity - IPP

5,324

6,040

(12%)

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 Dollars. Rayong power plant and KEGCO receive compensation monthly for each billing period. They receive higher capacity charges 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 reduced capacity charges if the Baht falls below 28 per US Dollar. 133

For 2010, Rayong power plant and KEGCO received compensation for the exchange rate effect of Baht 91 million. • Interest income and others amounted to Baht 63 million, a decrease of Baht 21 million or 25%, mainly from a decrease in other income of Rayong power plant due to the sales of power plant’s component parts in 2009 and from a decrease of KEGCO and Rayong power plant’s interest income in 2010. • Cost of sales totaled Baht 3,284 million, an increase of Baht 232 million or 8% from an increase of KEGCO’s cost of sales by Baht 348 million due to major maintenance as planned. Meanwhile, Rayong power plant’s cost of sales decreased by Baht 116 million due to lower major maintenance. Cost of Sales - IPP: Unit : Million Baht 2010

2009

%Changes

Rayong power plant KEGCO

1,574 1,710

1,690 1,362

Total Cost of Sales - IPP

3,284

3,052

(7%) 26% 8%

• Administrative expenses and income taxes were Baht 1,004 million, a decrease of Baht 48 million or 5%, mainly from the decrease in Rayong power plant’s tax payment by Baht 291 million due to lower revenues and tax rate after the entity was transferred to EGCO. Meanwhile, KEGCO’s income tax increased by Baht 113 million from tax payment rate of 50% corporate tax reduction privilege on profits from power generation ending on September 25, 2009 and administrative expenses increased by Baht 130 million mainly from Rayong power plant’s inventory write-off and KEGCO’s higher provision for devaluation inventory. • Finance costs were Baht 131 million, a decrease of Baht 98 million or 42%, resulting from KEGCO’s lower principal amounts of debentures. • Share of profits (losses), BLCP and GPG, was recognised in the amount of Baht 4,993 million, a decrease by Baht 369 million or 7% that resulted from a decrease of BLCP’s electricity sales due to a lower Base Availability Credit, while incurred a decrease in finance costs. A decline in share of profits was also from an increase of GPG’s cost of sales caused by the scheduled maintenance. 3) SPP’s total revenues were reported at Baht 2,315 million, an increase of Baht 78 million or 3%. The total expenses were Baht 1,980 million, an increase of Baht 8 million or 0.41%. The share of profits (losses) was reported at Baht 299 million, down by Baht 90 million or 23%. The details are as follows: Total Revenues, Total Expenses and Share of Profits (Losses) of SPP: Unit : Million Baht Roi-Et Green

2010

2009

2010

2009

2010

2009

2010

2009

308 171 137 137

305 158 146 146

322 322

400 400

2,315

2,237

1,980

1,972

0.41%

(23) (23)

(11) (11)

335

265

26%

299

389

(23%)

634

654

(3%)

2009

Total Revenues 2,007 1,933 Total Expenses 1,809 1,814 Profits bf Share of 198 119 Profits (Losses) Share of Profits (Losses) Net Profit bf FX and MI 198 119 134

GCC, NKCC, SCC, GYG

EGCO Cogen

NED

Total

• Sales of electricity were Baht 2,305 million, an increase of Baht 79 million or 4%, mainly from an increase in EGCO Cogen’s electricity sales to EGAT and industial users. Sales of Electricity - SPP: Unit : Million Baht 2010

2009

%Changes

EGCO Cogen Roi-Et Green

2,002 303

1,927 299

4% 1%

Total Sales of Electricity - SPP

2,305

2,226

• Cost of Sales was reported at Baht 1,871 million, an increase of Baht 24 million or 1% from Roi-Et Green and EGCO Cogen’s higher consumption of fuel by Baht 16 million and Baht 8 million, respectively, which were in accordance with the higher electricity sales. Cost of Sales - SPP: Unit : Million Baht 2010

2009

%Changes

EGCO Cogen Roi-Et Green

1,713 158

1,705 142

1% 11%

Total cost of Sales - SPP

1,871

1,847

• Share of profits (losses), GCC, NKCC, SCC, GYG and NED, totaled Baht 299 million, a decrease of Baht 90 million or 23% mainly from the increases of GEC’s administrative expense as well as NKCC and GCC’s income taxes.

135

4) Overseas’ share of profits (losses), Conal, Quezon and NTPC, was reported at Baht 830 million, an increase of Baht 307 million or 59% mainly from the elelctricity sales of NTPC due to achieving COD on April 30, 2010 and purchased 10% additional stake from ITD on September 29, 2010. Share of Profits (Losses) - Overseas: Unit : Million Baht 2010

2009

%Changes

Conal Quezon NTPC

140 583 107

63 499 (39)

122% 17% N.A.

Total Share of Profits (Losses) - Overseas

830

523

59%

5) Other Business’ total revenues were Baht 991 million, an increase of Baht 100 million or 11% and total expenses were Baht 721 million, an increase of Baht 47 million or 7%. The details are as follows: Unit : Million Baht

Total Revenues, Total Expenses and Share of Profits (Losses) of Other Business: ESCO

Total Revenues Total Expenses Profits bf Share of Profits (Losses) Share of Profits (Losses) Net Profit bf FX and MI

ET *

Total

2010

2009

2010

2009

2010

2009

%Chg

730 585 145 145

621 545 76 76

261 136 125

270 129 141

991

891

11%

721

674

270

217

24%

125

141

270

217

24%

* ESCO purchased additional shares in ET in January 2010, increased the investment portion to 74.19%.

• Service income from ESCO amounted to Baht 722 million, up by Baht 110 million or 18%, resulting mostly from higher maintenance service income. • Cost of services of ESCO was Baht 490 million, an increase of Baht 55 million or 13% which was in accordance with the increase in service income.

136

4. Report and Analysis of Financial Position 4.1 Asset Analysis

As at December 31, 2010, total assets of EGCO Group amounted to Baht 65,655 million, an increase of Baht 2,735 million or 4% from December 31, 2009. The important details are as follows: Unit : Million Baht 70,000

65,655 62,920 2010

60,000

2009

50,000 40,000

30,715 28,529

30,000 20,000

13,407 15,068

10,439 7,923

10,000

10,129 10,452

965 947

Total Assets

Cash, ST&LT Investment

ST&LT Invesment as Collateral

Inv. in Subs. & Interests in JVEs

Property, Plant and Equip (net)

Others

1) Cash and deposits at financial institutions, short-term and long-term marketable securities were Baht 10,439 million or 16% of the total assets, up by Baht 2,516 million or 32%. This resulted mainly from dividends from joint ventures and others totaling Baht 4,655 million and cash receipts from operating activities of Baht 4,021 million. Meanwhile, the decreasing amount were from the dividend payment to shareholders totaling Baht 2,856 millon, investment in subsidiaries and joint ventures of Baht 2,651 million and the principal repayment as well as interest payment of debentures and loans totaling Baht 1,699 million. 2) Short-term and long-term investments used as collateral were Baht 965 million or 1% of the total assets, up by Baht 18 million or 2%. 3) Investment in subsidiaries and interests in joint ventures recorded under the equity method in the consolidated financial statements as at December 31, 2010 amounted to Baht 30,715 million or 47% of the total assets, up by Baht 2,186 million or 8%. 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 6,133 million. 3.2) An increase in share capital of joint ventures totaling Baht 2,457 million. 3.3) The transfer of net liabilities to interests in a joint venture totaling Baht 151 million. 3.4) Dividends received from GEC, BLCP, Quezon and Conal by Baht 5,538 million. 3.5) Loss from translation adjustments totaling Baht 990 million. 3.6) A repayment from liquidation of PGS totaling Baht 24 million. 3.7) A repayment from Lao Holding State Enterprise (LHSE) totaling Baht 4 million regarding the intial investment in NTPC that EGCO paid for LHSE. 137

For the company financial statements, the original cost was applied for recording the investment in subsidiaries and interests in joint ventures at the beginning; the book value as at December 31, 2010 was Baht 34,815 million, up by Baht 2,596 million due to the additional paid-up shares in NTPC and NED. 4) Property, plant and equipment (net) totaled Baht 13,407 million or 20% of the total assets, down by Baht 1,661 millon or 11%. The decline was mainly from the decrease in the depreciation of EGCO and subsidiaries’ assets totaling Baht 2,210 million and the reclassification of transfer capital spare parts out to spare parts and supplies at KEGCO and Rayong power plant totaling Baht 263 million. Meanwhile, there was a recording of capital spare parts as property, plant and equipment following the major maintenance at KEGCO and Rayong power plant in the amount of Baht 718 million and net purchase of property, plant and equipment totaling Baht 94 million. 5) Other assets were Baht 10,129 million or 15% of the total assets, down by Baht 324 million or 3% mainly from a decrease in trade receivable from a related party totaling Baht 756 million and spare parts totaling Baht 802 million. Meanwhile, dividends receivable from joint ventures increased by Baht 1,001 million. 4.2 Liability Analysis

As at December 31, 2010, EGCO Group's total liabilities were Baht 10,838 million, which was Baht 989 million or 8% lower than the amount as at December 31, 2009. The total liabilities consist of the following: 1) Long-term loans and debentures totaled Baht 9,561 million, or 88% of total liabilities, down by Baht 1,155 million or 11%. This mainly came from the debenture repayment of KEGCO as well as the long-term loans repayment of EGCO Cogen and Roi-Et Green. The details are as follows: USD JPY THB Debenture

• USD loan in the amount of USD 13 million • Yen loan in the amount of Yen 566 million • Baht loans in the amount of Baht 8,460 million • Baht debentures in the amount of Baht 497 million

THB 89 %

Unit : Million Baht

Maturity of long-term loans and debentures as at December 31, 2010 EGCO

KEGCO

EGCO Cogen

Roi-Et Green

Within 1 Year 1-5 Years > 5 Years

4,000 4,000

497 -

186 666 -

37 155 20

Total

8,000

497

852

212

Long-term loans and debentures are secured liabilities over land, buildings, power plants and equipments of subsidiaries. The subsidiaries have to maintain cash reserves as at December 31, 2010 totaling Baht 224 million for the purpose of payment of principal and interest due within one year.

138

2) Other liabilities amounted to Baht 1,277 million or 12% of total liabilities, an increase by Baht 167 million or 15% which mostly resulted from the increases of KEGCO and EGCO’s income tax payable and KEGCO and Rayong power plant’s trade payable from a related party. 4.3 Shareholders' Equity Analysis

As at December 31, 2010, Shareholders' Equity amounted to Baht 54,817 million, which was Baht 3,724 million or 7% higher than the amount as at December 31, 2009. This was mainly from the net profit in the consolidated financial statements amounted to Baht 6,792 million, while appropriated dividend totaled Baht 2,764 million, the market price of available-for-sale investment and loss from the translation of foreign currencies to Thai Baht in foreign joint ventures totaling Baht 294 million. The analysis of the company's capital structure as at December 31, 2010 can be summarized as follows: Liabilities were Baht 10,838 million or 16.51%. Shareholders' equity was Baht 54,817 million or 83.49%.

Equity 83.49 %

Debt 16.51 %

Important financial ratios

were as follows: • Debt to equity ratio was 0.20 times, lower than 0.23 times at the end of 2009. • Book value per share was Baht 103.16, higher than Baht 96.06 at the end of 2009.

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 the cash and the cash equivalents. As at December 31, 2010, the ending balance of the cash and the cash equivalent was Baht 7,748 million, which was Baht 1,894 million higher than the amount as at December 31, 2009. The details of the sources and uses of funds are as follows: • Net cash received from operating activities totaled Baht 4,021 million. This was cash received from operating activities of Baht 4,187 million and cash payment for working capital of Baht 166 million. • Net cash received from investing activities was Baht 2,471 million mainly due to dividend received from joint ventures and East Water totaling Baht 4,537 million and Baht 118 million, respectively and EGCO’s redemption of short-term investment used as collateral of Baht 450 million. Meanwhile, investment in subsidiaries and joint ventures totaled Baht 2,651 million. • Net cash payment for financing activities was Baht 4,557 million. This was mainly from the dividend payment to shareholders totaling Baht 2,856 million, debentures repayment of KEGCO totaling Baht 914 million, the loan repayment of EGCO Cogen and Roi-Et Green that totaled Baht 208 million and interest payment of Baht 577 million. As at December 31, 2010, the company’s liquidity ratios were as follows: • Current ratio was 10.26 times, compared to 8.30 times in 2009. • Quick ratio was 5.59 times, compared to 4.35 times in 2009.

139

Related Transactions

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 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 26 of the Notes to 2010 Financial Statements for the period ended December 31, 2010.

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 will 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 will 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 will be treated in accordance with the requirements of the SET’s and Securities & Exchange Commission (“SEC”) 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 annually. 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. It should be noted that the Management had already reported the transactions in 2010 to the Audit Committee and the Board. • 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 will not have a voting right. Since the voting will 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 and management with potential conflict of interest will not be allowed to vote or attend the meeting

Related Transactions in 2010 EGCO’s related transactions in 2010 were normal business transactions with no objective to siphon profits between EGCO or its subsidiaries and parties with potential conflict of interest. Each transaction was duly approved under the transparent process and the persons with potential conflict of interests were not involved in the decision making. Such transactions were well justified that they were carried out for the best interest of the Company like the transactions with the third parties. The system to follow up and review the transactions was also in place to ensure that they are carried out in line with the established process. 140

Details of related transactions in 2010 are as summarized below. 1. Related Transactions with Electricity Generating Authority of Thailand

In carrying out the EGCO Group’s business, there were related transactions relating to the power sale and maintenance services between the Group companies and the Electricity Generating Authority of Thailand (“EGAT”), a major shareholder which owns 25.41 stakes in EGCO and has 4 representative directors on EGCO Board. However, all the transactions followed the established process and in line with the disclosure and other requirements of the SET and SEC. 1.1 Power Sold to EGAT

EGCO (Rayong Power Plant) and three subsidiaries being 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 EGAT. The PPA terms for EGCO (Rayong Power Plant) and KEGCO are twenty years and fifteen years while the terms for EGCO Cogen and Roi Et Green are twenty one years each. Such transactions are justified as power generation is EGCO Group’s core business and EGAT is the single wholesale buyer. In addition, the pricing and conditions of those transactions are in accordance with the standard contracts which have been endorsed by relevant government agencies.

Companies

EGCO (Rayong Power Plant) KEGCO EGCO Cogen Roi Et Green

Relationship

Subsidiaries

Transaction value for the period ended December 31, 2010 (million baht) Sale Revenue

Trade Receivables

2,535

220

2,789 1,189 303

63 150 36

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.

Companies

GEC BLCP NTPC

Relationship

Joint Venture

Transaction value for the period ended December 31, 2010 (million baht) Sale Revenue

Trade Receivables

14,290 8,853 1,818

2,204 814 202

141

1.2 Maintenance Service to EGAT

EGCO Engineering and Services Co., Ltd. (“ESCO”), EGCO’s subsidiary which is an O&M service provider, has entered into a Maintenance Agreements with EGAT to provide major maintenance work including other administrative and relating services to the power plants. Such transaction is justified as the price is charged on a “cost plus basis” with the annual CPI escalation which is the same standard as the price charged to the third parties. The agreement is effective for a period of eight years commencing September 24, 2007.

Companies

ESCO

Relationship

Subsidiary

Transaction value for the period ended December 31, 2010 (million baht) Maintenance Fee

Trade Receivables

122

1.3 Maintenance Service by EGAT

EGCO Group has entered into the operation and maintenance agreements with EGAT which are defined as the transactions to support normal business of which the general trading terms and conditions are applied and the agreed price can be calculated from the assets or the referenced price in accordance with SET’s guidelines. • EGCO (Rayong Power Plant) and KEGCO has entered into the Major Maintenance Agreement (“MMA”) with EGAT for the latter to provide major maintenance services, repair services, administrative services, and additional services to their power plants. The service fees are charged on a “cost plus basis” with the annual CPI escalation. The contracts have been extended for another 8 years for EGCO (Rayong Power Plant) with the execution date on December 7, 2006 and 6 years for KEGCO with the execution date on June 19, 2002. • ESCO enters into the long term agreement with EGAT with the term starting from January 2005-December 2020. However, EGAT started providing the service under the agreement on May 23, 2007. The service fees are charged on a “cost plus basis” with the annual escalation of 3%. Companies

EGCO (Rayong Power Plant) KEGCO ESCO

142

Relationship

Subsidiaries

Transaction value for the period ended December 31, 2010 (million baht) O&M Fee

Trade Payables

205 4

58 1

â&#x20AC;˘ GEC has engaged EGAT as advisor for maintenance work. The fee is charged in accordance with the agreed price. Companies

GEC

Transaction value for the period ended December 31, 2010 (million baht)

Relationship

Maintenance Advisory Fee

Account Payables

0.63

0.93

Joint Venture

2. Related Transaction between EGCO and Subsidiaries

EGCO has entered into three agreements with subsidiaries and joint venture companies, which EGCO is a major shareholder and EGCO executives sit on their boards. 1. Agreements to provide office space and building services for 5 companies being KEGCO, ESCO, EGCO Cogen, Roi Et Green and EGCOM Tara. The space and service scope is specified in the contract with a one-year term. Such transaction is considered justified as it helps maximize the building space usage and the fee is charged at the market rate which is the same rate charged to the third party. 2. Agreements to provide management services to the above companies of which the scope covers internal audit, legal counseling, Boardâ&#x20AC;&#x2122;s secretarial work, technology, public and community relations and financial work (exclude ESCO and EGCOM Tara) and agreements to dispatch employees to NTPC and BLCP. Such transactions are well grounded because those Group companies do not have internal staff to take care of such work while EGCO has the capability to provide the services. The management service fee is charged in accordance with the actual operating hours based on the cost plus basis.

Companies

Relationship

Transaction value for the period ended December 31, 2010 (million baht) Financial Statements

KEGCO ESCO EGCO Cogen EGCO Green Roi Et Green EGCOM Tara EGCO BVI

Subsidiaries

16 9 7 0.85 7 2 0.55

Total for subsidiaries

NTPC BLCP NED

9 20 4

Total for joint ventures

Joint Venture

33 143

4. Financial Support

EGCO provides 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, 2010. 4.1 Inter-company Loan

ESCO On November 22, 2006, EGCO entered into an agreement to provide loan to ESCO in the amount of 780 million baht. Principal payment of 46 million baht each is scheduled annually commencing December 2009 to December 2025. The interest rate is set in accordance with the market rate for long term loan at MLR minus a certain margin and payable on a semi-annual basis. The outstanding loan amount as at December 31, 2010 was 688 million baht NED On September 25, 2009 EGCO entered into an agreement to provide loan to NED in the amount of 32 million baht with the bullet payment within 1 year after the loan drawdown. Such loan was provided in accordance with EGCO’s ownership in such companies and on the same conditions as the other two shareholders in those companies being CLP Thailand Renewables Limited (“CLP”) and Diamond Generating Asia, Limited (“DGA”). The interest rate is set in accordance with the market rate for short term loan which is a fixed rate. NED had fully repaid the principal and interest payment in May 2010. 4.2 Liabilities

EGCO provided the loan guarantee under the Sponsor Support Agreement to subsidiary, joint venture and associated companies. Significant information is as follows. 4.2.1 Contingent Liabilities EGCO Cogen As of December 31, 2010, EGCO Cogen’s sponsors had a commitment to provide the loan to EGCO Cogen if it has any financial liquidity problem and cannot service debt and expenditures in accordance with the conditions in the contract in the amount not exceeding 200 million baht. Since EGCO holds an 80% stake in EGCO Cogen, its guarantee portion is not exceeding 160 million baht. This agreement is justified as it is the condition in the loan agreement and the financial support is provided on a pro-rata basis in accordance with the ownership in the company. 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, 2010, the total commitment amounted to 572 million yen equivalent to 214 million baht. This agreement is justified as it is the condition in the loan agreement and the project development condition. 144

4.2.2 Letter of Guarantee EGCO has the commitment to the banks under the Counter Guarantee and Standby Letter of Credit (“SBLC”) issued on behalf of EGCO for the subsidiaries and joint ventures. Details of the transaction are as shown 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, 2010, the value of the SBLC was 476 million baht. This transaction is justified as it enables EGCO to release the cash trapped in KEGCO reserve. NTPC The Nam Theun II project’s finance is structured in a way that will allow sponsors who invest in Lao PDR to inject equity on a back-end basis while lenders will allow loan drawn down during the first phase. As such, lenders request the banks on behalf of the sponsors to issue the SBLC to guarantee future capital injection. The face value of the SBLC will reduce in accordance with each capital injection. With respect to the above, EGCO requested Mizuho Corporate Bank to issue SBLC under the Shareholders’ Support Agreement. As at December 31, 2010, the guarantee value was US 27 million dollars (equivalent to 811 million baht). Such transaction is well grounded as EGCO has to comply with loan conditions and the guarantee is made on a pro-rata basis in accordance with the ownership in NTPC. QPL EGCO requested HSBC to issue the SBLC for the purpose of providing a guarantee for the reserve for principle and interest payment of Quezon project. As at December 31, 2010, the guarantee value was US 9 million dollars (equivalent to 274 million baht). Such transaction is justified as EGCO has to comply with loan conditions and the guarantee is made on a pro rata basis in accordance with the ownership in QPL. As at December 31, 2010, EGCO requested Deutsche Bank to issue SBLC as security in place of pledging cash with the value at 10% of the purchase price on the execution date of the Share Purchase Agreement amounting to US 22 million dollars (equivalent to 651 million baht.)

Guidelines for Treating Future Related Transactions Most of the existing related transactions will continue in the future. EGCO will seek to ensure that all of the related transactions are transparent, fair and beneficial to the Company. The Board will 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 will 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.

145

Statement of Directors’ Responsibilities

According to the Public Limited Companies Act B.E. 2535, the Accounting Act B.E. 2543, the Securities and Exchange Act B.E. 2535, and the Notification of Capital Market Supervisory Board 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 and that 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 to reveal the weakness to prevent unlawful conduct and abnormalities. Management has prepared both consolidated and Company financial statements for the year ended 31 December 2010 in compliance with the Thai Generally Accepted Accounting Principles under the Accounting Profession Act B.E. 2547. 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 2010, present the company’s financial position, operating results, changes in shareholders’ equity and cash flows fairly, in all material respects, and reliable manner and that such statements are in compliance with the Generally Accepted Accounting Principles and all governing rules and regulations.

Mr. Pornchai Rujiprapa Chairman

146

Audit Committee’s Report

The Audit Committee of EGCO consists of 3 independent directors whose qualifications, experience, and expertise are in accounting, finance, economics, law, management and energy business. The Chairman of the Audit Committee is Mr. Chaipat Sahasakul, and the other 2 members are Mr. Somphot Kanchanaporn and Mr. Thanapich Mulapruk. The Audit Committee has performed its duties in conformity with the mission entrusted by the Board of Directors as prescribed in the Audit Committee Charter which is in compliance with those specified by The Stock Exchange of Thailand (SET): the Audit Committee’s Qualification and Scope of Duties and Responsibilities B.E. 2551. The Audit Committee regularly reports the Committee’s Minutes of Meetings to the Board of Directors. The Audit Committee held 13 meetings in 2010 with all committee members attending each meeting. The Committee Meeting Attendance Report is shown in Table 1: Board and Committee Meeting Attendance Report in Corporate Governance section. The Audit Committee’s performance can be summarized as follows. 1. Review of financial statements

• To review the quarterly and the annual financial statements with the external auditors and the Management to ensure compliance with the generally accepted accounting principles. The disclosures were complete, accurate, reliable, and in compliance with related laws and regulations. The Committee also supported the IFRS (International Financial Reporting Standards) adoption in accordance with FAP’s (Federation of Accounting Profession) and SEC’s guidelines. • To review the Management Discussion and Analysis (MD&A) with the Management to ensure its accuracy, adequacy and usefulness to shareholders and investors for making their investment decisions. • To hold exclusive meeting with the external auditors to ensure their independence. • To consider other services performed by the audit firm’s group companies for EGCO and its subsidiaries. It was determined that the scopes of work and fees for other services were not significant and did not influence the independence of the auditor. 2. Review of the internal control systems

The Audit Committee reviewed the sufficiency and effectiveness of the internal control systems by considering the internal auditor’s and the external auditor’s reports. The external auditor agreed that there was no significant shortcoming in the year 2010. In addition, the Committee considered the results of the internal control evaluation of EGCO and its subsidiaries together with the internal control questionnaires which were prepared in compliance with the Committee of Sponsoring Organizations of the Treadway Commission’s (COSO) guidelines, The Stock Exchange of Thailand (SET), and the Securities and Exchange Commission (SEC). The evaluation result for the year 2010 showed that EGCO and its subsidiaries had sufficient and appropriate internal control system.

147

3. Oversight of internal audit

• To approve scope of work and annual audit plan which included Management Audit • To review internal audit report by demanding that the Internal Audit Division directly reports to the Audit Committee. • To review budget and manpower of the Internal Audit Division, the professional development of internal auditors, and Chief Internal Auditor’s KPI. The Committee also reviewed the performance of Chief Internal Auditor’s to ensure the Internal Audit Division’s independence. 4. Review of compliance with laws relating to EGCO’s business

The Audit Committee reviewed with the Management to ensure that EGCO’s activities are in compliance with the securities and exchange laws, requirements of SET and SEC, as well as other laws relating to EGCO’s business. In addition, the Committee acknowledged that employees at senior vice president level and upward reviewed their compliance with related laws before signing and submitting Annual Representation Letter to their immediate supervisors. 5. Review of connected transactions

The Audit Committee considered the accuracy and adequacy of EGCO’s disclosure on related-party transactions or any transactions that might cause conflict of interest to ensure that EGCO had complied with business conditions and requirements of SEC. 6. Review of risk management

The Audit Committee reviewed with the management the risk management policy, and the compliance with such policy and EGCO’s risk management guidelines. In addition, fraud risk prevention and monitoring practice for EGCO Group was prepared to ensure that EGCO and its subsidiaries had an appropriate risk management system that followed the COSO Enterprise Risk Management. The current and future major risks had been considered for mitigation and management as well 7. Review of good corporate governance

• To enhance 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 Conduct and questions about the financial statements and internal control systems by email to auditcommittee@egco.com. Whistleblower system was also set up. • To review and acknowledge 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. 148

8. Audit Committee’s self assessment

The Audit Committee assessed the Audit Committee’s performance for the year 2010 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. 9. Review of the Audit Committee Charter

The Audit Committee reviewed the Audit Committee Charter to ensure that the duties entrusted to them in 2010 were achieved and complied with international practices and those specified by the SET’s Audit Committee Best Practice Guidelines, while also being appropriate for EGCO’s business. 10. Appointment of the external auditor

The Committee reviewed the auditors’ performance in 2010 and recommended to the Board of Directors that PricewaterhouseCoopers ABAS Ltd., Ms. Nangnoi Charoenthaveesub Certified Public Accountant (Thailand) No. 3044, Mr. Prasan Chuaphanich Certified Public Accountant (Thailand) No. 3051, and Mr. Vichien Khingmontri Certified Public Accountant (Thailand) No. 3977, be appointed by the shareholders as the Company’s auditors for 2011 due to their independence, professional practices, appropriate experience, SEC approval and discharging their duties effectively. Based on the above practices, the Committee was of the opinion that EGCO’s 2010 financial statement was accurate, complete, and reliable. The internal control system was adequate and appropriate. Operations were in compliance with the Securities and Exchange Act, regulations of The Stock Exchange of Thailand and laws relating to the business of EGCO. In addition, information disclosure in case of related-party transaction or conflict of interest was correct and complete.

Mr. Chaipat Sahasakul Chairman of the Audit Committee

149

Nomination and Remuneration Committee’s Report

Based on EGCO’s Governance Principles, the Nomination and Remuneration Committee (“NRC”) shall consist of 5 directors, three of which shall be non-executive, independent directors. The term of office of each NRC member is 3 years. In 2010, the NRC duly performed its duties under the Nomination and Remuneration Committee’s Charter and held eleven meetings in such regard. The major issues being discussed included director nominees, selection of EGCO senior executives under the new organization structure, performance appraisal of the Company and its subsidiaries including the performance appraisal of directors and management, the remuneration of directors and management and the succession plan for key positions. In scrutinizing the list of nominees for directors and executives, the NRC had taken into account the required skill sets and experience, integrity and ethics, good attitude towards the Company, and professionalism along with the time commitment. With regard to the remuneration structure of the directors and senior executives of the Company, the NRC had established a clear and transparent process to ensure that the remuneration structure of both directors and executives were comparable to those of peer companies, effective in retaining qualified personnel, fair and tied to the long term benefits of the Company and the shareholders. The guideline for selection of directors and executives along with their remuneration are disclosed in this annual report.

Mr. Mark Jobling Chairman of the Nomination and Remuneration Committee

150

Financial Statements t t t t t t

Auditorâ&#x20AC;&#x2122;s Report Balance Sheets Statements of Income Statement of Changes in Shareholdersâ&#x20AC;&#x2122; Equity Statements of Cash Flows Notes to the Consolidated and Company Financial Statements

151

Auditorâ&#x20AC;&#x2122;s Report

To the Shareholders of Electricity Generating Public Company Limited I have audited the accompanying consolidated and company balance sheets as at 31 December 2010 and 2009 and the related consolidated and company statements of income, changes in shareholdersâ&#x20AC;&#x2122; equity and cash flows for the years then ended of Electricity Generating Public Company Limited and its subsidiaries and of Electricity Generating Public Company Limited respectively. The Companyâ&#x20AC;&#x2122;s management is responsible for the correctness and completeness of information in these financial statements. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the consolidated and company financial statements referred to above present fairly, in all material respects, the consolidated and company financial position as at 31 December 2010 and 2009 and the consolidated and company results of operations and cash flows for the years then ended of Electricity Generating Public Company Limited and its subsidiaries and of Electricity Generating Public Company Limited respectively in accordance with generally accepted accounting principles.

Nangnoi Charoenthaveesub Certified Public Accountant (Thailand) No. 3044 PricewaterhouseCoopers ABAS Limited

Bangkok 10 February 2011 152

Electricity Generating Public Company Limited Balance Sheets

As at 31 December 2010 and 2009

153

Electricity Generating Public Company Limited Balance Sheets (Continued)

As at 31 December 2010 and 2009

154

Electricity Generating Public Company Limited Balance Sheets (Continued)

As at 31 December 2010 and 2009

155

Electricity Generating Public Company Limited Statements of Income

For the years ended 31 December 2010 and 2009

156

157

For the years ended 31 December 2010 and 2009

Statements of Changes in Shareholders' Equity

Electricity Generating Public Company Limited

158

For the years ended 31 December 2010 and 2009

Statements of Changes in Shareholders' Equity (Continued)

Electricity Generating Public Company Limited

Electricity Generating Public Company Limited Statements of Cash Flows

For the years ended 31 December 2010 and 2009

159

Electricity Generating Public Company Limited Statements of Cash Flows (Continued)

For the years ended 31 December 2010 and 2009

160

Electricity Generating Public Company Limited Statements of Cash Flows (Continued)

For the years ended 31 December 2010 and 2009

161

Electricity Generating Public Company Limited Notes to the Consolidated and Company Financial Statements For the years ended 31 December 2010 and 2009 1 General information Electricity Generating Public Company Limited (the Company) is a public limited company incorporated and resident in Thailand. The address of its registered office is 222 Moo 5, EGCO Tower, 14th and 15th floor, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210. The Company is listed on the Stock Exchange of Thailand. For reporting purposes, the Company and its subsidiaries are referred to as â&#x20AC;&#x153;the Groupâ&#x20AC;?. The principal business operation of the Group is the generation of electricity for sale to the government sector and industrial users. These consolidated and company financial statements were authorised for issue by the president on 10 February 2011.

2 Accounting policies The principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out below. 2.1 Basis of preparation

The consolidated and company financial statements have been prepared in accordance with Thai generally accepted accounting principles under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the Accounting Profession Act B.E. 2547, and the financial reporting requirements of the Securities and Exchange Commission under the Securities and Exchange Act B.E. 2535. The consolidated and company financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below. The preparation of financial statements in conformity with Thai generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses in the reported periods. Although these estimates are based on managementâ&#x20AC;&#x2122;s best knowledge of current events and actions, actual results may differ from those estimates. An English version of the consolidated and company financial statements has been prepared from the statutory financial statements that are in the Thai language. In the event of a conflict or a difference in interpretation between the two languages, the Thai language statutory financial statements shall prevail.

162

2 Accounting policies (continued) 2.2 New accounting standards, new financial reporting standards, new interpretation, amendments to accounting standards and accounting framework

The following new accounting standards, new financial reporting standards, new interpretation and amendments to accounting standards (collectively “the accounting standards”) and amendments to accounting framework are endorsed by the Government Gazette during 2010. a) Effective on 26 May 2010 The amendment of accounting framework. b) Effective for the accounting periods beginning on or after 1 January 2011 TAS 1 (Revised 2009) TAS 2 (Revised 2009) TAS 7 (Revised 2009) TAS 8 (Revised 2009) TAS 10 (Revised 2009) TAS 11 (Revised 2009) TAS 16 (Revised 2009) TAS 17 (Revised 2009) TAS 18 (Revised 2009) TAS 19 TAS 23 (Revised 2009) TAS 24 (Revised 2009) TAS 26 TAS 27 (Revised 2009) TAS 28 (Revised 2009) TAS 29 TAS 31 (Revised 2009) TAS 33 (Revised 2009) TAS 34 (Revised 2009) TAS 36 (Revised 2009) TAS 37 (Revised 2009) TAS 38 (Revised 2009) TAS 40 (Revised 2009) TFRS 2 TFRS 3 (Revised 2009) TFRS 5 (Revised 2009) TFRS 6 TFRIC 15

Presentation of Financial Statements Inventories Statement of Cash Flows Accounting Policies, Changes in Accounting Estimates and Errors Events after the Reporting Period Construction Contracts Property, Plant and Equipment Leases Revenue Employee Benefits Borrowing Costs Related Party Disclosures Accounting and Reporting by Retirement Benefit Plans Consolidated and Separate Financial Statements Investments in Associates Financial Reporting in Hyperinflationary Economies Interests in Joint Ventures Earnings per Share Interim Financial Reporting Impairment of Assets Provisions, Contingent Liabilities and Contingent Assets Intangible Assets Investment Property Share-base Payment Business Combinations Non-current Assets Held for Sale and Discontinued Operations Exploration for and Evaluation of Mineral Resources Agreements for the Construction of Real Estate

The Group will apply the aforementioned accounting standards from 1 January 2011. The Group’s management assessed and determined that there are no significant impacts to financial statements being presented except the following accounting standards.

163

2 Accounting policies (continued) 2.2 New accounting standards, new financial reporting standards, new interpretation, amendments to accounting standards and accounting framework (continued)

b) Effective for the accounting periods beginning on or after 1 January 2011 (continued) - TAS 1 (Revised 2009) states that an entity shall present all items income and expense recognised in a period in a single statement (the statement of comprehensive income) or in two statements (the separate income statement and statement of comprehensive income). In addition, this revised standard requires an entity to present a statement of financial position as at the beginning of the earliest comparative period in a complete set of financial statements when the entity makes a retrospective restatement or reclassifies items in the financial statements. However, for the financial statements which period begins on or after 1 January 2011 and are the first period apply the revised standard, an entity can choose to present statement of financial position only two statements without the statement of financial position as at the beginning comparative period. The Group decides to present both the separate income statement and statement of comprehensive income as the two statements. - TAS 16 (Revised 2009) requires that the cost of an item of property, plant and equipment includes the costs of its dismantlement, removal or restoration, the obligation for which an entity incurs as a consequence of installing the item. Each significant component of property, plant and equipment is required to be separately identified and depreciated if the useful life of each significant component differs from other components. In addition, useful lives and residual values of the property, plant and equipment are required to be reviewed and adjusted, if appropriate, at least annually. The Group assessed and determined that the changing in depreciation has not been significant impact to the financial statements. However, the Group is in the process of reviewing the impact of an obligation for dismantlement, removal or restoration and residual values. - TAS 19, the Group has adopted the TAS 19 since 2007 before the effective date. - TAS 24 (Revised 2009) expands the definition of related party to include parties with joint control over the entity, joint venture in which the entity is a venturer and post-employment benefit plan for the benefit of employees of an entity. This revised accounting standard may impact only to the disclosure of related party information in the notes to financial statements. - TAS 27 (Revised 2009) prescribes an accounting for changes in ownership interest in a subsidiary. The revised standard requires changes in a parentâ&#x20AC;&#x2122;s ownership interest in a subsidiary, including all transactions with non-controlling interests that do not result in the loss of control to be accounted for in equity. When the entity loses control of a subsidiary, any investment retained in the former subsidiary is measured at its fair value and any gain or loss is recognised in profit or loss. The accounting for such changes in ownership interest shall be applied prospectively. - TAS 31 (revised 2009) required that when an investor ceased to have joint control over an entity, it shall account for any remaining investment at fair value and recognise any gain or loss in profit and loss. - TAS 40 (Revised 2009) prescribed the accounting and disclosure for investment property. An entity is required to present an investment property separately in the statement of financial position. The entity may choose to measure the investment property either the cost model or the fair value model. Under fair value model, any changes in fair value are recognised in profit or loss. The Group will apply the cost model for measurement and expected reclassification land for future projects of Baht 323 million which has been presented as other non-current assets. 164

2 Accounting policies (continued) 2.2 New accounting standards, new financial reporting standards, new interpretation, amendments to accounting standards and accounting framework (continued)

b) Effective for the accounting periods beginning on or after 1 January 2011 (continued) - TFRS 3 (Revised 2009) continues to apply the acquisition method to business combinations, unless it is a combination involving entities or businesses under common control. Examples of significant changes in the revised standard are (a) all payments to a business acquisition, including contingent considerations shall be recognised at fair value on the acquisition date and changes in fair value of contingent consideration classified as a liability are recognised in profit or loss, (b) for each business combination, the acquirer shall measure any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets, and (c) all acquisition-related costs should be expensed in the periods in which the costs are incurred, etc. The revised accounting standard shall be applied prospectively to business combinations from 1 January 2011. c) Effective for the accounting periods beginning on or after 1 January 2013 TAS 12 TAS 20 (Revised 2009) TAS 21 (Revised 2009)

Income Taxes Accounting for Government Grants and Disclosure of Government Assistance The Effects of Changes in Foreign Exchange Rates

The Group will apply new accounting standards, new financial reporting standards, new interpretation and amendments to accounting standards (collectively “the accounting standards”) from 1 January 2013. The Group’s management is in the process of reviewing the impacts of those accounting standards. - TAS 12 prescribed the accounting treatment for income taxes, comprising current tax and deferred tax. Current tax assets and liabilities are measured at the amount expected to be paid to or recovered from the taxation authorities, using tax rates and tax law that have been enacted or substantively enacted by the end of the reporting period. Deferred taxes are measured by based on the temporary difference between the tax base of an asset or liability and its carrying amount in the financial statements and using the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates and tax law that have been enacted or substantively enacted by the end of the reporting period. - TAS 21 (Revised 2009) required each individual entity to determine its functional currency which is a currency of the primary economic environment in which the entity operates. Foreign currency transactions are required to be translated into the functional currency using the exchange rates prevailing at the dates of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from translation at year-end exchange rate of monetary items denominated in foreign currency are recognised in profit or loss. In addition, the results and financial position of all the group entities that have a functional currency difference from the presentation currency are translated in the presentation currency by (a) assets and liabilities are translated at the closing rate at the date of that statement of financial position (b) income and expenses are translated at exchange rate at the date of the transactions and (c) all resulting exchange differences are recognised in other comprehensive income. 165

2 Accounting policies (continued) 2.3 Group accounting - investments in subsidiaries and interests in joint ventures

2.3.1

Investments in subsidiaries Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which their control is transferred to the Group. They are deconsolidated from the date on which the control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange plus other relevant costs directly attributable to the acquisition of the subsidiary. Identifiable assets and liabilities in the business combination are measured initially at their fair values at the acquisition date, regardless of minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets of the subsidiary acquired by the Group is recorded as goodwill (see Note 2.10.1 for the accounting policy on goodwill). Intercompany transactions, balances and unrealised gains or losses on transactions between group companies are eliminated; unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed, where necessary, to ensure consistency with the accounting policies adopted by the Group. In the company financial statements, investments in subsidiaries are accounted for using the cost method of accounting. Under the cost method, income from investments in subsidiaries will be recorded when dividends are declared. A test for impairment for investments in subsidiaries is carried out when there is a factor indicating that investments might be impaired. If the carrying value of the investments is higher than its recoverable amount, impairment loss is charged to the consolidated and company statements of income. A list of the Group’s subsidiaries and the financial effects of the acquisitions and disposals of subsidiaries are shown in Note 13.

2.3.2

166

Interests in joint ventures The Group’s interests in jointly controlled entities are initially recorded at cost and accounted for using the equity method in the consolidated financial statements. The Group has recognised interests in joint ventures including goodwill (net of accumulated amortisation). The Group’s share of its joint ventures’ post-acquisition profits or losses is recognised in the consolidated income statement, and its share of post-acquisition movements in reserves is recognised in fair value reserves. The cumulative postacquisition movements are adjusted against the carrying amount of the interests in joint ventures. When the Group’s share of losses in joint ventures equals or exceeds its interests in joint ventures, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.

2 Accounting policies (continued) 2.3 Group accounting - investments in subsidiaries and interests in joint ventures (continued)

2.3.2

Interests in joint ventures (continued) In the company financial statements, interests in joint ventures are accounted for using the cost method of accounting. Under the cost method, income from interests in joint ventures will be recorded when dividends are declared. A test for impairment for interests in joint ventures is carried out when there is a factor indicating that investments might be impaired. If the carrying value of the investments is higher than its recoverable amount, impairment loss is charged to the consolidated and company statements of income. A list of the Groupâ&#x20AC;&#x2122;s joint ventures and the financial effects of the acquisitions and disposals of joint ventures are shown in Note 13.

2.4 Foreign currency translation

Items included in the financial statements of each entity in the Group are measured using the reporting currency of that entity. The consolidated financial statements are presented in Thai Baht. Foreign currency transactions are translated into Thai Baht using the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into Thai Baht at the exchange rate prevailing at the balance sheet date. Gains and losses resulting from the settlement of foreign currency transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated and company statements of income. Statements of income and cash flows of foreign entities are translated into the Groupâ&#x20AC;&#x2122;s reporting currency at the weighted average exchange rates for the year and balance sheets are translated at the exchange rates prevailing on the balance sheet date. Currency translation differences arising from the retranslation of the net investment in foreign entities are taken to shareholdersâ&#x20AC;&#x2122; equity. On disposal of a foreign entity, accumulated currency translation differences are recognised in the consolidated statement of income as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing rate. 2.5 Financial instruments

Financial assets carried in the balance sheets include cash and cash equivalents, investments, trade receivables and trade receivables from a related party. Financial liabilities carried in the balance sheet include trade payables, trade payables to a related party, loans and debentures. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. The Group is also a party to financial instruments that reduce exposure to fluctuations in foreign currency exchange and interest rates. These instruments, which comprise interest rate swap contracts and foreign currency forward contracts, are not recognised in the consolidated and company financial statements on inception. 167

2 Accounting policies (continued) 2.5 Financial instruments (continued)

Foreign currency forward contracts protect the Group from movements in exchange rates by establishing the rate at which a foreign currency asset will be realised or a foreign currency liability on the settled date in the future. Assets and liabilities in foreign currency which are protected by foreign currency forward rate on the contracts. Interest rate swap contracts protect the Group from movements in interest rates. Any differential to be paid or received on the interest rate swap contracts is recognised as a component of finance costs as incurred. Foreign currency and interest rate swap contracts protect the Group from movements in foreign currency and interest rates. Any differential to be paid or received on the interest rate swap contracts is recognised as a component of finance costs as incurred. Disclosures about financial instruments to which the Group is a party are provided in Note 26. 2.6 Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. Cash and cash equivalents comprise cash in hand, deposits held at financial institutions and short-term highly liquid investments with maturities of three months or less from the date of acquisition. 2.7 Trade receivables

Trade receivables are recognised initially at original invoice amount and subsequently measured at the remaining amount less allowance for doubtful receivables based on a review of all outstanding amounts at the year end. The amount of the allowance is the difference between the carrying amount and the amount expected to be collectible. Bad debts are recognised in the consolidated and company statements of income as part of administrative expenses. 2.8 Spare parts and supplies

Spare parts and supplies are stated at cost less allowance for obsolescence. Cost is calculated on the moving average basis. The spare parts are categorised as “specific spare parts” and “common spare parts”. Specific spare parts are classified into 2 categories, which are capital spare parts used for specific plant equipment in power plants and specific spare parts used for general use. The allowance for specific spare parts is calculated by dividing the balance of specific spare parts on hand at the year end by the number of years remaining under the Power Purchase Agreements with the Electricity Generating Authority of Thailand (EGAT), except for capital spare parts that are used for specific plant equipment in power plants (Note 2.11). The allowance for common spare parts is generally provided based on an aging analysis.

168

2 Accounting policies (continued) 2.9 Other investments

Investments other than investments in subsidiaries and interests in joint ventures are classified into the following three categories: held-to-maturity, available-for-sale and general investments. The classification is dependent on the purpose for which the investments were acquired. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. - Investments with fixed maturity that the management has the intent and ability to hold to maturity are classified as held-to-maturity and are included in non-current assets, except those with maturities within 12 months from the balance sheet date, which are classified as current assets. - Investments intended to be held for an indefinite period of time, which may be sold in response to liquidity needs or changes in interest rates, are classified as available-for-sale, and are included in noncurrent assets unless management has expressed the intention of holding the investment for less than 12 months from the balance sheet date or unless they will need to be sold to raise operating capital, in which case they are included in current assets. - Investments in non-marketable equity securities are classified as general investments. Purchases and sales of investments are recognised on the trade date, which is the date on which the Group commits to purchase or sell the investments. Cost of investment includes transaction costs. Held-to-maturity investments are carried at amortised cost using the effective yield method. Available-for-sale investments are subsequently carried at fair value. Unrealised gains and losses arising from changes in the fair value of investments classified as available-for-sale are recognised in equity. The fair value of investments is based on the quoted bid price by reference to the Stock Exchange of Thailand and the Thai Bond Dealing Center. When investments classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the consolidated and company income statements as gains and losses from investment in securities. General investments are carried at cost less impairment. A test for impairment is carried out when there is a factor indicating that an investment might be impaired. If the carrying value of the investment is higher than its recoverable amount, impairment loss is charged to the consolidated and company statements of income. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the consolidated and company statements of income. When disposing of part of the Groupâ&#x20AC;&#x2122;s holding of a particular investment in debt or equity securities, the carrying amount of the disposed part is determined by the weighted average carrying amount of the total holding of the investment. 2.10 Intangible assets

2.10.1 Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Groupâ&#x20AC;&#x2122;s share of the net assets of the acquired subsidiary undertaking or joint venture at the date of acquisition. Goodwill on acquisitions of subsidiaries and joint ventures is reported as an intangible asset and included in interests in joint ventures respectively in the consolidated balance sheet.

169

2 Accounting policies (continued) 2.10 Intangible assets (continued)

2.10.1 Goodwill (continued) Recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash generating units for the purpose of impairment testing. The allocation is made to those cash generating units or group of cash generating units that are expected to benefit from the business combination in which the goodwill arose. 2.10.2 Right in Power Purchase Agreement and Tap Water Purchase Agreement The right in Power Purchase and Tap Water Purchase Agreements arising on acquisitions of the Group is amortised over the periods of the Power Purchase Agreements with the Electricity Generating Authority of Thailand and of the Water Supply Agreement with the Provincial Waterworks Authority (PWA), which are between 16 and 25 years. 2.10.3 Development expenditure Development expenditure is recognised as an expense as incurred. Costs incurred on development projects are recognised as intangible assets when it is probable that the project will be a success considering its commercial and technological feasibility, and only if the cost can be measured reliably. Other development expenditure is recognised as an expense as incurred. Development expenditure previously recognised as an expense is not recognised as an asset in a subsequent period. Development expenditure that has been capitalised is amortised from the commencement of the commercial operation on a straight-line basis over the power plantsâ&#x20AC;&#x2122; life. 2.11 Property, plant and equipment

All property, plant and equipment are initially recorded at cost. All plant and equipment are stated at historical cost less accumulated depreciation. Depreciation is calculated using the straight-line method to write off the cost of each asset to its residual value over its estimated useful life, except land which is considered to have an indefinite life, as follows:

Years Power plants Water plants and transmission pipeline Buildings and structures Substation and transmission system Operating and maintenance equipment Office equipment, furniture and computers Motor vehicles

170

15, 18, 20 and 21 30 10 and 20 20 and 21 5 3, 5 and 10 5

2 Accounting policies (continued) 2.11 Property, plant and equipment (continued)

Capital spare parts whose estimated useful life is more than one year are capitalised and depreciated using the straight-line method over the estimated useful life of between 6 and 12 years when used in major repair and maintenance processes. The capital spare parts which are replaced by a major overhaul will be removed and recorded as spare parts and supplies at the net book value at the date of replacement. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Repair and maintenance expenses are charged to the consolidated and company statements of income during the financial period in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset. Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are included in the consolidated and company statements of income. Interest costs on borrowings to finance the construction of property, plant and equipment are capitalised as part of the cost of the asset, during the period of time required to complete and prepare the property for its intended use. All other borrowing costs other than interest costs on borrowing are recognised as expenses in the consolidated and company statements of income. 2.12 Impairment of assets

Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets and intangible assets that have definite useful life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the assets exceeds its recoverable amount which is the higher of an assetâ&#x20AC;&#x2122;s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows. Assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. 2.13 Leases

Leases of assets which substantially transfer all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated to the principal and to the finance charges so as to achieve a constant rate on the finance balance outstanding. The outstanding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the consolidated and company statements of income over the lease period. The equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset or the lease term.

171

2 Accounting policies (continued) 2.13 Leases (continued)

Leases not transferring a significant portion of the risks and rewards of ownership to the lessee are classified as operating leases. Payments made under operating leases are charged to the consolidated and company statements of income on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which the termination takes place. 2.14 Borrowings

Borrowings are recognised initially at the fair value of the proceeds received, net of the transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective yield method; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated and company statements of income over the period of the borrowings. 2.15 Corporate income taxes

The Group calculates income taxes in accordance with the Revenue Code on an accrual basis. The Group does not recognise income taxes payable or receivable in future periods in respect of temporary differences arising from differences between the tax base of assets and liabilities and their carrying amounts. 2.16 Employee benefits

2.16.1 The Group operates a provident fund that is a defined contribution plan. The assets are held in a separate fund which is managed by an external fund manager in accordance with the Provident Fund Act B.E. 2530. The provident fund is funded by payments from employees and by the Group. Contributions to the provident fund are charged to the consolidated and company statements of income in the year to which they relate. 2.16.2 The Group provides for post employment benefits, payable to employees under the labour laws applicable in Thailand and other countries in which the Group has its operations. The liability in respect of employee benefits is the present value of the defined benefit obligation which is calculated by an independent actuary in accordance with the actuarial technique. The present value of the defined benefit obligation is determined by discounting estimated future cash flows using yields on government bonds which have terms to maturity approximating the terms of the related liability. The estimated future cash flows shall reflect employee salaries, turnover rate, mortality, length of service and other factors. Actuarial gains or losses will be recognised in the consolidated and company statements of income in the period to which they relate. The costs associated with providing these benefits are charged to the consolidated and company statements of income so as to spread the cost over the employment period during which the entitlement to benefits is earned.

172

2 Accounting policies (continued) 2.17 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. 2.18 Treasury stock

Treasury stock presented in the consolidated and company financial statements is carried at cost and shown as a deduction from total shareholders’ equity. Gains on disposal of treasury stock are determined by reference to its carrying amount and are taken to “Premium on treasury stock”. Losses on disposal of treasury stock are determined by reference to its carrying amount and are taken to “Premium on treasury stock” and “Retained earnings” consecutively. 2.19 Revenue recognition

Sales under the Power Purchase Agreements (PPA) comprise Availability Payments and Energy Payments. Availability Payments are recognised according to the terms set out in the Power Purchase Agreement. Energy Payments are calculated based on electricity delivered. Sales under the Electricity and Steam Sales/Purchase Agreements with industrial users are recognised on delivery of electricity and steam and customer acceptance. However, under the PPAs of two subsidiaries, EGAT has to bear the natural gas cost, therefore, the calculation of revenues from the portion of energy sales of electricity and the natural gas cost of those two subsidiaries are not included in these financial statements. Revenue from construction services is recognised using the percentage of completion method. The stage of completion is measured by reference to the relationship that the contract costs incurred for work performed to date bear to the estimated total costs for the contract. Revenue from other services is recognised when the services have been rendered in accordance with the terms of the agreements or invoices have been issued. Interest income is recognised on an accrual basis unless collectability is in doubt. Dividend income is recognised when the shareholder’s right to receive payment is established. 2.20 Dividends

Dividends are recorded in the consolidated and company financial statements in the period in which they are approved by the shareholders and the Board of Directors.

173

3 Critical accounting estimates, assumptions and judgements Accounting estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. During 2010, the significant accounting estimates of the Group are as follows: 3.1 Useful life of power plants and water treatment plant

The Group determines the estimated useful lives of power plants and the water treatment plant based on the periods of the Power Purchase Agreements and Water Purchase Agreement. 3.2 Revenue recognition from construction services

Revenue recognition under construction and services contracts is based on the stage of completion of a contract measured by applying the cost-to-cost basis to contractual revenues. Use of the stage of completion method requires estimates of future gross profit on a contract by contract basis. The future gross profit represents the profit remaining after deducting the costs attributable to the contract from the revenues provided for in the contract. The estimate of future gross profit is based on a complex estimation process that includes identification of risks and any assessment that it is necessary to estimate with sufficient precision the total future costs as well as the expected timetable.

4 Capital risk management The Groupâ&#x20AC;&#x2122;s objectives when managing capital are to safeguard the Groupâ&#x20AC;&#x2122;s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, alternative practices include returning capital to shareholders, issuing new shares or selling assets to reduce debt.

5 Statements of cash flows Changes in short-term and long-term investments used as collateral are included in the consolidated statements of cash flows as cash flows from operating activities because proceeds from sales of electricity must be maintained as short-term and long-term investments used as collateral in accordance with the Master Agreements and loan agreements and debentures, as described in Note 9.

174

6 Segment information - consolidated financial statements Financial information by business operation segment

The business of the Group is the generation of electricity and tap water for sale to government and industrial users, both in Thailand and overseas, including providing maintenance services and operating power plant. The Group does not disclose segment information for piped water and the provision of maintenance services and power plant operations because revenues from those two business segments were equivalent to 3.01% and 6.35% of total revenue from sales and services, respectively (2009: 2.59% and 4.66% of total revenues from sales and services, respectively). Financial information by geographical segment For the year ended 31 December 2010

Thailand Baht

The Lao Peopleâ&#x20AC;&#x2122;s Democratic Republic Baht

The Philippines Baht

Consolidated Baht

Revenue from sales and service income Cost of sales and services

8,608,979,776 (5,726,990,816)

Segment results Other income Currency exchange gains

2,881,988,960 386,196,878 11,260,680

Profit before expenses Administrative expenses Directors and management remuneration

3,279,446,518 (1,384,202,886)

(85,564,023)

Operating profit Share of profit from interests in joint ventures, net

1,809,679,609

5,292,538,871

107,269,990

722,342,750

6,122,151,611

Profit before finance costs and corporate income tax Finance costs

7,102,218,480 (569,080,001)

107,269,990 -

722,342,750 -

7,931,831,220 (569,080,001)

Profit before corporate income tax Corporate income tax

6,533,138,479 (455,179,284)

107,269,990 -

722,342,750 -

7,362,751,219 (455,179,284)

Net profit for the year

6,077,959,195

107,269,990

722,342,750

6,907,571,935

Net profit attributable to minorities Net profit attributable to equity holders of the Company

115,330,432

5,962,628,763

107,269,990

722,342,750

6,792,241,503

Property, plant and equipment, net

13,407,278,146

175

6 Segment information - consolidated financial statements (continued) Financial information by geographical segment (continued) For the year ended 31 December 2009

Thailand Baht

The Lao Peopleâ&#x20AC;&#x2122;s Democratic Republic Baht

The Philippines Baht

Consolidated Baht

Revenue from sales and service income Cost of sales and services

9,145,066,615 (5,411,443,004)

Segment results Other income Currency exchange gains

3,733,623,611 349,469,699 32,576,781

Profit before expenses Administrative expenses Directors and management remuneration

4,115,670,091 (1,052,269,597)

(98,405,558)

2,964,994,936

(10,909,914)

(38,827,017)

(49,736,931)

5,761,661,155

561,430,446

6,323,091,601

Profit (loss) before finance costs and corporate income tax Finance costs

8,715,746,177 (567,509,560)

(38,827,017) -

561,430,446 -

9,238,349,606 (567,509,560)

Profit (loss) before corporate income tax Corporate income tax

8,148,236,617 (621,066,090)

(38,827,017) -

561,430,446 -

8,670,840,046 (621,066,090)

Net profit (loss) for the year

7,527,170,527

(38,827,017)

561,430,446

8,049,773,956

Operating profit Share of loss exceeding interests in joint ventures Share of profit from interests in joint ventures

Net profit attributable to minorities Net profit (loss) attributable to equity holders of the Company

114,178,106

7,412,992,421

(38,827,017)

561,430,446

7,935,595,850

Property, plant and equipment, net

15,067,989,416

7 Cash and cash equivalents As at 31 December 2010, cash and cash equivalents mainly comprised investments in promissory notes with maturities of three months or less. The interest rates were 0.13% to 2.00% per annum (2009: 0.13% to 4.00% per annum). 176

8 Short-term investments Short-term investments comprised deposits at financial institutions with maturities over three months but not later than one year and marketable securities. Deposits at financial institutions

The deposits at financial institutions of the Group mainly comprise deposits at financial institutions and promissory notes issued by local financial institutions. As at 31 December 2010, deposits at financial institutions of Baht 108 million in the consolidated financial statements bore interest at rates from 0.75% to 1.60% per annum (2009: Baht 82 million in the consolidated financial statements bore interest at rates from 0.63% to 1.50% per annum). Marketable securities

2010 Baht

Consolidated 2009 Baht

2010 Baht

Company 2009 Baht

Available-for-sale Debt securities Changes in fair value of investments

500,000,000 5,981,000

575,281,603 950,818

506,298,797 9,416,703

579,882,323 11,936,511

Short-term investments in marketable securities

505,981,000

576,232,421

515,715,500

591,818,834

9 Short-term and long-term investments used as collateral The majority of the deposits at financial institutions used as collateral are those of three subsidiaries: Khanom Electricity Generating Company Limited, EGCO Cogeneration Company Limited and Roi-Et Green Company Limited. They comprise cash reserves required to be maintained under their loan and debenture agreements for the purpose of repayment of principal and payment of interest due within one year and as a reserve to minimise exchange rate risk. These cash reserves are provided from the proceeds of sales of electricity. As at 31 December 2010, the cash reserve for the purpose of repayment of principal and payment of interest due within one year of these three subsidiaries amounted to Baht 224 million (2009: Baht 223 million). The remaining balance of short-term and long-term investments used as collateral of Baht 741 million (2009: Baht 274 million) represented collateralised deposits maintained in accordance with the loan agreements but which could be used subject to certain lender approvals. As at 31 December 2010, the Group had Thai Baht deposits at financial institutions used as collateral of Baht 965 million bearing interest at the rates of 0.50% to 2.00% per annum (2009: Baht 947 million bearing interest at the rates of 0.63% to 4.00%). As at 31 December 2009, a deposit at a financial institution used as collateral of the Company that amounted to Baht 450 million represented a collaterised deposit under a Standby Letter of Credit issued on behalf of the Company to a subsidiary for the investment in Quezon Project. During the second quarter of 2010, the Company has released a deposit at a financial institution used as collateral amounting to Baht 450 million. 177

10 Trade receivables, net

2010 Baht

Consolidated 2009 Baht

2010 Baht

Company 2009 Baht

Trade receivables Less Allowance for doubtful receivables

245,779,344 -

157,441,813 -

Trade receivables, net

245,779,344

157,441,813

2010 Baht

Consolidated 2009 Baht

2010 Baht

Company 2009 Baht

Not overdue Overdue below 3 months Overdue 3 - 6 months Overdue 6 - 12 months Overdue over 12 months

135,331,854 109,625,108 491,907 330,475

125,937,960 31,173,378 330,475

Less Allowance for doubtful receivables

245,779,344 -

157,441,813 -

Trade receivables, net

245,779,344

157,441,813

2010 Baht

Consolidated 2009 Baht

2010 Baht

Company 2009 Baht

394,772,788

400,353,555

196,059,782

191,653,101

Less Allowance for obsolescence

578,376,062 1,830,821,206 42,668,003 409,408 2,847,047,467 (720,157,771)

965,586,924 2,033,487,250 44,669,840 106,300 3,444,203,869 (515,599,808)

249,832,046 953,986,316 6,671,817 1,406,549,961 (413,275,040)

316,524,214 1,112,218,695 9,557,551 106,300 1,630,059,861 (319,885,128)

Fuel and spare parts and supplies, net

2,126,889,696

2,928,604,061

993,274,921

1,310,174,733

Outstanding trade receivables as at 31 December can be analysed as follows:

11 Fuel and spare parts and supplies, net

Fuel Specific spare parts - Capital spare parts used for specific equipment of the power plant - Other specific spare parts Common spare parts Spare parts in transit

178

12 Long-term investments in marketable securities and others

Available-for-sale Debt securities Equity securities Changes in fair value of investments Total long-term investments in marketable securities Other investments Other equity securities Total other investments Long-term investments in marketable securities and others

2010 Baht

Consolidated 2009 Baht

2010 Baht

Company 2009 Baht

3,000,000 867,490,823 1,203,606,391

867,490,823 540,232,396

867,490,823 1,203,606,391

6,249,697 867,490,823 544,026,312

2,074,097,214

1,407,723,219

2,071,097,214

1,417,766,832

2,000,000 2,000,000

2,076,097,214

1,409,723,219

2,073,097,214

1,419,766,832

13 Investments in subsidiaries and interests in joint ventures, net 2010 Baht

Consolidated 2009 Baht

2010 Baht

Company 2009 Baht

Investments in subsidiaries - 11,988,181,196 11,987,540,281 Less Impairment (47,820,000) (47,820,000) Investments in subsidiaries, net (Note 13.1) - 11,940,361,196 11,939,720,281 Interests in joint ventures (Note 13.2) 30,715,119,040 28,529,156,466 22,874,309,238 20,279,561,685 Investments in subsidiaries and interests in joint ventures, net 30,715,119,040 28,529,156,466 34,814,670,434 32,219,281,966 The movements in investments in subsidiaries and interests in joint ventures can be analysed as follows:

Opening net book value Share of profit from interests in joint ventures Increase in share capital of joint ventures (Note 13.2) Return of share capital from a joint venture (Note 13.2) Transfer of net liabilities to interests in a joint venture (Note 13.4) Dividends received from joint ventures (Note 13.3) Acquisition of a joint venture (Note 27) Translation adjustments Closing net book value

2010 Baht

Consolidated 2009 Baht

28,529,156,466 6,133,464,474 2,457,316,292 (27,568,738) 150,777,223 (5,537,914,927) (990,111,750) 30,715,119,040

24,494,257,861 6,323,091,601 1,360,914,420 (4,428,048,700) 1,038,179,750 (259,238,466) 28,529,156,466

179

13 Investments in subsidiaries and interests in joint ventures, net (continued) The movements in investments in subsidiaries and interests in joint ventures can be analysed as follows: (continued)

2010 Baht

Company 2009 Baht

Opening net book value Increase in share capital of joint ventures (Note 13.2) Increase in share capital of subsidiaries Return of share capital from a joint venture (Note 13.2) Return of share capital from discontinued operation of a subsidiary (Note 13.1) Loss from discontinued operation of a subsidiary (Note 13.1) Acquisition of a joint venture (Note 27) Business transfer from a subsidiary (Note 30) Investment in a new subsidiary (Note 13.1)

32,219,281,966 2,622,316,291 (27,568,738)

34,324,559,966 1,502,530,250 542,548,000 -

640,915

(7,508,981) (3,491,019) 562,843,750 (4,702,200,000) -

Closing net book value

34,814,670,434

32,219,281,966

Principal movements in investments in subsidiaries during the year ended 31 December 2010 EGCO Engineering and Service Co., Ltd. (ESCO)

On 6 January 2010, ESCO, a subsidiary of the Company, purchased an additional investment in ordinary shares of Egcom Tara Company Limited (Egcom Tara) from a third party, totaling 1,420,860 shares, which is equivalent to 4.12% of the total ordinary shares of Egcom Tara. The total consideration was Baht 28 million. This additional share purchase has increased the investment portion of the Group in Egcom Tara from 70.07% to 74.19%. North Pole Investment Co., Ltd.

On 16 July 2010, EGCO established a wholly-owned subsidiary, North Pole Investment Company Limited, in the Republic of Mauritius to hold shares in EGCO International (B.V.I.) Limited (EGCO BVI). EGCO BVI registered capital is US Dollars 181 million, which is equivalent to Baht 5,770 million, and consists of 181,096,921 ordinary shares priced at US Dollar 1 each. Principal movements in investments in subsidiaries during the year ended 31 December 2009 Rayong Electricity Generating Co., Ltd. (REGCO)

On 1 October 2009, REGCO transferred its entire business to the Company. All assets, liabilities and agreements with third parties were transferred to the Company at the book value of net assets as at 30 September 2009. At the extraordinary shareholdersâ&#x20AC;&#x2122; meeting of REGCO on 2 October 2009, approval was granted to dissolve REGCO, and REGCO registered its dissolution with the Ministry of Commerce on the same date (as described in Note 30). However, the business transfer is part of the restructuring of the Groupâ&#x20AC;&#x2122;s operations and does not have any impact on the consolidated financial statements. Sustainable Energy and Environmental Development Co., Ltd. (SEED)

Sustainable Energy and Environmental Development Co., Ltd. (SEED), a wholly-owned subsidiary of the Company registered and resident in Thailand registered its liquidation with the Ministry of Commerce on 19 June 2009. The Company received a return of share capital of Baht 8 million and a loss from the liquidation of a subsidiary of Baht 3 million was recognised as expense in the company statement of income for the year ended 31 December 2009. The dissolution process of SEED was completed on 30 November 2009. 180

13 Investments in subsidiaries and interests in joint ventures, net (continued) Principal movements in investments in subsidiaries during the year ended 31 December 2009 (continued) Quezon Power (Philippines), Limited Co. (QPL)

On 30 March 2009, EGCO International (B.V.I) Ltd. (EGCO BVI) purchased 100% of the outstanding shares of GPI-I, Ltd. (GPI-I) from GPSF Cayman I LDC (GPSF), where GPI-I had 10% ownership in GPIQ and GPIQ had an indirect interestin QPL. This transaction increases EGCO BVI’s aggregated indirect shareholding in QPL from 23.40% to 26.00% (as described in Note 27). 13.1 Investments in subsidiaries, net

The subsidiaries are as follows:

Company 2010 Business

Paid-up share capital Baht’000

Portion of Investment (%)

Cost Method Baht’000

Dividend Baht’000

4,850,000 400,000

474,715 142,365

129,500

94,720

(Including indirect holding) Subsidiaries incorporated in Thailand Khanom Electricity Generating Co., Ltd. EGCO Engineering and Service Co., Ltd. and its subsidiaries - Agro Energy Co., Ltd. - Egcom Tara Co., Ltd. EGCO Green Energy Co., Ltd. and its subsidiary - Roi-Et Green Co., Ltd. EGCO Cogeneration Co., Ltd. Subsidiary incorporated in overseas North Pole Investment Company Limited (incorporated in the Republic of Mauritius) and its subsidiaries and joint ventures - EGCO International (B.V.I.) Limited (incorporated in British Virgin Islands) - New Growth Cooperatief U.A (incorporated in Netherlands) - New Growth B.V. (incorporated in Netherlands) - Conal Holdings Corporation (Conal) (incorporated in the Philippines) - Quezon Power (Philippines), Limited Co. (QPL) (incorporated in the Philippines) Less Impairment

Electricity generation Power plant operation and maintenance services Trading/delivery of natural scrap Tap water business Investment in biomass fueled electricity generation plant Husk fueled electricity generation plant Electricity generation

4,850,000 400,000

99.99 99.99 99.99

175,000

74.19 74.00 95.00

1,060,000

80.00

891,894

160,000

Investment in energy related business

5,770,026

100.00

5,716,787

Investment in energy related business Investment in energy related business Investment in energy related business Investment in power projects Electricity generation

12,569

100.00

2,169

100.00

1,094

100.00

729,320

40.00

7,340,472

26.00 (47,820) 11,940,361

871,800

181

13 Investments in subsidiaries and interests in joint ventures, net (continued) 13.1 Investments in subsidiaries, net (continued)

The subsidiaries are as follows: (continued)

Company 2009 Business

Paid-up Portion of share capital Investment Baht’000 (%)

Cost Method Baht’000

Dividend Baht’000

4,850,000 400,000

1,304,697 424,827 40,074

129,500

74,000

(Including indirect holding) Subsidiaries incorporated in Thailand Rayong Electricity Generating Co., Ltd. Khanom Electricity Generating Co., Ltd. EGCO Engineering and Service Co., Ltd. and its subsidiaries - Agro Energy Co., Ltd. - Egcom Tara Co., Ltd. EGCO Green Energy Co., Ltd. and its subsidiary - Roi-Et Green Co., Ltd.

Electricity generation Electricity generation Power plant operation and maintenance services Trading/delivery of natural scrap Tap water business Investment in biomass fueled electricity generation plant Husk fueled electricity generation plant Electricity generation

EGCO Cogeneration Co., Ltd. Subsidiary incorporated in overseas EGCO International (B.V.I.) Limited Investment in energy (incorporated in British Virgin Islands) and related business its joint ventures - Conal Holdings Corporation (Conal) Investment in power (incorporated in the Philippines) projects - Quezon Power (Philippines), Limited Co. Electricity generation (QPL) (incorporated in the Philippines) Less Impairment

182

4,850,000 400,000

99.99 99.99 99.99

175,000

70.00 74.00 95.00

1,060,000

80.00

891,894

100.00

5,716,146

729,320

40.00

7,340,472

26.00 (47,820) 11,939,720

1,843,598

13 Investments in subsidiaries and interests in joint ventures, net (continued) 13.2 Interests in joint ventures

The joint ventures are as follows:

Consolidated 2010 Business

Portion of Investment (%)

Cost Method Baht’000

Equity Method Baht’000

Dividend Baht’000

50.00

6,672,769

11,612,632

1,233,700

50.00

10,433,597

10,296,183

3,800,966

33.33

198,000

164,403

(Including indirect holding) Joint ventures incorporated in Thailand Gulf Electric Public Co., Ltd. (GEC) and its subsidiaries BLCP Power Ltd. (BLCP) Natural Energy Development Co., Ltd. (NED)

Investment in power project Electricity generation Development of renewable energy project

Joint ventures incorporated in the Philippines Conal Holdings Corporation (Conal) and its subsidiaries Quezon Power (Philippines), Limited Co. (QPL)

Investment in power project Electricity generation

40.00

954,647

615,011

128,355

26.00

4,833,293

4,610,076

374,894

Electricity Generation

35.00

5,569,943

3,416,814

28,662,249

30,715,119

5,537,915

Joint venture incorporated in the Lao People’s Democratic Republic Nam Theun 2 Power Company Limited (NTPC) Total interests in joint ventures

183

13 Investments in subsidiaries and interests in joint ventures, net (continued) 13.2 Interests in joint ventures (continued)

The joint ventures are as follows: (continued)

Consolidated 2009 Business

Portion of Investment (%)

Cost Method Baht’000

Equity Method Baht’000

Dividend Baht’000

50.00

6,672,769

10,398,240

1,392,219

50.00

9,902,800

10,699,218

2,665,311

50.00

554,844

40.00

954,647

681,408

87,678

26.00

4,833,293

4,834,532

282,840

25.00

3,141,149

1,360,914

26,059,502

28,529,156

4,428,048

(Including indirect holding) Joint ventures incorporated in Thailand Gulf Electric Public Co., Ltd. (GEC) and its subsidiaries BLCP Power Ltd. (BLCP)

Investment in power project Electricity generation Power Generation Services Co., Ltd. (PGS) Power plant operation and maintenance services Joint ventures incorporated in the Philippines Conal Holdings Corporation (Conal) Investment in power and its subsidiaries project Quezon Power (Philippines), Limited Electricity Co. (QPL) generation Joint venture incorporated in the Lao People’s Democratic Republic Nam Theun 2 Power Company Limited (NTPC) Total interests in joint ventures

184

Electricity Generation (construction phase)

13 Investments in subsidiaries and interests in joint ventures, net (continued) 13.2 Interests in joint ventures (continued)

The joint ventures are as follows: (continued)

Business

Investment (%)

Portion of Method Baht’000

Company 2010 Cost Dividend Baht’000

(Including indirect holding) Joint ventures incorporated in Thailand Gulf Electric Public Co., Ltd. (GEC) and its subsidiaries BLCP Power Ltd. (BLCP) Natural Energy Development Co., Ltd. (NED) Joint venture incorporated in the Lao People’s Democratic Republic Nam Theun 2 Power Company Limited (NTPC) Total interests in joint ventures

Investment in power project Electricity generation Development of renewable energy projects

50.00

6,672,769

1,233,700

50.00 33.33

10,433,597 198,000

3,800,966 -

Electricity generation

35.00

5,569,943

22,874,309

5,034,666

Company 2009 Business

Portion of Investment (%)

Cost Method Baht’000

Dividend Baht’000

50.00

6,672,769

1,392,219

50.00 33.33

9,902,800 8,000

2,665,311 -

50.00

554,844

25.00

3,141,149

20,279,562

4,057,530

(Including indirect holding) Joint ventures incorporated in Thailand Gulf Electric Public Co., Ltd. (GEC) and its subsidiaries BLCP Power Ltd. (BLCP) Natural Energy Development Co., Ltd. (NED) Power Generation Services Co., Ltd. (PGS) Joint venture incorporated in the Lao People’s Democratic Republic Nam Theun 2 Power Company Limited (NTPC) Total interests in joint ventures

Investment in power project Electricity generation Development of renewable energy projects Power plant operation and maintenance services Electricity generation (construction phase)

As at 31 December 2010 and 2009, according to the conditions under the loan agreement of BLCP, the common shares of BLCP were pledged as collateral for its long-term loans.

185

13 Investments in subsidiaries and interests in joint ventures, net (continued) 13.2 Interests in joint ventures (continued)

The following changes in interests in joint ventures occurred during the year ended 31 December 2010 Nam Theun 2 Power Company Limited (NTPC)

In March 2010, the Company received cash from Lao Holding State Enterprise (LHSE) amounting to US Dollars 83,333.34 which is equivalent to Baht 4 million and represented the portion that the Company initially invested in NTPC on behalf of LHSE as stated in Amended and Restated Shareholders Agreement dated 25 April 2005. On 29 April 2010, NTPC called for additional paid-up share capital at US Dollars 23.5 million. The Group paid for additional paid-up shares in the same portion as its original investment, totaling US Dollars 5.875 million which is equivalent to Baht 190 million. On 30 April 2010, NTPC has commenced the Commercial Operation Date (COD) as specified in the Power Purchase Agreement (PPA) with EGAT. The contract is effective for the period of 25 years starting from the COD. On 29 September 2010, the Company acquired 450,000 shares or 10% of the outstanding shares in NTPC from Italian - Thai Development Public Company Limited (ITD) in the price of US Dollars 73.33 million which is equivalent to Baht 2,243 million (as described in Note 27). Power Generation Services Co., Ltd. (PGS)

PGS is a joint venture of the Company who is engaged in the provision of generation and maintenance services to BLCP (a joint venture of the Company). On 19 January 2010, the entired business of PGS was transferred to BLCP and BLCP issued new ordinary shares as a consideration upon the business transfer. PGS registered its liquidation with the Ministry of Commerce and transferred the investment in BLCP to the Company in return on the same date. The Company considered that such event is an investment restructuring within the Group. Therefore, there shall be no effect to the investmentâ&#x20AC;&#x2122;s value held by the Company. At the Extraordinary Shareholdersâ&#x20AC;&#x2122; meeting dated 14 July 2010, the shareholders of PGS had a resolution to return the remaining investment after completed the liquidation process to shareholders amounting to Baht 48 million which equivalent to Baht 24 million based on the Company proportion. The Company received the return of investment on 14 July 2010 and recorded this transaction by decreasing the investment in BLCP. Natural Energy Development Co., Ltd. (NED)

On 28 April 2010, NED issued additional ordinary shares of 198 million shares at par value of Baht 10 per share. The Group paid 25% of the additional paid-up shares in the same portion as its original investment, totaling Baht 165 million. On 22 December 2010, NED issued additional ordinary shares of 30 million shares at par value of Baht 10 per hare. The Group paid 25% of the additional paid-up shares in the same portion as its original investment, totaling Baht 25 million.

186

13 Investments in subsidiaries and interests in joint ventures, net (continued) 13.2 Interests in joint ventures (continued)

The following changes in interests in joint ventures occurred during the year ended 31 December 2009 Nam Theun 2 Power Company Limited (NTPC)

During 2009, NTPC called for additional paid-up share capital of US Dollars 127.98 million. The Group paid US Dollars 42.67 million, which is equivalent to Baht 1,503 million, for the additional paid-up shares based on the proportion of its original investment. Natural Energy Development Co., Ltd. (NED)

In July 2009, the Executive Committee approved the joint investment with CLP Thailand Renewables Limited and Diamond Generating Asia, Limited in NED, which will be dedicated to the development of renewable energy projects in Thailand. Each of the parties will hold equal 33.33% stakes in NED with a value of Baht 8 million. Power Generation Services Co., Ltd. (PGS)

On 14 December 2009, the Companyâ&#x20AC;&#x2122;s Executive Committee approved the purchase of ordinary shares of PGS from CLP Power (Southeast Asia) Operation Limited representing 50% of the total outstanding shares for US Dollars 16.75 million, equivalent to Baht 555 million (as described in Note 27). 13.3 Dividends receivable from subsidiaries and joint ventures

The principal movements of dividends receivable are as follows:

For the years ended 31 December Opening balance Dividends declared by subsidiaries and joint ventures Dividends received from subsidiaries and joint ventures Closing balance

2010 Baht

Consolidated 2009 Baht

2010 Baht

Company 2009 Baht

4,755,176,964

3,889,865,572

6,123,509,671

7,130,153,391

5,537,914,927

4,428,048,677

5,906,465,803

5,901,128,751

(4,536,948,586)

(3,562,737,285)

(4,920,419,170)

(6,907,772,471)

5,756,143,305

4,755,176,964

7,190,556,304

6,123,509,671

187

13 Investments in subsidiaries and interests in joint ventures, net (continued) 13.4 Net liabilities in a joint venture

The Company entered into agreements to provide financial support to Nam Theun 2 Power Company Limited (NTPC), which is a joint venture of the Company, amounting to US Dollars 94 million. As at 31 December 2009, the outstanding balance of the financial support was US Dollars 25 million. The Company has accounted for interests in joint ventures under the equity method of accounting in the consolidated financial statements. During the year ended 31 December 2009, NTPC called for additional paid-up share capital of Baht 1,503 million. The Group paid for the additional paid-up shares based on the proportion of its original investment. Accordingly, the share of the loss from NTPC did not exceed the interest in the joint venture. Consequently, the net liability has been transferred to interest in a joint venture (Note 13.2). In addition, the Company entered into a loan agreement with Natural Energy Development Co., Ltd. (NED) amounting to Baht 32 million (as mentioned in Note 28(f)). For the year ended 31 December 2009, the Company recognised the accumulated excess of the loss over the interest in NED amounting to Baht 3 million in the consolidated financial statements. For the year ended 31 December 2010, NED issued the registered share capital amounting to Baht 2,280 million which the Company purchased the registered share capital follow the same investment ration that affect share of loss from NED not over the total investment. So the Company move to present on interests in a joint venture (Note 13.2). The movements in net liabilities arising from interests in joint ventures in the consolidated financial statements for the year ended 31 December are as follows:

Opening net book amount Acquisition of a joint venture Share of loss for the year Capital increase of a joint venture Translation adjustments Transfer of net liabilities to interests in a joint venture

2010 Baht

Consolidated 2009 Baht

(2,909,914) (11,312,863) 165,000,000 (150,777,223)

(39,667,033) 8,000,000 (49,736,931) 1,502,530,250 (63,121,780) (1,360,914,420)

(2,909,914)

Closing net book amount The amount of net liabilities in the joint ventures is as follows:

Consolidated 2010 Business

Portion of Investment (%)

Cost Method Bahtâ&#x20AC;&#x2122;000

Equity Method Bahtâ&#x20AC;&#x2122;000

Dividend Bahtâ&#x20AC;&#x2122;000

198,000

(Including indirect holding)

Joint venture incorporated in Thailand Natural Energy Development Co., Ltd. (NED)

Development of renewable energy projects

33.33

(transfer of net liabilities to interest in a joint venture)

188

13 Investments in subsidiaries and interests in joint ventures, net (continued) 13.4 Net liabilities in joint ventures (continued)

The amount of net liabilities in the joint ventures is as follows: (continued)

Consolidated 2009 Business

Portion of Investment (%)

Cost Method Baht’000

Equity Method Baht’000

Dividend Baht’000

8,000

(2,910)

(Including indirect holding)

Joint venture incorporated in Thailand Natural Energy Development Co., Ltd. (NED) Development of renewable energy projects

33.33

Joint venture incorporated in the Lao People’s Democratic Republic Nam Theun 2 Power Company Limited Electricity generation 25.00 3,141,149 (NTPC) (construction phase) (transfer of net liabilities to interest in a joint venture) 3,149,149 (2,910)

13.5 The Group’s share of the assets, liabilities, revenues and expenses of the joint ventures is as follows: Interest in Gulf Electric Public Company Limited (GEC)

Gulf Electric Public Company Limited is a joint venture between the Company and J-Power Holdings (Thailand) Company Limited (JPHT) and Mitr Power (Thailand) Company Limited. GEC’s business is the generation of electricity for sale to Electricity Generating Authority of Thailand (EGAT) and industrial users under long-term purchasing agreements. The Group has a 50% interest in GEC. Interest in BLCP Power Ltd. (BLCP)

BLCP Power Ltd. is a joint venture between the Company and Banpu Coal Power Limited. BLCP’s business is to generate electricity from the coal fire electricity generating plant for sale to EGAT under long-term purchasing agreement, in which the Group has a 50% interest. Interest in Conal Holdings Corporation (Conal)

Conal Holdings Corporation is a joint venture between EGCO International (B.V.I.) Limited, which is a subsidiary of the Company, and Alsons Consolidated Resources, Inc. Conal’s business is the generation of electricity for sale to the National Power Corporation (which is part of the government sector of the Philippines) and the provision of maintenance services and power plant operations, in which the Group has a 40% interest. Interest in Nam Theun 2 Power Company Limited (NTPC)

Nam Theun 2 Power Company Limited is a joint venture between the government of Lao PDR (through Lao Holding State Enterprise (LHSE)), EDF International (EDFI) and the Company. NTPC’s business is the generation of electricity for sale to EGAT and Electricite Du Laos (EDL), in which the Group has a 35% interest.

189

13 Investments in subsidiaries and interests in joint ventures, net (continued) 13.5 The Group’s share of the assets, liabilities, revenues and expenses of the joint ventures is as follows (continued): Interest in Quezon Power (Philippines), Limited Co. (QPL)

Quezon Power (Philippines), Limited Co. is a joint venture of EGCO International (B.V.I.) Limited (EGCO BVI), the Company’s subsidiary. EGCO BVI holds 100% of the shares of GPI Quezon Ltd. (GPIQ) and GPIQ holds 26% of the total shares of QPL. Accordingly, EGCO BVI is an indirect shareholder of QPL, with a 26% interest. QPL’s business is the generation of electricity for sale to the major private sector of the Philippines under long term purchasing agreements. Interest in Natural Energy Development Co., Ltd. (NED)

Natural Energy Development Co., Ltd. is a joint venture between the Company, CLP Thailand Renewables Limited and Diamond Generating Asia Limited. The joint venture is governed by a joint venture agreement and the Group has a 33.33% interest. NED’s business is to generate electricity from its solar power plant for sale to EGAT. As at 31 December 2010, NED is still under construction. Details of the financial position and joint venture’s return follow the company’s ownership are as follows:

Country of incorporation GEC and its subsidiaries BLCP NED Conal and its subsidiaries QPL NTPC

Thailand 22,842,591 Thailand 24,790,948 Thailand 523,301 The Philippines 1,305,093 The Philippines 6,785,623 The Lao People’s 13,375,354 Democratic Republic

190

(Including indirect holding) 2,454,339 50% 3,035,365 50% (22,687) 33% 67,274 40% 615,715 26% 120,204 35%

11,247,040 18,026,639 358,898 282,399 2,650,206 11,238,982

15,128,337 8,989,336 649 654,3671 2,774,911 1,727,718

Assets Baht’000

Liabilities Baht’000

For the year ended 31 December 2009 Revenue Profit (loss) % interest Baht’000 Baht’000 held

23,271,483

12,896,572

15,003,470

Thailand 26,687,624 Thailand 31,342 Thailand 140,748 The Philippines 1,382,054 The Philippines 7,661,369 The Lao People’s 9,557,591 Democratic Republic

19,166,032 34,252 110,610 399,105 3,334,446 8,196,677

9,916,564 435 617,583 2,810,959 261,101

Country of incorporation GEC and its subsidiaries BLCP NED PGS Conal and its subsidiaries QPL NTPC

Assets Baht’000

For the year ended 31 December 2010 Liabilities Revenue Profit (loss) % interest Baht’000 Baht’000 Baht’000 held

Thailand

(Including indirect holding) 2,541,459 50% 3,370,888 (10,910) 90,765 533,521 (38,827)

50% 33% 50% 40% 26% 25%

14 Property, plant and equipment, net Consolidated Buildings and land Land improvements Baht Baht

Power plants, substation, transmission system and water plants Baht

Equipment and motor Construction vehicles in progress Baht Baht

Total Baht

At 31 December 2008 Cost Less Accumulated depreciation Net book value

1,527,881,309 1,527,881,309

3,894,535,590 35,455,048,582 (2,178,661,368) (21,798,658,924) 1,715,874,222 13,656,389,658

504,109,572 (377,135,004) 126,974,568

13,593,288 41,395,168,341 - (24,354,455,296) 13,593,288 17,040,713,045

Year ended 31 December 2009 Opening net book value 1,527,881,309 Additions Capitalisation of capital spare parts Transfer of capital spare parts out Disposals, net Write-off, net Transfer Depreciation charge (Note 22) Closing net book value 1,527,881,309

1,715,874,222 6,369,528 (53,200) 46,433,268 (199,521,347) 1,569,102,471

13,656,389,658 19,831,166 273,489,780 (216,105,345) (142,402) 66,738,350 (1,971,851,565) 11,828,349,642

126,974,568 40,600,349 (3,259,119) (21,943) 4,950,299 (43,073,731) 126,170,423

13,593,288 121,504,200 (490,000) (118,121,917) 16,485,571

17,040,713,045 188,305,243 273,489,780 (216,105,345) (3,944,721) (21,943) (2,214,446,643) 15,067,989,416

Consolidated Buildings and land Land improvements Baht Baht

Power plants, substation, transmission system and water plants Baht

Equipment and motor Construction vehicles in progress Baht Baht

Total Baht

At 31 December 2009 Cost Less Accumulated depreciation Net book value

1,527,881,309 1,527,881,309

3,947,285,185 35,424,499,562 (2,378,182,714) (23,596,149,920) 1,569,102,471 11,828,349,642

524,380,621 (398,210,198) 126,170,423

16,485,571 41,440,532,248 - (26,372,542,832) 16,485,571 15,067,989,416

11,828,349,642 17,717,580 718,446,962 (262,927,304) (108,532) (14,463,975) (1,961,544,761) 10,325,469,612

126,170,423 26,590,737 (235,502) (49,745) 30,123,044 (45,946,090) 136,652,867

16,485,571 15,067,989,416 42,502,902 95,010,950 718,446,962 - (262,927,304) (1,347,805) (49,745) (42,464,226) - (2,209,844,328) 16,524,247 13,407,278,146

3,977,879,113 35,714,286,294 (2,578,311,002) (25,388,816,682) 1,399,568,111 10,325,469,612

549,433,023 (412,780,156) 136,652,867

16,524,247 41,787,185,986 - (28,379,907,840) 16,524,247 13,407,278,146

Year ended 31 December 2010 Opening net book value 1,527,881,309 Additions 1,182,000 Capitalisation of capital spare parts Transfer of capital spare parts out Disposals, net Write-off, net Transfer Depreciation charge (Note 22) Closing net book value 1,529,063,309

1,569,102,471 7,017,731 (1,003,771) 26,805,157 (202,353,477) 1,399,568,111

At 31 December 2010 Cost Less Accumulated depreciation Net book value

1,529,063,309 1,529,063,309

191

14 Property, plant and equipment, net (continued) Company Power plants, substation, transmission system, operating and Buildings and maintenance structures equipment Land Baht Baht Baht

Office equipment, furniture, computers and motor Construction vehicles in progress Baht Baht

Total Baht

At 31 December 2008 Cost Less Accumulated depreciation Net book value

189,041,766 189,041,766

619,473,511 (307,916,176) 311,557,335

257,566,421 (190,349,793) 67,216,628

1,066,081,698 (498,265,969) 567,815,729

189,041,766 126,531,679 315,573,445

311,557,335 473,462,340 2,422,098 1,143,865 (49,217,330) 739,368,308

5,144,820,420 281,805 61,786,715 (253,452,299) 4,953,436,641

67,216,628 11,375,195 23,402,424 (2,994,425) (21,942) (22,656,335) 76,321,545

53,236,716 21,241,358 (62,930,580) 11,547,494

567,815,729 5,809,426,350 47,347,685 (2,994,425) (21,942) (325,325,964) 6,096,247,433

Year ended 31 December 2009 Opening net book value Business transfer from a subsidiary Additions Disposals, net Write-off, net Transfer Depreciation charge (Note 22) Closing net book value

Company Power plants, substation, transmission system, operating and Buildings and maintenance structures equipment Land Baht Baht Baht

Office equipment, furniture, computers and motor Construction vehicles in progress Baht Baht

Total Baht

At 31 December 2009 Cost Less Accumulated depreciation Net book value

315,573,445 315,573,445

1,096,501,814 (357,133,506) 739,368,308

5,206,888,940 (253,452,299) 4,953,436,641

274,596,493 (198,274,948) 76,321,545

11,547,494 11,547,494

6,905,108,186 (808,860,753) 6,096,247,433

315,573,445 315,573,445

739,368,308 1,343,539 9,635,345 (107,118,642) 643,228,550

4,953,436,641 138,995 219,764,097 (102,140,231) (11) 2,345,000 (983,161,900) 4,090,382,591

76,321,545 11,964,063 (91,377) (49,745) 14,499,173 (28,335,147) 74,308,512

11,547,494 14,932,024 (26,479,518) -

6,096,247,433 28,378,621 219,764,097 (102,140,231) (91,388) (49,745) (1,118,615,689) 5,123,493,098

315,573,445 315,573,445

1,107,480,698 5,326,812,730 (464,252,148) (1,236,430,139) 643,228,550 4,090,382,591

274,137,402 (199,828,890) 74,308,512

7,024,004,275 (1,900,511,177) 5,123,493,098

Year ended 31 December 2010 Opening net book value Additions Capitalisation of capital spare parts Transfer of capital spare parts out Disposals, net Write-off, net Transfer Depreciation charge (Note 22) Closing net book value

At 31 December 2010 Cost Less Accumulated depreciation Net book value

192

14 Property, plant and equipment, net (continued) As at 31 December 2010, property, plant and equipment amounting to Baht 7,867 million in the consolidated financial statements were mortgaged and pledged as collateral for long-term loans and debentures, as described in Notes 17 and 18 (2009: Baht 8,540 million). As at 31 December 2010, the Group had no significant capital commitments in respect of construction of power plants and purchases of equipment but not yet recognised in the consolidated financial statements (2009: Nil). As at 31 December 2010, the gross carrying amount of fully depreciated equipment that was still in use was Baht 626 million and Baht 292 million for the consolidated and company financial statements, respectively (2009: Baht 589 million and Baht 287 million for the consolidated and company financial statements, respectively).

15 Right in long-term power and tap water purchase agreements, net

2010 Baht

Consolidated 2009 Baht

Opening net book value Addition investment in subsidiaries Amortisation (Note 22) Closing net book value

181,646,649 8,994,328 (15,301,794) 175,339,183

196,171,740 (14,525,091) 181,646,649

At 31 December Cost Less Cumulated amortisation Net book value

306,172,492 (130,833,309) 175,339,183

297,178,164 (115,531,515) 181,646,649

For the years ended 31 December

16 Other non-current assets, net

Deposits Refundable tax Land for future projects Licenses for operating power plants Others

2010 Baht

Consolidated 2009 Baht

2010 Baht

Company 2009 Baht

13,593,824 322,071,012 80,700,929 40,462,762 456,828,527

13,995,382 3,661,229 322,071,012 86,870,818 43,426,467 470,024,908

11,527,548 322,071,012 333,598,560

11,527,549 3,661,229 322,071,012 950,400 338,210,190

193

17 Long-term loans, net The long-term loans are as follows:

Current portion of long-term loans, net Thai Baht US Dollars Japanese Yen Less Deferred financing fee Long-term loans, net Thai Baht US Dollars Japanese Yen Less Deferred financing fee, net Total long-term loans, net

2010 Baht

Consolidated 2009 Baht

2010 Baht

Company 2009 Baht

102,447,500 87,283,640 37,721,175 (3,754,608) 223,697,707

88,152,500 83,088,148 36,853,387 (3,754,608) 204,339,427

8,364,522,500 310,567,371 175,780,673 (10,624,308) 8,840,246,236 9,063,943,943

8,466,970,000 440,142,618 208,590,172 (14,378,916) 9,101,323,874 9,305,663,301

8,000,000,000 8,000,000,000 8,000,000,000

As at 31 December 2010, the long-term loans of the Company amounted to Baht 8,000 million. The long-term loans are unsecured loans from local financial institutions. The interest rate on Baht 4,000 million of the long-term loans is equal to the six month THBFIX rate plus a certain margin per annum. Interest is payable on a semi-annual basis and the principal is to be paid in 2014. The interest rate on the other Baht 4,000 million of long-term loans is fixed at 4.75% per annum for the first five years, and then changes to 5.35% per annum for the last two years. Interest is payable on a monthly basis and the principal is to be paid in 2016. Long-term loans at subsidiaries are secured liabilities. The long-term loans are secured over land, buildings, power plants and equipment of the subsidiaries. The subsidiaries are required to maintain cash reserves which are provided from the proceeds of sales of electricity for the purpose of repayment of principal and payment of interest due within one year and as a reserve for minimising the exchange risk (refer to Note 9). In addition, the Power Purchase Agreements, the Asset Purchase Agreements, the Major Maintenance Agreements and insurance policies have been assigned as collateral in accordance with the conditions under the Loan Agreements and debentures. However, the Company (formerly Rayong Electricity Generating Company Limited) repaid the whole amount of its outstanding loan in 2006. As at 31 December 2010, the Power Purchase Agreement of the Company has not been pledged as collateral in accordance with the condition under the Loan Agreement.

194

17 Long-term loans, net (continued) The interest rate exposure on the long-term loans of the Group after taking account of interest rate swap contracts is as follows:

Long-term loans, net - at fixed rates - at floating rates Total long-term loans, net

2010 Baht

Consolidated 2009 Baht

2010 Baht

Company 2009 Baht

5,063,943,943 4,000,000,000 9,063,943,943

9,305,663,301 9,305,663,301

4,000,000,000 4,000,000,000 8,000,000,000

8,000,000,000 8,000,000,000

After taking account of interest rate swaps, the weighted average effective interest rates of the long-term loans of the Group were approximately 7.17% per annum for US Dollars loans, 2.83% per annum for Japanese Yen loans and 4.64% per annum for Thai Baht loans. (2009: US Dollars 7.49% per annum, Japanese Yen 2.78% per annum and Thai Baht 6.19% per annum) After taking account of interest rate swaps, the weighted average effective interest rate of the long-term loans of the Company was 4.57% per annum for Thai Baht loans. (2009: 6.32% per annum) Maturity of long-term loans is as follows:

Within 1 year Later than 1 year and not later than 5 years Later than 5 years Total long-term loans, net

2010 Baht

Consolidated 2009 Baht

2010 Baht

Company 2009 Baht

223,697,707

204,339,427

4,820,710,190 4,019,536,046 9,063,943,943

5,044,228,280 4,057,095,594 9,305,663,301

4,000,000,000 4,000,000,000 8,000,000,000

Credit facilities

As at 31 December 2010, the Group had the available credit facilities from financial institutions amounted to Baht 4,333 million and US Dollars 100 million of which Baht 4,000 million and US Dollars 100 million for the Company (2009: Baht 4,333 million of which Baht 4,000 million for the Company).

195

18 Debentures The debentures are debentures in Thai Baht of a subsidiary as follows:

Current portion of debentures Debentures, net Total debentures

2010 Baht

Consolidated 2009 Baht

2010 Baht

Company 2009 Baht

496,621,203 496,621,203

913,608,200 496,670,303 1,410,278,503

Debentures are secured liabilities. The subsidiary is required to maintain reserves for repayment of principal and payment of interest due within one year. These cash reserves are provided from the proceeds of sales of electricity as described in Note 9. The subsidiary also has to pledge the relevant assets and agreements as collateral as described in Note 17. The weighted average effective interest rate exposure of the debentures was 13.86% per annum (2009: 12.64% per annum). Maturity of debentures is as follows:

For the years ended 31 December 2010 Baht

Consolidated 2009 Baht

496,621,203 496,621,203

913,608,200 496,670,303 1,410,278,503

2010 Baht

Consolidated 2009 Baht

2010 Baht

Company 2009 Baht

165,202,205 12,799,643 7,587,214 1,912,590 (6,968,516) 180,533,136

158,487,484 13,777,646 8,101,861 (15,164,786) 165,202,205

75,265,316 6,196,281 3,767,703 925,881 (3,995,690) 82,159,491

45,171,386 3,970,965 2,449,408 (15,164,786) 38,838,343 75,265,316

Within 1 year Later than 1 year but not later than 5 years Total debentures

19 Retirement benefits obligation

Opening balance Retirement benefit expenses Interest cost Actuarial gains Retirement benefit paid Retirement benefits obligation from business transfer Closing balance

The following table is a summary of the assumptions relating to the actuarial technique as at the balance sheet date: Discount rate as at 31 December Salary increase rate Turnover rate Pre-retirement mortality rate 196

2010

2009

4.80% 5.00% - 10.00% 0.00% - 5.00% 0.11% - 2.18%

5.40% 6.00% - 11.00% 0.00% - 5.00% 0.11% - 2.18%

20 Legal reserve

Opening balance Appropriation during the year Closing balance

2010 Baht

Consolidated 2009 Baht

2010 Baht

Company 2009 Baht

530,000,000 530,000,000

Under the Public Companies Act B.E. 2535, the Company is required to set aside as a legal reserve at least 5% of its net profit after accumulated deficit brought forward (if any) until the reserve is not less than 10% of the registered capital. The legal reserve is non-distributable.

21 Minority interests

Opening balance Shares of net profit from subsidiaries and interests in joint ventures Addition investment in subsidiary Dividend payment of subsidiaries Closing balance

2010 Baht

Consolidated 2009 Baht

2010 Baht

Company 2009 Baht

521,174,207

476,263,893

115,330,432 (19,422,872) (107,987,288) 509,094,479

114,178,106 (69,267,792) 521,174,207

2010 Baht

Consolidated 2009 Baht

2010 Baht

Company 2009 Baht

2,209,844,328

2,214,446,643

1,118,615,689

325,325,964

15,301,794

14,525,091

322,635,033 1,050,335,011

256,516,680 965,614,970

118,211,344 477,030,452

52,648,758 277,076,690

22 Expense by nature The following expenditure items have been charged in arriving at net profit:

Depreciation on plant and equipment (Note 14) Amortisation of right in long-term power and tap water purchase agreements (Note 15) Major repair and maintenance expense of power plants Staff costs

197

23 Earnings per share Basic earnings per share is calculated by dividing the net profit for the year attributable to shareholders by the weighted average number of ordinary shares issued and paid-up during the year, net of treasury stock.

2010 Baht Net profit attributable to shareholders (Baht) 6,792,241,503 Weighted average number of ordinary share in issue (Shares) 526,465,000 Basic earnings per share (Baht) 12.90

Consolidated 2009 Baht

2010 Baht

Company 2009 Baht

7,935,595,850

6,142,120,802

6,188,803,652

526,465,000 15.07

526,465,000 11.67

526,465,000 11.76

There are no dilutive potential ordinary shares in issue during the periods presented, so no diluted earnings per share is presented.

24 Dividends (a) At the Annual General Shareholdersâ&#x20AC;&#x2122; Meeting dated 22 April 2010, the shareholders approved the payment of dividends in respect of the operating results for the six-month period ended 31 December 2009 for 526,465,000 shares at Baht 2.75 per share, totaling Baht 1,448 million. These dividends were paid to shareholders on 6 May 2010 (2009: Dividends for 526,465,000 shares of Baht 2.50 per share, totaling Baht 1,316 million). The shareholders acknowledged the payments of interim dividends in respect of operating results for the first six-month period of 2009 for 526,465,000 shares at Baht 2.50 per share, totaling Baht 1,316 million. These dividends were paid to shareholders on 17 September 2009. (b) The Board of Directorsâ&#x20AC;&#x2122; meeting on 23 August 2010 approved to pay interim dividends in respect of the operating results for the six-month period ended 30 June 2010 for 526,465,000 shares at Baht 2.50 per share, totaling Baht 1,316 million. These dividends were paid to shareholders on 17 September 2010. In addition, the Company reversed dividend payable, payable to foreign investors who were unable to exercise rights to receive such dividends, amounting to Baht 1 million during 2010 (2009: Baht 14 million).

25 Promotional privileges The Group has been granted promotional privileges by the Office of the Board of Investment under promotion certificates in respect of electricity and tap water generation. These five subsidiaries have been granted exemption from certain taxes and duties as detailed in the certificates including exemption from corporate income tax for a period of eight years from the date of first revenue. As promoted entities, these subsidiaries are required to comply with the terms and conditions specified in the promotion certificates.

Certificate issuance date EGCO Cogeneration Company Limited Roi-Et Green Company Limited

198

7 June 1999 6 December 2000

25 Promotional privileges (continued) The promotional privileges of Khanom Electricity Generating Company Limited and Egcom Tara Company Limited in relation to the eight-year corporate income tax exemption expired on 26 September 2004 and 14 February 2009, respectively. Khanom Electricity Generating Company Limited is eligible to apply the corporate income tax rate of 50% of the normal corporate income rate for a period of five years beyond the eight-year corporate income tax exemption period. On 25 September 2009, Khanom Electricity Generating Company Limitedâ&#x20AC;&#x2122;s privileges in relation to the use of the corporate income tax rate of 50% of the normal corporate income rate expired. Egcom Tara Company Limited is not eligible for any further reduction in corporate income tax. Accordingly, the net profit of these subsidiaries is subject to the normal corporate income tax rate after the expiration date.

26 Financial instruments The principal financial risks faced by the Group are interest rate and exchange rate risks. The Group borrows to finance its operations, which involve payments in foreign currencies, at both fixed and floating rates of interest. The objectives of using derivative financial instruments are to reduce the uncertainty over future cash flows arising from movements in interest and exchange rates and to manage the liquidity of cash resources. Interest and exchange rate exposure is managed through interest rate swap contracts and foreign currency forward contracts. In respect of currency exchange risk, the formula for the calculation of revenues from the Availability Payments and Energy Payments charged to EGAT allows for the minimisation of the impact of currency exchange. Trading for speculative purposes is not allowed. All derivative transactions are subject to prior approval by the respective board of each company in the Group. (a) Financial assets and liabilities As at 31 December 2010 and 2009, the Group had outstanding foreign currency assets and liabilities after taking account of foreign currency forward contracts as details below.

Currency Million Liabilities US Dollars Japanese Yen

13.13 570.53

2010 Million Baht 398 213 611

Currency Million 15.61 671.33

Consolidated 2009 Million Baht 523 246 769

The Company did not have the outstanding foreign currency assets and liabilities as at 31 December 2010 and 2009. Foreign currency assets represent cash and cash equivalents, trade receivables and US Dollars deposits with financial institutions. Foreign currency liabilities represent trade payables, other payables, interest payables and long-term loans. As at 31 December 2010, the subsidiaries have not entered into any foreign currency forward contracts to cover their exchange risk relating to long-term loan repayments of US Dollars 13.13 million and Japanese Yen 570.53 million (2009: US Dollars 15.61 million and Japanese Yen 671.33 million). However, the subsidiaries receive compensation from EGAT for exchange rate effects related to its US Dollars and Japanese Yen debt services. 199

26 Financial instruments (continued) (a) Financial assets and liabilities (continued) Objectives and significant terms and conditions

In order to manage risks arising from fluctuations in interest rates and currency exchange rates, the Group uses the following derivative financial instruments. Interest rate swap contracts

Interest rate swap contracts are entered into to manage exposure to fluctuations in interest rates on specific transactions. The Company entered into an interest rate swap contract by converting floating rates to fixed rate for the total amount of credit facilities of Baht 4,000 million. A subsidiary of the Company entered into an interest rate swap contract by converting floating rates to fixed rate for the total amount of credit facilities of US Dollars 13.13 million (which equivalent to Baht 398 million) and Baht 467 million. The fixed interest rates under the swaps for long-term loans and credit facilities at 31 December were:

Currency US Dollars Thai Baht

Contract amounts (millions) 2010 2009 13.13 4,467

15.61 4,555

Fixed Exchange Rates 2010 2009 7.42 2.48 - 5.65

7.49 2.48 - 5.65

The remaining notional principal amounts of the outstanding interest rate swap contracts at 31 December were:

Within 1 year Later than 1 year

2010 Million Baht

Consolidated 2009 Million Baht

2010 Million Baht

Company 2009 Million Baht

190 4,675 4,865

171 4,907 5,078

4,000 4,000

(b) Credit risk The Group has no significant concentrations of credit risk relating to its cash and investments. The Group places its cash and investments with high quality financial institutions. The Groupâ&#x20AC;&#x2122;s policy is designed to limit exposure with any one institution and to invest its excess cash in low risk investment accounts. The Group has not experienced any losses on such accounts. For trade receivables, the Groupâ&#x20AC;&#x2122;s sales are made to EGAT and industrial users under the terms and conditions of the long-term Power Purchase Agreements and the long-term Electricity and Steam Sales and Purchase Agreements. (c) Revenue swap contract As described in Note 28, the Power Purchase Agreements between subsidiaries and EGAT state that revenue from Availability Payments shall be calculated based on factors denominated in US Dollars. A subsidiary of the Company, Rayong Electricity Generating Company Limited (REGCO), therefore entered into a revenue swap contract with a financial institution to minimise exchange rate risk. On 1 October 2009, REGCO transferred its entire business including the revenue swap contract to the Company (as described in Note 30). As at 31 December 2010, there was no outstanding revenue swap contract (2009: the electricity revenues under the revenue swap contract amounting to US Dollars 1.86 million were fixed at Baht 33.80 per US Dollar.

200

26 Financial instruments (continued) (d) Fair value The carrying amounts of the following financial assets and financial liabilities approximate their fair values: cash and cash equivalents, investments, trade receivables and payables, amounts due from and due to related companies, other receivables and payables, and short-term loans due to the short maturities of these instruments. Long-term loans and debentures

The fair values of long-term loans with fixed interest rates have been calculated from the net present value of future cash flows discounted by market interest rates using rates at the balance sheet date. The fair values of long-term loans with floating interest rates approximate their carrying amounts. The fair value of debentures is estimated by discounting the future contractual cash flows at the market interest rate available on the latest trading date in the Thai Bond Dealing Center on the balance sheet date. The contract amounts and fair values of certain long-term loans with fixed interest rates and debentures at the balance sheet date are as follows:

2010 Company

Consolidated

Long-term loans Debentures

Contract amounts Million Baht

Fair values Million Baht

Contract amounts Million Baht

Fair values Million Baht

4,212 497

5,138 513

4,000 -

4,880 -

2009 Company

Consolidated

Long-term loans Debentures

Contract amounts Million Baht

Fair values Million Baht

Contract amounts Million Baht

Fair values Million Baht

4,243 1,410

5,298 1,519

4,000 -

5,036 -

Derivative financial instruments

The fair values of the derivative financial instruments at the balance sheet date are as follows:

Unfavourable interest rate swaps Favourable interest rate swap Favourable revenue swap

2010 Million Baht

Consolidated 2009 Million Baht

2010 Million Baht

Company 2009 Million Baht

(126) 23 -

(98) 52 1

(85) 23 -

(51) 52 1

The fair values of interest rate swap contracts, currency and interest rate swap contracts have been calculated using rates quoted by the Groupâ&#x20AC;&#x2122;s bankers to terminate the contracts at the balance sheet date. 201

27 Business acquisition Business acquisition during 2010 Nam Theun 2 Power Company Limited (NTPC)

On 29 September 2010, the Group purchased additional ordinary shares in NTPC from Italian - Thai Development Public Company Limited (ITD), totaling 450,000 shares, which is equivalent to 10% of the total equity of NTPC. The total consideration paid was US Dollars 73.33 million (which is equivalent to Baht 2,243 million). This additional share purchase has increased the investment portion of the Group in NTPC from 25% to 35%. The Group calculated the fair value of the net identifiable assets at the date of acquisition amounting to Baht 949 million. The difference between total purchase price and fair values of net assets represents the right in the long-term power purchase agreement (PPA) amounting to Baht 1,293 million. The right in the long-term PPA will be amortised on a straight-line basis over the remaining life of PPA (25 years) from October 2010 onwards. Details of the net acquired assets and the right in the long-term power purchase agreement are as follows:

29 September 2010 Baht’000 Property, plant and equipment Loans from financial institution, net Other assets less other liabilities Fair value of net assets Right in long-term power purchase agreement Total purchase consideration Net book value of net assets approximated to their fair value.

3,235,239 (3,073,735) 787,727 949,231 1,293,376 2,242,607

Quezon Power (Philippines), Limited Co. (QPL)

On 13 December 2010, the Group entered into a definitive agreement to acquire 100% of the ordinary shares of Ogden Power Development Cayman Inc (“OPDCI”) and Covanta Philippines Operating Inc (“CPOI”) from Covanta Energy International Investments Ltd. (“CEILL”). The total consideration paid was US Dollars 215 million. This share purchase increased the investment in Quezon Power (Philippines) Limited Co., (“QPL”) from 26% to 52.125% and the Group has 100% ownership of CPOI. CPOI provides operations and maintenance services to QPL through a long-term Operation and Maintenance Agreement. The above transactions are expected to be completed in the first quarter of 2011, subject to the obtaining of the relevant consents and adherence to the related conditions.

202

27 Business acquisition (continued) Business acquisition during 2009 Quezon Power (Philippines) Limited Co., (QPL)

On 30 March 2009, EGCO International (B.V.I.) Limited (EGCO BVI) purchased 100% of the outstanding shares of GPI-I, Ltd. (GPI-I) from GPSF Cayman I LDC (GPSF), where GPI-I had 10% ownership in GPIQ and GPIQ had an indirect interest in QPL. This transaction increases EGCO BVI’s aggregated indirect shareholding in QPL from 23.40% to 26.00%. The subsidiary calculated the fair value of the net identifiable assets at the date of acquisition at Baht 446 million. The difference between the total purchase consideration and the fair values of net assets represents the right in the long-term power purchase agreement, which amounted to Baht 36 million. The right in the long-term power purchase agreement will be amortised on a straight-line basis over the remaining life of the agreement. The right in the long-term power purchase agreement is included in interests in joint ventures. Power Generation Services Company Limited (PGS)

On 14 December 2009, the Company’s Executive Committee approved the purchase of ordinary shares in Power Generation Services Co., Ltd. (PGS) from CLP Power (Southeast Asia) Operation Limited (CLP-SEA) representing 50% of the total outstanding shares for US Dollars 16.75 million, equivalent to Baht 555 million. PGS is engaged in the provision of operation and maintenance services to BLCP Power Ltd. (BLCP), a joint venture of the Company. On 19 January 2010, the entire business of PGS was transferred to BLCP, including assets, liabilities and agreements entered into with third parties. BLCP issued new ordinary shares as a consideration upon the business transfer. PGS registered its liquidation with the Ministry of Commerce and transferred the investment in BLCP to the Company in return on the same date. The objective of this investment in PGS was to provide future benefits to the Company, as a shareholder of BLCP, through a reduction in the future power plant’s operating costs.

28 Related party transactions Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the Company, key management personnel, including directors and officers of the Company and close members of the family of these individuals and companies associated with these individuals also constitute related parties. In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form. The major shareholders of the Company are the Electricity Generating Authority of Thailand (EGAT) and One Energy Thailand Limited (formerly named “CLP Power Projects (Thailand) Limited”), holding 25.41% and 22.42% of the Company’s shares, respectively. The remaining shares in the Company are widely held. The information on the Company’s subsidiaries and joint ventures is provided in Note 13.

203

28 Related party transactions (continued) The following material transactions were carried out with related parties: (a) Sales of electricity

For the years ended 31 December Sales of electricity - Major shareholder

2010 Million Baht

Consolidated 2009 Million Baht

2010 Million Baht

Company 2009 Million Baht

6,816

7,503

2,535

929

Subsidiaries of the Company Four subsidiaries of the Company, Rayong Electricity Generating Company Limited (REGCO), Khanom Electricity Generating Company Limited (KEGCO), EGCO Cogeneration Company Limited, and Roi-Et Green Company Limited, have entered into Power Purchase Agreements (PPAs) with EGAT. The agreements are effective for periods of 20, 15, 21 and 21 years, respectively. According to the resolutions of the Cabinet meetings dated 15 February 1994, 23 January 1996, 28 January 2003, and 29 May 2003, respectively, the electricity revenues from such agreements must be calculated on a cost plus basis. There is a limitation on sales of electricity to third parties as specified in the agreements. In addition, REGCO and KEGCO are eligible to receive compensation for exchange rate effects, by adjusting the formula for calculation of electricity sold to EGAT each month pertaining to The First Amendment to the Power Purchase Agreements dated 30 January 1998 over the periods of the PPAs. Compensation for the years ended 31 December 2010 and 2009 amounted to Baht 91 million and Baht 214 million respectively. Under the PPAs with REGCO and KEGCO, EGAT has to bear the natural gas cost until the subsidiaries enter into natural gas purchase agreements with PTT Public Company Limited. To date, the subsidiaries have not entered into such purchase agreements. Therefore, the calculation of revenues from the portion of energy sales of electricity and the natural gas cost are not included in these financial statements. On 1 October 2009, REGCO transferred its entire business including Power Purchase Agreements (PPAs) with EGAT to the Company (as described in Note 30). (b) Service income

For the years ended 31 December Service income - Major shareholder

2010 Million Baht

Consolidated 2009 Million Baht

2010 Million Baht

Company 2009 Million Baht

122

EGCO Engineering and Service Company Limited has entered into the Subcontract for Major Maintenance Agreement with EGAT to provide major maintenance services, repair services, administrative services and additional services related to power plants. The compensation for such services is calculated on a cost plus basis. The agreement is effective for a period of eight years commencing from 24 September 2007.

204

28 Related party transactions (continued) The following material transactions were carried out with related parties: (continued) (c) Major maintenance expenses

For the years ended 31 December Major maintenance expenses - Major shareholder

2010 Million Baht

Consolidated 2009 Million Baht

2010 Million Baht

Company 2009 Million Baht

259

127

Two subsidiaries of the Company, REGCO and KEGCO, have entered into Major Maintenance Agreements with EGAT in order for the latter to provide major maintenance services, repair services, administrative services and additional services related to the subsidiariesâ&#x20AC;&#x2122; power plants. The price for such services is calculated under the agreements on a cost plus basis and will be adjusted annually according to the Consumer Price Index. The agreements have been extended for a period of eight years, commencing from 7 December 2006 for REGCO and a period of four years, commencing from 1 August 2008 for KEGCO. (d) Trade receivables from and trade payables to a related party

As at 31 December

2010 Million Baht

Consolidated 2009 Million Baht

Trade receivables - Major shareholder 545 1,301 Outstanding trade receivables as at 31 December can be analysed as follows: Not overdue 506 1,301 Overdue below 3 months 1 Overdue 3-6 months 38 Overdue 6-12 months Overdue over 12 months 545 1,301 Trade payables - Major shareholder 93 30

2010 Million Baht

Company 2009 Million Baht

220

665

220 220

665 665

205

28 Related party transactions (continued) The following material transactions were carried out with related parties: (continued) (e) Amounts due from and amounts due to related parties

As at 31 December

2010 Million Baht

Consolidated 2009 Million Baht

2010 Million Baht

Company 2009 Million Baht

8 52 60

29 39 68

8 8 4 20

4 2 6

247

228

247

228

2 10 12

10 10

2 4 6

6 6

2010 Million Baht

Consolidated 2009 Million Baht

2010 Million Baht

Company 2009 Million Baht

46 642 688

46 688 734

Amounts due from related parties - Major shareholder - Subsidiaries - Joint ventures Amounts due from related parties due over one year Amounts due to related parties - Major shareholder - Other related party Right to share spare parts (other non-current liabilities) (f) Loans to related parties and related interests

As at 31 December Short-term loan to related parties a join venture Long-term loan to related parties subsidiaries - Due within 1 year - Due over 1 year For the year ended 31 December Interest income - Subsidiaries

206

28 Related party transactions (continued) The following material transactions were carried out with related parties: (continued) (f) Loans to related parties and related interests (continued) Loans to subsidiaries EGCO Engineering and Service Company Limited

On 22 November 2005, the Company entered into a long-term loan agreement with EGCO Engineering and Service Company Limited to lend Baht 780 million. The principal is to be repaid annually in the amount of Baht 46 million from December 2010 to December 2025. The interest rate is MLR minus a certain margin and interest is payable on a semi-annual basis. Loans to a joint venture National Energy Development Co., Ltd.

On 25 September 2009, the Company entered into a shareholder loan agreement with Natural Energy Development Co., Ltd. (â&#x20AC;&#x153;NEDâ&#x20AC;?), a joint venture of the Company, for the total amount of Baht 32 million. The loan has a fixed interest rate. The principal and interest are to be paid one year after the drawdown date. The company issued such loan in the Companyâ&#x20AC;&#x2122;s investment proportion and in the similar terms and conditions as the other two shareholders which are CLP Thailand Renewables Limited and Diamond Generating Asia, Limited. Interest rate is market interest rate for short term loan. Furthermore, entire loan and interest was fully paid to the Company in May 2010. (g) Investments in debentures issued by a subsidiary and related interests

2010 Million Baht

Consolidated 2009 Million Baht

2010 Million Baht

Company 2009 Million Baht

Investments in debentures (investment in marketable securities) - Subsidiary

For the years ended 31 December Interest income on investments in debentures of - Subsidiary

As at 31 December

207

28 Related party transactions (continued) The following material transactions were carried out with related parties: (continued) (h) Office building rental and service income The Company has entered into Office Building Rental, Service Charges and Management Agreements with subsidiaries and joint ventures. The agreements are renewed yearly. The price for management services is calculated under the agreements on a cost plus basis.

For the years ended 31 December Office building rental and service income - Subsidiaries Management fee - Subsidiaries - Joint ventures

2010 Million Baht

Company 2009 Million Baht

7 7

11 11

35 33 68

63 23 86

29 Commitments and significant agreements 29.1 Commitments and significant agreements of the Company (a) As at 31 December 2010, the Company had commitments under Sponsor Support Agreements, which were made in respect of loans of subsidiaries, totaling Baht 374 million (31 December 2009: Baht 407 million). (b) As at 31 December 2010, the Company had commitments under the Counter Guarantee and Standby Letters of Credit issued on behalf of the Company to a subsidiary and joint ventures of Baht 2,213 million (31 December 2009: Baht 1,632 million). (c) According to the Power Purchase Agreements (PPAs) between the Companyâ&#x20AC;&#x2122;s subsidiaries and the Electricity Generating Authority of Thailand (EGAT) whose period between 15 years and 21 years, the subsidiaries have to provide bank guarantees, totaling Baht 140 million. The collateral is to be returned to such subsidiaries upon the expiry of the agreements. (d) As at 31 December 2010, the common shares of BLCP were pledged as collateral for the long-term loans of BLCP as described in Note 13.2.

208

29 Commitments and significant agreements (continued) 29.2 Significant agreements In addition to the PPAs with EGAT which is one of the Companyâ&#x20AC;&#x2122;s major shareholders (as discussed in Note 28), the Group had the following significant agreements. Water Supply Agreement

A subsidiary of the Company has entered into a water supply agreement with the Provincial Waterworks Authority (PWA) for a period of 30 years. Under the agreement, the subsidiary is required to produce water for sale to PWA in Ratchaburi and Samutsongkram provinces. The PWA has an obligation to purchase water at the minimum volume and price agreed. Fuel Purchase Agreements

Subsidiaries of the Company have entered into gas purchase agreements with PTT Public Company Limited (PTT). These agreements are effective for a period of 21 years and can be extended for another four years. A subsidiary of the Company has entered into a heavy fuel oil purchase agreement with PTT. The agreement shall be effective for a period of three years from 1 January 2005 to 31 December 2009. The agreement has been extended by one year and can be extended automatically for further one-year periods (in the event that there is no cancellation of the automatic extension). Operation and Maintenance Agreements

A subsidiary of the Company has entered into power plant operation and maintenance, and power plant equipment maintenance agreements with two customers. The agreements, totaling Baht 517 million, are effective for a period of five years and six years, respectively. In addition, the subsidiary has also entered into a subcontract for Supply of Spare Parts with a third party. This agreement is effective for a period of 2 to 3 years. The total contract price is US Dollars 14.48 million.

30 Business Transfer On 1 October 2009, Rayong Electricity Generating Co., Ltd. (REGCO), a wholly owned subsidiary of the Company, was to transfer all assets, liabilities and agreements with third parties to the Company at the book value of net assets as at 30 September 2009. The Company acquired the entire business of REGCO on 2 October 2010. At the extraordinary shareholdersâ&#x20AC;&#x2122; meeting of REGCO on 2 October 2009, approval was granted to dissolve REGCO, and REGCO registered its dissolution with the Ministry of Commerce on the same date. The Company received a return of share capital of Baht 4,960 million, and a gain from the liquidation of a subsidiary of Baht 258 million was recognised as expense in the statement of income for the year ended 31 December 2009. After the acquisition of REGCO, the commitments and agreements made by REGCO, Power Purchase Agreements (PPAs) and Major Maintenance Agreements with EGAT, were transferred to the Company.

209

Audit Fee

In 2010, EGCO and its subsidiaries paid the audit fee of 3,688,600 baht to the Office of the Auditors, comprising EGCO’s and subsidiaries’ audit fees of 1,922,400 baht and 1,766,200 baht, respectively. No other audit fee had been paid to the auditors or related parties to the auditors and the Auditors’ office.

Non-Audit Fee The following non-audit fee was paid by EGCO and its subsidiaries. 1. Payment to the Office of the Auditors:

In 2010, EGCO subsidiaries paid the non-audit fee of 630,833 baht to the Office of the Auditors for the special purpose review. In addition, EGCO and its subsidiaries would also be responsible for the expenses of undelivered work of 1,850,000 baht to the Office of the Auditors for advisory services on International Financial Reporting Standards. 2. Payment to Other Related Parties of the Auditors’ Office:

In 2010, EGCO and its subsidiaries paid the non-audit fee of 24,315,181 baht to other related parties of the Auditors’ office for the special purpose review and advisory services on offshore investment structure. In additional, EGCO and its subsidiaries would also be responsible for the expenses of undelivered work of 935,729 baht to the parties related to the Office of the Auditors for advisory service on offshore investment structure. The engagements of the office of the Auditors and its related parties to provide the non-audit work were reported to the Audit Committee to ensure that it would not involve any conflict of interest or any review of their own work which would contaminate the independence judgment of the auditors.

210

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 â&#x20AC;&#x153;Thai Forest Conservation Foundationâ&#x20AC;? which had the objective to conserve the environment on behalf of all shareholders who opt for electronic form. In 2010, the Company donated the cost saving in this regard to the Thai Forest Conservation Foundation on behalf of all shareholders in the amount of 1,910,688 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.

211

General Information

Company

Business

Registered Share Capital (Million Baht)

Par Value (Baht)

Paid-up Share Capital (Million Baht)

Ownership Interest (Direct+Indirect) (%)

Electricity Generating Public Company Limited (EGCO) Registration 0107537000866 (No.BorMorJor.333) Head Office 14th, 15th Floor EGCO Tower, 222 Moo 5, Vibhavadi Rangsit Road, Tungsonghong, Laksi, Bangkok 10210, Thailand Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 Rayong Power Plant Bangkok Office 12th Floor, EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0931 Rayong 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

Holding Company focusing on Power business and others related to power business

5,300

5,264.65

Registered Share Capital (Million Baht)

Par Value (Baht)

Paid-up Share Capital (Million Baht)

Ownership Interest (Direct+Indirect) (%)

IPP Electricity Generating and supply business

5,000

4,850

99.99

Engineering, operation and maintenance services for power plants and manufacturers

400

99.99

5,445.64/1

30.0703/1

5,445.64/1

100

(181,096,921 USD)

(1 USD)

(181,096,921 USD)

Independent Power Producer (IPP) Electricity Generating and supply business

Sector Energy & Utilities Industry Resources Foreign Limit 44.81% Share of Minor Shareholder (% Free Float) 51.90% Website www.egco.com

Subsidiaries Company

Khanom Electricity Generating Company Limited (KEGCO) Office 12th Floor, 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 13th Floor, 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 North Pole Investment Company Limited (North Pole) Office EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 Oversea office 6th Floor, Tower A, 1 Cyber City, Ebene, Republic of Mauritius 212

Business

Holding company focusing on investment in electricity generating companies in foreign countries

Subsidiaries (continued) Company

EGCO International (B.V.I.) Limited (EGCO B.V.I.) Office EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 Oversea office Akara Bidg., 24 De Castro Steet, Wickhams Cay 1, Road Town, Tortola British Virgin Islands, P.O. Box 3136 New Growth Cooperatief U.A. (Coop) Office EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 Oversea office De Lairessestraat 154, 1075 HL Amsterdam, The Netherlands New Growth B.V. (BV) Office EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 Oversea office De Lairessestraat 154, 1075 HL Amsterdam, The Netherlands EGCO Cogeneration Company Limited (EGCO Cogen) Office 13th Floor, 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 13th Floor, 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 EGCO Tower Tel. +66 (0) 2998 5000 Fax +66 (0) 2955 0956-9 Egcom Tara Company Limited (ET) (ESCO is the company’s 74.19% shareholder) Office 13th Floor, 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

Business

Holding company focusing on investment in electricity generating companies in foreign countries

Registered Share Capital (Million Baht)

Par Value (Baht)

Paid-up Share Capital (Million Baht)

Ownership Interest (Direct+Indirect) (%)

10.52 /1

30.0703 /1 (1 USD)

10.52 /1

100

(350,000 USD)

2.17/2

3,979.32/2

2.17/2

(54,500 EUR)

(100 EUR)

(54,500 EUR)

1.09/2

3,979.32/2

1.09/2

(27,500 EUR)

(100 EUR)

(27,500 EUR)

Small Power Producer (SPP) Electricity and steam generating and supply business

1,060

Holding company focusing on power business

175

SPP utilizing Biomass as primary fuel

180

70.30

Trading/delivery service of fuel from natural scrap

99.99

Piped water generating and supply business

345

74.19

Holding company focusing on investment in electricity generating companies in foreign countries

100

213

Joint Ventures: Company

Gulf Electric Public Company Limited (GEC) Office 87 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 Gulf Power Generation Company Limited (GPG) (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 Gulf Cogeneration Company Limited (GCC) (GEC is the company’s 100% shareholder) Site office 79 Moo 3 Tandeow District, Amphur Kaeng Khoi, Saraburi 18110, Thailand Tel. +66 (0) 3624 6531 Fax +66 (0) 3624 8020 Nong Khae Cogeneration Company Limited (NKCC) (GEC is the company’s 100% shareholder) Site office 111/11 Moo 7 Nongplamor District, Amphur Nong Khae, Saraburi 18140, Thailand Tel. +66 (0) 3637 3676 Fax +66 (0) 3637 3691 Samutprakarn Cogeneration Company Limited (SCC) (GEC is the company’s 100% shareholder) 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) (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 Conal Holding Corporation (Conal) (EGCO B.V.I. is the company’s 40% shareholder) Office EGCO Tower Tel. +66 (0) 2998-5000 Fax +66 (0) 2955-0956-9 Oversea office 2286 Alsons Building, Pasong Tamo Extension, Makati City, Philippines Tel. (632) 816 6740, (632) 892 4632 Fax (632) 814 0625 Alto Power Management Corporation (APMC) (Conal is the company’s 60% shareholder) Oversea office 2285 Solid House Building, Pasong Tamo Extension, Makati City, Philippines Tel. (632) 812 0294 Fax (632) 812 1005 214

Business

Registered Share Capital (Million Baht)

Par Value (Baht)

Paid-up Share Capital (Million Baht)

Ownership Interest (Direct+Indirect) (%)

Holding company focusing on IPP and SPP

14,000

13,784.35

Independent Power Producer (IPP) Electricity Generating and supply business

9,607

Small Power Producer (SPP) Electricity and steam generating and supply business

850

Small Power Producer (SPP) Electricity and steam generating and supply business

1,241.72

Small Power Producer (SPP) Electricity and steam generating and supply business

981.54

SPP utilizing Biomass as primary fuel

460

Holding company focusing on power business in the Philippines

544.64 /3

68.08 /3

544.64 /3

(800,000,000 PESO)

(100 PESO)

(800,000,000 PESO)

13.62 /3

68.08 /3

6.81 /3

(20,000,000 PESO)

(100 PESO)

(10,000,000 PESO)

Operation and maintenance services for power plants and consulting

Joint Ventures: (continued) Company

Western Mindanao Power Corporation (WMPC) (Conal is the company’s 44% indirect shareholder) Oversea office 2285 Solid House Building, Pasong Tamo Extension, Makati City, Philippines Tel. (632) 812 0294 Fax (632) 812 1005 Site office Sitio Malasugat, Sangali, Zamboanga City, Philippines Southern Philippines Power Corporation (SPPC) (Conal is the company’s 44% indirect shareholder) Oversea office 2285 Solid House Building, Pasong Tamo Extension, Makati City, Philippines Tel. (632) 812 0294 Fax (632) 812 1005 Site office Bo. Baluntay, Alubel, Sarangani, Philippines Quezon Power (Philippines), Limited Co. (QPL) (EGCO B.V.I. is the company’s 26% indirect shareholder) Oversea office 62 H. dela Costa, Mauban, Quezon Province, Republic of Philippines Site Office Cagsiay 1, Mauban Quezon Province, 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 Village, P.O. Box 5862 Vientiane, Lao PDR Tel. (856-21) 263 900 Fax (856-21) 263 901 Natural Energy Development Company Limited (NED) Office 999/9 45/F The Offices at Central World Rama 1 Road, Patumwan Bangkok 10330, Thailand

Business

IPP Electricity Generating and supply business

Registered Share Capital (Million Baht)

Par Value (Baht)

Paid-up Share Capital (Million Baht)

Ownership Interest (Direct+Indirect) (%)

340.40 /3

68.08 /3

307.45 /3

17.6

(500,000,000 PESO)

(100 PESO)

(451,600,000 PESO)

204.24 /3

68.08 /3

188.24 /3

(300,000,000 PESO)

(100 PESO)

(276,500,000 PESO)

141.36 /3

(207,641,268 PESO)

17.6

IPP Electricity Generating and supply business

12,010

100

2,010

IPP Electricity Generating and supply business

13,531.64 /1

3,007.03 /1

11,231.26 /1

450,000,000

100

373,500,000

USD

Feasibility study on Renewable Energy project in Thailand

2,304

594

33.33

Business

Registered Share Capital (Million Baht)

Par Value (Baht)

Paid-up Share Capital (Million Baht)

Ownership Interest (%)

1,663.73

18.72

Other: Company

Eastern Water Resources Development and Management Public Water resources development and Company Limited (EASTW) management for supplying raw water Office 23-26/F Eastwater Building, to the customers 1 Vibhavadi Rangsit Road, Jomphol, Chatuchak, Bangkok 10900, Thailand Tel. +66 (0) 2272-1600 Fax +66 (0) 2272-1601-3 Website www.eastwater.com Note : The Exchange rate as at December 30, 2010 /1 1 USD = Baht 30.0703 /2 1 EUR = Baht 39.7932 /3 1 PESO = Baht 0.6808

215

Referenced Persons

Regulator

Share and Debenture registrar

Auditor

216

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, +66 (0) 2654 5656 Fax. +66 (0) 2229 2030, +66 (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 +66 (0) 2229 2888 E-mail: contact.tsd@set.or.th Website: www.tsd.co.th 1. Ms. Nangnoi Charoenthaveesub Certified Public Accountant (Thailand) No. 3044 2. Mr. Prasan Chuaphanich Certified Public Accountant (Thailand) No. 3051 3. Mr. Vichien Khingmontri Certified Public Accountant (Thailand) No. 3977 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

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) Topics

Page No.

1. General Information

212

2. Financial Summary

3. Business Characteristics 3.1 Business Operation

3.2 Revenue Structure

3.3 Industrial trend and Competition

4. Risk Factors

123

5. Shareholding and Management Structure 5.1 Shareholder

5.2 Management Structure

5.3 Director and Management Selection

5.4 Remuneration

5.5 Good Corporate Governance Report

5.6 Inside Information

5.7 Internal Control

120

6. Related Transaction

140

7. Management Discussion and Analysis

128

8. Financial Statements 8.1 Financial Statement

153

8.2 Audit Fee

210

217

Glossary

1. Companies

EGCO Group companies, EGCO Group AE APMC BLCP BV Conal Coop DGA East Water EGAT EGCO BVI EGCO Cogen EGCO Green Egcom Tara ESCO GCC GEC GECC GEN GIPP GPG GPIQ GYG KEGCO NED North Pole NKCC NMPC NTPC 218

Electricity Generating Public Company Limited Electricity Generating Public Company Limited and its subsidiaries and joint venture companies Agro Energy Company Limited Alto Power Management Corporation BLCP Power Limited New Growth B.V. Conal Holdings Corporation New Growth Cooperatief U.A. Diamond Generating Asia, Limited Eastern Water Resources Development and Management Public Company Limited Electricity Generating Authority of Thailand EGCO International (BVI) Limited EGCO Cogeneration Company Limited EGCO Green Energy Company Limited Egcom Tara Company Limited EGCO Engineering and Service Company Limited Gulf Cogeneration Company Limited Gulf Electric Public Company Limited General Electric Capital Corporation Gulf Energy Company Limited Gulf IPP Company Limited Gulf Power Generation Company Limited GPI Quezon Company Limited Gulf Yala Green Company Limited Khanom Electricity Generating Company Limited Natural Energy Development Company Limited North Pole Investment Company Limited Nong Khae Cogeneration Company Limited Northern Mindanao Power Corporation Nam Theun 2 Power Company Limited

OneEnergy PGS Quezon REGCO Roi-Et Green SCC SPPC WMPC

OneEnergy Thailand Limited Power Generation Services Company Limited Quezon Power (Philippines) Limited Company Rayong Electricity Generating Company Limited Roi-Et Green Company Limited Samutprakarn Cogeneration Company Limited Southern Philippines Power Corporation Western Mindanao Power Corporation

2. Government Organizations

EPPO ERC NEPC PWA SEC SET

Energy Policy and Planning Office Energy Regulatory Commission National Energy Policy Council Provincial Waterworks Authority Securities and Exchange Commission, Thailand Stock Exchange of Thailand

3. Other Institutions

IOD JBIC

Thai Institute of Directors Japan Bank for International Corporation

4. Technical Terms

Associated Company

Controlling Person

A firm is an associated company if : A) listed company or its subsidiaries hold 20.00% (twenty percent) or more, but not more than 50.00% (fifty percent) of its overall voting stock. B) A listed company or its subsidiary has influence, but not controlling power, over its monetary and operational policies. (The company is not deemed to be a subsidiary or joint venture.) This is a shareholder or a person who, through their behavior, can significantly influence the policy, management and operations of a listed firm. This is irrespective of the source of their authority: through their rights, contracts, or any others. Specially, a â&#x20AC;&#x153;controlling personâ&#x20AC;? includes, but is not limited to, one who: A) Has direct or indirect voted exceeding 25.00% (twenty-five percent) of the total company votes. B) Through their behavior, has control over the appointment or removal of company directors. 219

COSO IPP Major Shareholder PDP SPP Subsidiary Company

220

C) Through their behavior, has de facto control or undue influence over policy, controlling those company members authorized to determine management and operational policies. D) Through their behavior, acts or has the power to act in the same manner as the company management. This includes those who hold other positions in the company, but are able to act in the same manner as the company management. The Committee of Sponsoring Organizations of the Treadway Organization Independent Power Producer Such person is a one whose holding in a listed firm exceeds 10.00% (ten percent) of the listed companyâ&#x20AC;&#x2122;s overall voting stock. Power Development Plant Small Power Producer Is : A) A company that a listed company holds over 50.00% (fifty percent) of its total voting stock. B) A company that the company referred to in (A) holds over 50.00% (fifty percent) of its total voting stock. C) A company that is held by another company in a chain of ownership, no matter how many number in the chain, ending with the company referred to in (B) and D) A company that the company referred to in (A), (B), or (C) hold over 50.00% (fifty percent) of its overall voting stock, either directly or indirectly. E) A company that the company referred to in (A), (B), (C), or (D) have controlling power over its monetary and operational policies, and are able to direct and gain interest on its activities. The holding of (A), (B), (C), or (D) is included those held by related persons.